TFMR Podcast #39 - The Full Willie


Our most-requested guest returns today and you're in for a treat.

Now, I always try to be respectful of your time...and attention span. Therefore, I try to keep these podcasts to something less than 30 minutes. However, visiting with The Jackass is something entirely different and this baby clocks in at about an hour and ten. If you don't have that much time or interest, then you are certainly entitled to skip around and cut the thing short. However, we live in tumultuous times and 2013 promises to be a year of significance, so I strongly encourage you to listen to this entire interview. Maybe break it up into 20 minute intervals if you must. But, The Brain of The Jackass is large and complex. If you skip around too much, you're likely to miss something.

So, if you're ready...kick back, relax and hit the play button.



Wallace HartleyAl Huxley
Feb 6, 2013 - 11:34am

@ Al Huxley re: Shanghai Premium...

The arbitrage opportunity you speak of is a tool designed by Central Banks to move gold reserves to safe havens from potentially volatile areas of the world. By creating the arbitrage, the CBs can hide their true intentions to shift gold stockpiles by claiming "market forces" were responsible for the exodus (and if global commercial banks make billions by acting on the arbitrage, then all the better!). Major shifts of gold reserves have occurred in our recent history and in both instances, the shifts took place prior to World Wars. I've pasted a section of an article written by Julian D.W. Phillips entitled, "The Big Picture Behind Germany Taking Half of Its Gold Home" that explains the process and the historical context better than I could. The implications of the current shift are not favorable for the United States or for liberty loving peoples around the world...hopefully this will help some to connect the dots....

"Are the nations where the gold is held the right places to store it? What if they face crises themselves? Is the move being made because of expectations of crises in those countries? What future monetary scene did Germany see that prompted the moves we see now? Nearly all the world’s nations are acknowledging that China is headed to the top of the wealthy nations pile and is going to take the Yuan to a major global reserve currency, but the prospect of holding German or any other developed nation’s gold in the People’s Bank of China takes a leap of faith and an admission that power and wealth has moved East into politically unknown waters that is just too much at this time.

As we said above, the move of this gold to Frankfurt will allow time to ensure the central banks where the gold is held, to get hold of the gold if they do not have it at the moment. The prospect of developed world central banks now competing with those of the emerging world in the gold market may well start the next leg of the gold bull market because this new, persistent, price-insensitive buying has the power to take gold to a whole new level! We watch to see. If this does happen, then the whole nature of gold in the money system will change even before the changes are officially accepted. Gold will be in a de facto pivotal position in the monetary system again. It will be a short time from that point before it is officially accepted then. The way will have been paved for China to arrive on the scene and gold to have a vital function in the monetary system between two very different and unconnected, politically and economically, power blocs, the developed world and the emerging world with China as its hub.

The last time the world was divided on this basis was at the start of both world wars. The consequences to the monetary world then were so devastating and saw the destruction of national currencies on both sides, in Europe.

History teaches us another lesson. Ahead of the second war, when it became apparent that extremists had taken power in Germany and war became a probability again, gold came into the picture very forcefully. We are all aware of the 1933 Confiscation of gold then, with the stated objective of expanding the money supply through the devaluation of the dollar in the U.S. but one side of that event has not been the subject of full public examination.

What happened to European Gold from 1935+?

Is the fear of future crises in those countries a motive for the move of Germany’s gold back home? It certainly was so in Venezuela’s case, fearful of the U.S.’s power over its gold and reserves. We don’t expect any further statement on the reasons from Germany because that’s the nature of central banks. But history tells us that there are other reasons which discount the future. These confirm the move of gold back to the monetary system and why Confiscation of private gold has become a probability in the future too.

When the U.S. dollar was devalued in 1935, it was done so only in terms of gold. It was not devalued against foreign currencies. Exchange rates were then fixed against each other. Other governments did not devalue their currencies against gold. The result was that while gold was trading outside of the U.S. in the foreign currency equivalent of $20 there, it was trading at $35 in the U.S.

With markets relatively unsophisticated in those days, alongside limited communication abilities the original arbitrageurs [dealers between two markets] found they could buy gold at the foreign currency equivalent of $20 and sell it into the U.S. for $35. Is it any wonder that the U.S. gold stocks roared up to 26,000+ tonnes?

Was this a financial error in an undeveloped world? We have no doubt it was not. It was the ideal quick way to shift the gold reserves of Europe away from the war zone to the relative safety of the U.S. The war arrived in Europe four years later.

But foreign governments weren’t stupid. European governments permitted this move, even though it was seen as a market event. Remember that gold was the basis of money then so such a shift had to happen with government approval. This had to happen within the monetary system in force at the time. The fact that it happened so smoothly implied total government cooperation.

We see it also as an example of how the banks work completely with monetary authorities to ensure complete control over the monetary system. The same is true today as we see the efforts of governments primarily directed at repairing the banking system and government finances with scant attention to the national economies below them.

With a war on the way Europe sent its gold to the U.S. without governments being seen to do it. The move came about as a result of ‘market forces’.

But you may rightly say that surely that wasn’t the end of the story? Of course not!

With a huge U.S. army based in Europe after the war, the flood of dollars from the U.S. to Europe happened from the forties right through to the sixties [Eurodollars] continued. European nations, including France, Italy, Switzerland and Germany led by President de Gaulle, kept selling their U.S. dollars for gold. Once Europe’s gold returned to it [as the war was out of the way and reconstruction just about complete], Europe had its gold back. Then the change in the monetary system occurred and the dollar (the exclusive currency in which nations could buy their oil to run their economies with) closed the gold window and excluded gold from the day-to-day system but remained in national vaults. It was then that the experiment, now 42 years old, in un-backed paper currencies began. European central banks were then rewarded by the extraordinary rise in the gold price in the seventies and eighties.

This two-way process of gold to and from the U.S. only became visible with hindsight."

Feb 4, 2013 - 9:05am

Barter was better

Barter was better then (late 70's early 80's) , and it will be better now. Gold worked then and still works now, keep stackin

Feb 4, 2013 - 7:11am

The length is greatly

The length is greatly appreciated. When you interview a guy for 10 minutes, he's gonna give you the same lines each and every time (see KWN as it is now). Only after 30 minutes or so you will really get to the good part, the stuff you haven't heard before.

Mariposa de OroStrongsidejedi
Feb 4, 2013 - 1:54am



Let me begin by saying I love it here and the local nationals I've met are very nice all in all. What's the deal with the Marshalls? If you ask most Americans here, they'll tell you we've ruined the Marshallese people. I guess in a way I'd have to agree. There was a horrific battle here during WWII. The Japanese army had occupied this area for a couple of decades prior to the war. During the war, the Marshallese had pretty much been enslaved by the Japanese. The US took possession of the Atoll during operation Flintlock. The islands and the people were devastated. So the US came to the rescue and never left. The Marshallese economy is largely dependent on the US Army base on Kwajalein. The US has the Western Test Range that starts off the California Coast and extends to Kwajalein. The base employs several hundred Marshallese workers. It also provides support to the neighboring island of Ebeye. There are approx 20,000 people living in a third world slum. The Marshallese society has a very different ethic than what most Americans have. The Marshallese tend to be, shall I say, very laid back about things. Their societal structure is also very different from America's. Combine that with 65 years of hand outs, and a nation of dependents is what you get. Its very sad to see. Diabetes is epidemic here, as in many other Pacific island nations. The people love their soft drinks and junkie snacks. There is also plenty of alcoholism and drug use. I could go on but it's very complicated to explain. I worry for the people here knowing what I do about the global economic situation.

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Feb 4, 2013 - 12:10am

Kitco says thanks and bye to John Nadler?

Other changes to the site include the departure of Jon Nadler, a long-time consultant and regular contributor. Nadler started his collaboration with the company in 2006 and was a cornerstone of the contributed commentaries section of and a regular on the trades how circuit.

"We appreciate Jon's contributions to the company and wish him well," Dourekas said. "We are dedicated to having the best-of-the best expert analysis on, and solidifying our role as the go-to site for all precious metals information. We have the most frequently quoted analysts and that is a reflection of our commitment to content, accuracy, and speed."

dateline Feb 1, 2013

Feb 4, 2013 - 12:09am

Speaking of international ramifications

Those Icelandic people are small in number but got big back and big brains.

They kicked the FBI out of Iceland when the showed up to try to convince the Icelandic police to play ball.

Instead, the US got a formal protest for the intrusion and the FBI guys got escorted and deported!

Now, what's that about the small island nation called the Marshall Islands?

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