Europe’s Back is up Against The Wall

There is serious movement in Europe now to finally create a single debt to keep Europe together. It is the only way to solve the problem. There must be a consolidated single debt for a single currency. Any fragmentation will result in the collapse of Europe being torn limb from limb. They are running out of time. Our models are pointing to August/September as the critical time period. Europe has its back against the wall. It is time to wake up before everything collapses into dust. We may for the first time see movement. Up until now, the fear has been trying to sell that to the people. Since Europe is suppressing elections anyway, what is the point.

Reality Check

Those who think Government does not control the press, read this one. They want all money to be electronic to collect taxes. They want the kill switch on the internet to shut down the only Free Press that remains. Britain is tearing apart Murdock because they have not been able to control the press as in the USA.

Now if you think Government is honest and benevolent, you better listen to this speech at UCLA. Those yelling fiat are distracting people from the real threat – electronic money. If government truly cared about gold, why are the selling it? Their end-game is the elimination of tangible money replacing it with electronic book entries. Gold will be the savior of the underground economy – not the aboveground economy.

This gets interesting at 14 minutes: He wrote an op ed in the NY Times on how the Fed could not predict anything and the FBI started an investigation of his firm as well as Congress. If you criticism government, you are a dissident – not exercising any constitutional right. The sad truth, there are now rights. They get to do whatever they want and you have to find a judge to ENFORCE your rights that you have to prove exist. When government has stacked the courts, good luck in finding a judge to defend you.!

Operation Twist

At the beginning of the year, we published in the 2012 Metals Report this Forecast Array showing August for a Panic Cycle and Sept as the big turning point for the year. We ran the model updating these Arrays (to be sent to those who purchased the Metals Report by Friday), and the timing has not changed. We are still headed into 2015.75 where government debt will be in turmoil. Today’s action by the Feb is perfectly in line with our broader warnings about 2015.75 – 2020.05.

At the end of a two-day policy meeting Wednesday, the Fed said it was extending a program called Operation Twist, under which the Fed swaps short-term bonds for longer-term ones to help keep long-term interest rates low. This is a serious brain-dead idea and it is setting everything up to make interest rates much more susceptible to higher volatility. Why? The reason you fund long-term is to reduce risk and volatility. If you have a 30 year fixed mortgage, someone else is assuming the risk short-term for a rise in interest rates. The Fed in shifting away from long-term into short-term is making it possible for government interest expenditures to rise like a rocket-ship when the debt crisis reaches here. This will create the meltdown for government will be just like the banks, lending long-term with demand deposits. The crisis hits, the depositors want their funds, but the bank lent them out for the long-term and cannot return cash now, that creates the run, and the bank fails. The Fed has just adopted the very same risk showing how desperate they are to help Obama win the election trying to stimulate the economy. Sorry – it will fail as usual. If you want to help the economy – regulate the profit market at the bank. They are NOT passing along interest savings to borrowers so the lowering of rates is just increasing profits at banks – not stimulating a damn thing!

The extension of Operation Twist will not provide ANY benefit whatsoever. Businesses and consumers who aren’t borrowing now aren’t that likely to change their minds just because rates dropped a little more. Banks will not pass on that savings anyway. So what are you really doing? The Fed can do NOTHING. But they cannot be scene to be doing nothing, so they do something even if it will accomplish nothing.

I have tried to explain that the theories everyone is using today regarding the economy are simply wrong assuming it is a fish bowl with no consideration as to external influences. The cost of producing oil has risen from $25 to nearly $75. The cost of government continues to rise. Local governments are raising taxes. This is producing NOT an economic recovery, but STAGFLATION, where there is inflation we see in prices, but the driving force is not DEMAND, but rising costs. Banks contribute to STAGFLATION refusing to pass on savings with lower cost of funds while refusing to now lend without full collateral. So they will lend only to those who do not need it and are not interested in borrowing for investment, and this keeps the deflationary trend in place. The banks then are more likely to trade with client funds so they do not have to lower their profit margin.

So welcome to the crazy world of STAGFLATION where you can’t keep down rising costs, but the rise is not fueled by private demand.

The Problem With Ideals

“My first impression is that this Jason Hommel is as frustrated as the rest of us with the fact that the world (essentially US govt.) does not acknowledge gold as money.

His statement:  I BELIEVE ARMSTRONG IS SIMPLY A PRODUCT OF THE AGE OF PAPER IN WHICH WE ALL LIVE.  reveals to me the denial Jason suffers re the fact that we are all enslaved in the ‘age of paper’ . . ..  the operative word being ‘enslaved’ . . . . . & Armstrong’s ‘reality check’ in that circumstance is antithetical to Jason’s ‘ideal’.  Knowing that this is not ‘right’ does not change the reality in which we live.  I think Armstrong is on to something when it comes to facing this ‘reality’.”

Gold is not official money and you better stop praying it is for they will only come take it away. It is the hedge against corrupt government and it should be FREE never fixed for that is doing what Marx himself tried with Communism – to eliminate the business cycle which is why any fixed exchange rate fails – ie even British Pound v DMark 1992, Asian Currency Crisis 1997 etc.. Unless you have been a major trader, you cannot see reality.  Short the hell out of currency that is fixed. If you are wrong, government guarantees there will be no loss. If you are right, you make a fortune! Remember Soros 1992? I warned the Euro Commission the currency would fail. This is also why the Euro is collapsing. I was not being a brilliant forecaster – just a down to earth trader. As long as each member still had their own debt, I could isolate just Greece and short their bonds making it a VIRTUAL currency! This is the REAL world – not dreamland. Money is simply a derivative that in reality trades as a stock in a company. Currency has become valued purely on the whims of confidence in a country. Still want to buy some Greek bonds?

If you cannot see that government is trying to eliminate ALL tangible forms of money and go to electronic debit cards etc, you are blind to what is taking place because you are too focused on a dream that has NEVER taken place! Perpetuate fixed exchange rate killing the business cycle. Kondratieff gave his life because he warn the cycle would defeat the government. They hate my guts for the same reason. They do not like to hear they are noy 120% in control. That is why there is no longer a FREE press. Mainstream media will not publish the truth if it offends government. Look at MF Global!

In the failed bill  HR 4646 the original idea was to eliminate the income tax replacing it with a 1% tax on ALL transactions in a bank account. This is not income. This is money flow – a 1% tax on all bank transactions which will include paychecks, retirement checks and Social Security checks. It was designed to get rid of government checks and force everything into direct deposit and eliminate “paper money” and checks to make it easy to tax everything.

Why people are living in the past and cannot see the trend right before their eyes is truly amazing. Even if gold was revalued to $60,000 to match the outstanding debt making the bonds redeemable in gold, that is why Nixon closed the gold window – to stop the redemption that would have drained all gold from the USA. What then? The holder say thanks, here is your worthless bond and we will take all the gold? The gold standard failed because you cannot flat-line the economy.

It also makes no sense to say governments are keeping gold from rallying & that is the conspiracy when in 1971 they were the ones pushing it all higher. So why would they suppress gold now, and sell as much as they can removing even VAT taxes in Europe if they BELIEVED gold was money and were conspiring to keep it down in price? This nonsense is bantered about to explain why they are NOT wrong and gold would be $60,000 but for this conspiracy?

Gold is the REAL hedge against government because it is what will be left in a crisis in the UNDERGROUND economy not the ABOVEGROUND dominated by electronic deposits. Look to coins rather than bullion. To verify the authenticity of a US $20 gold coin, you have to verify the weight and size since the purity is .900 fine. There is NO need to test the metal for the size & weight cannot match using lead or anything else. Each metal has a unique density. Therefore, if the coin has the proper weight, is the correct size, it is gold.

  • Dates:                      Weight:           Diameter:            Gold:
  • 1849 – 1907            33.436 g            34 mm           .96750 oz
  • 1907 – 1933            33.436 g            34 mm           .96750 oz

Bars are more problematic. The AVERAGE person may be unable to determine or trust a bar. A coin can be determined easily and does not require an acid test.

There are just so many people married to this whole fiat nonsense that they are distracted from the truth – it is the debt crisis, not what is or is not money.


Answering Your Questions

” Hi Martin, thanks for your steady flow of valuable market comments and economic comments. I see that one option during a monetary reform likely facing us in the next 8 years is the launch of a new currency to replace the current or “old” one. If this were to occur, wouldn’t all debts in the “old” or existing currency be converted into the new much weaker currency hence providing a windfall for debtors ? Or am i missing something? What has happened to debtors in all cases where a new currency has been launched to replace a current currency – is it a windfall for debtors or do they get hit hard ? I think North Korea was a country who did this recently if i recall correctly.


In most cases the lender gets nothing. That is what destroyed capital formation during the great depression. People hoarded gold and money was eradicated by the permanent defaults. It is how government always gets out of paying off its debt. This is why there will NEVER be a return to the gold standard. You then have to pay the debt in gold? All the debts of former governments go to ZERO.
The reason there is plenty of Continental Congress currency around is because the USA defaulted. The Constitution promised to pay all those debts and notes. They never did. A team of lawyers & I got together to see if we could buy up that currency and then demand the government pay it off. The conclusion was a Federal Judge would deny the claim unless you could show your family personally had that money and was harmed. This is the way debt is always resolved – bug off! This is the essence of the shift between private and public. It is why Adam Smith said nobody ever pays. So those who take the National Debt, divide the purported gold reserves, and then announce to the world everyone is an idiot because gold has to be $60,000 – get real! That assumes the debt game keeps going and there is some guilty conscience that says they will pay it off in gold. Sorry – I go to Capitol Hill regularly and meet behind closed doors on these topics – it ain’t gonna happen! They will default. The new currency will be electronic for they see this as your fault and if you paid every time of tax there would be not debt crisis. What makes you think these people actually believe they are responsible?

Europe has cancelled its currency plenty of times and war always wipes out previous debt unless you are the victor – and then you use inflation to devalue it. The idiot is not the guy who questions $60,000 gold, but the guy who thinks they will honor that debt so gold has to be $60,000. It will never happen! Buy gold physically for it will help make the transition from the current currency to the next. It will probably hit $5,000 by 2017 BEFORE the currency changes so it is impossible to say even what that $5,000 means in purchasing power today. So will real estate, and of course shares, collectibles from coins & stamps to fine art & antiques. This is why people HOARD in a crisis. They instinctively see something is wrong. In Greece, leading into the elections, more than 1 billion euros were being withdrawn from ATMs each day. That was the hedge to hoard cash just in case!

The Model – Look Out August-September

One of the most fascinating aspects of our work has been the object of eliminating personal opinion. Therein lies the mistakes. Everyone has an opinion. So what. NOBODY can forecast a market from a gut feeling and be consistent. That is the problem with all forms of analysis that includes pattern recognition or anything that is subjective. That is where the arguments come in he’s wrong and I’m right nonsense. I do not care who you are, nobody is right 100% from a personal subjective manner.

The ONLY way to approach this is with a quantitative model. The numbers are the numbers. TIME is TIME. We have run the model updating the Forecasting Arrays and NOTHING has changed. The computer still shows AUGUST as a PANIC CYCLE and SEPTEMBER and the big turning point for 2012.

There is a lot going on everywhere. There could be a revolution as people are yelling that the elections in Greece were rigged. The way the politicians are in Europe trying to prevent any elections, those claims cannot be just dismissed. So hang on to your socks. We are approaching a period of importance. We will have the next report of interest rates out very shortly. What for the advertisement on the site.