No Economic Recovery; Prepare For Inflationary “Meltup”

By Julian Dunraven, J.D., M.P.A.

Honorable Friends:

Your government is lying to you. We are not in economic recovery. We are merely experiencing a cash bubble through printing—inflation—and every day that bubble is in greater danger of bursting. When it does, the American people will face national bankruptcy.

The following video comes to me on the recommendation of Gerald Celente, director of the Trends Research Institute, and The Trends Journal. For those of you who have not already subscribed to his journal, he is one of the best economic forecasters in the world.

To my friends in the Tea Party, this is why you are marching. Simply getting Republicans elected will not be enough to save this nation from economic collapse. Any politician, Democrat or Republican, who does not understand what is in this video must go.

In addition to Mr. Celente, this documentary, "Meltup," features some of the best economic experts available including:

• Peter Schiff, Austrian School economist, bestselling author of Crash Proof, owner of Euro Pacific Capital, former economic advisor to Ron Paul, and current candidate for U.S. Senate in Connecticut
• Dr. Ron Paul, Congressman from Texas , former presidential Candidate, bestselling author and voice of the Austrian School economists on Capitol Hill
• Marc Faber, renowned Austrian School economist.
• Jim Rogers, investor, author, and financial commentator
• Tom Woods, historian, bestselling author, and senior fellow at the Ludwig von Mises Institute.
• And several others.

The National Inflation Association has done a fine job in producing "Meltup." Our liquid fuels crisis, the manipulations and fraud in the precious metals markets, the debt problems and the looming threat of dollar collapse through inflation are all covered in detail. As Celente points out, we are on the verge of the second American Revolution. This video will give you a better understanding of what we face, and what the Tea Party and its supporters MUST achieve if it is to be successful.

Deflation Is Not The Problem: We Face Inflation And Currency Collapse

By Julian Dunraven, J.D., M.P.A.

Honorable friends,

The value of the dollar is up, gold is down, and so is oil; stock values have plummeted, and everywhere I hear fretting about deflation. Do not be deceived. It is not deflation, but inflation which has come to plague us. If people fail to understand this point and rely on the dollar, their wealth will be wiped out.

The credit crisis has forced a massive deleveraging process faster than anyone anticipated. As a result, entities are selling anything they can for dollars to pay down debts. This sell off includes gold holdings, which is helping to push the already manipulated prices down further. The deleveraging sales (along with naked short selling) have also crashed stock prices. This has caused speculators to fear deflation rather than inflation and seek dollars rather than assets, and so they have sold off oil, causing a drop in the price. Coupled with the recessionary fears, this has cut demand slightly and OPEC is cutting production. Keep watching. All of this is temporary.

Demand for oil is still growing, even if that growth has slowed somewhat. Even with demand expected down at 86 million barrels per day, that is still more than last year and less than we are expecting for next year. China alone still has an 8% growth rate. We still suffer a supply destruction of 5-8% per year and have no prospects of any major new fields. The value of oil will climb, and it will climb high.

As for our stocks, many are not overleveraged and are quite strong. They should recover nicely from the dumping this liquidation is forcing right now. They will also benefit as Sen. Charles Grassley (R-IA) has ordered the Justice Department to begin an investigation of the SEC. As a result, the SEC is starting to take action against naked short sellers who have been stealing trillions by selling non-existent stock on the markets. One investment advisor has reported to me that up to 50% of the stock of several major companies currently being traded simply does not exist. Congress is finally beginning to notice this and take aim at these criminal traders who have defrauded both the companies they trade and the investing public in what may be the biggest financial crime we have ever seen. Thus, certain sectors of our economy are still very strong, and with prices so low, it is a good opportunity to buy.

Be very clear about this point: inflation or deflation is determined by increasing or decreasing the money supply; they are not determined by rising or falling prices alone. We are not in deflation simply because of a few momentarily low prices. The Fed is the real worry. It has just added over $5 trillion to its balance sheet. Yes: $5 trillion. We have borrowing and inflation when we should have savings and capital. Our money supply is inflating as if there is no tomorrow. Such a thing has never before been seen in this country. We did see it in the Weimar Republic of Germany, in Argentina, and in the French Revolution, though. In each case, the government inflated the currency to the point of collapse. When the people began to starve, the French Queen was foolish enough to say “Let them eat cake.” She lost her head for it.

When the Fed manages to inject this cash into the market, we will begin to enter hyperinflation. Inflation will far surpass the interest rates for cash and bonds and any savings connected to the dollar will be wiped out. This is why we have seen savvy investors like Warren Buffett move all of their money into the equity of stocks, or into the safety of real money: gold and silver.

This is still a wonderful time for the purchase of gold and silver. The spot prices on COMEX have yet to realize the shortages we are facing. Yet, every dealer I talk to is desperately adding staff to try and keep up with the unprecedented demand. People are now waiting more than twenty minutes just to place an order and then being told they will have to wait anywhere from 3-5 months for delivery. Faced with such shortages, I have seen the price of a 1 oz. gold coin on eBay rise to over $1,500 while the spot price on COMEX lingers at $700 per ounce.

This will not continue. COMEX prices would lead you to believe there is a glut in supply. Yet it is becoming difficult to get gold and silver. It will shortly be even more difficult to get silver as it is a byproduct of lead and zinc mining and those metals are selling below cost, so mines are shutting down. People are beginning to realize that COMEX does not have physical metal to back up its paper contracts and they are demanding delivery. Many investment strategists expect COMEX to default by December. Once that happens, the dollar really does collapse as the price of gold may climb up to $5,000/oz., and silver may shoot to over $100/oz.. At that point, people will either have gold, silver, and stocks, or they will have worthless paper. We are facing inflation, and that is the simple fate awaiting our fiat currency system.

All That Glitters Is Not Gold: Our Government’s Lies and Manipulations in the Gold Market

By Julian Dunraven, J.D., M.P.A.

Honorable friends,

We have all heard the old adage that when the market is down, gold is up. Well, the market is most assuredly down . . . but so are gold prices. Yet, strangely, demand for gold and other precious metals is skyrocketing, while supply is so low that people are being told they may have to wait six months or more for delivery. Even stranger, on eBay, prices for gold and silver coins and bars are well above the price they are being traded at on the commodities exchange in New York. So what is going on? That is the question some of my clients wanted answered as they fretted about their hedge investments. To answer quite simply, our government is actively working to suppress the gold market, and defrauding investors in the process. Now I will tell you why and how.

In the 1930s, we abolished the gold standard. Instead, we now have a fiat currency where money has value only because we say so. This allows the Federal Reserve to adjust the money supply without regard to a set amount of gold. Unfortunately, the Fed abused its power. Thus, every time we faced an economic hurdle, rather than allowing for market corrections, the Fed simply cut interest rates, printed more money, and inflated the problem away. It worked as long as people had faith in the currency.

As this behavior repeated itself over time, the central bank managed to encourage the unrestrained spending and overleveraging that has caused the economic crisis we face today. This time, though, the problem is not going away.

We are facing the accumulation of years of bad policy. People are beginning to see that the nation is so deeply in debt that the only way out is massive inflation and devaluation of the dollar. In an effort to preserve their wealth and hedge against this inflation, they turn to gold. This causes problems for the Fed and the other central banks.

Although our money is no longer backed by gold, the Fed cannot ignore gold entirely. If the value of the dollar drops too fast against gold, people begin to lose faith in the system. They buy gold instead of treasury bonds and the Fed and other central banks would be forced to stop their meddling in the markets and allow the money supply to readjust to the level it should be at. Thus, the Fed and other central banks have coordinated their efforts to prevent this.

First, as gold begins to rise, they release some of their own gold reserves into the market. The flood of new supply pushes down prices and allows them to continue with their operations. Of course, there is a danger. If they do this too often or too openly, people begin to see the manipulation and lose faith in the system. In recent years, as the increasing activity of the central banks has required more extensive manipulation of gold, the central banks have kept their hands clean by turning to private bullion banks. They have actually started paying these banks to lease gold and then sell it short on the market to keep the price down. Naturally, as an attempt to manipulate the currency, this is illegal for private entities — yet it is happening every day at the expense of investors.

Obviously, even the central banks do not have unlimited supplies of gold and cannot keep this up forever. The U.S. government, though, keeps its gold reserves a closely guarded secret and Fort Knox has not been audited since Eisenhower’s time. Yet, given the long waits for delivery and the high price of physical gold on eBay, we know that physical supply is short. So how do they continue to keep the price of gold futures contracts down on COMEX? They use naked short selling.

Few people ever demand delivery while trading on COMEX. Thus, it is remarkably easy to sell off more paper contracts than there is gold to back it. As long as few people demand delivery, the deception works. This, too, is criminal, but the law has not been enforced. We may see that begin to shift soon though. The manipulations have become so extensive that the difference in price between paper trading on COMEX and physical trading on eBay is becoming severe. People are beginning to notice. As early as December, we may see people demanding delivery on their COMEX contracts. When delivery cannot be met, this house of cards the Fed and other central banks have created will crash down.

So the government has fed us gilded lies while poisoning our market and actively undermining our hedge protections against inflation they created. Angry? You should be. But it will continue until we demand that it stop. Do so. First educate yourself. There is no better place to start than with the people at GATA. Then vote with both your money and your ballot. When you buy gold or silver, demand delivery. When you cast your ballot, vote against candidates who have fostered these manipulations and promised more. Vote against candidates who have benefited from the corruption through huge donations from the perpetrators. Vote against Barack Obama.