18 April 2001
would happen if one person, from each of the roughly
100 million households in the United States of
America, went out and bought a one-ounce equivalent
gold coin, tomorrow? The government could easily
satisfy that demand, but at the cost of 1/3 of
its official reserves, assuming a $300 an ounce
gold price… "Sure,
ya wanitt, here have it!"
Yikes, run, I was just kidding? It was a fake
bid? Nope. It would be a steal. The lending rates
for bullion are rapidly approaching the market
yield on US Government money, meaning that the
gap between what the market will bear for each
additional unit of gold relative to each additional
dollar is closing, fast. This is bad for the dollar,
but it is worse for long bond yields, especially
if that's where gold sellers, hedgers, and borrowers
are vested… oops!
3-month Tbill yields are green; 3 month Gold lending
(lease) rates are Gold
The chart is courtesy of our good friend Sharefin
who we are convinced, can do just about anything.
despite the reality that that kind of buy order
could probably not be filled in one day, would
you believe that it could push the government
to the brink of bankruptcy? Well, after the banking
system dissolves anyway. Remember that US dollar
policy was born of a gold standard. It is a political
alternative to the anchor, which a gold standard
provided to us as security against the debauchery
of our savings by a rogue government. Thus, it
is not only an enemy of gold, but also a dangerous
one, for the politics of the dollar have accumulated
an extraordinary entanglement of hidden inflationary
imbalances, over the years. Considerable wealth
redistribution is underway and it is about to
become visible, we believe.
what a different world it is today. We actually
cheer this rogue government on. "Lower
the rate for Reichmarks!"
You see, it doesn't matter if we do it or someone
else does it, the point is, do you want to have
your savings vulnerable to the kind of perverse
confidence game, where so long as no one else
sells, it will all be fine? That's what is going
on today. Time to become conscious of it because
someone we think we trust is changing the balance
of objective value. And the incentive to sell
out, which up until now had been low enough to
keep most participants honest, is on the rise.
As incredible as this may sound, it is fact not
fiction. So let's stop talking about whether there
is any motive to keep you out of the gold buying
business. Forget about the win that was "awarded"
in September 1999. That was a gift. It's time
for Gold bulls to take their own victory! Going
too far?? Do you have any idea how far they have
waves are long and can be completely unnoticeable
in deep water, often triggered by "an impulsive
disturbance that vertically displaces the water
column," according to the Geophysics Department
at the University of Washington where this picture
came from. One wave can be up to 100 km long and
stay only 15 inches high until it approaches shallow
The tsunami that devastated Hilo, one of the Hawaiian
Islands, in 1946 for example, went unnoticed by
the fishermen whose homes it took while they were
out at sea. When they got back, they had noticed
that their lives were changed forever by this invisible
fury. It traveled right underneath their boats.
the Pacific Ocean, where the typical water depth is
about 4000 m, a tsunami travels at over 700 km/hr.
Because the rate at which a wave loses its energy
is inversely related to its wavelength, tsunamis not
only propagate at high speeds, they can also travel
great, transoceanic distances with limited energy
of Geophysics, University of Washington.
breaks a tsunami? Islands can, like Japan in 1993. But
Japan is in the process of breaking another tsunami,
a financial one, and one that originated in US financial
markets… let's not get that wrong. If this were a normal
business cycle, it would have been over by now. But
it is not. The big one is still coming, fast, and as
of yet largely unnoticed. It has nothing to do with
faith, or lack of it, nor has it anything to do with
whether we are optimistic or pessimistic. It is only
our simple contention that the Fed/Treasury are about
to lose their two most powerful confidence tools.
Treasury Bond / 30-year / 1 year chart
Gold Price / 1 year chart
even slick Bill Clinton will be able to keep this wave
from biting him right in the ass… though as I write
that, why do I visualize him grabbing for his surfboard?
And why does it say "property of
the Whitehouse" on it…
for this week's GIC:
technical review of the major asset classes and
market averages - what are they telling us this
the economic laws, governed by scarcity, been repealed?
Not at all, just held back by the state, and so
maybe the time for a big Gold play is now.
stocks and junk bonds, then profits and the economy,
then the government accounts and the bond market…
then the wheels really come off!
We are past disappointing profits and a deteriorating
economy. The FOMC said as much in its brief statement
yesterday (below). Our focus is now on the government
accounts and the bond market. Read on...
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Edmond J. Bugos
The GoldenBar Global Investment Climate is
not a registered advisory service and does not give
investment advice. Our comments are an expression
of opinion only and should not be construed in any
manner whatsoever as recommendations to buy or sell
a stock, option, future, bond, commodity or any other
financial instrument at any time. While we believe
our statements to be true, they always depend on the
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