Christian DeHaemer: Starting Jan 1 (2013) Gold Will Be a Risk-Free Asset

Christian DeHaemer's latest email reminds us that on Jan 1 2013, gold LEGALLY becomes a risk free asset in the eyes of the global banking system.

Here are the facts:

·         Most people do not know that gold is money much less that it and silver are the only constitutionally authorized money much less that the people who really know how money works have stated flatly that it is the only real money on the planet, ever.

·         Most people consider gold as an investment which is very risky instead of the truth which is that it is not an investment of any sort but rather the safest form of long term savings that ever was.

·         Most people whine about the fact that gold pays no returns.  They have been taught by their monetary masters that it is a valid role of money to make more money without doing more work.  They ignore the fact that in both real and in inflation adjusted terms, gold has far outpaced ALL global stock market indices for the past 40 years in aggregate.  They also ignore the fact that any “gains” made on paper investments are subject to government taxation at threat of imprisonment or worse if you don’t comply.  Ask Wesley Snipes about it when he gets out of jail in 2013.  Since gold pays no returns then nobody looks to tax it.  In fact, going after gold “gains” for taxation by the government is not done simply because so few people are involved and government doesn’t want to call attention to the huge paper gains (fake inflation gains) that people have been making in gold.  Such stories of beneficial ownership of gold detract from the propaganda that gold is a barbarous relic that doesn't pay gains, etc.  In truth, it does not pay gains nor should it because that is not a function of money.  It should simply hold its purchasing power and that is exactly all that gold has done for the past 40 years of "modern economics".

·         Most people don’t know that the main reason the economy did not care about gold was that banks held enough fraudulent but "high confidence" paper assets in reserve that they could easily run their fractional reserve lending racket on top of the fraudulent assets and nobody would be the wiser.  Most people do not understand that in order to keep the massive scam of fractional reserve banking going for a while longer that bankers need to shore up confidence in their reserves.  Most people don’t know that BASEL III has mandated that banks decrease their leverage by increasing the amount of tier 1 capital relative to outstanding loans.  Those which do not or cannot comply will eventually be taken over by the government.  Government has to do this in order to retain confidence in their collapsing debt Ponzi and in fact I have written many times in the past that I thought a return to gold backed economy was not only possible but in fact the most likely outcome for this very reason.

·         Most people don’t understand that the amount of debt out there is so huge that requiring even a few small percentage points of increase in reserves amounts to huge bucks.  Let’s say we are just talking about government debt which is 16 trillion.  Add the housing debt owned by Fannie and Freddie and you are well over 20 trillion.  Add to that the rough estimates of private debt and you are in the 50 trillion range.

    Tier 1 capital has to increase from pre Basel III levels of around 2% to post Basel III levels of around 8.5% - an increase of 6.5% or put another way, a tripling of the reserves.  Even just 6% of $50 trillion is $3 trillion folks.  Once gold is considered a tier 1 asset, why would any fool buy a government bond instead of gold in order to meet these new rules?   The current gold pile of the ENTIRE US is worth less than 500 billion at current gold prices.  Even if the banks owned all that gold, the price of gold would have to increase 6x in order to create an increase in reserve values mandated by Basel III.

·         And now here is the kicker: what’s the maximum price possible for gold should bankers decide to pile into it (to say nothing of hundreds of millions of people who finally wake up to the math of the debt Ponzi)?  As I detailed here before in my blog, prices of other “commodities” are limited by demand which is a function of ability to pay.  But after bankers build a stockpile of physical gold for themselves at today's depressed gold price, any subsequent increase in gold price simply helps bankers to meet the  new rules without having to actually buy any more reserve assets!  So it totally benefits them to buy what they need today and then pump the living crap out of it to a panicking population down the road.  Let’s say the ongoing remonification of gold drives the price up to $10,000 per oz.  Oil will want to follow in order to maintain historical relationships regarding how many barrels of oil one could purchase with an ounce of gold.  Wheat and corn will also want to go up.  Problem is, those things cannot keep up with gold prices unless salaries also go up and that is unlikely to happen given globalization and the deleveraging of the economy.  If their prices go too high then people will not be able to pay for them no matter how much they would be willing to.  Gold is not affected by this dynamic because gold is NOT a commodity as all the talking heads would have you believe.  Gold is money. 

Very few people have any idea that Basel III is even happening or what it means.  That’s the way these things always work.  The insiders talk quietly amongst themselves, planning, scheming, plotting, preparing while the world is watching the riots in Europe, the property crash in China, the water canon wars between China and Japan about a stretch of barren rocks and other $hit that simply does not matter in big picture.  I urge all readers of my blog to begin dollar cost averaging into gold at a time when it is still being artificially depressed by government.  This value depression is the direct result of being ridiculously labeled a tier 3 banking reserve asset by the con men running the show when in fact history shows that gold has always been the ONLY viable tier 1 asset ever to have existed.

In short, keep buying gold on a measured pace once per month or once per quarter while ignoring the daily ups and downs.  Do it not as an investment that you hope to make money on but rather as a savings plan that you want to ensure you will not get screwed out of.  Do it just as you would save into your 401k and in fact do it INSTEAD of saving into a 401k.  Ensuring that you have something in the kitty for retirment is really just that simple.  All other paper based strategies are bound to fail because they are part and parcel of the massive global debt Ponzi.  Current valuations of paper based assets are FAR too high thus ensuring that they will collapse in dollar denominated terms when the boomers begin to divest of them in retirement just as the Nikkei 225 did to the Japanese over the past 20+ years.  Those that don't get out of the paper investment Ponzi before the leveraged players bail out will be left holding an empty paper bag.  The global financial markets are in large part a racket; a con job and no con ever ran forever.