Weimar-Style Money Printing Has Arrived To The West

Investment Research Dynamics

For starters, I want to re-emphasize the importance of getting your money OUT of fiat currency and OUT of U.S. banks.  If you read this article and do not come to that conclusion, you will end up getting what you deserve:  Commerzbank To Hoard Euros  The Fed is devaluing the dollar every day.   My solution for day to day cash management isBitgold.  I am not an “ambassador” or “affiliate.”  But I am convinced that it’s the best viable means of managing money that requires “fungability” – i.e. that you need for daily expenses.  You can sign-up for Bitgold here:   Gold-Backed “Checking” Account.  Bitgold operates OUTSIDE of the global Central Banking system.

Second, a colleague of mine told me he knows why the stock market is up today – because it’s open.   That’s not entirely a joke.  But what is a joke is the underlying cause:  rampant global money printing disguised as “quantitative easing  – or Central Bank asset monetization.”

Goodbye Keynes, hello Havenstein.  The Fed and the ECB have resorted to Weimar-style money printing.   The lack of transparency makes it easy for them to impose various forms of disguise to hide the outright money printing.   Today the ECB rolled out its program tobuy corporate bonds.  It prints money and buys the bonds of U.S. and European corporations.  The disguised name is “quantitative easing.”

It’s a meaningless description.  It’s printing money and giving that money to banks and corporations to spend.   It may not increase the official tabulation of the money supply, but effectively it balloons the supply of money.   After all, money is spending or lending power.   That money sitting on bank balance sheets translates into “high powered” reserve credit.  It multiplies the spending power by 10.  That’s the real supply of “money” in the system.

The precious metals market understands this truth.  The move in gold is “quantitative price appreciation.”   It’s gold’s response to “quantitative easing.”  For the last five years, the Fed and the ECB – and with help from China, I suspect – has been able to further disguise its money printing by using paper derivative forms of gold – OTC derivatives, Comex futures, LBMA forwards, Central Bank lease agreements and hypothecation – to hold down gold’s quantitative price appreciation.

But that ability to keep a lid on the price of gold may well be measurably fatigued.  The demand for deliverable physical gold and silver is starting to offset the price dilution that has been imposed on the precious metals market with printed derivative forms of gold and silver.  GATA – on the foundation of the research done by Frank Veneroso in the mid-1990s (he visited several Central Banks and discovered that they were leasing gold in large quantities to help hold down the price) – predicted that eventually the physical market would overwhelm the paper market and lead to a huge parabolic move in the price of gold.

It’s taken a lot longer than any of us could have imagined.   But something different is occurring in the gold market right now, because all the technical indicators over the last 15 years that have foreshadowed a massive take-down in the price of gold are betraying their promoters.  While the price-rigging schemes may not have completely run out of energy, as John Embry said yesterday:  “I’d much rather be playing our hand than theirs.”

I took profits (265%) on a call option trade on a high quality mining stock that I presented to the subscribers of the Mining Stock Journal in the debut issue.  It was a low-risk proposition.  I rolled the profits into shares of the stock.   I currently am sitting on a 25% gain in a short term trade idea presented to MSJ subscribers less than two weeks ago (a high quality junior stock).  I am looking to make 30-40% in total within another week and then take the profit.  Again, another low-risk trade idea.  In the next issue published tomorrow, I am presenting a high-risk, high-return junior silver mining stock idea.  You can subscribe and get all the back-issues (email delivery) with this link:   Mining Stock Journal.

One more note:  I presented a brand new silver explorer to subscribers of the Short Seller’s Journal on Jan 10th.  That stock is up 663% since then and still has room to double from here.