Barron:  “The indian rupee has plunged very recently and it is now at an all-time low vs the U.S. dollar.  This is very interesting because in my KWN interview last week I was talking about the moves that the Indian government had been making to kill the demand in the Indian gold market.

These attempts by the Indian government to suppress gold purchases have been a total failure.  Gold is now the most black-market trafficked item into India....

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“Indians are moving to protect their wealth as the Indian currency continues its plunge, and they are doing this by purchasing physical gold and silver.

There was an interesting study that was done by Macquarie Bank and it was just released a couple of days ago.  This study simply confirmed what you and I have been talking about for a couple of months now -- that gold and silver wealth is exiting the West and going to the East.

Macquarie Bank was tracking gold coming out of the U.K. because that’s where many of the exchange-traded funds have their gold stored.  The study showed that there are massive amounts of gold coming out of the U.K. and going to Switzerland.  The reason this gold has been going to Switzerland is so that the Swiss gold refiners could melt it into smaller bars for the Chinese, but particularly for the Indian market.

We are looking at very volatile exchange rates right now.  Despite jawboning from the Fed, very recently the dollar has been losing ground vs other major currencies.  There has been continued liquidation from countries such as China, who own large amounts of dollars.

I would also like to add that yesterday I received an interesting call from a friend of mine who lives in Colombia.  She said that ‘The farmers were taking to the streets in a huge protest.’  I asked, ‘What’s going on?’  She said, ‘They want to have the Free Trade Agreements canceled between the U.S. and the European Union.  These agreements were originally perceived to be a positive thing, but not any more now that the Americans are undercutting their market by selling cheap goods.’

There are grain products being shipped into Colombia from America which are cheap because the U.S. has had this policy of ‘beggar thy neighbor.’  There has essentially been a de facto devaluation through the QE buying program.  This has been done intentionally to weaken the U.S. dollar, but this has ramifications worldwide.

So these farmers are now fighting against this ‘Free Trade’ agreement because they see the Americans as threatening their internal domestic markets.  This is what happens when you screw around with currencies, with interest rates, and you have a madman like Bernanke trying to literally control everything.”

Eric King:  “How do you see things progressing in terms of moving toward the end game?”

Barron:  “Well, eventually this will all unravel and get completely out of control.  Bernanke seems to think he can turn off the money spigot simply by using the correct timing, and that this will not cause massive inflation.  But they are causing inflation.  Any person in the street who buys goods or services in America knows this.  The U.S. continues to put out phony inflation numbers so they can can justify pumping all of this money into the system.

Eventually this is going to have serious repercussions.  There is absolutely no doubt that this will end in disaster, and in the coming ‘Great Inflation,’ gold and silver will soar.  Circling back to India, KWN readers need to keep in mind that the plunging rupee is not only highly inflationary in India, it also means gold and silver are soaring in terms of the Indian rupee. 

All of this has only solidified the reason why the Indian people buy gold and silver, which is to protect their wealth.  Yesterday the IMF was talking about making an emergency loan to the Indians with them selling some of their large gold hoard.  The idea was that this would theoretically help India with its balance of payments.

I think this is just more jawboning in an attempt to temporarily halt the advance in gold, and possibly to try to have the gold price back and fill a bit here.  You have to remember the Western central planners never want to see the price of gold advance because it is an important alternative to holding U.S. dollars.

But I think the West is going to great lengths to try to conceal the fact that everyone in Asia is dumping dollars right now.  We can see this in the recently released sales of U.S. Treasuries by Asian countries.  So they are dumping dollars as quickly as possible without trying to crash the price of the U.S. currency, and at the same time they are desperately buying as much physical gold as they can get their hands on. 

The bottom line here is this is rather tragic to witness the West near the edge of a cliff, as central planners recklessly endanger the entire global financial system and ensure that the West will eventually collapse.”

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Eric King

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