Today a 40-year market veteran sent King World News an incredibly important piece that warns the elites are now consolidating their power. This piece exclusively for KWN also covers what is happening in the war in the gold and silver markets.
By Robert Fitzwilson of The Portola Group
May 10 (King World News) – While the world guesses as to how much gold China has accumulated since the early 2000s, a look into their affection for precious metals reveals a rich history of amassing huge quantities of silver as the primary form of currency and as a store of wealth….
Continue reading the Robert Fitzwilson piece below…
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The path to a silver standard began with the discovery and exploitation of the “New World” by the Spanish Conquistadores. Enormous quantities of silver were extracted from what is now Mexico. Europe had a voracious appetite for Chinese goods, but the money to expand that trade was missing. The New World Silver fit the bill.
Much Of The World's Silver Flowed Into China
It has been estimated that as much as a staggering 40% of the New World silver eventually wound up in China. As the inventors of paper money, the Chinese also had a long history of various rulers imposing a paper standard on the population. We know that in every case, the paper money worked for a time, but then crashed and burned in value as the power to print money became abused.
The problem for the Europeans was the combination of an unlimited desire for the Chinese goods combined with the cost of incessant wars, particularly in the 18th and 19th centuries (an earlier version of the “Guns and Butter” dilemma). As the supplies of new silver diminished and the requirement to pay armies mushroomed, the Europeans exported something that they did have in ever-increasing quantities, opium.
The death knell for the Chinese silver standard came about in the mid-1930s. The price of silver had risen substantially by 1919. Vast quantities of silver left China in response to the much higher world price and demand. Unable to maintain the status quo, the Chinese government banned the private ownership of silver and the circulation of coins in 1935.
Few People Know Roosevelt Nationalized All Private U.S. Holdings Of Silver
China was not the only place in the world rejiggering their monetary system and engaging in hostile acts against precious metals. We all know about Franklin Roosevelt confiscating gold in the U.S. during the 1930s and then arbitrarily revaluing it to $35 per ounce. But few people know that Roosevelt also confiscated all of the private holdings of silver as well (see image above).
Even Fewer People Know That Roosevelt Also Did This
Another act among many in history occurred during World War II in the U.S. It was disdainfully called “L-208”. The formal name was the “War Production Board Limitation Order L-208”. This act virtually shut down gold mining operations in the United States. During the Depression, communities involved in mining for gold did relatively well. Mining costs had fallen significantly and Roosevelt’s revaluation made the activity even more lucrative.
L-208 was billed as redirecting “unnecessary” resources needed for the war effort to mining for base metals to make shell casings and the like. There was little real impact of the production of base metals, but it did succeed in the closing of most mines and the dispersion of the people involved.
It would not be until the 1970s before the miners in the U.S. began to recover. When people ask in the current day “How can they get away with this?” referring to manipulation of prices and overbearing legislation, the answer is that governments have been engaging in such activities since records have been kept.
Elites Consolidating Power
Next week promises to bring more Kabuki Theater, volatility or both. We got good theater last week with the very odd election results in the United Kingdom. Great drama about the outcome drove the headlines right up until election day, but what emerged was a massive victory for the status quo and Scotland. It should not be a surprise. Elections are becoming more and more perfunctory as the elites consolidate and grow their power.
Greece will be front and center on Tuesday as the deadline arrives for repaying a large tranche of Euros owed to the IMF. The drama set up for this event is whether or not the Greeks and the elites will hold to their demands and who will bend. There is always the chance of an outright default, but until the Greek deposits have been bailed-in, it is more likely for a gradual confiscation than some dramatic event. However, one cannot rule out a surprise.
The investment scorecard continues to show the HUI Index way ahead of the pack for both the current quarter and year-to-date. It is especially impressive given the incessant attacks on the metals. The HUI is 8% ahead of the S&P 500 and NASDAQ Indexes and a whopping 15% ahead of the bond proxy, TLT, since the start of the quarter. The latter comparison is also very interesting as longer-dated fixed income and the HUI were strange bedfellows for quite some time. No longer.
The War In Gold And Silver
The central bank computers, driven by their algorithms, continue to exercise a dampening effect on the prices for gold and silver. Investors should consider what JP Morgan is reportedly doing. If the reports are correct, JP Morgan has been amassing a horde of silver greater than Warren Buffet’s foray into silver ownership and the Hunt episode in the late 1970s, combined. JP Morgan must have a very solid reason for doing so. Long-term investors should tag along and continue to build up positions in both metals as well as the miners. KWN has now released the remarkable audio interview with Chris Powell, where he discusses more shocking and sensitive government and market information that he has uncovered and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***Also, KWN has now released the remarkable audio interview with Andrew Maguire, where he discusses a major surprise that China has for the gold market and a major shock that the bullion banks are preparing for right now, and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***ALSO JUST RELEASED: Is This The Most Shocking Interview Of 2015? CLICK HERE.
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The audio interviews with Chris Powell, Andrew Maguire, Rick Rule, Bill Fleckenstein, John Mauldin, Michael Pento, Gerald Celente, Egon von Greyerz, Dr. Paul Craig Roberts, James Turk, Dr. Philippa Malmgren, Eric Sprott, Robert Arnott, David Stockman, Marc Faber, Felix Zulauf, John Embry and Rick Santelli are available now and you can listen to them by CLICKING HERE.
