Leo’s guest post for this week…
I’m a little late getting this out as my computer was in the shop for 3 days. So even though I had planned on some personal commentary in this letter, it will have to wait.
I’m starting off this letter with a few quotes that came from the famous Hat Trick Letter by Dr. Jim Willie, followed by an excellent Mike Savage article, and then an amazing (and depressing) Greg Hunter interview.
Folks, there’s some great stuff here!!
Lest I forget (and I almost did), this email’s subject title comes from the linked King World News article The Great Illusion Is Coming To An End.
Have a terrific Memorial Day Weekend everyone, and……….BE SAFE !!!!
"By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose." ~ John Maynard Keynes (the founding father of destructive economic policies)
"Whenever destroyers appear among men, they start by destroying money, for money is men’s protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold was an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which is not theirs, upon the virtue of the victims. Watch for the day when it becomes, marked Account overdrawn." ~ Ayn Rand (Famous author of Atlas Shrugged)
"Fed policies are not just insane; they are destructive. Manipulating interest rates creates a hall of mirrors economy in which nobody can possibly discover the real price and risk of borrowing money. The Fed’s entire policy boils down to obscuring the real price of assets, credit, and risk with a tsunami of debt. The Fed’s solution to the economy’s structural ills is: don’t worry about risk, valuation, or costs, just borrow more money for whatever you want. The only thing that matters is your proximity to the Fed money spigot. The Fed’s control of the machinery of obfuscating price and risk has made us all members of the Keynesian Cargo Cult. Destroying our ability to discover the real cost of assets, credit, and risk has not just crippled the markets, it has crippled the entire economy." ~ Tyler Durden (editor of Zero Hedge)
"The people I know, that I would say are at the higher level of the food chain in the global world of finance, are hunkered down and making very serious preparations. What I see on a macro level is people acting like squirrels preparing for winter. They are burying nuts and gathering as much physical precious metals as they can. They are making preparations for a post-Dollar world in terms of world reserve currency." Rob Kirby (Kirby Analytics).
Further thoughts from Rob Kirby were that the status quo for US Dollar valuation depends upon suppression of the Gold price. The gold market has become a gigantic criminal arena to the extreme, with sponsored paper contract fraud by the biggest banks on a systematic basis. It has been a war of US Dollar versus Gold. In the last couple years, it has become clear that Gold will win. The USD is beset by hyper inflation risk, matched by profound fraud in its primary trading vehicle, the US Treasury Bond. The bond depends upon life support in the form of derivative contracts. Neither the Zero Interest Rate Policy nor the Quantitative Easing can change as current US Fed monetary policy, since stuck in place within the deep dependence. Without either, the USD currency and UST bond would collapse in three months.
Ray Dalio is a billionaire hedge fund manager who has made his fortune by seeing opportunity in markets and acting upon his findings. In a recent quote he said, "If you don’t own gold you know neither history or economics". WOW!
Stan Druckenmiller, who has made his name by investing in stocks and soundly outperforming the indexes for 30 years, two weeks ago at an investment conference, said: "Sell stocks and buy gold".
John Paulsen, Kyle Bass, and Paul Singer, all well-known hedge fund managers, currently have an increased interest in gold and are not shy in talking about it.
Of course, on the other side of the story you have Goldman Sachs who are shouting SELL! Because, they say the price is going to drop. I’ll bet they hope it does. I reported late last year that, as Goldman was talking down gold they added 2 tons to their OWN vaults- not for clients but for themselves. Just last week it was reported that they have now added another TON of gold to their vaults- for themselves!
Now three tons. NEVER listen to what they say- watch what they do!
Aren’t these the same people shorting subprime loans while peddling the same positions to their clients? Yes it is and the fines they paid prove it!
Why are all of these people now joining the chorus to buy gold? What are they seeing that most are missing? I have a few ideas.
The central banks around the world are creating scarcity. In English, that means that as they "print" money from nowhere that has no value it gives the appearance that all is ok but a closer look reveals that the liquidity being provided is now doing more harm than good.
The central banks and their partners at hedge funds and major banks are manipulating just about all markets. In doing so, they are crowding out private investment. The share of private ownership of assets is falling except for those at the very top.
Central banks are becoming the major shareholders of government debt and are now becoming major bondholders in corporations and in stocks of larger companies. Of course, as they do this they provide artificial stimulus to the markets they are buying but in the end it reduces private investment, saving and thrift, and eventually leads to their own demise in the form of lower growth, lower taxation and less economic activity at a time it is most needed to "grow our way out" of the debts that they themselves created. Sound familiar- we are seeing this right now.
Why can’t they do this forever many ask. Because, as you can clearly see that whether their "printing presses" are unlimited or not – actual resources that people rely on to live and earn a living are finite and those cracks are very visible right now. Those countries further down this path are showing major social and societal problems. This also leads to different central banks having different agendas and needing different policies to help their political class keep power. In short, they stop working together and are engaged in a de-facto financial war.
A friend of mine, Jim Leeper, sent me a video of what is happening in Venezuela- a socialist paradise where all of the other people’s money has run out. The video shows people looting a store that had rations. As Gerald Celente has said: "When people lose it all they lose it!" Another video I saw had a person who had planned to spend a week in Caracus and left after two days because it was too unsafe.
As resources dwindle the more desperate the public becomes and the more violence you are going to get.
We are seeing it all around us even here in the USA. The unrest and violence are being blamed on just about every excuse but the real one. That the Fed has taken us down a road that is a one-way street to a crisis. All that is left is to find out how it unfolds. Unfortunately, if history is a guide we might expect a major war of some kind as our "leaders" can never be blamed for what went wrong.
It is pretty obvious to me that nothing will change until a crisis of some sort forces the change.
If any changes were coming I believe they would have been made prior to running over $5.5 trillion budget deficits using GAAP (Generally accepted accounting principles) while our "leaders" crow about smaller deficits! Changes would have been made long ago in many pension plans that are on the verge of insolvency even with stock, bond and real estate prices near all-time highs if their administrators had honesty and character- a trait lacking from top to bottom in ours, and most societies today.
Just think how all of the government transfer payments (newly issued debt) is contributing not only to new unproductive debt but also to a falsely inflated GDP number so that the officials can report growth, when all that is actually growing is debt.
In a recent article it was written that 47% of all Americans couldn’t come up with $400 for an emergency without a credit card. 45 million plus are on food stamps. Real unemployment without statistical games is 23% (John Williams -Shadow Gov’t Statistics). Full time jobs are disappearing as the part-time Obamacare economy takes over.
It is NO surprise! I called this years ago. However, I had no idea how fast and furious this would happen. People are not spending "Savings at the pump" because their health insurance premiums and deductibles are going through the roof. Self-employeds have higher premiums and higher deductibles and co-pays. Get sick once and you have blown through all of your savings at the pump and then some!
My wife just got a statement that floored me. Her company paid $26,000.00 for our health insurance!
How many companies can afford this type of payment for long with increases from 17-35% already being reported by many media sources, including Contra Corner, in some places for 2017. This is not a guess- these rate increases have been filed already.
I could go on for many more pages about what these folks are seeing and taking action.
It is obvious to anyone paying attention that the numbers being reported don’t paint the picture that is being played out here in the real world.
It appears to me that the central banks are well on their way to owning virtually all of the tangible real assets and leaving us with the debt they used to purchase those assets. Think about that statement for a moment. If that is not enough to make all of us want to take action and plan for whatever may be coming then nothing will likely ever move you.
The time is now to determine YOUR plan. Be Prepared!
Mike Savage, ChFC Financial Advisor
2642 Route 940 Pocono Summit, Pa 18346
Raymond James Financial Services, Inc. Member FINRA/SIPC
https://www.youtube.com/watch?v=7-Me2f5Eh4w If you only have the time for one item in this letter I URGE YOU to watch this 19 minute interview of attorney Helen Chaitman by Greg Hunter. I’ve been ranting to high heaven for years about the fraud and corruption that is prevalent in our nation’s biggest banks, and of course all under the watchful eye of BIG BROTHER. Anyone with a sane mind WOULD NOT have financial exposure to a big bank.
http://kingworldnews.com/the-great-illusion-is-coming-to-an-end/ You all know how I’ve been preaching that we are living in an ILLUSION, and this James Kunstler piece from King World News spells it out in spades.
http://thecrux.com/how-free-is-our-freedom-of-the-press-it-may-shock-you/ This is what happens when BIG GOVERNMENT decides the 1st Amendment needs “a little managing”.
http://thecrux.com/the-scandal-in-washington-no-one-is-talking-about/ If you want to learn about CORRUPTION in the Obama administration, this is a great place to start. Just another one of BIG GOVERNMENT’S nefarious plans to get the citizenry to support the administration’s anti 2nd Amendment policies.
http://anonhq.com/wendys-autonomize-6000-locations-fight-wage-increases/ Excellent article on a real life case of how raising the minimum wage can actually hurt people in this wage zone.
Jim Rickards: ‘Helicopter money is coming’… and that’s good for gold
From Jim Rickards, Editor, Currency Wars Alert:
The global monetary elites had a conference in Zurich, Switzerland, last week. Among the speakers were William Dudley, president of the Federal Reserve Bank of New York, and Claudio Borio, chief economist of the Bank for International Settlements.
The topic of the conference was the prospect of multiple reserve currencies in the international monetary system. The speakers generally agreed that a system with more reserve currencies (such as the Australian dollar, Canadian dollar and possibly certain emerging markets’ currencies in addition to the Chinese yuan) would be a desirable one.
There’s only one problem…
It’s a zero-sum game. All of the reserve currencies in the world add up to 100% of the reserve currencies. If new currencies have a larger share, then the U.S. dollar must have a smaller share. It’s just basic math.
That means a long-term process of selling dollars and buying the new reserve currencies. That selling lowers the value of the dollar and imports inflation into the U.S.
It also means a higher dollar price for gold. The elites won’t tell you that, but it’s true.
Case in point: It seems George Soros might be subscribing to Rickards’ Gold Speculator!
According to Bloomberg: “Soros cut his firm’s investments in U.S. stocks by more than a third in the first quarter and bought a $264 million stake in the world’s biggest bullion producer, Barrick Gold Corp…
“Soros also disclosed owning call options on 1.05 million shares in the SPDR Gold Trust, an exchange-traded fund that tracks the price of gold.”
These are all signs of a weaker dollar. But it’s one thing for famous billionaires and analysts like me to expect a weaker dollar. It’s another thing when the guy who prints dollars also says the dollar will weaken. A moment ago, I mentioned William Dudley, head of the New York Fed…
Well, when the Fed wants to print dollars, it’s the New York Fed that buys bonds from Wall Street primary dealers and pays for them with money that comes from thin air.
In a recent interview, Dudley said that “energy prices seem to have stabilized and actually increased a little bit, and the dollar has actually weakened… I am reasonably confident that inflation will get back to our 2% objective over the medium term.”
So if the guy who prints dollars is looking at a weaker dollar and more inflation, maybe you should too.
Yesterday, I explained how the global elite plan to use higher gold prices to unleash inflation. Below, I show you the second part of their plan, which may already be underway. Read on…
Gold’s trading at around $1,280 this morning. So, if you buy gold today and it goes to $5,000 an ounce or $10,000 an ounce, which I do expect, you’d probably be extremely happy.
But that doesn’t tell the whole story. Gold will have increased dramatically in nominal terms. If gold goes from $1,000 an ounce to $5,000 an ounce, most people would say that’s a 400% increase in the price of gold.
But it’s really an 80% devaluation of the dollar. That 80% dollar devaluation leads to a world of $5,000 gold. But it also leads to a world of$400 per barrel and $10.00 gas.
Yes, you need to own gold in that situation because you’ll be protected against inflation. You’ll be in a far better position than those who don’t. They’ll be wiped out. But in many ways you’re just keeping up, since everything you buy will be much higher.
The key takeaway is that a higher dollar price for gold is just a lower value for the dollar. And that’s what the elite’s want.
It’s part of their global inflation plan…
How do you get all the major economies in the world to create inflation without relying on destructive currency wars that merely shuffle money around between winners and losers?
The answer is very interesting. It’s a two-part answer, really. And they’re both coming. You could call it a master plan for global inflation…
I explained yesterday how the monetary elites are looking to engineer higher gold prices to generate inflation since nothing else has worked. That’s the first answer. The evidence is very strong for that hypothesis.
The second part of the answer goes by the name of helicopter money. You’ve probably heard all about it. Helicopter money is different than QE, quantitative easing. It conjures up the image of a helicopter dropping money onto the streets below. Everyone picks up the money, runs down to Walmart and goes on a buying spree. All that extra spending leads to inflation. That’s not literally how the process works, but the idea is the same.
Let me explain technically how helicopter money does work. It’s a combination of monetary policy and fiscal policy. The central bank controls money printing, but it can’t control government spending. That’s up to the Congress.
With helicopter money, the monetary authority and the fiscal authority work together. When Congress wants to spend a lot more money, it produces larger budget deficits. And the Treasury has to cover that deficit by issuing more bonds. The Federal Reserve buys the bonds. And it prints money to buy the bonds.
The answer still comes back to money printing. Quantitative easing, which they’ve been doing for seven years on and off is money printing, but it works differently. With quantitative easing, the Federal Reserve simply buys bonds from a bank. It pays for the bonds with printed money, which goes to the bank. What do the banks do with it? In theory, they’re supposed to lend it to businesses and private citizens.
But people have been reluctant to spend it and banks don’t want to lend it. What do the banks do with that money if there’s no lending and spending? They give it back to the Federal Reserve in the form of excess reserves. After all, the Federal Reserve is a bank. It’s a bankers bank, essentially.
What good does that do anybody? None, really. It just inflates all the balance sheets and props up the banks. It doesn’t do the economy any good.
Helicopter money is different because Congress spends the money. Helicopter money doesn’t give the money directly to people because they might not spend it. But the government will. The government is very good at spending money.
The Democrats prefer benefit programs, welfare programs, social spending, education, healthcare, and the like. The Republicans prefer defense, intelligence, corporate subsidies, and so on.
The way Democrats and Republicans usually compromise on these things is to do both. Everybody gets something. They can build six new aircraft carriers, offer free tuition, free healthcare, free housing, etc.
Then the supposed Keynesian multiplier kicks in to increase consumer spending. The Keynesian multiplier says that if the government spends money to hire people to build a highway, for example, they’ll spend it by going to dinner, the movie theater, buying new cars, vacations, etc. And those on the receiving end of that money spend it on other things, in a virtuous cycle.
But the Keynesian multiplier might not be nearly as effective as elites suspect. With an economy saturated in debt like ours, you reach the point of diminishing returns. (By the way, if helicopter money fails, plan B is to increase the price of gold, as I explained yesterday. That works every time).
The leader on this is House Speaker, Paul Ryan. Last December, Sir Paul Ryan passed Obama’s budget and busted the ceiling caps that have been in place since 2011. The Ryan budget of September 2015 busted the cap. (It also refinanced the IMF, which was buried in a 2012 bill, but that’s a story for another day).
But that budget bill was the tip of the iceberg. The plan now is to have much larger budget deficits. The point is, if people won’t spend, the government will. When the government spends and deficit finances it, it will eventually produce inflation.
That plan is on the table. It’s discussed among the elites. It’s being advanced by all the big brains who work for the big think tanks, run by George Soros and the financial elite. These people don’t walk around with hoods around their heads. We know who they are. You just have to follow them to see what they’re up to.
But these elites are actually beyond the stage of calling for helicopter money. That’s already been decided. They’re now debating what they should spend the helicopter money on. They’re looking for the best way to reassure the public — meaning lie to the public — about what they’re actually up to.
I wrote recently in these pages about how the recent climate agreement may have really just been a disguised helicopter money scheme. Spending on emission reduction programs and infrastructure could total about $6 trillion per year, which would be carried out by the IMF through the issue of special drawing rights (SDRs).
That’s one way the elites could sell their plans to the public. It’s inflation masquerading as “saving the planet,” “climate justice,” or what have you.
The bottom line is that helicopter money is coming. I think inflation is too, either through helicopter money or increasing the gold price — or a combination of both. It may not happen overnight, but governments will ultimately get it if they’re determined enough.
It’s true, inflation is low right now. The Fed says it wants 2%. But it secretly wants 3%, which is really not so secret. Troy Evans is the president of the Chicago branch of the Federal Reserve. And he told me he wouldn’t mind seeing 3% to 3.5% inflation. His theory is that, if the target is 2% and it’s been running at 1%, you need 3% to average the two. And mathematically that’s right.
But the economy isn’t a fine Swiss watch you can tinker with to produce desired outcomes. Deflation has held the upper hand in many ways since the 2008 crisis. But once inflation takes hold, it can’t easily be put back in the bottle.
Think of the forces of deflation and inflation as two teams battling in a tug of war. Eventually, one side wins.
If the elites win the tug of war with deflation, they will eventually get more inflation than they expect. Maybe a lot more. This is one of the shocks that investors have to look out for.
Now is the time to buy gold.
SPECIAL SUPPLEMENT: COUNTERFEIT COINS? YOU GET WHAT YOU PAY FOR
Miles Franklin has been in business for 27 years – with an A+ Better Business Bureau rating, and not a single registered complaint since opened our doors in 1989. The company is still owned by the father and son team that founded it, Andy and David Schectman; and our brokers, on average, have been selling bullion since the early 1980s. For a variety of reasons – from our sterling reputation; to competitive sale prices; the industry’s best "buyback" prices (particularly for Miles Franklin customers); an industry-leading storage program, featuring per ounce pricing; and of course, this entirely FREE blog, we emphatically believe Precious Metal dealers are decidedly not "commodities" – even if our primary products are.
That said, whilst our "raison d’etre" is generating an honest profit, educating consumers is self-evidently a labor of love. Between David Schectman, who started the Miles Franklin Blog long before the internet existed – and still writes for it today, in semi-retirement; to Andy Schectman; myself; and until he recently left to join Jim Sinclair, Bill Holter; all of us cherish the ability to disseminate truth in a world of lies, propaganda, and misinformation. And nowhere more so than in the highly opaque Precious Metals industry, where strong communicators are few and far between. Which is why, I might add, Andy Schectman and I have experienced strong attendance at our free, nationwide "Q&A Rap Sessions," such as those held this year in Denver, Minneapolis, Phoenix, and Ft. Lauderdale. Which will most certainly be replicated at this Friday’s event in Houston (email me at firstname.lastname@example.org if you’d like to attend); June 24th in Chicago; and thereafter.
Regarding today’s "special supplementary" article, we have for years answered investor questions about the risks of bullion counterfeiting. Which, until recently, were close to zero – particularly regarding smaller denominated coins, as in one ounce or less. And of course, we’re only talking about gold here; as silver, as yet, is too inexpensive to even dream of profitably counterfeiting; whilst platinum is too scarce, with too narrow a supply chain, to reliably source.
Until very recently, we had NEVER seen a counterfeit one ounce gold coin. Although we have, from time to time, seen the "counterfeiting" of bullion coins (nearly invariably, in China) – which didn’t try to pass "gold-plated" coins off as pure gold; but instead, tried to make actual bullion coins appear to be numismatics.
However, modern times have brought modern technologies – and with them, modern fraud. Thus, atop our ongoing advice to avoid larger denomination bars (10 ounce-plus) from non-government mints – as exemplified by the 10 ounce bars discovered in 2012 to have been gold-plated tungsten – we want to emphatically remind you of the risks of buying from unreliable sources, that do not guarantee the authenticity of their products. And since Miles Franklin is one of just 27 U.S. Mint primary dealers; working with the largest, most reputable wholesalers in the world; of which, nearly all of our business regards the sale of newly minted government product,; the odds of "something going wrong" regarding the authenticity of your coins is as close to zero as you can get.
To emphasize the point of what you need to understand when considering a bullion coin purchase – from a counterfeiting standpoint – below are excerpts from an excellent article from Sean Broderick, Resource Strategist of the fine Oxford Club organization – with which, Miles Franklin has been proud to be affiliated for many years. After that, I’ve reprinted a description of what our principal distributor does to identify counterfeit coins. Which, after reading it, will most certainly assure you that when dealing with Miles Franklin, you can sleep well at night. First, Sean Broderick’s article – titled "Investing in Gold? Heed this Urgent Warning."
I have an urgent warning for you…
DO NOT buy gold coins from eBay, Craigslist, or any vendor that DOES NOT guarantee the authenticity of the coins. That’s because Chinese fakes have flooded the market. So, that super deal you found on eBay? It may not be so super after all.
"We’ve been seeing fake coins come from China for some time," says a numismatic expert at a leading bullion dealer. "It seems like many of these counterfeit coins from China are sold to unscrupulous distributors through sites like Alibaba."
These crooks love to sell their fake coins on the internet. But it used to be that the Chinese sold only fake "rare" gold coins. Made out of real gold, they were copies of coins with numismatic value. Today, the Chinese are going for volume. They are making "gold bullion" coins out of metals including lead, zinc and – especially – tungsten. And there’s the problem. Tungsten has very high density. It is very close to the density of gold. Some of these Chinese fakes are extraordinarily artistic, too. They are crafted with lasers to exactly replicate the look and shape of the real thing. In the old days, coin dealers could easily tell a bogus coin by its weight, its color and how it reflected light. China’s new laser-crafted, tungsten-filled coins are very difficult to spot from a distance. Especially if the resulting fake coin is plated in gold.
"There are hundreds of thousands of these things," Scott Schechter, vice president of Numismatic Guaranty Corporation, said in press reports. "They’re just everywhere."
Factories in China are busy churning out thousands of fake American Silver Eagles, Canadian Maple Leafs and U.S. Buffalo coins. They’re sold everywhere from flea markets to eBay and Craigslist. In many cases, you’ll likely be tipped off because the deal seems too good to be true. Or maybe the price will be just under the price of a reputable dealer. You could end up paying golden prices for a handful of tungsten.
How to Avoid Counterfeit Coins
We’ve seen tungsten used to fake out the gold market before. In September 2012, there were reports of a bunch of 10-ounce tungsten gold bars bought and sold in New York’s jewelry district. So the Chinese have been at this for quite some time. In fact, they’re quite brazen about it. One example is a company called China Tungsten Online that hawks "gold-plated tungsten coins" on its website. The web page says: "Our product is only for souvenir and decoration purpose. Here we declare: Please do not use our gold-plated tungsten alloy coin for any illegal purpose." I’m sure that covers the legal bases.
"Well," you might say, "Sean’s a worry-wart. I’ll continue to buy gold coins on eBay. I’ll just make sure I buy only from sellers with good reputations." Hey, it’s not as if eBay reputations can’t be pumped up or faked outright. And if you get into a dispute with a China-based scam artist on eBay, don’t be so sure that eBay will take your side.
The good news is you can beat counterfeiters. Even if you don’t take any extraordinary steps, you can still…
- Know your bullion dealer. If someone hasn’t been in the business for at least 10 years, find another dealer.
- Make sure the dealer has counterfeit-proofing measurements in place. They should be able to assure you they never accidentally bring fake bullion products into their inventories.
- Make sure your bullion dealer guarantees the authenticity of every product they sell. If not, keep on cruising.
Modern Technology to the Rescue
(Fortunately, a new device) called a Precious Metals Verifier, or PMV,(is now available). The PMV is made by Sigma Metalytics. It’s designed specifically to check for counterfeits. How it works: The PMV uses the known resistivity – or specific electrical resistance – of precious metals of varying purities to test if a coin is genuine. The PMV can even test most coins that are in album sleeves or plastic cases, making it a convenient and non-destructive option. "We sell PMVs to our customers and especially to other coin dealers," Mr. Millman added. Word to the wise: A PMV is not quite as expensive as a 1-ounce gold coin… but it’s still pretty pricey. If you’re not in the business, you might want to leave the testing to reputable dealers.
Please not that I bolded the sentence "In many cases, you’ll likely be tipped off because the deal seems too good to be true. Or maybe the price will be just under the price of a reputable dealer." Again, we cannot emphasize enough, that in a highly commoditized industry (product, not service), anyone consistently selling below the cost of primary dealers like Miles Franklin should be a major red flag, given that we can source bullion as cheaply as anyone in the business. In other words, you may well be "Tulving’d"; "Bullion Direct’ed"; or Northwest Territorial Mint’ed." Or in the case of buying online, from unknown sources, you could easily become the victim of a counterfeiting scam.
And now, for a bit of "bonus coverage" – which I assure you, you won’t find anywhere else in the bullion industry – here is what our principal distributor, who we have worked with for decades, sent me when I asked how they counteract counterfeiting. Specifically, how they recently spotted two counterfeit gold Kruggerands – which, as you can imagine, were not sourced from the South African Mint, but the "secondary market." It’s a quick read, and well worth your while…
"We take pride in our ability to detect and turn back counterfeit gold and silver coins and bars. We use the latest technology available to accomplish this, including electrical resistivity and radiographic testing, x-ray spectrometry, ultrasound, as well as well-trained eyes resulting from decades of experience.
Our primary sources of bullion coins and bars are direct purchases from the refiners and private and government mints that produce them. However, the secondary market is always very active and we are active bidders in all types of bullion products, so we inevitably wind up purchasing metal from "secondary" sources. Because this market entails a break in the "official" chain of custody, all products which we purchase in the secondary market are required by company policy to undergo special intake quality control procedures.
Recently we purchased several dozen 1 ounce gold Krugerrands from a dealer in another state. During our initial testing telltale anomalies were detected in the composition of the coins, and so the entire batch was then put through our most advanced level of testing.
One of the two coins above is a counterfeit. Can you spot it?
The coin on the right read appropriately on our Sigma Metalytics resistivity tester, but the coin on the left failed this preliminary test. Make note of the fact that the coin from the left is a more "golden" color than the coin on the right.
Next, the offending coin was tested using x-ray spectrometry, which provides a molecular readout of metals being scanned, up to about 10 microns deep. Notice that the purity of the Krugerrand from the left is 97.49%. This is far above the appropriate 91.67% purity of an actual Krugerrand. Notice also that the readout says "Gold Plate Suspect".
Additionally, when doing a "drop test", where the coin is dropped on a solid wooden surface, the counterfeit coin emitted a dull thud and a dull sounding roll. A genuine Krugerrand, when drop tested, sounds with a very high-pitched, clear ring. Now that we were assured of the counterfeit nature of this Krugerrand, we decided to cut into it to see what it was really made of:
By angling our x-ray into the cut, we were able to see that this coin was actually composed of a planchet struck from Germanium, Nickel, Zinc and Copper. A heavy 23k gold & copper plating was then added to the planchet. It appears they were attempting to alloy the plating to approximate the 91.67% purity of a proper Krugerrand, but they failed to perfect this technique for now. Even if they had managed to do so, the electrical resistivity and "drop test" would not have been passed by this piece.
By all accounts this was an incredibly sophisticated counterfeit Krugerrand. The thickness, diameter and weight were all 100% on spec. It easily fooled the traditional "gold fisch" test kit, which measures these attributes, and came in at an even 33.9 grams on the scale.
In total, there were 2 fake gold Krugerrands that we pulled out of 40 that were sold to us.
In the next image, the coin on the left is the counterfeit. You can see that the detail in the beard and the hair is washed out. This is due to the casting technique used by the counterfeiter. Although it was a very advanced casting technique, it still shows the telltale lack of perfect detail when compared to a genuine piece.
This fake coin was mostly gold, however. But, the purity was a couple percent lower than it should have been. Why anyone would attempt a counterfeiting operation like that is beyond me. It would take passing 100 fake coins off before a decent "take" could begin to be made.
Hopefully, this article opens your eyes, as to not only the inherent risks of bullion investing, but just how easy such risks are to avoid, if only you consider who you are dealing with. Remember, like anything in life – and particularly, the investment of your hard earned savings – "you get what you pay for!"
Texas Begins Construction Of Gold Depository
Submitted by Ryan McMaken via The Mises Institute,
Last year, we covered a story coming out of Texas in which the state government was planning to institute a state-controlled “gold depository” that would allow individuals to store their gold in a presumably safe place outside the United States banking system.
This proposition was met with emotionally-charged denunciations from Americans in far away northeastern American states where it was claimed this measure was contrary to the “supremacy clause” and just a terrible idea in general because it undermined faith in the US’s central government and the Federal Reserve System.
Well, in spite of the disapproval of New Yorkers, the Texas legislature passed the bill, and the governor signed it into law last June.
“With the passage of this bill, the Texas Bullion Depository will become the first state-level facility of its kind in the nation, increasing the security and stability of our gold reserves and keeping taxpayer funds from leaving Texas to pay for fees to store gold in facilities outside our state,” Abbott said when he signed the bill.
The depository won’t just store state gold and other precious metals. The law requires that individual customers, and even school districts, be allowed to open accounts. Capriglione has described it as a bank that doesn’t do any lending.
Originally, the bill appears to have envisioned Texas tax dollars being used to create the facility, but the bill only passed when it was modified to create what is seemingly a state-chartered gold depository that will be privately owned and paid for via fees for gold storage.
Thus, not surprisingly, several private firms are now trying to become the creators of one of these depositories. The Ft. Worth Star-Telegramyesterday reported:
Saab’s company, one of many interested in being involved with the state’s plan to create a depository, proposes building a potentially $20 million facility — with no Texas tax dollars — on 40 acres of land it has in Shiner, about 250 miles south of Fort Worth.
The original sponsor of the bill, State Representative Giovanni Capriglione appears pleased with the progress being made:
“I am optimistic that the depository will be up and running at the end of this year or the beginning of next year,” Capriglione said. “The most important factor is making sure that the process is completed with considerable thought and care.”
At the depository, Texans will be able to open accounts similar to checking or savings accounts at traditional banks — and monitor them online.
The physical construction of the facility is very humdrum compared to the implications of the creation of a depository of this sort.
Laying the Ground Work for Electronic Gold-Based “Money”
For one, many state politicians hope that the State of Texas will be able to relocate its own gold holdings into Texas from New York where it currently sits. The state spends a million dollars per year on its storage.
Moreover, existence of the depository opens up the possibilities for users creating a new type of currency in which purchases are made electronically with the backing of the gold in the depository. In other words, one could potentially use the depository’s infrastructure to make purchases using gold, and to have gold either directly deposited into another’s account, or converted to US dollars and deposited in a conventional bank. Arguably, this is just an electronic version of gold-backed money.
Ironically, Zero Interest Rate Policy Has Made Gold Depositories More Practical
And now more than ever, the idea of paying fees on gold deposits has become relatively economical thanks to near-zero interest rates on ordinary bank accounts. In ages past when banks actually paid meaningful interest on deposits, one might wonder why anyone would pay a fee to store gold when one could collect interest on cash at a bank.
Thanks to the central banks’ commitment to near-zero or even negative interest rates, though, holding cash in a bank no longer brings any benefit in terms of investment earnings. That is, the opportunity cost of storing gold in a depository is getting lower and lower thanks to central bank policy.
21 Facts About The Explosive Growth Of Poverty In America That Will Blow Your Mind
What you are about to see is more evidence that the growth of poverty in the United States is wildly out of control. It turns out that there is a tremendous amount of suffering in “the wealthiest nation on the planet”, and it is getting worse with each passing year. During this election season, politicians of all stripes are running around telling all of us how great we are, but is that really true? As you will see below, poverty is reaching unprecedented levels in this country, and the middle class is steadily dying. There aren’t enough good jobs to go around, dependence on the government has never been greater, and it is our children that are being hit the hardest. If we have this many people living on the edge of despair now, while times are “good”, what are things going to look like when our economy really starts falling apart? The following are 21 facts about the explosive growth of poverty in America that will blow your mind…
#1 The U.S. Census Bureau says that nearly 47 million Americans are living in poverty right now.
#2 Other numbers from the U.S. Census Bureau are also very disturbing. For example, in 2007 about one out of every eight children in America was on food stamps. Today, that number is one out of every five.
#3 According to Kathryn J. Edin and H. Luke Shaefer, the authors of a new book entitled “$2.00 a Day: Living on Almost Nothing in America“, there are 1.5 million “ultrapoor” households in the United States that live on less than two dollars a day. That number has doubled since 1996.
#4 46 million Americans use food banks each year, and lines start forming at some U.S. food banks as early as 6:30 in the morning because people want to get something before the food supplies run out.
#5 The number of homeless children in the U.S. has increased by 60 percent over the past six years.
#6 According to Poverty USA, 1.6 million American children slept in a homeless shelter or some other form of emergency housing last year.
#7 Police in New York City have identified 80 separate homeless encampments in the city, and the homeless crisis there has gotten so bad that it is being described as an “epidemic”.
#8 If you can believe it, more than half of all students in our public schools are poor enough to qualify for school lunch subsidies.
#9 According to a Census Bureau report that was released a while back, 65 percent of all children in the U.S. are living in a home that receives some form of aid from the federal government.
#10 According to a report that was published by UNICEF, almost one-third of all children in this country “live in households with an income below 60 percent of the national median income”.
#11 When it comes to child poverty, the United States ranks 36th out of the 41 “wealthy nations” that UNICEF looked at.
#12 The number of Americans that are living in concentrated areas of high poverty has doubled since the year 2000.
#13 An astounding 45 percent of all African-American children in the United States live in areas of “concentrated poverty”.
#14 40.9 percent of all children in the United States that are being raised by a single parent are living in poverty.
#15 An astounding 48.8 percent of all 25-year-old Americans still live at home with their parents.
#16 There are simply not enough good jobs to go around anymore. It may be hard to believe, but 51 percent of all American workers make less than $30,000 a year.
#17 There are 7.9 million working age Americans that are “officially unemployed” right now and another 94.7 million working age Americans that are considered to be “not in the labor force”. When you add those two numbers together, you get a grand total of 102.6 million working age Americans that do not have a job right now.
#18 Owning a home has traditionally been a signal that you belong to the middle class. That is why it is so alarming that the rate of homeownership in the United States has been falling for eight years in a row.
#19 According to a recent Pew survey, approximately 70 percent of all Americans believe that “debt is a necessity in their lives”.
#20 At this point, 25 percent of all Americans have a negative net worth. That means that the value of what they owe is greater than the value of everything that they own.
#21 The top 0.1 percent of all American families have about as much wealth as the bottom 90 percent of all American families combined.
If we truly are “the greatest nation on the planet”, then why can’t we even take care of our own people?
Why are there tens of millions of us living in poverty?
Perhaps we really aren’t so great after all.
It would be one thing if economic conditions were getting better and poverty was in decline. At least then we could be talking about the improvement we were making. But despite the fact that we are stealing more than a hundred million dollars from future generations of Americans every single hour of every single day, poverty just continues to grow like an aggressive form of cancer.