The GATA Gold Rush 2011 Conference was held at the Savoy Hotel in London 4-6 August 2011. I attended the conference out of personal interest and to learn from great minds. To summarize the conference is next to impossible, but I’ll sure give it a go.
The Gold Anti-trust Action Committee and its founders Bill Murphy and Chris Powell have been documenting the obvious and criminal price suppression schemes in the gold and silver markets for over 10 years now. Largely ignored, and considered fringe conspiracy theorists by main stream media, GATA has now emerged as a true free market advocate and a knight in shining armor for the gold and silver investment community. The conference was attended by hundreds of people from 38 countries and the respect for GATA and its board members was clearly felt and shared by attendees. I feel extremely privileged to have been able to meet such brave people.
During the last 10 years we’ve seen the gold price rise 7 fold and silver rise 12 fold. This despite the fact that the bullion banks on Wall Street have massively shorted both markets and conducted take-down raids on a regular basis. All this documented by GATA and submitted to authorities asleep at the switch. Considering the massive bull market of the last 10 years I’m astonished that the GATA conference wasn’t held at the Wembley stadium with attendees in the thousands. The level of intelligence among both speakers and attendees at the conference was well beyond my highest expectations. People invested now in gold and silver as a safe haven against market rigging, a financial system at the edge of a cliff, rampant inflation, ridiculous amounts of derivatives, excessive fiscal deficits and increasing debt burdens both public and private, are so far up stream ahead of the rise in public awareness of what gold and silver is: real money. Gold is the anti-thesis of funny money printed at will by Central Banks. When this fact is realized by the public we will see gold and silver prices at levels even farsighted attendees at the GATA conference will have a hard time imagining. Myself included.
I’ve spent at least five years of my life reading and learning on a daily basis about the financial system and how fiat money is created through the mechanism known as Fractional Reserve Banking. Still today, I find it difficult to grasp the complexity and the inter-dependence of our international banking system. Speakers at the GATA conference made things absolutely clear: We are now at a junction in time where the complexity of our banking system has reached critical levels.
This was one of the main points James G Rickards made in his extremely good speech. Rickards compared our global banking system to an avalanche waiting to happen. We can all see the snow piling up on the slope of the mountain, but none of us, not even Rickards or the other intelligent speakers at the conference, can tell us what snowflake will cause the avalanche to come down on us. In that sense looking at individual snowflakes is pointless at this time. The whole is greater that the sum of its parts. We can look at the amount of snowflakes, but discussing the fractal nature and categorizing snowflakes is pointless. We know the avalanche will come down on us if it keeps snowing. Unfortunately there is a snowstorm coming. A perfect storm. Rickards talked about what he calls “The End Game” and painted four different outcomes, the forth being chaos. That very week-end of the conference, the riots in London started.
The US is now downgraded by S&P, credit has frozen up in the Euro-zone and the Italian cabinet is having crisis meetings tonight. After the crisis of 2007 and 2008 private debt was nationalized. Now public debt has reached saturation levels. Here in Stockholm, the major gold dealer sold out of all 100g bars, an event that we haven’t seen since the collapse of Lehman Brothers.
Richards also warned that gold reserves of Germany held in US vaults might be seized by the US government in the midst of an escalating global financial crisis. Pondering what such an action would mean politically is something that I don’t want to do. We’ve seen currency wars. We’ve seen trade wars. Lets hope we don’t see wars of another kind. The fact is that the US is broke. The fact is that Germany cannot bail out Italy, nor Spain. The malady of the Euro-system has no cure. This is why gold is sold out across Europe. Richards also talked about what is being discussed now at the very highest levels of international finance: a new global currency, as one of four likely outcomes. In my view, a “solution” of that kind will be difficult to accept by Europeans when popular winds of nationalism is blowing across the Old World once again. When the Euro fails, people will want their national currencies back instead of a new Euro-system on a Global scale.
On a personal note, I’m very happy that I got the opportunity to shake Jim Sinclair’s hand and thank him personally for what he does, his writings that he gives out for free, writings that have been an essential foundation in my education and an important factor in my decision to exchange my hard earned fiat paper into physical gold. Sinclair’s speech was short but clear. We are now at a situation where confidence in the fiat system is hanging by a thread and gold has the potential to go into its parabolic bull phase. We’ve seen a steady ascent for ten years at about 20% per annum. Now we are at a point where the ascent can go exponential. That means higher and higher rates of climb for the coming years. Still, institutional investments, so called “smart money”, are nowhere to be seen. As for private investors, how many friends of yours own physical gold? 1 out of 100?
On Monday, August 15, it will be 40 years since Richard Nixon closed the gold window and defaulted on US government promises to pay trading partners in gold. Only 40 years ago, gold was at the center of international trade, a place it had kept for 5000 years at least. What do you think is the most sustainable system? Something that worked for 5000 years or a system where money, the blood of trade, can be diluted at will by Keynesian quacks at Central Banks to the point where oxygen can no-longer be delivered? Hold your gold positions and try not to analyze the volatility of individual snowflakes and know that gold will protect you from the coming avalanche. If you think gold has been volatile lately, you haven’t seen anything yet. Using leverage now will be a dangerous, albeit profitable game.
Only one man, other than Jim Sinclair, received standing ovations: London commodities trader and whistleblower Andrew Maguire. Having exposed the bullion banks for their criminal price suppression schemes in the gold and silver markets, Mr. Maguire and his wife suffered an assassination attempt by a hit-and-run driver. Fortunately Maguire and his wife survived their injuries. This is not only proof of the bravery of this man but also an indication that his claims of the severe criminality of the International Banking Cartel is accurate. The real looters of London are in the City of London, not its suburbs. As long as these bankers are free to roam the trading networks there will be no free markets, no true price discovery mechanism, only manipulation. Until we change the way money works, we change nothing, as former GATA board member Catherine Austin Fitts puts it.
However, their reign of brigandage are soon to be over as the Pan Asian Gold Exchange (PAGE) opens its doors for trading in both gold and silver, explained by Ned Naylor-Leyland speaking at the conference. This exchange will make it possible for domestic Chinese investors to buy 10 oz mini-contracts from the comforts of their own homes via the Internet. PAGE will offer 90 day spot rolling contracts with option to take delivery, 100% allocated. Additionally PAGE will be accessible globally with an RNB component. This will open the doors for international traders to get exposure to the RNB currency. An 8 AM Beijing fix will be in place by the last quarter of 2011. This will challenge the Anglo-American dominance since the 100% allocated gold backing of PAGE will produce a reversed Greshams Law vis-a-vis the unallocated Comex trading vehicle. This implies sell Comex and buy PAGE. PAGE is Chinas vehicle to release the RNB to the world and I can’t see this as anything but bullish for gold and silver. Just imagine what happens in the tiny market of silver if just a fraction of Chinese buy silver via PAGE. Silver above 100 USD/oz could be reached in a heartbeat, no matter what the Anglo-American Banking Cartel does. Physical demand will rule the paper shorts.
Credit must also be given to Reg Howe who gave an excellent presentation titled “Constitutional Money: Don’t Ask, Don’t Tell” available at his website.
Speaking to attendees was also an enlightening experience. All ages, creeds and backgrounds from all over the world. An interesting observation was that many attendees see farmland as their next investment. As silver will buy you bread and gold will buy you land, this implies that James Turk is correct about the future top in the gold market: “This time you will not sell it, you will spend it. Gold will reassert itself as currency”.
The last couple of years have been difficult on a personal level going against the herd. Humans are social beings and being a contrarian is hard work since you need to stand fast in your personal convictions. This takes discipline and courage. Looking back, what makes me proud of my own strength, having resisted criticism and sometimes even ridicule, is not the financial gains I’ve made, but the close friends I’ve helped with advice. In dire times friends and good advice are hard to come by. We, early gold and silver investors, will not be contrarians for much longer, so hang in there and be proud that you have the courage to walk your own path through the dark woods of finance. In the mean time, support GATA for their hard work, their courage, making our voice heard throughout the world and for providing a shining light in dark times. See you at the next GATA conference. It’s nice to be among friends.
With Love. /Johnny Mellgren
This article was originally published at RealMoneyTracker.com.