No Way Out for Fed Trapped in Monetary Roach Motel

peter-schiff333-e1358451318295Money manager Peter Schiff thinks that big inflation is in the cards for struggling Americans. Schiff explains, “This is going to be a rude awakening for the average American when he finds out how broke he really is. . . . Whether it’s double or triple or how long it’s going to take, prices are going to go way up. Eventually, going to Walmart is going to be like going to Neiman Marcus. Prices are going to be very, very high, and that means Walmart is not going to selling as many products in America. This also means that Walmart is not going to need to employ as many Americans. So, there’s going to be a lot of layoffs.”

On the Fed’s huge multi-trillion dollar bond portfolio, many years ago, Schiff predicted the Fed could not sell anything and only buy more junk to prop up the markets. Schiff adds, “Here we are in 2016, and not only has the Fed not sold a single bond, every bond that has matured has been rolled over. Every dime of interest they earned has been used to purchase more bonds. So, they are trapped in the very monetary roach motel they were trapped in from day one.”

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Central Banks Continue Their Debasement

bankruptcyA heavily divided Federal Reserve left short-term interest rates unchanged but said the case for a rate increase “has strengthened”, in a strong signal that a move is likely before the end of the year … Three out of 10 of the US central bank’s rate-setters voted against the decision, and called for an immediate increase. But the Fed said that for the time being it wanted to keep policy on hold as it waits for further evidence of progress towards its objectives, leaving the target range for the federal funds rate at 0.25 per cent to 0.5 per cent. -Financial Times

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Nothing happened again on Wednesday just as predicted. The Fed didn’t move and slightly more surprisingly, the Bank of Japan didn’t do anything either.

But as we pointed out yesterday, such inaction is not surprising. The world is stuck in a holding pattern when it comes to money. Central banks will continue to print around the world until a final catastrophe is triggered and elites attempt to generate an entirely new monetary system, probably featuring the SDR currency basket as worldwide “money.”

Central banks are mechanisms of monetary destruction. Since the advent of central banking, the dollar has been debased to one or two cents of its former value. And the world has been stuck in a quasi-depression for some seven  years. This is not a coincidence. The whole point of central banking is to create economic pressure that demands further – centralized – “solutions.”

In this case, sooner or later, there will be significant price inflation and perhaps credit collapses as well. Central banks may have printed up to $50 trillion in excess currency since 2008 and sooner or later this money will circulate.

While the outlook is grim indeed for the larger global economy, money metals are shining a good deal more brightly. The pressure on gold and silver prices relative to the dollar has abated a little with Deutsche Bank’s admission of metals price manipulation.

The Motley Fool tells us:

Silver could be looking a lot more lustrous in the coming years … With physical gold up more than $250 an ounce year-to-date (24%), 14 of the 22 gold mining stocks that have market valuations of $300 million-plus have more than doubled in 2016.

Upward momentum has been even more pronounced among physical silver and silver mining stocks. Spot silver prices are up better than $5 an ounce (37%) year to date, with all six of the silver miners valued at $300 million or more at least doubling in price. These stocks are the true standouts this year.

Part of the case for silver in particular has to do with demand for silver as money – coins and bullion. Also, demand from the jewelry and silverware industries

Total physical demand is up some 17% since 2012, while prices have fallen by nearly half. Additionally rates are very low and thus a purchase of gold or silver doesn’t sacrifice much in the way of ongoing income.

One ought to consider the silver/gold ratio as well. In the 20th century, gold’s per-ounce price was an around 47 times that of silver’s. But at current prices, the ratio is around 69. Let silver merely move to back to its 20th century average and we’ll see prices around $29 an ounce. This sort of price potential is beneficial for gold and silver mining stocks as well.

Some News About DB Sponsor Golden Arrow

DB sponsor Golden Arrow has recently advanced mine permitting at its  Chinchillas Silver Project. An Environmental Report (“ER”) has been submitted  to the mining authority in the Province of Jujuy.

This report initiates formal permitting for mine development and is part of the Chinchillas Project pre-development activities funded by Silver Standard (as per the proposed combined mining business with Silver Standard’s Pirquitas mine announced October 1st, 2015).

“The filing of this report is a major step forward for the development of Chinchillas with Pirquitas, and we are confident that the stakeholder review will yield a positive outcome. We are now finishing the pre-feasibility studies and look forward to a decision from Silver Standard by the end of the year,” stated Brian McEwen, Golden Arrow VP Exploration and Development.

Silver Standard has been considering a joint venture focused on Golden Arrow’s Chinchillas Project. The report includes a description of the expected environmental impacts of the proposed mining operation, a management plan for those impacts and a plan of action on environmental contingencies.

Chinchillas is located in Argentina, which has been attracting considerable interest of late as a destination for investment opportunities. In fact, it has been reported that Egyptian billionaire Naguib Sawiris is interested in mining investments there.

Part of Sawiris’s interest stems from the proactive approach of Argentine President Mauricio Macri who is working hard to attract foreign investment to Argentina.  Macri continues to struggle with the fallout from the overspending of his predecessor, Cristina Fernandez de Kirchner.

Golden Arrow execs will be attending GCFF’s 17th Annual Vancouver Conference 2016, entitled  “Connecting North America Companies To Vancouver’s Chinese Investor Community.”

Brian McEwen, Vice President of Exploration and Development will be making a presentation regarding Argentina opportunities at the conference. McEwen is a professional geologist with more than 30 years of exploration and production experience in open-pit and underground mining projects and operations. You can see an interview with Mr. McEwen here.


It is hard for people to imagine the world’s central-bank based economy has actually been designed to fail. But that does seem to be the case. Central banks fix the value and volume of money over time and this inevitably degrades the entire monetary system. We are in the last stages of this degradation and the next phase will involve credit collapses or significant – intolerable – price inflation.

The plan is to move to a new monetary system that is now being prepared. Those who understand this increasingly obvious evolution can protect themselves, at least in part, through the purchase of money metals.

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Gold Prices Will Soar When Central Banks Fail

07-01-14-us-public_policy-graphic-public_confidence-4Former Reagan Administration Budget Director David Stockman’s view of the wealthy buying gold is most sobering and illuminating. Stockman contends, “I think some people are realizing the central bank era of bubble finance and massive money printing is leading to a dead end and some kind of crackup phase in the world monetary system and a breakdown of confidence in the central banks. I think what this means is when the market loses confidence in the current regime, when they no longer believe the Fed has your back, that there is a put under the market or that they know what they are doing, when that confidence finally evaporates, the monetary system will be in crisis. Gold prices, in my view, will soar because it will be seen as the last refuge of monetary assets that are outside the purview of the control of a failing central bank system. I don’t think we have seen anything yet. It’s only a matter of time when we see the gold price revisit the $1,950 per ounce price that was achieved a few years ago and probably goes well beyond that.”

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