EurAnalysis

Yup, until the FOMC meeting...

That is why I vouched you

http://ca.mg6.mail.yahoo.com/ya/down...d=YahooMailNeo

Well, memo to Ben Bernanke: The disastrous effects of creating too much money and credit are VERY well known, you dolt! And they have been very, VERY well known for thousands of years!

Apparently Bernanke was stung by my rude remarks, and, realizing that they are true and that he really IS a lunatic neo-Keynesian econometric lowlife loser, tries to weasel around and give himself an out ("It wasn't my fault!") by lamely warning that "the use of nontraditional policies involves costs beyond those generally associated with more-standard policies." Higher costs? No foolin'? Hahahaha!

So he is creating (along with the European Central Bank and the International Monetary Fund (both run by socialists!) massive amounts of money so as to monetize massive amounts of government debt, thereby doing something that has failed every time it has been tried in all of history by whole economies collapsing as their money was devalued to worthlessness? Hahahaha again!

Of course, this pales in comparison to terrifying reality of his actually, unbelievably, tragically, horribly, and nontraditionally using monetary policy to "target inflation" to be at least more than 2%, and with rumors of his wanting 5% price inflation, instead of the traditionally-desired zero percent (or less!) price inflation. Yikes! We're Freaking Doomed (WFD)!

And why is he doing this? As Tyler Durden of zerohedge.com writes about Ben Bernanke and Alan Greenspan, they are "directly responsible for a crisis, which over the course of 30 years of 'great moderation' pulled over $30 trillion in future demand to the present (benefiting almost exclusively the banker class), and which will guarantee pain and suffering for generations of Joe Sixpacks."

Although Mr. Durden does not mention it because he is too polite, I will say that those selfsame Joe Sixpacks will suffer for generations because they consistently bought sixpacks of beer instead of consistently buying gold, silver and oil with that little bit of chump change.

Perhaps you will find it instructional that if they HAD bought gold, silver and oil instead of beer all these years, they are already able to buy beer by the case. By the truckload! By the trainload! And soon, thanks to their prices exploding thanks to the evil Federal Reserve continually creating So Freaking Much Money (SFMM), they will able to buy their own freaking brewery, for crying out loud! Dozens of them!


That's when they would really, really, REALLY realize the full implications of "Whee! This investing stuff is easy!"

-- Posted Friday, 7 September 2012

http://news.goldseek.com/GoldSeek/1347024300.php

http://news.goldseek.com/GoldenJackass/1346877028.php

Snippet:

MONETARY POLICY GONE ABSURD
Discussion of growth targets has turned absurd, since the recession is accelerating in speed. Discussion of bond buying shell game specifics has turned absurd, since the USFed has been buyer of over 80% of USGovt debt since 2010 during a foreign buyer strike. Discussion of inflation considerations and the ordinary deceptions has turned absurd, since the CPI has been over 7% or 8% for years on end. Discussion of the stimulative effects of 0% has turned absurd, since it is a giant wet blanket that shrinks profits and kills capital through retirement of equipment in unprofitable business enterprise. Current monetary policy assures a greater and faster economic decline, where GDP minimum limits will not be reached. Discussion of the benefits of more printed money has turned absurd, as the nation slowly becomes wise to the sham and counterfeit to wealth. If dispensed money is not earned, the hangover arrives the next year or next decade, whose tab is due now.

Discussion of the urgently needed spending restrictions imposed upon the USCongress has turned absurd, since they are deadlocked and should be disbanded as an ineffective temple of beggars to banks and industry, whose main function has been to raise funds and win the next election. Discussion that relies upon keywords laced throughout commentary has turned absurd, since the entire vocabulary has suffered from propaganda in a vast dumbing down of the American people. The national hive is in its sunset and twilight phase, long past the point of remedy, due to two decades of ransacking the asset base and capital base. The nation no longer comprehends the basic concepts of capitalism. Instead it embraces socialism and carries out fascism against a constant drumbeat of war, which even features appearances of military symbols at signature sporting events. The Gold price responds to the systemic failure of the ruinous financial and economic policy, aggravated by the devoted ghoulish doctors and their perverse solutions that neither fix anything nor attempt to apply remedy.


The Euro Central Bank has announced its own vapid stupid pointless monetary policy to enforce a cap on sovereign bonds. The absurdity runs parallel with the inept US counterpart. The USFed will buy bonds until an economic growth level is attained, never to be attained. The EuroCB will buy bonds to prevent the sovereign bond yields from reaching a dangerous level, which will always be pressured. No bond market can claim legitimacy when an imposed limit is enforced on bond yields. Harken back to the USFed buying TIPS bonds, like icing down the thermometer that measures fever levels.


The failure is stark and clear. Monetary policy has gone amok. They have no solutions, so they press harder in the same reckless direction. What the world is witnessing is the official institutionalized ruin of sovereign bond markets in the United States and Europe, which serve as foundations for the USDollar and Euro currencies. Both currencies are doomed to the dustbin of history, all in time. Central bankers have lost all credibility, cornered without options in a public way. Central banker appear writhing flailing wiggling as they apologize for lack of solutions, while their integrity vanishes like an oily mist off an overused printing press. Central banks are presiding over wrecked bond markets, wrecked currency markets, and a divergence gold market (paper versus physical). They are at the helm of giant vessels, which are sinking from their own ordered liquidity measures, taking on water, unable to negotiate around icebergs.

Snippet:

INSOLVENCY VERSUS LIQUIDITY
The battle for the minds of Americans continues in perverse fashion. The central bankers realize they fight engrained problems of insolvency with tools designed to provide vast liquidity. Imagine giving a steak & potatoes dinner with a side of cherry pie and a glass of milk chaser to a man who is dying of thirst. It has not worked. It does not work. It will not work. In their conferences, they struggle to justify the continued application of extreme liquidity treatment like utter morons, although increasingly recognized as futile. The newest wrinkle in the mad professor scheme is the continue bond purchase to reach a minimum GDP, given minimal details by Bernanke. The Jackass insists that his PhD degree be revoked, as he has proven in his five years as USFed Chairman that liquidity does not provide remedy to an insolvent system today, nor did it provide the basis for remedy to emerge from the Great Depression.

Instead, as contradictory thesis to the vapid treatise that supports his PhD degree in revisionist history style, it was the Gold Standard that permitted emergence from the Great Depression. The absent standard nowadays makes impossible any recovery today, since the new money is like spinning the gears in a broken locomotive that heads over the cliff. The Gold Standard would enforce traction, along with industry long ago forfeited to Asia. The nation neither has sound money nor factory income. The artificially cheap money helps business to expand their overseas operations, which has been seen.


The twisted irony of the new gambit, more like a new plank in the propaganda platform, is that the continued ZIRP monetary policy assures a continued decline in the USEconomy. The stuck 0% interest rate attacks capital, increases costs, hurts profit margins, neglects savers, and slows economy, a grand wet blanket prescription for hyper monetary inflation as official policy in a veritable cyclone. The immediate effect of artificially cheap money is to increase investment in commodities as a hedge from the hyper inflation policy itself. The rising cost structure reduces profit margins. The affected business segments, whether entire businesses or elements to a corporate structure, must shut down, which retires capital equipment, cuts jobs, and discontinues income streams for the company and workers alike. Amazingly, the inept bungling maladroit collection of US economists are blind to this basic phenomenon of capital destruction. Greenspan was aware of it though. They were badly edumacated to be sure, taught by professors receiving grants and subsidies from the US Federal Reserve itself.


A vicious cycle has been institutionalized, dictated by ZIRP, the zero percent interest rate policy. The hapless clueless wayward USFed has decreed that bond monetization will continue until the USEconomy grows above some empty-headed decreed level. This is death by decree by a myopic professor whose doctoral degree is losing stock with each passing month of no recovery. If the 0% rate assured a slow erosion of capital, then the overall economy will continue to decline in large part from the artificially low interest rate. The effect of ZIRP is to guarantee a systemic failure if extended indefinitely, like it is now. Blame can be placed upon Europe, but in reality they are committing the same cardinal sin to price money as the United States and England. The universal culprit is central bank policy and the 0% mantra. It does not stimulate.

It smothers capital and entire economies. The tragedy is that the nation, led by its devious bankers, no longer comprehends capitalism. Or else, their power goes at odds with capitalism since it is built upon fascism. The Gold price responds to the installation of hyper monetary inflation engines, the extreme dependence upon them, their amplified usage after previous failures in their application, and the absent comprehension of the extreme detrimental effect on capital. As Weimar features are kept in place, the Gold price will eventually be released when the funnels of printed money spew more freely into the system. As the big banks and central banks exhaust their supply of widget plugs (short-term USTBills, commercial paper, money market funds), the flow of new money will enter the Main Street economy. That time draws near.

http://67.19.64.18/news/GoldenJackass/2012/9-5jw/1.PNG

GOLD & SILVER FIND RENEWED VIGOR
All hail August and September, the months to kick precious metals into gear. The year's bottom was seen in May around the $1550/oz level. The upward movement began at end July and early August. The momentum picked up in late August, and has gained additional vigor in early September. Rumors of a weakened JPMorgan monster have yet to come to light, or be seen in the gold price from their relaxed heavy hand. No limit of naked shorting gold futures is being enforced. The criminality of the currency regime is complete, total, and profound. However, the daily chart shows some new life in a rather impressive reversal in progress. It has much more to run. The $1700 level should be breached very soon with confidence. There might be no looking back. The ruined banks, the ruined sovereign bonds, the ruinous wars, the struggles with mine output, the splendid citizen demand, it all adds up to aggravated price structures pointing to higher prices. See the daily price pattern.

http://67.19.64.18/news/GoldenJackass/2012/9-5jw/3.PNG

Yesss! CM is back with the Marubozu posts!

Nice one Swiss. I particularly liked two segments in his analysis and one that frighten me.

1) The metals complex. It adds support to what I believed and wrote about in that missing Ceasar induced post of mine a month ago where I said gold would shoot up with an initial target of $1719 and possibly the 78.6% FIB line at 1734.61. The wick portion of Friday's candle is above the FIB line and the close was at 1735.20 (or 59 cents above my second target).

2) The CRB Index segment regarding the US economy and inflation pushing the US dollar down more. This is exactly what has been worrying me and what I posted about earlier today ...

And now the scary part...

Smith & Weston is at a 52 week high. What does that mean to me? It means those "Right to bear arms" nuts are exercising their rights

Thanks for sharing the video

Bang bang for the win. Good bet.

Personally I welcome him back, there are certain copy and paste articles I enjoy reading. But when they contain words and phrases like "you dolt", "he really IS a lunatic neo-Keynesian econometric lowlife loser" and "run by socialists", you simply can not give any credibitility to the author and must dismiss him as he so eloquently put it, as just another "Joe Sixpacks" loser.

Demo test?

Yep

ECB, OMT: Nuances and Fireflies
September 8, 2012

Outright Monetary Transactions (OMT) is the name of the newest program launched by the European Central Bank (ECB). If you haven’t read about it, if you don’t care about it, don’t waste any more time reading this commentary.


Nuance 1. The ECB now views sovereign debt instruments with three years left to maturity as cash equivalents. There is a reason behind this strange definition; we discuss it in Nuance number 2. Under OMT, a promise to pay you in euro banknotes three years from now is viewed as the same as the banknote today. The adjusting process is the nominal interest rate on the seasoned and market-trading note. That interest rate will be manipulated by the ECB to something lower than market forces would set. That manipulation will be performed by the central bank issuer of the banknotes. Technically, it will be implemented by the 17 national central banks (NCB) that make up the euro system. The nuance is in the direct admission of this concept. By declaring this policy Mario Draghi has moved the policy needle to the extreme left. The ECB will disregard the creditworthiness of the sovereign issuer. The ECB standard is already down to a BBB-level rating. The ECB has bent its rules many times. Investors must ask how this latest move ratchets up moral hazard. They must guess when and where the presumed increase in moral hazard risk will evidence itself.


Nuance 2. The ECB publicly commits to a parity claim with the private creditors. Here the ECB is admitting that the previous assertion of a senior claim in the case of the Greek default created unintended negative consequences which the ECB must now repair. In the case of Greece, the collective action clause retroactively changed the terms of a sovereign bond of Greece. The CAC was used to “stiff” the private-sector holders of Greek debt. Prior to that arrangement, the ECB had manipulated its creditor position to a senior status. The result was to widen the spreads on Spanish, Portuguese, and other weaker eurozone credits. Market agents concluded that the European powers would stiff them again if things deteriorated. With this OMT action of denying seniority, the ECB is trying to cure a “Fool me once, fool me twice” folly. An additional nuance here is that the forthcoming ESM rules state that, starting January 1, 2013, all eurozone sovereign debt issued with greater than one-year maturity will have identical collective action clauses. Thus the ECB is positioning in advance of that rule and trying to manipulate the specific market in advance of the ESM. That leads to nuance number 3.


Nuance 3. “Conditionality” is the new buzzword. It has replaced the previous ECB construct used with Greece. Greece deteriorated ahead of changes in ECB policy actions. In each tragic step of Greek restatement, credit downgrade, spread widening, etc., the ECB acted after the fact. It kept amending the rules to permit Greece more time for misbehavior. The cost of this moral hazard increase has been severe. ECB policy-making was backward-looking. With conditionality, the ECB will require a country to request assistance and thereupon submit to review, supervision, and agreed-upon austerity measures. The ECB says its purchases of weaker-credit, 3-year-maturity debt will occur only after the sovereign has requested help. This, too, is a new form of central banking. It changes the rules. Sovereigns now need to determine if they are going to submit to conditions that are externally imposed. They will try to pre-negotiate the outcome. Spain is the candidate under scrutiny now. Investors need to determine how they will position on this uncertainty. Does the promise of ECB intervention keep Spanish rates lower than they would otherwise be, thus enabling Spain to avoid conditionality? Or defer it? We shall see. Is there a future unintended consequence that is going to result in a market shock? An example is Spain waiting too long to make adjustments and reforms, then encountering an accelerating downward spiral in its economy. Note that Spanish banks have been bleeding from capital flight. The Spanish central bank is now using Emergency Liquidity Assistance (ELA) to prevent bank failures. That happened and continues to happen in Greece. We shall see.


Nuance 4. The Bundesbank publicly dissented to the new ECB program. Its president, Jens Weidmann, declared the ECB move “tantamount to financing governments by printing banknotes.” Germany has only one vote in the ECB governing council decision, but note that Germany is the largest “capital key” in the eurozone. It is 27% of the weight and therefore incurs 27% of the cost of any failed ECB action. France is second at 20%, Italy third at 18%, and Spain fourth at 12%. Also note that as a country gets into trouble and “requests” help, its share of the capital exposure to EFSF and ESM guarantees is reduced to zero. That is consistent. How can a Greece, which cannot pay, guarantee anything? So far Greece, Ireland, and Portugal are on this “zero” list. That leaves the other 14 eurozone members more exposed. The recalculation to date has raised Germany to 29%, while Spain is up to 12.75%. If Spain requests aid and drops to zero, the recalculation among the remaining 13 eurozone states will be large.

Weidmann is rightfully worried.


Where does this lead?


We have labeled the European sovereign debt saga a “dance of the fireflies.” Why? Fireflies dance in the dark. They create a mosaic, an appearance.

Turn on the headlights and they stop. The image you then see is much clearer. Turn off the headlights and they resume their alluring but unpredictable dance. Headlights are the metaphor for unencumbered market forces.


In Europe, we continue to witness this game of lights on and lights off. We watch moral hazard increase with each action. And we watch economies shrinking as countries avoid reforms, defer the reduction of expenditures, and impose higher taxes. The politicians are doing the reverse of what is needed to contain the crisis. Until they emphasize growth in the private sector, this downward spiral will continue. Europe is in recession, and it is getting worse.


The newest ECB program is another “can kick.” It may buy some time. It uses monetary policy to address fiscal problems. It may delude markets, as it did in the short-covering rally. The OMT lacks headlights that could be turned on to achieve clarity. That is revealed on close examination of the nuances. Jens Weidmann is correct.


In a recent (August 15, 2012) Cato working paper entitled “World Hyperinflations,” co-authors Steve Hanke and Nicholas Krus document 56 episodes of monetary policy running amuck. The first was in France in 1795-6. Germany was 1922-3. Greece was 1941-5. About 40% of the episodes were in Europe.


Jens Weidmann knows his history.


David R. Kotok, Chairman and Chief Investment Officer

http://www.dailyfx.com/forex/fundame..._09102012.html


Dollar’s Recovery or Collapse Depends on the Fed

The dollar cratered this past week, and it would seem that few restrains are still in place to keep the currency from tumbling into an uncontrolled tailspin. Yet, extending the currency’s trend beyond its current, four-month low may be hard to do with the Fed on tap. There is little doubt that the Federal Open Market Committee (FOMC) meeting due Thursday is the top event risk for the dollar, but its influence on the currency and broader market will be a little more complicated than a simple flip of the switch from ‘risk off’ to ‘risk on’. To extend the EURUSD’s run to 1.3000 as well as the S&P 500’s climb above 1450 and on to 2007 highs, Chairman Ben Bernanke and company will have to meet and exceed the already-lofty expectations that have been priced in.


Leading into the heavy fundamental week ahead, it is important to gauge just how high the consensus for more stimulus has been set. The initially-pensive move by gold to break 1650 and persistent proximity of the S&P 500 to four-year highs indicated elevated expectations for some time. However, hope seems to have hit levels of near certainty this past week boosted even higher by the ECB rate decision and Friday’s NFPs. In the European policy authority’s move, we have precedence and the postponement of the world’s most distinct financial threat. In the ‘disappointing’ 96,000-position net increase for August payrolls and fresh three-decade low in participation rate (percentage of American’s in the labor force), investors see justification for the Fed to follow up on its vow that more would be done if job growth didn’t pick up.


And, so, we have a market running under the assumption that the Fed will act as a heavy-handed investor to buy into a market that otherwise faces tepid rates of return and considerable growth headwinds. To meet these expectations, we would likely need to see a QE3-level outcome. A large-scale asset program (LSAP) that targets Treasuries and mortgage-backed securities (MBS) carries inherent problems however. Thereby, a Fed program - if introduced at all – could struggle to meet the high standards of expectations (much less beat them). For timing, the lead up to the event will likely see big swings die down in the market as few will want to place significant trades ahead of such an important release. There is a chance that Euro-area event risk can intercede, but it is difficult to leverage much more risk appetite through deferment of the long-standing regional issues (more on that below). The Fed event itself should provide a conclusion by announcement (16:30 GMT) as any new program will likely come out with the statement. The economic forecasts (18:00 GMT) and Bernanke press conference (18:15 GMT) will be an after-thought.


Euro Rally to 1.3000 is Out of ECB and EU’s Hands
We may have drawn as much good will for the Euro out of the region’s crisis fight as we can hope to extract without definable steps to implement fresh EU-level rescue programs. That means a sustained rally for EURUSD to 1.3000 will have to fall to other fundamental means – most likely risk appetite trends. The trouble with leveraging euro strength through domestic means is that what we have seen to this point is more of a ‘relief rally’ rather than one founded on genuine optimism. The difference is changing gears whereby performance is based on an outlook for growth and competitive returns rather than capital flooding back in to severely oversold assets.


Elevating the importance of the Fed decision over the European event risk on deck is big picture and important for the larger trends. There is still considerable potential for volatility and exceptional standing risk should the respite won last week be undone however. There is important event risk on every day of the week, but there are particular headlines we should be especially conscious of. On Wednesday, there will be a considerable wave with the EU expected to release its plans for the Banking Union, the German Constitutional court will rule on the ESM legality (an important step towards activating programs) and Netherlands will hold its election. The second hit pulse comes after the FOMC on Friday. The EU Summit is the best place to make progress on stimulus arrangements and Greece’s budget proposals bring us back to a critical cog.

Germany Cannot Be ‘Leader of the World’: Italy’s Prodi...

http://www.cnbc.com/id/48941342

http://www.ritholtz.com/blog/2012/09...Big+Picture%29

http://www.zerohedge.com/news/99-yea...tarist-winning


99 years ago the Fed was born. Then there was a world war. Two decades later, Keynesian economics (in a somewhat mutated form than that envisioned by the author, much like the Taylor rule) became the gold standard (pardon the pun) of the status quo, as it gave the political establishment a "scientific" justification to spend and accumulate gargantuan debt loads without fear of backlash by the public. Then there was another world war. Then the gold standard was obliterated, allowing the same establishment to dilute the instrument used as money and to cross the "gargantuan" barrier in spending and debt issuance. Then the world came to the verge of complete socio-economic and systemic collapse after a ponzi pyramid of $1 quadrillion in credit money nearly imploded in on itself. Then the final chapter of the corporate takeover of the sovereign model established by the Treaty of Westphalia arrived, as private deleveraging at the terminal expense of public debt took place at a record pace. This is a nutshell is the world history of the past century. And to summarize where we currently stand, we present the chart below.

In the entire "developed" world, there is only one country that runs a budget surplus, even as the entire "developed" world is now, according to the Reinhart and Rogoff definition of sustainable public leverage, insolvent.
http://www.zerohedge.com/sites/defau...0World_1_0.jpg
And that, ladies and gentlemen, is Keynesian-Monetarist #winning!


* * *
P.S. Among the list of key events above, we did not mention the following two other majors one: the creation of the Welfare state by Bismarck in 1870 as a German unification ploy, whereby people were promised virtually anything if only they voluntarily agree to participate in a sovereign ponzi scheme which by definition is unsustainable and cede liberty in order to perpetuate a lie subsequently adopted by all "developed" world governments taking advantage of their mathematically-challenged citizens, nor the 16th Amendment ushering the personal income tax (previously ruled unconstitutional), coincidentally the same year the Fed was born, which in turn enabled the creation of the most bloated apparatus (which as a reminder produces nothing) known to homo sapiens - the US government.

http://www.321gold.com/editorials/ru...ell090612.html

http://www.the-privateer.com/button/ball2.gif Back To Gold Charts

Monthly Semi-Log Gold Bar Chart - Since 1974

Ten major Gold turning points are shown on this chart.
http://www.the-privateer.com/chart/usgmonth.gif

“Freedom is not worth having if it does not include the freedom to make mistakes.”

― Mahatma Gandhi

LIVE FROM —Navigating the
Politicized Economy

A CASEY RESEARCH / SPROTT INC. SUMMIT

By Doug Hornig

Make-Believe vs. Reality
Yesterday I was reminded again that life is full of irony. At the same time that the Democrats left Charlotte, NC, after renominating their president for another term – no doubt congratulating themselves for how much has been accomplished over the last four years – the Casey/Sprott Summit in Carlsbad, CA, kicked off, treating 300 attendees to an analysis of the real state of the economy.

Personally, as someone who doesn't believe in the notion that "ignorance is bliss," and who likes to know the facts, even if they may not be pleasant, I much prefer the somber revelations of the Summit (which are always coupled with actionable advice) to the make-believe buzz of the party conventions - conducted in a sort of eerie adult version of Mr. Rogers' neighborhood where the sky is always blue, the economy always on the mend, and the future always bright.

So, what's the real state of the union now (and beyond)?

No surprise: it isn't good.

Right at the outset, Casey chief economist and human energy dynamo Bud Conrad unleashed a blizzard of charts and graphs showing where we are and where we're headed if present trends continue. But perhaps most telling of all was the simplest chart of the day: the gold price as of Friday morning. Up $40/oz. in response to another dismal US jobs report.

If gold is not exhibiting a breakout from its six months of range-bound behavior, then it's doing a decent imitation thereof. Those who were still clearing away their sleep fog, and who had not yet seen the morning news, responded with a collective aaaaah… Most, if not all of us, hold at least 10% of our assets in precious metals, and many have an even greater commitment to hard money.

We're all a little wealthier today. Or maybe a lot wealthier, depending on your point of reference. As Eric Sprott, CEO of Sprott Asset Management, would mention later that he began buying gold at $260. So that portion of his holding rose 15% in an hour.

Since this conference is all about the effect of political meddling on the economy, it also seemed fitting for Bud to note that one of his college classmates was Dick Cheney. But whereas Cheney was even then plotting how to amass political power, Bud was playing with his slide rule (remember those?), crunching numbers.

Today, thankfully, Dick Cheney has been retired as a public nuisance, but Bud Conrad, thankfully, is still crunching those numbers. At the Summit, he reconfirmed what he's been saying for a long time: The ship of state is still heading for the iceberg… and that iceberg looms closer by the day.

The US national debt has far outpaced the government's ability to pay it off. It's unsustainable – and made continuously worse by the Federal Reserve, which pushes more and more debt onto its balance sheet, blowing up an ever bigger bubble. And judging from Bud's numbers, the resulting pop! will be one that will make the entire globe's ears ring. Or, to use another ghastly metaphor, those ever-optimistic government shills are not just putting lipstick on the proverbial sow, they're slathering stage makeup on a carcass.

Eric Sprott spoke next, fresh off a team victory in the golf tournament that his company sponsored on Thursday, and in which a number of conference attendees participated. Full disclosure: my own team did not win. But no sour grapes here. However, when the boss's team wins his own tournament, well… I have to say that questions will be raised.

More to the point, Eric reminded us of the difference between liquidation and bailout. As he points out, the last liquidation event on Wall Street was the collapse of Lehman Brothers. Since then, bailouts have been the order of the day. Which says as much about the health of the financial sector as it does about the banks' friendly relations with Washington.

In liquidation, the true value of an institution's assets is revealed, says Eric, and obviously, that was an unacceptable prospect for the government and its cronies. Can't let the public see just how much junk is still being carried on balance sheets at above-market values – better to keep the "Too big to fails" afloat, by hook or by crook.

He is convinced that the real death knell for the current financial system just may have been sounded by the emergence of NIRP (Negative Interest Rate Policy). In July, the German government was able to sell bonds with a negative interest rate – in other words, when the bonds reach maturity in two years, investors will get 0.06% less than they put in. They're ironclad guaranteed to lose money.

And yet people have gobbled up those "investments," content to park cash in German bonds that will lose less (or so they believe) than the bonds of other, shakier Eurozone countries with a high positive coupon rate. Or, alternatively, they may be betting on the collapse of the euro and subsequent settling of their bonds in more stable new Deutsche marks. In either event, NIRP is not a healthy sign for the Zone.

Consequently, Eric is highly invested in gold. And in what he terms the investment of the coming decade: silver.

Another two speakers with no love lost for the government and Federal Reserve were Dr. Lacy Hunt, of Hoisington Investment Management, and G. Edward Griffin, author of the wildly popular book The Creature from Jekyll Island.

Dr. Hunt called the Fed a failure because it hasn't met its goal of ensuring currency stability. He argued that the dollar has lost 97% of its value since the Fed was wished into being by a group of bankers in 1913. (Overall, the previous century had seen an actual appreciation of the dollar's value.)

G. Edward Griffin didn't quite agree with that analysis – he believes that the Federal Reserve has been vastly successful. The problem is, he says, that most of the American public has no idea what it actually is that the Fed is set out to do. Their mandate is not, says Griffin, to ensure currency stability or keep the US economy afloat. Instead, since its inception, the Fed has only had one purpose, he claims: to serve its member banks.

What many Americans don't know is that the Federal Reserve is not a full-fledged government agency but a hybrid of government affiliate and private banking cartel controlling and manipulating the price of money. And that primarily benefits those who get first access to each fresh dollar conjured from thin air.

Griffin makes no secret of his conviction that the Fed is a criminal organization, engaged in the legalized plunder of the American population. Through excessive money printing and the ensuing inflation, the Fed is basically imposing a massive tax. It's a stealth tax, says Griffin – but as old Will so aptly stated, a rose is still a rose by any other name.

The public, says Griffin, has been completely hoodwinked as to what's happening, namely that they are being robbed on a massive scale. Since the gold standard was abandoned in 1971, the dollar has lost 80% of its value. If this kind of larceny had been done out in the open – say, by the government imposing an 80% income tax for 40 years – we would have had another "Off with their heads" French Revolution in Washington a long time ago.

If Griffin's arguments left any shreds of trust in the US government, they were swept away by the Hoover Institute's Peter Schweizer. Schweizer, author of the instant best-seller Throw Them All Out, demonstrated how members of Congress can arrive in Washington as middle-class citizens and leave a few years later with millions in the bank. Their "secret of success": due to convenient loopholes, it is perfectly legal for our nation's finest to act and trade on insider information they hear in closed-door meetings. Accordingly, the crash of 2008 that nearly bankrupted many ordinary investors, says Schweizer, made a lot of legislators from both sides of the aisle a fortune.



After all those eye-opening and rather dismal revelations, several speakers were asked by the audience how much of their portfolio should be devoted to the ultimate crisis hedge, precious metals. Bud Conrad's answer: 50%. G. Edward Griffin: 51%. Eric Sprott: "I'm all in."