Gold News

Gold Makes New Highs

Gold Investment is surging as governments & central banks move to hyperinflation...

AS THE SAYING GOES, "In a ham and eggs breakfast, the hen is involved, but the pig is committed," notes Randolph Buss of

By my reckoning, Paulson and central banks are now the chicken at worst, but the world's taxpayers are the pig. We have no choice in the matter.

Meantime, in Euro terms, Gold Bullion has just broken out and made new highs. This is the true currency of last resort as other currencies devalue in purchasing power. This will become more apparent as higher inflation gets into the pipeline.

The prospect of hyperinflation is now becoming a REAL possibility. Trillions of dollars are being pumped into the banks, and yet nothing is happening in the credit markets. Fear is enveloping world markets. Here at DINL, we now think there may be another concerted effort to engage in socialist methods of the state buying up everything and guaranteeing loans as in Iceland and the United Kingdom.

We would not even be surprised to see civil unrest as people realize they have been cheated out of their lifetime savings and pensions. If you ever thought about Gold Investing, NOW is the time. A storm is brewing over the world economy and paper money is not helping anything it seems.

Witness these recent remarks from US officials:

  • US House of Representatives speaker Nancy Pelosi: "It's not a bailout, it's a buy-in."
  • President George W.Bush: "We have a sound economy."
  • Hank Paulson, US Treasury secretary: "Our underlying financial system is solid...The US Dollar is strong."

As an ambitious student of history in all its twisted and convoluted probity, I can only conclude that spin is no longer working. The Emperor (or better said, the Empire) has no clothes. He is now laid bare for all to see.

The Big Lie is a propaganda technique. It was defined by Adolf Hitler in his 1925 autobiography Mein Kampf ("my struggle") as a lie so "colossal" that no one would believe that someone "could have the impudence to distort the truth so infamously...

"If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State."

And here was a response from Joseph Goebbels to Churchill and Co. during the war:

"One should not, as a rule, reveal one's secrets, since one does not know if and when one may need them again. The essential English leadership secret does not depend on particular intelligence. Rather, it depends on a remarkably stupid thick-headedness. The English follow the principle that when one lies, one should lie big, and stick to it.

"They keep up their lies, even at the risk of looking ridiculous."

Like I have said in the past: The job of politicians is to repeat the government's mantra over and over again until they, and therefore you, believe it. Strong Dollar, sound economy, all is well, jobs will not be lost, economic fundamentals are good.

Now Gordon Brown, the UK prime minister, has used Anti-Terror Laws against Iceland for sandbagging UK citizen's accounts in those Icelandic banks which have just been nationalized...and which were allowed by the UK authorities to promote high-interest accounts to local councils – now owed up to £100 million – as well as private individuals.

And in the credit markets – source of this global panic? In the last few months, hundreds of billions have been literally created and thrown into the financial arena to try and "calm the markets". Yet we should realize that the total amounts of derivatives contracts – promises to pay when or if some future event occurs – are now 16 times the world's entire GDP, or approximately $650 trillion dollars in June 2008.

If this is the amount of "bad debt" on the books which must be cleansed, then I submit we shall soon see complete meltdown of the financial system and of general solid business, too.

Lacking access to credit to finance basic things like payroll, inventory and investment plans, the entire economy will face collapse. So it is pure folly to hear politicians and news stories of "Are we in a recession?" I now say we are entering a Depression. And if things continue on this route, we shall be entering a hyperinflationary depression.

Why? Because the central banks are embarking upon one of the greatest reflation programs ever witnessed in the modern world. Their hyperinflationary policies comes because the world is facing a deflationary menace – a menace of too many goods offered for sale in an environment of fear, panic and the need to save wealth. Thus those goods will linger and stagnate. No new widgets or gadgets need to be built. The bad debt is coming home, now.

And yet "Thank god I did not invest in gold," says one reader by email. "It has dropped so much." But anyone still delaying a Gold Investment shall likely eat their words if things get wholly out of control. In any case, the amount of reflation necessary to try and reboot the world economy will be horrendous.

We now see central banks – the people who set interest rates and can control the volume of money entering the economy – saying that:

  • Inflation is coming down; it is no longer a major threat;
  • The economy is weakening – so we have room to cut rates.

That allows them, in their Big Lie at least, to force fresh credit and money into the price of everyday goods and services in a bid to prevent deflation taking hold. And looking at the gold charts, I see gold in most major currencies has zoomed higher, breaking new record highs.

It's the major stock indices that are getting hammered down 20% or 30% or even more, while gold has maintained a steady uptrend. That is why gold is STILL in a stealth move, despite the growing press coverage. When or if the broader public realize this, there will be a jump.

A graduate in engineering who began his career in software programming, Randolph Buss now works in portfolio & asset management, studying the commodity markets in especial.

See the full archive of Randolph Buss articles.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

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