Monday, September 27, 2010

US Government Supports Higher Gold Prices

If the United States government hasn’t got the moral fiber to admit its past mistakes, and make the necessary changes to correct them, then other countries will bypass it, as will history. Then the United States can join the Club of Disgraced Empires, and the U.S. dollar can join the garbage heap of worthless fiat currencies of history, right next to the Zimbabwe dollar.
-Antal E. Fekete

US Congress committee approves China sanctions bill
A US Congress committee has approved a bill that would place retaliatory trade sanctions on China.

It means the House of Representatives - the lower chamber of Congress - will vote on the bill next week.

The bill would allow the US to impose import duties on countries who have fundamentally undervalued currencies.

To become law, the bill would also need support in the Senate, which is less certain ahead of mid-term Congressional elections due in November.

The US accuses China of holding down the value of its currency, the yuan, in order to give its exports an unfair price advantage.

"China's persistent manipulation is a major distortion in the international marketplace," said Sander Levin, chairman of the House Ways and Means committee.

"[The yuan] has a major impact on American workers and therefore American jobs. That's what this is really all about."

Ignoring for the moment that China is the United States LARGEST creditor, Congressman Levin's "belief" that an undervalued Chinese currency is the cause of a weak jobs market here in the US is misguided. It is a cop out as well, and a typically American excuse for problems with the economy, "it's always somebody else's fault".

Blaming China for the financial crisis and high unemployment here in America is like blaming your neighbor when you hit your thumb pounding nails with the hammer you borrowed from him. It's absurd.

Several days ago, Japan intervened in the currency markets to "lower" the currency, the Yen, so that it's exports would be more competitive versus the US Dollar. Where is the uproar in Congress? Columbia, Brazil, and Peru did the same with their local currencies, and the US Congress was mute on the issue. Blaming China for all that ails the US economy is completely ignorant of the truth about the US Economy.

The US Economy is in the toilet because of the US Congress sanctioned US Federal Reserve and it's manipulation of the US Dollar. US government regulations have made it increasingly unprofitable to operate a business here in the USA, that is why many businesses have "shipped jobs overseas". If the US Government is so"determined to create jobs" in America, why do they continue to pile on new taxes and regulations onto American business owners? Obamacare has done much more to halt job growth in this country than the Chinese Yuan has.

The Economic crisis Americans are in the midst of enduring is rooted in Washington and Wall Street arrogance and greed, not the value of the Chinese Yuan. Where was all this Yuan rhetoric when American officials were running around the World touting the "strong Dollar policy" that was a direct result of a weak Chinese Yuan. China has sold Yuan and bought Dollars to purchase US Treasuries for the past 15 years, and financed the US Government's global hegemony, wars, and welfare state. The "strong Dollar policy" has become an absolute failure, and now the US Government wants to blame China for the mess?

How typically American...blame somebody else. Obviously there are too many lawyers in the US Government.

China: U.S. move on yuan bill "redundant"
TAIPEI (Reuters) - A U.S. congressional panel's approval of a bill on China's currency is "redundant," China's vice commerce minister said on Monday, the latest salvo from China in the face of U.S. pressure on its currency policy.

Vice Commerce Minister Chen Jian also told a media briefing during a visit to Taiwan that China would set policy on its currency according to its own needs.

"We'll make a decision based on our own economic development levels and the world economic situation. If it takes the yuan to appreciate for our economy to develop, we will do it even though it would have negative impact," Chen said. "But it is redundant for the U.S. congress to pass the proposal."

The U.S. House of Representatives Ways and Means Committee approved a bill on Friday, expected to be voted on this week, that would let the United States apply duties on goods from countries with undervalued currencies.

The vote is a first step to fulfilling long-standing threats to penalize Beijing for keeping its currency artificially weak, which critics claim creates an unfair trade advantage for China.

The United States is the World's chief currency manipulator. Currency manipulation would be a complete non issue if global currencies were backed by something more than a "promise to pay". The US Dollar is presently the World's reserve currency, the US can print as much of it as they want. Once again the Chinese Yuan is not the problem, the US Federal Reserve is. The US Federal Reserve is THE BIGGEST PROBLEM in the whole world. Blaming China for the US' near 40 year currency fraud is NOT going to fix the global economy. Gold is sensing that now.

Yuan rises help ease China's inflation: Analysts
September 14, 2010
In a concerted measure to rein in rising inflation, the policy-makers in China have allowed substantive currency appreciations since the beginning of September, market analysts say.

Following a marked gain in the value of the yuan, or RMB, on Monday, the People's Bank of China, the central bank, set the official medium reference rate of its currency at 6.7378 per U.S. dollar on Tuesday, rising 131 basic points, the highest rate since July 2005 when China abolished the system of pegging the yuan to the greenback.

Consumer inflation in China rose at the fastest pace in nearly two years in August, when the National Bureau of Statistics said the nation's consumer price index rose 3.5 percent year-on-year, higher than the 3.0 percent annual target set by Beijing.

Chinese economists have suggested the central bank raise the value of its currency in a bid to blunt imported inflation. China's imports from other countries and regions in August rose unexpectedly by 45.5 percent year-on-year, the bureau reported.

Experts believe the recent streak of the yuan gains is expected as it helps the government combat domestic inflationary pressure. Analysts however have thrown cold water on the chances of an imminent interest rate hike by the central bank, saying the recent spike in consumer prices would be temporary and China's inflation will ease by year-end.

The Chinese currency is going to rise whether or not the US Government demands it. The Yuan will rise to protect the Chinese economy from a global inflation caused by a flood of US Dollars printed by the US Federal Reserve. US politicians must realize that a rising Chinese Yuan will result in a falling US Dollar. If US politicians are so desperate to "manipulate" the Dollar lower, why don't they just do an outright devaluation of it? What's the deal? China can't manipulate it's currency lower, but the US can? In effect that is what is going on here. Does the US think that it is all powerful, and just, because it "controls the World's currency"? Well, not for long it won't be. Gold is sensing that now.

Remobilize Gold To Save The World Economy! Open Letter To Paul Volcker
By Antal Fekete
Published: September 24, 2010
Let me explain. Gold is the only ultimate extinguisher of debt. Other extinguishers do, of course, exist but they are not ultimate in that they have a counterpart in the liability column of the balance sheet of someone else. Gold has no such liability attached. Gold is where the buck stops. It is this property that makes gold unique as a financial asset. Historically, gold discharged its function as the ultimate extinguisher of debt through the gold clauses written into the bonds of the U.S. government before 1933. Gold could also discharge this function, albeit rather imperfectly, under the gold exchange standard of 1934 with gold redeemability limited to foreign holders. It could still work under the system of fluctuating gold price introduced in 1971, thanks to the availability of paper gold. Imperfect as though these stratagems were, they served as a pacifier to the bond market. But as the threat of permanent backwardation indicates, all offers to put monetary gold at the disposal of the international monetary system could be abruptly withdrawn. In that event there would be no ultimate extinguisher of debt. The world is totally unprepared for such a momentuous development. I ask: are there contingency plans in the U.S. Treasury and in the Federal Reserve what to do if backwardation makes monetary gold unavailable for the indirect retirement of debt?

3 Government Warnings of Financial Fiascos!
by Martin D. Weiss, Ph.D.

Warning #1 Fed: Consumers Shunning Credit

For the first time since the Great Depression, consumers are not only borrowing LESS, but they are also cutting back on prior borrowings — either because they’re defaulting and being FORCED out of the debt market or because they’re voluntarily trying to AVOID that outcome.

Warning #2 NCUA Seizes Biggest Credit Unions

This warning comes in the form of stern action: On Friday, the National Credit Union Administration (NCUA) seized three wholesale credit unions that provide financing and investment services to more than 7,000 retail credit unions around the country.

The problem: Like the bailed-out banks and failed mortgage giants of recent years, these giant credit unions made big bets on commercial and residential mortgages. Their mortgages collapsed in value. They ran out of cash to cover the losses. And on Friday, regulators decided they were too far gone to save.

Result: All three will be shuttered … their executives will be fired … and their toxic assets will be scooped up by the government.

Warning #3 CBO: Deficit Armageddon!

The nonpartisan Congressional Budget Office (CBO), serving all of Congress regardless of party affiliation, is now raising the exact same alarms Dad raised years ago.

The CBO has announced that this year’s federal deficit will be the second largest in history.

It has disclosed data showing that, had it not been for some fancy accounting, this year’s deficit would actually be the LARGEST in history

Central Banks Gold Disposals Drop 40% in Accord, World Gold Council Says
By Stuart Wallace
Central banks and the International Monetary Fund sold about 94.5 metric tons of gold in the year that ended yesterday, the lowest amount under an agreement that began in 1999, according to data from the World Gold Council.

Eurozone banks disposed of 6.2 tons, led by Germany, Greece and Malta, while the International Monetary Fund sold 88.3 tons. The figure for the eurozone banks was 96 percent below last year’s 142 tons. The data run through Sept. 14 and the first year of the third five-year agreement ended yesterday.

Gold is heading for a 10th consecutive annual advance, the longest winning streak since at least 1920, spurring central banks globally to add the metal to reserves. Combined central bank holdings rose in every quarter since the second quarter of last year, data from the council show.

The Central Bank Gold Agreement was announced more than a decade ago because of concern that uncoordinated selling was destabilizing the gold market and driving down prices. Gold fell from a then-record $850 an ounce in 1980 to $253.83 in February 2001. It reached a record $1,300.07 on Sept. 24.

Signatories to the latest accord are limited to combined annual sales of 400 tons, down from 500 tons in the previous agreement. Sales under the previous agreement had dwindled to 157 tons by its final year, ending in 2009. Sales by eurozone banks have declined every year since 2006.

As they have for the past 10 years, the bullion banks at the NY CRIMEX and the London LBMA
are again this morning attempting to further slow the inevitable rise of the Precious Metals. With options on futures contracts expiring tonight, all efforts are being put forth to keep Gold below $1300. It looks as though the Rat Bastids will take a HUGE loss in their paper Silver contracts this month, however, October is not a delivery month for Silver, so the losses may not be compounded quickly, but they will be eventually in December. The CRIMEX goons are still scouring the globe for metal to meet delivery demands for Silver on the September contract. They have until the close of trading Wednesday to fulfill the 1.115 million ounces of September Silver still standing for delivery. This delivery shortfall has buoyed Silver prices all of this month, and driven them to 30 year highs. Our predicted September Silver default has not come to pass, but the month long short squeeze has been almost as delightful to watch.

A continued rise in the Chinese Yuan will only bring higher Gold and Silver prices going forward as this will increase the pressure on an already weakened US Dollar. The chart below clearly shows how a rise in the Yuan positively effects the Dollar price of Gold. A renewed rise in the Yuan should further steepen the rise in Gold as the US Dollar is crushed for it's past 40 years of monkey business in the global economy.

Continued insistence by the US Government that China allow it's currency to move higher will only guarantee a higher price of Gold, Silver, and ALL Commodities. Continue to buy Gold and Silver aggressively at support. Investors, continue to be right and sit tight...and add to you positions during periods of significant weakness.

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