50 Factors Launching Gold

The following article is written by Jim Willie and published at Goldseek.com (which I came across on goldsilver.com)

It covers many areas I follow on this blog in a quick snap shot. State and local Government debt problems in the US are getting closer on the horizon. Gold and silver continues to advance against ALL government currencies (including in Australia).

Edification is not the word that comes to mind when observing an interview with Larry Fink of Blackstone this morning on network financial news. It was inspirational if not humorous, and somewhat pathetic. Of course the interviewer treated him like royalty, when just a syndicate captain, a Made Man. As a cog within the US financial hierarchy, he was asked why Gold is approaching record price levels near $1500 per ounce. He gave his best 10-second answer, showing no depth of comprehension but an excellent grip of propaganda laced with simplistic distortion. He said, "GOLD IS RISING FROM ALL THE GLOBAL INSTABILITY, AND NOT FROM INFLATION AT ALL." Sounds good, but it lacks much reflection of the world of reality burdened by complexity and interconnectivity that the enlightened perceive. At least he did not babble about Gold being in an asset bubble. It cannot, since Gold is money. It is curious that all the analysts, bankers, fund managers, corporate chieftains who did not advise on Gold investment over the last ten years are precisely whom the financial network news appeals to for guidance in the current monster Gold bull run. They knew nothing before, and they know nothing now. The major US news networks carry the Obama water while the USCongressional members carry the USBanker robes and show respect with genuflection before the priests. But guys like Fink are their harlot squires. Poor Ben Bernanke, despite his high priest position, does not gather a fraction of respect that Alan Greenspan did even though Alan presided over the collapse. The wild card possibly later this year or 2012 will be a national movement to force mandatory wage gains, and thus avert a national economic collapse. The squeeze is on in a powerful manner to both businesses and households.


ANOTHER STRONG GOLD BREAKOUT

As long as Quantitative Easing programs are in place and actively pursued, Gold & Silver prices will soar. The programs are urged by exploding budget deficits and absent USTBond demand. That translates to a ruined USDollar currency. Gold & Silver respond to the debasement and ruin. Efforts will become ridiculously stretched to save the USDollar, but will fail. QE will go global and secretive, assuring tremendous additional gains in the Gold & Silver price. No effort to liquidate the big USbanks will occur, thus assuring the process will continue until systemic breakdown then failure. The more extraordinary the measures to save the embattled insolvent fraudulent USDollar, the more the Gold & Silver price will soar. It is that simple. Gold & Silver will soar as long as central banks continue to put monetary inflation machinery to work. They are attempting to provide artificial but coordinated USTreasury Bond demand. In the process their efforts will continue to push the cost structure up further. In my view, since the Japan natural disaster hit with financial fallout, the Global QE is very much in effect, but not recognized as a global phenomenon. It pushes up Gold in uniform fashion worldwide.


50 FACTORS POWERING THE GOLD BULL

1) USFed is stuck at 0% for over two years and printing $1.7 trillion in Quantitative Easing, otherwise called monetary hyper inflation. They are not finished destroying both money and capital.

2) USFed tripled its balance sheet, with over half of it bonds of exaggerated value, while it gobbled up toxic mortgage bonds as buyer of last resort. The mortgage bonds have turned worthless. The USFed waits for a housing revival to bail itself out, but it will not arrive.

3) Debt monetization has gone haywire, as over 70% of USTBond sales from the USFed printing press. The QE was urgently needed, since legitimate buyers vanished. Even the primary dealers have been reimbursed in open market operations within a few weeks.

4) PIMCO has shed its entire USTreasury Bond holdings, seeing no value. They joined many foreign creditors in an unannounced buyer boycott in disgusted reaction to QE which is essentially a compulsory unilateral debt writedown.

5) Growing USGovt deficits have run over $1.5 trillion annually, with absent cuts, obscene entitlements, endless war. The prevailing short-term 0% interest rates are out of synch with exploding debt supply and rising price inflation.

6) Unfunded USGovt liabilities total nearly $100 trillion for medicare, social security, pensions, and more. The obligations are never included in the official debt. It represents insult to injury within insolvency.

7) Standard & Poors warned that USGovt could lose AAA rating in lousy credit outlook, one chance in three within the next two years. Ironically, the announcement came on the day when the USGovt exceeded its debt limit. The network news missed it.

8) State & Municipal debt have collapsed, as 41 states have huge shortfalls, and four large states are broken. They might receive a federal bailout. It could be called QE3, maybe QE4.

9) Coordinated USTBond purchases from Japanese sales have relieved the USFed, as other major central banks act as global monetarist agents. The sales by Japan are vast and growing. Witness the last phase in unwind of Yen Carry Trade, where 0% borrowed Japanese money funded the USTreasury Bonds and US Stocks.

10) Quantitative Easing, a catch word for extreme monetary inflation and debt monetization, has become engrained into global central bank policy, soon hidden. It is so controversial and deadly to the global financial structures that it will go hidden, and attempt to avoid the furious anger in feedback by global leaders. This is the most important and powerful of all 50 factors in my view.

11) The FedFunds Rate is stuck near 0%, yet the actual CPI is near 10%, for a real rate of interest of minus 9%. Historically a negative real rate of interest has been the primary fuel for a Gold bull. This time the fuel has been applied for a longer period of time, and a bigger negative real rate than ever.

12) The USGovt claims to have 8000 tons of Gold in reserve, but it is all in Deep Storage, as in unmined ore bodies. The collateral for the USDollar and USTreasury debt is vacant. It is in raw form like in the Rocky Mountain range or Sierra Nevada range.

13) Fast rising food prices, fast rising gasoline prices, and fast rising metals, coffee, sugar, and cotton serve as testament to broad price inflation. So far it has shown up on the cost structure. Either the business sector will vanish from a cost squeeze or pass on higher costs as end product and service price increases.

14) The entire world seeks to protect wealth from the ravages of inflation & the American sponsored QE by buying Gold & Silver. The rest of the world can spot price inflation more effectively than the US population. The United States is subjected to the world's broadest and most pervasive propaganda in the industrialized world.

15) The European sovereign debt breakdown with high bond yields in PIIGS nations points out the broken debt foundation to the monetary system. The solutions like with Greece in May 2010 were a sham, nothing but a bandaid and cup of elixir. Spain is next to experience major shocks that destabilize all of Europe again, this time much bigger than Greece. The Portuguese Govt debt rises toward 10% on the 10-year yield, while the Greek Govt debt has risen to reach 20% on the 2-year yield.

16) Germany is pushing for Southern Europe bank climax in their Euro Central Bank rate hike. Europe will be pushed to crisis this year, orchestrated by the impatient and angry Germans. They have no more appetitive for $300 to $400 billion in annual welfare to the broken nations in Southern Europe.

17) Isolation of the USFed and Bank of England and Bank of Japan has come. The small rate hike by the European Central Bank separated them finally. The Anglos with their Japanese lackeys are the only central banks not raising rates. With isolation comes all the earmarks on the path to the Third World.

18) The shortage of gold is acute, as 51 million gold bars have been sold forward versus the 11 million held by the COMEX in inventory. Be sure that hundreds of millions of nonexistent fractionalized gold ounces are polluting the system. Word is getting out that the COMEX is empty of precious metals.

19) Such extreme Silver shortage has befallen the COMEX that the corrupted metals exchange routinely offers cash settlement in silver with a 25% bonus if a non-disclosure agreement is signed. The practice cannot be kept under wraps, as some hedge funds push for fat returns in under two months holding positions with delivery demanded.

20) China has begun grand initiatives to replace its precious metal stockpiles. They are pursuing the Yuan currency to become a global reserve currency. As they build collateral for the Yuan, they are also elevating Silver as reserves asset.

21) A global shortage of Gold & Silver has been realized in national mint production. From the United States to Canada to Australia to Germany, shortages exist. Many interruptions will continue amidst the shortages, which feed the publicity.

22) The Teddy Roosevelt stockpile of 6 million Silver ounces was depleted in 2003. He saw the strategic importance of Silver for industrial and military applications. The USEconomy and USMilitary will turn into importers on the global market.

23) The betrayal of China by USGovt in Gold & Silver leases is a story coming out slowly. The deal was cut in 1999, associated with Most Favored Nation granted to China. But the Wall Street firms broke the deal, betrayed the Chinese, and angered them into highly motivated action. No longer are the Chinese big steady USTBond buyers, part of the deal also.

24) Every single US financial market has been undermined and corrupted from grotesque intervention, constant props, and fraudulent activity. The degradation has occurred under the watchful eyes of compromised regulators. Fraud like the Flash Crash and NYSE front running by Goldman Sachs is protected by the FBI henchmen.

25) The USEconomy operates on a global credit card, enabling it to live beyond its means. The USGovt exploits the compulsory foreign extension of credit in USTBonds, by virtue of the USDollar acting as global reserve currency. Foreign nations are compelled to participate but that is changing.

26) The USMilitary conducts endless war adventures for syndicate profits. They use the USTreasury Bond as a credit card. The wars cost of $1 billion per day is considered so sacred, that it is off the table in USGovt budget call negotiations, debates, and agreements.

27) Narcotics funds have proliferated under the USMilitary aegis. The vertically integrated narcotics industry is the primary plank of nation building in Afghanistan. The funds keep the big US banks alive from vast money laundering.

28) No big US bank liquidations have occurred, despite their deep insolvency. Any restructure toward recovery would have the liquidations are the first step. The USEconomy is stuck in a deteriorating swamp since the Too Big To Fail mantra prevents the urgent but missing step.

29) The unprosecuted multi-$trillion bond fraud over the last decade has harmed the US image, prestige, and leadership. The main perpetrators are the Wall Street bankers and their lieutenants appointed at Fannie Mae and elsewhere. They bankers most culpable remain in charge at the USDept Treasury and other key supporting posts like the FDIC, SEC, and CFTC.

30) The ugly daughters Fannie Mae and AIG are forever entombed in the USGovt. They operate as black hole expenses whose fraud must be contained. The costs involved are in the $trillions, all hidden from view like the fraud. Fannie Mae remains the main clearinghouse for several $trillion fraud programs still in operation.

31) The US banking system cannot serve as an effective credit engine dispenser, an important function within any modern economy. It is deeply insolvent, and growing more insolvent as the property market sinks lower in valuation. The banks lack reserves, and hide their condition by means of the FASB permission to use fraudulent accounting.

32) The big US banks are beneficiary of continuous secret slush fund support from the USGovt and USFed. Their sources and replenishments have been gradually revealed. The TARP Fund event will go down in modern history as the greatest theft the world has ever seen, easily eclipsing the biggest mortgage bond fraud in history.

33) The insolvent big US banks continue to sit at the USGovt teat. The vast umbilical cord of banker welfare has not gone away. Goldman Sachs still is in control of the funding machinery.

34) The shadow banking system based upon credit derivatives keeps interest rates near 0%. The usury cost of money is artificially low near nothing. As money costs nothing, capital is actively and rapidly destroyed.

35) A vast crime syndicate has taken control of the USGovt. A vast crime syndicate has taken control of the USMilitary. A vast crime syndicate has taken control of the USCongress. A vast crime syndicate has taken control of the US press networks.

36) A chronic decline of the US housing sector keeps the USEconomy in a grand decline with constant deterioration. With one million bank owned homes in inventory, a huge unsold overhang of supply prevents any recovery of housing prices. Home equity continues to drain, and bank balance sheets continue to erode.

37) Over 11 million US homes stand in negative equity. The sum equals to 23.1% of households. They will not participate much in the USEconomy, except when given handouts. They have become downtrodden.

38) The USEconomy will not benefit from a export surge. The US industrial base has no critical mass after 30 years of dispatch to the Pacific Rim & China. The industry must contend with rising costs in offset to the falling USDollar, which is cited as providing the mythical benefit. Then can export in droves if they do so at a loss.

39) A global revolt against the USDollar is in its third years. The global players work to avoid the US$ usage in trade settlement. Several bilateral swap facilities flourish, mostly with China. If China supplies products, then the Yuan currency will be elevated to global reserve currency.

40) Global anger and resentment over three decades has spilled over. The World Bank and IMF have been routinely used by the US bankers to safeguard the USDollar and Anglo banker hegemony. Neither financial agency commands the respect of yesteryear.

41) A middle phase has begun in a powerful Global Paradigm Shift. The transfer moves power East where the wealth engines of industry lie, far from the fraudulent banking centers. The next decade will feature the Chinese as bankers, since their war chest contains over $3 trillion.

42) The crumbling global monetary system was built on toxic sovereign debt. Legal tender has been nothing more than denominated debt posing as legitimate by legal decree. That is what word FIAT means. The system is gradually breaking in an irreversible manner.

43) The global central bank franchise system has been discredited. It is a failure, which is not recognized by the bank leaders still in charge. The stepwise process of ruin continues with a new sector falling every few months. Next might be municipal bonds.

44) Witness the final phase of a systemic cycle, as the monetary system has run its course. It is saturated with debt from faulty design. The deception cited in the mainstream media focuses upon the credit cycle which will renew. It will not. It will break of its own weight and lost confidence.

45) The recognition has grown substantially that suppression of the Gold price has been the anchor holding fiat system together. The Chinese realize that Gold, when removed, leads to the collapse of the US financial system. They realize it more than the US public. But the syndicate in control of the USGovt understands the concept very well, as they designed the system.

46) The institution of a high level global barter system might soon take root. Gold will sit at its central core, providing stability. No deadbeat nations will participate. That includes the United States and several European nations. The barter system will be as effective as elegant.

47) The movements spread like wildfire in several US states to reinstitute gold as money. In a few states, led by Utah and Virginia, progress has been made for Gold to satisfy debts, public & private. Consider the movement to be in parallel to the Tenth Amendment movements.

48) Anglo bankers have lost control in global banking politics. The phased out G-7 Meeting is evidence. China has wrested control of G-20 Meeting, and has dictated much of its agenda in the last few meetings. The US has been reduced to a diminutive Bernanke and Geithner being ignored in the corner.

49) New loud stirrings by Saudi Arabia seek a new security protector. If security is no longer provided by the USMilitary, then the entire defacto Petro-Dollar standard is put at risk. Remove the crude oil sales in USDollars exclusively, and the US sinks into the Third World with a USDollar currency that cannot stand on its own wretched wrecked fundamentals.

50) The IMF solution to use SDR basket as global reserve is a final desperate ploy. By fashioning a basket of major currencies in a basket, they attempt to enforce a price fixing regime. It is a hidden FOREX currency exchange rate price fixing gambit that will invite a Gold price advance in uniform manner across the currencies bound together. This ploy is being planned in order to prevent the USDollar from dying a horrible death at the expense of the other major currencies. By that is meant at the expense of the other major economies which would otherwise have to operate at very high exchange rates.


THE BIGGEST UPCOMING NEW FACTORS

Introduction of a New Nordic Euro currency is near its introduction. The implementation with a Gold component will send Southern European banks into the abyss, marred by default. The new currency has the support from Russia and China, even the Persian Gulf. In my view, it is a USDollar killer. The first nations to institute a new monetary system for banks and commerce will be the survivors. The rest will slide into the darkness of the Third World.

Gold & Silver seem to be the only assets rising in price, an extension of a terrific 2010 decade. The exceptions are farmland and the US Stock market. However, stock valuations are propped by constant and admitted USGovt support. Their efforts are mere attempts to keep pace with the USDollar decline, as stocks merely maintain a constant purchase power.

A hidden overarching hand seeks the global Gold Standard as the bonafide solution. Darwin is at work, but Adam Smith turns a new chapter. The crumbling monetary solution demands a solution. Further investment in the current system assures a devastating decline into the abyss of insolvency and ruin.

Australia – selling our (fake and real) money to the world

Playing with toy money

If a child tried to pay for lollies at a tuck shop with notes from the Monopoly board game, the shop staff would know instantly that it was fake money... Yet in today’s society, we commonly accept and take for granted the polymer banknotes which we use every day as “money”. They are both just pieces of paper, so what’s the difference? They are both forms of currency, but accepted under entirely different circumstances. Paper money today, whether it be Australian Dollars or Zimbabwe Dollars are deemed valuable, only if the population believes it should represent value. We still believe a $50 Australian dollar note is worth $50 dollars – because that’s what the note tells us. However, we are aware that a $50 note today doesn’t buy as much as it did 10 years ago. Despite the knowledge that inflation is eating away at our purchasing power, we continue to be loyal to our currency. One day this will change, and it will be just monetary history repeating .

Fake (Fiat) vs Real Money

Part of the money problem today is that the definition of money has changed over the generations. Few people alive today were alive in the 1920s or 1930s when coins actually had silver in them, where your savings in the bank held its purchasing power, because our money was linked to gold. 100 Years ago, gold and silver were referred to as money, as it was the lifeblood to the monetary system. Today gold and silver are.... gold and silver, and banknotes and circulating coins are referred to as money. Another way to put it, gold and silver has and always will be real money, as it is a finite resource, while banknotes and circulating coins are merely currency. Currency is not money! It’s a fake, and more and more people will realise this over the coming decade as inflation dilutes our currency, while at the same time, increasing the value of real money (gold and silver).

Banknotes used to represent value

Historically banknotes were merely receipts for “real” money, that is, gold and silver. If you deposit 1 ounce of gold, you got a banknote (a receipt) which said it was redeemable for the amount written on it. In the US, its Constitution was written to include , that "No State shall...make any Thing but gold and silver Coin a Tender in Payment of Debts." Therefore, up until 1933, US banknotes held the words “Redeemable in gold on demand at the United States Treasury”. (confirming the role of the banknote as a receipt). In the Australian Constitution, Section 115 establishes the same principle, that “a state shall not coin money, nor make anything but gold or silver coin a legal tender in the payment of debts”.

The Constitution is our legal and political rule book (in this instance in Australia, Section 115 is the rule for monetary policy), but despite this, in 1971 the principle of backing a currency with real money was removed, when President Nixon removed the gold window for US Dollars, thus making the US Dollar and all other currencies in the world completely fiat (money declared by a government to be legal tender). In other words, between 1946 and 1971, any nation could hand in their US Dollars (receipts) and buy gold from the US for US$35 dollars a troy ounce.

Because the US printed extra dollars to pay for a negative trade balance and increasing inflation, other countries (particularly France, Switzerland and Great Britain) began to convert/redeem their US Dollar reserves with US gold. Thus the US had no choice but to abandon the system in order to preserve its gold. However, following this change, the US Dollar remained the world reserve currency, despite there no longer a requirement to link the Dollar to gold. Thus an endless money tree was born – and now around 70 per cent of the world’s currencies are denominated in US Dollars (with half of these Dollars residing outside the US).

Private bankers control our monetary system – not Governments

After explaining this brief history, there is one critical element which has not been covered. Since 1913, the Federal Reserve has been responsible for issuing currency in the United States. The Federal Reserve is a non-Government, private corporation which has private shareholders. It was established by private European bankers from families such as the Rothchilds, and Warburgs. These private banking families still remain shareholders of the US Federal Reserve, and thus have direct control over world monetary policy – through the US Dollar, and through the debt based Fractional Reserve Banking system. If the US Government can issue bonds, why does it need a private banking consortium to issue currency for the people? (I will go into greater depth another time).

Likewise in Australia, Australia’s banknotes and coins are issued in the same was that US Dollars are issued in the United States. For one year in 1910, Australia’s notes and coins (Pounds) were controlled by the people, under the Treasury Department. By 1911, the Commonwealth Bank was given powers to issue banknotes (however this was not made law until 14 December 1920 through the Notes Issue Board), and given central banking powers in 1945. The convertibility of Australian banknotes into gold effectively ended during World War I. In 1959, the central banking powers held by the Commonwealth Bank were transferred to the new Reserve Bank of Australia (RBA). Like the recently created Future Fund, the RBA is not a Government Department, but an independent statutory authority. Essentially the RBA make decisions on monetary policy (how much money (or inflation) to print) – just like the Federal Reserve has the power to influence the US Dollar (and economy through interest rates) in anyway it sees fit.

So why do we have confidence in paper money such as Australian Dollars today? Why do we allow bankers to control our money (by inflating it continually year in year out, largely through fractional reserve banking). Aren’t we just using Monopoly (Central Bank controlled) money?

So now that we know Australia no longer backs its Dollars with gold, what has the RBA done with our gold?

The Australian Government sold "our" gold

In early 1997 the Reserve Bank of Australia held nearly 250 tonnes of gold bullion reserves. By July 1997, the RBA sold 167 tonnes, reducing its holdings from 247 to 80 tonnes (selling some 6 million troy ounces). That 167 tonnes of sold gold is now worth an extra US$4.2 billion more 12 yrs later. What will it be worth in 10 years time? More importantly, what sort of purchasing power will that gold have in 10 years time (remember, there is a huge difference between price and purchasing power!) It’s ok for the RBA to make such a mistake though?

The RBA, the bankers, sold our gold (our money) near the bottom of the commodity cycle so it could leverage its balance sheet to speculate in fake money (currencies).

It’s even in the RBA’s charter that:

'It is the duty of the Reserve Bank Board, within the limits of its powers, to ensure that the monetary and banking policy of the Bank is directed to the greatest advantage of the people of Australia and that the powers of the Bank ... are exercised in such a manner as, in the opinion of the Reserve Bank Board, will best contribute to:
(a) the stability of the currency of Australia;
(b) the maintenance of full employment in Australia; and
(c) the economic prosperity and welfare of the people of Australia.'

I would argue that the RBA, and all other central banks around the world are:

A) Increasing the instability of the currency
B) Creating fake job opportunities through the current monetary system (eg. How many jobs rely on an inflation society – superannation, sharemarket, house prices inflating. ie. Bankers, accountants, lawyers...)
C) Decreasing the economic prosperity and welfare of the people of Australia (through the debt-based fractional reserve banking system to ensure businesses and individual become enslaved to the banks)

Anyway, its ok for Australia, we are naturally endowed in gold. We have enough gold in the ground to replenish and to restore to a more sound monetary system in the future – right? Only if our politicians, and everyone else learn basic monetary history. We are conditioned at school, amongst other things, to be savers, not investors - to rely on debt to buy “assets”. It is not a coincidence Australia is now a consumption/services economy today (and why we are willing to sell our gold dirt cheap).

Taking this one step further, from a different angle, lets examine what Australia, as a country does with its real and fake money. The great paradox is that Australia is well endowed in both real and fake money. We are a major gold producer/exporter (real money) and a significant producer and innovator of banknotes (fiat money).

1. Fiat Money

Note Printing Australia (NPA) - a wholly owned subsidiary of the Reserve Bank of Australia, prints the banknotes for Australia, New Zealand and a handful of other countries. In 2008, it exported 182 million (fiat) banknotes.

Securency International – 50 per cent owned by the Reserve Bank of Australia, prints the polymer substrate for banknotes which is used by 27 countries around the world. In 2008, it supplied polymer substrate to 13 countries. The company now has substrate manufacturing plants in Mexico to supply Latin America.

Both NPA and Securency achieved similar profits in 2008 to 2007.

So it appears Australia has been a world leader in the evolution of currencies, and has done modestly out of exporting banknotes (receipts) and banknote technology.

Let's compare to Australia's recent achievements selling real money.

2. Real Money

Lets now examine Australia’s production and export of real money – specifically gold.
For anyone who may not be aware, Australia and the world is currently experiencing a major bull market in gold and silver. With the explosion of Government and private debt, it is inevitable that more and more people will flock to real money, as opposed to printed money. We are currently halfway through a normal commodities cycle (which started in 1999). I feel this will be no ordinary cycle,but a once in a lifetime opportunity for a large wealth transfer to those who hold real money (particularly silver).

Until more recently, Australia, like South Africa, has had declining gold production for the past couple of decades. China became the world’s largest gold producer in 2007, but Australia should resume number 2 spot in 2009. If we compare the Australian Government’s view of gold to that of China, we get two completely different views. Australia is short-sighted, we see gold as a commodity export earner only, to fuel our consumption/services economy. On the other hand, the Chinese central Government is slowly accumulating gold and is buying most of its domestic production (oddly enough, an Australian company, Sino Gold is China’s largest gold producer). China is about to overtake India as the world’s largest buyer of gold.

Recent trade statistics supports this view. In 2008, Australia exported $14.3 billion worth of gold (up 27% on 2007), of which nearly 40 per cent was exported to India. Australia is also a major importer of gold, importing nearly $9.7 billion (up 59% on 2007), reflecting Australia’s niche capability in refining gold dore’ bars. Most of this gold is then re-exported.

This then leads into: AGR Matthey. This company (40% owned by the Perth Mint) refines about 60 percent of Australia’s annual mined gold. AGR Matthey refines the dore bars into 99.9% gold bars.

Now, the most interesting part of this post.

The Perth Mint - is one of only about six bullion mints in the world (partly owned by WA Govt). It is a top 50 export earner for Australia, with over 90% of its products exported overseas. It is Australia’s largest gold refiner (under the name Gold Corporation) and refines about 60 per cent of Australia’s annual gold production.

The Perth Mint recently released its annual report for 2008-09.

The growth in volume and profit is quite staggering for only one year. The Perth Mint is selling real money to the world, and making very handsome currency profits.

- A ten fold pre-tax profit increase to $38 million (up from original forecast of $4.9 million).
- Sales of coins, bars and medallions up 50 percent to 2.7 million units.

What I find most interesting is the growth in metal volumes. Here are my calculations based on their recent annual reports.

Graph 1:
To me, silver is the clear stand out in growth.

Analysing further:
- Averaging 100% volume growth per annum over the last 5 years.
- The 229 tonnes of silver produced in 2008-09 equates to 7.36 million troy ounces of silver (vs. 4.5 million in 2007-08).
- Excluding the last couple of years of silver product production, 229 tonnes is more than all the Perth Mint silver coin production for a 20 year period from 1987.

Clearly silver is exploding in growth, but only about 1 in 100 people would know this. But why?

Silver's price is biscuits compared to gold, and yet silver is 4 to 5 times rarer in gold today! This is because silver is still heavily manipulated by two US based banks on the NY COMEX exchange. No other investment opportunity I have studied comes close to the potential of silver. This may seem uncharacteristic to overstate such a claim, but do not take my word, study and draw your own conclusions. To determine if gold and silver are going to be good long-term investments will largely depend on your 10-20 year outlook for the world economy and for inflation. It's better to do a bit of study than to put it into the too hard box. I believe big inflation, political and social instability is almost all but inevitable because the current debt-based monetary system is broken. It’s just monetary history repeating. All past fiat currencies have collapsed to their true value - zero. There are times when fiat currencies, and debt are king (post WWII to 1999), and there are periods when real money is king, and is the only form of accepted money (other than barter). Don’t take my word for it. Like any investment, it is important we do our own due diligence. We must embrace individualism and always look outside the box (tv screen).

This post is starting to hit the crux to the reasoning behind why I first set up this blog. Understanding basic monetary history and having an awareness of current monetary events are vital if we are to shed some light on where the world economy is heading to in the next decade.

Best,
Scott

Concluding thought:
A few weeks ago I visited the Perth Mint, and one thing I found most intriguing is that it’s large gold bar collection is owned by N M Rothschild & Sons (of London). The same, famous banking dynasty which set-up the first central bank, the Bank of England, and later the Federal Reserve in the US. More on central banking soon...