Gold's New Records
(Editor's Note: Due to some absolutely criminal moves by the perverts we call the government, whose message is supported and dispersed by the sycophantic main stream media, most Americans actually believe that the value of gold is cratering. Mr. Turk points out that, far from losing value, is is, by far, the most stable investment anyone could make. Until the bounty that the Constitution provides for, in the taking of the ears of criminal politicians (the second amendment) is enforced (any day now) we will have more of the same. Fear not. Judgment Day is at hand. - JSB)
Gold closed this past week with new record highs against the Australian dollar, Canadian dollar, Indian rupee, South African rand and British pound. Here are gold's long-term charts against these currencies.
Gold did not close this week with a new record high against the euro or the US dollar. But gold remains in a clear uptrend against both of these currencies, as we can see from the following long-term charts (the price of gold in Deutschemarks is used until it was subsumed into the euro).
Gold was not the only thing making new records this past week. US government debt is soaring as it borrows money to pay for the bank bailouts concocted by it in recent weeks.
From September 30, 2007 to the end of this past fiscal year on September 30, 2008, total federal debt grew by $1.0 trillion, from 9,007,653,372,262.48 to $10,024,724,896,912.49, which is an 11.3% annual rate of growth. The federal debt as of October 16, 2008 is now $10,331,139,000,845.92. So in just 16 days since the end of the last fiscal year, the federal debt has grown by an astounding $331.1 billion, which is a 75.5% annual rate of growth. It has taken just 16 days to borrow one-third of what the government borrowed in all of last year.
The following chart is from Ed Steer, a regular contributor to "Casey's Daily Resource Plus" published by Casey Research. This chart of weekly T-bill issuance visually portrays this accelerated growth of federal debt.
The above chart shows T-bills only, and therefore excludes the growth of other federal debt instruments. Also, this $10.3 trillion debt total I refer to above excludes the federal government's unfunded liabilities. When these are added, the total obligations of the federal government are $110 trillion, or at least that's what they wereestimated to be last May by Dallas Federal Reserve president Richard Fisher. The federal government's unfunded liabilities, and therefore its total obligations, have obviously grown further since then, and are now some unknown number greater than $110 trillion.
In short, the US federal government is staggering under the world's heaviest debt load. To meet its obligations and promises, the Federal Reserve will continue to create "unlimited" amounts of dollars.
That word - "unlimited" - is getting used frequently in the media these days. Bloomberg reported on October 13th that "policy makers offered banks unlimited dollar funding." The Wall Street Journal reported on October 14th that "The U.S. Federal Reserve agreed to provide unlimited dollars to three major European central banks." Then on October 15th Japan jumped into this dollar creation frenzy too, and according to Bloomberg: "The Bank of Japan said it will offer lenders as many dollars as they want." Bloomberg went on to say that dollars will be provided at fixed interest rates for an "unlimited amount", quoting from the actual BoJ announcement.
At this time of "unlimited" dollar creation we need to take to heart the words of Warren Buffett's father, Howard Buffett, while serving as a Congressman from Omaha. In a now famous speech in 1947, Rep. Howard Buffett said: "When the people's right to restrain public spending by demanding gold coin was taken away from them, the automatic flow of strength from the grass-roots to enforce economy in Washington was disconnected...The gold standard acted as a silent watchdog to prevent unlimited public spending."
The gold standard is long gone so it no longer acts as a "silent watchdog to prevent unlimited public spending". Because it is no longer prevented, unlimited public spending is what we are now getting. In addition to the countless ways the federal government spends - or wastes, as many would no doubt add - the dollars flowing through its accounts, it is now spending unlimited dollars to bail out banks worldwide, a reality which I think makes clear the dollar's bleak future.
To achieve this unlimited public spending, central banks are creating an unlimited amount of dollars, which will in time mean that there is no limit as to how high the gold price will reach. The new record high in the currencies mentioned above will soon be joined by new record highs in the US dollar, euro and every other national currency around the globe.
While the gold standard - what Rep. Buffett called a "silent watchdog" - is gone, gold itself is a watchdog too, and not a silent one. Gold cannot prevent "prevent unlimited public spending" like the gold standard, but a rising gold price - like a barking dog - can warn of danger.
For several years the Gold Anti-Trust Action Committee has diligently explained why and how central bankers under the direction of the US government - the henchmen of the nefarious 'gold cartel' - have been capping the gold price. Their solitary aim is to silence the gold "watchdog", in the hope of making people unaware of the danger of holding dollars. But the watchdog is now barking in many countries as the gold price reaches new records against those currencies.
Importantly, the debasement of the dollar is becoming so profound as central banks create "unlimited" amounts, the gold cartel will no longer be able to stop the watchdog from barking by capping the gold price. I expect new record highs in gold against the dollar and the euro by the end of this year.
James Turk has specialized in international banking, finance and investments since graduating in 1969 from George Washington University with a B.A. degree in International Economics. His business career began at The Chase Manhattan Bank (now JP Morgan Chase Bank), which included assignments in Thailand, the Philippines and Hong Kong. He subsequently joined the investment and trading company of a prominent precious metals trader based in Greenwich, Connecticut. He moved to the United Arab Emirates in December 1983 to be appointed Manager of the Commodity Department of the Abu Dhabi Investment Authority, a position he held until resigning in 1987.
Since 1987 James Turk has written The Freemarket Gold & Money Report, an investment newsletter that publishes twenty issues annually. He is the author of two books and several monographs and articles on money and banking. He is the co-author of The Coming Collapse of the Dollar (Doubleday, December 2004), which has been updated for a newly released paperback version, now entitled The Collapse of the Dollar (www.dollarcollapse.com).