# 1. Straight line projection rarely works–humans harbor the illusion that they can predict the future–it rarely happens. #2. If the bad happens as predicted here, ownership will cease to be honored or protected–a new dictatorship will not protect your property or other assets–they will take over all ownership for alocation to the general public. Those stupid, small minds who constantly fight social welfare will get a combination of Nazism and Communism in one fell swoop. The world would be safer if you accepted that over-population always leads to some form of sharing. If not, start planning your funeral.

How can bonds crash if the EU is doing even worse? You have to place the US problem in context to the rest of the world. Even the countries with economic expansion and little debt will suffer if our economy stalls further.

Mind you I am envisioning a deflationary spiral as opposed to the Fed’s push to inflate. So far the numbers are surprising on the lack of inflation. Some might attribute it to manipulation. I dismiss that argument since for years the advocates for manipulation should have seen massive inflation by now and they haven’t.

I think high qulity corporate and government bonds will be another chance in a lifetime buy in 3 to 6 months. The chance of default is negligible and yields should easily fall to new lows by then.

I guess I am a contrarian on this one.

Asians accumulating gold and silver via spot purchases?

The contact out of London has updated King World News on the massive Asian buyers which have been accumulating both gold and silver. The London source stated, “Last week Asian buyers let the price come in to them. They were buying all day long, hitting all of the offers and they were not sending the price higher. As much as the orchestrators were hitting the bids, there were some smart buyers hitting the offers. The thinking was, I can pick up tonnage here, literally I can pick up tonnage here.”

The London source continues:

“On the surface this does not appear to have anything to do with the physical market. The spot buyers are indexing, and this is what no one is talking about. They are indexing the metal to the real physical even if they can’t get the physical metal at that moment.

What would stop you from putting up a few billion dollars? This is what China is doing. You’re China, you were refused IMF gold, so you are going to quietly sell your treasuries, or swap your treasuries more likely for a spot financial transaction. What they are doing is buying spot, which is a currency transaction because you can’t get the metal. The physical market has now completely diverged from the paper market.

The only way to fight it, and it can’t be done in the US, but it can over here in England (the Asians can), is to buy the foreign exchange transaction which is gold versus dollar, silver versus dollar. So essentially what you are doing is shorting the dollar versus gold, or shorting the dollar versus silver. The great thing about that is even if you can’t buy the physical, you are now indexed to the price of the metal. So even if you can’t get the physical at that time, you now have your hedge, you essentially have what you want.

So if the price of gold and silver goes up, the price of your spot goes up. Even if the Comex defaults, spot will go up. Even when the market is taken down, it is constructive in terms of filling your physical orders. As they take the price down, you are happy to pay a premium to pick up the physical. The point of all of these purchases is to eventually convert them to physical gold, or physical silver, 100% of them. The Fed has to know this, they are not stupid.

So the Asians are exercising patience in converting all of these spot purchases to physical?

“If these guys converted all of their spot to physical, there would be a massive default today. No one in the US understands that, the Asians are laughing at these guys. It’s a way to unload billions and billions of dollars into the market. Looking at the futures market gives you a totally false impression of what is going on, this is going to totally blow up. Remember if you are China, your primary goal is to get out of trillions of dollars, that means purchasing hard assets such as gold and silver.”

How sustainable is that?

“It’s eventually going to blow because at some point these buyers will say, ‘I’m indexed, but I actually want to get all of this physical gold and silver now.’ When that happens, the game is over.”

Well there you have it, the Asians are aggressively exchanging US dollars for gold and silver spot transactions, and eventually converting those spot transactions into physical gold and silver. For the Asian buyers this is an interesting game, it requires calm persistence, a scheme that is perfectly suited for a culture known for its patience and long-term strategy.

Eric King

KingWorldNews.com

If we buy into the deflationary theme don’t rates continue to fall?
Are not rising rates a sign of inflation and higher inflation expectations?