The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.NEW YORK ( Bullion Bulls Canada) -- Two weeks ago, I wrote that volatility was
It was at that point (punctuated by the "Crash of '08") that our governments began "competitive devaluation." It was at that point that the banksters ran out of bullion to dump, and began to buy it themselves. It was at that point that we (finally) recognized the imminent insolvency of our governments. It was at that time that gold and silver once again reasserted their 5,000 year old status as "safe havens." The real "bull market" for precious metals only began in 2009. Today, thanks to the banksters flooding our markets (and economies) with more of their worthless paper than at any time in history, and thanks to the banksters rendering all of our governments insolvent with their scam financing, both gold and silver are more undervalued today than they were 10 years ago. While the fundamentals for gold and silver are (much) stronger today than ever before, the same cannot be said for their current "competition": U.S. Treasuries. Admittedly I dealt with precisely this
same topic only three-and-a-half months ago. However, at that time our markets were not in the grip of another bout of mass, temporary insanity. Given the hysterical (and hilarious) commentary from the media and so-called "experts" on the precious metals sector, I can only assume that the current panic has also led to fear-induced amnesia. U.S. Treasuries are worthless. U.S. Treasuries are the largest Ponzi-scheme (and "bubble") in the history of humanity. We now have the Federal Reserve openly admitting to "buying" $100's of billions per year of this worthless paper with their other worthless paper (U.S. dollars) merely to keep this bubble inflated. No one (outside of the Fed) knows how many $100's of billions they have secretly bought (with their counterfeited money). As the infamous Jeffrey Christian of the CPM Group (and formerly of Goldman Sachs) observed during "The Great Gold Debate", manipulation works best if the market doesn't "see you coming." Manipulation of the Treasuries market only implies that Treasuries are grossly overvalued. It is the "fundamentals" for U.S. Treasuries which make it obvious that their actual value is near-zero. To begin with, the U.S. is a hopelessly insolvent debtor. The current banner-carrier for this argument is Professor Lawrence Kotlikoff. He calculates "total indebtedness" of the United States government at $211 trillion, or roughly fifteen times the $14 trillion fantasy-number which the government calls "the national debt."
He calculates that the U.S. is significantly more insolvent than Greece (by roughly 20%) despite the fact that Greece's government is currently being forced to pay more than 10 times the interest rate on its debt as the U.S. pays on its own debts. As I've pointed out in my own previous work, Greece's interest rates have been fraudulently manipulated to these usurious rates through the
"economic terrorism" perpetrated by Wall Street in the credit default swap market. That same "market" (i.e. Wall Street) has been recently asserting that the probability of Greece defaulting on its own debts is already at 98%. This puts the risk of a U.S. default at somewhere above 100%. It is common knowledge, however, that the preferred approach of the U.S. government to avoid repaying its creditors is a "stealth default" -- to "default" on its debts by repaying those debts with currency only worth a tiny fraction of its original value. In other words, if the U.S. government drives down the value of the U.S. dollar by 90% and then repays its creditors, it will have cheated them out of 90% of the obligation owed to them, in "real dollars." By now, everyone should be able to connect the dots: "competitive devaluation" is "stealth default." Our (insolvent) governments have now explicitly decided to cheat all of their creditors by repaying all of them with grossly diluted paper. Put another way, they have taken the "stealth" out of stealth default. However, at least with the other governments who are in the process of cheating their bond holders, they are currently paying interest on these mountains of debt. The chumps holding U.S. Treasuries are not getting any interest, and are paying the highest prices in history for this worthless paper. Buying Treasuries at the highest prices in history at a time when the explicit economic policy of the U.S. government is to drive down the actual value of those Treasuries is a form of behavior which would seem to provide conclusive proof that the buyers are not "of sound mind." But that is not the whole "message" which the propaganda machine was sending during the latest ambush of gold and silver.
Media talking-heads were telling us that (supposedly) investors were "fleeing" gold and silver, and "rushing toward the safe haven of U.S. Treasuries." They are rushing out of a "hard asset" which (as I just recounted) is grossly undervalued, and at a time when the official policy of all of our governments is to drive up the value of all such hard assets. They are (supposedly) rushing to buy the debts of the world's biggest deadbeat debtor, whose "total indebtedness" exceeds all the other debts of every other nation on Earth -- combined. They are doing this at a time when the explicit economic policy of the U.S. government is to drive down the actual value of its own bonds. Selling gold and silver and buying U.S. Treasuries at the highest prices in history? The legendary "Jack" (of "Jack and the Beanstalk" fame) got much better value when he traded the family cow for "magic beans."