Friday, November 25, 2011

Central Banks Buy Gold as Europe Has Contracted the Economic Equivalent of the BLACK DEATH

Guest Post From SD Reader AGXIIK:

Just when you thought it was safe to read SD this comes up. Russia is dangerous as hell.
Putin and his sock puppet President Medvedev consider the Chorney Zhup in the WH as less than a rank amateur. They play him like a cheap fiddle.
They're buying gold with OUR monopoly money.
Call it Rodina toilet paper.
As Douglas notes in his article, Central banks are buying gold and silver with something worth less than recycled newspaper. They buy gold with a click of a mouse. Countries throughout the world are buying this rare commodity at a bargain basement price of $1,700 an oz.
But as Douglas mentions, it doesn't matter what gold costs, these central banks will either print the script or use our dollars to strip-mine every ounce of gold that exists.
Hide your metals.
Uncle Same wants you (r precious metals).
If you sell gold for depreciating FIAT you are playing right into their hands. Bastards!
We have to work our a**es off to save enough to buy gold and silver.
They buy it with digitally printed FIAT. Bastards!
The Central banks are hoovering up gold like rats in a grain bin. What they don't eat, they piss on. As a recovering banker I really detest the breed.
As for the speed of the Euro collapse, it's accelerating. I'm no insider but am close enough to some people who are in the know to say that we are about to witness an event that we can tell our grandchildren---if we survive this apocalypse.
The DStag will soon vote on exiting the EU and reinstating the DMark. The time line is less than 6 months. The article about the UK crisis indicated they may dump their Euro bonds for Pounds and will try to do so 'In an orderly manner'.
They are in far worse shape as a country than Germany. The Mooch Class is restive.
I doubt if exiting the Euro in an orderly manner will work out as planned.
It'll be like a security guard trying to stop a Walmart crowd on Black Friday. Old Blightey WILL get trampled!

The TED spread, the fear factor interest rate spread, is climbing upwards much like the 2008 banking collapse. Lending shut down world wide for over 6 months after that FUBAR episode. We got lucky, if you can call it that, but the FIAT that flooded the market did little but exacerbate the worldwide economic problems.

I have doubts if the Fed can provide enough digital FIAT backstop to prevent a collapse of the Euro and consequently the EU itself.
Even $5 trillion might not be enough. The combined GDP of Europe and the US is over $30 trillion.
Europe is 20% of our US worldwide exports. It's also 20% of the S&P's total revenues. Our banks hold $1.5 trillion in European Bonds, including nearly $50 billion in Italian debt. It's one thing for Europe to get the flu when we get the sniffles. But when Europe contracts the economic equivalent of the Black Death, this is a pending disaster to the world economy Even China will get hit hard. That country could even collapse internally. No wonder they are buying gold hand over fist.

I have to confess that I've been in the lending arena for 31 years. I view business and countries through a financial lens.
I watched the 2008 banking collapse from a front row seat and barely survived the crunch of 1990-1993. 1,000 US banks failed in that time period.
The 2008 Fed funding that saved our banking system had the unintended consequence of leading to the collapse of Tunisia, Egypt and Libya through food inflation, a vital tipping factor that continues today.
The flood of currency required to save the Euro and US will make 2008 look like a summer day. I'm just saying that maybe the Fed can't save the world this time around.
So step right up, hand the Doc a silver dollar, buy a bag of popcorn and watch the show on Silver Doctors. You won't be disappointed

Signed. Another SD 'tard