Now that the details are out, we can safely state that the US political and financial leadership has completely sold out the taxpayers and has done so in a manner that is startling, both in its recklessness and its brazenness.

The reckless part I will spell out in the details below.

The brazen part is in how this is being spun out, as if the entire plan were hatched in a hurried rush, at the last minute, after events forced the issue.  This is the spin, but it is completely false.

Because many financial commentators, ranging from Roubini to Roach to Calculated Risk to myself, foresaw these events, we can be completely confident that these events were both anticipated and planned for long in advance.  The only question left was how they were going to be ‘sold’ to the public.  What better way than in the midst of a “massive financial panic” that required urgent action?

And now that the details are out, the plan is even more insidious than I ever dreamed.

On Friday  the news started to leak out  that perhaps $500 billion was the, uh

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Sept. 19 (Bloomberg) — Dennis Gartman is “joining the gold bugs” and betting on higher prices after the U.S. Federal Reserve and Treasury proposed plans to revive financial markets.

“Gold tends to rally during inflationary cycles, and we see the Fed as embarking in precisely that sort of thing,” Gartman wrote in his daily letter today. “The Fed shall have to buy Treasury securities from the dealers to make certain that very high-powered money is made available to them, and in the process, it shall reflate the economy.”

Gold for immediate delivery fell $12.39, or 1.5 percent, to $838.45 an ounce as of 11 a.m. in London. Futures for December delivery in New York dropped $54, or 6 percent, to $843.

“Selling is ill advised,” Gartman wrote. He sold the metal in mid-July, according to the letter.

By Alex Stanczyk

This is a roundup of all the amazing things unfolding in the economy over the last few days.

Keep in mind as you read this rant, that we know the solutions:

Gold, Silver, Commodities, Energy.

Of course everyone is slinging around their own ideas as to whats going up and down and why.

I honestly dont care about the short term, because the short term is not investing its purely speculative trading! Investing is identifying the core fundamentals and staying with those fundamentals, unless they change nothing changes except short term fluctuations.

What we need to know is, how do we protect our wealth over the next 5 and 10 years as these markets destroy most poeples wealth completely?

Overall, my feelings on what is currently happening are simple:

1. We have not seen the bottom of the credit crisis, and everything we are seeing today is a direct result of it continuing to work its way through the economy. It will continue for another 5 years, because thats how long it will take to purge the rest of this bad mortgage derivative paper from the system.

2.Funds, banks, and brokerages are continuing to have to take write downs on their balance sheets as the mortgage backed derivatives that started imploding last summer continue to explode. Every single time one of these “Financial Weapons of Mass Destruction ” goes off, more losses occur. We STILL have not seen all of the damage, and the truth is, every time one of these institutions like Bear Stearns, Fannie, Lehman, Merril, and soon to be many others fails, it sends repercussions throughout the financial world and more losses must be realized on the books of already hemmorhaging balance sheets.

3. The massive assault on commodities, oil, gold and silver, is simply a result of embattled financial “titans” who are bleeding to death, that are selling everything that moves to retain some semblance of liquidity. Lehman is going down as we speak, so obviously its not working, and will only be a short term dollar rally and commodities selloff.

4. The most important question we must ask ourselves is: Have the fundamentals changed? The answer to that question is, no, the fundamentals have not changed.

The Western Financial system is in the worst shape it ever has been, there WILL be more carnage as the recent failures sweep through the system, causing ever more damage to the books of financial institutions the world over.

Injecting liquidity (inflation of money supply via Federal Reserve bailout loans) will not fix this. Ben Bernanke and 34 flavours of bailout windows are not the answer.

The government propping up financial institutions is not the answer, It will only prolong it.

The US housing market MUST stabilize before these massive bleeding wounds stop gushing. That is not going to happen anytime soon, because we are about to see a wave of ALT-A and ARM mortgage resets hit from 2009 to 2011 that will make the Subprime blowup that triggered this mess look like childs play.

The BRIC (Brazil – Russia – India – China) nations are not getting smaller, and their billions of new consumers are not disappearing, they WILL continue to demand a western lifestyle that consumes 100 times the raw materials that the ramping up of the western world economies consumed. If this does not scream fundamental demand shift of a GIGANTIC PROPORTION, I dont really know how else to explain it.

Oil supply IS NOT GROWING, and global demand is only increasing. Some short videos with an excellent fundamental explanation of this: http://www.chrismartenson.com/peak_oil

US National debt is ESCALATING not diminishing, the creditworthiness of the US is dropping like a rock, and at some point if China decides to stop lending the USA the $2billion which it is borrowing daily, who is going to pay the governments expenditures?

Physical gold demand is exploding right now, and I suspect we are about to see a two tiered market JUST LIKE the London Gold Pool.

Basically there will be two markets for gold and silver, the “official price” which is totally determined by Central Banking Cartels, and the “Real Price” which is what is paid for the physical metal are paying for gold and silver, which by the way will be ORDERS OF MAGNITUDE above the “Spot Price” as this market develops and the universal laws of supply and demand kick in.

This has happened before, and history does repeat itself.

Bottom line, I am still very strongly convinced that the fundamentals of gold and silver will play out over the next 5 + years and we are going to witness a MASSIVE transfer of wealth.

Those who hold gold, and silver as well, should do very nicely over the next five years. Some will lose everything they have. But no one can say we didnt warn you.

Anglo Energy Company signed an exclusive agreement this week with Palau Pacific Exploration (PPX), an Australian based exploration company. PPX controls the option to explore what has been described as the “frontier exploration story of the decade”. Under the terms of the agreement, Anglo Energy has won the exclusive rights to raise $40 million for PPX exploration strategy. Independent geologist reports have estimated in excess of 1 billion barrels of oil in place in this ‘Mega-Field’ opportunity. “We are absolutely thrilled to be involved ground floor in such an huge opportunity with so much potential upside” said Philip Judge this week.

Anglo Energy will raise $40 million primarily through private placement and private venture capital which will become the project funding for PPX’s 2009 exploration drilling. “This project is so unique, mostly due

to its sheer size potential and managed risk profile. It makes a perfect fit for many private clients who are nervous about the share markets and are currently sitting in cash, but searching for a strong opportunity” said Anglo Energy’s Simon Heapes.

Last week PPX signed an important services contract with the global company Fugro, securing the ability to drill 3 test wells in 2009. Fugro’s latest specialist drill ship is a revolutionary design, currently under final construction and will be ready to commence its Palau work by the middle of next year. Due to its size and capacity, this ship makes an exceptionally good fit for PPX’s 2009 drilling program.

By Alex Stanczyk & Simon Heapes

Once again, we get to witness history repeating itself.

In times of economic crisis, governments have been known to confiscate the wealth of its citizens. In recent memory, citizens of the United States experienced this with the Gold Confiscation Act of 1933.

Today, as financial institutions teeter on the verge of bankruptcy, we see this being repeated in Britain.

A policeman uses an angle grinder to open a safe deposit box.

An excerpt from a recent Telegraph article:

Safety deposit box raids yield £1bn of drugs, cash and guns

By Richard Edwards, Crime Correspondent

Last Updated: 11:27PM BST 02/06/2008

Police have seized a potential £1 billion “treasure trove” of cash, drugs and guns in an unprecedented raid on concrete vaults holding 7,000 safety deposit boxes.

“Some of the boxes are only A4-sized, while others are “walk-in” vaults.

Although they do not know how many of the 7,000 boxes are being rented – at around £100-a-year – police suspect up to 90 per cent of them may hold criminal assets.”

The police of course, claim this has been done under the auspices of cracking down on a money laundering ring. Of course, its quite conceivable that law abiding citizens trying to protect their wealth might be labeled as such by a desperate government.

Back in 1933 when the Gold Confiscation Act was passed in the US, by order of the President all safe deposit boxes were sealed, and could not be opened unless in the presence of an agent of the IRS.

In addition,  all USA citizens where given 28days to hand in their Gold and the penalty for with holding was 10yrs JAIL! The only US citizens who benefitted from Gold ownership were those who held precious metals outside of the US in the hands of a trusted custodial agent or held it in the form of religious artifact (religious artifacts where deemed unconfiscatable under an act passed by the United Nations which the US is a signatory of). When those US citizens contacted their custodian they simply asked them to liquidate some of their Gold and then send the US$ to them within the United States.

This graph shows us that the US Banking system is currently under more strain than it has been for the last hundred years. Source: Federal Reserve Bank of St. Louis

So we must ask ourselves a serious question: could this happen again?

There are many hard money analysts who agree that Capital Controls are in the cards. What that means is, governments could put laws in place making it illegal to transfer funds outside of the country you reside in. The next step of course, would be confiscation. It’s happened many times before throughout history, just ask the Jewish people of Nazi Germany period post WWII. History is literally littered with such examples.

At Anglo Far East, our generationally wealthy clients have understood the value of “International Asset Diversification”. Basically what that means is, the government within one jurisdiction cannot confiscate what it cannot reach or knows who has.

In a recent article by Jim Sinclair, he details a legal structure that he feels would be the most secure, and legitimate means of protecting your wealth.

Anglo Far East happens to match that structure to a “T”. This is a structure which is not new, the generationally wealthy, their families & associated institutions have followed similar principles for millenia.

If your metal or assetts are held by an entity outside the jurisdiction of the country you reside in, and gold you own is actually a book entry on the ledger of another entity in another jurisdiction, then governments would have an extremely difficult time trying to confiscate what it can’t reach or see, and in the process would have to expend hundreds of millions of dollars to do so.

If capital controls are on the horizon, and you wish to protect yourself, the time is now to do your due diligence and act. Because once those laws go into effect, you will have run out of options.

Simon Heapes: Quite often quotes a verse from the wise King Solomon of some 3,000 yrs ago, “Put a portion of seven & eight throughout the land for you know not where trouble may arise!” King Solomon learnt the prudent act of the storage of wealth & assett diversification from his father King David. King David when ever he established or had taken a new city the first thing he would do was place a storehouse within that city yet King David did not live in that city!

Contact AFE today to learn how we are uniquely positioned to assist you in your wealth protection goals.

Posted by: Alex Stanczyk

One thing that the world has forgotten for the most part, is that gold is money. It has been parroted around for three generations as a commodity only, with little industrial use or demand, and no value as a currency.

Humans have this interesting tendency to forget history, even though through all of time it consistently repeats itself.

The cycle I am speaking of is the one where societies and economies cycle back and forth between paper fiat money backed by nothing but a governments promise that it has value, and currency that is backed by gold and silver.

This is not new, and in my opinion will happen again, as it always has, for thousands of years.

For a while now I have been going on about how the Chinese, OPEC, and other nations that have trillions of USD in their reserves are not going to simply sit on it and watch it devalue by 16%-20% a year because of a rampant monetary inflation policy of the Federal Reserve.

“Dollar crisis looms, says Nobel laureate Mundell
Reuters June 3, 2008 at 8:36 AM EDT

VALENCIA, Spain – A major dollar crisis could come within five years and China is discussing reforms to the global monetary system to protect its $1.6-trillion (U.S.) reserves pile, says Nobel Prize-winning economist Robert Mundell.

Mr. Mundell, who has regular contacts with Beijing officials, said they are considering proposing ways to fix major currencies including the dollar and the euro, in a system similar to the one which operated under the Bretton Woods agreement from the end of World War Two until the 1970s.”

If you were China and seeing this happen to your National Treasury, would you sit there and do nothing or look for a solution?

The answer is obvious.

“China is worried about its pile of about $1.6-trillion in foreign reserves, built up during years of U.S. trade deficits, which loses value as the greenback depreciates. ”

The excerpts from the above Reuters article shows that China seems to be interested in a gold backed system. If this were to occur, we need to take a serious look at what it means for the price and demand of gold.

I will give you one simple equation, which you can then apply to any nation, or the economy at large. If the USA were to go to a gold backed standard, that means each dollar in circulation would then have to be redeemable in gold. The current measure of USD in circulation based on private firm analysis is above $14 Trillion USD. The US Treasury claims it has 261,498,899.316 ounces of gold according to its website http://www.fms.treas.gov/GOLD/current.html . If we were to divide the number of USD in circulation by the amount of gold claimed to be on hand in the US Treasury, it would make the price of gold $53,537.00 per ounce.

You can perform this calculation on any nations currency, if you know the amount of currency in circulation and the country’s claimed national reserves in gold.

The bottom line is, if the world heads to any form of gold backed currency system, or any world government chooses to make its own currency backed in gold, then two things would happen:

1. That country will be the best runner up for the next world reserve currency

2. The valuation on gold will skyrocket beyond the angels

“Without reform, the global monetary system is headed for a dollar crisis within years, Mr. Mundell believes. ”

I sure hope you own some gold before that happens.

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Additional Notes by Simon Heapes:

The current Gold Bull Market is a once in a life time Generational Bull market.

People need to hold the course and stay with the fundamentals, because years from now when they look back they will see it as a very rewarding decision.

Posted by Alex Stanczyk

Gold is Money. Its been said before, notably by the late JP Morgan. Yet today we find ourselves forgetting that gold is money, and has always been money, regardless of what talking head economists would have you believe.

Modern economic alchemy has labeled gold nothing more than a commodity, a bygone relic, with no industrial or commercial use in todays world of paper and electronic markets.

But what happens when those who are in charge of those paper and electronic systems abuse it? What happens when people lose confidence in it? What happens when the paper becomes ever more worthless in the eyes of the world?

Quite simply, a return to gold is money. It has been money for over 5000 years. Human beings have this interesting tendancy to forget history, and what we have learned from societies past.

Economies, and nations, both regional and global have gone back and forth from ‘easy money’ to ‘disciplined money’ in a recurring pattern that so far has shown no reason of stopping.

Governments of course favor easy money, because they can print as much as they like, and spend as much as they like, with no sensible restraints on wars, emergency relief, subsidies on foolish programs, and social welfare that dwarfs the entire global gdp combined.

The bad part of course, is this propensity to print and create tens of trillions of dollars out of thin air is called inflation, and it is spreading around the globe like a cancer. Food riots, oil heading to $200 a barrel, $5.00 a gallon gas, and the sad part is, this is just the beginning.

There are, however, solutions. Investigate gold and silver. Learn why gold is money. Most importantly, learn why the cycle is again shifting back to gold is money, and what it means in terms of how high gold will truly go.

Do your research, as inflation destroys the value of paper currency denominated holdings, some will be gathering TANGIBLE wealth because they were intelligent enough to learn from history, and remember ignorance is no excuse.

To Learn more about gold and silver and how it can impact your wealth, or for information on how to open an Anglo Far East Gold or Silver Bullion Account, Click here.

Simon Heapes;

Price Controls will fail eventually, Rome gives us the historical pattern of this! Like the Wise King Solomon once said, “there is nothing new under the sun”!

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Finally, the very survival of the state was at stake. At this point, the Emperor Diocletian (284-305 A.D.) took action. He attempted to stop the inflation with a far-reaching system of price controls on all services and commodities. [10] These controls were justified by Diocletian’s belief that the inflation was due mainly to speculation and hoarding, rather than debasement of the currency. As he stated in the preamble to his edict of 301 A.D.:

For who is so hard and so devoid of human feeling that he cannot, or rather has not perceived, that in the commerce carried on in the markets or involved in the daily life of cities immoderate prices are so widespread that the unbridled passion for gain is lessened neither by abundant supplies nor by fruitful years; so that without a doubt men who are busied in these affairs constantly plan to control the very winds and weather from the movements of the stars, and, evil that they are, they cannot endure the watering of the fertile fields by the rains from above which bring the hope of future harvests, since they reckon it their own loss if abundance comes through the moderation of the weather [Jones 1970: 310].

Despite the fact that the death penalty applied to violations of the price controls, they were a total failure. Lactantius (1984: 11), a contemporary of Diocletian’s tells us that much blood was shed over “small and cheap items” and that goods disappeared from sale. Yet, “the rise in price got much worse.” Finally, “after many had met their deaths, sheer necessity led to the repeal of the law.”

Germany in call for ban on oil speculation

By Ambrose Evans-Pritchard

Last Updated: 1:40am BST 26/05/2008

German leaders are to propose a worldwide ban on oil trading by speculators, blaming the latest spike in crude prices on manipulation by hedge funds.

It is the most drastic proposal to date amid escalating calls from Europe, the US and Asia for controls on market forces, underscoring the profound shift in the political climate since the credit crunch began. India has already suspended futures trading of five commodities.

FULL ARTICLE; http://www.telegraph.co.uk:80/core/Content/displayPrintable.j
html;jsessionid=VBLZCKZUGQSA3QFIQMFCFF4AVCBQYIV0?xml=/money/2008/
05/26/cnoil126.xml&site=1&page=0

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Simon Heapes says: Although the fall of Rome appears as a cataclysmic event in history, for the bulk of Roman citizens it had little impact on their way of life. As Henri Pirenne (1939: 33-62) has pointed out, once the invaders effectively had displaced the Roman government they settled into governing themselves. At this point, they no longer had any incentive to pillage, but rather sought to provide peace and stability in the areas they controlled. After all, the wealthier their subjects the greater their taxpaying capacity.

In conclusion, the fall of Rome was fundamentally due to economic deterioration resulting from excessive taxation, inflation, and over-regulation. Higher and higher taxes failed to raise additional revenues because wealthier taxpayers could evade such taxes while the middle class–and its taxpaying capacity–were exterminated.

Although the final demise of the Roman Empire in the West (its Eastern half continued on as the Byzantine Empire) was an event of great historical importance, for most Romans it was a relief.

Alex’s Notes: today we are seeing a mirror of this repeat itself with the Brazil, Russia, India, China (BRIC) Nations. They are net buyers of gold for their treasuries, while the western nations are net sellers. Just as we saw with the Byzantines buying up the gold and silver sold off by Rome’s treasury, so the pattern repeats itself yet again.

The only way to protect yourself from inflation is to own Gold, Silver, and be invested into Commodities.

I have said it before do not be moved by current price swings, stay the course and hold your positions in anything tangible.

Simon Heapes.

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U.S. inflation understated, Pimco’s Gross says
By Rex Nutting, MarketWatch
Last update: 3:29 p.m. EDT May 22, 2008

WASHINGTON (MarketWatch) — The U.S. government has been understating inflation, which has led investors to misprice stocks, bonds and real estate, noted bond-fund manager Bill Gross said Thursday.

The real problem is not that the government publishes dubious numbers but that investors believe them and make decisions based upon them, he said.

“A readjustment of investor mentality in the valuation of all three of these investment categories — bonds, stocks, and real estate — would mean a downward adjustment of price of maybe 5% in bonds and perhaps 10% or more in U.S. stocks and commercial real estate,” Gross wrote in his monthly letter to clients of Pacific Investment Management Co., the largest fixed-income money managers in the world.

Gross, the managing director of Pimco, said investors should shun Treasurys, including inflation-protected Treasurys, and put their money into commodity-backed assets, including foreign equities.

Notes from Simon Heapes: This is one of the best pieces of advice I have ever read in relation to the current price of GOLD and all commodities for that matter! Look at point no.3 – In 1968 Gold was $35/oz and 12yrs later it reached nearly $900/oz, that is a 2500% increase over that time period. Back then there was a 3,000Mtonne short fall in banks Gold holdings, this short fall turned their suppression of the Gold price into an about face turn around back to acquisition of Gold driving it up during the 1970’s!!

Now compare the above with today!! We know total central banks Gold holdings was at about 33,000Mtonnes through the 1990’s, also we know covertly they have sold over half to two thirds of their Gold to suppress the price that leaves us with about a 16,500 to 22,000Mtonnes short fall today!! We know they will not sell all their Gold because it backs their independent nations own currencies, God forbid if their citizens were to ever find out that their own nations Gold reserves are so low. We also now the banks have started to slow down their Gold sales into the markets, this means we are very near to a reversal by the banks to an acquisition to re acquire their respective nations Gold!!

Gold’s bottom price was $248/oz in 2001, if we multiply that bottom price by the historical 1970’s turn around of 2500% that brings the Gold price to $6,200/oz!! But remember back in the 1970’s there was only a 3,000Mtonne shortfall, this time the shortfall by the banks is 5 to 7 times bigger!!!

The prices quoted above goes beyond my rational thinking in today’s terms, but then again I guess back in 1968 when Gold was $35/oz (and had been for 20yrs) a nearly 4 digit Gold price went beyond most peoples rational thinking through the 1970’s!!!

Dear Comrades In Golden Arms,

Listen to Volcker today. You cannot have a more pro gold statement than he made!

1. You are right on what it takes to trade gold.

2. Gold has been acting just like this since $248, yet it has traded to $1033.

3. Gold acted just this way in the 1968 to 1980 bull market, yet went from under $40 to $887.50.

4. Have you ever considered who is on the buy side of all the short of gold derivatives still embedded in every production loan of the past ten years?

5. It is just those you blame for the depreciation of gold who have the most gold long.

6. COT is a fine in indicator because it is accepted as such.

7. A metals dealer is always buying gold and silver from production.

8. They immediately sell the future short.

9. Their best profit exists when they take the opportunity to pound the market to buy back the short at a large profit.

10. Therefore they never have a risk.

11. They do not file as hedgers but then who tells any truth now, LIBOR? The inflation figures? Priests?

12. This results in wild markets because of black mindless boxes being triggered by the metals dealers.

13. Gold is the smallest market in the world being played by the largest money in the world.

14. In the final analysis, gold is currency.

15. The consequence of bailing out all and any by the Fed will be the US dollar at .5200.

16. Gold will trade at $1650 on or before January 14th 2011.

17. This time gold may defeat all top callers by not crashing after reaching $1650.

18. The means by which the dollar will find a bottom and gold will stay up is the Federal Reserve Gold Certificate Ratio, modernized then revitalized.

19. This is not gold convertibility nor the old style Fed GCR, which was tied to interest rates in an automatic way.

20. M3 will be again be published, considered at 100 on a index.

21. The Federal Reserve GCR will be tied to the liquidity index M3.

22. Gold will have to rise in price according to the up or down move of the index.

23. The US treasury will never have to do anything.

24. Devices will start trading on exchanges that are wagers on the price of gold according to the index movement, relieving the US Treasury Department of the need to buy or sell gold to change prices.

25. In desperation then in the dollar market this device will be accepted as a dollar tie to gold and will act as above.

26. This will signal the dollar low.

27. It would take a level of .52 to be so awful that the Fed GCR is seen as salvation.

28. Assuming the price of gold is at $1650, I estimate that gold would trade above and below that by $100.

29. Be calm!

30. Trading gold is a game for pros.

31. The pros pick the pocket of the public trying to trade gold.

32. I teach you simple and unique technical analysis as a mix for you to determine intermediate and long term trends.

33. So many go right at the low cap gold shares, making participants tired when 50% of the community members try to pick the pockets of the other 50% of the community.

34. These newbies of TA were the force that first started to debilitate the juniors.

35. Then came those with a plan to own it all.

36. The plan is brilliant.

37. The plan involves a consolidator, gold derivatives and juniors selling for less than they are worth dead.

38. Now you have the total picture, so relax.

39. Gold is going to at least $1650 by January 14th, 2011.

40. In the same period the US dollar will trade at .52 on the USDX.

Listen to Volcker’s comments today. You cannot have a more pro gold statement than what he made!

Regards,
Jim