It was Alan Greenspan who said in his 1967 essay entitled “Gold and Economic Freedom” that gold and economic freedom are inseparable. This is what the former Federal Reserve Board chairman said exactly: “An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense-perhaps more clearly and subtly than many consistent defenders of laissez-faire — that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.”

We thought it would be helpful for our readers to watch “America: From Freedom to Fascism”. This is a documentary film produced by film maker Aaron Russo. Mr Russo exposes how America is not really a free and capitalist society and how the monetary and fiscal system help perpetuate the present system.

It is ironic that Mr Greesnpan, who has helped perpetuate the present fiat money system, through his chairmanship of the Federal Reserve Board was the person who warned the world back in 1967 how freedom and a sound money system are inseparable.

By Jim Sinclair, June 29, 2007

They can manipulate as much as they want but it is all in the US dollar!

It is my opinion that those powerful short interests — both legal and illegal -are frantic to cover and are therefore pulling out all the stops.

Dirty tricks, use of media pals, and all the usual underhanded methods seem to populate everything these days from gold to gold shares of good value.

Using the baseball analogy, “Three strikes and you’re out,” I rate today as strike number two at the .8050 to .8150 range on the USDX. The interesting part of this is that commentators are looking at the differential rate between the US Fed and other Central Banks. My comment is, “Like hell that is the reason.”

The real reason is a meltdown of sub prime mortgages that appears to have caused Bear Stearns more of a problem than was first thought. When you see a new man come on board at Bear Stearns who specialized in asset maximization of corporations you know the horse dung has hit the proverbial fan.

I believe that Over the Counter Derivatives are now melting down, threatening many other well known international investment firms. And that is why the dollar looks like death warmed over. In addition, that is why the price of gold is under the great power of manipulation to hold it down so as not to reveal the degree of the problem.

Remember this about Over the Counter Derivatives:

1. They have no regulation.
2. They have no standards.
3. Without standards there can be no viable market.
4. They are unlisted
5. They are traded by private treaty negotiation
6. They are valued by “Mark to Model” which is a total cartoon.
7. They have no financial guarantee such as a clearing house.
8. They are unfunded special performance contracts floating in cyberspace. All funds in the OTC Derivatives are taken out as spreads and commissions.
9. More than 50% of the earnings of major international investment banks come from granting in private treaty negotiations these instruments of mass financial destruction.
10. The financial performance of the specific performance contract called OTC Derivatives depends on the financial capacity of the loser in the transaction.
11. Control has been loose in the interest sensitive OTC Derivatives because of multiple dealings outside of the initiating two until no one knows who has what.
12. The replacement value of these instruments is in the multi trillions of dollars.

Interest rate differential would not hammer the dollar as we are seeing today. Remember that three strikes and the US dollar is out. Expect every dirty trick and media negativity towards everything gold as quiet but frantic insiders attempt to offset a panic by subverting early warning systems.

Those in the know are frantic to cover their short positions which can only be accomplished if they stampede you by every means possible. They are going to fail. You are not. If you wish to screw the shorts royally - simply do nothing. They can make price but they cannot make cover as long as you are not spooked into selling everything gold. The gloves are off and the major battle between longs and shorts in gold is here!

Gold is going to $682 - $761 and then to $887.50 - $1000 plus

The bear market in gold shares is a total construction of bear raiding hedge funds that is doomed to failure

Their really bad day is close at hand!

Visit Jim Sinclair’s website

By Peter Schiff

Now that yields on ten-year Treasuries have cracked through 5%, on their way to infinity and beyond, many on Wall Street are wondering how high rates must go before bonds begin to draw investors away from stocks. 
 
Most equity analysts are sounding the all-clear by proclaiming that 5.25% – 5.5% ten-year yields do not offer a significant threat to stocks. Although I agree that this is true, I don’t share their confidence that 5.5% represents any kind of a ceiling for rates.  The important issue is not the point at which bonds become attractive relative to stocks. Rather it is the point at which they regain their attraction to foreign central banks, whose massive purchases of Treasuries have lost steam amidst rising global rates and lost confidence in the U.S. Dollar, and to private foreign savers, who have already abandoned treasuries for better performing assets.
 
The truth is that the fundamental lack of appeal of Treasuries on the global market means that rates will rise considerably from here, which is very bearish for stocks indeed. Given the real rate of inflation (not the phony rate implied by the CPI) and the potential for a protracted decline in the value of the dollar, rates must rise significantly in order to convince overseas buyers to stay in the game.
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By Peter Schiff

At a commercial real estate conference earlier this week, Alan Greenspan downplayed concerns that the Chinese might sell their significant holdings of U.S. Treasuries. The former Fed chairman based his opinion not on the inherent investment merits of Treasuries, but rather on their lack of them. His confidence stems simply from his belief that the Chinese have no one to whom they can sell. Furthermore, Greenspan sees this as a problem for the Chinese and not the U.S. 
 
Although the performance of U.S. Treasuries has long been regarded as poor vis-à-vis other classes of sovereign debt, its overriding virtue has always been its supposed unrivalled “liquidity.” As the most heavily traded asset in the world, it is argued that massive investors like the Chinese have few other markets in which they can operate.  However, if there are no significant buyers to whom the Chinese can sell, then there is no real liquidity at all. If there is no performance or liquidity, why would they continue buying?
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We have recently seen long term bond yields climb quickly through key technical levels. On the 8th of June the U.S. 30 year bond yield climbed through 5.30% and the 10 year bond yield reached 5.24%. The 10 year yield was below 4.90% just a couple of weeks ago and today we have seen bond prices drop lower and the all-important 10 year yield shot through the 5.25% and touched 5.28%! The break of the 5% level was psychologically important and on a technical basis we have seen the 10 year yield break through the upper part of a long term downward trend channel and consequently confirming that the low yield of around 3.10% we saw in 2003 marked the top (in terms of prices) of the bond bull market that started in 1981. The gold bull market of the 1970’s topped in 1980 and bottomed a couple of years prior to the 10 year yield in 2001. Check out the first chart below to see how gold broke a similar trend channel the 10 year yield broke last week back in 2003.

We have also noticed that the recent rise in bond yields has coincided with a sharp drop in the gold price from around $670 early last week to just under $650 at present. The mainstream press has reported that the gold price has gone down because higher yields make gold less attractive! We think this analysis does not follow as the gold price has actually been rallying strongly since the 10 year yield bottomed in 2003! We have also taken a look back to the gold bull maket of the 1970’s and noticed that bond yields were also rising during that same period. Note in the second chart below how the 10 year yield doubled from around 7% to around 15%.

What we have concluded from the third chart is that in the fiat momey era since 1971 the gold price and bond yields have moved roughly in unision. Even for the last four years, despite the fact that gold seems to have moved up at a much quicker pace than bond yields, they have moved up together. If anything we feel the 10 year yield might have a bit of catching up to do!

Fisrt chart

Second chart

Third chart