International Forecaster Weekly

We Are Now Seeing What We Saw In 1976

We are now seeing what we saw in 1976 as the dollar began its fall and gold began its rise. The FED again has committed itself to an inflation trap only this time when inflation has peeked depression will begin....George W. Bush desperately needed a 9/ll type of event to justify, via lies, to invade Iraq. This supplied the mandate for war and justified a dramatic increase in military spending.

Bob Chapman | December 7, 2003

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We are now seeing what we saw in 1976 as the dollar began its fall and gold began its rise. The FED again has committed itself to an inflation trap only this time when inflation has peeked depression will begin. A recent bevy of good news resulted in a falling stock market, which is proof positive that the market is very overvalued and the only thing holding it up is the “Plunge Protection Team.” The FED can’t possibly officially tighten monetary policy in order to aid the dollar, yet real interest rates will reflect that no matter what the FED does. Market intervention in the long end of the market by the FED and other central banks will only have a transitory affect. That is part of the reason gold is trading near $400.00 an ounce. Over this past week four large gold producers hit new six-year highs and the AMEX Gold Bugs Index hit a new all time high. Gold and gold shares continue to move higher on good news, which, of course, is bad news for the US economy. This is a bit surprising when the US stock market sells off on good news. Returns on gold shares generally are over 100% while the S&P is up 15%.

The best gold share performers have been the US, Canadian, Mexican, Central and South American producers. The exception being Freeport MacMoran. The South Africans’ have declining ore quality, higher costs, labor problems, aids, an appreciating rand and a Marxist government that will not be happy until they control all the mines. Those who talk about US gold shares discounting a high gold price just do not understand the mystique and history of gold. People buy gold as an alternative to fiat dollars, but also because it is the currency of the ages. You cannot hold a slide rule to the value of gold or gold shares. We started buying ERPM and Durban Deep at $0.25 and sold them at $52.00 and $55.00 respectively in 1980. Were they overpriced? Of course they were, but people and markets made that happen. It is happening now and will continue to happen. Thus, all those so called experts who don’t know history, who say gold and gold shares are overpriced, or to trade them, don’t have a clue about the dynamics of gold, people and history. Before this is over gold shares will sell at over 100 times earnings and silver producers at over 150 times earnings. They did in the late 70’s and they will again. In fact, they may even exceed those levels as Homestake did in the early 1930s, going from $63.00 to over $600.00 a share.

The fundamentals no longer mean anything to gold or gold shares or silver or silver share prices. We are again entering uncharted territory. The fiscal and monetary problems today make the 1930’s look like a picnic. Doesn’t anyone understand that the financial system as we have known it is going to collapse and there is nothing anyone or anything can do to stop it? This publication tries to predict what the future will bring based on the history of man. History is his story. We know with absolute assurance gold and silver are going higher, so again you buy for the duration. You don’t assign P/E ratios, you don’t look at shorts, you stay the course only making share changes when stocks don’t perform, or if you see something better to switch too. We’ll know when we are near the top and we will have a plan for departure. We’ve been there, we’ve done it. After 44 years of involvement with gold and silver we do have some knowledge to impart. Don’t be misguided by the background noise, stick to the mission which is, protecting your assets. You are going to see gold and silver shares with reserves, but not in production, go from $.50 to $35.00 a share. The public isn’t even close to entering the gold market as yet. These so-called experts just don’t get it. They have not seen bull markets in gold simply because many of them were not alive in the 1960’s.

You have to be prepared for a very wild ride over the next five years. There’ll be days when gold producers will fall from $400.00 a share to $375.00 a share and there’ll be days when gold will go up over $100.00 an ounce. It’s happened before and it will happen again. How about a two week move in silver from $10 to $15 an ounce and a move in a silver share from $25.00 to $50.00 a share? Yes, it’s happened before and it will happen again.

Put a slide rule or a P/E ratio to that and you come up scratching your head. That is what gold and silver are all about. A reflection of man’s fear and the indomitable power of gold and silver. Before this is over, gold will rise in value again and all currencies will crash indicating what real money really is. Among major currencies the US dollar will fare the worst because its excesses have been greater and it has no gold or silver backing. Owning gold and silver coins and shares are the opportunity of a lifetime. This is the big one. Don’t get left out. You have to be in the game to be a winner. This is the greatest lock of all time.

Had George W. Bush not responded to 9/11 in the way which he did we would have an entirely different nation today. He declared war on terrorism and under that guise implemented a radical foreign policy agenda where underlying principles had been in the works by neocons over the previous ten years. He chose power, not law and lied his way into war under the cover of law. George W. Bush desperately needed a 9/ll type of event to justify, via lies, to invade Iraq. This supplied the mandate for war and justified a dramatic increase in military spending.

The Administration fostered fear that had gripped the country in order to herd Americans into war. Bush used the war on terrorism to further the neocon version of colonialism and renew American supremacy. Such a policy stands in opposition to the precepts of our Republic and our democratic form of government. It is simply totalitarian. It is a policy that shows American supremacy to be based on a global military, which should not be the case. It certainly is part of America’s power, but America’s real power is research, innovation, education, free enterprise and capitalism, not running around the work invading third-world countries.

The sovereignty of the United States does not take precedence over international treaties and obligations. People of the world should be free to decide what kind of government they want. Most of the world does not want to be Americanized. A country like Iraq doesn’t want democracy. Worse yet is, under the cover of terrorism in America our civil liberties and freedom are being stolen by Bush and his gang. Outside America George Bush’s version of America is military force and at home it’s an internal spy system.

Bush’s version of democracy is so unpopular throughout the world that 80% of foreigners disagree with him. The world financial system is on the edge of disaster and the failure in Iraq only adds to its woes. If the Iraq occupation worsens you can be assured that the financial system with its remaining bubbles will pop more quickly and more violently. We should not have invaded Iraq and we should not have our military struggling to perform police work and in the process losing their lives. This is a war that cannot be won and what it will do is lead to perpetual war for perpetual peace and that is the last thing Americans need, because it’s really a recipe for fascist government and a cover for financial failure caused by elitists. What George W., Bush has done in three short years is deeply damage our standing in the world among other nations. His policies in dealing with free trade and globalization have been a disaster for America economically.

Globalization, while rendering the world increasingly interdependent and making the US poorer, has changed the world economically but not politically. Sovereign states still work for self-interest, which means free trade and globalization has to fail as George W. Bush has to fail. America has been deeply injured by his presence in government and we will pay for it for many years to come.

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