June 6, 2013
- Back to the future? The NSA’s phone records… and the searches that launched the American Revolution
- “Unprecedented” demand for Gold Eagles and other evidence Zero Hour approacheth…
- Wealth and power shifting from West to East: Financial Times confirms Chris Mayer’s World Right Side Up thesis…
- How to impress distinguished guests in your run-down town… Never mind the gold at Fort Knox, where’s the booze?… 71% gains in three weeks… and more!
So now we know what the White House’s “secret interpretation” of the Patriot Act is all about.
“When the American people find out how their government has secretly interpreted the Patriot Act,” said Sen. Mark Wyden (D-Ore.) two years ago, “they will be stunned and they will be angry.” As a member of the Intelligence Committee, Wyden would say no more than that. So it was up to an anonymous whistle-blower to spill the beans instead.
As you likely know by now, the National Security Agency is vacuuming up the phone call records of every Verizon customer in the United States… and has been since April 25, under a ruling from the secret Foreign Intelligence Surveillance (FISA) Court.
At least. For all we know, additional rulings preceded this one and cover other phone companies.
“The unlimited nature of the records being handed over to the NSA is extremely unusual,” reports the Guardian’s Glenn Greenwald. (Go figure, it took an American living in Brazil and blogging for a British newspaper to get the scoop.) “FISA court orders typically direct the production of records pertaining to a specific named target who is suspected of being an agent of a terrorist group or foreign state, or a finite set of individually named targets.”
And with that, we’re back to the general warrants that launched the American Revolution.
No sooner had George III become king in 1760 when his tax officials in Massachusetts began aggressively searching ships, businesses and homes for smuggled goods. No probable cause or even reasonable suspicion was required before the government obtained these “writs of assistance” from compliant judges. No one was safe.
Massachusetts merchants challenged the writs in court — and lost. But their attorney James Otis made a compelling case as he spoke nonstop for five hours. “It appears to me the worst instrument of arbitrary power, the most destructive of English liberty and the fundamental principles of law, that ever was found in an English law-book.”
“Every man of an immense crowded audience appeared to me to go away as I did,” John Adams recalled years later, “ready to take arms against writs of assistance.
“Then and there was the first scene of the first act of opposition to the arbitrary claims of Great Britain. Then and there, the child Independence was born.”
We’re not holding our breath for a modern-day James Otis to step forward. We figure things are too far gone already…
No, we can’t vouch for 100% accuracy of this meme that’s bounced around the Internet for the last month or so. We can only invoke the Native American storyteller who said, “All the facts might not be right, but the tale is true.”
As the modern-day empire of debt moves with ever greater speed to curb the scope of its subjects’ freedoms, we turn our attention toward matters that remain within your control…
“Demand right now is unprecedented,” says Richard Peterson about U.S. Gold and Silver Eagles.
He ought to know; he’s acting director of the Mint. “We are buying all the coin (blanks) they can make,” he says of his suppliers.
Peterson’s comments “are likely to allay concerns among some traders,” Reuters suggests, “that frenzied buying by mom and pop investors since mid-April after prices plunged to two-year lows had started to fade.
“Their interest has helped prices recover to above $1,400 an ounce, providing key support to prices after institutional investors fled the futures market and exchange-traded funds.”
Futures and ETFs… i.e., “paper gold.”
The paper gold price is holding above $1,400 this morning — barely, at $1,405. Silver’s steady at $22.55.
Here’s another way to look at the rush for physical metal in China.
As we mentioned off the top yesterday, China’s gold imports via Hong Kong took a surprise tumble in April — demand was intense, but there was a supply squeeze and many buyers were put on back order.
Now… check out the annual numbers as compiled by Australian gold-chart guru Nick Laird. These are net import numbers, taking into account gold flowing both into and out of China via Hong Kong. Note well: That last bar on the right for 2013 goes only through the end of April.
China remains the world’s No. 2 gold importer, behind India.
India’s government is trying yet again to staunch the flow of gold into the subcontinent.
The finance ministry has jacked up the import duty on gold for the second time in six months — from 6% to 8%. “Gold is a preferred investment option among Indian consumers,” says the BBC, “and the recent drop in its price has boosted demand.”
India’s government hopes the move will shrink its trade deficit and prop up the rupee.
Good luck with that, says Mohit Kamboj of the Bombay Bullion Association: “This is not going to help reduce imports but smuggling will increase.”
“How can it be,” writes Peter Schiff, “that people are rushing to buy physical precious metals around the world and yet the price keeps falling?
“This correction is being driven by institutional investors in the paper gold market.” Yep, we’re back to the futures and ETFs Reuters mentioned earlier — which you should never confuse with the genuine article.
“There is big money betting against gold and on the Fed,” Mr. Schiff writes. “I believe they are in for a rude awakening. This correction was kicked off by whispers that the Fed might start drawing down QE3 in September. That would indeed be reason to re-evaluate one’s precious metals holdings.
“But predictably, the Fed immediately backpedaled, insisting that it would, if anything, only ‘taper’ the QE at some point in the future. John Williams, head of the San Francisco Fed, then came out and said, ‘You could even imagine a scenario where we adjust it downward based on good data and then adjust it back.’
“How many times are the mainline financial institutions going to fall for this song and dance?
“Today, the fundamentals continue to point toward endless money printing to support a zombie U.S. economy. Meanwhile, gold and silver are being offered at bargain prices.”
But for how long? It’s becoming easier and easier to imagine the day when the price of physical gold breaks away decisively from the paper price — a scenario we’ve come to call “Zero Hour.” We think it’s so important, we recruited legendary investor Jim Rogers to walk us through the implications. He’ll be joined by Ed D’Agostino from the Hard Assets Alliance.
This exclusive online briefing — Countdown to the Zero Hour — will be streamed to the Web next Tuesday, June 11, at 11:00 a.m. EDT. For a video preview, click on the screen capture…
Access to this event is absolutely free. And as way of saying thank you for signing up, the Hard Assets Alliance is offering six months of free bullion storage. Click here to register now.
Dow 15,000 fell yesterday and Dow 14,900 is falling today. At last check, the blue chip index has shed another 60 points on top of the 200 lost in yesterday’s rout.
The S&P 500 is but five points away from giving up 1,600.
“Overall, the next few days are critical for the major indexes,” writes Greg Guenthner in today’s Rude Awakening. “If we don’t see a bounce at these levels, it will be time to map out some different scenarios for the markets this summer.”
“This year is pivotal for the global economy,” the Financial Times reports. “In 2013, for the first time since mechanization led Britain down the path of industrialization in the 19th century, emerging economies will produce the majority of the world’s goods and services.”
The tectonic plates are shifting. Rapidly.
The citizens of the richer, more advanced economies, FT explains, “have long represented a small but powerful proportion of the world’s population. Today, though, they are less economically important than the mass of people living in the world’s poor and middle-income countries.”
“The shift in the balance of global economic power is profound,” FT proclaims.
Profound? Yes.
Unexpected? Not quite.
Our own globe-trotter Chris Mayer has been calling this global shift for years. Such is the thesis of his book World Right Side Up, wherein he wrote:
“These trends will become more pronounced over time. The creation of new markets, the influx of hundreds of millions of people who will want cellphones, air conditioners and water filters, who will want to eat a more varied diet of meats and fruits and vegetables, among many other things, will have a tremendous impact on world markets. The rest of the world is catching up.”
And at a breakneck pace…
“Although living standards remain more than five times higher in advanced economies,” FT goes on, “the gap has been narrowing rapidly since 1990.
“In addition to the emerging economies’ half share of global output, three-quarters of the world’s economic growth is set to depend on their dynamism during the next five years.”
The FT even offers graphic evidence supporting Chris’ thesis — showing how wealth and power are shifting eastward, back where they came from…
Click infographic to enlarge
“The world’s top 10 countries by share of global growth will have shifted entirely out of Europe,” the salmon-colored paper reports, “and the whole EU is expected to account for only 5.7% of world growth.
“Together,” the FT concludes, “India and China will represent almost half of global economic expansion.”
[Ed. Note: Whether it’s Brazilian farmlands, Colombian gold fields, Chinese shopping malls or the souks of Dubai… Chris Mayer’s boots-on-the-ground perspective has led to six continents worth of valuable investment opportunities. While many Westerners fear the change, forward-thinking investors are cashing in on extraordinary new opportunities. Learn more about Chris’ methods at this link.]
The small Northern Irish town of Enniskillen is putting its best facade forward for a G-8 summit later this month.
Hey, as long as we’re on the subject of wealth and power shifting away from the West…
Enniskillen has been hit hard by recession. But the politicos still want to impress their distinguished visitors.
“These are basically empty shops that are being now made to look as if they are thriving businesses,” says Irish Times reporter Dan Keenan.
“What they’ve done is they have filled the shop front window with a picture of what was the business before it went bankrupt or closed…it looks as if the door is open and inside you can see a well-stocked shop. It’s nothing of the sort.”
Prosperity is just a veneer away…
Must be a U.K. thing. We spotted more of their Potemkin villages in March of 2010.
“It’s not funny,” says Keenan. “We’re inclined to take a very lighthearted look upon it, but the residents of this part of the world are looking upon the arrival of the G-8 positively because at the end of the day, it’s not often you have the eight wealthiest and most powerful leaders on Earth visiting your part of the world.”
Seems to us the arrangement is fraught with peril: If some assistant finance minister decides he doesn’t like the white-tie dinner fare and steals away for a bite off the beaten path…
“Funny,” a reader writes after yesterday’s episode, “I naturally assumed I was looking at ‘gold’ bars per capita on the chart/map until I read the print.
“It was perplexing why Kentucky was so low! Assuming there’s any there…”
The 5: Hmmm… We can’t vouch for the gold in Fort Knox, but “the alcohol laws of Kentucky,” according to a Wikipedia article that sorely needs editing, “lead to a confusing patchwork of counties that are dry, prohibiting all sale of alcoholic beverages; wet, permitting full retail sales under state license; and ‘moist,’ occupying a middle ground between the two.”
About one-third of Kentucky’s counties are dry — none of them in the area surrounding Fort Knox… Heh.
Cheers,
Dave Gonigam
The 5 Min. Forecast
P.S. “We’re starting to see a natural correction,” Options Hotline’s Steve Sarnoff wrote his readers after the close yesterday. “As the sell-off accelerates, we are eyeing price areas of expected demand to take profits.”
As of yesterday morning, Steve’s bearish play on small caps is up 15% in less than a month… and his bearish play on a Big Pharma stock is up an eye-popping 43% in only two days. And moments ago, he told readers to take 71% profits from a bearish play on Safeway… after only three weeks.
Steve’s next recommendation is due this Sunday: You can take advantage by following this link.