I’m Not Chicken Little

Last night I was working a bit on the computer on a couple of new projects. I found years ago that running multiple monitors dramatically increases my productivity. I keep various tasks on the monitors eliminating the need to switch back and forth. It really is a time saver.

On one of the monitors I keep 4 different charts from my trading software up at all times. The 4 charts are; gold futures, crude oil futures, S&P500 futures and Nasdaq futures. All of them show the front month.

As many of you are aware, gold is trading around $1500/oz and oil is hovering around $100/barrel. Last night while working on another project, I glanced over to my charts screen and gold was at $1370/oz and oil was at $89/barrel.

I’m fairly certain my heart stopped beating for at least 10 seconds. Keep in mind, this would be a roughly 10% downward move for both gold and oil – in a matter of minutes.

Luckily I noticed my software was going through an automatic update and it reverted back to the closing prices of a few months ago. Whew! My heart resumed normal operation.

But it got me thinking, what would cause a 10% move in gold in a matter of minutes? If you have even a basic understanding of Econ101, then you would know there must be a huge seller in the marketplace.

Of the larger gold hoarding nations in the world, who would want or need to sell? The largest gold reserves in the world are;

1. United States ~286M oz
2. Germany ~ 120M oz
3. IMF ~ 101M oz
4. Italy ~ 86M oz
5. France ~ 86M oz
6. China ~ 37M oz
7. Switzerland ~ 37M oz
8. Russia ~ 27M oz
9. Japan ~ 27M oz
10. Netherlands ~ 22M oz

Right now the total gold reserves in the world are about 1.1B oz. This means the US is by far the largest single owner of gold with about 26% of the world’s reserves. At $1500/oz, this means the US owns about $429B worth of gold.

Of the top 10 gold hoarders in the world right now, the only one I can imagine unloading would be the US. With the US fast approaching its debt ceiling of $14T, the only options are to get congress to raise the debt ceiling or sell assets.

Of course I find it rather ironic that the largest creator of monopoly money in the world is also the largest owner or real money – gold. But I digress…

Truthfully, the likelihood of the US selling its gold is pretty low. Just because they are scamming the world doesn’t mean they don’t know what real money is.

I’m not Chicken Little – I don’t believe the sky is falling. At some point though, reality will sink in with the people and they will realize the US government, and in effect the world, is in bad fiscal shape.

There is a reason commodity prices are soaring – the quantity of US dollars has more than doubled in the past couple of years far outpacing the level of productivity. Anytime there is more cash than stuff, prices rise.

The only reason we have seen oil prices slide over the past few days is the commodity exchanges have raised the margin requirement on oil futures contracts. It’s basically the same situation I wrote about in last week’s newsletter, The Black Crow Event.

I am confident there were some backroom phone calls made between the Fed, the Treasury, and the commodities exchanges that prompted the increase in the margin requirement on oil futures contracts. This is nothing more than government manipulation to control the slide of the US dollar.

Mark my words; there will be more pain to come before positive change occurs. We will see federal and state income tax increases, nationalization of IRA’s and 401K’s, increases in property taxes, currency controls to limit the movement of wealth, QE3-33, full socialization of healthcare, and many other measures not mentioned and probably not even considered yet.

I ask you, “What are you doing to protect yourself, your wealth, and your future generations?”

1. Have you hedged your portfolio risk?
2. Are your skills viable in tomorrow’s economy?
3. Does your business provide something of value in tomorrow’s economy?
4. Do you have a good rolodex of contacts to pull from for new and interesting opportunities?
5. Have you protected your retirement accounts?
6. Have you diversified your wealth or are you 100% tied to the US?
7. If you own real estate, have you minimized your litigation risk or do you own property in your own name?
8. Have you developed your own asset protection plan that addresses litigation risk, taxation, and continuity of your estate?

If you answer no to any of these questions, I implore you to take action now, before it’s too late.

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The Black Crow Event

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