On the heels of enormous volatility in gold and silver, today 40-year veteran, Robert Fitzwilson, wrote the following piece exclusively for King World News. Fitzwilson, who is founder of The Portola Group, tells KWN readers what they must know about the incredible action that is now taking place in these key markets.
Below is Fitzwilson’s exclusive piece for KWN:
Fitzwilson: “Give me control of a nation's money and I care not who makes it's laws” — Mayer Amschel Bauer Rothschild
“In trying to make sense of what occurred late last week and to start this week, it is important to remember this quote. The unifying factor underlying much of what we witnessed is the stark reminder that all of these seemingly disparate events share a common factor, control of the money.
Real wealth as a whole is comprised of natural resources, labor and intellect. If you control the money, you control everything. The ability to control the unlimited creation of money is the ultimate form of power as Rothschild stated. The holders of such power do not readily relinquish it.
“Another newcomer to the family of money, electronic Bitcoins, was taken to the woodshed and beaten to a pulp. The price of bitcoins had risen to unsustainable short-term levels, but the emotional damage of seeing such a severe reversal probably eliminates the chances of it being any serious challenge to the existing electronic currency for quite some time, if ever. The history is that any thing, person or country that attempts to change the role of the primary money has been summarily dispatched.
There is a tendency to personalize events. However, a robber does not hit the victim over the head to indicate dislike for that person. It is a robbery. It is about taking that person’s money or other valuable items. The purpose of Friday’s mugging was not to send a message. It was about confiscating wealth through fear, and it worked beautifully. Untold billions of real wealth were forcibly transferred to concentrated positions at certain institutions and countries through this act of financial terrorism. It is not personal. It is simply about taking your wealth.
We alluded to it last week. We suggested that there would come a time when the perpetrators of the price suppressions would surprise us with an announcement that they were no longer short real assets, but massively long. This could very well have been the opening salvo bringing us to that moment in history.
Roosevelt confiscated gold for two reasons. The first is that gold was money at that time. A rival to fiat currency and fractional banking could not be tolerated. The other reason is that he wanted to keep the upside from revaluing gold for his purposes, not to benefit the citizens. The latter reason has to be a factor in what transpired. Confiscate the real wealth, and then devalue to paper currencies in lockstep.
Japan is a special case. They appeared to be jumping the starting gate on devaluation. We can only apply logic to what we see as we certainly are not privy to any high level insights. However, geopolitical events suggest rearmament is the main goal. Japan is an aging society. The stated objective of trying to create inflation when the populace is more inclined to save and less inclined to consume seems illogical.
Letting rates rise and savaging their bond market also does not make any sense. By intimating these reasons for the massive spending increase, it gives cover to what does make sense. A military buildup is the logical conclusion. You certainly cannot blame them with North Korea threatening them with nuclear weapons.
For investors, the worst mistake that can be is to sell the core wealth protecting assets such as physical gold and silver. Once you do that, it is back to the world of counterparty and solvency risk. We believe that the Cyprus solution is in our future.
For those that think such a possibility is inconceivable, consider the failure in 2008 for what are called auction rate preferred securities. Touted as providing high income, security and a much better alternative to traditional money market funds and cash equivalents, that market died. The music stopped and there were no chairs.
Individuals and companies that had parked their funds in that market were shocked to find out that the securities could not be sold and the funds were not available. It took time, lawsuits and pressure from the regulatory authorities to unravel the mess, but it was a mere pinprick compared to what could happen if the financial system as a whole were to freeze up. It happened in the United States. It can happen anywhere.
While the past week has been rough for gold and silver, smart investors will consider the pullback as a gift. Investors need to overcome fear and focus on value. We know that savvy countries such as China, Russia and India are “backing up the truck” so to speak. Individuals need to mirror their accumulation where appropriate.”