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.”
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