This is what armed revolution looks like

January 20, 2014
Sovereign Valley Farm, Chile

It’s almost exactly like that scene from V for Vendetta.

You know– the part in the end where swarms of people go up against the police with their sticks and Guy Fawkes masks…

That’s what’s happening in Ukraine right now. And with reason.

After weeks of student protests over the government’s failure to sign a European integration and association treaty, the police violently cracked down on protestors, and politicians passed a series of new laws in the middle of the night. Among them:

Criminal extremist activity is now redefined, broadly and loosely, that effectively criminalizes protest, press reports, or social media that is anti-government.

Insulting a policeman or judge is now a criminal offense. This includes behavior that “patently offends” or “shows insolent disrespect”.

Blocking of administrative buildings is now criminalized with a 5-year prison sentence.

Anyone who organizes an assembly in violation of ‘established procedures’ can be arrested.

The government has streamlined its ability to force Internet Service Providers to block certain websites it deems harmful in its sole discretion.

New amendments to the criminal code allow pre-trial and trial proceedings to be conducted, even if the defendant is not physically present to defend himself.

The laws go on and on. It’s Soviet stuff all over again. And people aren’t taking this lightly.

In total defiance of these new laws, the gun-toting police thugs, and the bone chilling winter cold, people are once again out in the streets.

There’s a great video from a few nights ago where the cops were assaulting a few protesters. Then suddenly a swarm of people with nothing more than fists and sticks ran over and began attacking the police.

Watch the video here. (about 60 seconds in length).

Societies, like individuals, have their own breaking points. Citizens can only tolerate so much abuse before enough of them take action. Sometimes that means meeting violence with violence.

I wonder where this line is in the West. Back in the Land of the Free, the government has taken every possible step it can to abuse citizens.

It has enriched banks at the people’s expense. It has robbed the masses of the purchasing power of their savings. It has destroyed liberties, indebted future generations, raised taxes, and regulated the most fundamental aspects of our lives.

All of this has been done shamelessly, unapologetically. For example, President Obama’s “solution” to the NSA spying debacle is to simply outsource the metadata storage to some unknown company.

Pathetically, this is what passes for liberty in the Land of the Free today.

Yet while Ukrainians have clearly reached their breaking points and are fighting it out in the streets for their freedom, it remains unclear where North Americans and Europeans draw the line. Most people don’t seem to care.

Fortunately, anyone who actually values liberty doesn’t need to wait around for Ukrainian-style armed revolution.

The world is a big place, and there are a number of options to reduce our exposure to bankrupt, insolvent, destructive governments.

Every single person who holds dollars in a US bank account, for example, is entirely beholden to the whims of the Federal Reserve Board of Governors.

You can substantially reduce this exposure by moving funds to a place like Norway or Hong Kong, holding krones or Hong Kong dollars.

Or even still, owning precious metals at a foreign depository in a place like Singapore.

You can reduce your exposure to NSA spying by using simple encryption plug-ins for email (see our free report on how to give the NSA the finger…)

You can further reduce your risk and exposure to your home government by obtaining a low-cost second residency in a place like Chile or Panama, to ensure that you always have another option.

There are a plethora of solutions– individual solutions– that anyone can take advantage of. And in doing so, we are relying on ourselves. Not on our neighbors. And definitely not on government.

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Obama Worries About the Gateway Effect of Marijuana Legalization

In
his
comments about marijuana legalization to The New
Yorker‘s David Remnick, President Obama draws a line between
pot and “harder drugs”:

When it comes to harder drugs, the harm done to the user is
profound and the social costs are profound. And you do start
getting into some difficult line-drawing issues. If marijuana is
fully legalized and at some point folks say, Well, we can come up
with a negotiated dose of cocaine that we can show is not any more
harmful than vodka, are we open to that? If somebody says, We’ve
got a finely calibrated dose of meth, it isn’t going to kill you or
rot your teeth, are we OK with that?

It depends what you mean by “we.” I am OK with that, and so is
anyone else who believes people have a fundamental right to control
their own bodies, but polling data suggest most Americans are
not—possibly because they, like Obama, accept many
scary myths about “harder drugs,” such as the idea that
methamphetamine makes your teeth rot. What would a “finely
calibrated dose of meth” look like? Possibly like this. Obama seems
unaware that stimulants considered so dangerous that legalizing
them is unthinkable are widely prescribed to schoolchildren.

Remnick calls the possibility of broader drug legalizatiion,
resulting from consistent application of libertarian principle, a
“slippery-slope argument” against repealing pot prohibition.
Libertarians, who often warn that the precedent of one government
intervention will lead to additional, more ambitious interventions
down the road, are used to a different sort of slippery slope, one
that leads to tyranny. In Remnick’s nightmares (and possibly
Obama’s as well), it is freedom that lies at the bottom of the
slippery slope.

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Martin Luther King’s “Letter from Birmingham Jail”

Back in June 2013, I was suddenly inspired to read Martin Luther King Jr.’s thoughtful, powerful and provocative “Letter from Birmingham Jail.” It struck such a chord with me that I decided to write a post on it, in which I highlighted key excerpts.

Today, January 20th, is Martin Luther King Day for those of us in these United States. With the Republic at such a crossroads, one filled with peril, but also with tremendous opportunity; it would serve us all well to heed the words this great man wrote so many years ago, during another troubled and dynamic time in our history. As such, I am reposting my piece from last summer below.

Martin Luther King: “Everything Adolf Hitler did in Germany was Legal”

Posted on June 7, 2013

Even if you have read Martin Luther King’s celebrated “Letter from Birmingham Jail,” I insist you read it again. For those that have never read it, the inspired prose may very well change your life. The letter’s message is eternal and extraordinarily relevant in the current global struggle of the 99.9% against the criminality, corruption and oppression of a very small, but very powerful 0.01%. One of the key tactics this tiny minority uses is to claim that their immoral deeds are “legal.” He spends much of his time in the letter outlining the distinction between “just laws” and an “unjust laws,” and one of the key points he makes that we should all keep close to our hearts and minds in these trying times is:

We should never forget that everything Adolf Hitler did in Germany was “legal” and everything the Hungarian freedom fighters did in Hungary was “illegal.” It was “illegal” to aid and comfort a Jew in Hitler’s Germany. Even so, I am sure that, had I lived in Germany at the time, I would have aided and comforted my Jewish brothers.

I also think it’s important to recognize that many of his contemporaries referred to his tactics as “extremist,” very similar to how the term “terrorist” is used currently to demonize public dissent in America. Below are some of the excepts I found most powerful:

But more basically, I am in Birmingham because injustice is here.

Injustice anywhere is a threat to justice everywhere. We are caught in an inescapable network of mutuality, tied in a single garment of destiny. Whatever affects one directly, affects all indirectly.

Lamentably, it is an historical fact that privileged groups seldom give up their privileges voluntarily. Individuals may see the moral light and voluntarily give up their unjust posture; but, as Reinhold Niebuhr has reminded us, groups tend to be more immoral than individuals.

We know through painful experience that freedom is never voluntarily given by the oppressor; it must be demanded by the oppressed.

The answer lies in the fact that there are two types of laws: just and unjust. I would be the first to advocate obeying just laws. One has not only a legal but a moral responsibility to obey just laws. Conversely, one has a moral responsibility to disobey unjust laws. I would agree with St. Augustine that “an unjust law is no law at all.”

To put it in the terms of St. Thomas Aquinas: An unjust law is a human law that is not rooted in eternal law and natural law. Any law that uplifts human personality is just. Any law that degrades human personality is unjust.

Let us consider a more concrete example of just and unjust laws. An unjust law is a code that a numerical or power majority group compels a minority group to obey but does not make binding on itself. This is difference made legal.

One who breaks an unjust law must do so openly, lovingly, and with a willingness to accept the penalty. I submit that an individual who breaks a law that conscience tells him is unjust, and who willingly accepts the penalty of imprisonment in order to arouse the conscience of the community over its injustice, is in reality expressing the highest respect for law.

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Spot The Labor Force Collapse Culprit

A few days ago we disproved, in what we hoped would be the last time, any insinuation that the collapse in the labor force is due to demographics (a topic we had covered before) when we showed that it was just 10 short years ago that the Bureau of Labor Statistics itself was forecasting an increase in the overall participation rate – here we assume logically that America’s demographic profile was known to its labor market experts in 2004 – only to slowly at first, then very fast, revise it ever lower… and still it was unable to catch up to the unfolding gruesome reality.

Yet somehow, so called finance experts, econ PhDs, central planners and other ivory tower dwellers still refuse to let this topic go, and continue to reference the participation rate and demographics in the same sentence. So to truly end any speculation that the plunge in the labor force is due to “old people”, defined as workers 55 and over, retiring, here is a chart (which in an update of a post we did first in October 2012 and it took the rest of the media world only 14 months to catch up) of the cumulative job gains broken down by “young”, or those 16-54, vs “old”, those 55 and over.

Spot something wierd?

It seems that the “old” age worker group – that which is supposed to be bleeding workers to retirement – has had zero job losses since the start of the Depression in December 2007, while it was the “younger” workers who according to the BLS’ Household Survey, have hit the labor cliff and seen their number collapse, dropping as much a 6 million, and only slowly rising, with another 3.5 million jobs left to catch up before pre-recession levels are met.

In fact drilling down in the “young” worker category reveals that the most impacted group of workers is those in their prime working years: Americans aged 25-54.

And just to put the final nail in the coffin of this silly debate, here is the Labor Force Participation rate by “old” workers, or those most prone to retirement, and where the Fed is now desperate to scapegoat the collapse in the Labor Force, compared to all other age groups. The chart, which shows that the “55 and over” worker group has now normalized its participation rate to pre-crisis levels, speaks for itself.

So enough with all this “they are retiring” bullshit, and call it for what it is: millions of Americans of all ages, but mostly of prime working age, bailing out of the labor force by the millions because of equal or better opportunities elsewhere, opportunities which almost without exception are increasingly reliant on the ever more unsustainable and insolvent US welfare state.

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The Isoquants Of Gold

Submitted by mickeyman via The World Complex blog,

Today's plot shows a six-year scatterplot of the gold price (in USD) vs the USDX index.

The blue curves are hyperbolae of a constant level of gold x USDX. I have placed these for two reasons. Firstly, if gold and the USDX are inversely related, then the time-evolution of the scatterplot will follow one of these curves. Secondly, for companies operating gold mines outside of the US, the product of the gold price and the USDX indicates the real price they are getting for their product.

These equal-product curves, or isoquants, appear to be of some importance in constraining the evolution of the gold price over the past six years. Generally speaking, the price tends to migrate along an isoquant for an extended period of time, before jumping up (or down) to another one, typically in only a few weeks.

For much of 2008 the plot is constrained between the 600 and 700 isoquants, but the system shifted to the 800 isoquant in early 2009. The gold price advanced along the 800 isoquant until about October 2009, before shifting up to the 900 isoquant. The system then evolved along the 900 isoquant for a few months, with the gold price falling and USDX rising, until shifting to the 1000 isoquant near mid-2010. The gold price rose along the 1000 isoquant for nearly a year, whereupon it shifted to the 1100 isoquant, and after battling at that level for two months or so, advanced rapidly, ascending above the 1400 isoquant in September 2011.

A major battle was fought between the 1300 and 1400 isoquants until March of 2013, whereupon the system plummeted to the 1000 isoquant–a level at which it has remained since. The yellow circle near the middle of the plot shows the last month where we dipped below the 1000 isoquant; however today we crossed above it again.

For the time being it looks as though the 1000 isoquant will be the line in the sand for the gold-USDX system. For the gold price to go to $1000, the USDX would have to go to 100. Not impossible, but the world would have to be in pretty dire shape for us to see that, methinks. If the USG is successful in debasing the dollar to win the trade war, we might see a little advance in gold, but I'd expect it to follow the 1000 isoquant for the next six months at least.

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A.M. Links: Terror Warning for Winter Olympics in Russia, Mitt Romney Confident of Chris Christie, Federal Court Rules Federal Crackdown on Medical Marijuana in California Can Continue

Mike Rogers, the chair of the House
Intelligence committee,
suggested Edward Snowden could’ve been aided by Russia in his
disclosures about the NSA.
Asked about Chris Christie’s recent problems, Mitt Romney

said the New Jersey governor handled controversy over lane
closures on the George Washington Bridge well, and that it wouldn’t
affect his presidential prospects.
The Ninth Circuit court
ruled that the federal government could continue to crack down
on medical marijuana dispensaries in California, despite their
legal status under state law.
A video purporting to show two Russian-speaking Islamist
militants who took responsibility for a set of suicide bombings in
the country last month promises a
“present” for Russia and tourists at the 2014 Winter Olympics being
held in Sochi.
A Taliban attack on a restaurant in Kabul killed twenty-one,
mostly foreigners, while more than dozen people were
killed in a series of attacks in Baghdad this weekend. At least
26 more people were
killed in at least 7 bombings across Baghdad today.
The Syrian National Coalition, a major rebel group, voted in

favor of attending a peace conference in Geneva, but then

threatened to pull out over an invitation extended to
Iran.
Dennis Rodman returned from North Korea and
checked himself into alcohol rehab. A statement released by his
PR agency while he was in North Korea blamed a media rant on
excessive drinking.

Follow Reason and Reason 24/7 on
Twitter, and like us on Facebook. You
can also get the top stories mailed to
you—sign
up here.

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Obama Concedes Pot Prohibition Is Unscientific and Unjust

According to a recent CNN poll, 87 percent
of Americans think marijuana is no more dangerous than alcohol.
According to an
interview with The New Yorker published
yesterday, President Obama is one of them:

As has been well documented, I smoked pot as a kid, and I view
it as a bad habit and a vice, not very different from the
cigarettes that I smoked as a young person up through a big chunk
of my adult life. I don’t think it is more dangerous than
alcohol.

In fact, Obama said, pot is less dangerous than alcohol “in
terms of its impact on the individual consumer”—a view held by 73
percent of the respondents in that CNN poll. So Obama is not really
going out on a limb by acknowledging that alcohol, measured by
acute toxicity, accident risk, and the long-term effects of heavy
consumption, is more hazardous than marijuana. On the face of it,
he would be taking a bigger risk by endorsing the
theory of evolution.

Yet news outlets around the world are
treating Obama’s comment as a big deal, because it contradicts
official U.S. policy. Marijuana is on Schedule I of the
Controlled Substances Act, a category supposedly reserved for drugs
with a high abuse potential that have no recognized medical value
and cannot be used safely, even under a doctor’s supervision. The
Obama administration has stubbornly defended
that classification, pretending it is scientifically sound.

Obama also seemed to contradict his own avowed opposition to
decriminalizing marijuana, portraying legalization in Colorado and
Washington as a solution to the racially disproportionate impact of
pot prohibition:

“Middle-class kids don’t get locked up for smoking pot, and poor
kids do,” he said. “And African-American kids and Latino kids are
more likely to be poor and less likely to have the resources and
the support to avoid unduly harsh penalties.” But, he said, “we
should not be locking up kids or individual users for long
stretches of jail time when some of the folks who are writing those
laws have probably done the same thing.” Accordingly, he said of
the legalization of marijuana in Colorado and Washington that “it’s
important for it to go forward because it’s important for society
not to have a situation in which a large portion of people have at
one time or another broken the law and only a select few get
punished.”

To say that “it’s important for [legalization] to go forward” is
a bigger step than the
signals of prosecutorial forbearance the administration has
offered so far. Obama seems to be saying he wants these experiments
to succeed.

In short, Obama is conceding that marijuana prohibition is
unscientific and unjust. That is indeed a pretty big deal, assuming
he does not find a way to wriggle out of it.

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Market Trading Hours During The US Holiday

You asked, we answered.

New York, Chicago trading floors: closed
CME Equity products closes at 11:30 AM Eastern, resume trading at 6:00 PM Eastern
CME and CBOT Interest Rate & FX Products close early at 1:00 PM; resume trading at 6:00 PM
NYMEX, COMEX early close 1:15 Eastern; resume trading at 6:00 PM Eastern
NYSE Liffe – Normal close
Eurex – Normal close

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I HaVe A DRoNe 2014…

As I have said many times before, Dr King would have been appalled…

.

.

Just check out Obama’s new drone

“In The Land Of The Free” it is flown

Nothing will save

“The Home Of The Brave”

Tyrannical forces have grown

The Limerick King

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Into The Gold Labyrinth

The surprise of 2014 is gold! The yellow precious metal had its fourth week of gains in a row. It seems like the gold market has been ‘set free’ in 2014. This would mean the end of the cyclical correction, which indicates that the market is ready for the big and final phase of the secular bull run in gold. All of this fits perfectly with everything we have been saying for years about gold.

For those who didn’t notice, please read our free Guide to Gold.

One thing becomes very clear here: gold is moving from the West to the East. Chinese gold import from Hong Kong has been rising dramatically since 2011 and at the same time, the gold price has seen a 30% correction. This brought up a lot of questions from subscribers.

Source: Toqueville Funds / Bloomberg

“How is it possible that the price goes down when there is huge demand?!” To know the answer you have to look at the futures market. Because that is where the market price for gold is set. Yes, you read it well: paper contracts dictate the price of the physical metal.

Since 2011 there are a lot of ‘sell contracts’ for gold, better known as short positions. This caused huge downward pressure on the gold price. An ideal way for China to buy physical gold cheaply. But the Chinese were not the active shorters. American investment banks did that, with JPMorgan in the lead. JPM, AKA, the ‘banker’ of the US government.

JPMorgan built up an historical short position over the years. But at the same time, the bank was bringing in more and more physical gold to store it in its vault below the famous Chase Manhattan Plaza in New York. Where does this gold come from? Just look at the chart for the registered physical gold at warehouses with the COMEX, the American futures market.

Source: 24hGold

The COMEX has been sucked dry in the last year. You will never guess who recently signed a sale agreement for the JPM building in the center of New York, underground gold vaults included… yes, you got it, the Chinese!

Those who want an even better view, should check out the next photo of the new situation in NY.

(H/t Koos Jansen)

Yes, that is correct, the vaults of the Fed are right across from the Chase Manhattan Plaza. Coincidence? We do not think so… But the reserves in the US are naturally insufficient to satisfy the Chinese hunger for gold. The effect of the price correction made sure that the ‘weak hands’ in the gold market let go of their gold. Weak hands is a synonym for (small) investors.

Since the rise of the SPDR Gold Trust ETF (GLD) in 2007, more and more investors committed larger amounts of capital to the gold ETF. At the peak of the market there were 1,300 tonnes of gold in GLD, more than countries like China. That was also not part of the Chinese plan. You probably understand by now where this is going. When the gold price got shaken up, those same investors stepped out of GLD.

Meanwhile, more than 500 tonnes of gold was pulled out of GLD, which implies that the ETF has less than 800 tonnes of gold today.

Where did all this GLD gold go? From the vaults in London, to the smelters in Switzerland to the depots in… Hong Kong! And now we are full circle again: the enormous transfer of gold from Hong Kong to China. All of this – large scale price manipulation in combination with huge gold transfers – is not a walk in the park. All parties need to cooperate.

So it would be hard to imagine that it did not happen with the approval of the US government and the Fed. And probably forced by China! Let us clarify that. China has stopped buying US debt since 2011. That was also the moment that the Fed needed to jump in to support the market. After QE we quickly saw QE2, QE3…

Without these actions from the Fed there would not have been a single buyer of US Treasuries, which would probably mean the end of the American empire. China wanted, or rather demanded, its gold from the West! You can say many things about the Chinese but they certainly are not dumb.

The Chinese realized that for years they received a poisoned gift from the Americans. Only through the acquisition of gold, both world powers would be on a ‘level playing field’ again. Of course, we do not know where this level playing field is, but we do assume that China has more or less reached it. How much gold landed in China since 2011, is very hard to determine. In 2013 alone, more than 2,000 tons was transferred from Hong Kong to China. And this is just one of the import routes. China is not just buying gold from its own gold mines, but is also directly or indirectly the largest customer of most gold producers. All melted gold also found its way to China.

In short, China was the gold market in the last two years!

However, we are spotting a few signals indicating that China is releasing its grip on the gold market. Not only has the continuous drain from GLD stopped, but we also read that China has started buying US Treasuries again. Even more, the Chinese portfolio of US government bonds is at record levels! Now you also know why the American central bank suddenly started ‘tapering’, or scaling back the buyback program of US debt.

Does China have enough gold then? It would not surprise us.

A small calculation taught us the following:

The US owns more than 8,000 tonnes of gold while the yearly US GDP is just shy of 16 trillion dollars. The yearly GDP of China is a little over 8 trillion dollars, almost half. You would expect then that the level playing field for gold in China hovers around 4,000 tonnes.
The official amount of gold in the Chinese central bank is still 1,054 tonnes today, but because of the huge gold transfers these last years, we expect that China is close to its golden level playing field.

We do admit, it is a lot of information to digest, but it is extremely important! You have to understand that the US, with the largest pile of debt in the world, would be helped hugely by a higher gold price. The higher the value of gold, the lower the real value of their debt. We have the feeling that if China loosens its grip on the gold market, the gold price can move up quite fast. There is nothing that America wants more and China is now well-hedged.

Where can the gold price go to then? Another small calculation to help us out…

The historical ratio of the monetary base of the Fed teaches us that a gold price of 5,000 to 7,000 dollars/ounce should be enough for the US to make its debt bearable again. From the current level this means at least a quadrupled gold price. For most people this seems improbably high, but do not forget that since the start of the secular trend in gold, its price already went 5x higher. Also in the 70s, the gold price skyrocketed in its second phase from 100 dollars to 850 dollars per ounce in barely four years!

As for now, we’re in the midst of the bottoming proces with gold. Once this proces ends- lets say above 1,300 dollars – the gold price could see a voilent upswing towards 1,550 dollars, where the next battle field arrives for gold. We prefer to play the next U-turn in gold with a selection of quality gold stocks, as the current leverage to the gold price – risk/return – is the best in years, even decades!

Download our Free ‘Guide to Gold’

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