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Stutterer Bernanke Tips Hand on Gold

By: Rick Ackerman, Rick's Picks
Sunday, 18 November 2007


When our bird flu correspondent, Erich Simon, is not immersed in the potentially world-ending details of the pandemic, he sometimes likes to tote up the ways in which gold bugs could eventually profit from behind-the-scenes maneuvering by the bankers and their Friends in (very) High Places. Some might think Erich paranoid for ascribing so much power to one firm in particular, Goldman Sachs. But even if Goldie does not in fact run the world, there can be no doubt that they have the kind of incestuous ties to big government that most lobbyists would kill for.

By Erich’s reckoning, bullion investments are not likely to disappoint over the long run. More immediately, though, he sees a cap on the price of gold that will be lifted only when Goldman and its good friends are “over the hump” of the financial system’s present duress. Here’s Erich:

“I mentioned to you earlier that Bernanke shows his hand when he stutters. During his recent appearance before a joint Congressional panel, I was somewhat surprised by which subjects caused him to stutter and which did not. I was also pleased that his stuttering may be telegraphing some bargain-hunting opportunities ahead in gold.



“According to Bernanke there are 450,000 mortgages resetting every quarter extending through the end of next year. No surprise there. Many of these are doomed to foreclosure. On this point Bernanke's voice was all a-stutter. He then went on to speak about "growth" in the domestic economy, and on this point his voice went beyond a stutter. It shook. The deflationary implication is now obvious. Curiously, on the subject of our huge trade deficit, his voice did not stutter. And when Ron Paul admonished the Fed Chairman about the dollar's collapse Bernanke literally wiped his nose with his index finger. The look in his eye was as scathing as it was telling.

“The job of the Fed is twofold: 1) maintaining America's leadership in the global financial forum; and 2) preserving the domestic status quo. Bernanke has shown his cards, and the implications for the price of gold, among other assets, is clear. Bernanke's foremost responsibility is to his crony Goldman Sachs. (Kudlow and Cramer, by the way, hail from that same institution, as do former Treasury secretary Robert Rubin -- now head of the largest U.S. bank -- and present Treasury Secretary Hank Paulson. Goldman Sachs IS the U.S. government.

‘Save Lenders First’

“What is a government? A militarily underwritten institution that apportions scarce resource according to man-hours of work, denominated in currency. Accordingly, Bernanke announced in his congressional testimony that his foremost responsibility is to save lending banking institutions. He advocates protecting Goldman Sachs' empire by shifting the firm's problems onto the GSEs. On this matter, the Fed Chairman's voice did not stutter.

“The implications in all of this are clear. The gold price is capped, and while it will eventually break the cap set by Goldman Sachs, whatever the price may come to be, it will do so at the discretion of Goldman Sachs and on their time. If the POG runs to $2,500, you can be sure that they will garner more than the average pound of flesh. Correspondingly, the US dollar will not, as prescients like Peter Schiff entertain, go the way of the dinosaur under such metric. War or Pandemic, however, is a far different cry.

Rigging of Dollar

“Paulson has successfully orchestrated the rigging of the dollar in collaboration with crony banks like the BIS, ECB, BOJ and BOE (Barclays); and, surprisingly, for the moment, China. The "smart money" -- no small part of which are the insiders, the henchmen providing logistical support to the Goldman empire (self-aggrandizing CEOs, etc.) -- has long moved into gold (back when the Rothschilds abandoned the London gold fix), Euros and, increasingly, tangible properties lying outside of the sinking-ship America, into high growth regions like Asia and India -- and now, increasingly, mineral rich Africa.

“This explains the absence of the bond vigilantes. The wealthy have never held their money in the equity casino. Their lifestyles are framed in the triple-A credit markets, taking sustenance from the interest earned on the shoulders of the working man. With interest payments no longer covering the cost of inflation, the Goldman Sachs oligarchy has corralled the wealth and relocated it offshore.

Orca vs Great White

“This is the essence of the fight between the Orca and Great White that I have been observing and which is now at a climax. The battle of the Big Money between those on the inside and those on the outside (i.e., the remainder of the speculating and investing community long ago disappeared from view).

“The banking system has evolved into the modern equivalent of feudalism, rooted so obviously in our present and growing real estate quagmire. Only today, rather than a feudal lord holding whip over fief and vassal, the banking system holds whip (for the time being) over the global village through the lending mechanism, usury and the strong arm of Goldman Sachs and ultimately, the U.S. military-industrial complex.

“The implications are clear. The battle between the Orca and Great White is the final battle in the global financial marketplace. In this denouement Bernanke is buying time by shifting Congress toward a taxpayer base (long in default) and Nationalization of the real estate (and banking) industries in lieu of write-downs and amends. He is not, as I had hoped, motivated to break the back of inequity, but rather to preserve it. His motive is not philanthropy. And whether the outcome is martial law, taxpayer revolution, inundation by organized crime or World War III, he is now all tooth.”

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