The real war is not in Iraq or Afghanistan but in the currency markets.
In his article “From Russia with Love,” Community friend, Dan Norcini, set up the subject matter of what is the most important but unappreciated characteristic of the gold market.
This characteristic is misunderstood by many but forgotten by even more. The Gold Dinar is coming without any doubt now that two major foundational items, which had caused a delay, are falling into place,.
Let’s review the entire strategy leading up to the breakdown of the huge bearish Head & Shoulders formation of the US dollar:
1. The 9/11 attack was staged to create a military response by the United States in the Middle East and Afghanistan.
2. The strategy of 9/11 is part of a plan to unite the one billon Islamic people in the world.
3. Bin Laden is a major unifying factor in the 9/11 strategy.
4. The plan of action was to drain the US dollar of its reserve status by driving expenditures inside and outside of the US up to unsustainable levels.
5. As the triple deficits go wild because of the costs associated with inland security and military actions around the globe the pre-election efforts to falsify the US economy as being healthy means the US dollar must decline thereafter. In actual fact, the decline is now below the bearish neckline drawn from the previous low and is a terminal technical breakdown. If the US dollar was a corporation, it would indicate clear potential for bankruptcy.
6. The increased cost of oil can only injure the US economy, driving down tax receipts.
7. The drop in tax receipts expands the US Federal Deficit thereby acting as a further brake on the US economy, injuring business activities and increasing US Federal demand for money in the money markets.
8. Middle Eastern dollar holders have been selling dollars constantly, putting increased pressure on these markets.
9. In all of Asia and more recently in Russia the US dollar is coming under pressure.
We stand now at that point whereby a tick below the low of this entire decline is within range and a new little Right Shoulder is in place.
Why the Gold Dinar Has Been a Silent Subject For a Year
The argument has been two fold. The first and most important is that Middle Eastern gold is primarily held in London, which is now not secure, and in violation of the Koran instructions concerning dealing with non-Muslin nations in financial matters. The second but intellectual argument is the position that gold was too volatile to tie a settlement mechanism or currency to.
Most observers would tend to select the UAE as an alternative for locating gold due to its no tax environment and history of free trade. However, its ability to defend itself militarily is doubtful against superior forces thereby endangering the gold hoard.
Now ask yourself where Iran has gotten all its courage lately and the answer comes up quickly. Their protector is Putin’s Russia which has much to gain from a full circulating currency form of the Gold Dinar because of its positive affect on oil and other commodity prices which incidentally are quite important to the ruble.
The argument that gold is too volatile for a currency to be tied to completely fails in light of the volatility of the US dollar.
The other aspect is the timing of its introduction which seems now to be somewhat after the bearish neckline breaks down as it will for the US dollar so that there is plausible denial that the dollar forced the Gold Dinar to emerge as a currency rather than the Gold Dinar forced the US dollar to enter its inevitable freefall condition.
So the shocker is that Iran might become the center of the Middle East’s gold holding in Dinar form because it will be protected militarily by Putin’s Russia. The Iranian theocracy plus a new totalitarian Russia will project the Gold Dinar and the Ruble as superior currencies to the US dollar.
This strategy then projects Putin’s Russia into a major superpower position and Iran as the leader of a more unified Middle East.
The only US defense against this strategy is the adoption now of the new modernized form of the Federal Reserve Gold Certificate Ratio tied to international liquidity and not to interest rate action. The chance of this occurring is as good as a snowball surviving in hell. Only by preempting the Gold Dinar by initiating the Federal Reserve Gold Certificate Ratio in the modernized and revitalized form that I have spoken about many times can offset the pending introduction of the Gold Dinar as a full-fledged currency.
1. Terrorism is primarily a financial tool designed to break the bank of the US.
2. The real war is economic and not political.
3. The reaction of the US was totally predictable and it walked directly into a bear trap that it cannot now easily extract itself from.
4. Regaining insurgent controlled towns in Iraq will not win this war.
5. The military action in Iraq and Afghanistan is a uniting factor among the one billion Muslims.
6. Capturing Bin Laden would be as meaningless as capturing Saddam Hussein
7. The price of oil will not become cheap again.
8. Iran is the covert third party behind the Iraq and Afghanistan military actions.
This explains why Asia and the Middle East have been the major buyers of gold since 1991.
Since no US presidential candidate or any advisor to either contender has even a remote idea of what is really happening, you can wager that the dollar will enter its freefall, the Gold Dinar will emerge as a full fledged currency, and Putin’s new totalitarian Russia will rise in stature as the US falls in stature among major nations.
So if I have been wrong about the gold bull market, it’s in considering it as a generational event while in fact it might constitute the entire foreseeable future.
If you fail to own gold and gold shares but rather depend on the US dollar to protect your life’s work you are in for the worst of disappointments. The gold writers who spend their time looking for temporary tops and encourage you to sell your entire positions will not be in business much longer.
I have met with key players who will be involved in the coming events and I am convinced without any doubt that the above is a road map from here until 2012 and well beyond.
Now you know why the survivors of the old European major financial families spoken of in the book “Our Crowd” have distributed US securities and bonds into the pre-election Made in Hollywood equity market and have been buyers of gold for quite a period of time.
Please be careful and pay attention. Make absolutely sure your mortgages have fixed rates. Eliminate any mortgage obligation that requires a balloon repayment or refinancing in 2007-2008. Reduce debt if you can and move your gold and gold share position up to no less than 33 1/3 percent of your liquid net worth.
For those of you seeking an even deeper understanding of this subject material, there is a book that should be read. It is “The Return of the Gold Dinar” written by Umar Ibrahim Vadillo.