“We’re Living In An Open-Air Prism” – Max Keiser

Luke Rudkowski talks to Max Keiser and Stacy Herbert at the G8 protest about the breaking down of the social contract, the economy, the NSA and the G8 protesters.

“I want to be on the winning side” says Keiser. “And bitcoin, silver and gold will be on the winning side.”

Gold price retests $1555 as Cyprus has 75% of its gold reserves ‘bailed-in’

The gold price started the week performing well rising to $1590, its highest level since the start of the month. But then yesterday the gold bulls ran out of steam and the price once again retested that $1555 which has been a great area of support for nearly two years.

Gold $ (15 min):

gold 11 april 2013 Gold price retests $1555 as Cyprus has 75% of its gold reserves ‘bailed in’  (click for sharper image)

On the longer term gold chart we can see just why the $1555 zone is so important.

Gold $ (daily):

gold 11 april 2013 a Gold price retests $1555 as Cyprus has 75% of its gold reserves ‘bailed in’  (click for sharper image)

So why did gold make another retest of that key level of support? The sell-off came on the same day that it was announced that Cyprus would have to sell 75% of their entire gold reserves as part of the Cyprus bailout raising some €400m euros.

This news was very unexpected because there was no mention whatsoever about gold during the height of the Cyprus crisis.

So, just how much is 75% of total Cypriot gold?

gold reserve cyrpus Gold price retests $1555 as Cyprus has 75% of its gold reserves ‘bailed in’  (click for sharper image)

More than 10 tons of gold.

Which means that Cyprus will go from having the 59th largest gold reserves on the planet all the way to…

gold reserve cyprus a Gold price retests $1555 as Cyprus has 75% of its gold reserves ‘bailed in’  (click for sharper image)

… number 80, leaving it with just 3.5 tons of gold.

The move is really rubbing salt in the wounds of the people of Cyprus who have seen many lose nearly all their savings and now face an almost guaranteed depression with the Troika now predicting the economy to contract by nearly 9% this year alone.

Having a large gold reserve relative to their size meant that leaving the Euro was actually viable because they could use their gold reserves to semi-back any new currency and quickly bring stability to it.

Now that option seems to have been completely taken away from Cyprus – perhaps that was the plan all along with the ‘bailing-in’ of their gold.

Authorities Seize $50 Million In Gold From Private Owner

Mac Slavo
April 6th, 2013
SHTFplan.com

After the theft of up to 40% of deposit accounts in Cyprus, a move that was approved and applauded by EU finance ministers, many Europeans who understand that the government will soon be coming for their savings as well are rapidly moving to extricate themselves from the global banking cartel. To do so, they are shifting paper assets and digital deposit accounts into tangible goods. One such tangible asset of last resort is gold, believed by many to be the only ‘currency’ that will survive the world-wide debasement of fiat paper currencies like the US Dollar, Japanese Yen and Euro.

But just because you own gold doesn’t mean you’re safe from the prying eyes and thieving hands of the government.

The following report from Italy highlights the growing trend in government confiscations of precious metals, investment assets, and critical resources.

When one obviously panicked family looking to get out of harms way before contagion spreads and financial Armageddon takes hold attempted to cross into Switzerland, customs agents on the border found much more than they expected.

After questioning the family and inspecting their vehicle police reportedly found one ton of gold hidden in the floor boards.

The nearly $50 million in gold was promptly seized by authorities.

But because taking one’s life savings is never enough for government goons whose job is to consider anyone with a pulse a criminal suspect or terrorist, the former owner of the gold is now being investigated by police for money laundering.

Police officers got the surprise of their lives when they found a treasure trove of gold bars hidden in a car at a border crossing with Switzerland. They haul weighed a ton…

The car belonged to an Italian family that lived in Switzerland.

*Note: The Bloomberg report above claims that one ton of gold valued at approximately $6 million was confiscated by Italian police. However, one ton of gold is equivalent to 32,000 ounces of gold. With the current price of gold around $1580, the total value of said gold exceeds $50 million US dollars. An earlier Bloomberg report calculated the value of this one ton of gold at $7.5 million.

If they know you own something of value, they will come for it. Take note of the digital and paper trail left by your purchasing and storage habits. They are watching, no matter how benign you think your activities are. If you own physical assets, get creative with how you hide them. And if you are ever forced to transport your personal assets, be they gold, guns, ammo, food or the like, spend the time to take multiple trips if at all possible instead of putting all your eggs in one basket.


This is why more and more people are getting into bitcoin:

Why Bitcoins Are Just Like Gold

By Alec Liu

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King Tut’s golden burial mask

Plenty of people still have a difficult time wrapping their heads around what bitcoin is or why it even has value, especially as the virtual cryptocurrency continues to scale record heights. How isn’t this a Ponzi scheme, many have wondered?

A good way to look at it is to compare it to gold. What gives a shiny metal that doesn’t have a whole lot of real utility–outside of jewelry and limited industrial use–any kind of real world value?

The only reason gold has value is because one day, way back when, long before recorded history, society simply decided that this yellowish precious metal should represent “money.” From that day forward–as that idea spread virally across the globe (or at least the small part of the planet then settled by homo sapiens)–gold came to be worth something in the eyes of the people.

As a representative (and thus store) of value, it became a universal intermediary between goods and services. This was the natural, inevitable economic evolution of the barter system. As it retained its value over time–and eventually throughout human history–gold gained cultural credibility. That’s the quick and easy answer.

Uninscribed Lydian coins made from electrum, a naturally occurring gold and
silver alloy, 6th century BCE. The first gold coins of the Grecian age were struck
in Lydia around 700 BC, via Wikimedia

Why the chemical element Au? There’s its obvious aesthetic qualities. But gold’s longevity comes from scarcity; its limited quantities were never able to keep up with demand. Since the beginning of human history, a total of 171,300 tonnes of gold have been mined.

As the human economy evolved, we’d eventually transition from gold to paper money, but up until the end of World War II, gold remained a fundamental piece of the financial system in the form of the gold standard, by which governments pegged the value of their printed currencies to amount of gold they owned.

After the war, the gold standard was partially abandoned with the establishment of Bretton Woods, yet the world system remained implicitly tied to it even as countries adopted the U.S. dollar as their reserve currency, being that the U.S. promised to maintain the price of gold at $35.

Then in 1971, due to the financial strains of the Vietnam War, President Nixon ended the direct convertibility of the dollar to gold, thus establishing the U.S. as a fiat currency, money that was backed only by the credibility of the U.S. government. No longer elementally linked to the modern economy, gold still kept its value as an investment asset, given its historic credibility and cultural relevance. Today, one ounce of gold is worth over $1600.

Gold bars in Fort Knox. Most developed nations still keep significant gold reserves. (reddogreport.com)

Bitcoin, in its present form, has a stark resemblance to gold. Both are backed by no one. Both are, relative to fiat currency, inconvenient for day to day use. Your gold coins or bitcoins (yet) won’t do much good at the grocery store. Both lack intrinsic value. If the apocalypse arrived tomorrow, your gold and BTC won’t help you survive against the zombies. Both have value only because society has confidence that they will maintain said value over time.

Bitcoin, of course, has been around only since 2009, so it doesn’t have the same kind of long term credibility. But the supply of bitcoins, like gold, are also constrained, built into its elegant mathematical model. There’s hard limit of 21 million bitcoins to be mined, which is predetermined to be reached during the year 2140. So as bitcoin demand and adoption continue to outpace its supply, its price will increase in lockstep.

So why bitcoin? Because bitcoin is gold on steroids, designed for a society that lives through the internet. Bitcoin is designed with the ideals of the contemporary cyber movement in mind: decentralization, peer to peer, cryptography. Easily transferable in ones and zeros, it’s a storage of value for a virtual society. As a payment system, it’s a temporal store of money that can be easily sent across the globe securely and speedily without counterparty risk. No matter the price of bitcoin, these benefits will always give it purpose. With bitcoin trading over $60, its market capitalization is approaching $700 million.

The benefits of this model are clear. Given its self-contained nature, it eliminates the need for inherent human interference. There’s no need for a central bank because bitcoin self-regulates. Certain aspects of it are, of course, vulnerable, such as mining, as well as security. Every month, it seems, we hear a new report of a hacked bitcoin wallet. Millions have been lost since 2011.

Yet these issues are self-correcting over time given bitcoin’s incentivization dynamics. Security of data and money is a concern that predates bitcoin and even currency; better practices and technologies can help prevent theft. And it wouldn’t make sense for any one entity, for instance, to attempt to monopolize mining, except to destroy it. After all, this part of the system is somewhat transparent, and bitcoin’s value will be retained in the degree that it is decentralized. If one entity controlled the world’s bitcoin output, it wouldn’t be worth very much, so trying to take over bitcoin doesn’t make financial sense.

Even destroying it poses problems, tantamount to eliminating the world’s gold supply. It’s possible that certain governments or companies even could attempt to cripple it, either through regulation or attacks on the system, yet destroying it completely, for now, seems out of the question. We have to look no further than BitTorrent. Despite years of assaults from the likes of Hollywood, the RIAA, and U.S. government, torrenting continues to drive the majority of internet traffic.

And as long as bitcoin survives, it will rebound. As long as it exists, it will grow. So ignore the warnings of hype and talk of a bubble, in the long run, it’s all more or less irrelevant. The value of bitcoin could crash again, like it did in the summer of 2011. Or it could keep skyrocketing. Whatever happens, neither gold nor bitcoin are going anywhere anytime soon. In the end, that’s all that really matters.

 

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