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quick intro: The following post is long but worth your time. I promise. I’m not going to go back in time and try and walk you through everything that Andy is talking about here so you are going to have to pretend you are picking up a book midway through and try to just understand where its going. If you have understood my posts in the past or personally heard me talk about the massive manipulation and price suppression in the paper gold/silver markets(basically everything not in physical form) then what Andy talks about should make sense. If this is your first time hearing about this or you are a non believer buckle up. I’m telling you now and I am telling you straight. the stupid tickers you see on CNBC for GOLD, SILVER  the GLD and SLV are not physically backed financial instruments. It means they have a claim on the asset nothing more. Think of a bondholder of Lehman brothers or soon to be bankrupt Bank of America. As a LEHMAN bondholder you thought you were going to get paid back 100c on the dollar. well, sadly today that defaulted bond is worth 24c on the dollar. the same applies to paper backed Gold and silver instruments which have been shorted and manipulated many multiples of the worlds supply…..anyways moving on from that, Andy talks about the movement of the world back to GOLD and SILVER as sound money and TRUSTED CURRENCY of the world replacing the 40yr FIAT CURRENCY (dollars, euros, pounds, etc..) experiment created by western central bankers…..

Following along best you can and if you are really interested in reading more I can forward you past emails for you to read through….

RANTING ANDY:  The Once and Future King

The GATA Conference, which I predicted would be “THE MOST IMPORTANT FINANCIAL CONFERENCE EVER”, concluded on Saturday, and in the first 24 hours of trading gold rose from $1,662 to $1,780, blowing away ALL-TIME HIGHS in essentially every currency on earth.  Ironically, the $1,650 “initial target” set by Jim Sinclair roughly three years ago was reached two days before the conference, while his $1,764 ‘point of no return’ level, at which a parabolic explosion becomes a certainty, was hit just a day later, and convincingly so.  In other words, no matter what happens to the price today (care of relentless Cartel attacks, particularly in collaboration with the Fed’s rate decision at 2:15 pm EST), the “SINCLAIR OMEN” was passed, essentially ushering in the official unshackling of the hyperinflation Kraken.

Sinclair’s reasoning, although a bit complex as it combines both mathematics and psychology, is that $1,764 gold numerically represents the level at which CONFIDENCE in fiat currencies ruptures the threshold at which order turns to disorder, threatening not just financial market, but REAL WORLD stability.  Can one possibly think it a coincidence that widespread rioting in London commenced just as gold reached this level (thank god we left Sunday), in a country historically viewed as among the world’s most civilized?

The commentary below from Nigel Farage, Britain’s version of Ron Paul, depicts just how scary the situation is, in that no real “cause” is being championed by the looters, just plain old anger and desperation.  As someone that just spent last week in London, I can tell you unequivocally it is the most expensive city I have ever visited, and as a long-time student of monetary policy, without reservation the primary source of this angst is the inflation caused by unchecked money-printing by the Bank of England.

Like the Fed, the BOE has an unfettered printing press.  By eschewing membership in the EU, Britain has the ability to print pounds in the same unchecked manner as the Fed prints dollars.  However, by NOT having a reserve currency like the dollar, the UK cannot pawn off its inflation to China and other creditor nations.  Hence, England has some of the highest REAL inflation levels on earth, and not shockingly a rising level of social unrest.


Yesterday was a watershed day for global markets in many ways.  The Dow had a near-record decline, European sovereign debt spreads soared, and commodity prices plunged.  All the hallmarks of the late 2008 collapse were present, including a surging dollar and Treasury bonds, ironically in the face of an historic S&P downgrade.  Thus, my view is that the beginning of GLOBAL MELTDOWN II commenced, only this time in an environment where unemployment and inflation are surging while interest rates globally (except in Europe, where the bond vigilantes have taken over) are pegged to zero.  In other words, every bit of central bank “ammo” has been spent, and every accounting gimic implemented, to restimulate.  Throw in the cascading sovereign defaults, widespread social rest, and high commodity prices, and one can see the situation is, in reality, vastly worse.  And did I mention the pending bankruptcy of Bank of America, which I give no more than a 10% chance of surviving through 2011?

Gold’s incredible run, blowing away the Cartel’s typical capping routine (particularly during a so-called “deflationary event” such as yesterday’s market crash), depicts a budding transformation of group psychology right before our eyes.  This scenario has occurred thousands of times throughout history, as predictable in its nature as the human errors that cause them.  As in the fable of King Arthur, the only rightful, by divine decree, heir to the throne of Camelot, gold is the ONCE AND FUTURE KING of the monetary realm.

We’re not there quite yet, but will likely be by year-end.  The buzz is spreading, the innate instinct that something is wrong.  Mankind has been genetically programmed over thousands of years with the experience of its ancestors.  Civilizations that embraced REAL MONEY advanced, while those that didn’t disappeared like sands through an hourglass.  Millions have perished from the inflation, shortages, war and pestilence that followed arbitrary monetary policies by ruthless leaders, just as millions are doing so today, potentially billions when hyperinflation returns in earnest sometime next year.

Today’s central banks are starting to realize this (particularly those with enormous dollar reserves), which is why they switched from net gold sellers to net buyers two years ago, never to switch back.  Sovereign wealth funds certainly understand this, as do a very, very small handful of hedge funds and endowments.  And, of course, the small band of “goldbugs” led by generals unknown to the mainstream world, such as Jim Sinclair, Eric Sprott, and James Turk.

But soon the world’s investors, and common men alike, will ALL know, as the 5,000 year old survival instinct kicks in, the instinct to PRESERVE ONE’S WEALTH and maintain a suitable MEANS OF EXCHANGE, which only PHYSICAL GOLD AND SILVER can provide in an entirely fiat world.

All the talk about what will “break the COMEX” or “the Cartel” will be moot when this “A-HA Moment” reaches critical mass, when billions of people worldwide realize simultaneously, as sheep tend to do by the way, that fiat dollars are BAD and gold is GOOD.  The flood of capital into Precious Metals, which have been suppressed for essentially the past CENTURY, will be permanently unshackled (or at least for several generations), and at that point no “price target” estimates will have meaning, be they created under the auspices of a supply/demand model or anticipated hyperinflation.

In other words, this reawakening is not about “the Gold Cartel” of the past decade, or even the disastrous fiscal, monetary, social, and military policies of modern day governments.  What is happening is a global resurrection of understanding regarding the nature of MONEY, to a society where ALL individuals, far and wide, realize that only GOLD AND SILVER represent REAL MONEY.

What we are witnessing today is the writing of one of the most important chapters in human history.  Not one that will change human nature, and certainly not one that promises a better world ahead (quite the opposite, in my view).  But a world where the virtue of REAL MONEY is re-established, where no amount of government intervention can stop the unrelenting, insatiable, GLOBAL demand for GOLD and SILVER as MONEY.

In the near-term (particularly with a major Fed policy decision coming later today), expect ANYTHING in the market, particularly dramatically increased volatility in all markets, as well as desperate (but unwinnable) attempts by the Cartel, in its dying throes, to control gold and silver.  But before we even reach the intermediate term, which I now expect within MONTHS, NOT YEARS, dramatically higher, and perhaps hyper-, inflation will be upon us, and either you will have PROTECTED YOURSELF sufficiently or put you and your family in harm’s way by having not.

Andrew C. Hoffman, CFA
Managing Director
San Diego Torrey Hills Capital
B (720) 350-4130
C (917) 324-7602