As we currently have members in more than 33 countries worldwide now, we don’t expect these discounted memberships to last very long. If you wish to “test drive” our Platinum and Wealth Secrets memberships before fully committing, we will still offer the 14-day trial, money-back guarantee at these discounted prices as well. The last time we ran a similar sale, most memberships sold-out before the two-week period expired.

Special Extended Sale of Select SmartKnowledgeU Services (February 6, 2012 – February 9, 2012)

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To receive your special, limited-time only discount on our above products,

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If you enter the above coupon code into the coupon code box in the shopping cart, click “apply” and no discount appears, this unfortunately means that we have already sold ALL of the additional limited amount of discounted memberships we decided to offer and the discount is no longer be available. You may download comprehensive fact sheets with details about the above services on our homepage. With the enormous +28.51% return in January of 2012, the cumulative gains of our Crisis Investment Opportunities newsletter portfolio from launch in June, 2007 to January, 2012 of +202.22% has enormously outperformed the S&P 500, the FTSE 100, the ASX 200 respectively by +216.54%. +217.94%, and +232.72% and outperformed the benchmark PHLX Gold/Silver index by +157.07% during this same investment period.

Did Bankers Deliberately Crash MF Global to Crash Gold and Silver Prices?

Gold & Silver Banker-Cartel Prolonged Price Suppression Has Set the Foundation for an Explosive Move Higher in 2012

In the first article, “Did Bankers Deliberately Crash MF Global to Crash Gold and Silver Prices?” I discussed two crucial points that are important to anyone that keeps any amount of digital savings in a bank (due to the fractional reserve system, the majority of the global currency in circulation today exists in digital form only). One, bankers deliberately invented paper markets in gold and silver to kill the influence that the physical demand and supply determinants of gold and silver have over prices. Two, bankers have historically rapidly contracted and expanded paper gold and paper silver contracts (that are backed with nothing but air) to introduce volatile movements in gold and silver with the express intent of scaring people away from real money (physical gold and physical silver) and keeping people invested in their bogus paper and mostly digital money (Euros, USD, Yuan, Yen, Pounds Sterling, etc.).

In relation to the MF Global debacle, we released private messages to our members that warned them that the MF Global liquidation and theft of client assets provided hard direct proof and critical legal precedent, that in the event of a bankruptcy of a major financial firm, clients had zero rights and property theft was now being sanctioned by and approved of by the State. There are still millions of people today that don’t understand the very dangerous precedent that MF Global set for future bankruptcies of financial firms that WILL HAPPEN in coming years.

If you have not been keeping up-to-date with the MF Global dispute over hundreds of millions of dollars of client money, then I highly urge you to read these three articles below:

MF Global Clients May Lose in $700 Million Bankruptcy Fight
SW Minnesota Farmer Testifies in Commodity Scam
How JP Morgan And George Soros Ended Up With MF Global Customer Money

The first MF Global article shows you that it is still a strong possibility that clients will lose $700+ million of their money they had with MF Global before it declared their bankruptcy. That is not a sum to sneeze at by any means.

The second MF Global article is in regard to a Minnesota farmer that has not been able to recover $253,000 he held at MF Global. The farmer claimed, “This money was real money in real banks. It wasn’t under somebody’s mattress,” a statement that underscores the lack of understanding about our monetary system that exists among the masses. In fact, the opposite of what the farmer stated is becoming true today. The vast majority of money that is used in global financial transactions today exists only in digital form, not even in paper form, so paper money stored under one’s mattress is more “real” than any digital bytes on a computer at your bank. Secondly, real money is not fiat digital or paper currency but real money is physical gold and physical silver, NOT paper gold and paper silver as those that bought gold futures contracts with MF Global, hoping to take delivery of physical gold with their paper contracts, sadly discovered.

The third MF Global article, emphasizes, just as the US & many EU countries demonstrated during the 2008 free fall of financial stocks, that lawmakers and regulators are in the back pockets of bankers and will always change the laws at their whim to benefit the bankers and to defraud the people. In 2008 to prevent bank stocks from plummeting that were deservedly plummeting, lawmakers in the EU and the US forced a short squeeze higher in financial stocks by arbitrarily changing the laws and banning any short sale of any bank stocks. Even though MF Global was clearly operating as a commodities firm, they applied for and were granted, the right to be dissolved as an equities firm. In this case, everyone from the legal system and the trustee of MF Global are merely ignoring the law to profit the bankers and defraud the clients.

“Rather than being treated as a bankruptcy of a commodities brokerage firm under sub-chapter IV of the Chapter 7 bankruptcy law, MF Global was treated as an equities firm (sub-chapter III) for the purposes of its bankruptcy, and this is why the MF Global customer money in so-called segregated accounts ‘disappeared’. In a brokerage firm bankruptcy, the customers get their money first, while in an equities firm bankruptcy, the customers are at the end of the line.”

In laymen’s terms, the unfolding debacle regarding MF Global also has critical repercussions and implications regarding the implied safety of any money you have in a money market account or savings account at a bank. Remember MF Global clients believed that their money was being held in “segregated” accounts that protected their assets in the event of a bankruptcy. If you don’t believe that the MF Global bankruptcy proceedings has affected how banks view their clients’ deposits, then you are hugely mistaken. At the end of last year, Bloomberg ran a story titled “BofA Said to Split Regulators Over Moving Merrill Derivatives to Bank Unit.” In this article, the journalist stated, “The bank doesn’t believe regulatory approval is needed”.  ZeroHedge explained why BofA was making this move in their article “Bank Of America Forces Depositors To Backstop Its $53 Trillion Derivative Book To Prevent A Few Clients From Departing The Bank”:

“it shifted anywhere up to the total of $53 trillion of the total derivatives it held as of June 30 (as Zero Hedge previously reported) on its books at Q2 from the Holding Company, which was downgraded last by Moody’s from A2 to Baa1 (the third-lowest investment grade rating) to its retail bank, which was downgraded to the far more palatable A2 (from Aa3). The reason for the transfer? Bank customers who were uneasy with the fact that suddenly the collateral backstoping the operating entity handling their counterparty risk was downgraded to just above junk, demanded that said counterparty risk be mitigated by the bank’s $1 trillon in deposits.”

The MF Global case has clearly demonstrated that any insurance of banking accounts up to $100,000 or $250,000, no matter what country in which you reside, is simply MEANINGLESS if

(1) the insurance company insuring the aggregate deposits in your country is severely underfunded;
(2) the ruling corporatocracy allows financial firms to steal your property in the event of a bankruptcy; and
(3) banks are using customer deposits as collateral against the riskiest of their junk assets

All three of the above have already been proven to be the case inside the United States and will likely be the case in countries around the world as well. From the US Federal Deposit Insurance Corporation’s (FDIC) own website, you can find this statement: “On July 21, 2010, the President signed the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) into law. The Dodd-Frank Act established a minimum designated reserve ratio (DRR) of 1.35% of estimated insured deposits, [and] mandates that the FDIC adopt a restoration plan should the fund balance fall below 1.35 percent.”

As recently as March, 2009 the US Deposit Insurance Fund had as little as $13 billion to insure nearly $4.83 trillion of deposits in US banks. By mid-2009, five US banks, Citigroup, JPMorgan Chase, Bank of America and Wells Fargo, held about 39% of all deposits in the US and in 2012, that figure is almost certainly higher given the large number of US bank failures since mid-2009 until the present day, including very large US banks like Washington Mutual (which yours truly predicted in advance). It doesn’t take a math genius to understand that should just one of these top US banks fail,

(1) the Deposit Insurance Fund would be completely wiped out, thus rendering the $250,000 guarantee of bank deposits worthless and meaningless; or
(2) necessitate the creation of trillions of new money to maintain the guarantee, thus severely degrading the value of all existing money, thereby making the guarantee worthless once again.

Should a large US bank or European bank go bankrupt, a highly likely event in the future that can only be prevented by excessive monetary creation (which in essence is admission that the bank is bankrupt), then once can refer to the recent MF Global debacle to understand that no one will have any rights in recouping any money that is lost during a bank’s bankruptcy. If push truly comes to shove during a bankruptcy of a financial firm, and a decision must be made to either make the clients whole or the creditors of the bank whole, we all know that the clients (us) will lose the battle.

These critical talking points lead nicely into our second blog article, “Gold & Silver Banker-Cartel Prolonged Price Suppression Has Set the Foundation for an Explosive Move Higher in 2012.” As we stated in that article, sentiment was the lowest in nearly three years regarding gold & silver mining stocks at the end of 2011 and that entering 2012, bankers were still heavily distributing propaganda that silver was going to crash to $20 an ounce and gold was going to crash to about $850 to $1,000 an ounce. I made it clear in that article that strong fundamentals in the gold & mining sector combined with super low bullish sentiment in the mining sector produced a super strong buying opportunity and fantastic valuation for gold & silver mining stocks. In this article, I stated:

“there are still many reasons to expect a stellar next couple of years from gold and silver performance, including the mining stocks. From a technical standpoint, gold and silver appear to be on the verge of making a very significant run higher. I’m not saying that this will happen tomorrow, but it does look very probable within a short-time period. From a manipulation factor standpoint, gold and silver also look poised for a run higher too.”

and

“we see 2011 as nothing more than a temporary setback in gold/silver mining stocks…from a technical standpoint, gold and silver appear to be on the verge of making a very significant run higher. I’m not saying that this will happen tomorrow, but it does look very probable within a short-time period.”

Given the severe undervaluation of gold and silver and the fact that nobody should ever trust paper gold and paper silver futures as a means of taking delivery of real physical gold and real physical silver ever again. We believe that the divergences between paper gold and silver futures and spot prices and real physical gold and silver prices will eventually become enormous, as we first started predicting would happen in 2008, with premiums in the price of physical gold and physical silver eventually rising so high above the paper prices that the paper gold and paper silver markets will either

(1) eventually be ignored for purposes of price discovery; or
(2) eventually implode into its own current cesspool of lies, fraud and deceit.

Many new investors to gold and silver investing always make the mistake of trying to time exact bottoms and also to repeatedly time exact tops and to exit and re-enter markets repeatedly during the year. Given the enormous amount of volatility that the global banking cartel has introduced into all paper gold and paper silver products, including mining stocks, we believe that this type of mentality is counter-productive when the long-term picture in gold and silver has been as clear as it has been for the past several years. For example, when silver dropped below $30 an ounce last year, it was entirely irrelevant to one’s long-term wealth whether one purchased silver at $30, $29 or $28 an ounce given the fact that the probability silver will eventually rise to triple-digit dollar prices is extremely high.

We have always told our members that is a mistake to try to time the absolute bottoms of these corrections. When tremendous value exists in a sector, as existed in mid-January in the mining sector, then we always tell all new members to our services to “go all in” in their buying strategies during these times and to not worry about any short-term downside volatility or any of the misinformation being spewed by the financial mass media during these times about collapsing gold and silver bubbles. Furthermore, when the US Federal Reserve announced recently on January 25, 2012 that they would be extending low-rates into late 2014 and jump-started a one-day 5%, 6%, 7%, 8% explosion in gold and silver stock, this underscores my point even further. When the global banker cartel slams gold & silver mining stocks by 10% or more as they did at the end of last year, taking an already undervalued sector to greatly undervalued status, if one understands fundamentals, one will always view this as nothing more than a buying opportunity and not as a time to panic.

The performance of our Crisis Investment Opportunities newsletter portfolio, in August of 2010, was flat YTD, but then piled on whopping +33% gains in the last four months of the year. In 2008, our portfolio gains of a nominal 3.21% gain was followed by explosive gains of +63.32% in 2009. Though last year was our most difficult year to date since we launched our newsletter in June of 2007, our cumulative gains from June, 2007 to December 31, 2011 of +135 .18% has still outperformed the S&P 500, the FTSE 100, the ASX 200 respectively by +153.12%. +152.37%, and +169.20%. Thus, our track record of outstanding performance over time backs up our strong belief that worrying about every rise and fall in gold and silver every year will do nothing but drive you crazy and merely prevent you from handling your investments properly and intelligently. It is impossible to predict every single global banking cartel smash down of gold and silver with perfect accuracy; however, as long as one can foresee enough of them, as our outperformance of the PHLX Gold/Silver index by +104.75% over the last 4-1/2 years proves, and maintain the nerve and confidence to stay invested in gold and silver even when the “pundits” are screaming at you to get out, as they were at the end of last year and the beginning of this year, then you will do quite fine in continuing to build wealth as the monetary crisis deepens.

If one understands the possibility that all digital credits in your bank and investment accounts could disappear given the failure or a major global bank (an inevitable event it seems right now), then one should clearly understand that owning physical gold and physical silver is NOT an option but a necessity if you are to survive the second phase of this global monetary crisis. Even if we are wrong about the failure of digital financial products and fraudulent paper derivatives in the future, we will still be right, as owning physical gold and physical silver will continue to protect the purchasing power of people’s money as this monetary crisis deepens. Remember, though many have been jumping on the gold and silver bandwagon this week, we, at SmartKnowledgeU, have been publicly advocating gold (and) silver ownership since 2006, and privately, for years prior to 2006, for the same exact reasons we’re still advocating it today.

The global banking & monetary system is a fraud, a mess, and there is no turning back from US dollar & Euro destruction at this point.

Just click here to read our 2006 article “Gold’s Speculative Stigma is Unwarranted.” It’s taken about five years since we wrote that article for the public-at-large to understand that gold’s label as a speculative investment is not deserved and is mere banker propaganda. Within the next five years, the remaining skeptics will be forced to finally recognize that gold and silver are real money, and that Yen, Pounds, USD, and Euros are not.

Given the severe undervaluation of gold/silver mining stocks, junior mining stocks in particular, and the undervaluation of gold and silver right now, we believe now is an optimal time for new investors to gold and silver to begin their journey. To help all newbie investors to gold/silver begin their journey, we are currently cutting as much as 30% off of all our major services during a special, limited two-week sale that will run from January 26, 2012 to February 9, 2012. To receive the coupon codes for this sale, please visit us at www.smartknowledgeu.com and please join our mailing list.

About the author: In 2006, fed up with the rampant immorality of Wall Street, JS Kim, walked away from his job with a Wall Street firm to found and become the Chief Investment Strategist of SmartKnowledgeU, a fiercely independent investment research & consulting firm. Since then, JS has tirelessly campaigned to increase understanding about real money like gold and silver and about the fraudulent nature of fiat money.

At the end of last year, there was a lot of chatter on the internet, due to the end-of-the year slam down effected on gold and silver futures by the global banking cartel, that silver prices were going go collapse to $20 an ounce and gold prices were going to collapse well below $1000 an ounce by the first quarter of 2012. We felt that these discussions and the consequent, induced panic selling out of gold/silver mining stocks and physical gold/silver at the end of 2011 was highly unwarranted and the result of people falling for the global banking cartel price suppression tricks. In fact, we sent Special Alerts to all of our clients at the end of 2011 informing them that the banking cartel often paints charts in gold and silver to fool people and that one cannot make accurate predictive behavior based upon the assessment of technical charts alone.

At SmartKnowledgeU, it has always been our mantra that technical analysts often make huge mistakes in their predictive calls due to their sole reliance on technical charting and therefore often have to flip-flop like a politician on their calls regarding gold and silver, one moment calling for a huge crash and to sell everything gold and silver, the next moment calling for a huge run-up and to buy back everything gold and silver. While nimbleness is a good trait to have given the volatility of gold and silver assets and staying on the sidelines is sometimes necessary, trying to get out of the market on every single weekly downturn in gold and silver will surely drive an investor insane. Thus, sometimes it is necessary to ride out difficult periods of volatility and maintain your eye on the long-term trend instead of short-term banking cartel tricks. We prefer to remain more long-term trends with our calls and to keep our eyes grounded on a more fundamental outlook that incorporates technical analysis with more than a decade of knowledge regarding global banking cartel price suppression schemes. We have stated since day one of launching our company in 2006 that gold/silver technical analysis performed without incorporating the contextual nuances of global banking cartel price suppression schemes will not be accurate, especially since the cartel’s gold and silver price suppression schemes exert the most influence right now over setting the futures and spot prices.

Last year, we informed our clients at the very start of the year in January of 2011 that 2011 would yield massive volatility in gold and silver assets, proclaiming the coming year as “The Year of Volatility”. Before the year started, we knew that 2011 would produce a fierce battle between the global banking cartel and the dynamics of the physical markets for gold and silver as the global monetary crisis deepened. And indeed it did. Though we can mark 2011 as a win for the global banking cartel as they collapsed open interest in gold and silver futures repeatedly throughout the year by raising initial and maintenance margins for gold and silver futures (once raising margins on silver futures a ridiculous five times in just 9 days when silver broached $50 an ounce) and by also using the MF Global bankruptcy to force involuntary client liquidation of gold/silver futures at the end of the year, I am confident that all the banking shenanigans of 2011 has set the stage for a spectacular year ahead for PMs in 2012. If you are interested in my thoughts about how the banking cartel used the despicable MF Global fiasco to collapse gold and silver prices, you can read about it here: Did Bankers Deliberately Crash MF Global to Crash Gold and Silver Prices?

In 2011, due to the extreme volatility in gold/silver mining stocks, there were periods we opted to cash out and sit on the sidelines preceding banking cartel smash downs of gold and silver prices, and other periods we opted to stay in the market and ride out the extreme volatility due to our belief that the downside volatility would be short-lived. Thus, admittedly we had to sacrifice short-term performance for our mission of a longer-term reward with the gold and silver mining stocks in 2011. As you can see in the chart below, the HUI Gold Bugs Index re-tested lows in the 490-500 range on five separate occasions last year and greatly underperformed the metals themselves. No wonder bullish sentiment regarding gold and silver stocks just recently hit a three-year low!

However, despite the severe underperformance of the mining stocks last year, from the launch of our Crisis Investment Opportunities portfolio in June 2007 to December 31, 2011, even in light of our slight setback of 2011, our cumulative performance of +135.18% during the past four-and-a-half year period has still respectively outperformed the S&P 500, UK FTSE 100, and Australian ASX200 indexes by whopping +153.12%, +152.37% and +169.20% margins. Furthermore, our Crisis Investment Opportunities portfolio has even outperformed our closest comparable index, the Philadelphia Gold/Silver Sector (XAU) index by a whopping +104.75%. Thus we see 2011, as nothing more than a temporary setback in gold/silver mining stocks, and we’ll explain why below.

More than 3 years ago, on October 16, 2008, I wrote an article titled, JS Kim Uncovers Four Parallel Markets for Gold: Asia Futures, NY Futures, Physical Bullion, Physical Coins. In this article, I discussed the complicity of regulatory agencies such as the CFTC in the global banking cartel price suppression scheme executed against gold and silver that was, at the time, creating very significant premiums in the futures and spot prices in Asia over the Western markets, and in physical gold/silver prices over paper gold/ silver prices. Since the time I wrote that article, I have followed up with many more articles that express my belief that the premiums of physical gold/silver will increase, and eventually in exponential fashion, over the prices of bogus global banking cartel-produced paper gold/silver derivative products. Eventually, I believe that the world will ignore these bogus paper gold/silver markets entirely when setting prices for physical gold/silver. Because the global banking cartel expended so many of their bullets in 2011 in keeping the price of gold and silver much lower than their respective free market prices, it is of my opinion that it will be much more difficult for them to contain the price of gold and silver moving forward in 2012.

Today, there are still many reasons to expect a stellar next couple of years from gold and silver performance, including the mining stocks. From a technical standpoint, gold and silver appear to be on the verge of making a very significant run higher. I’m not saying that this will happen tomorrow, but it does look very probable within a short-time period. From a manipulation factor standpoint, gold and silver also look poised for a run higher too. So the two factors I use to assess gold and silver’s direction both appear aligned with one another to move gold and silver higher very soon.

As far as the timeframe? Currently, due to excessive banker meddling in gold and silver futures markets, and the unknown factor of when greater divergence will occur between physical and paper PM prices as public awareness of the paper scam grows, the exact “when” part of the equation is the most difficult to assess, though I still believe that we will see some strong moves higher in gold and silver during the first quarter of 2012. Furthermore, I strongly believe that gold and silver will still both rise multiples higher than their current banker-suppressed price and that 2012 will see periods of explosive growth for gold and silver, more so for silver than gold, and that PM mining stocks, although accompanied by great volatility once again, will perform much better than they did in 2011. I believe that the largest difference between 2012 and 2011 will be, despite some continued large bouts of volatility in the PMs, a much stronger annual trend higher for gold and silver.

The start of 2011 was a phenomenal start for junior mining PM stocks but the latter half of the year was very negative. Still, one could have done very well in 2011 with junior mining stocks by taking profits off the table when they existed and letting one’s remaining capital ride risk-free in the junior mining sector. In addition to using discipline to protect profits when they exist in the junior mining sector, the greatest friend of a gold/silver investor is patience. Sometimes one knows that great moves higher are coming, but one’s timing may be off by a mere six to nine months. Patience will allow one to still reap the bulk of the rewards from these great moves higher as long as one isn’t shaken out of the markets by the banking cartel induced price volatility in gold/silver assets. To this end, I leave you with 10-year charts of gold and silver. Sometimes, it really is necessary to step back and take a deep breath to see the forest from the trees. To sign up for our free investment newsletter, please visit SmartKnowledgeU and sign up here.

About the author: JS Kim is the Chief Investment Strategist and Founder of SmartKnowledgeU, a fiercely independent investment research & consulting firm with a focus on precious metals. For much more detailed commentary about gold and silver, consider the SmartKnowledgeU Crisis Investment Opportunities newsletter.

Republishing rights: The above article may be reprinted at other websites as long as all text and links above, including the author acknowledgment, remain intact as is.

The futures markets in commodities is such a deceptive market that it is hard to know even where to begin to unravel its many mechanisms of deceit in all their glory. Futures contracts traded on the world’s largest commodity markets such as the COMEX in New York and the LBM in London allow bankers to commit reverse alchemy, turning real physical gold and real physical silver into nothing but false paper contracts and air. Secondly, through futures contracts traded in New York and London, bankers routinely defy the economic principles of supply and demand, and set short-term prices for gold and silver that literally have zero to do with the supply and demand dynamics of the physical gold and physical silver market. In the world of physics, such an illogical, comparable feat of deception would be the indefinite suspension of the law of gravity. Bankers invented paper derivative gold and silver markets to allow themselves to literally defy and suspend every single sound economic principle that exists.

This is important to understand because not only does understanding this concept make the bulk of what you learn in business school a lie and entirely useless, but also because bullion banks such as Deutsche Bank, Citibank, JP Morgan, Goldman Sachs et al that serve as the puppet conduits for more powerful families that control Central Banks, routinely used to lease physical gold into the open market as their primary mechanism to suppress the price of gold and silver. However, as their mechanism of fractional reserve banking began to threaten the viability and utility of the most widely used fiat currencies in the world, the USD and the Euro, bankers understood that they needed to utilize and/or create another mechanism to suppress gold and silver prices that could replace selling physical PMs into the open market as they no longer wished to give up a solid asset with no third party counter-risk for what they knew they were turning into essentially worthless pieces of paper. Thus bankers increasingly turned to the paper futures markets to manipulate and control the price of gold and silver and also served up additional bogus derivative products to the public like the GLD and SLV ETFs. Bankers knew that there was no way they could possibly control the price of gold and silver if the supply and demand determinants of physical gold and physical silver had anything to do with the price, so they conspired to fool the world into believing that the fake paper price they set was set by the supply and demand of the physical markets.

Collapsing OI of Gold/Silver Futures Markets Directly Related to MF Global Collapse?

And here’s where MF Global enters the banking cartel gold and silver price suppression scheme. Today, short-term futures and spot prices of gold and silver have almost nothing to do with the physical supply and demand dynamics of gold and silver, as odd as that may sound. Bankers created the futures markets and paper derivatives in gold and silver to kill free markets and for the express purpose of suppressing gold and silver prices. Today we literally have no idea what the free market price of gold and silver should be or could be, besides the fact that both would be multiples higher than their current price, because of the fake paper market in gold and silver that the bankers created.

As well, bankers ensured that they armed a legion of worker bees in commercial investment firms all over the world that would represent these paper derivatives backed by very little physical gold and silver to their clients as the equivalent of investing in 99.999% pure physical gold and silver. In doing so, the worker bees thereby lured people all over the world into what will turn out to be the fatal mistake of not buying millions of troy ounces of physical gold and silver and instead buying their offering of fool’s gold and fool’s silver. When we receive a massive default of gold and silver futures contracts that stand for delivery on the COMEX or LBM, or if the SLV and GLD default, then, and only then, will the public start to see true price discovery of physical gold and physical silver in action. However, for clients of MF Global, unfortunately, they have already experienced the mistake of buying fool’s gold and fool’s silver from the bankers and have received air in exchange for gold and silver futures contracts they purchased that stood for delivery.

Bankers invented fake paper gold and silver contracts, because they knew that if they could not fulfill contractual obligations to deliver physical gold and physical silver because the contracts were a binding lie to begin with), that they could always renege on these contractual obligations and give the people the nothingness they truly owned in return. And thus, we have the story of MF Global.

Ratings agencies downgraded MF Global on Oct 25 and MF Global declared bankruptcy on Oct 31. If one scours the data that the Chicago Mercantile Exchange (CME) releases via its aggregated Commitment of Trader (COT) reports during this time period, one may not notice any data that immediately stands. However, investigation of the disaggregated reports reveals far more interesting patterns that almost undoubtedly can be traced back to the collapse of MF Global. In a period just preceding the MF Global collapse, from late August to mid October, the open interest (OI) in longs in gold and silver futures within the Managed Money category collapsed by 33.75% in gold (202,430 to 136,103) and 44.74% in silver (29,849 to 16,494). During this exact same time period, shorts in the gold and silver futures in the Managed Money category increased by 19.3% and 83.82% respectively (see the chart below). Within the Managed Money category, between Sept 13th and 27th, in just a two-week period, the drop in OI in the longs in gold and silver futures was even more pronounced, with a 25.41% plunge and 34.3% plunge in silver. I imagine if someone could trace the connection of this plunge in OI in the Managed Money category in the gold and silver futures markets, one would discover that a good deal of the plunge was somehow directly tied to the impending MF Global bankruptcy and its freezing and/or liquidation of gold and silver futures accounts in its possession.

After Phase I of the collapse in OI in the gold and silver futures markets, Phase II followed. When the story about MF Global’s legalized client theft hit the presses, an enormous public distrust of the entire futures markets started to build. If clients lost millions of dollars in gold and silver futures accounts due to forced liquidation or freezing of contracts that they were holding for delivery, anyone that had considered using the futures markets to take delivery of real gold and real silver following the MF Global debacle obviously reconsidered their options. Thus, due to the massive fraud of the futures markets that was revealed by the MF Global collapse, another huge drop in the OI of gold and silver longs in the Managed Money category occurred during Phase II (as labeled in the above chart) that respectively amounted to an additional respective 11.79% and 7.48% plunge. In essence, it appears that the MF Global collapse served up the exact same price suppression effect as a CME issued initial or maintenance margin hike in gold and silver futures, which forces a tidal wave of unwanted and involuntary liquidation of gold and silver longs that consequently violate technical support lines and trigger technical sells.

Of course, we also have to factor in the temporary OI-increasing effect of the risk-on CME event when they lowered initial margins to a 1:1 ratio with maintenance margins at the onset of November. Still, given the figures presented in the chart above, it seems that bankers used the MF Global collapse to force liquidation of gold and silver longs in the futures market quite rapidly and drastically. Why is this important? This is important because typically strong hands ride out any temporary banker manipulations of gold and silver prices downward. In this case, strong hands, if they existed at MF Global, were not given this opportunity and were forced to liquidate or had their accounts frozen whether or not they desired such an outcome. Furthermore, if primarily strong hands were forced out of the futures market, this would leave the majority of volume in the gold and silver futures markets primarily in the hands of the criminal banking cartel. We’ve seen repeatedly, this past year in the US S&P 500 index, when low trading volume primarily controlled by the banking cartel has translated into curious and inexplicable market bounces of 2% in a single day. In other words, low trading volume allows bankers excessive and easy manipulation over markets. If this was indeed the scenario bankers deliberately created with the MF Global collapse, then the MF Global collapse and simultaneous collapse of open interest in gold and silvers futures certainly would have paved the way for the banking cartel to easily manipulate gold and silver prices.

There was also further circumstantial evidence that bankers used the MF Global collapse to collapse gold and silver futures markets at the end of 2011. For example, in an article posted on the SilverDoctors blog by Jim Willie in which he gathered data regarding the amount of physical gold and silver ounces represented by the longs at MF Global that were standing for delivery in the futures markets before these contracts imploded, he stated: “JP Morgan increased the amount of registered silver and gold by precisely the amount that was suppose to be delivered [by MF Global]…JP Morgan effectively averted both a Comex default and a European Sovereign Debt implosion.”

Silver Lining in the MF Global Debacle?

Can there be a silver lining in the MF Global debacle? I believe that in the long-term, this extremely unethical, negative event could transform into a positive game-changer in the way people buy large amounts of gold and silver. Obviously, the futures market is not a safe market for anyone seeking to take delivery of millions of dollars of physical gold and silver as many MF Global clients learned. The GLD and SLV ETFs, of course, are no safer than any gold or silver futures contract for the same reasons. So in the future, and I mean the immediate future starting now, I believe that large buyers of physical gold and silver will now opt to bypass the bullion bank’s middle men in the futures market and go directly to the gold and silver mining companies to buy large quantities of bullion. This should eventually help usher in the death of futures markets as a mechanism for buying physical gold and physical silver and be a step towards establishing a free market for gold and silver prices for the first time in our lives. Mark Cutifani, CEO of AngloGold Ashanti, recently echoed the same: “Major [asset management fund] buyers are finding it is hard to get physical gold. People are coming directly to us [for large gold purchases,] people who want tonnes of physical gold, people with serious financial muscle, because they are finding it is very difficult to secure the volume of gold they want. That is something we have noticed over the last 18 months, and it has been increasing in the last six months. People are finding it’s hard to get physical gold.”

People that want to own physical gold and physical silver never should have been buying the GLD, SLV, or gold and silver futures. Now, in light of the MF Global debacle, scores of people will stay away from these fraudulent vehicles for good.

About the author: JS Kim is the Chief Investment Strategist and founder of SmartKnowledgeU, a fiercely independent investment research and consulting firm with a mission to help re-establish the monetary freedom that bankers have stolen from us. Despite believing that gold and silver will remain highly volatile in 2012, JS believes that long-term holders of physical gold and silver will be richly rewarded as bogus paper gold and silver derivatives start collapsing and reach their intrinsic value in coming years. Follow JS on Twitter and Facebook.

Republishing rights: The above article may be reprinted as long as all text, links and the author acknowledgment remain intact and exactly as printed above.

There has been much acceptance of the theory that Central Banks and bankers perpetually manipulate gold and silver spot prices through the gold/silver futures markets due to strong circumstantial, non free-market evidence such as gold/silver futures prices being significantly higher in Asian futures markets versus Western futures markets for long stretches of time as well as out-and-out flagrant behavior such as the irrational raising of initial and maintenance margins on silver futures five times in nine working days into falling prices instead of into rising prices. For those not aware of the multitude of schemes Central Banks execute to suppress gold and silver futures prices, please refer to this article, JS Kim Uncovers Four Parallel Markets for Gold, when during the Wall Street collapse of 2008, bullion banks (controlled by Central Banks) routinely knocked the gold futures price down by $10, $20, $30 and sometimes even $40 an ounce usually right at market open of the NY COMEX at a time when gold was trading at less than $900 an ounce and such movements reflected 2%+ to 3%+ waterfall movements downward in price (comparatively speaking today, such percent movements would consist of $40 to $50 an ounce movements downward.

Since then, bullion banks have executed this scheme over and over, pulling bids at the market open of the NY COMEX to cause a waterfall decline in gold futures prices in a matter of a few minutes. Throw in for good measure that you can check all US holidays when the COMEX is closed for the past five years and you can find nary a day when gold is not higher or at least about even, simply for the reason that the NY Comex is closed and the Western banking cartel is non-operational in the gold/silver markets on these days. If this circumstantial evidence, literally the tip of the iceberg in the mountain of circumstantial evidence of banker price suppression schemes against gold and silver futures, is insufficient to convince the most stubborn of skeptics, then consider former US Federal Reserve Chairman Alan Greenspan’s statement in 1966 that:

“An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense – perhaps more clearly and subtly than many consistent defenders of laissez-faire – that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.”

Would not statists that support the doctrine of seizing centralized control over economic planning and monetary policy, not covertly and actively suppress the price of gold, if the most famous Central Banker himself stated that they possess “an almost hysterical antagonism” towards gold? Today, nearly half a century later, banker propaganda and re-education campaigns regarding gold and silver have been so successful that Greenspan’s accusation that many defenders of the laissez-faire doctrine fail to recognize that gold and economic freedom are inseparable still stands true. I’ve read numerous essays by those that argue for less government interference in business and monetary affairs and for stronger free markets but yet vehemently deny that bankers ever interfere in gold and silvers futures markets through active price suppression schemes.

However, as I’ve written extensively about this topic for six years at my investment blog theUndergroundInvestor.com and will address this topic further in two books I will release by year’s end, I do not want to stray from the main topic of this essay: Gold and silver mining shares offer tremendous value and tremendous upside right now due to the fact that bankers have worked very diligently to suppress the price of gold and silver mining shares for the past 12 months.

I’ve always been surprised over the years by the lack of accusations from the CEOs of the mining world that one of the primary reasons, if not the primary reason, for the underperformance of their share prices in recent years are banker price suppression schemes enacted against the PM shares. I realize that many industry analysts refrain from making this accusation due to the fact that they are being afraid of labeled by their peers or superiors as “loony, conspiracy theorists” but who cares if someone at the CFTC or some top PM analyst at Goldman Sachs or Citigroup calls you a “loony”. Due to macro and micro-economic predictions that have the track record equivalency of Ben Bernanke, most of these guys have as much credibility as a talking dolphin, so to be discredited in an ad hominem attack by any of these guys should truly pose no worry. However, nearly all mainstream gold/silver analysts appear to still engage themselves in censoring the truth due to concerns of being ostracized by the mainstream financial industry. As far as I’m concerned, being ostracized by the criminal mainstream financial industry, in my opinion, should present one with the mark of credibility.

When I first started publicly speaking about the banker executed price suppression schemes against gold and silver futures prices six years ago, bankers tried to discredit and call me crazy back then, but now, six years later, such explanations for inexplicable movements downward in gold/silver futures markets when physical supply/demand fundamentals demand upward price movements are at times, even accepted by the mainstream media, or at a minimum, now reported by them instead of being ignored by them. These are huge steps forward in dispensing the red pill of truth to skeptics regarding the true reasons behind volatile price movements downward in the gold and silver markets. Furthermore, whenever I presented factual evidence of the manipulation in gold markets, most banking analysts that disagreed with me countered my arguments with simple ad hominem attacks that never once provided a solid refutation of, nor a credible argument against the evidence I presented, circumstantial and factual (in the form of Central Bank documents that specifically addressed their desire to suppress gold prices). I believe the same three stages of truth as described by German philosopher Shopenhauer, will also manifest itself in regard to PM mining shares just as they have manifested/are about to manifest with gold/silver prices: (1) First, truth is ridiculed; (2) Second, truth is violently opposed; and (3) Third, truth is accepted as self-evident. Finally, if people so widely accept now that bankers are interfering in suppressing much higher free-market prices from operating in gold and silver futures markets, is it really that much of a deductive leap to assume that they would also be interfering in suppressing free-market prices in gold and silver mining shares?

As is the case with the behavior of gold/silver futures markets, numerous illogical anomalies that manifest themselves with regularity in the gold/silver mining shares first made me suspect that bankers were routinely interfering with the prices of gold and silver mining shares. To illustrate my point, let’s look at the performance of a couple of flagship gold and silver mining shares versus the performance of some flagship retail and financial shares.

From the chart above, you can see that the mining shares either significantly outperformed or astoundingly outperformed non-mining industry companies with a similar market cap size in simple financial metrics except for share price appreciation in the last year, a category in which they astoundingly underperformed their competitors. I am not. In the case above, I have only provided a very basic example to illustrate how drastically undervalued share prices of producing gold and silver companies are right now. I fully realize that I am not comparing apples to oranges, but I merely wanted to illustrate how companies’ share prices with healthy earnings and revenues outside of the mining sector act, since bankers have targeted gold and silver mining shares as a sector for price suppression schemes. Thus, I had to look outside of the PM sector to provide examples of what should be happening with the PM mining share prices. And I only call the other company “competitors” of the mining stocks because the goal of commercial investment industry analysts is to prevent you from buying the most undervalued stocks in the entire market and to keep you invested in overvalued and overpriced stocks. After all, when gold and silver mining stocks finally get going in their next upleg, which may be very soon, investors will naturally want to also invest in physical gold and physical silver and thus dump the broad stock market index portfolios they may currently maintain. So in essence mining stocks are competitors of the retail and tech stocks though most would say they are not.

Furthermore, most would argue that substantially lower prices in the price component of PEG ratios are justified for the mining sector due to the typical volatility of mining shares, but this past year, this argument only serves to support my thesis regarding the fact that mining shares are the most undervalued sector and the most underappreciated sector in the market right now. Sectors that are viewed as volatile typically are expected to have lower share prices to compensate for the added risk of holding shares in that sector. However, this year, given that the broad stock market index of the S&P 500 has traveled an incredible 1,230+ points up and down since May 1st but has remained relatively unchanged in value, extra volatility of mining shares over components of broad stock market indexes does not justify lower share prices of the mining stocks. Furthermore, because banker attacks on gold and silver mining shares, whether achieved by indirect take downs of gold/silver futures prices and/or direct sell-offs of the shares during times of low volume trading, are responsible for the added volatility of PM shares, arguing that the volatility of the sector justifies lower PM share prices also loses credibility.

Even if we disregard this admittedly circumstantial argument, if we compare the trading ranges at which these four stocks traded at during most of the past 12 months, the volatility comparisons do not justify the huge differences in the PEG ratios of the past 12 months between the PM stocks and the stocks that trade on the broader stock market index. Chipotle traded between a range of $270 and $340, or a 25.93% spread for most of the year while Silver Wheaton traded in a range between $30 and $40 a share, or a spread of 33% most of the year, though both stocks traded both higher and lower than these ranges for short periods of time. Though this is but a comparison of two stocks out of hundreds of mining stocks and a couple thousand NYSE stocks, and though some may argue that Chipotle is overvalued at its current share price and PEG, many PM mining stocks across the board are flush with huge cash reserves, soaring revenues, double digit earnings growth for several consecutive quarters, but yet have experienced stagnant or even negative share price growth over the past 12 months. Again I am only comparing Chipotle to Silver Wheaton to highlight the massively manipulated state of flagship gold and silver mining companies over the past 12 months and not because I think a direct comparison is the most apropos one.

Besides the totally illogical performance of Barrick Gold and Silver Wheaton above when considering their PEG ratios and their massively positive earnings growth over the last year, I have witnessed numerous anomalies over the past decade that convince me beyond a shadow of doubt that bankers manipulate the prices of gold and silver mining stocks downward on a persistent and consistent basis to prevent the masses from understanding that ownership of physical gold and physical silver will liberate them from our current morally bankrupt, illegitimate and unconstitutional monetary and banking system. For example, during dozens of options expiration days over the past five years in particular, I have witnessed uptrends in the price of numerous mining stocks stall and shed 3% to 4% from the previous day’s market close on literally no negative news other than the fact that it was OpEx day. And usually the prices of mining stocks, on days when this happens, gap down significantly on market open. Then, the following Monday after OpEx day is finished, the uptrend in mining shares will resume. Yes, one can call this behavior coincidental but anyone that does so would be dismissing the laws of probabilities and calling for a new mathematical paradigm to apply only on OpEx days. The percent chance that attributes such regular and repeated price action behavior that occurs only on OpEx days to the probabilities of “random noise” would likely come in at less than a fraction of 1%.

For the first time I can recall in recent times, the CEO of a major PM mining company finally spoke out about the ridiculous and likely intervention of the banking cartel in suppressing the price of not only PM futures but PM share prices. Keith Neumeyer, the CEO of First Majestic mining, recently voiced his opinions behind the downward price volatility not only of gold/silver futures but of gold/silver mining shares: “I don’t think supply and demand has anything to do with the price [of silver], unfortunately. The world we live in today is a paper environment where silver is priced by financial circumstances. Banks, traders and investors around the world move markets to where they want them to be. Governments and commercials—big banks like HSBC and JP Morgan—all have a piece of the action. They alternately work together or sometimes against each other. All these forces price the metal. That’s one reason we’re seeing the volatility that we’re seeing today.” Dramatic silver volatility “has to do with the financial instruments that we trade in and with the fact that silver trades a billion ounces per day on the COMEX alone when there are 26 to 30 million ounces of silver available for delivery. With that kind of leverage, you just don’t have a proper market… The governments, regulators and bullion banks have let the silver market get more and more leveraged. We’ve seen a lot of wealth destruction as a result of this leverage and we’re going to see a lot more until, finally, the governments decide to change the system.” With these scathing comments about the casino like nature of banker-rigged gold and silver markets, Neumeyer hit the nail squarely on its head.

Unfortunately, governments, because they are partners with the bankers in this system of cronyism, will never voluntarily change the system. Thus, here is the billion dollar question if one understands the tremendous illicit activity of bankers in rigging gold/silver PM shares much lower than their free market prices: Why would you want to buy into these shares even if they are remarkably undervalued right now given massive banker desire to control and suppress their share prices? After all, all of this banker rigging convinced a few gold/silver technical analysts just two weeks ago to predict imminent collapses in the silver price to $20 an ounce in light of how bankers were “painting the charts” in gold and silver to keep investors fearful of these sectors. In fact, a look at the BPGDM (Gold Miners Bullish Percent Index) right now shows that bullish sentiment towards gold/silver stocks is practically non-existent though we are at a crossroads when people should be buying PM shares because of their current tremendous upside. So other than the fact that gold and silver mining shares offer great value right now, is there a reason to realistically believe that gold and silver mining shares will win their battle against banker initiated share price take downs any time soon? To answer this question, let me tell recall a couple of stories that will frame our current situation of negative sentiment about gold/silver mining shares in the proper perspective.

A couple of years ago, in April of 2009, I spoke in Asia to a group of investors at a time when bankers had knocked gold back down from the psychologically important $1,000 an ounce level for the fourth time in the about a period of 18 months. Back then, gold was trading at about $870 an ounce. The investors that attended my conference asked me back then why in the world they should buy gold at $870 if banker manipulation was one of the primary reasons responsible for the failure of gold to breach $1,000 an oz four consecutive times. Furthermore, they inquired, why couldn’t the bankers manipulate gold back down to $500 an oz if they could successfully prevent gold from breaching $1,000 on four consecutive occasions? I remember informing the investors that the banker manipulation schemes could only succeed short-term and that the bankers would fail long-term. Just as Central Banks’ endless rounds of QE will spectacularly fail long-term and only serve to kick the can of global economic failure down the road, the Central Banks’ price suppression schemes against gold and silver only kick the inevitable rises in gold and silver prices down the road as well. In addition, I informed my highly skeptical audience that the law of diminishing returns would apply to banker manipulation schemes that work against free market forces, and that each subsequent application of manipulation against free market forces would last a shorter time, as is evident in the chart above. Though there was a large gap of time between the second and third times that gold approached $1,000 an ounce after getting knocked backwards, the time in between the third and fourth time and the fourth and fifth time gold approached $1,000 an ounce was much more condensed. So those that remained skeptical and had more faith in banker amorality than in the belief they could defeat these banker manipulation schemes lost out on a 100% gain in the price of gold that has occurred between then and today.

If we look at the chart of the mining shares I presented above, the same pattern with the mining stocks that afflicted gold prices a couple of years ago is evident. The HUI Gold Bugs Amex has been turned back from the 600-610 level four consecutive times (with one false breakout in early September 2011) and each time bankers have rebuffed the index from this level, it has taken less and less time for the index to rebound to this level again as with the bankers’ attempt to defend the $1,000 an oz price level with gold. Though you may not recall, I remember many people being incredibly frustrated with the price action in gold from 2008 and 2009 and with some people selling all their gold as a result of the bankers’ intervention to control the price of gold, an action that ironically was the exact end goal of the bankers’ manipulation game. Today, despite the fact that we have history as a guide and the cliché that history always repeats itself, for some reason, I have seen many people become incredibly frustrated with the bankers’ rebuke of the attempts of gold and silver mining shares to climb higher and as I witnessed in 2009, I have seen people make the big mistake of dumping all of their gold and silver mining shares in the past couple of months due to frustration. In fact, after I scripted this article, Don’t Miss Out on One of the Best Investments of a Lifetime…Yet Again, on August 8, 2011 in which I advocated the HUI at 531.78 as a good low-risk, high-reward entry point to purchase some gold mining stocks, I received some comments that literally called me an “idiot” for writing this article after the HUI hit a low at market close of 502.92 in early October, even though this represented less than a 5.5% drop from the level I advocated buying mining stocks that past August.

As one can hardly legitimately call anyone an idiot for making a call that leads to a temporary 5% drop, I can easily guess the novice investor mistake that this irate person committed. Just as is the case today, as was the case on August 8, 2011, hardly any investors ever make a move when gold/silver assets are dirt-cheap. Instead they fall victim to the game of banker manipulation, and refuse to buy gold and silver assets when they present solid value as they fear a gold/silver crash. Consequently, they wait for significant rebounds before ever investing in gold/silver despite golden fundamentals at much lower prices that point to the strong possibility of much higher prices in the future. Even if much higher prices are followed by another round of manipulation and lower prices, interim volatility is irrelevant, as long as your decisions to enter gold/silver markets at the right time and prices are solid. I can only fathom that this person finally made the move to buy mining stocks after the HUI hit a short-term top of 635.04 one month after I advocated the buying of gold mining stocks. Thus, one month later, instead of being able to sit through a very manageable 5% drop, this investor likely panic-sold out of gold mining stocks after taking a 26% hit to his gold mining stock portfolio in little over a month. Though my call that PM stocks would be the best in class from that point forward to the end of this year has not yet come to fruition, I strongly believe that my end prediction will still prove correct, and that only the time frame of my prediction will be pushed out by several months. That is why I always provide timely guidance to my clients that distinguishes between the times we need to move into, or remain in cash, and the times we need to remain patient and fully committed. As I illustrated in my example above, timing can easily be the difference between easily waiting through a minor 5% correction or being stuck with a 26% loss after one month.

The short-term corrections of the HUI Gold Bugs index from the 600-610 level on four consecutive occasions has led to bullish sentiment being nearly non-existent for gold mining shares right now (and you could easily make the point that bullish sentiment in silver mining shares is even worse right now). Just as most investors committed the huge mistake of judging gold’s upside in 2009 as non-existent due to banker price suppression schemes, people are making the very same mistake in judging the upside of mining shares right now as non-existent. The banker price suppression scheme against gold and silver mining shares will fail, and I believe that the fifth approach of the HUI to the 600-610 level will be the time that the HUI breaks above this level for good and heads much higher.

Last time I saw an opportunity better than our current one in the mining shares, I informed my clients to double down on their positions in Silver Wheaton at $3.45 a share in November of 2008. Today with Silver Wheaton trading at $33.52 a share, those that acted during a time when sentiment regarding PM shares was at an all-time low, have been rewarded with a 872% gain in little more than three years. Though I don’t expect mining shares to gain 872% in 3 years again, no doubt there may be more than a handful that return several hundred percent in gains in the next three years.

We must not let our fear of bankers’ amorality and their desire to suppress our freedom scare us away from buying assets that will free us from their illegitimate and unconstitutional monetary system. If one remains too fearful to buy gold and silver mining shares due to banker introduced volatility into this sector, consider at a minimum, purchases of physical gold and physical silver to replace your fiat paper currencies and to replace your paper silver SLV and paper gold GLD ETFs. Also consider that the global broad stock market indexes have been no less volatile than mining shares this year with MUCH greater risk as banks have manipulated broad stock market indexes higher and mining share indexes lower. And what if I’m wrong about mining shares heading much higher from this point forward? The aforementioned Keith Neumeyer, CEO of First Majestic Silver, provides perhaps the best answer to have faith that history will repeat itself with the mining stocks share prices eventually moving higher into their free market, non downward-manipulated prices:

“If I’m wrong (about free market forces winning the battle in gold/silver markets in the future), the banks will run the world, even more so than they do today, 10 or 20 years from now. God forbid that we ever get there because that’s a one currency, one government world that would absolutely be a disaster for the human race. There would be no freedoms at all to move or to invest. It would be like having shackles on our ankles. There is a movement to go in that direction, unfortunately. There are a number of very wealthy people that want to see that. I hope that we can find the politicians to prevent that type of world from coming to pass.”

About the author: JS Kim is the Managing Director, Chief Investment Strategist & Founder of SmartKnowledgeU, a fiercely independent investment research and consulting firm that has been providing contrarian, independent investment guidance to clients in 33 different countries since 2006. Despite the struggles of PM mining shares in 2011, his Crisis Investment Opportunities newsletter, since inception in June, 2007 to the end of September 2011 has yielded a cumulative +162.40% gain versus the -36.20% loss of the ASX200 and the -25.70% loss of the S&P 500 over the same investment period. Follow us here on twitter.

Republishing Rights: The above article may be reprinted on other websites only if all links remain intact and all text is reprinted as is, with no revisions to the above material, including the “about the author” section.

Alexander Hamilton equated essential freedoms with the preservation of the purchasing power of all money. Debase the value of money and we will lose our freedoms. So then, what does the Central Banker deliberately directed, massive debasement of all major fiat currencies in the world bode for future generations? This is precisely why we have recently witnessed the birth of uprisings all around the world – Greece, Iceland, Ireland, the United States, the United Kingdom, Spain, Portugal, Egypt, and Tunisia just to name a few. As we all know, the world’s reserve currency, the US dollar, has now lost about 97% to 98% of its value and purchasing power since private bankers created the US Federal Reserve in 1913. Say what you will about the death throes of the Euro but the US dollar is hanging by a thread right now as well.

I urge everyone to:

(1) Read the below Utah Monetary Declaration;
(2) Discuss it with your neighbors and friends;
(3) Research the parts you may not understand so that you can better understand the tyranny and complete immorality of our current monetary system; and                                                                                                                                                             (4) Learn why Alexander Hamilton believed the soundness of money to be inseparable from freedom to such an degree that he advocated not imprisonment, but death, for the deliberate act of devaluing US coins.

The freedom to choose the form of money we can use in our daily lives is inseparable from the ability to live one’s life as a free man and a free woman. Monetary freedom is inseparable from all other inalienable freedoms we possess in this life. What we have today is monetary enslavement. Many of us have lived our lives believing the lies and propaganda about our current, extremely oppressive monetary system because powerful banking families have deviously inserted these lies into the textbooks they feed into our global educational system. Other times, they just insert professors that they have paid-off to spread their propaganda directly into “esteemed” (and I use that word very lightly) institutions like Harvard University, Princeton University and the University of Chicago to pollute the minds of millions of impressionable youth. It is time we help one another wake up to the truth about the utter disgrace that we call our modern banking and monetary system. If we wish to stand in solidarity with our brothers and sisters around the world in restoring our essential freedoms, the first pro-active step every citizen in this world must take is to research and learn why the debasement of monetary value is a direct attack on the freedoms of every citizen in every district, in every province, in every state in every country in the world.

As many people already know, Utah Governor Gary Herbert signed HB317, the Utah Legal Tender Act into law earlier this year in March of 2011. Though well reported by the mainstream media as an act that made Utah the first US state to accept gold and silver coins as legal tender, this interpretation was erroneous as all federally minted gold and silver coins have always been accepted as legal tender at their face value in every state inside the United States. The Utah Legal Tender Act did not change this important Central Bank restriction on the use of gold and silver coins as money and as a competitor to their fiat currencies. In the state of Utah, a one-oz gold American Eagle coin can still only legally be used at its face value of USD$50 in monetary transactions and not at its current US bullion dealer price of about USD$1,740. There is no fool that is going to spend a coin valued at USD$1,740 to buy USD$50 of groceries, so even though the US government states that gold coins and silver coins can be used as legal tender, that declaration is the equivalent of telling someone imprisoned in solitary confinement that he is free to leave any time he wants as long as he can avoid being shot and killed by the guards if he attempts to escape. Thus, the Utah Legal Tender Act HB317 truly accomplished nothing in the fight for freedom other than to exempt all sales of gold and silver coins from the state capital gains tax.

However, there is a much more important declaration now circulating among the citizens of Utah that deserves our attention, the Utah Monetary Declaration, the full text of which I have reproduced below. This much more important declaration, if it can reach the Utah legislature and eventually be passed into law, would be infinitely more important than the Utah Legal Tender Act for it would grant Utah the power “to monetize gold and silver coin as an alternative, voluntary medium of exchange, and as an effective check and balance against debasement of the national currency by the national government which is constitutionally precluded from demonetizing state legal tender, through disparate tax treatment, discriminatory regulation, the threat of suppression and seizure, or otherwise.” One of the essential tenets of this declaration is the following: “As an essential element of true liberty and of the pursuit of happiness in a free society, all people enjoy the inherent and unalienable right to lawfully acquire, hold and use as a medium of exchange whatever form or forms of money they may prefer, including especially gold and silver coin.” This declaration is attempting to enforce the mandates of the US Constitution that the private owners of the US Central Bank, the Federal Reserve, have directly violated for nearly 100 years. The Utah Monetary Declaration also attempts to re-establish the freedoms first established by one of the first laws to regulate coinage in the United States, the US Coinage Act of 1792. The most important sections of the US Coinage Act of 1792 were Section 14 and Section 19 as reprinted below:

Section 14. And be it further enacted, that it shall be lawful for any person or persons to bring to the said mint gold and silver bullion in order to their being coined; and that the bullion so brought shall be there assayed and coined as speedily as may be after the receipt thereof, and free of expense to the person or persons by whom the same shall have been brought.

Section 19. And be it further enacted, That if any of the gold or silver coins which shall be struck or coined at the said mint shall be debased or made worse as to the proportion of the fine gold or fine silver therein contained, or shall be of less weight or value than the same out to be pursuant to the directions of this act, through the default or with the connivance of any of the officers or persons who shall be employed at the said mint, for the purpose of profit or gain, or otherwise with a fraudulent intent, and if any of the said officers or persons shall embezzle any of the metals which shall at any time be committed to their charge for the purpose of being coined, or any of the coins which shall be struck or coined at the said mint, every such officer or person who shall commit any or either of the said offenses, shall be deemed guilty of felony, and shall suffer death.

The Utah Monetary Declaration

WHEREAS, money, as a medium of exchange, a store of value, and a unit of measure promotes economic activity, growth and productivity by facilitating specialization and trade, the accumulation of wealth and its long-term investment, as well as accountability in setting prices, tracking progress, and settling accounts;

WHEREAS, natural money – precious metal coin – by virtue of its inherent qualities of recognizability, measurability, uniformity, divisibility, durability, portability and scarcity has reliably retained its purchasing power, notwithstanding periodic fluctuations, over the centuries and millennia of human history, serving as an effective medium of exchange and store of value often without any governmental declaration to require, legitimize or perpetuate its adoption and operation as such;

WHEREAS, sound money, by retaining stable purchasing power over time, best serves societal needs by substantially reducing the uncertainty of inflation risk for creditors and deflation risk for debtors as well as encouraging saving and investment among the general populace and benefiting the economic zone in which it circulates by stimulating the economy and by attracting foreign capital and commerce to the region;

WHEREAS, history attests that monopolistic monetary systems frequently engender currency debasement, resulting in serious consequences such as lost purchasing power, inequitable wealth redistributions, misallocation of productive resources, and chronic unemployment, and that, as the cornerstone of a free market and society, the right to choose, whether between suppliers of goods and services, political parties and candidates, or between alternative media of exchange, effectively promotes the general welfare;

WHEREAS, for the equal protection of all people, rich and poor, the open circulation of complementary and competing currencies should be fostered and promoted by every sovereign state, including those of The United States of America pursuant to their monetary powers (expressly reserved in article 1, § 10 and in the 10th amendment of the United States Constitution) to monetize gold and silver coin as an alternative, voluntary medium of exchange, and as an effective check and balance against debasement of the national currency by the national government which is constitutionally precluded from demonetizing state legal tender, through disparate tax treatment, discriminatory regulation, the threat of suppression and seizure, or otherwise;
NOW THEREFORE, we the undersigned hereby declare and affirm that:

1. As an essential element of true liberty and of the pursuit of happiness in a free society, all people enjoy the inherent and unalienable right to lawfully acquire, hold and use as a medium of exchange whatever form or forms of money they may prefer, including especially gold and silver coin.

2. All free and sovereign states bear the moral, political and legal obligation not only to refrain from debasing their own currencies (except under the most exigent circumstances) and from erecting barriers to the unfettered circulation of monies issued under the authority of their sovereign trading partners, but also to affirmatively defend and protect against fraud, counterfeiting, uttering, passing off, embezzlement, theft or neglect by requiring full transparency and accountability of all state chartered financial institutions.

3. No tax liability nor any regulatory scheme promoting one form of money over another should apply to: (a) the holding of any form of money, in a financial institution or otherwise; (b) the exchange of one form of money for any other; or (c) the actual or imputed increase in the purchasing power of one form of money as compared to another.

4. Except in the case of government assessed taxes, fees, duties, imposts, excises, dues, fines or penalties, the authority of government should never be used to compel payment of any obligation, contract or private debt in any specific form of money inconsistent with the parties’ written, verbal or implied agreement, or to frustrate the intent of contracting parties or impair contractual obligations by invalidating the application of a discount or surcharge agreed to be dependent upon the particular medium of exchange or method of payment employed.

5. The extent and composition of a person’s monetary holdings, including those on deposit with any financial institution, should not be subject to disclosure, search or seizure except upon adherence to due process safeguards such as requiring an adequate showing of probable cause to support the issuance by a court of competent jurisdiction of a lawful warrant or writ executed by legally authorized law enforcement officers.

We hereby urge business leaders, educators, members of the media, legislators, government officials as well as judicial and law enforcement officers to use their best combined efforts to reinstate and promote the legal and commercial framework necessary to establishing and maintaining well-functioning, sound monetary systems based on choice in currency. The signatories hereto concur in the general principles expressed in the foregoing declaration notwithstanding specific reservations some may have as to how such principles should be interpreted and applied in practice.

We, at SmartKnowledgeU, who will continue to fight for monetary freedom in perpetuity as one of our most important missions, would add one more caveat to The Utah Monetary Declaration and it is this:

“Immediately outlaw the use of all gold and silver paper derivatives that allow bankers to create millions of imaginary paper ounces of gold and silver that do not physically exist in the real world, and thus allow bankers to defy the basic tenets of supply and demand in manipulating the spot price of gold and silver futures. If demand for physical gold and physical silver accelerates and if supplies of physical gold and physical silver diminish, falling gold and silver prices will no longer be legally accepted in light of these supply/demand dynamics. Let the price of gold and silver be dictated only by free market forces of the supply and demand for real physical ounces of gold and silver and not set by the behavior of a single ounce of paper gold and paper silver that represents nothing more than what a piece of paper fiat currency represents – which, of course, is nothing.”

GOD BLESS & AMEN.

Republishing Rights: This is a copyrighted article that may be reprinted as long as this blog is acknowledged as the author and a DIRECT link back to this blog is contained in the reprinted article.

In 2008, I publicly predicted that US markets would crash just 18 trading days before US markets started a slide that saw it lose about 50% of its value. That year, when major developed markets ended up losing 38% to 40%, we still returned positive returns to our investment newsletter clients precisely due to our strategy of concentration and our aversion towards diversification. For six years now, I’ve said that diversification is a sell-side strategy that fattens commercial investment firm executive’s wallets at their clients’ expense even as commercial investment firms continue to sell this rubbish strategy to their clients. My claim has drawn the ire of more than a handful of commercial investment financial consultants. However, convincing clients to believe in the “intelligence” of a diversification strategy that simply has ceased working for years is what puts food on the tables of many financial consultants and keeps food off of yours. Ask yourself, when was the last five-year period that diversification strategies helped you achieve a significantly positive cumulative return? Can’t remember the last 5-year period in which this has happened, can you?

Since I launched my investment newsletter, I have concentrated my newsletter’s portfolio in hard assets and commodity-based stocks every single year. Some years, my newsletter portfolio may contain almost nothing but gold and silver based assets while in other years, I may choose to hold some agricultural and energy based stocks as well. This type of strategy is anathema to all commercial investment industry financial consultants and advisers who are trained to believe that diversification is an absolute must. Of course if you choose to concentrate a portfolio in the wrong assets, you will lose the bulk of your clients’ money every year. This is precisely why nearly all commercial investment industry consultants and wealth “advisers” choose not to concentrate. Diversification serves as a cover for the fact that the great majority of commercial investment industry employees know little more about markets than you do and are nothing but glorified salesmen and saleswomen in fancy suits and expensive cars, thanks to the large fees their clients pay them every year. Think about it. Did you really need a Private Wealth Manager to lose 35% to 40% of your portfolio’s value in 2008? I’m sure most people could have done that on their own and saved the fees associated with being a client of a “prestigious” investment firm.

When I used to work for a commercial investment firm before I walked out on the immorality of the industry, I was actually instructed to prime my clients to expect a portion of their portfolio to underperform every year. I was trained to parrot to my clients that it was impossible to know what sectors would rise and what sectors would fall in the coming year and to support my dog and pony show with charts and data that would illustrate this point in order to legitimize it. But statistics can often be manipulated to prove a point, even when that point is wrong. Of course, in reality it was impossible for me to know what sectors would rise and what sectors would fall every year. Why? Not because I couldn’t do it, but because the firm I worked for wanted me to spend all my time meeting with prospects and closing deals. Consequently, where in the world would I actually find time to analyze markets and formulate an intelligent opinion about which assets would rise and which assets would fall? When I worked for the commercial investment industry, I probably spent 95% of my time marketing and 5% of it studying markets. Since I left the industry many years ago to start my own firm, this ratio has completely reversed. Now I probably spend 5% of my time marketing and 95% of my time analyzing markets to ensure my clients stay very profitable throughout this deepening global economic and monetary crisis.

Diversification is the big fat lie that the commercial investment industry desperately needs you to believe in, even as your portfolio size continues to shrink. Even famed investment guru Jim Rogers agreed with me two years ago and publicly declared that the diversification strategy, in his words, was a “scam” designed to bilk clients of money and enrich the executives of commercial investment firms. The job of anyone that works in the investment industry should be to determine what sectors will be up every year, what sectors to avoid every year, and how to maximize our client’s profits. This is what our clients pay us to do. However, this is not the goal of the commercial investment industry. The goal of the commercial investment industry is to maximize their bottom line even if it minimizes yours. This is why my investment newsletter has outperformed all diversified major global developed stock market indexes by 20% to 45% every single year. This is why from the launch of my newsletter until August 30, 2011, my newsletter has yielded a cumulative +226.61% return to my clients while the diversified S&P 500 index has yielded a negative 20.89% loss to its clients during the exact same investment period (in a tax-deferred account).

I realize that the level of brainwashing from the commercial investment industry regarding the “intelligence” of diversification is quite strong. I still, on occasion, receive emails, from a potential customer that chooses not to buy our investment newsletter after reading a couple of sample issues, due to his or her shock regarding our concentration strategy. A typical response from someone that has been brainwashed by the commercial investment industry would be the following: “I can not justify buying a newsletter that is so risky and so heavily concentrates its portfolio. When gold and silver crash, your portfolio will be wiped out. I will continue to diversify. Thanks but no thanks.” The lie the commercial investment industry continues to spread about concentration is that it may lead to enormous gains at times, but the enormous gains are only achieved with great risk. If this were true, then the most positive years I’ve achieved (a +63.32% yield in 2009) should have been offset by enormous losses in 2008. For if one is taking great risk to achieve very significant gains then during negative years, that great risk should translate into much worse performance as well. Instead, in 2008, when all developed global stock markets lost 35% to 40% for the year, I was still able to achieve positive gains that year as well. So much for the concentration is risky lie.

For four years, I have chosen to heavily concentrate my newsletter’s portfolio in gold and silver assets among a few other very select asset classes. If one looks at the below chart of the AMEX HUI Gold Bugs Index, an index of gold mining stocks, one may wonder how in the world one could ever achieve enormous returns by investing in gold and silver mining stocks.

From June 15, 2007 until August 30, 2011, the HUI, despite all the volatility that is evident in the above chart, the HUI has still returned a positive cumulative return of +81.69%, outperforming the S&P 500 and other various major global stock market indexes by more than 102% over the same time period. Take a look at the chart of the diversified US S&P 500 over the same time period. The commercial investment industry has worked their hardest to brainwash you to believe that diversification equals safety.

Does the chart of the very diversified S&P 500 index below look any less volatile to you than the chart of the gold miners index? Furthermore, if you have to endure such volatility, would you not rather endure such volatility and be sitting on a cumulative +81.69% gain (the HUI Gold Bugs Index returns) versus a -20.89% loss (the S&P 500 returns)?

Furthermore, the commercial investment industry fails to inform you that the very firms they work for deliberately create periods of massive volatility in gold and silver to the downside at times for the very purpose of confusing investors and preventing them from concentrating in the only assets that will save their financial well-being. For example, due to my understanding of banker manipulation of gold and silver prices, I have predicted intra-day price declines and rises in gold very accurately on my twitter account even though the information I provide through my tweets is only about 1% of the information I provide to my clients on a regular basis. Because much of the downside volatility in gold and silver is artificially induced and engineered by bankers to scare investors away from this asset, the commercial investment industry fails to inform its clients that one can actually leverage this volatility, as long as it is understood properly, to further enhance gains. Just check my article here, written just a few weeks ago, where I posted the below chart and informed all my blog readers that gold and silver stocks were a great buy because they were heavily undervalued.  Since my post,  gold and silver stocks have strongly risen.

For example, had you bought any number of gold mining stocks at the point I advocated buying on the chart above, as of yesterday’s market close, Newmont Mining has risen +12.91%, Barrick Gold by +10.89%, and Royal Gold by +20.77% in just the past several weeks just to name a few of the gold stocks that really took off higher in price. And had you entered gold mining stocks at the point I advocated just a few weeks ago, you would now be able to weather any subsequent correction in price in the mining stocks, should it develop over the next week, with little worry.

Artificial banker manufactured downsides in gold and silver assets always provide an opportunity to buy assets on the cheap at various points throughout the year. By using the volatility as an opportunity rather than being fearful of it, I was able to produce a +226.61% cumulative return to my clients during the same four-year period that the HUI Gold Bugs index returned a +81.69% return. So please don’t continue to be fooled by the commercial investment industry propaganda about gold and silver. Ensuring that you correctly view its volatility as an opportunity to enhance gains instead of viewing its volatility as a negative, and ensuring that you transform your belief about gold and silver from an erroneous belief that they are risky assets into a correct belief that they serve to protect your wealth may very well save your financial life in the next few years.

About the author: JS Kim is the Founder, Managing Director & Chief Investment Strategist of SmartKnowledgeU, a fiercely independent investment research and consulting firm that seeks to expose the many fraudulent concepts of Wall Street, uncover the best ways to invest in gold and silver, and protect and grow the wealth of our clients.

Republishing rights: The above article may be reprinted, as long as all text and all links remain intact as exactly above.