Something Wicked This Way Comes

By Greg Hunter’s USAWatchdog.com

I am not a gold bug, but I can spot a warning sign when I see one.  Gold is near an all time high and this is no fluke!   High prices are the result of  big demand from monster players who are afraid of a dollar crash.    My fears all center around Fed Chief Ben Bernanke’s announcement in mid-August of  plans to end Quantitative Easing.  QE is a program where the Fed used more than 300 billion in “printed money” to buy Treasuries to artificially hold interest rates down.   The Fed wants this program phased out by the end of October.   Oh really!  Bernanke is going to stop buying debt and allow interest rates to spike!  Not a chance.     Interest rates could go up dramatically, and any homeowner with an adjustable rate mortgage would be hit with higher payments…much higher.   I, and many other people, think  The Fed will be forced to keep “printing money” and that creates an even bigger problem for the dollar.   Martin Hutchinson at the Prudent Bear revealed his prediction in a recent article called “October Surprise,” …” Given the current predilections of the world’s central bankers, it is likely that when the T-bond bubble bursts, they will rush to the printing presses, the Fed buying Treasuries in a frantic attempt to stabilize the bond market. In all but the shortest term, that is unlikely to work; it will cause a spiraling increase in gold, oil and other commodities…” Hutchinson goes on to say,”If October 2009 fails to produce a full-scale T-bond rout, it will not be long delayed thereafter…”

He’s not the only one feeling something bad is coming.  New York University Professor Nouriel Roubini, who predicted the financial crisis, said recently,“If markets were to believe, and I’m not saying it’s likely, that inflation is going to be the route that the U.S. is going to take to resolve this problem, then you could have a crash of the value of the dollar.”

Nassim Taleb, author of the runaway best seller “The Black Swan,” said in mid-August on CNBC ,”The risk is still there and we are probably worse off than we were before.” You definitely cannot call Taleb a market cheerleader and he is clearly not comfortable with this so-called “recovery.”   You can check it out in the video below.

I think  when Taleb says, “worse off” , he means the economy is worse now than when Secretary of the Treasury Hank Paulson told members of Congress last year that there was risk of “systemic failure.”  Right after that Congress voted for TARP money to bail out the banks.

Even easy Al Greenspan is a little worried about the dollar.  “Unless we roll in this whole degree of expansion, we will be in trouble,” the former Chairman of the Federal Reserve told a conference in Mumbai via videoconferencing.  “I am not talking 3-5 per cent inflation, I am talking double-digit inflation in the US.”

Finally, there is John Williams at shadowstats.com.  Just last week, he correctly predicted there would be a “negative surprise” with the unemployment number.  He was right on target, it was worse than expected.  Now he says,”With both the economic and systemic solvency crises, I believe the worst
still is ahead of us.”

How far ahead of us is my question?  Famed gold investor Jim Sinclair thinks the dollar will take a big hit,”in the middle of the fourth quarter.”  Sinclair also thinks the Fed will once again be forced to “print money” to buy Treasuries when the QE program ends.  When that happens, the dollar will fall hard and all hell will break loose.

Just like the famous book “Something Wicked This Way Comes,”  there will be horror.  Who knows how it will all turn out, but there will be no happy ending and gold will sell at a much higher price.

Comments
  1. George

    WOW! This was a Great article. Greg pulled a complex tangle of facts together and painted a picture anyone can understand.
    If any one out there is still listening to their broker’s advice to “Buy and Hold”, you probably believe it’s a sane strategy as the markets have rebounded off the lows. The only people using “Buy and Hold” are us little people with 401-Ks. “Oh, I’ll stay in ‘cause Warren Buffett is in long term”, you say. Tell me, do you have options and futures to hedge your losses in the stock market like Buffett does? I don’t.
    This is a game of financial musical chairs. Get out while you can get a seat. I’m not real bright but when the President of Russia brings a gold coin to a G-20 summit and says that it should be the new WORLD RESERVE currency, I take notice. Yesterday, the UN, our dear friends that are the masters of bureaucracy and corruptions, say that the U$D needed to be replace as the world reserve currency. I take notice. I refuse to listen to the pundits that are telling talking about the “Recovery” becuase I’m sure not seeing a recovery where I am.
    I’m not saying buy all gold and silver but if you don’t have some as a HEDGE, like all the BIG BOYS, you are going to regret it. When I see the rats leaving the ship, I have learned that I don’t need to go below deck and check for a water leak or a fire. I now head for a life boat early. I’m going to buy some gold and silver and put it in a safe. Not ETF’s, real cold hard bullion. I know the rats are smarter than I am. I’m getting in the lifeboat now.

  2. Dave

    Say what you wish about gold,I’m up 70% in 3 and a half years.
    I’ll keep this over paper anyday.

  3. Greg

    George,
    Thank you for taking the time to comment!!!
    Greg Hunter

  4. Greg

    Dave,
    I think everyone should have some gold coins. Congrats on having the guts to make that good call!

    Greg Hunter

  5. Dave

    Well,it really doesn’t take guts to “buy and hold” gold.I think it takes guts to have alot of FRN’s sitting in a bank account amounting to mere blips on a screen.
    If my assets were in the bank,I wouldn’t be able to sleep at all.
    With the stroke of a pen, dollars can be demonetized or reduced in value by half overnite(the potential for this from the UN is getting higher every day).
    While gold may be confiscated-they have to physically get it from us first…
    Good luck.

    • Greg

      Dave,
      Thank you for taking the time to comment. It means a lot to me. By the way, I do not think they will confiscate gold coins from the little guy. The big guys I am not so sure. Thanks for reading USAWatchdog!
      Greg Hunter

  6. Wayne

    The positive fundamentals on gold are over whelming with India buying this season now that the bottom in gold seems to have been reached so far,other big buyers will be waiting to the middle of the month before deciding to jump in, the Chinese pushing gold and silver to their people, the dollar collapsing eventually,the rumour Ft Knox and WP have no gold in their vaults, COMEX empty or almost or unable to deliver a big order, the Chinese walk out on derivetives, and many other points to the eventual direction notyh gold and silver will take. The positive fundamentals far far out number the criticisms if one can even be found. This is a tremendous once in a life time offer for those who have the ability to read, deduct, determine, and reason that with the existing conditions and trends world wide this will be a time for opportunity in these metals like the world has never seen.Many millionaires will be made from this.

    • Greg

      Thank you Wayne.
      I think everybody should probably have some gold coins in this environment. Thank you for reading my site!!

      Greg Hunter

  7. horace manoor

    Gold is a tough master because it’s subject to high volatility, shaking off nearly everybody but the bankers who know how to play goldbugs like violins. Look at Barrick, a huge goldmining company whose executives are horrifyingly inept at dealing in their own product.

    • Greg

      Very good point! Thank you for writing.
      Greg Hunter

  8. BRIAN

    Greg,

    Just some interesting points on confiscation. The US Mint has been in business for over 25 years selling coins to the public. Millions of new collectors have been added to the rolls. Selling bullion coins is a billion dollar money making industry. The USA supposedly has 8000 tons why do they need mine? The 1933 US confiscation did not confiscate coins they were all deemed collectible. Anyone owning $100 or less did not have to turn in there GOLD (that’s in 1933 dollars btw). Also a rising GOLD price is not a hedge against inflation but a increasing distrust in one’s management of it’s currency (supply/demand). Owning GOLD maintains your buying power. Great article.

    BJS

    • Greg

      Thank you for the info and reading this site!
      Greg Hunter

  9. Carl

    The banksters stole all the USA gold back in 1913 when they created that monster called the federal reserve. Most of the U.S gold are in the baseman of the Rothschilds. America got robbed blind because most of our citizens don’t want to get educated and keep believing the MSN, and the crap that teachers teach at schools and universities.

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