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Jim Cook



Every once in a while I switch the TV channel from Fox to CNBC to see what the liberals are saying.  After listening awhile I get a deep sense of hopelessness and foreboding for our country.  The most important thing for the left is giving money to people.  They are happy to see the growth of food stamps, disability payments, housing subsidies, free healthcare and all the other welfare benefits.  They utterly fail to see the damage it is doing to the recipients.  Whole cities that once flourished have deteriorated into rotting eyesores populated with shambling hulks of chemically dependent drones.  These people are no longer employable.  They have become incompetent and helpless and the liberals can’t see that it’s their doing.

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The Best of Jim Cook Archive

Commentary Of The Month
May 11, 2006
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By William Buckler

Close Of Trading: May 5, 2006

Updated Weekly

Special Update: Tuesday, May 9, 2006 - Spot Future Gold Hits $US 700

As you will know by now, spot future Gold rose $US 21.60 to hit $US 701.50 at the close on Tuesday, May 9. This event was reported on under the headline: $700 Gold: Want in? Think Twice. On the surface, this is the normal type of stuff that the US mainstream financial media comes up with. They have to report it because it's news, but they structure the story in a way that they hope will dissuade most people from diving into the Gold market.

As we said, "normal", at least on the surface. But check out this story from exactly the same source, posted just under a month ago on April 11: $600 Gold: Want in? Think Twice. We strongly suggest that you print both these stories out and compare them. You will find that practically nothing but the numbers ($600 vs $700 as a Gold price) has changed. Clearly, the author of the two reports simply used the $600 Gold report as "boiler plate", substituted $700 for $600 in the $700 Gold report, and left the rest completely unchanged.

Please note that our Gold This Week commentary for April 14 - "Gold's Great - But Not For "Individuals" was based on this $600 Gold report from CNNMoney. What we said in that report goes double or triple for this new report, published less than a month later and with Gold $US 100 or 16.7% higher. This is very sloppy work indeed from the mainstream media. It will be interesting to see if they do it again at $US 800 Gold.

In any discussion of the future of Gold, or of the price of Gold, the first thing that must be realized is that Gold is a POLITICAL metal. In the true meaning of the word, its price is "governed".

This is so for the very simple reason that Gold in its historical role as a currency is fundamentally incompatible with the modern worldwide financial system.

Up until August 15, 1971, there has never in history been an era when no paper currency was linked to Gold. The history of money is replete with instances of coin clipping, printing, debt defaults, and the other attendant ills of currency debasement. In all other eras of history, people could always escape to other currencies, whose Gold backing remained intact. But since 1971, there is NO escape because NO paper currency has any link to Gold.

All of the economic, monetary, and financial upheaval since 1971 is a direct result of this fact.

The global paper currency system is very young. It depends for its continued functioning on the BELIEF that the debt upon which it is based will, someday, be repaid. The one thing, above all others, that could shake that faith, and therefore the foundations of the modern financial system itself, is a rise (especially a sharp rise) in the U.S. Dollar price of Gold.

Gold - The "Unthinkable" In Action

On December 21, 2005, not much more than four months ago, spot future Gold was closing under $US 500. On April 13, 2006, a mere THREE WEEKS ago, spot future Gold was closing under $US 600. Now, on May 5, 2006, Gold is 84.3% of the way to $US 700. Two points need to be made about this HUGE acceleration of Gold's upside velocity. The minor point is that it is so big, and has come on so rapidly. The MAJOR point is that the paper markets are doing their level best to act as if it has not taken place at all.

The great German man of Enlightenment, Friedrich Schiller, has been quoted as saying: "Against stupidity the gods themselves contend in vain.". Schiller in his era was witness to his fair share of it, as are we in our age. But what we are contending against, and what Schiller was so nobly contending against, is not stupidity, it is wilful ignorance.

In itself, ignorance is not a vice. Ignorance is simply a lack of knowledge. In that context, we are all "ignorant" in that there are vast swathes of human knowledge which we know nothing or next to nothing about. An honest man or woman is one who freely acknowledges ignorance and, should he or she deem it necessary, strives to replace it with knowledge. In this context, the "unknowable" is instantly dismissed from the realm of reason as an insolent contradiction in terms. If one can't "know" something, why bother wasting any time thinking about it?

That leaves the "unthinkable". How many times have you heard the word bandied about unashamedly in public? How often is a policy, most often a proper, workable and correct policy, summarily dismissed because to implement it would be "politically unthinkable"? When you hear something being deemed unthinkable, you may know that the person using the word does not want to think about it, and doesn't want you to think about it either. There is a vast gulf between a lack of knowledge and a refusal to know. Simple ignorance is inconsequential. WILFUL ignorance is always debilitating and frequently deadly.

In all our years of watching politics and markets and reading about events which took place long before we were born, we have seldom if ever seen such a dose of wilful ignorance as we are witnessing today. And while it is unedifying enough to watch the political and economic debauchery practiced by the Bush Administration and their "allies" in the UK and Australian governments, it is truly nauseating to watch the antics of their sycophants in the media and in "academe". Nobody wants to identify the nature of the mess they have gotten themselves into. And nobody wants to do anything to give anyone else grounds for taking up the task they have shirked. We are "governed" and "led" by the three monkeys, with eyes, ears and mouths firmly sealed.

If the situation were not so tragic it would be truly comical. The comedy lies in the fact that these people expect to be taken seriously. The far vaster tragedy is that too many DO take them seriously. Most people have neither the time nor the inclination to become truly knowledgeable about fundamental political and economic principles. We live in a world of specialisation and in such a world, it is a lifetime task to master ANY single field of human knowledge. An "expert" worthy of the name has spent a lifetime gaining knowledge and honing the skills necessary to make the fullest and most skilful use of that knowledge. Such a person naturally expects that his or her peers in other fields, areas where they themselves are "ignorant", have done likewise.

Abe Lincoln said that you can't fool all of the people all of the time. He knew he was right, having tried it. But what modern politicians, media barons, journalists, propaganda artists and so called "educators" know is that you don't have to fool all of them. You just have to fool enough of them. Actually, you don't even have to "fool" them. All you have to do is to create a set of circumstances in which their future well being as they see it is dependent upon them going along with what you want of them.

At that point, it becomes "unthinkable" to challenge the direction they are taking a town or a state or a nation or a continent. At that point the vast majority of people see themselves as having no choice but to fall back on the old: "They must know what they're doing, they're the experts."

In Nazi Germany in the mid 1930s, Germans were free to leave at any time. They did, in their millions, all year round. In winter, they went skiing in Switzerland. In spring, they did tours of the ancient churches of the British Isles. In summer and well into the autumn, they basked on Italian and Greek beaches. And then, when their holiday was over, they all trooped back to Germany of their own free will. To imagine that they were returning to a police state which had become a tyranny was "unthinkable". To imagine that they and/or their children were about to be sacrificed by the million to the ambitions of one man was "unthinkable". To imagine that their nation was rushing headlong towards a war was "unthinkable". It was not stupidity or ignorance, it was a refusal to know.

In the West today, everyone is free to live within their means, to refrain from getting into debt and to protect themselves from the ravages of paper money by owning Gold and Silver and wealth in the form of REAL economic goods. Some of them, but not nearly enough - yet - are doing just that. But the vast majority have not left the system in any way, shape or form and have no intention of doing so. To imagine that the money they depend on will inevitably crash in purchasing power is "unthinkable". To imagine that their system has "mortgaged" their children's futures for the next five generations is "unthinkable". To imagine that the markets they cling to could come crashing down about their ears is "unthinkable". It is not stupidity or ignorance, it is a refusal to know.

There have been many eras of history when men could get away with a refusal to know for an entire lifetime and not have to pay for it, except for the fact that they cheated themselves of the lives they could have had. Those who paid for it were their children or grandchildren. We are not living in one of those eras today, any more than the Germans of the mid-1930s were. The political consequences MAY not be as bad, but the economic and financial consequences will be magnitudes worse.

It took Gold nearly four YEARS to rise from $US 300 to $US 500. It has taken it less than five MONTHS to rise from $US 500 to (almost) $US 700. The US Dollar is crumbing nearly as fast as it is losing its reserve currency status. The political cohesion of the world is fracturing to the point where President Bush is now calling the period since 9/11 "World War III".

While this is going on, Wall Street is hanging on to their sense of complacency with teeth-grinding tenacity. The Dow is now one good day's rise below the highs it set almost six and a half years ago, ignoring the fact that in "purchasing power" terms, the equivalent of a level of 11723 in January 2000 would be about 14,000 today. Financial "experts" are falling all over themselves to predict a "pause" in the Fed's rate rising regime, ignoring the fact that the Dollar is crumbling. Any talk that there might be ANY cloud on the horizon is not only not talked about, it is deemed "unthinkable".

The problem with the "unthinkable" is that the more insistent those in control become about NOT thinking about it the closer it is to becoming reality. Once that happens, it's too late to think, one has to act, and action without thought can lead only to chaos.

The current "system", in both its political and economic/financial aspects, has been twisted 180 degrees from its proper foundations. It is utterly unsustainable. When government is carried out without consent and exchange is carried out without a valid money, the system is doomed. While the date of the demise of representative government in the US is debatable, the demise of valid money is not. It happened on August 15, 1971. The time for getting by without thinking about THAT is almost over.