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Controversial post: What will you do when the ATMs run out?

From Bill Bonner, Chairman, Bonner Partners: 

Please remember this warning when you go to the ATM to get cash… and there is none!

While we were thinking about what was really going on with today’s strange new money system, a startling thought occurred to us.

Our financial system could take a surprising and catastrophic twist that almost nobody imagines, let alone anticipates.

Do you remember when a lethal tsunami hit the beaches of Southeast Asia, killing thousands of people and causing billions of dollars of damage?

Well, just before the 80-foot wall of water slammed into the coast an odd thing happened: The water disappeared.

The tide went out farther than anyone had ever seen before. Local fishermen headed for high ground immediately. They knew what it meant. But the tourists went out onto the beach looking for shells!

The same thing could happen to the money supply: Cash could evaporate suddenly and disastrously – just before we drown in it.

Credit Money

Here’s how… and why:

If you look at M2 money supply – which measures coins and notes in circulation as well as bank deposits and money market accounts – America’s money stock amounted to $11.7 trillion as of last month.

But there was just $1.3 trillion of physical currency in circulation – about only half of which is in the U.S. (Nobody knows for sure.)

What we use as money today is mostly credit. It exists as zeros and ones in electronic bank accounts. We never see it. Touch

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Forget Swiss bank accounts… This is the last great option for protecting some money overseas

Financial privacy is essentially dead.

I think it’s only prudent to assume that sooner or later all the details of your financial life will come to rest in a government computer—if they haven’t done so already—and to plan accordingly.

We live in a world where pretty much every penny you earn, save, and spend is stored in a permanent record somewhere and can be retrieved for scrutiny one day if needed.

It’s not a comfortable or happy thing. But no matter how unpleasant it is, I believe it’s a reality we have to face.

Knowing that you are financially naked and exposed to an insolvent government hungry for revenue might make you feel like you just ate rat poison for lunch.

That said, don’t be tempted to try to illegally hide your income and skirt reporting requirements. It’s a fool’s errand. The draconian penalties make a cost/benefit analysis easy… don’t even think about it.

An Inescapable Global Dragnet

FATCA is at the vanguard of the global trend for the automatic reciprocal exchange of financial information between governments.

In case you don’t know, FATCA, the Foreign Account Tax Compliance Act, is the wildly unpopular law that forces every financial institution in the world to report information about their American clients to the US government, which imposes huge costs on those financial institutions. In effect, FATCA causes every foreign bank to become unpaid agents of the IRS.

The US is in a position to enforce an extra-territorial law only because it controls the world’s reserve currency and has threatened

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New Gold Probe – Don’t Get Your Hopes Up

Best Regards

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The Data Shows the REAL Economy is Imploding…Is a Crash Next?

Best Regards

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Read this before you invest in gold stocks

From Brian Weepie, analyst, Stansberry Resource Report:

Gold stocks are back.

That’s what many analysts are saying right now.

From December 16 to January 20, shares of the benchmark Market Vectors Gold Miners Fund (GDX) soared 34%. That’s a remarkable run in a short time.

Even with the recent pullback, shares of GDX are still up more than 18%. And many expect gold stocks to head higher.

But before you dive into the sector, there’s one important thing to know about gold miners today…

Many gold miners are losing gold reserves (gold in the ground that can be mined for a profit).

For example, global gold miner Eldorado Gold produced nearly 800,000 ounces of gold in 2014. But its gold reserves fell by 1.8 million ounces. That means 1 million ounces of gold – more than a year’s production – just disappeared.

Eldorado isn’t alone. Giant gold miner Barrick Gold’s gold reserves fell 11.1 million ounces last year. But it only produced 6.2 million ounces. Goldcorp’s reserves fell 4.8 million ounces, while it produced 2.9 million ounces. And Kinross Gold lost 8.4 million of its 42.8 million 2013 gold reserves.

This is a real problem. It means the fundamental value of these companies – their gold in the ground – is disappearing. In short, over time, these companies won’t be able to produce as much gold as they thought they could. And the companies won’t earn as much money as they thought they would.

So why are so many reserves disappearing?


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Seven things to expect from Warren Buffet’s BIG annual letter this weekend

From Bloomberg: 

Warren Buffett promised a hefty annual letter this year — some 20,000 words — as he celebrates his 50th anniversary running Berkshire Hathaway Inc. and charts its next half century.

The report, which is usually closer to 14,000 words, has long been a must-read on Wall Street — full of homespun wisdom about investing and business. The contents are a closely guarded secret before the release as Buffett, 84, exchanges drafts with retired Fortune magazine writer Carol Loomis.

He’ll aim to put out a document on Saturday that shareholders in the Omaha, Nebraska-based company will turn to long after he’s gone. As a bonus, Berkshire Vice Chairman Charles Munger, 91, will also contribute a letter. Here are topics to consider before settling into a chair to read:


Berkshire was a struggling textile maker when Buffett took control. It’s now one of the largest businesses in the world. Its Class A shares — which have never split — trade for more than $200,000 each. The company’s market value is about $367 billion.

Size, however, is an “anchor to performance,” the billionaire has said. Berkshire’s operations include insurers, railroad BNSF and electric utilities. It also has a stock portfolio worth more than $100 billion. One of the biggest holdings − International Business Machines Corp. − has slumped in recent months, showing how hard it is to outperform when dealing with huge sums and few places to invest.

Buffett could use the letter to help shareholders

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What Then Is Your Point, Mr. Potter?

Best Regards

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The Worlds Cumulative Gold and Silver Production

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Have the big banks been manipulating gold and silver prices?

For many years most of the perennially bullish precious metals commentators, led in terms of continuing vehemency on the matter by the Gold Anti Trust Action Committee (GATA), have been claiming that precious metals prices are being heavily manipulated by the big commercial banks in collusion with the U.S. Fed and other central banks. And they cite as evidence various documentation, mostly quite old, obtained under freedom of information requests, together with some seemingly very strange volume and price movements on the COMEX markets at potentially key inflection points for precious metals prices, as well as the huge short positions held in all four major precious metals by a small group of major banks in particular. It has always been the gold bulls’ gripe that the evidence they have come up with has been totally ignored by the mainstream media, but is this all changing?

In a key article published on Monday this week, perhaps arguably the most prestigious globsl mainstream financial newspaper of all, the Wall Street Journal, reported that at least 10 major global banks are being investigated for precious metals market rigging by the U.S. authorities. The paper notes specifically that it has received reliable information that prosecutors in the Justice Department’s antitrust division are scrutinizing the benchmark price-setting process for gold, silver, platinum and palladium in London, while the Commodity Futures Trading Commission has opened a civil investigation, presumably into activities on the major commodities markets.  

The newspaper reports that the

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Bill Bonner: Why the Federal Reserve has it all wrong

From Bill Bonner, Chairman, Bonner Partners: 

… Let’s turn our attention to that rare phenomenon: real intellectual progress.

Well, let’s not overstate it. In the world of ideas, there is one step back for every step forward. This at least is a step in the right direction.

We used to think every forest fire had to be snuffed out immediately. Now, forestry officials realize it is often better to let them burn themselves out. They burn up the dry tinder and help the forest regenerate.

So, too, it was only a few decades ago that we believed that childhood fevers were something to be feared and stopped. “I’ll give him something for that fever,” said the friendly pediatrician.

Then they came to see that fevers, too, were not a bad thing. They were nature’s way of combating germs. Raising the body’s temperature made for a swifter recovery.

This intuition has also been picked up in the business world. We’re not up on the latest airport biz jargon. But we’ve observed that organizations that have the least top-down, least authoritarian business cultures seem to do best.

If this has become a fad in the business world, we would like to claim some credit for it. For the last 35 years, we have been answering employees’ questions as follows: “I don’t know. What would you do?”

This response was regarded as evidence of stupidity at the time. Lately, it has been attributed to cleverness. But it arose naturally out of

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