I recently received an interesting email that the US Treasury has apparently sold out the entire remains of the United States gold to the Federal Reserve for a steal – at nearly $900 per ounce less than current market values.  I have read several articles as of late relating to the balance statements of the Federal Reserve and it’s been pretty clear that there have been some drastic changes in the last few months.  My research has indicated that the balances are further out of whack than has ever been seen historically.  To put it simply, the percentage of loans vs. the retained assets of the Federal Reserve have been heavily skewed towards the loan side.  To put it in layman’s terms, it would similarly relate to a person making $30,000 a year taking out a loan for a million bucks.

Here is the copy of the email I received:

The entire 260,540,028 oz of Gold that was previously held by the U.S. Treasury has been issued to the Federal Reserve during the period of Feb 11-18, 2009 at a cost of $42.22 per troy oz.  The Federal Reserve issued credits to the U.S. Treasury  in the amount of $11 billion in federal reserve notes.  This transfer of gold represents the nation’s entire official gold stock.  In other words, a private bank, never having an independent financial audit, now  has all our nation’s real wealth!!!

It’s bad enough selling our gold, but why not at current market price of $950.00??  Are the taxpayer’s getting ripped off once again???

(The above information was released by the Fed on Feb 19,2009 in their Factors Affecting Reserve Balances–H4.1, table 8, page 1.)

I am not inclined to believe this information without first confirming it through the sourced references.  I was quickly able to find the sourced reference on the web, directly from the Federal Reserve’s web site.  You can check the information for yourself.

Though I am not an expert in these matters, I have had a fair amount of difficulty deriving the supposed stated facts from the sourced reference.  Specifically, I noted that the table referenced does not directly indicate any specific gold purchases, nor do any of the supposed values or purchase prices add up anywhere in the tables.  There is a row for gold certificate accounts which indicates zero change from both last week and last year.  So, with that said, I’m not entirely ready to believe the information I received in the email.

Through this research, though, I did take note of something interesting however, and I would like to bring it to your attention.  The assets relating to the Federal Reserve balances did increase at an abnormal rate.  If you look at the total assets and their reported changes compared to the previous week and previous year, you’ll see an asset increase on the magnitude of 72 billion dollars since February 11th.  Some simple math indicates this increase is just under twice the average week-over-week increase that we typically see.

Of deepest concern though is WHERE the increase of assets is coming from.  Interestingly, when looking at the referenced table, it’s pretty clear the largest increase has come from “securities, repurchase agreements, term auction credit and other loans.”  These are typically not real, tangible “right now” assests, but rather promises to pay and other IOU based assets.  Even more alarming is the breakdown of these sources and the elements that make them up.  If you take note, the “mortgage backed securities” increased this week at a rate 46 TIMES higher than the average week over week increases.  Some quick math shows the average weekly increase (total yearly divided by 52) is about 1.25 billion dollars.  In just this last week, that very same element increased by almost 58 billion dollars!

So what’s the deal?  Well, if you did any research on “mortgage backed securities” through the link I provided in the last paragraph, you’ll find that these are typically mortgage based loans, primarily in the residential markets.  Boiled down, that means that mean the Federal Reserve just bought a rather hefty percentage of the home loans and other property loans in the United States.  They’re well on there way to owning you, your life and your property.  No longer is it primarily the US taxpayers “promises to pay” (e.g. US Treasury bonds) that are backing up the dollar, but now your homes and property is what is giving it value.  That’s a very deep concern for me, especially considering it’s the private bankers at the Federal Reserve that have gotten us into this mess to begin with.

Even deeper, though, if you look at the other reported figures that millions may be defaulting on their home loans over the course of 2009 due to the economic recession…this could spell out a recipe for disaster.  As the Fed takes possession of our former homes, one-by-one they will begin to own and control huge percentages of personal property out there.  These guys are smart – they have the power to do this and they are beginning to exercise it.  They’re the biggest bank on the block and they’re priming themselves to control America, all the way down to our land and structures.

I did expect some increase of assets by the Fed though I wondered how they were going to do it.  It was essential because the huge loans that are being made to the US for bailouts and other disreputable causes have thrown the Fed’s balance sheet far too out of whack.  Foreign countries, banks and investors are looking at this to derive the stability and desirability of the US dollar and treasury bonds – getting too far out of balance would result in these entities going elsewhere for their investments.  I think we’ve reached the teetering point where the US taxpayers no longer have the ability to repay the huge debts that have been created – and now, the Fed is putting our private property on the line too.

The times, they are a changin’!

I’ve been keeping an eye on those metals – especially the silver market.  Fairly recently, I wrote about the blatant manipulation we’re seeing in these markets – how it’s done and why it’s being done.  I also mentioned how the market was stressing from supply issues and how many sources were charging significant percentages over “spot” price, simply because the market was fed up with the ridiculously low prices.  I learned to keep an eye on E-Bay for current market values – and even when prices were down as low as $10.00-11.00/oz for silver, people were paying upwards of $15.00-$20.00 simply because physical possession was difficult all around the country.  E-Bay, oddly enough, shows the fairest market prices that I’ve been able to discover anywhere – after all, it clearly indicates what people are willing to pay.

I’ve wondered to myself how they can keep the prices so artificially low for so long.  Well, I think we’re finally starting to see the dam break and it’s coming back with a vengeance.  Since the first of the year, we’ve seen silver go from $11.00/oz up to about $14.50 at last check, or about a 31% slide upwards.  Compare that to other commodities, such as crude oil prices, and you’ll find nowhere near the same response.  In fact, oil has been steadily falling since the beginning of the year.  Corn shows the same trend, as does canola, wheat, cattle and nearly every other commodity out there.  (Source)

So, the commonly spewed logic that gold and silver generally follow the same trends as other commodities is clearly being blown out of the water.  With this being the case, there would seemingly be no logical reason for the prices of silver to have fallen from the low 20’s back down to the low tens over the course of late 2008.  It obviously has a mind and life of it’s own, completely independent of other markets.  Logically so, too…gold and silver have inherent actual value whereas other commodities are only as good as the price people are willing to pay for them.  I suppose this could be said about gold and silver as well – but it’s truly an odd world when the charts say it’s worth “X” and people out there are paying “X” plus ten to a hundred percent.

I guess the point here is that I wanted to dig on the idiotic logic of all those economorons out there who consistently stated that gold and silver follows other commodity trends.  I told you so.  Look at the numbers and charts.  Explain away.  Can you see it yet?

Lalalalala…I’m not listening.

I expect silver to at least hit $25/oz this year and gold will probably touch $1250/oz.  Maybe more…maybe a LOT more.  There’s a lot of wild and unpredictable factors swirling about right now and a whole house of cards that could come tumbling down even further.  I wish you all well this 2009…and I’d highly recommend you get out of stock and commodity markets and into something you can have and hold.  Pure silver and gold!

I have been facing the magnitude of our current economic crisis for some time now.  I expected it long before we ever got here…it’s just logical progression for those that are aware of the facts.  I have struggled, however, in the ways I can use to communicate the severity of the crisis.

The puppet heads in the media really aren’t saying what this crisis is.  They want to look at the housing market or the stock market…the companies and the malinvestments.  They just simply aren’t looking at the facts.  The problem has been and will be inflation – the creation of money out of thin air, by the Federal Reserve, without anything of substance to give it value.  This crisis is essentially the systematic destruction of the US dollar by central bankers, fueled by an ignorant and fearful Congress.

I found a video that pretty much sums it up.  The sheer numbers on a graph, when compared against historical records, illustrate quite well the maginitude of what we face.

[flv]https://old.jeffwhiteside.com/video/thegreatfedfail.flv[/flv]

For those who may not get what these numbers mean, essentially this is the balance sheet of the Federal Reserve.  Imagine that I have $1,000 worth of something valuable (say, gold for example) and that is used as collateral to give value to something that has no inherent value, such as a printed dollar.  Then, say, you come to me and borrow a thousand printed dollars.  I’m now at a one-t0-one ratio, right?  I have $1,000 worth of value and $1,000 worth of debt…not a bad place to be.

But then imagine, I all of a sudden say that I’ll now borrow out $5,000 of intrinsically worthless paper…but I don’t increase my reserves.  You borrow the $5,000 paper dollars…I’m now at a 5 to 1 ratio, right?  The value of those dollars has not increased, but rather decreased because I still only have $1,000 in reserves.  If you wanted to buy that $1,000 worth of gold, it would cost you the whole $5,000 because that’s what the gold now represents.

Take that to where we are today.  The graphs in the above video illustrate what would happen if I all of a sudden said I now have tens of thousands of dollars that I can borrow out…but still, refuse to increase that which gives those dollars value.  Again, the perceived value of all those tens of thousands of dollars are decreased by the ratio of reserves to loans.

The danger of this situation is significant…both to me, the originator of such loans and to you, the borrower.  Why?  As we increase this ratio, the perceived value of those paper dollars becomes less and less attractive.  The risk comes when you, the borrower, starts to see the impacts of this devaluation and consider other options that may be less risky.  That’s where the danger comes in – if the significant borrowers of my paper money become disinterested in borrowing from me….all of sudden the system fails and both you and I are hung out to dry.

This is the rapidly approaching situation that we face, aleit simplified by magnitudes.  We cannot turn a blind eye to what is really going on with our economy these days, as scary as it is to face it.  The sooner we accept what the problem  really is, the sooner we can come to terms on how we can fix it.

Well, it seems appropriate around this time to provide my very own “State of the Blog Address” where I can tell you where we’ve been…and more importantly, where I’m going with this blog.

Come this February, jeffwhiteside.com will be turning a whole two years old!  Yep, I claimed it…so all you poser wanna-be Jeff Whiteside’s out there have to suck it up and take it.  You’ve got to listen to my Libertarian crazed criticisms and forever hope that someone doesn’t mistake me for one of you.  Sorry ’bout that if it happens.  I’m just conceited enough, though, to think it might actually *help* you.  🙂

Over the last couple years, my site’s design has changed a few times.  What stated as a little web page hosted off one of my servers at home has now seen two different web hosts.  I’ve been able to pursue my interests of providing online videos and now have the knowledge (but not the motivation) to do a video log.  I’ve also (barely) ventured into the realm of social networking.  I’ve toyed around with the so-called “Web 2.0” with dynamic information relevant to my life.

I still don’t have a MySpace account and I surprisingly haven’t become the next millionaire blogger.  Some things will never change.

In the coming four years, you can expect more of the same from me.  I don’t promise change…no…I vow to stay the same.  I promise to keep ever vigilant and critical against violations of our civil rights, unwise governance and an out-of-control world.  I hope to continue my own personal education and efforts to share that which I learn, and to inform those who are interested by writing about that which I feel is important.  I seek to hone my skills as a battered in blood political activist and to follow through on my commitment to restore what I think is great about this nation, America, in which I live.

You see, the last two years of this blog have seen great growth.  Admittedly, I only manage to write a handful or two postings a month…and sometimes ya’ll won’t see me for months on end.  Call it a vacation…I still probably put more time in than Bush did during his eight years.  But you see, that’s not what’s important here…it’s how I feel as a person.  I guess one could say that I finally feel like I have a place in this world.  And this blog has been part of it.

I do wish I was blessed with the motiviation and inspiration to write every day or nearly every other day – but, sadly, it simply wasn’t in the cards.  Nonetheless, I think the last couple years of this blog have shown a marked improvement in quality over the term of it’s existence.  I suppose it’s a natural progression of “learning to blog,” if you will, but it’s also about (in my case) forcing myself to find the creative outlet with words.  It’s about being inspired enough to actually go and write about it while resisting the urge to bore you with insignificant facts like, “I flossed my cat today.”  It’s also about resisting the urge to be apathetic and lazy.

And with that, comes even deeper clarity and perspective.  This blog has become me.  Not my specific interests, not my deepest desires, nor a representation of any of that.  It’s the journey…the process…the growth of one individual amongst a sea of others.  Where I stand and what it’s worth amongst that sea, I do not care…it’s more for me then it is for you.  It is the documentation of myself and my work, my thoughts and my hopes, my fears and my state.

So as we go into the next several years, I hope to maintain this effort and have an historical account of my life and the path that it’s on.  I hope to reconnect with those I have met in the past and look forward to meeting those who have yet to come.  I anticpate knowing what I have never known and resolve to do the best that I can with what I’ve got.  I thank you for your interest and hope you too will find your place in the world.