Andy Berke took the oath of office today as Chattanooga mayor under a tattle of headlines that suggest a public giddy for his arrival. Mr. Berke’s arrival excites many people who esteem him as a man of leadership and quality who will use a political office to alter the life of people in the city.
The change at the helm of city government coincided with a bloodbath in the metals markets that begin Friday as the 400 tonnes of gold futures worth F$20 billion was dumped in a tiny market unable to absorb the deal.
The ordinary way of viewing the precious metals market is to consider the value of gold and silver rising and falling. An alternative lens is to consider that metals are standing inertly in place — dull, stolid, nonmoving, nonparticipatory, waiting-waiting-waiting, tedious and uninteresting — with the paper money yapping higher or lower on any given day.
But the paper dollar is the numeraire and primary economic measuring tool for ordinary mortals in Chattanooga and beyond. We think in terms of dollars, that the green rectangle is stable. So I relate the day’s lesser story in conventional terms. Gold and silver, in a long-term bull market against paper money, fell into a bear phase beginning Friday with the dumping of 13.4 million ounces of gold (400 tonnes) in the futures window at the commodity exchange. That weight is equal to 15 percent of annual gold mine production, Ross Norman writing at SharpsPixley.com says. This morning the Wall Street Journal website said gold was on track today for the biggest one-day fall in 30 years. The plunge of gold against the paper dollar puts the metal at a two-year low, with the loss of more than F$200 an ounce.
Do not sell; dollar’s gain means buying opportunity
Silver’s spot price at day’s end, according to Kitco.com, is F$22.89 an ounce. It is 11 percent cheaper than this morning, The Wall Street Journal said. Bruce Paulhamus of Southern Precious Metals Exchange in East Ridge (my recommended Chattanooga dealer) said he could not give any quotes as the market was so wild, and he suggests people interested in buying gold and silver wait a few days for the turbulence to end. If you call him, please make sure to mention me. (I do not get a commission for recommending Mr. Paulhamus.)
With real money relaxing in a long-term bull market, you should take an interest in acquiring it. The Moneychanger newsletter in Westpoint, Tenn., has long recommended trading into silver as opposed to gold, as it is undervalued in paper money, and has the most upside potential. I would agree with Franklin Sanders’ discussion that buying circulated silver coin, 90 percent fine (dimes, quarters, halves, dollars) is the best option for preserving your buying power and enjoying total liquidity and market useability. A bag of $1,000 is probably now under F$20,000.
If you have contemplated the issues we explore here, you have lost confidence in the ideasphere nature of the paper money and credit world, and gained confidence in the underlying and biblical principles of lawful money as a store of value. Generally, acting on principle, one should have a stake in real money. Specifically, one should try to swap out of greenbacks into silver or gold when market conditions are favorable.
With the sudden elevation of the greenback as measured by metals, the time is certainly better than it was a few days ago for increasing their percentage in your portfolio.
The metals markets are subject to manipulation by banking interests. Chris Powell, the managing editor of the Journal Inquirer newspaper in Manchester, Conn., in 1998 helped organize with Bill Murphy the Gold Anti-Trust Action Committee, which explores and litigates collusion in the gold market. Mr. Powell gave a lengthy interview about his group’s work in The Moneychanger in April 2012 and delves into manipulation of gold and silver future markets by the likes of investment banks Morgan Chase and Goldman Sachs. GATA discovered that gold price manipulation is government policy, with the big banks acting as agents for the U.S. and central banks.
As greenback soars, so does Mayor Berke
It’s not fair to suggest that the powerful jump of paper money in the past two trading days has anything to do with Andy Berke. But I see a coincidence between the greenback arcing upward on vulture’s — err, eagle’s — wings and the happy arrival of a recently popular political figure at the post of chief executive in Chattanooga. And I see potential similarities.
“City Hall enters a new era,” booms the Times Free Press headline Sunday. “Berke starts job in hopeful time.” The story supports this double dose of positivity, with Pete Cooper of the Community Foundation of Greater Chattanooga gushing, “I think a lot of people are almost giddy about a new administration that is going to bring new ideas to the forefront and make this thing work.” Former Chattanooga mayor Jon Kinsey tells the newspaper, “I think this is really an exciting time, not only for all of the newly elected city officials but also for the citizens. *** People are ready for a change, and they’re optimistic about what that holds for the future.”
My unpretentious question for Mr. Berke and the 1,000 people who attended the swearing in of the lawyer and former state senator at the Tivoli Theater is as follows: Will local economy and free markets improve because of Mr. Berke? Or will they improve in spite of his forward-thinking and good-faith effort as a politician whose city hall shakeup creates office titles that sound as though they come from a Silicon Valley startup?
The Federal Reserve dollar is a political currency. It is private money, not the public money that local economy favors and that is a foundational minimum requirement for prosperity and economic security. It is purely political, with the Fed creating ex nihilo more than F$80 billion in dollar units monthly in a “quantitative easing” to stimulate the economy.
Mr. Berke’s whole worldview as a Democrat and backer of the public welfare establishment seeks to affect every resident of the city, as his speech today suggests. “We’re going to have an inclusive city,” he says. “For those who can’t make it and those who can, we’re going to run government for all of you. Each of us has a role to play in the future of our city, and I look forward to serving everyone.” (Read the text of his talk at andyberke.com.)
The dollar is soaring. The mayor and his generosity are soaring. People’s yearnings for security, safety and civic unity in one Southern city are soaring. Real money, the real measure of buying power, is waiting.
Sources: James Harrison, “Andy Berke sworn in as Chattanooga mayor,” Nooga.com, April 15 2013
Dave Flessner and Cliff Hightower, “City Hall enters a new era[;] Berke starts job in hopeful time,” Chattanooga Times Free Press, April 14, 2013
Mark O’Byrne, “Massive $20 billion paper gold sell orders trigger stop loss selling and unfounded panic,” Goldcore.com, April 15, 2013