Gold Tightens Its Grip

The beginning of the end of fiat currencies is in sight.

Consider this quote from Janet Tavakoli:

Gold Game Changer
J.P. Morgan Chase & Co. announced on February 7, 2011 that it will accept physical gold as collateral for investors that want to make short-term borrowings of cash or securities.

Presenting gold to satisfy demands for performance bond collateral has been allowed on the London CME in a limited way since October 2009. As of November 22, 2010, the Intercontinental Exchange Inc. (ICE) has accepted gold bullion as collateral on all credit default swaps and energy transactions.

I don't recall the G-20 declaring gold a new currency. Yet JPMorgan Chase and a couple of financial market exchanges have effectively declared that gold is an alternative currency.

In other words, gold is money.

So the unraveling begins, as fiat paper is gradually recognized for what it is - trashy government promises. What is more revealing is the reaction, or specifically, the opposite reaction of gold to the hike in Chinese interest rates.

China hikes rates

On the final day of celebrations of the Lunar New Year holiday, China’s central bank announced it was raising interest rates for the third time in four months. The 25-basis-point rate hike, unveiled Tuesday, follows a series of increases in Chinese banks’ reserve ratio requirements and strict housing purchase restrictions aimed at countering rising prices, continued loose lending practices and a runaway real estate market.

Gold's reaction - up!:

And gold continues to outperform bonds. In other words, paper is in trouble as the stress in the financial system continues to grow.

It appears that the market is setting many bulls up for some serious hurt. Although the timing of the correction remains difficult to determine, my own suspicion, as I previously outlined in Collapse Day is March 18, 2011 will play a prominent role in the final results.

38 days remaining to March 18th.


  1. Loading up on DXD PW, thank you for your efforts.


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