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What we’re witnessing is the death of the dollar as we know it. This is a chess game where the loser’s currency devalues greatly. All the moves from all corners of the world are centered on gold, the dollar/IMF, and the new Euro currency. This is the Achilles’ heel of our new-age bubble economy that will blind-side most Americans when they wake up and see gold revalued 20 or more times higher. They will ask, “Where did that come from? I thought gold was dead.” The answers we get will miss the point. Perhaps it will be blamed on Y2K or on hoarders or LTCM or hedge funds or derivatives. The correct answer is (and remember this) currency needs a basis of discipline that will prevent money from being printed, credit being created out of thin air as the dollar has been since 1971. That is why the Euro is backed by 15% gold valued at market. In 1971, President Nixon removed us from the gold standard. That is when the present situation started in earnest. Since then we have been in a dollar exportation game that has flooded the world with over $400 billion dollars, mostly held overseas in Central Bank accounts to purchase oil and other world-trade settlement items.

With the advent of the Euro, the destructive actions of the IMF, and the large dollar overflow, we are seeing desperate moves by desperate players — all in the background to an otherwise goldilocks economy. So, how soon becomes more an issue of how can we tell we are getting close?

Watch the players move their pieces.

– First, the US was taken off the gold standard in 1971.

– Oil went up in 1973.

– Next, gold was demonetized in 1976-1978 and made cheaper in dollar terms, while OPEC bought up gold-repayment contracts from the mining companies as they were loaned OPEC petrol-dollar profits through bullion banks . The BBs, in turn, leased private and some Central Bank gold into the gold markets that made gold cheaper and cheaper as it was sold into the world paper gold markets. They did these moves even to the point of hedge funds jumping on board to short the gold market. Now many of these gold contract repayments are near default as gold is no longer available in quantity to pay back the oil countries their gold that they had been receiving from the mines. Some of these folks are obviously concerned (BIS/Euro/Asia/OPEC).

– In 1982, the great bull market of the Century started. Much of the money in the bull market came from excess liquidity resulting from credit expansion in our banks. Since gold was no longer needed to back the dollar, banks and the Fed were free to create money without a resulting rise in the price of gold (this is the lack of discipline brought on by not having gold backing. As gold should have been allowed to rise as the dollars were created).

– 1988-89 was when Japan’s bubble economy burst. They have been struggling ever since.

– In 1994 through 1999, hedge funds shorted the gold market in earnest further increasing the gold shortages above. The BRE-X scandal broke gold’s back and almost destroyed the gold mining as an investment further depressing the price of gold. Doesn’t this story sound similar to JP Morgan’s massive short position currently in Silver?

– In 1999, the Bank of England announced a public gold auction of half of their gold reserves. The Euro was announced. The IMF became embroiled in a scandal. The European Union announced they won’t fund any more gold leasing except for 2000 tons (sale) over four years. Gold hit a 20-year low. Gold rose from $252 to $338 in one week. Rumors floating that the Bank of England doesn’t want to auction any more of its gold. Ashanti and Cambior (two gold mining companies) actually lose money when gold rises $80, because they (like many others) were threatened with a lower credit rating by bullion banks if they didn’t further hedge their production. Many gold mining companies and hedge funds scramble to cover their short gold positions. Gold lease rates rise to nearly 10% during the $80 price move. Inflation indices of the US government start to show signs of inflation. Greenspan gives the doom and gloom (for him) Jackson Hole speech. The long-term bond yield continues to remain above 6%.

Conclusion: BRE-X almost seems as though, in retrospect, it was orchestrated to lower the price of gold, something not really mentioned then but makes sense now. The pace of chess moves has increased in frequency and intensity in 1999, where it took years to see these changes before they are now coming weekly and daily. This indicates that the end-game is near. The stock market bubble seems to inversely track the efforts to contain gold in a box. In other words, as the stock market finishes up the greatest bull market; gold and the Euro promise to bring in a new gold and Euro market at the expense of the DOW, NASDAQ, and dollar.

Predictions (general and specific):

– Long-term bond yield above 7% or higher.

– An increase in volatility and a divergence in COMEX and London Bullion Market Association gold prices from actual physical gold prices, where physical will continue to gain a premium over paper such that the paper markets either fold or certain large players fold.

– Rumblings of gold backed US currency.

– More nationalization of gold mines overseas as more hedge positions put additional mining companies at risk.

– Several large gold mining companies to fold or be taken over by their banks.

– Gold to continue to play in the news on an ever increasing basis.

– IMF to value their gold at market.

– OPEC to eventually accept Euros in payment for oil.

– Talk of new regional currencies.

– China to dishoard dollars and buy more gold.

– Paper millionaires from bubble market to lose fortunes by buying on dips – as markets eventually correct.

– Political rumblings of gold confiscations, gold mine taxes, and new dollar currency based on gold.

– European Union to create a standing army and navy.

– India to become a more dominant world player.

– Solar and wind power to become more popular.

– Big push to get off oil dependency as gasoline goes above $2.50 per gallon.

Today we’re seeing unprecedented Gold and Silver all time Highs. Silver, in my opinion is experiencing similar short manipulation to BRE-X scandal in the late 90’s. JP Morgan will be exposed of its naked short and forced to cover and catapult silver higher than its current value of $26.00.

Stocks to Buy

Earnings at Newmont Mining Corp. (NEM) the largest U.S. gold producer may increase 47 percent to $1.93 billion in 2010.

Eldorado Gold: (EGO) Shares of EGO closed at $19.31 in the previous trading session and opened today at $19.49. EGO is trading above the 50 day moving average and higher than the 200 day moving average. The stock’s 52 week low is $9.74 and 52 week high is $19.72.

Goldcorp Inc: (GG) Shares of Goldcorp traded 2.2% higher

Barrick Gold: (NYSE:ABX) are up 2.0% on Tuesday. So far this year, the stock jumped over 34%

Hecla Mining Company: (NYSE:HL) Up 16% in one week. Over the past 52-weeks, the stock has been trading within the range of $2.85-$7.47. At current market price, the market capitalization of the stock stands at $1.40 billion.

Silver Wheaton Corp (NYSE: SLW) Silver Wheaton Corp. (Silver Wheaton) is a mining company, which generates its revenue primarily from the sale of silver.

Pan American Silver Corp (NASDAQ:PAAS) During the quarter ended June 30, 2010 the Company recorded sales of a record $147.3 million, a 32% increase compared to the second quarter of 2009.

Endeavour Silver Corp. (NYSE Amex:EXK) Endeavour Silver Corp. (Endeavour) is a Canadian mineral company engaged in the evaluation, acquisition, exploration, development and exploitation of mineral properties. The Company produces silver-gold from its underground mines at Guanacevi and Guanajuato in Mexico.

Coeur d Alene Mines Corp (NYSE:CDE) (Coeur) is a silver producer with gold assets located in North America. The Company, through its subsidiaries, is engaged in the operation, ownership, development and exploration of silver and gold mining properties and companies located primarily within South America (Chile, Argentina and Bolivia), Mexico (Chihuahua), United States (Nevada and Alaska) and Australia (New South Wales).

IShares Silver Trust (NYSE Arca: SLV) ETF that correlates silver futures

SPDR Gold Shares (NYSE Arca: GLD) ETF that correlates Gold futures

Gold Fields Limited (NYSE:GFI) Gold Fields is a producer of gold and holder of gold reserves in South Africa, Ghana, Australia and Peru. In Peru, Gold Fields also produces copper. Gold Fields is primarily involved in underground and surface gold and copper mining and related activities, including exploration, extraction, processing and smelting.

Jaguar Mining Inc (NYSE: JAG) Jaguar is engaged in the acquisition, exploration, development and operation of gold producing properties at its 93,000-acre land base in the Iron Quadrangle region of Brazil, a greenstone belt located near the city of Belo Horizonte in the state of Minas Gerais.

Silvercorp Metals Inc (NYSE:SVM) The Company’s properties include Ying Mine (77.5%), HPG Property (80%), TLP Mine (77.5%), LM Mine (80%), Nabao Project (82%), GC Project (95%) and Silvertip Project (100%).

We believe Gold will head towards $3,500 within the next 5 years. Silver is headed to $80