When gold vies with an inflated paper currency (because too much of it has been printed), gold always wins. If investors lose faith in a paper currency or just have enough uncertainty about it, they usually turn to gold.

::::::::

Markets are often the best forecasters since their
direction supposedly represents the collective wisdom
of the smartest people moving them - the
professionals, not the public that just goes along for
the ride where they're taken. The way the dominant
"players" view the future is how they decide where
they want to place their financial bets. Now,
however, the financial markets (stocks, bonds and
other money instruments) are in a tug-of-war with the
price of gold, which is typically seen as a safe haven
in times of uncertainty and in the past has moved
inversely with the price of equities. Since 2003,
when the Iraq war began, world equity markets have
soared and still are moving up strongly except in the
US where since 2004 they've gone up modestly. All are
stable or rising, however, seeming to be pointing to
good economic times ahead. The global bond markets
seem to concur as they've been surprisingly stable as
well and in the face of 14 consecutive interest rate
hikes by the US Federal Reserve. The equity markets
love wars because they're good for business - as long
as they go well. The markets always discount the
future about 6 months ahead, and today's valuations
represent that view - that all is well, profits will
keep rising and so will stock valuations.

GOLD'S AWAKENING FROM A 25 YEAR SLUMBER

If the equity and bond markets are right and the
future is rosy, why then is gold also soaring after a
25 year slumber following its decline after peaking at
$850 an ounce in 1980. Since early 2001 it's more
than doubled in price from around $250 an ounce to
around $550, and gold forecasting pundits fearlessly
predict much higher valuations ahead. Amazingly the
highest number I've seen is $5,000. Wow. Now that
forecaster surely must also be predicting some kind of
financial or other type Armageddon or worse.

I'm not an economist, Wall Street whiz or professional
fearless forecaster. And I'll admit straight up I'm
not sure what gold is telling us, but I have some
ideas. Read on, and I'll play a mug's game laying out
what I think, right or wrong. The best and brightest
in the financial world do it every day, and even when
they're wrong, often enough, clients pay dearly for
their advice. I'll give it to you free of charge, and
I may turn out to be smarter than they are, or maybe
just luckier in making a good call. But, as the
saying goes, you get what you pay for.

FACTORS AFFECTING GOLD PRICES

Ask a gold expert what factors affect gold prices and
you'll get some pretty standard answers, usually
right. Gold is a global thermometer that reflects
monetary, political and economic stability as well as
marketplace demand for the metal itself as jewelry,
investors' (including central bankers') desire to hold
it for any reason or a as hedge against the uncertain
value of fiat money, which is just paper currency from
a government printing press that can be produced in
any amount.

Governments, Wall Street and business around the world
hate it when gold prices rise because it usually
reflects an early warning of some kind of trouble
ahead, nearly always financial. It may be signaling
rising inflation or deflation as well as a general
lack of confidence in fiat or paper currency. When
the gold price rises sharply against a country's
currency, as it has in the US, it points to trouble
ahead for that country's economy and monetary policy.
At least it's worked that way in the past. What's
also worked is that when gold vies with an inflated
paper currency (because too much of it has been
printed), gold always wins. If investors lose faith
in a paper currency or just have enough uncertainty
about it, they usually turn to gold.

Just retired and now former US Federal Reserve
Chairman Alan Greenspan was very fond of the printing
press. He must have been since he used it liberally.
He doubled the money supply since 1991 and increased
it over 40% since 2001. Of course, being above all
else a consummate politician, he had to do it to
please his constituents (Wall Street and the big
banks) and especially to help George Bush and the
Congress spend like drunken politicians to fund an
expensive war with no end in Iraq and lots of others
on the drawing board. You need big bucks for that,
there's no end in sight, and the new Fed chairman will
probably be just as friendly to the warmakers and make
things even worse ultimately - that is, keep the
printing press active enough to pay the war profiteers
well and the economy moving ahead, for now at least.

Ben Bernacke, the new chairman, begins his tenure with
a nickname he may live to regret - "Helicopter Ben."
Now there's a dubious handle for a former
distinguished academic at Princeton and now Fed
chairman. He got it after his remark that he'd drop
dollars from a helicopter if that was needed to
stimulate the economy - meaning, of course, he'd keep
the printing press running "full out" if that's what
it took. Central bankers never run out of paper or
ink.

ARE THE PUNDITS MISSING THE REAL MESSAGE FROM THE GOLD
MARKET

I don't know, and they're a lot smarter than I am, but
I'll stick my neck out. World stability changed
direction after 9/11 when the Bush administration
declared war on the world - at least all parts of it
not subservient to US interests. The price of peace
with the US is "knowing who's boss" and being
respectful and obedient - just like organized crime
family members are to "The Godfather." But just as
mob bosses mete out punishment to disobedient
underlings, so too will be the fate of any nation
daring to go its own way, independent of US wishes.
It'll likely see some hostile action against it -
political, economic, military or all three.

The "fun and games" began for real against Afghanistan
a month after 9/11 and went into overdrive against
Iraq in March, 2003. Now the war drums are audible
against Iran, at the head of the target country queue,
with Venezuela and Syria likely next in line and other
choices to be named later to follow. Despite the
enormous cost (an economic boon at the outset and for
a while), the Bush administration declared a
"permanent state of war" and doesn't want to be
accused of running out of targets. To keep the war
economy going they'll always have another one at the
ready.

Looking back, the price for good times that were too
good or for reckless behavior that was too reckless
has always been the same - the day comes when you
"gotta pay the piper." That may not be this week or
next month, but I'll speculate that the sharply rising
gold price in the US is discounting more than the
usual financial rebalancing its price action usually
indicates. Ask any gold seer and they'll explain that
while geopolitical events may affect the price of
gold, they're never a major factor. I'll be contrarian
and speculate that along with whatever other message
the gold market is sending, it's also signaling
concern about the geopolitical threat to peace and
world stability, especially in the strategically
important Middle East. High oil prices may be sending
the same signal, although of late prices have
stabilized and come off a bit.

My best guess is that the rising gold price may be the
canary in the mine shaft warning of a growing and
dangerous change in world stability reflected in
investor sentiment. At times of growing economic or
geopolitical tension, uncertainty or danger, gold is
seen as a conservative asset or "safe haven" and a way
to preserve wealth as it always has been for the past
6,000 years. That's a track record even the Dow Jones
averages can't match.

There's a lot for investors to worry about now along
with the new war drums beating I'll discuss below.
There's the perceived threat of terrorist attacks, the
continued loss of civil liberties in the West and
especially in the US, the possible disruption of oil
supplies, and at some point that "piper" waiting to be
repaid for years of financial profligacy in the US to
fund all the "adventuresomeness" and excess stimulus
to keep the economy humming. And there's one other
factor affecting the US dollar. Many currency experts
believe the currency is in a long-term bear market
that began in 2002, even though it rebounded well last
year and is holding its own so far this year (a
cyclical rally in a longer term secular bear market
say the dollar bears). Some of the reasons given for
this trend are the emergence of the euro as a
competitor to the dollar in December, 2001 by the 12
European nations using it and the desire of other
nations to diversify into other currencies (as well as
gold). And its interesting that some Islamic nations
have begun doing some bilateral commerce in gold
dinars and China now has its first gold exchange. All
this signals a potential or maybe likely shift away
from the almighty dollar as the world's primary
reserve currency.

ANOTHER MIDDLE EAST WAR MAY BE ONE TOO MANY

Now to those war drums and the speculation that's now
rife that the Bush administration has chosen Iran as
its next target. I read about it every day as well as
hear the same kind of strong administration rhetoric
hostile to Iran that we heard in the run-up to the
Iraq war. The demonizing campaign moved ahead further
in mid-February when Secretary of State Rice told the
Senate Foreign Relations Committee the US would
"actively confront" Iran and asked for an extra $75
million in funding for anti-Tehran propaganda and
support for opposition groups inside and outside the
country. It all points to one thing. The US may
launch an attack against the Iranians and do it as
early as March when Iran opens a new oil bourse and
begins trading in euros. Saddam did the same thing in
2000, providing the US an added reason to attack him,
and other oil producing countries including Venezuela,
Russia, Indonesia, Libya and Malaysia have also agreed
to sell oil in euros.

The sale of oil worldwide in dollars has been a key
support for the dollar and its stability through the
years.

The US will do whatever it takes to preserve
this. If enough countries begin selling their oil in
euros or other currencies (the Japanese yen is the
only other possibility), it would seriously undermine
the dollar and have grave consequences for the US
economy. The US, and especially the Bush
administration, will surely go to war to prevent this.

MORE CLUES POINTING TO WAR WITH IRAN

If the gold market and those reading this need more
evidence, consider these two jarring tidbits. Last
year former chief UN weapons inspector Scott Ritter
said George Bush received and signed off on orders for
an aerial attack on Iran planned for last June. It
didn't happen then, but former CIA officer Philip
Giraldi also claims he has information that the
Pentagon was ordered by Vice President Dick Cheney to
draw up plans to attack Iran "to be employed in
response to another 9/11-type terrorist attack on the
United States... (and)... As in the case of Iraq, the
response is not conditional on Iran actually being
involved in the act of terrorism directed against the
United States......Iran is being set up for an
unprovoked nuclear attack" against them by the US.

Nervous anyone, especially those of us convinced our
own government was behind or complicit in the first
9/11 attack. A number of US government officials and
private "terrorism" experts are on record saying it's
just a matter of when, not if, the US will be struck
again. On June 6, 2003, the AP quoted a US government
report saying "There is a 'high probability' that
al-Qaida will attempt an attack with weapons of mass
destruction in the next two years." Are we being set
up to be duped again if there's a major strike against
us? You know the drill by now - a major attack
happens on US soil, the Bush administration and
complicit corporate media hype what happened, scare
the public and get them mad enough to demand
retribution, they blame it on Iran claiming secret
intelligence they can't reveal, and it's (nuclear)
bombs away - and George Bush's approval rating
skyrockets just like after 9/11, and the Republicans
keep control of both houses of Congress in November.

HOLD ON TO YOUR BULLION (IF YOU HAVE ANY)
-THINGS ARE WORSE THAN YOU THINK

As disturbing as another real or faked "terrorist"
attack is plus a new war, consider this. Under the
radar the US has been waging "nuclear war" against
Iraq by using so-called depleted uranium weapons (DU)
since the Gulf war in 1991. We also used them against
Afghanistan in 2001 and later as well as against
Serbia/Kosovo in 1999. These are radioactive and
chemically toxic weapons that are banned under the
Geneva and Hague Conventions, and any use of them in
combat or for any purpose is a war crime.

The military loves these weapons and uses them because
DU is a "dense metal" able to penetrate hard targets
like tanks and structures and explode inside them.
However, after exploding they also aerosolize into a
fine spray of submicroscopic particles that
contaminate the air, water and soil with toxic
radiation. They're also swept by winds into the
atmosphere and carried long distances, falling to
earth along the way and contaminating vast areas far
from the combat zone. The result in Iraq from the
Gulf war, repeated bombings using these weapons all
through the 1990s, and now with their intensive use
for nearly the last 3 years, is that vast areas of the
country are an irremediable, irradiated, toxic
wasteland. The country is largely unsafe for human
habitation forever (the radiation contamination has a
half-life of 4.5 billion years) even with an end to
hostilities, and there's no sign of that which only
makes things even worse.

The Bush administration has now stated its intention
to use so-called "mini-nukes" or "bunker-busters" as
conventional weapons in any area of conflict. They're
not "mini", but they sure are "nukes", about one third
as powerful as a Hiroshima bomb or stronger as they
can be made to any desired potency. Officially, these
weapons are called "Robust Nuclear Earth Penetrators",
and they work the same as other DU weapons -
penetrating a designated target before exploding
including those underground for protection. But since
these weapons are much stronger than the ones now
being used, the destruction and fallout from them will
be much greater. And should they be used, it's likely
that world instability will increase and cause great
reverberations including in the financial and gold
markets.

If the US attacks Iran, even by a "shock and awe"
strike from the air only with no invasion and with
so-called "mini-nukes", the Middle East may boil over
even more than it now has. But there's even
speculation the US will make a targeted invasion into
the area known as Khuzestan, the Iranian province
bordering Basra in Southern Iraq, where most of the
nation's oil is located (possibly as much as 90% by
some estimates). Make no mistake, the situation in
Iraq is hopeless, the war is lost and the US knows it
and will find a way to exit eventually even though
it's now spending billions on as many as 14 permanent
bases in the country. With that quagmire to resolve
and with the Arab street and entire Muslim world
justifiably inflamed, it's hard to imagine the US
would risk making things even worse by attacking Iran.
But that's what many writers and Middle East analysts
are now predicting. If they're right, the very risky
and uncertain fallout from it is what the gold market
may be signaling as the price of the precious metal
heads higher.

IRAN IS IN FULL COMPLIANCE WITH NPT - YOU'D NEVER KNOW
IT FROM THE ONE-SIDED HOSTILE NEWS REPORTING

Iran is a signatory to the Nuclear Non-Proliferation
Treaty or NPT and is in full compliance with it. The
core of NPT is in Article IV which gives signatories
"an inalienable right to develop research, production
and use of nuclear energy for peaceful purposes" and
acquire technology from other signatories to do so.
That's exactly what Iran is doing as opposed to Israel
which is not an NPT signatory and is known to have 200
or more nuclear bombs, a stated intent to use them if
they choose, and no condemnation of this by the world
community. Of course, Israel is a valued strategic
ally while Iran is an "outlier", going its own way and
refusing to bow to the dictates of the "Godfather" (a
no-no), Israel or any other nation. It follows that
launching an attack against them has nothing to do
with its legal right to develop commercial nuclear
power or even its right to defend itself against a
hostile US and Israel by building any weapons it feels
it needs. It's only about the long-term US desire for
regime change in this oil rich country. As in Iraq
(and also Venezuela and Syria) we want a government
subservient to the US, and, of course, we want the oil
- not access to it, but control of it, the profits
from it and being able to decide who gets it and who
does not. The plan isn't to take over Iran's exports
of carpets (the finest in the world), fruit or
pistachio nuts, but maybe the war hawks might want to
on second thought as they're worth about $39 billion a
year.

CONCLUSION

So where are we, and what's it all add up to - trouble
likely, maybe big trouble down the road that may come
sooner than most think. Will it, and is that what I'm
predicting? I've always loved the answer Hollywood
film mogul Louis B. Mayer once gave an interviewer
when asked how well he thought his newest movie would
do at the box office. He said he never liked making
predictions, especially about the future. Louis was a
lot smarter than I am, and I'll go along with him on
that one. I don't know what the US, in fact, will do
(or how gold and the financial markets will react) and
neither does anyone else outside the power circles
making these decisions. They may even be unsure
themselves at this time. But my best judgment is that
the gold market senses trouble and is sending an
ominous message that all is not well in the world, and
it's better to take cover in the traditional safest of
all safe havens than risk potential big losses in the
financial markets. As one market seer once said -
we'll know for sure "in the fullness of time." Place
your bets, and stay tuned.

Stephen Lendman

The author lives in Chicago and can be reached at
lendmanstephen@sbcglobal.net.

His blog site - Url.: sjlendman.blogspot.com.

Authors Website: https://stephenlendman.org/

Authors Bio:

VISIT MY WEBSITE: stephenlendman.org (Home - Stephen Lendman). Contact at lendmanstephen@sbcglobal.net.  My two Wall Street books are timely reading: "How Wall Street Fleeces America: Privatized Banking, Government Collusion, and Class War"

Stephen Lendman was born in 1934 in Boston, MA. In 1956, he received a BA from Harvard University. Two years of US Army service followed, then an MBA from the Wharton School at the University of Pennsylvania in 1960. After working seven years as a marketing research analyst, he joined the Lendman Group family business in 1967. He remained there until retiring at year end 1999. Writing on major world and national issues began in summer 2005. In early 2007, radio hosting followed. Lendman now hosts the Progressive Radio News Hour on the Progressive Radio Network three times weekly. Distinguished guests are featured. Listen live or archived. Major world and national issues are discussed. Lendman is a 2008 Project Censored winner and 2011 Mexican Journalists Club international journalism award recipient.