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Karl Marx on the opium trade

June 7, 2011 1 comment
Faced with a labour crisis after slave revolts, Europe (specially England) needed alternatives for a new 'slavery' model. A fugitive theorist - Karl Marx. Capitalists and capitalist nations of Europe loved – especially the USA.. Click for bigger image.

Faced with a labour crisis after slave revolts, Europe (specially England) needed alternatives for a new 'slavery' model. A fugitive theorist - Karl Marx gave a model for 'slavery'. Capitalists and capitalist nations of Europe loved – especially the USA.. Click for bigger image.

Marx on the Opium trade

Some 150 years later, Karl Marx’s commentary on the opium trade remains relevant.

Much loved by the capitalists of his time, Karl Marx analyzed opium trade well.

Nurtured by the East India Company, vainly combated by the Central Government at Pekin, the opium trade gradually assumed larger proportions, until it absorbed about $2,500,000 in 1816. The throwing open in that year of the Indian commerce gave a new and powerful stimulus to the operations of the English contrabandists.

In 1820, the number of chests smuggled into China increased to 5,147; in 1821 to 7,000, and in 1824 to 12,639. Meanwhile, the Chinese Government, at the same time addressed threatening remonstrances to the foreign merchants, punished the Hong Kong merchants, (with) more stringent measures. The final result, like that in 1794, was to drive the opium depots from a precarious to a more convenient basis of operations.

The trade shifted hands, and passed to a lower class of men, prepared to carry it on at all hazards and by whatever means. Thanks to the greater facilities thus afforded, the opium trade increased during the ten years from 1824 to 1834 from 12,639 to 21,785 chests.

The year 1834 marks an epoch in opium trade. The East India Company lost its privilege of trading (and) had to discontinue and abstain from all commercial business whatever. It being thus transformed from a mercantile into a merely government establishment, the trade to China became completely thrown open to English private enterprise which pushed on with such vigour that, in 1837, 39,000 chests of opium, valued at $25,000,000, were successfully smuggled into China, despite the desperate resistance of the Celestial Government.

We cannot leave without singling one flagrant self-contradiction of the Christianity-canting and civilization-mongering British Government. In its imperial capacity it affects to be a thorough stranger to the contraband opium trade, and even to enter into treaties proscribing it.

Yet, in its Indian capacity, it forces the opium cultivation upon Bengal, to the great damage of the productive resources of that country; compels one part of the Indian ryots to engage in the poppy culture; entices another part into the same by dint of money advances; keeps the wholesale manufacture of the deleterious drug a close monopoly in its hands; watches by a whole army of official spies its growth, its delivery at appointed places, its inspissation and preparation for the taste of the Chinese consumers, its formation into packages especially adapted to the conveniency of smuggling, and finally its conveyance to Calcutta, where it is put up at auction at the Government sales, and made over by the State officers to the speculators, thence to pass into the hands of the contrabandists who land it in China.

The chest costing the British Government about 250 rupees is sold at the Calcutta auction mart at a price ranging from 1,210 to 1,600 rupees. But, not yet satisfied with this matter-of-fact complicity, the same Government, to this hour, enters into express profit and loss accounts with the merchants and shippers, who embark in the hazardous operation of poisoning an empire.

The Indian finances of the British Government have, in fact, been made to depend not only on the opium trade with China, but on the contraband character of that trade. Were the Chinese Government to legalize the opium trade simultaneously with tolerating the cultivation of the poppy in China, the Anglo-Indian exchequer would experience a serious catastrophe. While openly preaching free trade in poison. it secretly defends the monopoly of its manufacture. Whenever we look closely into the nature of British free trade, monopoly is pretty generally found to lie at the bottom of its “freedom.” (via Karl Marx in New York Daily Tribune Articles On China, 1853-1860 Free Trade and Monopoly; linking text in parentheses supplied; parts excised for brevity and relevance).

‘Opium financed British rule in India’

Elephants in the room. (from the Non Sequitur series of cartoons by Wiley Miller). Click for larger image.

Elephants in the room. (from the Non Sequitur series of cartoons by Wiley Miller). Click for larger image.

Under the British Raj, an enormous amount of opium was being exported out of India until the 1920s.

Before the British came, India was one of the world’s great economies. For 200 years India dwindled and dwindled into almost nothing.

Once I started researching into it, it was kind of inescapable – all the roads led back to opium.

I was looking into it as I began writing the book about five years ago. Like most Indians, I had very little idea about opium.

It is not a coincidence that 20 years after the opium trade stopped, the Raj more or less packed up its bags and left. India was not a paying proposition any longer. (via BBC NEWS | South Asia | ‘Opium financed British rule in India’).

Poor Indy Joe

Amitav Ghosh, a trained anthropologist and historian with a doctorate from Oxford University, did not know about the opium trade by the British Raj. The West has done a great job of hiding elephants in the room.

Does the average Indy Joe have a chance?

Birth of a new religion

But there is any layer to this problem. A new religion. It is called Westernization. ‘Modern’ Indians can be satisfied with perception and propaganda. Easier to digest, I presume.

At this rate, India will become another case of ‘forget-nothing-learn-nothing’. So enamored with the new religion of ‘Westernization’ are we, that no criticism will be accepted or tolerated.

Many ‘educated’ Indians have come to believe that the West is a friend of India – or has answers or solutions for India. Forget about India.

Does West have an answer to their own problems.

How governments drive tobacco trade

Tobacco – a colonial addiction

Six companies and sundry State monopolies drive global cigarette consumption. These six companies derive more than US$100 billion dollars in revenues, globally. For many years they were advertising industries largest customers.These six companies are headquartered at former European imperial powers (UK, France, Spain), USA and Japan.

Four tobacco companies and State monopolies control global tobacco trade. (Image source - http://www.tobaccoatlas.org). Click for interactive source map.

Four tobacco companies and State monopolies control global tobacco trade. (Image source - http://www.tobaccoatlas.org). Click for interactive source map.

In recent years, dozens of cigarette manufacturing companies have consolidated under four major private corporations: Altria/Philip Morris, British American Tobacco, Japan Tobacco International, and Imperial Tobacco. State monopolies are also major cigarette manufacturers. The largest state monopoly is China National Tobacco Corporation, with a global cigarette market share that exceeds that of any private company. Because the European Union intends to restrict further mergers and acquisitions that increase a tobacco company’s market-share dominance, industry consolidation trends may have peaked.

The tobacco industry includes some of the most powerful transnational corporate entities in the world. Tobacco conglomerates have diversified into many other industries, such as financial services, food and beverages, pharmaceuticals, real estate, hotels, restaurants, communications, and apparel, among others. The tobacco industry is expected to continue increasing in size and power.

The global tobacco market, valued at $378 billion, grew by 4.6 percent in 2007. By the year 2012, the value of the global tobacco market is projected to increase another 23 percent, reaching $464.4 billion. If Big Tobacco were a country, it would have the 23rd-largest gross domestic product in the world, surpassing the GDP of countries like Norway and Saudi Arabia. (via Tobacco Atlas Online – Tobacco Companies.).

India’s small production base is a combination of two aspects. Indian social inertia against addictive substances and the Government on the other. Indian cigarette business, small as it is, was put in Indian hands during Indira Gandhi’s socialist days. BAT lost control of ITC, which was placed in the hands of professional Indian managers.

Cigarette production in major markets (Graphics by timesofindia.com.). Click for larger image.

Cigarette production in major markets (Graphics by timesofindia.com.). Click for larger image.

Chinese State Tobacco monopoly

The complicity of governments is very similar to the modern expansion in prostitution – especially in the West.

Or Western powers pushing opium in China in the nineteenth century. After the opium experience of the Chinese, when Western trading houses, under State protection, using the garb of ‘free trade’, made China into the largest consumer of opium.

The Chinese Govt. has replaced opium with tobacco.

The second secret of the tobacco business is to be dominant in purchasing and cornering tobacco stock. For cornering tobacco stocks, Big Tobacco depends on Central Banks’ support – aka State support. For instance, ITC (and other major global tobacco purchasers) in India has a major presence in Guntur, where Indian tobacco trade is headquartered.

ITC’s over-sized chequebook buys it market dominance.

The Indian tobacco profile

India is the third largest producer of tobacco – after China and USA. India ranks 6th as a tobacco exporting nation, as most of tobacco in India is consumed by domestic consumers. Tobacco consumption in India follows traditional patterns, as a non-industrial product – spanning chewing tobacco, bidis (tobacco rolled in leaves), hookah, clay pipes and snuff. Indian traditional tobacco usage consumes between 75%-85% of total tobacco cultivation.

Indian tobacco consumption and control follows consumption patterns of psychotropic drugs. All the major drugs in the world came of India – opium is afeem, khuskhus पोस्त; cannabis is charas, ganja, marijuana, hashish. Heroin is a derivative of opium. Even, as Indians are significant (legal) producers, they are not high on consumption lists.

However, drugs never became a big problem in India. Unlike in China, or in Medieval Middle East (when drug crazed criminals called hashishis became assassins). All these drugs were introduced to the world by India – with records going back to 1000 BC. Similarly family and peer pressure plays an important role in controlling the less dangerous form of traditional tobacco usage in India. In modern times, Indian gold smuggling was funded by carriage and export of drugs.

Cigarette production consumes less than one-fourth of India’s tobacco production.

Until two years ago, non-filter cigarettes comprised 30% of the total cigarette consumption. But with an increase in excise duty on non-filter cigarettes from Rs 168 to Rs 819 per thousand from March 1, 2008, the demand for low-priced filter cigarettes has risen At present, the excise duty on a pack of 10 filter cigarettes is Rs 8.19, and VAT Rs 1.05. Thus, taxes total Rs 10 per pack. Illicit cigarettes are sold for less than this amount, leading the government to believe that either registered cigarette units are evading duty or foreign-made cigarettes are flooding the market from Myanmar and the UK The business of low-cost cigarettes is big in the country, especially in Delhi, Uttar Pradesh, Madhya Pradesh, Rajasthan and Punjab. (via Article Window).

The expansion of manufacturing in cigarettes globally (see chart) is much like the housing scam in US and Europe. Banks made huge advances, created a bubble, and are now busy foreclosing these loans. The modern myth of Republic Democracy at work.

How maya works in real life.

Zoroastrian Pride – At what cost?

May 24, 2011 3 comments

Is it a false sense of superiority that is behind the Zoroastrian problem? Instead of feeling superior, is it time that Zoroastrians learnt something from these Hindoos, divided by caste?

Life in Parsi Colony - Cartoon by Satish Acharya.

Life in Parsi Colony - Cartoon by Satish Acharya.

The Parsis were exemplary because they stood high above the common divisiveness of caste and demonisation of The Other. We must remain a community that’s worth emulating – and worth preserving. (via Blindly into the abyss – The Times of India).

Snootiness stops you from learning

Bachi, I would not be so superior over these ‘Hindoos, divided by caste’. The same Hindus united to give shelter to your refugee forefathers, when driven away from your homeland. And before giving refuge, some 500 years earlier, to win back the lands conquered by Alexander.

Without Indian elephants corps, would the Sassanians have ruled for more than 500 years?

Staying down is defeat

Anyone in the world can have their lucky day – including Alexander!

Losing to Alexander was not the tragedy. The one important question which is ignored was “Were the Greeks able to retain their Indian or Persian conquests?”

Within the next few years, Western history admits that the Indians kings won back all their losses – quite unlike the rest of Alexander’s conquests. For instance the Sassanians, a true-blue Persian dynasty was able to retake Persia, in 223 AD, 500 years after Alexander, from Parthians, who in turn were able to depose the Seleucids after 250 years – by 63 BC. Egypt and Greece never recovered.

After the defeat and death of Cyrus The Great at the hands of Tomyris, the Persians stopped looking India-wards. 500 years later (nearly), with the help of the Indian cavalry and elephant corps, the Sassanians stopped the Romans at Persian borders in 363 AD.

Achaemenids did not learn their lessons from the death of Cyrus, the Great. Possibly, the outcome against Alexander would have been different, had they used more elephants at Gaugamela – instead of 12-15. Similarly, a 1000 years later, the Sassanian army, had forgotten their lessons – and could not use their few elephants to full effect, against the Islāmic Arabs.

But, the Sassanian dynasty was able to wrest back and defend Persian dominions from the Greco-Romans, after setting up an elephants corps in their army – evidenced, for instance, by the carvings at Taq-i-Bustan.

At one time, the Sassanian rulers had increased its Indian war elephant corps to 12,000.

Of an Edwardian India  By SILLOO MEHTA (Image courtesy - Copyright © 2011, The Hindu.). Click for larger image.

Benefits of collaboration? When life in a Parsi household was lived at a leisurely pace ... Of an Edwardian India By SILLOO MEHTA (Image courtesy - Copyright © 2011, The Hindu.). Click for larger image.

Entrepreneurs or Collaboration?

Is it the entrepreneurship of Homi Mody that you are proud of?

Or his collaboration with the British? Can it be Homi Mody’s adulation and admiration of the British?

October 28th 1933.

On that day, the Bombay Mill Owners Association signed the Lees-Mody Pact. This earned all Indian industrialists, Nehru’s distrust. The British had succeeded once again in divide-and-rule.

While the whole country was on a boycott of British goods (specially Lancashire), 21 businessmen led by Homi Mody (father of Russi Mody, Piloo Mody) agreed to a system of ‘imperial preferences’ – which furthered India’s impoverishment. Earlier, Homi Mody had warned Gandhiji against the renewing the swaraj movement.

Homi Mody had his own political ambitions. After Independence, Nehru did try and make up with Homi Mody. Homi Mody was also included in to India’s Constituent Assembly – even though he had served the British well.

Or is it the wealth from opium trade with China by Parsi traders who set up their offices in Hong Kong that you are proud of? Or the collaboration in the opium trade (and slavery) on which the British Empire was built. Not that Parsis were not the only collaborators. Remember these Hindus traders, divided by caste, restricted by shubh labh compunctions played a lesser role (compared to the European and Parsi traders) in this opium trade.

Even during Alexander’s conquest of Persia, witness the complete collaboration that Alexander got from the defeated Achaemenid ruling family of Sisygambis, Stateira, Oxathres (brother of Darius III; also written as Oxoathres and Oxyathres) et al. But, at Indian North-West of the foursome Bessos, Spitamenes, Datafernes and the Scythians made Alexander’s life miserable. At Gaugamela, it was Bessos and his cavalry which broke Alexander’s formation.

The tribes and kshatrapas (satraps) of Indian North West swath, delayed Alexander for nearly three years – before he could step into India. In India, Alexander had to pay the King of Taxiles, Omphis, (Ambi) 1000 talents of gold (more than 25 tons of gold) – to secure an alliance. He had to return the kingdom of Punjab to Porus – purportedly, after winning the battle.

What were Alexander’s loot and pickings from India? Negligible.

SKETCH OF PARSI COUPLE BY MOKSHA; Posted on SATURDAY, MARCH 22, 2008. Click for larger image.

SKETCH OF PARSI COUPLE BY MOKSHA; Posted on SATURDAY, MARCH 22, 2008. Click for larger image.

Bactra – Bharat-ah …

Of course, India is not what India calls itself.

Bharat(ah) and aryavart are the more common names. Bactra is the Greek pronunciation (possibly) of Bharat(ah). Till about 8th century BC, Zoroastrians were based in Iran.

Within a few years, after the fall of Zoroastrian Sassanian kingdom, under persecution by the Islāmic conquerors, in Persia, the first set of Zoroastrians made their way back to  India. Over the next 200 years, from 8th century to 10th century, the Zoroastrians returned to Bactra  – Bharat(ah).

This false sense of superiority is what is behind the Zoroastrian problem. Just like all Parsis are not drug dealers or British collaborators, Hindus don’t deserve negative tags. Factually bad and misplaced in terms of etiquette, you should take a 2ndlook at this caste tag.

Instead of feeling superior, it is time that Zoroastrians learnt something from these Hindoos, divided by caste.


Gold grand prix – The Chinese challenge

Total Gold demand - Top world markets (Image courtesy 0 ft.com). Click for a larger copy.

Total Gold demand - Top world markets (Image courtesy - ft.com). Click for a larger copy.

Golden ambitions

Western media has breathlessly announced that India’s leadership of many centuries as the largest buyer of gold has been broken by the Chinese. What does this mean for India and China? Not to forget the rest of the world. In the last few months,

India and China combined to contribute 63 percent of the total gold jewelry demand in the world in the first quarter.

Investment demand has grown (in China) by an average 14 percent a year since deregulation of the market in 2001, “a trend that has continued with the strong growth momentum witnessed in the first quarter,” it said. China’s investment demand jumped 123 percent to 90.9 tons in the first three months, compared with an 8 percent rise to 85.6 tons for India.

The country’s total (investment + jewelry)  gold demand in the first quarter jumped 47 percent from a year ago to 233.8 tons, the council said. That still lags behind Indian consumption of 291.8 tons, according to the council. (emphasised text in brackets supplied.)

Gold-to-silver ratios in the past few decades. Image courtesy - wsj.com. Click for larger image.

Gold-to-silver ratios in the past few decades. Image courtesy - wsj.com. Click for larger image.

Law abiding citizens

International regulatory damping of gold demand – especially in USA, India and China eased from 1975 onwards – from December 31st, 1974, with Executive Order 11825 by Gerald Ford.

Unlike India, which was well serviced and supplied with gold by the Indian underworld, China and the USA were deprived of gold supplies during this regulatory blackout of nearly 50 years. Current growth in demand for gold in China is building on a

low base which means that the investment demand and demand for an inflation hedge from 1.3 billion increasingly wealthy Chinese people is more than sustainable.

The not realized important fact that the people of China were banned from owning gold bullion from 1950 to 2003, means that the per capita consumption of over 1.3 billion people is rising from a tiny base. Gold ownership by the Chinese public remains minuscule. Especially when compared to other Asian countries such as Vietnam and India.

Should the Chinese economy crash as some predict, demand could fall. However, sharp declines in Chinese equity and property markets and a depreciation of the yuan would likely lead to significant safe haven demand for gold. Chinese demand alone likely puts a floor under the gold market at $1,450/oz.

It is worth noting that the People’s Bank of China’s gold reserves are very small when compared to those of the U.S. and indebted European nations. China appears to be quietly accumulating gold bullion reserves. As was the case previously, they will not announce their gold purchases in order to ensure they accumulate sizeable reserves at more competitive prices.

China – Biggest gold producer and consumer

China is already the world’s largest producer of gold from 2007, for four years now. China has captured the top position from

South Africa, which was producing as much as 1,000 tons of gold in 1970, (but) has seen its mining production decline for five straight years.

Accelerating a drop in output last year, the country’s mining authorities started a crackdown on unsafe mines after 3,200 workers were trapped at Harmony Gold Mining Ltd.’s Eldestrand mine in October.

Following an order by President Thabo Mbeki, the mining commission in the last three months started to requiring gold mines that suffer a fatal accident to suspend operations while a safety audit takes place. (emphasised text in brackets supplied.)

In 2010 Chinese gold production was

340.88 tonnes of gold in 2010, retaining the position of the world’s largest producer of the precious metal, the China Gold Association said. The number of domestic gold producers shrank to around 700 at the end of 2010, from 1,200 in 2002, through mergers and acquisitions

Further recently, the Chinese Government, through public sector companies, bought South African gold mines from the Australian owner.

Citic Group, China’s biggest state- owned investment company, and partners agreed to buy Gold One International Ltd. (GDO) for about A$444 million ($469 million), gaining gold assets in South Africa.  China Development Bank Corp. and Long March Capital Group are the other members of the bidding group, which is seeking as much as a 75 percent stake and plans to keep the company trading in Australia and South Africa, with a potential listing in Hong Kong. Citic is bidding through its Baiyin Non-Ferrous Group Co. unit and China Development Bank through its China-Africa Development Fund.

Gold One operates the Modder East mine in South Africa and also has projects in Mozambique and Namibia.

A frothing-at-the-mouth FT.com found many reasons to critique the deal.

China and silver

The other big story is silver. Why this sudden spurt in prices? How sustainable is price increase in silver?

Silver is down nearly 30% this month in volatile trading. Such a move in the Dow Jones Industrial Average would equate to an eye-popping drop of more than 3,700 points. Tony Crescenzi of Pacific Investment Management Co. called silver’s parabolic rise and subsequent skid a “tulip mania-style move.”

Silver backers counter that even with its recent drop, the lesser precious metal has retained a nearly 80% gain over the past year.

While gold supply is well understood, silver bulls and bears argue about just how much silver is out there. Some analysts make the case that silver in batteries and photographic film is “recycled” back into the market, reducing scarcity. Silver bulls, of course, think that’s a bunch of poppycock.

More important, the gold-silver price ratio has gotten out of whack. During most of the past 10 years, the ratio hovered around 60, meaning gold was 60 times more expensive than silver. Silver’s incredible surge over the past year has pushed the ratio down to 43, a level not seen since silver’s last crazed phase in the early 1980s. At its peak, back on April 29, the ratio narrowed to 31, a level not seen in three decades.

Silver bulls will argue that the gold-silver price ratio should reflect the 15.5 level authorized by France in 1803, or the 15 level outlined in the U.S. Coinage Act of 1792. It’s more likely that the ratio will revert to modern-era norms rather than race back to the Napoleonic era. And that means that gold, more than silver, looks like the solid store of value today.

Behind this huge spike in silver prices

The Chinese.

As 2ndlook has pointed out earlier, Chinese love silver – and Indians love gold. Most of Chinese consumption of gold is by a few well-heeled elites with guanxi.

But only look at the Chinese trading frenzy in silver.

Chinese speculators have emerged as a big driver of silver’s spectacular rally and subsequent crash with trading in the metal in Shanghai soaring nearly 30-fold since the start of the year.

The commodity, nicknamed “the devil’s metal” for its wild price swings, surged 175 per cent from August to a peak of almost $50 a troy ounce two weeks ago. Since then, it has plummeted 35 per cent, hitting a low of $32.33 on Thursday.

At the same time, silver turnover on the Shanghai Gold Exchange, China’s main precious metals trading hub spiked, rising 2,837 per cent from the start of this year to a peak of 70m ounces on April 26, according to exchange data.

The number of contracts outstanding, an indicator of investor exposure, doubled over the same period.

Silver trading in Shanghai remains below the levels in London and New York, the two main global hubs, but its rapid growth means its has become increasingly significant in driving prices.  “I’m pretty certain it’s the Chinese retail [investment] that is driving this move,” one senior precious metals banker said. “There’s an enormous amount of speculation going on out there, they’ve got the bit between their teeth.”

The Chinese gorilla

Looking at the reports of the market and commodities, it is plain that the Chinese Government is an interested player in gold acquisition – something that 2ndlook projected nearly 4 years ago. And the Chinese consumer is behind the rise in silver prices.

Since China is anyway the world’s largest producer of gold, disruption in gold supplies has not highly marked. If other Governments follow the Chinese example, gold prices could explode. If Chinese buying gets very aggressive, again, prices could spike.

The only cloud on the horizon could be some kind of consensus to bring some undeclared quantities of gold into the market – like the Central Banks Gold Agreement (CBGA). Is that likely? The only such seller could be EU members? With the Euro-zone and the Euro-currency itself in such trouble,  would ECB members dare to sell gold?

Especially, if the Chinese Government is ready to buy?

Top national central bank gold holdings. (Image courtesy - FT.com.). Click for larger copy.

Top national central bank gold holdings. (Image courtesy - FT.com.). Click for larger copy.

Of Mice and Men – 2015 Gold Outlook

USA, EU traderelationships with oil producers. The European hands-on, micro-management issue of trade balance seems to be delivering? Some may question, what it is delivering, though.

USA, EU trade relationships with oil producers. The European hands-on, micro-management issue of trade balance seems to be delivering? Some may question, what it is delivering, though.

Of mice and men

While the US dollar is weakening, by design, Greece, Ireland, Portugal and Spain are being bankrupted by a deliberately overvalued Euro.

In such a scenario, China believes that it has a winning hand. Even though, the Chinese exports juggernaut has been slowed by a yuan, trading at 17 year-highs. March 2011 reports indicate

an unexpected $7.3 billion trade deficit, the biggest in seven years. The nation’s (China’s) exports rose at the slowest pace since November 2009.

The US is betting that a weak dollar will reignite economic growth – much like what happened after the Japanese Yen strengthened due to Plaza Accord (1985).

For Europe, the grand prix is to replace the dollar as the currency of international trade – especially oil trade. Euro as a international trade-currency-of-choice, will give the Euro region access to more than 1 trillion euros in zero-cost floating balances.

China is expecting the yuan to play a similar role. Such are plans made by mice and men.

Monsieur Murphy says

What can go wrong with these plans? Plenty.

The eternal enemy of currency manipulation – gold. As a million bureaucrats work on the mechanics of their plans,

Increasingly, everyone is a victim - except the powerful 0.5% elite that rules the world. Break their power. Buy gold. (Cartoonist - Ted Rall; courtesy - http://charlesgoyette.com). Click for larger image.

Increasingly, everyone is a victim - except the powerful 0.5% elite that rules the world. Break their power. Buy gold. (Cartoonist - Ted Rall; courtesy - http://charlesgoyette.com). Click for larger image.

Sales of gold coins are on track for the best month in a year amid the worst commodities rout since 2008, a sign that bullion’s longest bull market in nine decades has further to run, if history is a guide.

The U.S. Mint sold 85,000 ounces of American Eagle coins since May 1 as the Standard & Poor’s GSCI Index of 24 raw materials fell 9.9 percent. The last time sales reached that level, bullion rose 21 percent in the next year. Gold will advance 17 percent to a record $1,750 an ounce by Dec. 31 and keep gaining in 2012, the median estimate in a Bloomberg survey of 31 analysts, traders and investors shows.

UBS AG, Switzerland’s biggest bank, had its second-best day this year for physical sales on May 9, according to a report the following day. The bank’s sales to India, the world’s top bullion consumer, are more than 10 percent higher than in 2010. (via Gold Coins Show Bull Market Unbowed in Commodities Decline – Bloomberg).

You take free advice …?

While George Soros talks of gold being the ultimate bubble, his companies are quietly buying gold.

Back in late January, as the world’s important people rubbed elbows in Davos, billionaire investor George Soros had some rather definitive thoughts to offer on gold, which he called “the ultimate asset bubble,” according to reports.

However, he neglected to mention that his hedge fund had been buying.

Another report points out that the liquidation (by people like Soros) of investments in public investment vehicles may be replaced by private investments.

In this game of musical chairs, when the music stops, everyone who does not own gold is out. (Cartoon by David Horsey; Courtesy - http://politicalhumor.about.com). Click for larger image.

In this game of musical chairs, when the music stops, everyone who does not own gold is out. (Cartoon by David Horsey; Courtesy - http://politicalhumor.about.com). Click for larger image.

The new filings from funds “may show that big names exited ETPs and this news may cause prices to slip in the very short term,” said Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland. Some funds switched to holding gold directly so they wouldn’t have to announce it publicly, he said.

Is gold a bubble?

A rather disbelieving journalist writes of the situation in the West

Gold is in a bubble. Anyone will tell you that. They’ve been saying it since gold was about, oh, $500 an ounce. But it’s a funny kind of a bubble. It’s the only one I’ve encountered where so few people seem to own the asset in question.

During the dot-com bubble, you met lots of people with tech stocks. Taxi drivers told you what dot-coms they owned. During the housing bubble you met normal, ordinary people who were trading up to expensive homes using adjustable-rate mortgages, buying new condos off plan to flip, and cashing out their fictional “equity” through a refinance mortgage.

But who actually owns gold? I keep hearing about the gold bubble, but every time I ask people if they own any themselves, they say, “no, no, of course not, it’s a bubble.”

Some bubble.

Central banks around the world are printing more dollars, euros, pounds and yen. Gold may simply be a less awful currency than all the others. Banks can’t print any more of it, so its price should probably rise while other currencies fall.

For this year, the question in India seems to be, “Will gold cross Rs.25000, by 2011 Diwali?”

The shadow of oil

Middle East Politics (from Coming apart, coming together By Edward R. Kantowicz; Page 165; courtesy - books.google.com). Click to go to source.

Middle East Politics (from Coming apart, coming together By Edward R. Kantowicz; Page 165; courtesy - books.google.com). Click to go to source.

Is the USA like Britain was a hundred years ago? (Caroon courtesy - mpg50.com.). Click for larger image.

Is Pax Americana like Britain was a hundred years ago? (Cartoon courtesy - mpg50.com.). Click for larger image.

Fat and lazy

Between 1875-1935, Britain was dependent on India for gunpowder, on USA and Iran for  oil, on Malaya and India for rubber. British economy had grown fat and uncompetitive – unlike Italian, German and Japanese economies.

Even though Britain won WWII, their economy was a lost cause. Though Germany, Italy and Japan were losers, with their economy in shambles, they could make a brilliant recovery and vastly out-compete Britain.

The story of Middle East oil is similar for USA and West. The Welfare State, built on a diet of cheap oil, easy dollars,  is now too expensive for the West to sustain. The above book extract gives an excellent snapshot of the oil industry in the 20th century.

And the shadow of oil on the 21st century.

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