Will FT-900 Bring about the “next 9/11” in April, 2014? What is Jeff Opdyke talking about?

Checking out the teaser pitch for Opdyke's Sovereign Investor newsletter, similar to Porter Stansberry's "July 1, 2014" dire predictions.

By Travis Johnson, Stock Gumshoe, February 12, 2014

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Jeff Opdyke has a pretty inflammatory ad going around these days for The Sovereign Investor, it’s all about how the consistent export of gold from the US — as reported in form FT-900 — will lead to America experiencing it’s “next 9/11” moment in April of this year.

The basic argument is that the US Treasury Department has been secretly selling off the gold from Fort Knox for years, consistently exporting more than can be explained by the mining production and internal consumption of gold in the US, and that the global public is becoming aware of this but will be shocked into action in April.

The April date comes from the fact that he says China has tended to release information about their gold reserves only every five years or so, and they last reported their gold holdings in April, 2009. Next release, whenever (if) it comes, will call attention to the huge hoard China has been building (though it may be largely from mining, as I believe all Chinese-mined gold is required to stay in China)

Here’s what Opdyke says about the gold export anomaly:

“Here’s what I found out: Since 1991, the U.S. has been consistently exporting large quantities of gold on a net basis.

“And the amount of gold the U.S. has exported is well above and beyond what the US should be capable of exporting.

“Let me show you what I mean…

“Using data from the Gold Fields Mineral Services, the US Census Bureau, the US Mint and Bloomberg, I was able to determine the U.S. total demand and supply of gold during those 20 years.

“During that time, the U.S. had a total amount of 7,532 tons of gold available for consumption… but the U.S. consumed 7,605 tons.

“So, we consumed more than we had available to us. That implies we should have been a net importer of gold.

“But oddly enough, we were not. In fact, we exported a massive 5,504 tons.”

I don’t know how reliably these import/export figures describe the real situation in the world, since gold is fungible and recyclable moves around the world in both paper from and in bullion form pretty easily (it doesn’t just get exported from one place, imported to another, and consumed — it could just as easily be exported again to another customer), but there are certainly plenty of folks who believe that the Treasury is hiding empty vaults at Fort Knox. They buttress this both by saying that the Federal Reserve has been dragging its feet at Germany’s request to repatriate its gold (though that’s not at Fort Knox), and by noting that many politicians over the years have asked for audits of both Fort Knox and the Federal Reserve, to no avail.

Just as an FYI, Fort Knox is the US bullion depository — it’s the gold that the government owns, managed by the Treasury Department. The Federal Reserve doesn’t have anything to do with Fort Knox, but has a separate gold bullion depository in Manhattan that is filled with gold owned by the central banks of other countries in the world … it’s the Fed-held gold that Germany has asked to have back, not Fort Knox’s gold. I don’t know if that makes any difference in the grand scheme of things, but they are separate — the US government owns only a tiny portion of the gold that’s being held by the Fed. And yes, it seems sketchy that it is going to take the Fed seven years to give Germany its physical gold back, and that they’ll be returning less than Germany holds with the Fed in New York and less than they initially wanted back within German borders — but “seems sketchy” applies to a lot of global finance, banking, and government posturing, I don’t know if that means there’s really any problem with the availability of that gold in the Fed’s vault or not.

So the basic argument from Opdyke ends up being pretty similar to Porter Stansberry’s argument that we’re on the cusp of the global economy losing faith in the US dollar as the world’s reserve currency, and that the loss of this faith will and would mean that the dollar falls versus other currencies and against commodities, meaning imports would be more expensive for Americans and our wealth and standing in the world would be eroded. Porter also intimates that we’ll see social unrest.

There is a clean and attractive logic to all of that, and it makes some sense given the history of currencies and central banks that points to shakeups every 30, 40, 50 or 100 years, depending on who you ask — the waves of currency dominance have mostly tracked the rise and fall of global empires as the Dutch currency and Spanish currency each had a century or so of global importance before the British Pound took over in the 18th or 19th century, then the British Pound collapsed around WWI and the US dollar began to rise, followed by the gold standard being coopted in the 1930s and then abandoned in the 1970s as “fiat” currencies took over both in the US and worldwide, followed by … well, whatever happens next.

And yes, it is absolutely true that we owe much of what we take for granted — cheap imported goods, cheap energy — to the fact that pretty much everyone in the world has agreed on the dollar as their medium of exchange… and, perhaps more importantly, that we’ve been able to build up a massive debt by borrowing money in a currency whose supply we control. With it not being missed by many that we used a chunk of that borrowed money to build the most powerful military in history.

The hegemony of the dollar is clearly eroding to some degree, partly because dollars should be losing value as we print more of them in order to pay off our debts, though the dollar has held up much better than many folks expected in the last few years … arguably because most other currencies of any size seemed more dangerous, what with Greece and their ilk threatening the Euro, and China’s currency remaining under strict control, and the Japanese Yen being aggressively devalued to save that economy… etc.

I’ll leave the big picture thinking to you — I have some sympathy with the view that the US dollar should be losing value more quickly than it has, and that eventual significant devaluation is the only reasonable way to deal with our un-payable federal debt … though I also think that in the current hair-trigger world of global trading and financial engineering it’s quite possible that all of these changes happen slowly enough that the dollar doesn’t appear to crash. The logic of the dollar’s demise is almost impeccable, but logic doesn’t drive the global economy — and, as we’ve seen in the past, crises send people fleeing to the dollar even if logic tells them that the dollar is doomed. At least, so far.

And I do buy a bit of gold or silver bullion now and then to diversify my savings, I’m mindful of real assets owned by companies, and I sometimes hold foreign currencies (though I don’t have any at the moment)… but it’s worth noting that a productive company that produces or owns something important to people should be relatively agnostic, over the long term, regarding the currency in which their daily business is transacted… failing currencies wouldn’t be good for any business operating in that currency, obviously, but strong businesses have survived worse.

Porter Stansberry’s trigger point for his similarly-described collapse of the dollar is the enactment of the Foreign Account Tax Compliance Act (FATCA) this Summer — that’s the new tax and reporting regime that the US government is pushing through to improve reporting for banks and to catch more tax cheats, and that looks like it will be a big regulatory burden for banks…. and possibly a better solution to tax evasion, though I’m no expert on the details. Porter thinks that will lead banks to exit the US market and avoid the dollar. That sounds fairly extreme to me, though it will certainly impact banks if and when it’s enacted (it’s already been delayed at least once, to July 1, and many folks think the banks will keep chipping away at it and delaying it or altering it to cut out the teeth).

Otherwise, Porter is essentially spinning the same tale that he marketed extremely aggressively in his “End of America” pitch a few years ago — that you need to get into assets that you don’t have to report to the government (like American Eagle bullion coins), and get some money overseas (get a foreign bank account while you can, buy real estate in other countries), and buy farmland to protect your family, etc. etc. You can see Porter’s latest version of this spiel here if you’re so inclined.

Opdyke has a fairly similar pitch (you can see it here if you’re curious), though his trigger point is different, coming in April instead of July. The basic idea is the same: the dollar’s going to collapse, the world as you know it will change dramatically, buy something that will hold its value if the dollar falls (ie, don’t stuff your greenbacks under the mattress or in a savings account — turn them into something else).

Like Stansberry, he cites four things to do … and they’re very similar to Stansberry’s stipulations: buy precious metals, sell bonds that mature in more than five years, generate income with trading (selling options, it appears), get some of your money out of reach of the US government, and buy real estate in some select foreign countries. Frankly, it sounds kind of like Opdyke took his lead from Porter’s “End of America” spiel of a few years back and just twisted it a bit … though, to be fair, the folks who have been suggesting the decline of the American Empire have shared similar kinds of ideas for decades (and built a few newsletter-publishing empires in the process).

[And if you’re curious, Porter’s “World’s Most Valuable Asset in a Time of Crisis” is, yes, still farmland. I’m afraid I’m going to be sticking with my farm share subscription for a while and not tilling to earth myself, but still, it’s hard to argue that owning a farm is a bad thing if you’ve got money burning a hole in your pocket.]

Opdyke’s trigger point, that awakening to the fact that China has more gold than the US or than the Federal Reserve, will, he says, come not with a gradual change over decades but with a “bang” … he quotes an oft-cited study on this point:

“Economists Carmen Reinhart and Ken Rogoff explained this phenomenon in their best-selling book ‘This Time is Different’, in which they examined hundreds of confidence crises. They call it the ‘bang’ moment. Here’s how they explain it:

‘Perhaps more than anything else, failure to recognize the precariousness and fickleness of confidence is the key factor that gives rise to the ‘this-time-is-different’ syndrome. Highly indebted governments can seem to be merrily rolling along for an extended period, when bang – confidence collapses, lenders disappear, and a crisis hits.'”

So … will a future announcement about Chinese gold reserves shock the world, or will the enforcement of FATCA drive the rest of the world away from the dollar? Will the dollar collapse with a bang or continue to deflate in value with a whimper as it has for most of the past 50 years? Or even surprise everyone and go the other direction?

I dunno. And I bet geopolitical surprises will play as much of a role as central banks and interest rates. But let’s look into what investment Opdyke is teasing as a way to protect your wealth in this eventuality.

The first thing he points to is physical bullion ownership — which Porter Stansberry and several other folks also say is important, they think it’s critical that you avoid owning just “paper gold” through ETFs or through the futures market, but own actual physical gold you can touch … or, secondarily, own real, audited, allocated gold held in some (preferably foreign) vault that you can have delivered to you if and when needed. Lots of other heavily-hyped newsletters and precious metals pundits have talked up the importance of “physical” gold and silver — I think the last time we wrote about it was for a Palm Beach Letter teaser about the “paper silver” crisis.

And there are a couple more esoteric ideas in the bunch, too, that I can’t really opine on without sounding uninformed — like the foreign real estate pitch, which has him touting a few opportunities to cut taxes by relocating overseas (including a thinly-veiled hint about “Galt’s Gulch”, which is the name often given to Doug Casey’s Cafayete, Argentina expatriate haven). It all ends up sounding like solutions for the wealthy and government-averse or profoundly tax-averse, or for the young and idealistic — who else would go to the hassle of buying foreign real estate and moving halfway around the world? It just sounds exhausting. I moved my family 600 miles in search of higher taxes and worse schools, and if I never move again I’ll be awfully pleased.

Yes, I know that Porter and others say that the “normalcy bias” leads those of us in the comfortable American middle class to think that the government won’t really get that bad or confiscatory, that “they” won’t come for our gold or our retirement accounts, and that this is a throwback to the fact that so many hundreds of thousands of Jews stayed in Nazi Germany until it was too late to escape, failing to see the clear writing on the wall … but I choose to hear that as more offensive than it is prescient.

But anyway, we do eventually get to something that’s more like an “investment” thought.

One of the ideas Opdyke pitches is related to precious metals — here’s how he teases it:

“… there’s an even better way to profit from the rise of a new monetary system. It’s a gold investment few people know exist.

“A small group of investors have figured out a unique way to profit from gold. They’re striking special deals with certain companies involved in the gold industry.

“Nolan Watson, for example, started using this strategy back in 2008. So far, he’s already increased his investment by 809%. That’s enough to turn a small investment of $25,000 into almost a quarter million dollars.

“Gold expert John Doody has increased his portfolio by more than 1,200% with this strategy. And many consider him one of the best gold investors of our time.

“Here’s what he said recently:

‘I love [this investment]. You just make these deals and move on to the next one.’

“I call this strategy ‘Golden Streams.’ And it has performed much better than the metal in recent years….

“While gold is up 61% since 2008, the ‘Golden Streams’ investment is up 352%. The good news is you can also participate in these deals right from any brokerage account.

“And what’s really amazing is this special class of gold investment has nothing to do with ETFs, bars, coins, options, mutual funds or investing directly in gold miners. And yet, it has managed to beat all those types of gold investments.

“While ‘Golden Streams’ have performed extremely well in recent years, I expect them to go parabolic once investors lose faith in the dollar.

“Even if gold moves to just $3,000 an ounce, I expect this investment will move more than 700%. That’s enough to turn each $20,000 into a little more than $165,000.”

Sound familiar? Yes, indeedy — Opdyke is teasing the old streaming/royalty concept in precious metals. Which, frankly, is my favorite way to invest in mining as well — but it’s been awful over the last year, getting much the same downside as the actual large mining stocks and falling worse than the price of gold. In general industry parlance, Streaming refers to usually larger investments made in “almost ready to produce or expand” mining operations that give the buyer the right to buy a substantial portion (typically 8-30% or so) of the gold (or silver) mined at a set price, typically fixed at roughly a third of what the then-current commodity price is.

This strategy was developed and commercialized by Silver Wheaton (SLW), which made streaming deals for silver with big non-silver mines (silver being a valuable byproduct that the miners could monetize by pre-selling it to SLW). Nolan Watson was the CFO at Silver Wheaton when they perfected this model, and later went on to found Sandstorm Gold (SAND, SSL in Canada), which is presumably one of the stocks being teased here, and Sandstorm Metals and Energy (SND in Canada, STTYF on the pink sheets), which focuses on base metals (and is still a bit of a train wreck after some bad deals). Sandstorm Gold continues to be my largest mining investment and largest and preferred gold equity investment, but it’s sure been a rough ride as gold has fallen.

Royalties are often the result of investments made into a mining project at a much earlier stage, or of early work by a prospector or settlement to a land owner, and if bought they cost the investor less than streaming deals, and they yield a flat percentage-of-the-gold (or other metal) produced that’s typically far smaller (1-5% or so). The two largest passive gold mining investment companies are mostly royalty owners, Franco-Nevada (FNV) and Royal Gold (RGLD), though they also do both own some streaming deals and some non-gold assets.

So it’s hard to picture a world in which those aren’t the three “Golden Streams” investments Opdyke teases, if only because they’re by far the largest and most accomplished and viable of the existing royalty/streaming companies that are gold-focused — unless you throw in Silver Wheaton in place of one of those to get your silver exposure instead of gold (SLW has a little gold exposure too, but it’s very small)… SLW has been by far the most volatile of the four over the years, but is also by far the largest (the volatility comes largely from the fact that silver has almost always been much more volatile than gold). All four of those streaming/royalty firms are up since 2010 or so … but all are also down considerably (dramatically, even) from their highs of late 2012, when all the world seemed to think that gold and silver were simply not allowed to fall in price. Leverage is fun when prices are moving up and a $100 move in the price of gold causes your stock to go up to 20 or 30% in a month or two, but when gold falls 25% that same leverage means your stock can fall by 50%, sometimes more.

The John Doody quote, by the way, is from a conference call the Phase 1 Investor folks had with Nolan Watson, SAND’s CEO, when they recommended that stock a couple years ago — we covered their teaser pitch for it at the time, but Sandstorm Gold has since put the transcript up online here.

And yes, Opdyke and I aren’t the only ones who like the idea of these “passive” precious metals investments — the benefit of royalties and streaming deals is that you don’t have to worry too much about cost inflation in mining, or about delays in mine development causing a cash crisis or dilution … on the flip side, the downside of these kinds of deals is that same passivity — you end up pretty stuck if the operator is desperate for cash or losing money and can’t finish building the mine, or simply decides to shut the mine down for a while if prices are low. Diversification should help with that, as will counting on Sandstorm or Royal Gold or Franco-Nevada to choose projects wisely, projects that are sustainable and profitable and low-cost, with potential upside from future exploration or expansion … but it does sometimes backfire on the royalty or streaming deal owner if a few partners go bad at once. That’s how Sandstorm Metals & Energy got into trouble a while back, and it’s hitting Sandstorm Gold a little bit right now — the larger RGLD, SLW and FNV are reliant on a few tentpole projects but otherwise are far more diversified than the smaller SAND.

So … all that gives you something to chew on when it comes to the “big picture” stuff … and at least a few royalty and streaming stocks to consider that are likely Jeff Opdyke’s three “Golden Streams.” Got an opinion on any of it? Well, what are you waiting for? That friendly little comment box below isn’t going to fill itself …


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205 Comments on "Will FT-900 Bring about the “next 9/11” in April, 2014? What is Jeff Opdyke talking about?"

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condolawyer
Irregular
1
condolawyer
April 1, 2014 7:22 pm
Travis, I always thought it was spelled “Shpiel”…guess it’s pronounced that way…..keep up the good detective work. You should ask Barry Ritholtz to borrow his line before he allows posts: “Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after… Read more »
arch1
Irregular
5234
April 2, 2014 8:24 pm

Robert; Great disclaimer, I don’t know of Barry Ritholtz but I think I may steal for my trick bag.

v4t1n4
Irregular
32
September 15, 2014 12:42 pm

Hi, Frank (arch1?);
Still not know Barry Ritzholtz? Check out The Reformed Broker (tho’ I’m finding his site less entertaining since he’s written his ‘new’ book, and concentrates so much on hawking it).

harpswell
Irregular
32
harpswell
April 16, 2014 10:28 pm

The gold versus fiat currency discussion is as fascinating as the stock pumps. One thing that no one mentions is that gold is a fiat currency also–it has value only because everyone agrees it has value. Its intrinsic value is not great since its uses in manufacturing or technology are minimal.
Also, did anyone watch the recent Dent interview in which Dent and the editor of the Elliott Wave newsletters conclude that the end consequence of the undoubtably worrying trends discussed above will be deflation so severe as to bring gold back to $300 or so?

Alan Harris
Guest
0
Alan Harris
April 17, 2014 7:46 am
Ok, so the $ is gonna crash and gold will either go to the moon or the dungeon. So what are you gonna do about the sky falling in Dr Zeus? Nothing!! Its beyond your control, so chill out. Can anyone imagine a world where you carry your gold bar around and scrape off a few grains to pay for your carrots? You’d get mugged before you got home. The $ is an iou. Whatever form of iou you choose is a fiat currency coz it only represents an iou for a portion of your store of value. That store,… Read more »
KG
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KG
April 17, 2014 8:03 am
Indeed. I ask many so-called “preppers” what do they tell their children? “Don’t worry about your grades in school, it will all be over soon.” How sick is that? The Debt is NOT the only thing that our children will inherit but all of the infrastructure we have built. It seems that people think of the debt as useless, yet it is the Debt that represents the money supply in America. Lessen the debt and there is less money to go around. What America needs is more Unions and less free markets. Unless the market has customers, what good is… Read more »
WA1
Guest
0
April 21, 2014 7:41 pm
Like many here, I also wonder whether America deserves the criticism it sometimes gets for being the most military minded country in the world. BUT, having bases in 147 different countries (or so I heard) even with only a few thousand troops there, doesn’t really send out the right signal. Having worked in Texas for one of the US’s foremost tech companies 15years ago, I found the people open warm and god-fearing. (Also gun-toting, but that might be just Texas) But, the only way that America has been able to fund that military might is because of the FED and… Read more »
Anonymous Questions
Member
1
May 7, 2014 10:58 pm
Porter Stansberry is touting another newsletter claiming that on July 1, 2014 there will be a secret provision in H.R. 2847 that will affect all Americans in many ways. Truthorfiction.com states that it is unproven while Snopes has an extensive analysis of the law and its potential impact upon U.S. investment values and currency Quote from Snopes: “But no credible source that isn’t an investment firm trying to scare potential customers into forking over money for a newsletter subscription is seriously maintaining that a law passed four years ago will, within the next few months, collapse the entire U.S. economic… Read more »
John J.Meehan
Guest
0
May 28, 2014 2:18 pm

No body belies what is coming,thats how Obama got elected twice,when it happens,his voters will get what they deserve for being so dumb.

John Harris
Guest
0
John Harris
May 28, 2014 3:28 pm
Wooooa. Don’t sling political mud here at more than half the population (that voted for him). I do not consider myself dumb and I voted for Obama twice and am proud of that. I think national health care is great and the republicans should be delighted it is being done thru private insurance. Dems wanted a single payer like Medicare (which by the way works fine and at lower cost that private insurance) but we compromised with the republicans on private insurers, almost like what Mitt got passed in Mass. but now republicans don’t like that? And why – because… Read more »
NumberoneD
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0
NumberoneD
June 29, 2014 4:26 am
Obviously, you seem to have a filtered (single) view of the Obama Care perspective somehow. It has been interesting visiting this thread but the entire read has taken its toll but before I go, you need to at least read a couple of additional view points. I don’t know where you have been concerning opposing Obama Care views and contrary voices but you may consider a few viewpoints to get you started. I am just too tired to spend any more energy on this. Here are a few: “The Cost for 4 Failed Healthcare Exchanges Will Blow Your Mind” http://americanprosperity.com/4-failed-obamacare-exchanges-lose-474-million/… Read more »
John Harris
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0
John Harris
June 30, 2014 9:36 am
Dear NumberoneD, Seems like if anyone here has a “filtered view” it might be because you get your information from Americans for Prosperity – and totally biased ultra right wing voice of the Koch brothers. Both your citations above are from undated (and now very old out of date) articles from them that take a few potshots at the health care plan. Sure there were some issues along the way getting the state sites working and I suppose somewhere you can find someone working for the system with not enough to do to justify their position. A look at the… Read more »
Bakermre
Guest
0
Bakermre
September 6, 2014 10:19 pm
There has been no appreciable warming of the earth’s surface since 1995 and for 16 to 26 years none has been detected in the lower troposphere. That’s right! Canadian Professor of Environmental Economics Ross McKittrick has published his study in the Open Journal of Statistics, titled “Measurement of the Duration of a Trendless Sub-sample in a Global Climate Time Series”. McKittrick has crunched the numbers from all the major weather organizations in the world and has found that there has been no overall warming at the earth’s surface since 1995. Sorry folks, the “Religion” of Climate Change has lost much… Read more »
sdmaley
Member
5
September 24, 2014 10:36 pm

Interesting, but what did it have to with the topic(s) under discussion.

tes1900
Guest
0
tes1900
January 28, 2015 12:27 am

Just received (1/27/2015):
“What you are about to see is based on information obtained from a little-known government document called FT900.
It’s published by a non-descript Federal office located at 1401 Constitution Avenue in Washington, D.C., less than one mile from the White House.
The following presentation not only reveals the contents of this document, but it walks you through the exact timeline of how and when this 9/11 event is scheduled to occur…
Just like 9/11 had a lasting impact on our society, this event will also reshape America … in a different, but equally dramatic way.”
Sent to spam !

desi erasmus
Guest
0
desi erasmus
March 29, 2015 9:46 pm

Interesting study on the use of Ruthenium (element 44) to catalyze cracking water into O2 and H2 :
“Water electrolysis activated by Ru nanorod array electrodes”
http://ualr.edu/txkarabacak/wp-content/uploads/2010/01/JA-31.pdf

wpDiscuz