Willem Middelkoop is one of the winners of the current crisis. In 2007, the former photojournalist , entrepreneur, investor and stock market commentator wrote his first book with a sour view on the economy, If The Dollar Falls. It was followed by a book with tips on how to cope with the crisis, Survive The Credit Crisis. He sold more than 100,000 books. He became a celebrity with his gloomy comments about the financial system, but there was always a bright spot: gold. This precious metal would always continue to hold its value, as opposed to paper money.
With his latest book on a new financial system, The Big Reset, he is now making successful steps abroad. The book is already second on Amazon.com’s best-selling books about finance and banking. Again, gold plays an important role in this book. The global financial system will be radically overhauled before 2020, according to Middelkoop. The dollar will lose its place as the world reserve currency, and a portion of the sovereign debt of countries will have to be cancelled. Gold will return as a monetary anchor, and that will benefit its price, which will see new highs, according to Middelkoop.
But while he celebrates his success as a writer, at the moment he seems a lousy investor, as his predictions haven’t came out yet. The gold price has fallen steadily since its high in 2011. “I’ve been terribly wrong for one and a half years,” admits Middelkoop. Is he getting nervous ? “No, I’m more convinced than ever of the rosy outlook for gold.”
The fact that the gold price is declining fits his theory, which is that the gold market is highly manipulated, by the U.S. in particular. Excuse me? “If the price of gold gets too high, people lose faith in the U.S. dollar. That would not suit the U.S. now that it is printing $1 trillion a year and the U.S. dollar hegemony is under severe pressure.”
Middelkoop picks up a couple of charts from Australian bank Maquirie. “Look”, he says, “here is the demand for gold in China. It has exploded since the outbreak of the crisis. Oddly enough, the price has dropped. That is because of price suppression.”
It is the central message of his work: there is no such thing as a free market. The market is rigged and controlled by the U.S., with the help of its allies, with the specific intention to save the system and especially the U.S. dollar hegemony. In The Big Reset, he shows that this system is no longer sustainable.
While the economy is improving, you are warning of a collapse.
“It’s not improving. Western countries are struggling with huge debts . Government debt is quickly increasing because of the crisis. If you look at the ratio of debt relative to GDP of an advanced country, you will discover this cannot be solved. According to a recently released IMF report, it is impossible for developed countries to grow out of such debts. That rate of growth is just not attainable. It can only be performed by a very young economy such as the emerging economies. ”
“Debt restructuring is the only solution, but it will also affect the dollar. Due to the huge U.S. debt, the dollar is no longer credible as a global reserve currency. The Chinese know this. The Chinese state news agency has recently called for a new global currency to replace the dollar. In anticipation of this, they are already accumulating large amounts of gold. China even stimulates its citizens to buy gold.”
In what way is the gold market manipulated?
“Through futures contracts, which settle gold transactions at a later date. These are often used by speculators who are not interested in buying physical gold, but despite this, the price of gold is set by the trades in these contracts. By dumping large amounts of futures contracts on the market, you can bring the price down. The size of these paper markets is a hundred times larger than the physical market, which adds to the effect.”
Middelkoop is an autodidact – “I started studying the financial system in the nineties when I borrowed three million euros from a bank in order to buy real estate in Amsterdam. I wanted to know where that money was coming from” – and knows that he is sometimes depicted as a conspiracy theorist. He brings the subject up himself. “These are not conspiracy theories, these are conspiracy practices. In my book you will find a lot of evidence. Many people are starting to think in the same way. Fifteen years ago, you were an outcast when you proclaimed that the markets were not free. Not anymore. Everybody knows interest rates aren’t set by the markets. Central banks all have support operations to keep yields low.”
Middelkoop says his ideas are no longer ‘economic underground’. On the contrary, they have become mainstream. He noted that he was accosted by an eighteen year old boy at the car wash three years ago. The boy recognized him and said “Gosh, that was interesting” And then he began to tell me about the secrets of the Fed and the deceit of Monsanto.
That boy was the embodiment of a whole new generation that distrusts the economic elite and that has embraced the underground coverage, according Middelkoop . “The youth of today knows that central bankers cannot be trusted, and that you should distrust large corporations. Websites they visit are reporting a lot on these underground stories. The generation of my parents has a boundless respect for authorities. But these young people know that they are being cheated.” That boy at the car wash is now a student in political science, and even helped Willem with the research for his latest book.
The international success of his new book can be explained by the fact that people are beginning to see that his ideas and those of others are not conspiracy theories. It was an interview that appeared on the well-respected website of zerohedge.com that propelled him up the Amazon list. Zero Hedge is an alternative financial website where generous but well researched suggestions and speculations are made. The site is also read in detail by anyone who plays a role in the financial world. Within 24 hours, the interview had been viewed 40,000 times.
Who did that interview on Zero Hedge?
“There is a Dutch blogger who does research on the Chinese gold market. He publishes on ingoldwetrust.ch, under the name Koos Jansen. He did some remarkable findings and is taken very seriously abroad. I sent him my manuscript at an early stage, and he interviewed me later about my book. That interview, in English, ended up on Zero Hedge as a guest post.”
What really drives you? Why do you have an urge to show people the murky aspects of society?
“I wish I wouldn’t have to, but the deception runs too deep. One day you realize that what you learned in high school is completely false. I find it inexplicable that one would not be bewildered once they find out. That boy of eighteen was stunned and wanted to know exactly what the truth was. The same goes for me. The journalist in me wants to tell this story. I have to show this to the world, because soon no one will believe that you could have foreseen this ten years ago.”
Of course you also have an interest in turmoil in the financial markets, and in a collapse of the system. This would cause the gold price to rise, as you describe yourself, and this would suit you as a gold investor.
“I don’t like monetary turmoil but want to protect myself as an investor and as a speculator. I put my money where my mouth is. More than 75% of my assets are invested in the precious metals sector. Gold will retake its rightful place in the monetary system. Once the reset comes, the new world reserve currency will become partially backed by gold. When the Americans abandoned the gold standard in 1971, the current crisis was actually triggered. As money was no longer backed by gold, the unbridled creation of money – creating money out of nothing by central bankers – began. This created the current debt predicament. Previously central bankers were chained by gold.”
The system will return to the old ways, Middelkoop believes. “History has shown that no single currency can survive without gold.” When the rise happens, the price of gold will explode. Will he take profits? “I will only sell my gold if the price hits $ 5,000.”
Translated by KJ
Interview published in NRC Handelsblad 1-2-2014