Over the week-end of the fall-out from the BREXIT referendum, the markets were in turmoil.
The pound fell against the dollar, and the dollar fell against other assets such as Gold, Silver, and other precious metals. The dollar, also rose against the FT and the DOW… as did the pound… But, the problem for Britain is, or has been, the perceived strength of the dollar, as much as the perceived weakness of the pound. But the Swiss Franc too, is suffering as people have rushed to hold it, raising its strength – making negative interest rates the only tool that the Swiss Central Bankers have to weaken the Swiss Franc (CHF).
It is true that the markets are a discounting mechanism, but what one misses when there is a period of uncertainty, is that traders get out of the markets. If you are not absolutely sure which way the markets will move, as a professional trader, you sit on your hands. So, the shorts will have closed, perhaps causing the spike in both Gold and Silver over the intervening period. Gold is to the markets, what silver is to a vampire… The antedote, the bullet in the heart. And when uncertainty reigns, then you have to have it.
Alan Greenspan, ex Fed Chairman, has even gone back to his original premise, that we should now be considering returning to the Gold Standard amongst other things. (The Greenspan Gold Bug?) – You can see the Greenspan Bloomberg interview there.
If you have read this blog for a while, you will know, that many moons ago – back in the sixties, before the good Chairman was enamoured with the reins of power at the Fed, he advised that the Gold Standard was a way of constraining overspending, and getting something for nothing. In the above video, he calls himself a “Gold Bug”, though this appears to have passed him by somewhat during his time as Fed Chair.
When one person gets something for nothing from the economy, it matters little, but when half the population is doing it, either through tax subsidies, transfer payments (that’s fancy talk for social security, working family tax credits or whatever name is given to it) then it WILL cause problems. Greece, and the other nations on the Mediterranean in Southern Europe, also need to heed this warning.
Of course, when we have major dislocations in the economy, for whatever reason, then we hope that governments will help to support those who have been dislocated. The issue becomes a major problem, when human ingenuity is curtailed, because they see a soft option of just taking money from the state – who get their money from us. Whether that is through taking money for government contracts for F16 fighters, or whether that is enough to buy a pint of beer at the weekend.
So, when governments overspend, the Central Bankers, or the people who control them, who know how this game works, have the strategic goal in mind of being the power behind the throne, and ultimately of the world, then they will give us enough rope to hang ourselves. So it is incumbent upon us, to rein in spending for all but the most deserving cases. Mass immigration will of course mean more tax-paying citizens, and that is a good thing, but immigrants, particularly in Europe, who live in a world where they are just an hour and a short 2-3hr flight away from their original home, can just as easily disappear again, taking their earnings, spending power, and taxes with them.
If you remember back in the dim and distant past, I said that silver will once again begin its rise to the stars, and the major resistance level of $18.50, was shot through over the U.S. holiday week-end. In fact as I write, Silver went through the $20 mark to $20.70, only to fall back to just below $20 at circa $19.75, before settling above the $20 mark again. This suggests, that those who watch these things, have closed out their short positions, perhaps leaving themselves un-exposed over the week-end, of the U.S., July 4th holiday period, and are now expecting the next signal to be upwards.
Absent any major shorting of silver, which to my mind would be tantamount to financial suicide, the silver market is now facing the reality I have talked about for so long.[See Pic]
The Chinese Central Banking Authorities, have been buying Gold, as have the Russians, and selling treasuries to fund it, (see Image Below) and because the Indian authorities imposed an import tax on Gold, (which they’ve now reduced) the canny Indians have been buying silver in their droves. I too have dipped a toe back into the water, so I nail my colours to the mast.
Here, in this video, David Morgan of the Morgan Report gives clues as to where he thinks we are headed, and also gives a few tips as to when you should unwind your position in silver (should you have one).
If you saw the previous reports that predicted a rise in prices, and if you saw the video above where ex-Fed Chairman suggested that M2 money supply, which had been growing steadily, has in recent months grown at a higher rate than the trend, which suggests inflation is on the way.
The indicator that inflation is coming, is a rise in prices of raw materials – including precious metals. Trying to stay ahead of the game, means owning them, and you can do that at Liberty Silver
And for those interested in getting into the Bitcoin space, perhaps this will give you some encouragement…Especially, if you look at the price over a five year period… https://www.coinbase.com/charts
If you are still curious, but not keen to spend large amounts of money to get involved, then going to FREE Crypto-currency, to get yourself a crypto-currency account with daily deposits (rather like interest on your savings?) which is one way to protect yourself.
What many failed to have noticed though is that the Brexiters achieved in one night, what Gordon Brown, Mervyn King, and the current Goldman Sachs apparatchik – Mark Carney- had failed to do with 15+ years of loose money policies… Lowered the value of sterling, making our exports cheaper, and our imports dearer, and in so doing, made them less likely, potentially rebalancing our trade deficit, and reducing the “Pull” factors on mass immigration by lowering the value of wages and benefits, but also raising inflation…
Not bad for a night’s work…
But here, former Presidential candidate, and Texas Governor, Dr Ron Paul, gives his thoughts on the reasons for, and the outcomes of the referendum: You be the judge.
So WHY are we predicting a new collapse greater than 2008?
Here are some unpalatable facts:
1) The REAL problem for the financial system is the bond bubble. In 2008 when the crisis hit it was $80 trillion. It has since grown to over $100 trillion.
2) The derivatives market that uses this bond bubble as collateral is allegedly circa $700 trillion in size.
3) Many of the large multinational corporations, sovereign governments, and even municipalities have used derivatives to fake earnings and hide debt. NO ONE knows to what degree this has been the case, but given that 20% of corporate CFOs have admitted to faking earnings in the past, it’s likely a significant amount.
4) Corporations today are more leveraged than they were in 2007. As Stanley Druckenmiller noted recently, in 2007 corporate bonds were $3.5 trillion… today they are $7 trillion: an amount equal to nearly 50% of US GDP.
5) The Central Banks are now all leveraged at levels greater than or equal to where Lehman Brothers was when it imploded. The Fed is leveraged at 78 to 1. The ECB is leveraged at over 26 to 1. Lehman Brothers was leveraged at 30 to 1.
6) The Central Banks have no idea how to exit their strategies. Fed minutes released from 2009 show Janet Yellen was worried about how to exit when the Fed’s balance sheet was $1.3 trillion (back in 2009). Today it’s over $4.5 trillion.
7) In the last week, the IMF indicated that the German bank – Deutsche Bank, is the most systemically linked, and systemically stressed of any bank in the world… Is this the next Lehman moment in the making?
Are you prepared yet?