Debt

Digital Currency – The Last Refuge of a Banking Scoundrel?

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In the news over the weekend, we heard the story that Andrew Haldane, the chief economist and executive director for monetary analysis and statistics at the UK’s Bank of England, has tried to run up the flagpole, the prospect of a digital only currency. America too is discussing this.

Now, why would a Banker do this?

What is a Bank? Primarily it stores savings (Capital) for its customers, and loans out this money (well we’ll call it money for now) to businesses and others to finance the development of new products and services, which add value, assist in growth, employ people, and spread prosperity throughout the nation (or currency union).

However, when a country has excess savings, these are liabilities on the bank’s books, and has been touched on several times throughout the time of this blog, these have to be paid back. However, there may be times when there are fewer good opportunities to loan money out for the banks, with huge amounts of money sitting in savings and today is one such time.

The driving force behind this excess savings is demographics. Demographics is the study of populations. The studies look at birth, and death rates, gender etc, and at how those births and deaths impact the society, and the economy. Where we build schools, hospitals, and even infrastructure like industrial parks.

After the second world war, all those returning service personnel got busy making babies. It happened in America and the Pacific region in ’47, it happened in Europe in ’46, as those two major conflagrations came to an end.

Twenty years later in the sixties, those babies, now young adults drove the swinging sixties, and Carnaby Street, the music and fashion scene as they all began doing what young people do. The children of those people reached maturity 20 years later, in the 80s and early 90s, driving Punk music, New-wave and the New Romantics, the “Acid house” scene, and the Brit-pop and Indie scenes of the 90s. This was the shadow boom as you might call it. These children of the baby-boomers are driving the economy now, as they reach their 40s, and lead consumption spending, but soon this too will slow.

Of course the baby-boomers as they are known, those born after WWII, are now frantically saving for their retirements, buying buy-to-let properties, and investing in their pension funds and therein lies the rub. All that capital going into savings has led to several booms; in Technology, in Housing, and since the 2009 credit crunch, the stock-markets in general. But since early 2012, the baby-boomers have been retiring in droves at the rate of circa 8-10,000 people per day, in the U.S. alone, and because of the low interest rates, and the drive to “save the economy” the Central Banks have loaned the people, and their representatives (governments) huge amounts of money.

America has an $18 Trillion public debt. Britain is in an even worse situation (person for person) with a public debt of £1.4 Trillion ($2Trillion+) And those Bankers are now worried that they might not get their money back.

And what IS money? When money was just Gold and Silver, the Bankers got rich, by lending pieces of paper, that were exchangeable for Gold and Silver, that they had mysteriously created out of nothing more than paper and ink. This fractional reserve lending, grew their power, and grew their immense wealth.

The Houses of Rothschild, Morgan, Seif, Rockefeller and others who ran or owned Banks became the powers behind the thrones of more countries than could be imagined.

Digital Currency Drawbacks?

If we can just take our money “out of the banks”, this should force Bank Presidents to be prudent with it, or, as we saw with Northern Rock, we get a run on the Banks. When our money (or rather currency) is just digits on a Bank Balance sheet, we cannot. This means Bankers can fund whatever they want, without worrying about us cutting off their drug supply.

But a purely digital currency has several other drawbacks too.

With a purely digital currency, EVERY transaction will register on a computer somewhere. Tax Authorities will therefore be able to trace every transaction – And TAX it. That tax goes to pay salaries of government employees, but it also pays for those in politics, who may not always disclose where that money goes: Funding Wars overseas, providing incentives and making deals in private rooms under the guise of “National Security”, and it pays off the loans that bankers make to governments – all made possible by greater tax taking.

But a further worry is that the account details of every person will also need to be held somewhere too, making the prospect of 1984 as written about by George Orwell a frightening reality.

The informal economy disappears too.

Tipping a waiter, a Cabbie, a Pizza Delivery boy or even the Bin-man come Xmas time, becomes almost impossible. The loss of these ways of showing appreciation, potentially makes poor service a given, as with no financial incentive to provide excellent service, these people may offer mediocre service at best, or even leave the industry making many restaurants forced to pay higher wages forcing up costs, and thus reducing the number of visits per week, per month or per year. Giving someone a £50 note for a Birthday present, or Xmas present becomes impossible too. Teenagers everywhere will suffer, and grand-parents will actually have to get to know them and find out what their kids actually need – or want – and they may get a few unusual requests or worse…

But, the one big drawback for everyone, is not zero interest, it is negative interest rates. Which means charging you to hold your money. Anyone with savings in an account, or perhaps as the result of a house sale, becomes just another potential donor to a Banker’s lifestyle.

BUT the ultimate issue is one of liberty and trust. A business deal of old, demanded nothing more than the money, and a handshake. This relied on trust of the money, and the person. In a digital world, all trust comes down to is your credit rating, and your government granted identity number. Perhaps ultimately your radio frequency identification (RFID) chip implanted under your skin, so you don’t even need to carry a bank card.

But it also opens up a world of potential to deny you access to things the government thinks you shouldn’t see, or get access to. In effect WE become slaves to government, and the people who pull their strings, instead of government working for us. And that is the most important reason, why it should NEVER be considered the only way to pay.

“Bank paper must be suppressed and the circulation restored to the nation to whom it belongs.
“The power to issue money should be taken from the banks and restored to congress and the people.
“I sincerely believe that banking establishments are more dangerous than standing armies.
“I am not among those who fear the people. They and not the rich, are our dependence for continued freedom. And to preserve their independence, we must not let our rulers load us with perpetual debt.”

Thomas Jefferson – Former President of the U.S. of A.

And in his farewell address to the people, March 3, 1837, President Andrew Jackson solemnly warned the people against the Banker’s power, after the recent financial crisis; as the “Credit Crunch” is still ringing in our ears, it appears VERY apposite

“We are not left to conjecture how the moneyed power, thus organized, and with such a weapon in its hands, would be likely to use it. The distress and alarm which pervaded and agitated the whole country, when the Bank of the United States waged war upon the people in order to compel them to submit to their demands, cannot yet be forgotten.

The ruthless and unsparing temper with which whole cities and communities were oppressed, individuals impoverished and ruined, a scene of cheerful prosperity suddenly changed into one of gloom and despondency, ought to be indelibly impressed on the memory of the people of the United States. If such was its power in a time of peace, what would it not have been in a season of war, with an enemy at your doors.

No nation but the freeman of the United States could have come out victorious from such contest; yet, if you had not conquered, the Government would have passed from the hands of the many to the hands of the few; and this organized money power, from its secret conclave, would have dictated the choice of your highest officers, and compelled you to make peace or war, as best suited their own wishes. The form of your Government might for a time have remained, but its living spirit would have departed from it.”
(Read more at: The Coming Battle 2013 )

And Finally, if the above comes to pass, what will our International trading partners make of a currency, that can be conjured up on a computer by a banker? If China sells us Cars, Computer Equipment, Smart-phones etc, and all they get in return is a ledger entry on a computer, what confidence will they have that those digits will be worth anything, when they decide to spend them, possibly years later. What would you do if you were China?

If we are ever to have international finance based on trust, then there is only one solution – currency must be in the final analysis, backed by precious metals. and those metals represent true value, even if their value may vary from time to time – but Gold is still gold, and Silver is still silver. Platinum, and Palladium too are useful – usable in catalysts, jewelry and other uses. Silver is usable in 10,000 uses and rising, and its value and availability are about to get a whole lot rarer, and a whole lot more expensive as a result.

So if this does come to pass, who is really in charge in the UK? The Government? or its Financiers?

If you want to move your money out of the Bankers’ way? Then Click Here to get started.
PS:
After posting this I discovered a video clip by Max Keiser of the Keiser Report, which mentions the speech by Andy Haldane. Let me know what you think below.


W.

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Chinese Torture?

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Anyone over 50 (at least in the UK.) will no doubt have learned of so-called Chinese Water Torture, which was discussed in the playgrounds of schools the length and breadth of the country during the 50s, and 60s – perhaps this misplaced discussion was just childish minds being over imaginative, or the result of the war films that were the standard fare of the era, or perhaps just the result of propaganda by a biased media, or just by ill-educated professionals, who had been mis-informed and we juniors picked up on it – we can but speculate.

According to the stuff of legend, this involves suspending a bucket or other recepticle full of water in which a small hole has been punctured, such that water will drip out at a fairly consistent rate over a fairly lengthy period of time.

The torture victim, is placed under this recepticle, and strapped in a fixed position. The slow but monotonous dripping, at first appears to offer no threat to the intended victim, but over time, first becomes an inconvenience, then a minor irritation, then an annoyance, then a major irritation, then downright torturous.

The slow drip, drip, drip, ratchets up the pressure on the intended victim…

Applying the Torture?



So, this analogy brings me to the reason for this tortuous piece.

As I wrote some weeks ago, China informed the world, back in May, that they had improved their Gold holdings over the previous six years from April 2009 at 1,065 tonnes to 1,658 tonnes (allegedly – since many commentators think this was significantly under-reported)

According to reports, China announced it had purchased an additional 19 tonnes in July, but news released a few days ago, says they have also now added an additional 16 tonnes in August. This now brings their total to 1,693 tonnes, and according to silverdoctors.com, they’ve imported “a whopping 112 tonnes” so far in the first half of this year from the LBMA, up from the 110tonnes in the whole of 2014.

So is this “Drip, Drip” of additional purchases the equivalent of the torture method mentioned earlier for the FEDs?

China sold some $94 Billion in Treasury Bills, which might also be sending a signal to those in the non-BRICS Banking world.

And according to Alisdair Macleod, who referenced a Zero Hedge article, he said that if nothing else, it confirms the gold market is plagued by disinformation, not limited to Comex. Besides the conflict between the bears in the futures market and the physical bulls, on one day we are told of record Indian gold and silver imports at 126 and 1,400 tonnes respectively for the month of August (Koos Jansen), and of Indian gold demand “remaining weak” (HSBC). The former is a hard number, the latter an opinion, but it is opinions that are quoted most in the mainstream market commentaries.

Also in August, Chinese public demand reported on the Shanghai Gold Exchange totalled 265 tonnes, so between India and China identified demand exceeded the world’s monthly mine output by about 56% – Over half. Given anecdotal evidence of increasing physical demand from elsewhere in Asia and also in western markets by the general public, the drainage of physical gold previously available to cover futures and forward contracts, as well as unallocated bullion bank accounts is at very high levels. No wonder there is so little registered gold in the Comex vaults.

Alisdair Macleod September 3rd 2015, interview…

Now we hear via Jim Willie interviews, that the Tianjin explosion, may MAY, have been a Langley (i.e. CIA) inspired or managed incident. Remember, this was in an industrial park, port, and the home of a chinese super-computer, which according to JW, managed not only financial transactions of the emerging Chinese Banking and Financial Services Industries, but Chinese Military, and with a footprint of 1,000 square feet is HUGE. Within days of the explosion, the whole of the North-East of the U.S. Airline databases went down. Was this a revenge attack by Chinese hackers? We shall never really know, but we can speculate.

As things stand, the British, German and American Financiers, who essentially rule western industry and politics, will have control wrested from them, when the Chinese wrest control of the Gold market, and Precious Metals are priced in Yuan/Renminbi (RMB) and Chinese currency will be required in most trade deals, and many east-asian nations may, MAY only accept Renminbi for their products, and that will help seal the fate of the dollar.

As things stand now, 32 nations have currency swap facilities with China in Chinese currency, as I suggested some months ago, when Saudi-Arabia began discussing oil deals with China, as a way of balancing the emergence of the changes in the oil markets which have driven down oil prices largely because of fracking, and deep water production made possible by cheap money loaned out in the form of Corporate Bonds, we may see oil wars, but therein lies the problem.

As oil prices have collapsed from their 2007 high of $147/barrel, those corporate bonds, and finance raised to drill for shale oil, will come due, and many of those companies, are now struggling to make money. According to Jim Willie, the oil bond market collapse could be greater than the sub-prime crisis, that exploded onto our screens in 2008.

And at this particular point in time, the world credit markets stand on $700 TRILLION worth of derivatives. When the derivatives market collapses, perhaps as a result of those oil bonds, we could be seeing the end of the dollar empire, and thus the end of Western hegemony.

But this is of course all speculation…

However, when this collapse happens those who have savings in Banks, Savings in Stocks, Savings in Pension Funds, IRAs, SIPPs and bonds, will all suffer. When all those savings – excess savings as “Conant” once in the late 1890s called them, sought out productive assets overseas, in the round advocating a dollar Empire in the process, rush for the exits, from assets with counter-party risk, to assets with none, then the long awaited price reset in Precious Metals will begin.

And this price reset, will cause a spike in metals prices as many of those manipulators, who are currently shorting the price using leveraged shorts in such products as ETFs, ETPs, Options, Covered Warrants, CFDs, Spread-Betting accounts, and Binary options accounts, will all be rushing for the exits at the same time.

And where will the carnage lead them? To the one asset class with no counter-party risk.

Have you got yours yet? The sand in the hour-glass may be fast running out, as reports emerge of severe shortages in small denomination coins and bars. 100 Kilo bars are still plentiful in Silver, and larger bars. This may be a fabrication issue – i.e. refineries struggling to keep up with coin and small bar demand, or it may be that there is an emerging shortage of silver in the supply chain. If you were a miner, would you sell your ore into a falling market?

Remember, no-one will sound the bell identifying that now is the time to act. If you haven’t already begun to prepare, time may be fast running out.

It will be prudent too if Jim Rickards and Bill Bonner are correct, who have been following this inevitable crisis from its inception in the 1970s to its current conclusion, advise us to take currency from our bank account, and keep it outside the banking system, while we still can. About a month’s currency should suffice.

The banking crisis in Cyprus, in 2013, and Greece in 2014/15 were just stepping stones on the way to this one. Legislative changes forcing European Banks to seize their depositors’ currency rather than hit tax-payers for another bailout have been put in place. The digits on the banks ledgers are now theirs, not yours. You have been warned.

A New Russian Winter, or the Calm before the Storm?

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Some weeks ago, before Xmas, I floated the proposition that “The West” might be about to shoot itself in the head, heart, AND foot, just to make sure.

My reasoning was that Russia, might be about to demand payment in Rubles for their gas and oil and other things, which would effectively shoot the west in the aforementioned organs, as they sought to ratchet up pressure on President Vladimir Putin.

The U.S. through its monetary influences and power in International Organisations – the World Bank, the IMF, BIS, Federal Reserve, and of course the ECB, Bank of England, U.N. and Bank of Japan etc, is waging a war against Russia, in a vain attempt at defending and extending its influence in the middle-eastern region, and throughout the near east, ostensibly to protect itself from the rise of China and a resurgent Russia. (more of which later)

The beginnings of this madness began with the end of the Soviet Union. The west in NATO, and through European organisations made agreements with the Soviets, to not encroach into former soviet countries, yet many of those countries, in order to avoid the risk of re-colonisation, chose to join the North Atlantic Treaty Organisation (NATO) and/or the European Union. (E.U.). This was also of course to strengthen the U.S’s Federal Reserve backed monetary system, which as I’ve mentioned numerous times is now no longer backed by physical precious metals.

Of course, when the U.S., under its attempt to extend its influence in the region, encouraged the western larger part of Ukraine to throw off its recently elected leader as it were, to rub Putin’s nose in it, and incurred the wrath of the Crimean Russians, and the Russian speaking ethnic Russians east of the Dneiper River, it essentially wandered into Russia’s back-yard, and that was the straw that broke the camel’s back.

The Crimeans, who are predominately ethnically Russian, were backed into a corner, as the new western backed government in Kiev, made the Russian language illegal.

Imagine if you were a Welsh speaking Welsh person, and the incoming British government, made your language illegal? Or Irish? or Highland Scottish and they tried to make Gaelic illegal?

You’d be pretty PO’d too…

The Crimeans, who felt Russian, spoke Russian, and historically WERE Russian – If we remember our history – Balaclava, near to Sevastopol, on the western coast of Crimea, is where the British Light Brigade, charged the Russian guns, to such detrimental effect, in 1854, and it is remembered in the rousing poem by Alfred, Lord Tennyson. So, a hundred and fifty years ago, this part of the world, was as Russian as it surely is today.

The President, of Russia, kept a low profile recently, and even disappeared from view for ten days, prompting mass media speculation by western media about his health. Of course, when he reappeared, the President issued a wry smile, and joked about “gossip”.

But behind the scenes, the Russian bear is fighting back against the Dollar hegemony. Of course the war of words is being ratcheted up as American military conduct war games in Estonia, this week-end, a former Soviet satellite nation, and right next to the Russian mainland.

Guyane Chichakyan a journalist for RT, posed an interesting question to one of the U.S. government’s PR spokespersons today (Saturday) when she asked Jeff Rathke of the U.S. State Department: Why was it that when Russia conducted military exercises on their own soil, it was supposedly raising tensions, but when Americans conducted military exercises several thousand miles away from home on Russia’s borders, it was in the guise of international peace and security.

The PR guy nearly choked on his reply, denying that they had ever said such a thing, to which, RT showed a clip of Jen Psaki of the U.S. State Department, on August 14th, 2014, doing just that, when referring to events in Ukraine and close to the Ukrainian border. As I mentioned some months ago, the next world war has already begun as a war of words, and for people’s hearts and minds. Every channel, both public and private will be used. It will in all inevitability end in a military war, though perhaps not on such a full-scale as the last one in 1939.

But perhaps also the anti-U.S. state of mind is gathering steam… As I mentioned some weeks ago, Britain applied to become a founding member of the AIIB (Asian Infrastructure Investment Bank) the alternative to the U.S. dominated World Bank and IMF, and we hear from the New York Times, that now Germany, France and Italy wish to join in defiance of U.S.’s (cough) “requests”.

Perhaps the dollar’s end as a major world currency is finally coming to an end, as a result of the mass Q.E. exercise of recent years.

It is time we all engaged our brains.

And then last week, I read this… http://russia-insider.com/en/2015/03/19/4696 which discusses just that.

If a shooting war does begin in earnest, money – hold in your hands money – will allow you to survive the inevitable inflation that will ensue, and the grey market will offer up far more than the government enforced, and controlled ones. If you value your freedoms, liberties, and the health and well-being of your family and friends, I strongly suggest you begin preparing – if you haven’t already.

Gold and Silver coins and widely accepted silver and gold ingots of widely known mints will prove to be good ways to secure your own future “essentials”. And Bitcoin, and other [Alt-coins] will enable international transactions. You can begin your own FREE collection of these precious [Alt-coins], when you set up an account by merely supplying an e-mail address.

We’re all slaves now…

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Over the previous weekend, I bought a DVD, of a film, I’d been hoping to watch for some time. I would have gone to the cinema, but my wife prefers Rom-Coms, to historical dramas, and my friends all live disparate lives, so I had to watch it home alone.

It featured that giant of the acting world – Daniel Day-Lewis, in a role he was nominated, and won an Oscar for, having been directed by Steven Spielberg – Lincoln.

The film tells the story of Lincoln’s finals months, as he negotiated with the Confederates who were on the point of being beaten in the Civil War, and also with his own Congress to add the 13th amendment to the constitution. Sally Field played his wife, and her part conveyed the pain that she and Lincoln had to endure as their sons enlisted, or were killed, and as his wife blamed him for their loss.

The 13th amendment effectively brought an end to slavery, and set forth the proposition, that all men were created equal in the eyes of the law, and thus the ownership of another human was contrary to God’s Laws.

The final debates took part in January, and after some political back-slapping and chicanery; The vote, took place, if the film was at all accurate, on 31st January 1865 – almost exactly 150 years ago. The Civil War ended barely three months later and the peace treaty was signed in April of that year.

I mention this, because as a resident and citizen of the U.K, like so many U.S. citizens, the politicians have so indebted us, as to effectively make us all debt slaves to the banksters.

When a Central Bank creates money out of thin-air, to buy up assets, the Bank owners effectively are able to buy assets on the cheap, that they can either sell later at inflated prices, or use to earn income from as a “Rentier”. Bonds being the case in point.

The term “rentier” derived from the French term just prior to the French Revolution, when the various kings, but especially King Louis XVI granted privileges to certain nobility and others who were similarly closely connected to the money power. These privileges granted (for example) the right to collect a toll on a bridge, river crossing or road.

The right to be the monopoly supplier and thus to extract monopoly profits from the citizenry, who became increasingly disenfranchised, dissolute and the poorer while the idle rich were kept in the lifestyles to which they felt obligated.

However, these changes over time, slowly strangled the economy to the point where free trade was stifled. To paraphrase Mrs Thatcher who once intoned something akin to – “They know the price of everything, and the value of nothing.”

These changes ultimately led up to the Revolution, and the former wife of the king – Marie Antoinette issuing her now infamous phrase. When she asked the king why the people were revolting – his reply was “they have no bread” (or words to that affect) to which her reply has become the stuff of legend: “Well let them eat cake.”, though historians suggest this was just “journalistic cliché”

Although these events were important, it wasn’t the real source of the revolution – that was probably because of the financial situation. John Law, a Scot, had introduced in the early 18th century a financial system that inflated land and property prices, disenfranchising those without property, though the economy was also not healthy due to poor harvests, rising food prices, and an inadequate transportation system (due to those privileges mentioned) that made transporting of goods costly and therefore food even more expensive.

The sequence of events leading to the revolution involved the national government’s virtual bankruptcy due to its poor taxation system and the mounting debts caused by numerous large wars between the British and the French.

However, the Americans too once were being bled dry by over taxing authorities in the form of taxes from King George III, and this led ultimately to the Boston Tea Party, where British Cargo Ships were boarded in the dark of the night, and their cargoes of tea bound for England were thrown overboard into Boston Harbour. Thus began the American Revolution.

Which leads me to today.

In the world of offshore asset protection and personal finance, you nearly always come across the claim that there are only two countries that actively tax their residents’ worldwide income: the United States and Eritrea. All other countries only tax income earned at home, though the UK is making steps in that direction.

But, that rule is apparently no longer true.

It turns out that in the early 1990s, Chinese tax officials went on a series of fact-finding missions around the world. One team enjoyed what The New York Times describes as a “long visit” with the IRS, and came away with “a two-volume bound copy of the U.S. tax code and a five-volume copy of I.R.S. regulations.”

After reviewing the materials, the Chinese government decided to write a tax code that would allow them to tax their residents’ worldwide income … the only problem is, they had no idea how to enforce it. And then FATCA came along. Now China knows how to achieve the same.

And given the recent spending on saving American, and other nation’s Banks, the Federal Reserve, have now indebted the people of America and the customers of Europe’s bailed out Banks, to the tune of more than $30 trillion.

With just 325 million Americans, and according to recent evidence, only 63% of the population actively engaged in the workforce, paying that debt has only two possible outcomes – little possibility, and no possibility.

Roughly, 180 million taxpayers, will need to pay almost $95,000.00 each, plus interest (whenever interest rates begin to rise) to pay down this debt, and that’s before any further spending by the successors to Obama’s legacy, or of the unfunded liabilities in medicare, medicaid, pensions or social care.

This indebtedness, is the basis of modern slavery. The UK debt per household is not quite as bad, but is bad enough. the last time I calculated it, it was a mere £76,000 per household of four, but when you break it down to taxpayers, it goes way up.

So you can be forgiven for trying to protect yourself. In the years that follow, I expect governments on both sides of the Atlantic to come after retirees pension pots. We hear so much of how political parties have learned their lessons in regards to spending, but people have short memories, and the parties have too often broken promises, then asked for forgiveness afterwards.

But, one of the ways that you can protect yourself, is with precious metals.

I know, you’ve probably heard this too many times over the last 15 years… You’re probably thinking – “What makes you think precious metals are the answer? “, or “Yeah, right!”.

In the last 15 years, Central Banks have again begun buying Gold, after 30+ years of sales, and falling interest rates, many have asked for their Gold back – Venezuela, Holland, Austria, Germany, or asked to audit their holdings – like Australia.

China has been buying up Gold like there is no tomorrow. India, has historically been the world’s largest buyer, but this has now been overtaken by China’s insatiable lust. And China has been covertly buying from its wholly owned miners, as well as using its huge dollar reserves to buy on the open market, as the Gold price has fallen from its high of 2011.

In fact Jim Rickards has mentioned that he believes that the intention is to protect its huge dollar reserves as the expected dollar collapse occurs, and they’re buying using the dollars they’ve earned selling to the U.S., and loaned the U.S. buying up the Treasury Bonds that have been issued over the last 8+ years but it appears they are now, along with Russia, net sellers of Bonds, and as Jeff Opdyke, Investment Director of Sovereign Society has regularly posted, when China announces its official holdings to the world – all hell will break loose. (though that was done last year in 2015, and to little fanfare)

Because now, they’re increasingly worried about the value of those dollar bonds, and as so many attest, the Chinese are masters of the long game.

It is even possible that China, through the BRICS Development Bank, which Britain recently joined, is seeking to back its currency (at least partially) with Gold, giving it the status that the U.S. has hitherto had.

As inflation begins to pick up in the years ahead, the urge to buy gold, to protect large dollar holdings, will gain traction, and all assets that rise in value with inflation will be chosen as the protection of last resort. But any asset that is the liability of someone else, that may fall to zero, will be sold. And what happens to any asset when everyone wants to sell at the same time?

As interest rates rise, loans will get more expensive, Bond values will fall, and loans will get called in.

Asset values, secured against loans, such as mortgages on property, will fall in value, just as they did in 2008, and that will mean we are back where we were in the “Lehman moment”. Except now, the debt load worldwide, has risen to such a size, that there is no-one big enough to bail out the Central Banks of the world.

Then governments will do what they have always done – seize their citizen’s wealth. (Chancellor Denis Healey famously remarked, he would ” Tax the Rich, until the pips squeaked.” in 1974)

Banks that fail, will seize their depositors money – Cyprus times ten – and Deposit Insurance will not be enough to save the Bank or its Depositors – too Big to fail.

Only precious metals held in the hands, or in secure vaults as custodian assets in safe political environments, with a history of ensuring the sanctity of custody and ownership – not deposit boxes, which governments have now legislated are Bank’s assets, will be safe.

Overseas held precious metals miners too, will mean an opportunity to increase your wealth as the coming collapse unfolds.

One junior miner with assets in at least four countries in Africa, with 18% of a Diamond mine in South-Africa, a 75% ownership of a Nickel mine and smelter in Zimbabwe, a similar ownership of a Gold mine and refinery in the same country, Diamond assets in Angola, and a growing asset base in Democratic Republic of Congo, with a huge gold-copper find there.

To-date, this 9 kilometre rift has only had 3 kilometres explored, and already 2.9 million ounces have been defined as a resource. This miner has a P/E of just 4 (meaning the company earned a quarter of its share value in one year)

Anyone, who has studied markets for any length of time, knows that on average a healthy PE ratio of about 15 is considered normal. Values in excess of 20 are considered expensive, and values below 10, are considered cheap. So a value of 4, means that if the value of the company increases 3 fold, it would still be cheap. I’ll leave you to draw your own conclusions…

And this mysterious company is? ASA Resources on two exchanges – London (AIM: ASA.L) and was  targetted for a hostile takeover, when its board were removed, and its name changed from Mwana Africa (MWA.L).

Of course, this is not a recommendation to purchase, but perhaps an instigation to do your own research…

And if silver is more your thing… One company I have followed for several years which to be honest has only just managed to survive the onslaught of the falling silver prices from the highs of 2011 down to the current silver price of around $16 might be worth your investment research. For many silver miners, the current silver price is below operating costs, but this miner, which was a producer for several years using a toll-mill agreement (i.e. Leasing someone else’s mill and smelter) has managed to survive after divesting itself of some assets, after a failed financing agreement had to be called in and payments went unmade.

There are many, who feel that the silver price, that has fallen so low, will equal the price of gold, as Silver’s industrial uses rise, silver has a wide range of applications. It is found in jewelry, electronics, batteries, mirrors, solar energy, and water purification, just to name a few (10,000 and rising) and the amount of available silver falls. Seventy five years ago, as U.S. president FDR, confiscated that nation’s silver (and Gold), the above ground stocks of precious metals had a 5:1 ratio in favour of silver. In 2013, that ratio had totally reversed, and there was now a 5:1 ratio in favour of gold. Furthermore, there are those who think we may run out of available mine-able silver – TOTALLY – by the mid 2020’s.

Silver is used in small amounts, so small, that recycling would be so costly as to make it almost impossible to achieve economically. And we currently use circa 680 million ounces each year. Though demand in recent years has risen so far, and so fast, with U.S. Silver Dollar Eagle sales rising to previously unheard of levels, that the current price of silver, which is widely believed to be manipulated to protect the dollar hegemony is likely to rise spectacularly, when the price can no longer be held down.

There are a number of reasons why silver may begin its meteoric rise this year. It has already risen from the low $14.00 range to $17, and most of that came in short bursts in February, and April.

India is the single largest consumer of bullion in the world. As the silver price went down globally, consumption went through the roof in India. India’s first quarter 2013 silver demand was up to $1.78 billion — a 311% increase from the previous year. In the first eight months of 2013, silver imports in India reached 4,000 tons, more than doubling imports during the entirety of 2012.

There were two driving forces behind this trend. First, India placed extremely tight restrictions on gold imports. As a result, sentiment in precious metals shifted towards silver. The second factor here is inflation. With the Indian Rupee inflating a staggering 9.3%, it’s no wonder the nation was buying as much silver as they can get their hands on. The peak silver import hit 5,819 tons in 2013, which was the all-time highest it had ever been.

Industrial applications for silver make up nearly half of global silver consumption, and a rebound in global manufacturing is going to drive up demand. The JP Morgan Global Manufacturing PMI has indicated growth for 19 months straight, while factories in the U.S., UK, and Asia reported increases in activity.

In 2013, there were two devastating landslides at Rio Tinto’s (NYSE: RIO) Bingham Canyon mine in Utah, one right after the other. Over 165 million tons of rock went down to the mine floor, suspending production indefinitely.

This event was, without exaggeration, a catastrophe. It was called the biggest non-volcanic landslide in the history of the United States, and is considered the first landslide to have triggered earthquakes (instead of the other way around, which is common). Fortunately, no one was injured by the slide.

The Bingham County mine is the second largest silver mine in the U.S. and accounts for a staggering 16% of national silver production. So we’re talking about four million ounces of silver per year that have essentially vanished — a strong catalyst for a rise in prices

Silver hit its peak value in 2010, going from $16.94 per ounce all the way up to $49. Since then, the price has come down, but demand hasn’t – it has only grown.

In the first quarter of 2013, silver ETFs purchased 20 million ounces of silver.  And in June of 2013, the world’s largest silver fund added a record of 572 tons to its inventory — more than all of its 2012 purchases combined.

This is incredibly important, because it shows us where smart money is going in the market.

And the company I was telling you about has a property in Zacatecas in Northern Mexico, a historical silver mining district. Four rounds of drilling have identified 50 million ounces in the proven category, and 80 million ounces in the probable category, The company is Arian Silver (AIM: AGQ.L)  with  113.69 million shares in issue, at 1.25 pence, when the silver price rises to $100.00+ I have been expecting, this company will rise with it.

 

However, I have also learned of another Copper, Gold and Silver miner, with huge reserves, and the cash to develop it, though some political interference from the government has squashed some of the enthusiasm, and taken some of the shine off it in Mongolia, which does not have a history of stable political institutions and a threat to improve the 30% government holding by an incoming President, brought the share price down thundering from its highs of $27, to its currentlevel. Turquoise Hill Resources though (TRQ.TSX) has huge resources, and is off the radar for many investors at the moment. A fresh rise in metals prices will bring this miner back into focus, and with such huge reserves, and a major corporation in Rio-Tinto, and with the share price at £1.91(C$3.52) as at 26/4/16 these are set to rise

TRQ - Moonshot in the making?
Production figures show rising production at a time of rising prices…

Inevitably we can not know when the Gold and Silver prices will rise to that extent, but it is my sincere view, that we are about 3-5 years away from the steepest rises, but that we may see smaller rises over the period between now and then.

You pays your money, and takes your choice.

Dinosaurs, Debt and Destruction

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I’ve been thinking about the World Debt problem for some days, and searching for a theme to make it lively. I couldn’t see how the citizens of the world can get out from under this pile of debt we’re leaving our children… (Mine’s 19 by the way and a Bio-Chemistry student at Manchester University and loving it. – Hi Rachel?)

Anyway, we have a US. economy, with a national debt of close to $17 trillion, a European one with €14 trillion, a British one with over £1trillion, and a Japanese debt to economy ratio of 270% of GDP by the end of next year… (And the Chinese?)

When will politicians realise you can’t steal from the future, you can only borrow it. And the day you start to pay it back you shrink the economy.

Every hundred years or so, we need to clear away this debt so that we can get out from under it, and that is usually done by a war…

The Central Bankers have for a hundred years been building this ship, and the ship is now getting so big the ocean won’t be big enough to sail it.

Banks – Too Big to Fail?

So, the “Too Big to Fail” Banks, who get their blood money, from the Fed… They remind me of Tyrannosaurus Rex, Gigantosaurus, and the great plant-eaters the Brontosaurus and Diplodocus… They must have felt quite secure in their bigger than you world, just days before the sky darkened, and flamed, and a meteor hit the boggy marshland that is now beneath the Gulf of Mexico, throwing up mud, plants, rock dust and huge plumes of water and spume. Over the days that followed, the dust encircled the globe, and the planet cooled.

The day that changed the world, and the world view.

The Tidal wave probably spread to the shores of Africa, Europe, and beyond. The entrance to the Mediterranean was opened and washed away sending the wave as far as present day Israel and Egypt, and perhaps even through the straits of the Bosphorus to the Black Sea. and even the Persian Gulf.

In the space of three days or less, the planet probably cooled by 5-10 degrees, and the world had changed irrevocably. Plants died from lack of sun, rain was acidic, and the mammals scurrying beneath their feet, who were warm blooded took their opportunity as ever larger dinosaurs succumbed to the devastation, providing a veritable feast of the carcasses now rotting in the moisture laden atmosphere.

Over the next decades the air cleared, and new plants and animals emerged to take the place of the great lizards.

Sometime in the next 10-30 years we are going to see a similar event, and the TBTF Banks, will be like T-Rex and the Brontosaurs.

Smaller, nimbler, perhaps warmer creatures will grow up and replace the cold-blooded dinosaurs of the Industrial Revolution. The Internet, and the Internet of things will replace them, and a new currency system will have emerged.

Is Bitcoin, Litecoin and the others the financial equivalent of the mammals of 65 million years ago. Will these crypto-currencies, and precious metals replace the Dollar, just as the guinea-pig replaced the Tyrannosaurs. And on that day, the true value of these 5,000 year old monies will be known once again?

What the Fed has done for us?

A hundred years ago, an ounce of Gold bought a Savile Row suit, and today, it still does. A Pound weight of Sterling silver the same. Now that British Pound Sterling, will not buy a loaf of bread, and a carton of milk. THAT’s what the Fed and the politicians have done for us…

But over the next 5-20 years, that pound weight of Sterling Silver will once again buy that suit, and the wardrobe to put a dozen others in. As we speak, the ratio of Silver to Gold coming out of the ground is 9:1… Historically it was 16:1, and yet if we check the current prices… Gold today, is circa $1213.22, and Silver is $19.04 – a 63:1 ratio.

50 years ago, the amount of above ground Silver was 5 times that of Gold, today the reverse is true. In my lifetime, Silver will be gone from metals warehouses, and the only silver will be available from mines and scrap. To encourage more mining, the price will need to go a LOT higher. Those who have even just a little will be the “Nouveau Riche”.

And miners with large reserves and resources will be probably FTSE 100 companies. Companies such as Arian Silver a British AIM registered company, but traded also on the Toronto Stock Exchange has that and will be tens, possibly 20 times their current price…

(Incidentally that is not a recommendation – but an invitation to do your due diligence – Arian Silver)

But with 50 million ounces proven, and another 80+ million probable, and who knows how many ounces still to discover, the prospects are at least positive, given the current price point of silver. No other substance on the planet apart from oil has so many uses- 10,000 and counting. And Silver is irreplaceable in so many of those applications. Silver is my number one long-term investment. Eric Sprott a multi-billionaire is reputedly 70% in on silver and silver miners, and he knows Arian Silver well, which is why he owns 14% of the company.

And if you’d like some Silver… Just in case… Liberty Silver

Until next time…

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