Category: Precious Metals
Black Swans are in Flight
It’s been quite a month. Heads down for 70+ hrs a week to launch a web site aimed at helping people understand and engage in the effort to return to honest money. The Honest Money Center is formed with the prayer that over time, it will have the same impact as the 10th Amendment Center is having.
With Utah passing their sound money bill into law, the first shot across the Federal Reserve’s bow has been fired. It very well could be looked at as a historical event in the decades to come.
Outside of that, the 2014 Outlook continues to unfold as scripted. I must say that some events are progressing faster than I had thought, mainly due to the flock of black swans that have been let loose. Japan’s nuclear problems, post earthquake/tsunami, the unrest/war in the Middle East…. Right now its too early to declare the Outlook has accelerated. Economic statistics are improving, which will counter some of the other issues for a short time.
Over the next few years, there will be an ebb and flow that will at times make it seem as though we are heading for a collapse in weeks/months. Then we may enter a period that makes it appear as though it may be many years. Keep your eye on the overall trend. It is still in motion. In my opinion there is nothing short of an act of God that will stop us from experiencing a form of what was written in the paper.
The precious metals markets are near all time highs again. Silver is on fire. It seems to want $40/oz before correcting. I still fully hold to my prediction that we will see a very sharp pullback in all markets, including commodities and precious metals sometime this year. The 2011 deflationary scare will likely begin when QE2 comes to an end or shortly before. That assumes it will end.
The unknown factor now in that equation is the shock that Japan’s woes will bring to the world economy. If it manifests itself prior to QE2 ending, we could see an extension or a roll right into QE3. This could possibly a) place the beginning of the correction in the May time frame and b) make it a very brief one, as it becomes evident that the Fed (and most of the world’s central banks) will print, print, print.
Should the Fed end QE2 in the face of a new global economic downturn, we will see a very ugly sell off again. Maybe not as bad as 2008, but breathtaking none-the-less. The result would be, there would only be a few weeks/months between the end of QE2 and a QE3, and QE3 would be a doozy.
Oh, and just a quickey on the Police State front. This from Republican Senator Lindsay Graham:
Sen. Lindsey Graham (R-S.C.), a military lawyer, is the first member of Congress to say the legislature needs to explore the possibility, however unlikely, of limiting some kinds of free speech – like Terry Jones’ Quran burning – that help America’s enemies. “I wish we could find a way to hold people accountable. Free speech is a great idea, but we’re in a war,” he told CBS’s Bob Schieffer on “Face the Nation.”
A great idea? But….. we are at war! Really? When was war declared? When does war predicate suspension of 1st Amendment rights? It is happening people. Help your friends remove their rose colored glasses before it is too late.
And I haven’t even spoken of the dire finances of the states and large municipalities….
As I said in the Outlook paper. Lots of variables. None can be perfectly predicted. Stay alert.
Now that the big push for the web site release is over, I plan to give weekly or bi-weekly updates. That’s the plan. We’ll see how it goes.
View PostThe Great Global Debt Prison
Forwarded to me by a friend. Food for thought.
The Great Global Debt Prison
By Giordano Bruno
Neithercorp Press – 2/4/2011
Tense and terrible times inevitably summon an odd coupling of two very different and difficult human conditions; honesty, and brutality. Certain painful truths are revealed, and often, a palpable fury erupts. Being that times today are particularly tense, and on the verge of being spectacularly terrible, perhaps we should embrace both conditions in a constructive manner, and become brutally honest with ourselves. This begins by admitting to that which most ails us. It begins by admitting how far we have fallen…
Our economy, our culture, our entire world, is built upon debt. No one ever asked us if that’s how we wanted it, it is simply how the system was designed when we came into it. Many of us have lived our entire lives under the assumption that debt is a necessary function of daily commerce and a valuable driver of successful society. Most households in America operate at a steep loss, trapped in constantly building cycles of liability and interest. There are even widely held schools of economic thought that are centered completely on the production and utilization of nothing but debt. Only recently have many people begun to ask themselves what the tangible benefits are (if any) in being dependent on debt based finance.
What (nearly) killed the markets today?
A nearly 1000 point drop in the DOW. Gold up nearly $30. What does is all mean? Well, that depends on who you ask at this hour. MSM news outlets are claiming a computer glitch or a mistake made when entering a trade. Others claim the markets are simply catching wind of just how serious of a problem exists in the currency markets with the sovereign debt problems in Greece and the Euro zone. Still others blame HFT - High Frequency Trading – that simply got caught without a negative feedback loop, ala the 1987 crash.
Whatever the reason, one thing is certain. Market sentiment is sure to have changed. All the spin that has been engineered by the MSM and PTB over the last year was undone in one, 60 minute roller coaster ride on Wall St. If nothing else was evident today, it is clear that someone – be it millions of individual someones – or a few computer programmers in the glass houses of the big investment banks – has a hair trigger when it comes to exiting the markets. That was on display for all investors to see today, and now people know that they can lose thousands of dollars in the blink of an eye. Investors now will have their finger hovering over the mouse clicker or on the speed dial number of their broker. “Sell NOW!” is on their minds.
18 months is not long enough for investors to have forgotten the pain that the market dive in late 08 and early 09 brought them. They saw their financial life pass before their eyes. Many were late to “get back in” and have recovered only a fraction of their losses. They will not stand by this time and watch the rest of it slip away. The question is, where will they go? If today’s market action did nothing else, it served to reveal in a 3 hour period where money will flow when the next down leg gains momentum (tomorrow and Monday will tell us if that is now). Places to be: US Treasuries, the US dollar, gold and silver and their equities. Nearly everything else got thrashed today.
Let’s look at these one by one. US Treasuries will be a safe haven only for a short period of time. That period could be days or months, depending on how quickly things unravel. Eventually, they too will join the list of asset classes doomed to fall. Ditto for the US dollar. In the game of cascading currency defaults, even the last man standing (which will NOT be the US dollar) will fall.
Now to gold and silver. Today they showed their metal (no pun intended). Gold was firm all day long, steadily catching a bid in the face of major market turmoil. Silver was noteworthy due to its lack of volatility. This is the opposite of what happened in late 08/09′ when they both got crushed with the markets. Why? I have given this some thought, and in 08/09, the markets were under pressure because the financial system was failing. Now, however the actual “money” itself is failing. Big, big, big (did I say big?) difference. This is a trend that will continue throughout the remainder of this crisis, until our current fiat empire is replaced by something else.
And what about energy and other “hard” assets? Well, you saw that they will likely receive the same treatment – at least in the short term – as most other asset classes. The fear of “demand destruction” will outweigh the flight to tangible assets in the early stages. That simply means that energy and other hard assets will be great investment opportunities after the first wave of selling subsides. It will take some wisdom to know when to enter those markets.
If the markets somehow gather themselves tomorrow and are able to put this horror show behind them. It will only be temporary. Gold may pull back slightly, however people now know what to expect. More and more people will begin to accumulate precious metals and their shares. Even Larry Kudlow remarked today “Gold is now the world’s reserve currency. Amazing.” Not for those who have been watching this unfold for the past 3 to 5 years. Not for the Austrian economists. Not for those who read and study history. And last but not least, not for those who read and study their Bible.
Buckle up everyone. The next few days will be very telling. Let’s see how the overseas markets view today’s action.
Agenda – Grinding America Down (5 star!)
Words from Jim Sinclair
I have been following Jim Sinclair’s writings for years. He has focused on the gold market as a means to protect your wealth. He often talks in somewhat coded language. This is by far his strongest, direct warning to prepare. Please take heed.
My suggestion for those who have not yet done so is to 1) secure a source for clean water. That may be as simple as several good water filters. Remember, wells will not work without electricity. City water? Don’t count on it. 2) get a food supply set aside. This is a long discussion, however I suggest some food grade buckets, mylar bags, wheat, rice and beans (don’t forget baking supplies such as baking soda and baking powder)- dried fruits, canned goods, etc. etc.
Now it the time. At best I believe we have a couple of years before some kind of dislocation happens. I’ll say it again – now is the time. Are you ready?
The System Has Failed
Posted: Apr 07 2011 By: Jim Sinclair Post Edited: April 7, 2011 at 11:22 pm
Filed under: General Editorial
Dear CIGAs,
The system has failed. It failed the day that Lehman Brothers was flushed.
There is a financial condition of an ocean of liquidity making the broken remains of a failed financial system in the Western world opaque.
There is no future failure coming. What is coming is a mass realization that exposes the fact there is no functioning system under all this liquidity. It is a sharp contraction in confidence that lies down the road. Realize this and know that there is one more step you need to make.
Having the largest pile of gold and silver without considering one more step might make you a modern Midas.
There is more to insurance than simply financial. Shortages of goods and services will occur because of currency induced cost push inflation resulting in dislocations of the organization and compensation in the distribution functions. That means there could be ample food in the system but little available on the shelf of your local market.
Because of the ill-understood world shaping changes in the Middle East, the impact of “Peak Oil” on price has been sharply accelerated. Public utilities considered now as a human right will prove themselves to be privileges. Expectation of power on a constant basis will become a hollow expectation.
If you do not have the experience of living in India and Africa in the 80s, you have no idea of how to live in a Western World experiencing long term currency induced cost push inflation. Self reliance will become as important as your holdings in gold. To have a huge pile of gold but remain totally dependent on the infrastructure of the Western World system is a serious mistake. You would have substantial capital but lack goods and services to buy. You will be able to afford much, but much will be either in short supply or illegal.
You know more about what is occurring than 99% of investors.
You are the 1% that knows the SYSTEM HAS FAILED.
You are the 1% that knows the system failed the minute Lehman Brothers was flushed.
You are the 1% not looking for some failure in the future but know there is no system below the flood of liquidity.
You are the 1% that has been exposed to the concept of currency induced cost push.
You are the 1% that can understand the future.
Please be that 1% that is not seduced by your profits and fails to take the last step to the best degree they can.
The picture above is another aspect of Sunnyfield’s Farm. It is one of two 20KW generators powered by a marine diesel engine. There is a special fuel filter system custom designed that allows this engine to run on low grade heating oil. There is at all times 14,000 gallons of fuel buried. This fuel is diesel, heating oil and gasoline. This is at best a short-term answer to the predictable failure of fossil fuel electric generation. The longer term solution is wind power banking batteries and a converter.
I will walk you through everything that I have done in hopes that you might use it as a model to improve on.
Regards,
View PostJim