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JS Kim Explains Why the US Economy Will Share the Same Fate as the South Korea Sampoong Superstore Disaster
Submitted by SmartKnowledgeU Editor James Carusso.
On December 7, 2009, I sent out a warning from our Managing
Director, JS Kim, to thousands of people via email about the deterioration of
the global economy that he had discussed for years that the great majority of
people were ignoring. In that message, I spoke of many serious warnings issued
by JS publicly since 2006 (and even earlier than 2006 to his clients) about the
necessity to own physical gold and physical silver to avoid financial ruin in
the coming years. Here’s some excerpts from that warning below:
"In September of 2006, when Stephen Roach, a senior executive
of Morgan Stanley stated that the commodity bull had ended, this man responded,
'Everywhere in the media, you have pundits saying that the commodities Bull Run
is over - including even chief global economists of major investment firms like
Steven Roach of Morgan Stanley. THEY’RE ALL WRONG…I’ve dug deep enough down
into the rabbit hole to know that gold will rise much much higher in the future.
Yes, oil has slipped to below $60 a barrel but again, this doesn’t mean that oil is done either.'
Since
then, gold did not plummet from $570 an ounce back down to $250 an ounce as
many 'experts' predicted, but instead rose to more than $1,200 an ounce as of
December, 2009."
"At the very start of September 2007, this man stated,
'Increased volatility in stock markets will occur as $370 billion in sub prime
mortgages re-set to higher rates, starting with $50 billion in September and
$30 billion every month thereafter for the next 18 months to 2 years.
Triple-digit losses in the Dow during single day trading sessions will become
commonplace.'
Just three months later, triple-digit losses in the DJIA happened
almost daily or several times a week to open January of 2008, shocking the
investment community."
In this same warning, JS predicted that the global economy, and
in particular the US economy, would experience great shocks in 2010-2011. While economic shocks have hit other
countries in 2010, great economic shocks have not hit the US thus far in 2010,
at least on the surface level. Look below the surface, and we have a completely
different story regarding the state of the economy. JS now looks for these
economic shocks to rise from below the surface into full view for all to see in
the timeframe of 2011-2013.
To understand why JS has pushed out this timeframe, I
recently sat down with him and asked several questions:
James C: “Why do you think so many people today aren’t able
to see the disaster that is coming to the US economy?”
JS: “Despite the weapons of mass financial destruction
that bankers have created and governments worldwide have coddled and shielded
from proper regulation, the majority of people still incredibly do not understand
the crime syndicate-like relationships among governments, corporations and
banks. The public sees that the US markets are up a little over 10% this year
and many are duped into believing that that the stock market performance means
that the economy is recovering. And this belief is reinforced by idiot talking
heads on TV like Jim Cramer that do nothing but misinform people. Sure US
markets have now risen by more than 36.79% since they crashed in 2008, a figure
that sounds impressive on the surface level. Then combine this impressive
sounding figure with US Fed Reserve Chairman Ben Bernanke’s national appearance
on 60 Minutes, when he lies to the nation about inflation rates and about
continuing to create more money out of thin air, and you have millions more
that are converted into sheeple. How do I know? Because I talk almost every
month to people in the US that tell me they believe the US economy is recovering. So
when people believe that inflation is still less than 2% because the Fed tells
them to believe this, they look at a near 37% gain in the US markets in the last
two years and believe that they have made substantial recovery in their
pensions and IRAs and consequently believe the economy must be recovering as
well (by comparison, JS’s Crisis Investment Opportunities newsletter has returned more
than 105.25% over the same time period, clobbering the S&P 500’s 36.79%
return, and yielding very substantial REAL gains, even after the inflationary
monetary effects of the US Federal Reserve’s schemes).”
James C: “So besides the government and bankers deliberately
keeping people in the dark, why else do you think some, or even many, people
believe the economy is recovering?”
JS: “First of all, the Federal Reserve’s insane POMO
(Permanent Open Market Operation) schemes this year are largely responsible for
propping up the US market this year. In 2009, when I stated that the US would
experience significant economic shocks in 2010 and 2011, I did not yet know the
duration of the Fed’s POMO operations and how insane they were going to be. Although daily POMOs had already reached
upwards of $6 billion and $7 billion per day as of mid-2009 (just for US
Treasuries, but up to multiples of these figures when including US Treasuries
and other debt-related financial products), many had speculated that the POMOs
would soon end. Obviously, with projected cumulative POMOs of nearly
$1,000,000,000,000 just between November 2010 and June 2011 (again just for US
Treasuries), the Fed Reserve POMO scheme not only did not end, but it received
an injection of steroids in 2010. So POMOs that were used to buy future
contracts of US market indexes is a major factor that has kept the US market
afloat at this juncture and may continue to keep it afloat for several more
months. Rising stock markets have no correlation to a strong economy anymore
due to scams run by Central Banks and due to gains that largely occur due to the
devaluing currencies that these markets are denominated in. The best performing
stock market of the past decade has been the Zimbabwe stock market. Still, it’s
irrelevant if you made a quadrillion Zimbabwe dollar profit investing in the
Zimbabwe stock market, as by 2008, a loaf of bread would have cost you 1.6
trillion Zimbabwe dollars.”
James C: “If the economy is really not recovering, then can
you explain what is really going on?”
JS: “Let me explain what is really going on with the economy
with the following disaster analogy. In June of 1995, the Sampoong department
store, a five-story building with four basement levels, suddenly collapsed in
Seoul, South Korea, tragically killing 501 people and injuring 937 others. When
the Sampoong department store was constructed, the owners, due to a desire to
cut costs, made several fatal decisions. First, they decided to cut away a
number of support columns in the original blueprint in order to install
escalators. Secondly, in order to cut costs, the owners shrunk the original
width of the support columns from the required 80cms to only 60 cms, an
inadequate width to support the load of the building. In addition, the original blueprint called for only a four-story
building but the owners built an additional fifth story that housed a
restaurant with a very heavy heated concrete base that quadrupled the load of
the original building design. Two months before the building collapsed,
worrisome cracks appeared in the ceiling of the south wing’s floor. On the day
of the collapse, cracks as wide as 10 centimeters appeared in the top floors of
the building five hours before the building collapsed, but the owners hid this
information from its patrons and refused to shut down and/or evacuate the
building as they did not want to lose its daily revenue. When it became clear
that the building was going to collapse, senior executives of the department
store fled without warning any of the patrons still inside the building. An alarm
to evacuate the building was only sounded when the building started to make loud
cracking sounds, just 7 minutes before its collapse at 5:57 PM despite signs of
an imminent collapse being clearly visible more than five hours prior. City
officials Lee Chung-Woo and Hwang Chol-Min, in charge of overseeing the
construction of the building, were responsible with concealing the illegal
changes to the original blueprint designs and were later charged with and
convicted of bribery.”
“Amazingly, the above story serves as nearly a perfect
analogy for the US economy. The government and bankers laud a rising stock
market as proof that the economy is recovering. They go on record stating that
inflation is less than 2% when in reality it is more than four times higher. They
state unemployment is less than 10% when it is nearly 23%. Thus, to many
people, the economy appears as the Sampoong department store’s exterior appeared
to the public right before its collapse, structurally sound and with a solid
exterior. This is the reason why 40,000 people a day visited the department
store despite its fatal structural integrity problems. The government and
bankers are just like the Sampoong department store owners, actively concealing
all warning signs from the public and selling them an illusion that all is okay
when instead, the economy is heading for collapse. Just as the Sampoong
department store owners constructed a crappy building destined to collapse due
to excessive greed, bankers with the help of government officials, constructed
dozens of financial derivative products destined to collapse due to their
excessive greed as well.”
“The US regulators that also see the impending cracks in the
economy, are just like Lee Chung-Woo and Hwang Chol-Min. They receive
inordinate pressure and bribes from the bankers to look the other way and keep
the public in the dark about the impending doom that is coming. In the case of the Sampoong disaster,
when the contractors refused to continue work on the building when the owners
changed structural regulations that endangered the integrity of the building,
the owners fired the contractors and hired ones that would cut corners. US
regulators that are honest and that try to protect the American public, like
Brooksely Born, received the same fate as the original Sampoong contractors and
are also fired or forced to resign.
When the entire system is corrupt, even the rare good person can’t save
disasters from happening. Thus, the public is none-the-better-off despite the
presence of regulators that are supposed to protect the public’s interests and
safety, but in reality, protect the greed and profits of companies that exploit
the public’s interests.”
“And finally, the economy itself is like Sampoong’s
interior. It is replete with cracks and fractures that warn us of the disaster
ahead. But even so, a large percentage of the masses still remains ignorant because
the banker/corporate/government three-headed monster keeps the people’s vision
in a tunnel by pummeling the public with a constant stream of propaganda on
MSNBC, newspapers, and financial talk shows. In Seoul, Sampoong’s owners
distracted the public’s attention away from the developing disaster with stores
fully of luxury goods. So when the US economy finally experiences shocks in the
future more disastrous than those in 2008, as was the case with the Sampoong
department store collapse, many will believe that no warning signs had existed
despite the evidence that exists to the contrary today. And I’m quite certain
the media, just as they did in 2008, will stupidly ask the same questions they
did back then, such as “How did this happen?” when in fact, all the answers stare
them in the face right now. With the Fed’s POMO schemes, regulators that aid
and abet fraud, and governments and bankers that conceal truth from the public,
the combined effect of these actions is just to delay disaster for another year
or two. So that is why I say now that disaster will visit the US sometime
between 2011-2013.”
The Sampoong Superstore Collapse
James C: “So why do you think some analysts are saying that
gold and silver are a bubble now?”
JS: “They’re saying that because either they have been
directed by someone above them to say that, or if they really believe it, then
they’re merely demonstrating that they have zero understanding of why the global
economy is on the brink of disaster right now."
James C: “So is that why you changed the pricing on your
services to a constant gold standard? As far as I know, at the time, you were
the first US company to do this, and perhaps still the only company that made
the decision to price services/products on a gold standard.”
JS: “That’s exactly right, James. A long time ago, I
switched the pricing of my services to a gold standard to protect my company’s
profits against the destructive policies of Central Banks, in particular the US
Federal Reserve. Frankly I’m shocked that no other company has also followed
suit since then. At least none that I’m aware of. I stuck to this policy when gold rose to $1,000 an ounce
despite the cries of banking shills that were releasing loads of propaganda
against Gold, stating gold was a bubble destined to burst, that gold was
heading back down to $500, or even $300 an ounce, and other such nonsense. I
stuck to this policy even when the price of gold fell in some of the months
after I switched to this policy, and falling gold prices caused the prices of
all of my services to decline. I felt that my commitment to a constant gold
pricing standard despite gold’s decline would prod many people to inquire of
themselves why my company was pricing all of our services on a constant gold
standard despite the claim of so many Western bankers back then that gold was a
speculative and risky asset. I thought that people would ask themselves, if the
bankers were correct, then why in the world would I subject my monthly income
flow to the possibility of a gold crash and to price fluctuations of a risky
asset? The answer, of course, was that discussions of gold crashing, even back
in 2005, and every year since then, have been ridiculous.”
“By sticking to this standard through the various periods of
volatility that gold experiences every year, I thought people would come to understand
gold (and silver) as real money and to finally realize that all fiat money, as
long as it is backed by nothing but the full faith and credit of governments, which
in reality means less than nothing, is junk. With the exception of the first
several months after we launched our investment newsletter during which we
offered special introductory rates, my newsletter has basically remained a constant
0.50 ounces of gold. It’s true
that its price, and the price of all my services, have risen significantly in
terms of fiat currencies but in terms of gold, there has been no price increase.
But had the price of gold cratered during this time, the prices of my services
as denominated in fiat currencies also would have cratered and I was confident
in my decision to do so because I knew that the risk of gold cratering was very
low while the risk of fiat currencies cratering was very high. If the price of
gold continues to soar over the next few years as I expect it to do, for the
sole reason that many people have foolishly taken zero steps to get out of fiat
currencies, I may have to even lower my prices in terms of ounces of gold even
though the prices denominated in fiat currencies may still continue to rise
against these lesser amounts of gold.”
"Every gold and silver investor
remembers the Fed Reserve/bullion bank engineered collapse in gold/silver
prices that happened in October, 2008. But despite what gold/silver investors
remember as a monumental collapse back then, in retrospect, if we look at this
“collapse” on a 10-year scale, when we look at the big picture, what we
remember as a “collapse” was only a speed bump in the ongoing gold and silver
bull. So don’t listen to the immoral bankers and their foolish employees that
attempt to keep you from purchasing physical gold/silver or tell you to sell it
now because it is absolutely the wrong thing to do.”
James C: “So people should purchase physical gold and silver
even now?”
JS: “Yes, they should buy even now. Of course, not all
corrections in gold and silver are engineered by bankers, and corrections are a
natural occurrence as bull markets need time to consolidate and build new bases
before moving higher. So these corrections will happen, whether engineered by
bankers or whether they are just a natural pause in a bull market, and they may
be steep at times. But when they happen, this events only present buying opportunities
for the millions of people that still do not own a single ounce of physical
gold or physical silver. To someone that still doesn’t own any physical gold
and physical silver now, I would say buy at least some today. Wait too long,
and in the future, people without physical gold and physical silver may find it
impossible to buy at all.”
James C: “I understand why you are so bullish on gold and
silver even now, but can you explain more to everyone that doesn’t understand
your view?”
JS: “Sure. As I’ve been stating since 2005, we are and have
been in a monetary crisis. When stock markets crashed in 2008, it was due to
this monetary crisis. When subprime mortgage derivatives crashed, it was due to
this monetary crisis. In the future, when tuition rates soar around the world,
when food prices soar around the world, it will be because of this monetary
crisis. 100% of people in the world should view silver and gold as real money
but in reality, well less than 5% of the world does so. That is why, whether
people believe that Max Keiser’s efforts will crash JP Morgan or not, everyone
in the world should listen to him, and buy not just one ounce of silver, but
one ounce of silver every week if they can afford it, and twenty ounces of
silver every week if they can afford it. Unfortunately bankers are hellbent on destroying people's wealth today and the system is so corrupt, that governments and regulators will never fix the current monetary crisis. If people want to survive this monetary crisis, they better buy precious metals.”
James C: “And what if their timing is poor, and silver
corrects heavily right after buying?”
JS: “I would say use the corrections to buy more unless we
have reached the mania period when it will be time to sell. Though the next few years are bound to bring volatile
periods when we may see gold rise (and fall) by $100 a day at times and silver
rise (and fall) by $3 or $4 a day, the bankers are dead wrong. There is no bubble in
gold and silver today, and unless a major world currency collapses next year,
there won’t be one next year either. I've been telling people to buy gold since it was about $560 an ounce and silver since it was about $9 an ounce. I wasn't there at the very beginning of these bull markets, but I hope to stay in until it reaches the end."
»
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Get real.
Convert all paper assets into real, physical silver and gold.
Kim's analogy is close but not 100%. Financial markets are moved by the emotions of greed and fear. Physical structures are moved by gravity, load, tensile strength, fatigue and other physical properties. Ergo, psych ops can and do keep financial markets levitated by controlling fear and encouraging greed.
The question is whether the psych ops can keep things levitated until the needed foundational repairs are complete. That seems to be the fundamental policy of the world's central banks. They view their job as maintaining a calm, orderly retreat while labor wage arbitrage is slowly reduced and global imbalances are corrected.
I don't blame them for trying, but I think it will end in tears. I think the lesson that the oligarchy learned in 1929 was that it is important to shift all market risk to the general public before running out the door. So to that extent I believe Kim's anaolgy is 100% correct. Management is watching the cracks grow and doing everything within their power to keep the financial architecture together until most of the oligarchs who profited are clear of the mess. At that time, Ben will start raising interest rates, and not a minute earlier.
Yes that is what the ruling class is trying ,but they only way they can pull it of is in a closed loop system like north korea. So if you see the government trying to stifle communications then you know why, because in that scenario you must have a great communication system with no truth leaking in ala the internet etc. So then the only thing they are left with is to have many many cheerleaders out shouting any sane people who would point out that the cracks are so big we can see the Emperors nether regions :) . All they have is Bluff, i know that people in my area stopped trying to even sell cars or lawn mowers when the crash came and they didn't seem to like to buy anything for awhile and now only necessities
James C: “So besides the government and bankers deliberately keeping people in the dark, why else do you think some, or even many, people believe the economy is recovering?”
I'm afraid your guy is something of an idiot. It is obvious why people believe the economy is recovering: THEY ARE STILL WORKING.
It should be clear now that people won't "wake up" to the problems with the economy until they themselves are unemployed. Apply that to the middle class, and you see the difficulty of the population "waking up:" MOST ARE STILL EMPLOYED.
It doesn't take a genius to realize why the propaganda sticks: MOST PEOPLE ARE STILL WORKING.
So, if you were the last human with a job in the entire USSA, you would say "the economy is recovering"?
!!! Wow !!!
I really liked the analogy in the article of the south korean dept. store. A pretty good telling of the current crowd psychology surrounding gold. I can also agree too, that the idea still has not really caught on with the public.
One poster mentioned putting 100% wealth in gold, but frankly I am a wimp that prefers some diversification, 50% is more comfy to me. No matter what goes down or comes up, I do not really lose. While I am not in any way affiliated, I do like goldmoney's website, since I can handle things electronically. Physical storage is a pain in the arse to me.
Sure, then diversify.
40% gold.
30% silver.
10% copper.
10% weapons and ammo.
10% other real, physical goods, seeds, farmland, etc.
But consider this. I've been 90%+ in gold, silver and junior PM producers for ten years. Everyone I know said I was crazy and they were too afraid to do the same, so they kept their savings in conventional stocks.
Overall, they are down, especially in real terms.
I am way, way, way, way, way up.
They still tell me they are too afraid.
Oh, well, at least they don't say I'm crazy any more.
@Romanko. Thanks for the link, much appreciated.
another classic from smartknowledgeu,
thanks a lot, keep the sage wisdom coming!
Well, I broke down and bought some silver yesterday. It was actually fun. The coin dealer had tons of very cool things including a tiny gold roman coin with Nero on it -- 900 bux. Very interesting! I did not get that one ;) though I was tempted...
My current theory is that the stock market is going to keep going up for a while, due to these POMOs (still nobody told me what that stands for, but I looked it up and it makes no difference, just more incomprehensible financial jargon - though I do see the word "permanent" in there...) and so I am going to invest in some of the same stocks that Harvard invests in. I looked up their SEC filing. Interesting. Like 3 US companies out of 100+. So much for the "balanced portfolio". It's India this, Brazilian that, telecom, telecom and more telecom. But I am going to decide on a percentage of profit on a regular basis to take if they go up, and put that into either PMs or art. I don't think the "rebalancing" idea that all the investment books tell you to do is good, because what's the point of having a lot of long term T bills if they are going to blow up in 10 years. Art.
Christies just sold a roman bust for far over estimate. I can't decide what to buy in art -- I know mostly contemporary but that is a crazy thing to invest in for the long term. So maybe antiquities. Have to investigate further.
You guys should think about art, too. Make a nice change from reading all those mystifying charts!
I collect ancient coins as well, and over the years I've narrowed down my buying from one dealer only, Frank Robinson, here's the link to his latest online auction:
http://www.fsrcoin.com/a.html
I highly recommend him.
Thanks! the coins really are fun.
buy the dips, like now, and sell the rips. But keep core in both, easy to say but not easy to do but long term, correct. That is why most fail, but this is so insane and he is spot on. Most people think I am nuts for my views.
AMZN PCLN, no thanks.
I have book-marked this article & added it to my favorites. I have also sent this article to all my friends who think that I am the nutty one who runs around begging people to buy food & silver (my friends & family are out shopping & planning cruises, I am stockpiling silver & foodstuffs!) . I really liked the article & admire the author's work. holiday regards to all my favorite people on ZEROHEDGE !!
I agree, lynnybee. The principle of self-reliance guides our family preparations. If SHTF, we're good. If it never arrives, our lifestyle still reflects the values of independence we cherish.
Didn't agree with JS about formal education, but this article is sound.
I would really like to see a nice big speed bump in gold - just so I can buy more of it.
.
You should probably ask JPM whether they have any financial friends scamming in gold.
who cares what JS KIM has to say. What does BANG DA HO has to say about the US economy?!
Just Look at the Numbers, you can just look away but at sometime you will have to wake up. The economy is falling and not that its great, but at least understand what is happening.
those 10yy chart of gold is outstanding.. COMPARE TO 70-80 chart..
compare to NASDAQ bubble of 2000.. point is
we all know all bubble usually ends in parabolics... ITS NOT WE OBSERVE KNOW..
alx
1% of your personal net worth should be more than enough PMs to hold.
Inflation won;t add more than 2 zeros to a currency overnight.
1% of your personal net worth, eh? And the rest in.... paper instruments? Promises to pay? From people, 99% (see your 1%) of whose net worth is in....paper promises to pay?
Come see me when you are burning your stock certificates to keep warm. I will be laughing.
Likelihood of the currency devaluing more than 2 zeros on the end is miniscule and if it does you won't want to be in that country. 1% is enough to keep your entire net worth consistent enough to leave the country and set up elsewhere. 25% is way too much.
Say you're net worth is $100k, you hold 1% in gold $1k.
The currency is devalued by 2 zeros overnight. Your paper money is now worth $1k but your gold is suddenly worth $100k = same amount.
What about only a 1:10 devaluation? Then your gold = 10K and your other assets = 9.9K.
Just to share this with the ZH readership: my family has 80% of our wealth in PM's, 20% in paper. Because we started buying PM's early in the bullmarket, their current prices seem high only because our cost basis is so low. Still, we're regular buyers.
Kim's analogy is real to me. I see the cracks. I hear the groans. If no collapse comes, fine. But in the meanwhile, we're living deliberately. As someone once said, owning 100 ounces of gold in any age has never made a man poor. And as part of a broader lifestyle choice, we're guided by this insight.
Yes but one zero will pretty much wipe out any gains would realize by holding overpriced paper..
JS might brush up on his math
SPX up +86% from its lows, not 36.79%
http://stockcharts.com/charts/gallery.html?s=spx