With deception in the mainstream financial media reaching
new heights regarding the recent rallies in Western stock markets, it’s time to
shed some light on this matter. The first rule of building wealth is that your
gains have to outpace the rate at which Central Bankers depreciate the currency
in which your asset is denominated. Otherwise you end up with more money in you
account but no better standard of living. For example, if your investment
adviser tells you that his or her goal for you this year is 8% returns, if
Central Bankers have depreciated your currency by 15% this year, then
fulfilling his/her goal actually results in a 8.2% destruction of your wealth,
exclusive of tax consequences.
Even though every investment veteran, sans the most naïve of
the naïve, understands that the US stock market has been rigged higher for the
past two years solely through free market interference by politicians and Wall
Street elements, what if these rigging games continue and the Central
Banking/government cartel successfully rigs the DJIA and the S&P 500 higher
by another 30%? Those still naively invested in the broad US stock markets
should be ecstatic because of the fact that their accounts now hold 30% more
paper money, right? Wrong. In 2007, the Zimbabwe Industrial Index soared 545%
and at one point, on a 12-month rolling period, was up more than 12,000%!
However, Central Bankers in Zimbabwe would probably not care to reveal that the
unemployment rate during this stock market “boom” was also an astounding 80%.
But this is the trick that Central Bankers use to fool those
that don’t understand how the monetary system works. Central Bankers can
actually rig the stock markets to return a greater absolute amount of dollars
(or Euros, or Yen, or Pound Sterling or Yuan) and a significant positive return
in nominal terms, that in actuality, may contribute nothing to or may even
decrease your REAL net worth.
So let’s put this into pictures. Below I’ve reproduced three
charts for you. The returns of the S&P 500 priced in the fake monopoly
money of US dollars since its bottom on March 6, 2009 and the returns of the
S&P 500 priced in what I consider to be the only two REAL forms of money
today, gold and silver. When priced in US dollars, the gains of the S&P 500
are an enormous 76.68% since March 6, 2009. Not so fast though. Price the gains
of the S&P 500 in gold and more than 55% of those gains disappear. Against
gold, the S&P500, despite the daily rigging games of the government/banker
cartel, has only managed to rise 21.64% since March 6, 2009. Price the gains of
the S&P 500 against silver since March 6th, and not only does every single
percent of the 76.68% gains disappears, but it actually astonishingly loses
The moral of the story? Beware of Central Bankers bearing
big bags of paper money as gifts. It’s not the amount of money you own that
counts or your nominal returns that matter. All investors should be fixated
upon only REAL returns (adjusted for REAL inflation, not official government
inflation rates which are never correct) and the purchasing power of their
money, not how much of it they have.
About the author: JS Kim is the Managing Director of SmartKnowledgeU, a fiercely independent investment research & consulting firm dedicated to exposing the fraud of the mainstream investment industry, helping the everyday retail investor earn real gains, and uncovering the best ways to invest in gold and silver.