"In the rest of the world and particularly Asia, people do not think like we do. As far as they're concerned, gold is the only long term asset worth holding. It is the family pension fund... the financial press in the West, the mainstream media, basically rely for their information on analysts in the bullion banks. And the bullion banks are always short... Now whether the West is right or wrong is not the point. The point is there are 4 billion people in Asia who have got a very old-fashioned view of gold, and they have become wealthy over the last twenty years. And their view is likely to prevail against the <1 billion of us in North America and Western Europe. I mean it really is as simple as that. It's not a question of Austrian economics, or Keynesian, or whatever. We're outnumbered."
The reasons to hold gold (and silver), and we mean physical bullion, are pretty straightforward. So let’s begin with the primary ones:
- To protect against monetary recklessness
- As insulation against fiscal foolishness
- As insurance against the possibility of a major calamity in the banking/financial system
- For the embedded 'option value' that will pay out handsomely if gold is re-monetized
The punch line is this: Gold (and silver) is not in bubble territory, and its largest gains remain yet to be realized; especially if current monetary, fiscal, and fundamental supply-and-demand trends remain in play.
According to the stock markets in the US and in Europe, the world’s economy is not just in good shape, but is in the best shape it’s ever been. The S&P 500 hit an intraday new record high of 1,858.71 on Feb 24, 2014, and is now 18.6% above the peak it hit in 2007, a moment everybody now recognizes was heavily overvalued. An almost 19% gain above the prior all time high is an enormous and unusual event. Surely, you are thinking, there must be an equally compelling story and loads of fundamental data to support such a bull market?
Well, there really isn’t.
Inflation is always somebody else’s fault. Ludwig von Mises called out finger pointing central bankers and politicians decades ago in his book, Economic Policy. “The most important thing to remember is that inflation is not an act of God, that inflation is not a catastrophe of the elements or a disease that comes like the plague. Inflation is a policy.” Don’t expect the printing to stop any time soon. Central bankers believe they are doing God’s work. “To ensure that my people survive, I had to print money,” Zimbabwe's Gideon Gono told Newsweek. “I found myself doing extraordinary things that aren’t in the textbooks. Then the IMF asked the U.S. to please print money. The whole world is now practicing what they have been saying I should not. I decided that God had been on my side and had come to vindicate me.”
Are fish from the Pacific safe to eat? What about the elevated background radiation readings detected in Japan, and recently in California? Are these harmful levels? Should we be worried? And if so, what should be done about these potential health threats? What steps should we take to protect ourselves? Fukushima-related fears have been both overblown as well as heavily downplayed by parties on each side of the discussion. Much of this stems from ignorance of the underlying science. But some of it, sadly, seems to be purposefully misleading. Again, on both sides. To assess the true risks accurately, you need to know about the difference between radiation and contamination. The distinction is vital and, unfortunately, one of the most glossed-over and misused facets of the reporting on nuclear energy.
The number of Americans that renounced their citizenship was 221 percent higher in 2013 than it was in 2012. That is a staggering figure, and it is symptomatic of a larger trend. In recent years, a lot of really good people with very deep roots in this country have made the difficult decision to say goodbye to the United States permanently. A few actually go to the trouble to renounce their citizenship, and that is mostly done for tax purposes. But most willingly choose to leave America for other reasons. Once upon a time, the United States was seen as "the land of opportunity" all over the globe and it seemed like everyone wanted to come here. But now that is all changing. As we have abandoned the principles that this country was founded upon, our economy has gone steadily downhill.
Argentina is a country re-entering crisis territory it knows too well. The country has defaulted on its sovereign debt three times in the past 32 years and looks poised to do so again soon. Its currency, the peso, devalued by more than 20% in January alone. Inflation is currently running at 25%. Argentina's budget deficit is exploding, and, based on credit default swap rates, the market is placing an 85% chance of a sovereign default within the next five years. Want to know what it's like living through a currency collapse? Argentina is providing us with a real-time window.
After five years of aggressive Federal Reserve and government intervention in our monetary and financial systems, it's time to ask: Where are we? The "plan," such as it has been, is to let future growth sweep everything under the rug. To print some money, close their eyes, cross their fingers, and hope for the best. On that, we give them an "A" for wishful thinking – and an "F" for actual results. If we take a closer look at the projections, the idea that we're going to grow – even remotely – into a gigantic future that will consume all entitlement shortfalls within its cornucopian maw becomes all but laughable. Of course, the purpose of this exercise is not to make fun of anyone, nor to mock any particular beliefs, but to create an actionable understanding of the true nature of where we really are and what you should be doing about it.
"The shale oil plays are going to be probably much less than a 10-year flash in the pan. They are very dependent on a lot of different things, including low interest rates and the ability to keep borrowing - which could turn around very quickly. Lower oil prices would tend to do the same thing. But even if you hypothesize that we can keep the low interest rates and that the oil price will stay up there, under the best of circumstances, the Barnett data says they probably will not go for very long... And so these companies put together optimistic financial statements that have the benefit of these extremely low interest rates. They keep adding debt onto debt onto debt. How long can they continue to get more debt to finance this whole operation? It's not a model that anybody who is very sensible would follow."
The Fed is busy doing everything in its considerable power to get credit (that is, debt) growing again so that we can get back to what it considers to be “normal.” But the problem is that the recent past was not normal. For the Fed to achieve anything even close to the historical rate of credit growth, the dollar will have to lose a lot of value. This may in fact be the Fed’s grand plan, and it’s entirely about keeping the financial system primed with sufficient new credit to prevent it from imploding.
Having watched Mike Maloney's "Secrets Of Money" series (Part 1, Part 2, Part 3, and Part 4 here), Chris Martenson discusses the critical aspects of the must-watch episodes. Crucially, as we enter a period of apparent Nirvanic equity markets (and dystopian 'real' economics), Martenson's points on the "unnecessarily complex monetary system" that we have today are summed up by his statement that "there is nothing more important that understanding how our money system operates... and why it will fail us."
Chris Martenson explains why it's easier to start than to stop quantitative easing: "A lot of what we hear is the Fed's exit strategy … what most people don't know is that this thing doesn't work in reverse very well at all." In this excellent interview with RT, Martenson explains why Bernanke & Co. found it relatively simple to start their money printing, but why they will have a hell of a time getting off the runaway QE train.
The basic predicament we are in is that the current crop of leaders in the halls of monetary and political power do not appear to understand the dimensions of our situation. The mind-boggling part about all this is that it's not really all that hard to grasp. Our collective predicament is simply this: Nothing can grow forever. Sooner or later everything must cease growing or it will exhaust its environs and thereby destroy itself. The Fed is busy doing everything in its considerable power to get credit (that is, debt) growing again so that we can get back to what they consider to be "normal." But the problem is -- or the predicament I should more accurately say -- is that the recent past was not normal.
Alasdair explains how his "Fiat Money Quantity" (FMQ) is derived, as well as what it can tell us about the true levels of fiat money supply. In the case of the dollar, it reveals that levels are far above what is commonly appreciated – so far, in fact, that a currency crisis could arrive sooner than even many dollar bears expect... and how horribly mispriced gold remains.
The sad, stark fact is that oil is now too expensive to permit further expansion of economies and populations. Expensive oil upsets the cost structure of virtually every system we need to run modern life: transportation, commerce, food production, governance, to name a few. In particular expensive oil destroys the cost structures of banking and finance because not enough new wealth can be generated to repay previously accumulated debt, and new credit cannot be extended without a reasonable expectation that more new wealth will be generated to repay it. Through the industrial age, our money has become an increasingly abstract and complex product of debt creation. In short, a society with deeply impaired capital formation has turned to crime, corruption, fakery, and subterfuge in order to pretend that “growth” — i.e. expansion of capital — is still happening.