The Elites Are Privately Warning About A Crash

Authored by James Rickards via The Daily Reckoning,

Many everyday citizens assume powerful global financial elites operate behind closed doors in secret conclaves, like the scene of a Spectre board meeting in the recent James Bond film.

Actually, the opposite is true. Most of what the power elite does is hidden in plain sight in speeches, seminars, webcasts and technical papers. These are readily available from institutional websites and media channels.

It’s true that private meetings occur on the sidelines of Davos, the IMF annual meeting and G-20 summits of the kind just concluded. But the results of even those secret meetings are typically announced or leaked or can be reasonably inferred based on subsequent policy coordination.

What the elites rely on is not secrecy but lack of proficiency by the media.

The elites communicate in an intentionally boring style with lots of technical jargon and publish in channels non-experts have never heard of and are unlikely to find. In effect, the elites are communicating with each other in their own language and hoping that no one else notices.

Still, there are some exceptions. Mohamed A. El-Erian is a bona fide member of the global power elite (a former deputy director of the IMF and president of the Harvard Management Co.). Yet he writes in a fairly accessible style on the popular Bloomberg website. When El-Erian talks, we should all listen.

In a recent article he raises serious doubts about the sustainability of the bull market in stocks because of reduced liquidity resulting from simultaneous policy tightening by the Fed, European Central Bank (ECB) and the Bank of England.

He says stocks rose on a sea of liquidity and they may crash when that liquidity is removed. This is a warning to other elites, but it’s also a warning to you.

But it’s not just El-Erian who’s sounding the alarm…

You’ve heard the expression “the big money.” This is a reference to the largest and most plugged-in investors on Earth. Some are mega-rich individuals and some are large banks and institutional investors with a dense network of contacts and inside information.

At the top of the food chain when it comes to big money are the sovereign wealth funds. These are funds sponsored by mostly wealthy nations to invest a country’s reserves from trade or natural resources in stocks, bonds, private equity and hedge funds.

As a result, sovereign wealth fund managers have the best information networks of any investors. The chief investment officer of a sovereign wealth fund can pick up the phone and speak to the CEO of any major corporation, private equity fund or hedge fund in the world.

Among sovereign wealth funds, the Government of Singapore Investment Corp. (GIC) is one of the largest, with over $354 billion in assets. So what does the head of GIC say about markets today?

Lim Chow Kiat, CEO of GIC, warns that “valuations are stretched, policy uncertainty is high” and investors are being too complacent.

GIC allocates 40% of its assets to cash or highly liquid bonds and only 27% of its assets to developed economy equities.

Meanwhile, the typical American small retail investor probably has 60% or more of her 401(k) in developed economy equities, mostly U.S.

But it may be time for everyday investors to listen to the big money. They are the ones who see financial crashes coming first.

The bottom line is, a financial crisis is certainly coming. In my latest book “The Road to Ruin,” I use 2018 as a target date primarily because the two prior systemic crises, 1998 and 2008, were 10 years apart. I extended the timeline 10 years into the future from the 2008 crisis to maintain the 10-year tempo, and this is how I arrived at 2018.

Yet I make the point in the book that the exact date is unimportant. What is most important is that the crisis is coming and the time to prepare is now. It could happen in 2018, 2019, or it could happen tomorrow. The conditions for collapse are all in place.

It’s simply a matter of the right catalyst and array of factors in the critical state. Likely triggers could include a major bank failure, a failure to deliver physical gold, a war, a natural disaster, a cyber–financial attack and many other events.

The trigger itself does not really matter. The exact timing does not matter. What matters is that the crisis is inevitable and coming sooner rather than later in my view. That’s why investors need to prepare ahead of time.

The new crisis will be of unprecedented scale. This is because the system itself is of unprecedented scale and interconnectedness. Capital markets and economies are complex systems. Collapse in complex systems is an exponential function of systemic scale.

In complex dynamic systems that reach the critical state, the most catastrophic event that can occur is an exponential function of scale.

This means that if you double the system, you do not double the risk; you increase it by a factor of five or 10.

Since we have vastly increased the scale of the financial system since 2008, with larger banks, greater concentration of banking assets in fewer institutions, larger derivatives positions, and over $70 trillion of new debt, we should expect the next crisis to be much worse than the last.

For these reasons the next crisis will be of unprecedented scale and damage.

The only clean balance sheet and source of liquidity left in the world will be the International Monetary Fund, which can make an emergency issuance of Special Drawing Rights, which you can think of as world money.

Countries around the world are acquiring gold at an accelerated rate in order to diversify their reserve positions. This trend, combined with the huge reserves held by the U.S., Eurozone and the IMF amount to a shadow gold standard.

On the level of the individual investor, losers will fall into two groups when the next crisis strikes…

The first are those who hold wealth in digital form, such as stocks, bonds, money-market funds and bank accounts. This type of wealth is the easiest to freeze in a panic. You will not be able to access this wealth, except perhaps in very small amounts for gas and groceries, in the next panic. The solution is to have hard assets outside the digital system such as gold, silver, fine art, land and private equity where you rely on written contracts and not digital records.


The second group are those who rely on fixed-income returns such as life insurance, annuities, retirement accounts, social security and bank interest. These income streams are likely to lose value, since governments will have to resort to inflation to deal with the overwhelming mountain of debt collapsing upon them.

The solution to this is to allocate 10% of your investable assets to physical gold or silver. That will be your insurance when the time comes.

Meanwhile, demand for secure vaulting space in major financial centers like London and Frankfurt is soaring. There are plenty of bank safe deposit boxes in those cities, but investors are insisting on non-bank vaults because investors understand that the banks cannot be trusted in a panic. As a result, proprietors of non-bank vaults can’t build them fast enough.

This is one indicator that reveals three important facts. The first is that investors feel a panic may be near and the time to act is now. The second is that investors don’t trust banks. And the third is that investors are buying gold to protect themselves since that’s the main tangible that people put in their private vaults. Don’t wait until the panic hits to secure your gold and make arrangements for safe storage.

The time to act is now.


Four chan c2nnib2l Tue, 07/25/2017 - 14:37 Permalink

to an unhinged leftist."the unhinged left is controlled by the assassins of trump. let us know when you are feeling its ok to murder trump because that's when your controllers are going to do it. this will be a great trading opportunity. i think the left will murder trump when they feel the psyops against the unhinged left (fake news is the psyops against these types cnn programs them) isn't working to the extent it triggers a random to kill trump. when they get tired of waiting the deep state will take matters into their own hands and kill him kennedy style, ending the last hope this republic has to be free. your own anti trump brainwashing will be very helpful to us in trading this market killing event. "

In reply to by c2nnib2l

Manthong Four chan Tue, 07/25/2017 - 14:43 Permalink

 “secure vaulting space in major financial centers like London and Frankfurt”  Hmm… Let’s see… If I was an evil totalitarian government masquerading as a democratic and/or socialist authority, in a crisis what might be the first facilities I would lock down and empty for the good of the state and to provide an orderly environment?
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And Charlie Gard was not allowed to leave London why?  

In reply to by Four chan

Mr 9x19 shizzledizzle Tue, 07/25/2017 - 18:23 Permalink

 What is most important is that the crisis is coming and the time to prepare is now. It could happen in 2018, 2019, or it could happen tomorrow. The conditions for collapse are all in place.The exact timing does not matter. What matters is that the crisis is inevitable and coming sooner rather than later in my view. That’s why investors need to prepare ahead of time.  i disagree simply because just like any vampire who has tasted the blood you cannot pass on it. it is a drug, the system is so interconnected now and all have put faith  and even mislead the masse to force em to believe all is good, recovery time, they will make all to prevent a crash. the autor talk about a war as trigger,  he must be blind cause there is an economic war for decades. and usa is 17 years in afghanistan, so to me, it is brave new world, take SOMA and get loaded as fuck to fly like a plane until you land on your TV program.nothing to be changed, at least, until the technology really comes into play and mess with some billions souls function.

In reply to by shizzledizzle

ShorTed Liber Hater Tue, 07/25/2017 - 14:21 Permalink

They've called 27 of the last 0 crashes accurately.  Always "the big one" is right around the corner.  Buy VIX!  Dump Stocks!  Short Bonds!  Bitcoin Crashes!  Gold plunges!  Auntie Em, Auntie Em!eventually they're gonna be right but the amt of $ left on the table by any schlub following that advice would choke a whale.

In reply to by Liber Hater

dark fiber Babs.St.Louis Tue, 07/25/2017 - 15:12 Permalink

Neither.  They are terrified of a real crash they cannot control, they know it is a certainty the way central banks have fucked things up and what they are debating is in fact the timing of the crash, thinking they can profit from it.  Because they are that stupid.  They thing they are above the system when in fact they are the system that is going to crash no matter what.

In reply to by Babs.St.Louis

order66 Tue, 07/25/2017 - 13:56 Permalink

"Most of what the power elite does is hidden in plain sight in speeches, seminars, webcasts and technical papers."Yeah, if you're like John Nash in the movie A Beautiful Mind - which is excatly what all these paranoid conspiracy nut authors that dominate ZH are.

order66 Tue, 07/25/2017 - 14:00 Permalink

"But it may be time for everyday investors to listen to the big money. They are the ones who see financial crashes coming first."3 words: 2008 Financial Crisis.The so called Big Money didn't know shit and had to get themselves into "me too" trades when they realized how stupid they'd been.

Teja order66 Tue, 07/25/2017 - 16:16 Permalink

Many big money people are INHERITED big money. Their grandfather was a quite clever guy. They maybe not, they have paid advisors who don't need to be clever, for the day business at least. They won't be able to see financial crashes coming. But they might not need to.I believe the way Old Money is kept stable and growing is by investing in things which basically can't crash - forests, land, conservative real estate, conservative companies. New Money (especially the sports variant) invests in more risky things, with their investors making a cut - see Boris Becker, the tennis star who is now more or less broke.

In reply to by order66

Mr Perspective Tue, 07/25/2017 - 14:11 Permalink

Until folks realize that this is nothing but a game for the "elite" they will continue to fall for the communications that they are indeed making in plain sight. Their "intentionally boring" comments like "valuations are stretched, policy uncertainty is high”, "the next crisis will be of unprecedented scale and damage" and "the time to act is now" are just a few of the constant reminders that they believe you are just a another pawn in their game. Participation is optional. The choice is yours.

Winston Churchill Tue, 07/25/2017 - 14:12 Permalink

I suspect when the great retribution comes, any American trying to claim anything, in private storage oranywhere else, will be in for a rude awakening.I saw firsthand what happened to one unlucky American in Jalalabad in the 70s.The crowd weren't interested in waiting on legal process, he mey have been CIA, but probably not.Once SHTF all bets are off. 

GunnerySgtHartman Tue, 07/25/2017 - 14:19 Permalink

I've been telling friends and family for over a year that a big crash is coming.  Most of them have ignored me.Meanwhile, demand for secure vaulting space in major financial centers like London and Frankfurt is soaring.Doesn't matter if it's in a bank or a private vault - if you can't hold it, you don't own and control it.  Does anyone really think that a private vault is going to throw open its doors to its customers in a SHTF situation???

Dirtnapper GunnerySgtHartman Tue, 07/25/2017 - 15:12 Permalink

I don't think it is going to be "A" crash, but a series of crashs as the dollar being accepted as the reserve currency (Petrodollar) implodes.  Best case we are looking at 2 years of hell but even 5 years would be acceptable vs 10-15 year Depression.  I do love my AG, but I'm stacking cryptos because it's what they are doing in Asia. Asia is the dominate world economic power house for the rest of this century and we better get use to it.According to #webbot, window opens Aug 15th - November for SHTF.   

In reply to by GunnerySgtHartman

The Real Tony Dirtnapper Tue, 07/25/2017 - 18:08 Permalink

As daily trading volumes dry up and everyone knows the sytem is 100 percent rigged the central bankers know their days are numbered and will unload everything amass tripping every circuit breaker known to mankind and some mankind hasn't even seen yet. The markets will reopen 2 weeks to a month later some 50 to 60 percent lower upon reopen and the suckers that buy the dips will be wiped off the face of the Earth.

In reply to by Dirtnapper