However controversial this might sound to you dear reader, this article sums up the handwriting on the wall - no sugar coating. Follow Bob Chapmans references down the rabbit hole at your own risk. I don’t really care for the conspiracy stuff anymore even though I have my fair share of insights. This blog is about how to prepare yourself in times of change as well as explaining the lies of financial media in simpler terms - not so much about the conspiracy you inevitably find doing research. Thing are happening, knowing about why is secondary. Knowing how to act to protect you purchasing power is primary.
Most observers discuss Europe’s problems and the plight of the euro, pound, and the Danish and Swedish koronas. They believe these European currencies will plunge lower versus the dollar and that the dollar will maintain, even after a dollar rally from 74 to 81 on the USDX. As we have said before the euro was unnatural creation born of a desire to usher in a world currency. As we shall see in the future the euro will fail. In spite of that the dollar is certainly no bargain, because next year America will be totally bankrupt. As a result of the terrible conditions among currencies, gold makes great gains. Last year and so far this year gold is up 10% to 24% against many major currencies. This kind of action of course proves again that gold is the world’s strongest currency. We might add here that we believe that it is only a matter of time before the LBMA, or Comex, or the ETFs, GLDs and SLVs are enveloped in scandal. As so often has happened in history fiat currencies have collapsed. Thus, it will happen again. Those of you not in gold and silver related assets will lose most of what you have worked for your entire lives.
Like I said, no sugar coating, from Bob Chapman of The International Forecaster.
What is the difference between the State of California and the State of Greece? The State of California is a bigger bankruptcy… The financial industry is at war with Greece. The CDS-attack (Credit Default Swaps, an off-the-counter derivative) is a nuclear financial attack on Greece.
In part 2, Jim Sinclair talks about Quantitative Easing, hyperinflation and the coming One World Currency of the IMF and a de facto financial One World Government.
The interview ends with Jim Sinclair concluding:
“Be prepared! This is a great civilization change. The most positive thing you can do is to recognize what is out there. The greatest contribution you can make to your family is to be prepared. So when all of this happens, you already have things in place: plans as of what you can do.
…We are not trying to scare anybody or trying to sell anything. We are simply saying, this is the hand writing on the wall. This is what’s most likely going to happen. In order to prepare you have to look at your financial and physical situation. You have to se weather or not this is a really great and significant shift in world history.
…The entire purpose of all this is preparation, because the truth will set us free.”
That last statement is at the core of why I have this blog. The world is changing. If you want to protect the purchasing power of your savings from the devaluation of the printing press - buy gold. If you want to stimulate your mind and stay a head of the game, keep reading, listening and watching. Stay tuned…
Today Bloomberg quoted Romano Prodi, the former European Commission President and the former Italian prime minister:
“For Greece, the problem is completely over.”
“I don’t see any other case now in Europe. I don’t think there is any reason to think the euro system will collapse or will suffer greatly because of Greece.”
So yesterday everyone was concerned about the huge soverign debt of Greece, Portugal, Spain, Italy etc, and today the problem is gone? I advise you, dear reader, to read between the line and consider this as Orwellian doublespeak. This is what Jim Sinclair calls MOPE, Management of Perception Economics. This statement is to me the best evidence to date of the seriousness of the Greek cricis.
I got a question from a friend today and I thought I’d share it with you here on my blog:
Question: The value of the dollar has gone up recently and it seems to be holding steady. Why is that so?
My short answer is this:
First, the derivatives and equities markets are highly leveraged. This means that fund managers borrow cash, with stock or other assets as collateral, to buy even more stock.
The more they borrow the worse their credit rating gets and the more interest they have to pay on their loans, their “leverage”. How do they get a better credit rating? They call AIG and purchase a “credit default swap”, insurance from defaulting on loans, and they borrow even more…
Now, when the value of the stock invested fall, they get a “margin call” from the bank or institution that provided the borrowed cash. This means that the fund manager by contract is forced to sell.
The loan for the cash is taken in USD, but the stock bought with the cash is often purchased on a stock exchange outside the US in the currency of that market. When the stock is sold, due to the margin call, this sale is also done in the local currency. But since the loan is denominated in USD the fund manager first have to sell the local currency and buy back USD to pay back the loan to the issuing institution (paying back the loan is called “deleveraging”). This creates a temporary demand for USD which causes it to go up compared to the local currency.
Also, the second point to be made is that US government bonds are considered to be a “safe haven” in times of turmoil. This is because the USD is still the preferred reserve currency of central banks. This is about to change as inflation kicks in due to the expansion in the money supply and the mega borrowing from the Fed. When the deleveraging is over, and the central banks around the world realize that the USD is no longer a safe haven, the USD will drop like a stone – game over. The other currencies will then shortly after collapse as well. Only gold and silver will preserve your purchasing power at that point.
In late 2009/2010 the USD has been rising again. This is caused by the massive short on the Euro in connection to the crisis in Greece. The financial industry will hammer the Euro, Sterling and eventually the USD again. Remember, all fiat paper will go down to its true value Zero. It’s not how high gold will go, it’s how low paper will fall.
Adrian Douglas of GATA.org just released an incredibly well researched article on the current inventory levels of the COMEX for both gold and silver. According to his paper gold inventory levels have decreased by 41% for gold and 24% for silver in just 6 months! At current reported inventory levels the COMEX will default on delivery of physical metal in 8,5 months for gold and 18,8 months for silver!
At no time in history has it been this important to own physical metal in your own possession and not paper promises. Gold and silver are money. The only real money that are no-one else’s liability. When the COMEX goes bust gold and silver will head for the moon and beyond.
The article concludes:
Investors should make sure they own physical bullion and not a paper substitute. When the music stops, and it looks like it could be soon, paper promises will not be honored with bullion. When a shortage becomes obvious to investors the price of bullion will be multiples of its current price. But those holding paper promises will not benefit. At best they will be paid in fiat currency and probably after months or years of legal wrangles, and most likely at the price on the day of default, not at the price on the day of settlement. Why accept anything but physical bullion?
The Chinese continue to move out of the US fiat paper currency and into real money, gold. India purchased 200 tones last year. As the saying goes “he who owns the gold makes the rules” this furthers the process already in the making for decades - the financial center of the world will move from the US to China and Asia. http://english.pravda.ru/business/finance/25-02-2010/112369-china_gold-0
Wherever we look at the world economy today, we see a wall of risk…and potential financial catastrophe. We see a large number of virtually bankrupt major sovereign states (US, UK, Spain, Italy, Greece, Japan and many more) teetering atop a financial system that is bankrupt, but is temporarily kept alive with phony valuations and unlimited money printing. Increasingly, therefore, investors will want to exchange this funny money for gold.
A smart investor with influence spreads one rumor and does the opposite - that’s how markets are played. Like when Nathan Mayer Rothschild took control of the London Stock Exchange in 1815 when he had prior knowledge of the defeat of Napoleon. Here is Max Keiser on George Soros now infamouse statement that “Gold is the ultimate bubble”. Soros has since that statement at Davos doubled his gold holdings.
Great interview with Marc Faber. FT.com really lets Faber talk in this 4-part interview giving him the chance to go into more depth than he is usually allowed to in F-TV interviews. Video on FT.com
Johnny Mellgren is a Swedish entrepreneur with a keen interest in macro economics and macro politics. This is his web site where he blogs about the economic collapse of our time, what to do about it and the economic future we create together. Contact Johnny Mellgren.
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I provide advice on investment portfolios for private and corporate clients. I also hold lectures in the history of money and the current economic collapse and how to protect your wealth in a time of transition.
