- The sovereign debt crisis is revealing what fiat currencies really are: A Con-Job! Smart money are dumping Euros, UK Pound and Yen for gold. You cannot debase gold ! Gold is accepted worldwide as money. We are heading towards a global financial, economic and monetary meltdown in about 12 months! Bob Chapman writes:
America and the world face a financial conflagration of immense proportions. The world of fiat money and massive credit is buckling under the pressure of unpayable debt. Each day the safe haven of gold and silver related assets become more attractive. We ask where else do you go for safety? A conflagration is a fire out of control and that is exactly the conditions the world faces today. The inflationary depression has smoldered for 14 months and it will soon accelerate.
For the last 15 years the world has lived far beyond its means especially the US, UK and Europe and as we all know that cannot continue indefinitely. The federal government continues to hire when it should be firing. Having lost 80% of our industrial base we struggle in a service economy that cannot service 300 million plus people, never mind supply exports to offset the cost of imports that we no longer manufacture. We now supply indefinite unemployment benefits, which in reality cannot go on forever. The fiscal debt spirals ever higher and the Fed creates money and credit with no end in sight, which devalues the dollar. Taxation on individuals and businesses continues relentlessly higher. This is the way of corporatist fascism. This is now the way of America.
In Europe we see the manifestations of years of reckless spending in Greece., a nation that will have to be bailed out by the IMF and other European countries, especially by Germany that holds much of the worthless bonds issued by Greece. Greek bonds are now yielding 17%. Such a premium will not save the economy. The debt service is unpayable. Greece should leave the euro zone; reissue the drachma and default, now. Their position is untenable. We said this on Athens International, French International, BBC worldwide and Deutsch Welle radio a few weeks ago. The Greeks certainly are not blameless, but 80% of the blame lies with the bankers. The outcome is Inevitable, whether it’s now or 1-1/2 years from now. These problems affect all euro zone nations and all will suffer accordingly. For the time being most of the damage to the euro is over, but in time the euro will break up, probably in the next two years. As a result official EU unemployment will hit 14%.
We do not believe the powers that be want Greece to bite the dust just yet, as we pointed out previously. We believe they envision a simultaneous collapse of many nations and multilateral devaluation and debt default. This is their style. This way they believe they can control things and cover up one of the biggest transfers of wealth and power in history. The elitists expect to then usher in world government, as they create another world war.
Those who recognize what the elitist plays are can safeguard their assets and perhaps become very wealthy in that process. Those who ignore the signs and warnings are doomed to lose most everything. Political solutions won’t work now and they won’t work later.
The life of the euro zone and the EU, which consistently have been wrong, at least for now, are trying to make us believe all is well. All is not well. We are told over and over again the crisis won’t spread and it will spread and is spreading. Borrowing costs are already rising in Portugal, Spain, and Germany and throughout Europe.
The euro zone is in jeopardy as Greek contagion affects Portugal and Spain. Sovereign debt is the new subprime paper. We could perhaps see a domino effect as bond yields use in the weaker countries and eventually spread to the stronger European countries, and to the UK and US. The problem will eventually affect the entire world if it rolls out that way. Such a situation could cause a crisis of confidence, which would most certainly drive gold and silver prices higher. Bond markets would already have been affected and world stock markets would be falling. We are perhaps seeing that already with a topping in the US and European equities suffering their largest losses this year. In Europe, Greek bond losses are onerous. A bailout of Greece will probably come and their debt rescheduled. If the bailout doesn’t come watch out. The fallout of a Greek default, the exit from the euro, and the reintroduction of the drachma could force the other 18 nations in trouble to the edge if not into insolvency. These ideas are what we expressed this week in an interview with Greece’s largest newspaper. In addition we could see the dumping of PIIGS bonds and stocks. This could cause major losses and freeze markets. It could also lead to the demise of the euro zone and deeply damage the EU. Another unexpected outcome could be the withdrawal of Britain from the EU followed by the imposition of tariffs on goods and services by the UK, which would be followed by the US.
Another aspect to the Greek problem is that rating cuts are going to force Greek banks to post more collateral, which would force them into a liquidity trap and that could spread the contagion through the global financial system. If more collateral is not forthcoming the banks’ bonds would be downgraded. This also could cause Greek banks to sell assets, putting more pressure on an already weak system. Is it no wonder that gold and silver prices are rising?
In spite of all this the euro zone has the fiscal capacity to backstop banks within the region and to support the PIIGS. The question is will they? Germany seems to be in no hurry to do so. Greece needs loans or to float bonds in the amount of $350 billion over the next five years, which is a tall order. The present approach is to solve this year’s problems of some $80 billion, but bondholders are looking out five years. They are saying to themselves what is going to happen next year and up to five years from now. One good thing is if the Greeks stay in the euro zone they cannot monetize debt away and ruin bond values. Seventy percent of Greeks oppose dealing with the IMF, or accepting loans from the EU. We ask then what do they propose? This is why many investors are throwing their hands in the air and opting to buy gold throughout Europe. No matter which way Greece takes gold is really the only good hedge against a devaluing euro. Gold is not only a hedge against the euro, but also against commodity inflation. A recovery, if it did take place in Europe, would cause higher inflation as well. Causing conflict on the inflation issue is the ECB’s opinion that there is no inflation, when even officially there is. Germany had best not press Greece too hard, because if Greece leaves the euro it would rock global markets. We believe a deal will be done and that will temporarily solve the problem, perhaps for 1 or 1-1/2 years. That is when all the financial derelicts will be taken down together.
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- The smart money are moving into gold away from fiat currencies. You should do the same before the sheeple awaken and the stampede starts. CNBC reports:
Investors with Euro denominated holdings are moving out of currencies and into gold, says Alex Barrett, head of client research at Standard Chartered.
- Eric King of KingWorldNews.com writes:
Eric King: This statement from Alex Barrett says it all, “Gold in Euros is at record highs and I think that people not just in Europe but across the world are losing faith in a lot of the fiat currencies and are actually heading towards real assets.” This is exactly the kind of thing you would expect to see in phase II of this secular bull market in gold. Big money flows into hard assets including gold and silver and also more institutional involvement. Contrarians may worry that gold is getting on more investors radar screens but this is simply the nature of bull markets.
Phase II of secular bull markets are longer than phase I so it will most likely go on for years before the manic phase III begins. Alex Barrett also remarked about the flow of funds, “…and that’s going to continue until we see this loose monetary policy start to get tightened up, so until then just keep investing.” Well there you are, we do not expect tight monetary policy just jawboning so the flow of money into both gold and silver should continue and accelerate for years which is supportive of a long phase II leading into the final crescendo of phase III.
If you understand the 3 stages of a secular bull market it makes it much easier to hold on during the reactions or shakeouts. Seasoned investors always look to accumulate during major corrections inside of secular bull markets because the wind is at their backs longer-term. For those who have a hard time buying during the major drawdowns they can simply use James Turks advice which is to dollar cost average by making purchases each month. This is sound advice from James and it helps remove emotion for some investors. The most effective way to make money in bull markets is simply to buy and hold, this is a fact but it requires tremendous patience.
South Korean President Calls Up Top Commanders to Discuss Security! Defense Minister Vows Retaliation for Cheonan Sinking !
- The chess pieces are being setup for a Korean war. It will in all likelihood be nuclear. This is but another piece in the World War 3 end game. North Korea has denied involvement in the sinking of the war ship Cheonan. If not North Korea than who did it? There is a distinct possibility that this is an Illuminist engineered false flag event to ignite war in the Korean peninsula. It will allow massive deployment of US (nuclear) forces in South Korea. The ultimate chess move against China. In war, it is always about deception and deflection to keep your enemy off guard.
- China itself ain’t dumb, their naval (submarine) forces have been spotted close to Okinawa. The site of US military bases. Quite obviously on a recce mission. China has enough economic might to break the Illuminist central banking and fiat currency hegemony. Most of Asia will align themselves to China should China seek to part ways with the western Illuminist financial and economic hegemony.
Japan says Chinese submarines, ships seen near Okinawa
(April 14, 2010) Japan’s defense minister said yesterday that Tokyo was investigating an incident in which two Chinese submarines and several warships were spotted in international waters off the southern island of Okinawa.
“We are now conducting a detailed analysis, and will decide on our response after a thorough investigation, including whether there was any intent toward this country or not,” Japanese Defense Minister Toshimi Kitazawa said.
President calls up top commanders to discuss security
Emergency meeting is the first of its kind called by the head of state.
For the first time in the 62-year history of Korea’s military, a president will chair an emergency meeting of top commanders to discuss the national security crisis prompted by the sinking of the Navy warship Cheonan near the inter-Korean border.
About 150 commanders from the Army, Navy and Air Force will attend the meeting with President Lee Myung-bak tomorrow, according to Blue House spokesman Park Sun-kyoo.
“President Lee will discuss the task that the Cheonan’s sinking has put before our people and military, and reveal his position as the chief commander of the armed forces,” Park said.
Defense Minister Vows Retaliation for Cheonan Sinking
Defense Minister Kim Tae-yung on Sunday threatened North Korea with retaliation if it is found to have been behind the sinking of the Navy corvette Cheonan on March 26. “Retaliation — whatever form it takes — must be done,” Kim said on KBS TV. The possibility of a vicious cycle of retaliation “must clearly be considered,” he said.
The minister was echoing Chief of Naval Operations Adm. Kim Sung-chan’s pledge during Thursday’s funeral for the 46 sailors killed in the shipwreck that whoever caused the tragedy would not be forgiven and get away.
“We must investigate the exact cause of the shipwreck to the last. And I think those responsible for killing our soldiers must pay the price,” Kim said.
Former U.S. Forces Korea commander Burwell Bell, meanwhile, called for strict blockade measures if North Korean involvement in the sinking of the Cheonan is proved.