Tag Archives: Precious Metals

Time To Say Goodbye to The Everything Bubble, by Egon von Greyerz

When one of today’s massively inflated bubbles pops, they all will. From Egon von Greyerz at goldswitzerland.com:

Will the autumn of 2021 be the end of the everything bubble?

Are investment markets very soon coming to the end of market insanity?

Since there is very little sanity left in markets or the in the world economy, we have now reached a point where we must accept madness as sanity, as George Bernard Shaw said:

When the world goes mad, one must accept madness as sanity; since sanity is, in the last analysis, nothing but the madness on which the whole world happens to agree.”

George Bernard Shaw

Investment markets today are all about instant gratification and getting rich quick.

“Stocks always go up” and so does property in the everything bubble. Even the normally boring bond market has had a 40 year rise. And then we have the supercharged tech stocks, many of which have gained 1000s of percent in this century

And we mustn’t forget the SPAC stocks (Special Purpose Acquisition Companies) or Blank Cheque Companies where shell companies are used to acquire existing companies to inflate their share price.

None of these things are new of course. During the South Sea Bubble in the 1720s for example, companies were formed and capital raised with just the purpose of “Making Money”.

We mustn’t forget the cryptocurrencies which are now worth valued at $2 trillion. They were just over $1 billion 8 years ago. Is that the bubble of the century like tulip bulbs in the 1600s or is it the money of the future. Well, most readers know or can guess my opinion on this!

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The funny-money game, by Alasdair Macleod

Eventually fiat-debt-blown bubbles pop, and down go bond, stock, and most other financial asset prices. One non-financial asset that will keep you in good stead will be precious metals. From Alasdair Macleod at goldmoney.com:

The sense of general unease that I detect among those I meet and discuss economics and financial matters with is increasing —with good reason. Clearly, what everyone calls inflation, rising prices or more accurately currency debasement, will lead to higher interest rates, threatening markets which are unmistakably in bubble territory.

The consequences of rising prices and interest rates are still being badly underestimated.

In this article I get to the source of the inflation problem, which is the monetary debasement of the dollar and other major currencies. An important part of the problem is that mathematical economists have lost sight of what their beloved statistics represent —none more so than with GDP.

I explain why GDP is simply the total of accumulating currency and credit which is wrongly taken reflect economic progress – there being no such thing as economic growth. Once that point is grasped, the significance of this basic error becomes clear, and the fiat currency paradigm is revealed for what it is: a funny-money game that will go horribly wrong.

There is only one escape from it, and that is to own the one form of money that is no one’s counterparty risk; the one form of money that always comes to humanity’s rescue when fiat fails.

And that is gold. It is neglected by nearly everyone because it is the anti-bubble. The more that people believe in fiat-denominated assets, the less they believe in gold. That is until their funny-money games implode, inevitably triggered by sharply rising interest rates.

Introduction

Those of us with grey hairs gained in financial markets can, or should, recognise that after fifty years the funny-money game is ending. Accelerated money printing has led to what greenhorn commentators call inflation. It is not, as they claim, rising prices: they are the consequence of the monetary expansion which was the original and remains the correct definition of inflation.

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The Death of Truth & the Rise of Centralized Government Control, by Matthew Piepenburg

Being criminal enterprises, governments destroy trust. From Matthew Piepenburg at goldswitzerland.com:

As I write this from a France making ever more bold moves toward forced vaccination, one can’t help but ponder the broader issues of centralized government control, regardless of one’s take on vaccine or no vaccine.

Focusing on financial rather than viral data, the evidence of centralized state control over natural market forces in the stock and bond markets is becoming increasingly incontrovertible.

We’ve written elsewhere about the death of logic and the madness of crowds. It should therefore come as little surprise that the death of truth is yet another casualty of the increased central control we are experiencing in global markets.

Debt Crisis Disguised as a Health Black Swan

Long before COVID reared its highly controversial head (from viral source debates, baby-with-bathwater policy reactions, censored science as to vaccine efficacy and safety, distorted math on infection rates vs death rates, and centralized government control by officials acting “for your own safety” vs. Constitutional and legal issues of individual choice), the global financia

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Don’t dismiss gold and silver… by Alasdair Macleod

After the fiat currencies collapse, which could be soon, they’ll be replaced by gold and silver-backed money, which would impose stringent fiscal control on free-spending and heavily indebted governments. From Alasdair Macleod at goldmoney.com:

There is worrying evidence that 2021 will see the end of fiat currencies, led by the US dollar. US dollar money supply has accelerated at an extraordinary rate, a process that will continue.

Signals from the markets that a monetary collapse is increasingly likely include a weakening dollar on the foreign exchanges, bitcoin’s price reflecting an growing disparity between the rate of its issue and that of fiat, rapidly rising commodity prices, and a bubble in non-fixed interest financial assets.

Current thinking is yet to link these events with a developing collapse in fiat currencies, but it is only a matter of a relatively short period of time, perhaps spurred on by a banking crisis, before a realisation that a John Law-style financial asset and currency collapse is on the cards.

While gold rose in dollar terms by 25% last year, it has yet to reflect an increasingly likely collapse in fiat currencies, which this article concludes is likely to happen in this new year.

Introduction

We enter the new year with a growing realisation that fiat currency debasement is accelerating. It is hardly surprising that bitcoin bulls, who have learned about relative rates of currency issuance, are in the vanguard of those hedging increasing currency debasement. They are being encouraged by statistics in charts such as that shown in Figure 1.
Screen Shot 2021 01 07 at 12.35.13 PM

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An unexpected systemic crisis is for sure, by Alasdair Macleod

If you don’t think a financial crisis is on the way, check the stock market valuations and the balance sheets of the global systemically important banks. From Alasdair Macleod at goldmoney.com:

Downturns in bank credit expansion always lead to systemic problems. We are on the edge of such a downturn, which thanks to everyone’s focus on the coronavirus, is unexpected.

We can now identify 23 March as the date when markets stopped worrying about deflation and realised that monetary inflation is the certain outlook. That day, the Fed promised unlimited monetary stimulus for both consumers and businesses, and the dollar began to fall.

The commercial banks everywhere are massively leveraged and their exposure to bad debts and a cyclical banking crisis is now certain to wipe many of them out. In this article we look at the global systemically important banks — the G-SIBs — as proxy for all commercial banks and identify the ones most at risk on a market-based analysis.

Introduction

In these bizarre markets, the elephant in the room is systemic risk — visible to all but simply ignored. This is partly due to everyone in government and central banks, as well as their epigones in the investment industry and mainstream media, believing our economic problems are only a matter of Covid-19. In other words, when the pandemic is over normality will return. But Covid-19 has acted like a conjurer’s distraction: it has deflected us from the consequences of Trump’s trade wars with China and the liquidity strains that surfaced in New York last September when the repo rate soared to 10%.

The liquidity strains and the severe downturn in the stock markets that followed earlier this year before mid-March have been buried for the moment in a tsunami of central bank money. Liquidity problems following last September’s repo crisis and the S&P 500 index collapsing by one third between 19 February and 23 March were a clear signal that the multiyear cycle of bank credit expansion had already peaked. Ever since the last credit crisis in 2008, the banks had recovered their lending confidence and expanded bank credit, a classic expansionary phase.

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Gold at $2k+. So why the fuss? by Alasdair Macleod

The bull market in gold reflects a bear market in fiat currencies. From Alasdair Macleod at goldmoney.com:

There appears to be no way out for the bullion banks deteriorating $53bn short gold futures positions ($38bn net) on Comex. An earlier attempt between January and March to regain control over paper gold markets has backfired on the bullion banks.

 Unallocated gold account holders with LBMA member banks will shortly discover that that market is trading on vapour. According to the Bank for International Settlements, at the end of last year LBMA gold positions, the vast majority being unallocated, totalled $512bn — the London Mythical Bullion Market is a more appropriate description for the surprise to come.

An awful lot of gold bulls are going to be disappointed when their unallocated bullion bank holdings turn to dust in the coming months — perhaps it’s a matter of a few weeks, perhaps only days — and synthetic ETFs will also blow up. The systemic demolition of paper gold and silver markets is a predictable catastrophe in the course of the collapse of fiat money’s purchasing power, for which the evidence is mounting. It is set to drive gold and silver much higher, or more correctly put, fiat currencies much lower.

This is only the initial catalysing phase in the rapidly approaching death of fiat currencies.
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“When No Man Has a Farthing…” by Jeff Thomas

Sell paper assets, buy real ones. Maybe wait a while after executing the former to execute the latter. From Jeff Thomas at internationalman.com:

economic collapse

Market cycles have existed since the advent of lending institutions. As far back as 2,000 BC, in Assyria, merchants provided loans to farmers and traders. Often, this created prosperity, with greater amounts of money passing from hand to hand with greater frequency.

Not surprisingly, the interest paid to the merchants inspired them to increase the amounts they would lend, again increasing prosperity.

But periodically, hard times returned and those who borrowed were unable to pay back the loans, leading to recessions.

Since at least the 14th century, rather than lending out gold and silver, goldsmiths in Europe issued letters of credit. Then, in the 17th century, fractional reserve banking emerged as a common practice.

The concept was that a bank might lend out the majority of its deposits, retaining a small percentage for day-to-day business. But for many banks, at some point, the temptation to lend out more in promissory notes than the bank actually had on deposit became too great.

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The Real Reason for the Shocking New Developments in the War on Cash, by Jeff Thomas

When cash vanishes so too will any vestige of financial privacy other than transactions in real money, i.e. gold and silver. From Jeff Thomas at internationalman.com:

war on cash

International Man: Australia has proposed a law that provides a $25,000 fine and two years in jail for those who make cash transactions of $10,000 or more. If passed, the Currency (Restrictions on the Use of Cash) Bill could be implemented in 2020.

Do you see this legislation as Orwellian?

Jeff Thomas: Oh, yes, very much so. The claim by the Australian government’s Black Economy Taskforce is that the law will help stamp out tax evasion, money laundering and other crimes.

What we’ll be seeing is a plethora of laws popping up in all the countries that were a part of the post-war prosperity boom – the US, Canada, Japan, Australia, Europe and others. All those jurisdictions dove headlong into the debt pit that the US created after 1971. All of them are now facing an economic crisis as a result.

Consequently, all of them will be creating capital controls. My belief is that each will host several of these laws, and the others will all adopt them. Each law will be justified as protection against money laundering, terrorism, tax evasion, a rising black market or a combination of those scare tactic focal points. As such, the populace of each country will welcome them, not understanding that the real purpose is to have the banks determine how much you’re allowed to spend.

By having each country put forth a portion of the laws, then having all the others copy them, they’ll hope to make the laws appear to be less draconian. After all, how bad could they be, if all these countries support them?

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How to Survive the “Deep State”, by Doug Casey

The deep state will be your enemy, not your friend, when collapse finally arrives. From Doug Casey at internationalman.com:

Almost everyone looks for a political solution to problems. However, once a Deep State situation has taken over, only a revolution or a dictatorship can turn it around, and probably only in a small country.

Maybe you’re thinking you should get behind somebody like Ron Paul (I didn’t say Rand Paul), should such a person materialize. That would be futile.

Here’s what would happen in the totally impossible scenario that this person was elected and tried to act like a Lee Kuan Yew or an Augusto Pinochet against the Deep State:

First, there would be a “sit-down” with the top dogs of the Praetorian agencies and a bunch of Pentagon officers to explain the way things work.

Then, should he survive, he would be impeached by the running dogs of Congress.

Then, should he survive, whipped dog Americans would revolt at the prospect of having their doggy dishes broken.

Remember, your fellow Americans not only elected Obama, but re-elected him. Do you expect they’ll be more rational as the Greater Depression deepens? Maybe you think the police and the military will somehow help. Forget it…they’re part of the problem. They’re here to protect and serve their colleagues first, then their employer (the State), and only then the public. But the whipped dog likes to parrot: “Thank you for your service.” Which is further proof that there’s no hope.

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150 years of bank credit expansion is near its end, by Alasdair Macleod

Alasdair Macleod’s innocuously titled article has enormous implications. From Macleod at goldmoney.com:

The legal formalisation of the creation of bank credit commenced with England’s 1844 Bank Charter Act. It has led to a regular cycle of expansion and collapse of outstanding bank credit.

Erroneously attributed to business, the origin of the boom and bust cycle is found in bank credit. Monetary policy evolved with attempts to control the cycle with added intervention, leading to the abandonment of sound money. Today, we face infinite monetary inflation as a final solution to 150 years of monetary failures. The coming systemic and monetary collapse will probably mark the end of cycles of bank credit expansion as we know it, and the final collapse of fiat currencies.

This article is based on a speech I gave on Monday to the Ludwig von Mises Institute Europe in Brussels.

Introduction

So that we can understand the financial and banking challenges ahead of us, this article provides an historical and technical background. But we must first get an important definition right, and that is the cause of the periodic cycle of boom and bust. The cycle of economic activity is not a trade or business cycle, but a credit cycle. It is caused by fractional reserve banking and by banks loaning money into existence. The effect on business is then observed but is not the underlying cause.

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