Investors globally have never faced the risk of the magnitude that we are now exposed to. But sadly very few are aware of the unprecedented risks the world is facing. For the ones who understand risk and take the right decisions, it will “lead to fortune”. Only very few will choose that route. Instead, most investors will continue to live in the hope that current trends will go on forever but sadly these people will end up “in shallows and in miseries”.
The risk is now staring us all right in our face but very few people can actually see it.
Let’s just be clear what some of the events that will change the face of the earth are:
Why are the most advertised Gold and Silver coins NOT the best way to invest?
- No Sovereign state will ever repay their debt – That is an irrefutable statement and anyone who doesn’t understand that lives in denial.Sovereign debt has increased exponentially in the last couple of decades and governments neither can nor have the intention of ever paying their creditors. They can’t even afford to pay the interest and this is why an ever increasing number of countries have negative interest rates. So not only will they not repay the capital but investors now pay bankrupt nations for the privilege of holding their worthless paper. It is incomprehensible that investors are prepared to hold nearer $100 trillion of debt with no yield or negative yield and no chance of getting their money back. No one worries about the return OF their money and now it seems that investors don’t even worry about getting a return ON their money. This is a shocking state of affairs that eventually will lead to a total collapse of all sovereign debt.
- No bank will ever give depositors their money back – I know that very few believe this statement. Because, if bank depositors did, they would not hold around $200 trillion of assets in the financial system plus another $1.5 quadrillion derivatives in the banking system. Bank stocks in Europe, whether it is Deutsche Bank in Germany or bank Monte Paschi in Italy are continuing to crash to new lows. As I stated in a recent article, the share price of most European banks, as well as many US banks like Citigroup or Bank of America, have collapsed 70-95% since 2006 and they are on their way to ZERO. Consumer borrowing is still growing exponentially. Student loans in the US are now $1.4 trillion up a MERE 3x since 2006. And the delinquency rate is increasing exponentially as most students can’t find a job.
- Stock markets will fall 90% or more – I know that most investors will think that this is a sensational statement from someone totally deranged. But let me just remind investors that when the Dow crashed 90% between 1929 and 1932, the economic conditions in the USA and the rest of the world were far superior to the ones we are experiencing currently. Economic conditions are deteriorating fast worldwide but stock markets are continuing to go up to dizzy levels. Investors are putting their faith in funny or printed money. S&P earnings have declined for 5 straight quarters. The Dow is now valued at a dizzy 24x GAAP earnings. And sales revenue, adjusted for share buybacks is down 1/3rd since 2006. Yes, governments worldwide will this year launch the most massive money printing programme in history. But that will be like pushing on a string and will have zero effect on the world economy. The time when the misconceived Keynesian methods of creating prosperity by printing worthless pieces of paper (or electronic money) are now passed. The printed money will only exacerbate the debt problem. And the world will soon learn that you cannot solve a problem by applying the same methods that caused the problem in the first place.
