Take Collateral in Physical Gold if You Lend Money to Your Bank

Will this be the Fall of Falls. 10 years after the Lehman collapse, will we again have an Autumn of Shocks in financial markets? The odds are very high!

Overstretched stock markets look extremely vulnerable including 13 recent Hindenburg Omens for the US market. The Dollar could soon be on its final leg to oblivion and US Treasury Bonds on the verge of a major fall that will eventually lead to hyperinflationary yields like Argentina and Turkey in the 20%+ region.


There is always a silver lining of course and a golden one. Silver and gold, together with precious metal stocks, will soon start an extraordinary journey to levels that few can imagine. The undervaluation of this sector is best represented by the XAU gold and silver index. At inception in January 1979, this index was 100 and today after four decades of inflation, money printing and credit expansion, the index is standing at 63.


The final moves before a secular turn in world markets are often emotional roller coasters. Many investors know, at least subconsciously, that markets are overstretched and can turn at any time. Since Central Banks have consistently “saved” investors in the last few decades, why wouldn’t that continue? Stock market bulls might be apprehensive after a 9 year bull move. But very few are prepared to get out. Greed and recent experience tell them that “the market always goes up”. Very few know that the market fell 90% in 1929 to 1932 and took over 25 years to return to the 1929 level. And even if they did know, “it is different today because …..”


Forex is the biggest market in the world with almost $6 trillion daily volume. So in just over 2 weeks, there is more currency trading volume than global annual GDP. It is of course a market with only paper trading and no physical settlement. Interestingly Deutsche Bank has 20% of all forex volume. No wonder that bank is more exposed than any other bank. Global daily Forex volume is 200 times the daily volume on the New York Stock Exchange. The value the currency, whether it is Dollars, Euros Yuan or Yen has a massive bearing on people’s standard of living. But very few understand this, mainly because no government tells their people that they are consistently destroying the value of the currency.

The best way to protect against the constant erosion of the currency is to own gold which is the only money that has survived in history. AmazonBasics Security ... Buy New $42.05 (as of 06:15 EDT - Details)

With no shackles central banks have had a unrestrained freedom to manufacture fake money by unlimited printing. 5,000 years of history and tradition as the only money that has survived has given gold total supremacy as King Money.

No paper money can ever make that claim. It is pitiful how Emperors, Kings and Central Bankers have all, when government coffers were empty, resorted to making fake money which by definition is always worthless. But just as no one dared to point out that the Emperor was naked, no one today dares to say or understands that the whole financial system rests on a foundation of nothing.

The bankers and the powers that be have a vested interest to keep this going as they are major beneficiaries. Ordinary people haven’t got a clue what is happening. They see prices going up but they think that this is normal.

Whatever Nobel prize winner Krugman says, paper money doesn’t fulfil the basic criteria for real money as a store of value. What ordinary people don’t understand, because governments suppress the truth, is that the value of their money is constantly being debased. Just look at the US dollar since 1971 against gold. $35 bought an ounce of gold in 71. Today an ounce costs $1,200. That is a 97% devaluation in 47 years.



Special Offer Fireproo... Buy New $81.00 (as of 12:20 EDT - Details) Americans are not quite yet in the same boat as the Venezuelans who have lost 99.9% on their Bolivars this year only. And Argentina is on its way to do the same and so are many more countries.

What is virtually guaranteed is that the US with its massive debt and accelerating deficits will end up in the same situation within the next 7 years. With a 97% fall of the dollar since 1971, there is only 3% to go. But as the people in Venezuela have discovered this year, that final fall involves a total destruction of the currency and also of the economy. It also destroys people’s lives totally as they struggle to survive physically and financially.

This is the inevitable consequence of socialism. You always, without fail, run out of other people’s money. And since socialism gradually takes over in country after country. The economic collapse that is now taking place in the periphery – Venezuela, Argentina, Brazil, South Africa, Turkey, Indonesia etc – will spread at a fast pace to all emerging countries and then on to the Western economies. Thus socialism is a guaranteed route to hyperinflation. It is only a question of how long it takes before you get there.

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