Global Debt Is a Pest That Must Be Eradicated

The coming gold and silver surge is guaranteed. It is not a question of IF but only WHEN. Initially, the imminent revaluation of the precious metals will have nothing to do with an investment mania but with the total mismanagement of the world economy. A spectacular rise in the metals is just a reflection of the mess the world is in. But as the paper market fails in gold and silver, there will be panic and manic markets.

So has the Silver Rocket just started? Last week I talked about the coming silver explosion and we could be seeing the beginning of it right now. I have often talked about the Gold-Silver Ratio as the key to the turn up in the precious metals.

GOLD-SILVER RATIO – A LEADING INDICATOR

With bearish divergence on momentum indicators at the critical 80-84 level, it was always a matter of time before the Gold-Silver ratio would break down. When the ratio turns down from an important level, it signifies a turn up in the metals with silver leading the way. As the long term chart below shows, the target for the ratio is 15-30. A return to the historical level of 15 would mean that silver will move up 6x as fast as gold.

If we look at the Weekly chart of the Gold – Silver ratio below, it shows the 4% fall that has taken place in the last 10 trading days. In itself this fall might not seem significant. But the key is the reversal from a very important top area combined with bearish technical indicators. As the chart shows, this ratio can fall very fast once it starts, like the 65% fall in 2010-11 or the 23% fall in 2010.

ONLY ONE SOLUTION TO THE GLOBAL MESS

Normally I avoid talking about short term moves since they make no difference to the long term strategic picture, especially from a wealth preservation point of view. The fact is that the world is in a mess economically, financially, politically and morally. We are seeing examples of this daily in most countries around the globe. How an Economy Grows a... Peter D. Schiff, Andre... Best Price: $2.01 Buy New $9.00 (as of 07:55 EST - Details)

One thing is certain, no political leader whether it is Trump, Merkel or May or the EU King Junker has a chance to solve these problems. There is only one solution to the shambles the world is in.

The excesses and moral decadence of the magnitude the world is experiencing today can never vanish in an orderly way. Sadly, only a total economic collapse can solve the problem. And this is of course inevitable. No government, no corporation and no individual can or will ever repay the $250 trillion debt that is owed. Nor will values or decency return by themselves. For example, the world is more interested in whether or not a Supreme Court judge candidate had a teenage fling 36 years ago rather than having a properly functioning legal system.

So global debt must implode together with all the assets that the debt are artificially underpinning. This debt is a pest that must be eradicated from the face of the earth. The world needs bad times to come back to real values and morality. Only from that level can we get back to genuine growth at all levels.

The suffering to get there is, of course, going to be horrible for the world. But this is the price that we must all pay for the untenable situation we are in.

The Road to Ruin: The ... James Rickards Best Price: $4.50 Buy New $9.72 (as of 06:10 EST - Details) All of this can happen very quickly or it can be a slow and torturous process. In the meantime, we must prepare to the best of our ability and enjoy life which after all is why we are all here.

1970S – MARKET CRASH, OIL CRISIS, MINERS’ STRIKE, 21% MORTGAGE RATE

Having had a long business life, it is natural to draw parallels with previous periods which were testing. In one sense, I was fortunate to experience a mass of economic and political problems early in my working life. That quickly gave me an excellent understanding of risk and unforeseen events.

I came to the UK in the early 1970s from Switzerland. I joined a small photographic retailer. In the early 1970s there was a global oil crisis. In the UK there was a coal miners’ strike, and our retail stores only had electricity 3 days a week. The other days of the week we sold televisions with candlelights. The UK stock market declined by over 60% between 1973 and 1974. In the US the Dow was down by 47%. I received my first options in the company at £1.32. 18 months later they were 9 pence. The interest on my mortgage went up to 21%. But the UK survived and so did our company that we later built up to the UK’s largest consumer electronic retailer and a FTSE 100 corporation. They were certainly testing times, filled with what seemed insurmountable obstacles. What is coming next will be many times worse.

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