I wrote this hypothetical article December 29, 2014. One of our readers wrote me this morning and thanked me for writing it because he did take heed and began preparing with his family back then. Was it all correct? Not yet, but one can certainly imagine where we go from here. There is not much time left to make preparations but get moving and do the best you can do, that’s all one can do!
Fact or Fiction?
This past year was jam packed with news of all sorts. Some was surprising, some of it was expected, while other news seemed to either be another dot to connect or an outlier dot to be connected later. We even got news from time to time which even in today’s world could be considered bizarre or surreal. Suffice it to say, were we receiving the current news of today just 15 years back, the financial and social worlds would have been in outright panic. Not so today, the sheep are sound asleep even while a few well intending herders are sounding the alarm. The populace in general have become dumbed down, beaten down and barely able to read past whatever headline it happens to be for the day. Let’s call the condition “comfortably numb”…
Very brief commentary today.What happens when the most overlevered global economy in history shuts down for a month, or more?Global bankruptcy.It is over folks, the system is coming apart at the seams and the “promises” the world ran so smoothly on for so long are being laid bare.You might ask, which promises?The answer is ALL promises.
All of a sudden and immediately after the Fed and Treasury announced over $4 trillion in various stimulus and aid …interest rates on Treasuries are rising.For example, rates on the 10yr Tsy collapsed to .34% a week ago Monday.Now, after 150 basis points in cuts, the 10yr is trading over 1.1% just 7 trading days later!
In the metals arena, you see paper pricing extremely weak.However, the real world shows something very different.The US Mint is out of both gold and silver eagles.Other sovereign mints are also running out of supply or already out.So you think silver is $12.50?Maybe you can purchase 100 ounce bars for $16+ but do they really have utility?The form that does have utility (because of the small denominations) is junk silver.The only dealer I see still selling junk is APMEX, they are currently $10.99 over spot which equates to over $20 per ounce!The physical market is now taking COMEX by the throat and ignoring their fraudulent prices.
We told you (and were laughed at) that the day would come when you had what you had and that was all you had.This is now fairly apparent as “real” things like real metal and even food are showing serious supply issues.This is not a drill folks, Humpty Dumpty has fallen and the supply of super glue is gone.The dollar has gone through par and may even go to the 110-115 level or higher before it burns out.This is a function of Richard Russell’s “synthetic short”.The majority of global debt and trade is priced in dollars.The current deflation is exposing a dollar shortage as debtors scramble for dollars to settle.When all is said and done, ALL fiat currencies will collapse to their intrinsic values (zero or very close).Leaving real monies gold and silver as the last men standing.
Lastly, as physical gold and silver are becoming unattainable, there is only one last area left for exposure to real metal …the miners.The miners with real and verified reserves in the ground in our opinion are set to make stock market history.The “leverage” which has largely been forgotten about is still there.It looks like they turned or reversed on Monday and are acting much better.It is only a matter of time before investors understand it is their only avenue of exposure to precious metals to protect their financial lives.
Hold on to anything and everything precious as the world awash in liabilities melts down around them.Stay safe and God bless us all!
Standing a terrified watch,
We have been telling you it is all about credit for years…you will soon see the real world reasons why. It is clear the real global economy was already seriously slowing down in Q4 prior to the coronavirus outbreak. Now, China who has been the supplier to the world and the great hope to be the engine of growth to pull the world forward, is all but frozen up.
Within a very short period of time, we will begin to see more and more real world examples of products not being produced which affects downstream ability to get final products to market. The latest example of this is the Audi electric vehicle plant “pausing” production because they cannot procure batteries. Just watch how many other various products cannot and will not be produced in the coming weeks…and remember, businesses have both accounts receivable and accounts payable, not to mention boatloads of DEBT!
As for the coronavirus, all one must do is take a look at the travel and leisure industry. Airlines, resorts, etc., not to mention restaurants and other ancillary businesses have already reported severe drops in traffic, some as much as 30-40%. All of these have both accounts receivable, accounts payable, and debt. Can the industry survive with lower traffic flow? Can the industry survive if even one part of the chain breaks?
Please understand the entire global financial AND real economic systems only function as long as cash flows function. Lack of parts or product means no final sale which means the entire supply chain chokes because the final product is not monetized. This is where accounts payable and receivable come in. How does a business pay another business if they are not being paid? Or how do they pay their bank debt with less or no cash flow? This episode already looks like a chain breaker in not one but several links!
Originally posted for subscribers on February 12, 2020.
Bill is interviewed re: gold and silver physical purchase/sale.