A deluge of an unprecedented magnitude is both inevitable and imminent. The consequences of the economic and political mismanagement will have a devastating impact on the world for a very long time. And the consequences will touch most corners of the world in so many different areas; economic, financial, social, political and geopolitical. The adjustment that the world will undergo in the next decade or longer, will be of such colossal magnitude that life will be very different for coming generations compared to the current social, financial and moral decadence. But history always gives us lessons and the one that is coming will be necessary and eventually good for the world. But the transition and adjustment will be extremely traumatic for most of us.
...Although food and fuel inflation is rampant worldwide already, we are only seeing the very beginning. Massive oil price rises are likely to continue as a result of the geopolitical situation as well as peak-oil. The Middle East is a time bomb waiting to go off. Israel is in an extremely precarious position and the involvement or non-involvement of the US in this conflict would both have dire consequences for Israel and peace in the world. Food prices will continue to rise dramatically. Major parts of the world are living below the poverty line today and this will increase exponentially.
...The following are INDISPUTALBLE FACTS:
- The US dollar is down 82% against gold since 1999
- The US dollar is down 49% against the Swiss Francs since 2001
- The Dow Jones is down 81% against gold since 1999
- The Continuous Commodity Index is up 100% since 2009
The above facts are clear evidence of an economy that has been totally mismanaged. But more importantly most of these trends are now starting to accelerate – a clear sign that hyperinflation is just around the corner.
A hyperinflationary depression will destroy the value of money as well as most assets that were financed by the credit bubble (property, stock market). Wealth protection is now critical and urgent. We see no better way of protecting assets against total destruction than physical gold and silver stored outside the banking system. Thereafter, precious metals, energy and food stocks are our preference. But it must be remembered that any asset including stocks that is held through a bank is dependent on a sound and surviving banking system.
The real move in precious metals is still to come as we have outlined in many articles. Less than 1% of investors own gold. Before this economic cycle is over we are likely to see a mania in physical precious metals that will drive prices exponentially higher. And luckily for investors, this is a mania which is unlikely to end in a collapse since gold most probably will be part of a future reserve currency.
Finally we are again quoting von Mises who clearly understood that “le déluge” is inevitable:
“There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency system involved.” – Ludwig von Mises
Note well: Gold and silver are not becoming more valuable. Your dollar, your savings, your earnings are becoming less valuable. This is directly related to the activities of Federal Reserve keynesian economists.
The accuracy of Austrian economic predictions has been borne out over the past 90 years; only the timing of the prediction is in question.
"Good night, and good luck." -- Edward R. Morrow
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