Very Few People Realize “THE TOTAL DEVASTATION” Of The Value Of Paper Money !

Unless you’ve been living under a rock for the last 6 months, you already know gold and silver have been ON FIRE since the beginning of the year.  It’s becoming clearer by the day that the global community and it’s economy are in a WORLD OF HURT, and that all of the worlds’ paper currencies are being systematically devalued into oblivion.  Furthermore it is the U.S. dollar riding in the fancy car with the GRAND MASTER sign on it’s side that is leading this whole charade/parade!!

 

Just below I’m featuring a brief quote from the exceptional article by Egon von Greyerz  that is the first linked article below.  Please do yourself a favor and read that entire article. 

“Since governments are doing what they can to hide the mismanagement of the economy, VERY FEW PEOPLE REALIZE THE TOTAL DEVASTATION OF THE VALUE OF PAPER MONEY. Also, most banks don’t understand gold. Since they can’t churn commissions on physical gold, they are not interested in offering it to clients. Instead they are flogging stocks and funds on which they earn high commissions.

And no bank will ever tell their client that in real terms, that stocks are doing very badly. Since the Dow is up 57% in nominal terms since 2000, very few investors realize that they have lost money in real terms. Measured in real terms like gold, stocks have had a terrible century with the Dow down a massive 68% since 2000 against gold. It is the same with all stock indices around the world. They are all down 60-85% already against gold and are on their way to an additional 70-95 % fall in the next 5-7 years. This is hard for most investors to fathom but IT IS THE INEVITABLE CONSEQUENCE OF THE MOST MASSIVE ASSET BUBBLE IN HISTORY.”

I’m going to close my comments by stating the following:

 

It’s becoming clearer by the day that NEGATIVE INTEREST RATES ARE DRIVING PEOPLE INTO GOLD.

 

It’s becoming clearer by the day that GOLD IS THE ULTIMATE CURRENCY.

 

It’s becoming clearer by the day that CENTRAL BANK POLICIES ARE FAILING.

 

It’s becoming clearer by the day that CONFIDENCE IS THE LAST TOOL THAT THE CENTRAL BANKS HAVE AND WHEN IT FAILS,

 

                                                                 IT’S GAME OVER.

 

 

It’s becoming clearer by the day that THERE IS NO WAY OUT !

 

But, there is a way to protect yourself, OWN GOLD AND SILVER (in physical form) and other hard assets that are important to you, and avoid debt whenever possible.

 

Hope you find the enclosed information worthwhile.  Take care.

 

                                                                                        Leo

 

Over the last several centuries, government bond yields around the world typically stayed in a range between 5% and 15%.

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July 1, 2016

Santiago, Chile

 

[Editor’s note: Check out Simon’s video podcast of today’s Notes.]

 

In the late 12th century while the rest of Europe was choking on feudalism, Venice was rapidly becoming the most advanced power on the continent.

 

At that point Venice had already created a free society where anyone, regardless of origin or class, could work hard and prosper. It was truly the America of its day.

 

The Venetians were very forward thinkers. They established a very crude type of limited partnership called a commenda that formed the basis for the modern corporation.

 

And starting in the late 1100s, the Venetian government began issuing a unique type of sovereign debt called prestiti. 

 

Prestiti were among the earliest form of institutionalized government bonds.

 

And in their incredible book A History of Interest Rates, authors Sydney Homer and Richard Sylla show these Venetian government bond yields ranged between 5% and 22% for several centuries.

 

This set the standard for government bonds for the next eight centuries

 

When the first Dutch bonds were issued in 1517, almost 500 years ago, yields were roughly 20%.

 

And over the last several centuries, government bond yields around the world typically stayed in a range between 5% and 15%.

 

That’s the real long-term average… the range that you could consider ‘normal’ for government bonds.

 

Yet today’s government bond yields are near zero. And in many respects, less than zero.

 

This essentially means that investors who buy these government bonds are absolutely guaranteed to lose money if they hold to maturity.

 

This is absolutely insane. If you’re guaranteed to lose money, a bond is no longer a safe haven. It’s not even an investment anymore. It’s just pure insanity.

 

Barely a month ago I told you how the total size of all the government bonds around the world with negative yields had reached an astounding $10.4 trillion.

 

That’s an enormous figure. But what was really alarming was how fast the number is growing.

 

In February 2015, less than 18-months ago, there were $3.6 trillion worth of government bonds around the world that had negative yields.

 

A year later in February 2016, it had grown to $7 trillion.

 

By May, $9.9 trillion. Last month, $10.4 trillion.

 

But just in the last 30 days, the worldwide total of government bonds with negative yields grew $1.4 trillion in just one month to $11.7 trillion.

 

That’s astonishing. $11.7 trillion is larger than the GDP of China!

 

We’ve seen this movie before. It was only eight years ago that the financial system was engaged in the same kind of insanity.

 

Banks had spent years making massive home loans at ultra-cheap interest rates to borrowers with pitiful credit, in many cases with absolutely no money down.

 

Unsurprisingly, the old adage eventually came true: if you owe the bank $100,000 and can’t pay, you have a problem. If a million people owe the banks $100,000 and can’t pay, the banks have a problem.

 

Well, the subprime borrowers couldn’t pay, and the banks ended up with a huge problem.

 

The subprime housing bubble, in fact, almost caused an all-out collapse of the financial system.

 

Now here’s the important part:

 

back then, the total size of the subprime bubble was ‘only’ $1.3 trillion.

 

Today’s negative interest rate bubble is NINE times the size of the 2008 subprime crisis.

 

Now, I don’t see a whole lot of difference between 2008’s subprime home loan borrowers, versus 2016’s subprime government borrowers.

 

Neither borrower has the financial means to repay its debts.

 

Back in 2008 the banks loaned money to subprime borrowers under the false premise that ‘home prices always go up.’

 

Today investors buy the bonds of subprime governments based on the false premise that ‘governments always pay their debts.’

 

Both assumptions are completely absurd and defy even the most cursory lessons of financial history.

 

History, in fact, teach us that anytime financial markets engage in such reckless, irresponsible behavior, a crisis almost invariably ensues.

 

Ask yourself these questions:

 

1) Does it really make sense that woefully bankrupt countries (like Japan, with its national debt exceeding 1 QUADRILLION yen) are able to borrow money and issue bonds with negative yields?

 

2) Do we really expect that this subprime government bond bubble, whose rate of expansion is accelerating, can continue to get bigger and bigger without consequence forever?

 

3) Would you take your hard-earned savings and buy some bankrupt government bond where you’re guaranteed to lose money?

 

If not, then ask yourself one more question:

 

Whose money do you think the banks are using to buy these bonds?

 

Why, yours, of course.

 

Banks don’t use their own money to buy government bonds. They use your money.

 

So if you’re thinking, ‘big deal, I don’t own any of these government bonds,’ guess again. If you have money tied up in the banking system, you’re exposed.

 

The entire financial system is exposed, just like the entire financial system was exposed to the 2008 subprime crisis.

 

Look, no one has a crystal ball. This bubble could continue to expand for weeks, months, or even years.

 

But in the face of such complete insanity, it certainly makes sense to take some basic precautions to limit the impact on your own life.

 

Whenever you get in your vehicle, you know there’s a bunch of crazies out on the open road.

 

That’s no reason to panic or live your life in fear. Instead, we take some very basic precautions. We put on a seatbelt.

 

It’s pretty clear there’s a bunch of crazies in the financial system as well. So put on your seatbelt.

 

Consider, for example, holding some physical cash instead of keeping 100% of your funds in the banking system.

 

Own some real assets like gold and silver.

 

There are plenty of options available to reduce this risk. Just don’t ignore this bubble, because………

 

 the BIGGER it becomes, the MORE SEVERE the consequences when it bursts !!! 

 

Enjoy your weekend,

Simon Black

Founder, SovereignMan.com

 

http://kingworldnews.com/legend-warns-what-is-coming-will-totally-devastate-the-world/  A must read and the source of this email’s subject title.

 

 

https://www.youtube.com/watch?v=XuaOfCl4EhM  This is a MOST interesting Greg Hunter interview with Michael Krieger of LibertyBlitzkrieg.com.  It’s only 18+ minutes but Mr. Krieger presents a very interesting perspective on current events.

 

https://www.youtube.com/watch?v=B4HXZUZCenI  This and the next link are short (8-10 min.) videos by Greg Mannarino of TradersChoice.net with some VERY important new information regarding the government’s ongoing charade that things are OK in the American economic climate.  You need to know and understand this.

 

 

http://kingworldnews.com/dr-stephen-leeb-7-3-16/  Excellent short King World News interview with Dr. Stephen Leeb.

 

https://www.youtube.com/watch?v=2-Be9f7Ovgg  Only watch this video if you wonder why our once amazing nation is in such a fix.  The short answer is simply…. IGNORANCE !

 

 

 

http://www.zerohedge.com/news/2016-06-30/curse-wealth-effects-central-banking  This is an excellent David Stockman article.

http://thecrux.com/the-global-monetary-system-is-collapsing/

http://www.oftwominds.com/blogjune16/pie-shrinking6-16.html

http://www.zerohedge.com/news/2016-06-29/you-want-own-gold-marc-faber-warns-brexit-excuse-qe4

http://www.oftwominds.com/blogjune16/Brexit-powerless6-16.html

https://hubertmoolman.wordpress.com/2016/06/30/gold-price-forecast-golds-final-warning-of-impending-monetary-collapse/

 

 

Mike Savage

 

Watch the Banks

 

I imagine many are wondering why a vote by a small island in the North Atlantic to leave the Eurozone would cause the largest evaporation of wealth in the history of stock markets. CNBC reported that over $3 trillion in value was vanquished in just two trading days- Friday and Monday.

 

My cynical mind tells me that this may be a planned out event so as to be a warning to any other countries that might dare want to leave the EU- of which I am sure there are many!

 

As I write this, the many markets that were bleeding value seem to have stemmed the tide- at least for now.

 

I woke up on Monday morning greeted by the headlines that Christine Lagarde (IMF) was saying that the central banks did their job and they stopped the carnage in the markets. To me, that is like saying that the market never found out what actual prices SHOULD be because the central banks injected “liquidity” so that we wouldn’t find out just how far these markets are overvalued. I believe we will all learn that lesson soon enough anyway.

 

It appears to me that Great Britain should actually make out pretty well with this vote. Their currency is way down- making their exports more affordable across the world. Too bad for others that, as that happens, other currencies must rise to fill the vacuum. Enter Japan. Yes, the country that is purchasing vast amounts of many markets but the Nikkei 225 in particular, has seen the fruits of their labor come home to roost.

 

In wanting the Yen to depreciate (go down in value) they have been “printing” more money than we in the USA ever did (that we know about anyway) – with a much smaller economy to boot. The result- the Yen is surging against most other currencies making their exports LESS desirable around the globe.

 

In buying the Nikkei to prop it up- it has gone from 18,000 at the same time they started negative interest rates and just today it recovered to just over 15,000. What a great job they are doing!

 

The negative interest rates in Japan and Europe don’t appear to be helping the major banks in those areas. According to Ambrose Evans-Pritchard “Italy is preparing a 40 billion Euro rescue of its financial system as bank shares collapse on the Milan bourse and the powerful aftershocks of Brexit shake European markets”.

 

Premier Matteo Renzi said, “Italy will do everything necessary to reassure people”. Hmm… sounds to me like -yeah we’re broke but we will “print” whatever is necessary to keep as many in the dark as possible for as long as we can.

 

I have noticed that not only in Italy are there problems with large banks but also in Germany, Spain and Belgium. I mention these because in a research paper by Martin Weiss of Weiss Ratings- which I consider to be the gold standard of ratings for many reasons he mentions two banks in Italy, three in Spain and one in Belgium that are exceedingly weak. His firm is the only one that I am aware of that called Lehman and Bear Stearns bankrupt far in advance of the reality. (I was a subscriber to Weiss research then) To be fair, he is not calling any of these banks bankrupt but not in good condition where a large external shock could compromise their solvency.

 

I believe this is where the world’s real problems lie. Many of these banks are likely a counterparty to many others (expected to pay if their trades go against them) and some of these banks likely have exposure to derivatives that could wipe out all of their equity and then some in the blink of an eye.

 

In another example of just how serious this latest downturn is- particularly in bank stocks European bank stocks dropped between 10-15% during the Long Term Capital Management breakdown in the late 1990s. During the Lehman bankruptcy in 2008 European bank stocks dropped approximately 13%. During the EU crisis in 2011 bank stocks dropped approximately 14%. Between Friday and last Monday European banks were down over 23%. (Chart on King World News by Gerald Celente).

 

In addition, it was reported by Casey Daily Dispatch that the Bank of England has injected 3.1 billion pounds into their banks and have pledged up to 250 billion pounds to stabilize the financial system. The Bank of Japan injected $1.5 billion into its banking system the same day and have made comments that they will intervene in the currency markets to prevent the Yen from rising further. Can you say possible currency war?

 

If all of this isn’t enough many high profile billionaires are actively shorting (expecting to go down) stock markets. Alan Greenspan has now also been weighing in as in a CNBC interview he said:

 

” This is the worst period I recall since I’ve been in public service. There’s nothing like it, including the crisis-remember October 19, 1987 when the Dow went down 23 percent? On Bloomberg he reiterated:

 

” We are in the very early days of a crisis which has got a way to go”.

 

By the way- he was not discussing Brexit here but the entitlement spending in the USA.

 

Of course, in my opinion, without Mr. Greenspan we would likely not be in this position today. I used to point out that in the 60’s he was a prolific writer and defender of the gold standard- (currency backed by gold). Of course, as Chairman of the Federal Reserve he went all-in away from a gold standard and ushered in the age of unlimited fiat currency and market manipulations. I certainly can’t say if he ever saw these interventions going as far as they have.

 

At 90 years old Mr. Greenspan has now changed his opinion again and says the answer to the world’s current problems is … a gold standard! In a Bloomberg interview he said (According to David Stockman) Remember that the period from 1870 to 1913 was one of the most aggressive periods economically that we’ve had in the United States and that was a golden period of the gold standard. I’m known as a gold bug and everyone laughs at me but why do central banks own gold now?

 

I believe the central banks, sovereign nations and others buying gold are buying because they see a system in place that is enriching a few at the expense of the many and the many are fed up. They are also seeing a system that appears to be becoming more fragile day by day as the central planners are running out of excuses as to why the economies are not performing. They are also seeing signs that the usual answers of “Print” money and buy stuff appears to be backfiring. I also believe that central banks are looking at history and seeing when confidence needs to be restored in a fiat currency system (like here in the USA in the 1930s) often gold is the currency of choice to add that confidence back into the system. I have heard others say that the US could revalue gold to $5000.00 per ounce. While I would like to see it I don’t believe that. I believe China may ultimately re-value the gold price at many multiples of where it sells at today. Whether this current system ends because of a geopolitical event, an election, or a monetary accident it appears it could end.

 

Don’t bury your head in the sand.

 

Be Prepared!

 

Mike Savage, ChFC Financial Advisor

2642 Route 940 Pocono Summit, Pa 18346

(570) 730-4880

Raymond James Financial Services, Inc. Member FINRA/SIPC

 

 

Making The Case For $12,000 Gold & $360 Silver

SRSrocco Report on June 30, 2016

Global Financial Assets are more inflated and propped up than ever.  According to the most recent figures published by The City UK Fund Report, total Global Conventional Assets under management topped $105 trillion in 2014.  That’s one hell of a lot of future PAPER CLAIMS.

Unfortunately for most investors, the majority of these supposed assets will evaporate into thin air from where-ith they came.  Bubbles were designed for children to make and play with… not meant for adults to use in the financial industry.

Regardless, the global financial system is now polluted with a massive amount of toxic bubbles covering all corners of the planet.  When the first large one finally pops… WATCH OUT.

Gold & Silver As A Percentage Of Global Financial Assets Are Less Than Peanuts

I put together this chart from figures I found at Sharelynx.com.  According to the data, gold comprises 0.58 percentage of global financial assets, while silver comes in at a pathetic .013%:

Gold-Silver-Percentage-Of-Global-Assets-2015/

Even though gold is a little more than a half of a percent of total global financial assets, it’s at least 45 times greater than silver.  Which is why Central Banks hate silver much more than gold.  Why?  Because very few Central Banks own silver and the market is so tiny that if a significant amount of funds decided to flow into silver, it would cause its price to skyrocket higher.

These next two charts show how gold and silver as a percentage of global financial assets have declined since 1980:

Gold-As-Percentage-Of-Global-Financial-Assets/

Silver-As-Percentage-Of-Global-Financial-Assets/

In 1980, gold represented a stunning 5% of the total global financial assets, while silver comprised of 0.25% (a quarter of a percent).  However, over the next three and a half decades, these percentages declined significantly.

Gold is now 9 times less of a percentage of global financial assets than it was in 1980, while silver is 20 times less.   The Fed, Central Banks and Wall Street did a wonderful job administering a FRONTAL LOBOTOMY on the public, which forced them out of real assets and into the largest financial ponzi scheme in history.

Making The Case For $12,000 Gold & $360 Silver

If investors decided to increase their gold and silver investments to equal the percentage in 1980, we would have the following:

Gold = $1,300 X 9 = $12,000

Silver = $18 X 20 = $360

Before some of the readers start rolling their eyes and BELLY-ACHING that this is just another attempt at precious metals hype, let me add a few logical points of view.

Many precious metals analysts including Jim Rickards and Jim Sinclair, believe we are going to see a gold price north of $10,000.  They base their forecast on backing all the outstanding U.S. Dollars by a certain percentage of gold.  The higher the percentage of gold backing, the higher the gold price.  However, $10,000 gold seems to be a base price when faith in the U.S. Dollar goes down the toilet.

So, the $12,000 gold price figure shown above is not all that crazy.  Furthermore, a $360 silver price when gold is $12,000 is a 33/1 Gold-Silver Ratio.  We already experienced a gold-silver ratio of 31/1 in April 2011.  Gold was trading at $1,500 when silver was trading at $48.  Which means a 33/1 gold-silver ratio at $12,000 gold and $360 silver is really not that insane after all.

That being said, I actually believe the future values of gold and silver could be even more silly and stupid than $12,00o or $360.  Why?  Because the popping of adult sized massive financial bubbles could actually push gold and silver investment percentages even higher than what they were in 1980.

What the hell happens when global investors try to invest 10% in gold or say just 1-2% in silver?  This may seem outlandish right now, but when financial institutions start going bankrupt and bankers start jumping off of roof tops, COMMON SENSE investing will likely return as proper investing logic like a 2 X4 across the head.

When the world finally experiences a global Lehman Brothers event that pushes us into massive depression, investors will seek safety in the precious metals.  Unfortunately, there will be very little supply… only a much higher prices.

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