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2016 Deflation, Stocks & Pensions: Get Into Gold Soon!

2016 Deflation, Stocks & Pensions: Get Into Gold Soon!

Dear Reader

Before we begin, I'd like you to remember the number 15. I'll explain later.  It relates directly to the current price of an ounce of Physical Gold, whether you buy it in a coin or a bar.  15.

Now, what a financial start to the New Year! 2016 opened with this headline:  "FTSE suffers worst stock market start in 16 years as China-led malaise wipes £38bn off index. US markets tumble after a 7pc Chinese share price plunge batters confidence on first trading day of the year."  In case you missed it, "Trading floors began the new year in a state of chaos as weak economic data from China and heightened tension in the Middle East wreaked havoc on financial markets worldwide."    I'd like to start with looking back at a piece I wrote for Bleyer back in July of last year, when I asked the question: "Is a Stock Market Crash Coming?"
 
"Max Keiser: He came up with the phrase, "Extend and pretend." This is exactly what is happening in Greece right now, but also in the U.S. economy, Euro Zone and around the world. The shorter version of, "Kicking the can down the road." At some point, this illusitory pack of financial cards has to collapse (see previous blog entitled "The Greek Default and Stocking up on Gold", Peter Schiff, Mick Maloney and the financial actions of people like Warren Buffett. Buffett has been dumping U.S. stocks: "Despite the stock market’s record run and Washington’s assurances that the economy is getting better, some of America’s wealthiest billionaires aren’t convinced. In fact, their recent actions suggest some sort of market crash is on its way. Do they know something you don’t? Not really. The data is out there for everyone to see. Unfortunately, Wall Street is too busy ignoring the warning signs. The outlook for the stock market looks bleak. Buffett, Paulson, and Soros understand this. And the reality of the U.S. economy has led them to see there is a real good chance the U.S. markets could experience a crash or serious correction in 2015." (John Whitefoot, 8th July 2015) We strongly encourage our readers to look into the information and factors we are highlighting. Even Alan Greenspan stated just a few months ago that, "Something Big is Coming." (see our blog from April 2015) In conclusion, one commentator notes that, "There have only been 54 weeks in history in which stocks have been more expensive than they are today — the 21 weeks preceding the market top in 2000 and the 33 weeks after that top before stocks continued their crash." (Business Insider UK, 15 June 2015, from an article entitled "A Crash is Coming and it may be Terrific."
 

I actually can't say I'm surprised. I feel as if I've been waiting for something big to happen for a long, long time.  Admittedly, I got the timing slightly early but rather early than late.  I have been writing for some time that 2016, and onward for some years, I believe, will be a very bumpy ride, financially and geo-politically.

And this week the financial headlines began to, not just say but, shout the same sentiment. Two days ago, the Royal Bank of Scotland "has advised clients to brace for a “cataclysmic year” and a global deflationary crisis, warning that major stock markets could fall by a fifth and oil may plummet to $16 a barrel. The bank’s credit team said markets are flashing stress alerts akin to the turbulent months before the Lehman crisis in 2008. “Sell everything except high quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small,” it said in a client note.  Andrew Roberts, the bank’s research chief for European economics and rates, said that global trade and loans are contracting, a nasty cocktail for corporate balance sheets and equity earnings. This is particularly ominous given that global debt ratios have reached record highs. “China has set off a major correction and it is going to snowball. Mr Roberts expects Wall Street and European stocks to fall by 10pc to 20pc, with even an deeper slide for the FTSE 100 given its high weighting of energy and commodities companies." (The Telegraph, 11 January 2016)

 

Now, many of us will remember the crash of 2008.  Yes, it eventually trickled through to affect us in Britain and austerity did kick in, particularly for those working in local government jobs.  There were large scale redundancies across the sector plus pay rise freezes continue today. But I firmly believe the next financial crisis will be a deep reset for many, many more people. I'll explain more later but one of the earliest financial casualties will be pensions: "BRITISH pensions are set to suffer huge hits in the months ahead, as oil prices are expected to crash further to create market carnage, experts have warned." And that has the potential to affect a very large number of our readers.  "The bluechip index shed billions of pounds in value last week, in what was the market's worse start to a year this century. The losses are terrible news for people hoping to draw cash from their pension savings now or in the near future." (Lana Clements, 12 January 2016)  Stock market crashes affect real people, not least our savings pots linked to third parties investing in the stock market on our behalf. We rely on their decisions for the financially security of our futures. 

 

GOLD IN YOUR PENSION

If you are a UK citizen, you can invest in Gold Bullion through your Self-Invested Personal Pensions (SIPPS). SIPPS are personal pension schemes containing a basket of investments of your choosing until you retire and start to draw a pension income. SIPPs can hold tangible investments, which can now include Physical Gold. Investments made in gold bullion are topped up in the form of tax relief, meaning individuals can claim back the tax on the money they put in. The amount varies depending on the income tax band into which they fall, so if you are a higher rate tax payer you can get up to 40% back. So, for example, a £10,000 investment will only cost you £6,000. Physical Gold is allowed in a SIPP providing it is investment gold, such as the fine gold bars that Bleyer sell in a variety of denominations. The bullion must be stored at ‘arm’s length’ with a secure third party. It cannot be taken possession of and used as a “pride in possession” article. It can, like any other investment, be sold within the pension wrapper and then the cash re-employed within the normal rules of a SIPP pension. Thus Physical Gold is allowed in your SIPP when we store it for you. Please call one of the Bleyer Team to find out more. We maintain the gold in your SIPP Gold account, while you are in complete control in instructing an Independent Financial Advisor (I.F.A.) and a Trustee Company will manage your SIPP Pension as a whole. You will instruct us to either communicate directly with you or with your I.F.A. / Trustee, whichever you would like.

 

PHYSICAL GOLD AND SILVER BARS AND COINS AS A SAFE HAVEN:

There is always a move into people wanting to own and hold their own Physical Gold and Silver in financial crises, I believe 2016 will be no exception. It is clear to see that it has begun already, as Nasdaq revealed this week: "China's stock-market volatility is driving up the price of gold as investors seeking safety pile into the yellow metal, reversing expectations that the price would slump this year in the wake of a strengthening dollar. Gold is up about 4.3% since the beginning of 2016...If there is continued weakness in stocks, then we expect gold prices to move higher," said Seamus Donoghue, Chief Executive at Allocated Bullion Solutions, a Singapore-based international bullion-trading network. When a large equity market such as China loses so much in a single day, "there will be a flight to quality assets," he added." (11 January 2016)

Now, I cannot promise the price of Physical Gold and Silver will rise steadily, it never does.  I actually believe it may even fall a little further, before rising into Safe Haven territory. As we know, these plummets in stocks are usually proceeded by a few ups and downs, when everyone thinks, "Oh, we escaped that one." And here's why.

 

WHAT IS DEFLATION AND WHY WE ARE IN IT:

As the Bank of Scotland correctly stated, we are now in a period of Deflation.  What is Deflation?  To quote from one of my previous blogs from two years ago, simply put, "DEFLATION is less known but just as unpleasant (as inflation).  Webster defines deflation as "a contraction in the volume of available money and credit that results in a general decline in prices.” "Typically" explains Michael J. Kosares of The Market Oracle, "deflations occur in gold standard economies when the state is deprived of its ability to conduct bailouts, run deficits and print money. Characterized by high unemployment, bankruptcies, government austerity measures and bank runs, a deflationary economic environment is usually accompanied by a stock and bond market collapse and general financial panic — an altogether unpleasant set of circumstances." (Extract from my previous blog, "Gold & Silver as a Deflation Hedge, October 2014)

Our current falling into Deflation was therefore long-expected if you knew where to look. I first wrote about Deflation more than 3 years ago, then again on 22 October 2014 in a further piece entitled, "What happens when a currency dies" where I wrote: "One clear sign of Deflation fears by Central Governments worldwide is the suspiciously falling oil prices. Again, like our lower mortgage rates, it is designed to try to make the average man on the street to feel richer and therefore spend more. Oil and low interest rates are both classic mechanisms to try to reverse the onset of Deflationary fears."

 

Does that now sound very familiar?

The week after the above blog archive, the Telegraph wrote the following piece: "Filling up the car with diesel the other week, I was pleased to discover something which – at least for someone of my generation – still feels very unusual; the price had gone down – again. And it’s not just fuel. It’s food, it’s clothing, it’s laptops, it’s air fares and much else. For those of us who spent our formative years in the inflationary 1970s and 1980s, this is an unfamiliar, even alien world. Back then, the big economic challenge was double-digit inflation, which Britain in particular seemed perennially prone to. Interest rates were repeatedly raised and lowered to cope, entrenching a pattern of economic boom and bust that was devastating for industry. It was not until the Great Moderation of the Nineties and early Noughties that the UK was able to kick the habit. Today the threat is very different and, many would argue, very much more serious – that of stubbornly persistent economic stagnation and price deflation. That we are still worrying about this a full six years after the start of the financial crisis is itself something of an eye opener. Trillions of dollars worth of central bank money printing was meant to have seen off the spectre of deflation once and for all. Regrettably, it has not. Not since the 1870s have real wages seen such prolonged and deep erosion. And if the eurozone does fall into outright price deflation, it will undoubtedly drag us down with it. Britain cannot for ever remain Europe’s debt-fuelled consumer of last resort. What’s all the fuss about, some ask? Falling prices – that’s surely a good thing? For those with secure forms of fixed income, it most certainly is; it makes them better off. It is also undoubtedly true that there are “good” forms of deflation, created generally speaking by bountiful, and growing, supply. We can include falling commodity, food and energy prices in this category. When these basics fall in price, it puts money in people’s pockets for spending on other things.

It was this type of “good” deflation that characterised much of the Industrial Revolution, and to a lesser extent the 1920s, when there were productivity-enhancing breakthroughs in the application of technology that massively expanded supply. Prices dropped, but consumption, living standards and output boomed.  Yet unfortunately they are probably a comparatively minor part of today's deflationary story. Current deflationary pressures seem substantially to be made up of the “bad” variety, particularly in the Eurozone – the kind that stem from financial crises, deep recessions, and big debt overhangs, where demand is depressed below the level of supply. Monetary activism (Quantitative Easing) may have helped save the UK and the US from greater calamity after the financial crisis, but it only steals growth from the future and from others. One effect of loose money is currency devaluation, which might give a temporary boost but merely shifts the deflationary problem onto other states. This in turn produces a race to the bottom as each country attempts to outdo the other. Globally, it’s a zero sum game."

It is of both concerning and note-worthy to read this week that "Larry Summers, the former US Treasury Secretary, said it would be a mistake to dismiss the current financial squall as froth. Markets often sense a gathering storm when policy-makers are still asleep at the wheel. He has long argued that the world economy is so far out of kilter that it takes permanent financial bubbles to keep growth going, an inherently unstable structure."

 

GLOBAL FINANCIAL RESET 2016 ONWARDS - MOVES INTO PHYSICAL GOLD AND SILVER:

It is precisely this global and financial RESET that I believe will begin to emerge in 2016 and why I believe as I stated earlier in this piece that the next financial crash will affect more everyday people than the 2008 crisis.  To explain this view I highly recommend, if you have 45 minutes to spare, to watch a crucial and very insightful video by Mike Maloney entitled, "The Perfect Economic Storm is Here - Speech at the Silver Summit" (December 2015)

"Never before in history have all the governments of the world laid down the foundation for the perfect economic storm. And in this just-released presentation from Mike Maloney, you’ll discover why we can not avoid it. It was recorded LIVE at the 2015 Silver Summit. And it’s loaded with new research that proves a financial crisis of epic proportions is headed straight toward us. As you would expect from Mike, it’s all laid out in eye-opening charts everyone can understand. This talk comes on the 10-year anniversary of Mike’s uncanny 2005 Silver Summit appearance where he made several stunningly accurate predictions. They were unpopular at the time but many have already come to pass. Back then, he said the real estate bubble would burst. And it would cause a tsunami of foreclosures transmitting a crisis around the world instantly through derivatives. This was two years BEFORE Ben Bernanke even admitted there was any kind of housing bubble. And it happened. Mike also said stocks would crash. They did 3 years later. And he said that these events would trigger deflation. But that Ben Bernanke, Chairman of the Federal Reserve at the time, would do everything in his power to prevent that. He said Bernanke would re-inflate stocks, bonds, and real estate with an unprecedented amount of money printing. This also happened. Now, Mike reveals what’s coming next. And it could catch 99% of all investors off guard."

But, as always, if you do not have the time, I highly recommend watching from the 34 to 37 minute mark.  In that section Maloney shows one of the most stunning graphs I have seen in relation to the current price of Gold.  As far as I can research, the graphic is not available elsewhere online, outside of the recorded seminar.

He explains that when the price of stocks is between 5 to 10 times more than the price of Gold, Gold is undervalued.  And when the price of Stocks is 10 times or more the price of Gold, then Gold is ON SALE! 

Remember I asked you to remember the number 15?  Well, based on yesterday's Dow Jones close of $16,516 and today's Gold price of $1081, today's Gold price is a staggering 15 times cheaper than the Dow Jones!  That means that Stocks are in a massive bubble, while Physical Gold is beyond highly undervalued, it is ON SALE!  Click the video link and fast forward to 34 minutes to see the historical, economic facts of where we sit today.  This is why I believe 2016 will be an incredibly bumpy ride, with massive loses in Stocks and why I believe Physical Gold and Silver will be the safe havens of choice.  Going back to the Royal Bank of Scotland's quote warning to get out of the stock market, "In a crowded hall, exit doors are small" that is also inversely true if you are trying to get into the room of Physical Gold and Silver ownership in a future stampede! We recommend entering the room quietly and steadily now before the rush.   

I like to keep track of what people say and whether their finanical insight comes true. Out of interest, Mike Maloney predicted a period of inflation followed by Deflation back in 2005!  That archive video clip is also available at the beginning of the video link above.

Maloney concludes his seminar in December 2015 with the following statements, which I'll précis for you:

"Right now is your greatest opportunity. Anybody who claims that this precious metals bull market is over with isn't looking at the evidence." [Re: trend lines] I think we're going to see spectacular performance because, this time, [as opposed to 2008] Gold will be rising against a stock market, a real estate and a bond market crash, probably accompanied by a change in world monetary systems. 

We've had the classical gold standard before World War I, the exchange standard between the Wars, the Bretton Woods system for 1944 - 1971 and the global dollar standard today.  They are very different world monetary systems. The previous monetary systems were all baby steps off of Gold and now we're going to go from nothing but basically debt backed currency, probably to something that is going to be a huge transition.  Every body on the planet will feel it. Previous transitions only the banks and governments felt. This time its going to affect everybody on the planet. So when and how high?  I do not know.  I just know that its impossible for it [the price of Gold and Silver] to stay down at the bottom where it was."

Call the Bleyer team now on 01769 618618, email [email protected] or order online. We look forward to helping you purchase your own Physical Gold and Silver in 2016.  For a personal consultation to discuss putting Gold into your pension, with no obligation, please call and ask for our C.E.O. Caroline Peers in the first instance.

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