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Gold and Silver: the Global Robin Hood of Economic Collapses

Gold and Silver: the Global Robin Hood of Economic Collapses

Dear Reader

If I took my news from the B.B.C. then I would have nonchalantly enjoyed my breakfast, as I glanced at bland economic headlines such as, "Bosses more gloomy on growth" and "Shares in London slump amid oil rout."  To me, the weather is "gloomy" and slumping is what one does on the sofa. As usual, the B.B.C. takes an oddly bland line on our current economic times.  

In life and in general, it's much healthier to be a positive person.  Being positive doesn't mean being blind or naive, just positive. This balance is summed up rather clearly in a stunning article published in The Telegraph yesterday morning. It is stunning because it is both measured but rings the financial alarm bells really rather loudly, unlike the B.B.C.  To warn others is a positive, socially responsible action.

Here is an extract: "The global financial system has become dangerously unstable and faces an avalanche of bankruptcies that will test social and political stability, a leading monetary theorist has warned:  "The situation is worse than it was in 2007. Our macroeconomic ammunition to fight downturns is essentially all used up," said William White, the Swiss-based chairman of the OECD's review committee and former chief economist of the Bank for International Settlements (BIS). "Debts have continued to build up over the last eight years and they have reached such levels in every part of the world that they have become a potent cause for mischief," he said."  (What a beautifully laden word is "mischief"!)

"It will become obvious in the next recession that many of these debts will never be serviced or repaid, and this will be uncomfortable for a lot of people who think they own assets that are worth something," he told The Telegraph on the eve of the World Economic Forum in Davos.

"The only question is whether we are able to look reality in the eye and face what is coming in an orderly fashion, or whether it will be disorderly. Debt jubilees have been going on for 5,000 years, as far back as the Sumerians."

This type of measured, but un-whitewashed analysis, is more often than not found away from the mainstream media outlets, within online blogs and financial forums.  But what makes this so stunning a warning is that it is written by Mr Ambrose Evans-Pritchard who is International Business Editor of The Daily Telegraph. He has covered world politics and economics for 30 years, based in Europe, the US, and Latin America. He joined the Telegraph in 1991, serving as Washington correspondent and later Europe correspondent in Brussels.

He goes on to explain that, "The next task awaiting the global authorities is how to manage debt write-offs - and therefore a massive reordering of winners and losers in society - without setting off a political storm. Mr White said Europe's creditors are likely to face some of the biggest haircuts. European banks have already admitted to $1 trillion of non-performing loans: they are heavily exposed to emerging markets and are almost certainly rolling over further bad debts that have never been disclosed. The European banking system may have to be recapitalized on a scale yet unimagined, and new "bail-in" rules mean that any deposit holder above the guarantee of €100,000 will have to help pay for it.  The warnings have special resonance since Mr White was one of the very few voices in the central banking fraternity who stated loudly and clearly between 2005 and 2008 that Western finance was riding for a fall, and that the global economy was susceptible to a violent crisis.

White said stimulus from quantitative easing and zero rates by the big central banks after the Lehman crisis leaked out across east Asia and emerging markets, stoking credit bubbles and a surge in dollar borrowing that was hard to control in a world of free capital flows. The result is that these countries have now been drawn into the morass as well. Combined public and private debt has surged to all-time highs to 185pc of GDP in emerging markets and to 265pc of GDP in the OECD club, both up by 35 percentage points since the top of the last credit cycle in 2007."

If you don't own some Physical Gold and Silver yet, this sounds like the loudest and most measured ringing of the alarm bell I've yet read.  It sounds exactly the same as the sad but inevitable news that we have been championing here in the Bleyer blogs.  But this is one of the calmest, most high profile warnings I have read in recent times, not only in the mainstream media but in The Telegraph; one of the most respected and level-headed broadsheets.

But, to pick up on one small point, what does William White, the Swiss-based chairman of the OECD's review committee and former chief economist of the Bank for International Settlements (BIS) mean when he says, "Debt jubilees have been going on for 5,000 years, as far back as the Sumerians."  A jubilee is actually a Biblical term, meaning the 7 and 50 year cycle of clearing debts and setting the counter back to zero.  But it is more than just counting years. The term "Jubilee" is a concept based on eternal justice that those who try to steal from the poorer sections of society, through extortionate interest or financial injustice, have their own accounts wiped by something greater than themselves; a cosmic leveling of the playing field, if you will.  It is a surprisingly philosophical term for the Chairman of the OECD and former chief economist to use but use it he does.  It is also born out from facts and figures.  Every fiat paper currency system in history created at some point collapses. 

But his analysis links in nicely with the exact same quality that Physical Gold and Silver both hold; an ability through the creations and collapses of man-made currencies, to level the playing field in times of trouble.  Mike Maloney, to whom we refered in last week's blog, often calls the ownership of Physical Gold and Silver before the coming currency collapse "our greatest opportunity for Wealth Transfer in history."  Gold and Silver are the Robin Hood of currency collapses, if you will.

But are Mr William White and Mr Ambrose Evans-Pritchard alone in their measured warnings? Or are the B.B.C correct in their "nothing to see here" except a little slumping and a bit of a gloomy day approach?

France, Germany and Saudi Arabia have all announced their economies are in desperate straits but so far this news is not really coming through loud and clear into the mainstream reporting, so we thought we'd give you advance notice of just how many countries are announcing financial woes. Unlike the Great Depression, today's economies are truly linked globally:

Saudi Arabia: "The Middle Eastern kingdom unveiled a £66 billion ($66bn) deficit for 2015, 15 per cent of GDP, after fuel revenue failed to provide enough to balance out the government's spending. In the past huge oil profits have funded the Saudi Royal Family's decadent lifestyle and enabled Saudi citizens to be able to work without paying income tax on top of state-funded benefits. But now policymakers have announced plans to cut the deficit to £58 billion ($87bn) next year with the biggest shake-up of economic policyin the world's top crude exporter for over a decade."

France: "The President of France Francois Hollande declared a state of Financial emergency in France on January 18, 2016. France is already under Emergency since terrorists attacked Paris, in November 2015. French President Francois Hollande has declared a state of economic and social emergency to redefine France’s economic and social model." This is huge news that for some reason isn't being heralded loudly at this time.

Germany:  "Germany’s industrial production has slipped to ZERO per cent and customer confidence has plummeted in just part of a catalogue of disasters for Chancellor Angela Merkel."  To be fair, the fact that Germany's economy was struggling was reported way back in 2014, again by the observant Mr Ambrose Evans-Pritchard and that was before the social and migratory changes currently sweeping mainland Europe.  Back then, most of the mainstream media were telling us how strong Germany was within the Eurozone. Warnings are warnings precisely because they tell you to take action BEFORE a crisis event.  If they are telling you about the event that is either unfolding or has already happened, that's just reporting. It takes a brave and unusual "reporter" to cross categories and warn.

We know that Greece, Spain and Italy are all in a disastrous economic state. That is not being alarmist, that is just a fact.  Do we feel the desire to bury our head in the sand?  We reiterate and encourage you to follow Mr William White's approach - "The only question is whether we are able to look reality in the eye and face what is coming in an orderly fashion, or whether it will be disorderly."

Owning some of your own physical Gold and Silver is part of that "looking reality in the eye" now.  Also, it is highly recommended to get out of debt and save as much as you can. 

As I write this, I have just seen that William White's comments have been re-reported in The Business Insider this morning; it is good news that this excellent piece is being spread but the Business Insider is still in many ways what its title suggests, business information for the insider.  The main stream British public are still probably in the dark.  The economic restructuring that is coming is going to be a shock to many, we really hope it is not a shock to you, our readers, because of our weekly newsletters and blogs.  I hate to say it but most economic collapses in history, because of their very unpleasant nature, are accompanied by war.

And the two largest economies in the world are in extreme trouble; the U.S. and China.

The U.S.: “Peddling fiction” …this is what Mr. Obama said of anyone who believes and says the U.S. has a weak economy. How ironic he should say this when he did, the State of the Union address? I mean the timing could not have been any better! In a week where oil prices hit a 14 year low, freight rates at over 30 year lows, equity, credit and FOREX markets all over the world are crashing and derivatives blowing up. How do we know derivatives are blowing up? Simply because the Dallas Fed has given their banks permission not to mark energy debt to market. In essence, the Fed has instructed their banks TO PEDDLE FICTION!" (Bill Holter, 19 January 2016)

China:  "The start of this year has been the worst for financial markets since the onset of the Great Depression, with stock prices slumping around the world amid mounting concern over the situation in China."(The Times, 16th January 2016)  I first wrote that something big was going to happen in regards to China and the economy back in April 2015 and again in June 2015.  

However, as Casey Research so succinctly remind us in their "A Glimpse into the Coming Collapse" in January of last year, "none of the above was the result of gypsy fortune-telling, nor did it require the brightest of minds to work out. It is mostly based on the simple assumption that history repeats itself—that the world's leaders make the same mistakes in every era, because human nature never changes. Anyone who is willing to expend the effort to study history diligently and to be prepared to think in contrarian terms, may develop a meaningful insight into the events of the future."

And how is all this turmoil affecting the real price of owning your own Physical Gold and Silver? Let's consider that we don't act the first time we are warned but we do act the second time? Based on that, if we had moved our wealth into Gold Sovereigns, for example, back in June 2015, we would already be looking at a 4%* increase in our savings in just 7 months, and I really don't think we've seen anything yet in times of global economic collapses and restructuring. (*based on the increase in the sale price of 1 x Gold Sovereign in June 2015 of £198 compared to today's price of £203; a move of 4%) I probably don't need to tell you that that is two to three times the interest rate on pretty much all high street current accounts. And for the few bank accounts that have interest returns that are comparable, strict terms apply, usually being able to pay in over £1,500 a month.  No such rules with owning physical Gold and Silver. Buy when you want, spend how much and when you want, sell when you want.

And finally, a look at the U.K.:  "The value of the pound has been sliding on international currency markets, declining nearly 4% since the start of 2016" So what is causing this? Apart from the historically low interest rates for savings, which make holding the pound less appealing in international markets, "there are other factors at work as well, explaining the Bank of England's reluctance to raise interest rates. Weak economic data is casting doubt on the future performance of the UK economy, with inflation persistently well below the Bank of England's 2% target and earnings growth slowing down from a six-year high. Earlier this month, figures for November showed that UK industrial output had suffered its sharpest decline since 2013." Last week the Chancellor, George Osborne warned that "the UK was facing a "cocktail" of serious threats from a slowing global economy. He added that this year was likely to be one of the toughest since the financial crisis, and that far from "mission accomplished" on the economy, "2016 is the year of mission critical". In this context, the pound's latest woes seem a fair reflection of uncertainty ahead."

In conclusion, sometimes the best we can do is to say what needs to be heard, not what wants to be heard and the news is not currently pretty. 

Owning Physical Gold and Silver has been a method of protecting one's wealth and / or keeping one's head above the economic waves during many storms in history. It is "real money" and an asset of real inherent value, unlike all our international paper currencies:

"We all know that gold prices in US dollars have been in a downtrend for about 4.5 years. We all know that gold prices rise, on average, as the underlying currency declines in value.  Gold in the US was priced under $21 per ounce when the Federal Reserve was established.  Since then the dollar has been devalued and gold has increased in price by a factor of about 50. It is the same story around the world, whether you evaluate in terms of British pounds, euros, rubles, yen, or any other debt based fiat paper currency." (ZeroHedge, 15 January 2015)

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.  

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Comments
1/20/2016 3:07 PM
Great article Jennie, from what I've been reading in the papers the fact that the UK is undecided over Europe has a lot to do with the unpopularity of sterling.  This has taken it's toll on our exchange rate which I watch keenly as I buy gold and silver which are mostly followed in US Dollars.