The Stages of Economic Collapse and Gold
We first examined this issue back in 2013. Now at the beginning of 2015 the original article is truer than ever. Today Jennie re-examines this Cycle, looks at where we are now and what you can do to take responsibility for your own Wealth Protection.
Every Empire lives through seven economic stages, and then it falls. It is as predictable as the cycle of days of the week or the moon and the sun. One of the financial commentators who most clearly explains this process is, in our opinion, Mike Maloney. Maloney believes that “the world is going to have a new monetary system in this decade that we’re in. We’re going to experience this huge deflationary crash around the world. People will just lose confidence in currency. And what do they always go back to throughout history? Time after time for the last 5000 years actually.... Gold and Silver. It always plays out in seven stages. It always ends with Gold delivering a knockout blow to debased currencies.”
Maloney’s superb video presentation of 30 minutes builds on Dmitry Orlov’s mapping of the fall of the USSR in his earlier book “Reinventing Collapse” (2008) which I first reviewed back in 2013. Orlov, a Russian-American engineer and economic writer, identifies five stages of societal collapse which occur alongside economic collapses.
Another commentator who over-views this cycle perfectly is James Turk: “In a world of floating currencies and that’s what all national currencies are today, they bob up and down relative to each other but they’re all sinking relative to Gold. That includes the dollar as well as the Euro, and the British pound, and all the others. They’re going to continue to lose value. They’re going to continue to lose purchasing power.”
Maloney states that he does not personally think there is a way to “avoid what’s coming, there’s not a way to fix it right now. There’s only a way to let it wipe you out or to benefit from it.”
So, to re-assess what we examined in 2013 almost two years on, the Seven Stages of Empire are:
Stage 1: The Empire has ‘good money’ backed by Gold and Silver
Stage 2: Social programs and public works develop
Stage 3: Political influence grows. Massive military build up to protect this influence
Stage 4: Puts military to use. Expenses increase, so taxes go up
Stage 5: To pay for these expenses, the government begins to take the wealth of its people by stealth through either:
- debasement of its currency and/or
- the creation of fiat currency which can be created in unlimited quantities
- what it can’t raise by taxes, it borrows
Stage 6: This debasement in currency is sensed by the general population. A loss of faith in government and currency occurs.
Stage 7: An end mass-movement out of the fiat currency into precious metals, causing end of paper currency and hyper-inflation.
It is now very clear to see that the world is squarely within Stage 6. Personally, over the last 18 months, it feels as if we are in a holding pattern in this Stage now. All the natural fundamentals in the markets seem to be artificially held down, white-washed, and the free market price of Physical Gold and Silver surpressed in relation to their paper price (ETF’s etc.) There is always a silver lining, excuse the pun. This has created an elongated buying opportunity for our more savy clients to position themselves in Physical Gold and Silver before Stage 7 begins.
The following article was published in The Telegraph on Saturday 13th of August, 2011. It is what we have been describing to our clients via our Gold and Silver Education programme of blogs and articles for several years. It’s well worth a read together with the comments providing an educational discussion afterwards: “The 2008 crisis represented the first recognition that those increases in asset prices and economic growth were chimerical. The recent relapse represents a recognition that the losses have merely been transferred on to sovereigns' balance sheets. But what next?”
Also, back in 2013, Speaker John Bimelow had this to say at the Gold Rush GATA Conference at the Savoy London at which a representative of Bleyer Bullion was in attendance:
“The Wealth Effect is an economic term which refers to an increase in spending that accompanies an increase in perceived wealth. People tend to spend more when one of two things is true. Either when people are actually richer, or when people perceive themselves to be richer. To explain, the assessed value of a family’s home increases so they perceive themselves to be wealthier. The banking system offers them extended credit facilities and they begin to spend. In reality, the family is no richer. They have not increased their estate by their efforts, their education, or by doing more work – it’s all down to perception. All that is happening is the family perceives wealth and spends capital like its real wealth when in fact it is debt.”
John Bimelow closed by saying that all bullion based investment vehicles must be 100% backed by the commodity (physical gold or silver) or you are only investing in contracts, concluding that what is about to happen is a transfer of wealth. “If you’re not in gold and silver then you’re on the wrong side of the trade.” We at Bleyer are in full agreement and this is why we only trade in Physical Metals, not certificates. Bloomberg published an article last June stating that the ratio of physical Silver to SLV certificates is a staggering 250:1. Four years ago it was 100:1. This means today if 250 investors who held the same amount of SLV certicates wanted to take delivery of their Metal, only 1 would receive it. This is why we believe so strongly in owning your own Physical Gold and Silver.
David Morgan outlines the consequences of the idea of perception of wealth in Maloney’s Seven Stages of Empire video : “In 1965 silver was debased in the United States so that silver content in currency went from 90% to zero. Instead they put out something in a Gold or Silver looking form. For me it’s at a subconscious level. Why are they making them (coins) gold coloured? Why are they making them silver coloured? I think there’s an inherent knowledge in the human specie that knows Gold and Silver have value. So if they look in their pocket and then see something gold or silver coloured, it gives them kind of a warm fuzzy feeling. But there’s NO value in these coins REALLY.”
We at Bleyer Bullion strongly believe in helping everyone into the Physical Bullion market to position and protect their wealth, whether that is a few hundred pounds up to millions. We have noticed over the past few years a considerable growth in new clients; people who have never considered buying Physical Gold and Silver before. In 2012 alone about 80% of our clients were first time buyers. In 2013 – the year I originally began to look at and publish these Stages of Empire – Bleyer experienced a 29% increase in Sales and a 60% increase in clients storing with us, the majority of whom continue to store with us today in 2015.
We are a straight forward, professional and approachable team who encourage our clients to take responsibility for their own research and choice of products. We can advise on which products will save you both V.A.T and Capital Gains Tax in the UK and how each product can work for you. We offer both Secure Storage in England and off-shore, and a range of secure home safes. To find out more call the Bleyer Team on 01769 618618 and begin to transfer out of paper currency into the historic store of wealth that is Physical Gold and Silver. We offer a wide range of Gold and Silver pure bullion bars and coins from as little as approx. £15 per coin to tens of thousands per bar. We work with clients from a variety of financial backgrounds and hold your discretion and bespoke customer care in high regard.
I'd like to leave you with a quote from a Greek writer, when he saw the debasement of his own currency, back in 405 BC to show how timeless and repetitve this Cycle of Currencies really is. This extract is from “The Frogs”, a comedy written by the Ancient Greek playwright Aristophanes. It was performed at the Lenaia, one of the Festivals of Dionysus in Athens, in the same year. It could be as true of the debasement of all world currencies today as it was then:
“I have often noticed that there are good and honest citizens in Athens, who are as old gold is to new money. The ancient coins are excellent in point of standard; they are assuredly the best of all moneys; they alone are well struck and give a pure ring; everywhere they obtain currency, both in Greece and in strange lands; yet we make no use of them and prefer those bad copper pieces quite recently issued and so wretchedly struck. Exactly in the same way do we deal with our citizens. If we know them to be well-born, sober, brave, honest, adepts in the exercises of the gymnasium and in the arts, they are the butts of our contumely and we have only a use for the petty rubbish, consisting of strangers, slaves and low-born folk not worth a whit more, mushrooms of yesterday, whom formerly Athens would not have even wanted as scapegoats.”