The world is sitting at the edge of a massive deflationary cliff.
The world is undergoing a major economic transition from deflation to inflation. Sadly, very few retail investors are correctly positioned to benefit from this exciting change.
The early 2016 rally in gold stocks was the canary that sang loudly in the “inflation is coming” coal mine.
What’s coming in 2017 is not a “bull market”. It’s the start of a wondrous bull era!
DEFLATION is coming – just not in the price of gold and silver…
And it sure looks angry…
It’s not a question of either/or. It’s not a debate over inflation VS. deflation.
It’s only a matter of WHEN we’ll end up with BOTH.
What I believe we will see is what we have always seen as a final result of fiat currencies, a collapse of confidence. Call it what you want, a deflationary collapse, or hyperinflation, the end result will be “confidence” in the U.S. dollar will collapse.
A break in the confidence of fiat currency will end with many currencies being replaced, this is a major part of your coming “re-set”.
Ask yourself this, in a financial collapse, “what will be safe”? Will your bank, broker or insurance company be safe, or even still solvent? Will our over indebted government be safe?
Will the pieces of paper or digital credits issued by this “safe” government and held by your “safe” institution …really be safe?
Where are consumer prices headed and how this might affect precious metals?
This looks like the beginning of a severe deflationary cycle.
It is going to get worse before it gets better.
The central banks will try to correct this deflationary spiral with further reduce interest rate reductions, massive new doses of QE, moving even deeper into negative territory, a strategy that has proven to be a complete failure.
This does not bode well for any asset class.
Excess cash will not be loaned out, thus cramming more capital into the bank balance sheets, doing nothing for the global economies except stockpiling fuel for a burst of hyperinflation.
And central banks are running scared…
I want you to imagine this nightmare scenario for a moment.
At the local grocery store, the horrific realization finally cold-cocks you: prices are 0.4% CHEAPER than they were a month ago.
Trying not to panic, you grab your children and race home, speeding through every red light on the way, and then immediately hunker down to wait for the coming zombie apocalypse.
Deflation has arrived. And as terrifying as it sounds to have to suffer from prices that have fallen ever-so-slightly, that’s exactly what the unfortunate people of Sweden had to deal with earlier this year.
IF I’M RIGHT ABOUT THIS, things are going to get even worse before they get better. Why? Because hardly anyone else is talking about it! By the time the world outside of SD finally figures out what’s going on, the stock market will be crashing, crude will be near $80 and the metals will be even lower, particularly silver.
As things begin to unravel in October and November, The Fed will be forced to act.
Remember, their primary stated mission is prompt employment and inflation.
Deflation is their number one enemy and they will do anything (and this includes QE4) to avoid it!
The world’s leading silver expert David Morgan joins The Doc & Eric Dubin this week to discuss:
- The Fed tapers official QE another $10 billion- gold & silver whacked the day after the FOMC statement yet again
- David breaks down gold and silver trading over the first half of 2014: Gold & Silver still base building a Major Bottom
- Is the next banking crisis beginning? Banco Espírito Santo’s share price halved on Thursday
- Be right and sit tight? David explains why the PM markets will scare you out or wear you out
- We ask David how he sees the end-game for the dollar playing out- will we see a deflationary crash, or a hyper-inflation monetary collapse, and how will PMs protect wealth against both?
- On the Brink? Washington driving West towards direct conflict with Russia
The SD Weekly Metals & Markets With The Doc, Eric Dubin, and David Morgan is below:
When is the system going to break down? The answer is 2008.
The tipping point was the Lehman kill in Sept 2008, following the subprime mortgage collapse.
It was a death event for the US banking structure, which should have forced liquidation of all Wall Street firms.
Then came the Financial Accounting Standards Board relaxation of rules in April 2009, which still permits the big US banks to declare their assets at any value they wish. They hide grotesque insolvency. Their liquidation would not happen, instead zombies walked.
The next tipping point was the Federal Reserve announcing a move toward the Zero Percent Interest Rate (ZIRP) in early 2009, followed by the bond monetization initiative (QE) in early 2012.
The most recent tipping points are the Syria War and the Ukraine War to obstruct the Russian Energy Monopoly in the European energy market. The defense of the USDollar has taken historically unprecedented turns.
These cited extreme events are all serious tipping points. Since 2009, the vastly depleted, exhausted, and wrecked body economic of Uncle Sam has been kept going with life support, electric shock treatment, and the formaldehyde elixir.
No recovery comes. Systemic failure and total breakdown are assured.
The only protection is Gold & Silver coins and bars. The hyper monetary inflation has met the asset destruction.
With the Eurozone going to the extreme of negative interest rates and the IMF belatedly revising downwards their expectations of US economic growth, deflation is now the favoured buzzword.
It is time to untangle myth from reality and put deflation in context.
When the Federal Reserve drops the yield on savings to near-zero to funnel all that stolen wealth to its cronies on Wall Street, how is that not theft?
Monopoly power in all its forms–in our system, crony capitalism and its partner, the neofeudal state–enables theft on a systemic scale.
1) Thieves control the government; 2) Which results in increased stealing; 3) Deflation results from that; 4) Which gives the thieves a reason to print money and give it to themselves; 5) Which enriches the thieves some more; 6) Which gives them more resources they can use to consolidate their control of the government; 7) Back to step 1.
Many people seem confused about how there could be deflation in the paper (or digital) money era. If they would recognize how much stealing is going on, and if they understood the powerful deflationary effect of stealing, then perhaps they would not be so surprised to observe price decreases, particularly in wages and the prices of manufactured products.
After QE was unveiled in 2008, Western investors began to buy gold and related items with aggression. They believed that the Fed’s QE program would dramatically increase the money supply. They were correct.
Unfortunately, these investors didn’t understand that if a huge money supply has declining velocity, there is no meaningful price inflation created, at least in the short term.
By 2013, mainstream reports showed that inflation had still failed to materialize. Demoralized QE-focused investors began to liquidate their gold and related holdings, and booked substantial losses.
Did they give up just as money velocity is about to reverse the downtrend?
Many people believe there is a significant risk that the Irving Fisher debt-deflation theory of great depressions is still an economic threat today. They overlook the fact that Fisher published his theory examining debt-deflation events under a gold standard, which does not apply today. Financial credit contractions therefore take a different appearance.
This is not the situation today. The absence of the gold discipline allows central banks to replace credit with quantities of raw money sufficient to ensure that debt-deflation is bought off.
Is the coming financial collapse going to be inflationary or deflationary? Are we headed for rampant inflation or crippling deflation? This is a subject that is hotly debated by economists all over the country. Some insist that the wild money printing that the Federal Reserve is doing combined with out of control government spending will eventually result in hyperinflation. Others point to all of the deflationary factors in our economy and argue that we will experience tremendous deflation when the bubble economy that we are currently living in bursts. So what is the truth? Well, for the reasons listed below, I believe that we will see both.
Cash will not be king for long. In fact, eventually cash will be trash. The actions of the U.S. government and the Federal Reserve in response to the coming financial crisis will greatly upset much of the rest of the world and cause the death of the U.S. dollar.
The next major financial panic will cause a substantial deflationary wave first, and after that we will see unprecedented inflation as the central bankers and our politicians respond to the financial crisis. This will happen so quickly that many will get “financial whiplash” as they try to figure out what to do with their money. We are moving toward a time of extreme financial instability, and different strategies will be called for at different times.
So why will we see deflation first? The following are some of the major deflationary forces that are affecting our economy right now…
Jeff Nielson from Bullion Bulls Canada joins SGT to discuss the global flight out of paper gold and silver and into PHYSICAL bullion. We also talk about the new CBC documentary “The Monarchs of Money” – and how it attempts to elevate the Central Banksters to benevolent servants of the financial markets, even as it shares some truth. We wrap things up with a conversation about deflation VS inflation VS hyperinflation — Jeff says, without a single additional printed dollar, the US and all major countries on earth could find themselves in a state of hyperinflation the minute the Banksters unleash the TRILLIONS already printed.
Tangent Capital’s Jim Rickards was on CNBC’s Fast Money today, discussing gold in the wake of the recent smash to $1320.
Rickards called the smash a transition from weak hands at the COMEX to strong hands in China and Russia (& physical buyers across the world).
Rickards stated that the trend is up from here, although gold is likely to trade sideways for a majority of the year before climbing in Q4.
Rickards informed the CNBC shills that gold does well in periods of either inflation or deflation, and that The Fed will do everything they can. When they can’t win the battle against deflation, they devalue the currency against gold ’cause gold’s the only thing that can’t fight back.
The Currency Wars author states that If the Fed wins we’ll get inflation and gold will go up. If deflation prevails, we’ll wake up one morning and gold will be (revalued to) $4,000/oz.
Rickards’ MUST WATCH thoughts on gold are below:
Submitted by Deepcaster:
The five year chart of the CRB Index (a Broad Measure of Commodities Prices) shows three descending tops, which is suggestive of Deflation. But to conclude that Deflation is likely to be The Ruling Force in the Economy in 2013 would be a Dangerous Error.
Indeed, it is critically important for Investors to understand whether or not we are in an Inflation or Deflation, or both (we later explain how this is possible). Failure to understand The Reality about Deflation and Inflation is likely lead to poor or even lethal Investment decisions.
Here we explain The Inflation/Deflation Reality and indicate how to Profit.
In 2013, we will continue to see inflation in terms of the US dollar currency, and deflation in terms of gold.