David Morgan On the Dollar’s End-Game: Deflationary Crash Or a Hyperinflationary Monetary Collapse?


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:

What?  Traders worry?

We recorded this week’s show Thursday afternoon, only hours after Banco Espírito Santo’s share price more than halved.  As we all know and would expect, the financial press has been parroting official sector denial about the gravity of this problem for well over a month.  But fears of a deflation contagion is spreading.

Add on top of this Argentina’s latest debt default, a whole swath of disappointing corporate earnings reports, continued Fed tapering (now down to $25 billion in asset purchases per month), raging geopolitical tensions and the stage was set for a big hair-cut for the general equities market.  The Standard & Poor’s 500 Index declined 2% while the VIX index measuring volatility leaped 27% after a multi-month downtrend in the face of astounding levels of investor and speculator complacency.

Market volatility is rising after the S&P 500 ended its longest stretch of calm since 1995. Including today, the index has posted gains or losses of more than 1 percent three times in the past two weeks, compared with no equivalent moves during the 62 days through July 16th.

VIX - 3 years - July 31 - 2014

Deflationary bust or inflation blow-off:  David Morgan’s Take

With this as backdrop, our visit with David Morgan couldn’t have been better timed.  David is a “big picture” thinker, and he’s well versed in market history.  Ultimately, he believes an inflationary blow off will develop and I share his view.  But there’s a distinct and rising probability we might see a deflationary implosion first, which will usher in another tidal wave of fiat debt creation to float the Western financial system.  That cycle played out during the last financial crisis, but with a large percentage of the impacts of inflationary credit expansion simply canceled out as bad debt transitioned to “money heaven,” courtesy of undertaker Ben Bernanke.

It’s a bit disconcerting to watch oil dive right along with gold, silver and the general equities market.  West Texas Intermediate Crude slid 1.78% today, primarily driven by economic slowdown concerns.  But we’re probably also seeing a modest increase in the pricing in of rising probability of a deflationary “accident.”  We’ll have to keep a close eye on the credit default swap market, credit spreads in general and the smoke billowing out of Portugal because we already see plenty of smoke and it’s just a question of how big the fire will prove to be.  With a combination of a bail-in of depositor funds and bond holders taking a hit, the powers that be will probably succeed in ring-fencing Banco Espírito Santo and, in turn, protect against associated counter-parties becoming a long chain of falling dominoes.  It’s safe to assume Janet Yellen isn’t having a good week.

Tune in to the show for David’s big picture take on the perennial inflation/deflation debate.  Click here to visit his website.

gold - july 31

silver - july 31 - 2014

Gold and silver whacked

The last two weeks have been irritating to say the least.  Historically, gold is almost always taken to the woodshed and beaten down during the initial phase of significant geopolitical events.  Add to this the concerted effort to take gold under $1,320 and then $1,300 to ensure the bullion banks not having to pay long options speculators and viola, another month of farcical COMEX trading comes to a close.  Pity.  The first half of July saw significant departures from normal cartel capping patterns we reported on, which underpinned our expectation that higher prices would continue through the entire month.  Nevertheless, the cartel hasn’t been able to engineer sustained price declines during 2014 and early August will likely prove no different, with an upside reversal in the near-term.

Given the escalating turmoil on the geopolitical front, be sure to check out the Geopolitics section of The News Doctors this weekend;  click here.  I will be hand selecting insightful reports and publishing all weekend.

Thanks for tuning in!  — Eric Dubin, analyst, TND Managing Editor and occasional Flying Wombat.