Mad Max Scenario
QUESTION: You said we may enter a Mad Max scenario, if so would the Dow go to 0?
ANSWER: Everything goes to ZERO including gold. That is a Dark Age and this is caused by corruption in government, high taxes so people just walk away from real property, war, crop failures, and effectively you end up without money, any rule of law, and a the entire system reverts to plain barter from where it began. This took place in Greece between the Heroic & Hellenistic periods, Rome, and Japan. Hopefully, we will blink before we go too far but weather is going crazy as well and that is not good. Nothing survives because there is no rule of law, which is the cornerstone of civilization. Remove that, and you cannot own anything as title becomes mere possession. When Rome fell, there was the knee-jerk reaction of trying to put it back together and the barbarians tried to even imitate the coinage. But that soon died out and coins largely vanished during the 7th century. In Japan, the abuse of money by government and the lack of a rule of law led to the collapse of the monetary system and there was NO MONEY even coined for 600 years.
Money (gold and silver) evolved as a medium of exchange to facilitate barter. They had no utilitarian value so they evolved as a medium of exchange only as a luxury. The core of money was something of a practical nature that one needed. The two most common forms of a medium of exchange are (1) food which was cattle and grain, with the second (2) bronze for use as a tool. The earliest forms of money in Rome were grain and cattle and as bronze emerged, ingots traded with images of cattle and grain. These were both symbols used on early bronze ingots for they were a substitute for the real thing..
When we look at Italy and the Romans, we find the idea of MONEY and VALUE emerges from cattle, which even today provides the foundation for the terminology of MONEY and financial interests. The Latin for cattle was “PECUS” from which emerged the word for MONEY that became “PECUNIA” in Latin. At first glance you may not see how we still use this word and concept of cattle today. When someone has a financial interest in something, he is said to have a “PECUNIARY” interest. Cattle thus were the valuable object that served as the MEDIUM OF EXCHANGE and the UNIT OF ACCOUNT.
A Mad Max Scenario is the collapse of everything and we head into a dark age. That would only be likely (1) if we do not blink, and (2) after the peak in 2032.
Gold – To Sell or Buy – That is the Question
QUESTION: I own physical gold and silver do I sell hold or just give it away?
ANSWER: It depends on what proportion you have invested in physical metal. This is the problem of the promoters. They only say buy with no regard as for the threshold of an individual’s pain. It is like terrorism. The leaders tell the zealots to die for the cause and they will get a herd of virgins in heaven. They themselves would never do that – but they just tell others to do what they themselves would never do.
If it is a 100%, that is not good. The world will not end tomorrow. We are not getting off that easy. You should be diversified into equity. Keep in mind that the rally in the gold stocks during the late 1930s was caused by the DOLLAR DEVALUATION – making $20.67 worth of gold then $35. Keep in mind that IF the promoters were right and gold went to $50,000, the government would seize the mines like they did with the railroads and you will lose in gold stocks not gain. Do not put any more money into the metals if you have nothing else.
If you are a small percentage 25% or less, then you may look to buy the dip. Ideally 2013 should produce the low. It is possible that the intraday low could extend into early 2014, but by the end of that year gold will have recovered.
Selling physical positions rather than leveraged positions is entirely different. Futures you have to be a trader. Physical, unless you can show a tax loss, it doesn’t pay to buy and sell as long as it is not everything in one basket.
Central Banks Are Buying Equities – Watch the Dollar
Believe it or not, you better keep an eye on the dollar. Nearly 25% of all global central banks are all now buying stocks. The crisis that is emerging is there is really only one game in town – the DOLLAR!!!!! Japan is hopeless. Europe is on the verge of a major economic catastrophe with real negative growth and nations arguing over austerity while the unemployment among the youth is sending the continent into civil stress.
Everyone has been borrowing in dollars and there is the greatest short position of all time on the dollar. What is unfolding is the dollar is becoming the de facto world currency. This will result in causing the US economy to decline from 2015.75 and the high dollar will kill exports overseas. This is a dangerous position for it tends to lead to protectionism making everything much worse.
This is the mechanism that will result in the Phase Transition going into 2017 for gold.
Gold & Fort Knox
Some have asked why exactly is the inventory at Fort Knox relevant or not? Largely. no one is going to prove that there is no gold there and quite frankly it does not really matter. Thinking that proving there is less gold there will cause it to rise is absurd. That is still looking at only gold and not the entire scope of the economy. Gold is for the individual. It is not for the major institutions and government is not interested in gold. The ECB told Cyprus to sell it. There is no respect for gold behind the curtain and that may make people furious because they want the world to believe what they believe, but get over it. You will never convince all the people to join that idea just as they will not accept that money is simply a medium of exchange and not a savings account with a guaranteed value, yet they expect everything to rise in value from their wages to home prices. How exactly then can money have a fixed value when assets float?
The 1980 high in gold adjusted for inflation is about $2300. Gold in real terms has not exceeded the 1980 yet. Gold decline for 19 years. That is a long-time waiting to be right. It is 50% to 33% of your lifetime. Gold will rise when the markets are aligned.
When markets crash, you have to get back above the high on the day when the crash took place. Without doing that, you will fall again. In the case of gold, we need to get above 1500. Here is the Dow Jones during the 1987 Crash. It took months to accomplish that but there were no retest of the low other than mid-range movement. On the downside, we made a lower low this year so the correction has manifested nicely despite all the hatred hurled my way. If gold can break the 12600 level and reach the 1150 level, then it will swing the energy to one extreme enabling a strong counter-trend move. Gold will still struggle until it exceeds $2300.
So sorry. There is no SYSTEMIC MANIPULATION to keep the metals suppressed. There are one-off manipulations, but not systemic. None of the commodities have kept pace with the advance in the Dow. The idea that ONLYgold and silver are manipulated continually cannot be supported since they are in sync with the entire commodities perspective. It is not like copper is 15 times higher than 1980 prices and gold is not. If you only look at gold and silver ignoring the rest of the markets, then it is like having only a hammer and everything you see looks like a nail. Gold will take off when the entire sector is ready for prime time.
Thinking Out of the Box
Whenever someone disagrees with whatever you are saying, out comes the name calling. One of the most popular demeaning things to call someone is “genius” largely because the person using that term to ridicule another is someone stuck inside a box unable to see that the world around them is changing. Essentially, a genius is anyone who thinks outside the box and is willing to explore to see how things really work. They are not the “book smart” people who can repeat what they read, but the people who remain open minded. Einstein was called a genius. Why? Because he dared to never stop questioning and followed the evidence to reach a conclusion that was outside of the box.
Unfortunately, the majority simply conform. There are those married to this idea that the world revolves around gold and somehow we need to return to a gold standard. They fail to examine how that idea has always failed and this same theory of austerity is tearing Europe apart. They are unwilling to explore on an unbiased path to see where this is going or to ever consider for one moment that governments are headed toward electronic money to ensure 100% tax collection and see gold as a barbaric relic of the past.
Those willing to think outside the box are often ridiculed. They are typically hated by those who simply are stuck in a single idea and refuse to ever budge.If thinking outside the box is being a genius, then what does that make someone inside the box?
Genius is not knowing everything – it is willing to explore and remain open minded. Our greatest casualty in society stems from the fact that we have been unable to advance in our thinking as a society for we disregard the accumulative knowledge of centuries.
So as I said at our conference, everyone who attends must be a genius because they are thinking outside the box, willing to explore, judge on their own, and advance in knowledge rather than remain married to antiquated ideas of a system that has failed countless times in the past. In the Last Lion on Winston Churchill, the explanation is thought provoking on this subject matter.
Clearly there was something odd here. Winston, Davidson had conceded was the ablest boy in his form. He was, in fact, remarkable. His grasp of history was outstanding. Yet he was considered a hopeless pupil. It occurred to no one that the fault might lie, not in the boy, but in the school. Samuel Butler defined genius as “a supreme capacity for getting
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