Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Coronavirus Pandemic Vaccines Indicator Current State - 3rd Mar 21
AI Tech Stocks Investing 2021 Buy Ratings, Levels and Valuations Explained - 3rd Mar 21
Stock Market Bull Trend in Jeopardy - 3rd Mar 21
New Global Reserve Currency? - 3rd Mar 21
Gold To Monetary Base Ratio Says No Hyperinflation - 3rd Mar 21
US Fed Grilled about Its Unsound Currency, Digital Currency Schemes - 3rd Mar 21
The Case Against Inflation - 3rd Mar 21
How to Start Crypto Mining Bitcoins, Ethereum with Your Desktop PC, Laptop with NiceHash - 3rd Mar 21
AI Tech Stocks Investing Portfolio Buying Levels and Valuations 2021 Explained - 2nd Mar 21
There’s A “Chip” Shortage: And TSMC Holds All The Cards - 2nd Mar 21
Why now might be a good time to buy gold and gold juniors - 2nd Mar 21
Silver Is Close To Something Big - 2nd Mar 21
Bitcoin: Let's Put 2 Heart-Pounding Price Drops into Perspective - 2nd Mar 21
Gold Stocks Spring Rally 2021 - 2nd Mar 21
US Housing Market Trend Forecast 2021 - 2nd Mar 21
Covid-19 Vaccinations US House Prices Trend Indicator 2021 - 2nd Mar 21
How blockchain technology will change the online casino - 2nd Mar 21
How Much PC RAM Memory is Good in 2021, 16gb, 32gb or 64gb? - 2nd Mar 21
US Housing Market House Prices Momentum Analysis - 26th Feb 21
FOMC Minutes Disappoint Gold Bulls - 26th Feb 21
Kiss of Life for Gold - 26th Feb 21
Congress May Increase The Moral Hazard Building In The Stock Market - 26th Feb 21
The “Oil Of The Future” Is Set To Soar In 2021 - 26th Feb 21
The Everything Stock Market Rally Continues - 25th Feb 21
Vaccine inequality: A new beginning or another missed opportunity? - 25th Feb 21
What's Next Move For Silver, Gold? Follow US Treasuries and Commodities To Find Out - 25th Feb 21
Warren Buffett Buys a Copper Stock! - 25th Feb 21
Work From Home Inflationary US House Prices BOOM! - 25th Feb 21
Man Takes First Steps Towards Colonising Mars - Nasa Perseverance Rover in Jezero Crater - 25th Feb 21
Musk, Bezos And Cook Are Rushing To Lock In New Lithium Supply - 25th Feb 21
US Debt and Yield Curve (Spread between 2 year and 10 year US bonds) - 24th Feb 21
Should You Buy a Landrover Discovery Sport in 2021? - 24th Feb 21
US Housing Market 2021 and the Inflation Mega-trend - QE4EVER! - 24th Feb 21
M&A Most Commonly Used Software - 24th Feb 21
Is More Stock Market Correction Needed? - 24th Feb 21
VUZE XR Camera 180 3D VR Example Footage Video Image quality - 24th Feb 21
How to Protect Your Positions From A Stock Market Sell-Off Using Options - 24th Feb 21
Why Isn’t Retail Demand for Silver Pushing Up Prices? - 24th Feb 21
2 Stocks That Could Win Big In The Trillion Dollar Battery War - 24th Feb 21
US Economic Trends - GDP, Inflation and Unemployment Impact on House Prices 2021 - 23rd Feb 21
Why the Sky Is Not Falling in Precious Metals - 23rd Feb 21
7 Things Every Businessman Should Know - 23rd Feb 21
For Stocks, has the “Rational Bubble” Popped? - 23rd Feb 21
Will Biden Overheat the Economy and Gold? - 23rd Feb 21
Precious Metals Under Seige? - 23rd Feb 21
US House Prices Trend Forecast Review - 23rd Feb 21
Lithium Prices Soar As Tesla, Apple And Google Fight For Supply - 23rd Feb 21
Stock Markets Discounting Post Covid Economic Boom - 22nd Feb 21
Economics Is Why Vaccination Is So Hard - 22nd Feb 21
Pivotal Session In Stocks Bull Bear Battle - 22nd Feb 21
Gold’s Downtrend: Is This Just the Beginning? - 22nd Feb 21
The Most Exciting Commodities Play Of 2021? - 22nd Feb 21
How to Test NEW and Used GPU, and Benchmark to Make sure it is Working Properly - 22nd Feb 21
US House Prices Vaccinations Indicator - 21st Feb 21
S&P 500 Correction – No Need to Hold Onto Your Hat - 21st Feb 21
Gold Setting Up Major Bottom So Could We See A Breakout Rally Begin Soon? - 21st Feb 21
Owning Real Assets Amid Surreal Financial Markets - 21st Feb 21
Great Investment Ideas For 2021 - 21st Feb 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Gold and Silver Poised to Surge on Ticking Debt Bombs

Commodities / Gold and Silver 2011 Jul 14, 2011 - 01:58 AM GMT

By: Midas_Letter

Commodities

Best Financial Markets Analysis ArticleGold and silver are threatening to break new ground driven by one simple fact: Nearly all wealthy nations are labouring under one form of debt/monetary inflation issue or another. Ireland and Greek bonds have now been reduced to junk, Japanese bonds became safer than Chinese as reports of China’s massive deficits internally offset the rosy picture supported by 9.5% performance in the Chinese economy. Italy is looming large as the next bailout candidate, and the United States prioritize political brinkmanship over problem solving. Gold and silver are seeking new highs and threaten to break out strongly – especially now that the Fed has acknowledged a willingness to launch QE3.


The ridiculous posturing by Democrats and Republicans in the U.S. over the imminent rise in so-called borrowing makes it almost embarrassing to be human. They can’t even get out of the way of their own political agendas to solve a problem threatening to make politics obsolete. Certainly, I’d be embarrassed to be American. But on that point, I’d be embarrassed to be English, Irish, German, French, Swiss, Portuguese and especially Greek, Italian or Spanish. Stand close to any of the Davos men who constitute these nations’ finance ministers and you are immediately struck by the impression that you’re in the presence of the best-dressed con artists walking the globe.

But the creative rhetoric that has resulted in 2 + 2 equalling -4 since the deficit spending party got underway with the end of the Bretton Woods Agreement by the hand of Richard Milhouse Nixon is starting to disintegrate under its own inertia. The novelty and creativity of the formulas and structures, and subsequently, new language, required to continue funelling artificial dollars into broken down debt vehicles is yet insufficient and the charade is reaching its unavoidable and imminent end. Is it a coincidence that the debts, currencies, and economies of the top European, Asian and North American countries are all accelerating towards the brick wall of default at the exact same point in history? I smell a rat, or rather, a whole pack of rats. I think the ruling class, which is without a shadow of doubt corrupt beyond redemption, have figured out that if you bury your theft in a mountain of debt, it will never be found and you can ride off into the sunset undiscovered. Its time for the politicos and their brainwashed over-educated economists to disclose publicly both the amount of taxes paid on their sources of worldwide income.

But that’s another story. It amazes me, and then again it doesn’t, that there are no culprits in this grand global forum of doublespeak. The Greeks are guilty, but not a single Greek person has been named as responsible for anything that might constitute a transgression of fiduciary duty. The American president blames the Republicans, who blame the democrats. Again, nobody is fingered as the leader or treasury secretary or central bank chairman who is guilty of a crime, or even of towering stupidity. Greenpspan’s taking some heat, but he rode off into the sunset, and so in his dotage is a safe target. If corporations are the beard for the unsavoury acts of businessmen, then government is certainly the place to hide for leaders who seek to enrich themselves at the expense of the general public.

SELF DELUSION AS DESIRABLE SKILL-SET
It’s true that People tend to embrace the convictions that serve their circumstantial requirements. A cancer patient believes unequivocally he will beat the disease. A gambler believes just as forcefully that he can beat the house. An athlete believes he will win, and a judge believes he is qualified to pass judgment and sentence on the lives of others. In the United States, the President and Congress believe it is both their right and their obligation to pretend that the inevitable will only occur according to their political conditions, and fail to recognize that the inevitable will happen because its inevitable. Both sides know that there is absolutely zero chance of a compromise not being reached, and both sides plan to hold out for their respective demands until the very last possible second. Obama promises the Biggest Deal Possible, and Republicans are obliged to proclaim a Little Tiny Deal.

That means the solution will be the equivalent of little tiny band-aid on a gaping wound in a rain storm. It might slow the tide of the larger inevitability – the collapse of the U.S. dollar and the U.S. financial apparatus – but only temporarily. And then, maybe not at all. Where the boundaries of reason have long ago been surpassed by the astonishing ridiculousness of the economic ruling class, the average intellect is at a loss to opine where the relentless plunge into the apparently bottomless abyss of debt might end. Can we really keep ‘refinancing’ and ‘rolling over’ and ‘reinsuring’ our way into infinity? Is the next debt ceiling measured in quadrillions, and then quintillions, and so on?

At the end of the day, these vast sums being loaned into existence by the collusional participation of elected officials and their appointees is a smokescreen for skimming the national take and paying the minimum tax.

But the scheme has evolved into a scam, and the scam has gotten so mature, that like any Ponzi scheme it needs to replace old investors with new ones to keep the balls in the air. It looks like the principle product of our globalized pyramid economy – indebtedness – is about to collapse, because all the participants are maxed out; there are no new investors to keep the scam going. The central banks can’t create money fast enough to make even the interest payments on these colossal debts. We could theoretically amp up the rate of money issuance, but even with zero interest rates, that’s too much for the already over-inflated financial system. The value of national currencies is in terminal decline relative to real goods, and we are witnessing the birth of the first global hyperinflation in history. Which brings us back to the main thrust of this story, which is that we are on the verge of a major chronic meltdown.

The acuteness of the self-inflicted austerity measures that Obama has as his only bargaining chip, versus the depth of relinquished tax breaks which is the only bargaining chip of the Republicans, is all that remains to be negotiated in America. That and the numerical name of the next debt ceiling. In Europe, the game is slightly different. On multiple fronts, the banks and the governments are negotiating austerity measures as if they were carbon credits. And just as carbon credits are easily counterfeited, or cancelled, or fraudulently re-sold, the promises will be modified by political expediency, the CDO spreads and interest rates will be adjusted to suit the reality required by all the vested interests, and the numerical names of the next bailouts, puny in comparison with America’s, established.

CHINA AND JAPAN
The news yesterday that China grew by 9.5% in the second quarter of 2011 appears to have allayed fears that the Chinese Tiger was growing a little bit tired and threatening to lie down for a while. But not before the Chinese bad news triggered a warning from Moody’s.

According to the Wall Street Journal:
“China on Monday failed to sell some of the 50 billion yuan ($7.73 billion) in local bonds offered at a regular auction. It was the first time one of these Ministry of Finance auctions failed to sell out since they began in 2009. Local governments can’t issue bonds directly so the ministry auctions the bonds on their behalf.

Ratings firm Moody’s Investors Service warned last week that local-government debt posed an increased risk to the central government and the banking system, and said a National Audit Office estimate putting the debt at 10.7 trillion yuan understated the actual amount by some 3.5 trillion yuan.

With Europe squabbling over where to meet next, and Obama sticking to his guns for concessions on tax breaks, the bigger picture is looking an awful lot like gold and silver will be the ultimate beneficiaries of all this debt stupidity.

When the bombs go off and the delusion can no longer be supported, we’ll wake up and understand that defaults on all fronts have been ongoing for quite some time. Then the stampede will really begin into gold and silver.

James West is the publisher of the highly influential and widely respected Midas Letter at midasletter.com. MidasLetter specializes in identifying emerging companies in gold and silver exploration at the beginning of their share price appreication curves, and regularly delivers 10 baggers (stocks that increase in value by at least a factor of 10) to his premium subscribers. Subscribe at http://www.midasletter.com/subscribe.php.

© 2011 Copyright Midas Letter - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Midas Letter Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules