It’s All A Question Of Timing!

These last few years have been exceptionally challenging for those who share in the belief that the endless flood of worthless paper and debt can only end with investors, consumers and citizens being forced to pay a bill they cannot even begin to comprehend.

I can remember when I started writing back in early 2004; never in my wildest nightmares could I have believed the citizens of this Country would passively ignore reality while the very foundation which made the US the greatest Country in the world is being destroyed by one “executive order” at a time.

Never could I have predicted less than 10 years later the US would have recognized debt of almost $17 trillion and future entitlement obligations of more than $200+ trillion with one ingenious solution to fund this financial train wreck being the printing of a “platinum coin!”  Makes perfect sense to me!  I think the US should print additional coins to share with our world-wide neighbors so they can fund their own entitlement programs giving their own economies a boost in job creation!

Unfortunately, morals, ethics, common sense, truth and justice have all been set aside or in many cases completely discarded in lieu of greed, power, corruption and most importantly hidden agendas that serve only a select few.

A WHOLE NEW BALLGAME!

The banking crisis in Cyprus, in my opinion, is the trigger that in the end “should” bring reality to the doorstep of every individual who happens to fall into the category of suffering from “normalcy bias” when the topic of safety arises on their bank accounts.   

For those of you who may not yet be aware, Cyprus bank depositors have involuntarily contributed 47.5% of their savings, in excess of 100,000 euro’s, in what most likely will be a failed attempt to partially fund the Cyprus banking system bailout. 

I find it very interesting observing the worldwide political and public reactions to this game changing theft.  It is clear from the response and the lack of response that this is just the first financial act of this nature and most definitely will not be the last. 

A few countries like Canada, New Zealand, and the European Union have all stated bank depositors’ will face the same risk as the Cyprus depositors in the unlikely event of future bank failures within their own borders.

On the other hand I find it particularly interesting to see or hear, for the first time in a very long time, no response from President Obama or Ben Bernanke.  Kind of makes one think about how Cyprus is a testing ground and those who have deposits in their banks are nothing more than guinea pigs!  The fact that world-wide response to this blatant theft is anything less than an uproar should scare the living daylights out of anyone with excess deposits, beyond household expenditures, parked in a bank.

The inevitable outcome to this theft will find depositors world-wide asking themselves the simple question of “why have money in a bank in the first place?”  The irony to this question lies in the fact that the return on their capital is practically nothing while the risk of their capital has never been greater.

I also find it very interesting to read about the “fortunate few” in Cyprus who had the infinite wisdom to move their money, or should I say the depositors’ money, out of the Country just before the doors closed.  Talk about perfect timing!

CAN’T HAPPEN HERE!

In the US the “talking heads” have assured depositors that the issues in Cyprus could not happen here as we have the FDIC which, as we all know, is fully funded to protect all deposits of $250,000 or less in US banks.  Yeah, right!  Just go to the bank and try to withdraw $10,000; the red tape will definitely bring to mind a question as to whose money it is you are trying to withdraw.   These delays to get your own money should make you contemplate the obstacles you would face in an attempt to withdraw your money in the event of another September 2008!

While I’m on the subject of US banks I think it is imperative to point out the fact that not one banker was ever charged with a crime and sent to prison as a result of the part they played leading up to the financial debacle in September 2008. 

Cyprus and, let’s not forget, MF Global are now facts of life.  Since no criminal convictions have been achieved in either case I have to believe that no crimes were committed or those who may have committed crimes were acting under the blessing and protection of the Governments responsible for bringing justice to those who break the law. 

In the US I find it more than disconcerting that Jon Corzine, who I believe committed the greatest crime imaginable when running a brokerage and commodity firm, has thus far not been held accountable for his actions.

The crime of comingling client funds with corporate investments, or should I say “casino gambling” is an act, in my opinion, that cannot go unpunished as the public trust and integrity of the brokerage industry must be, or at least perceived to be, protected at all times.   I personally find it difficult to understand how this man is not residing in a cell right next to “Bernie.”  Imagine the conversations the two of them could share.

WHERE SHOULD YOU HAVE YOUR MONEY?

Ask any bank depositor who used to believe they have money and liquidity in a Cyprus Bank what they would do differently today.  I think one of the most common answers, for investment and excess capital, would be physical ownership of gold and silver stored in a place where “THEY” cannot steal it like they did with the cash in their bank deposits!

INSURANCE EVOLVES INTO INVESTMENT STRATEGY!

Gold demand and its price have steadily grown since hitting their lows in August of 1999 when the price of gold bottomed in the low $250’s/oz. 

People of wealth for years have been adding physical gold and silver to their portfolios as a hedge against times of financial uncertainty.  They did not allocate funds to this perceived dinosaur sector based upon the belief that gold and silver prices would rise; they were driven by the belief that the diversification in gold and silver would serve as an insurance policy to protect everything else they own.

As the years have passed many of these investors have come to the conclusion that the need and timing for additional insurance has never been greater.  In fact, what once began as an insurance policy is now viewed as an investment strategy.

The fact that the price of gold and silver has recently been clobbered while the physical demand for precious metals are at all-time highs is telling you there are two games in play here.  One is the manipulation of prices through the paper commodity markets and the other is the actual physical demand for the underlying commodities.

Which market do you think will win?  The paper market where you actually own nothing but a piece of paper or the physical market where you have, or should have, in your possession pure wealth that will never be worthless; unlike that deposit sitting in a bank waiting to be stolen?

THE END IS IN SIGHT!

With the growing uncertainty surrounding banks; wealthy investors and foreign countries are beginning to recognize the risks associated with using a bank to store their physical gold and silver.  These risks are identical to having cash in a Cyprus bank except for the probability that their gold was stolen long ago.  As a result they are now demanding delivery of what they once believed was their physical gold and silver; talk about bursting the “normalcy bias bubble” when in the end they are told they can’t have it.  Ask the Germans how they feel about their ownership of 2,000 tons of gold safely tucked away in US vaults for their own best interests!

This mass exodus or should I say “attempt to repatriate” will prove to be one of the bullets which when fired will trigger an end to the manipulation in the “paper” gold market which has plagued the precious metals industry for decades.

Additional bullets will be fired as ongoing future demand for gold continues to increase as investment capital recognizes the fact that the price of gold may rise and fall but the underlying value of the asset will never be worthless.   This simple fact will afford those with capital a safe haven to place funds giving them peace of mind, assuming of course they take physical possession of their gold and silver.

These acts in conjunction with the growing inevitable liquidation of worldwide Government Securities will create an endless supply of ammunition so long as the Governments of the world continue to run their printing presses 24-7. 

This act is guaranteed as Government continues to grow, spending money like an out-of-control lottery winner.  Only difference is the lottery winner is spending his money while the Governments are spending your future hard earned tax dollars.  Just can’t wait to jump out of bed in the morning to rush off to work; assuming of course you haven’t been taxed out of a job.

Eventually the available supply of gold will be squeezed bringing to light the realization that certain parties and Countries have been buying and stealing gold for years.

Imagine the epiphany when the world wakes up to the fact that the supply of gold is now in the hands of those who truly do recognize its value and you as a rightful owner or a potential investor can’t have any!

THE ULTIMATE CON!

Why do you think the paper price of gold has collapsed in relation to record physical demand levels?  You don’t see the price of guns and ammunition falling in contrast to record demand levels do you? 

Do you think the possibility exists that “the powers that be” are slowly implementing an agenda which, over time, they hope, will end with an attempt to outlaw private ownership of gold once again? 

Talk about the perfect crime; first they steal the gold, then they drive the price down to outlandishly cheap levels, via the paper futures market, forcing weak holders of gold to abandon ship, while covering shorts all the way down, then the bankers admit the vaults are empty and there is no gold leaving anyone who believes they owned physical gold safely tucked away in safe storage only one option which is to involuntarily convert true wealth for worthless debt and IOU’s at an absurd conversion price.  Can you hear them laughing?  They are absolutely beside themselves!

You might say the supply of physical gold and silver will share the same fate as quality affordable healthcare.  Both will become exceptionally expensive; affordable to only to a select few or worse yet completely extinct!  Those fortunate few who are in possession of these assets, like the Government bureaucrats who voted to pass a healthcare law that is not good enough for them and their families, fully understand the value they possess and those who failed to heed the endless warnings to prepare will be forced to settle for whatever table scraps have fallen on the floor.  Oh, excuse me I forgot, you can’t eat gold!  But I do believe it will buy you more meals throughout the world than the US Dollar!

THE FUSE IS LIT!

Who knows exactly when the world-wide debt crisis will implode; it could happen at any time or years down the road.  My guess is this fiasco will continue until the mere existence of the FED and the acceptance of the DOLLAR as the world’s reserve currency are finally called into question.  This is in the works at this time as we are seeing foreign countries make their own financial agreements for trade based on currencies other than the DOLLAR.

It is at this point in time, when the dollar is no longer the world’s reserve currency, that the US will be forced to deal with its out-of-control Federal Government spending.  The real irony to this outcome will lie in what I believe will be a backlash against our President by those who were formally known as his strongest supporters as their entitlements checks either fail to come in or they are cut just like the paychecks of those who work full time jobs.

Make no mistake about the fact that when the day of reckoning does arrive anyone owning traditional investments and long term bonds will be in a panic to sell seeking a safe haven to avoid the imminent carnage of rising interest rates and financial bankruptcies. 

Historically, September and October tend to be very temperamental periods of time for our traditional stock markets and if ever there was a time when one could use the word “overbought” now is that time.

If my thinking is correct the “herd” will eventually come to the conclusion that exposure to the precious metals is not a bad idea.  Unfortunately, they will realize this at a time when they have already been butchered and missed the opportunity to get on board the physical side of the market.  This take-away will leave the herd only wanting to own gold and silver more than ever leaving them and everyone else only one option for those who still have any skin left to put in the game.

WINNING BY DEFAULT!

In my opinion, one of the few viable investment options remaining when the uncertainties of the world boil to a head exposing the Emperor to be stark naked leaving the future physical supply of precious metals as precarious as the safety of a deposit in a bank will be an investment in a publicly traded gold and silver company where their gold lies safely buried in the ground.

In the face of the world wide debt explosion and a terrific gold market for the last 13 years, one would think that gold and silver equities would be trading near their highs.  The irony to this lies in the fact that publicly traded gold and silver companies have been clobbered over the last few years trading at all-time lows when I personally believe they should be in a position to explode to new all-time highs. 

In my opinion, this discrepancy is giving investors an opportunity to get on board a rising sector at rock bottom prices they may never see again.

No matter how you slice it; I believe, physical gold held in your own possession and gold equities should be an increasing percentage of every investor’s portfolio.

I am currently working on an update of my favorite publicly traded gold stock.  I know precious metal stocks have been massacred and are extremely out of favor but you might be surprised to find out that some stocks may be deserving of an investment at this point in time.

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As always folks, these are my own opinions and it is up to you to do your own research as your opinions may vary from mine.  I have not been compensated in any way for anything written in this article.  In fact I could say our investment portfolios have paid a pretty price for the beliefs I have over the last couple of years.  But then again; “IT’S ALL A QUESTION OF TIMING!”

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