Fail To Prepare...Prepare To Fail!

“Paper is poverty...it is only the ghost of money, and not money itself.” – Thomas Jefferson's Letter to Edward Carrington, 1788 -- The bottom for gold is now in as my graph proved this past Tuesday, August 20^th.  A couple of weeks ago, in another article I stated, “While you wait for the next bottom…the vaults are being emptied.”  The number of sales this month is average however the total price has risen from $10-$25K to $50-$350K.  Customers report to me that they are now “all in” physical assets from land to precious metals and they report they are even getting their mothers out of paper as they see this as their last chance! 

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We are daily experiencing the final steps in the collapse the most recent being the fact that our government’s interest rate on its debt has almost doubled since May.  That is why gold is finally getting its “just reward.”  The 10 year Treasury has rose 130 basis points since May and looks to be going even higher.  So watch the yields on 10 year U.S. Treasuries because the higher they go, the later into the game we are. 

This affects all interest rates and currently has doubled the cost of the interest on the U.S. debt in just 3 months. When credit slows, the life blood of the U.S. economy, life is going to get interesting really quick.  Higher interest rates mean less homes being sold and if you have to sell your home you will have to drop the price which lowers housing prices for everyone.  Money becomes more expensive for governments to borrow, consumer purchasing slows even further as credit becomes more expensive and the stock market goes into withdrawal as spending dries up.  Then you have the 441 Trillion interest rate derivative bubble that implodes and we are just warming up.  

People have forgotten what happened in the 1987 stock market crash that followed a surge in bond rates.  During a few months leading up to the October 19^th crash interest rates on 10 year Treasury Bonds jumped 50% while compared with the 80% we have seen since May.

In fact we haven’t had a bull in U.S. Treasuries since 1973 and most investors believe that it is impossible to lose money on bonds.  They have been described as "risk-free" investments, but that is far from the truth. We will see bond investors of all types end up losing trillions of dollars before it is all said and done.  Just wait, if rates go above 3% things are going to get ugly fast. 

Let’s all hope that the yield on 10 year U.S. Treasuries levels, if it stays at this current level, the damage will probably not be too bad.   However if we go from May 1.6 to Aug. 2.6 then to a Nov. of 3.6 the party is over, done, nada.  Foreigners have already started to sell U.S. Treasuries and in June were the largest net sellers of U.S. Securities since 2007.  The U.S. is facing 200 trillion dollars of unfunded liabilities and our debt is far worse than our government acknowledges.  Our U.S. gap is so huge closing it would require a permanent doubling of income taxes and raising our G.D.P. 10% and that is never going to happen. 

Did you know? In 2002 retired congressman Dr. Ron Paul predicted in a single speech that the U.S. would see our current financial crisis with exploding deficits, the Fed’s expansion, the Arab Spring support from our government and the Iranian oil battles.

http://www.youtube.com/watch?v=zGDisyWkIBM         

Take note that Dr. Ron Paul owns no bonds in his personal portfolio.  This man could have been our most important modern day President.  He knew what was ahead for our country and because he is not our country and the multitudes of our citizenry are destined to lose their freedoms, suffer, and die during the upcoming collapse.         

The stock market investor will lose trillions of dollars too as I addressed last week.  Our G.D.P. has dropped off the cliff and does not support the S & P 500 or the Dow Jones levels that we have seen with incessant growth.  Where is the real growth and of what? The only growth we have is in counterfeit money, spent like a college kid with his first credit card.  He doesn’t know how hard it will be to pay it back and there is always mom and dad to bail him out.   

My college kids hate to hear my mantra, “Fail to prepare… prepare to fail!” however that single proof has always rang clear to them after the fact.  The populace, whom have failed to prepare, will be ultimately desecrated at the amount of personal loss they will sustain during the upcoming two years.  Stock accounts and bond funds will evaporate overnight, pensions will be un-payable, retirement funds will be stolen or garnished to be invested into government bonds, bank accounts trimmed, safety deposit boxes confiscated and any other asset one owns will be at risk as the government breaks down in an inability to operate or fund its massive bloated departments, free programs and entitlements. The end is nearer than one could care to imagine! Once the dominoes start to tumble the whole house will come down quickly.  Then there will be no time to plan or react, at that point all you will be able to do is ride out the storm and pray that you and your family survive because suffer you will.  Your government will not protect or save you.  They will be too busy saving their own skin as they always do.