Grant Williams is a strategy adviser for the hedge fund, Vulpes Investment Management in Singapore, as well as the blogger behind the popular Things That Make You Go Hmmm…. In the following video, Williams reviews the disconnects between the economic realities that exist in today’s world and the rosy pictures painted by governments, central banks and the main stream media.
Williams’ problem #1: The disconnect between fundamentals and equity prices.
Williams’ problem #2: The paradox behind China’s mysterious GDP growth during a time of reduced manufacturing, shrinking demand for raw materials and declining imports/exports
Williams’ problem #3: How is France able to sell its sovereign bonds at such low interest rates when all indications of its own economy are performing like those of the European periphery?
Williams’ final problem: The difference between the “Gold Price” and “The Price of Gold”
In the end, the laws of mathematics cannot be subverted by governments or central banks. Central banks’ zero percent interest rate policies are damaging:
In the short term through the confiscation of savings and the forcing into riskier investments in the search for yield
In the long term by suppressing market volatility, which must be reconciled at some point
Mathematics, rightly viewed, possesses not only truth, but supreme beauty – a beauty cold and austere.
– Bertrand Russell
The currency wars being waged among the world’s nations at this time are going to continue for quite some time, according to Jim Rickards, author of Currency Wars. In this DJ FX Trader podcast posted at the Wall Street Journal, Rickards explains how nations around the world will likely continue their currency devaluations in order to gain an edge in their international trading.
Pierre Poilievre, Canadian MP, makes a plea for his nation not to follow in the footsteps of countries like the United States, where people have been encouraged to go into debt which will be impossible to repay, or like Europe, which is now ensnared in welfare programs that are impossible to stop without complete social upheaval.
Official US Debt is now larger than its economy. Through current or future taxation, the US citizen is on the hook for this debt.
The US is on the cusp of funding 100% of the Chinese Military – just with interest payments alone!
The direction the US is going reflects the socialist policies already in place in Europe, where Greek citizens are taking to the streets to demand their government not halt the flow of welfare checks they have become so dependent upon.
Now ask yourself this question: If there is an elite group (such as the Illuminati) holding key positions of power within government, corporate and banking institutions, and they are indeed conspiring to subjugate America, what would be their next step?
If those bastards are so powerful that they were able to pull off the 9-11 event and keep their positions intact, then you also must consider what else they might be capable of doing. Like, what would happen to the national psyche if a major US city, like Phoenix, for example, were to be suddenly vaporized in a Nagasaki-esque manner? (This is what S.K. Bain has fictionalized in his book.)
Absolute fear would grip the nation immediately. Martial Law would be declared. The new authorities already granted to the president under his own executive order would be cited and all resources would be seized by the government. Dissenters would be shipped off to all the FEMA concentration camps that have been prepared over the last few years. The internet would be cleansed of all ‘unpatriotic bloggers’ while the ‘controlled’ main-stream-media tells the public that the Iranians are to blame. Religious leaders are quick to point out that Muslims are not only anti-Jew, but anti-Christian as well. It would be enough impetus to garner support for invading yet another middle eastern nation, and possibly lead to World War III if China and Russia run to the aid of Iran.
So the next question you’ve got to ask yourself is when would this elite group initiate their next move? As the world economy spins toward ultimate depression, printing presses are already running at full tilt and there’s no real political will to tackle the underlying problems of the Fiscal Cliff – only moves to delay the inevitable collapse are given any attention. Meanwhile, the national debt surges due to continued unbalanced government spending. At some point, all these monetary shenanigans will become too obvious to the average citizen and a diversion will be needed to distract public focus.
A final question to ponder is whether or not the agenda requires the Constitutional Second Amendment to be abolished prior to the more drastic event, or whether a more severe tragedy might actually aid in it’s own destruction? As long as people continue their ignorance of freedom and refuse to accept responsibility for their own lives, they’ll happily increase their dependency on government wealth redistribution. Lady Liberty’s lamp flickers in the wind.
Lauren Lyster puts the tough questions to Eric Sprott regarding gold and silver and whether or not investment in such is warranted, given the lackluster performance over the past year. Sprott responds by pointing out that given the increases in quantities of the metal that have been purchased recently, it’s highly likely that central banks have been leasing their physical gold into the marketplace in order to suppress the price.
In the last 12 years, the annual physical gold demand has increased by 2500 tonnes/year. But the supply of gold has remained flat. Where does the new metal come from to meet this new demand?
Some rather prominent central banks have recently been subjected to questions asking about the validity of their gold claims held in foreign vaults (i.e. Germany and Austria).
The discussion continues to include:
The Fed is buying 90% of US Treasuries. Japan and other central banks are practicing similar policies. Central banks of the world are trying to keep interest rates low for extended time frames, “which is ludicrous.”
Sprott expects silver to outperform gold in the next decade and points out the investment ratios he’s seeing from the entities making purchases of these two precious metals.
Lauren Lyster defines Hard Money and it’s relation to old and new central banking policies.
Author of Currency Wars, Jim Rickards explains that the Fed’s easing programs have thus far failed to create their desired inflation, which, in their view, is required to boost US exports. Although Japan will be allowed to weaken their currency, all the other currencies of the world will be strengthened as the US strives to further weaken the US dollar. Of course, gold is still the currency of choice to preserve wealth.
Expanding the discussion, Lauren Lyster interviews Jim Rickards, where he clarifies the Fed’s tactics:
The economy has failed to recover despite the Fed’s actions so far because the consumer has not been willing to spend or invest. Hence money velocity has remained nil.
The Fed is trying to induce more spending by: (1) Forcing a negative interest rate as an incentive for more borrowing, and (2) Scaring the public into buying stuff through the threat of future inflation.
The inflation, they hope, will be the result of all the currency wars with other nations, especially China – cheapening the dollar will make imports more expensive.
“It’s a race between the Fed trying to achieve their goals and the whole system imploading because of a loss of confidence in the dollar.”
In his book Currency Wars, Jim Rickards reveals his participation in war games sponsored by the Secretary of Defense in 2008. The objective of these particular games was to discover how nations of the world might use financial instruments to wage war on each other and to gain some perspective on their effectiveness. In the video below, he goes a step further and hypothesizes on what events might take place between the US and China as the world economy continues to slide into the toilet. Rickards ends the video with a probable sequence of events that will take place if we stay on the current path.
Grant Williams, of Vulpes Investment Management, provides us with a brilliant presentation explaining how greed and fear play into the making of economic bubbles. After giving a few examples of historic bubbles of the past, Williams then goes on to describe two bubbles in the present. Spoiler alert!
Sprott Asset Management has issued a Gold Alert, showing six “key developments in the physical gold market” in the past couple weeks which indicate that there is strong demand for precious metals at these levels. One of those developments is the huge increases of Hong Kong gold exports to China.
“We have around 6 months left of trading in Western markets to protect ourselves,” according to Raoul Pal, founder of Global Macro Investor and former Goldman Sachs hedge fund manager. “The problem is not Government debt per se. The real problem is that the $70 trillion in G10 debt is the collateral for $700 trillion in derivatives.” See entire presentation below.
It’s now more important than ever to protect your hard-earned wealth from being destroyed by inflation or even outright theft by financial and government institutions. Please see our Protect Your Assets series to learn about ways to secure your wealth in the coming economic collapse.
Update May 16, 2012: In contrast with Jim Willie’s speculation below, a much more renowned Jim Rickards has a much more probable thesis on the JP Morgan loss. The trade was actually a bet on the spread between the bond index and the bonds themselves. Time ran out, resulting in the loss. Read about it at USNews.
Here’s an interview with Jim Willie (TheGoldenJackass) discussing his speculation on what’s really going on regarding JP Morgan’s $2 billion dollar ‘whale trader’ loss. Jim speculates that JPM’s declaration that it involved European bond investments that have gone bad doesn’t make sense because in the last 6 weeks those bonds haven’t changed so much to warrant such huge losses. More likely, according to Jim, is that these losses are much larger and they reflect losses in the credit derivatives markets. Furthermore, eastern nations like China are likely causing the rout in precious metals because they’re forcing the western commercial banks to sell to cover these losses in the derivatives markets.
This is a delayed release of Mike Maloney’s video initially released to his GoldSilver.com subscribers in mid-April. Mike reveals that he made a rather large investment in silver because he “saw an opportunity.” The video explains all the technical analysis behind his move.