Dr. James P. Wickstrom
Kevin Campbell
September 28th, 2011 ·
FOREX, CURRENCIES, COMMODITIES GOLD AND SILVER NEAR FREE FALL
Something has changed in the markets the last two weeks. In the months before September, gold and silver were inverse of the stock market. As the stock market fell, gold and silver rose. Suddenly, this month this inverse relationship ceased. Now, when the stock market falls, gold and silver are falling.
This is a tip off that deflation is winning the war with inflation as we move forward. Here are the facts supporting deflation that cannot be disputed:
1. Growing unemployment (16.9% and rising)
2. No bank lending (money not being lent into existence)
3. Contraction of M3 money supply due to destruction of wealth
4. Real Estate deleveraging
5. Baby boomers saving not spending
6. Loan defaults soaring
7. Oil prices falling
8. US Dollar rising in value .78 and up.
All of these virtually guarantee deflation is where we are heading. The evidence is now overwhelming and it will become more clear as the gold and silver bubbles begin to break and the world moves into
the US Dollar as a safe haven.
We should see wild swings in the markets for the next several months as news stories cause the super trading computers to overreact to every news release. We will most likely see several small bear rallies over the next few months until Europe finally falls apart and the market begins a massive move downward. By the summer of 2012, I would not be surprised to see the DOW fall to 5500 and gold fall to $500.
Those who protect themselves now with US dollars sitting on the sidelines will weather the storm and actually gain in value as the dollar soars in value. I have been unable to find any reliable source that can verify the world no longer wants the US Dollar as the reserve currency. My contacts in Europe and Asia all confirm the US Dollar is their currency of first choice. So this rumor of a dollar debasement is simply rumor. Most likely, those involved in the sale of gold and silver are the very same sources of this false rumor.
These metals dealers have spend millions peddling gold and silver on television and financial magazines. Now think about this, if gold and silver were the safe haven, why would these companies be so desperate to sell the metals for US dollars? Think about that question for a moment.
Does it mean they do not believe their own advertising? Why are they so desperate for these worthless dollars in exchange for their metals? I think if you follow the money, you will have your answer.
They are making a killing and placing the risk in the hands of their buyers. But those holding gold and silver ETF’s are at higher risk. They are holding paper gold that may not be backed by an equal amount of physical gold. They are holding derivatives. As gold and silver crash, these folks will get wiped out!
In my opinion, the place to be is in cash, or US guaranteed treasuries. The rate of return is not important. Capital preservation is most important. Stock mutual funds, most stocks, gold and silver are dangerous to be holding in my opinion. My parents are both in their 80′s and I told them to get out of all stocks and get into cash, or cash equivalent safe instruments like Treasuries. Now is not the time to be looking for return.
Posted by Ask Kevin at 1:27 PM
Posted by Ask Kevin at 1:27 PM
