Author Archive
Gold Will Hit $1300 An Ounce Shortly
Posted by: | Comments
By Peter Costa
As the economic turmoil unfolds worldwide the future for gold is looking more and more promising. It would literally take an entire essay to map out why gold is going to become the most valuable asset on the planet in the coming times. For the more immediate term I am going to map out why I feel gold will hit $1300 an ounce before the end of the fall. At this point in time everyone knows that gold is the ultimate asset. We have seen billionaires and central banks pouring their wealth into gold or gold related investments as a flee for safety from paper based assets. There are many reasons why gold is going to have precipitous growth in the coming times but I have narrowed it down to my top 3 reasons. Here are the top 3 reasons why I feel gold will hit $1300 an ounce before the end of the fall.
THE BANKING CRISIS
The banking crisis is only escalating in the United States and in the last 3 years we have had the most bank failures since the great depression. The current amount of failed banks for 2010 is at a staggering 86 and is only growing by the week. This same time last year there were 40 failed banks making the current number double what last year was. In addition 247 banks and counting have failed since 2008 and the number of banks on the troubled list has been increased from 500 to 750. This year alone we could see more banks from the troubled list close their doors for business. In lieu of the pending banking crisis troubled banks have begun issuing 7 days warnings letting depositors know that if things continue to escalate they could take up to 7 days to get depositors funds from checking, saving or money market accounts. In a time where banks are failing left right and center, the Federal Reserve has to print up enough money to protect depositors. This alone will cause massive inflation catapulting the price of gold.
LOW INTEREST RATES
Ben Bernanke head of the Federal Reserve has no plans to raise interest rates and may not raise interest rates until late 2011 therefore guaranteeing inflation in the United States. Inflation is the plan for the next while and Bernanke feels we can have positive inflation. As gold hit new record highs on June.18, 2010 closing out at almost $1264 an ounce, Bernanke denied inflation. This was the response Ben Bernanke had in regards to fears about rising inflation and the price of gold:
“Gold is out there doing something different from the rest of the commodity group. I don’t fully understand movements in the gold price, but I do feel that there is a lot of uncertainty and anxiety in financial markets right now; and some people believe that holding gold will be a hedge against the fact that they view many other investments as being risky and hard to predict at this point.”
“There is a great deal of uncertainty and anxiety in the financial markets right now,” Bernanke said. “Some people believe that holding gold will be a hedge against the fact that they view many other investments being risky and hard to predict at this point.”
We only have two ways to go in the US economy and it is inflation or deflation. There is no possible way Bernanke is going to let deflation happen because it could very quickly escalade into a great depression. We have become a consumption based economy in the United States and our industry relies heavily on consumption. If citizens begin massively cutting back on spending than we could quickly spiral into a great depression because many companies rely on our consumption and would become bankrupt. This would in turn create even more unemployment and would be the catalyst for a great depression. Everyone knows in an inflationary period gold soars. Historic record to back this fact up is the last inflationary period we had which was 1970 to 1980 where inflation peaked out at 13.3%. Due to such a high inflation rate gold grew 2400% in 9 short years it went from $35 an ounce to $850 at its peak.
STRENGTH IN THE YUAN
The yuan could appreciate by as much as 3% this year after which the yuan’s value would be dictated by supply and demand in the open market. Some analysts argue that the yuan is undervalued by as much as 40%. News of the Chinese allowing gradual appreciation in the yuan is expected to further bolster demand for gold in China as the Chinese consumers’ and investors’ purchasing power is increased. It was illegal in China to own physical precious metals until 2009 when they lifted the ban. Citizens are now allowed to purchase precious metals and are now being encouraged from the government to purchase gold and silver. With this recent ban being lifted there is one stipulation, citizens can not in any way export the precious metals they buy, they can only hold onto them. Chinese demand for gold has been growing at an average of 13% per annum over the past five years and it now has to import gold to meet national demand, despite being the largest producer of gold in the world. With gold still priced in US dollars the strength of the yuan will allow citizens to buy gold at a mere fraction of the price creating massive demand and a surge in gold prices.
I am predicting gold will hit $1300 an ounce before the end of fall this year. Before the dollar is grossly over inflated and the cost of gold is absurd, start transitioning your wealth into gold. Regal Assets has made it effortless with their website www.regalgoldcoins.com and also provide up to the minute market values for your position so you can track the growth yourself. It is not a question whether gold will grow in the coming times the only question is how fast it will grow and if the average household investor will be able to afford it.
Physical Precious Metals – The Ultimate Safe Haven
Posted by: | Comments
By Peter Costa
The rush for gold has not even begun according to billionaire Thomas Kaplan a New- York born commodities mogul. In fact he is so convinced of this that he has put $2 billion of his own money into physical gold through his company Tigris Financial. With this move Mr. Kaplan has now joined the likes of world market gurus such as John Paulson, George Soros, David Einhorn and Warren Buffet to name a few who have started to amass large quantities of physical precious metals. The key to their investment strategy is physical possession of precious metals that they store on their own and is something all precious metal investors need to take note of.
As the gold rush continues to unfold investors are being swayed into the paper asset of precious metals rather than the physical asset. Just like the old days when traveling merchants would hand their gold over to banks and would receive a promissory note in return, exchange traded funds are promising the same. Instead of a receiving physical metals these various ETFs promise to hold your gold and when your contract is up you are able to receive physical delivery of precious metals or you can sell the contract for cash. This strategy is becoming increasingly popular and such fund as GLD, SPDR, COMEX and SLV are experiencing incredible demand. The problem with this strategy is similar to the problem that arose centuries ago and is doomed to repeat itself. The main driving force behind the popularity of this paper asset is none other than registered financial advisers pushing these securities on their diminishing clientele base. Since there has been a complete loss of confidence in stocks and mutual funds these registered financial advisers are scrambling to find alternative paper assets so they can continue to keep clients money under management.
Centuries ago when a bank would create a promissory note for the traveling merchant and realized that nobody was cashing in the note for the gold being held, the bank would begin creating more promissory notes then they had gold. Once word got out in the land that this bank had more notes circling around than they had gold they were flooded with depositors wanting physical possession of their gold. Once this happened the bank would immediately become bankrupt and would have no choice but to close their doors for business due to lack of gold holdings. This event alone would devastate economies and more importantly the merchants who worked hard for their wealth. For centuries this cycle continued and mass amounts of wealth were vaporized due to greedy banks.
As much as we have had technological advances the same issues still remain today that plagued societies centuries ago. The exchange traded fund strategy is nothing but a more advanced version of what banks did centuries ago to vaporize wealth and will soon do the same thing to millions of hard working individuals. While the current state of humanity is greed based, I find it extremely difficult to believe that these various funds are actually holding the exact amount of precious metals that are trading. As banks have practiced fractional reserve banking for the last century loaning out $9 for every $1 they receive I feel the exact same strategy is being utilized for these various funds. I feel strongly that they are holding a mere fraction of what is trading through their fund and that if the whistle is blown on their operation there will be a 1 to 100 ratio meaning, if everyone requested physical delivery of their contracts 1 out 100 would receive their metals. Furthermore with this kind of a faulty fractional reserve operation these various funds are suppressing the true value of precious metals by creating a fictitious market place. Millions upon millions are trading these contracts on what they feel is physical precious metals none the wiser to the reality of the situation that they are trading a useless piece of paper just as useless as the greenback and all fiat currencies.
Smart money are already cognizant to the illusion of these various exchange traded funds and have begun ditching the paper asset of precious metals for physical possession. In the coming times as this fractional reserve practice is revealed with various ETFs, the illusionary price of precious metals will evaporate, setting in stone a new heightened floor for all precious metals. Only the owners of physical precious metals will be the recipients of this growth story leaving behind the owners of paper assets in shock and awe as their wealth evaporates. In 2009 legendary hedge fund manager David Einhorn who was the largest holder of the GLD fund with over 4.2 million shares, sold his entire stake in favor of physical gold. This strategy is being favored by world renowned investors such as John Paulson, George Soros, Warren Buffet, Thomas Kaplan, Jim Rogers who combined have purchased over $100 billion in physical precious metals. On May.22, 2010 Thomas Kaplan made front page news with the Wall Street Journal on his decision to purchase over $2 billion in physical gold that he stores on his own. “I’ve reached a point where I feel the only asset I have confidence in is gold” stated Mr. Kaplan in an interview at Tigris’s midtown Manhattan headquarters. The smart money knows what is coming and are focusing primarily on the acquisition of physical precious metals in preparation for the coming times.
It is not by chance that billionaires and smart money alike are rolling over their wealth into physical precious metals rather than the paper asset. Exchange traded funds, the green back, and all fiat currencies for that matter….will end like any fatally flawed system: With an unhappy ending. We are in a time of great change and as history has shown us we are about to learn a great lesson in owning paper assets over physical assets. If you have the paper asset of gold do yourself a favor and sell it now before the option no longer exists. Physical precious metals are the easiest asset to acquire and sites like www.RegalGoldCoins.com have made the transition seamless. As more and more paper asset based financial advisers are put out of business heed the warnings and position your wealth appropriately.
DOW Dropped 1000 Points, Is It Time To Exit?
Posted by: | Comments
By Peter Costa
It is staggering how so many individuals use the stock market as a gauge for economic recovery. They look blindly at the levels of the S&P 500 and the DOW Jones in hopes of finding the answer to where we are in the recovery stage. Whether the stock market is up or down, these simpletons continue to foolishly dump their hard earned wages into the market place. They are incognizant to the reality of our financial system and have no interest in learning the truth.
The world stared in awe as the DOW dropped 1000 points within a 15 minute time span on May.6, 2010. This was the largest drop the DOW has ever had in a single day since its inception. As the DOW scrambled to recover rumors began to surface that the event was triggered by a negligent trader. Apparently he meant to type $10 million for a trade and instead typed $10 billion. Thanks to our experts and market analyst being on the ball we learned that the fatal drop of the DOW had to do with the letter “b”. Simple mistake that anyone can make and now that we have it all figured out the DOW will go back to record highs. Who are we kidding? How “birdbrain” does one have to be to believe this rhetoric? There is no way that the DOW took such a precipitous drop due to $10 billion. This is a sign to all that are still in the market place to GET OUT.
I strongly believe that the stock market is just as illusionary as our monetary system. I feel like so many have become accustomed to using the stock market as a gauge for economic recovery that those in charge have an interest in keeping it up. The greenback is on such volatile ground right now that any loss of consumer confidence could bring down a collapse of the whole system. I’m coming to believe that most of the money being printed up right now is being used to prop up the stock market to give it illusionary growth. Companies are continuing to be bailed out and funneled more money so that the stock market can show some sort of recovery. It seems like Wall Street has become more important than the citizens of the United States. While citizens are being handed out food rations and barely surviving, Wall Street is being handed billions of dollars to keep the stock market propped up. Unfortunately the reality is that more people are exiting the stock market than entering and this is the reason the DOW took such a tumble on May.6, 2010. Further more for almost 3 years now the smart money has quietly exited the marketplace leaving nothing but the uninstructed to fend for themselves.
I am calling for a complete crash in the stock market within the next 2-5 years. Based on copious research I have come to conclude that there is no possible way for the stock market to survive in the coming times. There are 3 major factors guaranteeing the demise of the stock market and they are as follows:
HYPER INFLATION:
There is no doubt that hyper inflation is about to rear its ugly head in the United States. Ben Bernanke has stated on several occasions that he would rather create inflation than deflation. He has kept interest rates extremely low to guarantee this and has no interest in the immediate future of changing things. The economy has hit such a breaking point in the US where the printing press at the Federal Reserve is churning out strenuous amounts of money. The amount of money being printed right now is unprecedented from anytime in the nation’s history and the demand is only growing. We are projected to spend trillions of dollars in the coming years guaranteeing the devaluation of the greenback. The banking crisis alone is projected to cost the US $23.7 trillion to solve. This number does not even include social security, outstanding treasury bills to foreign nations or the toxic mortgage debt that continues to grow among many other things. As the dollar continues to be printed it will encounter precipitous devaluation. As the dollar crashes investors will jump ship from the stock market scrambling to put whatever they can into tangible assets such as gold and silver.
UNEMPLOYMENT:
Unemployment is at record highs and has no sign of recovery. The problem that lies ahead is the amount of people getting cut off of unemployment insurance. For the first time in decades they recently had to extend unemployment insurance for all recipients. This solution was temporary and in 2010 millions will be cut off of assistance. Here is where things get sticky. With most people unable to find employment they are now being forced to cash out of their retirement plans. As millions of IRAs and 401(K)s are cashed out, billions of dollars are being pulled out of the market place. The majority of retirement plans in the US are invested heavily in the stock market with over 90% in mutual funds and various stocks. As these are cashed in and the money is pulled out of the market place we are guaranteed to see a drop in the stock market. If things continue the way they are going in 3 short years we could see billions upon billions of dollars pulled out of the stock market in an attempt for unemployed people to survive. If $10 billion was really the reason the DOW dropped 1000 points in a day imagine what this will do.
LOSS OF CONFIDENCE:
With the stock market on such volatile ground it has caused a ton of uncertainty in the market place. Since the drop of the DOW on May.6, 2010 hundreds of thousands of investor have begun to quietly pull their money out of the stock market. Many have interpreted the drop of the DOW as a fore warning to get out of the market and have begun to act accordingly. In less than 2 weeks of this event millions of dollars have already been pulled out of the market place. We have already lost confidence from some of the largest investors in the world including Warren Buffet, John Paulson, David Einhorn and George Sorros who have begun pouring their wealth into commodities. Warren Buffet who has made billions investing in US stocks is now turning his strategy over into precious metals and recently made a substantial investment in silver. John Paulson owner of Paulson and Co. who runs a $60 billion hedge fund has positioned over 50% of its assets in gold or gold related investments and opened up a gold only hedge fund this year with $250 million of his own money. This is a sign of the times and will only increase as things take a turn for the worst.
If you are currently in the stock market heed my warning about the coming collapse. It is not by chance that the DOW took such an enormous drop; it is truly a sign of the times to come. For almost 3 years now all of the smart money have been quietly exiting the market place and changing their strategies into hedges. It is not by chance that most successful investors in the world right now are hedge fund managers. This is a time of hedging not investing. When the dollar is strong and showing a lot of possibility that is when you want to double it and make investments. When the dollar is dropping like a rock in value and being printed like monopoly money you want to hedge against it. Take a look around the world and see the change in the market place this is not a time for investments it is a time for hedges. If you have not properly hedged yourself now is the time to take action. When everything takes a turn for the worst it will happen suddenly and without warning. As we all saw on May.6, 2010 the DOW dropped 1000 points in 15 minutes without warning. You have worked hard your entire life do not let the wealth you have accumulated go down the drain. Physical possession of precious metals such as gold and silver are the easiest way to begin hedging. If you need help in doing this please visit www.regalgoldcoins.com and get started right away. Regal Assets is one of the most trusted names in the precious metals industry and has some of the best prices when it comes to precious metals. Take this action before you are left with paper that has been stripped of all its monetary value.
Bank Failures Setting New Record Highs
Posted by: | Comments
By Peter Costa
It seems like these days the crisis in the United States is only growing worse. With each passing week a new economic plight is arising. From JPMorgan being accused of manipulating the gold and silver markets to Goldman Sachs being tried for shorting their own product, the economic forecast for the future looks dreary. There is a particular event that has been kept out of the news and will be the death of the dollar and the beginning of our demise. The economic pillars of the United States are on the threshold of collapse and these pillars are none other than the bank failures happening all across the nation.
Unbeknownst to the majority we have had a banking crisis unfolding since 2008 that is sealing the fate of our great nation. Since 2008 over 228 banks have failed in the United States abducting billions of dollars from the economy. Just to paint the picture and severity of this situation two bank failures last year alone took over $33 billion out of the economy. It is safe to say that with the amount of bank failures in the last 3 year close to $1 trillion has been lost in assets. With 140 bank failures in 2009 we saw 7% of the nation’s banks close their doors for business. This situation is unprecedented from anytime in our recent history. To show you the reality of our banking system I listed all bank failures in the United States since 2000:
2000 – 2 Bank Failures
2001 – 4 Bank Failures
2002 – 11 Bank Failures
2003 – 3 Bank Failures
2004 – 4 Bank Failures
2005 – 0 Bank Failures
2006 – 0 Bank Failures
2007 – 3 Bank Failures
2008 – 25 Bank Failures
2009 – 140 Bank Failures
2010 – 63 Bank Failures
This same last year we were at 29 bank failures and in 2008 we were only at 2 bank failures. Things are only compounding with the banks and our economic crisis. Over 500 banks remain on the troubled list including Citibank. Troubled banks have begun to notify the public of a 7 day notice for withdrawal of funds. This is already effective with many banks in the nation including Citibank and if they decide to exercise this right, they could take up to 7 days to get you your funds from a checking, saving or money market account. This 7 day notice has been issued as a precautionary measure but we all know it is only a matter of time before they start exercising it. Neil Brofsky the SIGTARP, Special Inspector General for Troubled Asset Relief Program stated in a July 2009 report on government efforts to fix the financial system, that government support could reach a potential $23.7 trillion to keep thing afloat in the US. Ronald Fricke president of Regal Assets stated last week that as long as banks continue to loan out money they do not have our financial system is doomed to fail.
There is no doubt that the greenback is on the brink of collapse. The large institutions and smart money have known this for a while and have been cautiously moving their wealth into tangible assets. It is not by chance that John Paulson world renowned hedge fund manager started a gold only hedge fund this year with $250 million of his own money. It is not by chance that Warren Buffet world renowned investor has begun to diversify into precious metals with Berkshire Hathaway. Like the smart money and institutions have done you need to follow suite and start protecting your legacy. When the dollar collapses there will be zero notice, it will happen without warning and will blind side everyone. Do not risk your future, take the appropriate steps today and start backing what you have with physical precious metals.
Yuan Versus USD – The Real Story
Posted by: | Comments
By Peter Costa
The days of production outweighing consumption are past due in the United States. There is no doubt that we have become the greatest consumers on the planet and there seems to be no end to it. It was not always like this in the US and believe it or not, there was a time when countries relied heavily on our goods and services. The latter is nonexistent today and is something we need to change if we stand any chance of surviving the economic apocalypse that is heading our way.
China is becoming the dominant force in the global economy as the days go by. They have become a master of export and many countries including the US have become reliant on their production. China runs a huge trade surplus exporting way more stuff to the rest of the world than they import back, and that means the rest of the world runs a huge trade deficit with them. As every currency in the global economy faces continued devaluation the yuan is in a growth cycle. In fact according to many experts China has artificially kept the yuan low to become a dominant exporter. Some analysts argue that the yuan is undervalued by as much as 40%. As the global economic crisis escalates, China is positioning itself to become the dominant player. When the timing is just right China could release the artificial hold on the yuan and end up becoming the world’s dominant currency. The yuan has been rising steadily for the last few months and has recently touched a 9-month high against the USD. The yuan could appreciate by 5% this year after which the value would be dictated by supply and demand in the open market.
According to US Comptroller General David Walker who ran the Government Accountability Office (GAO) from 1998 to 2008 the US has become the greatest consumer and this threatens our ability to remain the world superpower. We have become obsessed with consumption and now less than 40% of our GDP comes from export. We have lost the luster for a self-sustaining economy and have allowed foreign interest to dominant our market place. Not only have we lost interest in a self-sustaining economy we are now outsourcing work to foreign countries. As the economy continues its downward spiral more and more corporations are gravitating toward outsourcing their work. US citizens are facing unemployment by the day due to so many jobs being sent overseas. The US government is on a ‘burning platform’ of unsustainable policies and practices with fiscal deficits, chronic healthcare underfunding, immigration and overseas military commitments threatening a crisis if action is not taken soon, the country’s top government inspector has warned. Ronald Fricke president of Regal Assets stated last week that China has become a larger exporter than importer and while all governments are convincing citizens to spend, China is urging its citizens to save.
If China is on the verge of letting the yuan float on the currency market, we could see the same result as 2005 when they did the same thing, which in turn sent waves through the financial markets. The time for us to take control of our future is now. There is no need for us to become so reliant on foreign industry we need to re-ignite the fire for industry here in the US. Instead of us importing and outsourcing we need to be exporting and creating employment demand. The reason China is becoming such a dominant player is due to the increase in export. We need to see what China is doing and follow suit. Outsourcing and giving up production is not an option. We need to take back our industry and support each other before we become completely reliant on foreign exchange and a pawn in the global market place. The hand of greed needs to be slapped away and we need to step up and support each other as a whole. The nail in our coffin will be continued growth in over-consumption and we cannot afford to have this happen.
Gold Consumption Over Consumer Consumption
Posted by: | Comments
By Peter Costa
While the whole world has become obsessed with consumption over production there is one country that has gone against the grain and that is China. It is no surprise that we have all become consumers over producers and this is one of the main reasons the dollar is on the path of no return. Since credit has been introduced to the everyday individual we have fallen into a comfort level of spending money we do not have and becoming consumers rather than producers. As we continue to extend our credit lines and apply for more loans we are only becoming greater consumers never understanding why we cannot beat the system. Read More→
Global Monetary Systems Set To Collapse
Posted by: | Comments
By Peter Costa
In the last article I posted I exposed the two types of global monetary systems we have gone back and forth from for centuries. If you did not read it please make sure you read it before you continue reading this article here is the link http://goldcoinblogger.com/fiat-monetary-system-revealed/
It is important for all my readers to know how currencies and global monetary systems are currently manipulated. As discussed in my prior work the mechanism behind the manipulation taking place is a central banking system backed by fiat currency. This is the central system most established countries operate from. As revealed this type of system allows banks to practice fractional reserve banking which essentially promotes banks to loan out more money than they have thus artificially expanding the money supply causing major instability in the economy. This type of practice has enabled companies to become too big to fail as well as currencies to become devalued at a rapid rate. As a result of this practice we now have a deadly web of financial turmoil so well woven that it is only growing by the day. The structure of this web is simple to identify.
The structure of our financial system is setup so you have a central bank known as the Federal Reserve that is allowed to print the US currency. Every bank in the nation is attached to the central bank in order to protect them from the threat of bank runs. This in return enables banks to loan out more money than they have thus allowing fractional reserve banking to exist. This type of practice promotes companies and individuals to go to the bank and seek money they do not have. Throughout the years this has created complete reliance on credit and loans for individual and with companies it has created an outlet for them to continue to be in business as long as their credit line continues to be extended at the bank. As we all know a system like this always has a breaking point and the breaking point of this system was caused by individuals faltering on their mortgages. With this happening in such large numbers it has caused banks to tighten up their lending and has exposed bank balance sheets for what they really are. Now the jig is up and these banks that were allowed to loan money at an accelerated rate have had to slow down their pace. This has lead to many companies closing their doors for business as well as too big to fail companies receiving big bailouts to keep operating. As the days go by this web of financial Armageddon is only growing and will soon have us so entangled that there will be no escape.
As a result of this current fiat system we now have a similar model that is forming all over the world. What is happening in the United States is a glimpse of what is going to happen worldwide. In the United States we have the Federal Reserve that is the central hub for the US economy. Attached to the Federal Reserve you have all the banks in the nation who in return are protected by FDIC if they were ever to go bankrupt. With such lee way banks have been over lending and over spending for decades not worrying about the repercussions. With all the banks in the nation being attached to the same reserve this has enabled them to artificially expand the money supply and bail each other out of financial trouble. As borrowers continue to default on loans and mortgages with various banks this puts pressure on them causing investors and depositors to withdrawal their money. With all the banks in the nation attached to the same reserve this puts pressure on the entire monetary system and affects every bank. With so much pressure on all the banks this has restricted their lending and has caused failing banks to face closure. As a result of this over 200 banks have failed in the last 3 years. With over 200 bank closures in the US this has drained FDIC of their insurance fund and has lead to the larger banks having to come up with a bailout solution for failing banks. This has only added pressure to the entire system and as each bank fails it puts more weight on the system ultimately threatening the survival of the US dollar. You would think as each bank folds that it alleviates the surrounding banks but it does not. It actually makes things worse because it is like having a group of people holding up an object and as each falls out it only makes the weight heavier. With over 500 banks on the troubled list the weight is only growing heavier and the survival of the US dollar is looking bleak. At this point the Federal Reserve has no choice but to continue to print money in hopes that things will turn around. With the continued printing of money it creates inflation which if not handled correctly could lead to a collapse in the dollar.
This exact same model can be seen globally and is a direct result of the financial catastrophe that is taking place with the euro. In Europe you have the European Central Bank also known as ECB which is the central hub of the EU. Attached to the ECB you have every country in the EU who in return are protected by the IMF if they were to have any financial collapse. With this system in play it has allowed countries in the EU to be careless with their balance sheets. With all the countries in the EU being attached to the ECB it has allowed them to be reckless with their spending and enabled them to bail each other out of financial trouble. As countries start to default on their debts this puts pressure on them leading to foreign investors withdrawing their money from the country which ultimately leads to financial meltdown and a need for a bailout. Unlike banks they cannot just close their doors for business and they become a massive weight on the whole system. With every country attached to the EU a country failing will greatly affect the entire power of the EU. As a result of this it has lead to the PIIGS (Portugal, Italy, Ireland, Greece and Spain) nations which is only becoming worse by the day. What started with PIGS (Portugal, Ireland, Greece and Spain) has now become PIIGS adding Italy to the equation. The IMF has already bailed out Iceland, Hungry, Romania and Latvia putting an enormous amount of financial pressure on them. With the IMF in such financial constraints countries such as Germany are now being forced to come up with a bailout solution. More countries will be added to the list as the days go by and with the way things are going it looks like France is next. The weight on the system is only growing and is threatening the survival of the euro. With more countries coming out of the woodwork this is causing an enormous amount of pressure for the ECB. Similar to the Federal Reserve they may be forced to inflate their way out of this mess which if not controlled properly could lead to a collapse in the euro.
The United States is so far in debt it cannot possibly inflate its way out of it. This is identical to an individual deep in credit card debt continuing to apply for credit cards to pay off the old ones. Sooner or later he will not be able to get a credit card and will be forced into bankruptcy. Just the banking crisis alone is projected to cost the US $23.7 trillion to fix. Along with the social security crisis, the mortgage crisis, unemployment numbers and loss of foreign investors a collapse in the green back is inevitable. Similarly the EU faces the same fate and will not be able to inflate its way out of this mess. Greece’s sovereign debt is currently 13 times its gross domestic product. Translated into USD, Greece owes the world over $300 billion. This will also run the risk of calling attention to questionable loans European banks still have outstanding to governments, firms, and government-sponsored enterprises in Eastern and Central Europe, many of them highly leveraged. With Portugal, Ireland, Italy, Greece, Spain, Iceland, Hungry, Romania and Latvia in deep financial trouble it paints a picture of the future for the euro. “What is taking place globally is the collapse of fiat currencies. The IMF is in so much financial trouble that they are being forced to sell their gold reserves just to keep things a float globally” remarked Ronald Fricke president of Regal Assets in response to the EU problem.
I am calling for a complete restructuring of currencies globally. I am not only calling for a collapse in the US dollar I am calling for a collapse in global currencies. Not only are the US and the EU in trouble but the list goes on. Dubai is in a situation as dire as Greece in regards to sovereign debt problems and currently has over $320 billion in debt. The UK is facing a similar problem leaving the pound on very shaky ground. Fiat global monetary systems have never worked and as a wise man once said to know the future is to know what was written. Look throughout history and you will see this type of system has only failed. It benefits only a small group while the whole is left to suffer. It is time for everyone to foresee the inevitable and to protect themselves accordingly. Gold have lasted thousands of years and is the only honest currency the world has ever had. To this day we have still not figured out how to create gold the only way is to mine it out of the earth. This is where you want to put your hard earned money because it is what will last for centuries even when currencies collapse and new ones are created. I own gold and urge every single one of you to do the same because this option is limited and shortages are sure to happen in the near future.
Fiat Monetary System Revealed
Posted by: | Comments
By Peter Costa
For over 3000 years from the formation of banking to the creation of currency there have been 2 systems that have ruled. One of these systems has been beneficial to a small group who has sought to control the money supply while the other has been beneficial to the whole. Civilization has gone back and forth between these 2 systems for centuries and a great deal of time and energy has been spent keeping it beneficial to a small group. After diligent research I have come to see that practically every economic catastrophe happening globally right now can be traced to the current monetary system every developed nation operates from.
The 2 systems we have gone back and forth from for centuries can be broken down into a backed monetary system and a fiat monetary system. All monetary systems that have ever existed have been either one. A backed system is when a monetary exchange is backed by something such as gold or precious metals thus limiting the expansion of the money supply. With a backed system it is difficult for the money supply to expand rapidly because it is based on the reserves that are held. When a system is backed and has limitations to the expansion of money it becomes beneficial to the whole and can create a lot of stability in the economy. When a monetary system is backed it makes it very difficult to manipulate the money supply. A fiat system is exactly the opposite of a backed system this is a monetary exchange that is backed by absolutely nothing. In a fiat system currency is typically issued by a ruling entity such as the government and is backed up or enforced by jail time or fees if not accepted. Normally this exchange is paper money or some other form of portable currency that is hard to replicate or forge. With a fiat system the money supply can be expanded as often as needed because there is absolutely nothing backing it. This type of system is typically manipulated and beneficial to a small group rather than the whole. Throughout history fiat systems have failed and have never worked. Fiat systems have been the catalyst for the rise and fall of many great nations.
The current system most developed nations are on right now including the United States is a fiat system. A majority of the currencies being issued today are backed by absolutely nothing. When you boil it down they are useless pieces of paper that are on a path of no return and will soon be used as nothing but paper to light a fire. The Wymore Republic and Former Soviet Union have been the most recent prey for this type of a system and the whole global economy will soon follow. For a fiat monetary system to properly exist there needs to be a central banking system put into place. A central banking system is setup where you have an entity such as the Federal Reserve commonly known as a central bank, print up the countries money and all banks in the nation are attached to this one reserve. The alarming thing with this setup is that the central bank is never owned by the government it is typically owned by bankers or private investors. This system is beyond faulty and can create a lot of volatility in an economy and cause everything from depressions to recessions. The most detrimental part of this setup is that it promotes fractional reserve banking. Fractional reserve banking is when a bank loans out more money than they have in deposits. As recent as the Clinton administration days banks were encouraged to loan out more money than they had and were given a 1 to 9 ratio. How a 1 to 9 ratio works is for every $1 a bank receives in deposit they are allowed to loan out $9. Ever since banking was formed this has been a standard practice between banks. On a backed system it is harder for banks to indulge in this type of practice because if word got out depositors would take all their funds from the bank causing a bank run. A fiat system with a central banking system put into play protects banks from this threat because it acts as a reserve and has all banks in the nation attached to it. If there were any threat of depositors taking out large sums of money they would simply cover that bank. This in itself is the recipe for economic instability and an eventual currency collapse because it allows banks to artificially inflate the money supply.
Now that you understand how the system works let me explain what this type of system enables. For decades now the United States has been on a fiat monetary system. In this type of a system the name of the game for banks is to get as much money out into the economy in the form of loans as they can. Many companies have understood this and have used it to their advantage. Companies have been lining up at banks to receive loans for their companies. With these loans they create companies, include the citizens of the United States in the workforce and start to become an asset or liability on the banks balance sheet. As the years go on these companies run out of money and keep going back for more loans so that they can pay off the outstanding ones. Due to banks wanting to keep money out in the economy they continue lending these companies money giving them enough to pay back interest on the loans and survive for a little longer. Before you know it these companies get to a level where they are “too big to fail” and if they were to go bankrupt they would take the bank down with them. So companies start spending lavishly and keep going back to the banks when they run out of money. This is why companies like AIG and countless others have been able to continue to exist. They have borrowed so much money from the banks and if they were to go bankrupt they would take the bank with them. This exact same scenario has been replicated with individuals through mortgages. Countless banks in attempt to keep money out in the economy have taken individuals who should not have mortgages and approved them. When the individual can no longer make payments they apply for another loan or restructure their mortgage driving them deeper into debt. As long as the money continues to stay out in the economy the bank is satisfied. The problem with this whole type of practice is that sooner or later it all falls apart because everything has a breaking point. This exact scenario has been the catalyst for our current economic state. All that is unfolding right now was lead by sub prime mortgages faltering where scores of individuals could no longer afford their mortgages and had to walk away. Once this happened the bank’s game of artificially expanding the money supply was up. With so many people defaulting on their mortgages banks were no longer able to loan money freely which leads to more loans defaulting and sooner or later it all unravels into what we are currently experiencing.
The jig is up and banks are being forced to close their doors for business. Now you can start to understand why over 195 banks have failed in the last 2 years and why 26 have already filed for bankruptcy in 2010. In addition there are 500 more banks on the troubled list that will soon face a similar fate. One of the biggest banks in the country is on the list which is Citigroup who have over $1 trillion in assets. Effective April.1st, 2010 Citigroup is going to need 7 days notice for anyone making a withdrawal from a saving, checking or money market account. The scary thing is this is already effective in Texas and they have been warning depositors about this since the start of the 2010. This is only the beginning and many more banks will follow suit as more loans default and depositors want to withdrawal their holdings. The only problem with this whole thing is that it is not the banks that suffer from this practice it is the people. Like these large companies that have become too big to fail many of the banks have become too big to fail. We are now in a situation where if certain banks were to fail our currency would collapse. That is why banks will now start exercising the right to take up to a week to provide you with money from your accounts because the government has no choice but to bail them out in hopes that this will all turn around. So far out of $600 billion plus used to bail out troubled banks $537 billion of it has been handed out in executive bonuses. “The banks have no remorse for the current economic crisis and are going to guarantee hyper inflation in the coming times which will lead to a currency collapse” stated Ronald Fricke president of Regal Assets in response to the current banking crisis. As we print more money to solve these situations it only devalues the dollar guaranteeing inflation. If things continue to escalate we will face hyper inflation which if not handled correctly could render our currency useless. As you are probably starting to understand this economic crisis is so inner woven.
As much as it pains me to say this, at this point it may be better off for the United States if the currency collapsed rather than continue to bail out the banks. This would free us up from the web our banks have spun and allow us to start off anew. There are too many things holding back any kind of economic recovery and as Obama put it when he first stepped into office this thing is much deeper than anyone could possibly imagine. The only system that has ever offered stability and the only time period where the United States deficit was completely paid off is on a backed system. All the way up until 1933 the United States was on a backed system and with manipulation from the certain parties we were transferred over to a fiat monetary system. When this system gives way and a new one is introduced rest assured it will be a backed system. If you look around you will already see this beginning. A currency collapse is inevitable in the United States and for the first time in over 30 years countries have started to buy gold in an attempt to back their currency. China is leading the way and plan to purchase over 6000 metric tons in the next 3-5 years. This alone is going to cause the demand for gold to sky rocket thus making it more and more difficult to acquire. If you have not already started backing your green back with gold now is the time.
Hyper Inflation Is The Recovery Plan
Posted by: | Comments
By Peter Costa
Since 2008 the US economy has been hit with a wrecking ball. It started with sub prime mortgages faltering and has escalated into a credit crisis. From toxic mortgage debt to the banking crisis unfolding, the US economy has been in need of surplus capital. In the last 2 years with the combined private bailouts and stimulus packages we have spent well over $2 trillion trying to keep the economy afloat. As each year passes the need for capital is only compounding. Our deficit is at an all time high and projections for the future seem grim. As new budget plans are purposed for 2010 we can start to gauge where the year will take us and how close we are to hyper inflation.
With only 2 months into the new decade the US government has been working rigorously trying to revive the US economy. A purposed $3.8 trillion budget plan is floating around congress and is grossly inflated from years passed. Behind all the fancy wording and political jargon we all know that the rescue efforts are nothing short of continuing to pump money into the system in hopes of recovery. This plan is similar to an individual applying for more credit cards to cover the current outstanding ones or a Ponzi scheme bringing in more money to pay off old debts. Like the later everything has its breaking point and sooner or later we will hit that point. With unemployment numbers at an all time high this has been the main focus of the new budget plan. If the US government gets their way we could see a $3.8 trillion budget plan passed this year. Why is this alarming? It does not take a mathematician or renowned economist to know that this is going to lead to hyper inflation. You cannot print up $3.8 trillion and avoid devaluation of the dollar it is next to impossible. We have lost confidence with our major lenders such as China and have seen many countries begin to abandon the greenback.
China has lost such confidence in the US dollar that for 5 months now they have stopped purchasing US treasuries. On Tuesday, 16th February, the US Department of the Treasury released Treasury International Capital [TIC] data for December 2009. It revealed that China sold over $34 billion US Treasuries in December 2009. With this recent news China is no longer the largest holder of US debt they have passed the title to Japan. “For over a decade now China has increased their US Treasury holdings by 8 fold, it is extremely alarming that they are now dumping them and paints a picture of where our economy is heading” stated Ronald Fricke president of Regal Assets. A tsunami of Treasury auctions are set to take place this year, amounting to a total $2 trillion to fund this year’s budget deficit. The Fed is likely to monetize a sizable portion of this debt due to the difficulty the Treasury will face off-loading such a large quantity onto the market. This would have been an easy feat in the 90s or the first half of the last decade, but with the debt ceiling now in excess of $14 trillion, the market will soon realize that buying US government debt is not “risk free” with a default likely. If we are not able to unload the required Treasuries on foreign countries, citizens of the United States may be the next target. There is a bill that is currently being passed around congress that is looking to nationalize retirement plans where if approved will make it mandatory for individuals to place a portion of their retirement holdings in US Treasuries. This will be a devastating blow to the individuals that have already incurred massive losses on their retirement plans and could cause major chaos. As lofty of a bill as it may be I am appalled that forcing Treasuries on US citizens would even be an option.
Based on what has been unfolding since 2008 I am not saying that gold and silver are going to do well I am insisting that they are going to do well. Hyper inflation is the next logical step in our recovery plan and for the people pulling the strings I do not feel that they have even taken into account the devastation it will cause. More importantly I am convinced that who ever is pulling the strings does not care about the US or the dollar. The more I research the more I feel that this may be a carefully orchestrated collapse. In any event we need to wake up and turn our useless pieces of paper into honest currency that cannot be manipulated by government. It is time for us to preserve what we have worked so hard for. Social Security? Not likely. IRA and 401Ks? Not all of it. For centuries royalty and the elite have been preserving their wealth in precious metals. It is time to follow suite before you get left with the short end of the stick. No one else is going to get our back, it is literally left up to us to take action.
Banking Crisis Continues Into 2010
Posted by: | Comments
Banking Crisis Continues
By Peter Costa
The banks in recent times have become a black hole sucking away any chance of dollar recovery in the United States. Since 2008 we have seen the banking crisis unfold and snowball into a colossal mess. As 2010 starts to unravel we need to keep an eye on the banking crisis because it will be an indicator of where things are heading financially. Banks are a crucial part of our financial system and if they continue to fail the green back will not be far behind.
From 2008 to 2009 we have seen 195 banks fail leaving over 500 on the troubled list. Regulators closed 140 banks last year, the highest level since 1992 when officials were still cleaning up from the savings and loan crisis. Community banks are facing persistent pressure from deteriorating loans, many tied to commercial real estate projects that have collapsed or are in decline. With only six weeks into 2010 the banking crisis is compounding from the prior year with over 15 bank seizures as of January. The last Friday of January saw 6 banks fail in a single day this is the exact same number of bank failures that happened in the entire month of January for 2009. The banking crisis is only escalating from last year and projections for the future seem grim. In 2008 we saw 1 bank fail in the month of January; in 2009 that number quintupled to 6 and now over 16 banks have failed for January 2010 leading us down a road of no return. With statistics like this hyper inflation is inevitable and could start to rear its ugly head shortly.
FDIC Chairman Sheila Bair has said in the current banking crisis that bank failures will peak in 2010. FDIC expects the insurance fund’s balance will remain negative until 2013 but says it has plenty of access to cash, including the ability to tap a $500 billion line of credit with Treasury. Ronald Fricke president of Regal Assets stated last week that the FDIC is down to less than a billion in their insurance fund promising to insure over $6.3 trillion in assets and will have no choice but to tap into their credit line with the Treasury.
Hyper inflation at this point it is an unavoidable reality. The dollar is only growing weak and the US economy is demanding more and more of it. The banks are the back bone of our financial system and if they start to give out we will all face an undesirable circumstance. With the banking crisis leading the way for financial meltdown the time to move your money into a tangible asset is now. Never in the history of the United States have we been faced with such a crisis and those who do not protect themselves properly will end up getting pennies on the dollar. Gold is an asset that has been used for centuries to protect people from the greed and manipulation of money supplies. With gold prices where they are currently you could not be in a better buying opportunity.
