SOLD OUT

March 30, 2020 by

Simon Phillips in Blog

“Sold” refers to the answer you would have got last week, and still get this week, if you go to buy physical gold or silver, anywhere, unless you were offering a $200p/oz premium for gold and 100% on silver, with an online “dealer”.

Do you think there was one mention in the media last week of problems in the Precious metal derivative market or sold out gold and silver, globally? There wasn’t.

Probably because of Coronavirus, right?

By now we hope you realise that one part of the twin crisis we’re dealing with right now is man-made. Let’s ignore the interestingly wonderful theory’s out there that call COVID:19 anything but an act of nature/God, or whatever.

What is happening now in financial markets is a result of unhinged “financialization”, over multi decades, particularly since the deregulation of the banking industry in 1998. The creation of bubble after bubble, culminating in this most recent bubble, the greatest of them all.

The Central Bank fiscal response to each bubble they created has been larger and larger, making themselves and their government masters (despite the appearance of independence) bigger and bigger, which you should now recognise as part of the problem, not solution.

A large part of the “problem” has been the complicity of educators, advisers, corporate leaders and, most of all, main stream media, at all stages, to fail to question the “status quo’.

The big thing they may feel but cannot say about this crisis is that it’s nothing like the GFC and, quite possibly, way beyond anything we’ve experienced in the last 100 years.

Those that tell punters “don’t worry it always comes back” have a view of economic history that limits itself to the last 40 years. This one could be more than a lifetime to come back for some.

Most have drunk from the same Keynesian economic Kool aid dispenser so we can still expect more of the same

It’s the nature of human herd mentality, the feeling of safety for ‘swimming between the flags” and the fear of the potential social humiliation of being caught “outside the flags” that makes it very difficult to see this crisis for anything other than that which ones current information sources present.

We strongly suggest you look a little harder at this one as those between the flags get dragged out to sea. There is still time to prepare.

Closer to home, we almost choked on our smashed avocado when we read this little gem last week. Last week!

“Coronavirus crisis: Why gold doesn’t always glitter as an investment in tough economic times”

This piece of “journalism” was published on the 23^rd of March by the local newspaper of the state of Western Australia and was authored by a highly esteemed Financial Advisor.

The article kicks off stating that the 5oz gold bar you may have hidden in your wardrobe for an “all else fails” moment like a bank failure (he assures us it won’t happen) assumes you’ll be able to use said gold.

Well, we really hope the author is not missing golds feature as a medium of exchange over the last few 1000 years with this statement. Fiat, paper currencies have always had a short life span.

He then goes on tell us that, “The trouble is, rather than soar to lofty new all-time highs, the value of gold has gone backwards”

Really? So, seeing a 90% of his audience is probably Australian, if not West Australian, let’s have a quick look at the price of gold in AUD over last year.

It may not be back to USD high but these are very, very early days in this crisis!

Actually, gold has made all-time highs in most major currencies as the US deals with a bounce in the USD, as it does in the early stages of most crisis over the last 40 years.

But really? To go on and say gold has a “checkered past” in a role of storing value?

On what planet?

It does not take much of a “search” to find any amount of evidence that prove the exact opposite, in any currency.

The author goes on the refer to the last 1944, Brenton Woods financial reset and its “love child”, gold!! Cripes those were the days. We are not exactly sure if the US itself wants “reserve currency’ status at this juncture.

The absolute “tell’ that the author belongs in the reputable realm of modern day financial commentators is when he refers to the 1971 break from any gold standard by the US Nixon administration as some kind of reason that gold doesn’t work and in doing so, the USD becomes the world’s first digital currency. Really looks that way now by the way they’re producing 0’s but we’re not sure that was the intention.

Continuing downhill from there, the author goes on to justify his argument for the meaningless of gold by referring the fact that the Australian Government/RBA have virtually no gold left.

Actually, it’s the Canadians that have none and and 1998, the Exchequer of the UK, Gordon Brown, sold 75% of all their gold at an average of $276 an ounce. Great club! Happy to be “in”?

There’s no point going on, the next few months will speak loud enough. We only refer to this argument to demonstrate how many people are on one side of the boat.

The chances of this Keynesian paradigm being destroyed over the next couple of years (or months) holds the greatest risk to your financial well-being, should be the warning.

What one really needs to fear in the final acts is: not if you lose or have any “money” but what will your money be worth. Really consider this. Hyperinflation is THE worst outcome.

2008/09 was supposed to be different but instead, global Central Banks decided to make it 10 times worse.

Let’s get current then.

Last week the demonstration of committment by Central banks to do more of the same is exemplified by the 10% of GDP 2TRILLION commitment of the US!! WOW, we think there is USD250Trillion of total debt in world! Good start eh?

And how about that 22% rally in US stocks and the subsequent flow on to global markets last week (not that it ended well!)

Biggest short squeeze, in history.