Short term Silver outlook

Just a quick heads up...

The media is very slowly catching up...

A thank you for one of our followers who sent me this link today : http://www.dailymail.co.uk/money/investing/article-2237878/MIDAS-SHARE-TIPS-Gold-quintuples-years-rising.html

It's nothing that we don't already know but it does appear that Gold and Silver is slowly creeping into the media's attention. However they always miss out on what's going on in the Silver market. Gold is a smart move, however the smarter investors are investing in Silver due to the hundreds of reasons stated in www.HedgingAgainstUncertainty.com 

And in case you haven't seen what's happening to the prices...here's the latest:

Silver Price To Increase 400% in 3 Years

Just came across this article in the Telegraph. Seems as though the larger papers are finally catching up with what's going on in the Silver world...

http://www.telegraph.co.uk/finance/personalfinance/investing/gold/9672895/Silver-price-to-increase-400pc-in-three-years.html

Is Apple the next Western Bubble to POP?!

I've been highlighting over the last few weeks how weak the US stock market is at the moment. I've shown forecast after forecast of how the S&P 500 could/will fall - and it has. However one of the main questions I'm getting at the moment is:

"But why is the Stock Market falling? The news says things are peachy now..."

Well for a start, without sounding too crass, if you believe that we're about to grow out of this recession, 2 points, i.) Not a chance in hell. Apple, the Stock Markets and the economy are going to hell in a handbasket, and ii.) you really need to watch this is full: www.HedgingAgainstUncertainty.com paying particular attention to the wealth cycles I explain in it.

The main reasons that we've seen a slight climb in equities over the last few months is mainly due to QE3 and also the fact that the Powers-that-be are all playing the status quo game. Election years are funny times and in a 6 month period we're having the US, Chinese and German elections. So once all that is out of the way, then the drama (Europe) can then unfold. As you may have noticed, just before the US election the NFP report was unusually rosy compared to previous months and the words 'FISCAL CLIFF' were nowhere to be heard on the news.

Also, another reason the US Stock Market (S&P 500) has been relatively buoyant recently is because Apple was the only thing keeping it afloat. However with less than expected iPhone 5 sales and less than expected 'fake growth' with QE3 and other factors, the Apple bubble is now popping. And as Apple deflates, so too will the S&P500. And as the S&P500 falls, so too will the rest of the world Stock Markets. So it doesn't look peachy. Unless Apple quickly releases their new iPanel product and it revolutionises TV like it did with MP3 players and mobile phones, there's very little hope of prosperity here. Even if that does happen, I fear it will be short lived though.

So what can we do?

I never give financial advice, but in my opinion, you're playing with fire if you have positions in the Stock Market (even if you think your big Blue Chip company is super strong). In 2008 we saw at least 5 of the biggest banks in the US go under and when the eventual crisis unfolds around 2014-2017, think of 1929 on steroids. If the Internet and Google was about in 1929, that crash would have been a lot worse! So without sounding like a 1 track record, you simply can't go wrong with buying Gold and Silver bullion coins. It's in my opinion the best hedge against the greed and over-leverage of the financial puppeteers. I've attached a little overview of Apple below.

US Stock Market sell off imminent...

If you have stocks and shares, please be very careful...

Please see previous posts to see how and why this has developed...

Doesn't look good for the US Stock Market...

Possibility of Stock Market crash now critical...

When the S&P falls, so too will the FTSE...

Is this the best investment ever?

This is a slightly old video of Robert Kiyosaki (author of Rich Dad Poor Dad) on his view of Silver. Kiyosaki was right about the Tech bubble collapse, the housing bubble and is now piling heavily into Gold and Silver...

What is the next bubble? Here it is...

Is this the set up of a market crash?

Why are the Banks so scared of Silver?

Not exactly the most eloquent video I've made, but I briefly touch on a number of things like BASEL 3.

BASEL is a very understated organisation which controls the Central Banks and sets their regulations. In an attempt to try and mend the world, they've released a new act which now makes Gold a 1st Tier asset as opposed to 3rd tier. This now means that Banks can lend off Gold at 100% of its value instead of 50% and Gold is now classed as good as cash and Government/Treasury bonds. As well as this, they've increased the capital ratio from 4%-6%, so this means that from 1 Jan 2013, Central Banks across the world will HAVE TO start acquiring and storing more PHYSICAL Gold. This is an immensely bullish sign for future Gold prices. Will this result in a spiking of Gold's price in the New Year? Only time will tell...

The Silver Market is manipulated

Don't trade it, buy it...

Spain is in serious trouble...

The famous EBSI Quadrant...

Although this shows that working in a job isn't the most effective use of ones time, having a job in the first place can help your progression into the B/I sectors a lot easier. I feel a job is just a cushy stepping stone before you make the plunge...but boy is it nice in the B & I sectors...However, starting your own business is rather risky, 9 out of 10 collapse in the first year...

QE = Delayed fuse Dynamite...

So what exactly has been happening over the last month?

In a nutshell, the US has pretty much signed a death warrant for the Dollar. The only reason why the markets have been up over the last few months is because the Federal Reserve is artificially propping up the system in the aim of avoiding deflation. They've done this by injecting colossal sums of currency into the banking system (QE1,2,3 and Operation Twist). Now these measures temporarily help stocks and bonds, but they absolutely ravage the economy. They don't even print the full amount of money these days, they just type zeros into a computer and POOF, fake Dollars spring into existence and every new Dollar they create, immediately DEVALUES every other Dollar in the world. So in essence, by doing so, the US is secretly taxing the world through inflation. As a result, we shall soon see prices for pretty much everything we buy increasing. Food inflation will be a big issue in 2013…so watch this space.

I hate to be the bearer of bad news, but the world is crumbling and if you think the status quo will be maintained, you'll be sorely shocked in the next couple of years. After the US and German elections are out of the way, it's end game for the Euro. If you're heavily reliant upon stocks and shares, I seriously hope you know what you're doing and know every detail about the company you've invested in. Again, when war in the Middle East erupts within the next 6 months or so, oil prices will be affected in a big way. So filling your car up will will only become more expensive. But it's not all doom and gloom. Did you know that in 2006, £6 would buy you 6 litres of petrol or 1 ounce of Silver. But right now, £6 will buy you 4.6 litres of petrol, whereas that same 1 ounce of Silver will now buy you 23 litres of petrol! Silver is literally the silver lining. Not only is it a great investment in my opinion, it's a great way to protect your wealth and purchasing power. An insurance policy if you may.

Well, I hope this helps in some way. I've also included a very basic picture of what QE is below.

If you ever have any questions, please send me an email or pick up the phone!

Silver Update - 09 Oct 12

Been asked by a follower to do a quick Silver update. Much has changed since I last did one, but the fundamentals still remain even stronger than ever before.

The next few months are going to be extremely interesting.

Hyperinflation in the US in less than 900 days?

Gold Silver Worlds | September 30, 2012

John Williams, who is the founder of ShadowStats.com, stated during a recent interview that the US is on track to become victim of hyperinflation the latest in 2014. He believes that “open ended QE” (which is nothing more than monetizing debt) is the key problem. He explains there is an annual deficit of 5 trillion dollar per year in the US, which includes the unfunded liabilities.  He declares the situation “beyond containment”. Central planners are responding to the current economic problems by simply increasing the amount of printed money. John Williams his expectations are that  we’ll soon see a heavy sell off in the dollar, quickly followed by a significant first spike in inflation. That will ultimately lead to  hyperinflation the latest somewhere in 2014. We are just before the kick off of inflation.

We recently mentioned in our article “Money printing and inflation” that in fact inflation IS the expansion of the money supply. Inflation results in price inflation (the phenomenon of rising prices). Usually there is a time period between those two events, which makes it hard for most people to relate them to each other. Inflation and price inflation are often confused in spoken language  but it’s mandatory to understand this fundamental difference.

Hyperinflation is a situation that most people can’t imagine they could go through in their lives. Among economic and financial experts and commentators, it’s a subject that triggers a lot of debate. The least you can say is that there is a consensus on when and how hyperinflation hits. If you think about it, it’s very strange as the world has experienced so many periods of (hyper)inflation. Even in the 20th century, the number of countries that were hit by severe hyperinflations  exceeds what most of us expect (see table below; courtesy of Miles Franklin). Honestly, it’s beyond us that even in the scientific world there is no consensus. The funny result is that most people belong to one of the two camps: either they think that inflation and possibly hyperinflation will hit, either they expect a deflationary situation. 

Hyperinflation vs inflation

First off, what exactly is hyperinflation? We think that the blog post from FOFOA “Just Another Hyperinflation” is excellent and that it provides an in-depth answer to our question. We consider it a must read for anyone trying to understand the concept of hyperinflation. It also puts the notion of deflation into perspective.

I would like to clear up probably the most common misconception about hyperinflation. What most people believe is that massive printing of base money leads to hyperinflation. No, it’s the other way around. Hyperinflation leads to the massive printing of base money.

Hyperinflation, in most people minds, conjures images of trillion dollar Zimbabwe notes. But this image is simply the government’s reflexive response to the onset of hyperinflation, which is actually the loss of confidence in the currency. First comes the loss of confidence (hyperinflation), then, and only then, comes the massive printing to keep the government and its obligations afloat.

You see, hyperinflation is exactly like deflation. The only thing hyperinflation has in common with inflation is part of its name. It looks just like a deflationary depression. In fact, it IS a deflationary depression, with a different numéraire, being GOLD.

The key in this view is to understand that debt (owned by banks & Central Banks) and credit (in the form of paper money) are not balanced anymore, although they were in the past. A desperate move to rebalance that situation is what (Cental) Banks are aiming to do with their actions. That’s why you see today for example tightened conditions of commercial banks in providing credit or the massive buying of mortgage backed securities and bonds by Centrals Banks. These actions result in a widening gap between debt and credit. It’s against that background that you should interpret FOFOA’s fundamental statement: “Hyperinflation is the process of saving debt-backed assets (MBS’s etc.) at all costs, even buying them outright for cash.”

The point here is that this tactic only works as long as all circumstances remain unchanged. As soon as the awareness on a larger scale kicks in and a tipping point is reached, it will be the market that pushes interest rates higher. Several other types of events could cause the situation to spiral out of control as well. It seems like it’s just a matter of time till one of those things happen! When we reach that point, (Central) Banks will not be able to justify money printing anymore … but the damage will be done, sadly enough.

Mind also the unit of measurement that can make a huge difference in understanding a situation, for example expressing an economic situation in terms of fiat currency or in terms of gold. Measuring a situation in gold for example could show a deflationary view, while in nominal US dollar terms it can look totally different.

The bottom line is what Andy Hoffman wrote: “EVERY fiat currency regime throughout history has COLLAPSED, and EVERY new attempt will do the same.”

Grant Williams about (hyper)inflation

We asked Grant Williams if he thinks hyperinflation will hit in 2014. He is the author of the respected newsletter Things That Make You Go Hmm and is very well positioned to have a clear and neutral view on the economy. He told us that the sharp sell-off in the dollar may not happen for a while as just about every other currency is being overtly weakened simultaneously. However, he believes there is a very real risk of extreme inflation and he doesn’t rule out hyperinflation can kick in.

Grant Williams closely monitors the velocity of money which has been falling since 2008 as well as the excess reserves parked at the Federal reserve which have been rising during the same period. 

Right now, the Fed is “confident” that once they get the velocity of money rising, they can simply and effectively stop those excess reserves from pouring into the economy in search of a productive home. Of course, they were also ‘confident’ that subprime was ‘contained’ and that there would never be a national decline in house prices.

If they fail to successfully extricate themselves from the corner they have backed themselves into, then there is a very real possibility of hyperinflation but for it to happen by 2014 is, perhaps, a bit of a stretch.

Protect yourself with gold & silver

So in the light of all of this to come, whether it is inflation or hyperinflation, the most logic way for you to protect yourself is by preserving purchasing power in the form of Gold & Silver. Since 1913, which is the year where the Central Bank was founded,  the US dollar has lost 98% of its value. By contrast, Gold has preserved its purchasing power since then. During a hyperinflationary period, Gold prices surge dramatically. It doesn’t mean though you are making profits when, say, the gold price doubles. You are simply preserving your purchasing power in an environment where the value of the currency has declined by 50%.

Article by Gold Silver Worlds

Billionaire Frank Giustra tells it straight...

A great interview with someone who really does know how the world works. Some great questions and answers.

Get your head around QE3

Fabian4Liberty on How To Buy Gold and Silver