Home > A Crash Warning Has Been Issued For The Economy; Buy Gold and Silver

A Crash Warning Has Been Issued For The Economy; Buy Gold and Silver

Jeff Nielson: Regular readers of my work know that I have been outlining (and warning people about) two potential economic scenarios; as the West’s terminally-ill economies lurch towards their final collapse. These hollowed-out, debt-saturated economies would (will) either crash under the weight of their own insolvency; or our governments will create a hyperinflation death-spiral — in a last desperate attempt to avoid that bankruptcy event.

While both paths represent utter, economic suicide; the road to ruin is much different in these two scenarios. This has severely limited the investment options and strategies for any prudent investor. Forced not only to “play defense” with our investing but to prepare for two more-or-less opposite events has made precious metals the one asset class which can protect investors from either of these fates.

I’ve explained on multiple occasions in the past why precious metals will outperform other asset classes in both a debt-default crash or hyperinflation-spiral scenario. The purpose of this piece is not to repeat that analysis, but rather to point out that as of this moment the “crash” scenario has become not only the most likely scenario, but an imminent event.

For those who have been paying attention recently as the West plummets deeper into Depression and the global economy teeters; the news that came out today was enough to send shivers down one’s spine. On a single day we hear that Europe’s interest rates have descended closer to the zero-percent graveyard already occupied by Japan and the U.S.; China has slashed its own interest rates again; and the (ridiculously inflated) U.S. “ISM” service sector measurement has reached its lowest level in 2 ½ years.

Each of these news items has dire implications, and so I’ll spend a moment dissecting each of them. As I have detailed in past commentaries, any fiat-currency produced at zero cost (i.e. with interest rates set at 0%) is worthless as a basic tautology of logic and arithmetic. There can be no possible debate or equivocation here. Just as with the yen and the USD, the euro now lurches much closer to the same worthless status.

Meanwhile we see China, the growth-engine of the 21st century global economy, again lowering its own interest rates. With China’s 1-year deposit rate on the renminbi now set at 3%, while the 1-year lending rate is now at 6%; China’s interest rates are still sane (unlike the West) – and it’s own paper is not (yet) officially worthless. However, China’s latest cut in its interest rates signals another deeply disturbing aspect to the economic carnage created by the reckless/greedy/incompetent Western banking cabal.

What most other economic commentators still totally fail to grasp is that the terminal, economic death-spiral in which virtually all Western economies are now trapped bears absolutely no resemblance to any other deflationary collapse in the limited experience of these pseudo-experts. In a “normal” deflationary episode, by definition the value of the currency in circulation rises. This makes that currency an effective “safe haven”.

Similarly, in previous deflationary episodes when our economies were still solvent, bonds also represented a safe haven: loaning money to the most reliable debtors, sovereign governments. Neither of these parameters exists today.

As Western economies accelerate toward their debt-default crash (i.e. bonds going to zero), we see inflation raging all around us (i.e. currencies going to zero). “Official” numbers on inflation have become such absurd lies that they are now entirely irrelevant numbers. In the real world, inflation is now a double-digit plague in virtually every economy – and cutting interest rates stokes that inflation still further. Worse, because inflation (by definition) is the destruction of our purchasing power; such crippling inflation causes the collapse of these hollowed-out economies to accelerate. Thus we have a world where inflation and insolvency can and are simultaneously worsening.

While Europe and China are stoking the inflationary side of this economic nightmare with their interest rate cuts, simultaneously we get more terrible news out of the world’s great, economic black-hole: the U.S. economy. While absurd statistical lies have transformed the U.S.’s Greater Depression into an “economic recovery” for the past 3 years, the short-term benefits of this propaganda campaign come at a terrible price.

Deluded Americans who should have spent the last three years bolstering non-existent savings and paying down their extravagant debts have instead done the opposite: they have stopped saving, while once again piling on more debt which they have no hope of servicing over even the medium term.

As usual, our greatest condemnation must be reserved for the mainstream media, a corporate propaganda machine which is entirely owned by a handful of Oligarchs. To protect the paper-empire of the felonious banking cabal, we have been fed an endless diet of “don’t worry, be happy” tripe from the shameless shills employed by these Oligarchs.

News from the U.S. economy has been totally unequivocal, once realistic numbers on inflation are used to translate the economic fiction distributed by the U.S. government. Manufacturing has collapsed. The housing sector remains mired in the worst depression in U.S. history, and saturated with mortgage-fraud there is no prospect of this market healing during our lifetime.

Several months of terrible retail sales numbers are being accompanied by a marked sag in the official readings for the U.S. services sector. With consumption directly or indirectly accounting for well over 80% of the U.S. economy; each percentage-point drop in this sector of the economy translates almost point-for-point into a decline in GDP. While the crippled economies of Europe at least attempted (suicidal) “austerity”; the U.S. economy is drowning in such extreme levels of debt that its cowardly two-party dictatorship has refused to even attempt to control the exponential explosion in U.S. debt.

The U.S. economy is nothing but a credit card which is past the point of being “maxed-out”. The ludicrous notion that the U.S. can “print” its way out of insolvency is nonsense, for (among many) a reason which I’ve already provided: the U.S. dollar is already totally worthless. As a basic proposition of arithmetic, worthless paper cannot mitigate insolvency. However trying to do so is how governments produce hyperinflation.

It is the act of attempting to ward-off bankruptcy by printing ever larger mountains of (worthless) paper currency which has always been the catalyst for hyperinflation; as such extreme/reckless conduct shatters the final delusion of the Sheep that this worthless paper actually has value.

The analogy of a government which claims it can ward-off insolvency with a printing-press is a simple one. It is identical to the Deadbeat who assures a creditor that he can “resolve” the problem when one of his bad-cheques “bounces” by simply writing another (bad) cheque. It doesn’t matter if the Deadbeat writes one more bad-cheque or a million; none of his debts can be reduced, let alone repaid.

So it is with Deadbeat Governments claiming they can “pay their bills” by simply printing more and more and more and more paper. It is not a question of “if” the Sheep finally and totally reject all of this fiat-paper. The only question which remains is how many months until this occurs?

Understand that during the Panic of the crash which looms ahead of us that it is entirely possible that the (nominal) prices of our precious metals assets (whether bullion or the shares in the miners) could decline still further. This must not deter us, and above all we must not attempt to become “traders” in this extreme/insane environment.

Those (amateur) investors who naively believe they can trade in and out of such markets overlook one, gigantic variable which can (will?) destroy them. As our economies collapse it is inevitable that both our banking system and markets will be forced to shut down – likely for extended periods.

Those who sell their precious metals assets for the bankers’ “magic beans” (i.e. fiat paper currencies) risk being caught holding that paper when our banks and markets are closed. By the time the financial system re-opens there is the very real possibility that any/all paper in their possession will no longer have any value whatsoever. Instead of prospering through their trading, such people can/will annihilate themselves financially.

Understand that what looms ahead of us is an economic cataclysm more severe than anything we have even read about in our history books, let alone experienced in our own lives. Understand what it means to “play defense”, and do so now – before it’s too late. Seats still remain in the Financial Lifeboats known as gold and silver, but the Titanic is sinking fast and the party is over.

Written By Jeff Nielson From Bullion Bulls Canada

Jeff Nielson is from Canada and is a writer/editor for Bullion Bulls Canada www.bullionbullscanada.com. He has a personal background in law and economics. Bullion Bulls  Canada provides general macro-economic and political commentary,  since the precious metals markets are among the most complex (and  misunderstood) in the world.

Bullion Bulls Canada also provides basic coverage of Canadian precious metals mining companies. Canada is the global leader in mining exploration, and Canadian-listed mining companies (on the Toronto Stock Exchange and Venture Exchange) are responsible for the majority of the world’s most-promising discoveries.



Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Facebook Comments


  1. Nathanimal
    December 26th, 2012 at 14:17 | #1

    Lots of informed and uninformed comments going on. @Jim “gold, silver and CASH(????!!!!)” paper is nothing. Merely ‘faith based value’. @James: yes, gold and silver CAN ‘lose value’ in respect to (insert Fiat currency here), but it’s scarce, cannot be created in fiat and has been ‘money’ for thousands of years. A $100 bill Benjamin Franklin note has an intrinsic value to a $1 note and only speaks bad English. While a .50 cent Benjamin Franklin has commodity value and speaks: Russian, Italian, French, Mandarin Chinese, etc, etc, etc….while in the fiat prison, we must exchange our USD for Euros to spend ‘money’ in Europe, Gold and Silver have value in EVERY COUNTRY without exchanging in a Bank. #JustSayin’…

  2. Rick McCoy
    December 24th, 2012 at 03:57 | #2

    Silver Bottomed at 28.00 this year. from the looks of things, silver is headed to 200.00

    If I was warren buffet, I would buy more now!


  3. James
    August 23rd, 2012 at 13:04 | #3

    Very late update….do your homework. Study the Great Depression. Gold and Silver ARE not a panacea. They WILL lose value too. ALL asset classes CAN lose value. Yes, you should have some. But I would never, as Jeff writes below……put it all in gold and silver. Silver should go to $20 before long. Then pull up the truck for a load.

  4. DontBuyGold
    July 27th, 2012 at 01:13 | #4

    Anyone who is planning to buy Gold or Silver starting July 27, 2012 –>> don’t buy. Don’t listen to the author of this article, if you buy Gold, you are taking your own risk, the author of this article is not responsible for your losses. Stay away from anyone who is telling you to buy Gold or Silver. The author of this article is talking himself out from a losing position.

  5. Pyronaught
    July 9th, 2012 at 23:46 | #5

    While the popular saying is that Rome was not built in a day, it did not fall in a day either. In fact, the fall of Rome took place over a 400 year span of time. The point I’m trying to make is the currency is not just going to collapse one day. While stock markets can crash like that, currency tens to erode over a much longer period of time, even when the printing presses are running full blast. Especially when you have a money base as huge as the US Dollar.

  6. frozen fred
    July 8th, 2012 at 11:20 | #6

    “they have stopped saving, while once again piling on more debt”
    Perhaps people are no longer saving (I am, just not FRNs) but the US debt clock shows declining personal debt in the mortgage and CC categories. Student loan balances are on the rise, but overall we are de-leveraging. I find that encouraging.

  7. Jeff
    July 8th, 2012 at 09:25 | #7

    I’m in the process of moving the money from the retirement fund of my ex-employer to silver and gold. What is the time line we’re looking at for this catastrophe, or could it literally be “any day now”?

  8. The Gold Reaper
    July 8th, 2012 at 08:00 | #8

    Hi all! David Krongard? I think everything is a question of balance. No-one will survive with bullion alone, and no-one will survive with food alone. After all, if someone does not want you can of tuna or bourbon, what will you give? I suggest to you all that you should have both! However, in reality, we should also add to these:

    1. Things that can be traded.
    2. Skills that can be used.
    3. Items that will be invaluable to others when used by you.

    1. The things that can be traded could be anything from wines and alcohol to clothing. From valuable items such as rare collections to mechanical parts. From women’s scents to babies nappies. Whoever has anything like these will do exceptionally well.

    2. Skills that can be used could be skills in hunting, military/security skills, welding, carpentary, electrical repairs, construction.

    3. Items that will be invaluable to others when used by you could be things such as tools, machines, spare parts, access to an established database of knowledge, either through books or computer. Medical equipment, building materials.

    After all, the thinking is, if you have all of the survival equipment, but you have nothing to trade, what use are you to anyone? If you have no skills of vital importance, who is going to need you? Moreover, if you have no precious equipment or things of vital importance to others, why will you be tolerated?

    Those of you who boast about all the food they have, which can last them say, 30 years. Will be in danger of being prayed upon by others. Not because those personages have any value in themselves but only because of what they have. Likewise, those who boast about how much Gold and Silver they have (though they have no food reserves or anything else of good use), will also be in danger of suffering the same fate.

    Therefore, let us stop this bickering over who has got what or not. Let us all concentrate on making ourselves “invaluable” to anyone who comes across us in any circumstance.

  9. jim
    July 7th, 2012 at 10:18 | #9

    I agree with John…except that I go even further. If the banking system fails…and it will, then how do I get my money from any of these. It is time to be in physical gold, physical silver, and cash. None of this should be in the bank.

  10. John
    July 7th, 2012 at 07:31 | #10

    Jeff…very appropos commentary right up to the point you claim GLD and SLV are also safe havens…they are anything but. Please do a little research (it doesn’t take much effort) and so advise your readers that these are gigantic frauds. Thanks, John

  1. No trackbacks yet.

Copyright 2009-2016 WBC Media, LLC