Death of Money 2014: Debt Bubble Changes Everything...
Stock Bubble? Demand Physical Metals
There's been some big news in the headlines this week:
The Market Tanks!
If You Think Our National Debt Is a Problem Now, Just Wait
German Legislator Seeks Repatriation Of All The Bundesbank’s Gold
Are Major Bank Runs in Our Near Future?
Signs of a Coming Asset Revaluation
Lawsky Said to Open Currency Probe of Over Dozen Banks
What all those headlines should read is: "No More Free Money: Time to Get Your Sh*t Together!"
Because that's what it all boils down to — the real message behind these events (which, by the way, are not mutually exclusive)...
Global currency woes, central bank distrust, and gold repatriation are all intertwined in a complicated web of fraud, bad policy, and dwindling consumer faith.
Finally, our nation's watchdogs are more aggressively seeking retribution for investors who were blindsided by some of the greatest Ponzi schemes in history.
Indeed, these investigative whistle-blowers are actively working to enforce real criminal consequences against those involved in the manipulation of the Libor benchmark interest rate and precious metals.
Bafin's current investigation into precious metals manipulation (perceived to be far worse than Libor) is actually expected to result in criminal charges, unlike the CFTC's...
And the U.S. just slammed J.P. Morgan with a $2 billion penalty in relation to the Madoff scandal.
Additionally, J.P. Morgan signed off on $543 million worth of settlements with investors who incurred grand losses in the aftermath of the Madoff Ponzi scheme.
Meanwhile, we've been getting Outsiders acquainted with the biggest Ponzi scheme since the Madoff scandal...
The good news is that America is waking up to the truth of the matter. And all these events will impact the physical market for precious metals in a profound way.
The free-money paper asset bubble is about to burst...
That said, it's time we revisit an important history lesson in order to plot our next move as investors.
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Portugal's Lost Gold
Back in 1990, Drexel Burnham Lambert — once the fifth-largest Wall Street investment banks — filed for bankruptcy as a result of illegal activities in the junk bond market. Michael Milken was blamed for high-risk junk bond trades and the ultimate demise of Drexel.
What most of those people didn't know at the time was that Portugal's central bank had loaned 17 tons of gold to Drexel. When the bank failed at the hands of scheming banksters, Portugal's gold holdings were washed away, unable to be reclaimed.
Imagine Portugal's dismay and frustration at having to learn the hard way that you can't trust big banks. (And it could have been far worse — gold was trading around $380/oz. then, as opposed to today's price of $1,250/oz.)
This time, people aren't investing blindly. We're all paying closer attention.
And the scenario for gold is changing across the globe.
According to Keith Barron, the geologist and consultant responsible for one of the largest gold discoveries in 25 years:
I believe that most of the Western world's gold, which is supposed to be in central bank vaults, has been leased out. Much of it is now in private hands in India, and what remains continues going East to China and other Asian vaults. So most of the Western gold has vanished from the vaults and it's now just a book entry. These various Western countries and bullion banks simply roll these leases over when they come due, and the gold never gets returned back to the countries.
So it's very interesting to see what's going on. Obviously the trust is breaking down in the system.
Consequently, the yellow metal and its ugly sister are looking better by the day.
Germany Won't Be Duped
When it comes to Germany's gold reserves, the Germans won't be taken for the same ride Portugal endured in the '90s. That's why, in 2013, Germany demanded its gold holdings be returned from the central bank in New York.
Germany has shaken up the market in a major way, the likes of which we've never seen before. Here's why:
1.) Its people are actively preparing for a currency crisis.
2.) It's simultaneously shedding an ominous light on the flaws and the growing distrust of the Fed.
As you may already know, Germany recently reported that it only received 37.7 tons of its gold from the New York Fed in 2013 — roughly 50 tons shy of what was supposed to be delivered over the course of last year.
Gold owners aren't going to overlook this little delivery difficulty.
They're going to see Germany's present struggle to receive its physical gold, and they're going to begin to panic.
Like Germany, investors aren't going to want to endure the same fate as Portugal in the '90s. They're going to demand their physical gold.
Events like this are historically bullish for gold. But what's going on now with present day markets, debt, and monetary policy is historically unprecedented.
A perfect storm is brewing...
Debt Bubble Changes Everything...
Finally, debt is a real issue. The Fed's $10 billion QE cuts are changing everything. Soon, the bull market run of 2013 will feel like an eternity ago.
Without all the Fed's money-for-nothing injected into the economy, the global market is in free fall. Emerging market stocks have seen the worst start to a year since 2008.
Thanks to the Fed's tapering, the global public is becoming painfully aware of the currency instability in diverse economies from Turkey to Argentina and India to Indonesia.
For me, the message is clear. The bear market is waking up, and so are the people. The illusion of a recovery is fading, and fears of bank runs and currency collapse are growing.
You need safe havens. And you need them now. Just make sure you have physical evidence that they're actually yours...
Farewell for now,
Brittany Stepniak is the Project Manager and Editor for the Outsider Club. Her “big picture” insights have helped guide thousands of investors towards achieving and maintaining personal and financial liberties while pursuing their individual dreams in lieu of all the modern-day chaos. For more on Brittany, take a look at her editor's page.