40-year market veteran Robert Fitzwilson sent King World News an incredibly important piece that warns all the central bank tricks are coming to a disastrous end.
By Robert Fitzwilson of the Portola Group
January 21 (King World News) – Herbert Stein became one of the most renowned macroeconomists during his lifetime. Stein received his doctorate from the University of Chicago in 1958. Known as a “pragmatic conservative”, Stein served as Chairman of The Council Of Economic Advisers which advised both Presidents Ford and Nixon. He is the father of Ben Stein, a well-known actor and author. He is also remembered for promulgating “Herbert Stein’s Law” which simply stated that “if something cannot go on forever, it will stop”
With the surprising Swiss announcement last week that they would sever the connection to the Euro, there have been several theories offered as to the reason and the behind the scenes events leading up to the announcement. Upon reflecting about these topics, it seemed to us that the simple answer comes from Stein’s Law.
It’s Coming To A Disastrous End
Common sense, history and mathematics have foretold that the central bank policies of unlimited credit and fiat currency creation would come to a disastrous end. It certainly has gone way longer than most of us imagined. The central banks did the unimaginable.
Tens of trillions of all types of currencies and credit instruments were created out of thin air to rescue the banking system and to support the stock market. Interest rates were also collapsed under the misguided idea that it would lead to lasting economic growth and jobs. Listening to the bankers commiserating about their poor earnings reports this week was really pathetic. What banker of old would have not have dreamt of a zero cost of funds environment? The answer is that the current generation are not bankers. Their business was to create financial products and trade for their own benefit in the financial and commodity markets. Carpetbaggers.
A Very Dark Future
All that was really achieved was to forestall the onset of a new Depression and the grotesque concentration of wealth in the hands of a tiny group of individuals and crony corporations. The average inhabitant of this planet faces a very dark future as the safety nets upon which many rely have been dismantled across the board.
History has also shown that a few nationalities are quite astute when it comes to money. Among those would be the Dutch and the Swiss. Eyebrows were raised when the Dutch opted to get their gold back. Now the Swiss have severed their destructive peg to the Euro. If two of the smartest financiers in the room have taken steps that certainly hint that something might be in the offing, it strongly suggests to us that the Keynesian mob might be witnessing defections.
Elephant In The Room
The elephant in the room would be the Germans. A case might have been made for pouring money into Southern Europe to enable those countries to purchase German goods in return. Given that much of the money was squandered and all of those countries are now insolvent, the “vendor financing” argument cannot be made. If the Germans decide that they have had enough, the Euro is finished. The totality of recent events could very well be indicating that the moment is at hand.
The mainstream media talked almost exclusively about the negative impacts from the Swiss announcement. Mathematics forced the issue. Whether or not it was the ECB pulling the strings or the Swiss Central Bank did what was necessary is irrelevant other than for historians. While painful in the short-term, it is extremely positive for the Swiss citizens as a whole. Known for their own work ethic and talents, purchasing power and future savings will once again accrue to their benefit not to the Keynesian wealth distribution scam.
There was also mention made of the mortgages in Poland, Hungary and Austria that were denominated in Swiss francs. For those homeowners, it is a blow. We wonder, however, how such mortgages came to pass. It is hard to imagine that the average home buyer would have ever thought about turning their dwelling into a currency speculation play. Just like destructive and costly derivatives sold to unsuspecting communities around the globe by the banks, there can be no doubt that the genesis of this disaster lies in the boardrooms of those same banks.
For investors who have been preparing for the end of the Keynesian monetary fiasco, it has been a long, painful wait, particularly for those taking positions in the last 3 years. The action in precious metals and the miners suggests that the moment might finally be at hand. The world is running out of safe havens for money, although the U.S. dollar is likely to rise even further as doubts about the Yen, Euro, Ruble and the Yuan emerge.
For those with savings worried about bail-ins or other forms of confiscation, gold and silver have to be increasing beneficiaries of their attention. All of the other “real” asset categories such as penthouses, artwork and collectibles are at ridiculous prices. Anonymity, no counter-party risk and extreme undervaluation should attract a mushrooming investor base.
For those investors with an unfilled allocation to metals and miners, now is not the time to be hesitant. If the price trends continue, the linear will lead to the exponential. For the physical metals in particular, the door of opportunity to acquire gold and silver might abruptly close.
The HUI mining index is already 24% ahead of the popular stock averages so far this year. While that would normally call for caution, the undervaluation remains beyond extreme and the sentiment is still in the “hate” zone. If this is the secular turning point, vast upside awaits those investors willing to step up to the plate.
Source: King World News