50% unemployment in the youth sector in some countries has missed the mainstream media’s (MSM) radar. Greece, Italy, Spain, and Portugal all have systemic problems that can’t be solved by further quantitative easing. Gold is moving out of Italian banks into Swiss banks, a sign that wealthy Italians don’t trust their own banks anymore. Europeans are expecting a major event soon. Until then, they are hesitant to make any financial moves other than taking their gold to a safe haven.
The IMF is obtaining commitments from countries with cash to help build up its war chest. If everything was rosy, why would the U.S. Federal Reserve reconfirm 0% interest rates into 2014? You don’t need to listen to the rhetoric about recoveries, lower unemployment, improved housing starts, etc. Just look around.
The U.S. economic statistics are pointing to recession once again. QE3 is not far off now, maybe within the next 120 days.
Oil speculators are not the villains as we are being told. $80 oil would slow down the Canadian tar sands and expensive well stimulation and development. This would tighten the supply even further than it already is. Alternative fuels are over a decade away from becoming a serious large-scale alternative to the oil-based transportation industry. Think tank planners know this and hence we are keeping troops in the oil-rich Gulf region on an indefinite basis.
All of this bodes well for those who hold precious metals. Quantitative Easing (QE) will put support underneath precious metals’ prices. Attempts to manipulate the prices to lower levels last only for a few days or weeks. Silver has resisted the $30 level in the last few attempts. Mining companies continue to grow their cash reserves and are looking to buy junior miners. Those of us who have held steady in our positions are being rewarded with buyout premiums of 30% or better.
Eliminate leverage when possible. You will sleep better at night and not worry when the dips in your investments come. I have seen 20% swings in the stocks I hold but I am unconcerned about the short term volatility. A bull market will always attempt to shake off the investors who are not fully committed. Solid mining companies with good management and sizable cash positions are excellent candidates for investment of discretionary cash.
On the positive side, the Kingdom of Heaven is at full employment, zero inflation, no crime, and plenty of resources set aside for development. The universe is still expanding and the Throne is still occupied.