When you buy gold or silver, you effectively vote against the future of the Dollar. When confidence is lost in a currency, gold & silver are acquired along with other international-oriented assets. Oil & gas are also traded internationally. Real estate is a tougher call unless it is farmland. Food producing land is a good investment since we all must eat. Adding new debt is not a great idea unless it is absolutely necessary.
When fear of hyper-inflation grips the population, the event feeds on itself and perpetuates further decline, ultimately to zero. There are many examples in the past to draw from. The Weimar Republic of Germany is one. Go to http://en.wikipedia.org/wiki/Hyperinflation for 39 examples. The result is always ugly. The business demand goes down, not up.
The U.S. National Debt is going up, up, and away. The global derivatives continue their growth into the stratosphere. There are multiple complex problems that defy solutions, any one of which could be the Black Swan to cause the whole system to come crumbling down. Politicians continue to kick the can down the road. The latest government shutdown was not resolved, just postponed. Don’t you think if they had a real solution, they would have implemented it? China, Russia, and other BRICS countries are moving away from the dollar when they settle their net changes in trade. The recent NSA scandal as well as the other scandals all point to an untrustworthy reserve currency. Men’s egos will not let this mistrust go unpunished.
There have been multiple takedowns in gold. If it was an ancient relic, why would those in power bother with multiple takedowns. There are 93 ounces of “paper” gold traded against every physical ounce of gold held in a warehouse. The current futures market cannot deliver its contracts if the players were to demand delivery of their contracts. Instead, they would be settled with Dollars.
The masses are living in denial. They have no clue how ugly it could get when the U.S. Dollar is no longer the reserve currency. The standard of living will decline. Food stamps have already prevented bread lines. Recently in this state, there was a 24 hour glitch in the food stamp system and I saw grocery shoppers walk out without their food. The problems continue to be masked from our eyes. Government statistics are orchestrated to paint a rosy picture.
Bail-ins are coming. What is a bail-in? This is where a depositor is required to cover his or her percentage of losses of that bank. When you deposit your money in a bank, you are an unsecured lender to that bank. Your deposit is classified as a liability on that bank’s balance sheet. Bondholders are secured lenders. If a bank becomes insolvent, the secured bondholders are paid first. Everyone is paid a percentage of the remaining assets. In a major banking crisis, the FDIC does not have enough money to fund the insurance portion of your deposits. The bail-in plan includes nationalizing retirement funds. The International Monetary Fund is leading the charge on the “bail-in” method of dealing with the current banking crisis. Depositors in Cyprus lost 83% of their deposits. Is Cyprus the blueprint for future crises? I think so. This bail-in plan is being put into law in countries around the world. With $10 Trillion in U.S. deposits, the FDIC has about $30 Billion to cover all loses.
The OTC Derivatives (http://en.wikipedia.org/wiki/Over-the-counter_(finance)) continues to be a source of major losses on bank balance sheets. They are allowed to carry these assets at cost rather than market value. Many of these derivative instruments contain substantial losses. If a bank had to liquidate today, only then would it have to account for those losses.
Quantitative Easing continues without any tapering in sight. For the last five years, interest rates have been suppressed. If all was well, these two actions would not be necessary. These lower rates were designed to help the banks recover from the losses contained in their derivatives position. That has not happened. Banks continue to bet with derivatives.
The main strength of the U.S. Dollar is the petrodollar, the international currency used for buying world oil. If the Saudis were to allow payment in other currencies, the dollar would drop like a rock. Gasoline in the U.S. would triple as a result.
What is the time frame for a major devaluation of the Dollar? No one knows for sure. Right now, 2016 appears to be the best guess, even though it could happen immediately. Between now and then, the middle class will suffer heavy losses. The U.S. consumer-based economy will begin to uncover the inherent losses on bank balance sheets. The dominoes will begin to fall.
Can these events be delayed? Only if Our Heavenly Father chooses to delay them. HE can open blind eyes at any time. If the populace were to suddenly take interest in the crumbling financial infrastructure, confidence would be lost immediately and the annihilation would begin. Simplify your life and set aside time for Our Heavenly Father. You will be glad you did.