For nearly a year I have been warning readers of the coming financial storm. It is here! Pundits have told us many times "the worst is over". That is not the case. We are still at the front end of the mortgage crisis. There are still many mortgage loans that have not yet reset. The recent demise of Lehman Brothers investment bank will take months to unwind. This domino is very significant. When the derivative instruments are fully cashed out, the counter-parties will take a big hit.
Was Lehman too big to fail? Nobody knows. Their bankruptcy is a huge risk to the global financial system. The greed of the last five years has come home to roost. All of the exorbitant bonuses collected by greedy financiers should be sought by the courts, and they probably will be. Securitizing a heap of junk and calling it "AAA" was the epitome of fraud by the banks as well as the ratings agencies. The regulators looked the other way as well. The Federal Reserve and U.S. Treasury have no experience to deal with a disaster of this magnitude. They are simply guessing and that is scary!
There has been an orchestrated attempt during this crisis to knock down the commodities including gold and silver. Gold is the barometer of the perceived status of the fiat financial system. Gold has no underlying liability attached to it. Historically when fiat currencies head south, investors move to gold thus moving its relative price upward. Central banks and their "agents" have been battering gold for the last several months in attempt to manipulate the market’s perception that "all is well". How much longer will they attempt to do this? Certainly through the U.S. election just 49 days away.
The fundamentals of the precious metals suggest that they will be significantly higher soon. This is the time to acquire real insurance- gold and silver. Headline inflation exceeds personal savings rates. This means your U.S. Dollars are slowing losing buying power. This could escalate. Stocks are at risk due to the unwinding of the financial instruments of mass destruction. What are we to do? One must keep liquid to pay the bills. Gold will be here one month from now. Your financial institution may not.
Humpty Dumpty sat on a wall,
Humpty Dumpty had a great fall.
All the King’s horses, And all the King’s men
Couldn’t put Humpty together again!
See Disclaimer: http://www.servias.org/?p=56