If you haven’t
bought any gold yet… By Simon Black |
July 21, 2011
Print. Lie. Borrow. Deceive. Deny. These are a the principal
tenets of the Greek restructuring plan that were released
today from Brussels… it’s as if EU policymakers
put it together after shaking a Magic 8-ball.
The whole world knows that Greece is bankrupt and has been
living bailout to bailout for over a year. Deep in debt
and devoid of cash, the country has completely forsaken
its sovereignty in exchange for becoming a ward of the European
Union; Prime Minister George Papandreou is now a hapless
stooge awaiting instructions from Germany.
It’s ironic that the Greek proposal released today
calls for a ‘Marshall Plan’ of investment across
Europe… given that the last time Greece was being
controlled by Germany was during the country’s occupation
by Nazi forces after being vanquished by Hitler’s
12th Army in April 1941.
And so, with limited debate and even less fanfare, Europe
has just officially signed on to destroy its own currency.
Utterly worthless, quasi-defaulted Greek debt will become
perfectly acceptable collateral, much in the same way that
the US Federal Reserve took every scrap of toxic paper it
could find off banks in 2008 and 2009.
Given the favorable market reaction, European politicians
must be feeling pretty proud of themselves. The euro is
up. The stock market is up. Oil is up. Well, never mind
about oil, they’ll blame that on evil speculators…
just like food prices.
And the proposal is so deliberately vague, they can go
back home and tell constituents whatever they want. Angela
Merkel can tell German voters that the French are paying
for it, and Sarkozy and tell French voters that the Germans
are paying for it. Win, win!
The European sovereign default SOP has just been set. When
Spain, Italy, Portugal, and Ireland’s time of insolvency
arrives, it will be handled just like this: Print. Lie.
Borrow. Deceive. Deny.
Every day it becomes more and more obvious that the financial
system as we know it is breaking down. The United States
and European monetary union, whose currencies comprise nearly
the entirety of the world’s fiat reserves, have both
signed up to debase their currencies as rapidly as possible.
This is going to kick inflation up another notch as anyone
holding on to Greek debt is going to trade out of it as
quickly as possible. All that money has to go somewhere…
and it’s a sure bet that a lot of it will feed rising
commodities price (which translates into more inflation).
If you haven’t found a safe haven for your savings
yet, it’s time to start. Now. No more excuses. A few
you could consider:
Swiss franc, Norwegian krone, Singapore dollar, Chilean
peso: These four currencies are generally regarded as safer,
stronger, and managed by less obtuse central banks. In a
world of fiat, these are among the least worst of the bunch.
Unidad de Fomento (UF): This is a special unit of account
used in Chile that was set up during the hyperinflation
days of the 1960s. The UF is designed to keep pace with
inflation and it’s possible to establish a bank account
denominated in UF in Chile. I’ll be telling SMC members
how to do that in an upcoming issue.
Agricultural Property: Nothing hedges your risk against
rising food prices like being able to produce your own food.
This idea underpins the concept for the resilient community
we’re planning in South America.
Precious Metals: Portable, divisible, durable, and scarce,
precious metals are the classic hedge against rising prices.
Gold and silver aren’t going to go up in a straight
line, and gold in particular is due for a correction, but
in a world ruled by an economic magic 8-ball, it’s
a much safer store of value than a government IOU.
High quality equities: If my only two options are Apple
stock and a bank account earning 0% interest, I’m
going with Steve Jobs. The chief problem with equities is
that the more money that central banks print, the more money
flows into equities… pushing valuations up to dizzying
(and unsustainable) levels.
Firearms and ammunition: Weapons and ammo serve a dual
purpose of providing better home security, as well as a
reasonable store of value. Unfortunately, they can also
serve a third purpose– putting you on some government
agency’s radar.
This list is by no means exhaustive… but if you have
the majority of your savings just sitting there wasting
away, it’s time to act.