Retirefund's  Instablog

Retirefund
Send Message
Long a buy and hold investor, I now believe that buy and hold has to be re-evaluated in a world of ever increasing, instant information and huge gyrations in markets all over the world. A value investor at heart, I anchor my portfolio with conservative funds and blue chip dividend stocks, but... More
My blog:
Retirefund
  • Quantitative Counterfeiting, Banker Theft And The Argument For Hard Assets Like Gold, Silver And Platinum 2 comments
    Apr 4, 2013 5:43 AM | about stocks: GLD, SLV, ABX, GOLD, GG, SGRCF, PPP, GPL, AUQ, SLW, SVM, SVLC, GLDX, GLDI, FXE, FXY, FXB, TITUF, TTHG, TTNUF, NEM, HL

    You do not own the money in your savings or checking accounts!

    Let me repeat that!!

    YOU DO NOT OWN the money that you "think" you own, which is currently sitting in your bank accounts. Actually, you don't even own the stocks that you "think" you own, which are now held in your brokerage account, but that is for another day and another article.

    When you make a deposit at your local bank, you are not really making a deposit according to bank law. You are actually "loaning" the bank that money. It sits in their accounts and is actually listed as a liability on their books, "because" it is a loan from you! Basically, if the financial spit hits the fan, as it recently did in Cypress, the bank can quite legally take all or some of that money as the poor depositors in Cypress are now finding out. Is it merely Cypriot law that allows this? No it is not. It is western banking law and it applies to every country with a modern banking system.

    This is one of the reasons why I like to hold physical gold, silver and/or platinum, as part of my investment strategy. Gold, silver and Platinum do not have a "third party liability" as does the fiat currency you have in your wallet, or the digital currency that makes up about 98% of ALL FIAT CURRENY in use today!

    What would you do if suddenly you could not access your bank account? What happens if your bank loans out all the money in their bank accounts, that you "loaned" them (which they can legally do) to a "third party", lets say a large hedge fund, that goes bankrupt, or looses billions at the hands of a twenty something trader who "made a mistake" in our fast moving worldwide financial derivatives market, which now tops twenty Trillion dollars per day!!

    Now the bank has essentially loaned out it's monetary base, which it borrowed from you, me and the guy down the street, and cannot replace it!

    Think it can't happen? Then think again my friends, and while you are thinking, have a talk to one of those little old men in their 80's and 90's who sit on the park bench every day in your community, and keep all their money "out of the banks" that robbed them and their

    parents in the last great fiasco of the 1930's (Think Jimmy Stewart in the movie, "it's a wonderful life" when there is a run on his small town credit union)

    I used to wonder why my father never trusted banks, and often carried large amounts of cash with him, or hid it in a place only he knew about. Now I don't wonder anymore. We are watching something very similar unfold in front of our eyes. something similar to the fiasco of the "dirty thirties" only with the added malaise of so-called "Quantitative Easing" thrown into the mix.

    Central banks from around the world, are printing what is essentially counterfeit money in fiat currencies from the U.S. dollar to the Euro, the Yen, the Ruble, The Rial, the Peso and the Yuan. In the 30's, you could buy bread for 2 cents a loaf. Except, that many people couldn't afford 2 cents a loaf, because they had no money at all. Quantitative easing was started partly because central bankers did not want a repeat of that era. The consequences (hyper inflation) could be that bread may actually cost a thousand dollars per loaf in 3 or 5 years. How about 5 thousand dollars per loaf! Think it can't happen? Think again! If my father were alive today, it would not be "cash" he was squirreling away, but gold, silver or platinum. Something tangible. Something that could not be debased by the pinstriped counterfeiters, or stolen outright by their lesser brethren. He was not an unreasonable man. On the contrary, he ran a small business and employed 20 people for the best part of 30 years.

    $450,000 in cash dollars today (U.S. dollars) is the rough equivalent $10,000 was in 1913. that's a 98% drop in the value of a currency over 100 years, and it does not factor in the latest and greatest fiasco.

    The German Wiemar Republic found out how devastating money printing was during those 1930's when they were trying to repay war reparations demanded by the allied nations by printing German

    Marks in huge quantities, not unlike our modern day "Quantitative Easing" does today. The end result was a loaf of bread that took a whole wheelbarrow of cash to purchase (literally). It can be said with truth that another unforeseen consequence of that devastating policy was the rise of Adolph Hitler and the Nazi Party. We all know where that ended. (That is why Germany wants no part of modern day QE, which adds to the debacle in the Euro zone)

    Now there is a hue a cry from the banksters (parroted by some in the investment industry that feed from their trough), that gold and silver are in decline as investments. I don't believe them for a moment. Do you? Bill Gross certainly doesn't.

    He's not a banker and he's not a CNBC cheerleader. His decisions affect millions of bond investors. So when the largest bond fund investor in the world chooses to deleverage from those investments and begins to buy gold , I pay attention. Maybe we should all pay attention to the next few U.S. 10 year treasury auctions. (I'm sure Bill and his cohorts are)

    A lack of the usual suspects in that auction, which takes place 8 times per year, will be the canary in the coal mine, so to speak, for a sudden, dramatic and violent change in the investment landscape. You see, the Fed does not control that auction. They only control the shorter term notes. So, when not enough buyers show up to buy the U.S. debt in the form of 10 yr notes, a rise in interest rates on those notes will take place to entice those reluctant buyers (Countries, major bond funds etc). That, my friends, will take the "fun" out of this dis"fun"tional market as the bond bomb destroys many nest eggs. Hopefully, yours won't be one of them. I sold the last of my bond funds six months ago.

    Oh, and by the way, if you hold your gold/silver etc in a bank or bank fund, it is susceptible to the same rules your fiat currency accounts. You can lose it at the swipe of a pen.

    Now, what are you doing about that?

    HP@Retirefund

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Stocks: GLD, SLV, ABX, GOLD, GG, SGRCF, PPP, GPL, AUQ, SLW, SVM, SVLC, GLDX, GLDI, FXE, FXY, FXB, TITUF, TTHG, TTNUF, NEM, HL
Back To Retirefund's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (1)
Track new comments
  • John Wilson
    , contributor
    Comments (2033) | Send Message
     
    Retirefund - man, you are right on the mark here. I, like many others had not considered the dangers that you describe until the recent Cyprus events. Everyone should be forewarned.

     

    This should be an article, but this is exactly the type of warning that would never be allowed to be published as an article. Too "political"; not enough "fundamental analysis". Thanks for putting it out here as an instablog.

     

    I'm sure you have read these other articles that discuss the same dangers but in a less "political" manner:

     

    Ellen Brown. "It Can Happen Here: The Confiscation Scheme Planned For U.S. And U.K. Depositors"

     

    Richard Shaw. "Can Your Gold ETF Holdings Be 'Cyprused?' Yes"

     

    One minor point to make about bonds: When there is a sharp market correction, you can be sure that there will be a big "flight to safety" move into 10 year bonds or T-bond funds. The prudent thing to do as you say is to accumulate precious metals.

     

    Great article.
    11 Apr 2013, 01:03 PM Reply Like
  • Retirefund
    , contributor
    Comments (770) | Send Message
     
    Author’s reply » Thanks for your input. I agree, This should have been allowed as an article, but SA rules basically forbid it.
    4 Jun 2013, 09:22 AM Reply Like
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.