Introduction: The failure of Banque Privee Espirito Santo SA in Portugal marked an inflection point in economic history, as fiat wealth, that is the coinage of the Banker Regime, traded lower the week ending July 11, 2014, and pivoted the world into Kondratieff Winter, the final phase of the Business Cycle.
I) ... Debasement of fiat wealth, that is the coinage of the Banker Regime, commenced on Monday, July 7, 2014, on fears that Greece, GREK, is an insolvent sovereign, and its bank the National Bank of Greece, NBG, is an insolvent bank.
Widespread debasement of the coinage of fiat money, specifically debt deflation in Sovereign Currencies, will occur soon, the reason it has happened yet is the strong demand for currencies in Asia, as is seen in the WSJ report Currency Reserves Swell in Asia.
Eventually it will be as in Venezuela, where William Neuman of the NYT posts Profits Vanish in Venezuela After Currency Devaluation.
On Thursday, July 10, 2014, a Portugal, PGAL, banking crisis sparked a global stock selloff, further debasing the coinage of the Banker Regime's fiat wealth.
On Friday, July 11, 2014, the Banker Regime's coinage of fiat wealth experienced debasement, as Energy Production, XOP, and International Energy, IPW, traded lower, as investors no longer trust the monetary policies of the world central banks to stimulate investment gains, spur the development of Global Natural resources, IGE, provide for Global Growth, DNL, procure Nation Investment, EFA, and maintain Emerging Market Nation Investment, EEM.
Financial Intermediaries, such as GNW, MS, PNC, WFC, PUK, BK, and Asset Managers, such as BLK, EV, no longer serve as economic governors.
It is out of waves of Club Med, that is Portugal, PGAL, Italy, EWI, Greece, GREK, and Spain, EWP, sovereign, banking, and corporate insolvency, that diktat coming through the ever developing Mario Draghi Regional Fascism paradigm, underwrites regional economic governance, and debt servitude as the way of life, as investors derisk out of debt trades and deleverage out of currency carry trades.
Risk-off investment has replaced risk-on investment. This week nation investment loss leaders included: SCIN, 12.6%, SCIF, 12.3, SMIN, 9.1, PGAL, 9.0, GREK, 7.5, SMEZ, 5.7, EWI, 5.2, EWO, 4.8, IWC, 4.8, EWP, 4.7, EWN, 4.4, EZU, 4.2, INP, 3.7. And this week sectors loss leaders included: EPI, 6.4%, TAN, 5.7, SOCL, 5.0, ENY, 4.8, EUFN, 4.3, RZG, 4.3, XOP, 4.2, PSP, 3.9, DFE, 3.8, IAI, 3.9, KCE, 3.8, RZV, 3.7, CQQQ, 3.6, BJK, 3.5.
II) ... The US is no longer a Global Hegemon: a new sovereignty and new seigniorage is emerging.
The US Fed's massive purchases of bonds of all types has served to underwrite the US Dollar Hegemonic Empire, and created a fantastic Global Credit Bubble, AGG, which finally burst on July 1, 2014, as the Bond Vigilantes began calling the Interest Rate on the US Ten Year Note, ^TNX, higher from 2.49%, with the result that the sovereignty and seigniorage of the Banker Regime began to fail.
A new sovereignty and seigniorage is emerging. In the new normal Mario Draghi economy of shared sovereignty, and the new normal Jean Claude Juncker economy of negotiated government, the call of liberals for income redistribution will not be met, as the mandates of these two Eurozone Titans and their soon to be appointed regional fascist leaders, will establish increasing austerity for all of the EU's citizens; these will be replacement for the world central bank economy's financial intermediaries such as Bank of America, BAC, and asset manager tycoons, such as Blackrock, BK.
The Eurozone will serve as the headquarters, and template, for the development of the Beast Regime of regional economic governance and totalitarian collectivism, which is synonymous with the Ten Toed Kingdom, which is replacing the US Dollar Hegemonic Empire, and the British Empire, now that the 30 Year US Government Bonds, EDV, and the US Ten Year Notes, TLT, are trading lower on the Bond Vigilante's Call of the Benchmark Interest Rate, $TNX, higher from 2.49% to 2.51%. Economic Collapse Blog posts The Dollar Is In Peril As Global The De-Dollarization Trend Accelerates. And Larry Summers posts The United States' Global Leadership Has Eroded.
Peter Koenig writes in Global Research Russia's Petro-Ruble Challenges US Dollar Hegemony As China Seeks Development of Eurasian Trade.
The seigniorage of diktat for regional security, stability and sustainability, will replace the seigniorage of investment choice, for investment gain.
III) ... Physical possession of gold bullion is the only safe investment.
Credit Bubble Stocks posts an analysis of the Commitment of Traders relating Silver Is A Very Crowded Long Again.
The Silver Miners are in the "sweet spot" being short silver at today's price of 20.57. Currently, the market price of Silver, SLV, is determined by industrial demand. And inasmuch as the world has just entered Kondratieff Winter, the price of silver will soon fall lower with the debasement of all things that takes place in the final phase of the Business Cycle. Beginning in 2015, future price rises above 19.50, the current 200 day moving average, should be bought as such a rise would indicate an investment demand for silver. Gold, GLD, should be bought and stored in a physically safe place, as it is the only safe haven investment available.
The Precious Metal Mining Stocks, GDX, GDXJ, SIL, and SILJ, such as Gold Miner, FNV, AWM, and Silver Miners, SSRI, FSM, are topped out in value, while only God knows how much higher Gold will go.
Bloomberg reports Gold Reaches 16-Week High as Portugal Spur Haven Buying. The Google Finance chart of the Gold Miners, GDX, shows a 26% rise year-to-date, compared to 10% for Gold, GLD.
The Gold Bugs Index, $HUI, has hit strong resistance. Look for the Gold Miners, GDX, to disconnect from the price of Gold, GLD, and tumble lower with all fiat wealth investments, such as World Stocks, ACWI, Nation Investment, EFA, Global Financial Institutions, IXG, and Dividends Excluding Financials, DTN, into the Pit of Financial Abandon.
IV) ... The world has fully pivoted into Kondratieff Winter, the final phase of the Business Cycle.
The Business Cycle is one of investing, and it is an experience in boom and bust caused by the expansion and contraction of credit, where people come to trust in monetary policies of sovereigns, who provide seigniorage, via monetary policies and schemes of control, for economic life.
The entrance into the final phase of the Business Cycle, Kondratieff Winter, is marked by debasement devaluation, and economic deflation.
Debt deflation, specifically competitive currency devaluation, is an inherent part of Kondratieff Winter; it doesn't come though nations selling their currencies, rather it comes through the combined action of bond vigilantes and currency traders carrying out a war of economic destruction against the Banker Regime; the result of which will be global economic deflation.
On July 11, 2014, currency traders sold the Canadian Dollar, FXC, caused Commodity Currencies, CCX, to trade lower. The Loonie is the first of Banker Regime's coinage of currencies, to experience debasement.
Political will and vision capitulate as the world pivots into Kondratieff Winter. Kathleen Geier posts Dems Abandon Economic Inequality Talk.
Banking and corporate insolvencies soar in Kondratieff Winter. Calculated Risk reports Unofficial Problem Bank List Unchanged At 465 Institutions. Nancy Hanover For Profit Education Chain Corinthian College Implodes. Corinthian College plans to sell or close its colleges and trades schools, affecting 72,000 students in the US and Canada.
The economic life experience in Kondratieff Winter is one of debt servitude. Kenneth Rogoff writes in Project Syndicate Europe's Debt Wish. It is difficult to see how Europe can revive economic growth without significant debt restructuring or rescheduling. Europe's politicians seem utterly unable to contemplate this scenario, thus placing a huge burden on the ECB.
V) ... For those not inclined to invest in gold bullion, short selling is the next most viable investment strategy.
One could use the a basket of Inverse Market ETFs, as collateral for short selling; these might include STPP, XVZ, EUO, YCS, MLPS, GLD, GYEN, GEUR, GGBP, YXI, EUM, DOG, SEF, EFZ, DDG, PSQ, REK, MYY, RWM.
Conclusion: The trade lower in European Financials on July 7, 2014, was an extinction event, that terminated economic life experience as an investor; one's new economic life experience is that of a debt serf.