Credibility…Confidence…Chaos And Gold Price!

November 8, 2016

The corrupted Republican and Democratic parties in the US have put forth two of the most despised candidates – ever. One candidate is probably more corrupt than LBJ - and both parties are rapidly losing credibility. Ask yourself, does either party speak for anyone but the political and financial elite?

The Dept. of Justice and the FBI have lost credibility by not prosecuting HRC and many others. Former Mayor Giuliani said about The Clinton Foundation, “If I was attorney general, I would indict the Clinton Foundation as a racketeering enterprise.”

The credibility of central bankers will decrease further. Central bankers have held interest rates near zero for about eight years and have pushed over $13 Trillion in sovereign debt “yields” to a negative interest rate. Crazy!

Market credibility and confidence in markets will decline. Stock, bond, and currency markets have been levitated by central bank “printing” for years. The newly created dollars, yen, pounds, and euros devalued existing currency units, destroyed pension plan returns and raised consumer prices. This process has been beneficial to the financial and political elite but not the lower 95%.

But What About Markets?

Markets, economies, and governments are held together by confidence in their systems and integrity, or at least their ability to sell the story of honesty and integrity. If the credibility of and confidence in such institutions as the Presidency, congress, FBI, Department of Justice, Wall Street, the Fed, and the dollar declines further, as seems likely, markets will react badly. Expect declines for stocks and bonds, a weakening dollar, and rallies in gold and silver.

Clint Siegner of Money Metals Exchange:

“This campaign is dragging whatever prestige is still associated with the Office of President into the mud.”

“There are indications of widespread voter fraud.”

“The FBI and Department of Justice are enforcing two sets of rules. One for Hillary Clinton and Wall Street and another for the rest of us.”

“Congressional approval ratings have been in the dumpster for years.”

“People are rapidly losing faith in the Federal Reserve.”

“Confidence in the greenback is, so far at least, holding up remarkably well. How long can that edifice keep standing while faith in institutions surrounding it continues to crumble?”

Note: Money has always bought politicians. What is the price for a “Pardon?”

From Graham Summers: The Market Just Gave Us Three “Tells” - But Few Are Paying Attention

“Long bonds led stocks to the upside this year. They’re now leading DOWN.”

“But earnings have already collapsed to levels not seen since 2012. Stocks would need to CRASH over 25% to below 1,500 just to catch up.”

From Graham Summers: Did the $100 TRILLION Global Bond Bubble Just Burst?

“Globally bonds are collapsing.”

“Folks, the bond markets are flashing DANGER DANGER. Globally the bond bubble is now well over $100 Trillion. And to top it off, there’s another $555 TRILLION in derivative trading based on bond prices.”

“Another Crisis is brewing…”

From John Rubino: This Is What Gold Does In A Political Crisis, “Trump Might Actually Win” Edition

“First, the financial stability that results from central banks buying up bonds and stocks and guaranteeing the derivatives books of the big banks is illusory.”

“Second, Trump was just a warning shot.”

“Which leaves three scenarios going forward:

  1. Trump wins and today’s gold bull market is turbo-charged, with $100 up days becoming the norm for a while.
  2. Clinton wins and business as usual continues until the system collapses under the weight of its own corruption – setting off a stampede into precious metals.
  3. The next election features a Trump sans the horrendously rough edges, who wins a mandate from both right and left to break up the banks, audit or abolish the Fed and close down the global military empire. And terrified establishment capital pours into gold.

However you slice it, the big trends all point toward chaos. And chaos is always and everywhere good for precious metals.” [Emphasis mine]

Read Karl Denninger: What If

Read Alasdair Macleod: Codes of Behaviour

Conclusions: (written before the election…)

  • Confidence holds the economy, markets, credit systems, elections and society together.
  • The credibility of and people’s confidence in most institutions has eroded – deservedly so. Expect some chaos, possibly wide-spread chaos.
  • Is HRC potentially a larger liability than asset to the powers-that-be, or has the “fix” already been locked into the election? Read: Paul Craig Roberts
  • Look for increased volatility after the election, expect stock and bond market corrections and/or crashes in late 2016 or 2017, and expect spikes upward in gold and silver as panicked wealth searches for safety.
  • Politicians will do what they do – borrow and spend. The Fed will do what they do – devalue dollars and feed profits to the banks. The financial and political elite will act to benefit themselves and only them. A reset will come.
  • Gold (and silver) prices in all fiat currencies will zoom higher in 2017 – 2021.
  • There will be death threats, deaths, and pardons. Not everyone will be pleased.
  • Wars, nuclear confrontations, and massive expenses for global militaries benefit the arms manufacturers, bankers, and politicians. The rest of us are stuck with higher prices, refugees, and friends and family in body bags.

Gold flies, paper dies! 

Gary Christenson

The Deviant Investor

Gary ChristensonGary Christenson is the owner and writer for the popular and contrarian investment site Deviant Investor and the author of the book, “Gold Value and Gold Prices 1971 – 2021.” He is a retired accountant and business manager with 30 years of experience studying markets, investing, and trading. He writes about investing, gold, silver, the economy and central banking.

Gold is using for heat dissipation in some cars.