first majestic silver

Collapse will Come Sooner than We Think

January 30, 2010


The financial elite all over the world have vast wealth in the form of currencies, productive land, stocks, bonds, businesses, gold, silver and fine works of art. These assets, however, do not constitute the foundation of their wealth. Their true wealth lies in the support by and control of governments who licence them to set up banks and print money, and armies which will enforce government edicts against anyone who challenges their monopoly over our lives.

History is full of graves, prisons and concentration camps where wealthy people without the control of armies and governments found their wealth to be useless. The paybacks for politicians everywhere are campaign contributions and well paid jobs after retirement that would constitute bribes in any other arena. For armies the rewards are more wars, more equipment and thus more spending for the benefit of the military-complex.

The elite could have opted for a brutal but short liquidation of all the toxic rubbish held in the Central Banks' darkest rooms but instead chose to pump the system with more debt and more spending. This was as smart as attempting weight loss through more eating.


The reality is that democracy and free markets are inspirational creations of the human mind. We have neglected them and abused them because we were led to believe that a debt fuelled orgy of consumption and speculative financial investment, were sufficient for long-term prosperity.

It was all a big lie, but the problem is that we are all addicted to our two fridges, three cars, four TV's and eight credit cards. We thought that by turning up the temperature gauge on the economy we could cook our feast a lot sooner. The result is a burnt outer and a raw inner on which we are now choking. Collapse is as little as a single day or single event away.

The collapse will probably not come in the form of a bank run or stock market collapse. This would be too dangerous for those in power as they would be seen as the cause of such a calamitous outcome. Instead, the collapse will be triggered by an arranged event -preferably from the outside. What follows may include pre-baked news, internet clamp-downs, restricted travel and controls on the movement of goods and money. There may even be a couple of sacrificial lambs thrown into the cannibal's pot to placate the hungry masses.

The problem with this world is that it contains too many optimists and pessimists, and not enough realists. The realists know that it's not the system that caused failure but the incessant tampering by bankers, politicians and consumers who felt that Gordon Gecko was right after all.


We can pretend that we are wealthy by carrying un-presented checks in our wallets or we can acknowledge that the person who gave us those checks is broke and unlikely to honour them. Refusal to write-off our bad bets and bad debts will only delay reality from steering us back towards more productive pursuits. The world cannot be re-capitalized with more debt even if it provided by central banks at close to zero per cent.

It is time to re-capitalize the world by bringing out into the light of day, the unencumbered assets of gold and silver held by individuals by giving them interest free loans using their gold as security. Productive employment must be given to all people including many who are employed by government producing nothing but red tape and idiotic outcomes whilst being paid a king's ransom. I have rarely come across any enterprise that does not have at least 10% wastage, duplication or inefficiencies.


It is time to acknowledge that there are only seven basic requirements for society and its members - employment, ability to feed a family, housing, peace and freedom, availability of education, provision of health services, as well as a system of wealth accumulation that will allow retirement to be dignified. Everything else is of secondary importance. I urge you to examine each day's events within the context of these seven pillars and to see for yourselves how they are constantly under assault.

Amidst this lunacy, the sight of gold falling in US dollar terms must be quite unnerving for some. Rest easy, this movement is at the periphery because the real owners of gold are not selling. It's just the cowboys who bought it for a quick ride and a quick buck that are exiting. In any case keep your eye on both the longer term movement as well as the movement in other currencies. Every time you get nervous just ask yourself whether China would prefer a trillion dollars in gold or dollars.

As for the recent warning by George Soros that gold could be the ultimate asset bubble I would not be concerned. It will go up and down but it will never become worthless and unwanted. In any case he should sell his investments in GLD to prove the point. The 160,000 tonnes of gold that are thought to exist above ground equate to roughly 0.8oz per person. Is that a bubble? Or is the yearly increase in the gold stockpile by about 0.4 grams p.a. per person a serious over-supply? The only serious over-supply is paper currency and the debt that attaches to it.


Just remember that all that accumulated debt is nothing more than promises that the future can supposedly pay for. Any attempt to pay off that debt will ensure that retirees will live more like paupers, workers will be taxed to death and young people will be deprived of jobs and hope. No government is willing to shrink itself as a means of saving the situation therefore they will print their currencies into oblivion.

The race has been run and our debt laden horse has lost. Holding onto the betting ticket will not achieve anything nor will it change the outcome. The only protection is gold and silver for the average person. Then again the average person also needs to be protected against his own self. This is why the elite must provide leadership if they are to continue being the elite.

In the meantime we will be subjected to gyrations in the stock markets of the world in the process of being both plucked and prepared for the pot.



Sydney Australia

29 January 2010

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