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Shadowstats: The future is here today. "We are on the brink of disaster"

Dollar on the Brink of Disaster-John Williams
By Greg Hunter’s www.USAWatchdog.com


http://youtu.be/QrHpcigR_xg

Economist John Williams has a dire prediction for the U.S. dollar. Williams says, “I don’t see what will save it at this point. . . . Now we are to the point that the dollar has been ignored for years. The federal deficit has been ignored for years. . . . That’s what we are on the brink of disaster with, and that is what has to be addressed now, and that’s not happening.”

Williams also contends, “The way I see it, the dollar could go to zero in terms of its purchasing power. You don’t want to have your assets in U.S. dollars.”

Read more at:
http://usawatchdog.com/dollar-on-the-brink-of-disaster-john-...



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even though it buys you less

even though it buys you less and less

Isn't that the key point of this entire issue?

...

the issue being discussed

was the illusion the dollar can go to zero.

We can agree on the dollar or any currency buying you less, of course. And over time, gold and silver will maintain their purchasing power. I wouldn't sell gold for a living if I didn't believe in its long term viability. But I can look at price action and make recommendations for my clients over the short term.

As I noted below, I am long NUGT right now. When I sell and buy DUST is my only immediate concern. Owners of physical gold don't care about the short term price movements, but those who buy from me of course would prefer to buy at the bottom. The way to play that bottom is to dollar cost average into a position. Then go have fun for a few years and worry about how else you can make a difference in this world.

Author of Buy Gold and Silver Safely
Next book: Illusions of Wealth - due out soon
Also writing book We the Serfs!

You don't make any sense. The

You don't make any sense. The usd isn't a basket of currencies. The dollar index is the value of the USD vs specific foreign currencies. The dollar index is only a reference to gauge the dollars value overall. It can vary well become virtually worthless. If its value drops too low other nations aren't going to hold or accept them. All the dollars 60% overseas will come home. The fed implemented QE to bailout the banks an save the system which was insolvent. About 50% of the worlds economy is implimenting trial systems to do international trade with each other without use of the dollar. If successful you will see the percentage allowed under these trial runs increased. We abused our reserve status too long countries are no longer willing to allow the US to control their future in such a mannar. There isn't any real viable solution to the dollar for reserve status at the moment. That isn't stopping anyone that is why they are implimenting a work around with bilateral trade deals until the rembi is ready. Google around the chinese are working pretty hard to setup the rembi to be a viable alternative. People don't give china near enough credit. Nobody anticipated them surpassing our GDP this quick either.

Putin-Gazprom in Shanghai

At this **VERY** moment as we speak, Putin & Gazprom big shots are in Shanghai inaugurating a landmark financial & natural gas infrastructure for 30 years. It will not involve a single US dollar. Iran will be involved in triangular trade treaty agreement trading oil <---> commodities back & forth as well. Saudi Arabia is now emerging as a bastard orphan stepchild in all of this, and may be forced to come to (at least in short term) peaceful terms with Iran, kicking & screaming.

How can you with strong certainty predict impact (or lack of impact) on crude oil & food prices in the US, while such momentous events are occuring? Almost all major civil unrests & riots in the world start as a result of out of control food & fuel prices. The so-called Arab spring began that way in Tunisia, spreading to Egypt/Bahrain. Current riots in Thailand & Turkey are all frustrations of diminishing middle class over food inflation. I find it impossible to believe that's not the fate facing American middle class.

Rigged prices of paper gold/silver certificates quoted today are irrelevant. LBMA & Comex are irrelevant. Prices they quote are not true supply-demand prices, because they've destroyed the markets. There are no more real markets & no true price discovery mechanisms. Crude oil, natural gas & electricity prices are & will be more relevant. After Comex & LBMA get incinerated into ash - as they deserve to be - will everyone discover what are true prices for gold & silver.

Exactly predicting the day & time when it will happen is impossible, just as precisely predicting when San Andreas fault in California will have next Richter 7 earthquake is impossible. But that doesn't mean, all predictions of next massive earthquake in California are incorrect.

Immoral funding of Military Industrial Complex by Federal Reserve and US taxation system must stop!!!! End illegal/unconstitutional wars! Preserve US currency!
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chief - you are jumping the gun a bit IMO

I know many who have been calling for crisis every year, including Schiff, Zero Hedge, Celente, and this guy John Williams.

How has that advice worked out for their clients who acted upon it? All depends on when they acted.

They simply haven't given the Fed enough credit for the money thrown at the financial crisis, but even Keynes said to put on the brakes (which we have not done of course). As you say, eventually the earthquake will happen, but meanwhile, some of that food you bought in preparation is expired. Was it a good buy? Sure.

I don't live my life in fear of what may happen, I trade and make recommendations on what is happening. I followed Richard Russel for years and heard bad call after bad call, and finally said I'm going to do my own research. Russell even says his PTI is smarter than he is. He's right. That's the lesson I have learned from Russell. Look at the price action.

When you make a statement; "How can you with strong certainty predict impact (or lack of impact) on crude oil & food prices in the US, while such momentous events are occurring?" I don't recall making any predictions on such.

I do see many things affecting the price of oil over the years (Iraq, Iran) and food, (droughts, government subsidies), that interfere with pricing and inflation (depending on your definition).

As far as gold and silver go, the "true price" is what it is at this moment in time. Doesn't mean one can't profit down the road from it or plan accordingly to hedge their position if prices fall from here. Most holders of physical gold and silver don't care about price as owning them gives them peace of mind. All depends upon your mindset.

If one is down on their position because of bad timing I imagine they are quite upset and looking for reasons as to why the price is where it is. No one said investing was easy, but in the long run, they'll be fine. My next book "Illusions of Wealth" will explain more and my first book did quite well in Chapter 4 explaining what's going on today (written in 2010).

I hope my 3rd book puts me out of the gold sales business, but the odds of that occurring are nil because of our inept government. Either way, I do my best to call it like I see it and believe my clients hardest decision in the future will be; "when to sell." I'll have ideas for that when the time comes, years down the road. In the meantime, a little patience is needed.

Author of Buy Gold and Silver Safely
Next book: Illusions of Wealth - due out soon
Also writing book We the Serfs!

Not exact words

You didn't make predictions in those exact words. But when you rebut John Williams making similar prediction every year & being wrong, it seemed to me that you don't believe food/fuel inflation is on horizon. Like, real short term horizon of this summer. (BTW, I didn't even mention devastating effects of California drought in my post.)

In many ways, the work John Williams is doing is similar to that of geologists & seismologists. On October 17, 1989 Loma Prieta earthquake on San Andreas fault, prediction was made that probability of Richter 7+ earthquake within 30 years (since then) was more than 99%. It's coming up to almost 25 years now, and we haven't had one yet. But every passing year, they've stuck with that prediction. I don't believe the original prediction was wrong & now think probability of M7+ earthquake over next 5 years is more than 99%. We all know tension continues to build on San Andreas fault with tectonic friction between continental plates. There is absolutely nothing relasing the stress. Every day there is no major earthquake, probability of it happening next day increases.

Likewise, we all know massive stress continues to build up in the geo-political spectrum. There is absolutely nothing relieving the stress. (BTW, the so-called Fed taper is a hoax; but it will take a dedicated thread going into details of that. Fraudulent "Belgium" US treasury purchases is one hint.) Instead, stress continues to build up more & more on geo-political tectonic plates. It's not possible to predict, which small micro event will rupture San Andreas fault & when. And the situation is exactly same with criminal frauds being done by banking cartel.

BTW: The emergency food purchases in preparation of earthquake or hyperinflation don't go to waste for me. Because, I don't belive in chemically preserved canned foods. There are better ways of dehydrating fresh organic foods & vacuum sealing them to last for upto 30 years. Whether it's the John Williams predicted hyperinflation or big earthquake/hurricane/..., none of the high quality emergency food preparation would go waste.

Immoral funding of Military Industrial Complex by Federal Reserve and US taxation system must stop!!!! End illegal/unconstitutional wars! Preserve US currency!
http://facebook.com/NoPropagandaZone
http://twitter.com/the_chiefe71

chief

I will go out on a limb and make predictions in my next book. I made some of them already in my first book in Chapter 4, and yes, I did use the word "hyperinflation." But first we must finish the cycle of a deflationary credit contraction which the Fed is fighting tooth and nail with QE the last few years, and is still fighting today to the tune of $45 billion a month (I quoted many Austrian economists including George Reisman in that chapter, but it goes against many of the Lew Rockwell crowd, including Lew himself).

We can agree that something will occur at some point. I have made the case quite well that it's the tortoise (gold) vs. the hare (debt) and watch many things that give me great insight into my articles which have been pretty spot on to use a gold term, unlike those who can't see the relevance of the Fed when it stares them in the face and keep talking the same story over and over. Eventually they will be right. At some point.

The first article I ever wrote in 2008 was "The Fed Is Relevant...For Now." Heck, anyone that can throw $9 trillion at a problem they created has to be given some credibility. Until of course the next failure. You can bank on it!

I'm just doing my best to predict the shorter term. Some may disagree, that's ok. I trade according to what I believe and I direct my clients to invest the way I believe as well. It's been a slow year. I'm ok with that.

Author of Buy Gold and Silver Safely
Next book: Illusions of Wealth - due out soon
Also writing book We the Serfs!

Physical metal availability?

As long as the Comex-LBMA criminal gang stays alive, anything can continue happening with precious metal prices. They can crash it even more & your short term predictions may come out correct. But as a dealer, do you have visibility into actual physical availability of metal? (Whether shipment within certain number of days can be guaranteed, irrespective of spot price movements?) There are only finite amounts of metals in the world. Like a poker game, none of the big players divulge how much precious metal they really possess. I don't for 1 second believe numebrs in daily Comex reports corresponding to various bullion banks as true figures.

They found out in India last year that due to artifical custom controls, it didn't matter which way spot price moved. The premiums over spot price were so high, still people kept shelling out fiat rupees buying smuggled gold.

Koos Jansen reported few days ago that physical gold shipment from London to Hong Kong/Shanghai via Switzerland has now dried up. Meaning, Bank of England gold vaults are running near empty. Now, very old cast bars from 1960s (owned by Federal Reserve Bank of New York or leased to them) have started appearing on the market.

I would assume, as a dealer apart from spot price movements, actual physical availability ought to be your big concern. What are you observing on that front?

Immoral funding of Military Industrial Complex by Federal Reserve and US taxation system must stop!!!! End illegal/unconstitutional wars! Preserve US currency!
http://facebook.com/NoPropagandaZone
http://twitter.com/the_chiefe71

chief

My suppliers are the largest in the U.S. and have plenty of metal. In fact, the U.S. Mint, by law, has to keep up with the demand and can dip into Fort Knox if necessary to meet the demand. Naturally one would hint that there is no gold in Fort Knox, never been audited, etc. I understand this. But gold is a plenty. Today's gold investor can't hold a candle to the big players (banks who are the market makers). They can push them around at will and that's their job. Knowing this can help you profit one way or the other, or at least hedge if you think the price might dip some more.

As long as derivatives of the metal are in use, the illusion of it being plentiful will be there too. I understand this aspect to it and it's a very good point. But remember, if necessary, all the Central Banks of the world can supply any amount on loan at any time to any entity in need. Heck, they even forced Switzerland to sell theirs until their citizens finally put a stop to it. The ETFs themselves are full of language that allows for shady practices and they all have banks as custodians without any insurance whatsoever.

I'm not worried about supply and can handle any size order. At the same time, I wouldn't want to be invested in a proxy to gold or silver.

Author of Buy Gold and Silver Safely
Next book: Illusions of Wealth - due out soon
Also writing book We the Serfs!

I have three questions for you

This topic is of interest to me, so my questions are purely to gain more understanding from someone who makes a living in the gold market. If you have time or interest, I would love to read your answers.

1) The cost of gold is currently at or below the cost of production for many miners. Does than mean the miners have done a poor job controlling costs, or is the market signaling to the miners that there is not enough demand for them to stay in business?

2) Do extended negative GOFO rates indicate a constraint in physical supply of gold? If so, why isn't gold priced at a level that miners can make a profit selling it?

3) Do you have a rational explanation for the huge selling that is done in the gold futures market during thinly traded hours? The price often spikes downward in a very short time, and market circuit breakers have been triggered occasionally as large sell orders have been dumped onto the market.

I'm not an expert, but my intuitive answers to the above 3 questions lead me to believe that the price of gold is being suppressed below what it would naturally be in a free market. I agree with you that the value of the dollar relative to other fiat currencies is irrelevant. The important thing is the value of the dollar relative to tangible things, most notably gold and oil. If the market is manipulated, as I suspect it is, then the dollar isn't as healthy as it appears.

We all want progress, but if you're on the wrong road, progress means doing an about-turn and walking back to the right road; in that case, the man who turns back soonest is the most progressive.

-C. S. Lewis

matt

All good questions. I don't have a crystal ball and technically I only advise on physical gold and silver, not mining companies. That said, I did recommend investors in Sept. of 2010 buy the physical and sell the miners when gold was $1,314 an ounce and the HUI was 512.56. Today gold hovers above and below $1,300 and the HUI is 217.31. I will make a call again for "all-in" for miners at some point. Just not yet.

The only logical explanation to your 3 questions can be summed up in price action. Richard Russell always says look at the price. He can give a 100 reasons why gold should go up since 2011, along with all of the other gold folks, but price action trumps all speculation as to why and also trumps logic when pulling out what the cost of mining is or GOFO.

I have trained my clients to simply dollar cost average into an allocation, buy the dips, and go enjoy their lives. But my clients aren't traders. I try and write articles for traders based on what I see and have done well with the timing of those so far. I really don't write that many articles either. I'm not Kitco, lol. Kitco will pull a reason out of a hat as to why gold does what it does.

As far as the extreme moves in thinly traded markets, when someone wants out and there is no bid, the price will drop that fast. Usually occurs overnight. That in turn will cause further sell stops to expedite the selling. Last April when it occurred, my clients were calling me to buy. They were trained well. I was calling some as well. December was the same story. They'll call again on the next major dip which I still think will come. I have a few million of orders waiting. Will have more once my book comes out and people see I simply call it like I see it.

Hope that helps some. Not specific, because I don't think one can get too specific although I do follow a few over on Seeking Alpha where I comment quite a bit. I stopped writing for Seeking Alpha because of their bias against physical gold/silver and their editors wanting me to push paper products (ETFs, stocks, mutual funds). I'll probably be back writing there again.

The most important thing you said was the following; "The important thing is the value of the dollar relative to tangible things, most notably gold and oil. If the market is manipulated, as I suspect it is, then the dollar isn't as healthy as it appears."

That's part of the illusion. "Priced in gold" is the key IMO. But right now, gold and silver are getting closer and closer to where I prefer them versus anything priced in them. A little patience is needed in my humble opinion.

Author of Buy Gold and Silver Safely
Next book: Illusions of Wealth - due out soon
Also writing book We the Serfs!

Thanks

The answers make sense. I saw one of your articles on Seeking Alpha, and I think your call is pretty similar to Jim Rogers. He called for a 50% correction in gold from the highs. I wish I had been able to sell the HUI and buy physical in 2010. I have been buying mining stocks since 2011 and it has been pretty much straight down the entire time. I just keep buying though. I told a friend I feel like a gambler that keeps doubling the bet after every losing hand. At this point, I think many miners offer great value, but I thought the same thing in 2011. Fortunately, this insn't my day job.

We all want progress, but if you're on the wrong road, progress means doing an about-turn and walking back to the right road; in that case, the man who turns back soonest is the most progressive.

-C. S. Lewis

matt - tax loss strategy on miners

Matt, you might want to talk to an accountant about this, but perhaps at this point you have been given a gift with the miners. Lets say you sell half of them today, and "lock in" the loss at $3,000 a year against winners for however long the loss can be carried forward, and buy back lower in another month (wash rule makes you wait 30 days).

It's a possible win/win for you on 50% of the portfolio of miners. Then you can possibly take the other half (just in case they moved higher you profited from some of them) and sell them if they moved lower and lock in an additional $3,000 a year write off against winners. I don't know how much you have lost, but many have lost a ton. It is simply taking advantage of the tax laws.

If it is an IRA, then that's unfortunately a different story.

NOTE: I am not a tax advisor and recommend speaking with a qualified accountant if implementing this kind of strategy. Of course you would look like a genius if the prices of the miners fell lower and you bought back at those prices. However the opposite could occur too. I just think we get one more big dip to lower lows. It's not that far fetched and not out of the realm of what market makers love to do; make people bleed.

NOTE 2: Every time the roulette wheel spins, it is the same odds for red or black. If red comes up 10 times in a row, the odds don't change that say black will come up next. Same with flipping a coin. Food for thought. With gold I view it differently than "trading" stocks. But you are closer to the end of the pain. Just not yet in my opinion. If you are not on leverage, then I think you'll be ok at this point. Just do some possible tax planning to help yourself out if advised to do so.

Author of Buy Gold and Silver Safely
Next book: Illusions of Wealth - due out soon
Also writing book We the Serfs!

Good point...I have done that

I have swapped mining losers for other miners to get the tax losses. Last year, I booked around $4700 in losses, so I have around $1700 of losses carried forward in 2014. I also booked losses in 2011 and 2012. Some of those stocks I sold at a loss back then I own again now. My account is a cash account, and I don't use leverage and don't trade (other than booking tax losses as mentioned).

The precious metal mining sector is tiny. If you ignore microcap stocks, there are only 42 gold/silver mining companies traded in the U.S. that are small cap or larger. I prefer owning larger companies that pay dividends and have productive mines in several countries and/or politically stable jurisdictions. That narrows down the universe of precious metals mining companies to a handful.

I certainly hope the bleeding stops. I knew the risk going in, and I was prepared to lose money....but this is getting old. Every time I think the beating has stopped, it starts again. No offense, but I also hope you are wrong in the call for another big dip down. :)

We all want progress, but if you're on the wrong road, progress means doing an about-turn and walking back to the right road; in that case, the man who turns back soonest is the most progressive.

-C. S. Lewis

How and where do you get your

How and where do you get your assets out of the dollar? Any suggestions?

TwelveOhOne's picture

It's elemental! Au, Ag, Pb, Fe, in that order

Silver is easier to trade. Gold stores wealth with less storage/carrying costs. Lead moves quickly, but you'll need a lot of them. Iron helps the lead, you'll only need a few.

Scientists haven't discovered the greatest element of all, although there was an old Simpsons episode in which the gas chromatograph (which was mentioned twice in that episode) gave the missing ingredient to the "Flaming Homer" drink:

Professor Frink: "Brace yourselves gentlemen.. according to the gas cromatograph... the secret ingredient is..... love!? Who's been screwing with this thing?"

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Other options...if you have to be in stocks

If you are preparing for total collapse of the dollar, nothing beats holding physical assets as others mentioned. If you have an ounce of gold in your safe, it will still be there no matter what happens in the world. However, there are financial assets that hold real value, including stock in companies that produce real things that can and will be sold even if the dollar goes to zero. The commodities sector has been beaten up in recent years, in particular precious metal mining companies. The oil and gas sector still has some value stocks. The Hong Kong stocks offer great dividends at reasonable valuations. The Russian stocks have unbelievably low valuations, and are highly concentrated in oil and gas. There are mutual funds and ETFs that focus on almost any sector you like and offer diversity for people with limited amount of money to invest.

Take my advice with a huge grain of salt, as I am not a trained investor and I have a bad track record. I started investing all the spare cash I have each month since 2011 in mining and oil stocks. I have consistently lost money every year, as the mining sector collapsed. I would have done much better buying stock in Facebook, Twitter, and other social/app internet stocks that earn less than zero income. However, I still believe I am right for the long haul. I haven't sold anything, and I keep buying every month.

We all want progress, but if you're on the wrong road, progress means doing an about-turn and walking back to the right road; in that case, the man who turns back soonest is the most progressive.

-C. S. Lewis

Besides what is below

... Think barter items ... what will people need that you can trade for ... I say "grow food not lawns"

This may be the last year to make mistakes in your garden ... I have been at it for four years ... still flubbing in some things.

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Turn your assets into commodities

Liquidate your assets into cash. Use that cash to buy land, precious metals, guns, ammo, food storage.

When a true genius appears in the world, you may know him by this sign: that the dunces are all in confederacy against him. ~J. Swift

Silver, Gold, Land, Bitcoin,

Silver, Gold, Land, Bitcoin, Guns, Ammo. Now those are some real assets