15/04/2016

Epic Change and Why You Need Physical Bullion Now - TAC Weekly Review - April 15, 2016 by Jeff Fitchett

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Epic Change and Why You Need Physical Bullion Now - by Jeff Fitchett
When a government spends more than the revenue received from taxation; a debt is incurred.  The government will then ask the treasury department for money to make up the difference from the lack of tax revenue.  The Treasury Department will sell a bond to the central bank and they in turn create money (out of thin air) and buy the bond from the Treasury Department. This is how money is created and how a government continues to be funded. Exponential growth in debt is extremely problematic and it will lead to an eventual collapse. Many parts of the economy and financial system are deteriorating.  High yield bonds (aka Junk Bonds) are being defaulted upon and the losses are going to steadily increase. Other sectors are showing serious signs of trouble. Slowly, but surely, the dominos are falling. 

In the movie ‘The Big Short’, the producers illustrated how the 2008 financial crisis was triggered from the US mortgage sector. Over time, the quality of mortgages issued by Wall Street became worse and worse.  Wall Street didn’t care because they were making huge amounts of money off of the fraud.  Slowly, as overrated mortgages began to go into default, the US mortgage market began to collapse.  Today, we are in a situation that is magnitudes worse than just the mortgage market.  Take a look at this clip from ‘The Big Short’ and imagine that they are talking about government debt instead of mortgages and that the repercussions will hit the global economy rather than just the mortgage market.  Click to watch the ‘Jenga scene from The Big Short’.    

The global economy is going down hill rather quickly.   The media is working overtime to keep the greater population distracted as politicians and investment elites sing a chorus of; “everything is wonderful”.  Last week, Janet Yellen had the following to say about the state of the US economy; “I certainly wouldn't describe this as a bubble economy”… “noting a "healing" labor market and a 5 percent headline unemployment number.”  I wonder if anyone has mentioned to her that there over 94 million working age Americans who do not have a job?  Last I checked, the US national debt has doubled since Obama took office, the bond and stock markets are at the most inflated level in history and daily life for the average Joe is getting a lot harder.  I’m sure you see it as well.  The decline is evident.  Job losses are mounting, our incomes no longer provide for us the way they used to and social cohesion is beginning to disintegrate.   

Geopolitical conflicts are becoming more frequent.  As Gerald Celente often says, “when people lose everything and they have nothing else to lose; they lose it.”  For quite a few years only a small fraction of the population discussed government overreach, but now the understanding has gone mainstream and the masses are unhappy.  People are beginning to question US interventionism in the Middle East, Ukraine and in other hot spots.  The majority of people are tired of Wall Street corruption and lobbyists controlling government policy. The Panamanian law firm leaks have confirmed what many people have suspected for years; the elites avoid taxation and leave the bill for the working stiff to pay.  ‘Fringe’ politicians within the US have tapped into a disgruntled populace and the establishment is doing everything in their power to paint the new players in a negative light.  Check out the recent Boston Globe front page to see how the powers that be are trying depict Trump if he becomes the President.  

Japan is in full melt down mode and I’m not talking about the aftermath of the Fukushima disaster that continues to be a serious issue.  Japan’s demographics are terrible as they are dealing with an aging and shrinking population.  Japan is by far the worst offender as it pertains to unsustainable levels of government debt.  Japan makes Greece look ‘not so bad’.  Abenomics is a buzz term that has captivated mainstream economists, but really it is the same policy from the same playbook that every Central Bank is using.  Provide stimulus via central bank money printing and use the funds to purchase government debt.  Central banks are all in on the con of monetizing sovereign debt. The Bank of Japan buys all Japanese government debt.  They are now the biggest player in Japanese stocks too.  How far can they go with keeping the facade alive?  

Mario Draghi just announced that the European Central Bank will now buy corporate bonds in addition to the debt of failing economies in places like Greece, Spain, Portugal, Italy, etc.  Draghi recently increased the EU ‘Quantitative Easing’ program to 80 billion Euros per month.  In addition to the failed policies of the ECB; the European Commission is on the fast track to destroying the grand European experiment that is the European Union.  The general population is dismayed at the blowback that has been caused by following US foreign policy.  Specifically, the EU is being overrun by migrants and refugees that are fleeing their homelands because US and European nations have bombed them into oblivion.  Cause and effect is a pretty simple concept to grasp, but politicians have bigger agendas and ‘collateral damage’ is par for the course in this day and age.

The end of the road is now in clear view.  Sure, the system can limp along for a little while longer, but something massive is about to give.  Currencies have been fluctuating like a suffering heart attack patient hooked up to a heart monitor.  Sadly, the patient is dying, the heart is still beating, but it will fail at some point because the health of the individual (system) is terminal.  Debt cannot grow exponentially indefinitely.  Governments will not be able to cover the costs of entitlement benefits that dwarf the cost of funding existing debts.  An economy based on debt never lasts long because future growth is brought forward into the present using debt.  The fact that fiat currency is created through the issuance of debt should scare anyone with savings.  Stock valuations do not represent the underlying condition of companies.  A handful of years ago, investors started to flee bonds and move into dividend paying stocks in an effort to receive some income.  Former Fed official, Richard Fisher, admitted that the Fed juiced the markets in an effort to create a wealth effect.  High frequency traders are now responsible for most of the volume on stock exchanges.  Low interest rates have fuelled the housing market in most countries and the prospect of home prices remaining elevated looks dismal.  

The obvious solution for anyone with savings is to purchase gold and silver bullion.  Sure, bullion has been suppressed and manipulated over the past number of years.  For anyone who is not intimate with this asset class; mainstream media and financial pundits have demonized gold as a barbaric relic from a bygone era.  A large number of people question the point of owning gold because of the barrage of negative sentiment stirred up about bullion ownership.  Vested interests always try and sway popular opinion.  After all, Wall Street and Governments must always keep the illusion alive that all is well.  For the current debt paradigm to continue, Wall street needs to lend money and governments need to borrow money.  

Gold has been a store of wealth for thousands of years. Justin Spittler, from Casey Research, noted in Wednesday’s daily dispatch that “Gold is the best form of money because it has these characteristics: it’s easily divisible, easily transportable, has intrinsic value, durable, and has consistent form around the world.”  The US dollar has lost 98% of its value since 1913; the year the US Federal Reserve was created. The dollar is printed out of thin air and does not have any intrinsic value.  Some people argue that it is backed by the US government’s ability to tax the US population.  That does not build a sense of confidence as statistics show that incomes are dropping while debt is growing.  

There is a major misconception held by the majority of the population and it has to do with the security of bank account deposits.  The belief is that bank account balances are backed by government insurance programs.  The truth is, government supported programs such as CDIC in Canada or FDIC in the US contain a trivial amount of money that is supposed to insure bank deposits.  Globally, legislation has and continues to be drawn up allowing for bank bail-ins.  Bail-ins allow for depositor funds to be used to recapitalize banks that fail.  That sad truth is that every bank is like the ‘The Big Short’ Jenga tower in the clip highlighted at the beginning of this missive.  Fractional reserve banking functions until debt reaches a level that can longer be sustained.  As soon as asset prices begin to drop the game is over and the pieces come crashing down.  Voltaire once said; “paper money eventually returns to its intrinsic value; zero”.  

Gold and silver bullion are unable to be printed like fiat currency.  They are precious because of their scarcity, durability and ease of exchange. Most hard assets can be used as money, but from practicality standpoint gold and silver are much easier to store than say chickens or bottles of scotch.  Gold and silver are extremely liquid and recognized globally.  Most importantly, there is no counterparty risk.  You can take possession of it and store it yourself.

In 1913, one ounce of gold would buy a man a suit, a pair of shoes, a briefcase and a hat.  Today, the same can be purchased with an ounce of gold.  The first quarter of 2016 has been the best start to a year for gold in decades.  This comes as no surprise to anyone who has been cataloguing the collapse of Keynesian economic policies.  Pushing interest rates into negative territory and creating currency units to buy up every insolvent entity (bonds, stocks, countries, etc.) does not lead to positive economic fundamentals.  It merely keeps the game going a little longer.  Crony capitalism has failed and the system needs a giant reset at some point.  It is important to remove your connection to this dying system and preserve your wealth.  Gold has lasted the test of time.  So too has silver.  Best of all, you can take physical possession of these precious metals and eliminate your exposure to the system. 

Peabody, World's Largest Coal Producer Files Bankruptcy; 8,300 Jobs In Jeopardy

Jeff Fitchett: The resource sector is getting decimated.  Pay attention to the high yield debt market.  Oil & Gas, coal and other natural resource sectors are all scrambling to cover interest payments on debt that is impossible to pay back.  The next Lehman Brothers collapse is just around the corner.  

The company listed debt totalling $10.1 billion and assets of $11 billion in its court filing. To help it fund operations in bankruptcy, the company has agreed to $800 million DIP loan arranged by Citigroup.  The bankruptcy leaves uncertainty around Peabody’s $1.47 billion in environmental liabilities. Under a federal law enacted in 1977, mining companies must post surety bonds or other collateral that cover future mine cleanup costs unless their balance sheets are strong enough to qualify for an exemption known as “self-bonding."


St├ęphane Dion approves export permits for $11B in LAVs to be sent to Saudi Arabia  

Jeff Fitchett: The CBC reported on documents that are shedding a light on the strategy the Federal Government of Canada is using to justify the sale of light armoured vehicles to Saudi Arabia.  The Saudi government is run by despots.  Their human rights record is atrocious, but they are an ally of the West so this must mean that everything is awesome from a Western government’s point of view.  We are governed by sociopaths that seek profit over humanity.  


Goldman and Wells Fargo FINALLY Admit They Committed Fraud

Jeff Fitchett: The too big to fail banks having been committing fraud for centuries.  Once upon a time bankers were jailed for their nefarious crimes, but in this day and age a bank can plead guilty, but no individual actually serves time in jail.  A fine is paid and the crimes continue unabated. 


The Forecaster 

Jeff Fitchett: This is a must watch documentary that TVO has on their website.  The US government, CIA, FBI and the too big to fail banks are in cahoots to suppress anyone who challenges the status quo.  “Martin Armstrong, once a US based trillion dollar financial advisor, developed a computer model based on the number pi and other cyclical theories to predict economic turning points with eerie accuracy.  In the early 80s he established his financial forecasting and advising company Princeton Economics.  His forecasts were in great demand worldwide.  As Armstrong’s recognition grew, prominent New York bankers invited him to join “the club” to aid them in market manipulation.  Martin repeatedly refused.  Later that same year (1999) the FBI stormed his offices confiscating his computer model and accusing him of a 3 billion dollar Ponzi scheme.  Was it an attempt to silence him and to prevent him from initiating a public discourse on the real Ponzi scheme of debts that the world has been building up for decades?  Armstrong predicts that a sovereign debt crisis will start to unfold on a global level after October 1, 2015 - a major pi turning point that his computer model forecasted many years ago.”  The purpose of Trivium Analytics Canada is to help individuals, organizations and businesses understand the risks that humanity faces and to help provide solutions.  Our civilization is about to be rocked to its core because the weight of debt is beginning to break.  


Swiss Bank Whistleblower Claims Panama Papers Was a CIA Operation

Jeff Fitchett: The level of corruption and manipulation that takes place in our world today is very difficult to fathom.  I often remark that “nothing is as it seems”.  I am no longer surprised by the brutality and underhandedness of people.  Our egocentric culture has developed over generations and we are now hitting a turning point in history.  The big lie is being exposed as the facade created by politicians, big media, multi-national corporations and banks can no longer be hidden from the general public.  We are now seeing the degradation with our own eyes and do not need to be told what is. 


The April Emergency The Fed Doesn't Want You To Know About - Mike Maloney

Jeff Fitchett: If you have some free time I encourage you to watch this presentation with Mike Maloney.  His assessment of the economy, monetary policy and precious metals are excellent.  He is an honest person that shoots from the hip.   


"If the American People ever allow the banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their fathers occupied. The issuing power of money should be taken from the bankers and restored to Congress and the people to whom it belongs. I sincerely believe the banking institutions having the issuing power of money are more dangerous to liberty than standing armies.”  Thomas Jefferson

I hope you have a great weekend!


Jeff Fitchett B.A., FMA, CIM
Analyst - Trivium Analytics Canada

226-448-4747
jeff.fitchett@triviumanalytics.ca 

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