An economic storm is gathering

Quite recently, and rather belatedly, I started to take a more serious interest in the economy.  In January I read an article that laid bare the real extent of this country’s debt burden and what history shows us happens when such a situation arises.  The rest of the world fares no better and compounds the parlous nature of the economy globally.

Having gone on to spend the last few months researching, then starting to invest in gold and silver, and writing an almost complete short guide about how to do that most effectively as a small investor, a piece on Bloomberg about billionaire investor, John Paulson, losing more than $300 million of his personal wealth as gold fell to its lowest price in almost two years, caught my eye.

Anyone who has an interest in precious metals will be accutely aware that their cost has fallen rapidly in recent weeks.  A lot of people are falling for the establishment propaganda that has seen comments and actions by George Soros presented as a rationale to abandon gold and silver and pour money into the dangerously inflating stock market bubble.  Goldman Sachs has joined in this week, urging its clients to sell out of gold.  That was the cue for large scale selling by individuals and organisations that has sent gold below £1000 per ounce and silver below £17 per ounce.

Yet the backdrop to this is the likes of Soros maintaining a huge position in gold, Goldman Sachs looking to buy physical metal on the cheap as their clients dump their paper options for unallocated metal which largely doesn’t exist, and governments/central banks dramatically increasing their gold reserves while telling everyone else that they need to be in equities where their monetary investments can be taxed and depositors can be given ‘haircuts’.  As always it is a matter of the establishment saying one thing and doing another.

The fact is the health of gold and silver is anything but poor.  Demand for physical metal is soaring and has even resulted in mints rationing sales of bullion coins and dealers finding it difficult to acquire stock – and with the sudden price change on Friday now taking the decision to suspend sales, knowing they would be overwhelmed by demand for the cheaper gold and silver and would not achieve the mark up over the price they paid.  For ordinary people the price of gold and silver only matters if you need to sell it to liquidise assets.  While the price may fluctuate, the physical metals still have intrinsic value that makes them more valuable than devalued currency that is being eroded by inflation.  John Reade, a partner and gold strategist at Paulson & Co, is one who is refusing to be taken in like the sheeple:

“Federal governments have been printing money at an unprecedented rate.  We expect the strengthening of the economy and stock market to cause money supply to rise more than real growth and eventually lead to inflation. It is this expectation of paper currency debasement which makes gold an attractive long-term investment for us.”

Goldman Sachs and the central banks know this all too well and are simply encouraging people to sell assets, worthless or valuable, to drive down the price so assets can be picked up on the cheap to make the long term investment even more valuable to them.  People who listen to them will be left high and dry as the investment vehicles being recommended fall apart as part of the monetary crash that will come.  ZeroHedge calls is right when in response to the Paulson story Tyler observes:

As for gold as an inflation hedge, here Paulson is certainly correct. The only question is when will the price suppression scheme of gold as an alternative currency finally end. Since various official organizations (such as the Troika) are currently doing all they can to buy the sovereign gold of insolvent nations at firesale prices, it is likely that the period of artificially suppressed prices may continue.

Which, incidentally, for all those who lament the recent price drop in gold, is a good thing: for those who see gold as an alternative currency to fiat, all the recent sell off (as well as alleged or real downward price manipulation) does is provide a lower cost basis for accumulating hard monetary assets. Which is something to be welcomed and not mourned, especially if one plans on holding on to said gold (or silver) as a currency, instead of merely converting it back into fiat at a higher price point, and thus as an asset (something all those who bought BitCoin at $260 and sold at $50 appear to have completely forgotten).

Dr Paul Craig Roberts was the US Assistant Secretary of the Treasury for Economic Policy and an associate editor of the Wall Street Journal.  He knows how the system works.  Just over a week ago on his website he put some context around what we are currently seeing in a piece that everyone should read.  He can see the writing on the wall.  The video below builds on the article (h/t Silver Doctors):

However, the establishment’s effort to prop up western currencies by encouraging people to act in a way that drives down the price of gold and silver to make these devalued currencies look more appealing, shows that the economy is in dire shape – and is a huge opportunity for ordinary people.  Pushing the price down to prop up the dollar in particular, has made it cheaper for ordinary people to acquire gold and silver before the price takes off upwards.

This week I have taken the opportunity to add another 2oz of gold bullion and 3kg of physical .999 fine silver bullion to my vaulted assets, along with some more 22ct Gold Sovereigns, and silver bullion coins in the shape of .999 1oz American Eagles, 1oz Canadian Maple Leafs, 1oz Austrian Philharmonicas and 1oz Britannias, all purchased legally without having to pay VAT and now safely stored in a secure, non-bank facility that I can access 7 days a week if I choose.  The more that government and the likes of Goldman Sachs try to get me to part with my assets, the more I am convinced to hold on to it.

When the economic storm eventually hits, the value of fiat money plummets, government raids bank account deposits a la Cyprus, at least I will have the comfort that I have no debt, bar what’s left to pay on my mortgage, and that a good proportion of my assets will not lose their value – indeed they will almost certainly be significantly more valuable than today.  Best of all, the government and their banker agents won’t be able to get their hands on it as it is kept outside of their system.

16 Responses to “An economic storm is gathering”

  1. 1 blackswansblog 14/04/2013 at 12:56 pm

    I have read some gold buffs warning that Canadian Maple Leafs, because of their design, can wear down easily – so impairing their re-sale value. It seems that Krugger rands & American Eagles do not suffer from this feature, & therefore tend to have a better re-sale value. Any comments, AM?

  2. 2 Autonomous Mind 14/04/2013 at 2:11 pm

    Gold Maples are more prone to that than silver maples because gold is such a soft metal. The only way the coins will wear down is if they are handled a lot or circulated, and with silver maples the main issue in recent years has been more to do with the development of ‘milk spots’.

    With the exception of my sovereigns, I buy mint condition bullion coins that have been shipped in master boxes, whose value is in the amount of ‘fine’ metal they contain. All bullion coins risk having very minor scratches or scuffs from the way they are handled at the mint. I keep all of mine in individual capsules which, while it takes up more room in the security box, does keep them from being rubbed or scratched any further.

    Anyone concerned about ‘wear’ would be better to buy proofs, which are much more expensive and whose value is numismatic rather than bullion based.

  3. 3 PeterMG 14/04/2013 at 2:35 pm

    AM I ‘m sure you are aware but in 1933 the US government confiscated private gold. Not sure what the cut off was but the compensation paid was derisory. When the establishment fouls up, there is no limit to depths they will sink to prop themselves up

  4. 4 Autonomous Mind 14/04/2013 at 4:03 pm

    Yes Peter, Executive Order 6102. The order resulted in most privately owned gold being moved outside US jurisdiction to Switzerland. The same jurisdiction where the bulk of my gold and silver is stored (although I am considering transferring my gold to Singapore by way of further diversification).

  5. 5 Restoring Britain 15/04/2013 at 7:52 am

    Despite writing about hoping, I’m increasingly worried that the reality is that economic events are set to overtake us. With that in mind, I think you’re on a fantastic tack here AM. It seems the first priority for each us might be to look inward and evaluate how each of us saves ourselves. There seem to be no shortage of fools in the financial world who look dead set to run this ship onto the rocks, back it up and and ground it again.

    There is a part of me that wonders if the coming crash will be of such significance that we do not have a proper historical reference point with which to compare it. Even the thirties may not provide a proper comparison as there was a different level of resiliance in society back then compared to today’s X-Factor population.

    I really do wonder if your message is what bloggers should be talking. I am fearful that we may not get the opportunity to take our democracy back, because this will hit first. We may end up rebuilding it from the ashes.

  6. 6 james higham 15/04/2013 at 8:50 am

    Cost has fallen, still need the money to buy.

  7. 7 Antony 15/04/2013 at 11:01 am

    I thought it was pretty well accepted these days to do the exact opposite of Goldman recommendations, no?

    With regards to confiscation, they can only take what they know about. I use a UK dealer and try my best to use cash, before they restrict that too. It is kept at home in a separate gun cabinet. I would rather be able to get my hands on it. Who knows what capital controls are around the corner?

    Anyway, this is all hypothetical as I’ve lost it all in a boating accident! (c. Zerohedge)

  8. 8 jones 15/04/2013 at 12:52 pm


    “Anyway, this is all hypothetical as I’ve lost it all in a boating accident!”

    I find that floods and tragic house-fires do their share of this sort of thing.

    As for burglars?………………..

  9. 9 John Bolton 15/04/2013 at 4:42 pm

    How do buy silver coin legally without paying VAT?

  10. 10 Autonomous Mind 15/04/2013 at 5:01 pm

    John Bolton, if you email me direct using the address on the right column of the page, I’ll give you an advance peek at the relevant section of my guide to Getting into Gold and Silver.

    With the way the prices have dived in recent days (thanks to ‘paper’ gold and investment bank speculation that isn’t backed by physical bullion) there is a great opportunity to get value purchases of gold and silver.

    I think getting the guide finished and published so people can buy it and save money immediately has to be a priority for me now. The cost of the guide would be saved many times over just by using the information I’ve collated to make a single purchase of the right items at the best prices.

  11. 11 Audrey Quattro 15/04/2013 at 10:21 pm

    Not everyone has the wherewithal to invest in precious metals. Is there anything that ‘cashless’ people can do to mitigate the oncoming? Assume a normal person, mortgage, some debt, wages paid into bank….?

  12. 12 Autonomous Mind 16/04/2013 at 5:46 am

    Before you do anything else, Audrey, pay down any card or catalogue debt. Mortgages are less of a problem in the immediate term.

    If you have credit cards, store cards or catalogue accounts, and any scope to reduce your normal monthly spending, pay off as much as you can afford each month to clear the balances and dump those borrowings as quickly as possible. They should be your first target.

    If your borrowings are a bit chaotic with stuff all over the place it might be worth totting up the settlement balances and consolidating them into a personal loan with your bank. You will save a lot of your money on interest by paying off those accounts and clearing them via a loan with a defined end date. Set the repayment term to be as short a time as possible while being affordable, then close the other accounts.

    Paying off any personal loan should be next. It’s less of a priority than the cards and catalogues because the interest rate is lower and the payment term is more clearly defined. Don’t even think about saving or investing while you have any of those debts.

    Even without being able to diversify your financial assets into anything such as gold, you will be significantly less exposed and better off in a financial crisis for not having the debt. It takes discipline to do it and change habits to live within your means afterwards, but it will free you from debt slavery and money you earn will genuinely be yours.

    It took me some months to get my cards and borrowings paid off by increasing the payments, but it has saved hundreds of pounds a month and suddenly made affordable things I couldn’t have before.

  13. 13 Andy Baxter 16/04/2013 at 8:02 am

    Audrey speaking as an IFA (Independent Financial Adviser) the above advice is spot on and if I’d had a blog I’d have been advocating AM’s stance too as I’m doing the same:

    BUT if access to say direct gold/silver is beyond your means do this instead:

    build a modest cash reserve and ensure no one knows about it and it is as secure as you can make it, burglars rarely look in bathrooms by the way or kitchens so be creative and imaginative if stashing cash.

    stock up on basic staple foodstuffs and other essential: just buy a couple of extras when you shop and look out for the offers at the shelf ends

    bottled water and I have purification and filters too just in case

    tinned goods (they keep forever basically if kept away from damp and you can ignore the sell by date)

    I built shelving in the garage and we store within those large sealable plastic stationary boxes meant for paper all sorts of essentials, they are secure free from damp (stick a couple of gel packets in the bottom)

    you can buy large 15kg to 20kg bags of rice in the Asian stores; I’ve got a couple of those tucked away as well as pasta etc

    Understand this we are only between 24 to 48 hours away from starvation and having nothing on supermarket shelves; modern distribution and food retail is tightly controlled based on profit margins and shifting consumer demand: they don’t stock huge surpluses and if panic comes as it will if their is a crash and TPB enforce capital and cash controls as they did in Cyprus and people go for a run on staples very quickly supermarkets will run out.

    I also grow a lot of my own food, its fun healthy and satisfying, very easy too and there are lots of books to show you how if you haven’t got a clue and you don’t necessarily need a huge garden or lose the lawn: I grow lots of stuff in pots as its tidy and easy : I’ve got tomatoes, peppers chillis runner beans potatoes parsnips carrots beetroot peas and asparagus all on the go at the moment and there is nothing like it; it only takes 30 mins a day to work and maintain. its nothing

    I’ve got a bread maker, use it all the time (you can even make bread without yeast (soda bread) in 30 minutes, flour doesn’t keep for ages but by using all the time and restocking I’ve always got fresh bread;

    I also have a diesel generator back up in the garage that can plug into my mains so when they do start rationing power via smart meters and power cuts we can still watch XFactor!!! lol seriously though I do have a generator and a set up to run my mains; wasn’t cheap and the leccy thought I was mad when he finally understood what it was I wanted doing but he set it up for a price of course.

    there is loads you can do with a bit of thinking:

    the basics you need to see to

    Gold silver if affordable (coins don’t wear and can’t be clipped easily as they are not 100% as they have other alloys to harden them, basically coins (bona fide ones) are recognised as being about 90% pure

    cash reserve for emergency
    don’t go hungry by building food reserves and or growing your own
    and see to your power needs to keep the freezer with all the stored food on

    its easy with a bit of thought time and effort

    be strong people be strong…

  14. 14 Silver 16/04/2013 at 10:00 am

    you can buy vat free silver in estonia and have it shipped… there three dealers,, and Tavid doesn’t ship but the other two do… I bought with celticgold as it’s a german company having an branch there… the service was top notch but you need to pay shipping separately and there is no vat to be paid when getting them to Ireland

  15. 15 ansel61bruce 16/04/2013 at 10:18 am

    Can you write a guide on how to get the money to buy precious metals cos I’m skint. And with the kind of governments we have around the world, the only safe place to store gold is in your underpants. But don’t do that and try to board a plane in the US or the TSA will find it in a routine hand search!

  16. 16 Audrey Quattro 16/04/2013 at 6:44 pm

    AM – thanks for those words of advice. I asked mainly on behalf of those that DON’T have the wherewithal and whilst I don’t have the readies either I DO make other arrangements along the lines of Andy Baxter’s recommendations. We are mortgage free, on private water/sewage, have a woodburner (and live in a forest!) and keep a small genny/bottled gas at hand, keep chickens etc. Our position is quite enviable as far as the majority are concerned but those that can’t emulate our situation (and they are the vast majority) need the other helpful advice you so kindly give. Thanks.

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