Category Archives: economy and money

The great bank robbery

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The banks worldwide are preparing the legal framework for the bail-in, which means they will basically prevent their bankruptcy by adding a portion or totality of all customer funds to their balance sheet.

In plain language, the Cyprus solution set a precedent. There are several ways a bank can handle bankruptcy. It can be bought by a larger bank (bank depositors win, larger bank absorbs the cost), it can be fixed by the state using tax money (bank depositors win, tax payers lose), it can simply go bankrupt (bank depositors lose everything), or, as it happened in Cyprus, the bank can add a portion of all deposits to its own balance sheet and fix itself (bank depositors lose a third or more of their money, but the state is happy because it doesn’t have to spend tax money on fixing a broke bank, and the bank is happy because it doesn’t have to try and find a bigger bank crazy enough to pour money into a pit of doom).

In even plainer language, the banks are all in serious shit, massive bankruptcies of major players are on the horizon, and they intend to screw you over. If you have significant amounts of money in the bank, take it out and convert everything you don’t need for monthly expenses into gold bullion, because when this shitstorm strikes, anybody close will not be smelling like roses.

This also puts a different light on their recent attempts to discourage the use of cash. It’s certainly not because of “money laundering and financing terrorism”, it’s actually because if you have cash with you, they can’t steal it. If it’s on their account, they control your access to your money. If you have cash, they don’t control anything. Also, that’s the reason why the state wants you to have everything on your bank account: if it’s there, the banks can steal it and the state doesn’t have to use tax money to fix the banks, and they can also create huge amounts of digital money out of thin air without anyone actually knowing the amount of money in circulation. Makes inflation much easier and cheaper for them. So, essentially, if you own gold you must be a terrorist. 🙂

Oh yeah, I almost forgot. Allow me to remind you what gold did in the last 12 months:

Yes, that’s the all time high. In plain language, if you bought a Krugerrand in 2005, it cost you around 300 EUR. Today you would pay around 1500 EUR. Either gold appreciated 5 fold in 15 years, or Euro was diluted to shit in 15 years. You tell me. In any case, if you kept your money in the bank, you can now wipe your arse with it. If you kept it in form of Krugerrands, you can now buy five times more euros. To me it doesn’t matter much because I was dirt poor 15 years ago, had neither money nor gold so yeah.

American economy collapse

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What I need to point out is that the primary factor in all my assessments about gold, silver and so on is the state of the American economy. Let me put it in very clear terms. American economy is clinically dead and on life support, and we’re waiting for something to happen that will make it apparent to all, and then all hell will break loose.

What’s currently going on there is the endgame of the fallacious thinking that stock market is the true indicator of the state of the economy. It is not, because this indicator has been gamed for decades. Basically, it’s all smoke and mirrors, or to be exact, an artifact produced by firing competent people who “cost company money” because they are doing research and development, and taking huge low-interest loans (after using up cash reserves) to buy back own stock, which of course raises the stock price into the sky, but the actual value of the company decreases because it has less cash reserves, more debt and less competent people to do the actual work. This policy became the best way for companies to quickly enrich the shareholders and is the reason why the managers who do it receive such stellar bonuses. Unfortunately, as a result of this practice the whole American economy now consists of pencil pushers and “financial experts”, while the actual work is done elsewhere.

So, everybody who points out their stock market to prove that American economy is doing great is selling you bullshit. All of that money basically enriches a very thin layer of people while the actual companies are empoverished at an exponential rate, and it’s contageous because when one company starts doing it the others have to follow in order to stay competitive. And since the stock market valuation is used as one of the legs of the currency backing (along with the mortgages and gold reserves), this means that all those huge amounts of money printed have no actual backing, because the stock prices were inflated by financial trickery and not an actual rise in fundamentals.

Boeing is a good example: it achieved great stock prices by firing thousands of engineers, to the point where it is now in serious shit because, guess what, its plane was engineered poorly. Also, its liabilities are several billions greater than its assets. Will it be the bankruptcy of Boeing or some other fortune 500 company that starts the avalanche, doesn’t really matter, because they are all profoundly fucked and it’s only a matter of time before this bubble pops, and when it pops, it’s the end for America, because there can be no recovery from this, because it’s the entire structure that’s rotten: the society, the economy, the politics, and the young people who should pull this off are snowflakes who spend their time trying to figure out their gender.

Metal buying strategy

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Gold and silver are getting out of the slump again, so that’s good.

I’ve been buying silver like crazy for the last, what, six months or so, and I think I’m at the point where I’m good if the prices suddenly explode; I have enough of an amplifier to actually matter. When I felt I don’t have enough silver, I went for it full throttle, but now I’m slowing down and adding physical gold to my monthly purchase strategy. Still buying silver, just not as heavily.

So far, gold proved to be a better investment than silver, but that’s expected. My predictions were always that gold is going to outperform silver up to the point where it reaches peak price and almost zero availability. Then, silver is going to rise to match and stop somewhere around scarcity equillibrium. That means I had to buy silver while it’s cheap, because it would not create enough of an amplifier if I went for it after the price had already climbed; also, there is so little metal actually available on the market, I might find myself in a situation where I want to buy, only to find myself facing empty shelves, and nobody selling. That’s the trick with this game: you must anticipate and buy when nobody thinks it’s a good idea, because when everybody thinks it’s a good idea, that train had already left the station. And when everybody goes completely crazy about it going vertical forever and people on the street start talking about silver being a no-brainer, it is probably a good time to start carefully heading toward the exit. Which brings us to the current state of the stock market. I’ve seen all this before, somewhere around 2007.

Gold and silver getting scarce

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Essentially, things are moving more slowly than I expected them to, but they are following the predicted pattern. The spot prices are completely fixed due to the fact that most “metal” being traded exists on paper only, but physical metal is getting scarce, especially since the central banks mopped up majority of it. Having in mind that only a small fraction of the population actually has physical metal, and the majority didn’t wake up and smell the coffee yet, you can imagine what will happen when the majority tries to convert their paper savings into gold and silver, only to find out that there isn’t any on the market.

In Germany, a small “gold rush” in the order of magnitude of 200 people daily per retail store was sufficient to completely exhaust the amount of metal available for sale.

Manipulated markets and war

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How can you tell a certain commodity market is being manipulated? It’s when supply is restricted, demand is enormous, and the prices are not rising. It means someone, usually the huge buyers, is influencing the markets by complicated and marginally legal means in order to keep the prices affordable for themselves. In my opinion, that’s what we have been seeing in the precious metals market in the last few months. The central banks and other big players have been buying unprecedented quantities, including the future production, and the prices have been dropping. I have a pretty good idea how some of it is being done, and even I am quite shocked at the amount of fuckery involved.

Also, we are approaching the upper limit of my prediction, because 3 months ago I said I expect the thing to blow up in the time interval of 15 days to 3 months. This was based on the expectation that the American stock market is in a hugely unstable bubble, that the central banks and other buyers will quickly exhaust the physical metal supply and this will in turn collapse the unbacked paper market, which worked thus far only because the bluff hadn’t been called. In the mean time, the fed has been printing money like crazy, and it’s been going into the American stock market, basically trying to prop it up in order to stabilize the house of cards. Also, overnight borrowing by the banks is huge, which indicates serious liquidity issues. In essence, the visible metal prices seem to invalidate my prognosis, but I think it’s just a matter of time before this house of card collapses, and I’m actually not in a great hurry to revise my time estimates, I think we’re still on the same schedule. I’ve seen very similar patterns in 2007. Marketplace was behaving contrary to the underlying realities seemingly disproving them, until it went poof.

I’m still buying silver with all the money I can spare each month, and I still recommend it to others. If the banks are buying metal instead of paper, contrary to their long-standing custom, it means paper is going to shit. Already, bets are being made on gold exceeding $4000 by summer of 2021. Some people say someone is betting high and will probably lose money. I say somebody is betting on a certain thing in a marketplace of asshats. A major constraint on my prognosis is that this time the financial collapse will be so big, it might cause the major players to pre-empt it with a nuclear war, seeing it as a preferable option. In fact, that’s what I’ve been warning about for years already; American intentional aggravation of the geopolitical situation makes no sense in any other context. Also, America is in the overture phase of a very nasty civil war for the last 3 years, with Obama-appointed people in the intelligence agencies acting as some sort of an insurgency that is trying to negate the results of the presidential elections, sabotage the executive branch of government, and, most importantly, control the media in order to propagandize their own populace. They actually revoked a law that used to prohibit that, so that everything would be legal.

When a significant part of a nation is refusing to accept the election results, using all kinds of excuses, that’s when you know the democratic system collapsed and the country descended into banana-republic stage. The level of political discourse in America is something I am used to seeing in African shitholes, but not in serious countries. It’s basically all at the point where the sides are so far apart in fundamental issues, they can no longer be said to belong to the same civilization, let alone nation. When this war gets hot, it’s going to be worse than Bosnia and Rwanda.