Great Asset Repositioning

Greg Hunter’s USAWatchdog.com 

Since this site went on line three years ago, more than a dozen readers either emailed or commented they cashed out of their IRAs or 401-Ks, paid the tax and penalty, and invested in physical gold and silver.  One reader, in particular, told me he did this when gold was at the outrageous “bubble” price of around $800 per ounce.  With the latest announcement of “open-ended” QE (unlimited money printing) by the Fed, it sure looks like everyone who did that made the right choice.  I am sure there are many more who bought gold at $300 to $400 per ounce and silver at $10 to $15 per ounce, but those were the early birds.  You might call them visionaries.  What has been going on in the last few years is what I call the “Great Asset Repositioning,” and it is now fully underway. 

Farmland, gems, oil wells and rare art are also in the category of hard assets, but it is gold and silver that are at the center of this move out of paper and into real assets.  This trend includes everyone from the small investor to central banks.  For confirmation, look no further than the big time financial players who have just recently become investors in precious metals.  Bill Gross is head of PIMCO with $1.3 trillion under management.  The company is so specialized in selling bonds that Mr. Gross is nicknamed “The Bond King.”  Just this month, Gross basically calls the Fed money printing “budgetary crystal meth” in the “Investment Outlook” section on the company website.  The Federal Reserve is printing around $85 billion a month to buy mortgage and U.S. government debt.  This is more than $1 trillion per year of new money, and remember, it is “open-ended” or unlimited.  Gross goes on to say if the money printing to fill the “fiscal gap” continues, “Bonds would be burned to a crisp and stocks would certainly be singed; only gold and real assets would thrive within the “Ring of Fire.”  (Click here to read the complete PIMCO post by Gross.)  “The Bond King” is a buyer of gold.  Gross has publicly stated many times in the past few months that gold, along with other tangible assets, are a good bet.  I find it a little scary that a guy who became a billionaire selling bonds is now telling people to buy gold and other hard assets.  

Just last month, a man named one of the 100 most influential people by Time Magazine, Ray Dalio, is also on the gold band wagon.  Dalio is also Not a long time gold bug.    I recently wrote a post about what he is advising that said, “Now, a modern day version of JP Morgan is telling the world, ‘Gold is a currency.’  That’s what $120 billion hedge fund manager Ray Dalio said recently about the yellow metal.  Dalio, founder of Bridgewater Associates, doesn’t give many interviews.  So, I find it very telling that when he does speak, he says, ‘It’s not sensible not to own gold.’  When asked if he owned gold, he quickly replies, “Oh yeah, I do,” and said people should have ‘10%’ in their portfolios.”  (Click here for the complete original post.) 

“10%” gold in someone’s portfolio—that’s all?  Think again.  Tom Cloud of Cloudhardassets.com is an expert in financial planning and tangible assets.  He has more than three decades of experience advising high-net-worth clients and institutional investors.  Some of the individual high-net-worth clients have more than $20 million to protect.  I talked to him on the phone this week, and he told me most of his clients are going to a 45% allocation of physical precious metals.  This move is the polar opposite of debt and leverage.  This is a pure insurance and protection of wealth play. 

Think putting “45%” in precious metals is outrageously high?  John Paulson, who made billions betting on the housing bust in 2007, has more than 44% in gold assets or gold shares in his fund.  (Click here for more on John Paulson’s gold holdings.)  By the way, Paulson recently sold all of his JP Morgan stock.                

Central banks are also big buyers of gold.  Bloomberg reported last month, “Central banks will increase gold purchases to 493 metric tons this year as they keep expanding reserves to diversify from the dollar and guard against a potential gain in inflation . . . We expect the official sector to remain a significant gold buyer for some time to come,’ GFMS said.”  (Click here for the complete Bloomberg story.)  China is leading the pack of central banks in gold buying.  Zerohedge.com recently reported, “China Imports More Gold In 2012 Than All ECB (European Central bank) Holdings.”  That’s more than 500 tons of gold imported for China this year alone!  (Click here for the complete Zerohedge.com post.)  This does not include China’s mining production of around 275 tons per year that it does not sell! 

What is coming is big, very big.  At no time in history has the Federal Reserve announced this kind of unlimited money creation along with 0% interest rates.  Inflation is a virtual certainty.  The Great Asset Repositioning is quietly going on unabated with the wealthy on the planet.  Do they see financial calamity, a new world currency, deflation, hyperinflation, global insolvency or all the above coming?  Who knows what they fear, but they are taking cover under gold and silver. 

Comments
  1. Mitch Bupp

    Greg, physical assets will always be a hedge against inflation if you can afford that asset. Gold is out of reach for me but I buy silver coins anywhere I can get them at a good price. Also food will be as valuable a gold and silver ass food prices escalate. You can also hedge against this inflation by positioning yourself and family to be more independent of the monetary system by being more self sufficient. I would advise everyone to depend on yourself more.

    PS: Loved the cartoon but I would love to see a FED hot air balloon trying to patch the whole with money by blowing more money into the balloon would be more accurate.

    • Greg

      Thank you Mitch, Art and Justin for weighing in.
      Greg

    • D Brunk

      Mitch, I love the point you make about being self sufficient. This is so true. If over half of the food you consume comes from your gardens for example, it won’t be as big of a shock when you can’t afford or get them at the store one day.
      I also invest in silver. I don’t trust gold in that it is worthwhile to counterfeit the bars and coins. Also, I do believe silver is more practical not only from a purchasing stand point, but from its useful qualities in commercial and industrial practices.

      • jay2

        D Burk. You are right.Can germs do what alchemists can’t? Maybe so. Researchers at Michigan State University have found a way to coax bacteria to turn a toxic, liquid chemical found in nature into 24-karat gold. I can see a day when silver and Gold will be the same price.Here is the link to a video of gold being made from germs.
        http://www.huffingtonpost.com/2012/10/04/gold-bacteria-24-karat_n_1937477.html
        Greg: I would like to see a interview with someone over this school lab.

  2. Art Barnes

    Greg, interesting to note that the Federal Reserve has tons of gold in its vaults – if gold isn’t money as Fed Chairman “Berwacky” has stated to Congress then why does the Fed hold it? You can see the shift into gold can’t you? Wait till the grocer on the corner accepts an ounce of old silver for a bag of groceries and that will be the end of the “not money” guys.

    • Tom

      Art,

      I wuoldn’t bet a whole lot of money that the Fed has ANY gold let alone the tons it claims to have. I WOULD be willing to bet that the Wall Street shysters have stolen it all. There has been a lot of stonewalling and excuse-peddling as to why there should not be an audit of the stated reserves – way too much for my liking.

      • Art Barnes

        Tom, probably true but my premise was why “did” or “is” the FED holding gold if it isn’t money? Doesn’t make any sense in my mind. Whatever happens you can bet that gold will be taken in and exchanged for any new currency created in a crisis; meaning, it is money, has been and always will be. Your comment was well taken.

  3. justin king

    It seems to be a tug of war between deflation and inflation these days.If deflation wins,the gold bugs will be dumbstruck and very wary of everything.// Greg’s article is very true,in every respect;but deflation is still a 50% proposition,due to wage stagnation and the world-wide economic slowdown. // I could sure use a crystal ball as i am 60% in gold mining stocks. Here’s hoping for inflation,but not hyperinflation.=GOLDILOCKS INFLATION.-Hey,I like that.

    • aa

      there is no tug of war between deflation and inflation. the only thing deflating is housing which wildly inflated due to easy credit during the housing bubble. There can be no deflation in a fiat money environment unbacked by anything but a politicians promise. forget the deflation myth. the only thing that will continue to deflate is housing that is still overpriced.

    • George Too

      The last time we had deflation we had $20 gold pieces and the USA ran a budget surplus

    • Sicilian Gold

      In Friend of Another’s (FOA) Gold Trail, he once said,

      “My friend, debt is the very essence of fiat. As debt defaults, fiat is destroyed. This is where all these deflationist get their direction. Not seeing that hyperinflation is the process of saving debt at all costs, even buying it outright for cash. Deflation is impossible in today’s dollar terms because policy will allow the printing of cash, if necessary, to cover every last bit of debt and dumping it on your front lawn! (smile) Worthless dollars, of course, but no deflation in dollar terms! (bigger smile)”

      -April 2001

  4. Goldenboy

    Greg,
    Sinclair says move 401k’s and Roths et al, into ‘self-directed’ IRA’s. Do you have any suggestions on who to ‘avoid’? That’s not giving a recommendation as much as a ‘don’t trip’ on that rock.

    What’s to keep the govt from confiscating them?
    Gb

    • Greg

      Goldenboy,
      All the people who wrote me paid the tax and penalty and took direct control of their assets. I don’t know what to tell you on this one. I am not a financial advisor, I’m just reporting what folks told me.
      Greg

      • Victoria

        I live in California and last week I tried to take direct control of my 401k handled by Mass Mutual. They told be I could not do this. I could take some out under one of the 6 hardship options, but would have to provide documents to support it. If I was 59 I could also take out some. My only option to get my money out of there was to take out a loan AND pay 4.25 interest. Also, I could only take out up to half of what was in my account. They told me these were the rules of the IRS! I was SO furious that they were holding my money hostage. Are there any less risky areas to focus the money I had to leave in there? I just discovered your site and I’m loving it!

        • Greg

          Victoria,
          I am not an expert on 401K’s, but they pretty much call the shots. I think you need someone with more knowledge than me to really advise you. Thank you for your support!!

          Greg

    • Mickey

      Go back to 8/8/2012 on http://www.jsmineset.com, DRS is explained by Jim & he also took many emails on how to do it & what you are up againist with brokers & all the other crap you may come across, he has spent lots of his own money to help every one who will try to help themselves! Good luck as new laws come in to play each day.
      M.

  5. Rod

    Greg, Myself and many others back in the day who followed finance and read Jim Sinclair knew this was coming. Jim put me on the path to financial sanity just by teaching the facts. Jim always said when you
    see everyone jump on the bandwagon you know the big runup is at hand. I think its kind of funny now that we have all these “Me Too’s” running around promoting precious metals when the rest of us have been quietly doing this for 10 years or more. Diversification is still the safest insurance, you just have to know what will hold value through the coming storm.

    • Greg

      Thank you Rob. It looks to me the rich are fearful on this one and not so much greedy. They see the calamity that is on us and know it will get much worse. Many more will seek cover before this is over.
      Greg

  6. D Brunk

    Greg, thank you for the great article!
    I’m happy that you’ve confirmed my thoughts on 401Ks. After all, they are money traps in more than one way on top of being a CASH savings. I agree that it is dangerous to carry too much cash these days. I would say that it is good to carry debt in these circumstances, however, who can say that we will all have a job to pay that debt as it becomes worthless.

  7. Randy Hammon

    Greg:

    if this Qualified money is money you can’t afford to lose (even a portion of it), are you and the rest of the hard asset people saying to put ALL of the assets in Gold/Silver?? I can’t believe anyone would advise that with money you can’t afford to lose! Maybe $25%, but not the whole damn Qualified account, AFTER a reduction of over 40% in taxes and penalties??

    Love your blog!

    • Greg

      Randy Hammon,
      I did NOT say put all your money into hard assets. I told you what the wealthy and central banks are doing. I believe the number is 45% for individuals and John Paulson. More on what the wealthy are doing next week from Tom Cloud. Thank you for your comment and support.
      Greg

  8. Ag047

    If you are not getting out of paper and into physical metals you will be in for a rude awakening. This is going to go down as the biggest legalized theft from the average citizen in the history of the world. Inflation is not a natural occurring event. It is man made by the FED and big corporate greed. The Dollar will be devalued to nothing. Most people will lose everything. Any and all savings. It’s not too late to get in on the smartest move you will ever make. Protect what you have worked so hard to acquire. Gold may go to $5,000. Silver to $500. Only 1% of the general population even knows what’s going on thus far. Don’t buy paper stocks in metals. Acquire actual physical bars, coins and rounds. If you don’t hold it then you don’t own it. Don’t trust your life savings with strangers. Take control of your own finances. You will not regret it.

    • Brad27

      Hi Ag,
      That must be Ag as in silver. I agree with what you say,especially the advice to get out of paper, but lest people think that they buy gold for $1,800 per ounce and it becomes $5,000 it will not purchase 2-3 times more than it does today in goods and services. It may purchase somewhat more, but mostly the high price will be a nominal figure blasted there by inflation. Gold is a store of value and what you put into it will still be there no matter what the figure. One must beware of the tax man who will want to tax you on capital gains of the $3,800 “increased value”. That is where the governmental theft continues apace. The IRS (please excuse my language) will not consider inflation when it taxes you. They will just look at the raw figures. If you can spend your PMs in barter, then you preserve the wealth that went into it. Keep this thing quiet and off the grid, so to speak.

    • Spanky

      absolutely correct…. of course gold should already be at $5,000 per oz. based on the amount of debts and printing that has been done just to this point. Of course the “moneychangers”.. the enemy of mankind for centuries are pulling every effort in the book to keep the price capped to keep the sheep from running into the only enduring liquid form of wealth the world has ever known. Meanwhile they are stuffing the Phony gold ETF’s with paper and stealing every ounce of gold they can get their grubby little hands on and running it out the backdoor and straight to the private vaults of Rothschild, who is going to try to create WW3 and a worldwide depression and then come out with a gold backed paper currency …. I can’t imagine anybody not being 100% in gold bullion right now.

  9. Shawn In San Jose

    About every 2-3 months I pick up a 1/10 or 1/4 oz gold coin. Most of them have been Australian Kangaroos just because I think they look cool. Maples, Eagles, etc are run about the same price. Silver is definately more affordable to the average person. I try to pick up 5-10 ounces every other month.

    If we hit a big deflationary period the value of those coins is going to plummet but they are for the “other side” of the rabbit hole so to speak. Meaning they are for after a new currency arises.

    If there is a huge inflation spike then I figure I’m okay too.

    In all honesty there is no way to properly plan for whats coming. We are in many ways in truely uncharted territory.

    • aurochs

      It doesn’t matter if we get inflation or deflation Shawn, your gold and silver coins will increase in value or real purchacing power in either event. The great depression was a deflation and ‘cash is king’ was the order of the day. Sure, prices go down in fiat dollar terms but the scarcity of gold and silver will make their relative value go up. When nobody has any money, even a little real money will make you safe and secure. Keep stackin’ bud.

  10. Robert

    Tell me again please, what word is it that a person is called when he doesn’t tell the truth? The people causing these troubles are such people. What more do we need to know?

  11. FluffyCone

    My wife and I are considering selling our existing home and buying something a little bigger because of our growing family. (We need a bigger home, but not a McMansion.) We are seriously considering cashing out some or all of our 401K money to buy the home instead of getting a mortgage. This is an example of converting fiat money/assets into a needed usable hard asset.

    • Greg

      Fluffy Cone,
      Yes, But it you do this make sure you get clear title to the house. Please hire a real estate attorney to make sure you get a clear title when the deal is finished.
      Greg

      • Spanky

        You NEVER OWN anything that you can’t hide. even if you ” own” the house free and clear they can still tax it or confiscate it via some newly constructed law. Live in a shack and put the rest in gold. BARTER what you need to get goods and services you need and NEVER EVER pay the tax on the “gain”

  12. Farley

    I think many more people would cash out 401k’s if they could.
    In most cases, I believe, people cant touch their 401K’s unless
    they are layed off from, or quit their current jobs. I am in
    this boat. My wife on the other hand got layed off a few years
    ago and has took the money and payed the taxes and penalty.

    • Guy Christopher

      Taking money from an IRA/401K will be costly if you are not of age to avoid penalties. Here’s an alternative idea. Leave the qualified accounts alone, but stop putting money in them and put that money instead into physical precious metals. Or part of it. No, you won’t get a tax break on that part going into physical gold/silver, but you’ll be better positioned in the long run. Also, consider the government has been discussing confiscation of private retirement money (google “IRA confiscation” or “GRA” (government retirement account). The plans are in the works. There will be little you can do once Congress decides to steal the several trillion dollars in private retirement accounts. They’ll sell the idea as doing your duty — good for the country — it’s for the children. But it will be grand theft on a massive scale. I also notice a lot of comments on ETFs. That’s paper gold, folks. That’s paper with the word ‘gold’ on it. It’s not gold. ETFs are paper. Read the fine print. Good luck getting that ‘gold’ you think you own when it’s really only paper.

  13. Mammoth

    Amatuer investor and first time visitor here – followed a link to this article from the coinflation website. Greg, the fact that you quoted Bill Gross and Ray Dalio, rather than the regular PM ‘perma-bills,’ gives credibility to your article.

    Aside from Econ 101, the only financial education I had is from what I’ve read on the Internet, and then attempted to filter the substance from the fluff.

    Although I do own land (rental property) and have a 401k which I contribute 4% of my pay to (in order to get the maximum employer’s contribution), aside from that my only other investments are PM’s. and quite frankly, I feel that I am getting ‘top-heavy’ in this, yet do not know where else to put my savings – other than in the bank at 0.0001% interest. So instead I usually just buy up another handful of old silver coins when I have extra money.

    • Greg

      Mammoth,
      Don’t see how you can go wrong in what you are doing. Thank you for your comment and support.
      Greg

  14. Martin

    Greg,
    I still contend ( much like Mr. Bupp above stated ) that very few Americans hold gold. I hold silver as well but personally would absolutely hold gold in 1/10 ounce coins if need be.
    The jobs number was given an Oriental massage by the BLS no matter how much they protest . The only number more massaged is the INFLATION number. Smaller boxes and less ounces per serving haven’t fooled very many people, but if you tell a lie consistently and loudly people will indeed believe it. The FED is destroying the dollar (and savers with the ZIRP policy) and– is only being held afloat by the EURO debacle which it is measured against. Since the bond market dwarfs the stock market ( smart writers have penned “the largest bubble of all time”) it will pop when the suckers who are holding bonds at these ridiculous prices and rates get smoked -or as Jim Sinclair often says – “have a religious moment”.
    The FED has not even made an attempt to “sanitize” their purchases of ABSOLUTE JUNK from the banksters who can’t wait to get rid of their toxic waste onto the backs of the U.S. citizens who in truth guarantee every purchase by these unaccountable for profit parasites of the U.S.A.- The FEDERAL RESERVE.
    Any candidate who runs on a reform of the tax system or has the brass cajones to dare ask the FED to see their books are never heard from again. AS the infamous “Deep Throat” whispered – FOLLOW THE MONEY.
    Thank you

  15. Gary

    Physical possession of gold is the only hedge. I think the ETFs are another form of pyrite. I can’t imagine that banks that use fractional reserves to invest and loan wouldn’t also use fractional reserves on gold holdings, even if they are marked “allocated”

    • Greg

      I agree Gary, Thank you.
      Greg

  16. Bill

    Greg, thanks again for an informative and well written article. I bought gold and silver back in 1982, put away in a safe place and forgot about it.

    One issue I don’t see many folks talking about is the bank bail out. As you know because the federal board of accounting standards allowed the banks to mark their asset’s to a model rather than mark to market, they were then allowed to keep low market house’s on thier balance sheet at a high price.

    I think that what Bernake is doing is just going to make the banks solvent again by buying all of thier toxic mortgages. So, I see another real estate bubble coming, as houses are gaining in price. I think because of the low interest rates a housing bubble cannot be avoided. I think that this is the time to be buying not only more gold and silver but also bank stocks and houses.

    • Greg

      Bill,
      Carful,
      John Paulson just sold all of his JPMorgan stock. Thank you for weighing in.
      Greg

  17. Burt

    Pertinent and timely substance! What would you suggest Greg to holders of precious metals IRAs? Liquidate for the ounces now or wait until later? Or maybe a little at a time?

    • Greg

      Burt,
      I do not know much about precious metals IRAs. The folks I know and talk to have their gold and silver under their direct control. I’d rather be a year early than one day too late. What is going on now has never happened before in human history, so who knows what will happen. Remember, for the last few years we were told we were in a “recovery.” Then Bam! “open-ended” or unlimited QE. What the what? I guess we were not in recovery now were we? What is going on now is going to end badly and the people I talk to on a regular basis have their gold and silver coins and bars close. That’s not the answer you were probably looking for but that is my honest assessment. Thank you for your support.
      Greg

  18. BOB D

    If men are willing to blow up three buildings. Lie the country into wars and murder maybe over million people.
    Those same kind of men will take your gold and give you paper. After all the whole mess is about control.
    Who said you can’t have deflation, has never been so poor to sale his car at a lost. Deflation and inflation can happen on a gold stander. At one time bankers complained to many silver dollars were being coined.
    It’s all about power, the power to tell what the gold is worth and how much the slaves can have at any give moment. The power to control another countries oil. The power to tell people, that a 500 page Free Trade documented has something to do with freedom.
    I got some silver and land paid for, but in a lawless land, with no rule of law, I don’t think it could be called my wealth and my land. PEACE,LOL

  19. Brad

    Greg, Thanks for the well written article. As for Gold and other precious metals for that matter one needs to go back to the 1940’s to see what there real worth is. Talk with people who travelled thru the countryside of some European countries begging for their next meal with anything of value to trade for just one more meal. With the worlds population increasing and food production not keeping pace, along with a financial system on the brink it is only a matter of time till the next bow breaks. I don’t think anyone can truly prepare for what is coming in the physical sense. You better wipe the dust of those Bibles and start reading about something more than just the financial times. When the dust settles the 30’s will look like a piece of cake as at least there was ” moral fabric” back then. You can’t have underemployment and unemployment for long at the current levels before it all starts to unravel.

    • Greg

      Youn are correct sir. Thank you Brad.
      Greg

  20. Liquid Motion

    Greg,

    Nice follow up article from previous Dalio blog.

    What strikes a nerve here are the parrallels between modern day and historical events. I am currently reading “When Money Dies” – Adam Fergusson (The Nightmare of the Weimar Republic). Every account of what transpired during that piece of history has a resemblance to what is happening in the USA/EUR/ME as a whole. It is clear in hindsight that a combination of Fiat currency debasement and economic shocks to the economy have such a de-stabilising effect that when viewed /monitored from day to day…week to week..month..basis etc…it is only remotely noticeable. Over years it becomes more apparent but only those that either by chance or by good skill /knowledge/fortune have the ability and fortitude to be able to plan for harder times.
    “Who knows what they think” indeed !!! but you mention the word FEAR.
    Fear that they (central planners, govt, banks, elitists) have pushed the financial system to the brink and have lost control. It is not only the wealthy who claim to have the “inside” information and have done the necessary. Many people with 401k’s / retirement accounts have taken responsibility for their own retirement. It is clear the govt cannot be trusted to do this effectively without changing the goal posts or have made promises it will not keep.

    When paper money dies…….everyone will need some form of true money for not only survival…but to allow the continuation of an appropriate standard of living that matches their relative current standard whilst concurrently protecting their wealth.

    Viewed another way…a loss of 50 % of paper wealth is more than offset with the appreciation of physical wealth (one can afford to lose in one asset class whilst gaining in another in that scenario if one has an appropriate level of asset allocation).

    I would add that the concept of putting a $$$$$$ value on Gold is a strange construct. It gives false data which leads to false assumptions and decisions.

    The future world is one that is full of opportunity. There will be a massive shift of wealth and destruction of many asset values. It is quite difficult to imagine the ultimate destruction that lays before us and how we can revert to a different means of paying for the exchange goods and services and settling debt. IMHO its inevitable. Those that choose to remain in denial will unfortunately suffer the most. Education beyond the MSM BS is essential.
    Thank you for your committment to bring greater awareness of the realities of the world in which we live.

    • Greg

      Thank you LM for the comment and analysis!!
      Greg

  21. RationalThinking

    for the last two years Ive been watching and comparing the metals to the REAL dollar OIL. Its been hard to value gold and silver against fiat currency, so i use the dow and oil to see if there is coupling or decoupling. its fascinating as well as revealing to watch the valuation comparisons. The fed is doing all it can to keep oil and the paper dollar afloat, ANY BODY see a leak!!

  22. John

    I was told by an Israeli agent 2 months ago that there is a plan in place to officially report 1%-2% inflation while maintaining a course of a 3% target (as to keep the printing going)but in “unofficial reality” target 10% Real inflation over the next 10 years. This will effectively greatly reduce the debt, priced in present dollars or purchasing power. The will re-inflate the housing market through MBS’s will will give the average Joe the illusion of wealth through home equity, which they can then take loans against with a ZIRP marginal markup. If this does re-stimulate spending, then it is possible to pay off the debt in devalued currency; (Hence massive inflation, but trying to move ALL prices, including wages up). If if fails, they will just print the Dollar into oblivion. Both directions will inevitably destroy the Dollar, the former will just kick the can further down the road. He told me a major market event was already planned and WILL occur between Oct-May and to stay out of leveraged positions, only play with what you can afford to lose.

    • Greg

      Thank you John for the info!
      Greg

    • Saq

      I’m rather curious why an’Israeli agent’ has inside info on the stockmarket?

  23. Jim

    Government debt is already swamping the bank’s stern, and the demographic monsoon is still 20 years away. Interest rates on government bonds have been under-priced for years, or governments around the world would have had to deal with their deficits long ago.

    The Fed really must go. The idea of a central bank controlling money is not only feudal, it is arguably illogically silly; it forms a single failure point (no one would build a nuclear reactor safety mechanism like that, nor consider forming a monopoly on computers or cars) while allowing both bankers and governments to be irresponsible.

    Finance eventually trumps macroeconomics every time. The profession is much better named “political economics,” as it was originally named. And Bernanke will print money until he retires or the economy crashes. He has no choice. Word on the street though, is that these guys actually think they can control this tsunami and unwind it later.

  24. Don_in_Odessa

    Mr. Hunter,

    My wife and me have done as much as we can over the past three and a half years to become self sufficient. If Mad Max holds off we will be OK as well as maybe help a couple of neighbors. My question is this: We are not wealthy people and if all goes well I will most likely have to work well into my seventies. I am 61 now. However, by way of our small business I have been able to amass pretty good amount of a palladium/silver alloy. I have been contemplating sending it to the refiner and trading it in for some small denomination silver coins, But, I do wonder if it might be better to hold on to the palladium as an investment. We most likely would not need the silver to survive in scenario of total collapse. If a viable economic system survives, the palladium may prove valuable just because of the inevitable inflation that would be required for the system’s survival. What would you do?

    • Greg

      Don in Odessa,
      Palladium is not money and never has been. Silver has thousands of years functioning as that. If there is a total collapse, I think it would be hard to convert this metal and in a “Mad Mxa” scenario you speak of it would be of little help. I would convert at least some of it to silver coins.
      Greg

      • Don_in_Odessa

        Saw George Ure’s blog this morning. http://urbansurvival.com/week.htm Read something that relates to my question. His supposition is that if he is able to produce food to sell the silver will come. I am well on my way to and indeed now in that position to have food to sell if need arises. So,I am keeping my palladium with the hope that as long as the whole world is creating fiat money then there will be no reason for collapse. In as much as anyone posses currency all will be equally able to purchase goods. That being the case, commerce will continue at an inflated rate and palladium will sky rocket. No? If not then I can sell food for silver.

        • Greg

          Don,
          Sounds like a plan but try to buy some silver now as I think it will never be cheaper in fiat money. Thank you for sharing your plan and link.
          Greg

  25. Phillip Fleming

    Hi Greg
    I always wondered why the banks buy and store gold to protect themselves. Aren’t they supposed to be protecting me and my funds. So when the banks crash, and they will, does this gold value get allocated to it’s patrons in lieu of returning the funds they loose for us. I am one of those who cashed in like you said and took the loss. I will tell you now that the gain in peace of mind over rides many regret from loosing some of my assets versus loosing all or having it be worth nothing. The bell is ringing and those who have eyes and reason will listen and those who have eyes and refuse to believe what they see are lost. I just do not know what signs people are waiting for to make their move. I guess they just believe their government would never let them down. If anyone has any question of what is important I recommend seeing the movie “The Road”. It puts into perspective what really matters when TSHTF situations occur. This is a great piece Greg and I appreciate your getting it out there. Good luck and God bless.

    • Greg

      Phillip Fleming,
      Thank you for sharing this and for your support!
      Greg

  26. Mammoth

    Commenter Brad said on October 10, 2012 at 8:09 pm…

    “As for Gold and other precious metals for that matter one needs to go back to the 1940′s to see what there real worth is. Talk with people who travelled thru the countryside of some European countries begging for their next meal with anything of value to trade for just one more meal.”

    Actually, you can go back to the 90’s to see this. An acquaintence who is from Yerevan, Armenia escaped from there during the fighting which took place following the breakup of the Soviet Union. She and her parents went to Moscow, and survived by selling off their silverware – one piece at a time.

    This can’t happen here in the US?

  27. Callinex

    Some good thoughts there on Palladium re: Don. That was helpful, thanks!!

  28. Seriously?

    Wait a minute people, if you are investing in GOLD and SILVER. Have you forgotten that FDR made GOLD illegal and you had to swap it for fiat dollars. Digital currency is the future and all that own GOLD and SILVER will throw them in the streets because they are worthless. GOLD and SILVER will not feed you nor solve major problems regarding post economic collapse on a grand scale. I find it odd that you people think things will go back to normal after a global economic collapse and your GOLD/SILVER will help pave the way to the next economic machine? You people are not watching what really is happening behind closed doors. Let me make it simple for you guys, majority of countries will be split in 10 zones integrated into a one global governance. Guess what this global governance will use in terms of money? Digital cashless currency, you guessed it.

    • Greg

      Seriously,
      So you are long air? Right? How do you think you are going to get access to this digital currency? You think they are just going to put the digits into your account for free? “You people” need to rethink this little condescending rant.
      Greg

      • Phillip Fleming

        Gold and silver were around and used before there was electricity to run an electronic currency and will be here after the power grid has long failed. I challenge you Seriously, and I mean that in every way, to pull out your plastic when there are no machines around to swipe and you’re dealing with the farmer on the side of the road. Plastic looses every time. Seriously, you are misguided and wrong.

      • Forrest

        I would have to put my 2 cents worth into this discussion. As far as Gold and Silver are concerned it is really about the reason it is being gathered by people to begin with. Some are investing in them, which frankly should not be doing due to the fact they are not a good investment. When you do gather them it is protection for your financial assets, a hedge, if you may. No one knows the future, but you can know the past. History is there to teach us lessons, which unfortunately those in our leadership have failed to remember. Gold has been used as an exchange for centuries for food, property, and such. It is also useful for jewelry and certain devices. It is the same for silver, though its use in electronics is its strong point. Again no one knows what is going to happen and how things will be. One thing for certain the world that you have known changed at 9/11/2001, it is not the same world anymore. Continue to pray, read, study, save, store and be a help to those who cannot help themselves. Whether the countries are divided into zones or not is not what is important. What is though are you preparing yourselves for your family and loved ones, as well as, those around you? People are going to need strong leaders in the new world.

    • Liquid Motion

      Seriously,

      To be taken at full value you need to present a valid argument/point.
      The electronic age if I recall has a lot to do with the mess that we are in (Derivatives/Trading/Debt Money out of thin AIR etc…).
      When all is said and done, the only thing that holds some degree of value and is universally accepted and recognised for that quality..is…GOLD. Because of its scarcity it will demand a premium unlike your scenario of endless electronic digits which doesnt solve any problems nor does it prevent mindless central banks from creating bubble after bubble, all in the name of profits for BANKS and maintaining the status quo of power and control in the minority.
      Wake up man !! Its 10 minutes to noon.

  29. Mickey

    Greg it is great to see people waking up because of you & others who bring us the truth!

    I have one question? Why are Cental Banks world wide now the biggest net buyers of gold, instead of the biggest sellers? In the past they were sellers, now just the other way around! Physical gold buying by the CB’s under the radar is huge! Why are they not filling their vaults with silver also? I have not found the answer yet, but I bet Jim Sinclair could tell us!

    Thanks for what you do, it takes guts!!!
    M.

    • Greg

      Thank yoy Mickey for you kind words and support.
      Greg

    • Liquid Motion

      Mickey,
      You also need to distinguish between Western Central Banks and Eastern ones. They have different motives for acquiring gold.
      There is a school of thought out there that believes that the so called 25,000 tonne of Gold held in Western Central Banks is not actually there. Ooooops…watch out above when that baby gets out coz no one will be able to buy ANY Gold.

      As for acquiring Silver…well it all comes down to storage space.
      Gold (at present) has a value that is 50X that of silver in terms of $/wght. You can do the math in terms of what 25,000 tonne of gold is in terms of silver. The world would need another 50 Fort Knox’s.

  30. pt

    Greg,

    I agree 100% w/ owning physical metals.

    However, I’m not convinced of the prudence of cashing out the IRAs, assuming you have other funds to own metals with. For example, owning gold mining stocks in the IRA & owning metals directly seems like a good strategy based on the currency debasement under way.

    Have you done any investigation into determining the likelihood of the gov’t nationalizing IRA accounts? If there was a reasonable chance of this occurring, then cashing out IRA ahead of this action makes total sense. If there is zero likelihood of the gov’t changing the program on IRAs, then savers are needlessly penalizing themselves by forgoing the benefits of IRA accounts.

    As you may know, something like this was proposed before Congress several years ago. (http://www.carolinajournal.com/exclusives/dems-target-private-retirement-accounts.html) I have heard nothing concrete of late.

    Perhaps you can interview knowledgeable people about this subject.

    • Greg

      Pat,
      I’m not advocating cashing out of IRAs I’m just telling you what folks have told me. Casing out of an IRA is a personal decision the the individual has to be comfortable with. That said,lots of folks are fearful of losing their life’s savings and for good reason. Please understand what is going on today has never happened in human history on this scale. There has never been global “open-ended” QE. Thank you for your comment

  31. andrew james

    I bought in at $4.06/oz for Silver. I guess that makes me a time traveler.

    • Greg

      Bravo AJ, bravo!
      Greg

    • Just Observing

      And not even that old a time traveler.

      I started buying silver rounds when they were under 5 bucks…..wouldn’t buy if they went over 5 with the dealer premium ( how stupid was that )…..would wait for a dip. Finally went all in 2004/05, cashing in my IRA over two tax years, and bought silver at around 6 bucks average.

      My silver is a 6 bagger at this point, and the crappy mutual funds I had my IRAs in are still about where they were 10 years ago.

  32. Karen

    If I buy gold and silver, where do I keep it? Safety deposit box? I feel as if I buy a safe, then if someone were to break in, they would make me open it. Please advise.

    • Greg

      Karen,
      That is a personal choice. However, many folks tell me they want their precious metals under their direct control for fear of a banking holiday. It’s up to you.
      Greg

    • Ace Pilot

      Karen, I apologize for Greg giving such a short answer but you are really asking
      him for a lengthy article or series of interviews. The subject of security is a very
      big one as your frustration indicates. One tip I rarely see stated is to hide your
      metal at another property than the one on which you live. That way, all you
      have in your home safe are insurance papers, passports, etc. Of course, the
      friend or relative must not know what you hid and where you hid it. Think of
      what places you normally access when you go to visit. Then think of places that
      no one ever goes in the normal course of the day. No, the toilet tank is much
      too easy. Try again.

  33. tsuki

    Hi Greg,

    It is the 25%’er checking in this conversation.

    First, we believe there will be an assets grab. We have several survivor bags of silver, and all gold is denominated. Jewelry and coins were exempted from the confiscation of gold. The gold notes and bars were required to be turned in. Beware the EFT.

    If you are going to cash in your 401K, get some financial help, an expert. Good ones are hard to find, but they can be found, mostly by word of mouth. Take all your financial information, loans, credit cards, monthly bills, food, entertainment etc. to him. Once he analyzes it, sit down and devise a plan you are comfortable with and he recommends.

    While the expert looks at your total picture, you need to look at your monthly bills and try to trim 25%. Rule #1 – It must not be onerous.

    For example, a friend who is now a 25’%er was looking into a solar water heating system with solar pump. Cost $1500.00. We recommended a timer on his electric water heater. It comes on a half hour before they rise, and works for an hour. In the afternoon, it comes on about the time they return home, and works for an hour. It has a bypass in case they need extra hot water. Cost $35.00.

    Secure water and food. Have a sprinkler well. Gardening is fun for us, so we have a huge one. If you don’t care for gardening, plant a couple of pots of easy grow veggies. Haunt the farmers’ market in season.

    Lastly, pull yourself together physically, mentally and spiritually. I am not talking church. Attitude, that is what you want. Peace and calm.

    Just a few tips from the pejorative formally known as dirty effing hippy, now pejoratively referenced as dirty effing survivalist. :D

  34. RUSS SMITH

    Hi!, Patrons Of USAWatchdog.com Et Al:

    These are the unavoidable risks & consquences we all assumed, when we abolished not the gold standard per say but OUR basic, unabridged Constitutional Standard found in Article 1; Section 10 which nobdy refers to when dicussing OUR economic topics/plight but why not? It’s said that the first victim held within a lie is the TRUTH. It’s very sad that the TRUTH held within OUR Constitution has been abandoned for the sake of convenience that puts to sleep the sound reasoning demonstrated in Article 1; Section 10 written within OUR US Constitutional mandates to use only sound, specie money recognized by OUR Founders, due to the breadth of their persnal experiences.

    RUSS SMITH, CALIFORNIA (One Of OUR Broke States)
    resmith@wcisp.com

  35. ManAboutDallas

    Most people still don’t comprehend the significance of Gross’ message. For Gross, who worked his whole life in the bond market and made himself very rich while doing so, to reach an epiphany such as this ranks right up there with Saul on the Road to Damascus. It’s as if the Pope stepped out on the balcony there in St. Peter’s Square and calmly said, “You know, I’ve decided us Catholics need to start taking Buddha a little more seriously. Yeah, yeah, I know…. we’ve hung our hats on J.C. for the last 2000 years, but I tell ‘ya… this Buddha guy makes a lot of sense and just to show my support, I’m going to shave my head and start wearing this bedsheet.”

    • Greg

      ManAboutDallas,
      I totally agree and you have illustrated it far better than I did. Love it!!!!
      Greg

  36. jsmith

    Just read the article and the posts Greg. I’m not alone! I’m into physical silver myself, particularly silver eagles and junk pre 1964 silver coins.
    I’m with AGo47 and Martin in that the banksters with the help of the government are deliberately destroying the dollar. Why, just the fact that having a savings account means losing money tells it all. The country was based on thrift and savings and it doesn’t make sense to have a savings account paying essentially no interest while the true inflation rate is more than 7%! As it has been pointed out, a lot of people are going to lose I believe half or more of their money in just devaluation. What the government will do is tell you to bring in 4 or 5 of your old Dollars, and they will give you a new gold and silver backed new Fed Dollar. We are no longer the exceptional country. All these loses to our citizens will be explained as saving the economy and the United States. My paradoxical question is how do you devalue the Dollar which already has been devalued by 96% since the Fed took control?

    • Greg

      JSmith,
      Good question but devalue it will be.
      Greg

  37. Henry

    Those who “cashed out of their IRAs or 401-Ks, paid the tax and penalty, and invested in physical gold and silver” were ill advised. There is no impediment to owning gold or silver in an IRA or a 401(k). Buying gold was smart, but cashing out and paying taxes and penalties was stupid.

    • Greg

      Henery,
      The people I was talking about were folks in the stock market in general stocks and bonds.
      Greg

    • Ace Pilot

      Henry,
      If you don’t hold it you don’t own it. Fear is a great motivator for action.
      Fear of losing control of your paper wealth by gov’t edict is one of the best
      reasons to “take your money and run” that I know. The number of countries
      where this has already happened is too numerous to list. The penalties and
      taxes are what you must pay for the mistake of ever trusting the “… banks
      and the corporations that grow up around them …” in the first place, imo.

  38. Richard

    Someone asked why central banks are net buyers of gold. Why wouldn’t they be? All they need to do is run the printing presses a little longer, then exchange the worthless paper for gold and silver. Quite the deal if you can get it….until one day the music stops and those holding precious metals refuse to accept paper money altogether.

    • Ace Pilot

      Good thinking, Richard. In addition, the banks have already securitized just
      about everything under the sun. The one big asset remaining, besides sea
      water, is all the gold in all the vaults around the world. The current move to
      raise gold into Tier 1 Collateral Asset status tells me they are planning to use
      gold for the next round of paper issuance.
      Can you say, “GBS, gold backed security”? That will be the gov’t version of
      GLD and SLV exchange traded funds. I expect the “money” issued will be used
      to buy more gov’t bonds, to infinity and beyond. That way they will keep the
      Ponzi scheme going a few more years, especially when they repeatedly re-value
      gold to print even more money, time after time after . . . . Can you say “FRGC,
      fractional reserve gold collateral”?

  39. David Fine

    Greg: Great article (which I accessed via Bullion Mgt. Group’s weekly information e-mail); nicely put together. I have held a modest investment in the GLD ETF and in shares of one of the larger gold producers since before the 2008 crisis hit. At that time, most people had no particular reason to fear a significant debasement of many of the world’s major currencies. Since then, of course, the true depth of the economic/financial crisis that we are living through has become more apparent. Still, many economic observers continued to view as outlandish the idea of holding precious metals as a hedge against the loss of purchasing power. Could it be that they have little understanding of econonic history (which contains many examples of financial collapse over the years)? Over the past 18 months or so, we have heard suggestions that certain central banks (e.g., China, India, Russia, etc.) were increasing their gold holdings. Of course, these actions are taken quietly, so as not to show the market your hand, and it is difficult to get hard info on this subject. Which is why your link to Tyler Durden’s “ZeroHedge”piece was most welcome. In addition to those central banks, it is noteworthy that such as bigwigs as Paulson, Gross, et. al. have come around to the precious metals investment thesis. Thanks for bringing it all to my attention.

    • Greg

      David Fine,
      Thank you for your comment and kind words of support. I am not a fan of GLD. (Not many here are.) Most say you are much better off holding the physical metal. This is just a friendly word of caution.
      Greg

  40. Ace Pilot

    “You might call them visionaries.”

    If you’re one step ahead of the crowd
    you’re a visionary; two steps, a nut case.

    In this instance, a very wealthy nut case.

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