Gold and the Panic Phase

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"During the panic phase, the response in the gold and silver prices will be profound, with advances to date only a prelude to a march to $2000 gold and $50 silver."

A couple of friends reported some overriding themes at the PDAC gathering in Toronto last weekend. They mentioned that more than a few analysts, writers and speakers still do not get it. They actually believe the situation with the U.S. economy and U.S. banking system has begun to stabilize.

That is like saying a man has a hurricane under control as he clings to a roof rafter. The U.S. economy has entered an accelerated phase of disintegration, while the populace has entered a new panic phase. The U.S. stock market is under the microscope, and it just broke a key multi-year critical support level.

The plan for individuals, who have been betrayed on a colossal scale, must defend themselves by exiting all assets and hunkering into cash. The betrayal lies at the feet of bankers, politicians, military brass and corporate chiefs.

By the way, cash is prescribed in that perfectly crafted document called the U.S. Constitution. Gold and silver are the only forms of money that can legally satisfy debts public and private. That near-perfect document has also been betrayed, with even the last president calling it a 'mere piece of paper'.

The financial problems of the nation took deep root with the Vietnam War and the subsequent abrogation of the Bretton Woods Accord that had forged the US$-Gold linkage. The analysts, pundits, bankers and politicos seem to have totally lost sight of this basic fact. Their deep error, along with profound corruption, will be centerpieces in the next chapters written in history.

My rational and considered belief is that gold, as well as crude oil, will be anchors to the next global reserve currencies. What better route to stabilize both financial and commercial price systems? Those who believe that the U.S. dollar will prevail and survive this turmoil as the global reserve currency are precisely as incorrect as those who believed the U.S. banking system could survive the mortgage debacle as it unfolded.

We are witnessing a long slow drawn-out death experience for the U.S. dollar, liquidation of the U.S. economy, to be followed by a default by the U.S. Treasury Bonds. During the panic phase, the response in the gold and silver prices will be profound, with advances to date only a prelude to a march to $2000 gold and $50 silver.

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