Economic Advent

Today is the first day of Advent.

The word Advent (From The Free Dictionary) means:
1. The coming or arrival, especially of something extremely important: the advent of the computer.
2. a. The liturgical period preceding Christmas, beginning in Western churches on the fourth Sunday before Christmas and in Eastern churches in mid-November, and observed by many Christians as a season of prayer, fasting, and penitence.

In my view, we will soon reach an Economic Advent.

We need to make preparations for this event.

The explosion of the money supply and debt by central bankers around the globe is setting up a scenario of unintended consequences for the citizens of North America, Europe and Japan.

To get some perspective on just how much debt has accumulated consider this graph from the "Daily Reckoning".

As we can see, gold, the most accepted currency for the last five thousand years, has been dwarfed in value by the cumulative amount of global bailout debts by a factor of 4. These sovereign debts, accumulated by governments to be paid for from future earnings, are now so large, that the probability of repayment is approaching zero.
Clearly, the bad debts of governments also need to be eliminated as the point of insolvency is reached. However, with a fiat currency, there is strong motivation to simply print the currency required rather than choose austerity measures.
The implication for gold and other precious metals could be tremendously bullish. If we accept that gold is in fact a defacto currency, the present price levels of nearly $1200 per ounce may seem cheap. The money supply must be sufficiently large to retire debt outstanding at some point in the future. A money supply that is one quarter the size of the debt is clearly inadequate. Does this imply gold at $4000 per ounce is possible or even likely? In my view, as the printing presses around the globe fire up to full capacity, gold will shoot up to extremely high levels.

The Economic Advent I anticipate, is that soon, economists, citizens, and government officials will realize that they can not continue to supply the economy with more debt. Or to restate it, we can not borrow our way out of debt. The deflationary implications are enormous. A substantial stock market correction is likely. A flight to the safety of currency and gold is probable.
A realization that governments have promised pensions, "free" medical care, and other goodies that are so far beyond the ability to pay for them through taxation will occur. Citizens will understand that unfunded liabilities are just that - unfunded and unaffordable. An awakening will occur that we must look after our own needs rather than look to some semi-divine government to provide.
The timeline of this Advent I anticipate will be soon after March 18, 2011 for reasons I will not explain at this time.
We have addressed the preparations that can be made in previous postings.
Strategies Part 1
Strategies Part 2
Strategies Part 3

Where Oh Where Has Our Recovery Gone


  1. PW, why after March 18, 2011? Why this date?

  2. March 18 is a quadruple witching date. 2011 should give us enough time for all the stimulus to wear off, additional money printing and monetization to occur, banks to record more losses, and reality to creep back into the market. There are also some intangible items that I am aware of that will be shared at a later date if they are appropriate.

  3. The holdings of the SPDR fund increased by 65 Tonnes today, and increased Friday over Thursday, last; Bullion in London shows no private selling of gold; none. It was a mini-bubble it's having a mini-pop; you never know what kind of news event will occur in the world; but baring large events; the Gold price should bounce real close to $1,000; timeline around the second week of January. I don't see that there's any difference between $1,000 and 1,050$ for a medium term investor, that's where it started getting frothy so that's where it should correct to;

    and consider these activities ;
    the total debt in the USA ; , throw in a little grain disease like this stuff ; Ug99 , , and squeeze the supply and we got the formula for hyper inflation with a Growing Population thats the target of regulators and why we see these types of issues ;

    Text of H.R. 645: National Emergency Centers Establishment Act ;
    why are we doing this ???????????????????????

    and it plays right into this ;
    China is passing Inflated prices on our Imported goods too. And this will only get worse as they become less and less involved in buying US Treasuries , and rising prices on goods more and more to off set this devaluation process .
    This is a warning of whats to come from the Finished products China will be delivering into the markets and this will effect profits for the equities... Commodities will be the fundamental growth sectors for future growth as retail sectors will grapple with these inflation increases and the consumer is still without incomes that can sustain higher prices , so rationing will be a self imposed prophesy .

    double-digit growth in June fueled by government stimulus programs and spiking in November to more than 19%.

    China is paying $107/ton to import iron ore

    I want to point out the yearly DZZ chart here and say that it shows us that the fundamentals for deficit spending , the continuation , and noting of Chinas Inflation data at 19 % with a fundamental increase next year on rare earths that go into flat screen and tech related stocks is being shown in this chart , and why the trend in shorts are leaving the independent investor for the hard assets and the exposure for the Commercial trades is getting critical mass stages , they are going to get pushed into filling their own orders ;

  4. food shortages are coming , get ready for prices to spike .


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