Friday, September 29, 2017

The Derivatives Bomb That Could Wipe Out Your Wealth

A derivative is simply a contract between two parties, the value of which is based on an underlying financial asset. A stock option is a derivative, for example, because its value is “derived” from the underlying stock.

Farmers regularly use derivatives for hedging. The farmer locks in the price for his corn crop, for example, while the mill gets a guaranteed supply of crop. Sometimes gold miners do the same thing… though it’s usually viewed by investors as negative, management may think the price of gold will fall so will lock in a price now with the refiner, which in turn gives it a guaranteed amount of metal at some point in the future.

Banks have entered into the derivatives world, too. If all they did was what the farmer and miner do, the risk would be contained. But they’ve created such a complex financial daisy chain that the first failed contract could kickstart a massive ripple and quickly put the global economy in trouble…

Banks own lots and lots of mortgage loans. Bank X will hedge that risk with a derivatives contract with Bank Y. But then Bank Y thinks it has too much exposure to mortgages—so it takes out a derivatives contract with Bank Z. Bank Z “insures” Bank Y’s risk. It earns a premium for doing so, which is the motivation behind accepting these contracts in the first place.

So if you follow… Bank Z’s derivative hinges upon the mortgage loans insured by Bank Y, which in turn hinges upon the mortgage loan insured by Bank X. And on and on it goes. Multiply these hundred million dollar deals by thousands and thousands of contracts and you get a sense of how big this problem could be.

Well, here’s exactly how big…

As of the end of August 2017, derivative contracts exceeded a notional value of over $1.4 quadrillion. That’s a one with 15 zeros behind it.

Our debt load is a huge unsolvable problem, and so is the amount of global credit outstanding. Yet derivatives are so big that that debt load is barely visible on a chart.

How this could impact you and me is not just the complicated nature of derivatives, or how big they’ve gotten, or that many banks don’t fully understand their risk exposure, but by…

- Source, Gold Silver

Tuesday, September 26, 2017

We Will Have a New World Monetary System By 2020

When we read about George Washington, we learn about leadership and heroism. When we look at the history of Lincoln, the abolishment of slavery and the civil war come to mind.

And when you study monetary history, one glaring fact sticks out: fiat currencies don’t last!

A fiat currency is one that has no backing of gold or any other commodity. “Fiat” means by decree, so the dollar bill in your wallet is currency because the government says it is currency.

Unfortunately, monetary systems over the past 100 years or so have gradually moved from asset-backed currencies to faith-based currencies. The US dollar had full gold backing… then partial gold backing… then “some” gold backing. Today, it has no gold backing.

This gradual decline in the backing of the world’s reserve currency doesn’t come free of consequences. History repeatedly shows that faith-based currencies eventually go bust or are pushed to the back of the currency bus. This means the US dollar’s reign is limited.

We thus shouldn’t assume our dollars will, in their present state, last indefinitely. That has never happened in history.

We may still be using dollar bills with Hamilton and Jackson on them, but it’s the monetary system that supports them that Mike insists will be changed.

And it won’t be just the US dollar. The sobering fact is that for the first time in history, all currencies today are fiat.

This means that the global financial system is more vulnerable than it has ever been in history.

Just like in 1922, 1944 and 1971, there will likely be an emergency meeting to hash out a new monetary system.

And it will affect the entire world—all 180+ currencies in use today—because the US dollar represents over half of all currency in circulation. With this kind of dominance, faith in all fiat currencies could fail once dollar falls.

Make no mistake… transitions like this are never smooth. They cause not just economic turmoil but a massive loss in purchasing power of the currencies in use.

Those who own gold and silver, on the other hand, will not just survive but thrive in the transition.

Saturday, September 23, 2017

Mike Maloney on Silver Rocket Fuel

Mike Maloney and Jeff Clark sit down to talk about the recent action in precious metals and how silver is essentially rocket fuel at this point and is going to catapult higher in price. Jeff and Mike answer readers questions that have been submitted to them.

- Video Source

Wednesday, September 20, 2017

The Seven Stages of An Empire and How Precious Metals Are Key

Mike Maloney talks about the birth of an empire, and how it grows. The seven stages of that cycle and how both gold and silver have played a crucial role in these empires monetary history. They have been crucial in the success of all empires previously seen.

- Video Source

Friday, September 15, 2017

Mike Maloney: The Top 10 Reasons I Buy Gold and Silver

When the average investor thinks about gold, they may view it as an inflation hedge. Or maybe as crisis insurance. Or perhaps solely as a portfolio diversifier. 

These are all good reasons to own gold—but those are always good reasons to buy precious metals. Mike Maloney’s reasons to own gold and silver at this point in history are very different than what passes as standard arguments. 

Given the monetary and economic risks present today, and the types of crises Mike believes are coming, he wanted to share his personal reasons with everyone. And he has a brand new video that details them. 

They center around a perfect storm of worldwide trends that are set to explode simultaneously—and push gold and silver into hyper-bubbles.

- Source, Gold Silver

Thursday, September 14, 2017

Mike Maloney: This Is The Peak of Fiat Currencies

Mike Maloney explains how we are at the peak of fiat money around the globe and how we will be forced into a re-evaluation of precious metals. The writing is on the wall and it is now only a matter of time.

- Video Source

Monday, September 4, 2017

Is Money The Root Of All Evil? Mike Maloney Reads Atlas Shrugged

Is money the root of all evil? In answer to that question, I had originally intended to set a world record for the 'World's Shortest Article' and simply write 'NO!', then add the video, and post it to the interweb. But that would be far too lazy, and this is far too important. Plus there's a great story behind this weeks post, so allow me to set the scene: Let's start by imagining you are in our main office...