Just The Beginning, More Losses And Social Unrest, Great Depression 2.0 On The Way

Sad but true, the worst is yet to come. We’ve yet to even scratch the surface of the financial & social losses that are to come. It’s been over two years since I started sounding the alarm via e-mails and this blog, and not because I’m some sort of psychic, but rather because the writing has been all over the walls. It just took some reading. The threat of a recession was real then, and now that it is finally here (and for over a year now), the threat of a “Great Depression 2.0″ is even more real.

There have been others that have been warning us all for much longer and I thank them for having alerted me as well. Among them were; Peter Schiff from Euro Pacific Capital and David Walker, former United States Comptroller General. Both of which continue to try to wake up the American public to the reality that is unfolding in front of us.

Nonetheless, there are still idiots and/or optimists that are saying that this recession will be all be over and done with come Q3 2009. Don’t believe it for a second. This recession we’re in is serious stuff. This is not your grandparent’s recession. This is the culmination of over 70 years of the collective mind forgetting every last piece of common sense in how to run global, government, corporate and personal finance. This time it will be much worse and it will be a depression.

Go ahead, call me what some people called me two years ago… a nut job, a Chicken Little, a pessimist, or a party pooper, but the worst IS yet to COME. Think LA Riots, think post-Katrina looting, think unemployed, homeless, hungry and angry inner city residents turning over and burning cars in protest of the sad state of affairs.

Rioters during the 1992 LA Riots turn over a police vehicle

Once that begins to happen, our government will need to, regardless of what they might otherwise state publicly, detain thousands, maybe hundreds of thousands of people in camps. All in trying to maintain law & order.

This will be only part of the social consequences from our financial collapse and the economic decisions that have led to our over consumption, under production, outsourcing, deforestation, pollution, environmental, political and societal damage.

However, we will first have to experience further losses of jobs, homes, companies, banks, local governments, retirement accounts, life savings, followed by further bail outs, followed by a deflation/inflation roller coaster ride, and finally the total collapse of the dollar (potentially being replaced by the “Amero“). I think by then a large number of people will just lose it and crack under pressure. Then we’ll have a series of people going postal, rioting, looting and all out mayhem and disorder in the streets. Certainly some places more so than others (think NYC compared to Utah).

Add to that the increasing number of natural weather disasters that we are experiencing brought on by global warming (or just the natural cycle of things – if you don’t buy the whole global warming bit) and you’ll have even die-hard atheists converting to one of the many religions that promises eternal salvation before or after suffering through apocalyptic times.

Stay safe and have a plan of action!

Chief U.S. Accountant Quits, America “Will Fall Like Rome” States David Walker

David Walker, Comptroller General of the United States, has said that our government is “bankrupting America” and is using unethical accounting worse than Enron’s. He sees “striking similarities” with Rome and thinks both [political] parties are gluttons in a spending orgy.

You must read this article:
Bernanke’s Recession

Chicken Smith View:

That article provides 11 reasons why we’re already in a recession. There are many more reasons. Just browsing through the previous posts on this blog you can find a lot more.

Gold is nearing $1,000 per ounce. Something most people last year or the year before would have told you is “unreasonable”. Most people don’t know what’s going on.

Think about it. The top United States Government accountant. Yes, America’s Comptroller General, David Walker, the guy who has access to all our government books (cooked or otherwise), has spent the past few years on a nation-wide Fiscal Wake-Up Tour trying to wake-up Americans (laymen, industry leaders, politicians & the Federal Reserve) to the fact that we’re overspending and under-saving and that we’re headed for a collapse (ala Roman Empire). That very same guy has decided to quit his job. Did he just get tired of speaking to the wall?

If that doesn’t scream “the recession is here” to you, then please carry on with your spending and market “investments” as usual (and pray that 401k will still have something in it when you need it). Otherwise, “Wake Up!” we’re in a recession and possibly headed for a Second Great Depression, and it can easily take 5 years or more to see any signs of an improvement. If you haven’t saved anything up until now, now is a good a time as any. It could get ugly.

The Economy Crisis Is Contained… Yeah, Right!

Some News Links From Contributing Editor RH:

China’s Inflation Hits American Price Tags…
http://www.nytimes.com/2008/02/01/business/worldbusiness/01inflate.html?_r=3&hp&oref=slogin&oref=slogin&oref=slogin

‘It’s going to be much worse’ Famed investor Jim Rogers sees hard times ahead for the United States – and a big opportunity looming in China…
http://money.cnn.com/2008/01/30/news/international/okeefe_rogers.fortune/index.htm

U.S. Economy: Payrolls Fall for First Time Since 2003…
http://www.bloomberg.com/apps/news?pid=20601087&sid=agPvpBGH.EX4&refer=home

Countrywide And Chase sent letters to customers last week telling them they could no longer borrow against their credit lines because the total debt on the home exceeded the market value of the property. The lender says it is using computer modeling to determine which of its customers would have their cash spigot shut off…
http://globaleconomicanalysis.blogspot.com/2008/02/countrywide-and-chase-shut-off-cash.html

Home Depot to lower 10% of headquarters staff. For now!
http://www.marketwatch.com/news/story/home-depot-lower-10-headquarters/story.aspx?guid=%7BB2D577A3%2DA185%2D4D73%2D9AAF%2D377BDC78AB6A%7D

Say It Ain’t So, Municipal Bonds Are the New Junk: Joe Mysak
http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_mysak&sid=auPmzvv3Al.g

Bush Says ‘Serious Signs’ U.S. Economy Is Weakening…
http://www.bloomberg.com/apps/news?pid=20601087&sid=aJZqcryZJIqw&refer=home

Where a recession is already hitting hard…
http://articles.moneycentral.msn.com/Banking/HomebuyingGuide/WhereARecessionHasAlreadyHitHard.aspx

It’s just the beginning… -RH

Chicken Smith View:

I know, you’re probably thinking; “boy, these people don’t let up that the sky is falling.” Well, it ain’t just us. It’s a lot of people all over the world that recognize the trouble we’re in and the uncharted waters we’re headed towards.

As you can probably see, people are only now starting to wake up to this, just as I started waking up to this towards the end of 2006, and others, much smarter than I, have been predicting a decline for much longer than I have (check out Peter Schiff). Sooner or later you’ll have to recognize it. If you don’t see the signs that we’re in a recession and possibly headed for worse, I can only think of a few excuses for that reasoning at this point in time:

1. Your wealthy – I figure if you’ve got a lot of cash coming in, and someone else is managing your money, you might not feel all the cash that’s going out. I’m choosing to define wealthy as someone who’s combined household income after taxes is above $750,000. Although if you make that amount, chances are you probably have lost some money in the stock market recently, so you must have felt it.

2. You’re a hard working schmuck and your wife handles your money – Well, here’s how I figure it; the more inflation hits us, the more you have to work, the more you work, the less time you have to stop and see what’s really going on. As the bills come in, your wife simply insists that you have to work more, ok, well maybe she’s working more too, but the point is you can’t afford to stop to smell the roses.

3. You’re a student – Everything is already expensive, you already owe a lot of money, and you don’t know any better. Keep reading and learning, these are tough economic times we’re headed towards, similar to our depression years that started in 1929 and lasted well over 10 years.

If you don’t fall into one of those categories above, then surely you must be seeing it everywhere, from food prices to heating prices, from housing crises to financial crisis, from social woes to political woes, from health insurance to home insurance, from the falling dollar to the negative savings rate. Even global weather is lining up right along the rest of our economic uncertainties to produce the “perfect storm” of a world financial collapse that is being spear headed by the U.S. Granted, unless those terrorists decide to attack us again, we’ll all survive this and things will eventually get better, but they’ll certainly get worse before we even see the light at the end of the tunnel.

Economy Fails, Lose A Turn (or a year or more)

Chicken Smith View:

One year ago on January 31, 2007, the DOW closed at 12,621.69.

Today, on January 31, 2008, the DOW closed 12,650.36. This is growth? This is cause for celebration?

So what happened to all the records that the DOW broke over the course of 2007? What happened to that glorious bull market everybody was rushing to be a part of? Nothing. It was never really there. And now we’re back to January 2007 levels. What’s next 2006, 2005, 2004?

Oh, the numbers did get to 14,000, but it was all irrational exuberance. Not a true representation of a market economy. That got left behind along with the old century. Today, it is no longer supply based on demand, rather it is demand based on supply — if you’ve got the money (or credit) and it’s available, just buy it. Who cares if it’s any good, everything eventually goes up, doesn’t it? Besides, when stocks are down, isn’t that the best time to buy?

Have you purchased eggs lately? Inflation is going through the roof! I don’t have to remind you of the housing mess, but what about the dollar mess? Or the frivolous lawsuit mess? Or the credit crunch? Or the political mess? Or the health care mess? Live in Massachusetts and can’t afford health insurance? No problem, just pay an outrageous fine for every month you weren’t insured to the Department of Revenue and at least those who don’t even work will be able to get some sort of sub-standard subsidized health care while you get taxed to death (you can thank Mitt Romney for that one).

It seems every aspect of our modern, “first-world” civilized life is taking a turn for the worse. And remember that the stock market is a trailing indicator, so that means we’ve yet to feel that pain. And that talk of a recession? Too late, we’re already waist deep in it.

What to do? You’ve got me. I’ve recommended everything from getting solar panels and digging your own water well to learning another language and exiting our currently collapsing U.S. society. The truth is, nobody knows what’s going on, nor what the best course of action is. For all I know, the rest of the world will suffer right along with us.

My feeling is that the U.S. will be in a recession and/or depression for at least five years. I’ve heard numbers as high as 15 and 20 years, which lead me to believe it can easily get to 10 years of economic turmoil or more. If the Great Depression is any indicator, we may be in this for over 20 years! According to this chart of the stock market crash of 1929, I’d say we might be headed for a big drop, followed by a “Short Recovery” followed by never-ending drops.

Head for the hills? Fuggit about it, just charge up your credit cards and hope Visa & MasterCard collapse before you do.

Employment Plunges, Credit Tightens, Gold Climbs, Market Crash Forecast, Great Depression Ahead

The behavior in what we are observing in the last seven weeks is identical in many respects to what we saw in 1998, what we saw in the stock-market crash of 1987,” Greenspan was quoted by the newspaper as saying… http://www.reuters.com/article/ousiv/idUSN0640900320070907

Citigroup Unit Won’t Take New Mortgage Bank Clients… http://www.bloomberg.com/apps/news?pid=20601087&sid=aP1Ebhaa1J30&refer=home

The utterly ugly employment figures for August (a fall in jobs for the first time in four years, downward revisions to previous months’ data, a fall in the labor participation rate, and an even weaker employment picture based on the household survey compared to the establishments survey) confirm what few of us have been predicting since the beginning of 2007: the U.S. is headed towards a hard landing…. http://www.rgemonitor.com/blog/roubini/213894

33 percent of home loans didn’t close last month. A third of home loans originated by mortgage brokers failed to close in August as investors shied away from riskier borrowers, a new survey says… http://www.mcall.com/business/local/all-mortgages.6029291sep06,0,7164270.story

Countrywide May Cut Staff by 12,000. Countrywide Financial Corp., the nation’s biggest mortgage company, may reduce its workforce by 10,000 to 12,000 in the next three months, a 20 percent cut… http://www.bloomberg.com/apps/news?pid=20601087&sid=aQhytb8fv1Tk&refer=home

LEHMAN CUTS 850 MORE JOBS: Lehman Brothers Holdings Inc., which shut its subprime mortgage business last month, is cutting 850 more jobs, mostly at a U.S. subsidiary catering to borrowers with decent credit scores…http://www.nypost.com/seven/09072007/business/lehman_cuts_jobs_in_alt_a.htm

IndyMac to Cut 10 Percent of Jobs; May Post a Loss… http://www.bloomberg.com/apps/news?pid=newsarchive&sid=azgqnpf9trLM

Don’t you just feel real sorry for gold? Look at that poor chart below and weep. …Actually weep for those idiots who cannot recognize a gold bull market when they see one. Hah! Gold will yet go where gold wants to go and perhaps where it has never been before– higher Margarita… http://www.kitco.com/ind/vaughn/sep072007.html

Gold Prices Climb As Stocks, Dollar Fall… http://www.forbes.com/fdc/welcome_mjx.shtml

Debugging Wall Street’s funky math. Big chunks of investment banks’ earnings are from assets that few know how to value. Should investors and regulators be concerned??? http://money.cnn.com/2007/09/06/magazines/fortune/eavis_level3.fortune/index.htm?postversion=2007090710

As Housing Market Cools, Far Fewer Become Agents… http://www.nytimes.com/2007/09/07/business/07agents.html?em&ex=1189310400&en=78ece3289daf0498&ei=5087%0A

America is already in a recession and the U.S. Government is flat broke to the extent of 8.9 trillion dollars. In other words, every man, woman and child in America owes $29,672 dollars in Government debt… http://www.opednews.com/articles/opedne_allen_l__070830_america_broke__2f_aver.htm

US Economy: Drowning in Debt… http://www.opednews.com/maxwrite/link.php?id=21979

American Dream Slashed Along with Home Values… http://www.opednews.com/maxwrite/link.php?id=37915

The Great American Dream still exists — in Iraq! http://www.opednews.com/articles/opedne_jane_sti_070329_the_great_american_d.htm

America’s House of Cards Economy… http://www.opednews.com/articles/opedne_michael__070814_house_of_cards.htm

Economic Armageddon Is Coming… http://www.opednews.com/articles/opedne_joel_s___070423_economic_armageddon_.htm

Bush’s Economy Is Poverty Stricken, Bleeding Jobs and Ready to Crash… http://www.opednews.com/articles/opedne_dan_meri_070524_bush_s_economy_is_po.htm

China’s Passenger Cars Leave US in the Dust… http://www.opednews.com/articles/genera_braden_g_070327_china_s_passenger_ca.htm

Chicken Smith View:

I know what you’re thinking; “how can this great, rich, powerful, generous and glorious country collapse?” Well, starting with the fact that the Egyptians, the Greeks, the Turks, the Ottomans, the Romans, the Mayas, the Spanish, the British and basically anyone that’s ever been in or part of a “great empire” all thought the same thing (even more so right before it collapsed), and then proceeding to the fact that we are facing similar historical events that preceded their demise, I think it’s highly likely that our great nation can see a reversal of fortunes in the near future.

What to do? Save your money! Have some gold and/or silver (no I don’t sell any). Consider the possibility of moving overseas (or across the border, Canada eh?). Get some useful skills such as learning to modify a car to run on cooking oil, building a solar panel, fortifying your home against intruders, digging a well in your back yard, learn another language, and anything else that can prep you for some tough economic times (which in turn can lead to some tough social times). Hey, if nothing else happens, at least you’ve got some good skills that will help you in our new world economy.

Media Outlets Taking Notice Of The Pending U.S. Financial Crisis

More Clippings About Our Economy From Contributing Editor RH:

“Its going to get worse before it gets better. How much worse, I don’t know,”
http://www.nypost.com/seven/07122007/business/hedge_horror_business_paul_tharp.htm

The catalyst for this latest dollar weakness is concern that the US consumer, for years the mainstay of the economy, could be flagging. Such worries followed evidence that the US housing market still does not appear to be finding a bottom along with news that retailers are suffering….
http://www.ft.com/cms/s/9d692cde-2fdb-11dc-a68f-0000779fd2ac.html

The Coming Crash — Winners and Losers…
LOSER: People who actually believe that Bear Stearns, Merrill Lynch, Goldman Sachs, Citigroup, Wachovia, JP Morgan Chase, etc. actually give a crap about your retirement account, you personally or your money. If you actually go out and read the news, you will see the numerous stories where companies like these have been “fined” for misusing and abusing your accounts and your money. Churn and burn baby, because if you still think they care, you need a lobotomy. The disaster underway is of their doing and they will have all the help they need from you, the taxpayer to straighten it out.
WINNER: All homeowners who are in secure industries who did not take out an exotic re-finance agreement, have no credit card or other unsecured debt, and are actually able to save money. This means having a financial plan including a retirement program which includes safe investments (precious metals, non-US government bonds, etc.) and having at least three to six months salary socked away safely in case of sudden unemployment….
http://wallstreetbear.com/board/view.php?topic=47743&post=152263

The dollar dropped to a record low against the euro as
troubles in the U.S. mortgage and credit markets continued to dampen the currency’s appeal…
http://www.reuters.com/article/topNews/idUKN1238289820070712?rpc=44

Foreclosure Rates Continue to Climb Around the Nation and Taking Major Jump in California…
http://abclocal.go.com/kfsn/story?section=local&id=5469514

Disappointing results from retailers are renewing concerns that the housing market’s troubles may start weighing more heavily on consumer spending…
http://blogs.wsj.com/economics/2007/07/12/economists-watch-for-housing-to-weigh-on-spending

After the credit binge, markets fear the crunch is on the way…
http://business.timesonline.co.uk/tol/business/economics/article2062073.ece

Chicken Smith View:
The forthcoming economic collapse of our nation is under way. What’s been predicted for so long, with so many media outlets outright denying that we’re in any danger, many of them are now starting to see what’s happening and, actually reporting on it.

Keep reading reports from around the world and do not rely on any one source for all your news. However, do learn to spot trends and market movements. The Dow Jones is obviously not a good indicator, as it is highly illogical and mainly motivated by emotions and ignorance rather than actual market conditions. Otherwise, why would the Dow Jones be doing so well, while the dollar continues to make all-time record lows?

Are companies really doing that well? Look at retail numbers, look at employment numbers. Look at entire industries such as manufacturing. Look at our debt and you’ll know all is not well. Start saving your pennies gold, as financial and, might I add, social devastation the likes none of us, not even our grandfathers who went through the Great Depression have seen, will begin affecting every facet of society.

These are new times. While we have greatly advanced in many areas such as science and technology, we as a society have not advanced in financial literacy, nor have we been as financially prudent as we should have been. Instead, we’ve been taught how to be mindless consumers with absurd levels of debt that shackle us to our jobs, yes, even those who are self-employed are shackled. The victors? Corporations and their shareholders… for the time being, however the collapse will affect many. Some will be better off, most will not.

False Market Earnings Due To Declining Purchasing Power

Why your stock market investments look like they’re doing really well, but in reality it is not what it seems:

Chicken Smith View:

Bottom line… the Dollar is losing its value, that’s why the Dow Jones went from 12,000 to 13,000 in only 7 weeks, while it took 7 years to get to 12,000 from 11,000. That’s part of the reason why inflation is currently rising at such a fast pace.

That’s also why the market will crash when people start waking up to the realities of our current economic situation.

The Coming Of The Second Great Depression

Here’s a quote from an insightful interview with Warren Brussee, author of The Second Great Depression. Read the entire interview when you get a chance.

If people had been saving, some cushion could have been found through reducing the savings amount. But people have had a negative savings rate for the last 24 months. People have been living on the edge, and there is no cushion. The economy has been carried by the money that housing put into the economy. With that source gone, and with people now beginning to have to repay their loans, we are going to be driven into a deep recession, followed by a probable depression.

Chicken Smith View:

Another brief re-cap of some of the major events that will prompt the next depression:

1. 2000 – 2003 In an effort to avoid a recession, due to several quarters of negative GDP, the Fed lowers the Federal Funds Rates from 6.5% in May 2000 down to 1% in June 2003.

2. 2001 – 2005 Housing market soars as demand for homes exceeds supply. New homes are built. A huge sub-prime mortgage sub-sector of consumers purchase homes that they otherwise wouldn’t qualify for by taking out adjustable rate mortgages (ARMs).

3. 2002 – 2006 Consumers cash out on their rising property values by taking out equity mortgages to pay for travel and non-durable goods.

4. 2003 – 2005 A huge surge in the economy results from all the spending prompted by the cash out. Excessive spending causes Americans to deplete their savings and assume more debt. Inflation begins.

5. 2004 – 2005 In an effort to reduce the inflationary effects of the economic boom caused by the housing market and the increase in consumer spending, the Fed begins to raise the Federal Funds Rate. The rate goes from 1% in 2004 up to 5.25% in June 2005.

6. 2006 – 2007 The housing market reaches its peak and begins its downward path as interest rates rise and most demand has been met. Home builders all but stop new construction. Housing related businesses begin to see unemployment due to lower sales. ARMs begin to reset and homeowners experience sticker shock as their mortgages rise by as much as 50%.

7. 2007 – 2010 The American economy goes into a depression due to the domino effect that the housing market has on the rest of the economy.

I believe the Fed interest rate adjustments were just a band-aid on what would have been normal cycle recession and we simply delayed it and made it worse. We are now facing a major depression precipitated by the fact that we no longer have any savings and now-a-days every Tom, Dick and Harry have money in the stock market. It’s no longer something the informed investor does, rather something anyone with an internet connection can participate in.

The Dow Jones Industrial Average recently rose to 13,000 in seven weeks, when it took more than seven years to reach 12,000. Capital spending is down and companies are buying up their own stock. Consumer spending is only temporarily up right now, as that will take a big hit once everyone wakes up. The price of consumer goods as well as food staples such as corn and milk are going up, that in turn, raises the price of all sorts of products that come from those prodcuts and food prices usually don’t come back down.

The best advice I can offer is to save your money, but don’t keep it in a volatile place (ie, not the stock market), have some tangible assets (ie, a home that’s already paid for, maybe gold, maybe a bio-fuel car, or solar panels), and have a plan to ride out a downturn in the economy (ie, a backyard vegetable garden, maybe some canned goods).

If history is any indicator, things should get better. I say should because there are other factors that will come into play here that have not been part of previous recessions and the Great Depression, factors such as the devaluation of the dollar, foreign ownership of US companies and US debt, and a general disdain for all things American in some parts of the world. So even if our dollar is cheap, world-wide interest in some of our products has been diminishing, so there may not be an increase in our exports due to our devalued dollar.

Signs Are Starting To Show. First Up… Banks.

British-based HSBC Bank has encountered a problem with its US-based lending division. An unexpected rise in sub-prime loan defaults.

“A growing number of debt-ridden Americans defaulting on their mortgages have forced British banking giant HSBC Holdings to increase its provision for bad loans…” -Forbes, February 8, 2007.

“The problems follow warnings from experts throughout last year that a slowing US economy and rising borrowing costs would lead to an increase in bad loans by homeowners” - Gulf Daily News, February 9, 2007

“Signs of credit deterioration from the slowing U.S. housing market have already shown up in recent results of other banks as more borrowers fall behind.” - MarketWatch, February 8, 2007

American based sub-prime lenders such as Delta Financial, Countrywide Financial, American Home Mortgage Investment, Washington Mutual, IndyMac Bancorp Inc., New Century Financial, and Marshall & Ilsley Corporation, some of which are really large outfits, are seeing and will continue to see a rise in defaults. How much of this pounding they’ll be able to absorb is anybody’s guess.

Chicken Smith View:
With such revelations from HSBC, it now becomes a clearer picture as to why their HSBC Direct Internet Savings division is currently offering a 6% interest rates on their savings account. They clearly need the money to bail them out of some really bad investments (sub-prime loans).

Remember the inverted yield curve? I mentioned it in an earlier post or a personal e-mail, regardless, this is a very important indicator of the times we are in. The simplest way to explain it is as follows; money invested for a short period of time earns a higher interest rate than money invested for a long period of time.

In general, a yield curve is not supposed to be inverted. Think of a regular savings account and a Certificate of Deposit (CD). The savings account is liquid and can be accessed at any time (provided the bank is open). Because you’re not committing to keeping your money in the bank for any length of time, the amount of interest you earn will be relatively low compared to a CD which requires the money remain in the bank for a set period of time (ie, 12 months). This is generally how things are supposed to work.

However, when the curve is inverted, the opposite is true. Hence you can put your money in a savings account and earn 6% right now or you can place your money in a CD and earn a paltry 3% over the course of a year. It doesn’t seem to make sense. And it shouldn’t, as Inverted Yield Curves, historically predict a down-turn in the economy.

This, my friend, is what I’m talking about. The signs are everywhere, the defaults, the inverse curves, the outsourcing, the job losses, the weakening dollar, the rising price of gold & gas (just wait), the drop in the housing market, the drop in construction, the loss of manufacturing, the rise in personal debt, the rise in corporate debt, the rise in national debt. It’s all happening at the same time. Each factor is pressing against it’s limits. The good times have never lasted forever, and I doubt this time will be an exception.

What to do?

I’m not telling you to head for the hills, just be aware. Save your pennies, better yet, save your pre-1965 dimes and quarters. Don’t spend your money frivolously, as a dollar devaluation will require more of it to purchase less than you can today. I’m not a big fan of the stock market, and my fear is that it will take a dive right along with the rest of the economy, so a minimal amount of investing in paper currency and stocks would be my recommendation. If you invest in anything, it’s probably best that it be a hard asset, something real and tangible, like a tangerine farm or a chicken coop (with chickens). I’m sure you can come up with better ideas.

Just realize that things are not right, no matter what the press, politicians, your friends, or some bosses try to tell you. Look for the facts. See the signs. If the banks start taking it in the rear, don’t think you’ll somehow escape unscathed.

Why Buy Gold Bullion? Or Not…

Nick Barisheff has posted an article on some gold myths and why it is important to have gold bullion as part of your portfolio to be truly diversified [and, might I add, prepared for the forthcoming downturn in the world economies].

Excerpt:
“Gold will continue to increase in purchasing power as long as its inflation rate (mine supply) is lower than the increase in the money supply. Mine supply increases by about 1.5% annually, but has recently started to decline because new sources are becoming more and more difficult to find. In sharp contrast to gold “inflation,” most central banks are now increasing money supply at double-digit rates.”

Full Article:
http://www.resourceinvestor.com/pebble.asp?relid=28607

Chicken Smith View:

Gold bullion is not your common equity share. It is a tangible asset that will still be there after the market and world currencies crash. We’ve had a long bull ride for some time now, but nothing lasts forever. We have reached the peak in some markets and are about to reach it in all the rest. When the bottom is pulled from under us, gold will become the default currency… because it’s real.