I wrote an article way back on August 7th 2010
titled “To Infinity...And Beyond”, funny
enough this was days before other pundits began coining the term QE to
infinity. Funny how that works.
I talked about in that article and in many others
that it was a certainty that central banks around the world would have to
print so much money in order to keep the system solvent, ie
QE, that it would devalue all the major currencies to a large degree and it
will hurt every single person out there who has not invested in physical gold
and silver as a mechanism of protection or insurance as well as a method of
Huge news this morning came after a dull day
yesterday when I was Tweeting about something big coming down the pipe it
seemed due to the dull market action. (You can follow me on Twitter at iTraderz or find me at Warren Bevan)
There is a saying that one should never short a dull
market and those who did yesterday learned that
lesson hard and quick.
The news was that the worlds
largest central banks including the U.S. Federal Reserve, the Central Bank of
Canada, the Japanese central Bank and Switzerland have allow joined forces to
basically bailout the world.
I don’t really know why the IMF isn’t
just stepping up to the plate since they are funded by these Central banks
anyhow but this news is even worse since it’s a much clearer to regular
folk now. Most citizens understand their Central Bank and their role,
while the IMF’s role is quite murky to most.
The fact is that these banks will print dollars to
bail out many, many countries and financial institutions who
get into trouble.
This will increase the dollars in circulation beyond
my imagination, well maybe not, but it will reduce our purchasing power much
more quickly than I’d thought would occur.
This may seem like a good move as commodities,
markets and stocks are ripping higher today and this certainly will be great
in the short-term and likely even in the longer-term for markets. But
this will hurt us and our purchasing power in the medium to longer-term.
Let me explain.
As any inflationary episode occurs the corresponding
stock markets soar. The shares won’t necessarily be worth more in
terms of purchasing power, but they will be much higher on a nominal basis.
High stock prices are only good if the currency they
are valued in remains stable and value does not erode.
Basically, we’re screwed now, and even though
we knew it was coming, it’s just now publicly admitted knowledge.
Gold and silver will preserve purchasing power
against any currency debasement. The Central Banks I listed above are
likely to now devalue their currencies in tandem, taking many of us down with
I’m not sure what currency is safe these days,
but I do know money/gold is and will remain safe.
I have and still do suggest owning a hefty
percentage of physical precious metals while owning some high yielding
dividend stocks along with a basket of great mining companies and also
short-term swing trading a smaller percentage of the total portfolio.
It’s working for us and it’s sure to
work going forward now that we “know” what’s in store for
the world in term of monetary policy.
I’m feeling pretty under the weather today so
I’ll cut it short and keep it simple.
Enjoy the rest of your week and consider the big
picture and what types of investment strategies suit both your personal view
of the world economies and your risk tolerances.
I dare say the lower your risk tolerance, the more
physical precious metals you should own.
That may seem backwards from anything you’ve
heard from 99.9% of the financial advisors out there and I am not a financial
advisor, just a keen market watcher and I have my own opinion formed from
years of study. I don’t read reports from upstairs and
regurgitate them verbatim.
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