Thursday, September 15, 2016

Questions from a paid subscriber

After watching the Bill Bonner vid I linked to yesterday, a subscriber to my paid site asked:

Was reading your article about Bill Bonner and have some questions.  

Do you have a recommendation where to buy gold? I'm in Canada so will have to be online purchase if it is an American company. You suggested to keep as little money in the bank. Would it be ok to keep most of it in an investment account since it is insured for up to $1 MM ? You mentioned house prices will drop in the crisis, but people need somewhere to stay, so is investing in a rental property now a good idea ?

I am not well versed in these subjects and its great you share your thoughts on your blog :)

Thanks again

First, thanks to that person (you know who you are) for asking these questions because they are very basic and many people probably have the same questions. 

My responses:
Do you have a recommendation where to buy gold?
- I have bought all my gold through Monex.  They have been the best price, shipped.  This is NOT an endorsement for them!  Why would I withhold this?  Simply because they are part and parcel of the fractional reservation of physical gold. 

You know what it means for the dollar to be fractionally reserved, right?  In case there is still a question, it means that for each dollar authorized to be in existence by the fed, at least nine dollars are legally allowed to exist in the economy.  Each of those debt dollars is said to be fractionally reserved.

Many gold dealers do the same thing with gold when you store it with them.  For each ounce of real physical metal that has been legitimately mined from the Earth and refined and then placed on deposit with them, they write contracts to loan out 9 troy oz of gold.  They get paid interest for these loans of vapor gold. All of this is totally legal yet totally immoral and corrupt.  It is the original something for nothing scam. Loaning out something that you never had is essentially the naked short selling of that asset.  This is an illegal practice that happens all the time in the stock market due to weak enforcement but it is actually legal for Monex or banks to do the same thing with gold or greenbacks respectively.

It is no different than gold smiths of the 1600s who had vaults and thus people asked to store their gold there.  The smith would accept the gold and give the person back a paper marker or ticket for the gold.  Like the Chinese laundry, no ticky no laundry.  In other words, the ticket was the only way a person could reclaim their gold.  This worked for the goldsmith in three ways:
- some people would lose their tickets or die without giving their tickets to heirs.  Their gold would then become the property of the goldsmith.

- most people would leave their gold on deposit for long periods of time, perhaps even unto retirement.  The goldsmith would then loan their gold out for interest without their permission in the hope that not everyone whose gold was loaned out would all come back to claim it at once.    

- it was work to go exchange ticket for gold and gold was not as easy to carry as a ticket.  So people would trade the tickets back and forth for goods and services without taking physical possession of the gold per each transaction.  At first this scheme was an implementation of actual gold backed paper currency.  The problem is that since nobody would regularly audit the goldsmith by collecting up all the tickets and trading them for all the gold to make sure that there was enough gold to cover the tickets, the goldsmith would eventually let greed get the best of him and use this fact to create tickets from thin air which had no gold backing.  He would go spend them into the economy and live a better than deserved lifestyle.  It was not until the people self organized and got suspicious about this and then stormed his vault that the goldsmith was proven to be a con man.

This storming of the vault is known as a run on the currency and the main reason for it happening is a loss of confidence in the issuing authority.  Do these words sound familiar?  They should because I have written many times that loss of confidence in the issuing authority is always the true cause of hyperinflation.  Once the con man is found to be a con man, his paper receipts lose all value and all value imbued upon them by the metal backing reverts to the metal backing.

The reason I know so much about our fake money system is that I understand history.  There is nothing new under the sun except the history that you don't know.  Our fake money system is just the modern version of the 1600s gold smith scam.  Another thing: I have Jewish blood in me.  I have the nose and the innate sense about numbers (as well as the name) to prove it.  I have been to Israel many times and I really like most of the Israelis I have worked with (I used to work for an Israeli company).  So I'm not trying to be an anti Semite here, but consider this: people's last names used to be derived from their occupations and Jews have been JEWelers since time immemorial.  The name Goldsmith (and Goldman, Goldstein, Goldberg, etc.) is highly identified with Jewish people. 

Gold smiths are people who work gold into jewelry.  No, it is not a coincidence that these words are as they are.  Jews know how money works because they are good with numbers and enough of them have human frailty of greed that when you combine this with their goldsmithing past they, as a people, have the more than a little deserved reputation of being con men.  Unlike the Romans who would just walk up and kill you to take what is yours for themselves, the Jews will trick you out of your wealth and leave you smiling about the deal you got even though you got screwed (in truth a form of enslavement).  When you see a money scam going down, look for a very smart, very people savvy Jewish person behind it.  You won't always find one but the odds are high that he's in there somewhere.  Again, everyone has their faults and no I'm not calling all Jews crooks and I'm not saying anyone who isn't a Jew is honest as a result.  But neither am I intimidated from saying aloud what I know to be the truth based on years of observation from afar as well as at close range.

Back to the point, Monex has a program called "Atlas".  You buy some gold from them that, instead of delivering it physically to you, they supposedly store for you in their vault.  They then allow you to borrow as much as 5x as your base gold deposit in order to speculate in the metals markets.  This fake gold is fractionally reserved at 5:1.  ANY and I mean ANY fractional reserve system is a scam.  It is a Ponzi.  This is why I cannot "endorse" Monex.  So far they have always delivered my metal in a reasonable time frame from payment and I would currently use them again.  But I also know that they are at great risk with eventual assured collapse because of their fractional reserve leverage.  If people suddenly demanded physical delivery of their gold because they lost confidence in the authority supposedly storing it on their behalf then I suspect Monex would collapse and anyone who paid for gold but did not yet receive it would lose everything.

We are not likely yet at the stage where this will happen but at some point it probably will because the gold is the only monetary asset of any real value in the system.  There are plenty of valuable commodity assets in the system but gold is money and nothing else is.

Would it be ok to keep most of it in an investment account since it is insured for up to $1 MM ?
For those still asking this question I recommend listening to the vid again because the specific advice is clear: REGARDLESS of the number of guarantees, promises, assurances, and insurances that are used to keep people from losing confidence, the whole system is a God Damned con game and their promises will, come the collapse, count for nothing whatsoever AT ALL. 


Because they have loaned out more than what exists.  There is not enough fiat currency to make good on any of the assurances or insurances.  It simply does not exist.  What is not possible will not happen.  The banks will close and nobody will get access to their money because THE MONEY IS NOT THERE AND NEVER WAS in sufficient quantity to repay all the Marks and Patsies who stored their wealth in the system.

I do not care what kind of bullshit "iron clad" promise is made to you!   And I do not care who it is that makes the promise either.  It will be as a whisper in a crowded super bowl stadium when a touchdown is scored in the 4th Quarter!  In other words, it will simply be lost and forgotten.  Those who are supposed to protect us from such theft ARE ALL IN ON IT whether they understand it or not (some are "captured" by the system).  They will be of zero use during a true existential economic crisis AKA "currency event".  This almost happened in 2008. Watch this vid as an actual senator explains it to us after the fact.

The fix to the 2008 crisis was to make more promises.  More accounts would be covered by the FDIC "insurance".  And each account would be covered to 250k instead of 100k.  Other unkeepable promises were also made in order to keep people from losing confidence in the con and I suspect just as many Roman style threats were made at the same time.  But these did not fix anything; they simply kicked the can down the road to eventually blow up into an even bigger explosion.  IF the kettle is boiling over and your fix is to wrap a chain around the lid to keep it down, how long until the pot itself explodes in an even bigger mess than could ever have happened by just letting it boil over?

An explosion is coming.  I don't know when it will occur but its coming.  100% for sure.  As Bonner states, mathematically assured.  When it comes it will, as Bonner explains, change everything.  As Mike Malone says, it will be the greatest transfer of wealth in history.  Wealth always transfers from the dumb/asleep/trusting/unaware people to the smart/awake/alert/fully aware people.

In every crisis, possession becomes 9/10s of the law.  If all you possess is a CLAIM on a real and actual asset, you will get stiffed.  But if you hold the physical asset itself and are ready willing and able to defend your possession of it then you will retain your wealth at a time when everyone else loses theirs. 

Is investing in rental property a good idea?
In short, no.  You will have overpaid for the property and its value will go down because rents will collapse.  Yes, people need a place to live but landlords do not set the rent price!  The renter market does that.  Just because people want something does not mean they can have it.  How many homeless people "need a place to live"??  The answer is 100%.  So how come the number of people living under bridges just keeps growing and growing?  It's getting to be an epidemic here in Austin.  Just needing a place to live does not mean you will have the money to pay today's prices.  And so rents will collapse, just as Bonner states, right along with real estate values.

So to be clear, my view is that we have a supernova economy, a term I have been using for a long time before I even began blogging.  It means first a deflationary collapse followed by a period of massive or even hyperinflation. This is not a new idea.  Its all about the history that most people simply do not know.


Augustine said...

Indeed, everyone needs a place to live, but not at any price. If all one can afford is zero, landlords will prefer to avoid the wear and tear and pain in the neck and rent property to no tenant whatsoever. That's when bridges become tenements.

Indeed, for almost 20 years the last place I had seen people living under bridges was my home country. Until a couple of years ago, here in Austin. The third world just got a tad closer.

PS: Provident Metals is merely a dealer, though it partners with storage and IRA custodians.

The Captain said...

Problem with holding unrented properties is that they are not without holding costs. Even without government this can add up quickly but then governments have also been known to raise property taxes in use as a weapon against those who have but who will not share at a lost.

"We're going to spread the wealth around"

Augustine said...

Very true. But when the state forced rent controls back home, assaulting property rights, there were many empty properties all over town, as well as slums under bridges.

The laws are nice on paper, but the one enforcing it, especially when he needs a place to live, can be easily persuaded to look the other way when he moves into a nice apartment for a generous rent.

IOW, when the economy collapses, it's not the only thing collapsing in society. Expect the laws, the mores, the culture to collapse alongside.

The Captain said...

The laws and mores that you mention are already little more than a polite facade which is wearing thin and quite threadbare in many places.

Still, I agree. The false prosperity of the fake money is alluring even to the beasts of society; it contains them and restrains their activities while it is in effect. After it goes bad they want to make up for lost time and the pickings become easy.

The fake money also teaches many the incorrect idea that society is somehow nice and benevolent when in fact history shows it is a slave master and always will be. Much of society is, at its heart, one man trying to enslave others. When the veil is lifted and the lie is exposed it thus comes as a psychological shock to those who bought into the "It Takes A Village" centralized socialism bullshit. Addiction to the Mammon Money weakens the player.

A person's best long term survival plan always was and always will be self sufficiency IMO.

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