Another vicious week of volatility… I am not sure if it is worse that the market is swimming in uncertainty or that it appears the market is waiting for a catalyst to send it up or down. When scanning the world it is hard to see where the good news will come from that will propel the market up. I know that recent history shows that if the Fed comes out and buys bonds we may get a shot up for a little while. The recent announcement of “Operation Twist” did not impress the markets as the markets were looking for more support.
Obviously, news can come from anywhere, but whatever the news or event, it would have to overcome the heavy weight of what appears to be a pending disaster in Europe. Really, the disaster in Europe has been set in motion.
The government does learn from its mistakes, but it is more-times-than-not too late to act. Below I have provided some color commentary from our (corrupt?) government and quasi-government officials:
“That day the U.S. announced that the dollar would be devalued by 10 percent. By switching the yen to a floating exchange rate, the Japanese currency appreciated, and a sufficient realignment in exchange rates was realized. Joint intervention in gold sales to prevent a steep rise in the price of gold, however, was not undertaken. That was a mistake.” – Paul Volker former Fed Chairman regarding events in 1973
“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.” – Alan Greenspan Gold and Economic Freedom – 1966
So, just as Volker wishes he had intervened in gold when the dollar was devalued to the Yen sometime ago, Bernanke and the global bankers attacked gold 4 minutes before the Swiss devalued their currency a few weeks ago. I assure you global central banks and commercial banks are desperate to keep their charade going, but it is too late. The world is awash in debts and currencies that are being destroyed to hide it.
The bottom line is that rising gold prices let people know that something is amiss in the world of currency. If you are destroying a currency, gold will be screaming the message. So, it is safe to say that gold is like central banker kryptonite. The problem our disingenuous central bankers face is that they have made a 40+ year mess in debts and are desperate to not have anyone notice. Even though the central banks are still toying with the metals, as they have for some time now, the metals (as they have said so themselves) is the only protection out there.
Do you have an investment strategy that seeks to protect your portfolio against volatile economic conditions? Call me to schedule a free review of your current investment portfolio – 913.693.7918.
John P. Chladek, MBA, CFP® is the President of Chladek Wealth Management, LLC, a fee-only financial planning and investment management firm specializing in helping families and couples who are not yet retired realize their financial goals. For more information, visit http://www.chladekwealth.com.