As the West's terminally ill economies lurch towards their final collapse, these hollowed-out, debt-saturated economies would (will) either crash under the weight of their own insolvency, or our governments will create a hyperinflation death spiral in a last desperate attempt to avoid that bankruptcy event.
While both paths represent utter, economic suicide, the road to ruin is much different between these two scenarios. This has severely limited the investment options and strategies for any prudent investor.
Forced not only to "play defense" with our investing but to prepare for two more-or-less opposite events has made precious metals the one asset class that can protect investors from either of these fates.I've explained on multiple occasions why precious metals will outperform other asset classes in both a debt-default crash or hyperinflation-spiral scenario. The purpose of this piece is not to repeat that analysis but to point out that as of this moment the "crash" scenario has become not only the most likely scenario, but an imminent event. For those who have been paying attention recently as the West plummets deeper into depression and the global economy teeters, the news that came out Thursday was enough to send shivers down one's spine. On a single day we hear that Europe's interest rates have descended closer to the zero-percent graveyard already occupied by Japan and the U.S.; China has slashed its own interest rates again; and the (ridiculously inflated) U.S. ISM service sector measurement has reached its lowest level in 2 ½ years. Each of these news items has dire implications, and so I'll spend a moment dissecting each of them. As I have said, any fiat-currency produced at zero cost (i.e. with interest rates set at 0%) is worthless as a basic tautology of logic and arithmetic. There can be no possible debate or equivocation here. Just as with the yen and the dollar, the euro now lurches much closer to the same worthless status. Meanwhile, we see China, the growth engine of the 21st century global economy, again lowering its own interest rates. With China's one-year deposit rate on the renminbi now set at 3% while the one-year lending rate is now at 6%, China's interest rates are still sane (unlike the West) and its own paper is not (yet) officially worthless.
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