Greg McCoach Says Keep The Best And Dump The Rest

Source: Kevin Michael Grace of The Gold Report (10/9/13)

Greg McCoach, publisher of Mining Speculator newsletter, is not ashamed to admit he has taken a big hit in juniors in the last couple of years. What he has done in response is what he advises all investors to do in this interview with The Gold Report: Get rid of the also-rans and keep and build positions in those companies that have what it takes to gain in multiples when the market recovers. And he suggests six companies that could do just that.

The Gold Report: You wrote recently, "The 2008 crisis will pale in comparison to what is now on the horizon." Given that the 2008 crisis nearly destroyed the world economy, how bad will the next crisis be?

Greg McCoach: The derivative issues were never fixed after the last crisis. In essence, the laws were changed so that the banks didn't have to keep derivative liabilities on their books. That way, bank stocks could soar again. But the banks have acted even more recklessly since 2008 and are now in bigger trouble. The recent White House meeting with all the big financial players should be a warning to investors that something big is about to hit. The media touted this as a meeting to discuss the debt ceiling, but I would say it was about the crisis that is about to envelope the big banks again. Barack Obama didn't run that meeting, JP Morgan Chase ran the meeting and told everyone what was coming. The banks don't have the capital to cover their interest rate derivative problems that are as big as the Pacific Ocean. I would tell investors to expect ten times worse conditions from what we saw in 2008.

TGR: I've read that even if only 4% of the derivatives held by the banks are at risk, and only 10% of that goes south, it would completely wipe out the net worth of the top five banks.

GM: At this point, the acceleration of what I consider tyrannical measures on the part of the U.S. government has reached such a degree it's obvious that something is coming. Why would it buy billions of rounds of hollow-point ammunition? Why is it buying millions of ready-to-eat meals? Why would it take all these extra security measures? Obviously, the U.S. government knows more than the general public does and it reveals something is wrong and the government is worried about it.

TGR: We had this situation after the scandal with HSBC Holdings Plc (HSBA:LSS; HK5:HKG) where the U.S. Department of Justice admitted that criminal acts were probably committed, but prosecution would be unthinkable because the big banks cannot be allowed to fail.

GM: Well, that pretty much tells the story right there. The bureaucrats, Rebooblicans and Dumocrats, as Jim Willie says, don't represent the people of America anymore. They represent themselves and their elitist banker puppeteers. They're trying to control the message and all the outcomes. It's a train wreck in process, but you have to tip your hat to them—they have been able to keep it together for so long. We could have experienced the end game at multiple occasions in the past 12 years, but it now seems to me that the limits of their good fortune are quickly coming to a close.

If you're just watching CNN and FOX News, you're oblivious to what's really going on. But if you're a thinking person, you should start getting together food storage and get your investments in line for the major problems ahead. I can't tell you when it's going to happen because I don't have a crystal ball, but it's not a matter of if this is going to happen; it's just a matter of when.