Clive Maund - Tue, Aug 2, 2016

Gold and Silver, Guns & Ammo

Precious metals expert Clive Maund says markets are becoming increasingly chaotic, and he advises investors to hang on to their gold and silver.

Gold and Silver

Markets are becoming increasingly chaotic as we move deeper into the fiat endgame. It is far too late to permit the corrective forces of deflation to purge the system of excesses. If this were allowed to happen the system would rapidly go into a state of "cardiac arrest" leading to a credit lockup, ATMs not working, the food distribution system breaking down, widespread rioting and looting, martial law being imposed and the growing risk of the citadels of government being stormed in outright revolution, so that much of the Western world ends up like Venezuela right now.

Faced with this prospect the only logical choice for those in power is to keep the game going as long as possible, and at this late hour, that involves the use of "helicopter money."

Until recently the concept of helicopter money has been dismissed as an absurd joke, but now it is openly being talked about. Its purpose is to stave off the ever-increasing threat of a credit lockup caused by the exponentially expanding debt-and-derivatives monster, which would involve spiraling interest rates leading very quickly to a deflationary implosion. For obvious reasons this is to be avoided at all costs. The apparent impediment that helicopter money is illegal in some countries can be swept aside by the simple expedient of changing the law, which will be deemed necessary in the face of the impending emergency.

The slow-motion global train wreck that we are now witnessing is the direct and inevitable consequence of the decades of irresponsible profligacy unleashed by the abolishing of responsible money in 1971, when the gold standard was abandoned under the Presidency of Richard Nixon. This was a far worse crime than Watergate. And it is not just governments and central banks that are responsible for the mess; many ordinary citizens are also to blame because they voted for politicians who promised the Earth while pushing the bill off onto later generations, and did not hold bankers and politicians to account. For example, Nixon should have been impeached when he eliminated the gold standard.

Since we are now on the threshold of entering the twilight world of helicopter money, what will be the result? While it will buy time for bankers and politicians by maintaining systemic liquidity, quite clearly it will dilute the purchasing power of money to an increasingly extreme degree. The result will be robust inflation leading eventually to hyperinflation. The collapse and widespread poverty and privation that would come about very rapidly as a result of a deflationary implosion will still be the end result. It will be a more gradual but equally inevitable outcome.

Those of you who know your history will be aware that economic depression and major wars are frequent bedfellows. For example, the Great Depression of the 1930s led to the Second World War. You don't have to listen hard to hear the war drums playing steadily in the background, and in some countries they are already very much in the foreground. Two reasons for this are that the governments of economically afflicted countries see war as a means to stimulate their economies—particularly those with a big arms industry—and it is also as a convenient way to deflect public anger caused by economic privation toward an external enemy.

When the Cold War ended in 1989, the world could have entered a golden age of peace and prosperity, since there was only one superpower and no real enemy. A huge peace dividend could have resulted, since defense budgets could have been reduced dramatically and the freed funds put to more productive use, but clearly this would have resulted in much lower profits and slashed jobs and salaries at the likes of General Dynamics, Lockheed Martin, Northrop Grumman, etc. Since these companies have massive clout in Congress via the lobbying system, it was not to be. When you look for the origins or root causes of wars, the simplest and most direct way to trace them is to ask the question: "Who stands to gain?" When we do this, we can quickly pinpoint the origins of the current mess and mayhem in the world, which is moving us quickly in the direction of major wars.

The two principal originators and drivers of the present mess and mayhem in the Middle East are Israel and the U.S. military-industrial complex. Israel wants to achieve suzerainty over the region—to create a greater Israel extending from the Nile to the Euphrates—by smashing up and Balkanizing the Arab powers all around it.

straightforward because Israel has a controlling influence on U.S. politics and the military-industrial complex. By instigating wars it justifies its existence and makes windfall profits when large quantities of ordnance are used up. Those who doubt the influence of both Israel and the military-industrial complex over US politics and policy need look no further than the recent nomination acceptance speeches of both Clinton and Trump, who both paid homage to Israel and the military—mandatory if you are to have any chance of becoming president and remaining president.

Europe is set to pay a very heavy price for playing the role of lapdog or sidekick to the U.S. in respect to its actions in the Middle East and its economic and military vendetta against Russia (and now China). Europe is already paying a very heavy price, as the U.S.-instigated wars in the Middle East are spinning off vast quantities of dispossessed refugees who are flooding into Europe in search of peace and prosperity. The underlying reasons for Europe's sad decline into its increasingly parlous and increasingly dangerous state are set out in Is Europe Doomed by Vassalage to Washington? While this article may initially seem extreme, it makes perfect sense when you have a grasp of the Big Picture.

Larry Edelson of Weiss Research, who has studied the subject extensively, has pointed out for years now that there is a major confluence of war cycles peaking in 2019- 2020, so in a sense what is going on is fated or inevitable. And he doesn't mince his words when he says that it will be "hell on earth" in many places, which it already is in Iraq, Libya and Syria. The Mideast is already well along the road to war and anarchy, and now Europe is being destabilized, with the "Muslim invasion" and the pending breakdown of the European Union, and the needless provocation of its big and powerful neighbor, Russia.

You can see the drive to war in so many theaters, with a big nexus for future conflict being the campaign currently being waged both economically and militarily against Russia and China. Russia and China are standing up to the Empire (U.S.), and are thus perceived as targets to be taken down. They are building up their respective military capabilities and planning to conduct trade outside of the U.S. dollar system, and are refusing so far to bow before the power of the Empire. This has put them on a collision course with it. If you asked the ordinary man on the street if he wants to go and kill millions of Russian or Chinese people, the answer would almost certainly be "No," and the answer would undoubtedly be the same in the other direction, if you asked the same questions of Russian or Chinese citizens.

But the elites, with their power games, have other intentions. The massive and pointless death and destruction caused by the First World War was the handiwork of similar elites, who sat in their war rooms and sent the ignorant masses off to go and get slaughtered. If the First World War foot soldiers had not be so hopelessly ignorant, na´ve and servile, they would have flat refused to go and there would have been no trench warfare. The price of ignorance and stupidity can be very high. The economic and military chess game currently being waged by the Empire against Russia and China is actually fascinating to watch. First, in violation of agreements and treaties made with Mikhail Gorbachev and other Russian leaders, NATO advances into Eastern Europe. Then the Empire organizes and facilitates a pro-Western coup in the Ukraine to install a puppet government on Russia's western flank. Next, when Russia reacts in a modest manner by moving into the Crimea, whose citizens are pro-Russian, partly to secure access to its only warm water port in Sevastopol, it is declared to be an aggressor, and economic sanctions are imposed, with Europe playing the part of poodle and very foolishly joining in, and all the while Russia is demonized and portrayed as an aggressor in the Western media, in order to correctly orient the largely stupid Western public.

Lately, the provocation has been stepped up even more with missile batteries being moved right up to the Russia's borders, and war games being conducted on its flanks. If this gets out of hand, and it could well do with the war cycles peaking in 2019-2020 as Larry Edelson states, then there is the risk of a large swath of Eastern Europe being turned into smoldering ruins—and don't think it can't happen—if you do, try asking the old survivors of Dresden or Hiroshima if they think it can't happen. If you live in Eastern Europe it is definitely worth considering getting out before too much longer. People are as primitive and stupid as they have always been when it comes to war situations, and no amount of technology will change that.

Hard on the heels of the stepped up campaign against Russia, we have the campaign against China, with the dispute over the South China Sea providing the convenient excuse to pile on the pressure. If you take the trouble to look at a globe, you will quickly appreciate that what goes on in the South China Sea is none of the U.S.' business, but that hasn't stopped it threatening China with its powerful military, and attempting to exercise a controlling influence in this theater. This is actually a very dangerous game that the U.S. is playing. China is not some dumb African or South American banana republic, Chinese military strategists are very sophisticated and intelligent—if you are going to play geopolitical war games with China you had better be good at it. Those who are familiar with Sun Tzu's "The Art of War" will know that the usual crude approach of threatening to bombard it with tons of ordnance will probably backfire, especially as, aware of the growing U.S. threat, the Chinese have fast tracked the development of some very powerful weaponry in recent years, like a surface-hugging supersonic missile that can strike an aircraft carrier before it even knows it's being attacked. The stakes involved in this theater are set out in the article "Is War Inevitable in the South China Sea?"

Additional moves in this chess game have been made in recent months, with the U.S. chummying up to Vietnam and India, and organizing arms deals with them, designed to turn them into missile bases aimed at China, and to net additional profits for U.S. arms companies. You would think that Vietnam would have learned enough about the U.S. during the 1960s and 1970s, especially as they still have 26 million bomb craters to remind them of these times, some of which are usefully employed nowadays as duck ponds. As with Eastern Europe, in the worst-case scenario, Vietnam, which is a lot closer to China than the U.S., will be incinerated if it continues to play Washington's game.

On the Home Front, in the U.S., the government has militarized the police, the better to control the population when the economy deteriorates, if they should try to revolt, and established a network of FEMA camps in which to incarcerate malcontents. Currently, in an effort to concentrate power further and render the population more impotent, they are moving quickly on gun control, using the excuse of the spate of apparently senseless gun attacks.

Ironically, the hegemonistic plans of the elites are more likely to be upended by the rugged individualism of Texans than the obsequious and servile governments of countries like those in Eastern Europe or Vietnam. Texans are much less likely to bow to the demands of Washington, and they are armed to the teeth and know their country, and in a good number of places the police will refuse to open fire on their own people, so unless the government plans a "scorched Earth" policy of blitzing the State with heavy ordnance, they might find themselves backing down.

If the economy deteriorates dramatically, then ordinary citizens are going to need their guns more than ever, to defend themselves and their families and property against intruders, who almost certainly will be armed. In this situation the police are virtually useless. Even with the best of intentions, they are not going to show up for at least 20 minutes, and more likely half an hour or more—and a lot can happen in 20 minutes. So if you have got guns, hang on to them, and equally important make sure you know how to use them. Of course there will always be nut cases who go on the rampage and massacre people, but that is not a reason to remove people's ability to defend themselves, as enshrined in the U.S. Constitution—by the same logic, would you ban knives because people get stabbed?—of course not.

It's topical to mention the Olympic Games here with the latest ones set to begin in a Rio in a few days. Those of you with even the minimum of reasoning capacity must have wondered at what underlies the obscene expense of this cyclical farce, where cities are redeveloped and enormous infrastructure built, all for the sake of a few weeks of sporting activities. In Brazil there are really extreme contrasts as giant stadiums are constructed at vast expense right next to sprawling slums. Both the Olympic Games and now the football World Cup are major "bread and circuses" events, which serve two purposes from the elite's point of view; one is that they serve to distract the masses and keep their small minds occupied with the trivial details of sporting activities, so that they have less time to think about what a raw deal they are getting, and the other is that since the masses are paying for the whole show anyway through their taxes with the low paid working classes undertaking all the toil of construction, the elites can make even more money out of it through lucrative deals for the companies involved in planning and construction and TV rights, etc., which they control. The athletes, like the fans and the taxpayers at large, are simply unwitting and expendable pawns.

As "helicopter money drops" become established as the only way to keep the economy from imploding, inflation must eventually ramp up in the direction of hyperinflation, so that everything gets progressively more expensive. In this situation gold will and must become the money of choice, because it has intrinsic value and holds its real value no matter what. Here it is vital to understand that gold is not just a commodity, it is real money that has been used throughout the ages to give substance to paper money, which in the absence of gold is just worthless fiat. The effect of the accelerating inflation will be to funnel ever more money into gold and silver, as those wishing to maintain the value of their savings will realize that they need to front run further depreciation in the buying power of money. The upward squeeze on the prices of gold and silver will be magnified by the fact that the supply of physical gold and silver is finite and limited, and once investors and savers realize that gold and silver are appreciating in price beyond the current rate of inflation there is likely to be a stampede into them that drives a parabolic ramp the like of which has never been seen before, dwarfing the run-up in the late 1970s.

Conclusion: hang on to your gold (and silver), and hang on to your guns, and make sure you know how to use them. Depending on how things pan out there may be a significant correction in gold and silver soon, which COTs are indicating as likely. If so, use it as an opportunity to build positions. Long-term, the outlook for the precious metals could not be better. There is a risk of major wars breaking out over the next several years. If living in Eastern Europe, you may want to consider relocating.

It is understood that this article is likely to be perceived as gloomy or negative, particularly by those who cannot see past the smog of propaganda that is continually pumped out by the Western media, but in reality it is simply an objective and dispassionate assessment of what is really going on.

Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years' experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.

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