It's Getting Serious

Generally speaking, we try to offer information for people seeking to understand what's happening in the world and how to protect what they have in these perilous times.  Our position is simple: the US, and parts of Europe, are in the early stages of an inflationary depression.  Asia, assuming they focus on being less reliant on the US and Europe as customers, are in a recession.  The dollar, as reserve currency of the world, is in trouble due to profligate spending and overextension.  We are in a period where we will revert back to more equilibrium in the world, and the transition will be very painful.  It is likely that many will lose everything in this transition, which will take a decade or so to play out.  The transition time may include wars, starvation, and most certainly increased government oppression around the world.

We use the technicals to help navigate the financial storm, but the reality is that over time, holders of most fiat currencies are in trouble, notably Americans.  As we enter a time of incredible strife and conflict, it will be imperative that intelligent people spend time preparing for what's to come.  Food, water, energy, clothing, shelter and protection should be the key focus for people just starting out.  Have several months worth of living expenses in cash.  After that, just note that cash in all of its fiat forms is being destroyed through the actions of banks and the government.


Gold is, in our opinion, the single best protection in this environment--physical gold in your possession.  After that, the goal should be either to diversify assets into things that are guaranteed to hold value (tangible assets) or to take appropriate risks for capitalizing on the chaos that will ensue.  Yes, it sounds terrible to capitalize on destruction, but the destruction is going to occur whether you capitalize on it or not.  You can either benefit from it or suffer from it.  That is a personal choice.

Yesterday, we wrote a piece on currencies and inflation.  Last night, we reported on the breakdown that in the dollar and its imminent test of support at 76.  We've reported many times that there's not much support for the dollar between 78 and 72, with the exception of minor support at 76.  We have touched and bounced off of 76, consolidated, and last night we reported that we would test 76 this week again, and that gold would break through its resistance at 1020.  We didn't know it would happen quite that fast, but it occurred today.

We're at an important stage.  A drop from 76 to 72 in the USDX is a major drop.  Asset prices will rise quickly in response.  The 72 range is a critical range.  If the dollar breaks down below 72, the risks are substantial. 

If you own no physical gold at all, you should consider purchasing some on any pullback.  Email us if you'd like the names of some possible suppliers--we have no affiliation with them other than being customers ourselves. 

We will be watching the 76 closely and reporting on it.  Gold will react opposite the dollar.  It may lead the move, but gold will not truly take off until the 76 level is broken through.  That may happen at any time.  You can see the inverse correlation between dollar-based asset prices (including gold) and the dollar itself.  Stocks today have shot up on lousy fundamentals as the dollar has taken a dive in overnight trading.  This is a serious time.

More on gold, the dollar, and gold stocks later today.