James Turk continues:

“Gasoline prices are also holding their own, and the situation here in Europe is just as bad.  As the European economy continues to head south in a deepening recession, today it was reported that inflation in the eurozone in September hit a 6-month high.

Everybody who lived through the 1970's will immediately recognize these conditions as stagflation, which is what it was called back then....

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“A poor economy and rising prices sharply reduced American standards of living in the 1970s.  In fact, the numbers show that when adjusted for inflation and dollar debasement, American standards of living, as measured by disposable income, actually peaked in 1973.

Think about that for a moment, Eric.  That is almost four decades ago.  I think it is a record, but obviously not one the central planners want to talk about.  I believe it is the longest stretch of time in American history that living standards have failed to make a new high.

Stagflation in the 1970s created an environment that lit a fire under precious metal prices, so it is not too surprising to see the gold and silver flying higher again.  It is important to note, Eric, that gold just made new record highs against both the euro and Swiss franc, and continues to climb higher in both of these currencies.  It won't be long before the US dollar and British pound are making new record highs too.

Interestingly, the only currency that has not yet broken above its 1980 peak is the Japanese yen.  It will be the last piece of the puzzle to fall into place, and the picture that puzzle is showing is massive currency debasement around the globe. 

Worldwide money printing from QE is of course the symptom, but the disease is never-ending government deficits.  Because they are printing, these deficits are being turned into currency, which always causes hyperinflation if not stopped.

The Federal Reserve has been doubling-down for years, Eric, with QE1, QE2, Twist and now QE3, which has no limit.  The other central banks have been doubling-down too because just about all of them are out of control.  They refuse to admit, or possibly do not even understand, that their formula to create wealth by money printing is based on flawed economic theory which is just plain wrong.  Wealth does not come from the printing press; it only comes from hard work.

I guess there are too many past Nobel Prizes and PhD’s on the line to get the central planners to admit that they are heading toward the cliff, which as we discussed before, Eric, is not the fiscal cliff everyone is talking about.  The US and most other governments went over that cliff years ago when they eliminated all the budget discipline and let their spending spiral upward. 

I am of course referring to the currency cliff the world will fall over when the dollar collapses, which is getting closer every time the Fed buys more debt.”

When asked about the markets, Turk responded, “We saw some great numbers in September, Eric.  Gold was up 5.1% while the XAU jumped 12.4%.  Finally, the mining shares are starting to outperform the metal itself.  Silver had a brilliant month too, chalking up a 10.0% gain. 

And look at the strength we saw today.  It's important that there are no signs of profit-taking after last month's big gains, which is a particularly significant point given that Friday also marked the end of the quarter.  It suggests to me that gold and silver are very close to breaking above resistance at $1780 and $35 respectively.

One can only conclude from the precious metal's strength that more and more investors are seeing the writing on the wall.  They understand that the dollar, euro, Swiss franc and all the rest of the currencies are being debased by the central planners. 

Therefore, the logical and prudent thing to do is to continue accumulating both physical gold and physical silver.  Sometimes the best strategy is the simplest, and there is nothing simpler than building up one's precious metals holdings on a regular cost-averaging basis and listening to one's own common sense, instead of the pronouncements of central planners.”

© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

The interviews with Michael Pento, Don Coxe, Pierre Lassonde, Rick Rule, and Nigel Farage are available now.  Also, be sure to listen to last week’s line-up of other KWN interviews which included, Ben Davies, Dr. Keith Barron, Jean-Marie Eveillard, Bill Fleckenstein, Egon von Greyerz, and Felix Zulauf by CLICKING HERE.

Eric King

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