By Bill Haynes, President CMI Gold & Silver

December 29 (King World News) - The Big Picture As We Head Into 2014

Recent developments suggest that despite the dismal performances of gold and silver over the last 2-1/2 years, they remain safe havens.  Never before in the history of the world have we seen such a rush to printing money to stimulate world economies.  Printing money, or more accurately money creation because nowadays most money is in digital form, seems to be the solution to any and all financial problems....

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Tuesday China’s central bank injected $5 billion into its financial system after fears mounted that the system was under stress.  Immediately the markets there calmed, and financial papers, such as the Financial Times, reported that the injection was successful without a single comment of the downside of money creation.

In the US, politicians are pushing for an extension of unemployment benefits, at a cost of a mere $25 billion.  That money will have to be “borrowed,” but we know that it will be borrowed from the Fed, which creates money in the same way that the Bank of China does.  And, let’s not forget that the solution to the recent US government “shutdown” was to increase deficit spending.  Further, Japan continues it “Abenomics,” which is basically money creation and more government spending.  No problems have gone away in the Eurozone, which means more money creation there.  Same in the UK, and there are numerous other examples that could be added.

A truly astounding thing is that whenever the solution of creating more money is discussed in establishment financial media, never is it mentioned that massive money creations in the past have not stimulated economies but often have resulted in the destruction of the currencies being printed.  It seems to be that if the currency is not about to collapse tomorrow, there is no need to worry.

Massive money creation bails out the politically connected, mostly banks, but economies do to not get kick started, as is always promised.  Following the destruction of the French Assignat and Mandat during the French Revolution, it was forty years before economic activity reached pre-revolution levels.

In the US, we are now five years into the most massive money creation ever for this country.  Yet unemployment remains at 7%: and as noted above, politicians in Congress are so fearful of the economy that they want federal unemployment benefits extended beyond the five years that was agreed to as one of the solutions to the 2008 financial crisis.

Everyone holding gold and silver would like to see higher prices, as would I.  However, I recognize that a belief that economies can be controlled via money creation is the prevalent economic thinking nowadays and that it will take time for people to realize that massive money creation leads only to ruination for currencies and economies.  At that time they will return to the metals, slowly at first then a mad rush.

Yes, there are those who can prosper during these times: the politically connected, savvy investors such as Warren Buffett and deft speculators.  However, the people reading this probably do not fit into these categories and had better hang on to their gold and silver until there is a realization of what is sound money and what is unsound money.  Gold and silver have stood the test of time while the number of paper currencies that have been destroyed by the printing press are almost too numerous to name.

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