As the world continues to move into uncharted territory, today a 40-year market veteran sent King World News a powerful piece warning that one of the most spectacular turns in history is now upon us. He also discussed gold, silver, and what investors should be doing in this dangerous environment. Below is what Robert Fitzwilson, founder of The Portola Group, had to say in this exclusive piece for King World News.
By Robert Fitzwilson of The Portola Group
November 17 (King World News) – One Of The Most Spectacular Turns In History Is Taking Place
While much has been made about the recent strength in the dollar, the Dollar/Euro relationship has been in an extremely tight range for ten years. Given the design of the Dollar Index, it should not be surprising. The Index is billed as a comparison against a basket of currencies, but that basket is certainly lumpy and heavily biased. The Euro represents about 58% of the Index, and the Yen about 14%.
Given the surprise announcement by the Japanese to embark upon a massive program of money printing and quantitative easing, and the subsequent plunge in the Yen, it is not surprising that the Index would have acted as it has in the weeks following that announcement….
Continue reading the Robert Fitzwilson piece below…
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The uneven percentage allocations in the Index were probably adopted to reflect trading patterns for goods and services at the time. However, this was before China became such an enormous factor in world trade, so the relevancy of the allocations has to be suspect. Also, just as the quantity of fiat currencies separated long ago from any reasonable relationship to global GDP, the choosing of currency weightings in the Index by trading patterns is also probably a relic of another time. We have described the Index as a “sock puppet” used to distract people from the enormous debasing of all fiat currencies. The volatility in the currency markets as well as oil does answer the demand from Wall Street for more volatility from which they can profit. However, it is an indication of a disease, not a cure.
We also note that the Swiss are rapidly approaching the vote on the policies to be followed by their central bank. It is hard for most to imagine that there once was a time when the Swiss Franc, the German Deutsche Mark and the Japanese Yen were “hard” currencies. During the ‘70s, gold and silver were hedges against a dodgy Dollar, but a dollar-hedged portfolio was a blend of the metals and these hard currencies. It was also not about who had the highest interest rates. The Swiss actually charged a negative rate to customers wanting to have deposits in those days.
It is unfortunate that the attractiveness of the currencies has been transformed into a relative valuation in the last 40 years. The so-called “cleanest” and “dirtiest” shirts in the laundry phrase. The Dollar is not attractive in an absolute sense, but it does relative to a suicidal money printing program in Japan and a Europe and Euro that look increasingly at risk.
What made the Franc, Mark and Yen hard currencies was a reputation for prudence, hard work, innovation and quality. These were the factors that created reputations for sound currencies, not the manipulations of the central planners. The Swiss should not be afraid of returning to their roots that served them well throughout history. People will always demand high quality goods, and there is also the time-tested formula of reducing costs through further innovative ideas, something that the Swiss have always exemplified.
Regardless of whether or not the central planners or the Swiss Central Bank have more tricks up their sleeves to negate the effects of the referendum, it is an important first step for the world to come back from what will be an economic abyss for the Swiss to vote “Yes.” If the vote is “No,” another firewall to preventing a very bleak future will be taken down increasing the risk for everyone. Not even the Swiss will be immune if the current path cannot be reversed.
Gold, silver and the miners staged an impressive reversal on Friday. Normally, that would be a very positive sign, and we hope that is the case. Demand for the metals continues to go through the roof. The U.S. Mint was sold out of Silver Eagles. India’s demand for officially imported gold has risen dramatically. Russia announced another significant purchase on the order of 55 tons.
Countries representing the bulk of the inhabitants of the planet continue to exhibit an insatiable demand for the metals through direct as well as government purchases. If there is to be a sustainable reversal, it will have to come from a continuation of this accumulation. It has been a rough ride for precious metals investors for more than 3 years, but a historic turn in these markets may finally be at hand. A “Yes” vote by the Swiss will certainly add to that likelihood, but it may not even be necessary to cement this historic turn. If that is the case, right now we may be seeing the final opportunity for investors to buy physical gold and silver and the mining shares at these artificially suppressed and extremely discounted prices.
UPDATE – KWN has now released the two extraordinary audio interviews with David Stockman and Gerald Celente and you can listen to them by CLICKING HERE.
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IMPORTANT – KWN has many more interviews being released today.
The audio interviews with Gerald Celente, David Stockman, William Kaye, Dr. Paul Craig Roberts, Andrew Maguire, Eric Sprott, Bill Fleckenstein, Rick Santelli, Michael Pento, John Mauldin, Egon von Greyerz, and Marc Faber are available now. Other recent KWN interviews include Jim Grant and Felix Zulauf — to listen CLICK HERE.
