As people continue to digest breaking news out of Greece and around the world, the Godfather of newsletter writers, 90-year-old Richard Russell, warned that the elite are panicking out of fiat money and into hard assets as central banks are now on the verge of losing the Gold War.
Richard Russell: "The last two times the US saw at least three straight months of declining industrial output, the economy was in recession, or about to be. Industrial output in April fell for the fifth consecutive month, indicating that the US economy was close to or actually dipping into recession. Analysts, surveyed by the Philadelphia Fed, see GDP expanding 2.5% in the second quarter, 3.1% in the third quarter, and 2.4% overall, down 0.8% compared to the last survey. In the face of all this, it is almost axiomatic that the Fed will not be raising interest rates any time this year, or even into 2016.
More QE Or Massive Make-Work Projects?
With the US economy in or near recession, pressure will be put on both parties to “do something.” I see two possibilities ahead. One is bringing back QE and filling the system more fully than ever with liquidity. Or the more likely event: massive make-work projects that were last seen during the Great Depression. With the nation’s infrastructure falling apart, this calls for repair work by millions of men in new, huge make-work projects set off by a union of both parties.
During the 1930s, the Great Depression was ended by the huge make-work hiring as we entered World War II. Thus we have the precedent of the massive make-work projects of the 1940s. This is what I expect as the Fed and the government battle against a resumption of the recession.
Today, an hour before the close, the Dow is trading at 18,321, which would be a new record closing high. Transports are up 55 and the Nasdaq is up 31 and above the critical big number of 5,000. At the same time, gold is up a 1.8 to 1225.3.
Elite Panicking Out Of Fiat Money And Into Hard Assets
In the background the wealthiest 1% are paying astounding prices at auction. Last week for the first time in history, a daily auction at Christie’s brought in over $1 billion. Prices for everything from top New York real estate to Picasso masterpieces are going at new record highs. The big money is preparing for record asset prices, suggesting that the purchasing power of currencies is heading south. The battle for the cheapest currency continues, and the big money is preparing for it. Precious metals and stocks are heading north as investors prepare to retain their purchasing power.
Central Banks On Verge Of Losing Gold War As China To Reveal Its Gold Hoard
The move in gold above 1200 establishes that level as the new and rising base for gold. The anti-gold element is on the verge of losing the battle, we can expect increased gold hating stories and headlines to appear. Shortly China will reveal the size of it gold hoard. Would the US would do the same?
China and Russia have become economic allies. This is a good thing, as the last thing I want to see is China and Russia at war. Both of these nations want to be economic powerhouses, not stronger than the US, but on a par with the US.
My intuition tells me that wars between great nations may be a thing of the past. The incredible loss of life in WWII stands as a monument to human insanity. Furthermore, (WWI and) WWII saw two ghastly weapons of war appear: the atomic bomb and mustard gas. These two weapons are so horrific that they may have ended wars between the great powers. If so, the end of major wars will mark a tremendous advance in civilization.
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The dragging US economy now presents a daunting problem for the Fed. It would not surprise me to see QE or something like it brought back. It’s wise to keep the big picture in mind. The big planetary picture is deflation and a deleveraging of the 70 years of inflation and financial engineering in the massive buildup of economies since World War II.
One Last Thought On The Massive US Debt
One last thought — the US will not renege on its debt. My thought is that the US will attempt to inflate the debt away. My intuition tells me that we will find a way of surviving the greatest mountain of debt ever produced by a nation. I believe the key to survival will be the precious metals. When all else is crushed under the weight of debt, the holders of precious metals (nations and individuals) will survive." You can subscribe to Richard Russell's 90 years of wisdom and remarkable writings at Dow Theory Letters by CLICKING HERE TO SUBSCRIBE.
***King World News note: There is no doubt that most protagonists in World War II had stockpiles of poison gas. By 1945, the Germans had 7,000 tons of Sarin alone – enough to kill the occupants of 30 cities the size of Paris. The Americans also had sizable quantities of poison gases stockpiled.
Britain experimented with anthrax on remote Scottish islands to see its impact on the animal population there. All countries that possessed poison gas in any form also had the potential to deliver it on an enemy. With such potency and the ability to change the course of a battle why wasn’t poison gas used – even as a last resource?
It would appear certain that the fear of retaliation was the reason and the fear that the enemy may well have developed a poison gas more virulent that anything the other side had. So in a war where atomic weapons were used, napalm, phosphorous, unrestricted submarine warfare etc, where civilians were seen by some as legitimate targets, no side was prepared to risk using a weapon that had been so feared in World War I.
***ALSO JUST RELEASED: Theft Of Greek Bank Deposits To Send Shockwaves Around The World! CLICK HERE.
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