This blog has spent months identifying and explaining a myriad of obvious reasons that the stock market cannot continue its long-in-the tooth bull run. The oldest and still strongest concerns are:
- the common and continuing practice of public corporations to borrow cheap Fed money earmarked for maintenance, infrastructure, and expansion, then diverting it instead to stock buyback programs that artificially inflate stock prices, while leaving the company impotent and utterly incapable of growth,
- the common and continuing practice of our banking system to assume astronomical levels of liability through the abuse of derivatives. It was reported last week, that Goldman Sachs Bank has achieved a 349:1 liability-to-asset ratio. They’re no longer just too big to fail…they’re too big to fail without taking our entire country with them, and
- the fact that the petrodollar has effectively been dissolved. The 1974 Kissinger/Faisal agreement that created and protected dollar value has been completely disemboweled. The U.S. military protection guaranteed to Saudi Arabia is no longer needed, because Russia sold them a complete defensive missile system back in November and the requirement that all oil sales take place in U.S. dollars, though not yet formally announced, has effectively been nullified by China’s successful circumvention of the petrodollar, by agreements with more than 20 countries to trade oil for Yuan/Gold.
But today, 81-year-old investing legend Mark Mobius announced his concern that the market is poised to drop 30% for almost any excuse. “The market looks to me to be waiting for a trigger that will cause it to tumble. You can’t predict what that event might be – perhaps a natural disaster or war with North Korea…And if the U.S. market falls, then everybody is in trouble.” And his observation comes on the heels of last week’s prediction from Jim Rogers regarding the coming “biggest crash of our lifetimes.”
Due to the technology now being utilized by the stock market, Mark also believes that the collapse will be far more rapid than previous downturns, because “You have computers and algorithms working 24/7 and that would basically create a snowball effect. There is no safety valve to prevent further falls, and that fall would escalate very quickly.”
To not have the “typical” minimum physical precious metals reserve at this point is not only foolish, but it is potentially, economically dangerous. The only real question is how much more than “typical” is enough, to compensate for today’s economic environment? The trigger Mr. Mobius is referring to is nothing more than a fill in the blank excuse. It’s totally immaterial. What’s important is the fact that a day of reckoning is coming and a proper level of portfolio protection needs to be considered and acquired, NOW! Call the experts at American Bullion at (800) 653-GOLD (4653). But no matter what, don’t get caught without a chair when the music stops.
Although the information in this commentary has been obtained from sources believed to be reliable, American Bullion does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. American Bullion will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.