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As a
matter of style, I tend to be short on words and to the point so trying to
achieve both accuracy and brevity when evaluating the results born of the
multi-year machinations of the U.S. Government and the Federal
Reserve’s attempts to manage the fiscal crisis could prove
difficult. I believe, however, that what follows will provide a
reasonably fair assessment.
Myriad
of Statistical Measurements are being Manipulated and Massaged
There
have been a myriad of statistics presented by analysts attempting to quantify
the short- and long-term impact of the economic and fiscal policies deployed
over the last couple of years. Gauges, such as the contribution to GDP
expansion in relation to government spend, earnings growth of publically
traded companies, the status of bank balance sheets, etc., have all been
factored into some sort of scorecard for the state of the economy. In
the segregated and insulated world of government policy makers, Fed
officials, well-connected bankers and other sundry insiders, these
manipulated and massaged statistical measurements have been designed to serve
as the basis for public pronouncements as to how we are to see the world
around us. Unfortunately, due to a dearth of inquisitive and
competent financial journalists, the alliance of powers at the global
economic helm have been free to make erroneous and unchallenged declarations
such as the sighting of “green shoots”, or an
"officially declared" emergence from recession, or
"officially documented" resumption of sustained economic growth. In
the real and tangible world, however, the statistics don't support reality.
Rescue
Plan Was Ephemeral
For
the vast majority of those who were not those bailed out after profiting
handsomely from their destructive business practices, I believe the verdict
regarding the success of the Government’s so-called rescue plan can
best be summarized in a single word – and that word is ephemeral
- yes ephemeral! This beautifully succinct word, ephemeral, is defined
as; "lasting for only a short period of time and leaving no permanent
trace” (Encarta Dictionary). Indeed, what better word is there to
describe the Government's rescue plan than ephemeral – here today and
gone tomorrow and without a trace of lasting benefit!
The
Blind Begin to See
Many
of the economists who relied upon deceptive government-generated economic
statistics to tout a questionable recovery are now becoming increasingly
pessimistic as a consequence of mounting evidence of collapsing consumer
confidence, punk retail sales, and a fierce resumption of housing’s
descent. They are adjusting their forecasts down and some are even suggesting
that normal economic activity will not resume until 2015 or beyond.
What remains to be seen, however, is if a nation that is so massively indebted,
top to bottom, will be recognizable after such a prolonged period in the
tank.
America’s
Socio-Economic Transition is in its Final Stage
What
has emerged from the financial crisis, and the officially sanctioned choosing
of winners and losers, is a clear picture of the evolving two-tier global
social order. Now that those beneficiaries of official favor have
succeeded in off-loading their losing wagers onto the general public, there
is no longer any urgency on behalf of Washington or the Fed to alleviate the
suffering of those unfairly saddled with the burden of payment. What
will be implemented are schemes that require further surrender of individual
liberty and the extinguishing of any prospect for building personal wealth in
exchange for worthless promises of government supplied sustenance and
protection. In place by 2015 will not be renewed economic growth in the
traditional sense, but an economy that has devolved into a confluence of the
worst elements typically associated with socialist Europe and Central/South
American banana republics.
Preservation
of Wealth Today is a Prudent Course of Action
Simplistic
investment axioms passed off as wealth management, such as buy/hold equities
and real estate never go down (see chart below), have failed miserably for
the past decade. Preservation of wealth until the storm passes, in lieu
of squandering hard earned dollars chasing yesterday’s investment
themes, appears to be the more prudent course of action. In the not too
distant future, once the unmitigated misallocation of capital is reckoned
with and artificially supported sectors of the economy are vanquished, t here
will be great opportunities to be realized. The key to survival through
this long dark period is proper positioning of one's capital now, surveying
matters with a strategic mindset, and great patience.
Bugaboo
of the Paper Aristocracy
Although
derided as useless by those with a vested interest in preserving the
privileges accorded those who steal wealth and gain power via a fiat monetary
system, gold and silver have historically served as a refuge when such a
counterfeit system is threatened with degradation or collapse. Our
mirage of a money system is facing a challenge to its viability right now.
Should the Feds irredeemable paper scraps experience further loss of
purchasing power, or global repudiation, gold and silver holdings will come
through such a debacle intact and still be in possession of intrinsic value
tradable for goods and services globally.
Conclusion
The
model portfolio has always included a measured position in gold and silver
and such an allocation should be regarded as a long term store of wealth and
not as a position for short or intermediate trade.
Given
that we are hurtling headlong into what the Chinese would call
"interesting times," it makes sense to grab hold of something that
has been here before and has consistently come out intact – physical
gold and silver.
Chris Blasi
Neptune
Global
Chris Blasi is President
of Neptune Global Holdings LLC (www.NeptuneGlobal.com) and a guest
contributor to both www.FinancialArticleSummariesToday.com and www.munKNEE.com
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