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It's happening. The world is getting smaller. No, the
physical world is not shrinking. And the number of people populating the
planet is not going down, at least not yet. Instead, what we are referring to
here is the human condition on mother earth. How we have become masters of
our destinies through technological development, and how all this has
effectively shrunk the world in terms of resource procurement, international
trade, and economic organization.
And while it may be true that within all this so called progress that in the
end we are largely controlled by a centrally planned Neo
Liberal aristocracy, which apparently would like to see the world
get even smaller as it continues to enrich itself, unfortunately for these types, forgotten frailties
associated with the human condition need to be reintroduced to them, meaning
our political economy is to cease shrinking on an increasing scale.
What does this mean? In a nutshell, basically it means
that the trend towards increasing centralization of power in the hands of a few greedy elitists
is about to come to a screeching halt. What's more, and this is the bad news
for elitists, dictators,
and oligarchs
alike, the trend towards centralization is about to reverse, meaning
organizational and economic power will decentralize, which will eventually end the Fed and the free reign it and
it's international counterparts have enjoyed
in exploiting a set of extreme circumstances within the human condition that
will not be repeated for a very long time, if ever. Because increasingly, as
process unfolds, fewer and fewer members of the elite's bureaucracy's will no
longer be able to confiscate public wealth at a sufficient rate in order to
maintain their bloated lifestyles. And then, increasing numbers will be
forced out, cut off from a weakening food chain, forced to join the ranks in
the real world.
This is of course what is behind the rioting, revolts, and
revolutions increasingly percolating in periphery economies to the core
Western coalition, soon coming to an economy near you in good time. And this
has already begun in earnest with the election in Ireland this past weekend,
whereas process unfolds, political / economic revolt against the blatant
fraud self-interested banks and crony capitalists is now becoming the popular movement;
which again, is also the beginnings of moving away from the central planning
gone amuck that has brought us to this collective juncture. So, it's
important you understand that while the Fed, BIS, ingrained bureaucracies and
political parties will not disappear from our larger socio-economic landscape
overnight, still, their influence has likely peaked, making way for more
localized organizational forces to increasingly shape our lives.
Of course such thinking is nothing new if one shares the
views of E.F Schumacher,
and the society
that was created based on his views, where it was recognized long ago 'small
is beautiful' in matters of local economy, and that even when integrating
with larger organizational systems, this should not be forgotten. And his
views are going to become a lot more popular moving forward for the uniformed
as well, where once global trade begins to breakdown in earnest as the larger
fiat currency economy implodes, people
will have no choice but to reorganize, and the reorganizations will be
locally / regionally oriented due to practical considerations. (i.e. peak
oil, unemployment, etc.) Again however, it should be remembered that this
will all take time, and international trade will not disappear overnight, but
what essentially happens under such an outcome is trust between trading
partners breaks down, which could spiral into a profound condition.
What would be a profound condition? Well, how about no
crude oil shipments to the US. People in the know
think peak oil has arrived and that crude oil procurement will become
increasingly difficult. (i.e. and expensive.) Or, how about the trade loop
between the Chinese and US (all Western economies) breaking down, where they
no longer accept our worthless paper currency for manufactured goods. If this
occurs, all the things we import from cheaper manufacturing economies abroad,
with China at center, would then need to be made at home or go without. Of
course many of these things are necessities, like shoes, clothing,
appliances, you name it), so going without is not a realistic longer-term
solution to such a state of affairs. So, people would be put back to work in
making these things, which is going to be the investment opportunity of a
lifetime for those with savings at some point, which will reinvigorate local
economies on a smaller scale in everything from manufacturing at the base, to
tertiary services, to agriculture.
In the meantime however, in order to procure things from
abroad once such conditions arrive (think anytime now), new and improved
exchange mechanisms will need to be developed, which is where history, and
precious metals, come into the picture. Because in order to facilitate
international trade when your foreign trading partners no longer trust you
(or your un-backed paper currency), we will need to back our external
currencies with something they do trust, and that something will be gold.
(i.e. leaving silver as a primary intermediary to back internal currency.)
And as alluded to above, calls for such a reorganization are already popping
up across the political landscape,
and will necessarily need to become a cornerstone any new world order
moving forward. And when momentum in such a movement arrives, it will become
self-evident to even the less endowed that the dollar's ($) role as the
world's reserve currency will be kaput, meaning increasing inflation and
perhaps even hyperinflation might hit the US, because the economy is not
equipped to handle the austerity that such an outcome would eventually be
forced on a dazed and confused population. (See Figure 1)
Figure 1
 
And one must wonder if those days have in fact arrived,
where although the fate of all fiat currencies will be the same in the end
(replaced by gold or silver backed currencies), in the meantime attempts to
maintain the status quo by our bankers / elitists will undoubtedly go on,
meaning those currencies perceived to warrant interest will rise against the
$, which is exactly what is happening to the Canadian Dollar (C$) above, and
the British Pound below. What's more, in spite of the fact both the Canadians
and Brits are big trading partners with the US, or perhaps because of this,
we can tell a lot about what to expect in the larger economy and financial
markets by watching their relative movements, the former as it pertains to
the economy, and the latter to stocks. That is to say, when the C$ is rising
against the $ one should expect to see rising commodity prices either
concurrently or in the future, the same for stocks when the pound is
out-performing.
Unfortunately we cannot carry on past this point, as the
remainder of this analysis is reserved for our subscribers. Of course if the
above is the kind of analysis you are looking for this is easily remedied by
visiting our web site to
discover more about how our service can help you in not only this regard, but
also in achieving your financial goals. Along these lines, you should know
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either the myself or Dave Petch. As you may know, I cover macro-conditions,
sector timing, and value oriented stock selection, while Dave covers the HUI,
XOI, USD, SPX, and TNX technically each week. Mr. Petch is a world class
Elliott Wave Theory technician.
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commentaries, the Chart Room, exhibiting 100 annotated charts of the precious
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pages. Here, in addition to improving our advisory service, our aim is to also
provide a resource center, one where you have access to well presented 'key'
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Naturally if you have any questions, comments, or
criticisms regarding the above, please feel free to drop us a line.
We very much enjoy hearing from you on these matters.
Good investing and best of the season all.
Captain Hook
Treasure
Chests.com
Treasure
Chests is a market timing service specializing in value-based position
trading in the precious metals and equity markets with an orientation geared to
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