The Phaserl


The Coming Revaluation of Gold

by Hugo Salinas Price, Plata:

The current melt-down of the world’s debt bubble is likely to continue in the course of the next months. The secular trend to expansion of credit has morphed into contraction and liquidation. It is my opinion that the new trend is now established and no action by any of the Central Banks (CB) that issue reserve currencies will do anything at all to reverse that trend.

Sandeep Jaitly thinks that the desperate reserve-issuing CBs – the US Fed, the ECB, the Bank of England and the Japanese CB – may resort to programs of QEP, by which he means “Quantitative Easing for the People”. This quantitative easing will mean putting money into the hands of the populations by rebates on taxes, invented make-work schemes or any other excuse to furnish the people with the famous “helicopter money”, to get them to spend.

As the present crisis deepens and given our experience with the way our so-called “economists” think, we can reasonably expect such programs to be launched. Nevertheless, the present trend of world economic contraction will not be reversed by any ad hoc program. The world’s expectations – positive for growth since WW II – have turned negative. This is an event of such magnitude that no “QE” will have any effect upon the final outcome: debt collapse.

The growing fear in the world’s markets arises from the recognition on the part of indebted corporations and individuals that their debt burdens are increasing due to devaluations of their national currencies. International investors are attempting to reduce their exposure. “Hot money”, invested in countries which offered higher interest rates, now wants to go home. In recent years of bonanza, foreigners borrowed some $11 trillion dollars, in various Reserve Currencies, to invest in their own countries. Of this total, it is calculated that about $7 trillion of those dollars are denominated in dollars. The debtors are now attempting to pay-off their dollar loans, and this has the effect of lowering the value of their own currencies with respect to the US Dollar, thus aggravating the situation. There is a loss of confidence in national currencies, producing Capital flight to the rising Dollar, because the countries that issue those currencies are no longer able to maintain export surpluses against the reserve-issuing countries, and are thus unable to increase reserves and are actually losing these reserves. The export-surpluses are disappearing in the “rest of the world” because the reserve-currency countries, plus China, are in an economic slump (essentially attributable to excessive debt) and are reducing their consumption of imports, thus reducing the exports of the export-surplus countries.

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8 comments to The Coming Revaluation of Gold

  • Kevin

    Any QEP put into my bank account will be promptly spent on buying gold/silver. lol

  • Timco

    Thank you for posting this excellent article from Mr. Price.

  • Ed_B

    “This quantitative easing will mean putting money into the hands of the populations by rebates on taxes, invented make-work schemes or any other excuse to furnish the people with the famous “helicopter money”, to get them to spend.”

    There are times when I think that these gov types will NEVER “get it”. It is not the mere spending of money that stimulates an economy but the PRODUCTIVE spending of money. Money spent on make-work generates a make-believe economy. If we want a REAL economy, we need a lot less government getting under-foot and on our backs. Supporting this massive government and its huge over-reach is what is causing this lousy economy. We simply cannot afford the huge overhead expense of all this non-productive government.

    Anyone who has worked in business or industry could spot this amount of waste in a very short time, yet those in government cannot seem to see it at all.

    My only conclusion is that they simply do not wish to see it. That won’t make it go away, however. The only thing that can do that will be if the people take control of the government and set it firmly back on its constitutional foundation of very limited government and very low taxes. They can start with everything that the government does in the name of… “Wouldn’t it be nice if…”. Nice it might be… for a while… but eventually it becomes an unaffordable morass of laws, rules, regulations, standards, and licenses.

  • Fraser

    Could not agree more. Trouble is, no politician wants the required collapse – reset on their watch. Heck, even I am afraid of it! Hence we get the extend and pretend. My prediction – we keep grinding further into insanity until everybody loses confidence and starts fighting for tangible assets = hyperinflation.

    • AgShaman

      They must ingratiate a lot of soylents to engender the crime of complicity via the company of les miserable(sp?). Sellouts working for the gubmint are similar to the welfare recipients. They know its a scam and yet they still want in on the action. Since Amerikwans are the most selfish people on the planet…they will continue stuffing their faces with cheetos and ride the ship into the iceberg, rather than learning some economic theory and putting a stop to their politicos engineering this dooty show.

      The Free $h*t Army does not complain when it does not apply to them. When the Honcho of the soup kitchen (AKA: the sellout politician doing the announcement) lets all the soylents know about the “new policy”….they will not be bothered by dotguv stealing from the responsible people.

      Your enemy wants you to give up your guns for a multitude of reasons. Since gold has been confiscated before…people should expect a repeat of that very scenario.

      Out of control psychopaths don’t respect OPP…they view it as already theirs and ripe for the taking whenever they see fit. I see them confiscating, followed by a re-value at market price. The enemy will plan to ride the precious metals wave up…and without the soylents.

      • glitter 1

        “Since gold has been confiscated before…people should expect a repeat of that very scenario.”

        They can’t take what they can’t find!

  • Grand Master B

    confiscating gold before confiscating guns would be quite futile this time around

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