There’s no doubt that we live in times of momentous change.
But it’s more than that: We live, quite literally, at the crossroads of history.
It is a time of empires rising and falling.
A single generation ago, America’s economic might was unchallenged. The long and remarkable growth of the people’s prosperity had long been the envy of the world.
Our economy was a mighty engine of growth and job creation.
Our currency unit — the almighty dollar — ruled over the entire global financial system.
Today, after decades of neglect and abuse by corrupt and incompetent political leaders, the United States of America is fading fast — along with the ideals, liberties and opportunities our founding fathers envisioned for us.
In a world where the greatest empires have prospered for centuries on-end, America now risks, after its brief time in the sun, becoming a noble experiment undone by reckless politicians.
The Contrasts Between America and Her Rivals
Are Striking … If Not Downright Terrifying
It must even be apparent to the president himself: On a recent trip to Cambodia, only a few small groups of curious citizens appeared to watch Obama’s motorcade speed through the streets of Phnom Penh.
America’s rapid decline is especially obvious when it comes to economic matters:
A generation ago, America was still the manufacturing hegemon of the world. Now our manufacturing has been shipped offshore. A creditor nation only a generation ago, America is now a debtor nation.
America hasn’t had a trade surplus since 1975.
The American savings rate today is only about a third what it was when Ronald Reagan was elected.
Now the Chinese are role models for saving. It has made them richer, even as we have become poorer.
Our status as a prosperous manufacturing empire has given way to a bankrupting and crumbling military empire. One that has left Americans staggering under trillions in debt.
Our prosperity has been traded for a mess of welfare state/warfare state pottage.
Meanwhile, China’s commercial empire is spreading across the world at breakneck speed.
Where we have deployed troops at ruinous expense, China has deployed dealmakers.
It is a reality of stunning irony. For example, China became the first foreign nation to sign a multibillion-dollar oil deal with Iraq after the fall of Saddam Hussein!
In grand capitalist manner, China has been tying up resources throughout the Mideast — all across Africa, and even in the Americas.
Meanwhile our own economy, burdened by debt that will never be paid, is in intensive care. For those relying on the government’s promises, the prognosis is grim.
Despite a temporary slowing in growth rates, China’s economy is expanding more than three times faster than ours is and will soon eclipse ours in size and wealth.
With more than $16 trillion in public debt and $222 trillion in total obligations, Washington is debtor to the world — begging and borrowing every penny it can lay its hands on to finance our ruling class’ scandalous vote-buying schemes.
With more than $14.4 trillion in capital reserves, China — an economy that was once devastated by collectivist government policies — has become the world’s No. 1 lender.
Recently, we learned that America’s manufacturing base is shrinking again; the ISM index is plunging to levels not seen since 2009.
Meanwhile, China’s manufacturing base continues to expand at break-neck speed despite the massive slowdowns both in Europe and the United States.
Today China considers its 7 percent annual growth rate a slowdown. Growth at that pace would be considered a miracle here.
China’s credit rating is “AAAA” — the best in the world.
America’s credit rating has been downgraded and is in constant danger of additional downgrades as we face the Fiscal Cliff.
The rest of the world has become more friendly to capital — and capital formation — than it has ever been.
But here in America, the principles of the U.S. Constitution … the rule of law … the individual’s rights to his own property … are being systematically destroyed.
Now, with Washington spending all it has … borrowing all it can … and finally PRINTING trillions of dollars to feed its insatiable hunger for ever-greater political power …
The U.S. dollar, which was once as good as gold, is deteriorating before our very eyes.
It has lost more than 66% of its buying power and nearly tripled your cost of living since 1980: To live as well as you could have on $20,000 in 1980, you’d need an income of nearly $54,000 today.
In 2012 America, only gold is as good as gold; and central bankers and global investors know it: That’s why so many of them are dumping unbacked paper dollars and loading up on the yellow metal.
More Change:
The World Is a Tinderbox
Anybody who doubts that this is a time of momentous change — that we now stand at the crossroads of history — need only consider how unstable our world has become:
• Slaughter without end in AFGHANISTAN: Tens of thousands have already lost their lives in this conflict — and thousands more will die there in the weeks and months ahead.
• IRAN is in the crosshairs: With the prospect of war at any time, Iran’s only leverage is closing the vital Strait of Hormuz. In 2011, 14 empty tankers entered the Strait each day and carried a total of 17 million barrels of oil out.
• Massive bloodshed in SYRIA: The finest minds now say it’s inevitable that the U.S. will be drawn into the Syrian war.
• Huge flare-ups in IRAQ: Political factions of all stripes are now challenging the government and violence is escalating, threatening to turn that nation into a boiling cauldron.
• EGYPT is speeding toward a second revolution: The masses are taking to the streets, threatening to destabilize the new government there — even to overthrow it.
• LIBYA is arming the world: After deposing a terrorist dictator, the nation has become ground zero for gun-running for all the Middle East, arming Syrian factions and smuggling arms throughout the region.
• ISRAEL is a powder keg: The Israeli-Palestinian conflict continues unabated and is capable of plunging the entire region into all-out war on a moment’s notice.
Gold Sets Up Shop
at the Crossroads of History
(Silver Too!)
For over 5,000 years, mankind has demanded gold and other precious metals as a safe harbor in times of radical change.
When governments debased their own currencies …
When nations went to war …
When empires staggered and fell …
Only precious metals held their value.
Whenever men were reminded that paper money and paper investments were nothing more than a pledge backed by a promise … a pocketful of mumbles … little more than hype and hot air …
They naturally stampede away from paper and into stores of value that can be counted on in tough times.
In that way, the precious metals are very much like a referendum on the value of the U.S. dollar today:
The LESS faith the world’s investors have in the U.S. dollar …
The MORE they demand bullion!
And judging from the explosion in precious metals prices we’ve seen recently …
A 567% rise in gold …
And a 907% rise in silver …
All since 1999 …
The entire world is losing its faith in paper money and paper investments at breakneck speed!
And that means, the gains we’ve seen in bullion prices so far will likely be dwarfed by what’s ahead!
Look: The plain truth is that, since the Romans introduced the idea of fiat currencies in the first century A.D., every single one of them has ended in devaluation and eventual collapse.
It happened in 11th-century China … in 18th-century France … in 20th-century Germany …
And in more recent times, we’ve seen a pandemic of currency failures: 1932: Argentina … 1994: Mexico … 1997: Thailand … 1998: Russia …
And now America is on the same road to currency catastrophe.
Bullion Doesn’t Lie
Bullion doesn’t care whose picture is stamped on it or whose national motto is printed there.
The value of the gold, the value of the silver is what it is.
In a world of extreme financial risk … economic risk … institutional risk … and geopolitical risk … bullion serves as THE ONLY form of money that is not someone else’s liability.
In this sense, even paper gold — gold-mining shares and ETFs — are poor substitutes for real bullion.
Because bullion is the only form of money you don’t have to step into the financial world for.
In fact, if you don’t invest in bullion, you haven’t taken advantage of its No. 1 benefit: Freedom from dependence on the financial system!
You can’t buy a single share of stock, a mutual fund, an ETF or a bond without first retaining a licensed, government-approved, government-regulated broker and then dealing with companies that can collapse or default on their obligations without a moment’s notice.
You also sacrifice your own right to privacy: Scores of records are created every time you make a move, and those records can be accessed with shocking ease by any attorney at any time.
The crossroads of history always meet at a time thick with institutional risk. The risk of counterparties, fraudsters, default, bankruptcy and bank failure.
Ask investors who had money with MF Global, Bernie Madoff or other failed institutions.
Ask those who stood in line to get their money from California thrift IndyMac. One day they didn’t give the safety of their deposits a second thought. The next day the bank run started. Police were called in to maintain order among the desperate depositors crowding in front of the bank to get their money out.
The bitter lesson of institutional risk has to be learned over and over again.
Gold and silver are the only forms of money completely free of dependence on others … the one kind of money you can hold outside the banking system with all its exposure to government interference, collapse, nationalization, malperformance.
For this reason, I strongly recommend that you maintain a core portfolio of gold and silver. Start with a crisis-insurance position equal to 10% of your liquid assets — or six months’ living expenses, whichever is more.
But don’t procrastinate. At the crossroads of history, things seem to move slowly one day until suddenly they move very, very fast the next!
Yours for Wealth and Liberty,
Charles