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There are countless reasons to save your net worth in the historical safety of physical gold and silver – as opposed to investing in government-fostered financial bubbles that now burst with exponentially increasing frequency.  Simply told, gold and silver are the only substances that have adhered to the key tenets of money’s definition throughout history; and unless the mythical art of alchemy magically emerges – enabling lead to be turned to gold – they are unlikely to face material competition in our lifetimes.  And no, Bitcoin will never meet said criteria, as faithfully listed atop every presentation I give.

Definition of Money

In today’s historically perilous times, in which a guaranteed-to-fail fiat Ponzi scheme has enveloped the entire planet the necessity to hold real money has never been more powerful.  By definition, money printing creates debt, and the tell-tale sign of a fiat regime’s dying breaths is when debt growth turns parabolic.  That is precisely what is going on today, on a worldwide scale; and thus, the need to transfer your scrip into money has never been more powerful.

It’s Wednesday morning and one of the quietest news days I can remember.  The “summer doldrums” are setting in, but the firestorm that is the accelerating collapse of global economic activity is burning hotter than ever.  Central bankers and government “manipulation organizations” have created a temporary “eye of the storm” by fostering the most virulent financial bubbles in history; but in doing so, have created conditions that will ultimately make the end game that much uglier.  Never has such a gaping disconnect between fundamentals and reality prevailed; and as “Economic Mother Naturealways wins, its inevitable unwind will truly be a sight to behold.

To wit, we are relentlessly propagandized of the economic “recovery” that is supposedly in its 77th month – despite negative GDP growth, a massive trade deficit, record food stamps participation, plunging real wages, and a 35-year low in the labor participation rate.  Amidst such “strength,” the Federal Reserve has held interest rates at ZERO for the past six years – with promises of doing so well into 2015; just as the Bank of Japan has for the past fifteen.  And now, the ECB has taken interest rates negative in the latest sign – or should I say, blaring siren – that the “monetary defibrillator” that is Central bank money printing cannot even produce a pulse.  In fact, despite the Fed’s so-called “tapering” demand for U.S. treasury bonds – and for that matter, nearly all sovereign bonds – is exploding as the world recognizes the economy cannot materially recover; at least, not under the present unsalvageable fiat regime.

Essentially, the entire world has reached the “point of no return” of total debt saturation; and thus, no matter how much “liquidity” Central banks create, such “pushing on a string” will NEVER catalyze a sustainable recovery.  Instead, it’s simply created financial bubbles for the “1%” receiving such undeserved largesse at the expense of exploding debt and inflation for the “99%.”  Thus, today’s revelation that U.S. commercial lending demand growth plunged to post-Lehman levels in the first half of 2014 shouldn’t surprise anyone; and conversely should scare the heck out of them!

Chart 6

Likewise, U.S. consumer credit rocketed into the stratosphere last week, as the combined effects of plunging savings, rising inflation, weak employment prospects, and the return of 2007-like subprime lending standards is catalyzing a new leg of unpayable debt accumulation.  Worse yet, despite real estate demand and prices rolling over – following last year’s QE3-fueled institutional buying binge – millions of formerly “underwater” homeowners are being forced to pay the highest rents in U.S. history.  Yes, thanks to the Fed handing trillions to Wall Street to speculate with the “buy to rent” scheme has turned tens of millions of Americans into Blackstone debt serfs.  Last week, David Stockman highlighted how only the top 1% of homes are experiencing price increases – which the below damning chart validates with a vengeance.

Zero Hedge

No matter where one looks, debt is exploding – from North to South, East to West.  Sovereign nations, municipalities, corporations, and individuals alike have taken on unprecedented amounts of debt; in part, prompted by the aforementioned economic cataclysm – but equally so, the insane, massively destructive ramifications of Central banks making credit so readily available (particularly for said “1%”).  Sadly, nearly all incremental borrowing is utilized not for investment but subsistence; even on Wall Street, where the newest financial scourge, “activist shareholders,” have enticed corporation to borrow gargantuan amounts for the purpose of unproductive share buybacks and dividend payouts.  In other words, exactly what corporate raiders like Gordon Gekko – and for that matter, Mitt Romney – are infamous for perpetrating?

For example, the U.S. national debt has nearly doubled since the 2008 crisis – not including $5 trillion of “off balance sheet” debt incurred when Fannie Mae and Freddie Mac were nationalized; and of course, ever-increasing “unfunded liabilities” estimated as high as $200+ trillion.  Total debt when incorporating all of the aforementioned categories is nearly $60 trillion – representing 60% of the global total.

US Total Debt

In fact, per this shocking article, total global debt doubled from $35 trillion to $70 trillion from 2001-2007 (not surprisingly, directly after the 1999 repeal of the Glass-Steagall Act); and in the ensuing post-meltdown six years, added another $30 trillion – crossing the otherworldly $100 trillion level in 2013.  The U.S. alone accounts for 60% of this amount or, put another way, more than 100% of the entire world’s cumulative wealth.  Sustainable, do you think?

Worse yet, using “generally accepted accounting principles,” one could easily measure the U.S. national debt closer to $80 trillion than the published $17.5 trillion; just as China’s “31%” debt/GDP would be nearly 170%, and Spain and France’s “85%-90%” published figures (conveniently, just below the “death zone of 100%), 140%150%.

Total US Federal Graph

And not only is debt increasing parabolic ally – both on and off-balance sheet (and we haven’t even touched on unregulated, over-the-counter derivatives), but “GDP” is blatantly overstated, and GDP estimates rapidly declining.  To wit, the U.S.’s first quarter 1.0% GDP decline (comically utilizing an historically low inflation deflator) was dramatically below initial estimates of +3.0%; and yesterday’s 13% reduction in the World Bank’s baseline 2014 GDP growth assumption validates that similar expectations have disappointed globally.  No doubt, Japan’s horrific post-sales tax spending decline will yield dramatically lower growth in the coming quarters, whilst China’s historic credit contraction may well cause such “trivial” declines to pale in comparison.  And as for Europe, last week’s draconian ECB moves to enact negative interest rates, whilst re-engaging the “LTRO” bailout mechanism and the “SMP” QE scheme tells you all you need to know about likely near-term European economic growth.

Zero Hedge

Zero Hedge

Consequently, global debt is all but guaranteed to continue its parabolic rise, which is precisely why Central banks can NEVER allow interest rates to rise.  And now that the world at large has become net sellers of the two largest bond markets – i.e., U.S. treasuries and Japanese government bonds or JGBs – the need for “QE to Infinity,” both overt and covert, has never been stronger.  Central bankers know it, politicians know it, and most importantly investors know it; which is why, they are buying the world’s worst sovereign credits hand over fist.

Zero Hedge

As always, unfettered money printing is yielding dramatic increases in the prices of things we “need versus want”– as validated by announcements over the past month that the U.S., Japan, and China – among others – are experiencing their highest CPI inflation prints in years.   And thus, real interest rates are only becoming more negative, i.e. the most powerfully bullish precious metals factor imaginable.  Heck, now that Europe has instituted negative interest rates, even the age-old propaganda that gold is not valuable because it doesn’t pay interest no longer holds water – given that it will now “pay” a higher rate than many bank accounts!

And all along, as the Cartel’s paper gold and silver algorithms suppress prices in unprecedented fashion – incorporating the newest variation, which I call the “DLIM” or “Don’t Let it Move” algorithm – demand for physical metal continues to steadily rise with China and India alone expected to yet again, account for at least 90% of all of 2014’s global production.

How much longer will it take for the “New York Gold Pool” to be overwhelmed by this inexorable, soon-to-be sharply accelerating global demand?  And when it does, will the 1970s 20x increase be the limit of the ensuing price surge, or will hyperinflation yield significantly higher gains?  We don’t know – or frankly care; as in all potential scenarios, we anticipate gold and silver’s purchasing power to rise exponentially against fiat currencies, and materially against “real items of value” as well.  And thus, we ask are you yet protected from the inevitable, currency-destroying effect of parabolic global money printing and debt growth?  And if not, what are you waiting for?