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Monday, 8 July 2013

What Governments Do When They're Dying


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Money and Markets  
What Governments Do When They're Dying
by Larry Edelson

Dear Gerald,

The French government on May 23 banned all movement of gold and silver shipped into, around or out of the country by post. Cash and euro coins were also banned.

Is this the beginning of a global trend toward more and more capital controls?

I believe it is, as is the recent revelation that the U.S. NSA is monitoring everything you do.

Mark my words: As insignificant as some of these things may seem to you, they are not minor matters. They are telltale clues that the next phase of the financial crisis is about to erupt.

Look, the governments of Europe, Japan and the United States are all dead broke. They are operating on a wing and a prayer. On funny money. With smoke and mirrors added in too.

If they were corporations, they would be in bankruptcy court. Chapter 7 of the code, a liquidation. Where the company is so broke, there’s no chance of ever surviving or getting funding elsewhere. Where assets are liquidated and what can be sold is sold for pennies on the dollar.

I wish it weren’t that way. But that’s the stark reality we all face. Thing is, governments never go down without a fight.

Instead, they tend to take down everything and everyone with them. That’s what happened in Rome. In Byzantium. In countless other great civilizations where the government went broke.

They hunt down the rich and want to know where all their assets are. They increase taxes on everyone. They start spying on you. They start making it more and more difficult for you to make money in your business. To protect yourself financially. To hide anything from them.

They squash your liberties. They deny you your rights. They act like Leviathans and Big Brothers, watching your every move. They will fight you every step of the way as they sink further into an abyss.

It’s not easy to say all this, right on the heels of July 4th. And I sure hope I am wrong. Especially when it comes to the United States.

But I doubt I am going to be wrong. Which is precisely why I have recently taken some extraordinary steps for myself, steps I also suggest you take.

I have moved my cloud storage to secure, encrypted servers in Switzerland. Swiss cloud-storage companies are not likely to be spied on.

I will soon move my email offshore to an encrypted email service away from the spying eyes of Google and the U.S. government.

I will soon move some banking offshore, but not to your typical bank. Instead I’ll be seeking out custodial and trust banks where my deposits are not creditors of the bank and are instead fully segregated from the bank’s liabilities, and therefore protected.

And more. All actionable items that I will also tell my subscribers how to do so they can take similar steps to protect their privacy and their wealth.

But most of all, I will trade the dickens out of the new bull market that’s shaping up in the precious metals. It’s where I cut my teeth in the markets 35 years ago. I’m ready to rack up the profits once again.

To find out more, you should attend the last session of my special online summit on the gold market.

Just click this link at 3 PM Eastern Time tomorrow.

If you missed any of the first four sessions or would like to watch them again, you can do so by clicking here.

Best wishes,


Rate Watchdog
by Mike Larson

Let’s get one thing straight: “Communication” isnot the problem.

The so-called experts on Wall Street keep saying that if the Federal Reserve would only communicate better about its expected monetary-policy path, everything would be hunky-dory. Interest rates would remain low, bond volatility would stay suppressed, and we could all go on our merry way.

But it’s not that the Fed isn’t talking enough. Hardly a day goes by without another Fed press conference, another speech by a Fed governor, or an “anonymous source” report in the Wall Street Journal or elsewhere, reports that are obviously the result of planted quotes from Fed policymakers.

The real issue is that policy makers are completely boxed in.

Look, the Fed basically spent the last four years cornering the bond market. They’ve amassed a $3.4 trillion balance sheet, one loaded down with Treasury bonds, mortgage bonds and more. That was fine when bond investors were playing along, buying bonds aggressively so they could turn around and flip them to the Fed at virtually guaranteed, predictably profitable levels.

But now investors are running scared. They know the Fed is going to have to slow its bond buying, then stop buying and eventually start reversing course. And they can see that a “tipping point” has been reached in the 30-year bull market for bonds. Worse, fund managers no longer have the firepower to keep the markets propped up because their own investors are yanking tens of billions of dollars per week in money out of their funds.

Result: Neither the Fed — nor the bond fund managers who keep going on TV to tout Treasuries — can stop the selling wave.

Ten-year Treasury yields just hit a 23-month high of 2.72%. The iShares Barclays 20+ Year Treasury Bond ETF (TLT) just reached a 22-month low. And the iShares MBS ETF (MBB), an ETF that tracks mortgage bond prices, plunged anew, flirting with levels not seen since December 2008.

If you didn’t heed my advice several months ago to virtually eliminate your fixed-income exposure, what are you waiting for? Take advantage of any bounce — like the one we had earlier this week — to sell. I also strongly recommend that you consider investments that rise in value when bond prices fall. That would include everything from inverse bond ETFs, to put options on bond ETFs, to vehicles like Treasury bond futures options.

I will have more on these in the coming days and weeks. So do stay tuned.

Mike Larson,
Money and Markets Analyst on Interest Rates and Real Estate

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posted by Informed Trading at 05:34
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