“Mother of All Collapses” Coming

Release Date: 
Friday, March 13, 2015

Gold and Silver Prices

Despite a recovery from lows earlier in the week, gold ultimately ended down as the dollar gained against the euro and the prospect of higher Fed rates persisted. “Gold prices continue to recover from a four-month low of $1,150.60 an ounce reached Wednesday, when the dollar neared a 12-year high against the euro. Gold, which is traded in dollars, becomes more expensive for foreign buyers when the buck strengthens against their home currency. The U.S. currency has strengthened on the back of expectations for higher interest rates, while the euro is under pressure from the European Central Bank’s bond-buying program, which began Monday.” (“Gold Futures Edge Higher,” WSJ, 3/13/15.)

Gold finished the week down $9.10, closing at $1,159.60. Silver prices closed the week at $15.74, down $0.29.

Sprott: “Mother of All Collapses” Coming

Billionaire Eric Sprott warns the current financial systems if facing the “mother of collapses” due to reckless central bank policies.

“’We had (the stock market collapse) of 2001 – 2003.  Then we had (the more intense collapse of) 2007, 2008, 2009.  The next one (collapse) is going to be worse because that’s just how these cycles progress.  As you know, they (seizures in the global financial system) get more violent and the collapses become more and more intense.  People couldn’t imagine it would get worse than 2001 – 2003, and yet we had 2007 – 2009.  This one that’s in front of us, I’m assuming it's going to be the mother of all collapses.’

“’The Debt/GDP numbers are getting so egregious that at some point they will have to stop.  It’s a lot like when Greece finally came out and said, ‘We’re a bankrupt state.’  Well, yes, we knew you were a bankrupt state and finally somebody admitted it and he won’t be the last guy either. There will be lots of those coming along because every country has done the same thing: increase the debt, GDP goes down and tax revenue goes down — ‘Hey, I can’t pay you back.’  That’s the definition of bankruptcy — ‘I can’t pay you back.’  Just like the U.S. government is not going to be able to honor their promises!’” (“Billionaire Eric Sprott Just Made The Most Terrifying Prediction Of 2015,” King World News, 3/13/15.)

Gold to $1400; Central Banks to Diversify With Gold

Two prominent fund managers see higher gold prices as central banks and foreign buyers flee fiat currencies for gold.

“Jeffrey Gundlach, the well-known investing guru who runs the money management firm DoubleLine Capital, is reported to have said in a presentation earlier this week that he thinks gold could rebound to $1,400 an ounce. His reasoning? Negative bond yields in Europe will make gold look more attractive. Gold is an asset that often outperforms in times of both inflation and deflation. In other words, when the market is scared of something, people flock to gold. And those negative bond rates are a tell-tale sign of deflation worries.…”

“Michael Cuggino, manager of the Permanent Portfollo fund, also thinks that there will be more foreign buyers for gold ... but it will probably be central banks holding it as an investment. The dollar may be the currency flavor of the month right now. But what happens when the dollar eventually weakens? Many central banks may find that gold looks like a safer bet than the euro. ‘Over time, gold prices will appreciate. Russia, China, India and central banks of other countries are looking to diversify their holdings. Buyers of any type will provide a floor for gold,’ he said.” (“Why gold could rebound to $1,400 an ounce,” CNN Money, 3/12/15.)

Good Time to Buy Gold: Hathaway

John Hathway, fund manager for Tocqueville Asset Management, believes now is a good time to buy gold.

“It seems to be a good time [to buy gold]. Gold is already strong in every currency other than the dollar. Negative interest rates in much of the world and the overly strong dollar should eventually result in political pressure to cheapen the dollar, but against what? The only monetary asset left standing will be gold.”

Mr. Hathaway also explained the importance of owning gold in these economic times: “What is going on in Europe is very unsettling to those with savings and capital in that part of the world. If Greece pulls out of the euro or if the Eurozone makes huge concessions to Greece, then it would become increasingly difficult to view the euro as a serious currency.”

“We all saw what happened in Switzerland. The Swiss couldn't just keep printing francs like crazy. So despite promises to the contrary, the Swiss pulled the rug out from the feet of a lot of people who bet on that. It was an important lesson. You can't take central bankers at their word. No matter what they say, currency manipulation is ultimately something that can't be sustained. One by one, those tricks will fail, and then we'll see the real economic consequences of our actions. When that happens, one thing you can own to protect you against massive currency devaluation is gold. It has been proven time and again.” (“Simple Test to Determine if Gold Price Is at a Bottom,” Market Oracle, 3/12/15.)

Gold Is Second Strongest Currency In the World: Aden Sisters

Noted analysts and publishers of the Aden Forecast, Mary Anne and Pamela Aden, told subscribers that the current currency wars should send gold, the “ultimate currency” into a new bull market.   

“Low interest rates are bullish for gold because gold is then not competing with the currencies. And with most major countries dealing with low to negative rates, gold moves up in the currency ranking. And indeed it has. Gold, as the ultimate currency, is only second to the U.S. dollar in terms of major currency strength. But the soaring fast paced dollar rise is now causing turmoil in the currency market. That is, a currency war is heating up.”

“The currency wars we have today are proof that it’s just a matter of time before gold moves back to center stage and overtakes the dollar as the ultimate currency… In other words, by this time next year we’ll probably have already seen the lows.
This means, we’ll take advantage of weakness this year to buy, more, and plan to keep all of your positions for several years. Once the lows have been established, the
next direction will be a big new bull market! Now if this major gold phase continues, we could see an exciting gold move develop, and we want to be sure to be onboard!” (“Metals, Natural Resources & Energy: Testing lows - the crossroads,” Aden Forecast, 3/15.)

CBO Warns Public Debt Will have “Serious Negative Consequences”

The non-partisan Congressional Budget Office issued a report that our national debt will equal nearly three-quarters of our economy, thereby threatening our economic health.

“Absent any dramatic change in spending or tax policy, the publicly held federal debt will amount to roughly 74 percent of the economy over the next several years – or more than in any previous year since 1950, according to a new budget analysis by the non-partisan Congressional Budget Office…

“While many economists differ on the importance and economic impact of a rising public debt, the CBO was adamant in its latest report that that such high and rising debt would have ‘serious negative consequences for the nation’ in the coming decade –   when interest rates begin to rise again and more and more of the budget must be dedicated to paying off interest on borrowing.

“’When interest rates [return] to more typical, higher levels, federal spending on interest payments would increase substantially,’ the CBO report states. ‘Moreover, because federal borrowing reduces national saving over time, the nation’s capital stock would ultimately be smaller and productivity and total wages would be lower than they would be if the debt was smaller.’”  (“CBO: Long Term Debt Poses “Serious Negative Consequences,” Yahoo Finance, 3/9/15.)

American Advisor Week In Review

Goldline provides a wrap-up of the week's precious metals news along with important commentary on the American Advisor Week in Review audio program: Learn why experts think gold is currently below the price of production and at a bargain buying opportunity. Listen to the show below:

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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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