Gold Can Save World From Credit Bubble

Release Date: 
Friday, May 8, 2015

Gold and Silver Prices
Gold moved higher on Friday after release of expected job numbers but could not completely retrace earlier losses.

“Gold is firmer in early U.S. trading Friday, following the much-anticipated April jobs report that was pretty much in line with most market expectations. Gold prices were near steady just before the report. Gold’s upside reaction to the as-expected jobs report suggests the bears had become exhausted on a near-term basis.” (“Gold Modestly Up After U.S. Jobs Data that Met Market Expectations,” Kitco News, 5/8/15.)

Gold finished the week up $9.60, closing at $1,188.50. Silver prices closed the week at $16.50 up $0.30.

Gold Can Save World From Credit Bubble
Silverseek writes that gold may be the only safety net once the world credit bubble created by sovereign debt pops.

“Interest rates are at multi-generational lows… The credit bubble has grown so large that the supposed central bank gold would have to be valued at $40,000 to $80,000 per ounce to back all the debt. Revaluing gold higher by a large factor may become necessary in the future to reestablish confidence in currencies. However a revaluation certainly will not be welcomed by central banks, governments, or most individuals. The transition to $80,000 gold, or even $10,000 gold, would be very traumatic.

“But can the world increase debt forever, inflate the sovereign debt and global credit bubbles even further, and not create an equally disastrous hyperinflation or a severe deflationary depression? Something is likely to break.

“Governments and central banks created the credit and currency bubbles. When fiat currencies crash in the next crisis, backing currencies with gold could “save the world” and restore confidence in fiat currencies but only after significant trauma. Perhaps central banks will do the “right thing,” but only after they have exhausted all other alternatives. It will be a long and difficult wait.” (“Can Gold Save the World From the Credit Bubble?” Silverseek. 5/6/15.)

Economic Recovery “Pure Fiction:” Steve Wynn
As new jobless figures suggest lower unemployment, business magnet Steve Wynn warns the claims of an economic recovery are untrue.

“One of America’s most astute businessmen, known for having expanded the Las Vegas strip of resort hotels and casinos in the 1990s, says the U.S. remains mired in an economic funk and any talk of a broad recovery is ‘pure fiction. A lie…’

“‘Well, the idea that America is in the midst of a great recovery is pure fiction. It’s a lie. It’s a jobless recovery… Because recoveries are marked by the level of real employment. And if you count the people who have left the work force, real unemployment is 15 to 20 percent.”

“Not only is unemployment much higher than the “official” rate of 5.5 percent, but Wynn said the Consumer Price Index, used to measure inflation, is also rigged in such a way that it doesn’t accurately reflect what real Americans experience on a daily basis. ‘If you take real inflation, and you’ve got to count energy and food and all that stuff, real inflation is much higher than they say it is,' Wynn said. 'My employees’ take home pay, in spite of the increases we give them, their paychecks are 90-cent paychecks, 90 cents on the dollar. It’s very difficult for the middle class in America to keep up because of the inflationary pressure and the devaluation of the dollar….’” (“Steve Wynn: Economic Recovery ‘Pure Fiction,’ WND, 5/5/15.)

“Black Swan” Catastrophe Likely
Geopolitical expert Ian Bremmer is warning a catastrophic cyberattack against the United States is becoming more likely.

“The cyber gap between the US and its adversaries is only expected to narrow as nation-states and hacktivists invest more time and money learning how to spy on, steal from, and destroy digital systems… Basically, America's foes are learning from the US — and Washington's previous aggression means that cyber adversaries aren't holding back… And as the trend continues, the chances of a catastrophic event increase…”

"’For now,' Bremmer said, ‘if there's a black swan event that proves maximally geopolitically disruptive in the near-term, an unprecedented-scale cyberattack from Russia or a non-state actor would be top of my list.’ As Ray Boisvert, a veteran of Canada's intelligence services, told the Infiltrate offensive hacker conference: If 2014 was the year of the hack, 2015 will be the year of destruction.” (“BREMMER: The US is losing its cyber edge and 'a black swan event' is increasingly likely,” Business Insider, 5/8/15.)

Threat Of Nuclear Arms Race in Middle East Growing
The Wall Street Journal reports that countries such as Saudi Arabia, Turkey and Egypt are considering adding nuclear arms, increasing the risk that terrorists will acquire nuclear weapons.

“In Saudi Arabia, there are widespread public calls to match Iran’s nuclear quest. The two other Middle East heavyweights, Turkey and Egypt, could also feel compelled to follow suit, senior Western and Arab officials warn. Such an arms race would further destabilize what is already the world’s most volatile region, where the risks of a nuclear war would be compounded by the threat of radioactive material falling into the hands of terrorist groups…

“Our leaders will never allow Iran to have a nuclear weapon while we don’t,' added Ibrahim al-Marie, a retired Saudi colonel and a security analyst in Riyadh. “If Iran declares a nuclear weapon, we can’t afford to wait 30 years more for our own—we should be able to declare ours within a week….”

“’Our allies aren’t listening to us, and this is what is making us extremely nervous,” said Prince Faisal bin Saud bin Abdulmohsen… ‘If I am basing my judgment on the track record and our experience with Iran, I will say they will do anything in their power to get a nuclear weapon…Should Iran gain the ability to produce weapons-grade uranium and ability to deploy such weapons,’ developing a Saudi capability in response ‘would be considered as part of our homeland security….’” (“Saudi Arabia Considers Nuclear Weapons to Offset Iran,” 5/7/15.)

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: Hear how the job market effected gold, the economy and fereral rates.

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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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