14 Questions for 2014

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Gary Christenson - Deviant Investor

“Those who cannot remember the past, are condemned to repeat it.” George Santayana.

  1. What mistakes from the past are we condemned to repeat?
  2. Since unbacked paper currency systems have always failed in the past, why have bankers and economists promoted an unbacked paper currency system since 1971?
  3. Would the Federal Reserve, which is owned by private banks, seek to enrich its member banks and the financial elite by implementing monetary policies such as QE that purchase distressed bank assets and boost the stock and bond markets?
  4. Janet Yellen is the new leader of the Fed and new leaders are almost always confronted with a financial crisis early in their term. What should we expect during the next 18 months?
  5. ALL paper money systems have eventually failed due to excessive “printing” of the paper currency. How many years of “printing” $85 Billion per month qualifies as excessive “printing”?
  6. Like this blog? You might enjoy my e-book:

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  7. Human nature changes very slowly if at all. Politicians have lied to most of the people most of the time during the past several thousand years to serve their own self-interest. Are politicians currently lying about ObamaCare, strength of the economy, employment, the NSA, big banks, the IRS, Syria, and so much more?
  8. Why does gasoline currently sell for approximately $3.50 per gallon even though it cost only $0.15 per gallon about 50 years ago? Why does a cup of restaurant coffee no longer sell for $0.10? Why do $20 gold coins containing nearly an ounce of gold now sell for over $1,250?
  9. The S&P 500 Index is trading near an all-time high and is by most measures and sentiment severely over-bought on a weekly and monthly basis. Is it ready to correct downward?
  10. Why is the official unemployment rate falling even though fewer Americans are working and the labor participation rate is at 30 year lows?
  11. The Federal Reserve has been levitating the stock market and bailing out banks. Is it possible the Fed policies will backfire and those policies will eventually accomplish the opposite of what the Fed wants?
  12. If the national debt of $17 Trillion can never be repaid, and if the U.S. government must borrow to pay the interest every year, and if the Federal Reserve must “print” those dollars, what is the real value of that debt? Is it $17 Trillion or perhaps a great deal less? The economist Hyman Minsky called this “Ponzi Finance” – the final stage of a debt based economic system when payments on the debt must be made from additional borrowing.
  13. If a soaring gold price encouraged people to question the value of the U.S. dollar, and if the U.S. government had the means to suppress the price of gold, would the U.S. government manipulate the price of gold lower?
  14. Germany requested their gold be returned from the NY Federal Reserve vaults about a year ago. It has NOT been returned. What happened to the German gold? Further, how much, if any, of the gold supposedly stored in Fort Knox is physically there and not “leased” or otherwise encumbered?
  15. Gold has been money – a store of value, divisible, a medium of exchange, a unit of accounting, and intrinsically valuable – for 5,000 years. Paper money has usually been little more than a politician’s promise of integrity and responsibility. Which do you trust – gold or a politician’s promise?

These questions and their answers suggest that:

  • Drastic restructuring of the current monetary system seems inevitable, whether or not it is imminent.
  • Before the system resets it seems likely that governments around the world will scramble to locate and nationalize assets in order to maintain their power for a while longer. Capital controls and financial repression via artificially lowered interest rates are already in place. Pension plans, savings accounts, and IRA and 401(k) plans seem vulnerable to partial confiscation, bail-ins, or mandatory investment in government bonds. Such confiscations and bail-ins have already occurred in other parts of the world and could easily happen in the United States.
  • Gold and silver have protected purchasing power and assets for 5,000 years. In this twilight period of the current debt based monetary system it seems likely gold and silver will increasingly be necessary for protection of purchasing power and assets. Are you prepared?

GE Christenson
aka Deviant Investor

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8 thoughts on “14 Questions for 2014

  1. How is gold a “store of value” when it sheds 30% of its value against fiat? This occurred despite you and others of your ilk advising to purchase…er…invest in gold.

    Anyone who followed this crazy gold advice in the last 2 years has gotten destroyed.

    Gold didn’t store any value…it got nuked and anyone with significant skin in the game has some wicked road rash now!

    Gold is for banks, givernments, gamblers and speculators.

    Gold does not belong in anyone’s investment portfolio. It is not an investment…it is a bet.

    You should post some ideas on blackjack and Texas Holdem…they would fit right alongside your advice regarding gold investing.

    • Thank you for your comment but I think you missed the point. I’ll try to address your concerns.

      1) I’m sorry you lost money in the gold market during the past 2 – 2.5 years. It happens.
      2) Yes, if you start counting at the high in gold in August 2011, it has lost money since then, against fiat.
      3) But if you look a bit longer, say back to 2001 gold has gone up about 400%. In that time the S&P has gone up, depending on your starting point, perhaps 25 – 50%. If you kept your money in fiat dollars in a saving account you probably earned, as a guess, 20 – 30% in that time.
      4) If you want to look back say 30 years to 1984 the S&P did better until 2000, but gold still did quite well over 30 years.
      5) Anyone who invested in gold in the past 2 years is probably unhappy. You are correct on that point. How did your investments in the NASDAQ do between 1999 and 2001? How about your investment in houses from say 2004 – 2010? Markets are volatile and they go up and down. Consequently gold does not only go up. Nor does the stock or bond market. You should know this.
      6) “Gold is for banks, governments, gamblers and speculators.” This ignores 5,000 years of history – but that is your choice.
      7) “Gold does not belong in anyone’s investment portfolio” Sorry, I must disagree with you. It belongs in the portfolio of those who understand history, understand the inevitable decline in the value of fiat currency, and who understand that investments move in cycles and that gold, like the S&P, oil, bonds and so many more move up for years and then down for years. If you don’t understand investment cycles then a portfolio of anything but savings accounts is probably not appropriate.
      8) re “Blackjack and Texas Holdem” … I enjoy both games but don’t understand them well enough to write about them or to put any real money into them. I think this is good investment advice – don’t put money into something you don’t understand.
      9) Based on your sense of history and the tone of your comment, you might be better off selling your gold here and now, near the bottom, and investing in a savings account that has less volatility. I think your investment results would be better in gold over the next 2 years, but regardless, everyone should invest in things that make sense to them and avoid the things that don’t make sense.

      I hope this helps.

      GE Christenson
      aka Deviant Investor

  2. “unbacked paper currency systems have always failed”? Well, we currently have an “unbacked paper currency system” world-wide and it is STILL WORKING. It hasn’t failed. You might not like it, you might argue that it impoverishes people, that it will probably fail in the future – but you cannot deny that it is still working and hasn’t failed.

    As opposed to a gold standard system, ALL of which have ALREADY failed in the past and NONE of which exists in working condition today.

    So, which is better? A system that still works, although all previous examples of it have failed, or a system all examples of which, without exception, have failed and no longer work?

    A gold standard imposes restriction and discipline on the government, which is why governments ALWAYS kill it eventually.

    • Interesting! I think you answered your own question. Which is better – a paper system that still works but all previous examples indicate it will fail… or a gold standard that works so well governments must kill it? Clearly the gold standard is better, if we can just keep it.

      Thanks for your interestingly worded comment.

      GE Christenson
      aka Deviant Investor

  3. An excellent summary of a system out of control and heading for an imminent tumble over the edge and into the abyss. Fasten your seatbelts? Better bail out now of any dollar denominated assets. Better a few months too early than a day late.

  4. With the same ” Tribe ” behind all the above mentioned activities , the same ” Tribe ” in control of the MSM , Hollywood, International Bank of Settlement , World Bank , F. E. D., Banks too BIG to JAIL , ALL U.S. Departments of Government , and the Sock Puppets in D. C. , when will people begin to stand up and identify these ” Tribe ” members without being afraid of being called Racist or Anti-Semitic ?

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