Are We Denying a Locomotive is Headed Our Way?

I have often been a good predictor of down trends. I have had success with gold and silver investments by seeing the discord in not only the markets but the public psyche.

They say don’t let your life be ruled by fear or you will bring what you fear. I have also found that to be true. But this new trend might not be influenced by how we think. What would be important is how we prepare.

I don’t consider myself a pessimist. But if I see a tsunami, I don’t think I can jump over it. There are plenty of indicators that major investors and governments are preparing for severe disruptions. The Chinese and Indian governments are two that are buying gold. China and major investors are eating up arable land in Africa.

If the global systems hit the wall, we can expect currency issues and even food issues. If currencies lose value the most important commodity on earth, food, becomes unaffordable. Several sources predict inflation in food costs which reflect currency issues as well as shortages.

There are early predictors of a global currency with hard assets as a foundation. Damon Vickers in “The Day After the Dollar Crashes” ,which would be the day no one wants to buy our Treasuries, predicts that the IMF would step in to negotiate a world currency. He predicts this could be a ten year window or less.

Therefore, guessing which currency or precious metal would be a good storage of value is not as crucial as determining how we will get food if super inflation hits. If currencies crash, it will most likely lead to panic and a run on food.

Even though our government would like us to believe increased GDP will take us out of trouble, the discussions behind the scenes are that we are in more trouble than we can escape. The hand writing is on the wall. It is also more likely that we will see disruption in Europe before we see it in the U.S.

The most important point is that we not panic, but prepare. There may not be anyone that can tell you exactly what to do. It is possible very few will escape a change if the world has to realign currencies and debt.  What is advisable is that everyone get healthy, create reserves, and contemplate how they could be productive if everything changes.

Developing countries in which people are already at the poverty level would be minimally affected. Developing countries might also have greater insulation because they are running a positive balance of trade.  If you can produce and export, you can work yourself out of problems quicker.

An article in the NY Times about Europe also reflects problems in the U.S. These have also become global problems.

“Given the problems in the euro zone — sovereign debt, undercapitalized banks, aging populations, imbalances in trade, growth and competitiveness between northern and southern countries — many analysts and some officials have been pushing for the introduction of eurobonds, which would combine the credibility and collateral of all the members of the currency union. “