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Traders Want Anything But Currencies

Published 07/06/2016, 02:50 PM
Updated 05/14/2017, 06:45 AM

Gold and silver have spiked dramatically higher in 2016. Just in the last week we have seen silver squeeze higher by 20%. It is extremely rare to see both gold and silver surging together. Why? Because gold is a store of safety, while silver is mainly an industrial metal. Which usually means that gold surges in times of uncertainty while silver generally stalls or falls because the uncertainty is due to something economic. Negative economic issues can hurt demand for silver.

It's Just Not Normal

This mega spike in gold and silver's price action paints a terrifying picture: one where investors have lost all confidence in the central banks. Whether it's the Bank of England, European Central Bank, Bank of Japan or the Federal Reserve, currencies are viewed as being far too risky. Remember, interest rates in Japan and some places in Europe are now negative. It is not normal to pay a bank to hold your money. Central banks have created this artificially. Investors now prefer to hold gold, which is normal in fearful times...but also silver. And that's shocking. Central-bank printing presses and monetary policy have gotten so out of control that investors are willing to buy anything but currencies. Look at the price of Bitcoin (BTC-eUSD), which is up over 200% in 2016. Remember, central banks around the globe have absolutely no regulatory power over the crypto currency. It can't be printed at will.

Keep an eye on other metals to see if they start getting the same play. An even more economic dependent metal is copper. If gold and silver continue higher, look to buy copper, which could be the next store of safety from the out-of-control central banks. Pretty scary for investors if you hold lots of dollars, yen, euros or pounds. Diversifying into other assets that cannot be printed is extremely important in this day and age.

What's The End Game?

It's simple yet horrifying. There will be another epic global collapse, far worse than the financial catastrophe in 2008-2009. It will spur a global depression. All of it caused by central-bank policy. As the world emerges, the central banks will be dissolved. You read it here first. This will happen in the next 10 years.

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