GOLD – GETTING SET FOR THE GREATEST BULL MARKET OF ALL TIME

The astonishing strength behind the most recent rally in gold is known to all readers. Also, the reasons behind gold’s change in fortune have been well documented by such writers as Michael Pento, Egon Von Greyerz, Peter Schiff, Marc Faber, James Turk, Rick Rule and on this site by Clive. Hence, there is no need to discuss this here. Suffice it to say that the scale of the developing global financial and economic crisis has no historic precedent. Furthermore, such is the parlous state of the Central Bank based global banking system that interest rates can no longer be used to stimulate or correct the excesses of a world drowning in an ocean of debt where the lifeblood of the economy is being absorbed by unproductive banks and financial institutions and enormously bureaucratic, inefficient and vastly oversized governments hooked on a battery of taxes ranging from graduated personal income tax, corporate tax, value added tax, capital gains tax, death duties, habitation tax, stamp duties and so on and on. Indeed, so complicated have tax systems become that the 2016 tax guides for the UK, US, Canada, Australia and Europe virtually rival major encyclopaedia in size. The misallocation of capital and resources has reached epic heights with taxation, debt, corporate and unprecedented personal regulation and loss of liberty closely akin to Communist Russia and other dictatorial regimes. To say the world has never been in such an appalling mess would be putting matters mildly. The reader is highly recommended to read www.zerohedge.com which daily documents how things really are, rather than the totally misleading Orwellian “Disney World” like fantasy presented by the mainstream media.

The latest proposals of the Central Bankers, led by the very desperate Bank of Japan and the increasingly desperate ECB moving ever deeper into Negative Interest Rate Policy (NIRP) country, after years with Zero Interest Rate Policy (ZIRP) and QE1, 2 and 3 from the US Fed, testifies to the absolute lack of options left on the table and maniacal nature of the elite in their pursuit of Global Government and control of the planet and the sustaining of the surreal “all will be well” and “strong economy” nonsense purveyed on all controlled media outlets to the Joe Public.

To add to the systematically unravelling economic and financial shambles, the world is now faced with not one imminent “black swan” event but an entire flock of them hitting almost simultaneously, as follows:

1. The collapse of the BALTIC DRY GOODS INDEX (BDI) to its lowest level in history – down from over 11,500 to 290 last week – a staggering fall of 97.50%, thus recording a virtual collapse of trade in major commodities lead by oil, gas, coal and iron ore as most notably the Chinese economy as well as the world economy generally implodes, coincident with the extreme loss of money velocity. Put simply the world economy is seizing up,

The greatest collapse in the bulk tonnage freight index in global history. The Baltic Dry Goods Index falls from its zenith of nearly 11,000 to todays 290. This is the clear harbinger of economic collapse and the effective seizing up of the global economy.

2. All major global equity markets are in a bear market and moreover it’s only just begun. Falls so far are off their peaks at between -12% and -20%. On this site, we are expecting at least a further 30% – 50% fall in these markets during 2016. The fall on the S&P will be the most spectacular with a 60% decline probable from its 2015 peak,

“STARING INTO THE MARKET ABYSS IN 2016″. A graphical history of 20 years of crass monetary policy by the Central Banks and the enormity of market bubbles created (equities, T Bonds, Derivatives and Real Estate).

3. Commodity markets (the CRB Index) are down some 85% to 90% and many major mining stocks are down between 65% (RTZ) to 90% (VALE and Freeport MacMoran FCX).

4. The war in Syria and Iraq which has gotten steadily worse with the stakes getting ever higher threatens to turn into an all-out proxy war between Saudi Arabia, Turkey and Russia and Syria, with the US and UK waiting for the go signal to come in behind its Muslim allies. The US, Israel, Saudi Arabia, the UK, France and Turkey have been planning this one for years. Russia entering on the side of Syria (the elected Government, despite how President Assad is presented in the syndicated and biased Western media) against ISIS and Al Nusra, plus a host of other “legitimate” (US and “Allies” supported) opposition groups all funded and militarily supplied by the West and Saudi Arabia has been a game changer for the US, UK, EU, Turkish and Saudi Arabian planners. However, the US led coalition, Turkey and Saudi Arabia always knew that there was a chance that Russia could militarily support Syria.

Currently, a very dangerous escalation has been precipitated by the imminent fall of Aleppo to the Syrian forces. Saudi Arabia and Turkey could send in ground troops and aircraft based in Turkey to “attack ISIS” a Saudi and CIA backed creation, but everyone knows their prime targets are to: 1) depose President Assad and replace him with a puppet Government; 2) neutralize Russia’s influence in the region; 3) meet Israel’s regional strategic agenda to neuter and control the Arab States in the region; 4) take control of the important Kurdish controlled Iraqi oil fields of Mosul and Kirkuk and those of Southern Syria, currently being pumped out and sold by ISIS and the Turks.

5. Finally, as if all this were not enough, China has been militarizing its newly built “islands” in the Spratly Island Chain in the South China Sea, jointly claimed by the Philippines, Malaysia and Vietnam. The Spratlys, besides being the potential site of major oil and gas fields containing billions of barrels of oil and trillions of cubic feet of natural gas, sit astride the world’s greatest trade route between Japan, China and the Indian, African, European and North American markets where some US$ 5 trillion in goods passes every year. This has all the makings of a major conflict flashpoint between China, the US, Australia, the Philippines, Malaysia, Taiwan and Vietnam.

Simply put, the situation for gold has never looked better in history, and this site believes that the next few years in the gold market may be the greatest the yellow metal will ever experience. Given the scale of the: 1) financial imbalances especially within the equity, bond and derivatives markets where risk levels are rising at an exponential rate; 2) colossal misallocation of resources and dislocation of society; 3) massive wealth imbalances due to monstrous redistribution of wealth into the hands of the few at the expense of the majority with all the inherent socio – political risks this implies; 4) most companies and individual people are submerged under unprecedented colossal debts from students to real estate mortgage holders; 5) growing and very serious geo-political risks from Estonia, Ukraine, Syria, Turkey, Iran, Afghanistan, Pakistan to the South China Sea and Korea, the stage is set for enormous upheaval not seen since 1914 and 1939. Against this unique and horrifying global canvas, gold is set to experience a resumption of its bull market and reach unprecedented valuations as the global markets face a brutal rebalancing in a world that is now a “tinder box” set to explode into war and conflict.

GOLD – GETTING SET FOR THE GREATEST BULL MARKET OF ALL TIME

Nigel Maund

March 2, 2016