Economist Bob Chapman, of The International Forecaster, has long advocated precious metals as one of the few wealth preservation assets against a wave of destruction that will wipe out everything from stocks, to bonds, to the US dollar itself. In his latest interview with the Corbett Report, Chapman shares his views on what to expect over the next several months:
The Federal Reserve knows that they can’t solve the problem. They have instructions to carry this thing out as far as they can, or until the powers behind government decide to pull the plug, so to speak.
One of the things you have to notice here, and this is pure psychological warfare, and if you’re not trained in it you don’t know what these people are up to…I was trained in it…Whenever you see an attack on silver and then gold the way it was you know that there’s going to be some dreadful things going up. Those were two vicious in-your-face attacks that a high school student could have identified as manipulation…
September and October are going to be dreadful. And that’s true, they are going to be dreadful. That’s the way I stack it up. And, of course, if there’s no QE3 equivalent the whole thing’s going down the chute.
There’ll be tremendous pressure on the stock market. They’ll try to hold it up. But it’s going to go down. How deeply it’s hard to say, but somewhere on the DOW between 8500 and 10,500.
In addition to stocks, Chapman warns about massive manipulations in the US bond markets through organizations like the New York Federal Reserve and Merrill Lynch, as well as a continued decline in real estate:
…by the looks of it it’s [the housing market] not going to bottom out in June of 2012…It will probably take another five years. So, if you’re thinking about buying anything, don’t. Because the pressure will be to the downside on prices. The inventory is going to be somewhere – now hold on to your seat – somewhere around 8 million homes. The inventory now is about 3.5 million. That’s where we’re headed now.
As we’ve opined in End of the Real Estate Crash?, this means real estate will collapse at least another 20% to 30% from here – perhaps even more.
We warn our readers, however, that any real estate purchases should be considered a long-term hold. Don’t plan on flipping, or even selling, for years.
Japan’s real estate boom, like ours, was predicated on cheap money and finite land. Inflation adjusted, the decline over the last 20 years has been roughly 75%. That’s a big number. Humanity’s cognitive dissonance response, especially in the Realtor community, will ensure that most analysts and experts avoid telling us how bad it can really get.
While we don’t have a crystal ball, we do have history books and if the real estate markets of today are anything like that of the Great Depression, then we have much farther to go.
According to analysis performed Martin Armstrong of Princeton Economics, during the Great Depression real estate prices in the farming sector fell from $2 per acre to 30 cents per acre. That’s a whopping 85% drop.
Most Americans have no idea this is coming, but it is simply impossible to ignore the (real) data, especially the forward looking data.
Even mainstream economists and financial sector insiders are now saying that we have serious problems ahead.
“I think we are heading for a market shock in September or October that will match anything we have ever seen before.”
-Senior Credit Banker at a major European Bank
source: Market crash ‘could hit within weeks’, warn bankers
“Here we go again…solving a debt problem with more debt has not solved the underlying problem. …Can the US continue to depreciate the world’s base currency?… European banks need $1 trillion of capital (bailout)… China’s growth is probably not sustainable… Solving a debt problem (ours) with more debt doesn’t work”
-Goldman Sachs Report Prepared for Hedge Fund Clients
source: The Daily Crux
“We are in a worse situation than we were in 2008. This time around we have fiscal austerity and banks that are being cautious. The hard economic data (which has come out recently) is all relevant to July while the soft data which has come out is for the future and that’s all moving in the wrong direction… The market may rally but unless the real economic data moves with asset prices, then eventually asset prices are going to go”
-Economist Nouriel Roubini
source: We Are in ‘Worse Situation’ Than in 2008: Roubini
The next phase of this collapse may very well be upon us. As Bob Chapman points out in his article Fearing An Even Worse Inflationary Depression Ahead, there’s just not enough money out there to stop this out of control freight train.
Print-and-Pray hasn’t worked, but governments and central banks will continue the same policies until the entire system seizes up:
The inflationary depression is still with us and has been for 31 months and it is going to get worse in the month’s ahead. We are again looking at a $1.7 trillion deficit.
We figure if no stimulus comes from Congress the Fed will have to create and monetize some $2.3 trillion more dollars, which can only mean worse inflation. We called QE 2 and stimulus 2, as well as QE 3 a year ago May. The Fed has not said anything about the $16.1 trillion they lent out, nor why none of it has been paid back. What about the $1.2 trillion that we ladled out to Wall Street and banking? It could be that QE 3 if announced in September could counter a falling stock market, at least temporarily. The timing could be perfect if even by accident. Then again, all markets and currencies are under pressure versus silver and gold. We could see gold shortly at $2,000 to $2,200 with silver at $60 to $70. By March gold could be $3,000 to $3,200 and silver $100.00. This may seem implausible to you, but we have been correct 98% of the time for 22-1/2 years.
September and the final quarter of 2011 is going to be a wild and wooly affair. If you are not yet into gold and silver related assets you had best start getting involved. If you own them buy more. You have no idea how really wild this is going to get.
The central planners have managed to keep the ship from sinking and the band playing for almost three years. They may finally be running out of stop gaps.