Christopher Wood, author of Greed & Fear, discusses the global economy including China, Europe, the US, and the collapse of the US dollar paper standard:
My view is that there is an inevitable end game as a result of all this massive spending of taxpayer money in the West and Japan to bailout bankrupt banking systems, so my view unfortunately, is the end game will be a systemic government debt crisis in the Western world. It will probably happen in Europe but I think it will climax in the US and I’m expecting in a five year view the collapse of the dollar paper standard.
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In the short-term the European crisis will cause dollar strength against the Euro. Ultimately the crisis will happen in the US. The key point: Investors who want to hedge this risk need to own gold bullion, they need to own gold stocks and they need to own Asian and emerging market equities.
We often discuss the potential for an economic collapse. While such a collapse, especially one that involves a crisis in the US Dollar, could happen very quickly in a period of mere weeks or days once it begins, the point at which the dollar reaches event horizon may take years to play out and has been outlined by Mr. Wood.
The global economy is massive and there are a lot of different elements involved. For the time being and since March of 2009 the place to put money for growth has been the stock market. With sovereign debt issues in Europe coming to the forefront and the potential for a massive real estate meltdown starting later this year the next phase of the crisis will likely involve a transfer of capital wealth from stock markets (including China) back into the US dollar via the purchase of US debt instruments like bonds, bills and notes. After this short-term dollar pump, the severity of the crisis will set in as US job losses continue to mount, US GDP goes negative, real estate prices spiral downward and US government spending continues to expand unabated. This is where the endgame will take place — when domestic and foreign investors lose all confidence in the US government’s ability to manage the crisis.
The public has been told that we are out of recession and that a depression was completely avoided. This head fake is only going to work once. Next time, lip service will not be enough and those with any money to invest are more likely to know they are being scammed by economic experts and government officials.
As a result, capital will flow into the last safe haven asset on the planet – precious metals.
It is impossible to predict the exact time frames involved. As we saw with the 2008 crisis, things can happen very quickly. Bob Chapman has suggested a time frame of about 12 – 18 months before the US Dollar begins to fall apart. Mr. Woods and well known investors like Marc Faber believe it will take a bit longer with time frames in the five year range.
In any case, the math is irrefutable. A US Dollar detonation is coming and along with it we may very well see an economic collapse unlike any other in the history of the world.
Hat tip Tom of the North and Michael
Watch the CNBC Interview with Christopher Wood:
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bullish for gold and miners over 5 years booyaaahhhh
miners papers will worth 0Â Â Â just papers
Already all in on what he’s saying.
If the dollar crashes. ANYTHING that trades in dollars will go with it. With that in mind, and with the unpayable debt that we have accumulated….WHY IS THE STOCK MARKET CONTINUING TO GO UP???
Comments…..The stock market going up is nothing but an illusion. In 2000 it took 43 ounces of gold to by the stock market, today it only takes 9 ounces. Which means if I sold the stock market ten years ago and converted that money into gold, today i can buy it back for a quarter of the price.
What’s more amazing to me is the absolute cluelessness of the CNBC “business” anchors. Did you catch the very end of the clip where one of them exclaims “wow!”.Â
How sysmbolic of the country as a whole. Millions of Americans that are utterly ignorant of what we are facing, whether it be 18-24 months(Faber’s position) or 5 years(Wood’s). I’m praying the latter. We all could use a little more time. We preppers more likely than not will end up being societal leaders by default. We have to remember that survival is 20% physical and 80% psychological.
I continue to scratch my head over why the stock market keeps going up. I don’t even think it should be higher than 8,000 right now. My gut tells me manipulation and the President’s Working Group on Financial Markets (aka the Plunge Protection Team) is working overtime the past year.
Gold is just as worthless as paper. People only have faith in gold because they have faith in gold. Gold can be undermined just as easily as paper dollars. Get real.
Gold can (and will) be confiscated by the Federal government. It happened before and it will happen again. After the confiscation, gold will be officially price-fixed to back all existing Federal Debt – somewhere upwards of $25,000/oz – maybe A LOT higher! Private gold holdings will be illegal and untradeable except on the black market (a dangerous activity). Once gold is concentrated in the hands and vaults of the Federal government, some ‘interesting’ characters will come to collect it. 😮
And yeah – gold is hard to digest!