Submitted by maalamalama Editor James Carusso
On December 7, 2009, I sent out a warning from our Managing Director, JS Kim, to thousands of people via email about the deterioration of the global economy that he had discussed for years that the great majority of people were ignoring. In that message, I spoke of many serious warnings issued by JS publicly since 2006 (and even earlier than 2006 to his clients) about the necessity to own physical gold and physical silver to avoid financial ruin in the coming years. Here’s some excerpts from that warning below:
In September of 2006, when Stephen Roach, a senior executive of Morgan Stanley stated that the commodity bull had ended, this man responded, “Everywhere in the media, you have pundits saying that the commodities Bull Run is over – including even chief global economists of major investment firms like Steven Roach of Morgan Stanley. THEY’RE ALL WRONG…I’ve dug deep enough down into the rabbit hole to know that gold will rise much much higher in the future. Yes, oil has slipped to below $60 a barrel but again, this doesn’t mean that oil is done either.” Since then, gold did not plummet from $570 an ounce back down to $250 an ounce as many “experts” predicted, but instead rose to more than $1,200 an ounce as of December, 2009.
At the very start of September 2007, this man stated, “Increased volatility in stock markets will occur as $370 billion in sub prime mortgages re-set to higher rates, starting with $50 billion in September and $30 billion every month thereafter for the next 18 months to 2 years. Triple-digit losses in the Dow during single day trading sessions will become commonplace.” Just three months later, triple-digit losses in the DJIA happened almost daily or several times a week to open January of 2008, shocking the investment community.
In this same warning, JS predicted that the global economy, and in particular the US economy, would experience great shocks in 2010-2011. While economic shocks have hit other countries in 2010, great economic shocks have not hit the US thus far in 2010, at least on the surface level. Look below the surface, and we have a completely different story regarding the state of the economy. JS now looks for these economic shocks to rise from below the surface into full view for all to see in the time frame of 2011-2013.
To understand why JS has pushed out this timeframe, I recently sat down with him and asked several questions.
James C: “Why do you think so many people today aren’t able to see the disaster that is coming to the US economy?”
J.S.: “Despite the weapons of mass financial destruction that bankers have created and governments worldwide have coddled and shielded from proper regulation, the majority of people still incredibly do not understand the crime syndicate-like relationships among governments, corporations and banks. The public sees that the US markets are up a little over 10% this year and many are duped into believing that that the stock market performance means that the economy is recovering. And this belief is reinforced by idiot talking heads on TV like Jim Cramer that do nothing but misinform people. Sure US markets have now risen by more than 36.79% since they crashed in 2008, a figure that sounds impressive on the surface level. Then combine this impressive sounding figure with US Fed Reserve Chairman Ben Bernanke’s national appearance on 60 Minutes, when he lies to the nation about inflation rates and about continuing to create more money out of thin air, and you have millions more that are converted into sheeple. How do I know? Because I talk almost every month to people in the US that tell me they believe the economy is recovering. So when people believe that inflation is still less than 2% because the Fed tells them to believe this, they look at a near 37% gain in the US markets in the last two years and believe that they have made substantial recovery in their pensions and IRAs and consequently believe the economy must be recovering as well! (by comparison, JS’s Crisis Investment Opportunities newsletter has returned more than 105.25% over the same time period, clobbering the S&P 500’s 36.79% return, and yielding very substantial REAL gains, even after the inflationary monetary effects of the US Federal Reserve’s schemes).”
James C: “So besides the government and bankers deliberately keeping people in the dark, why else do you think some, or even many, people believe the economy is recovering?”
JS: “First of all, the Federal Reserve’s insane POMO (Permanent Open Market Operation) schemes this year are largely responsible for propping up the US market this year. In 2009, when I stated that the US would experience significant economic shocks in 2010 and 2011, I did not yet know the duration of the Fed’s POMO operations and how insane they were going to be. Although daily POMOs had already reached upwards of $6 billion and $7 billion per day as of mid-2009 (just for US Treasuries, but up to multiples of these figures when including US Treasuries and other debt-related financial products), many had speculated that the POMOs would soon end. Obviously, with projected cumulative POMOs of nearly $1,000,000,000,000 just between November 2010 and June 2011 (again just for US Treasuries), the Fed Reserve POMO scheme not only did not end, but it received an injection of steroids in 2010. So POMOs that were used to buy future contracts of US market indexes is a major factor that has kept the US market afloat at this juncture and may continue to keep it afloat for several more months. Rising stock markets have no correlation to a strong economy anymore due to scams run by Central Banks and due to gains that largely occur due to the devaluing currencies that these markets are denominated in. The best performing stock market of the past decade has been the Zimbabwe stock market. Still, it’s irrelevant if you made a quadrillion Zimbabwe dollar profit investing in the Zimbabwe stock market, as by 2008, a loaf of bread would have cost you 1.6 trillion Zimbabwe dollars.”
James C: “If the economy is really not recovering, then can you explain what is really going on?”
JS: “Let me explain what is really going on with the economy with the following disaster analogy. In June of 1995, the Sampoong department store, a five-story building with four basement levels, suddenly collapsed in Seoul, South Korea, tragically killing 501 people and injuring 937 others. When the Sampoong department store was constructed, the owners, due to a desire to cut costs, made several fatal decisions. First, they decided to cut away a number of support columns in the original blueprint in order to install escalators. Secondly, in order to cut costs, the owners shrunk the original width of the support columns from the required 80cms to only 60 cms, an inadequate width to support the load of the building. In addition, the original blueprint called for only a four-story building but the owners built an additional fifth story that housed a restaurant with a very heavy heated concrete base that quadrupled the load of the original building design. Two months before the building collapsed, worrisome cracks appeared in the ceiling of the south wing’s floor. On the day of the collapse, cracks as wide as 10 centimeters appeared in the top floors of the building five hours before the building collapsed, but the owners hid this information from its patrons and refused to shut down and/or evacuate the building as they did not want to lose its daily revenue. When it became clear that the building was going to collapse, senior executives of the department store fled without warning any of the patrons still inside the building. An alarm to evacuate the building was only soundedwhen the building started to make loud cracking sounds, just 7 minutes before its collapse at 5:57 PM despite signs of an imminent collapse being clearly visible more than five hours prior. City officials Lee Chung-Woo and Hwang Chol-Min, in charge of overseeing the construction of the building, were responsible with concealing the illegal changes to the original blueprint designs and were later charged with and convicted of bribery.”
“Amazingly, the above story serves as nearly a perfect analogy for the US economy. The government and bankers laud a rising stock market as proof that the economy is recovering. They go on record stating that inflation is less than 2% when in reality it is more than four times higher. They state unemployment is less than 10% when it is nearly 23%. Thus, to many people, the economy appears as the Sampoong department store’s exterior appeared to the public right before its collapse, structurally sound and with a solid exterior. This is the reason why 40,000 people a day visited the department store despite its fatal structural integrity problems. The government and bankers are just like the Sampoong department store owners, actively concealing all warning signs from the public and selling them an illusion that all is okay when instead, the economy is heading for collapse. Just as the Sampoong department store owners constructed a crappy building destined to collapse due to excessive greed, bankers with the help of government officials, constructed dozens of financial derivative products destined to collapse due to their excessive greed as well.”
“The US regulators that also see the impending cracks in the economy, are just like Lee Chung-Woo and Hwang Chol-Min. They receive inordinate pressure and bribes from the bankers to look the other way and keep the public in the dark about the impending doom that is coming. In the case of the Sampoong disaster, when the contractors refused to continue work on the building when the owners changed structural regulations that endangered the integrity of the building, the owners fired the contractors and hired ones that would cut corners. US regulators that are honest and that try to protect the American public, like Brooksely Born, received the same fate as the original Sampoong contractors and are also fired or forced to resign. When the entire system is corrupt, even the rare good person can’t save disasters from happening. Thus, the public is none-the-better-off despite the presence of regulators that are supposed to protect the public’s interests and safety, but in reality, protect the greed and profits of companies that exploit the public’s interests.”
“And finally, the economy itself is like Sampoong’s interior. It is replete with cracks and fractures that warn us of the disaster ahead. But even so, a large percentage of the masses still remains ignorant because the banker/corporate/government three-headed monster keeps the people’s vision in a tunnel by pummeling the public with a constant stream of propaganda on MSNBC, newspapers, and financial talk shows. In Seoul, Sampoong’s owners distracted the public’s attention away from the developing disaster with stores fully of luxury goods. So when the US economy finally experiences shocks in the future more disastrous than those in 2008, as was the case with the Sampoong department store collapse, many will believe that now warning signs had existed despite the evidence that exists to the contrary today. And I’m quite certain the media, just as they did in 2008, will stupidly ask the same questions they did back then, such as “How did this happen?” when in fact, all the answers stare them in the face right now. With the Fed’s POMO schemes, regulators that aid and abet fraud, and governments and bankers that conceal truth from the public, the combined effect of these actions is just to delay disaster for another year or two. So that is why I say now that disaster will visit the US sometime between 2011-2013.”
James C: “So why do you think some analysts are saying that gold and silver are a bubble now?”
JS: “They’re saying that because either they have been directed by someone above them to say that, or if they really believe it, then they’re simply demonstrating that they have zero understanding of why the global economy is on the brink of disaster right now. Every gold and silver investor remembers the Fed Reserve/bullion bank engineered collapse in gold/silver prices that happened in October, 2008. But despite what gold/silver investors remember as a monumental collapse back then, in retrospect, if we look at this “collapse” on a 10-year scale, when we look at the big picture, what we remember as a “collapse” was only a speed bump in the ongoing gold and silver bull. So don’t listen to the immoral bankers and their foolish employees that attempt to keep you from purchasing physical gold/silver or tell you to sell it now because it is absolutely the wrong thing to do.”
James C: “So is that why you changed the pricing on your services to a constant gold standard? As far as I know, at the time, you were the first US company to do this, and perhaps still the only company that made the decision to price services/products on a gold standard.”
JS: “That’s exactly right, James. A long time ago, I switched the pricing of my services to a gold standard to protect my company’s profits against the destructive policies of Central Banks, in particular the US Federal Reserve. Frankly I’m shocked that no other company has also followed suit since then. At least none that I’m aware of. I stuck to this policy when gold rose to $1,000 an ounce despite the cries of banking shills that were releasing loads of propaganda against Gold, stating gold was a bubble destined to burst, that gold was heading back down to $500, or even $300 an ounce, and other such nonsense. I stuck to this policy even when the price of gold fell in some of the months after I switched to this policy, and falling gold prices caused the prices of all of my services to decline. I felt that my commitment to a constant gold pricing standard despite gold’s decline would prod many people to inquire of themselves why my company was pricing all of our services on a constant gold standard despite the claim of so many Western bankers back then that gold was a speculative and risky asset. I thought that people would ask themselves, if the bankers were correct, then why in the world would I subject my monthly income flow to the possibility of a gold crash and to price fluctuations of a risky asset? The answer, of course, was that discussions of gold crashing, even back in 2005, and every year since then, have been ridiculous.”
“By sticking to this standard through the various periods of volatility that gold experiences every year, I thought people would come to understand gold (and silver) as real money and to finally realize that all fiat money, as long as it is backed by nothing but the full faith and credit of governments, which in reality means less than nothing, is junk. With the exception of the first several months after we launched our investment newsletter during which we offered special introductory rates, my newsletter has basically remained a constant 0.50 ounces of gold. It’s true that its price, and the price of all my services, have risen significantly in terms of fiat currencies but in terms of gold, there has been no price increase. But had the price of gold cratered during this time, the prices of my services as denominated in fiat currencies also would have cratered and I was confident in my decision to do so because I knew that the risk of gold cratering was very low while the risk of fiat currencies cratering was very high. If the price of gold continues to soar over the next few years as I expect it to do, for the sole reason that many people have foolishly taken zero steps to get out of fiat currencies, I may have to even lower my prices in terms of ounces of gold even though the prices denominated in fiat currencies may still continue to rise against these lesser amounts of gold.”
James C: “So people should purchase physical gold and silver even now?”
JS: “Yes, they should buy even now. Of course, not all corrections in gold and silver are engineered by bankers, and corrections are a natural occurrence as bull markets need time to consolidate and build new bases before moving higher. So these corrections will happen, whether engineered by bankers or whether they are just a natural pause in a bull market, and they may be steep at times. But when they happen, this events only present buying opportunities for the millions of people that still do not own a single ounce of physical gold or physical silver. To someone that still doesn’t own any physical gold and physical silver now, I would say buy at least some today. Wait too long, and in the future, people without physical gold and physical silver may find it impossible to buy at all.”
James C: “I understand why you are so bullish on gold and silver even now, but can you explain more to everyone that doesn’t understand your view?”
JS: “Sure. As I’ve been stating since 2005, we are and have been in a monetary crisis. When stock markets crashed in 2008, it was due to this monetary crisis. When subprime mortgage derivatives crashed, it was due to this monetary crisis. In the future, when tuition rates soar around the world, when food prices soar around the world, it will be because of this monetary crisis. 100% of people in the world should view silver and gold as real money but in reality, well less than 5% of the world does so. That is why, whether people believe that Max Keiser’s efforts will crash JP Morgan or not, everyone in the world should listen to him, and buy not just one ounce of silver, but one ounce of silver every week if they can afford it, and twenty ounces of silver every week if they can afford it. Unfortunately bankers are hellbent on destroying people’s wealth today and the system is so corrupt, that governments and regulators will never fix the current monetary crisis. If people want to survive this monetary crisis, they better buy precious metals.”
James C: “And what if their timing is poor, and silver corrects heavily right after buying?”
JS: “I would say use the corrections to buy more unless we reach the mania period. Though the next few years are bound to bring volatile periods when we may see gold rise (and fall) by $100 a day at times and silver rise (and fall) by $3 or $4 a day, the bankers are wrong. There is no bubble in gold and silver today, and unless a major world currency collapses next year, there won’t be one next year either. I’ve been telling people to buy gold since it was about $560 an ounce and silver since it was about $9 an ounce. I wasn’t there at the very beginning of these bull markets, but I hope to stay in until it reaches the end.”
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