If there’s one thing you should have learned during the past four years it is this. Large global commercial investment firms are about as trustworthy as a used car salesman. This has been the case since the birth of Wall Street, but people are only waking up to this reality today after the ugly secrets of the industry have finally been revealed to the outside world in the past several years. The lesson the public-at-large is learning today is one that old-school American gangster Lucky Luciano learned after spending a day on the floor of the New York Stock Exchange, an eye-opening lesson that allegedly induced him to comment: “I realized I’d joined the wrong mob.”
In this article, you will be reminded of how firms bundled mortgages they knew were toxic into CDOs, sold them as solid investments to clients, and then shorted them behind their clients’ backs. You will further learn how under Congressional inquiry, only 25% of all investment bankers believed that it was their duty to act in the best interests of their clients. Sure, these bankers may tell you in face to face meetings that they always put your interests first, but according to their testimony in Congress, in reality, they think of you as a sucker more than anything else. Furthermore, I’m betting that more than half of the 25% of investment bankers that stated they should act in the best interests of their clients only stated this because they knew their statements would become part of the public record.
In this second article, you’ll be reminded of how JP Morgan somehow commingled $8.6 billion of their clients’ money with the firm’s own assets – an act that JP Morgan’s internal audits did not catch for seven years and an act that would have left their clients penniless if the firm had gone bankrupt during the time they did not separate their clients’ assets from the firm’s investments.
Finally, although almost every single US commercial investment firm adviser shuttles their clients that desire gold and silver into the paper ETFs GLD and SLV, I’m guessing that almost ZERO of these advisers properly explain the risks of the GLD and SLV, as paper proxies for real gold and silver, to their clients. Remember that bottom line profits to the firm from purchases of the GLD and SLV will be much higher than the zero profit that would result if clients opted to buy physical gold and physical silver on their own. As this third article explains, the probability is extremely high that these two funds will offer little of the protection that physical gold and physical silver will afford its owners, should the second phase of this monetary crisis progress in the manner we believe it will progress.
At a time when the short-term upside in US markets in my estimation is no greater than about 8% while the downside is about 50%+, financial advisers that work at commercial investment firms will work their hardest to ensure you stay unprotected by investing in the GLD and SLV and by telling you that this dip is just a “healthy pause” before the next leg up. Even if we receive a melt-up in stock markets instead of a melt-down because Central Banks engage in Armageddon-like quantitative easing, financial advisers won’t ever properly explain to you that your stock market gains in increasingly worthless fiat currency, will, in all probability, actually be causing your real wealth to shrink. Remember, to get to the truth of these markets today, you have to dig well below the surface of the sound bites provided to you by the mass media and by the commercial investment industry.
Remember, two years ago, I warned my readers of the stock market crash that wiped out 50% of the S&P 500 just 18 days before it happened. Today, I see a very similar precarious situation, comparable to the situation I identified on April 23, 2008. Back then, if you visit that article, I also commented on the absolute stupidity of numerous articles being printed in the mass financial media that labeled gold as a very “risky” and “speculative” asset. Though gold did experience a plunge in the latter half of that year that emboldened the “gold is risky” contingency, if one understood the dynamics and forces that created this plunge, one would have understood that gold would quickly rise back to its pre-plunge levels and rise much higher (which indeed happened). As always, being able to see the big picture back then, as it is now, is the most important factor to remaining profitable through this global monetary crisis. And any future steep dips in the price of physical gold and physical silver, when they occur, will be quickly regained as well. However, when the GLD and SLV finally take their steep plunges at some point in the future when their investors realize that the GLD and SLV are equivalent to emperors with no clothes, I do not expect the GLD and SLV to recover. If ever there was a time for you to take a stance in assuming control of your financial life instead of being a sponge for commercial firm propaganda, it is now.
About the author: JS Kim is the Chief Investment Strategist and Managing Director of maalamalama, LLC, a fiercely independent wealth consultancy company that guides investors in the best ways to invest in gold and silver through the progression of this global financial crisis. Since its inception in June, 2007, until August 26, 2010 his Crisis Investment Opportunities newsletter has returned a cumulative profit of 120.62%. JS also maintains an investment blog, the Underground Investor, in which he presents financial knowledge rarely covered by the mainstream media.
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