Chris Martenson
"When a country's public debt exceeds 90% of GDP, that is the magic number. You get to 90%, there is no way back, and that is the number that the U.S. is going through pretty much as we speak. It is also the number which the UK has gone through; all of the PIIGS are going through it, as well. They are all going past the 90% debt to GDP ratio. Obviously, Japan is miles past it already. It's up to 200%+. There does not appear, in the historical analysis, to be any great likelihood of getting back from that level of debt safely. There is this strong evidence that above 90% debt to GDP, you will experience either a cataclysmic default or some form of very serious inflation."
So observes Paul Tustain, gold market analyst and founder of BullionVault. In his view, gold serves as a beacon who's price is currently signaling the monetary system is in grave danger. He and Chris discuss the primary factors driving the price of gold and smart strategies for investors looking to build or maintain their holdings of the metal.
Paul Tustain: Gold Is Sending a Signal That the Monetary System Is in Grave Danger
"When a country's public debt exceeds 90% of GDP, that is the magic number. You get to 90%, there is no way back, and that is the number that the U.S. is going through pretty much as we speak. It is also the number which the UK has gone through; all of the PIIGS are going through it, as well. They are all going past the 90% debt to GDP ratio. Obviously, Japan is miles past it already. It's up to 200%+. There does not appear, in the historical analysis, to be any great likelihood of getting back from that level of debt safely. There is this strong evidence that above 90% debt to GDP, you will experience either a cataclysmic default or some form of very serious inflation."
So observes Paul Tustain, gold market analyst and founder of BullionVault. In his view, gold serves as a beacon who's price is currently signaling the monetary system is in grave danger. He and Chris discuss the primary factors driving the price of gold and smart strategies for investors looking to build or maintain their holdings of the metal.
Finding Shelter From The Storm
Monday, April 4, 2011
Executive Summary
- GDP growth requires energy, and the Fukushima disaster has just set back nuclear’s expected contribution by years (decades, likely)
- Trading strategies for an end to QE, by asset class (stocks, bonds, currencies, commodities, precious metals, real estate)
- Fukushima’s likely impact on the energy market
- Why the priority now for investors should be on wealth preservation
- The odds QE will resume later in the year
Part I: A Global Tsunami, Courtesy of the Fed
If you have not yet read Part I, available free to all readers, please click here to read it first.
Part II: Finding Shelter From the Storm
A Global Energy Shortage
The aftershocks from Fukushima will extend across the globe and well into the future, as energy plans that had formerly relied on nuclear will slow to a crawl. We will possibly even see a reversal in that energy source for a while as older plants are scrapped faster than new, safer designs can be brought on line.
Growth in net energy from oil is no longer possible. The cheap oil is gone, flow rates of conventional oil struggle to recover to 2005 levels, and the new stuff is hideously more expensive in terms of dollars and energy to extract.
Alternative fuels are not-yet-ready-for-primetime and have enormous scale issues to overcome. Coal will fill in some of the gap, but we had big plans for nuclear to plug much of the rest.
No longer.
Finding Shelter From The Storm
PREVIEWFinding Shelter From The Storm
Monday, April 4, 2011
Executive Summary
- GDP growth requires energy, and the Fukushima disaster has just set back nuclear’s expected contribution by years (decades, likely)
- Trading strategies for an end to QE, by asset class (stocks, bonds, currencies, commodities, precious metals, real estate)
- Fukushima’s likely impact on the energy market
- Why the priority now for investors should be on wealth preservation
- The odds QE will resume later in the year
Part I: A Global Tsunami, Courtesy of the Fed
If you have not yet read Part I, available free to all readers, please click here to read it first.
Part II: Finding Shelter From the Storm
A Global Energy Shortage
The aftershocks from Fukushima will extend across the globe and well into the future, as energy plans that had formerly relied on nuclear will slow to a crawl. We will possibly even see a reversal in that energy source for a while as older plants are scrapped faster than new, safer designs can be brought on line.
Growth in net energy from oil is no longer possible. The cheap oil is gone, flow rates of conventional oil struggle to recover to 2005 levels, and the new stuff is hideously more expensive in terms of dollars and energy to extract.
Alternative fuels are not-yet-ready-for-primetime and have enormous scale issues to overcome. Coal will fill in some of the gap, but we had big plans for nuclear to plug much of the rest.
No longer.
The Fed is in a bind. No matter which way it turns, utter failure is a risk. Putting more money into the system risks no less than the dollar itself. Stopping quantitative easing (QE) risks plunging the economy and financial system into another period of turbulent decline. It looks like the Fed is going to choose the latter.
In a recent report, I made the case that pressure was building on the Fed to end its QE 2 program in June, and that if it did, there would be an enormous rout in the stock, bond, and commodity markets. That analysis still stands.
This new two-part report will analyze the many competing factors, both for and against, that will determine whether QE 2 really is the end of the Fed’s efforts at printing up a recovery, or merely the event that precedes QE 3.
A Global Tsunami, Courtesy of the Fed
The Fed is in a bind. No matter which way it turns, utter failure is a risk. Putting more money into the system risks no less than the dollar itself. Stopping quantitative easing (QE) risks plunging the economy and financial system into another period of turbulent decline. It looks like the Fed is going to choose the latter.
In a recent report, I made the case that pressure was building on the Fed to end its QE 2 program in June, and that if it did, there would be an enormous rout in the stock, bond, and commodity markets. That analysis still stands.
This new two-part report will analyze the many competing factors, both for and against, that will determine whether QE 2 really is the end of the Fed’s efforts at printing up a recovery, or merely the event that precedes QE 3.
Noting that the press has largely turned its resources off of the Fukushima complex, and needing up-to-date information on the status of the damage control efforts there, we secured the most up-to-date satellite photo from DigitalGlobe (dated March 31st), which we analyze below. This is the first photo of the damaged reactor site at Japan’s Fukushima Dai-ichi nuclear facility made available to the public in over a week. That means you, our readers, are the first public eyes anywhere to see this photo.
Drawing upon the expertise of our resident nuclear engineer and Ann Stringer, imaging expert, we conclude that the situation at Fukushima is not stabilized: Things are not yet at a place of steady progress in the containment and clean-up efforts. It’s still a dance, forwards and backwards, with the workers making gains here and there but the situation forcing them to react defensively all too often.
In this report, we will tell you what we know for sure, what we are nearly certain of, and what we remain forced to speculate about.
Here is a portion of a much larger image (covering 25 square kilometers in total) showing the reactor complex as of March 31, at roughly mid-day:
EXCLUSIVE PHOTOS: Latest Satellite Imagery From Fukushima Tells Sobering Tale
Noting that the press has largely turned its resources off of the Fukushima complex, and needing up-to-date information on the status of the damage control efforts there, we secured the most up-to-date satellite photo from DigitalGlobe (dated March 31st), which we analyze below. This is the first photo of the damaged reactor site at Japan’s Fukushima Dai-ichi nuclear facility made available to the public in over a week. That means you, our readers, are the first public eyes anywhere to see this photo.
Drawing upon the expertise of our resident nuclear engineer and Ann Stringer, imaging expert, we conclude that the situation at Fukushima is not stabilized: Things are not yet at a place of steady progress in the containment and clean-up efforts. It’s still a dance, forwards and backwards, with the workers making gains here and there but the situation forcing them to react defensively all too often.
In this report, we will tell you what we know for sure, what we are nearly certain of, and what we remain forced to speculate about.
Here is a portion of a much larger image (covering 25 square kilometers in total) showing the reactor complex as of March 31, at roughly mid-day:
For those concerned about the reports of contaminated milk and radioactive rain, the levels are far, far below anything that should be on your personal worry list at this time. Perhaps that could change, but something would have to materially deteriorate at the Fukushima plant complex before I would devote much time to that here in the Americas.
And even if there were some sort of steam explosion over there, we’d have roughly eight days before that would reach the west coast. I am leery of the last-minute changes to the EPA radnet site and do not trust the site as my first source for radiation readings. The one I check every day is run by amateurs with no particular axe to grind or concerns about scaring the populace, and so I trust it a bit more. You can find it here:
Inflation and Radiation – Update
PREVIEWFor those concerned about the reports of contaminated milk and radioactive rain, the levels are far, far below anything that should be on your personal worry list at this time. Perhaps that could change, but something would have to materially deteriorate at the Fukushima plant complex before I would devote much time to that here in the Americas.
And even if there were some sort of steam explosion over there, we’d have roughly eight days before that would reach the west coast. I am leery of the last-minute changes to the EPA radnet site and do not trust the site as my first source for radiation readings. The one I check every day is run by amateurs with no particular axe to grind or concerns about scaring the populace, and so I trust it a bit more. You can find it here:
"Straight Talk" features thinking from notable minds that the PeakProsperity.com audience has indicated it wants to learn more about. Readers submit the questions they want addressed and our guests take their best crack at answering. The comments and opinions expressed by our guests are their own.
This week's Straight Talk contributor is 'Jesse', founder and proprieter of Jesse's Café Américain (jessescrossroadscafe.blogspot.com), one of the more esteemed and veteran econoblogs. Jesse publishes regular observations on the macroeconomic factors impacting the financial markets, as well as exceptionally rich technical analysis – his price forecast charts of gold and silver are 'must reads' for anyone who seriously invests or trades precious metals. Recently, his site was rated as the fourth-most-influential blog in financial media by Mindful Money.
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1. Jesse’s Café Américain has emerged as a well-regarded source for insight into the key indicators driving the markets. Can you summarize your overall outlook for the economy and what macro trends investors and traders should be following most closely?
Stagflation has been my forecast for quite some time as the most likely outcome, with a real protracted deflation or hyperinflation as lesser probabilities.
Straight Talk with Jesse: Concentration of Wealth & Power Is the Root Problem
"Straight Talk" features thinking from notable minds that the PeakProsperity.com audience has indicated it wants to learn more about. Readers submit the questions they want addressed and our guests take their best crack at answering. The comments and opinions expressed by our guests are their own.
This week's Straight Talk contributor is 'Jesse', founder and proprieter of Jesse's Café Américain (jessescrossroadscafe.blogspot.com), one of the more esteemed and veteran econoblogs. Jesse publishes regular observations on the macroeconomic factors impacting the financial markets, as well as exceptionally rich technical analysis – his price forecast charts of gold and silver are 'must reads' for anyone who seriously invests or trades precious metals. Recently, his site was rated as the fourth-most-influential blog in financial media by Mindful Money.
p.p1 {margin: 0.0px 0.0px 6.0px 0.0px; font: 13.0px Verdana}
1. Jesse’s Café Américain has emerged as a well-regarded source for insight into the key indicators driving the markets. Can you summarize your overall outlook for the economy and what macro trends investors and traders should be following most closely?
Stagflation has been my forecast for quite some time as the most likely outcome, with a real protracted deflation or hyperinflation as lesser probabilities.
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