Global Deflation

The junior mining share market has been hit to the downside yet again — this time by the implacable forces of global deflation.

This has the Fed and other central banks in an absolute panic as markets worldwide begin to react to the further decreases in asset values such as stocks, commodities, and real estate…

Richard Russell weighed in on this topic after Bernanke’s speech on June 21, 2012:

This is really the primary bear trend that I’ve been writing about. It’s the result of a fundamental change in the world markets. Suddenly, within the space of a few years, Asia has entered the global economy.

The world is now producing far more goods (and more competitively) than ever before. I think deep in his heart, Bernanke knows and understands this. As a result, he does not want to use all the possible anti-deflation ammunition that the Fed can muster.

The reason — it is dawning on Bernanke that the Fed cannot defeat the powers of deflation and the primary bear trend.

The result is that the sinking economy is actually producing signals ahead of the Fed, and Bernanke knows it, but cannot talk about it — it’s too frightening. Now Bernanke is playing for time. He’s hoping that somehow, some way, the US economy will not get worse and that it might even improve slightly.

Bernanke is worrying about the Fed’s bulging balance sheet. It’s so huge, how will he ever contract it?

In the meantime, the stock market is more puzzled than ever. With uncertainty looming large, the market backs off. It is giving up on QE3. In the absence of QE3 the market does what it always does to protect itself — it backs off.

Deflation brings terror to the banksters because they know the system can’t handle it — thus the comments from Ben “the Liar” Bernanke over the years that they will drop money out of helicopters if needed to avoid such a scenario.

But that failed thinking developed because the Fed actually thought they could control things with the wand of their superior intelligence (NOT!).

When we can look back in retrospect ten years from now, the likes of Alan Greenspan, Ben Bernanke, and their worldwide central bank Keynesian counterparts of the last 40 years will be so despised by the public, they’ll be running for their lives.

They are finding out right now that they can’t control things as they would have everyone believe. The “CONSEQUENCES EVENT” that is now hanging over the global financial system is simply too big for anyone to deal with.

This unprecedented event in world history will cause currencies and governments to collapse. It is going to cause terrible problems worldwide. No country will be untouched.

Ultimately, what they will now have to do as they come face to face with the consequences they created is hyperinflate to infinity in one last desperate act of insanity.

This fiat currency/central bank nightmarish playbook has been run many times before throughout history, and the end result is always the same: inflationary panic and disaster.

And those are just the Fed’s problems…

The crisis in Europe and its associated derivative liability is now clearly beyond anything anyone could have imagined.

With the Fed issues and the debt problems in the United States, Europe is beginning to realize it’s on its own. If there is such a thing as a European solution (which I highly doubt), it will have to come from within Europe itself.

Several hedge fund managers I recently spoke with at conferences I attended in Geneva and Zurich, Switzerland, are absolutely appalled by what they see in Europe…

One prominent gentleman shared with me his opinion that he saw 0% chance of the Eurozone surviving. He said the world leaders are walking around with a gigantic pink elephant in the room, and they are all pretending it doesn’t exist.

Why do we give them respect with the term “leaders” when all they really are is a bunch of power-seeking jackals looking after their own interests?

What the world really needs are some true leaders with real principals — not these liar, chameleon-like political types parading around as bloated parasites.

A true leader would have to stand up against the banksters with the support of the people.

Alas, that can’t happen because 80% of the people don’t even know who the real enemies are and what a true leader would look like…

So it looks like things are going to get much worse.

Expect anyone with the ability to create money out of thin air to do so with reckless abandon as one consequence after another must be dealt with.

This will be the moment for the physical precious metals and the quality junior mining shares.

The biggest gains in our sector are still in front of us, not behind us.

These gains will be for those who had the stamina to hang tough when everything inside screams to let go.

For now, it looks like our share prices could recede even further from where they currently trade…

But they will begin to rebound once QE3 (or whatever they decide to call it) shows up with a vengeance.

Unfortunately, the world is going to be in a real pickle for quite some time as things get sorted out, thus my ranting about preparedness.

As the saying goes, only the strong survive.

The strong will be holders of the precious metals and quality mining shares — along with items that can help you survive difficult and tumultuous times.

Until next time,

Greg McCoach

Greg is one of the leaders in the mining and precious metals industry. His years of business experience and extensive insight as an entrepreneur makes him a wealth of knowledge in the precious metals markets as a bullion dealer, investor and writer. He’s the man behind The Mining Speculator and he also launched the highly successful precious metals service known as Greg McCoach’s Insider Alert. Greg is President of AmeriGold, a gold bullion dealer and also a weekly columnist for Wealth Daily. Take a look at Greg’s incredible gains he’s had in recent years at his editor’s page.