Precious Metals and the Lost Generation

Source: Silver-coin-investor, by Dr. Jeffrey Lewis

“There are a thousand hacking at the branches of evil, to one who is striking at the roots.” – Henry David Thoreau, 1846

Institutional trust and confidence continues to unravel as less and less participation, combined with isolation, threatens the middle class. As in all major crises throughout Anglo American history, the weight will be carried on the shoulders of the pragmatic caught in the middle.

The Hidden Crisis

It is unprecedented that 50 million people in the United States rely on food assistance. Or that nearly 50% of all Americans receive some form of assistance from the government.

Jobs and Production

Labor participation has fallen to levels not seen in over three decades.

October 2013 saw, in the midst of a quasi-government shutdown, a sad reality.

Two events surrounding the Electronic Benefit Transfer (EBT) of food assistance stood out. The first was the programs shut down for one day, causing shoppers to abandon grocery carts while in checkout lines. The second was the following week, when card limits were temporarily removed. 

The first case was a demonstration of fear, the second one of greed and panic.

The degree of poverty among children is equally astounding. If it were not for electronic transmission of benefits, the psychological profile of the nation would be much more aligned with depression. This scenario is in comparison to the giddy celebration of equity all-time highs or the so-called housing recovery.

Stealth Inflation

The return of rational exuberance to equities is an artificially induced phenomenon. Every day, intervention via primary open market operations occurs to paint perception.

Housing has “returned” by means of the invasion of private equity and hedge fund managed, all-cash, purchases. The result has been not only a pricing out of the middle class, but the creation of a rent bubble and landlord disaster, creating even more of the disenfranchised.

Equally bizarre is the obvious rise in real inflation. Estimates of 6-7% annually are likely conservative.

CPI is a total disaster outside of ivory towers. The unevenness of asset price inflation is not lost on those who eat, use energy, or borrow for education. Health care is about to be another eye opener for those who have not had the need to know the real cost behind the broken system.

The Painful Collapse

Indeed, the middle class is becoming more and more disenfranchised by the current system. Those with retirement assets are most likely the next to be marginalized.

Pensions, 401K’s, money market accounts, and savings all represent the lowest hanging fruit for a soon to be even more desperate (and cornered) monetary complex.

Disengaged, get a glimpse of the system’s fragility.

Social Unrest and Economic Collapse

Much has been noted about the preparations underway (under the guidance of FEMA) to contain the potential mobility of the masses in case of disaster.

The fact that FEMA has been stockpiling ammunition is not lost on observers.

While hyperinflation or a currency crisis can take months to develop, it will ultimately catch most by surprise. Of course, those who are prepared will not be welcomed.

Hoarders will be blamed. Metals could be banned and/or taxed and, eventually, re-priced far from the futures exchanges. 

The return of precious metals to monetary status will not be welcomed by those who stand to lose the most. With or without official sanction or acceptance, precious metals will serve their role once again as the reverse wealth effect kicks into high gear on the unsuspecting, and soon to be scorned, masses.



Categories: REAL Money

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