Golden Dreams & Global Nightmares

Wednesday, April 25, 2012
By Paul Martin


It is now time once again to pause and view the global financial picture. The gold and silver markets have chopped mostly sideways for a very long time, and we are near a capitulation phase in investor sentiment. At AFE we are all heavily invested in our own product, namely physical gold and silver; therefore, we have an interest just as our clients do in knowing if this is a final top in precious metals.

Knowing this, we continue to step back and review the factors that may indicate if gold has reached the peak of its 11-year bull market. It is important to make sure that we isolate emotion from analysis, for it is the emotions of greed and fear that drive many investors to make poor decisions with their hard-earned wealth.

“Paper money has had the effect in your state that it will ever have – to ruin commerce, oppress the honest, and open the door to every species of fraud and injustice.” —George Washington

Currency Wars and Weapons of Economic Warfare

On March 17th, 2012, the unprecedented step of severing a country from the global inter-bank settlement mechanism known as SWIFT was put into force. SWIFT, the Belgium-based Society for Worldwide Interbank Financial Telecommunication, shut 30 Iranian banks out of the system completely. This is the equivalent of having all of your bank accounts frozen, as you cannot transfer funds.1

We have entered a new era of economic warfare. Make no mistake, this is warfare being conducted on a global scale, and it is no less deadly than a kinetic war. After using the tool of being severed from the international payments system as leverage, the US and European nations are all but guaranteeing that the current system will be called into question. By removing a country’s ability to conduct international bank transfers over the SWIFT system, the USA is essentially forcing nations to take a good hard look at if they want to be next. This is not an idle concern, as the US has already made threats intimating this to several other countries.2

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