A Financial Hurricane & Cracks In The Global Financial System
July 14, 2013
On the heels of continued turbulence in key global markets, today 40-year veteran, Robert Fitzwilson, put together another tremendous piece. Fitzwilson, who is founder of The Portola Group, discussed a financial hurricane, cracks in the global monetary system, and what this all means for investors. Below is Fitzwilson’s outstanding and exclusive piece for KWN.
“As we watch the spasms in the various markets, we know it represents that something is terribly amiss. The geopolitical, economic and financial complexities comprise a chaotic system. By definition, it is impossible to predict the events that will lead to resolution. History is our best guide, but even that cannot help us with the timing of those events. The Romans could not time the collapse of the volcanic column, and nobody can predict the timing of the collapse of our current financial eruptions.
What we do observe is that the global situation is worsening. Europe is a mess. Even the German economy is entering into a decline. China is about to release their latest numbers for economic growth, and it promises to be a grim number given the hints that have been dropped.
In the U.S, aggregate corporate cash flows and consumer confidence remain strong. Parts of the economy are doing very well such as high tech and energy. However, real personal incomes have turned sharply to the downside. Real GDP on a year-over-year basis has been flat-to-negative since late 2010. The unemployment numbers and the number of full time jobs continues to head in the wrong direction. Some economic series look great, others abysmal. Things are too-close-to-call given what we see today.
For those with gold and silver positions, it does appear that the metals and the miners might have reached a bottom. That said, there is a long way to go to regain prior levels, let alone what most people believe are quality companies true valuations. Those assets could well remain in the doldrums, but it must be endured and positions should be maintained. ”