If you didn’t read last week’s report, you might want to go back and read it first.
If you read last week’s report, you might be asking the following question below.
Skip! Why Such Apocalyptic Doom & Gloom?
What makes this stock market crash any different from 2008 or 2001?
Excellent question! Let me explain and please pay attention. There is a huge difference between what is happening now and what happened in 2008.
The 2008 crash was created by the bad policies of our central bank and government politicians. But instead of fixing them, they doubled down on those same policies and created a much worse problem.
In 2008 we had the real estate bubble created from easy money. Banks were allowed to lend to people who shouldn’t have been able to qualify for a loan. They created ‘liar loans’, remember those? Also known as ‘Stated Income’ loans, these were loans made to people who didn’t have to prove their income. All they had to do was ‘state’ how much money they made with no proof.
This created billions in toxic mortgages that were sold to Fannie Mae as well as banks, insurance companies and private Hedge Funds. Remember Lehman Brothers? Lehman was the fourth largest investment bank in the U.S. when it collapsed in 2008. It was the largest victim of the sub-prime mortgage crisis.
Other players included the largest U.S. banks like Bank of America, Wells Fargo, CitiGroup and JPMorgan Chase.
Fannie Mae was also bankrupt and all of these banks were bailed out by the U.S. taxpayers. Instead of letting the banks pay for their bad investment decisions, the government bailed them out with borrowed money the government didn’t have. Thus the massive buildup of our huge debt problem.
Fast forward to today, 7 years later. The U.S. debt problem never went away; it doubled in size from where it was in 2008. Our debt now stands at over $18 trillion and rising. This is debt that can never be repaid. Our government doesn’t have it and now no foreign country wants to lend us the money to cover it.
But what happened in 2008 was a policy problem that was mostly contained within the U.S. Now, we have multiple bubbles that include the entire global economy and will affect the status of the U.S. currency as the world’s reserve currency, the petro-dollar.
The current bubbles include a stock market bubble, a bond market bubble, a new real estate bubble, a global credit bubble and a currency bubble. All of these bubbles are reaching critical mass and when they pop, the entire global economy is going to collapse and the U.S. is going to fall the hardest.
The stock market bubble has already started to collapse and the bond market will not be far behind.
Why? Because no one wants to buy our treasuries anymore to fund our out of control spending and the U.S. dollar will be dropped as the world’s reserve currency. It’s already in process.
Foreign countries have stopped buying US debt (Bonds) and are starting to sell their US dollar reserves. China, Russia, Saudi Arabia and other major players in the oil and energy markets have already set up alternative payment methods for their oil imports using China’s Yuan as a form of payment, rather than US dollars.
These countries know the US economy is in serious trouble and holding US dollar reserves is like holding a toxic asset that is rapidly losing value.
The next downturn in our economy will not be a correction; it will be a collapse of the entire US currency system. This system has been held up by borrowing more debt in the past, by selling our bonds (debt) to foreign countries. But now those foreign countries see that the US is in trouble and they’ve stopped buying our debt.
But what’s worse is they are starting to unload it. Sell it to whoever will buy it. Unfortunately, the only buyer is the US Treasury. We are printing dollars to buy back our own debt in a desperate attempt to prop up the value of the dollar and hold off the inevitable. It’s a Ponzi scheme and it’s falling apart.
The house of cards that our politicians have created is starting to fall and this will create a global depression like we have never experienced before.
That’s why I’m forecasting such doom and gloom and that’s why I keep telling you that the only safe haven for your money is going to be in gold and silver bullion.
Precious metals have no counterparty risk. They maintain value and actually increase in value as economies collapse. The run on precious metals has already begun and it’s about to ramp up in a big way.
The signs for this collapse are everywhere, but if you’re not looking, this tsunami of debt is going to wash you away.
Gold broke through a major resistance point yesterday and today it has retraced slightly, but this is normal. Wave #3 is well underway and I expect gold to continue to rise over the next 2-3 weeks.
I currently have 2016 Call Option positions in GDX, SLW and RGLD.
Stock Market Indices:(SPY) (QQQ)
The stock market has broken through the Bear Flag support level (Blue Circle) and continues down into the next leg which will drop below the Black Monday lows. I expect it to reach 15,000 or lower over the next couple of weeks.
The bounce today was a knee jerk reaction to Janet Yellen’s speech last night regarding renewed ‘Hopes’ of a Fed rate hike. (Per Zero Hedge News Feed.) The bounce was short lived and already receding as I write this report.
Energy Stocks: (XLE) (UNG) (USO) (LNG)
Oil is undecided and trading in a consolidation channel. There is no clear way to pick a direction at this time until it breaks through either the upper or lower level of the channel and decides to choose which way to go.
With all the manipulation in the oil sector right now between Saudi Arabia, Russia and the turmoil in the Middle East, I’m staying away until we have a break out and then it will only be a short term play.
Financial Stocks: (XLF) (IYF)
It’s time to short financial stocks, the tide has turned and the devastation will be ugly.
Biotech: (BIB) (KITE) (IBB)
Biotech will be a good sector to get into once the stock market bottoms and begins to consolidate. For now I’m staying away.
Commodities: (FCX) (JJG) (DBA)
Commodities will move higher when we have inflation, however, I think we will start with deflation as the global economies crash and inflation will begin once the central banks begin printing more money to try to stem the crash in the markets. I will just watch these until I see a signal of a move up in price and a break of the downtrend line.
The DOLLAR COLLAPSE Will Rock The World — Jeff Berwick
“When the Dollar collapses it’s not going to be like when the Zimbabwe dollar collapsed, or the Venezuelan Bolivar, or the Argentina Peso, it’s going to rock the world. And China and Russia are getting prepared for it right now…“
Martin Armstrong Warns "Hell Is About To Break Loose"
This is the worst possible mess and the longer they have waited to normalize interest rates, the worst the total crisis is becoming for they will have zero control over the economy and once that is seen, holy Hell will break loose.