{"id":1199,"date":"2012-01-12T00:26:30","date_gmt":"2012-01-12T04:26:30","guid":{"rendered":"http:\/\/www.silver-investor.com\/blog\/?p=1199"},"modified":"2018-06-10T10:57:38","modified_gmt":"2018-06-10T10:57:38","slug":"euro-collapse-means-flight-to-precious-metals-for-investors","status":"publish","type":"post","link":"https:\/\/www.themorganreport.com\/blog\/euro-collapse-means-flight-to-precious-metals-for-investors\/","title":{"rendered":"Euro Collapse Means Flight To Precious Metals For Investors"},"content":{"rendered":"

Tracy Weslosky:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/em>Happy New Year, David.\u00a0 It\u2019s our first Currency Countdown for 2012, how are you today?
\nDavid Morgan:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/em>I\u2019m well, thank you, Tracy.
\nTracy Weslosky:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/em>Well let\u2019s talk about what\u2019s happening with the Euro.\u00a0 I\u2019d like to start about the bonds and the impact from the collapse of the Euro.\u00a0 Where do you want to begin?\u00a0
\nDavid Morgan:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/em>The overall conditions in Euro, in my view and many commentators is the Eurozone continues to deteriorate, and we\u2019re in a situation where you just cannot get this group of individual countries banded together for political purposes on an economic basis that it is equal for everybody.\u00a0 It\u2019s impossible, and the markets are bearing that out.\u00a0 So strength in one area, weakness in another, and that will continue.\u00a0 As the old adage goes, a chain is as strong as its weakest link.\u00a0 The weak links are several.
\nYou\u2019ve got Spain, Italy, Greece, and others, Ireland.\u00a0 And they\u2019re basically in a depression, these countries.\u00a0 And there\u2019s all kinds of people literally in the streets.\u00a0 So even though France might look good today, and Germany might look good today and the last week or so and there\u2019s all kinds of commentary about resolution of problems and the ECB coming to the rescue.\u00a0 In my view it\u2019s a smoke screen; things are deteriorating basically before our eyes.\u00a0
\nTracy Weslosky:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/em>Yes let\u2019s talk about smoke screens.\u00a0 And in particular the impact on bank lending; I would suspect that\u2019s one of the examples of how this is affecting all of us.\u00a0 Can you talk to us about banks and their lending and how they\u2019re going to cope with all of this?
\nDavid Morgan:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/em>Well that\u2019s the crux of the problem.\u00a0 The basic situation is extremely similar to what happened in the 2008 financial crisis in the United States.\u00a0 And to be specific, what happened at that point was that inter lending– bank to bank loans were not being performed.\u00a0 What that means is that bank A didn\u2019t trust bank B which didn\u2019t trust bank C.\u00a0 Well all these banks are interconnected, but none of them were trusting each other, and the whole system is based on confidence.
\nSo at the last minute, so to speak, and the Fed didn\u2019t waste any time, came in and said \u201cOkay, bank A, B, C, D what we\u2019ll do is we will eat your toxic paper and we will substitute Treasury bills, Treasury notes, Treasury bonds for that paper\u201d and trading continued because all these banks were willing to trade their toxic waste assets for government backed paper.\u00a0 And the system did not fall over the cliff.\u00a0\u00a0
\nWe\u2019re in a similar situation the Euro; the interbank lending for all practical purposes has ended.\u00a0 These banks don\u2019t trust each other.\u00a0 You don\u2019t know what the loan rates are, and you don\u2019t know what the discount rate\u2019s going to be in the future.\u00a0 You don\u2019t know how much the interest rate will be pushed up.\u00a0 Basically you just don\u2019t have any confidence between Eurozone countries.\u00a0 However, you still have the ECB, the buyer of last resort similar to the Federal Reserve in the United States.\u00a0 And so even though this over subscription to the French last bond program, which is currently going on, I think that\u2019s more of a, again, smoke screen meaning that the powers that be are there saying \u201cYeah, yeah we want buy French debt.\u201d
\nSure they do.\u00a0 Well fine, the real truth of the matter is that these banks are scared to death.\u00a0 They don\u2019t trust each other, and that further deteriorates the system.\u00a0 So I think we\u2019re getting near the end game here.\u00a0
\nTracy Weslosky:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/em>I want to talk about the Asian markets and how they\u2019ve been impacted.\u00a0 It seems that the press is starting to see a correlation; what do you think?
\nDavid Morgan:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/em>Global markets have been global for some time.\u00a0 I mean regardless of the different currencies, everybody is tied together.\u00a0 I mean without the export ability of China, and the ability of the Westernized nations, Europe as well, to be able to export funny money to the producers you\u2019re not going to have world trade.\u00a0 So we\u2019re all interconnected.\u00a0 And we\u2019re all connected to the U.S. dollar, although that has been lagging of late, meaning more and more we\u2019re seeing Russia and China say \u201cWe will trade with each other without going through the dollar first.\u201d
\nIt happened again recently with other countries and China.\u00a0 Some entities and nation states are going to use the Yuan directly and peg some of their trades in the Yuan without going to or pegging to the dollar.\u00a0 So you\u2019re seeing more and more undertones in the real world where trade will continue but the dollar isn\u2019t used as the supreme currency, and that trend will continue.\u00a0
\nTracy Weslosky:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/em>Hitting the ground running in 2012 I\u2019m reading all kinds of documents and e-mails on the impact of reflation, and how this is going to cause a beautiful boomerang in the resource sector.\u00a0 Can you tell me if you agree with that or what everyone\u2019s talking about?\u00a0 Do you think you could define that a little better for our listeners?
\nDavid Morgan:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/em>I think I can help.\u00a0 I\u2019ll add to it.\u00a0 The defaults are going on left and right.\u00a0 The depression is real in a lot of the European Union, and especially in Eastern Europe.\u00a0 And I think the analogy and even one of the leaders of one of the main banking sectors has used the word \u201cdepression\u201d recently.\u00a0 What happens during these defaults is really one of two things.\u00a0 One you default on the currency as we\u2019ve talked about.\u00a0 Or two you can default on your ability to pay back.
\nAnd as we\u2019ve discussed on Currency Countdown three weeks ago, when Greece was repositioned at about 50 percent, in other words their bonds were subject to a 50 percent hair cut; they\u2019re now worth half what they were previously.\u00a0 That\u2019s a default or partial default on the bond itself.\u00a0 And the other way is that you default on the currency where it isn\u2019t trusted anymore, and that I think is the route that we\u2019re going to see come to the fore especially in the United States.\u00a0\u00a0
\nSo what takes place is the currency becomes worth less and worth less, and finally it\u2019s worthless or perceived to be going to worthlessness.\u00a0 And at that point there is a huge rush in anything tangible.\u00a0
\nTracy Weslosky:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/em>I want to ask you about gold and what\u2019s happening with gold right now and for the new year.\u00a0 I thought I\u2019d throw this in.
\nDavid Morgan:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/em>Well gold is the main barometer for economic health on a global basis.\u00a0 And we\u2019ve had an 11 year run in gold for consistently 11 years in a row the road to gold prices continued to increase year over year over year.\u00a0 I believe that trend is still in place, and I believe for 2012 we\u2019re going to get a new nominal high.\u00a0 If you take the inflation adjusted high of $8.50 January 21st<\/sup>, 1980 and you project it forward to today using government numbers, which are suspect in my view, you would come out with roughly $2,400.00 gold.\u00a0
\nI think you\u2019re going to see $2,400.00 gold by the end of 2012.\u00a0 And all that says is that it\u2019s back to its old time high in real terms.\u00a0 So in other words, $2,400.00 equals $850.00, again using government numbers, which again are a bit suspect but that\u2019s the case.\u00a0 And so then I think after that we\u2019ll go up from there.\u00a0 Now obviously I\u2019m making a forecast here, and it could be off but we\u2019ll see.
\nI really do think that over the next two to three years that as this unwinds further, meaning the global economies and this currency problem continues, you\u2019re going to see a huge flight in to the precious metals, silver included.\u00a0 And a lot of people are going to wake up to the fact that \u2013 be it Canada, be it the United States, be it South America or in Asia somewhere, that their savings are being deteriorated and you need to protect yourself.\u00a0 You need to get something of value that will hold value.\u00a0 And since the global economy is much more inner connected than ever before, and the access to precious metals is greater than its ever been before, I think it\u2019s will be the mother of all bull markets in the precious metals.\u00a0 But we\u2019re not there yet, but we\u2019ve certainly built the foundation to build upon to get to that place.\u00a0 So I look for huge increases in real purchasing power for gold and silver over the next few years.
\nTracy Weslosky:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/em>David, thank you so much for joining me today on Currency Countdown.<\/p>\n","protected":false},"excerpt":{"rendered":"

Tracy Weslosky:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Happy New Year, David.\u00a0 It\u2019s our first Currency Countdown for 2012, how are you today? David Morgan:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 I\u2019m well, thank you, Tracy. Tracy Weslosky:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Well let\u2019s talk about what\u2019s happening with the Euro.\u00a0 I\u2019d like to start about the bonds and the impact from the collapse of the Euro.\u00a0 Where do you wantMore<\/a><\/span><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[121,89],"tags":[],"yoast_head":"\nEuro Collapse Means Flight To Precious Metals For Investors<\/title>\n<meta name=\"description\" content=\"Euro Collapse Means Flight To Precious Metals For Investors\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.themorganreport.com\/blog\/euro-collapse-means-flight-to-precious-metals-for-investors\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" 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