Saturday, July 21, 2012

Sprott - The Frightening Black Swan Nobody Is Talking About
“It’s beyond the ability of governments to deal with all of these weak countries.  There are only one of two answers:  Yes, someone could print as much money as they want.  Maybe they could print $5 trillion and say, ‘We’ll back up all of the banking systems.’”

“And then one could maybe say the problem is solved.  Of course the problem is, if they print $5 trillion, everyone knows they can’t back it up with anything.  Then you will lose confidence in the currency and you will go into hyperinflation because people will realize that real things are safer than paper things, including bonds and stocks and things like that.

So there are only two choices, they’ve got to print or there are going to be some defaults, which is the natural offspring of a Minsky moment...

“Sooner or later you have to write off the debt or you have to inflate it away.

If they inflate it away, then the reason for gold and silver to go higher will be incredible.  If they deflate it away, the need for people to take their money out of banks so the depositor doesn’t lose money becomes all that more apparent.  And where do you put that money you take out of the bank?  Well, the logical thing is to have it in gold and silver.”

“My biggest black swan, Eric, is that I think I’ll be right one day.  My worry is that one day they just shut everything down.”   They say, ‘You know what, we just can’t keep this up anymore, the whole Ponzie (scheme), we just can’t do it and we shut it down.’  All of the markets freeze, and the stocks that you are short are never allowed to go where they were. 

They might cease gold trading, in the normal sense, or maybe they will even outlaw gold trading.  But that’s my biggest worry.  Because everything else, everything that one would theorize and watch, in practical terms, all (of it) argues for gold and silver to win the day.

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