Wednesday, November 20, 2013

Everything is in Place for Another Crisis

The locomotive is the market, and in the end markets are always more powerful than government intervention. The locomotive is gaining momentum for the reason that I have been making since May, which is when the tipping point was reached. Since then there have been more investors willing to sell government securities than the Fed or other central banks are willing to buy. The consequence has been rising yields on the 10-Year Treasury Note.

But interest rates are not rising in spite of QE, instead, since May they have been rising because of QE. Interest rates are just way too low and do not offset all of the risks associated with holding Treasury paper. Therefore, Treasury paper is being sold, meaning that its supply is greater than the demand for this paper.

The reason why all of this so incredibly important is that everything is now in place for another crisis as we approach the February debt ceiling limit. As a consequence, it is extremely critical that investors understand that they should absolutely not be holding dollars or Treasury paper. They are incredibly overvalued and therefore they will be the ultimate losers here. Physical gold and silver are the place to be, and can continue to be picked up at prices that reflect severe undervaluation.

- James Turk via King World News: