40-year-old veteran, Robert Fitzwilson, tells investors it is absolutely critical that they catch the next massive play to the upside in global markets. The good deeds of the past such as hard work, moderation, thrift, savings, and retirement planning are being swept aside.
Eric King
December 25, 2012
King World News
Today 40-year veteran, Robert Fitzwilson, wrote the following piece exclusively for King World News. Fitzwilson, who is founder of The Portola Group, tells investors it is absolutely critical that they catch the next massive play to the upside in global markets, where the wealthy and powerful have already positioned themselves.
Below is Fitzwilson’s exclusive piece for KWN:
“Chutes and Ladders is a very popular board game. It has deep historical roots, and was originally developed in India. One of the early names by which it was called was “Snakes and Ladders”. The original game involved the concepts of good vs. evil, right vs. wrong, and fate (karma). The performance of a good deed allowed for the climbing of a ladder to a higher existence and fate. A bad deed led to a snake and a descent to a lower level of existence and worse karma.
We would characterize the current status as “Chutes and Almost No Ladders”. Bad deeds are being used by the powerful as personal ladders to a higher, more powerful fate, while the majority of us are inexorably sliding down chutes to a lower one. The good deeds of the past such as hard work, moderation, thrift, savings, and retirement planning are being swept aside. What was once a mindset of increasing abundance and charity is devolving into a global zero sum game where those with power seek more control and wealth at the expense of the trusting and the weak....
“Much of what we decry has been going on for a long time. Politicians have promised what they cannot deliver. There is no surprise there. That is the operational definition of what politicians always do. “A chicken in every pot” in another era, “free phones and condoms” in ours. Government largesse knows no bounds to those willing to be deceived.
The money printing and debasement has been going on for 100 years in the United States. Greed and financial shenanigans have been with us as long as there has been money.
We have often focused on the Roman experience, but the 19th century in the United States ushered in another version of debasement in what was called “stock watering”. The original term related to cattle. Prior to taking the cattle to market, some ranchers would allow their herd to consume a great deal of water which resulted in a much higher weight when sold.
As much as we decry the lack of enforcement and the diminution of the rule of law, it was “wild and wooly” in the late 1800s in the United States. One form of stock watering worked as follows. A company could be formed with the contribution of assets. However, the stock value was tied to “par”. Par could be declared by the board to be a multiple of the value of the underlying assets held by the company. The issuance of the stock would allow the early holders to sell their stock at a large premium to reality.
It sounds familiar. As the central bankers continue to print grotesque amounts of fiat currency, the analogy to money printing and watered stock rings true. The differences between the scheme in the 1800s and the present are twofold. The first is the scale. The amounts involved are light years beyond the imagination of the operators in the 19th century.
The second is that the assets underpinning our experiment with watered currency are declining in value and economies are being hollowed out. The watering of the currency is bad enough, but the wealth of the countries upon which the currencies are based is being simultaneously destroyed.
Powerful people also read history books. They have learned that hyperinflation, runaway metals prices and runaway interest rates frighten the majority of people. While there are coincident reasons for zero rates, low official inflation and repressed prices for metals, it is clear that suppressing those market signals has worked. A majority of the people continue to “whistle past the graveyard”. As long as they are doing well, that is all that matters to them. Given the level of economic ignorance and misinformation, this comes as no surprise.
What this is really about is a tectonic, historic reordering of power and control. There are many players in that activity, governments, financial institutions and the like. We are familiar with the names of many, but there are probably others that have no face or name. This is a normal process in history.
Only recently have a minority educated themselves to the extent of the currency destruction. Only a small percentage of those have taken any action to protect what remains of their accumulated wealth. Rapid change in expectations and belief systems can be very overwhelming and frightening for anyone. Attempting to predict the specific resolution of the events swirling around us is next to impossible. We are very fortunate to have brilliant men such as Gerald Celente giving us the best guidance that is humanly possible.
What we can do is accept our reality. The world is a very different place from the one in which we grew up, at least our understanding of it. Many of our beliefs and assumptions are no longer valid. There is a wonderful saying that “life is what happens when you are making other plans”. That is as true now as it ever was.
For investors, among the changes that we need to embrace is the need to focus on real assets. It is not a time for diversification across real and financial assets. The data from the late 1970s makes that clear. Financial assets will be destroyed at an accelerating pace. In the short-term, cash and fixed income can be safe stepping-stones, but not for long. As the legal, government, financial and social firewalls continue to erode, it is also wise to base your allocations and actions on the assumption that none of those even exist.
This is going to be a bare-knuckled fight for accumulated wealth, regardless of what form those assets might take. Nothing is off the table. Forces are in need of money, and we will see an increasing pace and creativity when it comes to separating investors, savers and retirees from their money. Frankly, the more successful among us at wealth accumulation are simply the bigger targets.
Real assets have been our focus, particularly energy and precious metals. It is also the focus of the powerful. It would be prudent to follow their lead.”
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