The Middle Class Weapon of Self Defense

Gold's positive start prompted this significant observation from the analysts at the second largest bank in the world, HSBC ...

"Positive bullion prices in reaction to the decline in equities may set the tone for 2014 and reinforce the negative correlation between the two."

The same economic momentum that is supportive for gold investments is negative for the stock market.

Irrational exuberance, a term coined years ago by former Fed Chairman Alan Greenspan, may accurately describe the situation in the US stock market at the close of 2013. The Dow and S&P 500 soared to all-time highs during the year. The Dow recorded its biggest annual gains since the late 1990s. The NASDAQ surged nearly 40% to highs not seen since 2000.

The problem, of course, is that all of this euphoria in the equity markets was not supported by economic fundamentals, but by monetary "goosing" by the Federal Reserve in the form of negative real interest rates and its Quantitative Easing bond-buying program.

It was inevitable that the artificial stimulus from the Fed would become less effective over time. And when, out of necessity, the monetary stimulus ceases altogether, the end will not be painless. This is all the more reason for investors to diversify into assets that have historically moved independently of the stock market--such as gold.

The US stock market experienced its first negative start to a year in six years in 2014, falling 2% in January. 2008 was the last time the stock market opened with a decline. Stock markets around the world have followed Wall Street's example, with stock indexes from Shanghai to London experiencing rocky starts.

Consider the following: The Dow Jones Industrial Average has been up for five years in a row. Since 1901, there have been only three other times when this happened: the 1920s, 1940s and the late 1980s.

There has been only one period when the DJIA was up more than five years in a row. That was in the 1990s when the Dow moved up nine years consecutively, then crashed.

Today the stock market is overextended. Based on history, and some of the biggest investors in the world, equities are due for a down year in 2014.

The building trouble in the stock market has key players headed for the exits.

In the latest filing by Berkshire Hathaway, billionaire investor Warren Buffett's holding corporation, Buffett dramatically reduced his exposure in stocks. He specifically singled out disappointment in blue chip companies, such as Johnson & Johnson, Procter & Gamble and Kraft Foods. Berkshire Hathaway reduced its holdings in consumer products stocks by 21% and also sold off its entire stake in chipmaker Intel, a tech blue chip.

Meanwhile, billionaire hedge fund manager John Paulson is also dumping stocks from his hedge fund and billionaire investor George Soros has unloaded all of his bank stocks.

When hugely successful billionaire investors start running for the exits, others should take notice!

But, believe it or not, the exit of these billionaire investors from blue chip stocks was not the most bearish signal we have seen in 2014. United-ICAP chief market technician Walter Zimmerman gets that crown. As reported in the Wall Street Journal, Zimmerman released a signal saying that 2014 would be the year of "major reversals," with the Dow commencing a two-year plunge that could send it down a whopping 70% to below 5,000.

Zimmerman called the present market the "bubble to end all bubbles." He sees the S&P 500 falling to 450 and the NASDAQ to 1000, each about 75% below current levels.

For the record, Zimmerman forecasts that gold will climb to $1,631 an ounce, roughly 30% higher than present levels.

Noted Wall Street trader Bill Fleckenstein recently told CNBC there was a huge amount of downside risk in the US stock market:

"The [price-to-earnings ratio] is 16, 17 times earnings. Why would you pay 16 times for an S&P company? I don't care about where rates are, because rates are artificially suppressed. Why isn't that worth 11 or 12 times? Just by that analysis, you'd be down by a quarter or 30 percent. So there's a huge amount of downside."

Significantly, Fleckenstein points out the mirage created by Federal Reserve policies:

"Printing money does not make the economy work, but it sometimes makes stocks go wild. The reason the stock market did well last year is because the Fed printed $1 trillion."

"If they taper, they're going to get a lot of weakness. People are being very macho right now, they think that if the Fed tapers it's going to be OK-and it might be for a little while. But the market's going to end up lower if they keep tapering, and they're going to have to come back the other way. Then at some point, people will see that the Fed is trapped, because what they do doesn't work, and they can't stop."

Certainly the turmoil in stocks makes owing physical gold even more attractive than usual, since historically gold has tended to move independently of the stock market.

There is no reason to believe the US dollar will sustain any real strength going forward, given US monetary and fiscal policy. That alone bodes well for gold in 2014 and beyond.

The chief means by which the federal government has been trying - mostly unsuccessfully - to engineer an economic recovery has been through unprecedented loose monetary policy from the Federal Reserve, including an extended period of negative real interest rates and the never before seen bond-buying program, Quantitative Easing (QE).

In 2013, the Federal Reserve turned 100. But there is no cause for celebration. One result of Federal Reserve policy throughout its lifetime has been a huge increase in the cost of living for the average American.

Most Americans now have no choice but to run up huge levels of debt to purchase items they used to be able to afford without credit cards and loans. Even items like homes, which have typically been paid by mortgage, require much higher levels of debt, even adjusted for inflation.

No matter what period of time is examined, over the long-term, gold prices have always offered protection from a declining dollar, runaway debt, inflation, stagflation, etc. Those who bought and held gold over the last 10, 25, or 50 years have maintained their purchasing power and far outpaced the rising cost of living.

For example:

In 1954 "¦
Average Income- $3,960
New Car- $1,700
Hew Home- $10,250
Gold- $ 35/oz.
Silver- $ 1/oz.

In 2014 "¦
Average Income- $ 50,054
New Car- $ 25,000
New Home- $254,000
Gold- $1,250/oz.
Silver- $20/oz.

Today it takes over 80% more labor/income to buy a new home than it did just sixty years ago. I call that the "murder the middle class" dream of home ownership. No wonder owning a home is such a struggle today and in most cases requires two-incomes to qualify. This has taken a bitter toll on families cohesiveness and created generations of latch-key children.

In The Inflation Deception: Six Ways Government Tricks Us ... And Seven Ways to Stop it (2011, Idea Factory Press) Craig R. Smith writes "¦

"Inflation is quietly being used as a tool, an ideology, and a form of taxation that secretly extracts the earnings not only of Americans but also of unsuspecting people in other countries. It has also become a means of wealth redistribution, a mode of social engineering, a device to weaken some and strengthen others both within our nation and in the global community of nations, and a way to seize and exercise power."

All of this has occurred due to Fed policies that have debased the value of the US dollar over time.

One of the world's most successful investors, Jim Rogers, warned that the Fed's policies have set the stage for a new economic crisis and even a collapse of the Federal Reserve itself in the next ten years. Rogers is bullish on the long-term prospects for gold and prefers gold coins over gold equities: "Gold will become one of the only refuges around," he says.

His statement recognizes that gold is inherently the best hedge against a falling dollar. Currently, the US dollar is the world's reserve currency of choice. As such, gold is the dollar's natural rival, since gold has historically been the world's best store of value and trusted medium of exchange.

When world investors lose confidence in the dollar, the first place they usually turn is gold. Moreover, gold is priced in dollars. That means when the value of the dollar declines, the price of gold tends to increase.

"Gold is moving steadily into the next stage of a bull market," said Barry Dawes, head of resources at Paradigm Securities, a Sydney-based securities advisory business to CNBC.

Spot gold prices are up over 3 percent so far this year, outperforming other precious metals such as silver, which is up about 2.3 percent and platinum which up just 0.75 percent.

Demand for gold coins is rising fast. "Physical gold is disappearing off the market at a terrible rate. As soon as that really starts to hit I think gold goes through the roof," Jim Walker, founder and CEO of Asianomics told CNBC.

Mints from the U.S. to the U.K. to Australia report climbing demand.

Bloomberg reports "¦

"Sales of gold coins by the U.S. Mint rose 63 percent in January to the highest since April. The volume climbed to 91,500 ounces from 56,000 ounces in December, while sales of silver coins almost tripled to 4.78 million ounces, the highest in a year."

The Perth Mint, which runs Australia's only gold refinery, told CNBC ...

"Sales of gold coins and minted bars rose 10 percent to 64,818 ounces of gold in January in the latest sign of firm demand for gold bars and coins."

The U.K.'s Royal Mint, which traces its history back more than 1,000 years, ran out of 2014 Sovereign gold coins because of "exceptional demand," it said in a statement on January 8th. Coins weren't available to customers until six days later when inventories were replenished.

Austria's Muenze Oesterreich AG mint has hired extra employees and added a third eight-hour shift to the day in a bid to keep up with demand.

Part of gold's bright outlook has to do with Chinese demand.

China, which saw record demand for gold last year, is seeing even greater demand for gold as the Chinese New Year has begun. 2014 is considered the Year of the Horse in China, horse related golden products have posted massive sales across the nation.

Chinese consumers have been eager to get their hands on gold. Many gold retailers in Beijing and Hong Kong have been catering to a steady stream of customers looking to buy gold objects of all types.

Not long ago, China's economy was considered "emerging" but it is now challenging the US economy for world supremacy. China's economic growth figures released in January indicate the country is growing almost four times as fast as the United States, rapidly closing the gap in the size of the two countries' economies.

This has long-term negative implications for the US dollar, which will benefit gold. Another factor at work here is China's official appetite for gold.

China is said to be increasing its official gold reserves. China surpassed India in 2013 as the number one consumer of gold. So, as China's economy gains supremacy, the Chinese appetite for gold should continue to expand.

More and more analysts from varying backgrounds and viewpoints are advising people to look to gold.

"¢ Dennis Gartman, editor and publisher of The Gartman Letter, says it's "time to be quietly bullish."

"¢ Steven Kaplan, chief executive officer of TrueContrarian.com, is predicting higher prices. He says ...

"Financial markets always do whatever rewards the fewest people, a powerful rally in 2014 is therefore extremely likely and almost everyone will be surprised when gold reaches a new, all-time high in late 2014 or early 2015."

"¢ DoubleLine CEO Jeff Gundlach sees a gold rebound this year.

"¢ David Morgan, publisher of The Morgan Report, points out only 6% of analysts are bullish on gold right now. That "nearly guarantees a bottom," he said, adding that he sees higher prices this year, not lower. "Gold will make back all of the losses of 2013 and achieve $1,700 per ounce."

"¢ Peter Schiff, chief executive officer of Euro Pacific Capital, said he's advising clients to buy gold ...

"At some point, gold's going to go straight up like a moonshot," Schiff tells CNBC. "Maybe it's going to take Janet Yellen to call off the taper. Or maybe she's going to have to say, 'We're doing more of it, we're going to start increasing it.' I don't know what that magic moment is going to be."

The consensus expectations for an additional 15% decline in gold prices for 2014 are unjustified, said Schiff, and with such negative sentiment on gold from the mainstream, "it's a good time for a contrarian move." The central premise that drove the selloff in 2013 - the economy has sustainably recovered and the Federal Reserve will end quantitative easing in 2014 - is flawed, said Schiff.

"¢ Michael Dudas, precious metals and mining analyst at Sterne Agee, believes "there's a lot more positive than negative to support gold in 2014." Dudas sees gold rising to $1,450.

"¢ Rich Ilczyszyn of iiTrader agrees gold is much more primed to rise than to fall. "We are getting too complacent with the daily ranges-watch for a breakout."

"¢ Ron Paul, former congressman and presidential candidate articulated the bright outlook for gold recently. Paul sees 2013's gold price decline as merely a blip on the screen in the overall scheme of things ...

"I don't see gold so much in short-term because I see it in over a 100-year period. Long-term, it will always go up so long as we have a Fed printing money. But, on the short-term, the traders have a lot to say about this. A correction like we just had last year - one year out of 13 - that's not a big correction. That doesn't destroy a so-called bull market."

"I think they're going to move to gold. Gold is going to be the safe haven which it's been for 6,000 years."

Gold prices, which have been at the mercy of technical selling since 2012, have now started to rebound in 2014. Short-term profit-taking by speculators in 2013 provide a golden opportunity for savvy savers to convert debased dollars into trustworthy gold - at a 25% discount!

Swiss America CEO Dean Heskin reminds gold owners that the physical gold market is still alive and well, despite ETF liquidations from major banks, brokerages and traders.

"This flushing out of weak-handed, short-term gold speculators will prove a valuable entry point for those who have felt they missed the gold rush over the last few years," says Heskin.

"Gold's healthy price correction below $1,200/oz. should be viewed as an excellent buying opportunity. Market fundamentals remain solid," said author and Swiss America Chairman Craig R. Smith.

Mr. Smith remains confident the 21st century rush toward a new gold standard and away from a debt-driven culture is far from over, "The strong fundamentals driving this flight to safety could continue to propel gold prices above $2,000/oz."

The recent price dip offers wise buyers the 9th major gold buying opportunity since 2004. The average price rebound following major price dips over the last decade is 36%! This is the first time in a decade gold prices have dipped nearly 30% - which I consider a gift for those who have procrastinated or simply never really considered owning physical gold.

Today we live in an era of moral and economic redefinition and 'rehypothecation' - that is - "The practice by banks and brokers of using, for their own purposes, assets that have been posted as collateral by their clients."

Rehypothecation without a depositor's permission in a free market is called STEALING. Like a child "borrowing" from their parent's wallet or purse in secret, hoping no one will catch them.

Rehypothecation helps explain why Germany has yet to get back their gold reserves requested from the Federal Reserve in January 2013, after the Fed refused to allow them to verify or inspect Fort Knox last April. Something sounds very fishy here to me. The Fed then responded by telling Germany they would return their gold, but it will take them eight years to return it!

Germany then demanded at least 300 of their 6,700 tons of gold bars on deposit with the Fed to be repatriated immediately. Glenn Beck's TheBlaze reports so far just 37.5 tons have been returned as of January 2014. Could it be the Fed cannot deliver the gold? Why has Fort Knox not been inspected or audited in over sixty years?

Very fishy indeed.

As I cover in detail in my upcoming book this summer, "Murder of the Middle Class," in the span of 100 years, America has witnessed the devolution and almost complete debasement of our morals and our "money" - from 'Pure' money' ... to 'Trust' money' ... to 'Fiat' money' ... to 'Virtual' money.'

Our nation has been blessed with vast natural resources, coupled with God-fearing immigrants who held a strong, moral work ethic and understood the importance of a stable monetary foundation. A pure money system provided a level road for our Republic to advance freedom, liberty, invention, progress, jobs and stable incomes.

Sure Americans struggled, but together walked a path leading to upward mobility. In fact, the prices of goods gradually declined during this "golden era" of American monetary history. Why? Because pure money always builds wealth while impure money ultimately destroys wealth.

Gold remains the ultimate store-of-value at the very moment the world is awakening to the economic consequences of living beyond our means.

Gold stands as the monetary guardian of honesty, freedom and liberty and exposes the financial lies undermining our prosperity and our future.

Now is not the time to sit on the fence! It is time for action! Owning physical gold coins offers unparalleled safety, privacy and profit potential. I hope this report has given you a clearer picture of why more and more analysts and experts feel gold's future is bright.

It's a jungle out there, full of bulls and bears more concerned about increasing their own income than about wisely investing, growing and preserving the purchasing power of your savings.

In these volatile and uncertain times, you would be wise to seek out a trustworthy, honest and experienced guide who can show you ways to hedge against risk using various forms of gold. This guide can help show you more than one way to win, by using gold to diversify your investment, retirement and inheritance planning.

So, what are the best forms of gold and silver to own today? Opinions vary. Some say gold and silver bullion bars or coins. Others say collector U.S. gold and silver coins, which are more private and exempt from government reporting and potential confiscation, such as we saw in1933 under FDR. My opinion is that it is wise to diversify between both bullion and collector coins if possible.

My favorite U.S. gold coins are the beautiful Saint Gaudens and Liberty $20 gold coins, minted in late 1800s and early 1900s. Each contains nearly an ounce of pure gold plus they hold historical value based on their scarcity and collector desirability. These classic or "numismatic" U.S. gold coins are 100% private and considered one of the few "non-reportable" assets you can own today.

The most popular U.S. bullion gold coins are the modern American Gold Eagle coins, which are available in one ounce, half ounce, quarter ounce and tenth ounce coins. For survival and bartering purposes I recommend the smaller denominations because they offer more liquidity.

When it comes to U.S. silver coins, I love the classic 19th and 20th Century Morgan Silver Dollars and Peace Dollars. These classic gems serve as a reminder of a time when our money was, "sound as a dollar!" They contain almost an ounce of pure silver, are very popular and collected worldwide.

Modern one-ounce American Silver Eagle bullion coins make excellent gifts for children and grandchildren and, along with American Gold Eagles, qualify to be included in a Precious Metals IRA.

The easiest way to begin the process of putting yourself on a personal gold standard is to open a Precious Metals IRA or to roll over an existing IRA or retirement plan into one based on a foundation of U.S. gold and silver coins.

Over the past decade, Precious Metal IRAs have outperformed all other asset classes by far. I firmly believe IRAs are the sweetest deal you're ever going to get from Uncle Sam in this life!

Gold has always been at the foundation of financial freedom over the ages. In history we see a repeating cycle - from the demise of the Roman empire, the Ottoman empire, the British empire and soon, the American Empire. They all started out with a pure gold and silver money system, but all ended up in decline using a fiat money system.

The rise and fall of nations and civilizations is always linked to the collapse of their money systems. All of these civilizations started out strong, but after about 200 years they destabilized and destroyed their culture, economy and money system with unsustainable debt.

It took America over 204 years to accumulate our first trillion dollars in debt in 1980. It then took another 28 years to reach the $8 trillion mark in 2008. Since 2008 our "official" debt more has more than doubled to over $17 trillion, under Obama, and is now increasing by a trillion dollars per year!

This explains why central banks around the world are all beginning to ditch dollars. The world's confidence in America's ability to manage our trillions in debt is fading fast.

If you value your personal and financial privacy, sovereignty, freedom, liberty and that of the next generation, you are going to have to become proactive in restoring and maintaining it. The good news is that corrupt, spendthrift Progressive politicians must now face the economic realities of their failed policies.

"Progressives now feel their power slipping away as Americans are withdrawing from a century of hypnotic control," argue Craig R. Smith and Lowell Ponte, in their latest book The Great Withdrawal: How the Progressives 100-Year Debasement of the America and the Dollar Ends (2013, Idea Factory Press).

"This is why a desperate Left is turning to naked force - 'financial repression,' rule by decree, 'Regulution,' crony capitalism, seizures and wealth redistribution, and politicized government agencies including the IRS and NSA to keep their hold on government power."