As the editor of the Silver Bear Cafe, I spend most of my time researching current events. I explore the markets, the economic war that is being waged on the middle class, precious metals, the Federal Reserve, energy, and how to go about surviving financially. In this weekly column I will attempt to condense the week's events and examine how the news might affect your pocketbook. JSB

Financial Markets

This week, as I embark on my commentary, I find that three of the six arenas of the current events that I follow involve the machinations of the Fed. I have determined central bankers in general, and the Federal Reserve in particular, are basically responsible for, pretty much, everything that is wrong with the world. Economic issues pervade the lives and life styles of everyone on the planet. The misguided attempt to micro-manage economies is a pretentious excuse for wealth transfer and larceny. I believe that the central banksters have employed their ability to counterfeit money and use its corrupting influence to cataclysmically screw things up all over the world. They are currently in a race to the bottom where everyone, except the banksters, come up on the short end of the stick. Given the pandemic apathy, that addles the overall mind-set of our nation, there is not much hope for a political solution. Our government is being administered by overly ambitious, yet not-too-bright shills and is otherwise peopled by sycophants. There are literally dozens of agendas being played out but they all share a common theme; gather up, and/or steal as much as you can, as fast as you can, while there is still something left. By the time the sheeple wake up and attempt to politically change things, it will be far too late. We are witnessing the end of an economic era where rapacity has overwhelmed the collective survival mechanism.

From Peter Schiff:

While the world's economies jockey one another for the lead in the currency devaluation derby, it's worth considering the value of the prize they are seeking. They believe a weak currency opens the door to trade dominance, by allowing manufacturers to undercut foreign rivals, and to economic growth, by fighting deflation. On the other side of the coin, they believe a strong currency is an economic albatross that leads to stagnation. But the demonstrable effects of currency strength and weakness reveal the emptiness of their theory.

A country that attracts investment from abroad (through stable and fair governance, low taxes, a growing economy, and a productive labor force) and produces goods that are in demand on the global stage will generally see a rising currency. In essence, this is the reward for a job well done. Strong currencies then help nations stay strong by conferring greater purchasing power to its citizens and businesses, which keeps input costs low, thereby enhancing international competitiveness. Strong currencies also encourage savings, keep real interest rates low, lower capital costs, and allow for greater productivity and higher real wages.

It is often argued that a weak currency confers advantages in foreign trade. But the edge only results from putting exports on sale. Any merchant will tell you that it's easy to sell more if you cut prices, but most would prefer charging full retail. However, exports are not an end in themselves, they are a means to pay for imports. The goal of an economy is not to work, but to consume. If citizens in one nation buy goods produced in another, they must pay with exports. When a nation's currency appreciates imports cost less and fewer exports are needed to pay. This means goods and services at home will be cheaper and more plentiful, and citizens won't need to work as hard to buy them. This is the definition of rising living standards.

On the Economic War Front

Longtime readers will appreciate the fact that my stance on Monsanto and other agri-multinationals of a similar ilk, that make up a group, owned, controlled and promoted by elite eugenicists, is wrought with disdain, because I believe that they are attempting to depopulate the earth.

Luminaries that have come out publicly supporting depopulation include David Rockefeller, Bill and Melinda Gates, George Soros, Ted Turner and many other ultra wealthy persons. They are not, however, volunteering to be personally eliminated.

This puts both the administrators and stockholders of the companies, as well as their high profile supporters in the same boat as any number of "Public Enemies", a group that I tend to address everyday. But then, don't get me started...

From Anthony Gucciardi:

Hungary has taken a bold stand against biotech giant Monsanto and genetic modification by destroying 1000 acres of maize found to have been grown with genetically modified seeds, according to Hungary deputy state secretary of the Ministry of Rural Development Lajos Bognar. Unlike many European Union countries, Hungary is a nation where genetically modified (GM) seeds are banned. In a similar stance against GM ingredients, Peru has also passed a 10 year ban on GM foods.

Almost 1000 acres of maize found to have been ground with genetically modified seeds have been destroyed throughout Hungary, deputy state secretary of the Ministry of Rural Development Lajos Bognar said. The GMO maize has been ploughed under, said Lajos Bognar, but pollen has not spread from the maize, he added.

Unlike several EU members, GMO seeds are banned in Hungary. The checks will continue despite the fact that seek traders are obliged to make sure that their products are GMO free, Bognar said.

During the invesigation, controllers have found Pioneer Monsanto products among the seeds planted.

Precious Metals

Man has an innate desire to obtain and own gold and silver. That we seek to possess precious metals seems as naturally entrenched in our collective psychic as any other instinct. The possession of wealth, in the form of gold and silver, has always represented power and control. There is nothing wrong or unnatural to desire power and control. The power to control one's destiny through the accumulation of wealth is not only natural, it is healthy. This natural desire is the basis of our capitalistic system. The gold standard, as prescribed by our Constitution, is "the Law" that insures that the "power and control" that is provided by wealth, cannot be abused. Those who would seek to abuse the power of wealth would consequently have to break "the Law." "The Law" has been broken.

It is my view, (and one that is shared by a great many others), that the failure of our current monetary system is eminent. The purpose of this web site has been, and will continue to be purposed to "wake you up", and make you aware of the facts that support my take on things. Hopefully it has increased your respect for the intrinsic value of precious metals. From an economic standpoint, gold and silver will lend heartily to our salvation. Gold and silver will soon regain their positions as the anchors of an honest monetary system. The market will demand it, and the "powers that be" will have no choice but to let the market have its way.

From Dr. Jeff Lewis:

The natural ratio of the occurrence of silver to gold in the ground is typically estimated at roughly nine ounces of silver to one ounce of gold, and yet the recent trading price ratio of 62 to one is almost seven times higher.

After contemplating this curious anomaly, one is left wondering if comparisons between gold and silver may be as fruitful as comparing silver investment demand and silver industrial demand.

A relationship certainly exists between the availability of these precious metals and their relative prices, but it always seems rather abstract.

Trading Ratios, Mining Supply and Investment Grade Metals

The recent 62 to 1 trading ratio of silver to gold clearly favors buying silver over gold, especially given a host of other favorable factors.

These include: bullish fundamentals, a likely bottoming technical picture in an oversold environment and a favorable COT sentiment structure.

Furthermore, from a historical perspective, silver's price has traded at a much lower 13 to 1 ratio relative to that of gold on average, making the precious grey metal seem very cheap relative to its yellow alternative.

The mining supply of silver is always rather difficult to verify because of silver's mixed history as a monetary metal, a currency and a commodity.

When it comes to looking at the supply of metallic silver (Ag) versus metallic gold (Au), yes gold is currently available, but at what price?

The ratio of silver to gold in above ground investment form is one ounce of silver to five of gold, as a conservative estimate. Silver is actually considerably scarcer than gold in its investment grade form, and this could create a much bigger problem for the market in an environment where investment demand for silver is rising notably.

Energy

Water scarcity is rapidly becoming the next international game changer. National, State and local governments, throughout the world, are passing legislation in an attempt to control the harvesting of fresh water. Is it possible that you could someday be charged for collecting rainwater off your roof? You would be surprised at how many trans-national companies already have stakes in water delivery in this country.

Globally, we have already entered water scarcity. The Middle East will run out of fresh water within the next ten years. Sub-Saharan Africa will run out in the next 5 years. China is considering moving the capital to another location because there is no more water in Beijing.

Closer to home, the mighty Colorado river no longer makes it to the Sea of Cortez. It trickles out somewhere in the Mexican desert south of the Arizona border. The Rio Grand, which use to flow into the Gulf of Mexico now stops some 20 miles short of Brownsville, Texas. Aquifers all over the country are being depleted far more rapidly than they can recharge themselves. We are on the verge of a national water crisis right here in America.

In the next two decades, the struggle for water will tear apart communities, exacerbate differences between social classes, and challenge governments and private organizations to change how they perceive their roles.

According to the World Trade Organization, "human needs can be supplied by private entrepreneurs for a profit, unlike a human right which accrues equally to everyone." National and international trade associations like the WTO and NAFTA define water as a "commodity" and have agreements requiring governments to permit water exports under specified conditions.

Commodification and privatization go hand in hand. Even though the evidence for water scarcity is overwhelming, governments and global bureaucracies, influenced by lobbyists, and, in many documented cases, outright bribery, are disposed to call water a commodity, to transfer what remains to private corporations, and to let the market determine who gets water and the price they pay for it.

The commodification of water, internationally, is on the horizon. The day will come when no one will be able to collect it without a permit. Many persons throughout the world will be prosecuted for its illegal possession.

It will happen here.

From Michael Snyder:

What is life going to look like as our precious water resources become increasingly strained and the western half of the United States becomes bone dry? Scientists tell us that the 20th century was the wettest century in the western half of the country in 1000 years, and now things appear to be reverting to their normal historical patterns. But we have built teeming cities in the desert such as Phoenix and Las Vegas that support millions of people.

Cities all over the Southwest continue to grow even as the Colorado River, Lake Mead and the High Plains Aquifer system run dry. So what are we going to do when there isn't enough water to irrigate our crops or run through our water systems? Already we are seeing some ominous signs that Dust Bowl conditions are starting to return to the region.

In the past couple of years we have seen giant dust storms known as "haboobs" roll through Phoenix, and 6 of the 10 worst years for wildfires ever recorded in the United States have all come since the year 2000. In fact, according to the Los Angeles Times, "the average number of fires larger than 1,000 acres in a year has nearly quadrupled in Arizona and Idaho and has doubled in every other Western state" since the 1970s. But scientists are warning that they expect the western United States to become much drier than it is now. What will the western half of the country look like once that happens?

The Fed

In an attempt to give the appearance of vitality to the stock market, the Federal Reserve has engineered a situation that is successfully dupeing investors. Once again, the complete absence of regulation has provided the opportunity for large corporations to borrow money, from the Fed, at essentially no interest, and use it to buy back their own stock. In doing so they are able to retire large blocks of shares. Through the retirement of stock, their P&E ratios are artificially enhanced, because the earnings of the company is divided by fewer shares. Nothing has actually changed. The company has not become anymore profitable, the value of the individual shares has risen because there substantially fewer of them. This also allows the board members to fraudulently award themselves huge bonuses as a result of the artificially enhanced P&E ratios. This, although not illegal, is certainly unethical. It is fraudulent, and the responsibility lies in the lap of the Federal Reserve for the criminal manipulation of interest rates, which is just an extension of the Libor scandal. Bottom line: smoke and mirrors.

From Deepcaster:

"The Fed wants to kill all signs of inflation to hide the damage they're doing to the middle class. First the Fed leaves food and energy out of the CPI, and then they get the Labor Department to lie about the figures. Their last trick -- smash the price of gold and silver. What are they going to do when the bond market (fearful of inflation) collapses? You can't fool all of the people all of the time."

"The CPI is manipulated, and I believe gold is being manipulated as well. The Fed's QE4ever is inflating everything -- school tuition, hair cuts, food, gas, insurance, medicine. They've already "rearranged" the CPI, so what's left for them to do to keep us from knowing about inflation? Oh yes, it's gold, so c'mon, Bernanke, keep the lid on gold. Slam it in after-market trading in the thin paper-gold markets of the night.

"I promise you, when the true forces of inflation finally break loose, the Fed won't be able to disguise what they've wrought. When the true forces break out -- it will be a national disgrace and an emergency. "Then you will know the truth, and the truth will set you free." The rest of this year should be something to behold." - Richard Russell

Legendary Newsletter Writer (since 1969!), Richard Russell is now singing the same Tune that Deepcaster and others (e.g., gata.org) have been singing for years. The Key Implicit Question which we answer here, is how to Profit and Protect in an Interventional Universe.

Given the Massive, Continuing, Multi-Market Interventions, savvy Investors today face a Great Dilemma.

Whether to continue to bet that Equities Markets will continue to rise, because, they hope, The Fed and other Central Banks will continue to print Hot Money even though they, The Investors, know that Economic Fundamentals do not support the Rally.

Since Economic Fundamentals do not support the Rally to bet against further Equities Rises, since they, The Investors, know this Rally is built on the Sand of mere Printed Liquidity, and cannot last forever and is likely doomed to end in Economic Stagnation and Hyperinflation – i.e., in Hyperstagflation.

Financial Survival

The Fed has stepped in and is overtly buying government debt. When the Fed directly buys government debt, and then uses that debt to create more money, it is immediately inflationary. No trickle down here. It is nothing less than hyperinflationary. But the banksters are terrified of deflation. It would crash the banks if their assets (collateral) lost any value. Obviously, if the sheeple ever began to realize that, through this hyperinflationary action, they were getting royally screwed, they might just lynch these bozos and restore some sanity to government.

Hyperinflation will make Government bonds far less attractive. Remember, the bond market is the cash cow that the central bankers depend on to continue to milk the economy. Therefore, the Fed will do everything in its power to insure that the bond market will be the last to deflate.

Bernanke is not the sharpest tool in the shed. He bases his convictions of the tenets of a faux science, namely, Keynesian Economics. The only real way to keep the bond market inflated is to substantially raise rates. He will not do this, however, because he knows that, through his past actions, and those of his predecessor, Allan Greenspan, that the whole situation is screwed up so bad, rising rates will cause the economy to implode. We have been waiting for the people finally wake up and start to make some noise. Consequently, the sheeple are not known for public outcries, so the throes of hyperinflation will already be choking the economy long before the Fed makes any meaningful interest rate increase, (read in: double digits). We really need to abolish the FED. The dollar is, temporarily, being bolstered by the more rapid decent of the Euro, the Pound and the Yen. It is all fiat and it is all doomed. When the dollar breaks below the USDX .78 there is nothing in the world that can stop it from entering free-fall.

From Porter Stansberry:

Well...are you ready for an "outlandish" prediction? The U.S. bond market – particularly junk bonds – is going to crash. When this crash occurs, it will be the largest destruction of wealth in history. There has never been a bigger bubble in U.S. bonds.

How do I know? It's simple. Junk bonds (aka high-yield bonds issued by less creditworthy companies) have never yielded less than 5% annually. But they do today. Likewise, the difference between the yields on junk bonds and the yields on investment-grade bonds has almost never been smaller. That means credit is more available today than almost ever before for small, less-than-investment-grade firms. The last time credit was this widely available – and at such low costs – was in 2007. And you know how that turned out…

The coming collapse in the bond market will be far worse than it was last time, too. This time, the Federal Reserve's actions have driven forward the huge bull market in bonds. The Fed is printing up almost $100 billion per month and buying bonds. That has forced the other buyers of bonds to buy riskier debt that, historically, offered much higher yields.

Today, those yields have been incredibly "compressed." You can imagine the high-yield segment of the bond market to be like a spring whose coils have been driven together by the force of the Federal Reserve's market manipulation. As soon as the Fed's buying stops (and it must stop one day, or else it will trigger hyperinflation), the yields on those riskier bonds will soar again. As bond yields rise, the price of bonds will fall sharply.

To give you a specific example, car manufacturer General Motors recently issued bonds to investors. The yield on these securities was only 3.25%. I'm fairly certain that inflation in our economy will exceed that rate.

That's why a company that went bankrupt in the last five years… that operates in a highly competitive market… and still suffers from massive overcapacity… is paying essentially nothing for capital. That doesn't make any sense. Investors are being paid nothing, in real terms, for their savings – or to accept the real risk that GM could default. Investors ought to be getting at least 7.5% on these bonds, a yield that would cause the price of these bonds to fall 50%.

I believe we'll see a real panic in the corporate bond market at some point in the next year. I expect the average price of non-investment-grade debt (aka junk bonds) to fall 50%. Investment-grade bonds will fall substantially, too. (I'd estimate something around 25%.) This is going to wipe out a huge amount of capital… and believe me… it's 100% guaranteed to happen.

You must first realize that there are, present in our lives, enemies. You must then know who those enemies are and act accordingly.

Eliminate as much debt as possible, especially “variable rate” debt, such as credit cards and lines of credit. Interest rates will be rising, so the elimination of debt offers a “real return” of escaping rising rates by creditors.

Get some control over some fresh water.

If you are depending on Social Security, stop.

Follow the course opposite to custom and you will almost always do well...

Its not what you don't know that will screw you up, it's what you know that is wrong. The spin you hear from the mainstream media is intended to mislead you. Open your eyes and face the future. If you leave your head in the sand and ignore it, you are only leaving your butt exposed for the world to kick. This all may sound like gloom and doom, but when you get a handle on what is going to happen, you will have a future filled with opportunity. Fortune favors the Informed.

More next week...

May the Great Spirit be with you always,

Johnny Silver Bear
Chief cook and bottle washer, The Silver Bear Cafe

Disclaimer

All statements and expressions are the sole opinions of the editor and are subject to change without notice. A profile, description, or other mention of a company in the newsletter is neither an offer nor solicitation to buy or sell any securities mentioned. While we believe all sources of information to be factual and reliable, in no way do we represent or guarantee the accuracy thereof, nor the statements made herein. The staff of Silver Bear Cafe are not registered investment advisors and do not purport to offer personalized investment related advice. The publisher, editor, staff, or anyone associated with, or associated to the Silver Bear Cafe may own securities mentioned in this newsletter and may buy or sell securities without notice.