Turk – A Black Swan Event, Global Monetary Reset & Chaos
Today James Turk spoke with King World News about a “Black Swan” event, the coming global monetary reset, and the incredible price action that KWN readers can expect to see in gold and silver over the next 60 days. Here is what Turk had to say in this fascinating and powerful interview: “What we saw in 2012, Eric, is a good example of what I have been calling a ‘managed retreat.’ The central planners were out in force – particularly in the fourth quarter – trying to keep a lid on precious metal prices, and they managed to accomplish that to some extent. Nevertheless, despite their best efforts, last year gold rose 7.0%, and silver climbed 8.2% in US dollar terms.”
James Turk continues:
“In fact, gold and silver were higher against all the world’s major currencies last year, which is an important point. National currencies are being destroyed by misguided government policies. So while the purchasing power of these currencies is being eroded, the best governments can do and the most they can expect is to try keep the gold price from rising faster than the rate at which the purchasing power of currencies is being debased.
This battle is what the phrase ‘managed retreat’ is all about, and it is indeed a retreat. The central planners are losing the war, as evidenced by the fact that gold has now risen twelve years in a row at an average annual rate of 16.8% per annum….
“That is a spectacular achievement for gold. But silver has done even better, rising 20.1% on average over the last twelve years. I also found it interesting that the US Mint stopped selling silver eagles. There are only two alternatives to explain it and both are bullish. Either they don’t have any physical silver, or they don’t want to sell what they do have at such a low price. As I said, either case is extremely bullish for silver.
So while the central planners may win the occasional battle or two, like the one being waged over the past couple of months, they are clearly losing the war. And we can expect more of the same in 2013, Eric. Gold and silver will climb higher, but the central planners with their interventions will continue to fight the free market.
I would like to go back to one point, Eric, namely, that gold has risen for twelve years in a row in terms of US dollars. Statistically speaking, we are in the tail-end of a Bell-shaped Curve. To put it another way, twelve consecutive years of price increases in anything is one of those so-called Black Swan events. It is very rare for anything to rise twelve years in a row, but despite this big increase in price, the important point is that gold remains undervalued.
The dollar and other currencies are being debased at basically the same rate at which the gold price has been rising, so gold, in essence, remains as undervalued as it was years ago. Its price has risen almost entirely because of currency debasement, not because gold has become more highly valued. And gold is far from being overvalued. The gold price still has much higher to climb before this bull market in gold, and bear market in currencies concludes.
Looking a year or two ahead, I expect to see a global monetary reset. It will likely hit sometime between 2013-2015, with the result that governments will return to gold as the core component of monetary policy, and it will occur in one of two ways. Either governments go back to gold through a well-reasoned plan, implemented over a few years, or they will go back to gold kicking and screaming.
I fear it will be the latter, which means there will be a lot of chaos ahead. What has been lost in the discussions of the fiscal cliff is that government has become too big. It has to shrink because the productive sector of the economy can no longer support the level of spending governments are pursuing.
Total government spending in the US, for example, is now a greater percentage of GDP than during World War II when the economy was on a war-footing. But the situation is not much better elsewhere in the world. Governments everywhere have become too big.
But rather than cut spending in order to reduce their footprint, monetary history shows that they always print money. It is the easy political option, and invariably it is pursued until the money is destroyed. Sadly, that is where the dollar and nearly all of the other national currencies are headed, and the best way to protect oneself and their family from this coming monetary debacle is to own physical gold and physical silver.
There is one lost point to make, Eric. 2012 ended just like 2011, with sentiment for the precious metals as well as the mining stocks at or near historic lows. The first two months of 2012 were good ones, and I expect the same thing now. So I expect a big rally in gold and silver – and probably the mining stocks too – is long overdue.
Given the similarity of how 2011 and 2012 ended, I expect 2013 to begin the same way as 2012. To put some numbers to it, in the first two months of 2012, gold rose over $200 and silver soared $10. There is every reason to expect that the same thing will happen again this year. So despite Thursday’s weakness, the metals will be seeing a tremendous surge in the next 60 days.”