Sunday, August 28, 2011

Whats the reason for this uprising? Next global reformation --By Shan Saeed

Its all about economics. When people dont have food, dont have jobs, dont have sense of purpose to their lives, its an excruciating agony. Let’s be honest– most history books are exciting. They have an amazing way of oversimplifying major cultural shifts, as if someone flips a light switch and society turns on a dime.

Take Martin Luther, for example. In 1517, Luther publicly posted a list of 95 grievances against the Catholic Church in Wittenberg, Germany, and history credits him with sparking the great ‘reformation’ that eventually created the Church of England and protestant movement.

This is mere historical convenience. There were hundreds, even thousands of people who came before Luther. Society was ready for a major shift and already moving in that direction. Luther gets credit for the spark.

Similarly, the history books of the future may look back on Tunisian fruit merchant Mohammed Bouazizi as the spark of the next ‘global reformation’. If you recall, Bouazizi lit himself ablaze in protest of Tunisia’s pitifully repressive economic conditions, and revolution ensued across the region.

Tunisia fell. Egypt fell. Libya was invaded by a peace-prize winning US president. Civil uprisings spread to Syria, Bahrain, Algeria, Morocco, etc. It would be fools to think this was all due to a fruit vendor.

Like Martin Luther, Bouazizi is a symbol… a metaphor for society’s pent up frustration that had been building for years. This frustration is worldwide. The entire world, which cheered the Arab Spring uprisings across the Middle East and North Africa, has been watching in complete shock as riots spread across Europe. Riots in London, riots in France, riots in Greece, riots in Spain.

Whatever excuse is laid to explain the upheaval, it’s just a superficial trigger. People are frustrated. They’re angry. They feel like they’ve been wronged, left behind to rot without any chance of a decent livelihood. And they’re so angry they’re willing to get violent and destroy property.

These are the same sorts of conditions that breed today’s terrorists. Someone who’s willing to strap a bomb to his chest has no economic prospects. He’s desperate… and much more easily influenced to do things that are destructive. You don’t see too many successful people making six-figures strapping any bombs to their chests.

Bottom line, when someone’s livelihood is taken away, all bets are off, and that’s precisely what’s happening right now. Deteriorating economic conditions are driving so much social unrest around the world, and the trend is definitely not our friend.
World governments recognize this, and they essentially have two responses from their canned playbook.

The first response is to “do something.” In the US, for example, Barack Obama recently announced a new wave of fiscal stimulus… because, hey, it worked out so well the first few times they dumped a bunch of money into the economy.

This is exactly the WRONG thing they should be doing. It puts the country deeper into debt and generates marginal return on investment. Even the Congressional Budget Office’s own analysis indicated that Obama’s first stimulus plan cost the American taxpayer between $225,000 and $631,000 for every job that it ‘saved’ or created after 18-months.

Even a complete moron can see that this is a waste of money, and ruinous for the economy. Hang on for round two to come very soon.

The second thing that governments are doing is curtailing freedoms. These people will take ANY STEPS NECESSARY to keep the party going. Sure, everyone cheered when Egyptians used Facebook and Twitter to launch a revolution… but when people do it in the London or San Francisco, they take immediate steps to shut off access.

San Francisco’s BART transit system spokesman Linton Johnson summed it up best in an interview with KRON-4 news when he said that transit passengers have “no right to free speech…” So much for the Constitution.

These two things– economic deterioration and the increasingly heavy hand of Big Brother– are the essential ingredients in revolution. When combined, widespread social upheaval is nearly a foregone conclusion.

Thinking people need to recognize the risks and consequences at stake, and formulate a plan to prepare for them. My ultimate recommendation is to set up a safe haven location outside of your home country– a crash pad in a stable place where you can feel secure in your family’s safety and watch the turmoil on television instead of from your front porch.

This is just a research piece and not an investment advice. All financial transactions carry a RISK.

Saturday, August 27, 2011

Japanese investors moving from gold to platinum---By Shan Saeed

Attracted by the narrowing spread between platinum and gold and recent stability displayed by the metal, Japanese investors are investing in physical platinum
Japanese investors have been steadily boosting their platinum investments over the last month, tempted by the precious metal's stability relative to gold as they look to diversify their commodity holdings with global markets in turmoil.

The amount of gold holdings customers want to sell has grown by the day this month, but purchases of platinum have actually doubled. Japanese investors have been bucking the global trend for buying gold, cashing in their holdings as bullion smashed through successive record levels.

I think platinum is being bought as price moves are much milder than gold. Buying momentum began early in July but there has been constant buying since late that month, accompanied by rising trading volumes. The daily average trading volume for Mitsubishi's platinum ETFs exceeded 100 million lots on Aug. 5, and has generally hovered above the average of around 50 million lots for most of August-2011.

While platinum prices are prone to downside risks as they are tied to industrial demand, the metal is more precious in nature than gold and its value is more stable. The fact that ETFs are growing may indicate more Japanese investors are shifting away from physical investment in precious metals.

A downgrade in the U.S. sovereign debt rating and growing worries about its economy, as well as the spreading European debt crisis triggered a rush to buy gold globally, pushing prices to a record high above $1,917.80/oz an ounce during the week [22-27].
But spot gold plunged about 9 percent in just two days after hitting its historic peak.

As observed by the market participants about possible change in tax code, there would probably be a flurry of transactions ahead of a revision to tax laws due to take effect from the start of next year. After the change, those handling the sale of gold and platinum ingots and coins exceeding 2 million yen in value must submit a record of the transaction to tax authorities.

Disclaimer: This is just a research piece and not an investment advice. All financial transactions carry a RISK

Gold is beginning to de-couple ------By Shan Saeed

That’s right; gold is showing real signs of finally decoupling from other risky assets, most notably stocks.

"De-coupling" is the action word here, not "decoupled." Gold hasn’t de-coupled yet, but the recent financial market instabilities in the wake of the debt ceiling crisis and the S&P downgrade have shown that it is clearly de-coupling.

On many days during the crisis, gold went up, sometimes a lot, when stocks went down. And, the same was often true in reverse, gold went down when stocks went up. Gold has also often been coupled to other commodities, most notably oil. In the recent crisis oil fell to one year lows whereas gold soared more than 10 percent.

I have always said that the key sign that gold is de-coupling is if the Dow falls 2,000 points and gold doesn’t fall with it. Well, at its lowest point during its recent collapse, the Dow fell almost 2,000 points and gold was still up — substantially.

So, why do I say gold hasn’t fully de-coupled yet? In a fully de-coupled situation, gold would be even more inversely correlated to the stock market.

When gold finally de-couples it will become inversely correlated to gold to a very high degree. Also, it has not achieved any significant safe haven status yet. That still belongs to — paradoxically — the recently downgraded US Treasury bond.

Gold was still fairly well coupled to stocks as recently as late June. In fact, I did a presentation on gold the first week in July and after looking at the data decided not to say that gold had decoupled. Gold has been de-coupled from stocks in a long term sense over the past decade. I always point out the performance comparison — gold is up more than 500 percent and stocks are up 0 percent.

De-coupling as I am referring to it in this article is on a short term basis, not a long term basis. Even during the last decade, when gold has risen substantially, if the stock market took a hit, gold often took a hit. Of course, it always rebounded more strongly than stocks, but it was still coupled to stocks and to commodities. When other metals fell significantly, gold would also fall. De-coupling would change all this.

Why is de-coupling so important for gold? Because it is graduation day for gold — the day it becomes viewed as an investment in its own right — an investment that goes up when the stock and bond markets go down and an investment that goes up even if other commodities go down. And it, when it is fully de-coupled it will be seen as a safe haven financial asset in turbulent financial markets and not as a commodity. As such, it will become an increasingly desirable investment.

Full de-coupling from stocks and commodities means gold’s golden years have arrived. Again, we’re not there yet, but the recent debt ceiling crisis showed we are clearly getting there.

Disclaimer: This is just a research piece and not an investment advice. All financial transactions carry a RISK

Monday, August 22, 2011

Next banks to fall-------By Shan Saeed

Bank of America is down by 20% after being sued by AIG for "Massive Fraud" ... Goldman, Morgan Standley and JP Morgan are next

Bank of America Down 20% Committed "Massive Fraud".....How? Mortgage papers were all fuged and not in the proper format. Bnak of America is down 20% after AIG sued the bank for "massive fraud" in connection with mortgage debt, seeking $10 billion dollars. AIG accused Bank of America and its Countrywide and Merrill Lynch units of misrepresenting the quality of mortgage-backed securities, including more than $28 billion it bought, and lying to credit rating agencies about the underlying loans.

According to its complaint, AIG examined 262,322 mortgages that backed 349 offerings it bought between 2005 and 2007. It said the quality of 40.2 percent of the mortgages was significantly inferior to what had been represented. Defendants were engaged in a massive scheme to manipulate and deceive investors, like AIG, who had no alternative but to rely on the lies and omissions made. The bank is down 50% for the month.

This is start of a massive fraud story unwinding going forward for amny banks. Morgan Stanley got $107 billion today.

Credit-default swaps on Bank of America Corp., the nation's biggest bank by assets, soared to the highest since May 2009. Goldman Sachs and JPMorgan Chase Bank to be sued by AIG very soon. Moreover, AIG intends to sue a number of other large banks for fraud as well.

A.I.G. is preparing similar suits against other large financial institutions as well. Its part of the litigation strategy aimed at recovering some of the billions in losses the insurer sustained during the financial crisis.

As I've repeatedly noted, both the Great Depression and the current financial crisis were largely caused by fraud, and the economy cannot stabilize until fraud is prosecuted. The failure of government to prosecute Wall Street fraud is the main reason that the markets are experiencing chaos again.

Bailing out the giant banks which committed massive fraud hurt - rather than helped -the economy. As I said last month in one of the TV channels If We Don't Break Up the Giant Banks NOW, They'll Be Bailed Out Again and Again ... Dragging the World Economy further down with them. This is not the view of some obscure economists. Virtually all of the independent economists and financial experts [not working for the Fed, Treasury, or big banks] agree ... BAD TIMES ARE AHEAD..MASSIVE BANKS BAIL OUT WOULD BE ON THE CARDS OF MANY GOVERNMENTS. LET THEM GO BANKRUPT AND PUNISH THEM FOR BAD BEAVOIR AND RISKY ASSETS POSITIONS.

Disclaimer: This is just a research piece and not an investment advice. All financial transactions carry a RISK.

Saturday, August 20, 2011

Emerging markets would perform better--By Shan Saeed

One of the themes of my research has been the importance of emerging markets.

As with gold and commodities, I think that these nations will do very well in the coming years. Again, this is a long-term play. Emerging markets have lagged for nearly a year now.

However, you have to expect this sort of weakness from time to time. For example, the Bombay Stock Exchange of India is one of the best-performing indexes of the past 13 years, yet it has seen two corrections of 50 percent or more during that time.
Right now, many emerging markets are being hit hard, along with the sell-off in North American markets.

However, the emerging markets don’t have the same problems of North American economies. Most of the emerging-market economies are very underleveraged with little debt and few problems at the consumer level. These nations are still in the midst of long-term growth.

The recent spike in commodity prices did hurt because their poor populations are much more sensitive to rises in these prices. However, as the nations become richer and more urban, they will be able to absorb these price shocks better. In addition, their markets aren’t expensive. Another interesting note about these markets is that for about the past three years, they have led the developed markets.

Emerging markets bottomed in the fall of 2008 while developed markets continued to fall into March 2009. This past year they peaked out earlier. So while I expect a bear market in developed markets could last into 2012 or even 2013, I would expect that many emerging markets will bottom later this year or early next year.

If they do drop another 10 percent or 20 percent — or even 30 percent — I would highly suggest you buy countries such as India, Brazil, Indonesia, South Korea, Chile and Peru on any such dip.

Disclaimer: This is just a research piece and not an investment advice. All financial transactions carry a RISK.

Saturday, August 13, 2011

Swiss Franc is the best choice in tough times ahead--by Shan Saeed

Swiss Franc is a defensive currency. You bet.

In bad times, most assets fall in value. For instance, in the 2008 sell-off, stocks fell. Most commodities fell, and real estate was falling too. Most investors/people didn’t know where to put their money to keep it protected.

However, during 2008, gold flourished. The Swiss franc flourished. The Japanese yen flourished. The U.S. dollar flourished. And, some of the biggest defensive, cash-rich dividend paying stocks made it big, like Wal-Mart. But that’s not a lot of assets “making the cut” when the crap hits the fan. What is tricky is that in every downturn, there will always be a slightly different twist to it.

In other words, as stocks are beginning to fall again, I don’t know that investors can just go out and buy the same combination of assets mentioned above just because they worked the last time around.

I wish it were that simple. However, this time around, Standard & Poor’s has just downgraded the U.S. So that could put a kink in owning U.S. Treasurys or the U.S. dollar this time around.

Japan is intervening in its yen to try to weaken it. So in owning the yen, you could find yourself fighting against Japan’s central bank. They’ve already sold 527 billion yen to weaken their currency but they said they are prepared to sell up to 2 trillion yen.

Does the retail investor want to be trading against that kind of fire-power during those times? I wouldn’t. But I am bullish on Yen for the long term.

Sure, if Wal-Mart drops another 20 percent down into the low $40s then it might tread water through another economic slowdown and stock market sell-off from that point.

I still believe that gold is a no-brainer with all that’s going on in the U.S., Europe, and Japan right now. Not long ago, when I was asked on TV Channel how high I felt gold could go, I told them that it should be no problem for gold to head to between $1,700-$2,000/oz in the next 12-months. I still stand buy that.

But as far as currencies go, I believe that the Swiss franc may be the best candidate if stocks continue their slide-off. Yes, they don’t like their currency being so high right now but there’s not much they can do about it.

Also, even though their currency is so high and it’s challenging their exporters, Switzerland still is in better economic shape than much of the world right now. For instance, their unemployment rate continues to head lower. Right now the Swiss unemployment rate is at 2.80 percent. That’s incredible. No other major industrialized nation has that low of an unemployment rate.

So while they may not like their ultra-strong franc right now, it’s not hurting employment. Therefore, if almost everyone has a job, it’s a great thing and it’s a great place to park your money.

But aside from this, investors historically have a habit of running to the franc and to gold when times get tough or uncertain or chaotic. In fact, the Swiss franc has actually been stronger than gold over the last couple of months.

A simple way to own the franc through your regular stock brokerage account is just to own the Swiss franc ETF, symbol FXF. Therefore, as stocks slump and the U.S. economy continues to slow down, you may want to consider padding the blow to your stock portfolio by owning some gold and especially owning some francs.

Disclaimer: This is just a research piece and not an investment advice. All financial transactions carry a RISK.

US must use Reaganomics to save economy---by Shan Saeed

Atten: President Obama----from Shan Saeed
If you are serious about economy, follow Milton Friedman's economic insights and you will see through this crisis.

The only way President Barack Obama and his economic team can solve the US economic woes is to adopt “common-sense” Reaganomics, the policy. Reaganomics would fix any economy that’s in the doldrums. it’s not a magic sauce, it’s common sense. How Obama can do it...Follow these 5 simple steps adopted during Reagan era in 1980's

Step 1

US have got to get rid of all federal taxes in the extreme and replace them with a low-rate flat tax on business net sales, and on personal unadjusted gross income.

Step 2
US must have to have spending restraint. Government spending causes unemployment, it does not cure unemployment. Government spending has never raised the GDP. Its the tax cut that enhances the GDP growth. Empirically proven.

Step 3
US need sound money. Fed Chairman Ben Bernanke is running the least sound monetary policy I’ve ever heard of. Markets dont like uncertainty and chaotic moves. US has increased it money supply by 138.6 % from Sept-2008 from $851 billion to Dec-2010 by 2.03 trillion. Price inflation can be decreased through monetary deflation. This was advocated by Late Nobel Laureate Milton Friedman from Uni. of Chicago, in his book Money Mischief-Episode in monetary history.
I openly admit that I follow Milton Friedman--the greatest Nobel Laureate in Economics of modern epoch along with Prof Gary Becker at Uni. of Chicago, Booth School

Step 4.
US need regulations, but they don’t need those regulations to go beyond the purpose at hand and create collateral damage. The regulatory policies are really way off here.

Step 5.
Lastly US need free trade. Foreigners produce some things better than Americans do and US produce some things better than foreigners. It would be foolish in the extreme if USA didn’t sell them those things US produce better than they do in exchange for those things they produce better than US do.

I think that USA can win its top rating back, but only when economic policies are completely turned around. However, President Barack Obama’s administration’s only economic plan seemed to be to expand government ownership of the means of production.
US have nationalized the health care industry pretty extensively and doing it with home building as well. Obama tried it with the auto industry as well. So Obama Administration have moved very, very deliberately and purposefully toward extending the government ownership of the means of production.

That to me, if you read the tealeaves, is what they are doing. It is not what they are saying they are doing, but that is what they actually are doing. People don’t work to pay taxes, people work to get what they can after taxes. It’s that very private incentive that motivates them to work. If you pay people not to work and tax them if they do work, don’t be surprised if you find a lot of people not working.”

Current economic woes started to form under President George W. Bush but have been made worse by Obama’s policies. There’s a wedge driven between wages paid and wages received and that wedge is the tax/government spending wedge. That wedge has grown dramatically in the last 4 ½ years…under W and a Republican administration and…under Obama. Bipartisan ignorance has led America to this very disastrously desolate state.

Disclaimer: This is just s research piece and not an investment advice. All financial transactions carry a RISK

Monday, August 8, 2011

Why Stocks are plummeting now--By Shan Saeed

Get ready for financial turmoil till 2013. There would be fear, volatility and uncertainity in the market for a very long time. What's the problem with the stock market? I think the Wall Street Journal said best with a line that might have been pulled from any one of my reports over the last three years…

The economies of Europe and the United States have arrived at the moment when they no longer have any conceivable hope of being able to pay for the huge public commitments they've amassed the past 40 years…

Now… I have to give you a sincere warning. There's no good way to sugarcoat this stuff. I shall share with you about details some of the fundamental, structural problems that led to Europe's current debt crisis and the stock market turmoil this week.

I already know some people might say " this is way over my head… I don't need to know this stuff. I don't care about Europe…" Many of you will wonder why you bother reading the paper at all…

Let me start with a few basic numbers so that investors will have the facts behind the scope of the debt problem in Europe…

There are two sides to the European debt crisis "coin." First, there are the banks. In the 17-member euro zone, there are 7,856 regulated financial institutions. For a variety of reasons (which will become clear to you momentarily), it's critical these institutions not fail. Unfortunately, in many cases, the value of their assets has been seriously impaired by the U.S. real estate crisis and the subsequent European debt crisis. Even more troubling, unlike the biggest U.S. banks, many of the biggest European banks rely almost exclusively on extremely short-term financing.

Looking at the 90 biggest banks in Europe (those covered under the latest stress test), I found out that they collectively face €5.4 trillion (yes, trillion) in principal loans coming due in the next 24 months. That equals 45% of Europe's entire GDP. These amounts are staggeringly large and are concentrated in the biggest banks. In Italy, for example, the two largest banks have debt maturities amounting to 9% of Italy's GDP in the next 24 months. People might recall: Names of these two banks… Here's a hint: One of them used to be called Kredit-Anstalt.)

The only way these debts can be refinanced (aka "rolled over") is if private creditors believe the European Central Bank (ECB) will fully stand behind these bonds. If any one of these banks is allowed to fail – à la Lehman Brothers – it will be a complete catastrophe. None of the major European banks will be able to refinance. They will all fail. All of them. Soc Gen and Unicredit might collapse. This is the latest update on 9th August-2011..Bank of America might collapse as well. Its down 17% in the market value.

The other side of the coin is the sovereign debt loads of the euro zone member states. Here again, there are large near-term maturities.

For example, through July 2012, Italy faces sovereign maturity amounts equal to more than 20% of GDP – not including the 5%-10% of GDP annual deficit it's also expected to run. There is no doubt that without the euro – without the ECB – Italy's government would be unable to refinance these debts at an interest rate it could afford to pay. Even with the currently explicit backing of the ECB, Italian CDS (credit default swap) markets are pricing in a 25% chance of sovereign default within the next five years.

Spain, France, Portugal, and Greece also have large near-term maturities over the next 12 months. If any one of these countries is allowed to default, they will all default. All of them. Bail out is the solution. Only default and restructuring can restore market confidence.

Investors might reasonably wonder… why in the world would these countries organize their financial affairs in this reckless way? It doesn't make any sense… until you begin to understand how the euro zone banking system actually works. It's a paper system that has no accountability attached. In the current system, countries are rewarded for taking on debt because there's never a clearing of the relative accounts.

Here's the core problem: The ECB operates a cross-border payment system that never settles accounts – ever. As a result, there was never any real limit to credit creation in the various euro zone countries. Instead, debts were allowed to build between central banks without any limit. In such a system, who borrows the most wins – at least until the entire system collapses.

Let me give you more detail on this point, because it's really, really important…

In 2010, depositors in Ireland worried their banks would fail because of all the bad real estate loans they held. Depositors took money from Irish banks and moved the capital into German banks. They withdrew roughly €50 billion from Ireland, or 52% of Ireland's GDP. That's a huge amount of capital. In a standalone country (like Mexico, for example) this amount of capital flight would have exhausted the country's foreign reserves, leading to bank failures and sovereign default. But that didn't happen in Ireland, because the ECB continued to provide fresh capital to Ireland's national bank at the same discount rate that was available to all national banks in Europe.

In fact, rather than demanding gold or valuable securities in exchange for the euros that were deposited, all the German central bank (the Bundesbank) got was an I.O.U. from the Central Bank of Ireland. As a result, the Bundesbank is now the largest creditor to the system. It's currently owed €336 billion, which is a larger amount of money than all of the bailout packages combined. In this way, it's virtually impossible for any bank in the euro zone to default – as long, that is, as the Bundesbank is willing to accept those IOUs.

This fundamental lack of accountability or restraint led to enormous increases in total debt, both on the public and private sides of the debt coin in Europe. Why make the hard decisions about who will get a loan if you can get access to more funding, no matter what happens?

Rarely does the "free money" spigot stay open for long. Some of Europe's central banks are now facing huge losses. And the taxpayers of Germany – the ultimate owners of the Bundesbank – are refusing to continue with the system. They're not fools. Germany's head of state is now demanding both sovereign creditors and bank creditors accept some of the losses.

That's why credit default swaps are now beginning to soar – because the market doesn't know how to price the risk of default. The bigger problem is if credit was priced with the possibility of default, few banks and few European countries would be left solvent.

Here's one more surprising fact about the European crisis: Most of the problem could be avoided if there were real and meaningful cuts made to public sector employees' wages and benefits. Take Greece for example. Everyone believes Greeks don't pay taxes. The solution, according to the IMF, is to collect more taxes. But the truth is entirely different: Greeks were already paying more taxes as a percentage of GDP than either the U.S. or Japan.

Even after the IMF package, the Greek deficit is projected to be €17 billion, or 7.6% of GDP. And that's the conundrum. Can you allow most of Europe to operate at a huge deficit, which ends up as losses at the Bundesbank… or do you demand discipline in the system and cause a catastrophic series of defaults?

Investors/ People continue to believe the ECB must, eventually, paper over these bad debts with an enormous bond-buying program that would dwarf the quantitative easing seen so far in the U.S. And it is believed – as I have written for many months – the U.S. Federal Reserve will ultimately backstop the program to ensure it doesn't destroy the euro. But still… how long will anyone, anywhere, accept the paper currencies of obviously bankrupt governments and their puppet banks? I am not sure. and not not optimistic at thispoint of time.

By the way… lest you think we just dreamed this up this week… here's what I wrote about the risks Italy (and the euro) posed to the global economy last July…

Some market participants clearly hoped the $125 billion Fed-orchestrated bailout of Greece would be the end of Europe's sovereign debt worries. They say these small economies "don't matter." But I know otherwise…

The Greek crisis (and the other European debt crises yet to come) is merely a precursor to the "real world" debt crisis of 2010-2012. (I say "real world" because a crisis among developed nations will dwarf the "emerging-market" debt default cycle of the late 1990s.) Likewise, both the emerging-market crises of the last decade, the Internet bubble that followed, and the real estate bubble after that were all merely stepping stones towards the ultimate collapse of the world's untenable, paper-backed monetary standard…

Many of the world's developed economies have been fueling growth with foreign debts. This growth and the asset values created under the euro standard are unsustainable for the simple reason that debt service cannot be made and creditors are unwilling to extend these debts on reasonable terms. These problems have no simple answers. They will spread from creditor to creditor and intensify as the market realizes these defaults are unstoppable. The next major country likely to experience a credit crisis is Italy, which has enormous exposure through its banks to Eastern Europe and the rest of Europe's weak economies.

Italy 's public debt totals €1.7 trillion – seven times the size of Greece. Italy is the world's third-largest sovereign borrower. It cannot be bailed out – it is simply too big. Meanwhile, it cannot possibly hope to pay back its debts as long as it remains in the euro. In fact, Italy has been in recession almost since the day it adopted the euro: Its economy has grown by a total of 0.54% over the last decade. The total public debt to GDP will soon surpass 120%. At that point, it will become progressively more difficult for Italy to extend its foreign debts because all of the foreign creditors will know these debts will never be repaid. A default and devaluation will be the only way to restart Italy's economy.

Finally… what should investors do about all these risks? Hold plenty of gold and silver bullion. Short financial stocks. Hold cash in sound currencies. Buy farmland. Buy energy – during the corrections. Don't believe a word anyone from the banks or the government. Investors should execute their own rsearch that is the golden rule of investment.

Disclaimer: This is just a research piece and not an investment advice. Please execute your own due diligence before making any strategic investment or taking position or entering into an financial contract. All financial transactions carry a RISK.