We Are All Trapped…

March 26, 2015

Finance and economic expert Alasdair Macleod sees a fragile global economy with many ways to crash.  Macleod starts in Europe with the euro currency, “We are looking at a currency which, at any moment, triggered by Greece or triggered by a butterfly in the jungle, could begin to unravel.  I actually think the lack of any history behind the euro is probably the worst thing that it has.  People can go off the euro incredibly quickly. . . . That is one area where it could happen. . . . Look what’s going on in Japan.  They are printing money, and its hyperinflation.  It is monetary hyperinflation which, at some stage, is going to be price hyperinflation.  It’s only a matter of time. . . .  I can’t find what’s good in the world.  China is going to try to tackle a credit bubble.  I have never known a government to tackle a credit bubble and succeed in managing it. . . . That is an accident waiting to happen.  Coming back to America, last year, the Federal Reserve laid out how it was going to raise interest rates.  That’s a complete joke.  They can’t do it.  We are all trapped, and it’s not going to take very much to change the valuations in the markets, and the effect on the gold price could happen at the same time, and it could be very, very dramatic.”

On the Asian Infrastructure Investment Bank (AIIB), Macleod says, “The reason this bank is being set up is twofold.  First, China . . . wants to build the largest internal market the world has ever seen.  It will run roughly from the Genghis Kahn’s Straits of Bering to the gates of Jerusalem.  We are talking over half of the world’s population once India joins in this. . . . From America’s point of view, she is losing a huge sphere of influence. . . . We then come over to Europe and you got NATO.  The importance of the AIIB is that NATO’s members’ commercial logic is driving policy a lot more than political logic.  So, even though they are all members of NATO, they are all deserting the ship as far as America is concerned by signing up to join the AIIB.  So, what we have is this new bank which is specifically set up to finance huge infrastructure projects in Asia, and we could be talking about upwards of $25 trillion worth of infrastructure spending.  This is enormous. . . . This is happening outside the control of America, and that is what is upsetting America.”   Will this undermine the U.S. dollar?  Macleod, who is also the top researcher for GoldMoney.com, contends, “Yes, in a sense, but it is part of multiple processes which, actually, collectively undermine the dollar.  This is just the latest in a chain of things that has been planned for an awful long time.”

In terms of the prices of gold, Macleod says, “The whole thing is mispriced.  We’ve been emptying our vaults, and the whole thing is going over to China. . . . The sentiment in the West for gold is so negative, but this is not unusual.  We see this in all markets.  Look at the reverse of it.  We had the dotcom bubble back in 2000.  The prices of the tech companies were absolutely ridiculous. That is a valuation extreme.  I reckon, in the case of gold, we have the opposite valuation extreme, and it coincides with valuation extremes of super optimism in bond yields and stock markets and high end property and all the rest of it.”

When will the Chinese make their next big move?   Macleod says, “Their style is not to go in and disrupt markets.  They act very, very quietly.  You would hardly know they are there.  This is certainly how they have handled their acquisition of gold.  I don’t think they would want to be blamed for destabilizing western capital markets.  What could happen is if we set a chain of events going that would lead to our own demise, then the Chinese would protect themselves?  There is so little gold left in western vaults now . . .  anything that changes the really sunny outlook for bonds equities and all the rest of it . . . and for people to realize that people don’t have any gold, that could drive the price sharply higher because there is not enough gold for us to buy.  The stocks are very, very low, and anybody who comes into the market is going to have to bid it up to get it.”   

US silver mining began on a large scale with the discovery of the Comstock Lode in Nevada in 1858.