Servias Ministries Blog

In an attempt to circumvent the debt ceiling issue, the Administration passed an idea by the public to see the reaction- create a $1,000,000,000,000 coin and deposit it with the Federal Reserve Bank thus creating money in one simple act.  Clearly, it did not fly.  History will ask the question “What were these guys thinking?”  The sad reality is that the American public has degraded to the point where an attempt of this nature could even be contemplated.  My oh my.

The following is an excellent concise article about this latest attempt:

http://finance.yahoo.com/blogs/the-exchange/treasury-already-minted-two-trillion-dollar-coins-005206800.html

“Geithner says gov’t will borrow from federal employee pension fund to avoid passing debt limit”

OK, let’s see how this issue progresses:

Step 1  Replace all Social Security funds with U.S. Government IOU’s

Step 2  Replace all Government Pension Funds with U.S. Government IOU’s

Step 3  Replace all 401K Funds with U.S. Government IOU’s

Step 4  Replace all IRA Funds with U.S. Government IOU’s

Problem solved!

See:

http://www.washingtonpost.com/politics/congress/geithner-says-govt-will-borrow-from-federal-employee-pension-fund-to-avoid-passing-debt-limit/2013/01/15/b58d6470-5f59-11e2-9dc9-bca76dd777b8_story.html

Countries are starting to get desperate.  The good ole’ times are over.  The debt-based system is teetering now and it is every man for himself.  Germany’s demand for its gold (over a 7 year period) is just another example of Central Banks beginning to align themselves for a currency conflict.  The American attitude of entitlement will soon be challenged.  The U.S. Dollar as the world reserve currency is being challenged by the Kings of the East.  I expect gold to be the beneficiary and silver to be dragged up the price scale with it.  This trillion dollar coin is just the latest laughable attempt to “fix” the problem of massive debt.  That must be quite a coin!

Russia is also commenting on the upcoming skirmishes: http://www.bloomberg.com/news/2013-01-16/russia-says-world-is-nearing-currency-war-as-europe-joins.html

Only the Kingdom-based economy can solve the global economic issues.  Only the wisdom from Above can steer us through the turmoil on the horizon.  Our leaders need to be reciting The Lord’s Prayer… and believe it!

The following article supports the numerous blogs I have written in the past about the importance of gold & silver as insurance against economic calamity:

http://www.telegraph.co.uk/finance/personalfinance/investing/gold/9804444/Bundesbank-to-pull-gold-from-New-York-and-Paris-in-watershed-moment.html

I guess the Germans are getting a little concerned as well

Let’s say you have access to power and authority under the current system.  You also have a considerable amount of wealth yourself or access to wealth.  This is a two phase process.

First, you initiate a fiat currency system in society and everyone is convinced that this system is workable and they accept the currency as a medium of trade.  You begin your process by implementing this system in society.  For a few years all is well and the currency is accepted in commerce.  Now you begin to print more and more currency so you can buy up hard assets.  This is debasing the currency to benefit your plan.  The sellers willingly sell to you because of their confidence in the currency.  You pay for their assets with worthless paper, only valued by perception.  Once you have bought up their assets, you now need to protect yourself from losing those assets by someone else with more of the fiat currency.  It is now time to change the rules and convert to a sound currency.

You revert back to a gold-backed system of payments and only those who have gold can buy assets back.  Since you have been acquiring gold with fiat currency, you can protect yourself from others attempting to take your assets from you with your low cost gold.  Those left holding the fiat currency end up with nothing but memories.  What a plan!

In 2012 gold only went up 7% in price.  We could only wish all investments could achieve the same return on investment (ROI).  Gold is honest money held in order to protect investors from the destruction of paper money.  Central Banks continue to destroy value of paper money and now hold $15 Trillion in paper money on the balance sheets.  Most of the growth of their balance sheets has occurred since 2007.  On the other hand, China continues its plan to acquire gold so that it can create its own reserve currency.  This multiyear plan has been consistently importing large quantities of gold.  The Western governments have obliged by suppressing the price of gold thus creating a large transfer of wealth to the Eastern Kings.

The U.S. debt now reported to be about $70 Trillion (including unfunded liabilities) has interest payments of approximately $1 Billion per day.  If interest rates went up from the current 2% to 5%, a normal rate, in ten years the U.S. Debt would grow from $16 Trillion to $40 Trillion (excluding unfunded liabilities).  Interest alone would be over $1 Trillion per year.  You can see why compounded interest is the “8th wonder of the world”.  This scenario assumes that the U.S. will not add other debt.  What are the chances?

The U.S. Government accounts for 40% of the economy and growing.  In Europe, the number is 60%.  The implementation of the Basel III accord (Banking guidelines) has been postponed until 2019.  This means that the banks cannot survive compliance of prudent reserve requirements.  Their toxic investments still reside on their balance sheets.  Central Banks continue to suppress interest rates so that commercial banks can attempt to generate enough profits to offset the worthless assets being used to prop up their reserve requirements.  This transfers wealth from the average person to the banks by way of cheap rates for their money.  Massive amounts of wealth are being transferred everywhere!

Which would you rather accumulate: honest money or dishonest money?  The Law of equal weights and measures demands honest money.  The current system has endorsed dishonest money.  Which will Our Heavenly Father back?

The release of economic data tends to favor the sitting president.  Government statistics are released and are usually overstated to the positive and then later revised downward to the real numbers.  The revised numbers are normally on “page 5” and not the headline of the news.  Had the real numbers been released, President Obama might not have been reelected.  However, unemployment ticked downward and reports of recovery were sprinkled over the airways.  Now we are once again dealing with the realities as reported by John Williams at www.ShadowStats.com:

December Unemployment: 7.8% (U.3), 14.4% (U.6), 23.0% (ShadowStats.com)

“The economic releases of this past holiday-shortened week showed real median household income in November to be in continuing severe downturn…”

“On the unemployment front, the December U.3 unemployment rate actually increased by 0.1%, although it was reported as “unchanged” at the headline level.”

“The White House and the Congress have pushed the planned second day-of-reckoning further into the future by another two months.”

The American people need the truth and facts on a timely basis.  They are ultimately called on to pay for the reality of the economic chaos ahead.  Politicians are gambling with the future generations’ opportunities and well being.  Our Heavenly Father is the only One with a solution to the deepening economic chaos ahead.  The complexities that surround the economic picture are beyond the comprehension of the average voter and taxpayer.  Self interest defines the current path to destruction.  How can businessmen truly plan their future with all of the economic uncertainty out there?  There is only one way.  Be still, do only what Our Heavenly Father tells you to do.  Resist the temptation to do projects for the sake of staying busy.  We MUST hear Our Heavenly Father’s voice!

Right on the heels of my blog is the expected all out assault on the precious metals.  Each and every time that there is a major economic event that should put gold & silver in a positive light, the opposite happens.  It is my belief that this is a managed attempt to dissuade the market from look at the true state of the economy.  Unfortunately the markets are not free and independent but subject to manipulation by the large investment banks who get their instructions from those who believe they are in ultimate control.

The net result of manipulating gold, silver, and related stocks downward is to provide China and India with buying opportunities at lower prices.  It works well for those of us who believe that the upward trend in prices is still in place.  The U.S. economy is not getting stronger, the U.S. debt crisis has not been solved nor will be under the current system.  The toxic debt and derivative weapons of mass destruction are still looming.  The currency war has not ended but is getting into full swing.

If you do not leverage your investments you will sleep better and look at this current environment as a buying opportunity.  If you believe that the current system has been fixed, you should sell your hard assets and convert to U.S. Dollars and disregard the raw U.S. Government statistics that John Williams at shadowstats.com has faithfully reported and summarized in my previous blogs.  Only Our Heavenly Father knows what is coming down the pike.

I have spent the last two years slowly accumulating gold & silver shares as funds have allowed.  I don’t give financial advise but I do share with others what I am doing myself.  Based on my personal observations and navigating through all the macroeconomic numbers, there is a true lack of ethics and integrity at the highest levels of governments around the world.  With few exceptions, the elite think they have all the answers yet they continue to take actions that would indicate the opposite.  If we were truly in a recovery, the Fed would not continue its Quantitative Easing campaigns.  We would not be constantly dealing with another fiscal cliff.  Government debt continues to grow.  In the midst of all of this economic ugliness the average person is simply trying to retain value and acquire some form of insurance against economic calamity.  In my view, hard assets have the best chance of retaining value.

The following chart provides us with a clue to the opportunity this year:

If a person can acquire a portfolio of solid gold & silver mining, and energy stocks, the portfolio appears to be set for a substantial return on investment this year.  My family owns shares in Silvercorp (SVM), Goldcorp (GG), McEwen Mining (MUX), Penn West Energy (PWE), Lexam VG Gold (LEX.TO), Chevron (CVX), and others.  With the Federal Reserve creating new money at a record pace, the hard assets should increase in value.  Well managed companies should see their share values increase.  A global severe recession could change all of these assumptions and crush stock values.  However, the underlying hard assets will still have value in a recovery.  Dividends from senior producers are a plus.

Disclosure and Disclaimer Statement: The author has personal investments in gold and silver bullion, as well as in gold, silver, uranium and base metal mining shares. The author’s objective in writing this article is to interest potential investors in this subject to the point where they are encouraged to conduct their own further diligent research. Neither the information nor the opinions expressed should be construed as a solicitation to buy or sell any stock, currency or commodity. Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions. The author has neither been paid nor received any other inducement to write this article.

Let’s first review my view from last year-

Silver:  “It is clear the silver has greater volatility attached to it, especially with an 81.9% move in 2010.  At this writing, I expect to see a drop similar to 2008.  Those that have the ability to manipulate the price will attempt to remove anyone who is “long” silver in a leveraged position.”

The price began the year at $28.78 and is ending the year around $30.00, a 4.2% increase.  It had a $10 swing during the year.  That is volatility.

Gold:  “I expect gold to move between 1,500 and 2,100 for 2012 unless the Iran conflict heats up or the European crisis reveals worse financial losses than previously reported. “

We began the year at $1,598 and gold closed at $1,657, a 3.7% increase.  The low was $1,540 and the high was $1,791, a $251 swing.

Both metals performed about how I expected.  Summertime is typically down for metals as it was this year.  Documented manipulation kept both metals at the lower end of my expectation, especially gold.

In 2013, I expect gold to break the $2,000 price level and silver should break $40.  Right now my focus is on the gold and silver mining shares.  I believe they are 20% underpriced versus the metal.  I believe that accumulation of the physical metal is insurance.  Your safe deposit box may be heavy but it did better than bank Certificates of Deposit this year.  I don’t provide recommendations for other people’s investments, I simply share what I am doing for my family.  I bought silver in the $28 range this year as well as the $32 range.  It matters not to me about the volatility since I believe the price is in an upward trend.  Obviously I would love to buy at the low.  I simply buy a little as I get some extra cash.  If the price seems a little high, I wait until it moves back down.

If the currency wars really heat up, the sky is the limit on precious metal prices.  It we have another financial system meltdown, people will flee to the safety of gold & silver.  If the various governments around the globe curb spending, become fiscally responsible and begin in earnest to pay off fiscal debt, the metals could suffer.  I don’t think that will happen.  My conclusion is that gold and silver will continue their upward trek.  Gold’s channel will move between $1,600 and $2,200.  Silver appears to have built a $28 base and could see $45-50 this coming year.  A black swan event could bust the highs overnight.

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