Economic commentator Franklin Sanders, who was interviewed for the Beyond Off Grid documentary and has been a guest on several of our webinars, sent out this analysis to his email subscribers last Friday regarding the shocking announcement from the Swiss National Bank. It’s important to understand how huge of an event this is.
“Yesterday with no warning whatever the Swiss National Bank removed its peg to the euro it had instituted in 2011 and promised as late as 30 days ago it would continue. The Swiss the franc soared 32% in 30 minutes. Try to wrap your head around that in a market where a 1% daily move is huge. The SNB’s surprise party sent earthquake tremors through all markets, and could be the death knell of the euro. (Just to mix my metaphors. Actually, the 1812 New Madrid Fault earthquake in West Tennessee caused church bells to ring in Columbia, South Carolina, so maybe it’s not mixing metaphors after all.)
From such catalysts as yesterday’s SNB surprise come great and global panics. The damage done to those with Swiss franc or euro positions, Swiss stocks, and currency and other derivatives will likely be catastrophic.
Here’s an example: founded in 1820, the Credit-Anstalt bank was one of the largest in imperial Austria. Credit-Anstalt declared bankruptcy on 11 May 1931 it became the first bank domino in the tumbling chain of dominos worldwide that turned a recession into the Great Depression. “Credit-Anstalt was too big to fail, but too big to save.”
It gets much worse. On 14 January Russia completely shut off gas shipped via Ukraine today, shipments headed to Bulgaria, Greece, Macedonia, Romania, Croatia, and Turkey. They also cut off all gas to Ukraine as well. The US and Europe have been stupidly picking a fight with Russia: they may get a war.
Worse yet, falling oil prices will severely reduce dollar revenue of oil producing countries. Fewer petrodollars means fewer petrodollars to recycle into the US economy bank deposits and financial assets. From a net surplus of dollars to deposit in US banks and to use to pay their bond interest and principal, the flow of petrodollars will become net negative, which means that more of those oil revenues will become not petrodollars, but domestic deposits and investments. Bad, bad juju.
I try not to be an alarmist, but all this is alarming news. Surely shaking confidence in the dollar and in financial markets will send silver and gold higher.”
These kind of unexpected events can be the trigger for significant financial and economic crisis. Are you ready for what’s coming?
Subscribing to Franklin Sanders’ Moneychanger newsletter is a great way to get educated about the rapidly changing economy and financial markets, and about real money – gold and silver – and how to make wise financial investment decisions in the current climate of confusion.
Franklin Sanders quote (c) 2014 The Moneychanger, reprinted by permission. You may sign up for the Moneychanger’s free commentary on the gold and silver markets — and a lot of other things — at www.the-moneychanger.com.”
