SGM Metals: Rupert "Once the Exodus Begins It Will be an Absolute Stampede!

May 30, 2012 - PRLog -- CNBC.com reports: [ Amid all the challenges facing the markets — Greece, Facebook, JPMorgan — investors face an even larger potential problem: They soon could be running out of traditional safe havens for their money. Much has been made recently of how gold no longer offers its traditional buffer against financial turmoil, with the yellow metal in a sharp pullback since early March.

But some strategists are beginning to worry that other places where investors are stowing their money — high-grade bonds, Treasuries and defensive stocks in particular — also could be losing their protective shields. "The problem is we're seeing safe-haven flows with shrinking instruments into which you can run," says Kim Rupert, managing director of global fixed income analysis at Action Economics in San Francisco. "Once the run for the exits gets started it's going to be an absolute stampede."

The search for safety comes as markets are in daily tumult over the debt crisis in Greece and its reverberations through Europe. The Facebook initial public offering had been viewed by some as a potential market turning point but has failed to live up to its billing. And JPMorgan Chase has struck another blow at investor confidence with the fallout from its $2 billion trading loss due to the so-called London Whale.

All of it has added up to major headaches for investors trying to restore their battered confidence. The safe-haven flows of which she speaks have occurred at a dizzying pace, from mutual funds that invest in stocks and into those that are concentrated in bonds. Mutual fund investing is considered a proxy for what individual retail investors are thinking.

Rupert worries that once the Fed is forced to raise rates — either because of inflation or economic recovery — those holding Treasuries could get hammered with principal losses. Compound that with the European debt crisis and the burgeoning debt and deficit problem in the U.S., and it makes for a troubling future for government debt.

She thinks "a couple of failed auctions" would trigger that stampede in which investors, "no matter what the price aren't willing to take down one more bit of paper."

"It could just be no sovereign debt instrument is safe and people move cash under the mattress or into cans of tuna fish and ammo," she says. "It sounds very apocalyptic, but this is probably as nervous as I've ever been about conditions."

"They're paying up for the privilege to sleep well," Paulsen says. Paulsen sees investors getting snookered by the stampede into investment grade debt instruments, such as corporate bonds, municipals and government agency securities. He fears there will be a steep price to pay once rates start to rise and principal evaporates. ]

Lets first start by identifying the propaganda against gold they snuck into the start of this article that is conveying a message regarding safe haven asset investments, oh the irony! Did gold recently have a healthy consolidation? Yes it did. Is the next leg of the bull market in gold healthier now that this consolidation has taken place? Yes again. Do all markets that have doubled since the housing crash began (are there any other than gold & silver?) need a consolidation in order to continue to rise in this unhealthy economic environment? Yes again.

Moving on, if you understand how markets work then you know the very consolidation they are dwelling on was nothing more than investors losing their shirts in Europe as Spain & Greece are watching their stock markets consolidate heavily and bank runs ensue. The investors, who are always conditioned to believe that when the stock market begins to have violent fits that they must cover their equity calls and cost average their stock holdings under the pretenses that the market will surely snap back up tomorrow (because the talking heads on the TV say so), tend to foolishly sell their inflation fighting capital preservation assets (gold & silver bullion) to cover these losses. The sad truth is that these good little sheep tend to get clobbered the next day when the markets continue to consolidate. These losses go into the pockets of the big Wall Street trading firms who are wise enough to short the stock markets while their front men go on the business news channels and advise the sheep to “stick out the volatility because the stocks are on sale at these prices”. It really is as simple as that unfortunately.

Why would the banks & Wall Street machine spend so much time and money going on TV and dumping on the precious metals sector when gold & silver are the very cornerstone asset they have on their balance sheets that acts as a collateral backstop for all of their fractional reserve banking activities? Not to mention it is the very cornerstone asset that every central bank (including the Federal Reserve) has in their vault and use as collateral to print the fiat paper money against worldwide? Because WALL STREET, BANKS, STOCK BROKERS & TRADING FIRMS AREN’T LICENSED TO SELL GOLD & SILVER TO YOU SO IT DOES THEM NO GOOD FOR YOU TO BUY IT AS THERE IS NO COMMISSION INVOLVED FOR THEM! Not to mention the fact that when your money is parked in gold & silver bullion it is unable to be bled off through the stock market, bond market, or commissions generated by these investments. If your money is in the stock/bond market it can be lost as the derivative paper investments drop while the big boys are shorting these same stocks & bonds. This can’t happen if your money is in gold & silver bullion. While the precious metals market may see a dip as investors lose their shirts in paper investments and are forced to liquidate the store of wealth in metals to cover their losses, you simply see the market value of your metals reduced temporarily while this trend is playing out. As soon as these investors begin to realize they are fighting a losing battle against the big boys in their own playground where they make the rules & are playing with risk free bailout dollars you will have to pay in taxes down the road, they will come running into the metals where you have wisely been safely relaxing and watching this stupidity play out.

The truth is that in the end there will be an epic exodus out of the paper assets when this game of “business as usual” fades away. After all, every other time we have had a recession the markets have eventually came back up, so why wouldn’t it happen this time, right? The exodus will probably be triggered when the almost $2 QUADRILLION derivatives market takes down the mega banks and the world is changed forever more. This more than likely will begin sooner rather than later now that the European financial crisis is sucking the tide out and exposing the overleveraged balance sheets of the banks in Europe and the US which are posing real threats to global stability. People will play along until the talking heads on the TV begin to get nervous unfortunately because we have been taught that they are the market experts because they worked for the mega banks or somewhere on Wall Street and wear expensive suits. Consider that you have been conditioned to see a person in a suit as a successful, official, powerful person such as an attorney, a politician, a bank manager, or the president. But they put their pants on the same way as you and I.

Once you accept that they bash gold & silver bullion because it gets you out of their reach and takes your investment monies “off the grid” then you can realize why this is good for you and your family. Get off the grid now before you get swallowed up by the grid itself. Establish your “Plan B” in physical gold & silver bullion now and begin to watch the disaster play out from the safety of precious metals safe haven. Get to a safe place until this whole thing plays out because we have only seen the first act in an epically long & drawn out economic disaster masterpiece. Tick, tock.