James Turk says precious metals are only winners of currency war

Oct 22, 2010·Roman Baudzus

As GoldMoney founder James Turk told the German finance blog wirtschaftsfacts.de in an interview, precious metals turned out to be the definite winner in the on-going international currency devaluation race.

The guidelines of policy makers as well as of central banks would result in the destruction of the western industrialised countries’ middle classes as well as entire economies. The persistent printing of money was not a universal remedy for a global economy that suffered from huge structural problems. In this context the economic theory of deficit spending by John Maynard Keynes turned out more and more futile, but nevertheless, there were no signs that the policy makers had recognized this fact so far. In fact it would be necessary to make a 180-degree turnaround, which would particularly include converting paper currencies back into gold and silver.

The currency war, which is waged on a global basis, knows only one winner: the precious metals. As long as freely convertible paper currencies, which are backed by nothing, can be appreciated and debased against each other without any control, it will only be the precious metals that will appreciate against Fiat currencies. In the current zero interest rate environment, Mr. Turk recommends his investors to hold nearly all of their capital in precious metals.

The policy makers are about to vehemently destroy the buying power of their currencies. Especially the retail investors should not make their investment decisions solely due to the daily price development of gold and silver. One should think about the real value of precious metals or other tangible assets in times of a growing risk of a paper currency crash. If somebody needed liquidity in the form of Euros or US dollars, one could just sell a part of their physically held precious metals.

In Mr. Turk’s opinion the governments, as well as the central banks had long lost control over the system. The result is that everybody should be prepared for the worst. The people who had been well prepared during the times of the Great Depression in the 1930ies had survived the crisis. The present situation would develop similarly, but Mr. Turk added that the current economic situation was by far worse today than it was during the Great Depression.

Moreover he proved to be a critic of John Maynard Keynes’s economic theories. According to Mr. Turk, a huge number of economists and Nobel Prize winners were almost blindly following these theories that led into an impasse, without thinking about the consequences of the measures taken. It would become more and more apparent that the followers of these theories were about to plunge the world into complete chaos. When asked whether he saw deflation or inflation developing in the upcoming years, he stated that he clearly believed in inflation. He even took a step further when saying that he counted on the outbreak of a hyperinflation, at least on a US dollar basis. If governments around the world did not finally succeed in altering the course, they would lead their countries directly into bankruptcy. Which domino would be the next one to fall after Iceland, Dubai or Greece remains to be seen.

Bookmark and Share