3/29/09 Preparing For A One World Currency

Precious Metals Market Analysis, By Michael Pennington (Copyright 2010 Pennco Coins)

Over the last two weeks there has been a lot of talk in the media about the likelihood of a global currency. China and Russia are the driving forces behind this idea, but the concept is gaining momentum right now due to the debasement of the dollar by the current administration. Obviously, the Chinese are very worried that the trillions of dollars they own will soon be worthless. They have had daily discussions with our government seeking reassurance we won’t con them like I wrote about last week. They know it really isn’t paranoia if somebody really is out to get you.

Right now I put the odds at greater than 50-50 this world currency eventually gets implemented. When is the more important question. One thing you can be certain of and that is no one will have advance notice. We will wake up one Saturday morning to an announcement that the dollar is no longer a lawful medium of exchange. We will be told that all banks and financial institutions will be closed for at least one week and perhaps two. This will enable them to make the exchange from the dollar to a “global basket currency”.  We will be told that all “old” dollars will be exchangeable at the national bank and that all bank accounts, stock accounts, mutual funds, all money and financial instruments, both assets and liabilities, will be adjusted according to the new official exchange rate. What that rate will be is anybody guess right now. But think about why this is even necessary. Every nation has had to issue incredible debt which can no longer be supported by broke taxpayers. To bury all this outstanding debt, we might see a 10-1 or even a 20-1 exchange rate. Suddenly a $10 Trillion deficit becomes a $1 Trillion deficit – certainly more manageable for the government. This means however if someone worked hard all their life and managed to save $100,000 and safely put it in the bank, suddenly this account becomes $10,000 overnight. The same would be true for all 401(k) and IRA accounts, for all stock owned, for home values etc. etc. THE ONLY ASSETS WHICH WILL  ESCAPE DEVALUATION ARE SILVER AND GOLD. What was a $100,000 worth of gold before any such announcement will continue to be worth at least a $100,000 or perhaps a lot more. The ratio of a country’s new debt to its total gold supply would most likely be the determining factor in the new price of gold and silver.

It is true that all of the above is just my guess at how things could work. The important thing for you to understand is that the US is very vulnerable right now to the world making a change. It will need to happen before a significant collapse in the dollar happens. It goes without saying that you need to prepare in advance of any such event occurring. It could mean the survival of your family. It’s better to be prepared as the Boy Scouts say and your downside risk is minimal.

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