When World Leaders Tell the Public, “Don’t Panic”…

This article was submitted by Addison Quale, SchiffGold Precious Metals Specialist. Any views expressed are his own and do not necessarily reflect the views of Peter Schiff or SchiffGold.

Bloomberg recently published an article about how world political leaders don’t have too much to say about the current sell off in equities – the worst of its kind since 2008. It states:

It’s wiped out more than $8 trillion in the value of global equities, leaving virtually no market unaffected, yet reaction from world leaders so far has ranged from muted to dismissive.”

Essentially, the message is that despite people’s portfolios hemorrhaging value and the world economy clearly starting to slow down, this is no big deal. There is no reason to panic and get out of the stock market. Oh – and it’s also China’s fault.

For example, Australia’s Prime Minister Tony Abbott insisted that stock market corrections are not uncommon. He said, “It’s important that people don’t hyperventilate about these things.”

Everyone knows that this global economy is struggling. SchiffGold has regularly reported on how the powers-that-be use cheap money policies, quantitative easing, and GDP accounting gimmicks to barely keep things afloat. As Peter Schiff has been declaring for years, nothing constructive has been done since 2008 to fix our financial system and the massive malinvestments contained therein.

The Federal Reserve has merely doubled down on the same zero-percent interest rate policies, and we are headed down the same road to collapse. The stock market, at least until this past week, has been very slow to reflect these macro realities – as seen from the chart below.

The US Macro line is based on the Bloomberg ECO US Surprise Index, which measures whether data on the economy is beating or missing expected forecasts. One important component is the labor market. The more the data miss the expected forecast, the lower the line trends. Lately, it’s been at its lowest level since 2009 – just after the Great Recession.

But don’t expect political and financial elites to be sympathetic to those who end up losing a huge chunk of their life savings while playing the stock market casino game. And don’t expect to be compensated for your losses. They aren’t going to have much say, because they don’t really care. The key for them is just maintaining their power and prestige and keeping the line moving. And if trillions of dollars of middle class wealth gets wiped out in the process of attempting to prop up smoke-and-mirror currencies and equity markets, it’s not their problem. They will live to see another day.

That last part of the Australian PM’s statement – “don’t hyperventilate about these things” – is especially disconcerting. Whenever political and financial elites essentially tell the public to “not panic,” it’s usually time to do exactly that. No leader, after all, wants to oversee a storming for the exits in terms of his country’s stock market.

So where do you think the safest places are to hold your wealth? Is it really good to have it wrapped up in a speculator-driven rollercoaster stock market? The Greeks have recently experienced a “bank holiday” – you know, where it’s impossible to access their life’s savings from the nation’s banks. Do you think that is an impossible scenario for the United States?

Be wise and make sure you have at least some physical wealth stored away – assets whose value cannot be wiped out overnight in a big market correction or locked away by a bank holiday. Be sure to own real trustworthy money as a hedge: physical gold and silver.

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