The McAlvany Weekly Commentary is quickly becoming my other favorite financial podcast/show (alongside Jim Puplava’s Financial Sense Newshour, of course). Most shows feature an in-depth interview with a money manager and/or financial expert – and most of these guests are excellent.
Bert Dohmen, author of The Wellington Letter, was absolutely outstanding a couple of weeks back. Bert is extremely concerned that we could see a rerun of the 2008 collapse, except worse, in which all asset prices would get taco’d as our sovereign debt skeletons spill out of the closets around the globe.
He thinks the worst-case scenarios should absolutely be respected by average investors – gold confiscation, you name it – Bert thinks this has the potential to unfold quite badly.
The thing right now is, people have to really consider that the impossible is possible. I was just at a hedge fund conference a few weeks ago. Over 1700 hedge fund guys were there. On the panel was Senator Chris Dodd, and he said that, in 2008, during the crisis, the country was within ten minutes of the government shutting down the banking system. Within ten minutes. I thought that was an incredible statement. These idiots that caused the crisis were ready to shut down and create a real global crisis, by shutting down the banking system. What use would that have been? They would have really compounded their original stupidity by not having recognized what I, and other people, did recognize, one year ahead of time, namely, that we were heading into a major financial crisis.
So, with that kind of thinking, where they would just shut down the entire banking system, good banks and bad banks alike, it means that there is absolutely no limit to what they will do, and that is what I warn people in the futures markets about. They can close down the futures markets in an instant, and they will. My prediction is that sometime over the next five years, they will close down the futures market. Especially people who are invested in gold futures and silver futures, metals futures, they should be aware of this.
This happened one other time, but it wasn’t done by the government, it was done by the exchange, itself. Do you remember Bunker Hunt, the Hunt brother that tried to corner the silver market in 1980? The exchange just said, “Okay, effective tomorrow morning, no new buying will be allowed, only selling will be allowed. If anybody would have said that they would do that one week ahead of that, they would have probably put him away because they would have thought him insane. But the exchange did it, and the exchange got away with it, and of course, that is when silver really plunged. So anything is possible right now. There is absolutely nothing in Washington that is no longer possible. As investors, I think we have to take that into consideration.
Bert is actually bullish on the dollar in the near term (like our favorites Jim Rogers and Sy Harding). While he does not think the Fed is done running the printing presses, he is very concerned about the potential for another deflationary collapse in the interim.