IMF Warns of New Vulnerabilities

Join Us in The Bahamas The Sovereign Society is heading to The Bahamas to host our biggest offshore event of 2015. We've lined up an amazing list of experts for this year's event. Judging by the demand from past attendees to return, it's agreed that it's more critical than ever to attend this one-of-a-kind experience. For full details on this event and to reserve your seat at the low early-bird pricing, click here.

The Financial Storm Isn't Over By Jeff D. Opdyke, Editor of Profit Seeker I live in hurricane country, South Louisiana. You learn down here that the first sign of blue skies after a 'cane passes through isn't the relief it first seems. It's a head fake — the quiet, clear eye of the storm. The horrible truth is that it's a beautiful lie. For on its way is the backside of the hurricane, and the destruction it brings is often worse than what you've already survived. Economies have their own analog. The financial storm passes; the regulators, politicians and populace exhale their relief ... and then the backside slams with an unanticipated ferocity — just what happened after the 1929 financial crash. Here we are today, seven years after blue skies re-emerged over America, and all is worryingly unwell. Is the backside of the Global Financial Crisis, a crisis born of imprudent fiscal and monetary policies in America, bearing down on our shores? That's the worry of the Bank of International Settlements (BIS) and the International Monetary Fund (IMF). In separate reports over the last week or so, the two global finance agencies caution that Western economies, led by the Pied Piper of America, are ill-equipped to handle the storms that will arrive on the backside of a crisis that has not yet blown itself out. Hidden in plain sight in their reports is a clear message: Lighten up on paper assets and load up of real assets that will weather the storms, namely gold and silver. The $54 Trillion Skeleton in Obama's Closet Nine months ago, this ex-Wall Street Journal veteran spotted an unusual pattern in a regularly published, though patently ignored government document. What he's flushed-out is quite possibly one of the best-disguised paper trails in accounting history. Until now it's been the State's deepest, darkest secret. Click here to find out why this maverick financial reporter believes this scandal is set to explode with strikingly devastating consequences for America… The Growing Storm The Global Crisis is not done. Not yet. The blue skies we're told to look at — the supposedly improving jobs market, the supposedly improving GDP, Wall Street near record highs, the strong dollar, the rebound in housing — all beautiful lies that paper over a horrible truth: Nothing much has been repaired. We've not allowed it. We — and I mean politicians and monetary bureaucrats — have not allowed capitalism to expunge the detritus built up during years of bubble blowing by letting companies to simply fail. We administered CPR in a crunch to keep the patient alive, but the root causes of the illness — excessive debts and government's efforts to fend off the painful yet necessary correction — here at home and across much of the Western world have not been addressed. Sure, we have Dodd-Frank(enstein), but it's a bloated grab-bag of reactionary codswallop that makes politicians — and Big Government cheerleaders — think they've built a bulwark that will stand in ending in the next crisis. That's what government always does — react to the last problem by applying Band-Aids. But what has really changed? Too-big-to-fail banks are bigger today than they were before they helped bring down the economy. As a Harvard Business School study found, Too Big to Fail has itself been a failure because its onerous regulations have crushed smaller banks and allowed the problematic big banks to get bigger. American debt hasn't decreased; it has risen by 83% since the end of 2008!!! The U.S. economy isn't the model of health the media and politicians tell us it is. We're generating low-pay jobs in the service while losing high-paying jobs in manufacturing and, yes, technology. The stock market is in another paper-asset bubble and has reached valuations not seen since just before 1929 and during the salad days of Alan Greenspan's delusional reign. Perhaps worst of all, the Federal Reserve has limited ammunition with which to fight a new war — be it inflation, a currency or debt crisis, an uncontrolled sell-off on Wall Street (à la China), an imploding mother of all bond bubbles, or even a simplistic recession. Which is why the BIS, central banker to the world's central banks, announced that the world is out of options when another crisis hits. Interest rates have been so low for so long that they are now the very reason for economic anemia rather than the solution they're supposed to be. Meanwhile, debt burdens in the West and the inherent financial risks remain much too high. "The unthinkable" the BIS concludes, "risks becoming routine and being perceived as the new normal." The BIS takeaway: Central banks have mismanaged the crisis to a large extent because they don't understand the crisis very well. They're effectively trying to cure a drug addict by pumping his system full of speed, and failing to realize the new drug is doing just as much damage, if not more. As for the IMF … executives there are doing everything but falling to their knees and begging the Federal Reserve not raise interest rates any time soon. The IMF sees "key fault lines" across all manner of the U.S. financial landscape and that "new pockets of vulnerabilities have emerged." Reflecting my earlier comment, large and interconnected banks, the IMF concludes, "dominate the system even more than before." Leverage has ramped up in the non-banking financial sector, and insurers have taken on more risk "and could be faced with negative equity in a downside scenario." When the blue skies yield once again to storm clouds and the winds roar ashore again, the second time around will be worse — if only because the Fed has little left in its quiver. A Safe Haven in the Storm Your solution is simple: Take some money off the table. I am. I've seen my personal portfolio increase nicely in recent years and I don't want to see it retreat if the backside of the Global Financial Crisis roars through the economy. You don't have to sell everything, but sell enough to keep your heart rate calm in a crisis. I'm using the cash to add more real assets to my portfolio. I'm buying gold bullion and adding investment-grade ancient and rare European coins to my collection. I like bargains and collectible European coins as an asset class have not kept pace with U.S. coins. They're cheap. I have written many times that gold is not an investment but, rather, an insurance policy protecting you from political and monetary stupidity. Now is not the time to believe the sugary hype of Wall Street and spin-doctoring of Pennsylvania Avenue. The risks to your personal wealth are too high. Until next time, stay Sovereign… Jeff D. Opdyke Editor, Profit Seeker P.S. While the world continues to struggle with growing debt and its dependency on low interest rates, the Obama administration has a secret that could unhinge America's financial structure. It's critical that you take steps now to protect your assets before the truth comes to light. Click here to learn what you can do now.

Become a Subscriber When the next economic crisis hits — will you be prepared? As a subscriber to Jeff Opdyke's Sovereign Investor, we will arm you with the tools and strategies needed to prepare and prosper in the months ahead. Subscribe Now! Recent Articles How to Outsmart FATCA FATCA rules have made opening foreign bank accounts difficult for Americans. But with an offshore asset protection strategy, you can legally outsmart FATCA. Is the American Economy Really Recovering? Analysts insist the American economy is recovering. Recent data supposedly point to a stronger economy. But there's a catch to this so-called recovery.

Privacy Policy The Sovereign Investor Daily, 55 NE 5th Avenue, Suite 200, Delray Beach, FL 33483 FREE BOOK: As a Sovereign Investor Daily subscriber in good standing, you're eligible to receive a FREE book offer full of little-known money havens and tax shelters that many thought were reserved only for the ultra-rich. You'll learn about a world where billionaires stash their cash, and how to cash in on this privileged world so that you too can get all the benefits. Just click here to claim your copy. The mailbox associated with this email address is not monitored, so please do not reply. Your feedback is very important to us so if you would like to contact us with a question or comment, please click here: http://thesovereigninvestor.com Legal Notice: This work is based on what we've learned as financial journalists. It may contain errors and should not be considered personalized investment advice. Therefore, you should not base investment decisions solely on what you read here. It's your money and your responsibility. Certain investments such as futures, options, and currency trading carry large potential rewards but also large potential risk. Don't trade in these markets with money you can't afford to lose. CFTC Rule 4.41 - These results are based on simulated or hypothetical performance results that have certain inherent limitations. Unlike the results shown in an actual performance record, these results do not represent actual trading and may have under-or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated or hypothetical trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. Past results of any individual or trading strategy published by the Sovereign Society are not indicative of future returns by that individual or strategy, and are not indicative of future returns which could be realized by you. (c) 2015 Sovereign Offshore Services LLC expressly forbids its writers from having a financial interest in their own securities or commodities recommendations to readers. Such recommendations may be traded, however, by other editors, Sovereign Offshore Services LLC, its affiliated entities, employees, and agents, but only after waiting 24 hours after an internet broad cast or 72 hours after a publication only circulated through the mail. Remove your email from this list: click here to unsubscribe