Alarms are Sounding in All the Wrong Places!

Go ahead! Ignore the crazy conspiracy theorists like Jim Rickards, Ted Butler and Ron Paul, after all, they’ve been predicting the coming of terrible economic conditions for years, yet the media is full of news about how the economy is growing, the stock market is rocking, and we’ve even agreed to sit down and speak rationally with Kim Jung-un about nuclear disarmament. How could things possibly get any better?

So why is Sheila Bair, who sat in the hot seat at the FDIC during the 2008 economic crisis, warning of a subprime mortgage meltdown even greater than the last? Why is Bloomberg reporting that a huge number of corporate and state pension funds are already underfunded and a stock market plunge could decimate or crush most of them completely? Why are reporters at The Hill and other publications sharing concerns about the $1.4 trillion debt already amassed by today’s students and even more so about the fact that 40% are already late making payments or in default?

The LIBOR/OIS spread is a clear economic health barometer that has been relatively dormant since July of 2009. It provides a more realistic view of how the market perceives credit conditions, because it strips out the effects of underlying interest rate moves, which are in turn affected by factors such as central bank policies, growth expectations and inflation.

It’s an important indicator that Bloomberg feels is sending a strong and clear signal about the onset of dangerous economic times. The chart above shows the LIBOR/OIS basis point spread results through the beginning of last week. It actually climbed to 64 basis points before finally settling back slightly, beginning last Friday. But the last time this alarm sounded was just in advance of the 2008 economic crisis.

So, in this media cacophony of happy Fed reports, positive employment numbers and corporations coming in with higher earnings than anticipated, it’s easy to see how these new dissenters can get lost in the shuffle. But yesterday, Templeton Fund’s investing legend Mark Mobius sounded the alarm by announcing his expectation of a 30% market correction and this on the heels of Jim Rogers “biggest crash of our lifetimes” prediction. And finally today, Ranier Michael Preiss, executive director at Taurus Wealth Advisors, on CNBC’s Capital Connection, announced an expected stock market drop between 30% and 40%.

These people are not conspiracy theorists, nor in the business of shock news, far from it actually. So it’s becoming increasingly apparent, that the media’s rose colored glasses are interfering with the average investor’s ability to see the trees through the forest. But that’s no reason to become economic road kill. Call the experts at American Bullion, at (800) 653-GOLD (4653), to learn how physical precious metals can offset the myriad of economic calamities potentially headed our way. Ignorance is no excuse. Don’t get caught without a chair when the music stops! Call now!