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The Korelin Economics Report

By Al Korelin      Printer Friendly Version
Oct 7 2008 3:06PM

www.kereport.com

In my last article I wrote about my wife’s concerns, actually very serious concerns, about the worldwide economy. We had just spent a few days in Idaho at the Silver Summit where I was doing radio. During this time, Kathy talked with some of our regular guests including David Morgan, Greg McCoach, Bill Murphy and David Bond. They all made a lot of sense to her as they do to most people and she became very concerned about the financial security of our family.

Well, now I am writing a follow-up to that article as we are flying back from Toronto where Joe Martin and the gang from Cambridge House just put on another great investment conference.

In Toronto, I had the opportunity again to do some great radio with the input of folks like James Turk, Bill Murphy and all of the other regular speakers at the Cambridge House conferences. Since Kathy and our daughter Sarah handle all of the technical work for our show they both listened to these interviews as they were taking place. To say that Kathy had a concerned look on her face while she was listening is an understatement.

When the conference ended Sunday evening everyone was aware that Monday was not going to be a pretty day in the financial markets. And, it was not as all of the major markets around the world fell significantly.

Kathy’s concern today is 1000% times greater than it was just a couple of short weeks ago. And, it should be.

The question now is not whether or not there will be an economic disaster in the near future. The question is will the situation prove to be a short-term panic or an economic meltdown that will lead to conditions worse than people experienced during the 1930’s.

Let’s first consider the possibility of a short-term panic.

I have a friend at home who is a successful stockbroker and an incredibly astute individual. He listened to our show last week when Bob Moriarty predicted that a bank freeze-up would occur by October 13th of this year and contacted me saying that “Moriarty was crazy”.

When the meltdown occurred on October 6th, I sent him an e-mail from Toronto and asked him if he still questioned Bob’s sanity.

He replied by saying that this was nothing more than a short-term panic and that there were still plenty of great investment opportunities out there.

Well, we’ll see..

We are definitely in uncharted financial waters. When was the last time we witnessed the failure of major U.S. financial institutions? When was the last time that the U.S. government had to pump unimaginably large amounts of money into the financial system? And, just where is this money coming from? Do people realize that the answer to that question is “out of thin air”.

And, here is the big question, how comfortable will people be when they understand the implications of the term “credit freeze”?  Logic tells me that the answer to that question is “not very”.

The guests on our radio show, The Korelin Economics Report, are some of the most accomplished economic thinkers in the world. They may disagree on some issues, but they all agree that we are in a situation that is much more serious than a “short-term” panic.

The only disagreement on this issue is one of duration.

Last week when Bob made his prediction I decided that I needed a counterpoint and I began calling folks who I thought would not agree with what he said.

Our CPA, who is incredibly bright, well-informed and not an alarmist told me that he could not disagree with Bob. I was sure that he would but he said that he felt the prediction could come true.

Jon Nadler, told me that he thought it was a possibility. I have known Jon for years and he is definitely not an alarmist.

Only Roger Wiegand had an issue with the comment. He said that in the short run he felt that Bob was off base, but that at some point next year we would see a banking crisis.

Okay, the possibilities are normal short-term panic, immediate breakdown of the banking system and a breakdown of the system during 2009.

One of those scenarios is going to prove to be correct. There are simply no other possibilities.

Regardless of what happens, there is only one sensible action for people who are searching for a safe and sound place to put their money and that is to invest in precious metals. Sound too simple? Maybe, but you have to admit that regardless of what happens gold and silver will not let you down. These are times of uncertainty and I would suggest that you do what others have been doing during similar conditions for thousands of years. Trust the metals.

You also have to be aware of what others are saying today. Not just in the conventional press, but everywhere. Listen to The Korelin Economics Report, read the articles on Kitco and get your hands on as many of the newsletters that deal with asset based investing that you can. You know who those people are. Pick their brains and then make you own decisions. In times like these, you cannot afford to be passive.

A.B. Korelin

 

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Al Korelin is the host of the internationally syndicated Korelin Economics Report radio program and the President of A.B. Korelin and Associates, Inc. – a regulatory consulting firm that has been providing services to mining companies for the past 27 years.