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Message: Greg McCoach

Greg McCoach

posted on Oct 06, 2008 12:31PM

Almost bought more in this crazy market. Here's Greg again:


The $700 Billion Bailout Bill Won't Fix Financial Problems

By Greg McCoach
Monday, October 6th, 2008

Regardless of what you may have heard from the powers that be in the last few days concerning the financial crisis, rest assured that the $700 billion bailout bill doesn't even scratch the surface in solving the financial problems that exist. This is evident in the 550 point drop in the Dow this morning.

In my opinion, this bailout bill is akin to trying to put a band-aid on a massive structural crack in the middle of the Hoover Dam. It simply is not going to change the outcome of this mess one iota. The dam is going to break.

The results of all this stupidity, manipulation, utter corruption and greed on the part of these financial institutions will be a crashing dollar and a horrendous depression. I wish it was otherwise, but I see no alternatives at this point. It's just a matter of time.

As I have said time and time again; Central banks and governments are completely incapable of preventing what is coming. Sure they will try their various ineffective interventions, but before long the dam is going to break and the flood waters will rage.

Over the past several days, the President, the Treasury Secretary and the Federal Reserve Chairman prostrated themselves before the Congress and the American people in absolute desperation. As the ugly truths began to seep out from behind closed doors "We the People" began to take more notice.

Subscribers of Gold World knew this was coming. Unfortunately, as I have been saying, this is only the second inning in a terrible nine inning ballgame. It is going to get much, much worse.

The $700 Billion Bailout Bill Blunder

Don't listen to the lies stating that this bailout bill is going to bring an end to the financial problems. This is not true. There is going to be wave after wave of this financial carnage as the derivative meltdown continues to ripple throughout the system. Over the next several days they'll likely be telling us that the bailout bill, "was never meant to be a quick fix, and that it will be a long-term solution" Don't buy it!

On top of this, problems with "commercial paper" will be the next new buzz word the public hears that is going south.

How big is the problem?

The FDIC's list of problem institutions has only 117 financial houses with $78 billion in assets. But given the current $700 billion bailout bill, it is clear that Administration officials tacitly recognize that the FDIC list understates the problem. There are many more financial institutions at risk or in need of assistance with their toxic paper.

How many more?

Martin Weiss who has a service that identifies problem banks recently stated from his analysis that 1,479 FDIC member banks are at risk of failure with total assets of $2.4 trillion. In addition, 158 savings and loans are at risk with $756 billion in assets. In sum, banks and S&Ls at risk have assets of $3.2 trillion, or over 36 times the assets of banks on the FDIC's watch list. These numbers alone indicate what a joke the $700 billion bailout bill represents.

Therefore, regardless of what Congress decides in the coming weeks, investors should continue to seek the safest havens for their money and pursue investment strategies designed to build wealth in a crisis.

Ownership of physical gold and silver holdings has never been so important. Dialing in your portfolio with the best gold and silver mining stocks will prove extremely valuable as well.

I recently returned from the Silver Summit where I had ample opportunity to talk with friends, associates, investors, junior miners, and bullion dealers.

Everyone seems to be in the same boat with regards to obtaining physical metals. Bullion dealers across the country are saying they can't get any silver for investors who would like to purchase. At AmeriGold this has been the case for the last six trading days. In ten years of operating AmeriGold I have never seen a situation like this. Had I been able to sell silver the last several days, we would have had almost $3 million dollars in sales. Unfortunately, there is no silver to be had at the moment, which tells you that something is grossly amiss in our market.

As far as gold is concerned, we can still get eagles, buffalo gold coins, Swiss 20 Francs, and limited supplies of bars. How long that will last I am not sure, but one fact is very clear to me and that is the precious metals prices are going to explode to the upside at some point. This in turn will launch our mining stocks once again.

So stay focused and be extremely leery of anything that comes from the mouths of Paulson, Bernanke and their gang of financial hoodlums. As one congressmen recently stated, "I wouldn't trust these people to give me the correct time of day!"

Until next time,

Greg McCoach

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