October 7, 2011
Before getting in to this week’s questions, I want to comment about the Wall Street protests in New York.
There’s no question that people are sick and tired of the status quo all over the world. Their apathy has turned to anger, and their anger is turning into action. The ‘Occupy Wall Street’ movement is a major sign of this… as are the demonstrations across Europe, the Arab Spring revolutions, etc.
(Hell, there are even some angry people in Hong Kong… though they go about their protests a little bit differently…)
The Wall Street protests could very well be the spark that leads the United States into a real revolution. But just remember what I wrote about ‘revolution‘ a few weeks ago when I was in Egypt:
“From a celestial perspective, however, ‘revolution’ denotes one complete orbit of a planetary body around its center, as in the earth’s revolution around the sun. In other words, after a revolution, you end up right back where you started.”
Are hundreds of millions of Americans, plus billions of other people around the world, willing to accept that government is the problem, not the solution? That the entire foundation of the monetary system they’ve come to accept is a complete fraud? That the entitlement programs they depend on are insolvent?
If not, then they’re just going to vote in another set of idiots who bring them right back where they started… more debts, more regulation, more confiscation, more asset seizures, more forced redistribution, more inflation of the currency, more bailouts, more deficits, etc.
This is always the major risk in ‘revolution’; you hope to replace evil with good. It doesn’t always happen that way. The French got Robespierre’s reign of terror in the 1790s, the Chinese got Mao in 1949, and the Egyptians traded Mubarak for a military dictatorship this year. What will happen in Spain? Greece? The US?
Now… if you’re the type of person to let others dictate your fate, then I encourage you to sit around, wait it out, see what happens, and hope for the best.
If you’re the type of person to take matters into your own hands, then every single one of these protests, police brutality videos, and government responses should serve as a constant reminder to become more self-reliant. Being dependent on the system is no longer an option for thinking, freedom-loving people.
With that, let’s move on to this week’s questions:
First, Dean asks, “Simon- you wrote the other day about a gold storage company in Hong Kong [www.thestorage.com.hk] and said that the boxes are about $80 annually. I looked at the website, it says they’re $600 annually. Am I missing something?”
Yes. The website quotes the price in Hong Kong dollars. $600 Hong Kong dollars is about $77 US dollars.
Next, Steve asks, “Simon, I live in Canada and my grandparents were of Polish decent. Can you recommended a lawyer I can contact who can help arrange a Polish passport for me?”
Sure. You can contact CK Law Office in Warsaw, www.CKlawoffice.eu. A number of Sovereign Research subscribers have used their services to obtain Polish citizenship. It’s not guaranteed, but they’ll look at your situation, do the necessary background research, and push all the documentation through if you qualify.
The thing about citizenship through Polish ancestry is that there aren’t clear-cut rules; Poland has been invaded and conquered so many times, people with relatives as far away as Kazakhstan technically qualify for Polish citizenship… so it’s definitely worth a shot. CK charges around 1,000 euros last I checked.
Next, Julian asks, “Simon, I’m confused about exchange rates. I’ve noticed that the euro has lost against the US dollar but gained against the franc. It doesn’t make sense to me at all. Is there a reasonable explanation on this?”
In times heightened risk, money managers sell riskier assets and park their funds in ‘safe’ assets. This is why emerging stocks and currencies tend to fall when the markets are stressed.
Traditionally, the Swiss franc has been regarded as a safe haven currency… but after the Swiss National Bank put a ceiling on the franc’s rise against the euro this past summer, this notion of safety was completely abandoned.
Now the franc and euro tend to rise and fall together, and on some days the euro may even move up against the franc a bit.
The biggest issue is the dollar. The financial system still considers the dollar to be ‘safe’ because it’s backed by the full faith and credit of the US government. People believe that if the government can’t pay, they’ll just print more money and go deeper into debt. Sounds pretty safe, right?
For now, though, there is no alternative. When investors panic and hundreds of billions of dollars get sucked out of world markets world looking for a safe haven, there are few places other than US Treasuries capable of absorbing that volume of funds.
Think about it– with roughly $14 trillion of debt outstanding, the US Treasury market can easily absorb $100 billion. In other words, the US dollar is ‘safe’ partly because the government is in so much debt. It’s truly mind boggling.
Gold is another story… and we’ll cover that another time.
Last, Richard asks, “Simon, can you give us some insight on what you pack when you travel?”
Most people can’t believe it when I tell them I don’t have a home, but it’s true. I bring everything with me as I travel from place to place, and it all fits into a carry-on. I have everything I require– a suit, nice shirts, ties, slacks, workout gear, etc.
You’d be surprised at how little you need… and frankly, most of my stuff could catch on fire and I wouldn’t care. I’m not attached to things, and everything is replaceable. The real essentials are my computer (Macbook Air), my passports, and my wallet.