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The Next Stage of the Global Monetary Crisis Has Arrived

By Porter Stansberry
Wednesday, September 7, 2011

A big prediction I've been making for over a year is unfortunately coming true.
By now, most people know my controversial "End of America" prediction: That the U.S government has promised too many free lunches to too many people... and has taken on impossibly large debts that will never be paid back with sound, honest money. The "end game" of this story is the collapse of the U.S. dollar as we know it.
But the U.S. dollar isn't the only paper currency I've predicted will collapse. The currency of the world's largest economic zone, the euro, is toast as well. A year ago, I told readers...
You should expect the euro to continue to weaken, as the European Central Bank cannot allow Italy or any large commercial bank to fail. And that means more and bigger bailouts. As the size of these bailouts continues to escalate, investors around the world will turn to gold and silver as the only truly reliable currencies.
Since I wrote that, gold is up 55%. Silver is up 140%. And European stock markets have collapsed. The cost of insurance against European sovereign debt defaults has skyrocketed to all-time highs.
Shares of Italy's largest bank, UniCredit, have collapsed 50% in just three months. Share prices in European banks most Americans are familiar with, Germany's Deutsche Bank and England's Barclays, are collapsing. Even UBS and Credit Suisse – headquartered in Switzerland, considered a stable banking haven – are collapsing:
Germany, the economic engine of Europe, finds itself holding the bag for essentially all the credit problems of "problem children" like Greece and Italy. Its central bank is currently holding more than $300 billion in IOUs from peripheral European central banks – obligations that are probably worth less than $100 billion.
It's unclear whether Germany will continue to finance these bad debts. And because of Germany's history, Germany's leaders are loath to consider any substantial effort to monetize the debts through inflation.
I believe Germany will leave the euro before the end of this year, triggering a massive devaluation in all the euro's remaining members. I'll state again: The euro is toast.
Over the past three years, readers have asked me when I expect the crisis to begin. Over that time, we've seen the bankruptcy of General Motors, the complete destruction of America's investment banks, the receivership of the world's largest mortgage firms (Fannie and Freddie), and the collapse of the world's biggest insurance company (AIG). We've seen gold soar to all-time highs. We've watched agricultural prices soar. We've watched U.S. federal debt explode to $14 trillion... and total U.S. debt soar past $54 trillion.
And now, we're seeing the collapse of the European banking system. Keep in mind, this system underpins an economic zone that is larger than the entire United States. The crisis is already here.
I know many people still think I'm crazy for my prediction. But when I perform a simple accounting analysis of U.S. and European sovereign balance sheets, and when I look at the European financial system in crisis, I have to think you're crazy NOT to come to the same conclusion. And you're crazy not to take my unrelenting advice to protect yourself against this crisis by owning plenty of gold and silver bullion.
Good investing,
Porter Stansberry

Further Reading:

Check out Porter's latest theories on the America's financial crisis here:
"What has really happened is clear: Bamboozling the poor has become a way of life for American politicians."
"Without the link to gold, bank reserves could be created by fiat. And they were. This led to a huge expansion of our money supply and our debts."
"All the profits of this scam go to the executives and the shareholders. The risk goes to the government."

Market Notes


Europe's "most disturbing chart" is getting worse by the day.
In December 2010, we published a sorry-looking chart of German banking powerhouse Deutsche Bank (DB)... and called it Europe's "most disturbing chart."
Back then, DB had broken down to a 52-week low. We noted how the stock's weakness was much more disturbing than weakness in Irish or Greek banking shares. After all, Germany is the "engine" of Europe. It is the continent's most important and most stable economy. And DB is Germany's largest bank.
We also noted that if German bank and asset prices were heading lower, it was a sign the "debt disease" at the fringes of Europe were starting to infect the whole body. As you can see from our updated chart, the disease has spread. DB has plunged 39% in just the past five weeks. Shares are at their lowest level since early 2009. The Euro Crisis has arrived... and it is laying low the strongest member.

Germany's biggest bank is plunging

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