12 May 2011

Tipping Point to Trigger $ Destruction & Hyperinflation- James Turk

With tremendous volatility in gold, silver and the US dollar, today King World News interviewed James Turk. 
When asked about the volatility Turk stated, “In a bull market there are a lot of opportunities to be shaken out. News comes up, downdrafts occur and you will see a lot of emotional reactions, but you really have to focus on the long haul. It’s been the same thing Eric, we’ve dealt with this many times before. Over the past ten years, back in the $320’s (on gold), back in the $400’s, the $700 area, it wasn’t going to get over $1,000 and then it finally did and here we are again. But at the end of the day gold is still holding above $1,500 and that in my mind is very, very important.”

Turk continues:

“It’s just bad news, these deficits just continue to grow and grow. We are seven months into the current fiscal year and we’ve added $870 billion in seven months to the US government’s debt. But here is the really frightening thing Eric, 40% of what the US government is spending is coming from borrowed money. In other words there is a 40% shortfall between what the US government is spending and what they are actually receiving in revenue.

This is clearly not sustainable and this is the thing that is driving the precious metals markets and I think is going to drive these markets much higher. I have been hearing they are going to increase it (US debt ceiling) $2 trillion, and from August of 2011 that is going to provide sufficient capacity to borrow up and through November 2012...What’s clear is that they are not addressing the debt problems and this uncontrollable spending.

They are just kicking the can down the road and I think enough is enough. The market is going to say, ‘We don’t believe you’ and you are going to see a tremendous move into precious metals as people exit the dollar.”

When asked if he remembers other countries with 40% shortfalls in their spending Turk replied, “Oh yeah, Zimbabwe, Argentina in 1991, and the Weimar Republic in Germany in the early 1920’s (all resulted in hyperinflation).

Without gold acting as discipline, politicians have no constraints on spending. They will spend and spend and spend until they are borrowing so much money that the market refuses to lend the money to the government and that’s where we are at the moment.

So what the government has to do is either stop spending or get the central bank to turn that debt into currency, and this is what destroyed the Continental (First official US paper currency). And what the Fed is doing with its so-called quantitative easing is no different that what happened during the period of the Continental. The central bank was basically turning government debt into currency and that’s what the Federal Reserve is doing....and it’s ultimately putting the dollar on the path to hyperinflation.”

When asked what will trigger the hyperinflation Turk responded, “What actually happens and what is quite clear is that there is usually some kind of event, it’s a tipping point. And the event causes people’s confidence in the currency pretty much to evaporate, and once that event occurs you’ve basically got six months before the currency is history.”

Tune in to James Turk’s KWN interview to find out what event Turk believes may cause this break in confidence setting off a chain reaction resulting in a collapse of the US dollar. The Turk interview covers gold, silver, the mining shares & more, it will be released today. You can listen to it by CLICKING HERE.







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