In this episode of the Keiser Report from Denver, Colorado, Max and Stacy discuss housing bubbles and surging economic activity. Despite the doomsayers, is the economy recovering? Stacy interviews Ellen Brown, author of ‘Web of Debt,’ about the state-owned bank proposal for Los Angeles. They also discuss the newly-discovered $14 trillion in debt previously hidden in the global derivatives market, and whether or not that could happen in a blockchain-based financial world.
Countries stockpile gold for strategic and defensive reasons — for instance, in case relations between nations are damaged and their currencies lose their value,” Gabriel Rubinstein, a financial consultant and former representative of the Argentine Central Bank.
Russia has been accumulating a significant gold reserve for over a decade, along with China and most, if not all of the BRIC/SCO/Silk Road countries. This is a fact that has been either unnoticed or intentionally ignored by the western mainstream media. Of course, gold is a barbarous relic that just “sits there and does nothing” (Warren Buffet).
The graphic above, courtesy of goldchartsrus.com, shows the monthly gold holdings of the Russian Central Bank. One has to wonder why Russia is willing to make this information public, unlike China or the United States. Having said that, I suspect that – like China – the public information does not show Russia’s true gold holdings, which I would bet is significantly greater. Conversely, it’s commonly accepted by those of us who have studied this issue for many years that the actual amount of physical gold held by the Federal Reserve on behalf of the U.S. is substantially less than the official number.
GATA posted an interesting article from Sputnik, which asserts that part of the motivation for Russia making gold a significant part of this currency reserves is to protect itself from currency and financial system attacks from the U.S.
Gold, this eternal financial resource, has a real value if compared to other financial assets. The Russian government believes that it’s better to have more gold resources than dollars. Hypothetically speaking, if Russia holds tons of US dollars and the US wanted to damage its economy, this would be possible through currency manipulations,” Rubinstein said, adding that gold guarantees against such a scenario (from the Sputnik article linked in the previous paragraph).
Russia has increased the value of its gold reserves by a factor of 10x over the last decade. It has also reduced its euro holdings from 40% of its Central Bank reserves to 26%. Russia has also been aggressively unloading its Treasury holdings.
You’ll note that there’s an inflection point in the graph above (my edit) which shows that the rate of accumulation of gold increased in 2014. As the Sputnik article points out, this point of inflection coincided with the sanctions imposed by the U.S. and the EU on Russia in 2014. Senator McCain is currently imploring Trump to ramp up those sanctions.
It’s been my view that the U.S. tried to attack Russia’s currency in 2014 – in conjunction with the sanctions – in order to affect the the value to Russia of its energy exports, as Russia is the world’s largest oil exporter:
The graph above shows the RUS/$ currency pair (from xe.com). Gold and silver investors are familiar with the waterfall formation that occurred in early 2014. That plunge in the ruble vs the dollar has the unmistakable footprints of a currency attack and the U.S. is the only country with motive.
This would explain one of the primary reasons that Russia accelerated the conversion of its dollar and euro reserves in yen. I would argue that one of the other primary reasons is that, along with China, the gold accumulation activity precedes an eventual re-introduction of gold into the global monetary system. My fear is that the U.S. is willing to start a global military conflict before it would be willing to let a reserve currency reset occur.
In this episode of The Mark Steyn Show, Mark explores what Daffy Duck used to call "pronoun trouble". His guest is Jordan Peterson, a clinical psychologist at the University of Toronto whose entire career has been imperiled by his opposition to the new "non-binary" gender pronouns - such as "zhe".
Transgender activists and other politically correct enforcers have determined to destroy him.
In this full-length interview, Steyn and Professor Peterson discuss the Orwellian perversion of language and the totalitarian impulses of social engineering. And Mark asks the big question: Is the jig up for western civilization?
Beijing is likely to “compel” Saudi Arabia to sell crude oil in yuan, and others will follow, according to the chief economist and managing director at High Frequency Economics Carl Weinberg. This will hit the US dollar, he says.
In an interview with CNBC Weinberg said China has become a key player in the oil market since overtaking the US to become the world's largest importer.
Saudi Arabia has "to pay attention to this because even as much as one or two years from now, Chinese demand will dwarf US demand,"Weinberg told the media.
"I believe that yuan pricing of oil is coming and as soon as the Saudis move to accept it — as the Chinese will compel them to do — then the rest of the oil market will move along with them," he added.
A 1974 agreement between US President Richard Nixon and Saudi King Faisal meant Riyadh has been accepting dollars for all its oil exports.
However, recently, countries like China and Russia have been looking to exclude the greenback from bilateral oil trade. Russia and Saudi Arabia are the most significant exporters of oil to China, alternating in top spot.
China has already said it wants to start a crude oil futures contract priced in yuan and convertible into gold.
Veteran investor Jim Rogers told RT last month that countries are getting more concerned about trading in dollars, because “if the US gets angry at you, they just set enormous pressure on you that can even get you out of business.”
“China, Russia, and other countries understand this, and they are trying to move world trade and world finance away from that,” said Rogers.
In July, Russia and China signed a 68 billion yuan ($10 billion) investment fund to ease ruble-yuan settlements.
Stocks are at record highs while volatility is at a record low. Which is another way of saying that investors aren’t as worried as they probably should be about the coming year.
That’s okay. Price corrections (with their attendant volatility spikes) are normal and natural ways for markets to teach overconfident investors a little humility. Think of them as the financial word’s forest fires, clearing out the underbrush of misconception, malinvestment, and hubris.
But there’s another area of Peak Complacency that is neither natural nor benign. And that’s cyberspace. Americans – and Europeans and Japanese – have moved most of their financial lives online just as hackers and other cyber-enemies get the upper hand. Recently:
Credit rating agency Equifax – apparently through its own incompetence – allowed hackers to access and presumably copy and sell “sensitive personal information” of 146 million Americans.
Online portal Yahoo upped the number of accounts that were hacked in 2013 to – get this — 3 billion.
The National Security Agency admitted that its state-of-the-art hacking tools were stolen by hackers and are now available for sale on the dark web.
The Federal Deposit Insurance Corporation (FDIC) suffered more than 50 data breaches between January 2015 and December 2016, exposing “personally identifiable information (PII) of U.S. citizens.”
Mr Wasyluk and his colleagues raised bitcoins for a new tech venture and lodged them in escrow at a company running a cryptocurrency exchange called Moolah. Just months later the exchange collapsed; the man behind it is now awaiting trial in Britain on fraud and money-laundering charges. He has pleaded not guilty.
Mr Wasyluk’s project lost 750 bitcoins, currently worth about $3m, and he believes he stands little chance of recovering any money.
“It really was kind of a kneecapping of the project,” said Mr Wasyluk of the collapse three years ago. “If you are starting an exchange and you lose clients’ money, you or your company should be 100 per cent accountable for that loss. And right now there is nothing like that in place.”
Cryptocurrencies were supposed to offer a secure, digital way to conduct financial transactions but they have been dogged by doubts. Concerns have largely focused on their astronomical gains in value and the likelihood of painful price crashes. Equally perilous, though, are the exchanges where virtual currencies are bought, sold and stored. These exchanges, which match buyers and sellers and sometimes hold traders’ funds, have become magnets for fraud and mires of technological dysfunction, posing an underappreciated risk to anyone who trades digital coins.
The obvious conclusion is that our bank, brokerage and bitcoin accounts aren’t safe from hackers and/or cyber-attacks that shut down settlement systems and power grids.
So physical cash – always a good thing to have on hand – is a crucial part of disaster planning. And precious metals in the form of small denomination gold and silver coins are if anything even more important, since who knows what a large-scale cyber event and the subsequent central bank money printing will do to fiat currency values.
The Greek bailouts were a banking crisis in disguise. In an excerpt of her upcoming book, editor-in-chief, Claire Connelly, explores how Greece took the fall for decades of irresponsible lending by French and German banks. If Greece continues to participate in the European Union, democracy is doomed.
It is somewhat fitting that the birthplace of democracy is now the battle ground for its continued existence.
The cliche of opulence and laziness disguises real Greek misfortune at the hands of the European community – and America – resulting in one of the most offensive punchlines of all time: Somehow Greece deserves the economic disaster wrought upon it, a severity not seen since The Great Depression.
In reality, the country’s long financial crisis is one big deliberate illusion created by some of the world’s largest banks and multinational conglomerates that have sidelined governments and made the rule of law and the will of the people all but irrelevant.
It has prioritised multinational profits over the economic needs of Eurozone countries, and even those outside of the union. With no sovereign currency with which to balance the score, Greece has become utterly subject to France, Germany, the International Monetary Fund (IMF) and the European Central Bank, (ECB).
The money from the three bailouts did not go to Greece at all and did not restore prosperity – it was never designed to in the first place – but flowed straight back into the coffers of French and German banks whose bad decisions over the last half century became the burden of the Greek people.
Banks never pay for their own mistakes. The European Union was formed – at least in part – to avoid the wars, destruction and barbarism of the 1920s, ‘30s, and ‘40s – but a monetary union with no federal mechanisms and no recourse for exploitation has led to war by other means. (It is no coincidence that fascism has reared its ugly head in Europe’s economically weaker nations while Germany continues to dominate the Eurozone).
If Greece continues to participate in the European Union, democracy is doomed.
The EU was created as an industrial cartel with the sole purpose of diminishing democracy and made the rule of Parliaments all but irrelevant. These technocrats and finance moguls will not simply hand back back their power to Europe.
Greece and its participating Eurozone partners should take the bold decision to leave the EU to save Europe from itself...
According to a recent report of the World Gold Council, After the financial banking crises of 2007 and 2008 German's have invested heavily into the gold market. Just last year alone they have purchased over $6 billion in gold related investment products.
In this episode of the Keiser Report from Phoenix, Arizona, Max and Stacy take a look at the underreported UN report on Russia sanctions and what the report might teach the individual about maintaining economic sovereignty.
In the second half, Stacy interviews Erik Voorhees of ShapeShift.io about the latest crackdowns on Initial Coin Offerings in the cryptocurrency space.
They also discuss whether or not bitcoin is a store of value or a payment system. Or both.
Do the Wall Street Journal’s editorial page editors read their own newspaper?
The front page headline story for the Labor Day weekend was “Low Wage Growth Challenges Fed.” Despite an alleged 4.4% unemployment rate, which is full employment, there is no real growth in wages. The front page story pointed out correctly that an economy alleged to be expanding at full employment, but absent any wage growth or inflation, is “a puzzle that complicates Federal Reserve policy decisions.”
On the editorial page itself, under “letters to the editor,” Professor Tony Lima of California State University points out what I have stressed for years: “The labor-force participation rate remains at historic lows. Much of the decrease is in the 18-34 age group, while participation rates have increased for those 55 and older.” Professor Lima points out that more evidence that the American worker is not in good shape comes from the rising number of Americans who can only find part-time work, which leaves them with truncated incomes and no fringe benefits, such as healthcare…
Positioned right next to this factual letter is the lead editorial written by someone who read neither the front page story or the professor’s letter. The lead editorial declares: “The biggest labor story this Labor Day is the trouble that employers are having finding workers across the country.” The Journal’s editorial page editors believe the solution to the alleged labor shortage is Senator Ron Johnson’s (R.Wis.) bill to permit the states to give 500,000 work visas to foreigners.
In my day as a Wall Street Journal editor and columnist, questions would have been asked that would have nixed the editorial. For example, how is there a labor shortage when there is no upward pressure on wages? In tight labor markets wages are bid up as employers compete for workers. For example, how is the labor market tight when the labor force participation rate is at historical lows. When jobs are available, the participation rate rises as people enter the work force to take the jobs.
I have reported on a number of occasions that according to Federal Reserve studies, more Americans in the 24-34 age group live at home with parents than independently, and that it is those 55 and older who are taking the part time jobs. Why is this? The answer is that part time jobs do not pay enough to support an independent existence, and the Federal Reserve’s decade long zero interest rate policy forces retirees to enter the work force as their retirement savings produce no income. It is not only the manufacturing jobs of the middle class blue collar workers that have been given to foreigners in order to cut labor costs and thus maximize payouts to executives and shareholders, but also tradable professional skill jobs such as software engineering, design, accounting, and IT—jobs that Americans expected to get in order to pay off their student loans.
The Wall Street Journal editorial asserts that the young are not in the work force because they are on drugs, or on disability, or because of their poor education. However, all over the country there are college graduates with good educations who cannot find jobs because the jobs have been offshored. To worsen the crisis, a Republican Senator from Wisconsin wants to bring in more foreigners on work permits to drive US wages down lower so that no American can survive on the wage, and the Wall Street Journal editorial page editors endorse this travesty!
The foreigners on work visas are paid one-third less than the going US wage. They live together in groups in cramped quarters. They have no employee rights. They are exploited in order to raise executive bonuses and shareholder capital gains. I have exposed this scheme at length in my book, The Failure of Laissez Faire Capitalism (Clarity Press, 2013).
When Trump said he was going to bring the jobs home, he resonated, but, of course, he will not be permitted to bring them home, any more than he has been permitted to normalize relations with Russia.
In America Government is not in the hands of its people. Government is in the hands of a ruling oligarchy. Oligarchic rule prevails regardless of electoral outcomes. The American people are entering a world of slavery more severe than anything that previously existed. Without jobs, dependent on their masters for trickle-down benefits that are always subject to being cut, and without voice or representation, Americans, except for the One Percent, are becoming the most enslaved people in history.
As we get ready to kickoff trading for the month of October, today Bill Fleckenstein spoke with King World News about the catalyst that will send gold surging above $1,400. Eric King: “Bill, what do you think will be the catalyst that sends the gold price above$1,400?”
Bill Fleckenstein: “A continuation of the current policies, I guess. I don’t know what it’s going to take for the price to go over $1,400, but what I can say is that there is a perception amongst a lot of investors that the central banks know what they are doing.
Anyone who reads your site probably disagrees with that statement. So here in America, and in Japan and in Europe, problems just get kicked down the road and they grow bigger and larger, which makes…
The news coming out of Puerto Rico -- limited as it is with power and cell service out on most of the island -- is terrible and demands far more of a media and government response than we've seen so far. Every effort should be made to get the people of Puerto Rico the resources they need to cope with this disaster.
"Cope" will be Step One. The island faced large-scale challenges even before Hurricane Maria hit, with a shrinking population, crumbling infrastructure and a financial mess. We need to be realistic about what the future for Puerto Rico and its people looks like. We're probably looking at hundreds of thousands of Puerto Ricans leaving the island for the mainland U.S. over the next several years, a scenario with significant implications for the island and the rest of the nation.
Puerto Ricans have been leaving for the mainland U.S. for decades. The island's population shrunk by 2.2 percent in the 2000s, and has already fallen by 8.4 percent since 2010. While the northeastern U.S. has historically had the largest concentration of Puerto Ricans, increasingly migration is to the Southeast. A 2014 study from the Pew Research Center showed that about half of all Puerto Ricans moving from the island to the mainland were moving to the South. In 1980, New York had around 10 times as many Puerto Ricans as Florida did. Today, they've roughly achieved parity...
While every effort should be made to rebuild Puerto Rico and to modernize its long-neglected infrastructure, I share my colleague Tyler Cowen's pessimism for the island's long-term prospects. It's over-indebted, its population is shrinking, and its young people have been leaving. Economically, financially and demographically, it would appear to combine the worst aspects of rural America's demographics with the pension, debt and infrastructure woes of places like Chicago.
In theory, some of these problems are fixable. The island's debts could be written down or bailed out. The federal government could invest tens or hundreds of billions of dollars to rebuild the island's infrastructure and economy. The Jones Act, making trade to the island more costly than it needs to be, could be repealed. But this menu of policy prescriptions requires the kind of high-trust society with well-functioning institutions that we sadly lack at present.
While many Puerto Ricans will want to stay, or lack the resources to leave, we should be realistic about what shape the rebuilding process will take over the next several months. Electrical systems need wholesale reconstruction. Water systems were damaged. Agriculture is in ruins. Cell towers and power lines need to be rebuilt. And that's to say nothing of roads, homes and schools. What Puerto Rico needs is a blank check of resources -- political will, labor and money -- in order to rebuild.
There's a sad chance that the resources simply will not be found. The mainland should prepare for an influx of Puerto Ricans over the next several months and years. Hundreds of thousands of Puerto Ricans seeking to move to urban centers in the Southeast, the Mid-Atlantic and Boston are going to put pressure on housing markets already struggling to keep up with current demand. Employers, however, may get some relief as they struggle to find workers.
While major international events, like nuclear tests carried out by North Korea, affect gold prices and result in a situation when investors prefer to invest their money in the noble metal, economic expert Dimitri Speck believes that there are other, more important factors that play a crucial role in influencing the global financial market.
Gold prices have been subject to constant manipulations since 1993, German expert on the gold market Dimitri Speck told Sputnik Germany.
According to him, the manipulation of gold prices has been presented by the media as if it has been initiated by a couple of malicious traders just recently, but this idea is wrong.
"When the gold price manipulation started on August 5, 1993, these were central banks that initiated the process, and namely the then head of the US Central Bank Alan Greenspan. He did not want to let the gold price rise over $400," Speck said, adding that Greenspan feared that a significant increase in gold prices might affect the "inflation thermometer."
The expert noted that the US Fed had arranged an agreement among the central banks to keep the gold price below $400 dollars. This was done for several years by means of sales and loans.
Drivers of Gold Price Manipulation
Central banks, which often belong to the state, do not act alone, but work closely with private banking and financial institutions, Speck continued.
"With the help of price shocks, they [the institutions] shortly knock the prices down to drive other buyers out of the market. The state is the first to get benefit from all this, and this primarily concerns the United States. Well, and the dollar. These are the main beneficiaries of the gold price manipulation. Because the US dollar, as the main world currency, looks good in this case," the analyst noted.
Explaining how the manipulation process actually takes place, Speck noted that this happens "very simply," namely by "damaging other competitors." In this case, gold is the main rival to currencies based on loans, such as the US dollar and the euro.
"The positive development of the price of gold as such exacerbates the debt and other economic deficits of the United States," he stated.
Benefits for Banking System
In his book "Secret Monetary Policy: Why Central Banks Manipulate Gold Prices," Speck also analyzes the benefits that the banking systems themselves get as a result of financial manipulations.
The expert came to the conclusion that the US banking system is one of the main beneficiaries of the gold price manipulation process.
When the gold prices drop, the US dollar rises and its position looks better than it actually is. Banks are then capable of lowering interest rates in order to reduce inflationary expectations and calm depositors.
"They propose lower interest rates to depositors, and this in turn facilitates obtaining a loan. This is beneficial for the state — and, of course, for the banking system," the expert said, adding however, that this approach was one of the main factors that caused the global financial crisis.
Cryptocurrencies, especially Bitcoin, have flown a little too close to the sun recently, and it has seen them get burned by a few key monetary institutions, as well as governments. This attack on Bitcoin, as well as fear and speculation around other markets, could spell a good time for investment in gold.
Seen as an insurance policy, gold has been a steady and safe investment for hundreds of years. As markets, beyond even the crypto market, get spooked, investors could see a safety net in the precious metal. Good time for gold
While all the attention over the last few months or so has been solely aimed at digital currencies and their astronomical gains, gold has not been suffering, although many thought it would.
Gold recently hit a new high of $1,350, and part of that was a $100 rise seen over three months for the steady commodity. It seems paltry for those who have been spoiled by swings as big as 25 percent in a day by digital currencies, but in its own right, it is a big jump.
Essentially, that jump, and new high, was reason enough for gold to be no longer considered a bear market - and all this while Bitcoin was making its own massive gains. Why will gold profit from Bitcoin under fire?
As Bitcoin was rising, so was gold, but when Bitcoin came under fire from China, and JP Morgan recently, gold profited even more.
Gold was always seen as a safe and steady investment; not too much growth, but never really any decline. When sexy cryptocurrencies came along, with their 800 percent gains in less than a year, many put their funds into it.
However, in the bad times, and for those investors who are a little more cautious, gold acts as a good insurance policy, as well as a reliable option to diversify with.
Additionally, it only takes a relatively small number of investors around the world to decide to allocate five to 10 percent of their wealth to gold, to radically improve its valuation. Real world factors aiding gold’s appeal
It’s not only Bitcoin that has talk of bubbles and uncertainty around it. The stock market has shown many times it has its propensity to pop, and there is a similar bubble feeling at the moment.
The US stock market is already too high, and that has to do with a concentration of speculation into a very limited number of stocks in the NASDAQ. Lesser company stocks have already fallen.
The dollar is also weakening, as it has done since its inception. But, it has its own factors to worry about. None more so than its country’s leader, Donald Trump. Trump, as well as his war of words - so far - for North Korea, is putting a lot of doubt into financial markets, making gold again appear to be the safest and steadiest option.
The fundamentals for precious metals has been rapidly growing behind the scenes, but none more so than that of gold. "In Gold We Trust" is a timeless mantra and one that we must never forget. The gold market is about to undergo another bull run, are you ready? - Video Source
There are large quantities of dollars ready to flow away from foreign ownership, a legacy of the days when businesses were unquestioningly happy to hold them as the principal reserve and trade currency. There has been little alternative until now. Furthermore, China’s central bank probably owns half of all the world’s central banks’ dollar reserves, and it is now in her interests to reduce that exposure.
America is isolated from the global economic growth story, which is centred on China and the Chinese-led development of Asia. America’s abuse of her dollar privilege over the years has left a legacy of mistrust in the non-aligned countries, and these countries are now driving the world’s economic progress. At the Asian economic feast hosted by China and Russia, the only guest not invited is America.
America’s poor state finances and her reliance on monetary stimulus will ensure a continuing supply of dollars to the foreign exchanges through persistent trade deficits. The Trump presidency looks like being a disaster for the dollar, and as soon as this becomes apparent in the foreign exchanges, selling is likely to escalate. And as the dollar slides, it should begin to lose its status as the settlement currency for increasing numbers of oil exporting nations.
The final curtain on the Make America Great Again mantra will be the growing covert support for the Chinese opportunity from major international banks, driven by commercial reality. They simply cannot afford to stand by, and there are early indications of JPMorgan and Goldman Sachs positioning themselves to be physical traders and suppliers of bullion in Shanghai. It would be a surprise if more Western bullion banks do not follow their lead.
Whether this is the time physical gold demand begins to take over pricing leadership from futures markets, only time will tell. But there can be no doubt that the balance of interests for China is turning to now see a weakening dollar. However, China is surely aware of the disruption she will cause in Western dollar-centric markets if she precipitates significant dollar weakness, and therefore strength in the gold price. She will not want to be blamed for overtly triggering the dollar’s demise as a reserve currency, which probably explains why she has deferred the launch of the yuan-for-oil contract, and is proceeding cautiously.
Obviously, geopolitics plays a central role in timing, with America desperate to oppose China in partnership with Russia as the dominant state on the Eurasian continent. The consequences of ending America’s financial hegemony are not to be underestimated, and China will not take such a step lightly. However, investors in Western financial markets appear to be beginning to get the message that the heyday of the dollar is now over, there is a significant decline ahead, and therefore mainstream investing institutions need to reconsider their asset allocations in favour of physical gold at the expense of the dollar.
I actively traded the internet stocks during the late stages of the internet/tech stock bubble in 1999 – from the short side. I will admit that I did take a few long-side day trade rides on a few internet stocks. I remember one Chinese internet stock that I bought in the morning at $10 after its IPO freed up to trade and sold it about 2 hours later at $45. To this day I have no idea what the company’s concept was all about – I think it was one of those incubators. I doubt that company was in existence after 2001. As such, the cryptocurrency craze reminds me of the internet stock bubble.
The cryptos certainly are a heated debate. The volume from the Bitcoin defenders is deafening, the degree to which I’ve only seen near the peak of bubbles. I had a subscriber cancel his Mining Stock Journal subcription after sending me an email explaining that he canceled because he was pissed off that I was not a Bitcoin proponent. He accused me of discouraging people from buying Bitcoins. His loss, he’s missed on out some high rate of return trade ideas in a short period of time like Banro and Tahoe Resources. I’m not trying to discourage anyone from buying anything. I’m simply laying out the “caveat emptor” case.
Having said that, there’s truth to the proposition that the inability to short Bitcoin contributes to its soaring valuation. I’d like to have an opportunity to see what would happen to the value of gold if the ability to short gold via the paper gold mechanism was removed from the equation.
Is it “Bitcoin” or “Bitcon?” The cost to produce, or “mine,” a Bitcoin does not imbue it with inherent value, as some have argued. It cost money to produce Pet Rocks in the 1970’s and they took off like a Roman Candle in popularity purchase price. Now if you own a Pet Rock, it’s nearly worthless. It costs money to produce and defend dollars. We know the dollar is headed for the dust-bin of history.
I’m not saying you can’t make money on cryptos. A lot of people made a small fortune on internet company stocks in 1999. But I’d bet that 98% of the internet stocks IPO’d during the tech bubble no longer exist. Currently cryptos are fueled by the “greater fool” model of making money. Most buyers of the cryptos are buying them on the assumption they’ll be able to sell them at a later time to another buyer at a higher price.
Cryptos are de facto fiat currencies. Perhaps there’s a limit to the supply of each one individually. But that proposition has not been vetted by the test of time. I do not believe that anything in cyberspace is 100% immune from hacking. Just because there have not been reports of the Bitcoin block-chain being hacked yet does not mean it can’t be hacked. It’s also possible that, for now, any breach has been covered up. Again, the test of time will resolve that. However, as we’ve seen already, the quantity of cryptocurrencies can multiply quickly in a short period of time. Thus, in that regard cryptos are no different than any fiat currency.
Finally, all it takes is the flip of a switch and your Bitcoin is unusable. But all these flaws are, for now, covered up by the euphoria of the mania. This is no different from every flawed “investment” mania in history. The current wave of crypto buyers are buying them with the hope of selling them at higher price later. “Hope” is not a valid investment strategy. “Hope” is the heart-beat of a speculative market bubble.
Perhaps one of the most definitive signals that the top in Bitcoin is imminent is this snapshot taken by the publisher of the Shenandoah blog at johngaltfla.com:
This picture was snapped in Florida. The sign says “got bitcoin? Passive income and no recruiting. Earn up to 1% on your money Monday – Friday.”
I recall reading about the process by which Bitcoins are “mined.” Anyone can get started but it involves an upfront investment plus the ongoing expense of the considerable amount of energy used to power the computer system required to engage in the mining process.
Let me guess, the creators of Bitcoin will be happy to assist you with buying the equipment and software necessary to get started? How is this any different from a high-tech-equivalent of a multi-level marketing scheme? As johngaltfla asserts: “When someone implies that it is ‘easy money’ it isn’t, it is a bubble.”
I’m not here to criticize anyone attempting to profit from trading Bitcoin. I am suggesting that it is not a good idea to get married to the trade. I regret not loading up on Bitcoins in 2012.
Without a doubt I believe there is legitimacy to the cryptocurrency concept. However, I can envision a Central Banking-led attempt to implement the crptocurrency model as means of centralizing the process of removing cash currency from the system. But that also means the eventuality that Governments collude to remove competing cryptos from the internet. This is just surmisal on my part. Again, the test of time will determine the ultimate fate of cryptos.
Speaking of time-tested money, it’s worth noting that China is going to roll out a gold-backed yuan oil futures contract – not a cryptocurrency-backed yuan contract. Perhaps one of the major Central Banks will eventually roll out a gold-backed cryptocurrency. That’s where I believe this could be headed.
Max and Stacy discuss ‘big data’ making the case for crypto by allowing for single point of failure leaks of vital, private information. Max interviews James Howard Kunstler about the hot mess of US climate change policy and infrastructure spend. - Source
Despite the upbeat U.S. inflation data Thursday, Kitco’s Peter Hug points out that gold prices remain resilient. The U.S. Consumer Price Index rose 0.4% in August, higher than expected, which investors saw as more ammo for the Federal Reserve to raise interest rates this year.
Gold prices fell to daily lows on the news but later moved higher, which to Hug is a positive sign. ‘I think traders bought the dip. You need to buy these dips,’ he said. ‘I’m still firm in my belief the Fed is not going to move in September.’
Forensic macroeconomic analyst Rob Kirby says people should be looking to buy gold and silver for protection because it’s still relatively cheap compared to the exploding value of some crypto currencies.
Kirby explains, “When you look at the price differential between silver and gold, you see an ounce of silver selling for around $18, and you see an ounce of gold going for $1,340, and that means you would need to sell 75 ounces of silver to buy one ounce of gold. The ratio in nature suggests you should be able to sell eight ounces of silver to buy one ounce of gold. This tells me one of those two prices is very wrong.
Either silver is too cheap or gold is too expensive. I don’t think gold is too expensive because I think it’s undervalued too. That leads me to believe that silver is insanely priced and probably the most underpriced asset on the planet.
I think silver will be going up in price much more than gold, even though gold is going to go up in price dramatically.”
Bitcoin is a pet rock. Jeff Christian, managing director for New York based CPM Group did not mince words when it comes to the cryptocurrency.
'Bitcoin is the ultimate pet rock,’ he told Kitco News Friday. ‘I think it’s just a gigantic speculative play, it has no tangible asset behind it. It’s a scandal waiting to happen.’
The longtime precious metals expert says he prefers gold because it is a more ‘legitimate’ asset class. ‘What you are seeing is speculative players buying bitcoin,’ he said. ‘Just because you make money on it doesn’t mean it’s a legitimate activity.’
In this episode of the Keiser Report, Max and Stacy ask, “RIP, Petrodollar?” China readies a yuan-priced oil benchmark backed by gold. Is this the final nail in the dollar’s coffin? In the second half, Max interviews Michael Pento of PentoPort.com to discuss the oil-gold-yuan futures contract, North Korea, hurricanes and coming market meltdowns.
China plans to trade oil gold-backed Yuan. This is a major death nail for the petrodollar. St. Angelo says countries will no longer need there US Treasuries. Massive bond dumping will take place, causing high inflation.
What does this all mean for precious metals? He says gold and silver should continue rising. St. Angelo also reveals the recent spike in American Silver Eagle sales shows a major shift in the silver market.
Gregory Mannarino discusses the slow decline of the US dollar and how its days are ultimately numbered. The fiat system is growing increasingly unstable and if you are not preparing for its ultimate decline, then you will be left behind in the dust, possibly losing everything in the process.
Take heed and take notice, you have been warned. Gregory Mannarino explains more.
BrotherJohnF tells Silver Doctors why silver is headed to $200/oz. The silver market’s Monthly MACD is turning upward toward the zero line. The last time the Monthly MACD broke above the zero line, silver rose from $5 to nearly $50.
If the Monthly MACD continues higher and breaks through the zero line once again, John expects a ten-fold increase, placing silver around $200/oz. Also discussed in this interview is China's recent outlawing of ICOs (Initial Coin Offerings.) John says the Powers That Be are petrified of cryptocurrencies. “If they don’t control money, their power is severely withered away - if not wiped out.”
Gold prices have not shot up dramatically on heightened geopolitical tensions instead, they’ve been steadily rising and to longtime investor John Doody, this is a good sign. ‘It’s not going up like a rocket, which is good.
I think a steady progression higher is exactly what the metal needs,’ he told Kitco News Friday. ‘$1,900 gold was an overshoot, there were too many speculators in the party and gold proved to be unstable at that price.’
Now that gold is trading above $1,300 an ounce, the Gold Stock Analyst founder said mining companies are better positioned to profit investors. ’It’s good to see companies re-establishing and raising dividends. We don’t need gold to be a good speculation, we need it to be a good investment.’
In this special double-header episode, Max and Stacy discuss Germany repatriating €24 billion worth of gold from New York and the US administration finally realizing it is already at economic war with China. They also discuss 'enlightened' Silicon Valley sorts who 'feel' they are inclusive despite the data proving they are not.
Last week featured two unusual stories on gold — one strange and the other truly weird. These stories explain why gold is not just money but is the most politicized form of money.
They show that while politicians publicly disparage gold, they quietly pay close attention to it.
The first strange gold story involves Germany…
The Deutsche Bundesbank, the central bank of Germany, announced that it had completed the repatriation of gold to Frankfurt from foreign vaults.
The German story is the completion of a process that began in 2013. That’s when the Deutsche Bundesbank first requested a return of some of the German gold from vaults in Paris, in London and at the Federal Reserve Bank of New York.
Those gold transfers have now been completed.
This is a topic I first raised in the introduction to Currency Wars in 2011. I suggested that in extremis, the U.S. might freeze or confiscate foreign gold stored on U.S. soil using powers under the International Emergency Economic Powers Act, the Trading With the Enemy Act or the USA Patriot Act.
This then became a political issue in Europe with agitation for repatriation in the Netherlands, Germany and Austria. Europeans wanted to get gold out of the U.S. and safely back to their own national vaults. The German transfer was completed ahead of schedule; the original completion date was 2020.
But the German central bank does not actually want the gold back because there is no well-developed gold-leasing market in Frankfurt and no experience leasing gold under German law.
German gold in New York or London was available for leasing under New York or U.K. law as part of global price-manipulation schemes. Moving gold to Frankfurt reduces the floating supply available for leasing, making it more difficult to keep the manipulation going.
Why did Germany do it?
The driving force both in 2013 (date of announcement) and 2017 (date of completion) is that both years are election years in Germany. Angela Merkel’s position as chancellor of Germany is up for a vote on Sept. 24, 2017. She may need a coalition to stay in power, and there’s a small nationalist party in Germany that agitates for gold repatriation.
Merkel stage-managed this gold repatriation with the Deutsche Bundesbank both in 2013 and this week to appease that small nationalist party and keep them in the coalition. That’s why the repatriation was completed three years early. She needs the votes now...
Gold & silver suppression & media blackouts: are they conspiracy theories or proven facts? What words of wisdom can be gained from one of the most senior analysts in the precious metals markets, reflecting across decades of experience? Bill Murphy, co-founder of the Gold Anti-Trust Action Committee (GATA.org) shares his essential takeaways from years of penetrating research and investigation, and exposes what keeps him on a crusade for truth and unhindered markets. Murphy believes that both truth and free markets will finally erupt into the light of day, bringing justice to criminals who have ridden on the backs of honest people!
Jason Burack of Wall St for Main St for Main St interviewed returning guest, Chief Portfolio Strategist at Sprott Asset Management, John Embry. John has over 40 years experience professionally managing money including producing industry leading returns managing a stock portfolio of gold stocks and resources stocks.
In this episode of the Keiser Report Max and Stacy discuss the Trump administration starting some trade wars - from renegotiating Nafta to looking at China’s treatment of ‘intellectual property’. They also discuss the trillions in unexploited mineral resources in North Korea.
In the second half Max interviews Dan Collins of TheChinaMoneyReport.com to discuss the ‘Doklam Transgression’ and the ‘Line of Actual Control’. The media has largely ignored the confrontation between India and China but will they notice if a hot war breaks out?
Given the anti-Trump feeding frenzy, we continue to believe that a Swan is on its way bearing Orange. But if that’s not enough to dissuade the dip buyers, perhaps the impending arrival of the Red Swan will at least give them pause.
The chart below comprises a picture worth thousands of words. It puts the lie to the latest Wall Street belief that the global economy is accelerating and that surgingcorporate profits justify the market’s latest manic rip.
What is actually going on is a short-lived global credit/growth impulse emanating from China. Beijing panicked early last year and opened up the capital expenditure (CapEx) spigots at the state-owned enterprises (SOEs) out of fear that China’s great machine was heading for stall speed at exactly the wrong time.
The 19th national communist party Congress scheduled for late fall of 2017. This every five year event is the single most important happening in the Red Ponzi. This time the event is slated to be the coronation of Xi Jinping as the second coming of Mao.
Beijing was not about to risk an economy fizzling toward a flat line before the Congress. Yet that threat was clearly on the horizon as evident from the dark green line in the chart below which represents total fixed asset investment.
The latter is the spring-wheel of China’s booming economy, but it had dropped from 22% per annum growth rate when Mr. Xi took the helm in 2012 to 10% by early 2016.
There was an eruption as dramatized in the chart. CapEx growth suddenly more than doubled in the one-third of China’s economy that is already saturated in excess capacity. The state owned enterprises (SOE) in steel, aluminum, autos, shipbuilding, chemicals, building equipment and supplies, railway and highway construction etc boomed.
It was as if a switch had been flicked on by Mr. Xi himself, SOE CapEx soared back toward the 25% year-over-year rate by mid-2016, keeping total CapEx hugging the 10% growth line.
However, you cannot grow an economy indefinitely by building pyramids or any other kind of low-return/no return investment – even if the initial growth spurt lasts for years as China’s had.
Ultimately, the illusion of Keynesian spending gets exposed and the deadweight costs of malinvestments and excess capacity exact a heavy toll.
If the investment boom that was financed with reckless credit expansion is not enough, as was the case in China where debt grew from $1 trillion in 1995 to $35 trillion today, the morning-after toll is especially severe and disruptive. This used to be called a “depression.”
China’s propagated spurt in global trade and commodities was artificial and short-term. It was done to flatter China’s rulers at the 19th party congress.
Now that a favorable GDP glide path has been assured, China’s planners and bureaucracy are already back at it trying to find some way to reel in its runaway credit growth and bloated economy before it collapses.
Downside Surprises in China Are Virtually Baked In
The sell-by date has expired on this latest China credit impulse, as evident in the chart below. During the first quarter of this year, total social financing (bank credit plus shadow banking loans) reached the incredible rate of $4 trillion per annum. That’s nearly one-third of China’s entire GDP.
The figure scared the daylights out of leadership in Beijing, who have now moved forcefully to reel in China’s debt machine.
What is coming down the pike is the great China Debt Retrenchment. Expect a global braking motion that will get underway once Mr. Xi dramatically consolidates his power at the 19th party congress.
This has the potential to drastically weaken the global economy – and the impact on corporate profits should not be underestimated.
The Red Swan Has Now Gone Berserk
Half of the world’s GDP growth since the 2008 crisis has been in China, and that, in turn, was purchased by the greatest credit eruption in recorded history.
As China’s nominal GDP was more than doubling from $4.6 trillion in 2008 to $11.2 trillion in 2016, its national leverage ratio soared from 175% of GDP to 300% in less than a decade.
There’s reason to seriously doubt that Beijing can bring the Red Ponzi to a soft landing. It cannot and will not permit the nation’s debt load to quadruple again during the next eight years, meaning that China’s days as the world’s ultimate stimulus machine are over.
The fading of the most recent China growth impulse will soon reveal that most countries, to adapt Warren Buffet’s famous metaphor, have been swimming naked from a fiscal perspective. It has left the world vulnerable to a renewed wave of funding crises as the ECB and other central banks attempt to launch monetary normalization.
In sum, during the last 19 months the Red Ponzi propagated a false upturn in the global economy that is already decisively reversing. This comes at the same time that central banks of the major developed world economies are finally bringing their printing presses to a halt.
The major central bankers have finally recognized that at $22 trillion on central bank balance sheets have become egregiously extended. China is the epicenter of the world’s two decade plunge into central bank monetary fraud and credit explosion. They have deformed and destabilized the very warp and woof of the global economy.
So, yes, even as the Orange Swan stumbles toward the Donald’s White House, there is a Red Swan following closely behind.
I don’t like to use inflammatory language, such as the title of this article, but the message from the mainstream media about gold demand is misleading.
Yes, coin purchases in North America are down compared to last year (a record-setting year, by the way). It’s been soft at a few other Mints as well, such as Perth.
But Eagle and Kangaroo purchases aren’t the whole market. You and I don’t buy paper gold products, for example, but throw in demand from this part of the industry and a very different picture emerges from the dour headlines you see from mainstream sources.
Let’s face it, some investors are going to opt for paper gold—so if we want an accurate picture of gold demand we have to include all sources. I know this seems obvious, but sometimes journalists favor headlines that are are sensational.
Here is an update on the various segments of gold (and silver) demand from around the world. See if this portrays a different message than the one you’ve been hearing. It might even make you feel emboldened…
Gold ETP Demand: Off the Charts
Add up all the gold exchange-traded products (ETPs) around the world and you’ll find that the first half of the year has been a knockout. Global ETPs (which includes ETFs like GLD) saw inflows of $245 billion in the first six months of 2017, a new and lofty record.
This is a LOT more than the first half of last year. Or most years. Look how it compares to the average level of demand over the past decade.
Keep in mind that as the chart shows, we haven’t got to what is typically the strongest part of the year.
Here’s another way to look at just how robust current demand is for gold ETPs. This chart compares the first half of 2017 to ALL of 2016.
What’s especially impressive is that $245 billion would be the second-largest FULL year amount on record. If the current pace continues, ETP inflows could reach a whopping $500 billion by year end.
This clearly signals that institutional investors—the primary buyers of gold ETPs—see a crucial need to have exposure to gold.
Silver ETFs: Record Holdings (Again)
It’s pretty straightforward: total global silver ETF holdings reached yet another record level last month. There simply has been no letup in investors buying silver ETFs.
This is not the behavior you would see if investors didn’t think there was strong potential in silver.
European Gold ETFs: Can’t Get Enough
Holdings in gold ETFs based in Europe just reached a new record level.
Demand for gold is so strong in Europe that these ETFs represented 76% of all net global inflows in the second quarter.
It’s rather obvious that European investors see an ever-growing need to have exposure to gold right now.
China: More Physical, Please
Chinese gold ETFs saw net outflows in the first half of 2017, but coin and bar demand was up a remarkable 56% over last year. Total gold consumption grew almost 10%, and physical withdrawals from the Shanghai Gold Exchange in July were the 3rd highest ever for that month.
The China Gold Association said that “Physical gold is playing an increasingly important role in Chinese residents’ investment portfolio… gold is broadly favored by investors as a store of wealth, as global markets become more fragile, the Federal Reserve raising interest rates, and increasing geopolitical uncertainty.”
The Association estimates that demand for the year may exceed 1,000 tonnes, which would be the highest level in four years. Gold production in the country, by the way, is down 6% so far, similar to what is happening almost everywhere.
As for silver, customs data shows that 1,984 tonnes were imported in the first half of the year, 37% more than last year. It was also the highest level of imports for the first six months since 2010.
Most headlines I see about China reference lower demand, but that is clearly not the full picture.
India, Turkey, Vietnam: Don’t Forget Us
Gold demand in India was up 26%, the third consecutive quarter of higher volumes. And imports in July more than doubled.
Retail investment in Turkey has surged, hitting its highest level since 2013.
Gold demand was flat in Vietnam, but the government just introduced a measure to remove much of the red tape surrounding gold bars. As such, state banks will soon be able to import gold bullion directly, which will likely lead to a spike in demand.
There is no letup in interest for gold in these countries.
Physical Demand: Resurging
And don’t look now, but the US Mint just reported that silver coin sales were up big last month, from 986,000 Eagles sold in June to 2.27 million in July, a jump of 130%. Overall sales are still subdued for gold, after 2016’s banner year, but silver sales last month were actually 65.7% higher than July 2016.
Meanwhile, UK dealer BullionVault reported an interesting anecdote about demand in early July: it said its record gold holdings are now so high that they could make more than 10 million 18-carat wedding rings, or supply the microchips for 1.5 billion iPhones.
Which Message Do You Listen To?
If an investor gages the status of the gold market by popular headlines, they might come to the wrong conclusion. And take the wrong action. They might assume interest in gold is on the decline, or that the price may fall, or maybe even sell their holdings.
But if global gold demand is actually much stronger than what is generally reported, the opposite conclusions are drawn: more people than ever want to hold gold right now, and the price will ultimately head higher once the fears those investors have begin to play out. And they’d take the opposite action: continue to denominate their savings in physical metal.
Based on a look at the total gold market, the latter message is clearly more accurate.
As such, I encourage you to do what we’re doing: accumulate gold coins and gold bars, while prices are subdued, premiums are low, and supply is plentiful. Someday, every one of those factors will be just the opposite—higher metals prices, expensive premiums, and sporadic availability.
Regardless of mainstream headlines, don’t lie to yourself about how much gold you’ll need or what’s ahead for the precious metals market.