If the creation of new money affected everyone evenly, there would be no point in government granting monopoly privileges to a central bank. It's precisely because some benefit at the expense of others, that monetary inflation is so intoxicating. The Federal Reserve is the beating heart of big government, military empire, and the welfare state. Ron Paul talks about the tough times that lie ahead.
Bitcoin was one of the hottest investment vehicles of 2017, gaining nearly 1,300% by year-end, but the blockchain technology has applications beyond simply investing and speculation.Michael Gord, CEO of MLG Blockchain Consulting, told Kitco News that blockchain is still in its infancy, but could gain widespread use in business and industry.“I think every that every business that has a website…every piece of value will be stored on blockchains, or will have a niche blockchain,” Gord said.
"Debt levels have reached a point where they have to be defaulted upon," Michael Pento of Pento Portfolio Strategies tells Silver Doctors.
The rate of the 10-year Treasury is at a four year high nearing three percent. Pento forecasts it will rise to four percent, which will be a "floor rather than a ceiling." If the rate rises to four percent, people will have lost about 25 percent from a "risk free" asset since July 2016.
The top is in for the stock market, Pento says. As rates continue to rise, look out for a bankruptcies, layoffs, and a stock crash.
Financial writer Charles Hugh Smith sees one very big problem coming at us, and that is a dramatic loss in buying power of the U.S. dollar, but it’s not just the dollar. According to Smith, “All these currencies, there is nothing backing the currencies except the government’s force. That’s the yen, the euro, the dollar and the Chinese yuan.
They are all going to have a catastrophic drop against real assets because they are all based on too much leverage, too much debt, too much money being pumped into the financial system that ends up in unproductive speculation. You can’t grow your debt at six times the rate of your economy.
In other words, if you are creating $6, $8 or $10 of debt to eke out $1 of low productivity growth, you are dooming your currency, and all currencies are doing the same thing. All the currencies are going to take a big drop at some point, relative to real stuff.
Real stuff is commodities we need: water, grains, food, oil, natural gas and, of course, precious metals. Everybody knows they have been money for 5,000 years, and I personally feel there is a role for crypto currencies.”
Lynette Zang from ITM Trading joins me to discuss the economy, precious metals and the storm that's brewing. The criminal banks have stopped lending to each other because they know something is very wrong. Will the masses realize it - or be told about it - before it's too late? Probably not. But you will.
Cryptocurrencies are a nascent asset class and could fall violently at any time, the founder of blockchain network Ethereum warned on Saturday.
"Reminder: cryptocurrencies are still a new and hyper-volatile asset class, and could drop to near-zero at any time," Vitalik Buterin said on Twitter. "Don't put in more money than you can afford to lose."
Buterin added: "If you're trying to figure out where to store your life savings, traditional assets are still your safest bet."
Cryptocurrencies have recovered slightly from a severe sell-off which saw the market lose as much as $100 billion in market value in a single day. Bitcoin recovered to a price above $10,000 last week after falling as low as $5,947.40 the week before.
In December, the Ethereum creator compared wild investment in the cryptocurrency market to the record sum paid for the world's most expensive painting, Leonardo Da Vinci's "Salvator Mundi."
Ethereum is a blockchain network; blockchain is the technology that underpins cryptocurrencies. It maintains a continuously growing record of cryptocurrency transactions across a decentralized network. The digital token of the Ethereum network is called ether, but it is also often referred to as ethereum.
The gold market is setting up for a perfect storm as the top mining producers’ supply is forecasted to decline right when demand is likely to surge. The surge in gold demand will occur as the broader stock markets roll over and begin their inevitable massive correction. Due to the tremendous amount of leverage in the system, the coming market correction will be quite violent at times. If investors believe the correction is over, and high times are here again, then they haven’t learned anything about the cyclical nature of markets.
For example, I have stated that Bitcoin and the Crypto Market are classic bubbles, and wasn’t at all surprised by the collapse of the Bitcoin price from $20,000 to $6,500 in a short period. However, now that Bitcoin and the Crypto Market have reversed, I see analysis and comments that anyone suggesting that Bitcoin is in a bubble is flat out wrong. I would kindly like to remind these individuals that markets don’t go down in a straight line.
The price of Bitcoin in 2013 surged higher, crashed and then corrected higher before falling over the following year. The same thing took place in 2013 and 2014:
At the end of 2013, the Bitcoin price surged more than ten times to a high of $1,150 before falling to nearly $500, reversed direction and shot back up to $900+. However, over the next year, the Bitcoin price trend was lower.
Now, I put this chart together to compare the current Bitcoin price trend with the previous graphs:
As we can see, after Bitcoin fell from nearly $20,000 to $6,500, it reversed and quickly added $5,000. But, this is exactly how corrections behave, as they did for Bitcoin in the past. Moreover, the Bitcoin price may move even higher before it starts to sell-off in the longer-run. Unfortunately, the notion that Bitcoin will continue to endure these corrections on its way to $100,000 or $1,000,000 will likely disappoint crypto investors who are counting on a wealthy lifestyle from their tremendous digital Bitcoin profits.
I realize my opinion on Bitcoin and the Crypto Market runs counter to many followers or a percentage of the Alternative Media. While a decentralized cryptocurrency seems much more appealing than our present highly leveraged debt-based fiat monetary system, it has degraded to nothing more than mere hype and speculation. Furthermore, even though blockchain technology offers positive solutions, it can function quite nicely without the highly speculative crypto coin values.
In a nutshell, blockchain and hashgraph technology can offer useful solutions, however, rampant speculation causing volatile cryptocurrency values are worthless distractions. Regardless, Bitcoin and the Crypto Market are behaving like classic bubbles and will eventually end up at the same value from where they started. So, it’s probably a good tactic for crypto investors to consider SELLING THE RALLIES rather than BUYING THE DIPS.
When Goldman Sachs, the Fed’s unofficial official partner in all things market fixing and system rigging, says “Okay, now you’re just getting crazy,” it’s time to listen.
It’s bad enough that the government’s current tax cut + debt binge is maniacally shortsighted and completely unsustainable. But what if the drastic tax plan can’t even achieve the minor near-term economic boost that is its only true purpose?
Goldman Sachs warned that the economic impetus from tax reform may have diminishing returns after this year. "The fiscal expansion should boost growth by around 0.7pp in 2018 and 0.6pp in 2019, but will likely come to an end after that"—listing a litany of reasons why spending and debt would conspire to undermine the world's largest economy.
Goldman's analysts wrote that the "growth effect comes from the change in the deficit, not the level, and further expansion would put the U.S. onto an even less sustainable long-term trend. Second, some of the recent deficit expansion relates to changes unlikely to be repeated, such as the temporarily large effect of certain tax provisions."
The U.S. economy won't be able to count on the pump-priming from tax cuts for very long, Goldman Sachs said on Sunday.
Federal spending, rising yields and surging debt needs are a growing worry, the firm said.
Deficit spending is approaching 'uncharted territory', Goldman said.
Uncharted territory. Imagine spending so wildly on credit that you put yourself into uncharted financial territory. You owed more than you ever had and had no sustainable plan with which to pay back your debt. So over the short term, you got a job that paid less, applied for eight new credit cards, and took out a third mortgage out on your house. This is the government’s plan.
JcPenny cutting 670 jobs, closing distribution center. Retail sales implode as data is being revised. Mortgage rates increase which pushes many individuals out of the housing market, mortgage applications decline. Whistleblower reports that the VIX might be manipulated. More states decide to pass laws allowing people to use cryptocurrencies. Russia says they are now ready to disconnect from the SWIFT system.
Just in case the economic data appeared to be coming in as too hot in recent days, today's two key regional Fed manufacturing indicators sent conflicting signals, with the New York Fed survey sliding from 17.70 to 13.1, and missing expectations of 17.50, while the Philadelphia Fed rose from 22.2 to 25.8, beating exp. of a dip to 21.6
The commentary from both regional Feds was optimistic, although NY conceded a slowdown in January:
Business activity continued to expand in New York State, according to firms responding to the February 2018 Empire State Manufacturing Survey. The headline general business conditions index fell five points to 13.1, suggesting a somewhat slower pace of growth than in January.
The New York internals, however, were good, especially when it comes to labor: number of employees rose to 10.9 vs 3.8, while work hours rose to 4.6 vs 0.8. Meanwhile, inventory fell to 4.9 vs 13.8. Unlike current conditions, optimism rose with six-month general business conditions up to 50.5 vs 48.6. A potential bottleneck was noted in future delivery times at a record high in Feb, up from 10.9 to 15.3
The Philly Fed meanwhile was stronger across the board:
Results from the Manufacturing Business Outlook Survey suggest that the region’s manufacturing sector continues to expand in February. The indexes for general activity, new orders, and employment were all positive this month and increased from their readings last month. Price increases for inputs were more widespread this month, according to the respondents. The survey’s future indexes, reflecting expectations for the next six months, suggest continued optimism.
Here, too, the internals were strong:
New orders rose to 24.5 vs 10.1
Employment rose to 25.2 vs 16.8
Unfilled orders rose to 14.5 vs -1.8
Shipments fell to 15.5 vs 30.3
Delivery time fell to 4.5 vs 6.1
There were some declines:
Inventories fell to -0.9 vs 9.4
Prices received fell to 23.9 vs 25.1
Average workweek fell to 13.7 vs 16.7
But the biggest surprise for both regional Feds was the blistering surge in the Prices Paid index, the clearest indicator of input cost inflation, which in the New York Fed surged from 36.2, to 48.6, the highest in six years, while according to the Philly Fed, "cost pressures were more widespread this month among the reporting manufacturers: The prices paid index increased 12 points to 45.0, its highest reading since May 2011" or in nearly 7 years.
As a reminder, these surveys are among the closest reading of the economy the Fed has at its disposal when making rate hike decisions, so based on just today's Prices Paid data, it may be time to guarantee at least 4 rates hikes in 2018.
So with new regulations came new shell games to hide the risks that banks take. The vast murk of the derivatives market is an easy and nearly regulation-free zone where the wildest casino bets can be placed well off the formal balance sheet radar.
We forget how extreme and extraordinary, and how unilateral and conducted-in-the-dark the machinations of The Fed were in 2008. This time, many of the measures they employed are no longer at their disposal.
The rules themselves have pushed ever larger parts of the money nexus into the shadows or into untested new instruments - "outside the perimeter" - and that is where the nitroglycerine now sits.
The structure is arguably more dangerous today than it was on the eve of the Great Recession:
It took $1.5 trillion of emergency loans to stop the vicious cycle. Events moved with lightning speed, in chaos, with zero visibility.
The Dodd-Frank Act, rushed through in 2010, prevents the Fed from rescuing individual companies in trouble (there must be at least five, and they must be solvent) or lending to non-banks in a panic.
It can lend only to "insured depository institutions" through its discount window with the Treasury's permission.
What saved capitalism in 2008 was epic action by the Fed to shore up the commercial paper and the asset-backed securities markets, and to head off an implosion of the money market industry.
The situation would be comical if it were not so grave. The Fed and fellow central banks have stimulated a titanic expansion of debt over the last quarter century: an asymmetric policy of letting booms run their course while always intervening to prevent busts, culminating in the final throw of QE.
Ah, California. It’s a polarizing state, depending on where you fall along the political spectrum, but there is no denying it is an economic powerhouse: since 2010, the state has accounted for about one-fifth of total US economic growth.
So if things start going sideways for California, things start going sideways for our national economic numbers in a hurry.
For California and the nation, there is a long list of things that could go wrong.
A surging budget deficit could stoke higher interest rates.
If the recent upheaval in stocks signals a longer-term decline, it would hurt California in particular because its budget relies heavily on high earners whose incomes rise and fall with the market.
President Trump’s moves to upend longstanding trade arrangements could be a setback for the state, home of the country’s biggest port complex.
And because the growth of the technology industry has played a huge role in California’s recent boom, a drop in company valuations or in venture capital investments would reverberate swiftly through the state’s economy and tax receipts.
What does renowned financial cycle expert Charles Nenner think you should buy for protection? Nenner says, “You buy gold because nothing else is going to keep its value. Gold is going, as I have said for a long time, to $2,500 (per ounce) at least.
Again, you buy gold because nothing else will keep its value. Stocks can go down, you can get stuck with some losses in the bond market, the housing market will go down based on homebuilder stocks and the financial system can scare you. So, what is left? Buy gold.”
It happened. Bitcoin, which only ever goes up, is near $7000, down over 60% from its high of nearly $20,000. If you've been listening to this show, there should be no surprise. It was inevitable. The DJIA lost 666 last Friday. Another inevitability, but predictions of this bull market's death have been greatly exaggerated, for now...
The day the Nunes FISA memo was released, stocks plummeted 666 points. Was it a message to President Trump? Q anon thinks so, and so do I. Is Rothschild ready to tank the US stock market as way to punish Trump for daring to challenge the ruling elite and shadow government?
Remember too that the 1988 cover of 'the Economist' predicted that 2018 would be a tumultuous year for the US Dollar. Bill Holter joins me to discuss.
We’ve said it before, we’ll say it again. You can’t exploit “emergency stimulus” level interest rates for the benefit of a propped-up stock market for a decade without eventually paying the piper. Now Jeffrey Gundlach, the “Wall Street bond king” who manages $118 billion, is saying the same thing.
Jeffrey Gundlach, chief executive of Doubleline Capital, said on Wednesday that the "low rate-low volatility" market environment went on for so long that now "the unwind will be turbulent and not over in a couple of days."
Gundlach, who is known as the Wall Street bond king, told Reuters that bitcoin was the "lead horse" of risk assets and its recent plunge has had a cascading effect on other risk assets.
Gundlach said it is "hard to love bonds at even a 3 per cent" yield. "Rising interest rates are a problem and the U.S. is in debt and there is massive bond supply," Gundlach said.
It’s usually very predictable. US credit card debt spending reliably spikes in Q4 every year due to holiday spending. Then it settles back down, dropping back to roughly-equivalent-to-prior Q2 and Q3 levels.
Until now. Whether they were celebrating the election results or shopping to ease their dismay, Americans actually piled on more debt in Q1 ’17 than they did in Q4 ’16. And then more still in Q2 ’17. And then more in Q3 ‘17. And of course, much more in Q4 ‘17:
These are not seasonally adjusted numbers, and you can see the seasonal surges in credit card debt every Q4 during shopping season (as marked), and the drop afterwards in Q1. But then came 2017. In Q1 2017, credit card debt skyrocketed to an even higher level than Q4, when it should have normally plunged – a phenomenon I have not seen before.
This shows what kind of credit-card party 2017 and Q4 2016 was. Over the four quarter period, Americans added $58 billion to their credit card debt. Over the five-quarter period, they added $109 billion, or 12%! Celebration or retail therapy.
So where does that put us in terms of total consumer credit card and revolving debt? You guessed it. Right back to where we were just before the 2008 financial crisis. The macroeconomic parallels, one after the next, keep emerging. What’s that they say about those who refuse to learn from history?
Gold traded lower overnight in a range of $1307.15 - $1319.25. It breached support at the $1308-09 – double bottom from 1/9 and 1/10, but found support just below at the double bottom from 1/3, 1/4 at $1306-07.
The yellow metal was pressured by an increase in global bond yields (JGB from 0.074% - 0.083%, German Bund from 0.74% - 0.77%, UK Gilt from 1.536% - 1.566%, and the US 10-year from 2.808% - 2.875%), and a firmer US dollar. The DX rose from 90.18 – 90.57 (fresh 2-week high) helped by a softening in the yen (109.11 – 109.78, weaker Japanese Economy Watchers Survey), and a decline in the euro ($1.2294 - $1.2211, lower than expected German Trade Balance).
Mostly weaker global equities were gold supportive, however, with the NIKKEI off 1.1%, the SCI down 1.4%, Eurozone shares were off 0.8% - 1.4%, and S&P futures were -0.2%. Lower oil prices (WTI from $61.78 - $61.11, news from yesterday on increasing US supplies still resonating) weighed on equities.
At 7 AM, the Bank of England said that interest rates would need to rise “earlier” and by a “somewhat greater extent” than they thought at their last review in November.
The yield on the UK Gilt climbed to 1.655% (high since 4/2016), and the pound shot to $1.4008, pushing the DX down to 90.18. Gold, which was testing support at its $1306-07 double bottom, was pulled from the fire and rebounded to $1313.
At 8:30 AM, a lower than expected reading on US Jobless Claims helped take the US 10-year yield to 2.884%, just shy of the 4-year high of 2.885% made on Monday.
S&P futures rose to 2686, helped by some dovish commentary from the Fed’s Harker (“lightly pencilled” in two rate hikes for 2018 and could see a third one depending whether inflation rises further and financial conditions remain loose) and Kashkari (Fed is "a long way away" from having to raise interest rates due to higher inflation caused by higher labor costs).
The dollar, however, failed to rebound as it was under continued pressure by the pound ($1.4064), and slipped to 90.01. Gold climbed higher in response to reach $1317.
By late morning, US stocks began yet another steep selloff (S&P -64 to 2613), with a continued drop in oil (WTI to $60.59 – 5 week low) contributing to the move.
A flight to quality ensued, with the US 10-year yield pulling back to 2.181%. Gold rose, and took out the overnight high to reach $1322.20. This was despite a recovery in the dollar (DX to 90.43), as the pound gave up most of its earlier gains ($1.3880).
In the afternoon, some calming remarks by the Fed’s Dudley (market drop just “small potatoes”, in favor of rate hike in March as long as the US economy continues to grow above trend) allowed for a small bounce in the S&P to 2649.
The 10-year yield bounced to 2.866%, the dollar hovered around 90.30-90.40, and gold slipped to $1316. However, this proved short-lived as another wave of equity selling ensued through the close, with news that the Senate was still scrambling for votes to avoid a government shutdown tonight adding angst to an already skittish market.
The S&P took out its 2/5 low of 2593 (10% correction) to reach 2578 before it finished off 78 to 2590. The 10-year yield pulled back to 2.825%, while the dollar was fairly steady around 90.30. Gold traded up to $1319.50, and was $1318 bid at 4PM, off $1.
Open interest was off 10.1k contracts, showing another sizeable chunk of long liquidation from yesterday’s decline.. Volume was lower but still healthy with 362k contracts trading.
Some bulls were and have been disappointed that gold hasn’t rallied strongly in the face of the steep equity declines. However, more seasoned bulls point out that the yellow metal has been facing stiff headwinds of a fresh 4-year high in the 10-year bond yield and a strong bounce in the DX.
Since 1/25, the 10-year yield has run up from 2.65% - 2.885%, while the DX has rallied from 88.43 – 90.57 (+2.43%). During the same period, gold has come off from $1350 to $1318 (-2.30%). The more seasoned bulls also argue that gold has and is performing well as a store of value, and often times gets sold in distress to meet margin calls or to be used as liquidity for bargain hunting of beaten down stocks.
The bulls will look for the now double top in the DX at 90.57-60 to hold, and that the now triple bottom in gold at $1306-7 will be a floor. They’ll look for prices to consolidate around closing levels, and will look for a test of initial resistance at the old support of $1323-24 followed by $1327-29.
Bears expect the firming trend in the DX and the 10-year yield to continue to pressure further long liquidation in gold. They’ll be gunning for further sell stops under the triple bottom at $1306-7, $1300-01 (50% retracement of up move from 12/12/17 $1236 low to 1/25/18 $1366 high), and then the 100-day moving average at $1293.
All markets will continue to focus on the volatile equity and bond markets, geopolitical events, developments with the Trump Administration, corporate earnings, oil prices, and will turn to reports tomorrow on Chinese PPI, Japan’s Tertiary Industry Index, US Wholesale Inventories, Wholesale Sales, Baker Hughes Rig Count, and Commitment of Traders Report for near-term direction.
Gold and silver got smashed down today. In his whole career, former commodities trader Bill Murphy has never seen any market trade like silver is trading right now.
The only way to have honest price discovery in the silver market is for physical demand to overwhelm the manipulation, Murphy says.
Silver manipulation, along with gold manipulation, when exposed will be "the biggest financial scandal in U.S. history."
The U.S. added 200,000 jobs in January, but the markets show fear of higher interest rates to come. The Dow fell more than 650 points today, ending the week down 1000 points.
There's a new Sheriff in town and his name is President Donald Trump and he is exposing the deep state treason, arresting pedophiles from coast to coast, lowering taxes, swearing off globalist treaties - and for the first time ever, even precious metals market manipulators are being ARRESTED. The new boss is definitely not the same as the old boss. David Morgan joins me to discuss.
With the mounting global debt, rallying equities and political turmoil, it would be “absurd” not to be protected with gold, this according to GoldMining Inc.
Chairman Amir Adnani. Speaking on the sidelines of the Vancouver Resource Investment Conference (VRIC), Adnani who previously said it was “crazy” not be in gold, has upped the ante by now saying its “absurd” not to be exposed to the yellow metal. “Gold has been in a stealth bull market, quietly moving up…last year I said it would be crazy, now I would say it is just absurd, not to have that protection,” Adnani said.
Adnani also pointed to the depleting global supply of gold as a bullish case for the metal. “The gold mining industry is sitting at a decade low [of gold supply] this is because we have had a prolonged bear market,” he said.
The CEO added that a $1,400-$1,500 gold price would be needed to bring interest back into exploration and with it much needed capital. “We are flirting with the $1,350 point; it is a bullish way to start the year,” Adnani said.
Financial writer Bill Holter says, “This country has lost the rule of law. It’s clear, looking at the DOJ and looking at the FBI, and what will come out on that, the rule of law needs to be restored.
There needs to be a confidence restoration, if you will, in those agencies. It’s a complete travesty. What has really happened is they got so dirty that they tried a coup attempt. They tried to take over the government.
They tried to negate an election. A lot of people are speculating on Hillary going to jail, and I would put out that with all this illegal surveillance, there is absolutely no way that could have been done without Obama’s knowledge.”
Holter, who is also a precious metals broker, says big money is piling into metal, especially silver. Holter says, “Gold should do extremely well, and silver should do four or five times as well as gold if it gets back to the 15 to 1 historical ratio.
The lows were put in with gold and silver back in late 2015.” What could go wrong with all-time high debt levels facing rising interest rates around the world?
Holter points out, “There is all kinds of stuff that can go wrong. Cash levels for investors are at all-time lows. Margin debt is at all-time highs. That, in and of itself, is a recipe for disaster. Also, if you look at valuation levels, we are at record levels never seen before.
Major structural problems in the U.S. economy and around the world may create headwinds for the stock markets, said best-selling author, Doug Casey. “One big problem is the central bank,”
Casey told Kitco News on the sidelines of the Vancouver Resource Investment Conference, “they keep creating trillions and trillions of new currency units.” Casey notes that while in the 1970s, money created by the central bank went to the retail level, now it’s going into the capital markets. “It’s all paper money, it’s going to dry up and blow away, and it will, and when it does, there’s going to be a lot of unhappy campers,” Casey said.
One catalyst for a market correction would be the bursting of stock “bubbles,” particularly in the blockchain and cannabis space, he added. More dramatic of a catalyst would be major geopolitical shocks. “We could wind up with World War Three,” Casey said, “I’m not just talking about what Trump and Kim are doing in Korea.
There are many other things that could blow up in the world. In many ways, it’s like things were before World War One.”
Let's get the year started properly with a visit from Rob Kirby, Kirby Analytics, and take a long look at the global house of cards built upon the "exorbitant privilege" of the world reserve currency Federal Reserve Note, U.S. dollar. Does the Federal Reserve Note, U.S. dollar still hold the reigns of control as the global trade currency or has that privilege been abused to the point of the U.S. dollar becoming irrelevant on the global stage?
