Why This Coronavirus is Different than SARS and Ebola

Charles Nenner: If the System Breaks Down Gold will be $60000 per oz

Renowned geopolitical and financial cycle expert Charles Nenner still stands by his prediction that “gold will go to $2,500 per ounce” in the next few years. 

Nenner explains, “Cycles show me that gold and silver will be going up for a couple of years. I take profits in a short term top, but people say that Mr. Nenner says the long term top is $2,500. So, I am in for the long term. 

The problem is it can go to $1,890 and then suddenly to $1,470, and they get afraid and sell out and no more long term investment.

If you are strong enough, let it go to $2,500, but never get weak even if it goes down. Be a long term investor. $2,500 gold could take three years.” 

How much higher could gold go in the longer term? Nenner says, “I made the calculation that if the system breaks down and we have to go back to the gold standard, then gold would be around $60,000 per ounce. Who knows what’s going to happen.”

- Source, USA Watchdog

China's Record Setting Repo Madness: Over $300 Billion Dollars in 2 Weeks

While many people are aware of all of the crazy Repo Madness going on in the US with the Federal Reserve, large US banks, primary dealer banks and hedge funds, very few people are aware that China has been ramping up its own repo since January 2019. Things got worse in China after January 2019 when Baoshang Bank was taken over in May 2019 have been escalating since.

- Source, Wall St for Main St

The Big Conversation: When’s a Bubble not a Bubble?

Using Refinitiv's best-in-class data, Roger Hirst examines the lack of emotional attachment suggesting that equities could still be some way short of a euphoric top. 

The market chatter sees a buying opportunity for the British Pound in the recent weak UK data, which largely pre-dates the election. And the whisper looks at a couple of market hedges that try to keep down the carry costs that are killing us.

- Source, Real Vision

Egon von Greyerz: Stock Market Ready to Crash, It Could Happen at Any Time

We will soon see how it all unwinds…

This week I will discuss Fed bubbles and a potential imminent major market event, including an extremely important chart and also the safest private gold vault in the world. But first, last week was overshadowed by Iraq and Iran, which again has reminded us of terrorism in various forms.

Terrorism is not just an act of violence. Cyber attacks can have devastating effects like paralysing air traffic or making all your digital assets disappear.

The killing of the Iranian General Soleimani reminds us all how near the world is to a nuclear war. The shooting down of a Ukrainian passenger plane “by mistake” in Teheran also tells us how easy it is for a country to press the wrong button. If that happens to be a nuclear button, the consequences would be catastrophic.

FINANCIAL CYBER TERRORISM – A MAJOR RISK

Most of us have no influence over wars or terrorist attacks and therefore we only have limited means to protect ourselves from these events. But a terrorist event that we are all exposed to on a daily basis is financial cyber terrorism.

Most financial assets today are digital. Whether you have a bank account, stocks, bonds or any other financial asset, all you have is a digital entry. In 2018 in the UK financial companies saw a fivefold increase, compared to 2017, in data breaches or cyber attacks.

Just in April 2018, seven UK retail banks, including Santander, Royal Bank of Scotland, Barclays and Tesco Bank, had to limit or shut down their systems after sustained attacks. Losses are major and the cost to repair the systems are substantial.

And it will get worse. Executives at leading UK banks and payment companies say that they are under constant fire from attackers.

For most investors this is a risk area that virtually nobody understands or worries about. Just imagine, a major cyber attack can wipe out your assets totally or at least make them disappear for a very long time before the total position of the bank can be reconstructed.

In our company, we worry about risk on a daily basis. We worry about market risk, financial and economic risk and security risk including cyber attacks. Investors who keep the majority of their assets in the financial system are not protected properly against these risks. Any one of these risks can totally wipe out your paper fortune.

YOUR BEST RISK INSURANCE – PHYSICAL GOLD

This is why it is absolutely essential to keep an important part of your wealth in a form and place that protects you from risks that can bankrupt you. We spent quite some time analysing these risks already over 20 years ago. The consequence of our analysis was that physical gold stored outside the financial system was the best insurance against financial risk, including currency debasement...

- Source, Egon Von Greyerz, read the full article here

Barron's DOW 30k Cover: Contrarian Indicator of A Stock Crash or Melt Up, Crack Up Boom Accelerating?

Barron's investing magazine just put DOW 30k on their cover for this week's new issue predicting that the DOW will hit 30k soon. 

Jason briefly talks about the history of Wall Street magazine covers from Barron's, Fortune, Business Week, etc predicting markets already in up trends going a lot higher or other outlandish predictions. 

Are these magazine covers still reliable contrarian indicators which could indicate that a stock market crash for US stocks is coming soon or is the melt up, Ludwig Von Mises' style crack up boom well underway and accelerating rapidly like in 1927-1929?

- Source, Wall St for Main St

Economic Prism: Living On Borrowed Time

Practicality the entirety of Congress now believes that the ability to pay should not limit the ability to promise people whatever they want. There’s no poll of members of Congress to support this assertion. We base it on what they’ve communicated by real, material actions.

Remember, per the Constitution, Congress – and in particular, the House of Representatives – is vested with the “power of the purse.” They retain the authority to tax and spend public money for the federal government. Over the last 50 years Congress has demonstrated they give less than half a rip about the government’s ability to pay.

Congress may be good at taxing. But they’re even better at spending. According to the Treasury Department, the annual budget deficit, the shortfall between tax receipts and spending, for the 2019 calendar year topped $1.02 trillion. But that’s nothing…

The budget deficit for the first three months of the 2020 fiscal year, which started in October, is up 12 percent over this time last year. Specifically, the deficit for the first three months of the 2020 fiscal year is $357 billion. At this rate, the annual 2020 fiscal year deficit will eclipse $1.4 trillion.

The deficit, of course, is funded with Treasury debt. And since mid-October, nearly half the Treasury debt has been purchased by the Federal Reserve. If you recall, starting in mid-October, the Fed began conjuring money out of thin air at a rate of $60 billion a month for the sole purpose of buying Treasuries.

Over the next decade, as debt and deficits go vertical, more and more of the Treasury’s borrowing will be financed via the printing press. Here’s why…

Inverted Pyramid

New U.S. Census Bureau figures show that the U.S. population is growing at an annual rate of 0.48 percent. If it wasn’t for immigrants, which are entering the USA at a reduced rate, the U.S. population would be in decline. Business Insider offered several anecdotes:

“The census data capped 10 years of sluggish US population growth. The 2010s may enter the record books as the slowest decade in population growth since the first Census in 1790…. And low fertility and an increase in deaths are projected to continue into the 2020s.

“The prospect of demographic stagnation is playing a critical role in projections of slower U.S. economic growth over the next decade, given smaller increases in the numbers of working-age Americans and as baby boomers continue retiring. Going forward, a ballooning number of retirees would rely on a shrinking number of workers to power the economy.”

Quite frankly, this ‘going forward’ scenario is unworkable.

You see, when an economy’s supported by a young and growing demographic, the burden of public debt quickly dissipate. At the local level, long term municipal bonds are issued, and then repaid by a larger and more prosperous tax base. Public pension funds also work reasonably well when supported by a growing work force.

But as the economy ages, and growth stalls, the legacy costs become insurmountable. In effect, the age demographic transitions from a well-functioning pyramid, with a large base of workers supporting a small tip of retirees, to a top heavy inverted pyramid.

By then the public grifters, like intestinal tapeworms, have taken control from the inside. Rather than making a course correction, they devour their host. That’s when the gig is finally up.

Local governments default. Pensioners get the shaft. Public services diminish. Infrastructure falls to derelict, decay and disrepair. And formerly grand properties degenerate to single room occupancy housing for the wicked…much like Los Angeles’s Hotel Alexandria in the 1990s.

Living On Borrowed Time

At the national level, the rules are a bit different. With the Fed and Treasury working in concert with a fiat dollar, and Congress raising the debt ceiling with little reservation, it is impossible for the U.S. government to technically default. However, to keep perpetuating more and more debt, the Fed and Treasury resort to mass currency debasement.

As noted above, the Fed is currently printing $60 billion a month and loaning it to the Treasury. This is financing about 50 percent of the deficit through the first quarter of fiscal year 2020. Moreover, this $60 billion a month is in addition to the nightly liquidity blasts of upwards of $80 billion the Fed applies to the overnight funding market to price fix the repo rate below 2 percent as part of its program of repo madness.

Without the Fed’s fake money intervention, Washington would be forced to raise taxes, reduce spending, accept a much higher interest rate, and default. The progression would happen in short order. Plus, the financial system would blowout to the extreme.

Yet there’s no turning back. There’s no graceful way out. There’s no backing away from QE or repo madness.

When it comes down to it, population and age demographics make it impossible to support the accumulated debt of yesterday’s spending. The likelihood of growing our way out of this mess is next to none.

So what are we left with? We’re left with debt financing by way of fake money from the Fed.

Make no mistake, we’re living on borrowed time. The day will come when the costs of debt monetization exceeds any benefits. That’s when those costs will be paid with ruinous price inflation. And, as it happens, ruinous price inflation is very costly.

- Source, Economic Prism

Kevin Shipp: The Deep State is Worried about a Trump Second Term and Jail Time

Former CIA Officer and counter-terrorism expert Kevin Shipp says the Deep State is worried that Trump will have a second term. Shipp says, “I think they (Deep State) are in a state of shock. 

They want to get rid of Trump because for the first time in their careers, they can be prosecuted for what they have done. I think they are afraid of that, and that’s why John Brennan and others are coming out as mocking birds on CNN and MSNBC and constantly attacking the President.”

- Source, USA Watchdog

Gold's Next Big Bull Run and Thoughts on Conservation

Dr. Thomas Kaplan, legendary gold investor and philanthropist, joins Dan Tapiero of DTAP Capital to discuss his illustrious career in the natural resources space, some of Kaplan's biggest winners, and the philanthropic efforts that he passionately pursues. 

In addition to his natural resource brilliance, he founded the Panthera Corporation, the world’s largest conservation effort to save the world’s big cats. 

Kaplan explains why both consolidation in the natural resources industry and global macroeconomic factors are aligning in a way that signals his latest venture, NOVAGOLD, could be the biggest opportunity he has ever encountered.

- Source, Real Vision

How the 1% at Davos make the same mistakes as we do about stocks and the economy

The World Economic Forum in Davos, Switzerland later this month is a textbook illustration of how the 1% are no smarter than the rest of us when it comes to resisting crowd psychology. Which is to say they border on clueless.

Consider the Forum’s latest Global Risks Report, which reflects the results of a survey of “the World Economic Forum’s multi-stakeholder communities, members of the Institute of Risk Management and the professional networks of our Advisory Board Members.”

Among th top 10 global risks to business right now, “asset bubble” ranks 10th on the elite’s list of concerns. That may or may not be an accurate assessment of where an asset bubble belongs in such a ranking. But what is noteworthy is a comparable ranking in the WEF’s Global Risks Report for 2009, published within weeks of the bottom of the 2007-09 bear market and global financial crisis. Back then, the No. 1 global risk was an “asset price collapse” — in terms of both likelihood and impact.

It goes without saying that whatever probability you assign to the threat of an asset bubble today, it’s much higher now than it was at the bottom of the financial crisis. Then, the S&P 500 SPX+0.67% had already declined by more than 50%. Nowadays this U.S. market benchmark index is almost 400% higher.

To be sure, the 1% are not alone in extrapolating the recent past into the future, a cognitive error known as recency bias. It’s human nature to turn bearish after the stock market has performed terribly. By the same token, it’s entirely normal for us to turn bullish after the market has performed spectacularly.

We see the same tendency in the oscillating fortunes of investors’ market-timing and buying-and-holding. It’s at the bottom of bear markets that market-timing becomes most popular, for example, even though investors would be better off at that point committing to a buy-and-hold strategy. And it’s at the top of bull markets that investors adopt a buy-and-hold mindset, just as they would probably be better off if they then became more open to market timing.

Moreover, this has nothing to do with an objective analysis of the historical data, The statistical case for buying and holding remains the same at all stages of the market cycle. What changes is investor mood and confidence.

This is why Warren Buffett famously advises us to be greedy when others are fearful and fearful when others are greedy. Where are we now on this greed-to-fear spectrum? One indication that we’re a lot closer to the greed end of the spectrum comes from the widespread popularity today of buying and holding index funds. Judging by the 200 newsletters I monitor, market timers are struggling. It’s a good bet that just the opposite will be true at the bottom of the next bear market.

- Source, Market Watch

Don’t Panic About Iran, But Don’t Sell Your Gold Either

Gold has had one of its more excitable runs since the start of the year. It surged so much in the wake of the Iran airstrikes that it even drew the attention of the broadsheet financial press. So naturally, the price was bound to tank shortly afterwards. Which is precisely what happened this morning. If you’re a gold investor, you might be fretting that gold’s high point for 2020 has already come and gone. I wouldn’t worry.

I have two thoughts about the market reaction to the conflict between the US and Iran. If I express them too quickly, it might sound like they contradict one another. So let me explain in detail.

The market is right not to panic about Iran, but it’s still complacent

My first thought is that markets are broadly right to avoid panicking too much. Tension in the Middle East is not new. Beyond the natural drama – which has been exaggerated by Donald Trump’s penchants for unpredictability and showmanship – there’s nothing game-changing here. Iranian oil is largely locked out of the market at the moment by US sanctions. The stuff they do sell is going to China. Barricading the Strait of Hormuz would thus hurt their biggest customer. 

So if you take a deep breath, look beyond the shouting about World War III and all the rest of it (much of which is motivated by a borderline unhinged hatred of Trump), then nothing has fundamentally changed in the last couple of weeks to make markets panic. It therefore makes sense that gold and oil – the classic “OMG scary stuff is happening, what do I do!?” go-to assets – are falling back to where they were before the US killed Iranian general Qasem Soleimani.

My second thought is that the speed with which this reversion to “everything is A-OK” has happened is indicative of a high level of complacency. It’s one thing to take a realistic view of things; it’s quite another to decide that the latest incidents deserve absolutely no change to the risk premium in markets at all.

What does all that mean in practice for you, the investor?

I’d just say that I think it’s still worth owning oil and gold in your portfolio. This latest excuse for a surge higher was always likely to falter. But there are plenty of other reasons to hold these assets. I’ve talked about oil a fair bit in the last few months so I won’t focus on it here (and there’s more on it in the forthcoming issue of MoneyWeek magazine, out tomorrow). But I’d like to take a closer look at gold.

The fundamentals are bullish for gold

Just a few days ago, gold hit a near-seven-year high. April 2013 marked the point where the long stasis afflicting gold after its 2011 high point turned into a properly nasty bear market. This week’s high point saw it claw back into that rarified territory. The Iran conflict gave it a boost. But it’s worth noting that gold was already doing well. All last year, it made gains. And that was in the face of a relatively strong – if broadly static – US dollar. As Louis-Vincent Gave of Gavekal points out, “it is possible to make a constructive argument for gold simply on future supply and demand.”

One point is that central banks “are back to buying gold.” Negative bond yields mean that gold – which at least yields a little less than 0% (after storage costs), rather than a lot less – suddenly looks like an acceptable reserve asset.

There’s also the fact that gold miners – which have been generally appalling investments – are in the “merge and preserve capital” phase of their evolution, rather than the “throw as much money as possible at digging holes and wooing stock promoters” phase. When miners would rather buy each other than open new mines – even though the gold price is actually pretty high compared to history – you have a recipe for restricted physical supply. It also indicates that sentiment is not overly bullish. As Gave puts it: “It’s a textbook sign of a bottom in any given commodity’s cycle.”

What if you’re a sterling investor?

There is, of course, the question for sterling investors: if the pound is going to get stronger (which may or may not happen, but it’s certainly fair to argue that the pound is undervalued), then does it make sense to have much exposure to gold?

My take on this is that you probably shouldn’t worry about it too much. It would be daft to have 100% of your portfolio in any one asset. In fact, I think that gold and sterling-denominated assets (such as UK equities) will probably work well in a portfolio together. Sterling, for example, is historically a “risk-on” asset – when investors feel bullish, the pound tends to get stronger, but gold tends to suffer. So it’s all good for diversification. And given that the pound does need to play catch-up, it’s quite possible to think of scenarios where both the pound and gold go up in tandem.

In short, you should own gold for all the usual reasons – it’s a good diversifier in a portfolio that otherwise consists of equities, bonds, property and cash, so there should always be a bit of it in your portfolio.

However, I also think that it’s currently in a bull market, and that this will continue. So if you are an active investor, you might want to have a higher asset allocation to gold than you normally would.

- Source, Money Week

Economy and Markets: It's Fine to Mine

Where is gold going? Harry Dent brings you the latest on the shiny asset that many of our readers hold dear. Plus, get the scoop on Money Velocity, and how it affects economies worldwide.

- Source, Harry S Dent

Get Prepared Now: It's Too Late To Fix the Coming Financial Armageddon

The cycle says we’re headed into hard times. Check out the meme Mike got from his producer, Dan, and how it fits with where we stand today. 

Mike admits that it worries him where we’re headed. Mike states emphatically that it’s too late to avoid financial Armageddon, due to the massive dilution of the currency, no viable options for central bankers, and that the debt can never be repaid. 

It’s not just Mike saying this: as he and Jeff discuss, the former governor of the Bank of England, Mervyn King, said “the world is heading for a political and economic crisis which could unleash a financial Armageddon… we are sleepwalking toward a crisis.” 

In his keynote speech to financial members of the IMF, Mr. King actually told them to “prepare for the next financial crisis.” It’s inevitable. Strong words from someone in the know—and advice we should all heed.

- Source, Gold Silver

Will The Dollar Or Even The United States Itself Survive 2020?

Food shortages, inflation, impeachment, trade wars, shooting wars and a war on the people, oh my! Stock up on popcorn to enjoy watching 2020 unfold? No way! More like hunker-down and watch your six because we could be in for one very ugly year, if we can survive it.

- Source, Silver Doctors

Welcome to the Economic End Game

Did the Fed Subsidize The US Shale Oil Boom?

A few days ago, Real Vision TV released a very interesting discussion between Danielle DiMartino Booth, CEO of Quill Intelligence, and Tracy Shuchart (Chi Girl on Twitter) of family office Capital Benoit about the oil market and whether the Fed enabled the US shale oil revolution.

- Source, Wall St for Main St