USA Watchdog: $90 Trillion in Treasury Debt, It’s Not Just Bad Accounting

Michigan State Economics Professor Mark Skidmore’s latest update to the “Missing Money” question is now the biggest in history by a long way. 

Skidmore’s research reveals the US Treasury market is rolling over $90 trillion to support the official debt of $22 trillion (2019.) That’s on top of the $21 trillion Skidmore revealed in so-called “Missing Money” in late 2017. 

Why do you need to churn $90 trillion in debt? Is the US debt really $90 trillion? What could go wrong with this much hidden debt? Skidmore says, “Yes it is concerning to me because this could blow up. 

We don’t know when or how, but if people lose confidence in our government, they could lose confidence in the currency. That could have severe impacts on lots of people in the whole global economy above and beyond what we are experiencing now.

Is there some reset in play? Is there some bigger issue at stake? Is this pulling away with other goals in mind? 

Yes, I think so. I don’t know how this all fits together but I do know there is something else going on that we all need to pay attention to.

I have documents that say something is really, really wrong, and it’s not just bad accounting.”

- Source, USA Watchdog

Ron Paul: Trade War With China, Beware of The Hot War

The great Frederic Bastiat said that "Trade barriers constitute isolation; isolation gives rise to hatred, hatred to war..." This is the path that should be avoided. 

If America is unattractive to entrepreneurs, and is falling behind competitively because it is saddled with the biggest government on earth, perhaps the focus should be setting the American entrepreneur free from the bureaucracy. 

For obvious reasons, American politicians do not want to decrease their power. They would much rather point the finger outwards.

- Source, Ron Paul

Wolf Street Report: Business Uncertainty About Sales Goes Haywire

I’m going to show you a chart based on data that the Atlanta Fed released today. We’ll dissect it in a moment. The chart would be funny, if it weren’t so serious. At first, just look at the chart superficially. These results are based on surveys of businesses of a wide variety of sizes, spread across all sectors of the economy (except agriculture and government), in all regions of the US. They’re asked about their own businesses, in terms of sales, employment, and capital investment over the next 12 months. And the chart also shows how uncertain the participants are about their own expectations.

So this is about expectations for their own businesses, and about the uncertainty of their own expectations. For now, just look at the chart without analyzing it: It shows better than just about anything else what mess businesses face going forward: Their world has gone haywire.

The pandemic has hit businesses differently. Some businesses have reported booms in demand because of the shifts cause by the lockdowns and other factors, and they have trouble keeping up. Other businesses are in a state of collapse or have filed for bankruptcy. And then there’s every business in between. And these results are the averages of the pandemic’s winners and losers combined.

Expectations of Growth and the Uncertainty of those Expectations

There are two factors here in the Atlanta Fed/Chicago Booth/Stanford Survey of Business Uncertainty: These companies’ expectations; and their uncertainty about their own expectations.
Business expectations.

Expectations of sales growth over the next 12 months (red line in the chart below has been trending down since November 2018 (high of 128.5). This was later borne out by the slowing economy. Those expectations were already low before the pandemic hit in December 2019 (86.7), indicating a further slowdown of the economy for 2020, and remained roughly in that range in January and February.

The collapse of those expectations commenced in March (53.6), and carried through April (0) and May (-36.6). In June, they ticked up but remained terribly low (-28.9).

Expectations about growth for capital investment (green line) and employment (black line) over the next 12 months declined in March, April, and May, but didn’t collapse. And both ticked up in June.

Each of the indices captures the direction and magnitude of how these companies expect sales, employment, and capital investment to change over the next 12 months. The indices have been set with a mean of 100 from January 2015 through December 2018.

Uncertainty about of those expectations

But businesses face a wall of uncertainty, and consequently, have become very uncertain about their own expectations – particularly about their expectations of sales growth. The uncertainty index tracks the gap between each company’s “lowest” and “highest” sales growth scenarios, or when the company assigns a higher probability to their “lowest” and “highest” case scenarios.

The uncertainty index for sales expectations (red line in the chart below) began spiking in March, but unlike sales expectations, the uncertainty about them continued to spike in June.

In comparison, the uncertainty about their employment expectations remained relatively low, but nevertheless ticked up in June the highest level in the data series. Uncertainty about investment remained range-bound:

So, plotting on the same chart the businesses’ expectations of sales growth and their uncertainty about their own expectations of sales growth shows the environment that companies find themselves in. While expectations of sales growth for this coming year plunged, the businesses are totally uncertain about those expectations, and they assign high probabilities to both extreme scenarios – a strong recovery in their sales or continued misery in their sales.

What these businesses are saying is this: They took a big hit in sales and in June still expected those sales to remain at low levels for the next 12 months, but they have no visibility over those 12 months, and have no clue how this will turn out, and lack any kind of confidence in their own expectations of where sales might go.

Practically by definition, a business decision maker has to expect sales growth, and has to figure out how to make it happen. That’s part of the job.

But unless visibility increases and certainty about their own expectations increases, it’s going to be tough to plan and make long-term decisions with confidence. From a business point of view, this is a mess.

- Source, Wolf Street Report

The Only Question Gold Investors Are Asking: How High is the Price Going?

It has been a big week for the gold market as surging momentum has pushed prices to their highest level in nearly eight years. 

In an interview with Kitco News, George Milling-Stanley, chief gold strategist at State Street Global Advisors, said that he continues to expect gold to push higher through the rest of the year. 

Although his base case doesn’t call for $2,000 gold by year-end, he added that a move to that level is not out of the “realm of possibilities.”

- Source, Kitco News

There Will Be No Great Depression, Fed Restructuring Has Begun

Todays interview is with Bob Kudla. Bob talks about the economy on how it is recovering. 

There will be no great depression but the market might drop a bit, but it will soon recover. 

The treasury has now taken control over the fed and the restructuring has begun. The treasury has taken control of the printing press.

- Source

Gold’s Safe Haven Appeal Will Drive Prices Not Inflation

Unprecedented monetary policy action will boost long-term inflationary pressures, supporting gold's long-term uptrend; however, one market strategist said that investors should keep their eye on economic uncertainty to push prices out of their month-long trading range. 

In an interview with Kitco News, Kristina Hooper, global chief investment officer at Invesco, said that although some economic data have improved recently, the global economy is still far from recovering from the devastation it saw as a result of the COVID-19 pandemic. She added that the threat of a second wave of the virus will be another headwind for the recovery.

- Source, Kitco News

Peak Prosperity: Is the Federal Reserve Worse than COVID-19?

As we've been railing on for too long now, the Federal Reserve is NOT serving the interests and welfare of the general public. Instead it serves the top 1%. 

Or more accurately, the top 0.1% -- i.e., the people who actually own the vast majority of financial assets, corporations and real estate. 

Right now, the Fed is pouring gasoline on the "wealth gap"; the tremendous divide in social inequity it has largely been responsible for creating. And yet it's Chairman, Jerome Powell, flat out refuses to acknowledge this. 

The very valid grievances of many dispossessed and disempowered groups can be laid at the feet of the Fed. Minorities starting at diminished employment prospects? Seniors unable to live off of their life savings in a world of 0% interest rates? 

The Fed is either directly or indirectly responsible. It's way past time for society to realize the truth and stop believing the Fed's pitch that it's the hero riding to the rescue in this story. 

It's not. It's the villain who created the injustices we're sick of. And it's "rescue" efforts are simply a trojan horse for using a crisis of its own making to enrich its stakeholders further...

- Source, Peak Prosperity

USA Watchdog: Global Reset Coming, No Real Recovery

President Trump signed an Executive Order (EO) on some police reforms this past week that, among other things, bans chokeholds. What about reforms and instructions for the public interacting with police? 

President Trump missed an opportunity to tell citizens NOT to resist arrest and to follow lawful commands of the nation’s law enforcement officers. That would go a long way to stopping the violent confrontations and police doing their jobs. 

Delegitimizing police and causing chaos seems to be part of the plan by the Democrat Party, which has adopted a Marxist communist agenda. 

The big picture story here is America is under full on attack, but not for reform. It is all part of the New World Order plan to stomp out America and reset the world economically and geopolitically. 

There is going to be a so-called reset that the globalists have been planning at the World Economic Forum in Davos. What will it look like? If Donald Trump gets to reset things, the globalists will not like how that plays out. 

The battle is really about who is going to shape the reset and how will the world look afterward. You have heard talk of a so-called “V” shaped economic recovery, but charts say the “V” is pretty shallow. 

Yet another 1.5 million Americans applied for unemployment benefits pushing the total to more than 44 million. When will this end?

- Source, Gregg Hunter via USA Watchdog

The Potential Looming Catalyst for Silver No One Sees Coming

There are a number of catalysts that could ignite the silver market over the coming months and years. To Mike and I it seems inevitable that silver will be a direct beneficiary of the monetary madness that defines the world of central banking today. Give us some headline-making inflation, for example, and a roaring bonfire in the silver market will be underway.

But there’s another potential catalyst that is so immense, so market-altering, that it would overwhelm the silver market and profoundly change its structure for a generation or more. Not just something that would send the price soaring, but reshape the supply/demand balance and even change the way people view it.

Big words, I know, especially when most economists don’t view what I’m about to outline a likely possibility. But those are the same people who said in 2005 that real estate wasn’t in a bubble… that in early 2008 the risk of an economic downturn was low… or that as recently as December 2019 the economy was recession proof. And the fact that no one is thinking about this is, in itself, another catalyst, since it would catch the investment world off guard.

Here’s what this looming catalyst for silver could be, along with why I think it’s a distinct possibility and how it could alter the market for years to come…

Enter a New Buyer: Governments
Yes, it’s true that central banks don’t hold silver in their reserves today. And yes, silver is not part of the monetary system anywhere in the world. And yes, they currently don’t buy silver and keep very little in inventory.

The possibility I’m raising is that they begin to do some, or all, of those things.

Why would they add silver to their reserves? Or begin to stockpile it again?

There are actually many reasons. Here’s five of them…

#1: History

Governments using silver as a monetary asset is NOT NEW. In fact, silver has been actual currency throughout history more often than gold.

Not only that, according to some sources, central authorities—whether defined as central banks or other entities—have held silver for more than 250 generations.

And as good historians know, the US previously used silver as part of its monetary system, as this infographic shows.

Governments have also stockpiled silver in the past. In some pretty big amounts, too, as I’ll show.

There’s other potential ties to governments and silver…
India was a silver country long before it was a gold country.
Mexico is the largest silver producing country in the world, Peru the second, so each have plenty of metal they could tap to sure up their reserves or any other use.
China and Russia are the third and fourth largest producers, respectively, so could use it as another way to diversify out of the US dollar, which they have been keen to do.
Poland is also a large producer with a long history of silver mining.

In today’s world would it really be that surprising to see some countries want to stockpile silver again, whether to sure-up industrial supply or perhaps even some sort of national security purpose? It wouldn’t exactly be a stretch to see China or Russia do that.

There are numerous examples from history of how silver was part of the monetary system… or used in circulating currency… or held in reserves by central authorities… or held in inventory. The idea that governments would buy it is literally an old idea.

#2: A Monetary Crisis Demands It

It is not current central bank policy anywhere in the world—at least that we know of—to hold silver as an official reserve asset.

But a monetary crisis could change that mandate. Perhaps easily, the strongest reason being the result of the fallout from current monetary and/or fiscal policies.

As you know, central banks are creating currency at an obscene pace. And despite not yet seeing any real-world effects of that massive dilution (other than the stock market going higher), I don’t believe in a free lunch. Actions have consequences—if that’s true, then it stands to reason that these extreme monetary interventions will lead to some very significant monetary consequences.

And the greater those consequences, the greater the pressure to find other strategies and ideas to deal with the fallout. A “new” way to solve the crisis.

Silver is a ready alternative to any monetary breakdown.

#3: It’s Already Money

Silver, like gold, has no counterparty risk. It is no one’s liability.

Silver is also internationally recognized, globally accepted, and highly liquid.

Silver is money, so governments don’t have to go looking for something else. Its strong monetary history already offers them a viable, ready-to-go option.

There just aren’t many other assets that could serve as a monetary backstop anyway. Stocks? Real Estate? Some other country’s currency? The IMF’s made-up SDRs that don’t exist except as digits on a computer screen?

None of these are sound forms of money. They have their uses—but not as money. There would be no reason for governments to look elsewhere.

#4: Silver is Cheap

Relative to gold, as every silver bug knows, silver is dirt cheap. It requires more storage space, but that’s not a strong enough reason to avoid it.

Given silver’s low relative price they could buy it as a strategic metal—in other words, buy in certain amounts for one specific purpose.

Its low price has made the market so small (see the 4:15 mark) that even just one country starting to buy would send investors worldwide scrambling to get their hands on some of it.

#5: Nothing is Impossible Today

One person I floated this idea to dismissed it as “unrealistic.” But after the pandemic and the protests can you really say that some unexpected event would “never happen?”

Besides, plenty of financial events have occurred at the hands of governments that we previously thought were “unrealistic.” Negative interest rates. Negative oil prices. Stock and bond and real estate bubbles. The Fed buying junk bonds. Trillion dollar deficits. Multi-trillion dollar emergency spending plans.

The environment is ripe for new approaches, too. Citizens and investors aren’t exactly in love with the establishment these days, the election of populist leaders on several continents being one obvious example.

Last, it wouldn’t be surprising to see politicians try to take monetary power away from central bank authorities. That’s actually one tenet of MMT.

As blatant as the intervention has been in economies, interest rates, stocks, bonds, metals, and other assets, it is really that far-fetched to think that in a major monetary crisis governments might not take the unconventional step of turning to silver, as they have in the past?
If governments begin to buy silver in any meaningful amounts, they would become a major source of demand, just as they are with gold now.

Here’s what that could look like...

Government Inventories vs. Monetary Needs

Governments today hold a total of 48.6 million ounces of silver in inventory.

This tiny amount is largely the result of silver being removed from the monetary system by virtually every government in the world. The need to stockpile it thus decreased, so they sold their silver. And sold and sold, to the point where the amount stockpiled today is negligible.

Here is the annual amount of global government silver inventories since 1970.

From 1980 to 2007, governments were relentless sellers. Those 48.6 million ounces today equates to just 6.4% of last year’s global mine output, a little more than what miners produce in three weeks. It is a mere 5% of 2019’s total supply. It’s an inconsequential amount, and is far short to serve any effective monetary purpose.

With such little in their coffers, governments would need to buy a lot to make a material difference, whether for reserves or inventories or some other purpose.

The first compelling thing about this idea is that if governments decided for any of the above reasons to buy silver, they would represent a new source of demand. One that is currently not present. This would occur on top of a supply chain that is already strained and amidst a trajectory for new mine supply that is headed nowhere but down.

The second compelling factor is how much they might buy. Let’s take a look at that from several angles…

First, here’s how many ounces governments would need in order to match the levels they held in 1970, 1975, and 1980.

If they wanted the same amount as 1975, they’d need to buy 205 million ounces. The 1980 level would require over 282 million ounces. And 1970 would entail a purchase of 314 million ounces—which is over 41% of all the metal mined last year.

Sure, they could buy over several years, but there’s another issue…

Those amounts don’t realistically represent what they’d need today. For starters, the world has a lot more people in it. A lot more wealth, too, which, combined with silver’s low price has pushed its percent of global wealth to a much smaller level than it was then. Saying what they held 40 and 50 years ago would be sufficient to meet today’s needs would be akin to asking you to live off your 1980 salary.

So let’s be a little more realistic…

First, let’s look at the global population. It’s grown 110.5% since 1970… 90.9% since 1975… and 75.1% since 1980. Here’s how many ounces governments would need to hold to represent the global citizenry to the same degree it did in those years.

To equal the same percentage of silver for the population as in 1970, governments would need to buy over 755 million ounces. This amount is not available, of course, as it exceeds a full year’s mine supply. Even the amounts for 1975 and 1980 are excessive and unattainable within a short timeframe.

But that’s still not enough to have a meaningful monetary impact…

In 1980 silver represented 0.268% of global wealth. But at the end of 2019 it was a miniscule 0.011%. In other words, governments would have to buy 2,436% more silver than what they held then to represent the same percentage of global wealth today. That would look like this.

Governments would need to buy 8.318 billion ounces of silver.

That is seven times more than all the silver held by ETFs… more than 26 times Comex “delivery” inventories at the end of 2019, and over 7,000% more than what’s held in London.

It’s also more than the number of gold ounces held by global central banks today. Total gold reserves are 34,891.5 tonnes (1.12 billion ounces), roughly an eighth of the amount of silver they’d need if this were a goal.

Again, this is just for silver to equal 0.268% of global wealth. This is a level they’ve held before, so it’s not some hope I’ve dreamed up.

This all obviously begs one big fat question: given how tiny the silver market is, and given that 15-20% is lost each year, and given that mine supply is in a structural decline… where would they get all this silver?

They won’t. It’s not available. But that may not keep them from trying if monetary issues get as bad as Mike thinks they will.

Would Governments Really Buy Silver?

To be clear, most analysts and economists think the odds of this are low. Maybe they are.

But the greater the crisis the more likely new strategies will be pursued. If this ends up being one of those strategies, it would have a direct, immediate, and immeasurable effect on this teeny, tiny market.

And by the way, I’m not the only one that considers this a possibility. The crew at Incrementum devoted an entire section to it in their new In Gold We Trust report (starting at page 249).

And here’s an important point: if governments do begin to buy silver again, it won’t just push the price higher, but would elevate silver’s importance around the world for many years. It’s hard to imagine that the persona around silver wouldn’t change.

Incrementum’s report summed it up best: “We do not know what the future holds but we would be surprised if, in retrospect, silver will not have proven to be a wise investment for the next generation.”

I’m with them, and Mike Maloney. Regardless of whether governments buy silver or not, there are glory days ahead for this shiny metal.

- Source, Jeff Clark

John Williams: Buy Gold Now, Coming Hyperinflation Will Make Dollars Worthless

Economist John Williams says not to worry about the hits on price crashing manipulations on gold and silver, especially in the face of massive record money printing. Williams says, “The price manipulation is to try to kill it. 

Central banks hate gold (and silver) because it shows they are not doing their job. I measure unemployment the way it used to be measured by the government, and I also measure the way inflation used to be measured.

Gold kept up with actual inflation and your actual out of pocket expenses. Gold is going up right along with real inflation. (ShadowStats.com computations say the real inflation rate in America currently averages 9% per year.).

I am looking for a hyperinflation. As this money get pumped out there, you will continue to see prices rise, and you are going to see some acceleration there. In hyperinflation, it will be so rapid the currency is worthless to you.”

- Source, USA Watchdog

Rare Earths Show Signs of Another Bull Market

Life-changing opportunities often come from the smallest markets or the tiniest stocks.

These opportunities are perfectly suited for the average investor, because they’re cheap enough to put your money in… they’re often overlooked by Wall Street… and they are so small that it could take just a little good news to send them soaring.

Take commodities, our bread and butter here at Casey Research. Most investors focus only on gold or silver, which offer plenty of strategies for building your wealth.

But there’s another set of metals that are almost completely overlooked. In 2018, the global market for this kind of commodity was worth just $2.8 billion.

For comparison, the global market for gold that same year was worth about $138 billion, almost 50 times higher.

But the small size of this overlooked metals market is exactly why I think it’s so exciting… because that means huge upside.

In fact, during the last bull market, some metals in this sector climbed by 1,000% or more.

And we’re seeing a similar opportunity today…

Rare Earth Elements

I’m talking about rare earth elements.

Rare earths are metals that have unique and valuable properties, like magnetism. They’re used in cutting-edge technologies that power everything from your smartphone to military aircraft.

In fact, rare earths are most often used in the manufacturing of military technology. For example, an F-35 fighter jet contains about 920 pounds of rare earths. A Virginia-class submarine contains more than 9,000 pounds of these elements.

So rare earths are critical because of their high-performance uses – and for our national security. But this market is still relatively obscure.

And this sector is almost entirely dominated by China-based producers. The country supplies 80% of the U.S.’s rare earths. Overall, China controls more than three-quarters of the total rare earth market.

Take it from Dave Forest, editor of International Speculator, and our go-to commodities expert at Casey Research:

Today, China dominates nearly every step of the rare earths supply chain. That includes mining, but also separating individual rare earth elements, and turning that raw material into specialty metal alloys to make high-tech parts.

America, on the other hand, let its rare earths infrastructure decay.

According to Dave, China’s stranglehold on rare earths supply, along with inflation, are what triggered the last bull market in 2010, when the metals soared as much as 1,000%. Dave again:

At the time, China – the world’s top producer of rare earths – threatened to cut off supply after a territorial dispute with Japan. These dual catalysts of inflation and geopolitics sent rare earths skyrocketing.

Dave knows what he’s talking about. One of his rare earths picks in International Speculator was up as high as 300% recently… and it’s been in the portfolio for less than a year. (You can find out more by going here.)

Meanwhile, China’s rare earths dominance is bothering U.S. officials. They don’t want to rely on China for crucial materials needed to arm and supply our military. So they’ve decided to take action.

It’s Time for Rare Earths to Be “Made in America”

As part of their push for rare earths independence, politicians have started suggesting that more rare earth elements should be sourced from within the U.S., or its allies, like Canada.

First, Republican Senator Ted Cruz announced that he would introduce legislation giving tax breaks and other incentives to companies that would produce rare earth elements domestically.

Then, on May 28, Representative Michael Waltz introduced a bill aimed at reducing America’s dependence on China for these critical elements.

The legislative push for rare earths independence is gathering momentum…

… but laws are one thing. Capital commitment is a much stronger vote of support.

Earlier in June, the U.S. Defense Department said that in the fiscal year 2021, it would seek a total of $2 billion for rare earths mineral purchases.

This is about 70% of the total rare earths market.

The Army isn’t releasing too many details about this funding, so nobody knows exactly how the $2 billion is going to be spent. If the government invests the money into U.S.-based and allied producers in the rare earths supply chain, the rare earths market outside of China will explode.

But even if a portion of the funds goes to Chinese companies, the global rare earths market will get a lift, too. (I’ll tell you how to profit from either scenario below.)

With the Army’s new push for domestic supply, some analysts predict China will lose as much as one-third of its market share by the mid-2020s.

And the market has already reacted to these announcements…

Since the depths of the COVID-19 crisis, rare earth elements outperformed the rest of the commodity sector by a factor of eight.

The broad commodity market has risen 7% since the market bottom on March 23, while rare earth elements have soared by 56%.

But it’s not too late to get exposure to this trend. Because this market is still small, I believe there’s plenty of upside left.

- Source, Silver Bear Cafe

Falling Supply and Surging Physical Investment, We Could See Some Crazy Silver Prices

Few investors realize that the fundamentals for silver continue to improve each and every day. Unfortunately, the bullish case for owning silver is lost in a market that has gone utterly insane trading high-flying over-leveraged tech stocks and other assorted financial garbage assets.

This is the way of the world presently… but a BIG CHANGE is coming.

As I have stated over-and-over again, the coming ENERGY CLIFF is going to change the world as we know it.

Thus, the value of most Stocks, Bonds, and Real Estate will disintegrate when global oil production heads south in a big way. And, we have likely already begun the process, due to the massive economic lockdowns in combatting the global contagion… which seems to be heading into a second wave.

While the global contagion impacted global silver mining the most over the past several months, I believe it will deteriorate even further in the second half of 2020.

According to a Reuters article, Mexico mining output to shrink 17% in 2020: industry group… this could impact silver supply considerably as Mexico is the largest silver producer in the world.

Here’s how I see the situation for global silver mine supply being negatively impacted this year and onwards.
The lockdowns of mines will impact two months of silver supply, mostly April & May. Most of the global mine supply affected by the worldwide contagion took place in Mexico and in South America, where most of the silver is produced.


Even after the world economies start to reopen, along with the mining industry, so much damage has been done to these economies; it will also hurt Global GDP in the second half of 2020 and likely into 2021. This will curtail base metal mining where 55% of silver comes from… as a by-product of copper, lead, and zinc production

Now, this leads me to the following chart. Global silver production peaked in 2015 and continues to decline while gold output hit a new record high last year:

Global silver production peaked in 2015 at 894 million oz (Moz) and declined to 836 Moz last year. While global silver production declined since 2015, world gold production increased from 104 Moz to 111 Moz. Thus, the global silver mine supply fell 6% since 2015, while world gold production increased by 7%.

To make matters worse for the silver supply, the impact of the global contagion will likely shrink production by another 30-50 Moz. So, there is an excellent chance that world silver mine supply falls below 800 Moz, to 785-795 Moz for 2020. Hell, it could be even lower if the situation continues to get worse in the second half of 2020.

The overwhelming majority of investors have no idea how undervalued silver is as an asset. With falling supply and surging physical investment demand in the future, we could see some crazy silver prices.

- Source, SRS Rocco

Holding at Least 10% in Gold Makes Sense as Inflation Begins to Pick Up

Look for gold prices to continue to move higher as the Federal Reserve will do everything to fight deflation risks, according to one economist. 

In an interview with Kitco News ahead of the Federal Reserve’s monetary policy announcement, Tim Shaler, chief economist at iTrustCapital, said that he couldn’t state enough the risks deflation poses for the U.S. and global economy.

- Source, Kitco News

Chaotic Price Swings Will Be Engineered To Shake Off Gold Investors

A European friend well known to us who prefers not to fall under even more surveillance in his own country sends the observations below, for which your secretary/treasurer will take the responsibility of sharing with you.

His main point — that huge volatility will be injected into the gold market to facilitate government intervention elsewhere in the world financial system — echoes the cable sent from the U.S. embassy in London to the State Department in Washington on the eve of the creation of the gold futures market in New York in 1974.

The cable noted the London embassy’s consultation with bullion banks about the futures market and provided this evaluation:

“The major impact of private U.S. ownership, according to the dealers’ expectations, will be the formation of a sizable gold futures market. Each of the dealers expressed the belief that the futures market would be of significant proportion and physical trading would be minuscule by comparison.

“Also expressed was the expectation that large-volume futures dealing would create a highly volatile market. In turn, the volatile price movements would diminish the initial demand for physical holding and most likely negate long-term hoarding by U.S. citizens.”

The cable can be read here:

http://www.gata.org/node/17081

Our friend’s observations follow.

* * *

I’ve no real idea of who is doing what in the gold market, but the shenanigans in the last two weeks have all the hallmarks of a managed retreat by the forces seeking to control the metal’s price.

Clearly Friday’s U.S. jobs report was an exercise in trying to paint a picture of the possibility of a fast economic recovery, but I’m not sure it had huge credibility after its initial impact on the markets. The U.S. Federal Reserve and Treasury Department have a really big problem of needing to keep interest rates low while procuring massive new funds. A few weeks ago they got a 20-year bond away at a yield around just 1.22 percent, and the gold price was under pressure as they were doing it. That’s no coincidence, in my view.

I think we now can expect gold to be attacked whenever a major government fundraising is being arranged or some big economic news is being presented. President Trump will support all this as he appears to be heading for defeat for re-election in November. Given his record, I imagine that the positive official spin on economic news will become even more remarkable.

Attacks on gold will keep investor interest in the monetary metal and gold-mining companies relatively subdued. It’s much harder to maintain a position when prices are so volatile.

Gold investors expect that suppressing interest rates can be successful only if vast amounts of dollars are created and that it is impossible to do this without gold going much higher, especially since official gold holdings have been depleted by years of price suppression. I would never rule out a gold revaluation or debt jubilee as some have suggested.

But to quote Clint Eastwood in “The Good, the Bad, and the Ugly,” where he talks about the stash of buried gold just before the final shootout, “We are going to have to earn it.”

Gold investors should expect chaotic swings in prices in the next few years unless or until gold returns to anchoring the monetary system. But the underlying trend should be up, up, and away.

These are very strange times.

- Source, GATA

Total U.S. Petroleum Consumption Still Down 25%, Inventories At Record High

The stock markets surged today on news that the U.S. unemployment rate “SURPRISINGLY” fell to 13.3% in May, down from 14.7% in April. Somehow, with most of the country still on lockdown in May, there were 2.5 million Americans added to the payrolls along with 345,000 new businesses that were formed.

Then, of course, we had President Trump praising, The “V-shaped” recovery that was now taking place in the U.S. Economy. I find this quite hilarious when the U.S. Public debt increased by another cool $830 billion in May alone. Furthermore, if we add that amount to the $1,234 billion added in April, it comes out to be a TAD BIT more than $2 trillion in just the past two months. So, if this is a “V-shaped” recovery, it took one hell of a lot of debt to keep it from heading straight into a depression.

Regardless, while Americans are heading back on the road in their SUVs and Chevy Tahoes, total U.S. petroleum products supplied to the market are still 25% lower than there were in March:

I took the EIA, U.S. Energy Information Agency’s weekly figures, and provide a monthly average in the chart above. The monthly average for December to March was about 20.2 million barrels per day (mbd). However, this fell to an average of 14.5 mbd in April and then increased to 15.9 mbd in May. But, according to the EIA’s most recent update for the week ending May 29th, total U.S. petroleum products supplied fell to only 15.1 mbd.

The largest decline of petroleum products supplied came from the Jet Fuel and Diesel Fuel categories. Motor gasoline product supplied increased by about 300,000 barrels per day, but the total decline from Jet Fuel and Diesel was a little more than 1,000,000 barrels per day. It will be interesting to see the changes in U.S. petroleum products supplied over the next several months as we continue to up that MASSIVE “V-Shaped” Recovery… SARCASM… LOL.

I also looked at how much U.S. total oil production had declined from its peak. According to the EIA, total U.S. crude oil production has fallen from a peak of 13.1 mbd (million barrels per day) to 11.2 mbd, a loss of 1.9 mbd. However, if total U.S. petroleum products supplied are still down roughly 5 mbd, where is the rest of the oil going??

Remember, the U.S. oil supply has only declined by 1.9 mbd from the peak. The difference between the loss of production and products supplied is roughly 3.1 mbd. So again… where is this oil going??

Well… it’s going into the total U.S. oil and petroleum stocks. First, the total U.S. oil and petroleum stocks increased by 19.1 million barrels over the past week. If we divide by SEVEN DAYS, we get 2.7 million barrels per day. So, the U.S. Petroleum Industry is still adding nearly 3 million barrels per day to the country’s total oil-petroleum stocks.

The following chart shows how quickly the stocks have been increasing:

The figures in these charts are in THOUSAND BARRELS. So, the U.S. total oil and petroleum stocks are a bit more than 2 billion barrels. And keeping with the HOPIUM STOCK MARKET mantra, these oil and petroleum stocks reached a new record level this week of 2.078 billion barrels compared to the prior peak of 2.067 billion barrels back in August of 2016:

So, we will see what happens to U.S. oil demand and petroleum inventories over the next few months as we “Supposedly” continue back up the “V-shaped” recovery. Let’s just say… I have my doubts.

- Source, SRS Rocco

ECB Went Too Far and Gold Possibly Entering Seasonal Pricing

Will the latest unexpected blow to the ECB impact the Dollar Index over the next few months?

We'll explore the price movements of gold, silver, platinum, palladium, the DOW, and the US Dollar Index in today's show. Is gold now entering into its seasonal pricing trends as the summer begins?

- Source, Golden Rule Radio

Return to A Gold Standard Could Value Gold at $7000 or More

Central banks have been printing so much money lately that one firm suggests a possible return to the gold standard. In fact, based on the gold standard, the firm argues the implied gold price is higher than $7,000 an ounce. However, right now, it argues that gold prices are too high.

Gold is too expensive right now

In a note over the weekend, Invesco analysts considered whether gold is cheap or expensive. They said history suggests the yellow metal is expensive, but a return to the gold standard would mean that it's very cheap. Their current estimate of fair value puts the price at $1,613, which would mean that as things stand now, the gold price is too high. The gold price is currently above $1,700 an ounce and has been above that level for a while.

To argue that the gold price is too high right now, Invesco analysts looked at how many barriers of WTI oil can be bought using an ounce of gold. At 51 barrels of WTI, the yellow metal has never been so expensive. They note that the ratio has been increased by the weakness in oil prices and became even more extreme when WTI prices went negative, causing the calculation to stop making sense.

Based on the traditional method for studying gold, they said the price peaked in September 2011 at $1,898. In real terms using U.S. CPI numbers, there were only two times when the gold price has been higher than it is today based on annual data using year-end levels. In 1979, the yellow metal was $1,856, and in 1980, it was at $1,831. In 2011, it was $1,791, and in 2012, it was $1,853.

A return to the gold standard?

Invesco analysts argued that the exploding government deficits and growing debt are reasons to be concerned about the stability of the financial system. Government actions stand to debase the value of their currencies. They noted that the Federal Reserve, European Central Bank, Bank of England, Bank of Japan and Swiss National Bank have increased their balance sheets sevenfold in the 15 years ending at the end of next year.

With these types of concerns, they question how high the gold price could rise "in a catastrophic scenario."

"One way to think about this is to imagine an outcome so bad that policy makers opt for a return to a form of gold standard," they explained.

They noted that as of the end of April, the U.S. Treasury held 261.5 million ounces of gold. At $1,732 an ounce, the market value is $453 billion. They then question what would happen if that amount of gold had to back all U.S. currency. The analysts said if it replaced the monetary base, which was $4.85 trillion in April, it would imply a gold price of about $18,500 an ounce.

They add that while that's a dramatic statement, it may be an overstatement because much of the monetary base consists of reserves held by banks in the Federal Reserve System. Those reserves have increased dramatically since the Fed started its latest round of quantitative easing.

If gold only had to back the $1.89 trillion in notes and coins that are in circulation as of April, then the implied price of gold is around $7,225.

A global view of the gold standard

If looking beyond the U.S., Invesco analysts note that the World Gold Council estimates that official entities held 33,919 tons of gold at the end of last year. The current market value is $1.9 trillion. If that amount of official holdings had to back the amount of notes and coins in circulation, which amounts to about $8 trillion, gold would be worth about $7,336 an ounce.

That's based on data from the Bank for International Settlements, which indicates that there was $6.7 trillion in cash circulating at the end of 2018 in economies accounting for 85% of world GDP, based on GDP data from the World Bank. Invesco analysts add that the official gold holdings represented just 17% of "above ground" gold holdings, based on World Gold Council data.

Echoing something Crispin Odey said in an investor letter recently, they said they believe private citizens and entities wouldn't be allowed to freely hold gold if the gold standard were reintroduced. They note that there were restrictions on holding gold in the U.S. between 1933 and 1974, and federal law allows for gold bullion to be confiscated. Including all the "above ground" gold in the calculation, the value of gold declines to $1,259 or $2,378 if jewelry is excluded from the confiscation.

Behavior without the gold standard

Invesco analysts note that the value of gold can be essentially whatever they want it to be, based on how they do the calculation. Thus, they looked at it from the point of view of investor behavior around buying the yellow metal.

They looked back at the introduction of their gold model in 2016, which used a regression model to explain changes in gold prices by changes in the real 10-year U.S. Treasury yield, the 10-year U.S. inflation breakeven and a trade-weighted dollar index.

Invesco analysts noted a change in behavior around 2007. Before that year, gold prices climbed as inflation expectations increased. After 2007, gold prices fell when inflation expectations increased. They explained that the coefficients on the other two variables were always negative. They explain this by saying that gold buyers became more fearful of deflation than inflation after 2007.

Then that model started to have problems around the time President Trump was elected. Since November 2016, the gold price was well above the value predicted by the model. Thus, they re-ran the model and found that the best statistical fit comes from a dummy variable that was "switched on" in November 2016.

The analysts add that all the coefficients are still negative, which means that the gold price increases when real yields, inflation expectations, or the dollar decline. They said the coefficient on the dummy variable is positive and suggests gold has received about a $230 boost during Trump's presidency. They also said gold buyers seem more concerned about deflation than inflation.

- Source, Valuewalk via Silver Bear Cafe

The Coming Food Shortage, But You Won't Be Caught Off Guard if You Do This

Co-founder of Polyface Farms, Joel Salatin, author, educator, speaker, and advocate for local, sustainable, high-integrity food production, returns to Liberty and Finance / Reluctant Preppers to declare both the bad and surprisingly promising news emerging from the COVID-19 pandemic’s impact on the US food supply. 

Salatin squarely outlines the serious state of affairs in factory-scale food processing, and its affects on workers, farmers, and those of us who need a resupply of food. 

He goes on to expand our thought process and awareness of unexpected opportunities and new trends borne of this crisis, and offers some immediate steps we can each take to increase the resilience of our domestic food supply, even without having a homestead acreage, extra freezers, etc.

- Source, Reluctant Preppers

All Structural Momentum Pointing to the Sky for Gold, Silver and Junior Miners

Tom welcomes a new guest, Michael Oliver, to the program. Michael discusses his early career back in the mid-70s when gold was legalized. At the time, he didn't know much about markets and technical analysis. 

He looked for opportunity and ended up apprenticing under David Johnston, who was Chairman of the Comex. Instead of focusing on price, he looks at long-term trends, which is important because price being based in fiat can be misleading. He says, "Today, we are in the hyper-space of money printing." 

Using price can be compared to building a house with a yard-stick that changes in length. Their focus is on the longer-term and not the day to day, they look for structure rather than short moves in momentum. 

Long-term momentum can enable an investor to see the pattern before it shows up in the price chart. He provides us with some of their charts for gold and silver that demonstrate these advantages. 

Currently, momentum charts are looking very bullish for gold and the larger view shows that we are nowhere near being overbought. He doesn't believe the markets are going up for much longer, as often a bear trend can take a few months to settle in, which is likely what we will see. 

He compares today's markets with the Nasdaq crash that started in 2000. Michael sees clear signs that Fed Chair Powell is in complete panic.

- Source, Palisade Radio

Who Owns The Fed? Are They To Blame For 40 Million Unemployed?

Who's in charge? Is The Fed responsible for 40 million unemployed? The concept of a "Deep State" may be a new one for Americans to come to grips with, but unaccountable power is as old as the hills. Liberty & sound money are the only neutralizing agents to Deep State power.

- Source, Ron Paul

Dollar Vigilante: Get Far Away From The USA... It's Collapse Will Be Messy