Tumblelog by Soup.io
Newer posts are loading.
You are at the newest post.
Click here to check if anything new just came in.

November 08 2018

moneymetals

Rep. Alex Mooney: Bring Back Gold!

Washington has been quite the circus lately. Bret Kavanaugh’s appearance in front of the Senate Judiciary Committee prompted dozens of interruptions from Democrats and numerous protests from leftists.

During Twitter CEO Jack Dorsey’s testimony to the House Commerce Committee, journalist Laura Loomer demanded to be verified on the social media platform, and Representative Billy Long (R-MO) held an auction.

Alex Jones tried to fight Senator Marco Rubio, a has-been actress got escorted from the premise, and CNN's Oliver Darcy was on the brink of tears.

What a time it was on Capitol Hill.

But as the crazies enveloped these events, a more subdued and mundane hearing occurred at the same time.

Entitled “The Future of Money: Coins and Banknotes,” the House Subcommittee on Monetary Policy and Trade discussed cryptocurrencies, counterfeit currency, intellectual property, and the U.S. Mint’s security developments.

One distinguished GOP representative took the opportunity to home in on two issues important to libertarians, constitutionalists, and sound money advocates: the gold standard and the Federal Reserve.

Representative Alex Mooney (R-WV), who has ostensibly continued where former Representative Ron Paul (R-TX) left off, alluded to the Fed’s inflationary policies, taxing legal tender under the Constitution, and his bill that returns the nation to money backed by the yellow metal.

Continue reading... 

November 07 2018

moneymetals

Post-Election Run Down: Biggest Winner, Biggest Loser

Tuesday's elections produced some winners, some losers, some surprises, and some lingering uncertainties.

For investors, the potential for a major shock to the markets was averted. But with Democrats poised to take control of Congress, new legislative threats to wealth holders loom on the horizon.

Even though the GOP lost the House of Representatives, it gained seats in the Senate – a rare feat during a mid-term election for a party that controls the White House. President Donald Trump hailed the night a “tremendous success.”

Biggest Winner: President Trump

Donald trumpIn more ways than one, President Trump emerged as a big winner on election night. He campaigned aggressively for several Senate candidates in states he had won in 2016. Thanks in no small part to his ability to energize the GOP base, a few races that had been widely thought to favor Democrat incumbents flipped to Republicans.

Trump-backed GOP candidates unseated Democrats in North Dakota, Indiana, Missouri, and Florida. Rick Scott’s narrow victory over a three-term incumbent in the Sunshine State was one of the more surprising and electorally important outcomes.

The perennially “too close to call” state of Florida once again lived up to its reputation as Republicans picked up the Senate seat and the governorship by less than 1-point margins each. Looking ahead to 2020, the newly elected Republican governor and Senator can be expected to serve as assets on the campaign trail in helping Trump win the state’s critical electoral votes.

At the end of the night, Trump didn’t put all of his endorsed candidates over the top. His party DID lose control of the House.

That’s not necessarily a bad outcome for Trump politically.

Full Article here: https://goo.gl/CGYZhc

November 06 2018

moneymetals

Sadly, Sound Money ISN’T on the Ballot

Americans will be headed to the polls to cast ballots in the midterm elections. Polling suggests that Democrats will return to power in the House of Representatives. Republicans are favored to hold on to the Senate.

However, political polls have proven less than reliable. There are plenty of people expecting a surprise once the votes are counted.

But there are many policies that won’t change regardless of who holds Congressional power come Wednesday.

U.S. debt bubble

For starters, we can count on the continuation of huge deficits. The Treasury Department’s most recent estimate is that government borrowing will double in 2018 versus last year. The bureaucracy is going to blow through $1.34 trillion more than this year’s record tax revenue.

That deficit will be the highest since 2010, back when the U.S. economy was mired in deep recession. Today, the IRS stands in high cotton. Imagine what deficit would look like if tax receipts were at recessionary levels and/or Congress was launching a major stimulus program.

The best-case scenario for deficit hawks would be a Republican victory in tomorrow’s election (although an argument could be made that a splitting of power between the two chambers would result in somewhat of a stalemate in Washington, possibly meaning less expansion of governmental programs).

Unfortunately, the “best case” is not all that good. Big government Republicans are already in control of Congress, and even the President’s supporters admit Donald Trump is not conservative when it comes to borrowing and spending.

Full Article: https://goo.gl/2FGBS8

November 05 2018

moneymetals

A Tale of Two Metals: One WAY More Valuable Than Gold, The Other Historically Undervalued

Gold is the metal of kings, the ultimate money, an eternal store of value, an un-tarnishable embodiment of beauty. Gold is all those things. But it is not the most valuable metal you can own on a cost-per-ounce basis.

Often, platinum commands a higher price than gold. Lately, platinum has traded at an abnormally large discount to the yellow metal.

Metals investors who want to hold the most concentrated wealth in a single ounce bullion product should opt not for gold or platinum…but for a different platinum group metal called rhodium.

Rhodium is scarce and thinly traded. Frankly, it’s a little-known metal even among metals investors.

Like platinum and palladium, the primary application for rhodium is catalytic converters for cars and trucks. It is alloyed with platinum and palladium to enhance resistance to corrosion. Rhodium is also used in some types of jewelry.

Rhodium has quietly been in a raging bull market over the past couple years. Prices bottomed out in 2016 at around $600/oz. This September, they surged to over $2,400/oz and have remained there.

As impressive as that quadrupling is, rhodium still trades far below its all-time high from 10 years ago. From 2004 to 2008, rhodium launched from $500 to as high as $10,000/oz. At its current value of $2,425/oz, the niche metal still has lots of room to run.

Of course, the trade off associated with rhodium’s explosive price potential is that it also carries significant downside risk. This metal isn’t for the faint of heart.

Folks just getting started in precious metals investing should first build up core holdings in gold and silver. But more seasoned hard assets investors who want to add a high-risk/high-reward speculative component to their precious metals portfolio might consider rhodium.

The high-flying metal is currently available to investors in the form of one-ounce bullion bars. They come sealed and authenticated by either of the reputable mints Baird & Company or PAMP Suisse.

More options are available for the more popular catalytic metals, platinum and palladium. Bars, privately minted rounds, and even some sovereign coins are available to investors.

Continue reading: https://goo.gl/wSqPno


November 02 2018

moneymetals

Chris Martenson Warns: Markets Are Making Faulty Assumptions about Growth & Resources

Chris martenson

Well now, without further delay, let’s get right to this week’s exclusive interview.

Mike Gleason: It is my privilege now to welcome in Dr. Chris Martenson of PeakProsperity.com, and author of the book Prosper! How to Prepare for the Future and Create a World Worth Inheriting. Chris is a commentator on a range of important topics such as global economics, financial markets, governmental policy, precious metals and the importance of preparedness among other things. And it's always great to have him with us.

Chris, it's been too long, but welcome back and thanks for joining us again.

Chris Martenson: Hey Mike. Thank you so much. It's great to be back with you.

Mike Gleason: Well Chris, we continue to follow your work closely, and your Crash Course video remains in our opinion, a must watch for people who are concerned about the road we are all on. You have summarized the problems we face as “expecting infinite growth in an infinite world.” No amount of money printing and Wall Street wizardry can change the fact that resources and energy in particular are limited. Unfortunately people are not always ready to listen, lots of folks tuned in following the 2008 financial crisis, but years have passed, and many Americans have forgotten about those darker times. Home prices and stock prices have been rising and few people are worried, at least with regards to the markets.

It isn't fashionable to be preaching caution, but the need for it is, we think, greater than ever. What are you saying to people who might think 2008 was just another bump in the road and now is not the time to be bearish, Chris?

Chris Martenson: Well, they have a point. They've got 10 years under their belt of the most expansive monetary policy ever, and I got dinged because I saw a lot of bearishness in 2011, and called it at the time, and of course, things just bottomed a little bit and then went up. Same thing in 2016, beautiful head and shoulders top, there was emerging market trouble everywhere, bonds were exploding overseas, and the dollar was spiking, as carry trades unwound, called that too, said, "Uh oh, this looks bad" and then was 50-degree rocket ride of monthly gains on U.S. equities after that.

Well, now we have the data, Mike. We look back, we say, "Oh, the central banks just printed more, then even more, and then even more." Most people mistakenly think the crisis was in 2008, they did a few extraordinary things on the fiscal side, they had TARP on the monetary side, there was all this quantitative easing, and then that's in the rear view.

But the truth is, the largest ever amount of printing happened in 2015, '16, and '17. Those in '16 and '17 in particular. Those were the years. If you want to understand why things denominated in freshly printed money go up in price, you don't need a PhD in economics. It's just how it works. And the central banks printed like crazy, tens of trillions, shoved it into the markets and guess what happened? Exactly what we predicted in the Crash Course in 2008.​...

Continue reading: https://goo.gl/47gwK4​

October 31 2018

moneymetals

WAITING FOR THE BUY SIGNAL: What’s Going On With Silver Investment

invest-in-silver-social.jpg

The Silver Market is setting up for one heck of a move higher as investors are waiting for the signal to start buying. While the silver price has shot up due recently, it still isn’t clear if this is the beginning of a longer-term uptrend. The reason for the quick spike in silver was likely due to a small short-covering rally by the Large Speculators trading on the Comex.

For the first time in a quite a while, the Large Speculators (Specs) were net short silver. For example, the Large Specs were net long by more than 100,000 contracts last year when the silver price was $18.50. However, the last COT Report showed that the Large Specs were net short silver by 17,000 contracts:

Net commercial short positions silver fell from 7,400 - 2,600

The Large Specs are shown in the Light Blue bars. Typically, the Large Specs are long, not short silver. You can see the Large Specs going short three weeks ago as their light blue bars turned down. On the other hand, the Commercials (in Red) are usually net short. However, the Commercials had the lowest net short position in years. So, to see the price of silver shoot by nearly $1.00 in a few days isn’t surprising when I have seen this setup for a few weeks.

However, it’s difficult to know if this is the start of a long uptrend in the silver price. It’s coming, but I just don’t know if this is it yet. We will know when the Silver price is making a big move when it finally gets above $20 as the broader markets crash. Now, many silver investors might be a bit frustrated because silver sentiment and investment demand dropped to a low last year.

Continue here to read the article: 
https://www.moneymetals.com/news/2018/04/23/is-it-wise-to-invest-in-silver-001460

October 30 2018

moneymetals

R.I.P. Fed-Fueled Bull Market (2009-2018)?


The Nasdaq composite enters this week’s trading down over 10% in the month of October. For what it’s worth, market technicians consider a 10% pullback an official “correction.”

So far it’s just that – a correction. It may therefore be a bit premature to carve the stock market’s tombstone.

But investors should be prepared for further downside in share prices… and a possible longer-term (and long overdue) bear market after several years of relentless Fed-fueled price appreciation.

Widely followed market analyst Greg Weldon warned last week that a crash may be coming. “You have the setup for kind of like a crack, a big crack,” Weldon told listeners of the Money Metals Weekly Market Wrap podcast. “There are correlations to 2007 and '08, and that's more macro in setup, but when you look at the market structure and some of the more overlaid type of correlations, there's a lot of 1987 here.”

The October 1987 stock market crash caught most investors completely by surprise. But then, as now, there were warning signs.

Weldon is eyeing monetary policy. He thinks the Federal Reserve’s last rate hike may have been one too far: “We said at the end of August if the Fed moves in September you'd see a selloff in October. That's exactly what's happened, and I think it's just beginning.”

What will happen if the Fed goes again in December? Well, it could be a very unhappy New Year for stock market bulls.

Trump federal reserve

Fed chairman Jerome Powell appears intent on continuing to hike interest rates until he buries the bull market. Perhaps President Donald Trump, who continues to express frustration over the Fed’s tightening campaign, will take to calling the Fed chair “Grim Reaper Powell” in a Halloween tweet.

The President’s main priority right now is helping more Republicans get elected to the Senate and preventing Democrats from taking over the House of Representatives. If Democrats do well on Election Day, you can bet Trump will amp up his rhetoric against the central bank.

A Democrat win would also dash investor hopes of more tax cuts, likely triggering another round of stock market selling. That, in turn, could catalyze a “fear trade” of flows into precious metals markets.

Gold and silver have been seen as “dead money” since the 2016 election swung the GOP’s way. They may finally be ready to come back to life.

Article Source: https://goo.gl/nQPTFf

October 29 2018

moneymetals

Greg Weldon Forecast: Dollar to Get Whacked, Catalyzing Gold & Silver Rally

Well now, without further delay, let’s get right to this week’s exclusive interview.

Greg weldon

Mike Gleason: It is my privilege now to welcome in Greg Weldon, CEO and president of Weldon Financial. Greg has over three decades of market research and trading experience, specializing in the metals and commodity markets, and his close connection with the metals led him to author a book back in 2006, titled Gold Trading Boot Camp, where he accurately predicted the implosion of the U.S. credit market and urged people to buy gold when it was only $550 an ounce.

He is a regular presenter at financial conferences throughout the country and is a highly sought-after guest on many popular financial shows, and it's always great to have him on the Money Metals Podcast. Greg, good to talk to you again and welcome back.

Greg Weldon: Thanks, Mike. My pleasure.

Mike Gleason: Well, Greg, let's start by getting your update on what impact trade policy and tariffs may be having on the U.S. economy. We last spoke in July. Tariffs were just beginning to actually take hold. Since then, the President has imposed additional tariffs. Anecdotally, we have seen some effect. We've recently ordered some steel storage lockers for our client storage vaults and the price was increased 10% based on the higher cost of imported steel. There are also wholesale price increases coming on one line of the preparedness products we offer on our SurvivalGoods.com website. We can assume lots of businesses are experiencing the same sort of thing. Do you think tariffs are now having a significant effect? Is any of the recent weakness in the equities markets attributable to trade policy, do you think?

Greg Weldon: Yes, no, and yes. First of all, in the sense of is tariffs having an effect, absolutely. But maybe not in the way you think and not in the way you couched the question. What I find really interesting is the Fed just published a really comprehensive survey last week in which they asked businesses, manufacturing firms, I should quantify, but this is where we're talking about in terms of trade ... Manufacturing firms in terms of the impact of tax cuts versus the impact of tariffs. And the results were fascinating, because the impact of tax cuts was dramatically positive, as you might suspect. But what you might not have suspected was the impact of tariffs, which were there a degree of percentage of firms which had negative impact from tariffs? Yes. I don't remember the exact numbers, but it was somewhere less than 20%.

At the same time, there was roughly something like 13% of firms that said that tariffs actually helped their businesses in terms of generating high revenue and to whatever degree there would be benefits to certain businesses, so offsetting and mitigating the negatives of the 20%, the 13%. So the net-net negative was not as big as you might think and was overwhelmed by the positives still from the tax cuts. We know that to be true as it relates to labor, stock buybacks, and even wages.

I think from the U.S. economic slowdown perspective not a big deal, and that's what Trump's counting on. But the bigger picture, absolutely an impact, because it's affected China so much, and China was already slowing. So the GDP numbers that came out, and you know that we look at most things from a mathematical perspective, and one of the knocks on China is the slowdown in retail sales, the slowdown in money growth, the slowdown in GDP growth, the slowdown in industrial production and FDI.

But the nominal numbers are so high in trillions of renminbi that of course you're going to have a percentage slowdown, because you came from such a low base. So something like retail sales, you've gone from a 15% year-over-year rate to 9, and everyone's up in arms because the consumer in China's slowing. No, it's a record number every month. It's just a lower percentage gain because the nominal numbers are so huge now.

But right here, the third quarter numbers, were different. There was real weakness, and it's kind of even ahead of tariffs, which are going to cause more problems for China. We already see inflation on the rise. We see commodity prices in renminbi breaking out here, big thing that nobody's really talking about too much. And the renminbi's about to take out 7, probably going to 7-1/4. So yes, major impact, but it's on China.

Then you see the flow through to how this affects the U.S. and how this affects other global markets, and this coming at a time when you have a lot of other things going on: The Fed, what's happening with emerging markets, how emerging markets, specifically Turkey, might flow into Spain, and how Europe is vulnerable. So, there's a lot more than just tariffs going on. Yes, there's a major impact, but it's not on the U.S. economy. It's in the market vis-a-vis what's happening in China as a result.

Full podcast: https://goo.gl/rKxkuN

October 26 2018

moneymetals

Win Big in Gold and Silver without "Buying the Bottom"

Last month in this space, I penned an essay titled "Are Silver and Gold 'at the Flood'"?. A few weeks later, two other essays on another widely-read site discussed this topic from the same perspective and sourcing – a case of "great minds thinking along similar lines"?

Please take time to read or review that Money Metals Exchange Post of August 28.

I made the case of a misalignment in the precious metals' markets regarding price versus value which had become so pronounced that – in the near term – an explosive change in trend catching most participants by surprise was pretty much baked into the cake.

Since that day, gold has notched its largest one day up move in two years, palladium has risen $200 an ounce, platinum and silver have penetrated the first layers of resistance, and mining sector ETFs have moved forcefully from their basing platforms.

Does this signify the end of the seven-year metals' bear market stretching back (with the six-month exception in 2016) to mid-2011? And is the bullish case risk/reward profile still compelling?

What follows could be one of the most valuable (and perhaps prescient) series of comments David Morgan has made in recent memory. Concerning the past few weeks' market action of the overall markets in general, and the impact on the precious metals' space in particular, he tells us:

The best way out is always through. Precious metals investors have gone through an extensive "wear you out" phase, in what may prove to be the most important precious metals bull market in the past century.

These words will no doubt be scoffed at during the initial publication of these thoughts. Yet the very few who have gone through this trial of holding a position in the precious metals need to understand that the shift from paper forms of wealth to real forms of wealth has now begun.

Almost everything in today's world is not what "appears" to be true. U.S. Bonds are thought to be the safest investment possible, yet monetary history is clear that there is a 100% failure rate of currency [which has been] issued beyond the markets' capacity to utilize it for productive means.

At that point, rank speculation takes over the markets, and gambling becomes the fashionable way to "invest." Gold has proven through thousands of years to remain a final means of payment, as currencies come and go. This lesson – which is missed by the vast majority – will once again be taught to the world.

A number of charts and comments by market participants could be presented here to bolster the bullish case, but let's just look at two charts from many, plus a comment -- then summarize how you might either add to your metals' holdings, or step up to the plate for the first time and "catch a wave" on what may become a major wealth-creating bull run.

Continuous gold contract - bull continuation hs pattern

The above chart, posted by Stewart Thomson of the Graceland Updates active traders' Letter - to which I have been a paid subscriber for a number of years - speaks eloquently for itself. As wizened traders with decades of experience in the markets like to say, "The bigger the base, the greater the upside case!"

Article source: https://goo.gl/Y57j3L

October 25 2018

moneymetals

How the Midterm Elections Might Affect Gold and Silver

midterm-elections-affect-gold-silver-social.jpg

The outcome of the November 6th voting will be a big deal for investors, including gold and silver bugs. The metals, perhaps more than most other asset classes, are sensitive to geopolitics.

Let’s break down what the potential voting outcomes might mean for the factors currently driving the metals.

Election

Let’s start with the equity markets. Stocks got a boost from President Trump’s election and subsequent tax cuts. Last week, the President floated the idea of additional tax cuts and he wants to pass a major infrastructure spending bill.

Not much of what he wants will get done unless Republicans do well at the ballot box. Republicans retaining control in Congress almost certainly represents the best-case scenario for stock prices.

Perversely for metals investors who favor the President’s policies, a positive outcome for the GOP could negatively impact gold and silver prices, at least in the short run.

Rising stock prices and the pervasive “risk on” attitude on Wall Street limits demand for safe-haven assets. We will need plenty of inflation reaching beyond equity markets and real estate for metals to win in that scenario.

Alternatively, gridlock in Washington based on Democrats winning one or both houses may not be good news for stocks. The metals may get a boost, however.

Full Article: https://goo.gl/7o7QTi

October 22 2018

moneymetals

Bitcoin or Gold: Which One's a Bubble and How Much Energy Do They Really Consume

is-gold-or-bitcoin-a-bubble.jpg

If you are investing in either Bitcoin or Gold, it’s important to understand which asset is behaving more like a bubble than the other. While it’s impossible to understand how the market will value these two very different assets in the future, we can provide some logical analysis that might remove some of the mystery associated with the market price of Bitcoin vs Gold.

I’ve read some analysis on Bitcoin profitability and energy consumption that seemed unreliable, so I thought I would put my two cents in on the subject.

For example, many sites are using the Digiconomist’s work on Bitcoin energy consumption. However, I believe this analysis has overstated Bitcoin’s energy consumption by a large degree. According to the Digiconomist, Bitcoin’s annual electric use is approximately 24 TerraWatts per year (TWh/yr):

Digiconomist bitcoin energy consumption

In a recent article that was forwarded to me by one of my readers, How Many Barrels Of Oil Are Needed To Mine One Bitcoin, the author used the information in the chart above to calculate the energy cost to produce each Bitcoin. He stated that the average energy cost for each Bitcoin equals 20 barrels of oil equivalent. Unfortunately, that data is grossly overstated.

Check out the article here: https://goo.gl/QEwGi4

October 19 2018

moneymetals
moneymetals

October 17 2018

moneymetals

Fed Policy Rattles Wall Street, Riles President Trump

Stocks just finished their worst week since March, but Friday left equities on better footing than they might otherwise have had. Buyers emerged at a critical moment to prevent even worse damage to the charts.

Given the timing, some speculate the Federal Reserve’s plunge protection team swung into action. We know the central bank is always ready to intervene, so that would come as no surprise.

This week’s performance in the equity markets will be telling. Last week’s weakness may prove temporary, just as prior bouts did in February and March. History could certainly repeat – particularly if the Fed is stepping in here.

Much will depend on bond yields. Stocks ran into trouble early in the year when the 10-year Treasury yield approached 3%. When rates moved above 3% in May, the S&P 500 stood near 2,700. A drop in yields during the spring and summer corresponded with a move higher in stocks and the S&P reached 2,930 on September 20th.

Falling stock prices

The Fed hiked rates again September 26th and yields jumped to near 3.25%. Stocks have been selling off since. The S&P 500 is at 2,762 (thru Friday’s close) and has given up nearly all of the gains made since May.

Stock prices have now fallen 7% since late September.

Roughly a third of the stocks in the S&P 500 have fallen into bear market territory – down more than 20% from their highs.

Fed officials may finally have reached the moment of truth. Prior to the last hike, they got away with tightening without a lot of corresponding pain. The next hike is expected in December. The landscape could look a whole lot different before the FOMC central planners get together again.

President Donald Trump is ratcheting up the rhetoric against the Fed. A big correction in stock prices won’t help Republicans going into the midterm elections early next month.

Trump said last Wednesday, “I think the Fed has gone crazy” as he reiterated his belief that officials there are making a big mistake by raising rates.

So far, the President is not threatening to replace Jerome Powell as Fed Chair. Heavy losses in the stock markets and in the elections may change Trump’s plans.

The metals markets appear to be sensing trouble ahead.

Thursday’s $30 spike in gold prices was the largest jump since Brexit in June 2016. If investors continue to seek shelter from falling stock prices, and if the consensus around another rate hike in December starts to crumble, the last quarter of the year could be a dandy one for metals.

Article Source: https://goo.gl/8sSavM

October 15 2018

moneymetals

As The Markets Sell-off The Precious Metals Rebound

To the surprise of many investors, the precious metals have rallied while the broader markets continue to sell-off. Currently, both gold and silver are solidly in the green while the major indexes were all the red following a huge sell-off yesterday. The Dow Jones Index has lost nearly 1,000 points in the past two days while the gold price is up nearly $25.

However, even though we could see a late-day rally in the markets, and even higher stock indexes over the next few months, the bear market for stocks is still coming. The Dow Jones Index has now suffered two large sell-offs in the past ten months:

Dow jones - oct. 10, 2018

In January, the Dow Jones Index fell by more 3,000 points, and the current correction is only one-half of that amount. So, I expect to see a continued correction over the next month. Because October is the worst month for market Crashes, this could be one hell of a blow for not only the economy but also, for investor confidence.

For example, according to the Zerohedge article, Used-Car Prices Plunge Most In 15 Years:

CPI - used cars & trucks mom

Looking deeper at the core inflation print, it reflected a 3% monthly drop in prices for used cars and trucks following increases in each of the last 3 months, and the biggest drop in 15 years…

And then, of course, the continued disintegration of the U.S. Retail Market, Sears Creditors Push For Bankruptcy Liquidation As Vendors No Longer Paid:

Amid recent reports that Sears is set to file for bankruptcy as soon as this weekend ahead of a $134 million debt payment due on Monday, the only question is whether the filing will be a Chapter 11 debt for equity reorganization or a Chapter 7 liquidation. And contrary to the desires of Sears CEO and biggest creditor, Eddie Lampert, who would like to preserve the core business, others are pushing for an outright liquidation.

Article Source: https://goo.gl/Ked2FS


October 09 2018

moneymetals

The Federal Reserve’s Rising Interest Rates Are A Ticking Time-bomb For U.S. Economy

One of the worst things for an over-heated and extremely leveraged economy is rising interest rates. So, with the recent 2-2.25% interest rate, big trouble is on the horizon, Also, with higher interest rates, the U.S. Treasury will have to fork out even more money to service its debt. In just a little more than two years, the U.S. Fed Funds Rate jumped by nearly 2%.

This is indeed a big change for the Federal Reserve’s “economic stimulation policy” as it kept interest rates below 0.25% since January 2009. And with extremely low-interest rates, nearly zero, it allowed the United States to more than double domestic oil production. Unfortunately, this newly created oil supply has come at a huge cost. It has created another big mess which I call the U.S. Shale Ponzi Scheme.

But, before I get into details of this article, I wanted to let my readers and followers know that the lack of articles this week was due to a freak storm that impacted our area. We had a mini-tornado or a micro-burst that touched down in our local area which caused a great deal of destruction, mostly to trees and bushes. In a little more than 10 minutes, upwards of 100 mile per hour winds uprooted, snapped and destroyed a large number of trees on our property.

Interestingly, there was only minor damage done to one home in the adjacent neighborhood. The homeowner’s wooden porch and garage tin roof were ripped off, and part of the roof is still hanging 30 feet up in one of our trees. So, I have been quite busy not only cleaning up the mess on my property, but also helping my neighbor. I will say, the good thing that came out of all this destruction is how our neighbors came out together to help out.

So, I apologize for the lack of articles this week. But, I will be posting several articles next week on the interesting changes taking place in the economy and financial system.

Okay, getting back to rising interest rates. The Federal Funds Rate is now 2-2.25%. As we can see in the chart below, it is the highest it has been in nearly a decade:

Effective federal funds rate (chart)

Furthermore, each time the Fed hiked interest rates, a recession (shown in the shaded areas) was the result. When the Fed increased the Funds Rate from 1% in May 2005 to over 5% by 2007, it assisted in the crashing of the mighty U.S. housing bubble and precipitated the investment banking meltdown in 2008.

Continue reading: https://goo.gl/3Ud3qx

moneymetals

Frank Holmes: Here’s Why Gold Stocks, Gold, and Silver Are Great Buys Now

Well now, without further delay, let’s get right to this week’s exclusive interview.

Frank holmes

Mike Gleason: It is my privilege now to welcome in Frank Holmes, CEO and Chief Investment Officer at U.S. Global Investors. Mr. Holmes has received various honors over the years, including being named America's Best Fund Manager by the Mining Journal. He is also the co-author of the book The Gold Watcher: Demystifying Gold Investing, and is a regular guest on CNBC, Bloomberg, Fox Business, as well as right here on the Money Metals podcast.

Frank, welcome back and thanks for joining us again.

Frank Holmes: It's great to be with you.

Mike Gleason: Frank, it seems like escalating tariffs and trade tensions have been the major topic on Wall Street since early last spring. We continue to be a bit baffled by the market's reaction, however. The President has gone from posturing to serious action with another $200 billion imposed on China a couple of weeks ago. The equity markets aren't particularly fazed near as we can tell. It is yet to move the needle on the trade deficit at all, though it is still early, but it is starting to show up in prices. We've been buying heavy duty racks for our storage vault over the past few months, for instance, and on a recent batch which we just ordered yesterday, the price rose some 10% from what they just were a couple of months ago, and the reason we were given was that the manufacturer is having to pay more for imported steel. You've called these tariffs a tax, Frank, and that's exactly what it is. Do you think the rest of America will notice much higher prices any time soon?

Frank Holmes: Well, I think that the tariffs or the trade war is able to do what it is doing short-term because of the fiscal stimulus that took place last year with tax reform, and I think that that's why the market hasn't capitulated. Profits are still strong. We had a big run in small cap stocks, predominantly domestic stocks, and a small handful of big cap like Amazon in the markets, but there's no doubt that the trade and tariff war is going to impact… and we see it on steel prices such as if you're building a contemporary modern home today, you have to use more steel for the open space, and those prices, steel prices are up 35%. So you start to run these numbers through and you're seeing price inflation is going to come now with Amazon at going to $15 an hour, you're going to see the CPI number ticking up. That's what I really believe. If we also looked at the 1980 numbers and later on numbers for CPI calculations, inflation's running at 10%, so when they say it's 2.4 or 2.7, I find that really difficult (to believe).

I noticed in San Antonio, our avocados used to always come from Mexico and no longer, and the prices are up and the quality is down. So, I do see that there's some issues on this trade war, but I don't think it's over, the trade war. And I think it's going to get worse because there's a real strategy against China. In the renegotiated NAFTA agreement, which is over 1000 pages, there are some policy decisions there that Canada and Mexico cannot go into a special pact with China, otherwise that whole agreement is thrown out the door. And same thing with South Korea, Mexico, Japan, there's a real push by the administration to go after China. Now the positive part is that Trump and his administration want to have zero tariffs everywhere and let the best athlete win. And the issues with China is that they are double standards and lots of protectionism. So, that battle is not over. There is also the big concern that China is trying to undermine the currency and have an alternative currency and that is something that Mnuchin and Trump are very concerned about.

You wouldn't normally think when you have such a high interest rate differential. Today we're seeing two-year, five-year, ten-year government bonds all about the CPI number that's reported and when you look and compare to Japan at ten beeps for ten-year money versus 3.8. Germany, Europe is 60 basis points, there's something not right there and normally the dollar would actually be much, much higher. Gold would be under $1,000 and the fact that it's not is very constructive for the price of gold because any rollover in the dollar, in a slow down this economic engine, which I think is going to happen next quarter. By the end of this quarter we're going to get into what's called rebalancing our portfolios and I think that we're going to have some real issues there.

Continue reading: https://goo.gl/9JGxc9

October 02 2018

moneymetals

U.S. Mint Silver Eagle Sales Spike By Another 1 Million At End Of September

us-mint-silver-eagle-sales-spike-by-another-1-million-at-end-of-september.jpg

Demand for the U.S. Mint Silver Eagles spiked again at the end of the September pushing sales nearly to three million. In a little more than a week, Silver Eagle sales jumped from 1.9 million to 2.9 million, nearly doubling from the previous month. Sales of Silver Eagles in August were only 1.5 million versus 2.9 million in September.

As I mentioned in my previous update, the U.S. Mint temporarily halted sales of Silver Eagles at the beginning of September due to a spike in demand. However, as the U.S. Mint resumed sales, the Authorized purchasers have been taking advantage of the low price.

Let’s look at my Silver Eagle chart from September 19th:

Silver eagle sales march-september 2018

As we can see, Silver Eagle sales bottomed in May at 380,000, and have continued to rise over the next four months. Now, if we look at the U.S. Mint’s most recent update, sales have jumped by nearly 1 million to 2.9 million:

US mint silver eagle sales september 2018

If we exclude sales in January (2017 & 2018), which are normally elevated due to the new annual release of the Silver Eagle, the last highest month was in November 2016 at 3,061,000. So, we can see that demand hasn’t been this robust in nearly two years.

Continue reading: https://goo.gl/7fEC4H

October 01 2018

moneymetals

Italy Borrows Too Much, The US Borrows More

Last week’s rally in the U.S. dollar was driven largely by weakness in the euro.

Italy was back in the headlines. The Italian government committed to borrowing even more money and, to the surprise of nobody with sense, the odds of default on Italian debt leapt higher.

Italian bonds are getting clobbered, and renewed concerns over the potential for a default now weigh heavily on the euro. Populists rose to power in recent Italian elections, promising to reduce austerity and increase government spending to stimulate the moribund economy.

Last week they delivered, passing a budget with large increases in a number of programs. The deficit there is expected to rise from 0.8% of gross domestic product to 2.4%, triple what was planned before.

The Italian government has already borrowed well in excess of the nation’s gross domestic product. The debt to GDP ratio is currently 132%. Those who own Italian bonds are right to be nervous.

When will the holders of U.S. Treasury debt begin wising up? Investors seem to think default is only possible elsewhere. European nations such as Italy, Greece, and Spain have been cycling in and out of financial turmoil for years now. So far, none of this has troubled the U.S. bond market.

The people who are worried about a jump in deficit spending in Italy ought to have a look at U.S. deficits when compared to federal spending...

Recent federal deficits as pct spending us from fy 2007 to fy 2017

The 2018 deficit is forecast to be 20% of overall spending. Currently one in five dollars spent in Washington has been borrowed. There has not been a year below 10% since before the 2008 financial crisis. And deficits are back on the rise, since bottoming in 2015.

The U.S. debt to GDP ratio currently rests at 104% and it is growing quickly. The trillion dollar deficit projected for next year will push that ratio to near 109%. When we get a major recession like the one plaguing Italy, GDP will be falling and our politicians will be pouring on the stimulus spending. The ratio will explode higher.

Check it out here: https://goo.gl/1YYQqX

moneymetals

Congress Approving Extraordinary New Deficit Spending


Chris powellMike Gleason: It is my privilege now to welcome in Chris Powell, Secretary-Treasurer at the Gold Anti-Trust Action Committee, also known as GATA. Chris is a long time journalist and a hard money advocate and through his tireless efforts at GATA he is working to expose the manipulation of the gold and silver markets. Through GATA's work over the years some important revelations have come to light, which quite honestly should concern everyone.

It's great to have him back with us. Chris, good to have you on again and how are you?

Chris Powell: Oh, very good, Mike. Glad to be here.

Mike Gleason: Well, Chris, before we get into other things please start by giving our audience a bit of background on your organization as some may not be familiar. What is GATA? How did you get started? And where do you focus your efforts?

Chris Powell: GATA is the Gold Anti-Trust Action Committee. We got started in January 1999 to expose and complain about and, if we could, stop the manipulation of the gold market, which is done largely surreptitiously by central banks and their agents. Certain investment banks.

We originally thought that the suppression in the monetary metals prices was an ordinary market rigging scheme run by the largest participants in the markets, the banks. After we did a year or two of research we realized that gold price suppression is longstanding Western government and central bank policy going back many decades. It used to be implemented in the open through the gold standard and the London gold pool and mechanisms like that. Now it is implemented largely through the rigging of the futures and derivatives markets. The major participants in this rigging are the Federal Reserve, the Treasury Department, the Bank of England, the Bank for International Settlements.

If you look closely through the government archives, the policy records, you can see this policy of gold price suppression is very plainly articulated. There's really nothing secret about it if you're ready to look for the documents. The problem is there're very few people who want to get into this issue because it would show that our market system is an illusion. That governments and central banks are really rigging not only the monetary metals markets, but they're rigging all markets and that in fact, we have a very elaborate government system of control of the prices of all capital labor goods and services in the world. It's really a totalitarian system and we just try to show people the documentation of it, urge them to raise questions about it and slowly push the world toward a free market system.

Mike Gleason: On that note, you guys have been at this a long time and the evidence just keeps piling up as to pervasive price manipulation in the metals markets. And to be fair, banks have now been caught cheating in a variety of markets – LIBOR, currency markets, mortgage back securities – you name it, they've rigged it. It seems like your job should be getting easier, but it isn't. Why is that? Why is it so difficult to get reform given the markets so clearly need fixing?

Check it out: https://goo.gl/kF7CaM

Older posts are this way If this message doesn't go away, click anywhere on the page to continue loading posts.
Could not load more posts
Maybe Soup is currently being updated? I'll try again automatically in a few seconds...
Just a second, loading more posts...
You've reached the end.

Don't be the product, buy the product!

Schweinderl