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May 21 2018

moneymetals

Federal Reserve Note Dances Upon Its Own Grave

Practically nobody enters the foreign exchange markets looking to buy and hold. Currency trading is generally a short-term game, and there isn’t much regard for analysis of the longer-term fundamentals.

That much is evident given the ongoing rally in the Federal Reserve Note dollar, despite its outlook being downright grim.

Depreciating dollar

Nobody should be fooled by recent outperformance relative to the currencies of other insolvent nations.

The greenback is in the worst shape of its life.

Sound money advocates are already well versed as to why the dollar has been losing purchasing power ever since the Federal Reserve took control of its fortunes more than a century ago. They understand the implications of perpetually rising federal deficits and debt.

The most recent decade, during which federal borrowing has begun growing exponentially, indicates we are much closer to the end of the cycle – insolvency and default – than we are to the beginning. But it isn’t the only indication that we are approaching the end-game.

The Federal Reserve Note’s hegemony in the global oil trade is starting to fall apart. Russia, China, and other BRIC nations are cutting deals to buy and sell oil using other currencies.

We can now add the EU to the list of potential defectors.

​Continue reading (source) ​

April 11 2018

moneymetals

FRAGILE NATURE OF CURRENCIES: Why Gold & Silver Are High-Quality Stores Of Value

As the U.S. and global economy speed towards the Seneca Cliff, very few individuals understand the fragile nature of currencies. Today, we use the lightning speed of the digital banking system to make our purchases at the store or online. It has become seemingly natural to buy groceries at the swipe of a card. Only a small percentage of purchases are made with cash… paper money.

However, our high-tech digital banking system is built upon a highly complex system that consumes a massive amount of energy just to maintain business as usual. There’s this notion that technology will grow exponentially while at the same time making our lives easier. TV commercials are showing how individuals today have more power at their fingertips than entire generations in the past. While this is currently true, I can assure you; we are not heading into a high-tech world where robots do everything for us.

Unfortunately, due to the rapidly Falling EROI – Energy Returned On Investment and the thermodynamics of resource depletion, we are heading into a future with much less technology and a great deal more human labor. I know, it sounds insane to say that, but it’s true. Human labor and human farming have a much higher EROI than any technology used today.

Continue to the full article (source

February 05 2018

moneymetals

January 29 2018

moneymetals

Precious Metals Markets Outlook 2018

The first trading days of 2018 are confirming signs of renewed investor interest in the precious metals sector after a long period of malaise.

Gold bull

Gold and silver markets entered the year with some stealth momentum after quietly posting gains late in 2017. Gold finished the year above $1,300/oz. – its best yearly close since 2012.

Over the past five years, the yellow metal has been basing out in a range between $1,050 and $1,400. A push above $1,400 later this year would therefore be significant.

It would get momentum traders and mainstream financial reporters to take notice.

The alternative investing world was enthralled by Bitcoin in 2017. While we don’t expect a Bitcoin-like mania to take hold in precious metals in 2018, we do expect gold and silver markets to make some noise.

Stimulus to Push Up Commodity Prices Again

Even as the Federal Reserve vows to continue raising its benchmark interest rate and “normalizing” its balance sheet, a flood of new fiat stimulus is set to hit the economy. The recently passed tax cuts will cause hundreds of billions – perhaps eventually trillions – of dollars to be repatriated back to the United States.

Continue reading (source)

December 22 2017

moneymetals

David Smith: Cryptos Bringing Broad Attention to All Dollar Alternatives

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

David smith

Mike Gleason: It is my privilege now to welcome back David Smith, Senior Analyst at The Morgan Report and regular contributor to MoneyMetals.com. David, Merry Christmas, and thanks for joining us again. How are you?

David Smith: Very good Mike, and thank you and the very same to you and yours.

Mike Gleason: Well, as we start out here, David, let's talk first about the setup as we finish up 2017 and move into the new year. There are a lot of similarities to last year, maybe the year before. We've had the Fed just announce a rate hike. The move was well telegraphed and all the selling in the metals happened prior to last week's FOMC meeting. Open interest in the futures got pretty extended about a month ago, and as often happens in that scenario, the speculative long buyers were taken out to the wood shed and punished as the bullion banks cashed in on their shorts. Now we're seeing a bit of a rally in the metals, so the situation in these regards is very similar to a year ago. What are you expecting from the metals markets in the weeks and months ahead? Are you looking for a rally to match last year's?

David Smith: I really think that we could be looking at a very similar set up to 2016 where the metals actually bottomed in December, and the mining stocks tried to put a lower low in in mid-January. And I'll never forget it, January 19th, and on an inter-day basis, they turned around, and then it was up and away for the metals and the miners for the next six months.

Then between then and now they gave back about 50% of it, which is what you'd expect on a retracement, and nobody can predict the future exactly, but I really feel pretty strongly that we're going to see a very strong, right out of the box, in January, on the metals and miners, and it may even turn before the new year, but there's so many technical indicators themselves, that when you add them all up, they become something larger, and so I think if a person is waiting to purchase their metal, they shouldn't be waiting too much longer if they had the same view I do.

And not only that, as you know, when the demand starts ramping up pretty quickly, the premiums go up too, so you would have a double whammy against you, buying at a higher price and paying a higher premium if you wait until a lot of other people kind of get the same idea.

Mike Gleason: Yeah, certainly a buyers’ market right now, both in terms of low spot prices, and also the premiums, as you mentioned. And the last couple years, we have had pretty strong, right of the gate, moves there in the metals and the miners, and maybe 2018 is going to have the same thing.

Now in your most recent article that we published this week in MoneyMetals.com, you make the case for physical metals and cryptocurrencies to coexist. Now we think that is a vitally important idea right now as people are working through questions about what the advent of Bitcoin and other cryptocurrencies will mean for gold and silver. It would be pretty easy for people to look at price charts and leap to the conclusion that metals are quickly becoming irrelevant. The reality is that the times we live in are desperately calling for honest money and that both cryptocurrency and metals both have important roles to play. They have very different strengths and weaknesses, however, so talk for a minute, David, about how these two asset classes are likely to coexist.

Read/Listen to the entire podcast here: (source)

November 22 2017

moneymetals

November 13 2017

moneymetals

The Dangers of Zero

Inline image 1

Zero is an important number in the psychology driving demand for bullion. There are periods when investors find the argument that gold or silver prices “will never go to zero” compelling.

The 2008 financial crisis and the years immediately following it are the most recent example. The fear of conventional securities and even the fiat dollar becoming worthless was palpable for many in the metals markets. Bullion demand hit record levels.

Left behind

Investors have chased bull markets
for fear of being left behind.

While demand for gold ETFs and futures contracts has been strong in 2016 and 2017, some investors in the physical market for coins, bars, and rounds seem to have overlooked the modest gains of the past two years and are anxious instead to participate in bull markets elsewhere. If they are worried about anything, it is the possibility of missing out.

Gold and silver’s appeal as a safe haven is in temporary eclipse.

The metals markets are awaiting the moment when investors lose their conviction about ever higher stock prices and once again grapple with the idea that prices do fall.

Indeed, the value of some securities can, and does, fall all the way to zero. Companies miss expectations or fail outright. Bond issuers occasionally default and fiat currencies eventually die. Investors discount risk in the euphoria of a bull market.

Continue reading: (source)

November 06 2017

moneymetals

November 03 2017

moneymetals

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

Inline image 1

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.

Read the full article: (source)

October 20 2017

moneymetals

Gold/Silver vs. Bitcoin Comparisons: A No-Brainer... or Brainless?

For most of the year, as Bitcoin soared, crashed, and soared again, cryptocurrency vs. physical gold-silver talking heads engaged each other in heated rhetoric about which of these venues is here to stay.

Some of the biggest names in finance, government, and the newsletter analyst space have made comments that – to be charitable – appear less-than-fully informed. Comments like "Even though bitcoin could rise to $100,000, it's still going to zero!" don't offer much insight. Some other questionable assumptions:

2017 percent price change comparisons: Relating this year's gold and silver's price range to that of bitcoin misses an important point. Yes, bitcoin (BTC) has risen by a much greater percent, but it's also fallen more. I don't recall gold dropping 40% this year, which bitcoin has... on a couple of occasions.

Bitcoins

Please note: Bitcoin has no tangible, physical form.

Trash-talking gold and silver as "antiquated": Bitcoin is now considered legal tender in Japan, but at this time, its primary function is for use in the purchase and sale of the 900+ "alt coins" currently available.

Most of these exchange entries in the crypto-space are not really "currencies" at all and will never trade as such.

Rather they are "coins" or "tokens" digitally created and circulated to raise seed money, via initial coin offerings (ICOs) in order to solve some business application in a blockchain-connected manner. Many have no trading volume – possibly because the market is skeptical of their business plan – and have become more or less "dead" coins.

At present, a relative few have an actively trading market. Investors have dropped literally millions of dollars into scores, if not hundreds of entrants which have appeared on the scene like dragon's teeth, in many cases only to see volume dry up soon thereafter.

At present, digital apparitions can be created and marketed by just about anyone. The following example demonstrates how easy it is (for now), and how gullible some people really are...

Article Source


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