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January 05 2018

moneymetals

Gordon Chang: Blowup w/ China or North Korea Could Change Almost Everything Overnight

Without further delay, let's get right to this week's exclusive interview. 

Gordon chang

Mike Gleason: It is my privilege now to welcome in Gordon Chang, author, television pundit, and columnist at the Daily Beast. Gordon is a frequent guest on Fox News, CNBC, and CNN, among others, and is one of the foremost experts on Asian economics and geopolitics, having written books on the subject and it's great to have him back on with us.

Gordon, it's a real honor to have you on again, and thanks so much for your time today. I know it's been a busy week for you given all of your media appearances, and we're grateful that you could join us today. How are you?

Gordon Chang: I'm fine, thank you, and thank you so much, Mike. I really appreciate the opportunity.

Mike Gleason: Well, there are many things to cover here given all that's going on right now. We certainly appreciate your expertise, particularly when it comes to the developments in Asia. There's a lot going on in that part of the world with big implications for investors. Let's start with North Korea. That's obviously been at the forefront of the news this week with tensions getting ratcheted up again.

Kim Jong-Un and President Trump are both bragging about their nuclear arsenals. The over the top posturing on both sides makes it hard to gauge just how seriously the threat of nuclear exchange should be taken. The market seems to have stopped paying attention for the most part. Please give us your thoughts on the matter. Is there any likelihood the disagreement over North Korea's nuclear weapons program will escalate beyond words, Gordon, or is this war only going to be fought on Twitter?

Gordon Chang: If you look at Twitter, this certainly is a matter of concern, but I think the reality is much different. Right now, Kim Jong-Un, the ruler of North Korea, is feeling sanctions. We saw a hint of that in his New Year's address where he referenced it, at least indirectly, and at one point he actually called the sanctions an existential threat.

What he's trying to do right now with his overture to South Korea is to get the South Koreans to shovel money into his regime. What he would like in return for sending two figure skates to the winter Olympics in South Korea next month would be for South Korea to lift sanctions to resume inter-Korean projects, like the Kaesong Industrial Complex, and also for more North and South Korean aid.

I don't think that those expectations are realistic. Some of what he wants would be a violation of UN sanctions, and President Trump's policy has been to cut off the flow of money to Pyongyang so it can't launch missiles or detonate nukes. This is going into, I think, a very crucial period, because if you look back in history, and I'm talking seven decades, we have seen North Korea engage in military provocations shortly after making peace overtures. And this whole concept of the Olympics and his opening of dialog with South Korea, that's a peace overture.

Mike Gleason: We've got two huge wild cards at the forefront of all this with President Trump and Kim Jong-Un being rather unpredictable, to say the least. Is Trump's tit-for-tat responses to his adversary here going to make diplomacy harder to achieve as our allies might have a hard time joining in full force to combat the North Korean threat?

Listen/Read the entire podcast here: (source)

January 03 2018

moneymetals

How the Investor Fundamentally Changed the Silver Market

While silver investors continue to be discouraged about the low price, the market has experienced a fundamental change that needs to be understood. Ever since governments removed silver from official coinage, over 50 years ago, the market has been supplemented by several billion ounces of silver. The majority of that supply has been depleted.

The reason the United States and other countries stopped producing official silver coinage wasn’t due to any monetary conspiracy; rather it was based on a straightforward problem; supply versus demand. Because industrial silver consumption had skyrocketed after World War 2, the silver market would have suffered deficits if the U.S. Treasury didn’t sell silver into the market.

It was quite simple; there just wasn’t enough silver to go around. So, governments started to reduce, then eliminate silver from their coinage in the 1960’s. A lot of this silver, known as “junk silver,” was either purchased by investors or remelted and sold back as supply into the market. While there is no way of knowing how much of the older official junk silver remains in the market, the majority of it was recycled for much-needed supply.

We can see the dwindling down of government stocks and older official silver coinage in the following chart:

Global silver scrap supply & net govt. sales (chart)

The BLUE bars represent silver scrap supply, and the OLIVE colored bars show the amount of net government silver sales. From 2000 to 2013, governments sold 636 million oz (Moz) of silver into the market. Net government sales were from stockpiled silver and older official coins. However, in 2014, this supply totally dried up. For the past four years, there haven’t been any government silver sales.

Another interesting aspect of this chart is the declining amount of silver scrap supply. Even though the price of silver during the 2015-2017 period was much higher than from 2000-2007, scrap supply is considerably less. For example, the price of silver in 2000 was $4.95 while global scrap supply was 181 Moz. However, the silver price has been three times higher (2015-2017), but the average scrap supply has been 140 Moz.

Continue to the full article (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)

December 05 2017

moneymetals

December 04 2017

moneymetals

Gerald Celente: Middle East Wild Cards Could Bring Down Markets, Drive Up Gold

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

Gerald celente

Mike Gleason: It is my privilege now to welcome Gerald Celente, publisher of the renowned Trends Journal. Mr. Celente is perhaps the most well-known trends forecaster in the world and it's always great to have him on with us.

Gerald, thanks for taking the time and welcome back.

Gerald Celente: Thanks for having me on.

Mike Gleason: Well, Gerald, to start off here, we still have the equities markets ripping and roaring and there is seemingly no news that can derail the train. So, as we head into the end of the year, what does your forecast show for the crowd on Wall Street? Is the party going to end anytime soon?

Gerald Celente: Well, as they go through with this tax deal, it's just going to bring more money to the bigger corporations and you saw what the corporations have done with the profits from the past, what do they do with them? They reinvested them into the stock market rather than building their companies and investing in capital improvements.

So, giving them more money will give them more stock buybacks. The more stock buybacks, the higher the market goes. I mean that's the reality of it. So, if the tax breaks go through the way they're being planned, we're going to see more stock buybacks, more cheap money to reinvest back into the markets.

Again, we're looking at a very small segment of the population that's really playing the markets. For example, only 10% of Americans are in the markets at the range that makes any difference, so that 10%, for example, that's playing, they have about in equity about $350,000 (on average). The rest of society that has money into it, the so called middle class, of those that have any money in it, and again the 10% own over 90%. For the rest of the society, they only have about $15,000 in equity.

So, the markets are just going to keep going up if the cheap money keeps existing. Again, that's going to also see what happens when they raise interest rates, which are about a 99% sure shot now, later in December. And if the cheap money flows stop, then the markets stop. It's as simple as that, but we don't think a 25 basis point increase is going to have much of an impact.

Mike Gleason: Clearly the world has a problem with crooked bankers and corrupt politicians. We talked about this a bit when we had you on back in August. The two aren't unrelated, of course. Bankers and politicians have a very long and dark history of collusion.

On one hand, if history is a guide, there isn't much reason to expect anyone will be held to account for their crimes. "They are too big to jail," as former Attorney General Eric Holder might say. On the other hand, we can't help but be a little bit hopeful. It looks to us like some of these crimes, such as the Uranium One deal, are getting harder to ignore.

What do you make of the recent news? Are you feeling any more optimistic about some of these crooks actually going to prison?

Gerald Celente: No, quite the opposite. Look at the new Fed chair that's coming in. He's already saying that the banking regulations in place now are too tough and tough enough. So, if under the current regulations nobody went to jail and they soften them, they could steal more, and get fined, and also accused of less crimes.

So, no, it's going in the opposite direction. Under the new administration, they're not draining the swamp, they’re just filling the swamp with different swamp creatures. I mean look at the Trump White House. Who's running it? Mnuchin and Cohn on the financial end and those are both Goldman Sachs guys. It's just more of the same.

Mike Gleason: The rise of cryptocurrencies, Bitcoin in particular, is making waves in the precious metals markets. Some of the demand for gold and silver has been diverted to Bitcoin. People see it as another form of honest money and there is plenty of excitement over the huge price gains. Lots of people are wondering what the rise of Bitcoin might mean for precious metals over the longer term.

Now, our take is that Bitcoin offer hope as honest money and we are certainly fans of anything that can circumvent central bankers. Gold and silver, on the other hand, are proven stores of value with a track record extending back thousands of years and they are totally off the grid. Physical metals work with or without electricity or an internet connection and they can be used without leaving digital tracks behind.

What are your thoughts on the relationship between Bitcoin and bullion?

Read/Listen to the full podcast here: (source

November 30 2017

moneymetals

How to Choose a Firm to Set Up Your Precious Metals IRA

Self directed IRAs are increasingly popular as investors discover they can use them to escape the ring fence represented by traditional IRA accounts.

Banks and brokerages successfully cultivated the idea that IRAs should contain only conventional securities – stocks, bonds, and mutual funds. The truth is that they get paid handsomely for selling those paper assets, so that is all they put on the menu.

But word is getting out that it is perfectly legal and easy to own tangible assets, including real estate and precious metals, in an IRA. Investors just have to leave Wall Street and find a custodian which specializes in self-directed IRA plans. Today, there are a number of firms offering this sort of plan, so it is worth covering how an investor might go about choosing one.

Secure Your Retirement with a Precious Metals IRA | Learn More  />

You’ll want to start by evaluating the basics. Choose a firm with a reputation for providing great service at competitive fees. You might give extra points for a firm which is well established in the industry. There has been a fair bit of consolidation and changes in the space recently.

We would not recommend custodians charging more than $150 in annual fees or those charging more than $50 for each transaction. There are some very good firms with fees significantly below those levels.

The capability to enroll, view and manage transactions online should be a big consideration if you prefer the convenience of managing affairs electronically. Those people who prefer to deal in person should inquire by phone to see if you can reach a service rep easily and get good care.

Continue to the full article (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 24 2017

moneymetals

Trump May Reappoint Yellen as Fed Chair after All

Candidate Donald Trump was none too kind to current Federal Reserve Chair Janet Yellen during his 2016 campaign. However, the President’s tone with regards to Yellen and Fed policy has been softening since his election.

Trump met one on one with Yellen and other top contenders last week and now appears quite open to the idea of reappointing her to another four-year term.

Janet yellen

Trump may reappoint UC Berkeley
Janet Yellen

Trump told CNBC in September of last year that Yellen should be “ashamed” for acting partisan. He accused the Fed of maintaining extraordinarily low interest rates at the request of former President Barack Obama and Democrats who wanted stimulus and credit for economic growth. Given an opportunity, he suggested he would find someone new as Fed Chair.

Now that has been thrown into question. Following his recent interviews with the candidates, Trump told Fox Business, “Most people are saying it’s down to two: Mr. (John) Taylor, Mr. (Jerome) Powell. I also met with Janet Yellen, who I like a lot. I really like her a lot. So, I have three people that I’m looking at, and there are a couple of others.”

Trump now favors Yellen’s low interest rate policy. He said in July of Yellen, “I’d like to see rates stay low. She’s historically been a low-interest-rate person."

Continue to 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


October 11 2017

moneymetals

STUNNING U.S. GOVERNMENT DEBT INCREASE IN PAST FEW DAYS... While No One Noticed


As the stock market continues to rise on the back of some of the worst geopolitical, financial, and domestic news, the U.S. Treasury has been quietly increasing the amount of government debt, with virtually no coverage by the Mainstream or Alternative Media. So, how much has the U.S. debt increased in the past few days? A bunch.

The surge in U.S. debt that took place over the past two days all started when the debt ceiling limit was officially allowed to increase on Sept 8th. In just one day, the U.S. Treasury increased the public debt by $318 billion:

Debt increase september 8, 2017

(chart courtesy of TreasuryDirect.gov)

The was the first time in U.S. history that the public debt rose over $20 trillion. I mentioned this in my article, The U.S. Government Massive ONE-DAY Debt Increase Impact On Interest Expense & Silver ETF:

The U.S. Treasury will have to pay out an additional $7 billion interest payment for the extra $318 billion in debt it increased in just one day. Again, that $7 billion interest payment is based on an average 2.2% rate multiplied by the $318 billion in debt. Now, if we compare the additional $7 billion of U.S. interest expense to the total value of the silver SLV ETF of $5.8 billion, we can plainly see that printing money, and increasing debt becomes a valuable tool for Central Banks to cap the silver price.

Thus, when the U.S. Treasury increased the public debt by $318 billion, it will also have to pay an additional $7 billion in an annual interest payment to finance that debt. However, that large one-day debt increase was over three weeks ago. What’s been going on at the U.S. Treasury since then? Let’s just say; they have been very busy… LOL.

On the last update in September, the U.S. Treasury increased the debt by nearly $40 billion on the very last day of the month:

Debt increase september 2017

(chart courtesy of TreasuryDirect.gov)

As we can see, the U.S. public debt increased from $20,203 billion ($20.203 trillion) on Sept. 28th to $20,245 billion on Sept 29th. Overall, the U.S. debt increased $83 billion more since the $318 billion one-day increase on Sept 8th. Which means, the total debt increase was $400 billion in a little more than three weeks. However, the U.S. Government must be making up for lost time when the debt ceiling was frozen from March 15th to Sept 7th.


​Continue to the full article. (Source)​

October 10 2017

moneymetals

September 28 2017

moneymetals

Stock Investors Should Brace for the Fed’s October Tightening Gambit

September’s Federal Reserve meeting left interest rates unchanged but sounded a hawkish tone. The Fed seems intent on hiking interest rates again come December.

Following Fed chair Janet Yellen’s remarks this Tuesday, interest rate futures markets bumped up the odds of a year-end rate hike to 81%.

The more immediate – and perhaps more important – policy move pending from the central bank is its plan to gradually reverse its Quantitative Easing bond buying program starting in October.

Yellen calls it “balance sheet normalization.” She is right in acknowledging that there’s nothing normal about the $4.5 trillion balance sheet the nation’s currency custodian has built up following the financial crisis of 2008.

Whether the Fed’s bond portfolio ever will get “normalized” to pre-crisis levels will depend on how markets react to the Fed’s attempt at Quantitative Tightening beginning next month.

The Fed technically won’t sell bond holdings into the market. Instead it will let bonds mature without rolling them over. The effect on the market will be as if a regular, reliable, very big customer stopped buying.

Initially, the Fed will allow $10 billion in Treasuries and mortgage-backed securities to mature off its balance sheet per month. Over the next year, the pace of “normalization” will accelerate. It is slated to eventually reach $50 billion per month.

Quantitative Tightening, if it goes through as planned, will withdraw hundreds of billions of dollars’ worth of liquidity from the financial system. Fed chair Yellen thinks the impact on long-term interest rates will be minor.

She has to know that the risks to the equity markets are huge. After all, her predecessor, Ben Bernanke, touted the bond buying program as an effective way to boost the stock market. Since 2009, the stock market has followed in roughly the same direction as the Fed’s balance sheet.

The latest run-up in stocks since the 2016 election has been different in character. The Fed’s balance sheet hasn’t expanded during this period. Instead, optimism toward the prospects of stimulus in the form of tax cuts has helped lift equity valuations.

Read the full article... (source)

September 21 2017

moneymetals

Why I didn't sell Gold and Silver in 2011

I'd like to share a personal investment tale with you, the origins of which go back a ways. I became involved in physical precious metals/futures trading in 1972 after reading Harry Browne's book, How to Profit from the Coming Devaluation.

Not unlike David Morgan (before we knew each other) I accumulated metal and silver futures contracts, and rode prices into the March 1980 top. I sold my futures, but held the metal until the Hunt Brothers were knocked out of the game after the CRIMEX changed the rules to contract-offset only, collapsing the silver price.

I watched silver drop through Harry Browne's "sell if it goes below $37.50" call to $10.80. Then, during a classic 50% retracement to $25, I asked my broker where he though silver would bottom. His answer: "$5.00." He called it almost to the dollar, but it took a generation to get there.

In 2000, after buying a one-ounce gold Krugerrand for my daughter's high school graduation and watching people at her party view it with zero interest, I decided to move back into the sector, focusing on physical metals and mining company shares.

As the new bull market was getting underway in 2001, I decided to write on a piece of paper the following sentence: "On June 22, 2011, win, lose or draw, I will exit my position in the metals and mining shares."

Fast forward to May, 2011. Having worked with David Morgan at The Morgan Report for a decade, we were following the resource sector on a daily basis for subscribers and for our own accounts. His brilliant call to buy silver in the mid-$20 range enabled his subscribers to re-enter for almost the entire upward surge to just under $50... and then he called that cyclical bull market top, to within one day. I called it a day later in an email to Greg McCoach.

You might be asking: "What about that note you wrote to yourself, saying you 'would get out on June 22, 2011 - win, lose or draw.'?" My honest answer, unaffected by greed or ego?

First, I was definitely aware that we could be looking at a major cyclical top – though I never dreamed it would drag the metals down into a five year bear market. However...

The Core Reason I stayed in

My 10 years' earlier sell call was predicated upon the belief that by 2011 we would have seen massive public participation into a blow-off secular top. But that simply had not taken place.

Sitting through the last 5 years was financially painful, but thankfully, instead of just holding onto everything, I moved in and out of mining stocks during the ups and downs into the December, 2015 cyclical bottom, while keeping a physical metals' position. It wasn't easy, but knowing that contrarians reap the biggest gains, I re-bought the strongest mining survivors as a new rise seemed likely.

While gold and silver prices dropped about 45% and 70% respectively, mining stocks were eviscerated – across the board. Here are the 2011 prices of four stocks I originally held, compared to where I finished buying them back 4 years later:

$26.00 - $3.50; $10.20 - $0.26; $13.00 - $1.00; $3.20 - $0.09 cents.

This demonstrates why most people who want to control risk and limit the downside during serious declines should focus on holding physical metal.

In my considered opinion, when silver penetrates and builds a base above $26 on the upside and gold does so above $1,500, we can be reasonably assured that the bull run is back in full swing, with - at the very least - an eventual challenge of the 2011 highs.

Once those highs are penetrated convincingly, above $50 silver and $2,000 gold, the public will enter the market in waves, seeking to buy metals and miners, plus anything remotely connected to them. (My original silver target – which still seems realistic – is an eventual [Phase III] price into the top of $175 - $250/ounce).

Gold bull markets - 1970s vs 2000

Courtesy goldchartsurus.com

Recently, I ran across an interesting commentary by Burt Coons – pen name Plunger – about the three phases of a bull market. He looked into how things were going when the first phase of the great 1949 post-WW II U.S. stock market suffered a devastating triple top correction a few years later. Here's how Coons discusses it:

This (correction) convinced the majority of market opinion that the bull was over. However there was a young independent observer by the name of Richard Russell who noted that the market had not yet shown characteristics of a phase III. Instead the market had been busy climbing the wall of worry and hadn’t had time to become manic yet. He therefore made a market call that one should buy the correction and hold on and wait for the phase III. His career took off from there.


Continue to the full article. (Source)

September 19 2017

moneymetals

September 13 2017

moneymetals

The U.S. Government Massive ONE-DAY Debt Increase Impact On Interest Expense & Silver ETF

The U.S. Government’s massive one-day debt increase had a profound impact on the amount of money it will have to fork over just to service its interest payment. On Friday, Sept 9th, the U.S. Treasury increased the total debt by a stunning $318 billion. Thus, the total U.S. Government debt increased from $19.84 trillion on Thursday to $20.16 trillion on Friday.

We must remember when the U.S Treasury adds more debt to its balance sheet; the government is now obligated to pay additional funds to service the interest on that debt. So, for each increase in U.S. Government debt, comes with it, an increase in its debt service payment.

However, the U.S. Government has been able to control the rise in its annual interest payments by pushing the interest rate lower. For example, the average interest rate on U.S. Treasury debt in 2000 was 6.4% versus 2.2% currently. If we look at the chart below, we can see how the interest rate has declined as U.S. Government debt increased:

U.S. total debt vs average interest percentage rate

The RED DOLLAR bars represent total U.S. Government debt in billions of Dollars, while the WHITE LINEshows the annual average debt service interest rate. We can plainly see that total U.S. debt has nearly quadrupled from $5.6 trillion in 2000 to $20.1 trillion in 2017.

NOTE: I arrived at the average interest rate percentage figures by dividing the annual interest payments by the total outstanding debt.

This next chart from the Treasurydirect.gov website lists the annual U.S. debt service interest payments:

Available historical data fiscal year end

(interest expense on debt outstanding, Treasurydirect.gov)

By taking the interest payment of $362 billion in 2000 and dividing it by the total U.S. Government debt of $5,674 billion ($5.67 trillion), it equaled 6.4%. So, the U.S. Treasury paid an average 6.4% interest payment on its outstanding debt that year.

What is interesting about the figures in the table above is that the U.S. Treasury paid out a larger interest payment in 2008 of $451 billion versus $432 billion in 2016, even though the debt was much higher in 2016. The reason the interest payment was higher in 2008 than in 2016 had to do with a 4.5% interest rate on $10 trillion of debt compared to a 2.2% interest rate on $19.6 trillion in debt. By cutting the interest rate in half (4.5% down to 2.2%), the U.S. Treasury’s interest expense remained flat or slightly declined as the debt nearly doubled.

Continue reading... 
(ARTICLE SOURCE: https://www.moneymetals.com/news/2017/09/13/govt-debt-increase-impact-001157)

September 08 2017

moneymetals

September 05 2017

moneymetals
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Don't be the product, buy the product!

Schweinderl