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April 18 2018

moneymetals

Trump’s bellicose rhetoric contrasts sharply with his prior posture

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

George leef

Mike Gleason: It is my privilege now to welcome Forbes Magazine columnist George Leef. George is a hard money advocate and a law graduate who has dedicated his professional life to teaching and education rather than practicing law, and over the past fifteen years has worked at the James G. Martin Center for Academic Renewal, a free market think tank that takes a critical view of higher education. Underneath George's byline on any of his Forbes.com columns, you'll find the words, "I write on the damage big government does, especially on education." And today, we're going to get into just how uneducated many are when it comes to the government's heavy-handed role as to our money.

George, thank you very much for taking the time to visit with us today. How are you?

George Leef: I'm very good, and my pleasure to be on with you, Mike.

Mike Gleason: I'm excited to cover this topic with you and first would like you to brush up our listeners on the role the US government was originally designed to play vis-à-vis our money. And contrary to popular belief, nowhere in the Constitution do we find anything about granting our governmental overlords a monopoly power in the creation of money, do we?

George Leef: No, we don't. The Constitution sets forth the powers that the government is supposed to have. In Article 1, Section 8, the powers of Congress are enumerated and that includes the power to coin money and regulate the value thereof and also the power to punish counterfeiting of US securities or US money. As I note at the beginning of my article, which is available on Forbes.com, that does not include the power to create a governmental monopoly in the creation of money. There would be no reason to think that the founders would have wanted such monopoly for several reasons. They had been unhappy with British monopolies like the East India Company that tried to sell them overpriced tea, and we know what happened to that tea.

We also know that at the time prior to the founding and after the ratification founding, there was lots of non US-produced coinage in circulation. There were coins in circulation that had been minted by the Spanish government. That's where we got the idea that the “piece of eight” and “two bits”. The colonists liked to cut the Spanish eight-real piece up into smaller pieces and they used that in trade. There were also privately minted coins in circulation. The people who wrote the Constitution knew about this and it didn't bother them in the slightest.

What they had in mind as the monetary system of the new country would be based on gold and silver. In fact, they wrote that into the first Coinage Act in 1792. They couldn't have cared less who minted gold or silver coins. All they were intent upon was that the coinage of the United States not be counterfeited. That, of course, was also written into law early in the country that it was illegal to counterfeit. They did not by any stretch of the imagination envision that the federal government would have monopoly on the production of money.

Mike Gleason: It was a certain amount of gold and silver grains, I guess, made up a dollar. They did have the ability to change that metric if they needed to, but that was the true backing.

Read/Listen to the full podcast (source) ​

April 17 2018

moneymetals

Global Silver Scrap Supply Falls To 26-Year Low

Global silver scrap supply fell to its lowest level in 26 years. World silver recycling in 2017 dropped by nearly 50% since its peak in 2011. According to the 2018 World Silver Survey, global silver scrap supply declined to 138 million oz (Moz) compared to 261 Moz in 2011. While the lower silver price is partly responsible for the large drop in silver recycling, there are other market dynamics.

For example, silver recycling from the photography sector has declined since consumption peaked in 1999. The photography industry was using 228 Moz of silver in 1999 compared to the 44 Moz last year. Thus, silver consumption in photography has declined by 80% in nearly two decades… and along with it, a great deal of recycled silver supply.

Furthermore, a lot of silverware was recycled during the period of rising prices (2007-2012). A lot of Millennials who inherited their parent’s (and grandparents) silverware decided it was much easier to pawn it rather than spending a lot of time polishing it for holiday gatherings. Which means, a lot of available stocks of silver scrap have already been recycled.

Global silver scrap supply (1990-2017)

As we can see in the chart above, even though the $17 silver price in 2017 was four times higher than in 1991 ($3.91), global silver scrap supply is less than it was 26 years ago. Moreover, world silver scrap was over 200 Moz a year (2005-2009) when the average annual price was much less than it was last year.



Continue reading (source

moneymetals

Investor Alert: How to See Through the Fog of War


​The U.S. fired 105 Tomahawk missiles into Syria on Friday night.

In other times, the salvo would have put Americans on edge over the prospect of war with nuclear-armed Russia. Our former Cold War adversary is actively defending the Syrian regime and warning the U.S. to mind its own affairs.

Fog of war

But, these days not much can command the attention of the complacent public.

The President quickly declared “mission accomplished” and markets may begin discounting the likelihood of further conflict.

After decades of warfare in the Middle East, the launch of several dozen Tomahawk missiles in the general direction of Russian forces in Syria does raise the stakes. It’s the second time President Trump has authorized missile strikes there in the past year, almost no one remembers the missile attack in April of 2017 at all.

Americans spent a few years on high alert following the 2008 financial crisis. They were lulled back to sleep when the Fed and their allies on Wall Street reassumed total control of the markets.

​Continue reading.. (source) ​

April 16 2018

moneymetals

Senator Ted Cruz’s Bill to Remove the Inflation Tax from Capital Gains Addresses a Symptom but Not the Cause

Washington, DC (April 13, 2018) – U.S. Senator Ted Cruz (R-Texas) has just announced he will introduce a bill to end taxes on capital "gains" that are simply a result of inflation.

Cruz’s inflation-indexing bill seeks to "expand economic growth and encourage more investment into the economy, helping create more opportunities for hardworking Americans."

"If you invest a thousand dollars, and then ten years later you sell whatever you have invested in for two thousand dollars, right now, you are taxed on that full gain, ignoring inflation, and ignoring the fact that inflation has eaten away a big chunk of that gain," Sen. Cruz said.

The Sound Money Defense League lauded the measure for acknowledging the problem created by the official policy of devaluing the purchasing power of the Federal Reserve Note "dollar" and for taking a reasonable first step to addressing it.

"Because of inflation, much of what is taxed as capital gains is not a real gain, but rather a nominal gain created by the Federal Reserve System through its policy of serial devaluation," said Jp Cortez, Policy Director at the Sound Money Defense League.

"We praise Senator Cruz for advancing a bill that addresses a symptom of Federal Reserve currency debasement," continued Cortez. "However, the fundamental solution is a return to sound money in America, i.e. gold and silver, as intended by our nation’s Founding Fathers.

"Until we strip central bankers of their abusive power to create money out of thin air, our nation’s investors, savers, pensioners, and wage-earners will be robbed of their assets through the insidious inflation tax."

(Original 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

April 09 2018

moneymetals

Two Mines Supply Half Of U.S. Silver Production & The Real Cost To Produce Silver

​Just two mines supply the United States with half of its silver production, and both are located in Alaska. It’s quite amazing that Alaska now produces half of the silver for the U.S. when only 30 years ago total mine supply from the state was less than 50,000 oz per year. The silver produced in Alaska comes from the Greens Creek and Red Dog Mines. One is a primary silver mine and the other a zinc-lead base metal mine.

Even though Hecla’s Greens Creek Mine is labeled as a primary silver mine, 56% of its revenues come from its gold, zinc, and lead metal sales. However, Teck Resources, that runs the Red Dog Mine doesn’t even list its silver production in its financial reports. Because Red Dog produces one heck of a lot of zinc and lead, their silver production doesn’t amount to much in the way of revenues.

For example, the Red Dog Mine produced 542,000 metric tons (1.1 billion pounds) of zinc and 110,000 metric tons (222 million pounds) of lead, while its estimated silver production was 6.6 million oz (Moz). According to Teck’s 2017 Annual Report, total revenues from the Red Dog Mine were $1.75 billion. With the estimated silver price of $17 in 2017, total revenues from 6.6 Moz of silver were $112 million, or just 6% of the total.

In addition, Hecla’s Greens Creek Mine in Alaska produced 8.4 Moz of silver this year, down from 9.2 Moz in 2016. As I mentioned, the Greens Creek Mine also generated a lot of gold, zinc, and lead, equaling $182 million of the total revenues of $326 million (including treatment costs).

The USGS just came out with their final Silver Mineral Industry Survey for 2017, reporting that the U.S. produced 33 million oz (Moz), down from 37 Moz the previous year. U.S. silver production declined due to the union strike and the shut down of Hecla’s Lucky Friday Mine. As we can see, Greens Creek and Red Dog accounted for 15 Moz of the total 33 Moz of U.S. silver production:

Top 2 silver producers vs. u.s. total 2017

While Greens Creek and Red Dog supplied nearly half of U.S. silver production last year, the next two largest mines provided 21% of the total. Coeur’s Rochester Mine in Nevada produced 4.7 Moz of silver while the Bingham Canyon Mine, the country’s largest copper mine, supplied 2.2 Moz. Almost 7 Moz of silver came from these two mines alone.

​Continue to the full article (source) ​

April 04 2018

moneymetals

China Moves to Neuter King Dollar in International Trade

Last Monday, the Shanghai International Energy Exchange launched the first futures contract for crude oil priced in Chinese yuan. It’s a major step forward in the process of international de-dollarization. Now Chinese and other international traders can buy and sell the world’s most important commodity in a liquid market without using U.S. dollars.

The “petro dollar” now faces the prospect of being rendered unnecessary as China – the world’s biggest oil importer – attempts to establish a “petro yuan.”

China is launching a pilot program to purchase oil from Russia and Angola (two of its top suppliers) using yuan. Russia and China share a common interest in trying to break the dollar's dominance in global commodity trading.

The two powers have been among the world’s top gold accumulators in recent years, with some reports suggesting Russia is now also loading up on silver for the possible launch of a silver ruble. Russia and other emerging commodity supplier markets stand to be among the big beneficiaries of a weaker dollar, as does China.



Continue reading (source

April 02 2018

moneymetals

What The Gold-Silver Ratio Says About The Future Silver Price

While silver investment demand is totally off the radar, certain indicators, including the Gold-Silver ratio, suggest that interest in the poor man’s gold will likely increase significantly over the next few years. The rising interest in silver will also occur as the broader markets continue to meltdown towards more realistic valuations.

In my recent youtube video, Amazing Silver Setup & Stock Market Update, I had a few comments stating the selloff of silver and rise in the stock market suggested that my analysis was incorrect. I find this sort of short-term thinking quite interesting when I noted that the information in the video was presented to occur over the next 1-2 years. Furthermore, in looking at my Youtube analytics of that video, the average watch time was about 10 minutes. The video was 24 minutes long.

Unfortunately, the attention span of individuals today isn’t what it used to be. So, even though the material is presented in detail, many people don’t even take the time to either read or watch it in its entirety. Moreover, when someone replies that the silver price selling off since the video was produced doesn’t understand that markets trade over a LONG PERIOD OF TIME. Anyone who is concerned with the silver or gold price on a daily basis (not including professional traders), needs to realize that TRENDS TAKE TIME.

Also, the naysayers that claim the precious metals analysts have been wrong since 2012 tend to overlook the massive money printing, the enormous increase in debt and the continued disintegration of the global oil industry. If I am not getting my point across, let me provide the following chart that shows just how quickly things can fall apart when investors have been BAMBOOZLED by the Fed and Wall Street:

Continue reading (source) ​

moneymetals

Silver Price Best Setup In Years & Update On Continued Meltdown In Stock Markets


This update is by far one of the most important as the silver price setup is the best I have seen in years. According to the data, the silver price is by far in much better position to outperform gold when the precious metals market takes off. Also, I do an update on the stock market as well as the continued disintegration of the U.S. Shale Oil Industry.

While most investors will be interested in what is taking place in the silver market, it’s very important to understand how much the situation is deteriorating in the U.S. Shale Oil Industry. Without cheap and abundant oil, the value of most stocks, bonds, and real estate would collapse. Unfortunately, falling stock and real estate prices are precisely what is going to happen to 99% of the public’s investments as only 1% hold precious metals.

The reason I believe the gold and silver prices will start to take off when the stock markets begin to really plunge lower is due to the setup of these assets since the Fed’s Q3 policy at the end of 2012. Because the precious metals sold off from 2013 to 2016 and are still close to their lows, they are ripe for much higher prices. However, the real estate and stock markets are near their highs. Thus, we are going to experience one hell of a disconnect between the stock and real estate market and precious metals.. quite the opposite that took place after 2012.

Continue reading (source


March 27 2018

moneymetals

Physical Gold Production May Be Peaking, But There Is No Shortage In Paper Gold

Gold production numbers for 2017 are still being compiled but estimates call for the first annual decline in mine output since 2008.

The gold price fell dramatically in the months following the 2011 peak in prices. It has languished at, or near, the cost of production for years. Low gold prices are having a predictable effect on mine output.

Many projects with marginal ore deposits were rendered uneconomic. High cost operators went out of business. Exploration budgets got slashed dramatically. And all of these factors compound a larger underlying issue. It is increasingly difficult to find gold deposits that make sense to mine. New discoveries are less than a fifth of what they were in 2006.

Exploration fail (chart)

Much higher gold prices will drive more exploration and should boost discoveries. Some projects which have been mothballed due to higher costs will become feasible once again. But the trend seems clear – the drought in discoveries, which began more than a decade ago, looks likely to persist regardless of the gold price. And the struggle to find economic deposits will translate to a serious decline in production in the years ahead.


Continue reading (source) ​

March 19 2018

moneymetals

Larry Kudlow Toes Wall Street’s Anti-Gold Company Line

Gary Cohn resigned as President Donald Trump’s Chief Economic Advisor on March 6th. He and Trump didn’t see eye to eye on the recently imposed tariffs and the President selected CNBC commentator Larry Kudlow to replace him Wednesday. Perhaps it was Kudlow’s experience on television that got him the job.

Larry kudlow

It doesn’t look like he was chosen for his intellectual honesty. Kudlow was quite vocal with his own opposition to tariffs.

He has suddenly done an about face and now says he can “live” with targeted tariffs. However, it gets worse than simply flip-flopping on trade.

In one of his very first interviews after accepting the post, Kudlow offered this bit of advice to investors: “I would buy King Dollar and I would sell gold.”

The dollar went on a dramatic losing streak during Trump’s first year in office – one of its worst annual performances in decades. Of course, that is just a single year.

The fiat dollar has been in almost continual decline versus real assets since the Federal Reserve’s establishment 105 years ago. It has lost 98.5% of its purchasing power relative to gold since then.

Kudlow must have seen the forecasts which show federal deficits spiking higher as the combination of tax cuts and higher spending wreak havoc on the budget. The tariffs should further weigh on the U.S. dollar as higher steel and aluminum prices drive inflation.




Continue reading...(here)

March 15 2018

moneymetals

BOOM: Wyoming Ends ALL TAXATION of Gold & Silver

Breakthrough Sound Money Bill Becomes Law Today with Wide Support


Cheyenne, Wyoming (March 14, 2018) – Sound money activists rejoiced as the Wyoming Legal Tender Act became law today. The bill restores constitutional, sound money in Wyoming.

Backed by the Sound Money Defense League, Campaign for Liberty, Money Metals Exchange, and in-state grassroots activists, HB 103 removes all forms of state taxation on gold and silver coins and bullion and reaffirms their status as money in Wyoming, in keeping with Article 1, Section 10 of the U.S. Constitution.

Introduced by Representative Roy Edwards (R-Gillette), HB 103 received a 55-5 favorable vote on final passage in the Wyoming House last week following Senate approval by a vote of 25-5. Gov. Matt Mead let HB 103 become law today without his signature.

The most immediate impact of the new law, which formally takes effect on July 1, is to eliminate all Wyoming sales taxes when purchasing gold or silver.

While Wyoming does not currently have an income tax, the bill stipulates “the purchase, sale or exchange of any type or form of specie or specie legal tender shall not give rise to any tax liability of any kind.” That means no income tax, property tax, sales tax or any other Wyoming tax can be assessed against the monetary metals.

Lead sponsor Roy Edwards said, “Imagine going to the grocery store and asking the clerk for change for a $20 bill and being charged $1.00 in tax. That’s what we’re doing in Wyoming by charging sales taxes on precious metals and we’re taking steps to change that.”

With the adoption of HB 103, Wyoming joins all its bordering states (South Dakota, Idaho, Utah, Colorado, Nebraska) and more than 30 other states that do not assess a sales tax against precious metals.

Some states have specifically eliminated income taxation on gold and silver (Arizona and Utah) or have established precious metals depositories to store the state’s own physical gold and help citizens save and transact in gold and silver bullion (Texas).

You can view the full press release here (source

March 12 2018

moneymetals

Gerald Celente Exclusive: "If rates go up too high, the economy goes down, end of story"

Mike Gleason: It is my privilege now to welcome in 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.

Mr. Celente, thanks again for the time today and welcome back.​

Gerald Celente: Oh, it's always great being on. Thank you.

Mike Gleason: Well, Gerald, it's never a dull moment in Washington, D.C., these days. President Trump always keeps it lively. We have the never-ending Russia controversy, of course, the war of words with North Korea, and the intervention in Syria have both been regulars in the headlines over the past year. Now Trump is talking about tariffs and people are worried about a trade war. Volatility is coming back to the stock markets and some investors are getting nervous about rising interest rates. When it comes to Russia interfering in U.S. elections, it seems more or less like a smoke screen. We have very little doubt there is plenty of collusion and a fair bit of it involved Hillary shepherding the Uranium One deal over the finish line.

So, we're finding it hard to predict which of these stories are worth paying attention to and which are likely to fade away. And there's nobody better who can help us evaluate this than you, so I'm excited to talk today. So, which of the current stories have legs, Gerald? Will there be a trade war, a big correction in stocks, another attempt by Democrats to impeach Trump? What?

Gerald Celente: Well, the attempt by the Democrats to impeach Trump have never stopped. And, again, Mike, I've been at this a lot of years, and anybody awake and alive that hasn't tuned out knows that every time we've had an election in this country, whether you like the person or not, they always used to say, "Well, whether you like it or not, this is the new person. Let's rally behind him and try to push the country forward." That never happened with Trump. And I want to make this really clear. I'm not a Trump supporter. I didn't vote in this last election. And (people say), "Oh, you didn't vote? Did you get what you deserve?", to which I say, "Grow up. If you voted for any of these people, then you got what you deserve and I don't deserve either of them. My standards are different."

And I look what's going on. It doesn't make the news, all the things that you just mentioned. Hey, how about what just happened in Italy with Cinque Stelle, the Five Star Movement, becoming the major party, a party that just started in 2009 because the people are disgusted with the establishment. How could you be disgusted with the establishment? You should love the establishment. How could you dare be anti-establishment? That's the stupidity of the language that they use.

They call it, for example, what Trump is doing, protectionist movements. Oh, a protectionist? Oh, I'm a close combat practitioner, have been for over a quarter of a century. I'll protect myself. I'll protect myself if I'm being attacked. But yet if you're being attacked trade-wise, economically, and you go to protect yourself, well, you're a protectionist. So, listen to the language, it's very important as a trend forecaster.

You mentioned about the Russian elections. The bar has sunk so low that people are listening to Samantha Power, the former UN Ambassador. And I'm tired of hearing this baloney, "Oh, if only women were in charge." It's not about men, women, race, creed or color. Good and bad comes in all of them. Let's call it equal. This is a woman, along with Hillary Clinton, Samantha Power and Susan Rice that started the Libyan War, that overthrew a sovereign nation, whether you liked the guy or not, that did nothing to us and created the refugee problem that nobody talks about and the migrant crisis. Because when Qaddafi was in there in Libya, they weren't going into Europe. He made a deal with them and warned them that when he went, the migrants would come.



Continue to the article (source

March 06 2018

moneymetals

SILVER INVESTMENT: The Lowest Risk, Highest Return Potential vs. Stocks & Real Estate

While silver is completely off the radar to most investors, it will turn out to be one of the best investments to own as the massive amount of leverage in the stock and real estate market evaporates. Unfortunately, investors, today are no longer capable of recognizing when an asset displays a HIGH or LOW risk. Thus, fundamental indicators are ignored as the investors continue the insane strategy of “Buying the Dip.”

A prudent investor is able to spot when an asset becomes a high risk and then has the sense to move his or her funds into one that is a lower risk. However, the majority of investors do not follow this practice as they are caught by surprise when a Market Crash occurs… again and again and again. Even worse, when investors are shown that the indicators are pointing to assets that are extremely risky, then ignore it and continue business as usual.

Today, complacency has turned investors’ brains into mush. They are no longer able to discern RIGHT from WRONG. So, when the market really starts to correction-crash, they will hold on to their stocks waiting for Wall Street’s next BUY THE DIP call.

Regardless, if we can understand the fundamentals, then we would be foolish to keep most of our investment funds in Stock and Real Estate assets. The following chart follows the KISS Principle – Keep It Simple Stupid:

Comparing high & low risk assets

You don’t need to be a highly-trained financial or technical analyst to spot the HIGH vs. LOW-RISK assets in the chart above. Hell, you don’t even need to see the figures in the chart. If we understand that all markets behave in cycles, then it’s common sense that asset prices will peak and decline. We can plainly see that both Real Estate and Stocks asset values are near their top while the silver price is closer to its bottom.

Thus, assets that are near a top are HIGH RISK, and those near a bottom are LOW RISK. It’s really that simple.

Continue reading... (source)

February 28 2018

moneymetals

February 27 2018

moneymetals

New Warnings on Risky “Self Storage” Gold & Silver IRAs

Bullion investors buy gold and silver as a matter of self-reliance. Physical metals aren’t dependent upon the promises of financial institutions, governments, or other third parties.

This lack of counterparty risk makes precious metals quite different from most conventional assets. There is no possibility of a default or mismanagement which renders them worthless. That is a lot more than can be said of securities such as stocks and bonds.

Gold retirement nest egg

Recently a few firms promoting “self storage” precious metals IRAs have been trying to exploit the self-reliance streak running through bullion investors in a manner that could cause significant harm.

These firms offer a scheme to circumvent IRS rules which require IRA metals be stored by a third party, and some people are biting. The desire to have possession and control of the metals appears to be outweighing good sense.

The warnings are piling up. Last week, the Industry Council on Tangible Assets issued the latest warning about storing IRA metals at home.

The trouble is rooted in the IRS requirement that assets in your retirement account be held by a third party.

Some firms have begun offering a dangerous work-around. They help investors create an LLC company which they claim will fill the role of the third party. The LLC buys and holds the metals, and the IRA holder manages the LLC.

IRS officials have already signaled that they see the formation of the LLC as a simple fiction to grant control over assets which are supposed to kept at arm’s length. ”Self storage” IRA holders seem likely to find their accounts disqualified, with taxes and penalties due immediately (as an early distribution of the full account balance).

As one expert frames it; “you can own a bakery with your IRA, but you cannot be the baker.” Owning a business with your self-directed IRA is okay. Hiring yourself and paying a salary is a definite no-no. Likewise it is perfectly fine to buy investment real estate, but your IRA cannot purchase your personal residence.

IRA promoters are offering LLC or “checkbook” IRAs despite knowing the program has not been defended successfully in court. It certainly does not have the blessing of the IRS.

​Continue reading (source)​

February 23 2018

moneymetals

5 Big Drivers of Higher Inflation Rates Ahead

Investors got lulled into a state of inflation complacency. Persistently low official inflation rates in recent years depressed bond yields along with risk premiums on all financial assets.

That’s changing in 2018. Five drivers of higher inflation rates are now starting to kick in.

Inflation Driver #1: Rising CPI

The Consumer Price Index (CPI) is a notoriously flawed measure of inflation. It tends to understate real-world price increases. Nevertheless, CPI is the most widely followed measure of inflation. When it moves up, so do inflation expectations by investors.

On February 13th, the Labor Department released stronger than expected CPI numbers. Prices rose a robust 0.5% in January, with headline CPI coming in at 2.1% annualized (against expectations of 1.9%).

In response to the inflationary tailwinds, precious metals and natural resource stocks rallied strongly, while the struggling U.S. bond market took another hit.

Inflation Driver #2: Rising Interest Rates

interest rates

Since peaking in mid-2016, the bond market has been stair-stepping lower (meaning yields are moving higher). In February, key technical levels were breached as 30-year Treasury yields surged above 3%. Some analysts are now calling a new secular rise in interest rates to be underway after more than three decades of generally falling rates.

The last big surge in interest rates started in the mid 1970s and coincided with relentless “stagflation” and soaring precious metals prices. It wasn’t until interest rates hit double digit levels in the early 1980s that inflation was finally quelled and gold and silver markets tamed.

​Continue to the full article (source)

February 14 2018

moneymetals

Huge Market Correction Update & Silver Price Trend

While the Dow Jones Index and broader markets are recovering from their lows set on Friday, the worst is still yet to come. Investors need to realize that stock market indexes don’t fall in a straight line. Also, there is also the possibility that the Dow Jones Index could surpass its previous high of 26,600 points. Only time will tell.

However, the leverage, margin and insane valuations in the markets are still in way out of whack. Just because the Dow Jones Index has added 1,200 points from its lows in early Friday trading, it is still 2,000 points below its peak of 26,600. Furthermore, when the Dow Jones peak at 14,100 points in 2007, it took six months and three different peaks before the index started to fall off a cliff in 2008.

For example, the Dow Jones Index hit three peaks in 2007:

  1. July 2007 = 13,900
  2. Oct 2007 = 14,100
  3. Dec 2007 13,600

Over that six month period in 2007, the Dow Jones Index rose and fell three different times. The biggest percentage drop was between July 2007 and Oct 2007, at nearly 10%. However, the Dow Jones index peaks were at the most, 3.5% from their high of 14,100. Moreover, it took six months for the Dow Jones Index to finally head lower on a sustained basis and it wasn’t until nearly a year later in Oct 2008 did the market finally crash.

So, if you think the Dow Jones correction is over, then you are going to be in for a rude awakening.

Continue reading (source

February 06 2018

moneymetals

DANGER AHEAD FOR U.S. GOVT: Unable To Service Debt As Interest Rates Surge

The U.S. Government is in serious trouble when interest rates rise. As interest rates rise, so will the amount of money the U.S. Government will have to pay out to service its rapidly rising debt. Unfortunately, interest rates don’t have to increase all that much for the government’s interest expense to double.

According to the TreasuryDirect.gov website, which came back online after being down for nearly a month, reported that the average interest rate paid on U.S. Treasury Securities increased from 2.2% in November 2016 to 2.3% in December 2017. While this does not seem like a significant change, every increase of 0.1% in the average interest rate, the U.S. Government has to pay an additional $20.5 billion in interest expense (based on the $20.5 trillion in total U.S. debt).

Already, the U.S. Government is off to a BANG as it’s interest expense paid for the first three months of the year increased to $147 billion compared to $139 billion in the same period last year:

US oct dec 2015 2017 interest expense

This chart was taken directly from the TreasuryDirect.gov site, with my added annotations. As we can see, the U.S. Government paid $126.5 billion to service their debt Oct-Dec 2015. We must remember, the U.S. Government Fiscal period starts in October. So, in just two years, the interest expense the U.S. Government paid for Oct-Dec increased more than $20 billion. Now, what is interesting is that the average interest rate in Dec 2015 was 2.33%, but in Dec 2017 it was only 2.31%. Thus, it was actually lower, even though the interest expense increased by $20 billion.

The reason for the $20 billion increase in the interest expense during Oct-Dec 2017 versus Oct-Dec 2015 was due to a more than $2 trillion increase in U.S. debt over that two-year period. So, the U.S. Government will have a serious problem as interest rates really start to rise… and that doesn’t even include the continued increase in total U.S. debt.

Check it out here (source)

February 05 2018

moneymetals
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