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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)

September 25 2017

moneymetals

U.S. Retirement Market Ponzi Fueled By Record Concentration In Stocks By Young Americans

For the U.S. Retirement Market Ponzi Scheme to continue, there must be a new group of suckers to pay for the individuals who are receiving benefits. Without a new flow of funds, the Ponzi Scheme comes crashing down. Such was the case for the individuals who invested in the $65 billion Bernie Madoff Ponzi Scheme that came crashing down in 2008.

Interestingly, the U.S. Securities & Exchange Commission (SEC) that investigated Madoff Securities in 1999, 2000, 2004, 2005, and 2006, found no evidence of fraud or the need for legal action by the commission. The failure of the SEC to find any wrong-doing by Bernie Madoff should provide Americans with plenty of reassurance and confidence that their 401k’s are the highest quality sound investments in the market.

Regardless, the concentration in equities by young Americans reached a record high since the 2008 financial crisis. According to the most recent data put out by the Investment Company Insititute (ICI), Americans in their twenties who participated in 401k plans, 75% of the group invested more than 80% of their funds into equities in 2015 versus 48% of the group in 2007:

Exposure to equities among 401(k) participants (80+% invested in equities)

In just eight years, Americans in the 20’s age group invested in 401k’s, increased their equity exposure (80+%) from less than a half to three-quarters. Furthermore, those in the 30’s age group increased their equity concentration from 55% to 70% in the same period.

All this means is that younger Americans participating in the 401k Retirement Market have considerably increased their exposure to stocks while net benefits paid out have now gone into the red. I wrote about this in my article, Something Big, Bad and Ugly Is Taking Place In The U.S. Retirement Market:

U.S. private dc plans: contributions vs benefits paid

As we can see in the chart, the Private Defined Contribution (DC) Plans paid out $28.7 billion more than they took in in 2014…. the last year the Investment Company Institute provided data. Simply, Private DC Plans are mostly 401K’s.

Unfortunately, the ICI only has data on 401k net benefit withdrawals up until 2014. However, young Americans invested in the 401k Market have no idea that their funds are being used to pay off those who are retired. Moreover, the record concentration of 20-30’s age group into equities hasn’t been enough to support the 401k Retirement Market as more money is going out than is coming in. That is extremely bad news.

Continue reading: (Source)


September 18 2017

moneymetals

September 07 2017

moneymetals

Debt Ceiling Capitulation Spells Trouble Ahead for the Dollar

“Frustration” no longer adequately describes what reformers in Congress – along with millions of investors and taxpayers who voted for reform – are feeling. For many, hopelessness is beginning to set in on the prospects for tax, budgetary, and monetary reform following Wednesday’s GOP capitulation on the debt ceiling.

Democrats shamelessly exploited the Hurricane Harvey disaster to couple the $7.85 billion disaster aid package with demands on unrelated issues in the budget. Congress didn’t pay for the bill with offsetting spending cuts, as the Club for Growth and other fiscal conservatives had urged.

U.S. dollar chart - september 6, 2017

Instead, this emergency spending (and more to come) will simply be added to the national credit card.

If there’s any fiscal upshot, it could be for those holding contra-dollar investments such as precious metals. The U.S. Dollar Index has been in a downtrend all year. It may now have impetus to fall further.

Months of legislative failure and inaction have caught up with Republicans. A recent Fox News poll shows that only 15% of voters approve of the job Congress is doing. Now – faced with a disaster in Texas and another one on the way in Florida that could inflict hundreds of billions of dollars more in damage – Republicans are being pushed by circumstances beyond their control.

Their president has all but given up on them. He is, understandably, beyond frustrated with feckless Republican leadership on Capitol Hill.

House Speaker Paul Ryan and Senate spoiler vote John McCain have seemingly devoted more effort to publicly criticizing President Donald Trump’s choices of words than passing GOP legislation.

This week, President Trump foisted the “DACA” immigration issue upon a Congress that doesn’t want to have to deal with it on top of everything else now on their capitulation schedule for the rest of the year.

Trump’s abrupt move left Americans confused as to what he wants Congress to do with President Obama’s illegal DACA amnesty directive. Trump had campaigned against it. Now apparently he wants DACA “legalized” in some form.

Trump Joins with Democrats on Debt Ceiling Extension

Perhaps Trump now sees reaching out to Democrats as his only viable political path forward. On Wednesday, according to Politico, Trump “turned on Republican leaders in Congress when he caved to Democrats’ demands to raise the debt limit and fund the government for three months, setting up a brutal year-end fiscal cliff.”

The three-month extension could give conservatives another shot at attaching reforms to the next funding bill. But so far Republicans have been outmaneuvered at every turn by Democrats and the forces of more spending and more debt.

President Trump’s decisions on Federal Reserve appointments in the months ahead will be critical. They will majorly help determine the outlook for interest rates and the value of the Federal Reserve Note, commonly thought of as the U.S. dollar. 

Continue to the full article: (Original Source)

August 15 2017

moneymetals

Rising Tensions with North Korea Prompt Safe-Haven Buying

The U.S. may somehow still find a way to get involved in a nuclear exchange with communists 26 years after the collapse of the Soviet Union – even if it’s with a backwater country whose rockets tend to explode on the launchpad. The decades-long war of words with North Korea escalated last week.

Most of us stopped paying much attention to the outlandish threats from North Korean dictators long ago. There have been plenty over the years as U.S. administrations, one after another, attempted to police the matter by applying sanctions directly and pressuring China to do the same. It is time to tune back in.

North Korea’s apparent nuclear capability, of course, makes this situation different than many of the other wars the U.S. has been waging with Third World countries. But, the stakes are getting higher generally as other major world powers have begun pushing back. Our government’s attempt to overthrow Bashar al-Assad in Syria has pitted the U.S. against Russia. Now China is threatening to engage if the U.S. attempts regime change in North Korea.

Chinese officials declared late last week that they will not tolerate a pre-emptive U.S. attack. They made the following statement via an influential state run newspaper on Thursday:

"If the U.S. and South Korea carry out strikes and try to overthrow the North Korean regime and change the political pattern of the Korean Peninsula, China will prevent them from doing so."

The Chinese have also warned North Korea’s leader, Kim Jong-un, against attempting a first strike. No surprise, China wants to avoid a conflict in North Korea which upsets the status quo and leads to even larger U.S. presence in the region.

North korean rocket

President Trump’s rhetoric on the matter has been a match for Kim Jong-un’s in terms of hyperbole. He tweeted the U.S. military is “locked and loaded” Friday. If North Korea performs another missile test, or attempts an actual strike, the president is building the expectation he will act. That makes it harder to walk back.

Continue reading....

August 14 2017

moneymetals

August 02 2017

moneymetals

Raising the Debt Ceiling Means Jacking Up Future Inflation

The dramatic failure of the U.S. Senate’s last-ditch Obamacare repeal effort leaves Republicans so far without a major legislative win since Donald Trump took office. No healthcare reform. No tax reform. No monetary reform. No budgetary reform.

July 27 2017

moneymetals

Something Big, Bad And Ugly Is Taking Place In The U.S. Retirement Market

While the highly inflated value of the U.S. Retirement Market reached a new high this year, something is seriously wrong when we look behind the scenes. Of course, Americans have no idea that the U.S. Retirement Market is only a few steps from falling off the cliff, because their eyes are focused on the shiny spinning roulette wheel called the Wall Street Stock Market.
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