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September 21 2018

moneymetals

Oil Prices, War Fears, and Rising Inflation All Point to Gold Strength Audio Player

Well now, without further delay, let’s hear this week’s exclusive interview with the man who famously advises people to have always have guns, gold and a getaway plan.

Gerald celente

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

Gerald, thanks for the time again today, and welcome back.

Gerald Celente: Oh, thanks for having me on, Mike.

Mike Gleason: Well Gerald, one of the hot topics in the markets today is the escalating trade tensions. Trump just announced another $200 billion in tariffs on China and he looks ready to more than double that if the Chinese should retaliate. The President is confident the U.S. can win a trade war. Do you share that optimism? How do you see this playing out?

Gerald Celente: I absolutely share that. Because I mean, here's the deal. If your or I were to do business and I'm making $350 billion more than you are, are you going to want to renegotiate this? Hey listen, something's wrong over here. So, when you look at even with the tariffs that Trump is putting on, that still amounts to a very small percentage of China's GDP, about 0.3%, or something like that, 5%, 6% tops. So China's going to negotiate. They're not going to give up a very lucrative business deal, so they could keep making more when the other business partner wants a better share.

Mike Gleason: And how do you see the escalating tariffs impacting markets? So far the response appears mixed. The dollar seems to be benefiting, and metals are suffering. We aren't sure the markets have it right when it comes to the dollar though. It seems to us that tariffs should drive price inflation. Either Americans pay a higher price for the imported goods, or replace them with more expensive domestic products. And the Chinese aren't likely to be buying as many dollars or treasuries if exports to the U.S. fall – to say nothing of their ability to wage and all-out currency war against the dollar. But so far, at least the dollar is getting stronger in foreign exchange markets. What are we missing?

Gerald Celente: Well, I think what people are missing is they're making too much of a deal of the trade war. It's every day. It's almost become stupidity with the business media. Every day they're going, “the market goes up because trade wars eased. The market’s down because trade fear is increased.” I mean, come on. What are they kidding? I mean, the world is bigger than that. Even what you saw car sales start slumping in China, the headlines blamed the trade wars. Does the average person give a damn about a trade war? They're buying what they're buying, they got what they got. If they don't have it, they don't spend it. If they have it, they spend it. They don't know what's going on behind the scenes and the details of a trade war. The media has dumbed down so much… it's every day. It's one excuse. And as far as the dollar going up, it's interest rates.

I mean, the United States is raising interest rates. You're looking at what, even with the United States raising interest rates, what are you looking at the overnight, the Fed funds rate? 1.75 to two? And what is it 1.5 in Canada and the U.K. Negative interest rates in Europe and the European Union. Negative in Denmark. Negative in Sweden. Negative in Japan. I mean, it's ridiculous. So what I'm saying, Mike is that the markets cannot take a rate increase. That's why the currencies are going down. And matter of fact, we just heard from the number two guy in China, Lee, saying that to think that the Chinese, he said, want to devalue our currency is ridiculous. He said we're not going to make up that much more trade on having our currency decline. Because by the same token, you look at China, what are they the largest importer of energy in the world? And now the Yuan is going down, and oil prices are going up. Oh, and what are oil prices based on? Petrodollars. So now as their currency declines, they got to input more energy. And it's based in dollars, as the dollar gets stronger, they don't want this to happen.

So to me it's a lot of misinformation out there. And again, I'm no Trump fan. I mean, I think the guy is ridiculous on a lot of stuff. But the media is so anti Trump that they'll keep using one play a day, and overlooking the bigger story.

Full Podcast here: https://goo.gl/9oqzzB

September 19 2018

moneymetals

Trump’s Backdoor Power Play to Rein In the Fed

“Just run the presses – print money.”

That’s what President Donald Trump supposedly instructed his former chief economic adviser Gary Cohn to do in response to the budget deficit. The quote appears in Bob Woodward’s controversial book Fear: Trump in the White House.

Trump disputes many of the anecdotes Woodward assembled. But regardless of whether the President used those exact words, they do reflect an “easy money” philosophy that he has expressed many times before.

Trump Likes Low Rates, Loose Money

President Trump has described himself as a “low interest rate person.”

Trump and the federal reserve

This past summer, Trump launched a very public attack on the Federal Reserve’s rate hiking campaign. He wants it to stop because it’s making the dollar “too strong” and threatening to undercut his tax cut fiscal stimulus.

There’s only so much dollar strength the U.S. economy and U.S. debt and equity markets can take. President Trump is keenly aware of the risks.

A Fed rate hike next week is a given at this point.

The Trump-versus-Fed feud will likely heat up again in December if the central bank raises its benchmark short-term rate at its scheduled policy meeting. Although a December hike is far from certain, Fed chair Jay Powell and company seem intent on raising interest rates again – and possibly a couple more times in 2019 if the markets don’t melt down before then.

Additional tightening will increasingly put the central bank on the wrong side of the President’s Twitter feed. If Donald J. Trump wants to put more than social media pressure on Fed officials, he can threaten to remove them.

Trump himself appointed Powell, a decision he now apparently regrets. It would be unprecedented for a president to fire a Fed chairman before his term is up... but not necessarily inconceivable. After all, President Trump has done a number of unprecedented things, as the anti-Trump media are wont to remind us.


Read more: https://www.moneymetals.com/news/2018/09/18/trumps-power-play-fed-001619

September 14 2018

moneymetals

Gold vs. Bitcoin

Since its introduction in 2009, bitcoin has taken the financial world by storm.

The enormous gains in bitcoin’s value are attracting attention around the world, both positive and negative. People ranging from everyday consumers to central bankers now have an eye on the digital currency.

Some remain skeptical. Several high-profile hacks in which tens or even hundreds of millions of dollars-worth of bitcoin were stolen from bitcoin exchanges have raised doubts that a purely digital asset can ever be secured. Others wonder if money without official government backing and no physical manifestation can really succeed.

On the other hand, many see bitcoin as the future of money – destined to end run banks and governments and the fiat currency systems they control.

What is Bitcoin?

what is bitcoinBitcoin is a peer-to-peer, decentralized, digital currency with more than 10 million holders as of this writing. The lure of decentralization, lower transaction fees, and pseudo-anonymity has fostered adoption around the world. And people are increasingly looking for alternatives as central banks around the world continue to abuse national currencies.

There is a particular concern regarding the U.S. Federal Reserve Bank’s perpetual devaluation of its Federal Reserve Notes – commonly known as dollars. Although it is no longer a true dollar, which was historically defined in terms of a certain amount of silver, today’s U.S. dollar is still the world’s reserve currency. And Fed officials recognize no limits in terms of how many dollars can be created.

​Check it out here: 
https://www.moneymetals.com/guides/bitcoin-vs-gold


July 17 2018

moneymetals

Gold & Silver Investors’ 8 Commandments for Avoiding Rip Offs

For every promising investment opportunity you come across, there are multiple opportunities for bad-faith brokers and hucksters to try to rip you off.

It could be undisclosed commissions and fees in an annuity, unwanted accounts opened up by a banker seeking additional fees, trades sabotaged by market manipulators, or any number of other schemes.

Rip-off artists, unfortunately, operate within the precious metals space as well.

Most recently, a scammer posing as a government agent in order to gain people’s trust was convicted of selling counterfeit gold bars and phony Morgan silver dollars. He took one investor for $11,000, according to reports.

You can avoid this type of scam as well as other common cheats when buying or selling precious by heeding the following guidelines.

1. Avoid “Too Good to Be True” Deals

If a price on a bullion product sounds too good to be true – or comes with exorbitant incentives or exaggerated claims – you should be suspicious.

Too good to be true!

Gold and silver bullion products do not legitimately sell below spot prices. Individuals holding precious metals can visit a dealer and sell items immediately, for full value. Given that everyone has this option, it is highly likely anyone offering items well below actual value is trying to stick it to you.

Legitimate dealers cannot afford to offer items way below cost either. Dealers must charge small premiums above spot prices to reflect product minting costs and the costs of doing business. (One notable exception: 90% silver U.S. coins minted prior to 1965 (aka “junk” silver) which exhibit significant wear occasionally become available at melt value or even slightly lower.)


Check out the other commandments.. (https://goo.gl/Zb8zg4)

June 26 2018

moneymetals

U.S. Gold Exports to London Surge

As U.S. gold exports to Hong Kong and China fell 25% in the first four months of the year, London picked up the slack. According to the USGS, U.S. gold exports to London surged more than doubled from January to April, compared to the same period last year. Interestingly, the amount of gold exported to London during this period nearly equaled the total U.S. domestic gold mine supply.

From the data reported in the USGS Gold Mineral Industry Survey’s, U.S. gold exports to the U.K. (London) jumped to 64.3 metric tons (mt) Jan-Apr, versus 25.5 mt during the first four months last year:

Total u.s. gold exports to the u.k.

Here is the breakdown of U.S. gold exports to London for each month:

Jan = 12.2 mt

Feb = 12.1 mt

Mar = 21.2 mt

Apr = 18.8 mt

Total 64.3 mt

As I have mentioned, a lot London’s gold is exported to China and Switzerland. And then, the majority of Switzerland’s gold is exported to Hong Kong and China. For example, according to the statistics on GoldChartsrus, in March, the U.K. exported 16 mt of gold to China and 32 mt of gold to Switzerland. In the very same month, Switzerland exported 80 mt of gold to Hong Kong and China. So, most of the west’s gold still ends up in Hong Kong and China.




Continue reading the article 

June 22 2018

moneymetals

Gerald Celente:Why You Still Need Guns, Gold, and a Getaway

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

Mike Gleason: It is my privilege now to welcome in 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 again today, and welcome back.

Gerald Celente: Thanks for having me on.

Mike Gleason: Well, Gerald, the potential for a trade war is the hot topic in the financial press these days. Around here, the question is what escalating concerns over trade might mean for the precious metals markets, and we would like to get your thoughts on that. But first, please give us your take on the President's trade policy in general. Some people think the U.S. has been a major beneficiary of trade. We've been able to import real goods and services in exchange for increasingly worthless dollars. Others hate what so-called globalization has done to U.S. manufacturing and think Trump is delivering a long overdue warning shot to nations who have taken advantage of the U.S. So, where do you stand on all this?

Gerald Celente: Well, we've been in the business since 1980. When NAFTA began, actually under Reagan began it trying to push through and Bush Sr., and they couldn't push through much, but Bill Clinton was the one that really brought us into NAFTA and China into the World Trade Organization. So, you just look at the numbers, and the numbers speak for themselves. Before we were in NAFTA, we had basically a neutral exchange in terms of merchandise trade deficit between Mexico and the United States. And now we have a $71 billion deficit. Who would do business like that? Would you do business with someone where you lose $71 billion a year? Then when you look at China ... and we lost by the way about 975,000 manufacturing jobs, and Clinton promised that we would gain 200,000. But I didn't have sex with that woman, Monica Lewinsky, and I smoked but I didn't inhale, so you know the guy's full of it from the beginning and to the end, and he's still a hero.

Then you look at China, what he did bringing them into the World Trade Organization. We lost about 3.5 million jobs, and we have a merchandise trade deficit with them of $375 billion a year. You can't blame Mexico or China or other countries on this. You have to, as we look at it, put the blame on the companies that went overseas to get their products made by cheap labor and then bring them back to the United States and sell them so they could gain greater profits. If you can't have an agreement with workers in your country to pay them a living wage, go to a slave labor country and get them made over there is basically what happened.

For example, 97% of the shoes and clothing that we wear are made overseas. When you go back to the 1990s, that wasn't true. It was being made over here. And then you look at the standard of living and the declines. The facts are all there. A matter of fact, we're right now, our standard of living of real personal income is below 1999 levels. Again, we don't blame anybody other than the ones that did it. China and all these other countries, Vietnam, they didn't have the technology. The Europeans and the Americans gave them the technology to do it. So, they sold us out.

So what Trump is doing with this, as we see it, this is typical Trump's Art of the Deal negotiation strategy that we point out in our Trend Alerts. You take North Korea, for example. He calls the guy Rocket Man, a moron, a maniac, and then after he meets with him, he's an honorable, great guy. The deal is done. He goes to the extremes. And that's what we believe he's doing with the tariff situation, because again, China's only buying about $130 billion worth of our goods. And they're selling us $375 billion. Are they going to kill the deal? Of course not. So, there's going to be a negotiation of this. Bottom line is, Mike, at this level, we don't see a trade war coming yet. It's not in the cards right now.

Mike Gleason: Now, when it comes to the gold and silver markets, the impact of trade policy will, we think, largely depend upon how that policy impacts the U.S. dollar. So far, the foreign exchange markets are reacting as if a potential trade war might be good for the dollar. It has been strengthening relative to other world currencies. Now, we're not so sure the markets have it right. The U.S. may run massive trade deficits on lots of products, but the one product that we export a ton of is the U.S. dollar. Anything that reduces this demand for the greenback overseas is liable to cause some problems, and the dollar is already under attack as the global reserve currency. What do you think? Will these escalating trade conflicts be good or bad for the dollar, and good or bad news for gold?


Read/Listen to the entire podcast here: 

June 08 2018

moneymetals

Pento: Inflation to Skyrocket When Fed Reverts to New QE & Interest Rate Cuts


Michael pento

Mike Gleason: It is my privilege now to welcome back Michael Pento, president and founder of Pento Portfolio Strategies and author of the book, The Coming Bond Market Collapse: How to Survive the Demise of the U.S. Debt Market. Michael is a well-known money manager and a fantastic market commentator, and over the past few years, has been a wonderful guest and one of our favorites here on the Money Metals Podcast. We always love getting his highly-studied Austrian economist viewpoint.

Michael, welcome back, and thanks for joining us again.

Michael Pento: Thanks for having me back on, Mike.

Mike Gleason: Well, Michael, we were struck by one statistic in particular in the latest edition of your always great Pentonomics commentary and we urge people to sign up for your email list, so they can start getting those themselves, if they're not doing that already. But in that piece, you referenced Chapter 11 bankruptcy spiking 63% in March versus the same month a year ago. This is a dramatic move, and it tells a very different story than the one people are hearing all day long on CNBC these days. You also mentioned the carnage in the retail sector, rising delinquencies in the subprime auto loans and other indicators, which are back to levels we last saw just before the 2008 financial crisis.

Meanwhile, the talking heads are going on about how strong the U.S. economy is, and to be fair, they can point at statistics such as unemployment, strong performance in the equities, at least until recently, consumer sentiments, and other positive signs. At this point, most Americans think the U.S. economy is in better shape and likely to get stronger, but we know at key turning points in the markets, most people wind up being wrong. Now, you are certainly sounding the alarm here, Michael, so give us your thoughts on the real state of the U.S. economy, and what are a couple of the key indicators, and what are those indicators telling you about what we should expect in the months ahead?

Michael Pento: Well, Mike, first of all, this kind of reminds me a little bit of maybe late 2007, early 2008. And I want to remind all your listeners that the economy entered a recession officially, for NBER rates recessions, in December of 2007. We were already in a recession at the end of 2007, but nobody really knew it. The stock market was still doing okay. And if you look at the metrics, some of the metrics that you quoted in that question still looked very well and fine and dandy, but underneath that ersatz construct, the economy was eroding very quickly. The yield curve had already inverted. Bank lending was drying up. And home prices were already in the process of rolling over. You fast-forward to today, and you can point to many things that will make you think the economy is doing well. You look at the JOLTS, Job Opening Labor Turnover construct. If you look at ISM Manufacturing surveys, we still have some time to go before this recession becomes absolutely, positively manifest.

But here's what's going on underneath. Let me just show you how, and let me try to prove to your listeners and your audience why this particular edifice is built of cards, this economic edifice is going to wash away. Let's just take a couple of things that I want to point out to your audience. In the wake of the Great Recession, it became clear to me that the level of asset prices along with the amount of debt outstanding in the world absolutely mandates that interest rates remain near 0% and never normalize. Otherwise, the entire artificial financial construct falls apart. This is the only thing keeping everything together. So, this is the rubber bands and tape and glue that's keeping Japan solvent, that's keeping the eurozone solvent, that's keeping China any semblance of solvency, and even in the United States.

Let me give you an example of what I'm talking about. If you look at the total value of equities as a percent of GDP, it's now at a record high, very close to 150%. If interest rates move too far off the zero bound, that ratio would close by the denominator, which is GDP, falling, but the numerator, which is asset prices, crashing much, much faster. Let me give you one more example. You touched on it a little bit when you mentioned business debt. Corporate debt as a percentage of GDP is also at a record high. These are nominal records and as a percentage of the economy. And also, the credit quality of that debt is at a record low. As this ratio contracts, what you'll see is GDP contracting again, but corporate debt defaulting in spades, which will manifest into a global recession/depression, which will be marked by rapid deflation. That is the condition of the global economy today. It's held together by artificially low rates, which are now in the process of being removed.

Don't forget, in the United States, QE ended in, I believe, 2014. QE ended. We have raised rates six times. There'll be a seventh rate increase next week. The ECB went from €80 billion per month to €30 billion. They'll probably end that program. We'll find out more next week. They'll probably end that program by the end of this year. And what you have is a condition when you have global debt as 330% of GDP, $230 trillion, up $70 trillion since the Great Recession. Interest rates are going to start to rise, because central banks have the hubris to believe that they solved all of the world's problems. And it is that rising debt, which is going to pop asset prices and pop corporate debt and personal debt and student loans and credit cards and leveraged loans, CLOs, these are all of the things that are going to pop simultaneously. It's going to happen very quickly. And unfortunately, I believe it is going to be much worse, the fallout is going to be much worse, than that of 2009.

Mike Gleason: People listening to this would say, "Well, why do they have to raise rates? Maybe they'll just stand where they are or go with the lower," but obviously there's a credibility factor here that's going to probably prevent them from reversing course, at least talking about the Fed. They've talked about raising interest rates. They're probably going to do it because their credibility is at stake. Isn't that fair to say?


You can find the entire podcast here​

June 04 2018

moneymetals

Money Metals Is the Best Place to Sell Your Metal (Even If We Don’t Think You Should)

We don’t talk about it much, but Money Metals Exchange is literally the best in the nation when it comes to buying precious metals from clients who need to sell. We’ll explain why that is in just a moment. First, however, it’s important to explain why we don’t promote it, despite having several competitive advantages.

We just don’t think most people should be selling metals, at least not now.

Buy, hold, sell

In fact, holding a position in physical bullion is, we believe, more important than ever. Our position on that hasn’t changed, even though the sideways action in the metals markets in recent years has sometimes been frustrating and difficult to watch.

The dollar’s future is more bleak than ever. The U.S. borrows too much, spends too much, and promises too much.

A national bankruptcy is coming and it will destroy confidence, the ephemeral foundation underpinning the Federal Reserve Note dollar.

We believe this is a truth which cannot be avoided, and no amount of price rigging or central economic planning can change it.

That said, it has always been a priority for us to make an honest and fair two-way market for our clients. We’re committed to supporting them whether they need to buy OR sell.

And there are, of course, plenty of good reasons to sell metal. Sometimes folks simply need cash for some other purpose – and gold and silver are highly liquid assets. Or maybe they simply disagree with our take on where the precious metals markets are headed.

So Money Metals has been steadily building tools to make it even easier for sellers as well.

​Continue reading the article on MMX

June 01 2018

moneymetals

Axel Merk Exclusive: Inflation & Precious Metals to Rise, Fed to Act Late

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

Axel merk

Mike Gleason: It is my privilege now to welcome back Axel Merk, President and Chief Investment Officer of Merk Investments and author of the book Sustainable Wealth. Axel is a highly sought after guest at financial conferences and on news outlets throughout the world and it's great to have him back on with us.

Axel, it's a pleasure to have you join us again today and thanks very much for coming on.

Axel Merk: Great to be with you. What a week.

Mike Gleason: Exactly. Well, Axel when we spoke to you in February the equity markets were in the midst of a sell off and some significant volatility, which had been extraordinarily low, came roaring back to life. Since then, the stocks have recovered some. The S&P regained about half of what it lost by the end of February and has been trading in a range since then.

Our thoughts are that precious metals are trading inversely correlated to equities markets, at least for now. Unless we get a pullback in stocks or more appetite for safe-haven assets it will be hard for metals to get much going to the upside. But what are your thoughts on the relationship between gold prices and stock markets, Axel? And what factors do you expect to be driving stocks between now and say the end of the year?

Axel Merk: Sure, and for context I think we should just mention we are talking before the Non-Farm Payroll Reports (are out), so who knows what's happened to markets since we have talked? One of the things I don't recall if I mentioned in February is, ever since last December, and I still believe in that, the markets have been a bit like a washing machine. That correlations have been breaking down. And, if you go back to, kind of, all the way to the financial crisis, that's the 2008 one, not the one from a week ago, that means that whenever there was a crisis the Fed bought treasuries. And so whenever “risk” falls off, when equities are plunging, bonds were rising. And that kind of ingrained this perception about certain types of correlations and so, similarly, the price of gold was actually reasonably highly correlated to that of treasuries. And so we got this thing that gold and the stocks are sometimes moving in tandem, sometimes they move in opposite directions.

Since January 1970, if you look at monthly correlations, the correlations between stocks and bonds is 0.00. So, there is no correlation. Yet, we get caught up in this thing that, for months at a time, sometimes there’s a correlation that is significant. I think the most noteworthy thing of late is that yields have been, until a good week ago, have been matching higher and the price of gold was falling up. And then, conversely, when bond yields were falling, gold didn't rise.

And so, gold has kind of marched on its own in some ways and I happen to believe that a lot of the buyers of gold these days are doing it because they are concerned about the equity markets because of volatility spiking. And the reason why volatility and the price of gold are related is because gold doesn't have cashflow. And that means the future cashflows don't get discounted more, whereas, if you have a quote unquote risk asset, like equities, and volatility increases, those future cashflows get discounted more and the prices of equities, all else equal, tends to fall. So, that's why in “normal” circumstances the price of gold should rise when equities tumble. Obviously, that doesn't always happen.

Mike Gleason: You pay more attention than most people to events in Europe and the European markets. Lately, troubles in the PIGS nations have crept back into the news. Populace in Italy and Spain are making hay by opposing EU imposed austerity and it's a reminder that deep fundamental issues remain and the union may not survive. Let's start by getting your take, if we can, on the overall status of the EU. Will there be any high-profile exits, perhaps by Italy or Spain? Is Great Britain going to complete its exit? Or are you expecting the EU to weather the storm here, Axel​? 


Continue reading (source) ​

May 29 2018

moneymetals

GLOBAL FINANCIAL BREAKDOWN CONTINUES: Economic Growth Chokes On Massive Debt Increases

The U.S. and global economies are choking on a massive amount of debt. While Wall Street and the Mainstream financial media continue to rationalize the skyrocketing debt as merely the cost of doing business, the disintegrating fundamentals point to an economic catastrophe in the making.

Of course, a full-blown economic meltdown may not occur this year or even next, but as time goes by, the situation continues to deteriorate in an exponential fashion. So, the cheerleaders for higher stock, bond, and real estate prices will continue to get their way until the economy is thrown into reverse as decades of increasing debt, leverage and margin finally destroy the engine for good.

Yes, I say for good. What seems to be missing from the analysis is this little thing called energy. The typical economist today looks at the global markets much the same way as a child who is waiting for the tooth fairy to exchange a tooth for a $20 bill. When I was a kid, it was $1 per tooth, but like with everything today, inflation is everywhere.

Mainstream economists just look at market forces, percentages, and values on a piece of paper or computer. When economic activity begins to fall, they try to find the cause and remedy it with a solution. Most of the time, the solutions are found by printing more money, increasing debt, changing interest rates or tax percentages. And… that’s about it.

There is no mention of what to do with energy in the economist’s playbook. For the typical economist, energy is always going to be there and if there are any future problems with supply, then, of course, the price will solve that issue. Due to the fundamental flaw of excluding energy in College economic courses; the entire profession is a complete farce.

Unfortunately, even the more enlightened pupils of the Austrian School of Economics fail to understand the Thermodynamics of value. Instead, we are only taught about SUPPLY & DEMAND to impact price. While supply and demand forces impact price, they only do so over a short period of time. However, the primary factor that determines price (for most goods, services, commodities, metals & energy) is the cost of production. Supply and demand only pull price above or push it below the cost of production trendline.

Regardless, you don’t have to take my word for it, just look at the following charts below.


Continue reading (source

April 20 2018

moneymetals

Jim Rickards Forecasts New Financial Crisis & Makes Prediction About Gold

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

Jim rickards

Mike Gleason: It is my great privilege now to be joined by James Rickards. Mr. Rickards is Editor of Strategic Intelligence, a monthly newsletter and Director of the James Rickards Project, an inquiry into the complex dynamics of geopolitics and global capital. He's also the author of several bestselling books including The Death of MoneyCurrency WarsThe New Case for Gold and The Road to Ruin. In addition to his achievements as a writer and author, Jim is also a portfolio manager, lawyer and renowned economic commentator, having been interviewed by CNBC, the BBC, Bloomberg, Fox News and CNN, just to name a few. And we're happy to have him back on the Money Metals Podcast.

Jim, thanks for coming on with us again today. We really appreciate your time as always and how are you?

Jim Rickards: I'm doing great Mike, great to be with you. Thank you.

Mike Gleason: Well Jim, I figure a good place to start here is with one of your most recent books. We want to get your take on the state of the world economy. In your book titled The Road to Ruin: The Global Elites' Secret Plan for the Next Financial Crisis, you make some very interesting comments. Now while the financial media is talking about booming stock markets and accelerating GDP growth, you aren't quite as optimistic. We both know that most of the growth we've seen in recent years has been built with huge amounts of central bank stimulus and the fundamental problems that drove the last financial crisis have hardly been resolved. In fact, you think the next financial catastrophe isn't too far away and many among the elite are getting ready for it. If you can, briefly lay out some of what you've been seeing.

Jim Rickards: Sure Mike, you touched on two different threads. One is, let's call it the short to intermediate term, which is how's the economy doing? What would the forecast be for the year ahead? What do I think about stocks and so forth? That's one part of the analysis, but the other one is a little bigger and a little deeper, which is what about another major financial crisis, a liquidity crisis, global financial panic and what would the response function be to that.

Let me separate. They're related because, I mean the point I always make is that there's a difference between a business cycle recession and a financial panic. They're two different things. They can go together, but they don't have to. For example, October 29, 1987, the Stock Market fell 22% in one day. In today's Dow terms that would be the equivalent of 5,000 Dow points, so we're at 26,000 or whatever, as we speak, a 22% drop would take it down about 5,000 points. You and I both know that if the Dow Jones fell 500 points that would be all anybody would hear about or talk about. Well, imagine 5,000 points. Well, that actually happened in percentage terms in October 1987. So, that's a financial panic, but there was no recession. The economy was fine and we pulled out of that in a couple of days. Actually after the panic, it wasn't such a bad time to buy and stocks rallied back. Then, for example in 1990, you had a normal business cycle recession. Unemployment went up. There were some defaults and all that, but there was no financial panic.

In 2008, you had both. You had a recession that began in 2007 and lasted until 2009 and you had a financial panic that reached a peak in September-October 2008 with Lehman and AIG, so they're separate things. They can run together. Let's separate them and talk about the business cycle. I'm not as optimistic on the economy right now. I know there's a lot of hoopla. We just had the big Trump Tax Bill and the Stock Market's reaching all time highs. I mean, I read the tape. I get all that, but there are a lot headwinds in this economy. There's good evidence that the Fed is over-tightening.

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February 15 2018

moneymetals

U.S. Public Debt Surges By $175 Billion In One Day

After the U.S. Government passed the new budget and debt increase, with the President’s signature and blessing, happy days are here again. Or are they? As long as the U.S. Government can add debt, then the Global Financial and Economic Ponzi Scheme can continue a bit longer. However, the days of adding one Dollar of debt to increase the GDP by two-three Dollars are gone forever. Now, we are adding three-four Dollars of debt to create an additional Dollar in GDP. This monetary hocus-pocus isn’t sustainable.

Well, it didn’t take long for the U.S. Government to increase the total debt once the debt ceiling limit was lifted. As we can see in the table below from the treasurydirect.gov site, the U.S. public debt increased by a whopping $175 billion in just one day:


U.S. debt increased 175 billion feb 2018

I gather it’s true that Americans like to do everything… BIG. In the highlighted yellow part of the table, it shows that the total U.S. public debt outstanding increased from $20.49 trillion on Feb 8th to $20.69 trillion on Feb 9th. Again, that was a cool $175 billion increase in one day. Not bad. If the U.S. Government took that $175 billion and purchased the average median home price of roughly $250,000, they could have purchased nearly three-quarter of a million homes. Yes, in just one day. The actual figure would be 700,000 homes.


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January 12 2018

moneymetals

World Debt Is Rising Nearly Three Times As Fast As Total Global Wealth

Some nasty dark clouds are forming on the financial horizon as total world debt is increasing nearly three times as fast as total global wealth. But, that’s okay because no one cares about the debt, only the assets matter nowadays. You see, as long as debts are someone else’s problem, we can add as much debt as we like… or so the market believes.

Now, you don’t have to take my word for it that the market only focuses on the assets, this comes straight from the top echelons of the financial world. According to Credit Suisse Global Wealth Report 2017, total global wealth increased to a new record of $280 trillion in 2017. Here is Credit Suisse’s summary of the Global Wealth 2017: The Year In Review:

According to the eighth edition of the Global Wealth Report, in the year to mid-2017, total global wealth rose at a rate of 6.4%, the fastest pace since 2012 and reached USD 280 trillion, a gain of USD 16.7 trillion. This reflected widespread gains in equity markets matched by similar rises in non-financial assets, which moved above the pre-crisis year 2007’s level for the first time this year. Wealth growth also outpaced population growth, so that global mean wealth per adult grew by 4.9% and reached a new record high of USD 56,540 per adult.

Total global wealth 2000-2017, current exchange rates (chart 1) | total global wealth 2000-2017, constant exchange rates (chart 2)

This year’s report focuses in on Millennials and their wealth accumulation prospects. Overall the data point to a “Millennial disadvantage”, comprising among others tighter mortgage rules, growing house prices, increased income inequality and lower income mobility, which holds back wealth accumulation by young workers and savers in many countries. However, bright spots remain, with a recent upsurge in the number of Forbes billionaires below the age of 30 and a more positive picture in China and other emerging markets.

There are a few items in the Credit Suisse’s summary above that I would like to discuss. First, how did the world increase its global wealth at a rate of 6.4% in 2017 when world oil demand only increased 1.6%??

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