Max Keiser

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Gold, Silver, Bitcoin
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A Possible Trade from Where We Are | SilverDoctors.com

La, 08/18/2018 - 18:26

I’m into silver for the very long haul.

Because spot prices go up, but up as slow as a crawl.

If your into silver to get rich quick, like the greedy.

You’ll end up in the street begging for handouts and needy.

– jetshack

 

 

If You Want to Survive this Election with Your Mental Health Intact, Turn Off the “News” and Social Media Now

La, 08/18/2018 - 01:20

Since elections are extremely profitable for traditional media / social media corporations, your sanity will gleefully be sacrificed in the upcoming election–if you are gullible enough to watch the “news” and tune into social media.Elections are extremely profitable because candidates spend scads of cash on media adverts.

The greater the discord and derangement, the higher the media profits. The more outraged you let yourself become, the more time you spend online, generating insane profits for the corporations that own whatever platforms you’re addicted to.

Seeking an echo chamber of people who agree with you? We got you covered. Attracted like a junkie to emotionally corrosive “news”? That’s our specialty! Want an outlet for your spleen? That’s what we offer, because “we connect people” (haha).

In other words, if you have a self-destructive attraction to anger, helplessness, frustration, bitter unhappiness and derangement–then by all means, watch the “news” and soak up social media. But while you’re destroying your mental health for zero positive gains, please recall that six corporations plus Amazon zillionaire Jeff Bezos own the vast majority of the mainstream media–a truly frightening concentration of power in the hands of a few whose sole purpose is to maximize profit.

This concentration of media control creates the illusion of choice— the same elite-propaganda spin is everywhere you look; our “choice” of “approved” (i.e. corporate) media is roughly the same as that offered the Soviet citizenry in the old USSR.

Given the Corporate Media spews the same tired, Soviet-style narrative with increasing desperation, it’s no wonder than public trust in the mainstream media is plummeting to all-time lows. The “news” isn’t just “fake”: it’s designed to push narratives that benefit self-serving elites at the expense of non-elites.

Given the extreme profitability of divisiveness, it’s also no wonder that political polarization is reaching extremes:

Here’s a reality that you’ll never see in the corporate media, because it’s off message:

As entrenched interests compete to protect their profitable skims, scams, monopolies and fiefdoms, the bottom 95% are slipping into darkness. “The lifestyle you ordered” is not just currently out of stock–it’s no longer being produced.

Propaganda doesn’t have to change your mind to be effective– all it has to do is disable your critical thinking by blinding you with rage, misdirecting your attention, generating an “Other” that acts as a target for projected frustration, creating either-or thinking, splinter the working / middle classes into divisive “tribes” supported by echo-chamber social media and addict you to constant drips of carefully tailored emotional derangement.

Welcome to the corporate / social media’s gulag of the mind: We’ll tell you what’s “true” and what is correct to think and believe. Any deviation from the party line is a threat and must be discredited, marginalized or suppressed.

The greater your mental anguish and derangement, the more profit you generate for the corporate / social media, because the more time you spend “engaging” media and social media, the more money they make.

Nobody in the corporate / social media cares about your mental health–that’s not what they’re paid to care about. They’re paid to sacrifice your mental health to increase their corporate profits. That’s the election in a (heretical) nutshell.

If you want to preserve your sanity and avoid unhappy derangement, turn off all corporate and social media from now to Thanksgiving, and other than watching sports or nature programs, it’s best to leave the corporate / social media off until Christmas–Christmas 2020. 

My new book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition.

Read the first section for free in PDF format. 

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

This Week’s Golden Nuggets

Pe, 08/17/2018 - 15:17

News, Market Updates and Videos You May Have Missed

As it’s Friday we are bringing you our weekly digest of the news, market updates, charts and videos that caught our eye this week.

We are also giving you a link to our most recent episode of the Goldnomics Podcast – Jim Rogers on Gold, Silver & Surviving the Coming Crash (Episode 7). We have been getting some great feedback on this and our previous episodes of our podcast, so why not check out one or two episodes this weekend.


Market Updates This Week

Gold And Silver Prices Fall Sharply To Near 2 Year Lows Despite Strong Demand In Turkey
London House Prices Fall At Fastest Rate Since Height Of Financial Crisis
Financial Crisis In Turkey To Trigger “Wider Calamity In Global Markets”


Videos of the Week

Click here to continue reading on GoldCore.com

Gold And Silver Fall Sharply Despite Surging Demand In Turkey

To, 08/16/2018 - 15:13

Gold And Silver Prices Fall 1.6% and 4.3% To Near 2 Year Lows

Gold and silver prices fell sharply again yesterday and were down 1.6% and 4.3% respectively to multi-month lows.

Gold drifted lower all day and ended near its late session low of $1173.20/oz, its lowest since January 2017, for a loss of 1.6%. Gold in euros has been more robust of late and it fell to about €1036/oz.


Gold in USD – 1 Year

Silver saw another bout of intense selling on the futures market and was pushed as low as $14.37/oz. There was no economic news or silver related developments that would account for the deepening sell-off.

It is again a purely futures-related price action with no refineries, mints or dealers reporting a sudden selling of silver bullion. Quite the opposite, contrarian gold and silver buyers are again accumulating coins and bars on the dip.

Demand for gold jewellery and gold bars has surged in Turkey due to the currency crisis. Gold trading volumes on the Turkish Gold Exchange (Borsa Istanbul) have more than doubled and gold prices in Turkish lira have surged by more than a third since March as reported by Bloomberg. Or rather the Turkish lira has collapsed in value by a third versus gold.

The sharp falls in the precious metals is being attributed to dollar strength. The U.S. dollar is holding steady near a recent peak for now, despite the increasingly precarious fiscal outlook as Trump’s reckless government spending has seen the national debt surge to $21.35 trillion – an increase of $1.45 trillion since Trump, the  “King of Debt”, took office.

Click here to read full story on GoldCore.com.

Our “Prosperity” Is Now Dependent on Predatory Globalization

To, 08/16/2018 - 05:30

So here’s the story explaining why “free” trade and globalization create so much wonderful prosperity for all of us: I find a nation with cheap labor and no environmental laws anxious to give me cheap land and tax credits, so I move my factory from my high-cost, highly regulated nation to the low-cost nation, and keep all the profits I reap from the move for myself. Yea for free trade, I’m now far wealthier than I was before.

That’s the story. Feel better about “free” trade and globalization now? Oh wait a minute, there’s something missing–the part about “prosperity for all of us.” Here’s labor’s share of U.S. GDP, which includes imports and exports, i.e. trade:

Notice how labor’s share of the economy tanked once globalization / offshoring kicked into high gear? Now let’s see what happened to corporate profits at that same point in time:

Imagine that–corporate profits skyrocketed once globalization / offshoring kicked into high gear. Explain that part about “makes us all prosperous” again, because there’s no data to support that narrative.

What’s interesting about all this is the way that politicians are openly threatening voters with recession if they vote against globalization. In other words, whatever “prosperity” is still being distributed to the bottom 80% is now dependent on a predatory version of globalization.

Let’s rewind to the era of truly free trade, from the late Bronze Age up to the Roman Era. In the late Bronze Age (circa 1800 to 1200 B.C.), vigorous trade tied together the ancient empires and states of the Mideast and the Mediterranean. In the Roman Era, trade in silk and other luxuries tied China, India, Africa, the Mideast and the Roman Mediterranean together in a vast trading network.

In the good old days, merchants paid for goods in gold or silver, as the value of the precious metals were known to all and relatively easy to transport and verify.

Nowadays, trade and “prosperity” are dependent on currencies that are created out of thin air via borrowing or printing. The problem with gold, in the view of predatory globalization, is that it can’t be printed or conjured out of thin air. That won’t do, because predatory globalization’s primary export is newly printed currencies: dollars, euros, yen and yuan.

This puts every nation that can’t print a global reserve currency at an extreme disadvantage. While the U.S. can conjure “money” out of thin air and trade it for goods, other nations must cough up resources and goods in exchange for the “money,” and borrow it at hefty rates of interest if they want to use the global “money” for development or investment.

That leaves them highly vulnerable to foreign exchange fluctuations which can raise the cost of their interest due in dollars, etc. to punishing heights while devaluing whatever they built with the dollars, etc. they borrowed.

Then there’s a financial crisis of loan defaults and those who created and loaned out their global reserve currency demand the debtor nation sell all its assets and resources at bargain prices. Being a member of the European Union didn’t save Greece from this fate; no peripheral nation can protect itself from the predatory powers who can create currency at zero cost and send the value higher by restricting its issuance after other nations have loaded up on loans denominated in the reserve currency.

This is how “free” trade works in predatory globalization: The only thing that’s free is the cost of issuing trillions in global reserve currency. Everything else will cost you dearly. 

My new book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition.

Read the first section for free in PDF format. 

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

London House Prices Fall At Fastest Annual Rate Since Height Of Financial Crisis

Ke, 08/15/2018 - 15:16

– London house prices fall at the fastest annual rate since height of the financial crisis
– London house prices fall in 5th month in row, worst falls since 2009
– London rents dropped at the fastest rate in eight years – ONS
– Brexit, London property slump put brake on UK house price growth

– Consumer spending declined in July as inflation increased

UK house price growth slowed in June to the lowest annual rate in five years according to official figures, likely driven by falling prices in London, Brexit and increasing economic and geo-political uncertainty.

The property slowdown is hitting London hardest. House prices in London fell at the fastest annual rate since the height of the financial crisis, while rents dropped at the fastest rate in eight years, according to the ONS.

The UK’s annual house price growth rate has been on a downward trajectory since mid-2016.

Average house prices across the country increased just 3% in the year to June, down from a 3.5% gain in May, the lowest annual rate since August 2013, the Office for National Statistics (ONS) said.

The UK-wide dip in growth was driven mainly by a slowdown in the south and east of England.

Click here to read full story on GoldCore.com.

Technocrats Rule: Democracy Is OK as Long as the People Rubberstamp Our Leadership

Ti, 08/14/2018 - 19:53

We are in a very peculiar ideological and political place in which Democracy (oh sainted Democracy) is a very good thing, unless the voters reject the technocrat class’s leadership. Then the velvet gloves come off. From the perspective of the elites and their technocrat apparatchiks, elections have only one purpose: to rubberstamp their leadership.

As a general rule, this is easily managed by spending hundreds of millions of dollars on advertising and bribes to the cartels and insider fiefdoms who pony up most of the cash.

This is why incumbents win the vast majority of elections. Once in power, they issue the bribes and payoffs needed to guarantee funding next election cycle.

The occasional incumbent who is voted out of office made one of two mistakes:

1. He/she showed a very troubling bit of independence from the technocrat status quo, so a more orthodox candidate is selected to eliminate him/her.

2. The incumbent forgot to put on a charade of “listening to my constituency” etc.

If restive voters can’t be bamboozled into passively supporting the technocrat status quo with the usual propaganda, divide and conquer is the preferred strategy. Only voting for the technocrat class (of any party, it doesn’t really matter) will save us from the evil Other: Deplorables, socialists, commies, fascists, etc.

In extreme cases where the masses confound the status quo by voting against the technocrat class (i.e. against globalization, financialization, Empire), then the elites/technocrats will punish them with austerity or a managed recession.The technocrat’s core ideology boils down to this:

1. The masses are dangerously incapable of making wise decisions about anything, so we have to persuade them to do our bidding. Any dissent will be punished, marginalized, censored or shut down under some pretext of “protecting the public” or violation of some open-ended statute.

2. To insure this happy outcome, we must use all the powers of propaganda, up to and including rigged statistics, bogus “facts” (official fake news can’t be fake news, etc.), divide and conquer, fear-mongering, misdirection and so on.

3. We must relentlessly centralize all power, wealth and authority so the masses have no escape or independence left to threaten us. We must control everything, for their own good of course.

4. Globalization must be presented not as a gargantuan fraud that has stripmined the planet and its inhabitants, but as the sole wellspring of endless, permanent prosperity.

5. If the masses refuse to rubberstamp our leadership, they will be punished and told the source of their punishment is their rejection of globalization, financialization and Empire.

Technocrats rule the world, East and West alike. My two favorite charts of the outcome of technocrats running things to suit their elite masters are:

The state-cartel-crony-capitalist version: the top .1% skim the vast majority of the gains in income and wealth. Globalization, financialization and Empire sure do rack up impressive gains. Too bad they’re concentrated in the top 1.%.

The state-crony-socialist version: the currency is destroyed, impoverishing everyone but the top .1% who transferred their wealth to Miami, London and Zurich long ago. Hmm, do you discern a pattern here in the elite-technocrat regime?

Ideology is just a cover you slip over the machine to mask what’s really going on. 

My new book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition.

Read the first section for free in PDF format. 

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

Jim Rogers on Gold, Silver, Bitcoin and Blockchain’s “Spectacular Future”

Ti, 08/14/2018 - 13:59

Jim Rogers, legendary investor and “Adventure Capitalist” speaks with Mark O’Byrne, GoldCore’s Director of Research, in the Goldnomics Podcast (Episode 7).

Are the actions of the US administration making China great again? What currency is going to challenge the US dollar as the global reserve? What can we do to protect ourselves against the next financial crash?

 

Key insights:

– Blockchain “has a spectacular future”
– “Blockchain is going to change everything” and “a lot of people are going to lose their jobs”
– “I don’t suspect cryptocurrencies are going to survive”
– Bitcoin and cryptocurrencies will be suppressed by governments
– Crypto currency guys are smarter than “every governments you can think of” but the “governments have the guns”
– Governments favour government digital currency and “love the fact that it gives them total control”
– Everybody should have a “Plan B” in the 21st Century and be willing to move country, residence and diversify investments internationally
– Gold and silver “are going to be huge bubbles” and favors silver as is “more depressed”
– Switzerland, Austria and Singapore are his bullion storage locations of choice
– “Everybody should own some gold and silver”


Listen on Blubrry, Soundcloud and iTunes. Watch on YouTube below

Skip directly to one of the following discussion points on YouTube

01:00Meet Jim Rogers: Best-selling author, traveler, finance expert and investment guru.

03:30 – Looking at the facts and potential, is the 21st century truly an Asian century?

05:00 – Are Trump’s policies right for the American economy?

06:10 – Increasing global debt and the potential for stagflation, depression and trade conflicts around the world.

08:10 – Unreported off balance sheet debt and other liabilities, and the most recent Institute for International Finance global debt report – should we be worried?

10:05 – It’s global debt, we all owe it to each other. Should we be concerned?

11:10Are central banks powerful enough to keep debts at manageable levels?

11:52 – Can we trust the dollar as a store of value down the road?

13:06 – Brexit and other eurozone conflicts: Is the euro safe?

14:11 – Is the Euro properly structured and sound enough to survive the EU conflicts?

15:00 – The Chinese renminbi looks set to take over as the next best international reserve currency.

17:53 – The future of cryptocurrency and blockchain technology.

19:01 – Bitcoin and most other cryptocurrencies may not survive into the future because government have the guns and government don’t like losing control.

20:10 – Future digital currencies is going to most likely be government money.

22:22 – Gold and silver “are going to be huge bubbles” and favors silver as is “more depressed”

25:50 – Picking the best location to store or own your gold.

26:23 – What do precious metals owners know that other investors don’t know?

29:01 – Learn Mandarin as a first, second or third language and know about the world.

30:28 – Everybody needs to have a Plan B just in case.


Make sure you don’t miss a single episode… Subscribe to Goldnomics Podcasts on iTunes or on YouTube

 

 

Gold Clinging To $1200 For Dear Life As The Fiat Currency Crisis Goes Global

Ma, 08/13/2018 - 16:47

We have been talking about the currency crisis and currency wars that have been gripping various parts of the world.

Namely the South American countries of Argentina and Venezuela have seen their share of currency turmoil.

Well now, we’re not just isolated to South America as the currency crisis spreads.

First, not necessarily “crisis”, but devaluation, is the Chinese yuan.

The overwhelming belief is that the Chinese are devaluing the yuan as a weapon in the trade war:

There has also been plenty of talk about the yuan peg to gold, as in gold in dollars is moving with the dollar price of the yuan, tick for tick.

The yuan is taking a backseat, at least for now, however.

That is because Turkey is the latest nation to see its currency in utter crisis.

The move is rather parabolic:

That’s nearly 200 points in the move since last Thursday to Monday morning, from 5.27 to 7.12.

CLICK HERE TO READ THE REST OF THE WEEKLY OUTLOOK ON SILVER DOCTORS

The Grand Irony of RussiaGate: The U.S. Becomes More Like the U.S.S.R. Every Day

Su, 08/12/2018 - 20:06

There are many ironies in the RussiaGate drama, but none greater than this: The U.S. becomes more like the former U.S.S.R. every day. Longtime correspondent Bart D. sketches out the irony:

I look at the US economy and what I see in actual everyday life is that corrupted capitalism has resulted in the same problems for average citizens as what crony communism did for the citizens of the USSR.

Poor consumer choice. Poor resource allocation. Poor quality consumer products. Poor environmental management/outcomes. Hyper-vigilance and hyper-control of Government over its people. Dodgy Utilities. The difference is that the Soviet Union had a better healthcare system than USA currently has and better housing availability for common people.

How’s the irony! Capitalism and Communism ultimately end up with similar outcomes and for the same reason: Cartel behaviours and cronyism.

Exactly. When the system is rigged to benefit insiders, cartels, cronies and elites at the expense of the many “outsiders,” the status quo must mask this reality with propaganda and Big Lies: that is, keep repeating the lie until people believe it due to its embrace by “experts” and authorities.

Case in point: inflation. The masses consuming the mainstream media apparently accept the Big Lie that inflation (i.e. loss of purchasing power of our money) is 2%, i.e. near zero.

But the reality is quite different: stagnant wages + soaring real-world inflation = lower standards of living, which is precisely what the bottom 80% of American households have been experiencing for the past decade of “growth” and “recovery.”

The citizens of the old Soviet regime had a wry saying: they pretend to pay us and we pretend to work. I propose a variation for the hapless US citizenry:

They pretend inflation is low and we pretend to be prosperous.

The current clampdown on social media and alternative media in America is ripped right from the playbook of the Soviet regime. We must “protect” you from “fake news,” lest you start questioning the official narratives of strong growth, prosperity, low inflation, etc.

Then there’s the case of Julian Assange, in exile for releasing what everyone concedes is factual evidence on par with The Pentagon Papers in the 1970s which blew up the false (but convenient to the elites) narratives of the Vietnam War.

They can’t paint Assange with the “fake news” brush, so they exile him just as the old Soviet regime exiled Andrei Sakharov in 1980, a hero of the Soviet Union and laureate of the Nobel Peace Prize in 1975.

Please note that the Soviet Union collapsed a decade after exiling Sakharov.Ramping up repression and official propaganda, strangling dissent and marginalizing independent skeptics are the desperate, last-ditch tactics of a doomed regime that only serves the interests of insiders and elites.

There are many pathways to collapse, with financial collapse being a favorite of regimes that print/borrow immense sums to buy off their populace and enrich the insiders/elites– for example, Venezuela:

When the Soviet regime exiled Sakharov in 1980, everybody assumed the USSR was permanent and impregnable to collapse. In other words, “it can’t happen here.” But it did happen, and believing “it can’t happen here” did nothing but hasten the collapse. 

My new book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition.

Read the first section for free in PDF format. 

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

This Week’s Golden Nuggets

Pe, 08/10/2018 - 13:46

As it’s Friday we are bringing you a selection of some of the precious metals articles, graphs and videos that caught our eye this week.

We are also giving you a link to our most recent episode of the Goldnomics Podcast – Trump’s War with China. We have been getting some great feedback on this and our previous episodes of the Goldnomics Podcast, so why not check out one or two episode this weekend!

We will be releasing the next episode on Monday. We are very excited about it because it features an interview with the legendary investor and “Adventure Capitalist”, Jim Rogers.

You can see two short clips from the podcast in this weeks featured videos. Check them out to whet your appetite.

This Week’s Featured Article The Next Silver Run To $50 (And Beyond)

By Theodore Butler

Twice in the past the price of silver has risen in a short period to $50. It happened in 1980 during the Hunt brother’s manipulation and again three decades later in April 2011, when the price rose to nearly $50. Prior to the price run up in 2011, I wrote that a move to $50 was more than possible, since it had already occurred and that proved such a move was possible. Something that has happened twice before can certainly occur again. One thing that makes it probable is that there was three times the amount of silver above ground in 1980 than there is today. The six billion ounces that existed in 1980 has shrunk to two billion ounces of industry standard 1000 ounces bars. The amount of world money creation and buying power has increased exponentially over the past seven years. It is nothing short of extraordinary that there is less than a third of world silver inventories remaining today than there was in 1980 while the price has remained far below the peak it reached back then.

In 1980, there were less than 3 billion ounces of gold in all forms above ground throughout the world – the cumulative production of thousands of years. Today, 38 years later, the total amount of above ground gold has doubled, thanks to an explosion of gold mine production. While silver mine production has similarly exploded over the past 38 years, there is much less silver around now. The explanation for why there is so much less silver and so much more gold is that silver is a vital industrial commodity, consumed in a wide variety of applications, while gold is not. Silver lost its primary consumption use – photography, due to digital displacement, but despite this loss, a myriad number of new uses powered silver’s continued consumption. Unlike silver, the price of gold is substantially higher than it was at its peak in 1980.

There is no minimizing the powerful dynamics in place for the next move higher in silver. That move should extend far beyond the $50 barrier of the past and, when the move does start, it will most likely unfold much quicker than the previous big moves. When it occurs, most observers will be dazed and confused. The principle dynamic of this coming big move in silver and gold will be the role of JPMorgan. Over the past ten years, as a result of its government-assisted takeover of Bear Stearns, JPMorgan has been the dominant futures (paper) short seller on the COMEX, becoming so powerful that it has compiled a perfect trading record – never once taking a loss and amassing many billions of dollars of trading profits. As remarkable as this unblemished trading record of the past decade has been, it actually pales in comparison to what JPMorgan has been able to accomplish in the physical market. It has used the highly depressed prices it largely created to accumulate on the cheap 750 million ounces of physical silver and 20 million ounces of physical gold.

The accumulation of such a massive private hoard of physical silver and gold, by far the largest such amounts in history, is the single most powerful argument that the coming move higher will be one for the record books. JPMorgan is the unchallenged master of the financial universe and it didn’t go to the trouble of accumulating such massive and historic quantities of physical silver and gold for a quick trade or a small gain. It did so in order to make the largest profit in history. I understand that many doubt my claims that JPMorgan has amassed 750 million ounces of physical silver and 20 million ounces of gold. After all, aside from the near 150 million documentable ounces of silver that JPMorgan holds in its own COMEX warehouse proof of the other 600 million ounces that JPM owns is notably missing. Certainly, if the entire 750 million ounces could be seen by everyone, there would be no debate. It is precisely because most of the silver held by JPMorgan can’t be seen that makes my claim noteworthy.

As it stands, JPMorgan’s accumulation of physical silver and gold is mostly unknown. I think this is a good thing because when silver does fly higher, no one will be pointing the finger at JPMorgan. They will skate undetected to many tens of billions of dollars of profits with the world blissfully unaware of the real story. It is in JPMorgan’s self-interest to hide from view as much of its silver and gold accumulation as possible. Even though the 600 million silver ounces held by JPMorgan are hidden, I have described in detail to subscribers (and in public articles) the three main means by which it has acquired the metal on a weekly basis going back at least five years. First was via skimming off a small portion of the unprecedented, yet documented weekly physical movement in and out of the COMEX silver warehouses – an inventory movement not seen in any other commodity. Over the past 7.5 years, more than 1.5 billion ounces of silver have physically been moved in and out of the COMEX silver warehouses of which JPMorgan has skimmed off at least 200 million ounces (apart from the 144 million ounces it holds in its own COMEX warehouse).

Next, JPMorgan bought at least 150 million ounces of Silver American Eagles and Canadian Maple Leafs from 2011 thru 2016, melting every coin into industry standard 1,000 ounce bars. JPMorgan’s buying alone accounted for the string of record sales years and when it stopped buying, sales of these coins collapsed. Finally, as the official custodian for SLV, the world’s largest silver exchange traded fund (ETF), JPMorgan was ideally positioned to convert shares in the trust to metal and avoid all ownership reporting requirements. This alone is the explanation for the continuous counterintuitive deposits and withdrawals in SLV over the past seven and a half years. All told, JPMorgan picked up at least 250 million ounces of physical silver in this manner. All three of these accumulation methods by JPM were reported weekly to subscribers for years, and I suppose anyone not privy to the reporting would doubt it had occurred. Not much I can do about that.

As great as JPMorgan’s massive and historic holdings of physical silver are, remarkably, there is more. Not coincidently, the “more” also involves JPMorgan. At this time, it is accepted that the futures market structure in COMEX silver and gold (and other metals) is the most bullish it has been in history. Specifically, the level of short selling by the managed money technical funds is the highest it has been in history. This is clearly bullish as these technical fund shorts have no choice but to buy back their short positions at some point and switch (or try to switch) to the long side. Thus, a massive amount of potential buying is already in place, awaiting only the eventual occurrence of higher prices to be set off.

While the current bullish market structure in COMEX silver and gold is reasonably well known and written about, much less is known about JPMorgan’s role in forming this bullish market structure. CFTC data verifies that JPMorgan has been, by far, the largest purchaser of COMEX silver and gold futures contracts over the past couple of months. In other words, not only has JPMorgan been the largest buyer in history of physical silver and gold over the past seven years it has also been the largest buyer of COMEX futures contracts on the deliberately-engineered price decline of late.

By my calculations and based upon CFTC data, JPMorgan has bought back 20,000 COMEX silver short contracts (the equivalent of 100 million ounces) and 90,000 COMEX gold short contracts (the equivalent of 9 million ounces). How many more COMEX futures contracts can be bought by JPMorgan is anyone’s guess, but based upon the record short selling by the managed money traders, it wouldn’t appear that JPMorgan can buy many more COMEX contracts. After all, the record managed money selling is what enabled JPMorgan to buy so many contracts in the first place; once that selling dries up, JPMorgan is unlikely to be able to buy many more contracts as a result.

It is the highly concentrated nature of JPMorgan’s futures contract buying that sets the stage for an upside price jolt that promises to unfold faster to the upside than any previous move. So deft has JPMorgan been in buying gold futures contracts recently that I have taken to describing it as a double cross of other traders. But once the move higher unfolds, it promises to be the largest rally in silver and gold in history by virtue of the massive physical hoard accumulated by JPMorgan.

Amazingly, all it will take for this price explosion scenario to unfold is for JPMorgan not to add aggressively to short positions when the inevitable rally begins. You heard me right – the silver price explosion to $50 and beyond, along with a commensurate move in gold is only contingent on JPMorgan doing nothing on the next rally. Admittedly, JPMorgan has been in many similar set ups in the past and has always added aggressively to its COMEX short positions, eventually capping those rallies. This has prompted many to assume that JPMorgan will always sell short aggressively on future rallies. But the current set up has never favored JPMorgan this much. If what JPMorgan has always done holds true again we will get a rally of some significance anyway, just not the big one. But if JPMorgan doesn’t add to short positions on the next rally, the third run to $50 silver and beyond should be at hand.

Ted Butler

Videos of the Week

Charts of the Week


Today’s News and Commentary

Stocks Fall With Euro on Turkey Contagion Concern: Markets Wrap (Bloomberg.com)

Gold prices buoyed by global political tensions (Reuters.com)

Gold Heads Higher After PPI as Attention Shifts to Inflation (Investing.com)

Gold Seeker Closing Report: Gold and Silver Close Mixed (GoldSeek.com)


Credit: Bloomberg

The Next Silver Run To $50 (And Beyond) (SilverSeek.com)

BoE Hikes for the Second Time since Lehman (GoldSeek.com)

Fort Knox Gold? (GoldSeek.com)

Listen on SoundCloud , Blubrry & iTunesWatch on YouTube below


Gold Prices (LBMA AM)

09 Aug: USD 1,215.50, GBP 944.08 & EUR 1,048.13 per ounce
08 Aug: USD 1,212.35, GBP 939.57 & EUR 1,045.17 per ounce
07 Aug: USD 1,215.40, GBP 937.32 & EUR 1,048.77 per ounce
06 Aug: USD 1,212.00, GBP 934.94 & EUR 1,048.26 per ounce
03 Aug: USD 1,207.70, GBP 928.60 & EUR 1,042.97 per ounce
02 Aug: USD 1,217.60, GBP 931.22 & EUR 1,048.23 per ounce

Silver Prices (LBMA)

09 Aug: USD 15.48, GBP 12.01 & EUR 13.35 per ounce
08 Aug: USD 15.35, GBP 11.93 & EUR 13.24 per ounce
07 Aug: USD 15.47, GBP 11.93 & EUR 13.34 per ounce
06 Aug: USD 15.35, GBP 11.86 & EUR 13.30 per ounce
03 Aug: USD 15.36, GBP 11.81 & EUR 13.26 per ounce
02 Aug: USD 15.45, GBP 11.78 & EUR 13.29 per ounce


Recent Market Updates

– The Stock Market is Stretched to Double Tech-Bubble Extremes
– Jim Rogers and the World’s New Reserve Currency
– Gold—Even at its Lowest Levels in 2018—is Behaving Just as Prescribed
– Jim Rogers – Making China Great Again! (Video)
– This Week’s Golden Nuggets
– Gold to Enter New Bull Market – Charles Nenner
– Here’s Where the Next Crisis Starts
– House prices aren’t just slipping in the UK – this is global
– Russia Sells 80% Of Its US Treasuries
– Are China’s Gold Reserves Slowly Rising?
– Gold Outlook In H2 2018
– Gold Production In South Africa Continues To Collapse – Plummets 85% From Peak In 1970 (VIDEO)
– Physical Gold Is The “Best Defence” Against “Escalating Currency Wars”
– Trump and War With China? Goldnomics Podcast
– Weekly Digest – News, Market Updates and Videos You May Have Missed

The Stock Market is Stretched to Double Tech-Bubble Extremes

To, 08/09/2018 - 14:28

By Joe Ciolli – BusinessInsider.com


Credit: Reuters

  • Leuthold Group has sounded the alarm on a valuation metric that shows the S&P 500 is twice as expensive as it was at the peak of the tech bubble.
  • This development could have large implications for stock investors of all types, particularly value traders who make their living by finding discounts in the market.

With the stock market within shouting distance of an all-time high, traders are readying their Champagne bottles.

Just don’t tell them about the eye-popping statistic just published by the reputed research outfit Leuthold Group , lest you spoil their fun.

Leuthold has taken a fairly traditional valuation measure — the price-to-sales ratio, or P/S — and added a twist. Rather than take the market-cap-weighted P/S for the benchmark S&P 500 , the firm has calculated the median P/S for every company in the index.

And as you can see from the red line in the chart, the historical comparison is jarring. Going by the median P/S measure, the S&P 500 is actually twice as expensive as it was at the peak of the tech bubble.

Click here to read full story on GoldCore.com.

The Fantasy of “Balanced Returns” Funding Retirement

Ke, 08/08/2018 - 19:30

The fantasy that a “balanced portfolio” yielding “balanced returns” will fund a stable retirement for decades to come is widely accepted as a sure thing:inflation will stay near-zero essentially forever, assets such as stocks and bonds will continue yielding hefty income and capital gains, and all the individual or fund needs to do is maintain a “balanced portfolio” of various asset classes that yield “balanced returns,” i.e. some safe “value” lower-yield returns and some higher risk “growth” returns.

This fantasy is based on the belief that yields will exceed real inflation for decades to come. That is, if inflation is 2%, and the average yield of a “balanced portfolio” is 6%, then the inflation-adjusted return is 4% annually–not great, but enough to secure retirement income.

What few dare ask is: what happens if inflation is 7% and yields drop to 2%?Then the retirement fund loses 5% of its purchasing power every year. In a decade, the fund’s value will decline by roughly half.

Oops. Analysts such as John Hussman have been pointing out that historically, eras of outsized returns such as the past decade are followed by eras of low or even negative returns. So assuming a “balanced portfolio” of corporate and sovereign bonds, growth stocks, index funds, etc. will yield 6% to 7% like clockwork is essentially betting that this time is different: high growth will never pause or reverse.

But let’s say things really unravel, and inflation is 8% and yields are negative 2% for a few years. Retirement funds will lose 10% of their purchasing power every year. In a few years, the fund will lose half its value.

What happens if the current “everything” asset bubble pops, and inflation starts running away from policy makers? It’s worth recalling that declines on the order of 75% to 80% are common when bubbles finally pop–for example, the NASDAQ stock index post-2000.

If inflation (i.e. the currency loses purchasing power) gets out of hand due to excessive money creation to fund interest on debt, entitlements and obligations, the only cure is to raise interest rates significantly. Higher rates destroy the value of existing bonds and they strangle speculation and debt-dependent projects and spending.

Higher rates means corporations, governments and households must pay more each month in interest, leaving less income for spending and investment.Unfortunately, the global economy is largely dependent on rapidly expanding debt for its survival. As this chart shows, the tiny reduction in debt expansion in 2008-09 very nearly collapsed the global financial system.

Only the conjuring of $20 trillion out of thin air by central banks saved the day and the decade.

Counting on endless real returns of 5% or more essentially forever is embracing a fantasy. Never mind what asset mix is considered “balanced”– bubbles pop, and when the “everything” bubble pops, it means stocks, bonds and real estate will all experience significant declines, and if history is any guide catastrophic declines in some asset classes.

That central banks and governments can create endless mountains of new money to fund soaring obligations without triggering a decline in purchasing power is also a fantasy. As I’ve explained in the past, it seems like central banks have created a financial perpetual motion machine: the government borrows $1 trillion to fund obligations, and the central bank “prints” $1 trillion and buys the government debt.

It seems so painless and perfect–who cares if the central bank balance sheet balloons to $100 trillion? We owe it to ourselves, the government can’t go broke since it can always print more money, etc.

The grim reality is printing trillions and pumping that newly issued currency into a stagnant, dysfunctional economy reduces the purchasing power of the currency, i.e. inflation. To use a health analogy, we’ve been gorging on doughnuts, pizza and beer for a decade, and since we’re still apparently disease free, we assume we can keep enjoying this diet for decades to come.

The consequences of systemic sclerosis are non-linear, meaning they pile up unseen until the major organs give out and the apparently disease free individual collapses in a heap.

Consider how a “balanced portfolio” yielding “balanced returns” worked out for middle class retirees in Venezuela:

 

My new book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition.

Read the first section for free in PDF format. 

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

Jim Rogers and the World’s New Reserve Currency

Ke, 08/08/2018 - 13:56

Today we’re bringing you another clip from our upcoming Episode of the Goldnomics Podcast with the legendary investor and “Adventure Capitalist”, Jim Rogers.

In this clip Jim tells us what he thinks about the long-term safe-haven status of the US dollar and what he sees as the future for the Euro currency. Jim also give us his opinion on what he suspects might be the currency to emerge as the only viable but necessary competition to the “highly flawed” US dollar as the world’s reserve currency.

About Jim

Jim is an American businessman, investor, traveler, financial commentator and author. He is the Chairman of Rogers Holdings and Beeland Interests, Inc. He was the co-founder of the Quantum Fund and creator of the Rogers International Commodities Index.

From his home in Singapore, Jim is in conversation with Mark O’Byrne, GoldCore’s Director of Research, discussing the implications for savers and investors of the developments in geopolitics and financial markets.

Be sure to catch the full Episode 7 of the Goldnomics Podcast when it’s released this Friday 10th August 2018

Trump Trade and Currency Wars With China –  Goldnomics Podcast

News and Commentary

Gold steady as dollar softens versus stabilising yuan (Reuters.com)

Gold And Silver Markets: Are Hedge Funds Setup For A Short Squeeze? (Investing.com)

EU parliament agrees to ease liquidity rules for gold trading (Reuters.com)


Credit: Bloomberg

Brexit – Will The EU Collapse Anyway? (TruePublica.org.uk)

Trader Warns “The Entire World Is Explained By 10-Year Yields” (ZeroHedge.com)

COMEX Gold and the Commitment of Traders Report (GoldSeek.com)

Listen on SoundCloud , Blubrry & iTunesWatch on YouTube below


Gold Prices (LBMA AM)

07 Aug: USD 1,215.40, GBP 937.32 & EUR 1,048.77 per ounce
06 Aug: USD 1,212.00, GBP 934.94 & EUR 1,048.26 per ounce
03 Aug: USD 1,207.70, GBP 928.60 & EUR 1,042.97 per ounce
02 Aug: USD 1,217.60, GBP 931.22 & EUR 1,048.23 per ounce
01 Aug: USD 1,222.75, GBP 932.47 & EUR 1,046.55 per ounce
31 Jul: USD 1,219.20, GBP 926.71 & EUR 1,039.86 per ounce

Silver Prices (LBMA)

07 Aug: USD 15.47, GBP 11.93 & EUR 13.34 per ounce
06 Aug: USD 15.35, GBP 11.86 & EUR 13.30 per ounce
03 Aug: USD 15.36, GBP 11.81 & EUR 13.26 per ounce
02 Aug: USD 15.45, GBP 11.78 & EUR 13.29 per ounce
01 Aug: USD 15.48, GBP 11.79 & EUR 13.24 per ounce
31 Jul: USD 15.43, GBP 11.72 & EUR 13.15 per ounce


Recent Market Updates

– Gold—Even at its Lowest Levels in 2018—is Behaving Just as Prescribed
– Jim Rogers – Making China Great Again! (Video)
– This Week’s Golden Nuggets
– Gold to Enter New Bull Market – Charles Nenner
– Here’s Where the Next Crisis Starts
– House prices aren’t just slipping in the UK – this is global
– Russia Sells 80% Of Its US Treasuries
– Are China’s Gold Reserves Slowly Rising?
– Gold Outlook In H2 2018
– Gold Production In South Africa Continues To Collapse – Plummets 85% From Peak In 1970 (VIDEO)
– Physical Gold Is The “Best Defence” Against “Escalating Currency Wars”
– Trump and War With China? Goldnomics Podcast
– Weekly Digest – News, Market Updates and Videos You May Have Missed

Gold—Even at its Lowest Levels in 2018—is Behaving Just as Prescribed

Ti, 08/07/2018 - 14:10

By: Rachel Koning Beals – News Editor Marketwatch

Gold’s sharp decline over the past month serves as little surprise to the investors who want the asset to perform in just this fashion—that is, as an alternative to assets perceived as risky, like stocks.

They’re betting that the opposite will be true as well, that gold will resume its role as protector and diversifier, even inflation hedge, when what they see as bloated price-to-earnings ratios, heavy debt-to-GDP ratios among major economies and hints of higher inflation finally catch up to the stock market.

“Sure, the opportunity cost of holding gold given where stocks are isn’t great, but the long-term reasons to own gold are just as real as they were months ago, as a store of value with low correlation to stocks,” said Adam Strauss, CFA, with Appleseed Capital.

For now, gold bulls have had to watch with some anxiety as gold prices GCQ8, +0.51% GCZ8, +0.48% plunged last month to their lowest level in nearly a year—notching a settlement as low as $1,224 an ounce at one point, and even grazing a $1,210 low in intraday action, in the futures market. That settlement marked gold’s entry into correction territory, or down more than 10% from its peak on Jan. 15 at $1,362.90. Gold futures have now fallen on a weekly basis for three weeks in a row.

Neither stocks nor gold have strictly followed the presumed rules in recent weeks as the threat of a full-scale trade war took root as the U.S. threatened to enact tariffs against China and the European Union and these trading partners responded in kind. Risk-on markets barely registered alarm; the S&P 500 index SPX, +0.35% has gained 3.6% so far in July. And gold, often serving as even a short-term haven stash when geopolitical and global economic worries flare, was largely ignored for this use; it’s on track to shed 2.5% this month and is down about 6.6% in 2018 to date. True, the stock-gold inverse relationship held, just not as expected.

However, there is another inverse relationship that is played out much as expected and that too restores gold holders’ confidence that the metal’s descent isn’t all that worrying. The trade-war worries elevated the U.S. dollar to haven status among currencies, markedly against China’s yuan CNYUSD, +0.3896% (see the following chart). A stronger dollar can make commodities priced in the currency, such as gold, more expensive to investors using other monetary units, thus cutting demand for gold.

After declining by 9.8% during 2017, for the steepest annual fall since 2001, the ICE dollar index DXY, -0.26% again started the year on the back foot. But since a mid-April nadir, the DXY, as the gauge is sometimes referred, has rallied by about 6%. Gold’s near-term fate may remain tied to the dollar, but there is little shock or surprise in that.

Part of gold’s drop has been because of a tainted association to commodities in general, a relationship that will presumably mean less to investors if and when they’re spooked back toward the shelter of the yellow metal if stocks retreat.

“While gold’s commodity function (jewelry) is not central to our monetary investment thesis, the fact remains that gold is a key component of most commodity indices. In fact, gold is currently the single largest weighting in the Bloomberg Commodity Index, at 9.32%. In the very short run, therefore, gold is not immune to the magnetic pull of displacements in the commodity complex,” said Trey Reik, senior portfolio manager with Sprott Asset Management.

He points to July 11, a particularly sharp daily drop for copper prices and even steeper declines for the Bloomberg Commodity Index since 2014. Base metals broadly fell 3%-plus that day, when gold comparatively fell a little more than 1%, a gap that “serves as a testament to gold’s non-correlating profile,” he said.

“We view gold’s early summer performance as incremental evidence of bullion’s true portfolio utility,” Reik said. “Gold is not a magical elixir, but it is a fiercely reliable store of value.”

Reik is worried about the durability of what he sees as buyback-fueled stock rally of relatively narrow breadth.

“While imbalances and fragilities continue to mount in traditional asset markets, gold’s portfolio insurance value is being priced remarkably cheaply,” said Reik. “This is frequently a signal that market dynamics are about to change.”

Peter Hug, global trading director with Kitco Metals, is watching exchange-traded fund interest, including in the popular gold-tracker SPDR Gold Shares GLD, +0.66%

“Inflow into ETFs have begun to accelerate,” said Hug in a recent commentary. “This is the vehicle used primarily by fund managers, and either they believe gold is cheap at $1,225 or they are becoming increasingly concerned of a ‘tipping’ event on the near-term horizon.”

“Technically, we would like to see gold break above the $1,237 level. We’ll leave a little on the table until we get this confirmation,” he said. Conversely, downside support remains at $1,220, said Hug, and gold remains vulnerable to a test of this marker.

Saxo’s Hansen also has an eye on $1,220, which represents a 50% retracement of the significant $329-per-ounce rally logged between December 2015 and July 2016.

“For this level to hold, however, it is clear that the dollar appreciation needs to pause or reverse, especially against the yuan,” said Hansen.

Appleseed’s Strauss believes stocks and their relative value justify diversification that includes gold. The S&P 500 has an overall P/E ratio, based on the past 12 months, of 24.9, according to S&P Global Inc. The average of the trailing P/E ratio of the index going back to 1960 is 19.2.

And some of the metal’s fate, though not its longer-term durability, resides with the rate-hiking Federal Reserve and Treasury yields TMUBMUSD10Y, +0.35% Higher rates in bonds lure demand away from haven gold, although that is only when higher yields offer enough compensation for inflation.

“The common fix for out-of-control debt/GDP ratios [in major economies] is to ‘inflate’ your way out of it,” Strauss said. “Consider that and the fact that while nominal interest rates are rising, real interest rates, when higher inflation is factored in, are still largely negative. That’s an environment in which gold has historically performed well.”

Trump Trade and Currency Wars With China –  Goldnomics Podcast

News and Commentary

Gold prices crawl up on steady dollar (Reuters.com)

Gold Prices Hover Near 17-month Lows as Dollar Weighs (Investing.com)

US sanctions on Iran to target gold, carpets and more (WebFQ.com)


Credit: Reuters

Gold—even at its lowest levels in 2018—is behaving just as prescribed (MarketWatch.com)

SWOT Analysis: Is The Dollar Near Its Peak? (GoldSeek.com)

The Federal Reserve As An Engine Of Deflation (sic!) (24HGold.com)

Listen on SoundCloud , Blubrry & iTunesWatch on YouTube below


Gold Prices (LBMA AM)

06 Aug: USD 1,212.00, GBP 934.94 & EUR 1,048.26 per ounce
03 Aug: USD 1,207.70, GBP 928.60 & EUR 1,042.97 per ounce
02 Aug: USD 1,217.60, GBP 931.22 & EUR 1,048.23 per ounce
01 Aug: USD 1,222.75, GBP 932.47 & EUR 1,046.55 per ounce
31 Jul: USD 1,219.20, GBP 926.71 & EUR 1,039.86 per ounce
30 Jul: USD 1,222.05, GBP 931.20 & EUR 1,045.95 per ounce
27 Jul: USD 1,219.15, GBP 931.06 & EUR 1,048.10 per ounce

Silver Prices (LBMA)

06 Aug: USD 15.35, GBP 11.86 & EUR 13.30 per ounce
03 Aug: USD 15.36, GBP 11.81 & EUR 13.26 per ounce
02 Aug: USD 15.45, GBP 11.78 & EUR 13.29 per ounce
01 Aug: USD 15.48, GBP 11.79 & EUR 13.24 per ounce
31 Jul: USD 15.43, GBP 11.72 & EUR 13.15 per ounce
30 Jul: USD 15.49, GBP 11.81 & EUR 13.25 per ounce
27 Jul: USD 15.36, GBP 11.72 & EUR 13.20 per ounce


Recent Market Updates

– Jim Rogers – Making China Great Again! (Video)
– This Week’s Golden Nuggets
– Gold to Enter New Bull Market – Charles Nenner
– Here’s Where the Next Crisis Starts
– House prices aren’t just slipping in the UK – this is global
– Russia Sells 80% Of Its US Treasuries
– Are China’s Gold Reserves Slowly Rising?
– Gold Outlook In H2 2018
– Gold Production In South Africa Continues To Collapse – Plummets 85% From Peak In 1970 (VIDEO)
– Physical Gold Is The “Best Defence” Against “Escalating Currency Wars”
– Trump and War With China? Goldnomics Podcast
– Weekly Digest – News, Market Updates and Videos You May Have Missed
– Financial Terrorism In The UK – Collusion between Government, Regulators & Two Bailed-Out UK Banks

 

We’ll Pay All Those Future Obligations by Impoverishing Everyone

Ma, 08/06/2018 - 18:50

I’ve been focusing on inflation, which is more properly understood as the loss of purchasing power of a currency, which when taken to extremes destroys the currency and the wealth/income of everyone forced to use that currency.

The funny thing about the loss of a currency’s purchasing power is that it wipes out every holder of that currency, rich and not-so-rich alike. There are a few basics we need to cover first to understand how soaring future obligations–pensions, healthcare, entitlements, interest on debt, etc.–lead to a feedback loop which will hasten the loss of purchasing power of our currency, the US dollar.

1. As I have explained many times, the only possible output of the way we create and distribute “money” (credit and currency) is soaring wealth/income inequality, as all the new money flows to the wealthy, who use the “cheap” money from central and private banks to lend at high rates of interest to debt-serfs, buy back corporate shares or buy up income-producing assets.

The net result is whatever actual “growth” has occurred (removing the illusory growth that accounts for much of the GDP “growth” this decade) has flowed almost exclusively to the top of the wealth-power pyramid (see chart below).

2. Much of the “growth” that’s supposed to fund public and private obligations is fictitious. Please read Michael Hudson’s brief comments for a taste of how this works: The “Next” Financial Crisis and Public Banking as the Response.

The mainstream financial media swallows the bogus “growth” story without question because that story is the linchpin of the entire status quo: if it’s revealed as inaccurate, i.e. statistical sleight of hand, the whole idea that “growth” can effortlessly fund all future obligations goes up in flames.

Combine that “growth” has been grossly over-estimated with an increasing concentration of wealth and income in the top .1% of 1%, and the only possible conclusion is there’s less available to pay fast-rising obligations out of what’s left to the bottom 99.9%.

3. We’ve been paying our obligations with debt for the past decade. Look at the chart below of the debt to GDP ratio–it has skyrocketed as GDP has inched higher while debt has exploded. (Remove the fictitious “growth” in GDP and the picture worsens significantly.)

Look at the chart of federal debt and explain how the steepening trajectory of debt is sustainable in a stagnating real economy with stagnating wages for the bottom 95% of the populace.

4. Recall that the federal, state and local governments pay interest on all the money they borrow to fund deficit spending, i.e. every dollar spent above and beyond tax revenues. All that interest is an increasing obligation that must be paid in the future. Borrowing more to pay interest increases the interest payments due in the future–a classic self-reinforcing runaway feedback loop.

5. Politicians get re-elected by increasing entitlements and obligations without regard to how they will be funded. “Growth” will effortlessly take care of everything–that’s the centerpiece assumption of all conventional economics, free-market, Keynesian and socialist alike.

6. The core constituencies of politicians are government employees and contractors, as these interest groups are funded by the government, which is nominally managed by elected officials and their appointees. Nobody’s more generous (or demanding) than those feeding directly at the government trough. (By “contractors” I mean the vast array of Corporate America cartels that feed off government spending: defense, Big Pharma, Higher Education, etc.)

7. The obligations that have been promised are expanding at a nearly exponential rate, as healthcare costs continue to soar and the number of government pensioners is rising rapidly. This chart illustrates the basic dynamic: the tax revenues required to fund these obligations are far outstripping the income and wealth of the bottom 95% of the populace.

Consider this chart of real GDP per capita, i.e. per person. Real GDP is adjusted to remove inflation from the picture, so this is supposed to be “real growth.” How many people are demonstrably 19% better off than they were in 2000?

Not many, judging by the decline in family financial wealth since 2001:

Income increases flow disproportionately to the top .1%. Adjusted for real-world inflation, the bottom 95% have actually lost ground:

Here’s the uncomfortable reality: the means to pay all these future obligations— the real-world economy, and the wealth and income of the vast majority of the populace– are far too modest to fund the fast-expanding obligations,which include interest due on the ever-increasing mountain of public and private debt.

The current “everything” asset bubbles have temporarily boosted the wealth and income of corporations and the wealthy, but all bubbles eventually pop as the marginal elements that are propping up the expansion weaken and implode.

Once the asset bubbles pop, the illusion that “taxing the rich” will pay for all the obligations pops along with the bubble. And as I’ve noted many times, those at the top of the wealth-power pyramid wield political power, so they have the means and the motive to limit their tax burden to roughly 20% or less–(sometimes much less, as in zero.)

That 20% is an interesting threshold, as once federal tax burdens rise above 20%, the higher taxes trigger a recession which then crushes tax revenues.This makes sense– if I pay an extra $2,000 annually in higher junk fees and taxes, that’s $2,000 less I have to invest or spend.

Put these dynamics together and you get one outcome: the federal government cannot possibly pay all its obligations out of tax revenues nor can it raise taxes high enough to do so without gutting tax revenues via a recession.

The only way to pay all these future obligation is by creating new money, which in a stagnant, dysfunctional economy can only reduce the purchasing power of the currency, in effect robbing every holder of the currency of wealth and income.

Here’s the end-game, folks: Venezuela. The nostrum has it that “the government can’t go broke because it can always print more money.” True, but as the wretched populace of Venezuela has discovered, there is a consequence of that money-creation to meet obligations: the destruction of the currency, and thus the wealth and income of everyone forced to use that currency.

 

My new book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition.

Read the first section for free in PDF format. 

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

Jim Rogers – Making China Great Again! (Video)

Ma, 08/06/2018 - 14:27

We are delighted to announce a very special guest for our next episode of the Goldnomics Podcast, due for release later this week.

We recently had the opportunity to speak with the legendary investor and adventure capitalist Jim Rogers.

Jim is an American businessman, investor, traveler, financial commentator and author. He is the Chairman of Rogers Holdings and Beeland Interests, Inc. He was the co-founder of the Quantum Fund and creator of the Rogers International Commodities Index.

From his home in Singapore, Jim is in conversation with Mark O’Byrne, GoldCore’s Director of Research, discussing the implications for savers and investors of the developments in geopolitics and financial markets.

Click here to read full story on GoldCore.com.

This Week’s Golden Nuggets

Su, 08/05/2018 - 01:33

As it’s Friday we are bringing you a selection of some of the precious metals articles, graphs and videos that caught our eye this week.

We are also giving you a link to our most recent episode of the Goldmomics Podcast – Trump’s War with China. We have been getting some great feedback on this and our previous episodes of the Goldnomics Podcast, so why not check out one or two episode this weekend!

This Week’s Featured Article Here’s Where the Next Crisis Starts

By Jim Rickards courtesy of the Daily Reckoning

So many credit crises are brewing, it’s hard to keep track without a scorecard.

The mother of all credit crises is coming to China with over a quarter-trillion dollars owed by insolvent banks and state-owned enterprises, not to mention off-the-books liabilities of provincial governments, wealth management products and developers of white elephant infrastructure projects.

Then there’s the emerging-markets credit crisis, with Turkey and Argentina leading a parade of potentially bankrupt borrowers vulnerable to hot money capital outflows and a slowdown of growth in developing economies.

Click here to read full story on GoldCore.com.

Here’s Why Rip-Roaring Inflation Is Inevitable

Su, 08/05/2018 - 00:25

One of the enduring mysteries of the past decade is why inflation has remained tame while the central bank and government have pumped trillions of dollars of newly created money into the economy. Millions of words have been written about this, and so some shortcuts will have to be taken to make sense of it in one essay.

Let’s start with the basics.

1. Adding newly created money but not generating new goods and services of the same value reduces the purchasing power of existing money. To keep it simple: say the economy of a country is $20 trillion. (Hey, the US GDP is $20 trillion…) Say its money supply is $10 trillion.

So banks and/or the government create $2 trillion in new money but the value of goods and services only expands by $1 trillion. the “extra” $1 trillion of newly created money (either “printed” or borrowed into existence) reduces the value of all existing money.

In effect, the new money robs purchasing power from all existing money.Those holding existing money have lost purchasing power while the recipients of the new money receive purchasing power they didn’t have prior to receiving the new money.

We can see how this works by looking at a chart of GDP to debt. As debt has soared (and remember, debt is “new money” that was loaned into existence), GDP has risen at a much lower rate, so the ratio of debt to GDP has skyrocketed. (see chart below)

2. Where “inflation” (higher prices for the same item) shows up depends on who gets the newly created money: the wealthy few or the wage-earning many. As I have explained many times, in our system, all newly issued money goes to banks, financiers and corporations–the super-wealthy few.

So what do already-wealthy people and companies do with trillions in new money? They buy assets–stocks and bonds and real estate. Wage earners who receive new money tend to save some of it but they also spend some of it. The super-wealthy and corporations already own more stuff than they know what to do with, so they spend the new money on income producing assets or stock buybacks.

The net result of giving all the new money to the wealthy is the inflation of an asset bubble, which is precisely what’s happened in the past decade. Real estate: bubble. Corporate debt: bubble. Stocks: bubble. We can see this bubble by comparing the value of the stock market to the real economy (as measured by GDP): the higher the ratio of stocks to GDP, the greater the bubble.

Look at the chart below. The current stock market bubble is the greatest in history, exceeded only by the insanity of the last few months of the dot-com bubble, when companies with very little revenue and zero profits were valued in the billions of dollars.

Stocks are in a bubble, period. This is the inevitable result of shoveling all the new money into the hands of the wealthy and corporations. Real-world inflation is certainly higher than official inflation, but the real inflation (higher prices for the same item) is in assets, which have tripled or quadrupled in a mere decade.

3. The inevitable consequence of asset inflation is rising income and wealth inequality. The wealthy few have gorged on assets with all the newly issued credit-money, and as the assets soared in value, they’ve become immensely wealthier.

A funny thing happens on the way to extremes of wealth/income inequality: social unrest, disorder, revolt. The lackeys and apologists that serve the interests of the wealthy few label this “populism,” but it’s really just the inevitable response to extremes of wealth/income inequality generated by funneling trillions in new credit-money to the wealthy few at the expense of wage-earners and holders of existing money.

4. To quell the revolt of the many, the Powers That Be will create trillions in new money and helicopter-drop it to the masses. This mass distribution of newly created money (borrowed into existence by the central bank and/or government) will flow into the real-world economy, not assets, and so the inflation (higher prices for the same item) will manifest in good and services.

This helicopter drop of newly created money will be called pensions, Universal Basic Income, tax subsidies, negative tax rates, etc. There are a lot of names for distributing newly created money that’s been borrowed into existence.

This is precisely what Venezuela has been doing for a decade: distributing newly created money that isn’t matched by a corresponding increase in the production of goods and services. And as we know, the result of this has been the complete destruction of the purchasing power of Venezuela’s money.

“That can’t happen here” is just what the Venezuelans thought five years ago.But really, it boils down to math: creating money out of thin air and pumping it into a dysfunctional economy destroys the purchasing power of the existing money. Those receiving the new money are like a snake eating its own tail.

Real-world inflation will blow the doors off every forecast of low inflation forever. From the point of view of the wealthy few who control the status quo in the US, they have a stark choice: either continue pushing wealth/income inequality to extremes that trigger social and political revolt, which puts their control at risk, or create and distribute trillions in “free money.”

They know this generates inflation, but the increases in the value of their assets have always far outstripped real-world inflation, so they don’t care about inflation. That’s for little people to worry about.

But what the wealthy few are forgetting is rip-roaring inflation destroys the system just as surely as wealth/income inequality. Just ask the Venezuelans how effective creating new money has been in terms of eliminating poverty: now their entire populace is impoverished, with the only exceptions being the wealthy few in control of the status quo.

The stability of America’s status quo is illusory. Can’t happen here is going to ring mighty hollow in five years.

Nothing to see here, move along. So what if debt has blown past GDP?

Rising stock valuations are good for America–or at least good for the few who own most of the stocks. Never mind this is the second-greatest bubble in history; stocks can never go down, volatility is low, the Fed has our backs, profits have never been higher, etc.

 

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Read the first section for free in PDF format. 

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Blockchain and security tokens are opening up secondary market trading to a wider audience

To, 08/02/2018 - 22:03

Startups used to all about going public. The US market saw more than 450 initial public offerings (IPOs) in 1999 alone right at the height of the dot-com boom.

This is not the case today. From 2015-2017, the yearly figure did not even tease 200. In 2000, it also only took ventures a span of three to five years for them to hold their IPOs. In 2016, venture-backed companies took somewhere between ten to twelve years.

This increased time span means that private company shareholders now have to wait before they are able to sell their shares in the open market. Should they decide to liquidate before IPOs, they have to resort to the secondary market and find investors interested in taking over their shares.

Fortunately, investor appetite for pre-IPO shares has risen. These assets promise massive returns down the line. This interest also allowed the secondary market to significantly grow over the past years. The value of shares traded in the global secondary market rose from just US$7 billion in 2004 to US$58 billion in 2017.

The growth in secondary trading has not been overlooked. Various efforts are being made to take advantage of opportunities the market now presents. Technologies such as blockchain and security tokens – crypto tokens that function as company shares – are also being leveraged to deliver new mechanisms for secondary trading.

The blockchain advantage

Blockchain technology has the ability to tokenize assets such as company shares and securely facilitate their trade. Because of this, blockchain-based platforms and exchanges are now emerging to deliver new trading mechanisms to the market.

For example, trading platform The Elephant creates dedicated partnerships that buy shares from existing shareholders of pre-IPO companies. It then uses blockchain to tokenize participation rights to these partnerships. The rights can then be readily traded in the form of security tokens.

Without such mechanisms, it is often challenging for shareholders and interested investors to connect with each other. Transactions also often require significant capital and effort to pull off when coursed through traditional means. Through such platforms, sellers can easily liquidate their assets and buyers can easily acquire shares. Fractional ownership can even be an option should the tokens be fractionally tradable.

Defined regulations

Regulations, or the initial lack thereof, have somehow delayed the adoption of security tokens for secondary trading. It was only in light of failed and fraudulent coin offerings that regulatory bodies stepped in to provide protection to investors. Prior to formal regulations coming out, several territories halted many key crypto activities.

Last year, the United States Securities and Exchange Commission (SEC) ruled that crypto tokens that function as securities have to abide by securities law. Other territories followed suit, putting forward regulations that defined how to conduct coin offerings and token sales and who can participate in them.

Despite increased restrictions, these rules actually make compliance achievable. It is now easier for coin offerings to feature mechanics that do not skirt around laws. Legitimate efforts by companies to offer security tokens could now be more capably pursued.

Big players moving in

These developments are prompting more players to move into the space. Overstock now offers a security token platform through its subsidiary, tZERO. The venture made waves when Kodak chose the platform to facilitate secondary trading of its KodakCOIN token.

Major crypto exchanges Binance and Coinbase have both announced their intention of listing such tokens on their respective platforms. The listing of security coins in such exchanges would only provide investors with better liquidity.

The Elephant is also currently in serious negotiations to acquire more stocks from shareholders of top-tier pre-IPO companies based in the US, Europe, and Asia. If successful, these would add to the company’s portfolio that is currently worth over $70 million. The company recently secured Compass Blockchain Solutions as advisor for its planned security token offering.

SharesPost is also set to expand its offerings to include security token trading after raising US$15 million from a Series C funding round. Such moves from both established and up-and-coming ventures only back up speculation that security tokens will be the next big thing.

Opportunities abound

Blockchain and security tokens are poised to become game changers for the secondary market. They provide shareholders new avenues for liquidity especially now that the road to IPOs have become longer. They also lower the barriers for ordinary investors to acquire pre-IPO shares of innovators and unicorns.

With clear regulations now available, investors and companies could have more confidence in trading and investing in security tokens. The entry of established players into the space and the aggressive moves they are making only affirm the presence of opportunities in the secondary market.

Sivut