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Max and Stacy give you all the financial news you need as the Global Insurrection Against Banker Occupation gathers pace. Occupy Wall Street, Crash JP Morgan, Buy Silver and DEFINITELY visit MaxKeiser.com!
Updated: 20 min ago

GDP Is Bogus: Here’s Why

8 hours 13 min ago

The rot eating away at our society and economy is typically papered over with bogus statistics that “prove” everything’s getting better every day in every way. The prime “proof” of rising prosperity is the Gross Domestic Product (GDP), which never fails to loft higher, with the rare excepts being Spots of Bother (recessions) that never last more than a quarter or two.

Longtime correspondent Dave P. of Market Daily Briefing recently summarized the key flaw in GDP: GDP doesn’t reflect changes in the balance sheet, i.e. debt.

So if we borrow money to pay people to dig holes and then fill them with the excavated dirt, GDP rises to general applause. The debt we took on to fund the make-work isn’t accounted for at all.

Here’s Dave’s explanation:

Once I learned about accounting, I figured out why the GDP metric wasn’t sufficient. What is missing?

The balance sheet.

Hurricanes are a direct hit to your nation’s balance sheet. The national income statement goes up because of increased spending to replace lost assets, but the “equity” part of the national balance sheet ends up taking a hit in direct proportion to the damage that occurred. Even if you rebuild everything just the way it was, your assets remain the same, while your liabilities have increased.

We know this because we use the balance sheet equation: equity = assets – liabilities. Equity is another word for wealth.

Before hurricane:

wealth = (house + car) – (home debt + car debt)

After hurricane, you rebuild your house, and buy a new car, using borrowed money:

wealth = (house + car) – (2 x home debt + 2 x car debt)

Wealth (equity) has declined by the sum (home debt + car debt)

So when you see pictures of a hurricane strike, you can now look through all that devastation and see the impact on the balance sheet. National equity (wealth) just dropped by the amount of damage inflicted by the hurricane. Whether it is ever rebuilt doesn’t actually matter; that equity is just gone. Destruction is always a downside for equity – even if there is a temporary positive impact on the income statement.

Isn’t it interesting that the mainstream economists, who don’t use banks, debt, or money in their models, largely ignore balance sheets and instead just looks at the income statement alone? Its almost as if the entire education system was organized so that people paid no attention to banks, debt, and money. Who do you think might benefit from our flock of PhD economists ignoring the extremely profitable debt-elephant in the room, and its purveyors, the banks?

Thank you, Dave, for an explanation we never see in the mainstream. And here’s a chart of our fabulous always-higher GDP, adjusted for another bogus metric, official inflation:

 

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Silver Price Spiking & Gold Pushing Higher On The 30th Anniversary Of Black Monday

11 hours 12 min ago

The intra-day “bull flag” formed in silver:

 

Here’s a closer look at silver with good volume:

Which makes us wonder if this short-term bottom is in?

Here’s gold on the 3 minute chart:

And the dollar, which is struggling to maintain 93:

It is the anniversary of Black Monday:

And it appears it is indeed risk off:

And something is indeed spooking the markets. Though not exactly the President, the MSM narrative is wearing thin:

.@foxandfriends “Russia sent millions to Clinton Foundation”

— Donald J. Trump (@realDonaldTrump) October 19, 2017

Here’s Bloomberg featuring this (in)famous day 30 years ago highlighting statements of many famous investors of the time:

PETER BORISH, head of research at Tudor Investment Corp. and Paul Tudor Jones’s No. 2:

We were tracking exponential moves in the equity market. The main one was the equity move in the 1920s, and the market in 1987 looked almost identical. The week before Black Monday, the technical and fundamentals aligned, and so we thought Monday would be the day.

ALLAN ROGERS, head of government bond trading at Bankers Trust Co.:

In the first half of 1987, the bond and stock markets diverged for seven months. Bonds went straight down, equities straight up. These sorts of divergences always get my attention. In August and September, I persuaded management to cover all of our hedged short positions in sovereign fixed income, and we built up a long position in notes and bonds.

MICHAEL LEWIS, bond salesman at Salomon Brothers:

A week or two before Black Monday, Salomon announced job cuts. They chopped a few departments, including the municipal and money-market groups. It felt ill-considered and rushed. Nobody completely understood why. [Ed. note: Lewis is a Bloomberg View columnist.]

ROGERS:

Nippon Tel, the Japanese telephone company, was going to do an IPO in mid-August. I thought that would pull money from other segments of the equity market. In early October there was another IPO, which I think was a very large British company. These IPOs were a big deal to me, because the main thing I pay attention to is changes in global money flow.

NASSIM NICHOLAS TALEB, FX options trader at First Boston who later wrote The Black Swan, a book about the impact of unpredictable events:

Currency options were very inexpensive during that period for some reason, especially OTM [out-of-the-money] options, so I had accumulated a few of these. I had accumulated a lot of OTM options in Treasuries and eurodollars, for no other reason than that they were cheaper than I had seen in a long time. [Ed. note: Eurodollars are U.S. dollars deposited in commercial banks outside the United States and futures tied to the interest rates paid on them are among the most-traded contracts in the world.]

ERIC ROSENFELD, vice president in the U.S. fixed-income arbitrage group at Salomon Brothers:

On Friday night, Oct. 16, the Dow was down 4 percent on the day and 10 percent on the week. I remember going to dinner with my wife, and the couple next to us were a young guy and gal out on a date. He was telling her how he was going to make a killing, because he’d put all of his money into the market on the close. And I’m thinking to myself, “I’m not so sure she should want to date this guy …”

BORISH:

That Monday morning was probably the greatest demonstration of trading skill that I have ever seen in my life. Even though we had this model saying Monday was the day, Paul was willing to add to the position.

LEWIS:

We were in One New York Plaza still, and everything seemed off from the time I arrived. I wasn’t exactly working. I was based in London at the time, and they’d asked me to come to New York to give a talk at the Salomon Brothers training program. I had free run of the place, so I was almost like a reporter who was wandering around the firm watching and talking to people.

DRUCKENMILLER:

On Monday morning, I took advantage of a very brief rally to sell the equities that I had bought on Friday.

JIM LEITNER, Bankers Trust FX trader:

During the day, the noise level in the trading room got quite ferocious. The chairman of the bank, who at one point had been a trader, walked onto the trading floor and stood behind my chair, which was a first.

LEWIS:

I remember walking from the 41st floor down to the 40th floor. The 41st floor was this cathedral of bonds, and then you walked down to 40 and were in this cramped, low-ceiled, dark place that was the equity department, with a lot of guys who were named Vinny and Tommy and Donny. They’d been around forever, and they had Brylcreem in their hair and big guts and they smoked too much and they were lovable. And they were all going through this visceral animal experience. People were screaming and going absolutely crazy in ways I’d never seen before. It was the first time in my career at Salomon Brothers where I was actually interested in standing beside the equity department and watching these people do their job.

EDWARD THORP, managing partner at Princeton Newport Partners:

We didn’t use Black-Scholes for option prices; we had our own model. And we didn’t model prices using a lognormal distribution—instead we had found a distribution that better fit the historical stock price data. We were trading off of those models. So even though I was surprised by the drop, I wasn’t nearly as shocked as most.

JIM CHANOS, founder and CIO of Kynikos Associates:

I had scheduled a marketing trip to Texas and flew from New York to Dallas on Monday morning. When the plane landed I called my brother, who was a stockbroker in Wisconsin. He mentioned a conflict with Iran in the Persian Gulf involving some oil platforms. “That’s making this whole thing worse,” he said.

ROGERS:

We hadn’t been able to sell our long Treasury position or make markets because of the fire drill. So we came back up and I think by the end of the day, 3 o’clock or whatever, we finally sold our long bond position. That fire drill saved us a fortune.

LEITNER:

In the afternoon, I went out and I bought a bunch of Japanese bonds, which were still yielding 6 percent. And I said, “If the world is really going to hell in a hand­basket, interest rates will collapse and at some point I’ll be able to sell those bonds at a higher price.”

LEWIS: It was right around then that I was selling my book, which would become Liar’s Poker, and I was absolutely aware that this was literary material. I remember grabbing scraps of paper and writing down notes, so I had it if I needed it.

ROSENFELD:

I remember talking to Mike Halem, the proprietary equity trader. I was urging him to do these basis trades. It was tough to do futures vs. stocks, because you couldn’t execute the trades simultaneously. So I was telling him to do futures vs. the most liquid stocks and not worry about the fact that he wasn’t doing exact arbitrage. I was talking to him about futures vs. IBM or futures vs. GE, and forget about anything else.

THORP:

By the time I left the office in Newport Beach, Calif., for lunch with my wife, the market was off 7 percent. I remember noting that was about half the decline of the two largest previous ones—Oct. 28 and 29, 1929, which signaled the start of the Great Depression. I then got a call at the restaurant that the market was down 18 percent. My wife thought maybe I should go back to the office, but I stayed and finished my lunch. There was nothing I could do.

SHIELDS:

There was one big pension fund that had 10 pieces of $100 million sales that came in the last hour and that just kept pressure on the market, so it closed at the bottom.

BORISH:

I think that Paul’s greatest skill was realizing that people were going to drive to the place of most liquidity, and that was going to be fixed income.

JONES:

I decided to get very long fixed income on the close on Black Monday, as I knew the Fed would react.

BORISH:

We were concerned about a lot of the counterparties and their liquidity, so the best place to be was in fixed-income futures, because if worse came to worst, we could always take delivery of the bonds.

ROGERS:

I was so scared that I got $10,000 out of the bank, took it home, and stored it in the rafters. When I moved out, I forgot that I’d stashed the money. I think it’s still there.

JONES:

I was feeling guilty about our success. I thought we were going into the Great Depression.

BORISH:

I had 1929 on my mind. Paul and I were concerned about our friends and people who were struggling that day.

ROSENFELD:

That night, [Salomon Brothers Vice Chairman] John Meriwether and I had dinner at Il Mulino in Little Italy with Vinny Mattone, the head of repo at Bear Stearns. For us, a key element to these longer-term convergence trades is making sure that you can hold the trade until convergence. Our worry was that clients were getting so skittish that they would pull their repo lines. The outlook from Vinny was dismal. It reinforced that we had to rethink the portfolio.

TALEB:

I started calling my friends to see if they were OK. I couldn’t leave the apartment, because Hong Kong might call, so I was calling anyone to chat. My cousin called and said the police were outside. It turned out a guy had committed suicide at 72nd Street and First Avenue, so it hit close to home.

THORP:

I went home and thought about what had happened. There was a huge difference between S&P futures, which were trading at 185 to 190, and the corresponding price of the S&P index, which was at 220. This difference was previously unheard of. Arbitrageurs usually kept it in line.

BASSMAN:

I had bought 100 bps out-of-the-money call options for a tick [1/32nd of a point] a month prior for a thrill. They had a few weeks to expiry. As the bond market exploded higher, my options started moving into the money. I ran over to the Treasury desk to sell some Treasuries to hedge my position, and in the time it took me to run over to the desk the market had rallied another point. That’s how fast the Treasury market was moving.

TALEB:

I had a huge delta in eurodollars. I remember vividly offering eurodollars at a price and selling them for much higher—it was like in Trading Places. We spent the day liquidating our positions and selling above our offers all morning. Currencies went wild and the USD collapsed.

BASSMAN:

I could use the Treasury basis—the relationship between cash and futures—to figure out where futures should be trading and, by extension, where options on futures should be priced. So I started trading futures options vs. cash, which the locals on the exchange couldn’t do. The spread was huge, and it was quite profitable.

SHIELDS:

Finally, Howard Baker [President Ronald Reagan’s chief of staff] called and said he’d just seen the president. And this is a direct quote, he said, “I’ve just been to see the president, and the president understands that you have to do what you have to do to protect your people. However, the president of the United States would very much prefer if the New York Stock Exchange could see its way clear to remain open.”

SHIELDS:

I think there was something that came out of either the Fed or Treasury that the New York Stock Exchange was not closing. And at that point, I think someone called somebody. My guess is it would have been one of the monetary people that would have done it; they would have known where to go. And the MMI started rallying, carrying everything along with it.

HULL:

“What will you buy 100 at?” a trader from Drexel [Burnham Lambert] asked. “285,” I said. And the Drexel trader said, “You own them.” I swallowed hard; it trades 287, 288. A few minutes later he asks, “Will you buy another 50 at 285?” And I said, “Yes.”

STRAUS:

On Tuesday, we were all watching, and it looked like the decline would continue—and then someone bought the MMI, the small index in Chicago, and that started to stabilize the whole market.

HULL:

These trades with me were really whisper trades—in other words, he sold them to me knowing that I was the only buyer. He didn’t want to hold an auction because there would have been a mass panic. I ended up buying 150 contracts at 285.

BORISH:

The early part of Black Monday was probably due to portfolio insurance, but the second part of the day was due to fear.

Oct. 19, 1987 remains the biggest one-day stock market drop in history.

ROSENFELD:

The need for dynamic trading from portfolio insurers exceeded the liquidity. The standby capital that usually comes in during these times was slow to come in. In that sense, circuit breakers do help. It allows the standby capital to assemble.

LEWIS:

It makes everybody uncomfortable when something dramatic happens with prices, and no drama in the world could explain such movement. It makes the market seem absurd. And so that was the feeling. To me it was like, Corporate America is not worth whatever percent less today than yesterday.

MARKS:

People think that if stocks went down 20 percent in a day, it must be the end of the world. That is, they impute intelligence to the market—and that’s a mistake.

JONES:

Black Monday’s 33 percent decline in S&P 500 futures taught newly baptized regulators what old-school commodity traders had known for a hundred years: Limits on trading of stock futures were obligatory. They learned the hard way that markets, left to their own devices, can and will break down into panic and chaos.

LEITNER:

It was the first time we gave a lot of thought to counterparty risk. Had the Hong Kong Futures Exchange [which was closed for nearly a week and subsequently bailed out by the Chinese government] gone belly-up and those futures contracts not been honored, I probably would have been fired.

BORISH:

Afterward, Paul seconded me to the New York Fed to help with the Brady commission. To Paul’s credit, he put a lot of resources into getting data and computers. We’d be in there on weekends with screwdrivers taking out floppy drives and putting in hard drives. We hired summer interns to type data into spreadsheets, which only had 3,000 rows at the time. We provided all of our data to the Brady commission; Goldman didn’t have it, J.P. Morgan didn’t have it. The chapter on the market break mostly came from Tudor.

ROSENFELD:

There wasn’t this global perspective that you see today with correlations being so high, and I think that’s what saved the marketplace that day. It wasn’t the circuit breakers that saved the day; it was that the markets were siloed. If that were to happen today, who knows what would happen.

BORISH:

If you look at Greenspan’s behavior during the Long-Term Capital Management crisis 10 years later, he moved quickly to provide liquidity to the system. So like every good trader, he learned from his prior mistakes. He thought, “We’re going to get out there, we’re going to get in front of it, and we’re going to provide liquidity to the system.”

TALEB:

If the Fed hadn’t stepped in on Tuesday morning, we would have a lot cleaner financial system today, but it would have been a complete bloodbath then.

SilverDoctors.com has been on the leading edge of Gold News and Silver News Since 2011. Each month, more than 250,000 investors visit SilverDoctors.com to gain insights on Precious Metals News as well as to stay up-to-date on World News impacting the metals markets.

How Gold Bullion Protects From Conflict And War

15 hours 33 min ago

– Gold and silver’s historical role in conflict shaped the world today and the modern financial system
– Gold played an important function in the great conflicts up to and throughout the 20th century
– Gold and the effective use of bullion played a crucial role in the outcome of the American Civil War
– Gold was an important economic agent in both World Wars, conferring a huge advantage on the allies
– In a world beset with risks of war both in the Middle East and with North Korea, Russia and China … gold will protect

Editor Mark O’Byrne

Gold and silver have played important roles during periods of conflict and have protected people but also protected nations and conferred power. HSBC Chief Precious Metals analyst James Steel has written a fascinating piece for this month’s Alchemist about this.

The article takes us through the major wars and conflicts from the 15th century to modern times. Each major war serves as a reminder that success is as much down to the management of bullion and finance as it is about the role of gold and silver.

…the way bullion was used, moved, stored and shifted had profound effects on long-term economic or military success. Indeed, the role of gold and silver in wars not only in influenced the shape of the world today, but laid the foundations for the modern financial system.

When managed effectively we see how important gold and silver were for victorious countries. Central bankers and politicians of today should use the following historical examples of military successes to appreciate the importance of a strong source of bullion and conservative financial planning both in and out of peacetime.

Click here to read full story on GoldCore.com.

Important Guides

For your perusal, below are our most popular guides in 2017:

Essential Guide To Storing Gold In Switzerland

Essential Guide To Storing Gold In Singapore

Essential Guide to Tax Free Gold Sovereigns (UK)

Please share our research with family, friends and colleagues who you think would benefit from being informed by it.

Fraud, Exploitation and Collusion: America’s Pharmaceutical Industry

Wed, 10/18/2017 - 12:46

America’s Pharmaceutical industry takes pride of place in this week’s theme ofThe Rot Within, as the industry has raised fraud, exploitation and collusion to systemic perfection.

What other industry can routinely kill hundreds of thousands of Americans and suffer no blowback? Only recently has the toll of needless deaths from the opioid pandemic finally roused a comatose corporate media and bought-and-paid-for, see-no-evil Congress to wonder if maybe there should be some limits placed on Big Pharma and its drug distributors.

The Drug Industry’s Triumph Over the DEA (WaPo)

Explosive ’60 Minutes’ investigation finds Congress and drug companies worked to cripple DEA’s ability to fight opioid abuse

What other industry can raise prices any time it wants because, well, it can?Longtime correspondent/physician J.F. recently submitted a chart of medication price increases (below)–nothing special, nothing out of the ordinary, just the usual because we can price increases.

What other industry has such complete control over the federal government? Dr. J.F. reminded me that the law enacting Medicare Part D prescription drug coverage specifically prohibits the U.S. government from negotiating lower prices on the immense volume of medications it purchases through Medicare (not to mention the Medicaid and Veterans Administration programs).

J.F. also submitted this investigative report from CNN, The little red pill being pushed on the elderly.

Here’s the money-shot:

“The combination of two generic drugs that makes up Nuedexta — a cough suppressant and heart medication — was once available from specialty pharmacists willing to combine the ingredients for less than $1 a pill, according to a US Senate report on rising prescription drug prices. Now the FDA-approved medication costs as much as $12.60 a pill.”

If this isn’t fraud, exploitation and collusion, then what is it? Please don’t say “good old free-market capitalism,” because competition is nowhere in sight.

The pharmaceutical industry is a crony-capitalist cartel that buys whatever political influence it requires to maintain its power and profits. Isn’t it obvious? Or have we become so distracted and drugged that we no longer care?

Ho-hum, just another 20 times the rate of inflation increase in medication prices by Big Pharma: nothing to see here, folks, just move along and take your meds….

We’re number one! — in drug-induced deaths per million residents: isn’t it amazing that this raises no eyebrows at all in our “leadership” or the citizenry?

Can we be honest for a change, and just admit that profits are way more important in our status quo than a couple hundred thousand deaths in America’s permanent underclass?

The rot within manifested by the pharmaceutical industry almost defies description. That we tolerate this as business as usual (BAU) shows that ours is a society and economy afflicted with the sickness unto death.

‘Worse Than Big Tobacco’: How Big Pharma Fuels the Opioid Epidemic 

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.

Silver Bullion Prices Set to Soar

Wed, 10/18/2017 - 06:30

Silver bullion prices are expected to jump as solar and smartphone demand rises and the Fed tries to stave off economic weakness

by Myra Saefong via Barrons

Gold prices have far outpaced gains in silver so far this year, but silver will emerge as the winner for the second year in a row.

With a per-ounce price of $17.41 for silver futures as of Friday, analysts say the white metal is poised for a big climb, particularly as the gold-to-silver ratio stands well above historical averages. “Silver is definitely undervalued compared to gold and as a stand-alone investment. I consider it likely to be the most undervalued asset in the general investment markets,” says Paul Mladjenovic, author of Precious Metals Investing For Dummies.

The best barometer of its potential gains comes from its value relative to gold. The long-term average gold-to-silver ratio runs around 15 to 1, while the modern average going back a century is roughly 40 to 1, says Mark O’Byrne, research director at precious-metals storage provider GoldCore. The ratio, which reflects how many ounces of silver bullion it takes to equal the value of one ounce of gold, stood at a whopping 75 to 1 on Friday.

That steep ratio suggests “it’s a good time to buy silver bullion,” says O’Byrne. He explains that the “huge amount of silver used up in industrial applications” suggests the ratio should fall over the long term: “It’s likely that the gold/silver ratio will gradually return to below the 100-year average of 40 to 1.” At the current gold price, that would put silver at nearly $32 an ounce, O’Byrne says.

So far this year, however, prices of gold futures have risen nearly 12%, while silver has gained roughly 6%. Last year, silver’s climb of about 16% outpaced gold’s rise of almost 9%.

Click here to read full story on GoldCore.com.

Important Guides

For your perusal, below are our most popular guides in 2017:

Essential Guide To Storing Gold In Switzerland

Essential Guide To Storing Gold In Singapore

Essential Guide to Tax Free Gold Sovereigns (UK)

Please share our research with family, friends and colleagues who you think would benefit from being informed by it.

The United States of Weinstein: Complicity, Greed and Corruption Is the Status Quo

Tue, 10/17/2017 - 13:01

The sordid story of Harvey Weinstein is being presented as an aberration. It is not an aberration; it is merely a high-profile example of how the status quo functions in the USA, a.k.a. The United States of Weinstein, in which complicity, greed and corruption reign supreme in every sector and in every nook and cranny of power. 

The dirty secret of America’s status quo is that power and wealth are both extremely concentrated, which means there are gatekeepers who must be bribed, sated or serviced if you want to claw your way up the wealth-power pyramid. Mr. Weinstein’s alleged conduct and payoffs of those he exploited is par for the course in the corridors of power in the USA.

As a gatekeeper in Hollywood, Mr. W. could make or break careers with absurd ease.

Gatekeepers are the key functionaries in a rentier economy in which the few at the top skim the wealth of the many. Want to play in the big leagues of Hollywood, Washington D.C., the Pentagon, or the various HQs of Global Corporate America? You have to pay the Gatekeepers what they demand.

It might be the casting couch or a slice of the profits, or a vote in committee, but the price of admission will always include complicity–silence about the crimes committed and the endemic corruption, and a sacrifice of moral standards. This is the minimal price of “success” in the elite circles of wealth and power in America.

If you doubt this, dig deep into any concentration of power in America and see what you find. Outsiders won’t find anyone willing to talk, of course; that’s how complicity works.

The overheated engine of complicity is greed. Hollywood kept quiet about Mr. Weinstein because insiders and wannabes alike hoped to score a plum role in Mr. W.’s next hitmaking production, or secure a couple of points of the gross. (1 point = 1%.)

This is the evil fruit of a system that ruthlessly concentrates power and wealth, not just in Hollywood and Washington D.C. but in the judiciary, in higher education, in Big Pharma, the National Security State, Corporate America and yes, the Deep State, which is comprised not of the bureaucratic functionaries (sorry to pop your balloon) of the state but those one level above the gatekeepers.

Every American has a simple but profound choice. Either place your integrity above all else, and refuse to climb the putrid pyramid of wealth and power, or succumb to greed and become complicit in an empire of greed, complicity and corruption.

If “success” means a fat salary, points of gross, invitations to A-list parties, access to the inner circle, being the right-hand boy/girl of someone powerful, a seat on the private jet, etc., then you will be required to service the gatekeepers and sacrifice whatever integrity you once possessed.

If integrity means more than any of these baubles, then prepare to fail. You won’t clamber up the putrid pyramid, you won’t get past the gatekeepers, and you won’t be invited to join the elite skimming the nation’s wealth for its own gratification and greed.

But you will still have yourself, your pride, and your integrity.

It’s not an easy choice. Choose wisely. As Orwell observed about a totalitarian oligarchy, some are more equal than others. But the sacrifices required to become more equal than than the bottom 99.5% are irrevocable–you will have to sacrifice everything but your greed, your appetite for corruption and your willingness to hide the truth from the outside world.

True success lies outside the empire of greed, complicity and corruption.

 

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.

Check out both of my new books, Inequality and the Collapse of Privilege($3.95 Kindle, $8.95 print) and Why Our Status Quo Failed and Is Beyond Reform($3.95 Kindle, $8.95 print, $5.95 audiobook) For more, please visit the OTM essentials website.

About That Oil For Gold-Backed Yuan Contract: Two Points EVERYBODY Has Missed

Tue, 10/17/2017 - 08:58

The first point (and a half) is a counter to this statement which everybody accepts as doctrine:

Anybody can buy gold with dollars at any time – no gold backed oil contract needed.

I won’t name names. We’re all on the same side here, but for some reason this topic is more polarizing than it should be.

Let’s think about “anybody can buy gold with dollars now” for a moment.

Dollars come from the United States. The benchmark global gold price in dollars comes from the United States.

It makes sense that if a company/country is selling a crap-ton of barrels of oil for dollars, said company/country would be most efficient in purchasing their physical gold on the COMEX with those dollars.

It’s not like a company or country can walk into some local coin shop with $350,000,000 in U.S. dollars and scoop up a 259,259 Chinese Gold Pandas.

They need the COMEX.

Here’s the problem:

If the U.S. futures market price of paper gold is nothing more than a debt based fiat currency price for something that never actually gets delivered, but rather, gets cash settled with more debt based fiat currency, then the company/country that just sold their oil for dollars is not really able to just take those dollars and buy gold as the “matter-of-fact” statement claims.

Secondary note to the first point (this is the half point):

We see what happens to world leaders when they announce or  begin to sell their oil for something other than dollars.

Anybody who is not familiar with this, the answer is death of said leader and destruction/plundering of the country by the war machine.

There is a flip-side to the oil-for-gold proclamations that we are missing:

Say Oil producers Canada or Mexico, or pick some non-bedfellow countries that attract the war machine, such as Turkey, Syria, Iraq, or Venezuela, who all of the sudden decide, “We are selling our oil for dollars, but we will immediately take them and buy physical gold from the COMEX with all the proceeds.”

Are the neo-cons, the deep state, the ESF, the Fed, the gold cartel and the other nefarious players just going to sit by and say:

“sure dude, whatever floats your boat”.

Not a chance. Said groups will spring into action, most likely of the swift and violent type.

Back to the main first point:

While theoretically possible to just “take those dollars and buy gold”, in practice this does not happen.

Between the levered-up, fractionally reserved “paper gold” which the bullion banks can naked short with a supply of unlimited paper, what company/country is going to want to get a futures contract and jump into that firefight, with the full brunt of market manipulation and precious metals price suppression bearing down on them, and backed-up by the war machine when all else fails?

To say “anybody can buy gold now” with their dollars misses the point.

And that’s the point.

Theoretically I can build a vast array of underground cities connected by public transporton submarines, or I can build an office building 39,000 feet tall, with a rotating restaurant on top for a 360 degree view of the clouds, but in coming down to earth a bit, we all know that in both practice and for all intents and purposes, neither of those things are possible. Much less just converting massive oil revenues into physical delivery from the COMEX, which is probably the least possible of all the scenarios I just mentioned.

The second point is even simpler:

The bigger picture that everybody keeps missing has to do with one of the principle reasons that people will use an un-backed, debt based fiat currency:

CONFIDENCE

Whether the oil for gold contract is true or false, myth or fact, it misses the point that China is looking for confidence in something other than the dollar.

Confidence builds very, very slowly, and it is bursts in a ball of flames.

Everybody understands what it means to have, and then to lose confidence in the currency. Loss of confidence is why un-backed, debt based fiat currencies always suffer death by hyperinflation.

No doubt we are in the growing pains of a paradigm shift in the global monetary system. Every single time, without fail, the world always goes back to gold and silver. We have been going through several years of pain, and perhaps, disbelief, much like the Brits went though a hundred years ago up until Bretton Woods.

This time is somehow different?

How ’bout a global twist in the “gold backed” story with President Trump ending the “temporary” convertibility of dollars for gold:

We do know that President Tump understands gold:

And we know Donald Trump accepts payment in gold:

Which is why, for the first time ever, Trump will accept today gold bullion instead of dollars for a lease deposit from his newest tenant in one of his marquee properties, 40 Wall Street, a 70-story skyscraper in Manhattan’s Financial District that at one time was the tallest building in the city until the Chrysler Building surpassed it. Trump will accept the gold at an event in the lobby of the Trump Tower at 725 Fifth Avenue.

And we do know that sooner or later, bullies (as in the US War Machine forcing the world to use dollars) will make a mistake, become weak, become complacent, or have opponents in numbers that band together.

There is a reason they say “Even a dog knows the difference between getting tripped over and getting kicked”.

It’s only possible to kick a dog so many times. At some point, the dog is going to get so angry that it will not take another.

The question is:

Is there one more kick coming, or is the dog about to bite? 

Brexit UK Vulnerable As Gold Bar Exports Distort UK Trade Figures

Tue, 10/17/2017 - 07:55

– Brexit UK vulnerable as gold bar exports distort UK trade figures
– Britain’s gold exports worth more than any other physical export
– Gold accounted for more than one in ten pounds of UK exports in July 2017

– UK’s stock of wealth has collapsed from a surplus of £469bn to a net deficit of £22bn – ONS error
– Brexiteers argue majority of trade is outside EU, this is due to large London gold exports
– Single gold bar (London Good Delivery) is, at today’s prices, worth just over £400,000
– “There are few things you’ll ever touch which pack so much weight into such a small size”
– UK’s economic vulnerability means safe haven gold essential protection

I’ve never played poker but I’m pretty sure the number one rule is not to reveal your cards to your opponents.

Yesterday the ONS possibly gave the EU one of the biggest reveals so far in Brexit negotiations. Revised figures from the statistics bureau showed the country’s stock of wealth has fallen from a surplus of £469 billion to a net deficit of £22 billion as reported by LBC.

This is down to FDI and fall in reserve foreign assets. In the first half of the year FDI fell from a £120 billion surplus in the first half of 2016 to a £25 billion deficit for the first half of this year.

With the UK totally losing its foreign assets, the EU (and the rest of the world) is aware that its safety net is no longer there. Not great timing, just as the government is trying to get through this crucial stage of Brexit negotiations.

The amount that has been knocked off the UK’s wealth is the equivalent of 40% of EU contributions. The bank balance isn’t the only thing the UK has at best misunderstood or at worst been mislead over. Their trade is not as internationally diverse as Brexiteers might have led markets to believe.

Following the referendum result there was an increase in Britain’s exports. Many pointed to the numbers as a sign of confidence in the future of the UK, following the Brexit vote.

It turns out that much maligned gold was to thank for this uptick. Without gold, the majority of the UK’s trade would be with the EU.

This is a reminder of how vulnerable we are to negotiations and reliant we are on the precious metal.

Click here to read full story on GoldCore.com.

Important Guides

For your perusal, below are our most popular guides in 2017:

Essential Guide To Storing Gold In Switzerland

Essential Guide To Storing Gold In Singapore

Essential Guide to Tax Free Gold Sovereigns (UK)

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Too Good For Too Long

Mon, 10/16/2017 - 14:14

Having just lived through the massive fires in northern California — on top of watching news reports over the previous weeks of similarly abrupt “before/after” transitions in Houston, Florida, Puerto Rico, Mexico City, Las Vegas and Catalonia — I have a new-found appreciation for the maxim that when it arrives, change happens quickly — usually much more quickly than folks ever imagined, catching the general public off-guard and unprepared.

We humans tend to think linearly and comparatively. In other words, we usually assume the near future will look a lot like the recent past. And it does much of the time.

But other times it doesn’t. And that’s where the danger lies in today’s markets.

Click here to read the full article

The Fading Scent of the American Dream

Mon, 10/16/2017 - 12:14

It’s been 10 years since I devoted a week to the theme of The Rot Within(September 17, 2007). Back in 2007, I listed 16 systemic sources of rot in our society, politics and economy; none have been fixed. Instead, the gaping holes have been filled with Play-Do and hastily painted to create the illusion of shiny solidity.

We live in a simulacrum society in which the fading scent of the American Dream is more a collective memory kept alive for political purposes than a reality. Even more disturbing, the difference between a phantom prosperity (or in homage to the Blade Runner film series, shall we say a replicant prosperity?) and real prosperity has been blurred by layers of simulated signals of prosperity and subtexts that are carefully designed to harken back to a long-gone authentic prosperity.

This is the reality: the American Dream is now reserved for the top 0.5%, with some phantom shreds falling to the top 5% who are tasked with generating a credible illusion of prosperity for the bottom 95%. While questions about who is a replicant and who is real become increasingly difficult to answer in the films, the question about who still has access to the American Dream is starkly answered by this disturbing chart:

If you talk to young people struggling to make ends meet and raise children, and read articles about retirees who can’t afford to retire, you can’t help but detect the fading scent of a prosperity that has steadily been lost to stagnation, under-reported inflation and soaring inequality, a substitution of illusion for reality bolstered by the systemic corruption of authentic measures of prosperity and well-being.

The New Reality of Old Age in America.

In other words, the American-Dream idea that life should get easier and more prosperous as the natural course of progress is still embedded in our collective memory, even though the collective reality has changed: for the bottom 95%, life is typically getting harder and less prosperous as the cost of living rises, wages are stagnant and the demands on workers increase.

Meanwhile, the asset bubbles inflated by central banks have enriched the top 10% of households, which own over 75% of all assets and take home over 50% of all household income.

“While most Americans are unprepared for retirement, rich older people are doing better than ever. Among people older than 65, the wealthiest 20 percent own virtually all of the nation’s $25 trillion in retirement accounts, according to the Economic Policy Institute.”

Household wealth follows a power-law distribution, i.e. the vast majority is held by the top few households: the top .1% own roughly 25% of all US household wealth, the top 1% around 40%, and so on. So the households between 80% and and 95% own a very modest percentage of what the top 96%-99% own.

The power-law distribution of wealth is visible in this chart:

Statistically, average per capita (per person) income and per capita share of GDP have risen substantially over the past the past 30 years. By these measures, everyone is considerably better off. Yet how many households are measurably better off in terms of free time, savings, disposable income, retirement accounts, financial security, reduction in debt loads, etc.?

These two charts tell the real story of our economy: median household income (using the Consumer Price Index measure of inflation, which grossly under-estimates real inflation, as I explained in About Those “Hedonic Adjustments” to Inflation: Ignoring the Systemic Decline in Quality, Utility, Durability and Service) has gone nowhere since 2000. If income were adjusted by real inflation, the chart would show a 20% decline in purchasing power for all but the top 5%:

This chart of household assets/corporate equities reveals the source of the phantom wealth propping up our simulacrum prosperity:

And please don’t claim corporate profits are soaring, so the valuations are justified. If you examine the Federal Reserve’s Z1 report, you’ll find that corporate profits are unchanged since 2014–no growth at all.

Clearly, our political-financial system and the policies of central banks have combined to concentrate wealth and income in the top of the wealth/income pyramid: those who own the assets that have bubbled higher are booking luxury cruises, while those who don’t own much of bubbling-ever-higher assets are working at tourist spots visited by the cruise ships.

The average person knows the scent of the American Dream is fading, and many have lost hope of what was once taken for granted: home ownership, increasing income, and an easier life as household income and wealth slowly but surely increased with time.

But the collective memory of the American Dream remains; people feel they should be able to take a vacation, should be able to buy a starter home, should be free of constant worry about paying the bills, and so on. With this collective memory still in place (and constantly kept alive by advertising), people naturally start feeling a pervasive sense of betrayal: the system implicitly promised everyone who worked a lifetime security and increasing prosperity.

Official claims of prosperity are out of alignment with reality, and so expectations are out of alignment with reality. As I have often noted, this creates a highly combustible and dangerous dynamic, as the emotions of betrayal and despair are volatile.

In other words, if 90% of the work force expects to be poor their entire lives, has no thought of ever owning a house, anticipates scraping by in their senior years, etc., then their expectations are aligned with the realities of a hierarchical power-law economy and social structure. Low expectations are difficult to dash.

But when 90% of the work force has expectations for an American Dream based on memories of those expectations being met, the widening gap between expectations and reality unleashes a politically combustible realization that prosperity is now concentrated in the hands of the top 5%. A sense of injustice and betrayal arise, along with a sense that something has gone profoundly wrong with the society and the economy.

This dynamic has yet to fully play out, but it will. Whatever you think of Trump, his election isn’t the problem; it’s merely a symptom of much deeper forces that will sweep our corrupt and rotten-to-the-core status quo into the dustbin of history. 

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Ready To Surge: Dow Is Going To Need A Lot More Than 23,000 To Fend Off Gold & Silver

Mon, 10/16/2017 - 11:01

First this to start a Monday morning:

The U.S. has gained more than 5.2 trillion dollars in Stock Market Value since Election Day! Also, record business enthusiasm.

— Donald J. Trump (@realDonaldTrump) October 16, 2017

In the overnight session, gold and silver have been looking good with respectable price action:

For this Monday Outlook, let’s see where we have been over the last year. As we can see, gold and silver have been all over the place.

For example, Silver is lower than where it was a year ago:

On November 9th, we had the election night spike higher, and then two days lower, they brought the smash. We are in a good position for the week when we move our eyes to the right side of the chart. The 50-day is right there at the 200-day, ready to show the world that the 50-day has decisively crossed to the upside. We know that already, but since the metals have had no love all year, it will be good for everybody else to see it.

Regardless, the silver price is decidedly lower than a year ago. It hasn’t been much fun, and those month long smashings this year have been brutal, but the more they try to force the price down, the more this pent-up energy needs to be released, and the cartel could quickly become overwhelmed.

A problem area on the chart is around $17.70. That is June 6th peak before a month long fall. Once silver gets through that level, the price needs to take out $18 with determination.

But if the copper price has anything to do with it, that could be sooner than later:

We know that everybody has been quick to discount the price action in copper as merely the result of rampant Chinese speculation. We have not been quick to agree with this point of view, and when we zoom out over the last year, we can see that when copper surged from the October 20th low a year ago, there was a seven month consolidation in price in preparation for the next leg up. Perhaps everybody is skeptical because it was a fading consolidation, but that chart looks decent. It does look overbought, due to the overnight surge to a new high since mid-2014, but looking at the surge last October, it could still have room to run before what may be another several month consolidation.

The point with copper is that the price of silver catches a bid with the price of copper. Silver is both money and an industrial commodity. At the very least, a rise in copper will move up the floor in silver.

We have been following the strong performance of gold in relation to silver all year.

In fact, gold is right where it was a year ago, gold has been higher than it was a year ago, and the up-trend is clear. At one point, from the lows last December to the high on September 8th, gold is up $240. In gold, just like there has been very little consolidation this year in silver as well, the gold price really needs to work it’s way up past $1350 sooner than later. The election night $70 surge show the price can move in a hurry. With Israel striking Syria, Iran and North Korea heating up again, all of Europe in chaos of the political, social, and monetary kind, there sure are several catalysts for one of those surges.

We could certainly use the boost to confidence that a surge would provide. Is this the week we finally see a surge in gold, silver, or both?

Palladium is at a new high again:

 

Palladium has shown what surges can do to price.

Platinum, however, has not held up well at all over the year:

Platinum is up year to date, but from a year ago, platinum is slightly down. The September smashing was exceptionally brutal for platinum. At this point, we should all just be hoping that platinum gets back above it’s 50-day. But looking at the other metals, both precious and base, it does seem that the platinum price action will do that sooner than later.

Crude has been surging over the past several days:

Talk about one of the hardest price moves to call all year. The price for crude is basically unchanged from a year ago, and it has been range-bound mainly in the $45-$50 range, but again, looking at the simple moving averages, the 50-day is about to cross to the upside through the 200-day. Crude bulls exist because they trade off of oil, or they have some connection to the oil fields or oil industry. For everybody else, it means get ready for higher diesel and gasoline prices, which means get ready for higher prices in everything else.

The dollar has been decidedly one way this year after the “infrastructure build”,  “inflation trade” and “Trump trade” hype:

It is worth noting that two times before, in 2017, the 50-day moving averaged looked to be turning up, only to fail after a few weeks. If the 50-day starts turning down again, it could get moving in a hurry.

Just yesterday, Janet Yellen was saying that low-rates are the new normal, and the dollar has been falling despite escalating geo-political tensions around the globe. And while the infrastructure spend is indeed coming, it is due to all the devastation caused by mother nature. This is not productive spending because it is only replacing what was already there with dollars that could have been used for something else. Not shown, however, is the fact that the dollar slowly climbed from 70 to 80 from the GFC as the pundits like to call it, and then again the dollar surged from 80 in mid-2014 to where it peaked out after the election.

Somehow it doesn’t seem like the dollar will see continued strength from here, and a decisive move to the downside would confirm this. But no matter where it goes, we all should come to understand that the Fed is doing their hardest to make sure that the dollar devalues by 2% per year as their stated public policy.

The yield in the 10 year Treasury Note had a big move lower on Friday:

Another drop in yield like that and the entire gap-up from September 27th will have been erased. Since we are looking back a full year in this Monday Outlook, it is worth noting that the rate on the 10-year was 1.724% on October 20th. Though all year long, the trend has been lower yields, no higher.

The VIX seems rather calm for all the uncertainty in the world:

Other than the election run-up spike in volatility, the entire year has been muted. There have been a few spikes here and there, and if ever body is short volatility, one has to wonder when the low-vol trade will end up looking showing the traders’ whose boss, just like everybody was long-dollar in the beginning of this year.

Here’s a farce:

Dow 23,000 by Friday? Then what?

On the fundamental side, Europe is a mess. Italian banks are struggling, Australia just elected the world’s youngest leader, Catalonia and Spain are in a good old Mexican standoff, the UK just wants to be friends with the EU as May engages on the most drawn-out break-up ever, and Greece is going to need another bail-out.

Back home, California has been burning to the ground, Puerto Rico is still in the dark, Texas, Florida and many other states in rebuild mode from multiple hurricanes.

Geo-politically, China will most likely re-elect Xi Jinping as the Communist Party Congress convenes in two days and last for the next two weeks. Iran and North Korea are facing an ever increasing war-mongering Donald Trump (who saw a massive spike in the number of bombs dropped on enemies last month), and somehow it is all a bit too much so Russia has to take a back seat again.

The economic calendar is full this week:

There is a slew of data releases and Fed speaker this week.

And it ends with a Janet Yellen crescendo this Friday:

Bottom line: We could see a nice healthy rise in the metals this week. The question is will we see a dominant surge higher in the gold and silver prices?

SilverDoctors.com has been on the leading edge of Gold News and Silver News Since 2011. Each month, more than 250,000 investors visit SilverDoctors.com to gain insights on Precious Metals News as well as to stay up-to-date on World News impacting the metals markets.

[KR1136] Keiser Report: Artificial Intelligence

Mon, 10/16/2017 - 08:28

In this episode of the Keiser Report from Standing Rock reservation in North Dakota, Max and Stacy discuss artificial intelligence – aka AI – as the Iron Horse Apocalypse of the modern social media man. The two recall their recent experience interacting with a real self-driving car and the car’s human operating system. They also discuss corruption, shakedowns and more financial news.

Jim’ll Brexit by Sketchaganda

Mon, 10/16/2017 - 08:26

How to Wipe Out Puerto Rico’s Debt Without Hurting Bondholders

Sat, 10/14/2017 - 11:09

During his visit to hurricane-stricken Puerto Rico, President Donald Trump shocked the bond market when he told Geraldo Rivera of Fox News that he was going to wipe out the island’s bond debt. He said on October 3rd:

You know they owe a lot of money to your friends on Wall Street. We’re gonna have to wipe that out. That’s gonna have to be — you know, you can say goodbye to that. I don’t know if it’s Goldman Sachs but whoever it is, you can wave good-bye to that.

How did the president plan to pull this off? Pam Martens and Russ Martens, writing in Wall Street on Parade, note that the U.S. municipal bond market holds $3.8 trillion in debt, and it is not just owned by Wall Street banks. Mom and pop retail investors are exposed to billions of dollars of potential losses through their holdings of Puerto Rican municipal bonds, either directly or in mutual funds. Wiping out Puerto Rico’s debt, they warned, could undermine confidence in the municipal bond market, causing bond interest rates to rise, imposing an additional burden on already-struggling states and municipalities across the country.

True, but the president was just pointing out the obvious. As economist Michael Hudson says, “Debts that can’t be paid won’t be paid.” Puerto Rico is bankrupt, its economy destroyed. In fact it is currently in bankruptcy proceedings with its creditors. Which suggests its time for some more out-of-the-box thinking . . . .

Turning Disaster into a Win-Win

In July 2016, a solution to this conundrum was suggested by the notorious Goldman Sachs itself, when mom and pop investors holding the bonds of bankrupt Italian banks were in jeopardy. Imposing losses on retail bondholders had proven to be politically toxic, after one man committed suicide. Some other solution had to be found.

Italy’s non-performing loans (NPLs) then stood at €210bn, at a time when the ECB was buying €120bn per year of outstanding Italian government bonds as part of its QE program. The July 2016 Financial Times quoted Goldman’s Francesco Garzarelli, who said, “by the time QE is over – not sooner than end 2017, on our baseline scenario – around a fifth of Italy’s public debt will be sitting on the Bank of Italy’s balance sheet.”

His solution: rather than buying Italian government bonds in its quantitative easing program, the European Central Bank could simply buy the insolvent banks’ NPLs. Bringing the entire net stock of bad loans onto the government’s balance sheet, he said, would be equivalent to just nine months’ worth of Italian government bond purchases by the ECB.

Puerto Rico’s debt is only $73 billion, one third the Italian debt. The Fed has stopped its quantitative easing program, but in its last round (called “QE3”), it was buying $85 billion per month in securities. At that rate, it would have to fire up the digital printing presses for only one additional month to rescue the suffering Puerto Ricans without hurting bondholders at all. It could then just leave the bonds on its books, declaring a moratorium at least until Puerto Rico got back on its feet, and better yet, indefinitely.

According to the Bureau of Labor Statistics jobs data, 33,000 US jobs were lost in September, the first time the country has had a negative figure since 2010. It could be time for a bit more economic stimulus from the Fed.

Successful Precedent

Shifting the debt burden of bankrupt institutions onto the books of the central bank is not a new or radical idea. UK Prof. Richard Werner, who invented the term “quantitative easing” when he was advising the Japanese in the 1990s, says there is ample precedent for it. In 2012, he proposed a similar solution to the European banking crisis, citing three successful historical examples.

One was in Britain in 1914, when the British banking sector collapsed after the government declared war on Germany. This was not a good time for a banking crisis, so the Bank of England simply bought the banks’ NPLs. “There was no credit crunch,” wrote Werner, “and no recession. The problem was solved at zero cost to the tax payer.”

For a second example, he cited the Japanese banking crisis of 1945. The banks had totally collapsed, with NPLs that amounted to virtually 100 percent of their assets:

But in 1945 the Bank of Japan had no interest in creating a banking crisis and a credit crunch recession. Instead it wanted to ensure that bank credit would flow again, delivering economic growth. So the Bank of Japan bought the non-performing assets from the banks – not at market value (close to zero), but significantly above market value.

Werner’s third example was the US Federal Reserve’s quantitative easing program, in which it bought $1.7 trillion in mortgage-backed securities from the banks. These securities were widely understood to be “toxic” – Wall Street’s own burden of NPLs. Again the move worked: the banks did not collapse, the economy got back on its feet, and the much-feared inflation did not result.

In each of these cases, he wrote:

The operations were a complete success. No inflation resulted. The currency did not weaken. Despite massive non-performing assets wiping out the solvency and equity of the banking sector, the banks’ health was quickly restored. In the UK and Japanese case, bank credit started to recover quickly, so that there was virtually no recession at all as a result.

The Moral Hazard Question

One objection to this approach is the risk of “moral hazard”: lenders who know they will be rescued from their bad loans will recklessly make even more. That is the argument, but an analysis of data in China, where NPLs are now a significant problem, has relieved those concerns. China’s NPLs are largely being left on the banks’ books without writing them down. The concern is that shrinking the banks’ balance sheets in an economy that is already slowing will reduce their ability to create credit, further slowing growth and triggering a downward economic spiral. As for the moral hazard problem, when researchers analyzed the data, they found that the level of Chinese NPLs did not affect loan creation, in small or large banks.

But if Puerto Rico got relief from the Fed, wouldn’t cities and states struggling with their own debt burdens want it too? Perhaps, but that bar could be set in bankruptcy court. Few cities or states can match the devastation of Puerto Rico, which was already in bankruptcy court when struck by hurricanes that left virtually no tree unscathed and literally flattened the territory.

Arguably, the Fed should be making nearly-interest-free loans to cities and states, allowing them to rebuild their crumbling infrastructure at reasonable cost. That argument was made in an October 2012 editorial in The New York Times titled “Getting More Bang for the Fed’s Buck”. It was also suggested by Martin Hutchinson in Reuters in October 2010:

An alternative mechanism could be an extension of the Fed’s [QE] asset purchases to include state and municipal bonds. Currently the central bank does not have the power to do this for maturities of more than six months. But an approving Congress could remove that hurdle at a stroke . . . .

The Fed lent $29 trillion to Wall Street banks virtually interest-free. It could do the same for local governments.

Where There’s a Will

When central banks want to save bankrupt institutions without cost to the government or the people, they obviously know how to do it. It is a matter of boldness and political will, something that may be lacking in our central bankers but has been amply demonstrated in our president.

If the Fed resists the QE alternative, here is another possibility: Congress can audit the Department of Housing and Urban Development and the Department of Defense, and retrieve some of the $21 trillion gone missing from their accountings. This massive black money hole, tracked by Dr. Mark Skidmore and Catherine Austin Fitts, former assistant secretary of HUD, is buried on the agencies’ books as “undocumented adjustments” – entries inserted without receipts or other documentary support just to balance the books. It represents money that rightfully belongs to the American people.

If our legislators and central bankers can find trillions of dollars to bail out Wall Street banks, while overlooking trillions more lost to the DoD and HUD in “undocumented adjustments,” they can find the money to help an American territory suffering the worst humanitarian crisis in its history.

____________________

 

Bitcoin Might Not Displace Fiat Currencies Soon but Nothing Comes Close as a Store of Value

Fri, 10/13/2017 - 22:47

Bitcoin seems to be the proverbial cat with nine lives as it continues to survive the onslaught of governments, regulators and traditional financial institutions. The digital currency lost some ground in the market after negative comments from the CEO of JP Morgan, Jamie Dimon who referred to the digital currency as a “fraud”. Dimon also said that he would sack any staff of his bank that trades in the currency, Yet, Bitcoin didn’t waste time in getting up from the backlash and it appears to be rallying up towards previous highs.

In addition to Dimon’s negativity, China initiated some tough measures against Initial coin Offerings (ICOs) which in turn affected the general cryptocurrency market negatively. Yet, the digital currency market responded in an amazing level of resilience as Bitcoin and Ethereum booked an amazing bounce in the following sessions. This piece looks at two reasons cryptocurrencies are here to stay despite criticism and cynicism from traditional financial institutions.

Cryptocurrency scores more than $3 billion a day in trading volume

Analysts believe that cryptocurrencies are here to stay and one of the best indicators of the market trend is the consistent rise in trading volumes. Digital currency trading is surging higher daily because investors are confident that cryptocurrency is the future of money.

The trading volume for Bitcoin is currently more than $3 billion daily, and Bitcoin’s trading volume might soon surpass the trading volume of Apple Inc. (NASDAQ:  AAPL ), which has a $4 billion daily trading volume.  For what it’s worth, Apple’s stock is the biggest stock traded in the world by daily trading volume.

Jens Nordvig, CEO at Exante Data observes that cryptocurrency might soon become the mainstay for investors who had hitherto been wary of putting serious money in cryptocurrencies. In his words, “cryptocurrency trading volume is now more than of $3bn/day on average, and will likely soon surpass that of the world’s most liquid stock: Apple ($4bn/day)”. He also noted the volume of trading taking place between the two largest digital currencies, Ethereum and Bitcoin in relation to trading volume for traditional fiat currencies as increased eight times this year.

2 Reasons Cryptocurrencies will continue to survive attacks

The cryptocurrency industry is constantly evolving

The first reason investors might want to drop their cynicism and open up to the latent potential in Bitcoin is that the cryptocurrency industry is constantly evolving. When Bitcoin debuted, regulators were quick to point that its anonymity made it a tool of trade for illegal activities – case in point, Silk Road. However, in the last couple of years, Bitcoin hasn’t fully lost its anonymity but some evolution in the protocol now makes it easy for a determined investigator to trace Bitcoin transactions.

Many investors are cynical about investing in cryptocurrencies because of past events on how hackers have stolen millions of dollars in Bitcoin. The fact that cryptocurrency exchanges lacked insurance or deposit guarantees also meant that many investors were left out cold without respite when such hacks happen.

Interestingly, some innovators with deep backgrounds in finance and technology are setting up shop to assuage the doubts on investors by creating a cryptocurrency exchange that meets the yearnings of traditional investors. Legolas provides cryptocurrency investors with a guaranteed wallet that preclude risk of theft and loss with guarantees on deposits by a real life bank.  The exchange is also built on a transparent protocol to provide a fair and honest trading environment that eliminates the chances for market manipulation and front running.

Cryptocurrency investors can also join the pre-sale of the LGO token, which will be used as payment for fee orders and other paid service on the cryptocurrency exchange. Hence, investors can reasonably expect an increase in inflows from Wall Street to cryptocurrencies once the major problems that keep institutional investors from cryptocurrencies are solved.

Undeniable proof of potential in cryptocurrencies

The second reason it might not be smart to stay on the sidelines of the cryptocurrency train is that there’s an undeniable proof of potential in cryptocurrencies. In the year-to-date period, Ethereum has rewarded investors with more than 2778.89% gains from $10.28 on January 2 to $295.95 on September 25 as seen in the chart below.

More interesting is the fact that Ethereum seems to have built a support and resistance trend in the $280 to $350 range. Ethereum has declined both times it touched the $350 resistance point in the last three months, but it has gone flat once and rose the second time it touched the $280 support trend line.

Bitcoin investors also have been treated to a steady 404.4% gains from $910.29 on January 2 to $4,800.03 on October 11 as seen in the chart above. Of course, Bitcoin has recorded some heartbreaking declines as seen in the chart; yet, you can’t deny the fact that the predominant trend in the cryptocurrency is northbound.

Interestingly, Bitcoin has delivered particularly impressive performance relative to stocks in the year-to-date period as seen in the chart above. The NYSE Bitcoin Index has delivered 404.04% in the year-to-date period. In contrast, the S&P 500 is up 13.94%, the NASDAQ is up 22.45%, and the Dow is up 15.59% in the same period.

Final words…

Nobody can guarantee that any digital currency will thrive as an alternative to any of the major traditional currencies. Neither can we state in absolute terms that cryptocurrencies will continue to outperform stocks.  However, the fact that cryptocurrencies keep  showing resilience to survive attacks, hate speeches and clampdowns suggests that cryptocurrencies will stay around for a long time. Bitcoin might not reach $100,000; but for now, there’s no other asset that lay claims to being a comparable store of value of growth vehicle on Wall Street.

U.S. Mint Gold Coin Sales and VIX Point To Increased Market Volatility and Higher Gold

Fri, 10/13/2017 - 07:57

– US Mint gold coin sales and VIX at weakest in a decade
– Very low gold coin sales and VIX signal volatility coming
– Gold rises 1.7% this week after China’s Golden Week; pattern of higher prices after Golden Week
– U.S. Mint sales do not provide the full picture of robust global gold demand
– Perth Mint gold sales double in September reflecting increased gold demand in both Asia and Europe
– Middle East demand likely high given geopolitical risks
– Iran seeing increased gold demand and Iran’s gold coin price up by 5%
– Trump’s war mongering could see demand accelerate
– Germany seeing very robust demand and now world’s largest gold buyer

Editor: Mark O’Byrne

Source: ZeroHedge

US Mint coin sales fell to a decade low last month. This follows poor sales since the beginning of 2017. In the third quarter sales reached nearly 3.7 million ounces. September gold coin sales were down a whopping 88% compared to the same period last year.

Year to date sales at 232,000 ounces are 66.5% lower than the 692,500 ounces delivered during the first nine months of 2016, according to the U.S. Mint.

American Eagle gold coin sales did see a slight uptick in demand from very low levels and increased by 11,500 ounces in September which was up by 21.1% in August.

Is this pick-up in US coin demand a sign of things turning around? Perhaps, but we believe the low coin sales this year might say something else about the wider economy. It is also important to look at gold coin and bar sales across the globe to get a better feel for actual demand.

Click here to read full story on GoldCore.com.

Important Guides

For your perusal, below are our most popular guides in 2017:

Essential Guide To Storing Gold In Switzerland

Essential Guide To Storing Gold In Singapore

Essential Guide to Tax Free Gold Sovereigns (UK)

Please share our research with family, friends and colleagues who you think would benefit from being informed by it.

Are You Better Off Than You Were 17 Years Ago?

Thu, 10/12/2017 - 16:53

If we use gross domestic product (GDP) as a broad measure of prosperity, we are 160% better off than we were in 1980 and 35% better off than we were in 2000. Other common metrics such as per capita (per person) income and total household wealth reflect similarly hefty gains.

But are we really 35% better off than we were 17 years ago, or 160% better off than we were 37 years ago? Or do these statistics mask a pervasive erosion in our well-being? As I explained in my book Why Our Status Quo Failed and Is Beyond Reformwe optimize what we measure, meaning that once a metric and benchmark have been selected as meaningful, we strive to manage that metric to get the desired result.

Optimizing what we measure has all sorts of perverse consequences. If we define “winning the war” by counting dead bodies, then the dead bodies pile up like cordwood. If we define “health” as low cholesterol levels, then we pass statins out like candy. If test scores define “a good education,” then we teach to the tests.

We tend to measure what’s easily measured (and supports the status quo) and ignore what isn’t easily measured (and calls the status quo into question). 

So we measure GDP, household wealth, median incomes, longevity, the number of students graduating with college diplomas, and so on, because all of these metrics are straightforward.

We don’t measure well-being, our sense of security, our faith in a better future (i.e. hope), experiential knowledge that’s relevant to adapting to fast-changing circumstances, the social cohesion of our communities and similar difficult-to-quantify relationships.

Relationships, well-being and internal states of awareness are not units of measurement. While GDP has soared since 1980, many people feel that life has become much worse, not much better: many people feel less financially secure, more pressured at work, more stressed by not-enough-time-in-the-day, less healthy and less wealthy, regardless of their dollar-denominated “wealth.”

Many people recall that a single paycheck could support an entire household in 1980, something that is no longer true for all but the most highly paid workers who also live in locales with a modest cost of living.

As noted in yesterday’s postAbout Those “Hedonic Adjustments” to Inflation: Ignoring the Systemic Decline in Quality, Utility, Durability and Service, the quality of our products and services has declined dramatically, even as prices continue marching higher.

Meanwhile, inequality and officially protected privilege has soared, as I outline in my book Inequality and the Collapse of Privilege.

The gulf between these two narratives–the ever-higher financial statistics, and our unsettling sense that we’re less secure, less healthy and less wealthy–is widening. I think the Grand Canyon is an accurate metaphor here: the mainstream media parrots glowing official statistics on the distant side of the canyon, while on the lived-in-world side, well-being continues decaying. 

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.

[KR1135] Keiser Report: ‘Deep State’

Thu, 10/12/2017 - 10:16

In this episode of the Keiser Report from Denver, Colorado, Max and Stacy are joined by artist Alex Schaefer to discuss city planning and state banks in Los Angeles. In the second half, Stacy talks to former George HW Bush assistant housing secretary, Catherine Austin Fitts, about the ‘deep state.’

[KR1133] Keiser Report: Housing Bubbles

Thu, 10/12/2017 - 10:12

In this episode of the Keiser Report from Denver, Colorado, Max and Stacy discuss housing bubbles and surging economic activity. Despite the doomsayers, is the economy recovering? Stacy interviews Ellen Brown, author of ‘Web of Debt,’ about the state-owned bank proposal for Los Angeles. They also discuss the newly-discovered $14 trillion in debt previously hidden in the global derivatives market, and whether or not that could happen in a blockchain-based financial world.

ps – sorry for delay in posting but we were driving across Wyoming, South Dakota and North Dakota for the past week and there was ZERO internet access. I’d get occasional pings of 3g on my iphone but they would last only for 10-20 seconds. Like another world out there.

Mad, Mad, Mad, MAD World: News in Charts

Thu, 10/12/2017 - 08:21

Global Outlook – Mad, Mad, Mad, MAD World: News in Charts

by Fathom Consulting via Thomson Reuters

Alarm bells are ringing for economic fundamentalists such as Fathom Consulting.

Asset prices look increasingly out of step with fundamentals, and in some cases they look downright bubbly. And other geopolitical developments are similarly alarming. One might even describe them as…

Mad:

Equity prices in developed economies, and specifically in the US, are more than one standard deviation higher than their long-run average in relation to nominal GDP.

Mad:

The Nasdaq has again played its part, posting an even greater degree of fundamental overvaluation than the S&P 500. Its degree of overvaluation in relation to nominal GDP is now close to its dotcom bubble high.

Mad:

Government bond prices across the developed world are at all-time highs. Bond prices have been increasing consistently since the 1980s, with a series of global shocks driving that move.

Total central bank assets across the developed world now stand at over $14 trillion, having increased by about $10 trillion since the recession.

Over the same period, the new issuance of government debt has increased dramatically right across the G5. All else the same, you would expect such an increase in government debt to result in higher government bond yields (lower prices).

However, short rates have fallen to the lower bound and QE has been introduced, mopping up almost all of the value of new issuance of government debt across the major developed economies. It is no surprise, therefore, that the price of government bonds has increased over the same period, by around 18%.

Click here to read full story on GoldCore.com.

Important Guides

For your perusal, below are our most popular guides in 2017:

Essential Guide To Storing Gold In Switzerland

Essential Guide To Storing Gold In Singapore

Essential Guide to Tax Free Gold Sovereigns (UK)

Please share our research with family, friends and colleagues who you think would benefit from being informed by it.

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