So you've ridden the markets higher--stocks, housing, commercial real estate, bat guano, quatloos, you name it--everything you touch turns to gold. What can we say, bucko, other than you're a genius! It's a market truism that rising tides lift all boats. But that's not the really important effect; what really matters is rising tides turn everyone into a genius--at least in their own minds. Those of us who have been seduced by the Sirens' songs of hubris know from bitter experience how easy it is to confuse a rising tide with speculative genius. When everything you touch keeps going higher, the only possible cause is.... your hot hand, of course! Stocks--I'm a genius! Housing--I'm a genius! Commercial real estate--yes, well, I suppose the evidence is overwhelming--it does seem I'm a genius. The only thing better than buy and hold is buy the dips and hold--and use margin or whatever leverage you have to buy more before the price goes even higher.
Wall Street and our central bank are in for a rude awakening very soon! The idea that the US economy is on stable footing and about to experience a surge in growth is ridiculous. Hence, the consensus that the Fed can normalize interest rates and its balance sheet is nothing short of a bad joke...and it's on them. For starters, the government's fiscal deficit for the month of March came in at $176.2 billion, which means the deficit 6 months into fiscal 2017 is $526.9 billion and running 15% over last year. If not for the calendar timing of receipts and payments, our government's deficit would be a year-to-date $564.0 billion or 23% above last year. In addition, there was an 18% decline in corporate income tax collection. We all know there was no corporate tax reform passed. So the credible conclusion must be reached that corporations are not growing there profits...they are actually shrinking. The nation will now bump up against the $20 trillion debt ceiling on April 28th and is facing a possible government shutdown. This will happen to coincide with day 100 of Trump's Presidency.
Late last week, the price of gold reached a five-month high going into a holiday weekend (most U.S. markets were closed last Friday while many European markets were closed this Monday).
Holiday weekends are a prime opportunity for the U.S. government through use of the Exchange Stabilization Fund, and actions by its primary trading partners and allied central banks to suppress precious metals prices (and also prop up stock prices). Why would the federal government have an incentive to manipulate such prices?
First, if the public perceives that the economy is chugging along better than it really is, that helps the U.S. government pay a lower interest rate on its nearly $20 trillion in debt.
Before we look at tonight’s charts I would like to thank Sir Plunger for putting on the short oil trade this week while I was recovering from surgery. You won’t find a more through and in depth look at oil than what Sir Plunger offered. And wouldn’t you know it his timing as usual was impeccable. Oil dropped almost 4% today.
Now lets turn our attention to the sector which many members have a love hate relationship with.
There is a potential new pattern forming on some of the precious metals stock indexes which is only coming to light today. Before today’s price action there was only a guess of what may be forming with no confirmation. After today’s big gap breakout another piece of the puzzle is falling into place. Nothing is ever guaranteed when it comes to the markets, so all we can do is get the odds in our favor and try to recognize a potential pattern as soon as possible. Once you think you may have something figured out you then put together a game plan and work it until it either plays out or fails.
Click through for the full article and a lot of charts.
Clinging to magical-thinking fixes that change nothing on the fundamental level hastens collapse. Here we stand on the precipice, and all we have in our kit is a collection of delusional magical thinking that we label "solutions." We are not just morally and financially bankrupt, we're intellectually bankrupt as well. Here are three examples of magical thinking that pass for intellectually sound ideas:
1. Mainstream neo-classical/ Keynesian economics. As economist Manfred Max-Neef notes in this interview, neo-classical/ Keynesian economics is no longer a discipline or a science--it is a religion.
Truth is a rare commodity on Wall Street. You have to sift through tons of dirt to find the golden ore. For example, main stream analysis of the Fed's current monetary policy claims that it will be able to normalize interest rates with impunity. That assertion could not be further from the truth.
The fact is the Fed has been tightening monetary policy since December of 2013, when it began to taper the asset purchase program known as Quantitative Easing. This is because the flow of bond purchases is much more important than the stock of assets held on the Fed's balance sheet. The Fed Chairman at the time, Ben Bernanke, started to reduce the amount of bond purchases by $10 billion per month; taking the amount of QE from $85 billion, to 0 by the end of October 2014.
The end of QE meant the Fed would no longer be pushing up MBS and Treasury bond prices (sending yields lower) with its $85 billion per month worth of bids. And that the primary dealers would no longer be flooded with new money supply in the form of excess bank reserves. In other words, the Fed started the economy down the slow path towards deflation.
We believe the 6 April 2017 Tomahawk missile attack on Syria indicates that Donald Trump has concluded that the fiscal, economic and political situations in the United States are beyond repair, and that without continued, massive military interventionism and spending, U.S. GDP will plunge, taking all of his campaign commitments down with it. Therefore, he has capitulated to the agenda of the Deep State looters and war profiteers. Trump’s capitulation has profound personal and financial implications for the citizens of the United States and the world.
Gold futures rose for a third straight session Tuesday, underpinned as financial markets nervously await a late-week meeting between President Donald Trump and his Chinese counterpart.
Haven gold also found a floor as well as a highly anticipated employment report out Friday could hold further clues for the pace of interest-rate hikes, especially in light of other recent softening data.
“Gold has been profiting not only from the weak U.S. vehicle sales figures in March, which have weighed on sentiment among market participants, but also from falling stock markets and lower bond yields,” said Carsten Fritsch and the commodities team at Commerzbank, in a commentary.
Those benefiting from these destructive "solutions" may think the system can go on forever, but it cannot go on when every "solution" becomes a self-reinforcing problem that amplifies all the other systemic problems.
We are living in an interesting but by no means unique dynamic in which the solutions to problems such as slow growth and inequality have become the problems. This is a dynamic I have often discussed in various contexts. In essence, a solution that was optimized for an earlier era and situation is repeatedly applied to the present--but the present is unlike the past, and the old solution is no longer optimized to current conditions. The old solution isn't just a less-than-optimal solution; it actively makes the problem worse.
Gold and silver futures moved strong out of the gate in their start to the new trading week on Monday with closes at or near 1-month highs.
Gold for April delivery settled up $7.20, or 0.6%, to $1,255.70 an ounce on the Comex division of the New York Mercantile Exchange. The finish is the highest since Feb. 27 when prices tapped in at $1,258.80 an ounce.
The use of the term “animal spirits” is most commonly attributed to John Maynard Keynes. But it originates from the Latin term, “spiritus animales” in reference to the spirit that drives human thought, feeling and action. We saw animal spirits at work in gold and silver on Tuesday this past week when the Dow dropped 237 points and gold quickly popped up $16. Silver jumped 72 cents, much to Wall Street’s surprise, on March 16th after the FOMC issued its latest monetary policy statement despite an assurance that the Fed would raise rates three
At some point the paper control of the gold market is going to fall prey to animal spirits. I think the reaction of the metals after the FOMC policy release and when the Dow plunged are evidence that “animal spirits” are percolating in the precious metals market. (Excerpt from yesterday’s issue of the Mining Stock Journal)
If you need some evidence that the echo-bubble in housing is global, take a look at this chart of Sweden's housing bubble. A funny thing often occurs after a mania-fueled asset bubble pops: an echo-bubble inflates a few years later, as monetary authorities and all the institutions that depend on rising asset valuations go all-in to reflate the crushed asset class. Take a quick look at the Case-Shiller Home Price Index charts for San Francisco, Seattle and Portland, OR. Each now exceeds its previous Housing Bubble #1 peak:
By Greg Hunter’s USAWatchdog.com (Early Sunday Release)
Market expert and financial writer Bill Holter says elite were in a “panic” last week to try to push down the price of gold and silver. Holter explains, “You have to understand that gold is the direct competitor versus the dollar. Other currencies in the world compete with the dollar, but the dollar is the reserve currency. It supplanted gold in 1971. Gold and the dollar are direct competitors or arch enemies, or whatever you want to call them. The best way to make the dollar look good is to make gold look bad. That’s what the purpose of all these naked sales or contracts are to suppress the price (of gold and silver). That’s the purpose of it. . . . Tuesday, Wednesday and Thursday were three big sales back to back to back, which shows the captains of the dollar are panicking. The dollar definitely looks like its rolling over and has been taking some fairly sizable drops intraday.”
Click through for the full post and video interview.
As a general rule the most successful man in life is the man who has the best information. John Exter was an American economist and a member of the Board of Governors of the United States Federal Reserve System. Exter is known for creating Exter's Pyramid - useful for visualizing the organization of asset classes in terms of risk and size. When the credit system is expanding most money flows to the top of the pyramid - the increasingly speculative and illiquid investments. When the credit system comes under pressure and debt cannot be repaid, the items at the top of the pyramid get sold and money flows towards the bottom.
Click through for the full article and all the charts.
The long-term view of silver is extremely bullish, given that it is one of the most undervalued metals, today. It is evident that ideal economic conditions are present, for silver to rise for many years to come: All-time low interest rates, that are about to rise Over-valued stock markets Fragile international monetary system that is debt-laden to the full. Furthermore, it appears to be the first time that these ideal economic conditions, for a rise in silver, align in such a timely manner; in particular, the bottom in interest rates, the peak in stock markets, as well as the coming collapse of the monetary system. Potentially all of these events can happen within a two to three-year period.
Today I’m going to show you one small instance of taxpayer money being wasted.
Multiply this by a thousand times at hundreds of agencies and you’ll understand why Washington’s finances are such a mess.
You’ve probably already heard that the Trump administration is planning massive spending cutbacks at most nondefense-related agencies. In fact, Mick Mulvaney, director of the Office of Management and Budget, is reported to have sent a letter recently to all federal agencies telling them to prepare for big cuts.
While gold futures ended the week near $1290, barely $1 off its highs and up ~2.5% for the week, the gold miners told a slightly different story. The GDXJ fell 3.52% on Thursday and only managed to gain 38 basis points on the week despite gold rallying more than $30/oz
All good things come to an end. Now, the “Trump Trade,” seems to be reaching its end…
The Trump Trade, also called the reflation trade, is based on the idea that President Trump’s policies of lower taxes, less regulation, and more infrastructure spending will improve corporate earnings, stimulate consumer spending, and therefore result in higher stock prices.
Lower corporate tax rates would mean higher after-tax profits for corporations that had domestic profits. Lower individual tax rates would mean that consumers would have more discretionary income to spend on everything from new cars to eating out.
Trump’s planned repeal of Obamacare would be good for hospitals and insurers who would be relieved of mandates. Trump’s repeal of Dodd-Frank would be good for banks because of reduced compliance costs and greater ability to engage in proprietary trading. Trump’s infrastructure spending plans would be good for construction companies and manufacturers of heavy equipment.
Former Assistant Treasury Secretary in the Reagan Administration, Dr. Paul Craig Roberts, sees trouble for the economy. Dr. Roberts explains, “This image of a strong stock market is based essentially on debt, borrowing and debt, money creation and debt. It’s a false signal that shows prosperity, and it’s not really there. . . . So, during a period of time when there has been no interest income on peoples’ savings in the form of bonds or CDs, there has also been no growth in Social Security income. So, the elderly, or the largest block of them, are hard pressed. The young come out of school with student debt and no good jobs. A large percentage can’t find sufficient employment to support an independent existence. They can’t possibly pay off the loans. So, wherever you look, you see a debt based system that’s running out of steam.”
Click through for the full post and video interview.
Gold and silver are acting differently right now. Usually when the open interest in the paper gold (Comex) net short of the bullion banks becomes overweighted, it’s a signal that they are getting ready attack the price of gold by triggering massive stop-loss selling by the technically-driven hedge funds.
And through last Tuesday, per the latest COT report, the Comex banks had piled heavily into the short side, feeding paper shorted to the hedge funds.
In the four trading days following the election, approximately 6200 tonnes of gold (2,000,000 contracts) traded on Comex. That is equivalent to two years of global gold mining production…That hair-trigger trading reaction led to a price smash of 4.5% and turned the trading sentiment for gold from positive to negative almost overnight. The question is where did sellers come up with 6200 tonnes – a preposterously enormous and unprecedented quantity of gold – on a moment’s notice, in the wee hours following the surprising election outcome? – John Hathaway on King World News
Perhaps what’s most interesting about Hathaway’s comment above is that sometime in the last few years Hathaway’s viewpoint has shifted from denial that the gold market is manipulated to seemingly full acceptance of that obvious fact.
When the system is rigged, "democracy" is just another public-relations screen to mask the unsavory reality of Oligarchy.
Democracy in America has become a hollow shell. The conventional markers of democracy--elections and elected representatives--exist, but they are mere facades; the mechanisms of setting the course of the nation are corrupt, and the power lies outside the public's reach.
History has shown that democratic elections don't guarantee an uncorrupt, functional government. Rather, democracy has become the public-relations stamp of approval for corrupt governance that runs roughshod over individual liberty while centralizing the power to enforce consent, silence critics and maintain the status quo. Consider Smith's Neofeudalism Principle #1: If the citizenry cannot replace a dysfunctional government and/or limit ...
Click through for the rest. The system we live in is not healthy.
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