Tag Archives: negative interest rates

A Global Race To Zero In Fiat Currencies…

Financial Markets, Gold, Market Manipulation, Precious Metals, U.S. Economy, , , ,

…ushers in the restoration of price discovery in the precious metals market. The price of gold is at or near an all-time in most currencies except the dollar. This summer, however, it would appear that the dollar-based valuation of gold is starting to break the “shackles” of official intervention and is beginning reflect the underlying fundamentals. Gold priced in dollars is up over 14% since mid-November 2018 and over 44% since it bottomed at $1050 in December 2015. But those RORs for gold are inconvenient truths you won’t hear in the mainstream financial media.

The movement in gold from 2008-2011 reflected the fundamental problems that caused the great financial crisis. The gold price also anticipated the inherent devaluation of the U.S. dollar from the enormous amount of money and credit that was to be created in order to keep the U.S. financial/economic system from collapsing. But those “remedies” only  treated the symptoms – not the underlying problems.

Once the economic/financial system was stabilized, the price of gold – which had become
technically extremely over-extended – entered a 5-year period of correction/consolidation.
This of course was helped along with official intervention. Gold bottomed out vs. the dollar in late 2015. As you can see, the gold price is significantly undervalued relative to the rising level of Treasury debt:

This is just one measuring stick by which to assess a “fundamental” dollar price for gold. But clearly just using this variable, gold is significantly under-priced in U.S. dollars.

As mentioned above, the underlying problems that led to the systemic de facto collapse in 2008 were allowed to persist. In fact, these problems have become worse despite the  efforts of the policy-makers and insider elitists to cover them up. But gold is starting to sniff the truth.  I’ve been expecting an aggressive effort by the banks to push the price of gold below $1400 – at least temporarily. But every attempt at this endeavor has failed quickly.  This is the ”invisible hand” of the market that ”sees” the ensuing currency devaluation race, which has shifted from a marathon to a track meet.

Though the politicians and Wall Street snake-oil salesmen will blame the fomenting economic contraction on the “trade war,”  the system was heading into a tail-spin anyway – the trade war is simply hastening the process. As such, the only conclusion I can draw is that there’s big big money globally – over and above the well publicized Central Bank buying – that is moving into gold and silver for wealth preservation. In short, bona fide price discovery in U.S. dollar terms is being reintroduced to the precious metals market.

The Mining Stock Journal  covers several mining stocks that I believe are extraordinarily undervalued relative to their upside potential. I also present opportunistic recommendations on select mid-tier and large-cap miners that should outperform their peers.  You can learn more about this newsletter here:   Mining Stock Journal information.

The System Will Implode When Central Bank Intervention Fails

Financial Markets, Gold, Housing Market, Market Manipulation, Precious Metals, U.S. Economy, , , ,

The economic reports released this morning added to the near-continuous flow of information reflecting a U.S. economy that is likely contracting, for the most part.  Perhaps the only “fundamental” variable not contracting is the hot air coming from the Fed.

In today’s release of its “services” PMI, Markit explains:  “The US economy is going through its worst growth spell for three and a half years…and the worst may be to come as the greatest concern is the near-stalling of new business growth.”

The core durable goods new orders index released today dropped for the 13th month in a row – Zerohedge points out that it is the longest “non-recessionary” stretch of consecutive monthly drops in 70 years.

In fact, a good argument can be made that if a bona fide rate of inflation was applied to the Government’s GDP calculations, the U.S. economy has not produced real, inflation-adjusted economic growth since 2006.  Review the work of John Williams’ Shadowstats.com for evidence of this fact.

The Swiss National Bank admitted that it has spent $470 billion on currency manipulation since 2010.  Given the Fed’s refusal to disclose any information about its currency swap programs – including denying all FOIA requests on this matter – there can be no doubt that the Fed has been actively funding the SNB’s endeavors. The same goes for the SNB’s huge U.S. stock portfolio, which includes insanely overvalued gems like AAPL and AMZN.

We are witnessing the western Central Banks’ last gasp at preventing total systemic collapse.  The Fed et al were able to defer this event in 2008 with many trillions of direct money printing – deceptively marketed as “Quantitative Easing” – and many more trillions of direct Government income and spending subsidization.  After all, a Government willing to underwrite and guarantee 3% down payment, subprime credit mortgages is creating nothing more than a form of “helicopter money” dressed in drag.

A reader who is a self-professed real estate expert took issue with my blog post the other day in which I stated that the housing market is tipping over now.   He said: “Until proven otherwise, the U.S. housing market is still alive and well right now – and Denver is still doing very well too!”

Quite an assertion given that his opinion is based almost solely on the corrupted data produced by the National Association of Realtors (I refer you to one of several blog posts in the  past in which I demonstrate in detail why the NAR data is highly flawed, if not intentionally fraudulent to some degree).   To which I responded:

We’ll have to agree to disagree. Despite the propaganda, prices have been falling in Denver since last summer. Inventory is going through the roof. The “bubble” neighborhoods everywhere in metro-Denver are starting to look like they did in 2008, littered with for sale and for rent signs. I’m not sure where your “Denver” data is coming from but I conduct actual “boots on the ground” due diligence. I am getting emails from readers in Florida, DC/Virginia, NY and other regions describing the same thing I’m seeing in Denver.

The NAR data is highly manipulated. Yr over yr SAAR is useless as is the NAR data collection methodology. The “seasonal adjustment” regression program is the same program the Government uses in its data manipulation scheme.

At the lower end of the spectrum, we are seeing the last fumes of a regenerated subprime mortgage bubble sponsored by FNM/FRE/FHA/VHA/USDA. Yes, the USDA, which sponsors 0% down pmt mortgages in “rural” areas where “rural” turns out be the outermost suburban band of most MSA’s. Were you even aware of that?  There’s also been a “last gasp” surge in investor/flipper volume. They will be stuck holding the bag on homes they can’t sell or rent, just like in 2008.

My point in all of this is that the only “trick” left in the Fed’s bag right now is direct intervention in the stock market.   It’s a last gasp effort in an attempt to generate a “confidence” and “wealth effect” dynamic.  Hey, if the stock market isn’t going down things can’t be that bad, right?

The problem is that, for the most part, the world can no longer absorb any more credit expansion. We’re seeing this in the U.S. with the rapidly rising delinquency rates for auto and student loans, soon to be followed by another round of mortgage delinquency/defaults.

The Fed knows this and that’s why it continues to defer raising rates despite the constant barrage of threats to do just that at “the next meeting.”  Even the boy who cried “wolf” is blushing on behalf of the Fed.  I believe that the Fed’s inability to inflict a meaningful price take-down of gold and silver – especially silver – may be an indication that the Fed’s manipulative powers are beginning to atrophy.

It’s likely that this latest bear market bounce in stocks – the one for which Jim Cramer has ceremoniously proclaimed “a new bull market” – is going to start tipping over.  It won’t happen all at once but it will likely lead to yet another “waterfall” drop in the S&P 500.  Incredibly, the last two times around witnessed an incredible amount of screaming from the “peanut gallery” for the Fed to do something in response to just a 10-15% drop in stocks.  Bear markets typically don’t end until stocks have dropped 60-90%.

At some point the Fed will be completely helpless to prevent the market from going lower. That’s the point at which the system will collapse.  In my upcoming issue of the Short Seller’s Journal, I outline why I believe both oil and stocks are getting ready to head down the roller coaster tracks once again.  I have an idea that will capitalize on another move lower in oil plus accelerating defaults in the energy sector.  Subscribers also received an update email last night that presented a stock that I think is getting ready to experience an “elevator shaft” drop.  This company’s accounting is more misleading than Amazon’s, if that’s possible.

The Fed has been working overtime to hold up a stock market that is the most overvalued in U.S. history based on using traditional GAAP earnings.  My Short Seller’s Journal will help you find stocks that will ultimately fall at least twice as much as the overall market, either because of misleading accounting that gets exposed or rapidly deteriorating fundamentals, or both.  (click below to subscribe)

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The War On Cash Is Irrelevant If You Own Gold And Silver

Financial Markets, Gold, Market Manipulation, Precious Metals, U.S. Economy, , , ,

The fear porn headlines are beginning to flood the alternative media blogs.  Everyone is warning about the growing “war on cash” and negative interest rates.  Yes, it’s inevitable and all the reasons why Governments prefer a digital currency to cash are obvious.  First foremost is that it is the bridesmaid to the Totalitarian creep engulfing our system.

But lost in this fog of fear is the obvious alternative:  gold and silver.  Worried about the elimination of $100 bills because it makes it harder to accumulate and safekeep meaningful amounts of cash?  An ounce of gold stores a lot more wealth than a $100 bill. Currently one roll of silver eagles is worth more than three $100 bills.

Negative interest rates?  Big deal.  Over long periods of time the relative value of gold accelerates vs. all other currencies when real rates are negative.  When the Fed takes nominal rates negative the price of gold/silver will begin to go parabolic.  Will that happen immediately?  Of course not.  The Fed will try to cap the price movement of gold with B-52 payloads full of paper gold.  When this happens, take as much cash out of the banking system as possible and convert it into physical gold and silver bullion coins.

Will the Government try to confiscate gold and silver?  The promoters of this hypothesis have glaringly failed to study the facts.   Yes, the Government decreed it to be illegal to use gold bullion coins as currency but it never embarked on an effort to “confiscate” private gold holdings.  In fact, other than a few idiots who took their gold to the bank and turned it in for cash, the only gold the Government “confiscated” was gold that had been found in abandoned safe deposit boxes.

FURTHERMORE, the possession and use of silver as a currency was never outlawed.  Please study the facts on what happened before you promote or buy into highly misleading or false tales about gold “confiscation.”

Whether or not the Government ever revives a moratorium on the use of gold as a currency or on its outright ownership is, quite frankly, irrelevant.  There will ALWAYS be a private market in which gold will freely exchange hands for like value.  Gold and silver have endured over 5,000 years as legitimate currencies.   The  United States has been in existence for roughly 240 years.  I think I know which of the two has a better probability of surviving the economic and geopolitical hurricane that is approaching.

The rampant proliferation of “war on cash / negative interest rate” warnings are little more than the childish rants of alternative media propaganda artists.   It’s like a repetitive announcement that the earth is round and circles the sun.  Yes, we know that the Government is going to digitize the currency system and take interest rates negative in an attempt to channel bank balances into consumption or the stock market or Treasury bonds.

But whatever measures the Government takes to implement capital controls and increasingly exert more control over your life can be offset if you move as much cash as possible out of the system now and into precious metals.

The Corruption In The U.S. Has Reached Insane Levels

Financial Markets, Gold, Market Manipulation, U.S. Economy, , , , ,

The U.S. financial and political system has become possibly the most corrupt system in recorded history. But even worse is the willingness of the American public to endure and even accept the blatant corruption that has engulfed the system. The latter attribute is best explained by the psychological phenomenon known as “Stockholm Syndrome.”

The poster-child for this analysis, of course, is Hillary Clinton. Clinton should be spending all of her time defending herself from being thrown in jail for life.  Instead, she gets annihilated in the New Hampshire primary voting and yet comes away with the same number of delegates as her opponent.  It’s almost as if the more evidence is released which shows that Hillary Clinton broke laws and seriously compromised national security the more popular she becomes with ideologically blind Democrats.

Same for Trump.  The only reason he has achieved some measure of support is because he’s willing to challenge the long running corrupt establishment politicians and there’s enough people who sense that the crux of the problem is Washington DC.  But Trump is not the solution to the problem – he’s part of the problem from the Wall Street side of the equation.  Trump is the guy who has run his casino “empire” into bankruptcy three times – “Chapter 33” (Chapter 11 x 3).  He’s no more qualified to run the country than is a pedophile to run a daycare center.

As for Wall Street, I’m watching in horror as the same problems that blew up the financial system in 2008, problems which were never fixed, have become even bigger and more dangerous.  Yet the public whistles by the graveyard as they are about to be subjected to money market fund gates and a cashless monetary system.   The EU is getting ready to abolish the 500 euro note.  And Larry Summers, one of the most insidiously corrupt public officials I’ve seen in my lifetime, has proposed abolishing the $100 bill.  And no one cares.

A digital currency system not only will enable the Government to monitor everything you do with your money, it will also enable them to more easily “corral” any money you keep in a bank in order to use that capital for the bail-ins which will inevitably hit the system when 2008 Redux hits the system.

It’s not  a secret to anyone paying attention, but the Government spending deficit is on the cusp of going parabolic.  The one-time accounting games and fleecing of Fannie Mae and Freddie Mac to help “fund” Government deficit spending and to enable the appearance of of a smaller deficit are now used up.  No one seemed to care, but the amount of Treasuries outstanding jumped up by about $700 billion to $19 trillion right after Congress and Obama raised the debt ceiling limit to $20 trillion. Folks, that’s money that has been already spent but which was hidden from the actual 2015 spending numbers by Jack Lew’s magic accounting wand.

Now that China is openly liquidating its Treasury holdings, the U.S. Government will need to find another source of funding for its Ponzi schemes.  Enabling “gates” on money market funds will help the Government channel big waves of capital into Treasury bonds via Treasury mutual funds.   Notice there have not been any proposals to gate those.  It’s another backdoor bail-in that will be implemented on a complicit public.

I said back in 2003 that the powers that be would hold up the system with printed money and credit until they were done sweeping every last crumb of wealth off the table and into their pockets.  But I had no idea what that process would look like.  Now I’m starting to see how my prediction is unfolding and I will admit it’s clever.  It’s the “boiled frog” strategy being executed with near-perfection.

Money market mutual fund gates, which go into effect in Q3  – and a digital currency system – which could go into effect before the end of the year – are nothing more than totalitarian capital controls in disguise.  I have no expectations other than that the public will embrace them with eagerness as I suspect they’ll be shoved down our throats in the name of national security.

For anyone who “gets it” and who is paying attention to what’s happening, my best advice is to start moving as much of your money out of mutual funds, retirement accounts and banks and into physical gold and silver that you safekeep yourself.  Ironically, at a time when the eschewal and ridicule of precious metals by the media and the clueless masses has reached an epitome, now is the best time since the bull market began to convert fiat currency and custodial-held wealth into gold and silver bullion.

U.S. Economic Collapse Becoming More Evident

Financial Markets, U.S. Economy, , , ,

It’s days like today that will keep the muppets invested as we keep going down.  – Jim Quinn of The Burning Platform in reference to Thursday’s stock market moon-shot

Well, I was wrong.  I was predicting that the Census Bureau would engineer a miraculously positive retail sales report for December.  As it turns out, the CB is admitting to a .1% drop in retail sales for the month.  The question begs, then, just how bad were the real numbers?  They also are purporting that November retail sales rose .4% instead of the .2% originally reported.  Unfortunately for the Government, all of the privately produced retail sales metrics during November showed large declines in retail sales during the month.  No, Virginia, the impressive percentage gains in online sales do no offset the decline in brick/mortar sales – online sales activity is about 7% of total retail sales.  The Consumer is tapped out which means the U.S. economy is tapped out.  But we should blame China, right?

In addition, the NY Fed general business conditions index registered a stunning collapse toUntitled1 -19.5 (vs. -4 expected).  This is the lowest reading on this index since the Great Financial Crisis Collapse in 2008/2009. This graph shows both the Philly Fed and NY Fed economic activity index readings. Does this at all look like the economy that Obama told us the other night is doing fine? (Source:  Bloomberg News)

NY Fed President Bill Dudley was out today announcing that negative interest rates would be considered if the economy continues to slide.  Negative interest rates are another form of QE.  QE is a politically/socially correct term for money printing.  “Money printing” is the code for “BAIL OUT THE BANK AGAIN.”

The price of oil is collapsing.  I predicted in the fall of 2014 that the price of oil would hit the $20’s.  The price of oil is collapsing because collapsing economic activity globally, especially in the United States, is causing a collapse in demand.  For get “Dr. Copper.”  The real barometer of economic health is oil.  Copper is used in a  lot of manufacturing applications, but oil/energy is used to mine and refine copper and to manufacture and deliver copper-based products.  Oil is the root indicator of economic activity.  Oil is the real “Dr. Copper.”  Everything else is a derivative of oil.  Think about that for a moment…