The Deteriorating Economic Outlook

I wrote an article with Dr. Paul Craig Roberts and John Williams ( which details why the negative 2.9% GDP contraction for Q1 as measured by the Government was likely a gross misrepresentation of the real GDP decline which occurred.  We also explain why this will likely lead to a further measure decline in GDP for Q2, despite Wall Street’s interminable optimism in calling for a 3% rise in GDP.   Finally, we explain the implications for real wealth being generated by the economy in relation to the inexorable rise in Government debt:

Years of understatement of inflation has resulted in years of overstatement of GDP growth. Thinking about the many years of misstatement, we realized that the typical computation in nominal terms of the ratio of debt to GDP is seriously misleading.

You can read the article here:  The Deteriorating Economic Outlook

With the economy starting to contract, corporate profits and cash flow will continue to dry up.   This will place the highly overvalued corporate bond at risk for a devastating sell-off.  Corporate bond spreads are the tightest they’ve been to Treasuries since 2007.  Anyone remember what notable credit market event followed 2007?

You need to dump your bond fund investments now.  As in, call you investment advisor or retirement fund administrator and get out.  ASAP.  Don’t put the money into money market funds because they blow up too – see 2008 for reference (they all have derivatives in them).  Move as much money as you can into precious metals and junior mining stocks:  Junior Mining Stock Research Reports.

While every chart and technical analyst under the sun has been screaming that the metals and miners are going to sell-off here, they just keep bouncing back and going higher – climbing that wall of worry…

11 thoughts on “The Deteriorating Economic Outlook

    1. A cool 1.4mm oz in 10 mins from 8:05 – 8:15 a.m. MST in Comex paper gold. That’s compared to 915k total “registered” gold, which is the gold available for delivery.

      1. thanks…
        pissses me off…but the phony slam was bought…widespread criminality is the order of the day. Silver below $21 per oz in 2014 – yeah right.
        thanks again.

        1. LOL. I’ve been pissed off about the metals manipulation since 2001. It’s been going on in extremis since the 1960’s.

          No doubt the real buyers are hip the game. I think there’s a frighteningly low amount of physical available to deliver into paper claims and that’s why the manipulation attempts aren’t working. Notice who the GFMS and World Gold Council have been issuing somewhat bearish outlooks for gold for 2014. The GFMS issued a report today that stated that it thinks mining companies will start hedging again. That’s complete bullshit. I have not talked to one single mining company management that has indicated anything but a very bullish outlook for the metals.

  1. Dave

    I’d be very interested to hear your thoughts on Bitcoin compared to gold/silver.

    Do you think Bitcoin is better than the precious metals? Or is it just nonsense?

    1. I don’t trust cyber-currencies. At the end of the day, cyber-currencies are at the mercy of Governments AND are subject, ultimately, to control by the software engineers behind them. I don’t believe any computer system is impervious to corruption, especially by the NSA.

      Gold can not created. It’s fixed in supply, ultimately, which is what makes it ideal as an “anchor” benchmark for wealth. Read Alan Greenspan’s essay from 1966, “Gold and Economic Freedom.” Explains better than anything I’ve ever seen why gold works best as a currency. Pretty amazing he was the guy who wrote that…

      1. The problem with cyber currencies or crypto currencies is the fact they are fiat without a printing press. A gold coin in hand is worth a hundred in J P Morge’s vault (if they haven’t been sold off a dozen times by now.)

        I know there are lots of bitcoin supporters out there, but if you listen to their arguments, and then compare their arguments to the arguments during the dot com mania, you will see and hear a near identical tone in their rhetoric. History repeats and sometimes rhymes but the bulk of investors seem to learn nothing at all from the past.

        Gold and silver coins outlasted kingdoms, nations and empires so it would be unwise to ignore the most favored metals on earth.

  2. Oh, it’s shaping up to be an exciting time for the long suffering gold community
    and my gut tells me the criminal manipulators are close to panic mode. They
    desperately try to knock gold price down but it bounces back like a beach ball under water. The greenback was off a bit today so they had to dump gold and look what it
    got them. It’s inevitable the dollar is going over the cliff and soon and then the
    pricks behind the manipulation piss their pants while gold soars beyond their
    efforts to control.

  3. Dave, I hear you loud and clear about getting retirement funds out of bonds, stocks & money markets. But..what can those of us do who have captive 401K accts with our employers? You can only invest in bonds, equities or money market fund. You can’t even keep your money in just “cash”. You can’t take any distributions without getting penalized 10% and paying full taxes. The only way you can rollover these funds to a self directed IRA is to quit your job (not desirable). So is it better to just take all funds out and just pay the penalty or stay in and take your chances??

    thanks for your advice….

  4. Could the fox have gotten in the hen house !?

    Jul 9, 2014 – 12:32 PM GMT
    by Eddie van der Walt
    The race to host the London silver price benchmark has been thrown open after the London Metal Exchange and rival bidder Autilla put forward a joint submission, sources told The Bullion Desk.

    Official sources at the London Bullion Market Association, Autilla and the LME did not wish to be drawn on the development but confirmation of the joint bid will be made later today, The Bullion Desk understands.

    Although the LBMA management committee was unanimous in its support for the joint bid by CME/ThomsonReuters, The Bullion Desk learned last week, sources now say that the challengers are refusing to go quietly and are challenging the bid on the basis of feasibility.

    The LBMA had previously said that it would release its findings as soon as Monday this week and also said that any decision it may or may not have taken would be subject to discussions with regulators. Today, though, it said that no decision had yet been made and that it hopes to make an announcement later this week.

    Time is running out for an official announcement, with some market participants saying they need a replacement mechanism to be in place by the end of this month allow for the changes in derivative contracts and for implementation onto trading desks.

    The current fixing process will end on August 15, with the market expecting an agreement by mid-July.

    The consultation process was triggered after Deutsche Bank announced earlier this year that it was withdrawing from the gold and silver fix process, leaving only two bullion banks in the process for the latter.

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