Thursday, December 12, 2019

Immutability And Timelessness, In The Dawning Of The Fintech Age

by Andy Hoffman, Miles Franklin:

2,500 years ago, the Greek philosopher Heraclitus wisely espoused, “the only thing that is constant is change.”  Which, in the world of investing, could not be truer – particularly today, as the pace of technological innovation accelerates at an unprecedented pace.  The problem is, that while technology is generally speaking a good thing, not all technology is utilized for favorable purposes; in many cases, in stark contrast to the best interest of the world’s “99{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}.”  To that end, the foundation of today’s technologically exploding world – its monetary system – is still based on an archaic, fraudulent fiat Ponzi scheme that is rotting the world’s finances and economy from within, for the benefit of a handful of politicians, bankers, lobbyists and billionaires.

Frankly, industrial technology is starting to resemble the world of Star Trek, whilst monetary “technology” is closer to the Flintstones.  And now that “fintech,” or financial technology, has enabled bankers to maniacally control the prices of “currencies”; as well as the “markets” they trade in; and, of course, the “barometers” of progress mankind uses to “check” monetary abuse, like gold and silver – the wealth disparity between the “99{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}” and “1{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}” has exploded to politically, geopolitically, and socially untenable levels.  Not to mention, global economic activity has been decimated by oversupply; whilst dramatically increasing the cost of living, and creating the largest, parabolically-rising debt edifice in history.  This is why, for all the excitement about new technology, the world is not yet able to truly advance; and why, given the exploding pace of technological growth and information dissemination, the historic “reset” of the monetary system required to enable advancement must occur sooner rather than later – in the process, catalyzing one of the greatest wealth transformations in global history.

The way I see it, the biggest losers will be the equally archaic stock and bond markets; perhaps not in nominal terms, as Central banks desperately print money to maintain the rapidly dying illusion that “all’s well”; but certainly, in real terms.  More importantly, I believe the very concepts of stocks and bonds are slowly being phased out, given how detrimental they have become to the global economy; and particularly, the world’s “99{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}.”  I mean, when one considers just how much fraud goes into the process of issuing “securities” – from rigged accounting, regulatory agencies, and financial markets; to the insider trading benefiting the “1{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}”; to the debt piled on, at parabolically rising rates, to “buy back” said “equity” – again, benefiting the “1{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}”; to their monetization by Central banks – in some cases, like the Japanese and Swiss, blatantly so – again, benefiting the “1{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}”; it’s difficult to believe that in the age of Artificial Intelligence, Driverless Cars, and Crypto-currency, a handful of unelected bureaucrats and their bankster cronies can remain in charge of printing “money” and administering “markets.”  Which I ASSURE you, won’t remain the norm much longer.

As for bonds, everything I just said about stocks goes double.  As despite relentless propaganda – now, more than ever, given the satanic “partnership” between the “evil Troika” of Washington, Wall Street, and the Mainstream Media – the world’s biggest scourge, in both Heraclitus’ time and today – is DEBT.  And now that Fintech has figured out methods – like off-balance sheet derivatives – to “leverage” debt at ratios putting Lehman Brothers to shame, the level of global debt has reached levels undreamt of as recently as the turn of this century – to the tune of roughly $320 trillion on balance sheet, and at least as much “off balance sheet.”  To wit, whilst NYSE margin debt of $539 billion is itself at an unfathomably large record-high, “shadow margin lending” – i.e., “off balance sheet” – may be at least as large.  Heck, the entire Chinese economy is based on shadow lending, “managed” by the equally anachronistic, and unwaveringly failing, Communist manifesto.  Which is why China, the anticipated “leader” of the 21st Century, must experience a dramatic, and globally destructive, economic and monetary crash before it can truly advance.  And why, wisely so, its government, and citizens, are stockpiling gold at a record rate – both “on” and “off” balance sheet.  Not to mention, China in many ways represents the center of the Bitcoin universe – with a government that understands crypto-currency more than perhaps any other.

To that end, as highlighted in yesterday’s “Precious Metals and Bitcoin – Twin Destroyers of the Fiat Regime, Part III,” Fintech innovation in the monetary space is advancing at an unprecedented rate.  Heck, yesterday’s Bitcoin “hard fork” may well prove to be a powerful, and extremely unexpected, dagger in the powers that be’s’ diseased fiat Ponzi scheme; in that it may well have separated Bitcoin into two powerful entities; one, focused principally on storing value – and the other, facilitating unprecedented transactional speed.  A few months ago, at the height of the “scaling debate,” I suggested this very thing, but was scoffed at for believing such blasphemy had merit.  However, in a world where literally thousands of transaction types occur each day, it’s difficult to ascertain how one currency can handle them all.  And frankly, the most important transaction of all, wealth storage, works best when it has a medium of its own.

This is why GOLD’s principal “use case” (and with it, it’s “baby brother” silver) – wealth storage – has been bastardized throughout history, diluted by government-abused “gold standards” due to a lack of viable transactional alternatives.  And why, when crypto-currency overwhelms the fiat monetary regime, it (they) will not only be liberated from the maniacal suppression that has pushed prices to their lowest-ever inflation adjusted levels; whilst simultaneously, destroying the mining industry’s ability to produce them; but finally, after thousands of years, they will be relegated to said principal use case – wealth storage – which for centuries, has been diluted by futile, universally destructive government efforts to manage the monetary system.

And for those that say, “but crypto-currency will take over that use case, too” – I’ll simply say “plus ça change, plus c’est la même chose”; i.e., the more things change, the more they stay the same.  As, per last week’s “co-existence of scarcity assets,” the amount of fiat currency – and debt default – to be “insured” against is unfathomably large, compared to the minuscule size of the available-for-sale float of the handful of scarce, wealth-storing asset classes.  To that end, if you are fortunate enough to be able to hold an ounce of gold in your hand – realizing its weight, luster, brilliance, and the amount of blood, sweat, and tears that went into finding, producing, and circulating it – I ASSURE you, you’ll understand why Precious Metals’ financial system role isn’t going anywhere, no matter how rapidly “Fintech” advances.

I could easily end this article here.  However, I kid you not, my original working title was “gail force economic headwinds, Precious Metal tailwinds,” so I feel compelled to discuss the reasons why.  I had no idea I’d go off on the aforementioned, extremely important, big picture tangent.  However, the fact remains that the global economy – and monetary system – is rapidly collapsing; to the point that the final hyperinflationary push, that forever destroys fiat currency in lieu of said “new world” of Fintech, has never been closer.

On a day when the Australian Central bank followed those of the U.S., Europe, and Japan (last week) in warning of the “dangers” of a strengthening currency; just one day before “whisper” rumors suggest the Bank of England will do the same; oil prices plunged based on OPEC’s production again hitting a new all-time high in July (with U.S. shale perhaps a month or two behind), as “deflation” fears – rigged stock market notwithstanding – continued to take center stage.  To wit, Jim Rickards’ tweet yesterday, regarding why the Fed is “done raising rates this year.”  Which, I might add, the money markets decidedly agree with – and myself, per last week’s (maniacal Cartel suppression efforts notwithstanding) “most Precious Metals bullish I’ve ever been.”

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A 10{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} Gold Allocation May be Outdated

by James Anderson

Market Updates and Opinions are provided as a third party analysis and do not necessarily reflect the explicit views of Kitco nor Kitco Metals Inc. The following information below should not be construed as financial advice nor is the author an accredited financial advisor.

To understand why the somewhat cliche 10{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} gold investment allocation mantra may be somewhat misleading today, some historical context is required.

In this 10 minute read, we will especially pay attention to the last half century or so in which fiat currencies (the numeraire or moving benchmarks for which gold and silver bullion are most often measured against) have been in full expansion and usage across the globe (since the early 1970s).  

Historical Gold Silver Investment Allocation Context

Nearly a half century ago, the London Gold Pool price rigging ended (1968). That was essentially the beginning of the end for the fixed $35 oz USD Bretton Woods’ gold price which was set globally following World War II and ultimately helped establish the US dollar then and still the main reserve currency it is today (while lessening its dominance in recent years, about 60{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of all currency worldwide is still USD denominated).

In August 1971, President Richard Nixon closed the official central bank gold window which meant nations could no longer exchange US dollars for gold bullion. Remarkably US citizens were still not even allowed to own more than some 5 ounces of gold bullion until full gold ownership freedom was reestablished at the start of 1975.

One ounce of gold ultimately performed a more than 20 multiple in US dollar values from a beginning price of about $38 oz USD in 1970 up to January of 1980 when it peaked at just over $850 oz USD.

Similar price performances for gold bullion also occurred for platinum bullion, palladium bullion, and especially silver bullion throughout this 1970 – 1980 timeframe. Notice all four precious metal peaks occurred within months of one another in early 1980 (COMEX forced liquidations of silver long contracts likely played a significant role in ending the price run ups for all four precious metals).

Following the 1980 mania in precious metals, it became fairly commonplace for financial experts and advisors to suggest investment allocations of some 5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} to 10{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of investment portfolios allocated to gold and perhaps silver for diversification and as a hedge against bond, currency, and equity volatility.

This cliche 10{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} gold allocation advice still prevails today but only amongst a small minority of financial advisors and commentators. Likely in part due to the brutal silver and gold bear markets experienced throughout the 1980s and 1990s whilst simultaneously occurring alongside many strong bond and stock bull markets the world over, this 10{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} gold allocation mantra all but disappeared only to have arisen thanks in large most part to the 2008 financial crisis and the prevalence of financial internet research now available.

Today high profile and alternative financial experts, like Jim Cramer or Jim Rickards, often say a 10{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} gold allocation makes sense, yet they may be a little understated in percentage terms. Let’s take a closer look as to why this may be the case.

Jeffrey Christian & CPM Group on Gold Silver Allocations

For over a decade I have worked and invested in the physical precious metals industry. Throughout this timeframe Jeffrey Christian and the CPM Group have consistently produced sound and accurate research and market projections.

When one studies precious metal price discovery mechanisms and the fractionally reserved leverage which commodity exchanges (e.g. COMEX ) use to highly influence precious metal spot prices and therefore ultimately physical bullion prices, the truth is futures derivatives have mainly run the show on bullion price discovery for decade after decade (perhaps the fall of 2008 a one glaring exception to this rule as bullion prices went up whilst their spot prices went down).

Jeffrey Christian is a somewhat controversial figure amongst many long term bullion buyers (mainly due to his explicit citing of the commonality in 100 oz paper derivative to 1 oz bullion leverage used in bullion price discovery mechanisms at a 2010 CFTC hearing, note moment 5:30 here). This fact angers many a bullion buyer as being unjust (including myself at times) but that doesn’t mean Mr. Christian was wrong in citing the virtually unbacked leverage in use in the year 2010, nor for that matter to date.

My experience studying Jeff and CPM Group’s work suggests not to bet against his nor his research firm’s analysis.

Jeff was somewhat bearish as we reached interim price highs for silver in the spring of 2011 and gold in the fall of 2011 whilst myself and most precious metal bullion buyers and sellers had little clue we would endure a cyclical bear market for as long and as pronounced as we have had to date.

Good news for bullion longs like myself is that Mr. Christian has recently been on record stating good years are ahead for both silver and gold prices. Given where we stand today perhaps he is not sticking his neck out all too far.

Backtesting Cliche 10{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} Gold Allocation Suggestions

According to Jeff in the early part of the 1980s, there were many seminal gold price studies that showed 5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} or 10{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of an investment portfolio could have been optimally allocated to gold from 1968 to 1980 to maximize a risk return allocation based on performance.

In late 2016, Jeff and his firm re-ran those numbers in a backtest from about 1968 to late 2016. What they found was if you took a portfolio of 50{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} S&P and 50{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} T-bills and you added gold to it in 5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} increments, the optimal gold allocation was actually about 27{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} to 30{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} gold depending on whether you used T-bills or T-bonds respectively.

Do take note, this 27{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} to 30{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} gold allocation does not take real estate investing into account (a study like that would be prohibitively more complex). The study strictly referred to bonds (now in total an over $100 trillion USD market worldwide e.g. government, corporate, etc.) and equity or stock markets (an over $50 trillion USD market worldwide) which are and have been easily estimated at more than ten times the size of all the physical silver and gold above ground and much less paltry investment allocations to each respective precious metal currently.

For example see the explosive growth in paper asset values to gold investment holdings since 1980 in the following chart.

It is also important to note that this recent CPM Group study on gold allocation spans almost the entire full fiat currency era in which all nations states have and continue to only issue paper and digital currencies backed by the full faith, credit, and taxation powers of their respective nation states.

Global physical gold and silver inventories and supplies expand slowly a sound money systems tend to be deflationary by their very nature. The same cannot be said for many fiat currency numeraires in which silver and gold are mostly measured (see the M2 chart below for many of their growth trends).

IMF SDRs are not excluded either, since 1973 SDRs have simply been indexed or backed by a fiat currency mix of unstable benchmarks like US dollars, yen, pounds, and more recently euros and yuan.

All SDRs have done since 1973, is lose some 95{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of their purchasing to gold bullion and about 92{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of its value to silver bullion. This trend will most likely not change unless the underlying structure of IMF Special Drawing Rights themselves are changed to include some form of bona fide physical bullion backing aside from its current 5 fiat currency indexing.

So long as we remain under a full fiat currency monetary system, I find it hard believing no physical silver bullion or gold bullion ownership makes prudent sense on a go forward basis.

Maybe we should reexamine from which era this cliche 10{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} gold allocation suggestion was born and put it to the test in terms of today’s bond and equity market valuations? Which asset classes seem most overpriced?

Perhaps it is prudent to buy and own more of what is most undervalued at the moment.

Contrary to naysayers, most bullion buyers are college educated, yet they are self-taught as little to no universities teach anything about bullion nor why 21st Century central banks increasingly own and buy more gold bullion reserves year in, year out.

The vast majority of gold and silver bullion buyers don’t buy bullion because they think the world’s going to end. Most simply buy bullion because they want to maintain their purchasing power over the long term. Having a portion of one’s wealth denominated in physical silver and or gold bullion is likely more stable than having an undiversified investment portfolio which often can be subject to severe currency valuation volatility, potential bond bear markets, and eventual stock bear markets which can wreak havoc on one’s investment portfolio if not properly diversified ahead of time.

I personally expect another mania in precious metal prices to ensue as the years progress, somewhat similar but far larger in scope than the last late 1970s version.

Perhaps now is the time to begin reallocating some capital from equities and other paper assets back into physical precious metals.

Low premium silver bars or silver coins are often a great choice for those just getting started with bullion buying. The downside on their current prices long term appear to be somewhat limited, and the upside potential for gold bullion and especially silver bullion looks to be attractive at these current price and bullion product premium levels.


by Egon von Greyerz, Gold Switzerland:

Stock investors are rejoicing about stock markets making new highs in many countries, totally oblivious of the risks or the reasons. It seems that this is an unstoppable rally in a “new normal” market paradigm. No major increase is expected in the inflation rate or the historically low interest rates. The present rally has lasted 8 years since the 2009 low. There is virtually no fear in markets so investors see no reason why this favourable climate would not continue for another 8 years at least.

Yes, of course it could. All that is needed is that governments worldwide print another $20-50 trillion at least and that global debt goes up by another $200-500 trillion.


The gullibility of people today is exacerbated by the power of the internet and social media. Anything we read is accepted as fact or truth whilst a major part of it is just fake news. This is of course nothing new as it has been used by governments for centuries. Goebbels, the Nazi Propaganda Minister, who was an expert at manipulating the German people, said: “If you tell a big lie often enough and keep repeating it, people will eventually believe it.” The power of the internet and other media has facilitated spreading news and propaganda to billions of people and very few can distinguish if they hear or read “real” news or “fake” news.

Anyone in government is in capable of telling the truth. Automatically when someone assumes an elected position his Pinocchio nose grows extremely long since his entire purpose is then to be all things to all men in order to be re-elected. This is why virtually no elected official has a backbone nor any morals or principles. Because if they had, telling the truth would make them unelectable.


During my early professional years as a banker at the end of the 1960s and early 1970s, I spent some time with a prominent UK Merchant Bank. This is what the old-style Investment Banks used to be called before the Americans came to dominate the sector. The senior bankers used to arrive at work around 10am and then go to lunch at 1pm. The lunch would consist of at least one gin and tonic to start with and then a good three course meal with a bottle of wine or two. Afterwards some Port with cheese and maybe a beer or two at the pub to finish off. Then back to the office at around 3pm for 4-5 hours of work. And this is how the City of London would operate when it was the financial centre of the world.

Any transaction was based on a handshake and a brief contract. Lawyers played a very small role in this process. Banking was based on trust, personal relationships and high moral standards.Banks displayed total loyalty to their staff and employees did not fear for their jobs. Major deals were concluded with a minimum of legal interference and compliance hardly existed. And still there was very little deception or fraud.

Today the financial world in London and major parts of the world is dominated by the US investment banks, the US legal system and the US government. Trust and loyalty are gone. Handshakes are worth nothing. Lawyers and compliance officers dominate everything and contracts are now running to hundreds of pages. Staff fear for their jobs since the banks have no loyalty to them. The only thing that counts is short term performance. This makes staff totally disloyal too as they know they can be fired on a whim.

Investment bankers are now Masters of the Universe and as the former Goldman Sachs CEO said, “Doing god’s work”. Well, one thing is certain there is certainly no humility in the financial world today or as Michael Lewis said in his book “Liar’s Poker”, major parts of US investment banks are dominated by “Big swinging di–s”. (Bankers with very big egos.)

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Ron Rosen: The Dollar And Equities Will Plunge Together – While Gold Spikes

by John Rubino, Dollar Collapse:

The dollar has been falling lately, which isn’t what a lot of people expected with the Fed being the only major central bank that’s raising interest rates. Higher yields on dollar balances should, according to basic economics, have attracted foreign capital to Treasury paper, thus putting upward pressure on the dollar. Didn’t happen though. The dollar is down about 10{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} since the Fed started tightening.

Stocks, meanwhile, might reasonably have been expected to fall, as their dividend yields become less attractive relative to rising risk-free fixed income returns. Also didn’t happen. US equities are now at record levels.

As for what happens next, Ron Rosen of the Rosen Market Timing newsletter has just published some dramatic predictions. Here’s an excerpt:

This REPORT attempts to demonstrate that the day the Dollar Index crosses beneath the 91.88 level will probably be the beginning of a collapse in the stock averages and a massive rise in the precious metals complex.

The completion of the 9 year Zig-Zag correction in the Dollar Index is telling us that D-Day will take place the day that the Dollar Index crosses beneath the 91.88 low. The following is an explanation of a Zig-Zag correction.

Excerpts from the NASDQ description of a Zig–Zag correction: “Zig zags look like a lightning bolt on the chart. There are 2 rules for zig zags: 1. The sub waves of an A-B-C zig zag appear as 5-3-5 2. Wave B of the zig zag cannot retrace 100{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of Wave A – most of the time wave B retraces 38-78{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of wave A The 3 waves of the zig zag (A-B-C) subdivide as a 5-3-5 meaning the ‘A’ leg has 5 sub waves in it, the ‘B’ leg has 3 sub waves in it, and the ‘C’ leg has 5 sub waves in it. As a result of the ‘A’ and ‘C’ legs both containing 5 sub waves each, the impact of the whole zig zag structure is to be a deep retracement and recover a lot of price from the previous trend. Also, the zig zag was designed to make progress against the trend. Therefore, wave B of a zig zag can be any 3 wave pattern (including another zig zag), but wave B cannot retrace 100{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of wave A. A retracement of 99{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} is acceptable, though unlikely and progress needs to be made.”

It is as obvious as anything can be that the Dollar Index underwent a 9 year zig-zag correction that began in the June quarter of 2008. The zig-zag correction was complete at the high of 103.815.

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The First Pillar to Fall in the Coming Debt Crisis

by Justin Splitter, Casey Research

Americans are falling behind on their car loans at the fastest pace since the global financial crisis.

You can see what I mean below. This chart shows the percentage of auto loans that are “seriously delinquent.” These are loans that haven’t been paid in 90 days or longer.

This key ratio has been surging since late 2014. It’s now at the highest level since the 2008–2009 financial crisis.

• This is a big problem…

You see, more than one out of every three Americans has a car loan right now. Not only that, the average U.S. household owes nearly $29,000 in auto debt.

Americans have borrowed so much money that the auto loan industry is now a $1.2 trillion market. That’s 58{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} bigger than it was in 2009.

For years, investors ignored this explosion in auto loan debt. But they won’t be able to for much longer.

That’s because the auto industry is cracking before our eyes. If this continues, carmakers and auto lenders will be in serious trouble.

But you can’t ignore this just because you don’t own any car stocks. That’s because Americans don’t just have too much auto debt…

• They have too much debt, period…

And the Federal Reserve is a big reason for that.

Since 2009, the Fed has held its key interest rate near zero.

This has made it cheaper than ever to borrow money. So, naturally, Americans loaded up on debt.

During the first quarter, U.S. household borrowings hit $12.73 trillion. That’s a record high, and 5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} more debt than Americans had at the peak of the last housing bubble.

This wouldn’t be such a problem if the U.S. economy were doing well. But it’s not.

The U.S. economy is recovering at the slowest pace since World War II. Not only that, the average U.S. worker is making just 16{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} more than they were in 2009.

• The average American now has more debt than they’ll ever be able to pay off…

You can see what I mean below.

This chart compares the level of household debt with disposable income.

A high ratio means that Americans have a lot of debt relative to income. You can see that this key ratio has been soaring since 2009. It’s now at the highest level ever.

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by Harvey Organ, Harvey Organ Blog



 In ounces, the OI is still represented by just OVER 1 BILLION oz i.e.  1.038 BILLION TO BE EXACT or 148{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of annual global silver production (ex Russia & ex China).


In gold, the open interest fell by 2,686 with the fall in price of gold to the tune of $1.60 yesterday.  The new OI for the gold complex rests at 436,962. Yesterday we had some banker short covering but it was minimal and this was accompanied by some longs entering the arena sensing danger due to the firing of that ICBM missile by North Korea. The shorts tried their best on the last day of options expiry to nullify any gains from option traders. The result a small open interest fall with that fall in price.

we had, ON second DAY NOTICE: 1309 notice(s) filed upon for 130,900 oz of gold.

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Precious Metals And Bitcoin-Twin Destroyers Of The Fiat Regime, Part lll

by Andy Hoffman, Miles Franklin

After Whirlybird Janet’s “ding dong, the Fed is dead” speech 2½ weeks ago, I predicted the “final currency war” I first warned of 4½ years ago would be taken to Defcon 1 – as all Central banks aggressively respond to the America’s increasingly inflationary monetary policy; particularly, after its “low interest rate person” President installs Yellen’s replacement early next year.  And lo and behold, last night’s Royal Bank of Australia policy statement “warned” that a stronger Aussie dollar would “contribute to subdued price pressures”; as it was “weighing on the outlook for output and employment”; which in turn, would “result in a slower pick-up in economic activity and inflation than currently forecast.”  In other words, its GAME ON in the global race to debase; simultaneous with, care of the gold Cartel, the lowest-ever inflation adjusted Precious Metal prices; and plunging gold and silver  production, as Steve St. Angelo pointed out last night – of how Chilean silver production is down a stunning 32{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} year-over-year.

Irrespective, the dollar continues to plunge to lows last seen more than a year ago; as now that the “reserve currency” issuer has made it clear that additional rate hikes aren’t happening; and likely, any hope of a balance sheet “exit strategy”; essentially nothing the administrators of “lesser fiat toilet papers” say or do matters.  Which is why it was so irritating watching PM’s yesterday, amidst maniacal Cartel capping featuring the time-honored DLITG, or “don’t let it turn green” algorithm.  And thus, why Precious Metal holders (like myself) become increasingly angry with each passing day; not just for the financial damage done to us personally, but the political, economic, and social damage incurred on the “99{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528},” for the benefit of the 1{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}.  Which is why, per today’s second follow-up to May 2016’s “Precious Metals and Bitcoin – Twin Destroyers of the Fiat Regime,” I am so excited about the dramatic, generational impact of crypto-currency.

On the eve of this extremely important challenge for Bitcoin – i.e., the “Bitcoin Cash” hard fork that is anticipated to occur less than an hour from now, at 8:20 AM EST (ironically, the same time as the COMEX open) – I attended the Denver Bitcoin Society meetup, where I was honored to kick off the meeting with a few words.  Which were, that in my role as Marketing Director of one of the nation’s oldest, most trusted bullion dealers, I am proud to be the biggest Bitcoin advocate in the Precious Metal community.  The reason being, that Bitcoin’s technology is so powerful, it may well serve as the “straw” that finally broke the “camel’s back” of fiat currency.  Which, as you might imagine, drew a rousing round of applause; given how, like Precious Metal advocates, the principal reason Bitcoiners “hoddle” (i.e. hold) Bitcoin is its perceived ability to serve as a gold-like store of value.

Yes, on the same day “BIP 148,” or the “User Activated Soft Fork” symbolically activated – i.e., the people’s response to “big blockers”’ attempt to commandeer the network; Bitcoin Cash’s success – or more likely, failure – will in many ways, determine the pace of adoption of the real Bitcoin.  If “BCC” fails to gain traction, as I anticipate, next week’s SegWit, or Segregated Witness protocol upgrade of the real Bitcoin will likely serve as a major positive catalyst for the sound money movement – as discussed in last week’s “Bitcoin SegWit activation – the gold Cartel’s worst nightmare.”  As whether Bitcoin becomes the world’s day-to-day, utilitarian currency of choice, the trend toward decentralization as the future of monetary value will dramatically accelerate.

As I wrote in December’s “why Bitcoin will make gold and silver go up,” I (more than ever) believe the monetary disruption Bitcoin is capable of – potentially, NOW – could be so powerful, it will cause governments to refocus their manipulative efforts – from the “barbaric relics” gold and silver, to the “newfangled technology” Bitcoin.  Which, at a time when Precious Metal supply is already historically low; whilst money printing is primed for another, potentially hyper-inflationary leg higher; may well hasten the end of an increasingly “unnecessary” gold Cartel.

As, if Precious Metals’ inevitable surge is caused NOT by a catastrophic monetary event; but instead, a diversion of the powers that be’s’ attention by Bitcoin; gold and silver holders may well get to enjoy the financial windfall they’ve been waiting so long for.  Potentially, in an environment NOT characterized by economic and/or monetary disaster.  In other words, gold and silver could potentially rise five, ten, or even 20x in the “modern monetary world” due to “repricing” in a Cartel-deficient market – without catalyzing the draconian government responses that have always loomed over the sector like a sword of Damocles.  In other words, for the first time in generations, it will be acceptable to view Precious Metals as investment opportunities” – as opposed to age-old propaganda that they are only to be considered insurance against monetary cataclysm.

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Letters from India: How Bad Can the Crackdown on Cash and Tax Evasion Get? What’s Next?

by Mish Shedlock, Mish Talk

Reader “IB” an India businessman, writes about the crackdown on cash and tax evasion by Prime Minister Narendra Modi.

“IB” is very concerned about recent events, as well he should be.

Background for this story started on November 8, 2016, when Modi stunned the country with an announcement that 500-rupee ($7.30) and 1,000-rupee notes, which account for more than 85 percent of the money supply, would cease to be legal tender immediately. For details, please see Cash Chaos in India, 86{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of Money in Circulation Withdrawn; Cash Still King in Japan.

The crackdown on cash has hurt the poor the most, and likely the richest the least. Nonetheless, Modi has widespread popular support.

Modi’s latest set of mandates has small businessmen caught in the crossfire. Let’s tune into to an email from “IB” (India Businessman) for some details.

Hi Mish,

I am writing from Mumbai, India. I have been running a small business for a decade now. Since the business has been profitable we have also been paying tax as applicable. But with the introduction of Goods and Services Tax (GST) in India from July 1, 2017, it looks like business might start experiencing difficulties soon due to its plethora of rules, some of which are mind-bogglingly inane.

More than the tax rates, it is the implementation and the draconian measures that have been taken by the Government that has made me come to this conclusion. Given that the incumbent government has been winning elections despite steps like demonetization and the opposition is in complete disarray (Modi is a great orator), they have been emboldened to introduce measures that would be viewed as draconian by normal standards. In this context, I have to mention Modi has been able to mesmerize voters to an extent that he can make even pain appear as something that is pleasurable and he has been able to conquer state after state and has an invincible aura about him now. Such acts always bring Goebbels to my mind.

I am attaching an article that highlights three steps (of the many) that have been introduced in GST that I feel would impact businesses negatively.

Thanks for your time.


New Rules

“IB” emailed a lengthy document describing new rules. What follows is a short list of three key points that I condensed from the document.

  1. The government will not allow Input Tax Credit on GST paid to vendors if the vendors do not pay their own taxes. The issue here is the Modi is forcing the role of tax-enforcement on businesses who buy goods for resale.
  2. Tax payments are required every month. For all cash businesses, there is no problem. There is a huge problem for those who have to pay taxes on receivables, in advance, when the business owners might not even get paid. Liquidity will kill many small businesses.
  3. Modi now wants three tax filings every month plus an annual tax return making it 37 overall. Currently, businesses file service tax returns twice in a year while they pay their taxes every quarter. Now with GST, small businesses have to file 3 returns every month, month on month, year on year, with fines stipulated for non-compliance.

All Hail Modi

The Economic Times reports PM Narendra Modi steps up assault on Congress, eyes Indian supremacy

Prime Minister Narendra Modi’s ruling alliance is stepping up its assault on the opposition Congress party as it looks to expand its national dominance and moves closer to securing a majority in the upper house of parliament.

How to Destroy an Economy

This is the path that populist fools take to gain control and destroy economies.

When tax collections actually go into reverse as businesses fail, Modi will come up with another set of ill-advised reforms, perhaps a total ban on cash.

All it takes is a Congressional majority and Modi can and will do what he wants.

In all likelihood, Modi’s enemies will soon be silenced for the “good of society”.

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The Scaling Debate and Hard Fork Highlight Several Key Differences Between Bitcoin and Gold

by Michael Krieger, Liberty Blitzkrieg

You know stuff’s going down when I write two posts in a row about Bitcoin, something which almost never happens anymore. In Friday’s piece, Is the Bitcoin Civil War Over? Here’s How I’m Thinking About Bitcoin Cash, I discussed a potential strategy that “big blockers” might attempt to execute should the 2x part of Segwit2x not happen later this year. Today, I want to discuss how the entire episode has actually served to highlight one of Bitcoin’s (and cryptos in general) huge competitive advantages in the realm of monetary-type assets, but also examine why gold is still important.

There’s been a lot of FUD written at length about the whole scaling debate, in addition to the fair observation that network splits cause confusion and can be bad for the Bitcoin “brand.” As I mentioned in Friday’s piece, I don’t see this being the case with Bitcoin Cash (BCC), since I don’t think there will be any real debate about which one is Bitcoin and which is an alt-coin. Interestingly enough, although the nastiness of the scaling debate has left a bad taste in a lot of people’s mouths, it’s also highlighted one of Bitcoin’s greatest strengths.

Earlier today I came across a tweet from an account I had never seen before, but it was simply genius in its poignant simplicity.

What this person is referring to is how the lack of support for BCC from several popular wallet providers/exchanges like Coinbase and Bitstamp, has led to a flood of requests from Bitcoin holders to move their coins off the exchange in order to access the BCC if desired after August 1st. This is essentially akin to a run on the bank, and any third party playing games with their customers’ assets will be exposed in due course. The fact that it’s so easy for a Bitcoin holder to initiate a withdrawal from a third party holding their asset is a huge advantage of Bitcoin versus gold and other traditional monetary safe-havens. It doesn’t take long to see why if you think things through.

Storing your own Bitcoin private keys is very much like holding actual gold or silver in your possession. One thing that hardcore gold bugs like to say over and over is “if you don’t hold it, you don’t own it.” At the end of the day, I think that’s right. It’s also what makes a gold backed digital asset less appealing than you might think at first glance.

When you hold your own Bitcoin private keys, not only do you have possession, but you also have a spendable asset. Gold can never replicate this competitive advantage. If you trust someone else to hold your gold, you’re exposed to counter-party risk. You are trusting someone else to secure your asset and be honest. You don’t need to do that with Bitcoin. Likewise, if China, Russia or any other government launch a gold-backed digital currency, you’re trusting the honesty of governments to have the gold they say they do. We know governments lie constantly, so I think it’d be completely foolish to trust such a monetary regime, and we don’t have to.

Before gold bugs start turning red in the face and cursing my name, let me finish. This is not to suggest that Bitcoin is a substitute for gold, or that I think the advent of crypto-currencies makes gold irrelevant as an asset. If I really felt that way, I wouldn’t still own precious metals. In fact, whenever the next economic criss happens I think gold will do exceptionally well, particularly versus stocks and bonds, as the traditional financial world will not rush headlong into cryptos as a safe-haven asset (though some will). Most funds probably aren’t even set up to be allowed to do that, so they’ll go to what has always worked and what they’re comfortable with, and that is precious metals.

We don’t need to be binary when it comes to the question of gold and Bitcoin. Gold has advantages Bitcoin will never be able to surmount, including thousands of years of history and genuine immutability. On the flip-side, Bitcoin has advantages gold will never be able to totally overcome. Namely, it’s an easily spendable asset that you can hold in your possession with zero counter-party risk. Moving large amounts of Bitcoin around is trivial compared to gold, which is an undeniably important attribute in the world we live in. You still need someone else’s help to move gold from a vault in let’s say Zurich to one in Singapore. You have to ask permission. Such permission is unnecessary with Bitcoin.

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