Sunday, July 12, 2020

The Yield “Curve” Knows – Craig Hemke (13/08/2019)

by Craig Hemke, Sprott Money:

As global interest plummets to historically negative levels—and as the U.S. bond market reveals a deeply inverted yield curve—it’s time again to assess what all of this means for the precious metals investor.

Just yesterday, a fellow on CNBC remarked that “no one had seen this coming”. By “this”, he meant a sharp rally in both gold and bonds. Oh really? We write these articles for Sprott Money each and every week.

Bank Gold Price Manipulation Continues – Craig Hemke (01/10/2019)

by Craig Hemke, Sprott Money:

You didn’t actually think that a couple of indictments were going to change things, did you? By now you must understand that The Banks will continue to manage and rig prices until the time comes that it is no longer profitable for them to do so.

In case you need a summary of recent events, please take time to review these three links:

• https://www.cnbc.com/2019/08/20/another-ex-jp-morg…

• https://www.nbcnews.com/news/us-news/justice-depar…

• https://www.zerohedge.com/markets/abject-corruptio…

What was once dismissed as “conspiracy theory” is instead becoming widely understood as “historical fact.” Yes, the market-making Bullion Banks seek to manage price for their benefit, and yes, gold price management dates back to the 1950s. However—and despite the recent indictments—these illegal schemes continue to this day.

Here’s a lesson from the 108,000 millionaires who left their home countries last year

by Simon Black, Sovereign Man:

According to a recent report from Bloomberg, more than 108,000 millionaires left their home countries last year in search of greener pastures.

Most emigrated from countries like China and Russia… no surprise there.

India also saw a large outflow of millionaires as tax authorities tightened their grip. And Turkey continues to see an exodus, in the wake of strong-man President Erdogan.

But Western countries like France and England also lost boat loads (or planes full) of millionaires. Excessive taxation is the most obvious reason.

Your Pension Is a Lie: There’s $210 Trillion of Liabilities Our Government Can’t Fulfill

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by John Maudlin, Market Oracle:

In the US, we have two national programs to care for the elderly. Social Security provides a small pension, and Medicare covers medical expenses. All workers pay taxes that supposedly fund the benefits we may someday receive.

The problem is that’s not actually true. Neither of these programs is comprehensive.

The End of Government Entitlements

Living on Social Security benefits alone is a pretty meager existence.

Medicare has deductibles and copayments that can add up quickly. Both programs assume people have their own savings and other resources (I wrote about this in detail in my previous issues of Thoughts from the Frontline). Despite this, the programs are crucial to millions of retirees, many of whom work well past 65 just to make ends meet.

This chart from my friend John Burns shows the growing trend among generations to work past age 65:

Having turned 68 a few days ago, I guess I’m contributing a bit to the trend

Limited though Social Security and Medicare are, we attribute one huge benefit to them: They’re guaranteed. Uncle Sam will always pay them—he promised. And to his credit, Uncle Sam is trying hard to keep his end of the deal.

Uncle Sam’s Debt Nightmare

In fact, Uncle Sam is running up debt to do so. Actually, a massive amount of debt:

Federal debt as a percentage of GDP has almost doubled since the turn of the century. The big jump occurred during the 2007–2009 recession, but the debt has kept growing since then. That’s a consequence of both higher spending and lower GDP growth.

In theory, Social Security and Medicare don’t count here. Their funding goes into separate trust funds. But in reality, the Treasury borrows from the trust funds, so they simply hold more government debt.

Today it looks like this:

• Debt held by the public: $14.4 trillion

• Intragovernmental holdings (the trust funds): $5.4 trillion

• Total public debt: $19.8 trillion

Total GDP is roughly $19.3 trillion, so the federal debt is about equal to one full year of the entire nation’s collective economic output. That total does not also count the $3 trillion-plus of state and local debt, which in almost every other country of the world is included in their national debt numbers.

Including state and local debt in US figures would take our debt-to-GDP above 115{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}… and rising.

Just wait. We’re only getting started.

$210 Trillion Worth of Unfunded Liabilities

An old statute requires the Treasury to issue an annual financial statement, similar to a corporation’s annual report. The FY 2016 edition is 274 enlightening pages that the government hopes none of us will read.

Among the many tidbits, it contains a table on page 63 that reveals the net present value of the US government’s 75-year future liability for Social Security and Medicare.

That amount exceeds the net present value of the tax revenue designated to pay those benefits by $46.7 trillion. Yes, trillions.

Where will this $46.7 trillion come from? We don’t know.

Future Congresses will have to find it somewhere. This is the fabled “unfunded liability” you hear about from deficit hawks. Similar promises exist to military and civil service retirees and assorted smaller groups, too.

Trying to add them up quickly becomes an exercise in absurdity. They are so huge that it’s hard to believe the government will pay them, promises or not.

Now, I know this is going to come as a shock, but that $46.7 trillion of unfunded liabilities is pretty much a lie. My friend Professor Larry Kotlikoff estimates the unfunded liabilities to be closer to $210 trillion.

Pensions Are a Lie

Many Americans think of “their” Social Security like a contract, similar to insurance benefits or personal property. The money that comes out of our paychecks is labeled FICA, which stands for Federal Insurance Contributions Act. We paid in all those years, so it’s just our own money coming back to us.

That’s a perfectly understandable viewpoint. It’s also wrong.

A 1960 Supreme Court case, Flemming vs. Nestor, ruled that Social Security is not insurance or any other kind of property. The law obligates you to make FICA “contributions.”

It does not obligate the government to give you anything back. FICA is simply a tax, like income tax or any other. The amount you pay in does figure into your benefit amount, but Congress can change that benefit any time it wishes.

Again, to make this clear: Your Social Security benefits are guaranteed under current law, but Congress reserves the right to change the law. They can give you more, or less, or nothing at all, and your only recourse is the ballot box.

Medicare didn’t yet exist in 1960, but I think Flemming vs. Nestor would apply to it, too. None of us have a “right” to healthcare benefits just because we have paid Medicare taxes all our lives. We are at Washington’s mercy.

Read More @ MarketOracle.com

Safe Haven Appeal Sends Gold Above $1,500

from Birch Gold Group:

This week, Your News to Know rounds up the latest news involving gold and the overall economy. Stories include: Gold gains as recessionary fears lift safe-haven appeal, gold prices to hit $1,575 in 3 months and $1,600 in 6 months, and why bullion prices could keep exploding next week.

Gold Gains as Recessionary Fears Lift Safe-Haven Appeal

After cementing its position above the $1,500 level, Tuesday’s trading session saw gold jump as high as $1,534 an ounce before settling lower. According to an article on CNBC, investors poured into the metal over increasing civil unrest in Hong Kong and a dip in Argentina’s peso that potentially signaled dire things for the country’s economy.

Former Secret Service Agent Files RICO Suit Against Clintons, Soros, Podesta, Brock

from ZeroHedge:

Conspiracy theorists (and conspiracy factists) are running wild as infamously outspoken former Secret Service agent Gary Byrne has filed a Racketeer Influenced and Corrupt Organizations (RICO) suit against what some call the Democrat Deep State.

Defendants in the case include:

CLINTON FOUNDATION, CLINTON-GIUSTRA ENTERPRISE PARTNERSHIP, MEDIA MATTERS FOR AMERICA, CORRECT THE RECORD, AMERICAN BRIDGE 21ST CENTURY, CITIZENS FOR RESPONSIBILITY AND ETHICS IN WASHINGTON, SHAREBLUE, DAVID BROCK, WILLIAM JEFFERSON CLINTON, HILLARY RODHAM CLINTON, GEORGE SOROS, JOHN PODESTA, JONATHAN WACKROW, JAN GILOOLY and CLINTON GLOBAL INITIATIVE.

Expectations and Opportunity Cost – Craig Hemke (15/07/2019)

by Craig Hemke, Sprott Money:

In an interview last week, I was asked if I had any regrets about owning and holding physical gold over the past six years. As you might imagine, my answer was a resounding “NO”.

Now don’t get me wrong. It has been a very difficult six years. Gold was smashed below $1525 in April of 2013 and then traded in what was mainly a $200 price range until a month ago. With price in dollar terms now breaking out of that range, I suppose the opportunity cost question was a timely one.

And what is “opportunity cost”? This from Investopedia:

Great Frauds Require Darkness

by Theodore Butler, Silver Seek:

No doubt you’re aware of the massive fraud uncovered at Theranos, the high tech medical startup purported to be able to run any number of diagnostic tests from a single drop of blood. Theranos was a Silicon Valley upstart valued at $10 billion at its peak and headed by an attractive young woman modeled after the late Steve Jobs. Theranos’ diagnostic machines didn’t work as advertised and the whole fraud, said to be the largest since Enron, was uncovered by a sharp and determined reporter at the Wall Street Journal. The reporter, John Carreyrou, was instrumental in the fraud’s demise.