Thursday, October 17, 2019

Gold Reaches 5 Year High – Possible Bull Run Ahead

from Birch Gold Group:

Over the past few days, gold prices reached as high as $1,400, the highest in 5 years.

The jump in price followed news the Fed may act “dovish” and cut rates as soon as July. According to one CNBC article:

The central bank predicts one or two rate cuts in its set of economic predictions, but not until 2020. Despite cautious wording in the post-meeting statement Wednesday, markets are still betting the Fed cuts, as soon as July.

You can see the moment gold prices spiked in the chart below for spot gold:

How to Build Your Own Underground Bunker

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from Off Grid Survival:

The persistent threat of the end of the world as we know it, popularly referred to as TEOTWAWKI, grows with each passing day. Whether it’s a global economic collapse, environmental disaster, a run on the borders, nuclear disaster or terrorism the threats have never been greater.

The only way to fully protect yourself and your family is to be prepared for anything and everything that could happen. You can’t hope that the authorities will swoop in and save the day. You can’t plan to ride out a disaster or the collapse of civilization in your house – not for long, anyway. You have to be ready, and that means you need to think about securing an impenetrable and defensible shelter. It’s time to think about underground bunkers.

NEARLY HALF OF AMERICA’S HOMELESS PEOPLE LIVE IN CALIFORNIA

by Mac Slavo, SHTF Plan:

Not only do nearly half of America’s homeless people live in California, but four of the five American cities with the greatest incidences of unsheltered homelessness are in the Golden State.  As California becomes a mecca for socialism, their quality of life diminishes along with it in a characteristic dystopian decline.

Bitcoin: A Tower of Monetary Babel

by Antonius Aquinas, Market Oracle:

The promoters of crypto currencies have gushingly touted them as the mechanism by which the present central banking cabal and the system of nation states which derive much of their power from will be brought down and replaced by digital money. Despite their meteoric rise as speculative “assets,” there are fundamental economic reasons why they will never act as a general medium of exchange despite the wild enthusiasm for them by the crypto-currency cultists.

Money – a general medium of exchange – is the most marketable (exchangeable) commodity in an economy. As a good, money is not sought after for its direct use – to satisfy individual wants – but to satisfy wants indirectly through exchange for other goods. Over time, one good becomes money since it possesses qualities superior to all other goods as a money. When gold became demanded not for its “use value,” but for its “exchange value,” it became a general medium of exchange – money.

As a consumer good, gold possessed a value or a “price” prior to it becoming a money, as the eminent monetary theorist Murray Rothbard explains:

. . . embedded in the demand for money is knowledge

of the money-prices of the immediate past; in contrast

to directly-used consumers’ or producers’ goods, money

must have pre-existing prices on which to ground a demand.

But the only way this can happen is by beginning with a useful

commodity under barter, and then adding demand for a

medium to the previous demand for direct use (e.g., for

ornaments in the case of gold.)*

Thus, Bitcoin’s “price” is not in terms of its original commodity price, but its price is in terms of dollars, Euros, yuan, etc. In the dollar’s case, it was at one time linked to gold, but has since been severed from it while Bitcoin has had no such relationship.

Once money is established, then prices are expressed in terms of it and thus economic calculation can rationally take place and the division of labor and specialization can be expanded. Rothbard continues:

The establishment of money conveys another great

benefit. Since all exchanges are made in money, all the

exchange-ratios are expressed in money, and so people

can now compare the market worth of each good to that

of every other good.**

Once gold became money, the price of goods became expressed in gold not in other elements – nickel, zinc, lead, etc. With the proliferation of crypto currencies, there will be a myriad of different price ratios for each good. There will be a Bitcoin price for a car, an Ethereum price for a car, a Dogecoin price of a car, and so on. This is the antithesis of the purpose of money – one unit of account that reflect prices for all commodities as Rothbard shows:

 

Because gold is a general medium it is most marketable,

it can be stored to serve as a medium in the future as well

as the present, and all prices are expressed in its terms.

Because gold is a commodity medium for all exchanges,

it can serve as a unit of account for present, and expected

future, prices. It is important to realize that money cannot

be an abstract unit of account or claim, except insofar as it

serves as a medium of exchange.*** [my emphasis]

Crypto currencies, therefore, directly violate one of the main principles of monetary theory. The vast array of digital money, all with unique price ratios (to say the least of their volatility), would make economic calculation and rational planning next to impossible. In this sense, the current world of fiat dollars would be preferable to a Tower of Monetary Babel that digital currencies would create.

Read More @ MarkeyOracle.com

 

Living in the Shadow of a Volcano: The US National Debt in Perspective

by Peter Schiff, Schiff Gold:

Every once in a while, a mainstream news outlet publishes a piece about the national debt. Here and there, politicians trot out the surging debt as a talking point to make some political hay. Now and then, an economist will wave the red flag. But by-and-large, the national debt just kind of looms over us.

We’ve gotten used to the shadow it casts, and we generally don’t give it much thought. It’s kind of like people living at the foot of a volcano. They know it’s there. It might cause some low-level anxiety. But they really don’t pay much attention to it – until it erupts.

So, just how bad is the national debt? We all know it’s pretty bad. But would you believe it’s actually worse than you probably think?

The headline number is operating debt. It currently stands at $20.5 trillion. It spiked $608 billion in just eight short weeks after Pres. Trump signed a bill raising the debt ceiling limit for the next three months in September. And Trump wants to do away with the debt ceiling altogether.

The national debt is currently over 105{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of total GDP. That’s the highest level in history except for a two-year spike at the end of World War II.

As Dan Kurz at DK Analytics noted in a recent report, “The surging operating debt is a reflection of a growing deficit since the dollar gold standard was terminated in August 1971 and would have been impossible had the federal government upheld fidelity to the Constitution. That same Constitution made only gold and silver legal tender for state commerce at a time when the federal government was extremely small with very limited powers. Most were reserved for states and the people.”

But the US operating debt is only the tip of the iceberg. You also have to consider state and local government debt. That adds another $3 trillion to the total. That brings aggregate operating debt to $23.5 trillion and growing.

In the immortal words of Billy Mays, “But wait there’s more.”

As Kurz points out, the operating debt pales in comparison to federal unfunded liabilities.

This is before taking into account the huge, unfunded, federal level off-balance sheet social security and Medicare entitlement commitments, which amount to $46.7 trillion when discounted back over the next 75 years, and to over $210 trillion without a 75-year cut-off. Needless to say, the secular federal government entitlement spending pressure cooker will lead to either huge, politically unpopular entitlement cutbacks, or to QE-based ‘inflationary cutbacks.’ In any event, both today’s large governmental operating deficits, as well as the massive reported operating debts, are ‘non-GAAP slivers of reality;’ no public company could report this way.”

It’s easy to get lost in the data. After a while, it’s just a bunch of meaningless numbers. We sense the doom, but we don’t really grasp on what it all means. Again, it’s kind of like living in the shadow of a volcano. It’s just a big mountain until the rumblings start and smoke begins to spew out the top.

All of this debt will have a real impact on the economy in the future.

For one thing, the massive national debt puts the Federal Reserve in a difficult position. It wants to “normalize” interest rates. But doing so would crush the US budget under interest payments. Analysts have calculated that if the interest rate on Treasury debt stood at 6.2{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} – their level in 2000 – the annual interest payment on the current debt would nearly triple to $1.3 trillion annually.

Read More @ SchiffGold.com

Gold and Gold Stocks – Patterns, Cycles and Insider Activity, Part 2

by Pater Tenebrarum, Acting Man:

Cycles and Sentiment

Another recurring pattern consists of the seasonally strong period in gold around the turn of the year, which is bisected by a mid to late December interim low in the gold price. An additional boost can be expected in January and Feburary from the strong seasonal uptrend in silver and platinum group metals as well (to see the seasonal PGM charts, scroll down to our addendum to this recent article by Dimitri Speck).

 10 tola cast bar made in Switzerland for Asian markets.
10 tola cast bar made in Switzerland for Asian markets.

Rallies in silver tend to be quite supportive for precious metals stock indexes, as silver stocks have an even higher beta than their gold brethren (note in this context that the XAU is the more broad-based of the two indexes these days and contains far more silver stocks than the HUI – see these lists of the current XAU and HUI constituents for details).

Below is the 20-year seasonal gold chart, with the period from the December 20 interim low to the late February peak highlighted. Note that the statistical data shown on the chart refer specifically to the highlighted period, which in turn is an average of the action at this time of the year over the past 20 years.

Obviously, there are years in which no gain is achieved in the seasonally strong period, but over the past 20 years the probability that prices would rally was 70% (14:6 = 7:3). Moreover, while the gains in profitable years ranged from +8.52 to +17.98%, losses were much smaller, confined to a range of just -1.60 to -3.30%.

Interestingly, even if one averages only the performance of bear market years (i.e., years which close at a y/y loss), the period of strength still shows up during January. We suspect this is due to the exceptional seasonal strength in silver during this time period, gold probably tends to rise in sympathy.

Gold, 20-year seasonal chart with all relevant statistics. The December interim low is close to the mid December Fed meeting, i.e., in recent years the seasonal pattern and the “FOMC relief rally” were going hand in hand – click to enlarge.

The 20-year seasonal chart of silver exhibits even more strength over a slightly longer time period starting on the same date: the probability of a rally is 80%, and the average gain is 9.39% (profits ranging from +12.90 to +42.92%), which is a stunning 58.70% annualized.

Note: regardless of how long the period chosen for the calculation is, the seasonally strong period in silver is always clearly visible and exceptionally large; it is even noticeable if one averages only bearish years. Apparently industrial users traditionally stock up at the beginning of the year. Strength in silver tends to particularly helpful for the performance of the XAU and HUI indexes 

Read More @ Acting-Man.com

When Long-Brewing Instability Finally Reaches Crisis

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by Charles Hugh Smith, Of Two Minds:

Keep an eye on the system’s buffers. They look fine until they suddenly collapse.

The doom-and-gloomers among us who have been predicting the unraveling of an inherently unstable financial system appear to have been disproved by the reflation of yet another credit-asset bubble. But inherently unstable / imbalanced systems can stumble onward for years or even decades, making fools of all who warn of an eventual reset.

Destabilizing systems can cling on for decades, as the inevitable crisis doesn’t necessarily resolve the instability. History shows that when systems had enough inherent wealth to draw upon, they could survive for centuries, thinning their resources, adaptability and buffers until their reservoirs were finally drained. Until then, they simply did more of what’s failed to maintain the sclerotic, self-serving elites at the top of the Imperial food chain.

Is the World Becoming Wealthier or Poorer?

by Charles Hugh Smith, Of Two Minds:

There is nothing intrinsically profitable about either robotics or AI.

At the request of colleague/author Douglas Rushkoff (his latest book is Team Human), I’m publishing last week’s Musings Report, which was distributed only to subscribers and patrons of the site.)

The core assumption of Universal Basic Income (UBI) and other plans to redistribute wealth and income more broadly is that the world is becoming wealthier, and so the pool of income and wealth that can be taxed is always expanding.

This pool of available wealth and income is so vast, we’re assured, that taxing the super-wealthy will not really dent their wealth or the economy as a whole.

Today Is The 85th Anniversary of Gold Confiscation In The USSA (And Satoshi’s Birthday)

by Jeff Berwick, The Dollar Vigilante:

One of the worst years in the history of fasco-communist USSA history was 1913, when both the income extortion tax was instituted, and the private Federal Reserve banking cartel took control of the US government.

1933 was the next worst year, since after the Federal Reserve caused the Great Depression, they then used it as the pretence to confiscate gold exactly 85 years to the date on April 5, 1933.

Deutsche Bank CoCo Bonds Plunge, Shares Hit Record Low, after US Entity Makes FDIC’s “Problem Bank List”

by Wolf Richter, Wolf Street:

The old question: When will she buckle?
Shares of Deutsche Bank fell 7.2% today in Frankfurt to €9.16, the lowest since they started trading on the Xetra exchange in 1992. They’re now lower than they’d been during its last crisis in 2016. And they’re down 71% from April 2015.

This came after leaked double-whammy revelations the morning: One reported by the Financial Times, that the FDIC had put Deutsche Bank’s US operations on its infamous “Problem Bank List”; and the other one, reported by the Wall Street Journal, that the Fed, as main bank regulator, had walloped the bank last year with a “troubled condition” designation, one of the lowest rankings on its five-level scoring system.

Housing Bubble 2 Gets Complicated: Pending Home Sales Plunge in San Francisco Bay Area, Drop in all California

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by Wolf Richter, Wolf Street:

But upward pressure on already crazy home prices persists.

Pending home sales in California fell 6{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} in September compared to a year ago, the third month in a row of year-over-year declines, after having dropped 3.5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} in August and 2.6{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} in July.

“Entering the fall home-buying season, the housing market momentum waned,” the California Association of Realtors said in its report. Brokers “reported slower open house traffic, and listing appointments and client presentations fell below positive territory in September.”

The report cited “continued housing inventory issues and affordability constraints,” as home prices have moved out of reach for many people, despite historically low mortgage rates. This “may have pushed the market to a tipping point.”

Pending home sales are an indication of what actual sales might look like over the next few months. They’re notoriously volatile. But in the San Francisco Bay Area, pending homes sales have been plunging in the double digits for months. And now Southern California is catching the cold.

In the San Francisco Bay Area, pending home sales plunged 10.8{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} year-over-year, after having plunged 11.6{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} in August, and 11.5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} in July. It was the 12th month in a row of year-over-year declines. In the two counties that make up Silicon Valley, San Mateo and Santa Clara, pending sales plummeted respectively 22.4{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} and 23.5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}!

In Southern California, pending home sales fell 7.1{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} year-over-year, after having fallen 3.8{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} in August. In July, they’d still inched up 1.4{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}. The counties with the sharpest declines were Los Angeles (-8{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}), San Diego (-11.5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}), Riverside (-13.4{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}), and San Bernardino (-11.6{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}).

In the Central Valley region, pending home sales edged down 0.6{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} year-over-year, driven by the 16.8{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} plunge in Sacramento County.

Of the homes put under contract, 26{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} had had their listing price reduced before buyers got interested. And after that:

  • 29{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} sold above asking price – at an average premium of 13{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}
  • 28{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} sold below asking price – at an average discount of 15{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}
  • 43{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} sold at asking price

Read More @ WolfStreet.com