Thursday, May 23, 2019

What Will the Tax Bill Do to the Housing Market?

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by Wolf Richter, Wolf Street:

The enormity of this change has not been fully appreciated just yet.

The tax bill now becoming law will impact the housing market in a big way via four mechanisms that gut the government’s subsidies of homeownership:

  • Nearly doubling the standard deduction (but wait…)
  • Lowering the cap on the mortgage interest deduction for new purchase mortgages
  • Capping the deduction for state and local taxes at $10,000
  • Eliminating the deduction for interest on home-equity debt, such as HELOCs.

The Big Equalizer: The New Standard Deduction

Nearly doubling the standard deduction – from $6,350 for individuals and $12,700 for married couples filing jointly in 2017 to $12,000 and $24,000 respectively in 2018 – would be a simple way of giving many Americans an instant, massive, no-hassles tax cut.

But wait: The law also eliminates the personal exemption of $4,050 allowed for each family member. A married couple will see an increase in the standard deduction of $11,300 (compared to 2017). But it will lose $8,100 in personal exemptions. This whittles down the net increase in deductions to $3,200. For couples with kids, it gets more complicated.

But whatever this does, it moves all of the up-front deductions and exemptions into the calculus that taxpayers routinely make: Should they use the standard deduction or itemize?

In other words, can a married couple filing jointly come up with over $24,000 in deductible expenses, such as mortgage interest? If the answer is no, they will benefit from the new tax law by taking the standard deduction, instead of itemizing and deducting their mortgage interest. And they’ll come out ahead.

Currently, about 44% of US homes are worth enough to carry a mortgage whose interest would be large enough to surpass the old standard deduction, and thus would incentivize homeowners to take the mortgage interest deduction by itemizing, according to Zillow. With the new standard deduction, this proportion of homes drops to 14.4%.

This effectively guts one of the most widely touted government subsidies of homeownership. It levels the playing field between renting and owning. In fact, it’s a particularly big benefit for renters. It’s the great equalizer.

Since it benefits so many households and hurts none of them, it’s devilishly hard to argue against. Nevertheless, the immensely wealthy and powerful lobbying group, the National Association of Realtors – whose constituents make more money when homes churn often and when prices surge – has lobbyied fiercely against it. And it lost.

A Sucker Punch for Expensive Markets

The mortgage interest deduction was already limited to interest on mortgages of up to $1 million. This cap has now been lowered to $750,000, but the cap only applies to new purchase mortgages, not existing mortgages.

Most Americans won’t feel it. Their mortgages are not nearly big enough. Only about 4% of purchase mortgages made in 2017 exceeded $750,000, according to Attom Data Solutions, cited by the Wall Street Journal:

But a few regions would get hit hard. In Manhattan, for example, 64% of purchase mortgages made this year were for more than $750,000, according to Attom. In San Francisco, that proportion is 58%, and the surrounding counties of San Mateo, Marin and Santa Clara register between 44% and 55%.

Black Knight Inc., a mortgage data and technology firm, calculates there are about 684,000 active mortgages with current balances over $750,000. Black Knight estimates that about 107,000 loans expected to be made in 2018 would fall above the $750,000 cap.

So in many markets, the impact of this provision will be small. In expensive markets, the impact could be significant in various ways, including:

  • Homeowners might stay put in order to maintain the deductibility of their original mortgage of up to $1 million.
  • Buyers might want to pay less to keep the mortgage under the cap.
  • Buyers might put down more money so the entire mortgage interest can be deducted.

Read More @ WolfStreet.com

GOLD RISES BY $5.00 UP TO $1266.15/SILVER RISES BY 8 CENTS UP TO $16.21

by Harvey Organ, Harvey Organ Blog:

COMEX GOLD EFP’S: 8815 CONTRACTS/SILVER EFP’S A LARGE 2867 CONTRACTS/SOUTH AFRICA ANNOUNCES IT WILL SUSPEND CONSTITUTION AND ACQUIESCE ITS CENTRAL BANK AS WELL AS CONFISCATE LAND FROM WHITE LANDOWNERS/SWEDEN TO STOP IMMEDIATELY QE

GOLD: $1266.15 up $5.00

Silver: $16.21 UP 8 cents

Closing access prices:

Gold $1265.80

silver: $16.20

SHANGHAI GOLD FIX: FIRST FIX 10 15 PM EST (2:15 SHANGHAI LOCAL TIME)

SECOND FIX: 2:15 AM EST (6:15 SHANGHAI LOCAL TIME)

SHANGHAI FIRST GOLD FIX: $1275.42 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME: $1264.00

PREMIUM FIRST FIX: $11.42

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SECOND SHANGHAI GOLD FIX: $1277.71

NY GOLD PRICE AT THE EXACT SAME TIME: $1263.70

Premium of Shanghai 2nd fix/NY:$14.01

SHANGHAI REJECTS NY /LONDON PRICING OF GOLD

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LONDON FIRST GOLD FIX: 5:30 am est $1265.95

NY PRICING AT THE EXACT SAME TIME: $1266.00

LONDON SECOND GOLD FIX 10 AM: $1264.55

NY PRICING AT THE EXACT SAME TIME. 1263.40??

For comex gold:

DECEMBER/

 NUMBER OF NOTICES FILED TODAY FOR DECEMBER CONTRACT:  246 NOTICE(S) FOR 24600 OZ.

TOTAL NOTICES SO FAR: 8809 FOR 880,900 OZ (27.39 TONNES),

For silver:

DECEMBER

8 NOTICE(S) FILED TODAY FOR

40,000 OZ/

Total number of notices filed so far this month: 6235 for 31,175,000 oz

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Bitcoin: BID $17,333/OFFER $17,480 UP $416 (morning) 

BITCOIN : BID $16,338 :  OFFER 16,499  down $584 (CLOSING)

end

Let us have a look at the data for today

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In silver, the total open interest SURPRISINGLY FELL BY A GOOD SIZED 3572 contracts from 207,275 FALLING TO 203,703 DESPITE YESTERDAY’S 1 CENT FALL IN SILVER PRICING.  WE HAD CONSIDERABLE  COMEX LIQUIDATION BUT  WE WERE AGAIN NOTIFIED THAT WE HAD ANOTHER GOOD SIZED NUMBER OF COMEX LONGS TRANSFERRING THEIR CONTRACTS TO LONDON THROUGH THE EFP ROUTE: A RESPECTABLE  2867 EFP’S FOR MARCH (AND ZERO FOR DEC AND OTHER MONTHS) AND THUS TOTAL ISSUANCE OF 2867 CONTRACTS. HOWEVER THE MOVEMENT ACROSS TO LONDON IS NOT AS SEVERE AS IN GOLD AS THERE SEEMS TO BE A MAJOR PLAYER TAKING ON THE BANKS AT THE COMEX.  STILL, WITH THE TRANSFER OF 2867 CONTRACTS, WHAT THE CME IS STATING IS THAT THERE IS NO SILVER (OR GOLD) TO BE DELIVERED UPON AT THE COMEX AS THEY MUST EXPORT THEIR OBLIGATION TO LONDON. YESTERDAY WITNESSED 1089 EFP’S FOR SILVER ISSUED. ALSO KEEP IN MIND THAT THERE CAN BE A DELAY OF 24 HRS IN THE ISSUING OF EFP’S.

ACCUMULATION FOR EFP’S/SILVER/ STARTING FROM FIRST DAY NOTICE/FOR MONTH OF DECEMBER:

40,365 CONTRACTS (FOR 14 TRADING DAYS TOTAL 40,365 CONTRACTS OR 201.82 MILLION OZ: AVERAGE PER DAY: 2,883 CONTRACTS OR 14.416 MILLION OZ/DAY)

RESULT: A GOOD SIZED FALL IN OI COMEX DESPITE THE TINY 1 CENT FALL IN SILVER PRICE.   WE HAD CONSIDERABLE COMEX SILVER LIQUIDATION BUT WE ALSO HAD A FAIR SIZED SIZED EFP ISSUANCE OF 2864 CONTRACTS  WHICH EXITED OUT OF THE SILVER COMEX AND TRANSFERRED THEIR OI TO LONDON AS FORWARDS:  FROM THE CME DATA 2864 EFP’S  WERE ISSUED TODAY (FOR MARCH EFP’S)  FOR A DELIVERABLE CONTRACT OVER IN LONDON WITH A FIAT BONUS.  WE REALLY LOST 705 OI CONTRACTS i.e. 2864 open interest contracts headed for London (EFP’s) TOGETHER WITH A DECREASE OF 3572 OI COMEX CONTRACTS. AND ALL OF THIS  HAPPENED WITH THE FALL IN PRICE OF SILVER BY 1 CENT AND A  CLOSING PRICE OF $16.13 WITH RESPECT TO YESTERDAY’S TRADING. YET WE STILL HAVE A MASSIVE AMOUNT OF SILVER STANDING AT THE COMEX.

In ounces AT THE COMEX, the OI is still represented by just OVER 1 BILLION oz i.e. 1.018 BILLION TO BE EXACT or 146% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT DECEMBER MONTH/ THEY FILED: 8 NOTICE(S) FOR 40,000 OZ OF SILVER

In gold, the open interest FELL BY A TINY 18 CONTRACTS DOWN TO 453,395 DESPITE THE SMALL SIZED FALL  IN PRICE OF GOLD YESTERDAY ($1.45).  HOWEVER,  THE TOTAL NUMBER OF GOLD EFP’S ISSUED YESTERDAY FOR TODAY  TOTALED A CONSIDERABLE  8815 CONTRACTS OF WHICH THE MONTH OF DECEMBER SAW 0 CONTRACTS AND FEB SAW THE ISSUANCE OF 8815 CONTRACTS. The new OI for the gold complex rests at 453,395. DEMAND FOR GOLD INTENSIFIES GREATLY AS WE CONTINUE TO WITNESS THE HUMONGOUS NUMBER OF EFP TRANSFERS TOGETHER WITH THE MASSIVE AMOUNT OF GOLD OUNCES STANDING FOR DECEMBER. EVEN THOUGH THE BANKERS ISSUED THESE MONSTROUS EFPS, THE OBLIGATION STILL RESTS WITH THE BANKERS TO SUPPLY METAL BUT IT TRANSFERS THE RISK  TO A LONDON BANKER OBLIGATION AND NOT A NEW YORK COMEX OBLIGATION. LONGS RECEIVE A FIAT BONUS TOGETHER WITH A LONG LONDON FORWARD.  THUS, BY THESE ACTIONS, THE BANKERS AT THE COMEX  HAVE JUST STATED THAT THEY HAVE NO APPRECIABLE METAL!! THIS IS A MASSIVE FRAUD: THEY CANNOT SUPPLY ANY METAL TO OUR COMEX LONGS BUT THEY ARE QUITE WILLING TO SUPPLY MASSIVE NON BACKED GOLD (AND SILVER) PAPER KNOWING THAT THEY HAVE NO METAL TO SATISFY OUR LONGS. LONDON IS NOW SEVERELY BACKWARD IN BOTH GOLD AND SILVER AND WE ARE WITNESSING DELAYS IN ACTUAL DELIVERIES.  IN ESSENCE WE HAVE A HUGE GAIN OF 8797 OI CONTRACTS: 18 OI CONTRACTS DECREASED AT THE  COMEX  AND A GOOD SIZED  8815 OI CONTRACTS WHICH NAVIGATED OVER TO LONDON.

FRIDAY, WE HAD 9150 EFP’S ISSUED.

ACCUMULATION OF EFP’S/ GOLD(EXCHANGE FOR PHYSICAL) FOR THE MONTH OF DECEMBER STARTING WITH FIRST DAY NOTICE:  179,361 CONTRACTS OR 17.936 MILLION OZ OR 557.88 TONNES(14 TRADING DAYS AND THUS AVERAGING: 12,881 EFP CONTRACTS PER TRADING DAY OR 1.2881 MILLION OZ/DAY)

Result: A TINY SIZED DECREASE IN OI DESPITE THE SMALL SIZED RISE IN PRICE IN GOLD TRADING YESTERDAY ($1.45). WE  HAD A GOOD SIZED  NUMBER OF COMEX LONG TRANSFERRING TO LONDON THROUGH THE EFP ROUTE: 8815. THERE OBVIOUSLY DOES NOT SEEM TO BE MUCH PHYSICAL GOLD AT THE COMEX AND YET WE REACHED THE HUGE DELIVERY MONTH OF DECEMBER. I GUESS IT EXPLAINS THE HUGE ISSUANCE OF EFP’S…THERE IS HARDLY ANY GOLD PRESENT AT THE GOLD COMEX FOR DELIVERY PURPOSES.  IF YOU TAKE INTO ACCOUNT THE 8815 EFP CONTRACTS ISSUED, WE HAD A NET GAIN IN OPEN INTEREST OF 8,797  contracts:

8815 CONTRACTS MOVE TO LONDON AND A 18 CONTRACTS DECREASED AT THE  COMEX. (in tonnes, the gain yesterday equates to 27.36)

we had:  246  notice(s) filed upon for 24,600 oz of gold.

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With respect to our two criminal funds, the GLD and the SLV:

GLD:

Today,  VERY STRANGE!!  WITH GOLD ADVANCING UP TO $1266., THE CROOKS DECIDED TO RAID THE COOKIE JAR AGAIN/ WE HAD A GOOD SIZED WITHDRAWAL OF 1.18 TONNES in gold inventory at the GLD.

Inventory rests tonight: 836.02 tonnes.

SLV

 

NOTE: THEY DO NOT RAID SILVER BECAUSE THERE IS NO PHYSICAL INVENTORY TO RAID AT THE SLV:

NO CHANGE IN SILVER INVENTORY AT THE SLV:

INVENTORY RESTS AT 326.337 MILLION OZ/

end

First, here is an outline of what will be discussed tonight:

1. Today, we had the open interest in silver FELL BY A GOOD SIZED 3572 contract
s from 207,945 DOWN  TO 203,703 (AND now A LITTLE CLOSER TO THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787) DESPITE THE  TINY FALL IN PRICE OF SILVER OF 1 CENT YESTERDAY . HOWEVER,OUR BANKERS  USED THEIR EMERGENCY PROCEDURE TO ISSUE ANOTHER  2867  PRIVATE EFP’S FOR MARCH (WE DO NOT GET A LOOK AT THESE CONTRACTS AS IT IS PRIVATE BUT THE CFTC DOES AUDIT THEM).  EFP’S GIVE OUR COMEX LONGS A FIAT BONUS PLUS A DELIVERABLE PRODUCT OVER IN LONDON.  WE HAD CONSIDERABLE COMEX SILVER COMEX LIQUIDATION. BUT, IF WE TAKE THE  OI LOSS AT THE COMEX OF 3572 CONTRACTS TO THE 2867 OI TRANSFERRED TO LONDON THROUGH EFP’S  WE OBTAIN A SMALL LOSS OF  705  OPEN INTEREST CONTRACTS, AND YET WE STILL HAVE A  HUGE AMOUNT OF SILVER OUNCES THAT ARE STANDING FOR METAL IN DECEMBER (SEE BELOW). THE NET LOSS TODAY IN OZ: 3.525 MILLION OZ!!! 

RESULT: A FAIR SIZED DECREASE IN SILVER OI AT THE COMEX DESPITE THE  1 CENT FALL IN PRICE (WITH RESPECT TO YESTERDAY’S TRADING).  BUT WE ALSO  HAD ANOTHER 2867 EFP’S ISSUED TRANSFERRING  COMEX LONGS OVER TO LONDON . TOGETHER WITH THE HUGE AMOUNT OF SILVER OUNCES STANDING FOR DECEMBER, DEMAND FOR PHYSICAL SILVER INTENSIFIES DESPITE THE CONSTANT RAIDS.

(report Harvey)

.

2.a) The Shanghai and London gold fix report

(Harvey)

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY: Bloomberg

3. ASIAN AFFAIRS

i)Late TUESDAY night/WEDNESDAY morning: Shanghai closed DOWN 8.93 points or 0.27% /Hang Sang CLOSED DOWN 23.72 pts or 0.27% / The Nikkei closed UP 23.72 POINTS OR 0.10%/Australia’s all ordinaires CLOSED UP 0.08%/Chinese yuan (ONSHORE) closed UP at 6.5780/Oil UP to 57.76 dollars per barrel for WTI and 63.84 for Brent. Stocks in Europe OPENED MOSTLY IN THE RED . ONSHORE YUAN CLOSED WELL UP AGAINST THE DOLLAR AT 6.5780. OFFSHORE YUAN CLOSED DOWN AGAINST  THE ONSHORE YUAN AT 6.5790 //ONSHORE YUAN  STRONGER AGAINST THE DOLLAR/OFF SHORE STRONGER TO THE DOLLAR/. THE DOLLAR (INDEX) IS  SLIGHTLY STRONGER AGAINST ALL MAJOR CURRENCIES. CHINA IS  NOT SO HAPPY TODAY.(WEAKER MARKETS)

Read More @ HarveyOrganBlog.com

Despite Record Levels, the Stock Market Is Actually Shrinking in Size

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by Pam Martens and Russ Martens, Wall St On Parade:

Like that box of macaroni in your kitchen cupboard, the U.S. stock market has become a lot more expensive but has actually shrunk in terms of quantity.

In 1975, U.S. domestic companies that traded on U.S. exchanges totaled 4,819. Forty years later, the market has shrunk to less than 4,000, despite a tripling in GDP.

If you take a shorter time span of  20 years, which included the dot.com craze of listing companies known to Wall Street insiders as “crap” and “dogs,” the numbers are worse. In September of last year, Jim Clifton, the Chairman and CEO of Gallup, the polling company, reported the following:

“The number of publicly listed companies trading on U.S. exchanges has been cut almost in half in the past 20 years — from about 7,300 to 3,700. Because firms can’t grow organically — that is, build more business from new and existing customers — they give up and pay high prices to acquire their competitors, thus drastically shrinking the number of U.S. public companies. This seriously contributes to the massive loss of U.S. middle-class jobs.”

As of early 2017, according to Ernst & Young, just 140 of these publicly traded companies represented more than half of the total market value of all stocks traded in the U.S. Another stark example of the dangerous trend of wealth concentration in the U.S.

The dangerous trend in the stock market follows an even more dangerous trend in U.S. banking. A March 31, 2016 report from the Federal Reserve shows that of the six mega Wall Street banks that make up the core of the U.S. financial system, just four of those banks (JPMorgan Chase, Wells Fargo, Bank of America and Citibank) hold $6.7 trillion in assets out of the $15.9 trillion total held by the other 6,000 commercial banks, or 42 percent of the total.

These anti-democracy trends of concentrated wealth have led to dystopian political power in Washington. The wealthiest one percent has led what amounts to a hostile corporate takeover of Congress and the Executive branch. One needs no greater proof than the current tax bill. According to the latest NBC News/Wall Street Journal Poll, nearly two-thirds of those polled believe the tax bill was drafted to benefit corporations and the wealthiest Americans.

Read More @ WallStOnParade.com

Republicans Are About To Pass The Most Important Tax Bill In A Generation

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by Michael Snyder, End Of The American Dream:

Republican members of Congress are racing to pass the tax reform bill so that they can get home in time for Christmas, and it looks like it is actually going to happen.  The key is the Senate, and at this point it looks like there will be enough votes, but we have seen surprises before.  As I have stated previously, I would have voted for this bill, but nobody should pretend that this fixes our tax system.  The tax code is still going to be more than two million words long, the regulations are still going to be more than seven million words long, and Americans are still going to spend billions of hours and tens of billions of dollars complying with the most complicated tax system on the entire planet.

The House of Representatives passed the tax reform bill on Tuesday, but because of a couple minor snags they are going to have to vote again on Wednesday.  The following summary of where we are currently at in the process comes from USA Today

House Republicans on Tuesday passed the most significant overhaul of the tax code in three decades, but the bill hit a late-afternoon glitch when the Senate parliamentarian ruled that three minor provisions in the bill did not comply with strict budget rules and would have to be stripped out.

That means the Senate will likely vote on a revised bill Tuesday night, forcing the House to vote again Wednesday on the tweaked tax package before Republicans can claim their first major legislative win and deliver the $1.5 trillion package to President Trump before Christmas, as he requested.

Even though there is still so much work to be done, at least this is a step in the right direction.  Any time we can lower tax rates we should do so, and this bill also includes many other desperately needed fixes.  The following list of 16 major things that this bill accomplishes comes from CNN

1. Lowers (many) individual rates
2. Nearly doubles the standard deduction
3. Eliminates personal exemptions
4. Caps state and local tax deduction
5. Expands child tax credit
6. Creates temporary credit for non-child dependents
7. Lowers cap on mortgage interest deduction
8. Curbs who’s hit by AMT
9. Preserves smaller but popular tax breaks
10. Exempts almost everybody from the estate tax
11. Slows inflation adjustments in tax code
12. Eliminates mandate to buy health insurance
13. Lowers tax burden on pass-through businesses
14. Includes rule to prevent abuse of pass-through tax break
15. Slashes corporate rate
16. Change how U.S. multinationals are taxed

Sadly, none of these changes apply for the 2017 tax year.  So when you are preparing your tax return next spring all of the old rules will still apply.  For much more on the details of this tax bill, please see my previous article entitled “Do You Know What Is In The Tax Bill That Congress Is About To Pass?”

As I discussed in that article, the most important change that this tax reform bill makes is a dramatic reduction in the corporate tax rate.

You may be thinking that the big corporations don’t need more money, and you wouldn’t be wrong.  But that is not the point of this change.

Right now, the U.S. corporate tax rate is much, much higher than almost everywhere else in the world.  This gives corporations an incentive to locate operations elsewhere, and that means fewer good jobs for American workers.

We want corporations to locate operations inside the United States, and so it is imperative that our corporate tax rate is competitive with other industrialized nations.

Unfortunately, the Republicans have done an extremely poor job of selling this tax plan to the American people, and as a result support for this tax reform bill is extremely low

The plan includes a steep tax cut for businesses and temporary tax cuts for individuals. Middle-income households would see an average tax cut of $900 next year, while the wealthiest 1 percent would see an average cut of $51,000, according to the nonpartisan Tax Policy Center.

Some 52 percent of adults oppose the tax plan, while 27 percent support it, according to Reuters/Ipsos polling.

Read More @ EndOfTheAmericanDream.com

If You Listen to Youtube Commenters Gold Is Dead And Crypto Will Never, Ever Go Down In Price

by Jeff Berwick, The Dollar Vigilante:

If you read the Youtube comments, many people think I am crazy for suggesting that those who have held crypto for the last year, or longer, and who have gains of 2,000-600,000% might want to take some profits and invest in an unloved sector like precious metals and gold stocks.

This is very interesting, because for the last six years, whenever I would mention that people should invest in cryptocurrencies as well as precious metals, many Youtube commenters would jeer me as being crazy for investing in a Ponzi scheme or scam such as bitcoin.

In other words, we’ve seen a complete 180-degree turn in public sentiment.

Cryptocurrencies were hated until this year… and now they are deemed to be impervious to any sort of correction or crash.

And precious metals were loved until this year… and now are deemed to be dead assets that will never rise again.

You can understand how crazy group psychology is by reading the Youtube comments!

Just read the comments in my recent video with Collin Kettell of Palisade Global where I suggested taking a small amount of crypto profits and putting them into precious metals.

In our talk, Collin mentioned there was an initial air of bitterness that existed between commodity and crypto investors early on, especially because many hard asset investors missed out on some of the early gains in the cryptocurrency space.

And we touched upon the fact that because mining stocks and hard assets have been relatively flat or languishing to some degree since crypto has risen in popularity over the last year or so meaning that this could be a great buying opportunity to add to your positions or establish new ones.

Collin believes that for the next year or so it’s likely that cryptocurrencies will continue to take the limelight, but as the hype subsides, it’s quite likely that people will begin moving a lot of their earnings back into the most well-known safe havens; gold.

We also had a chance to cover Mexican Gold Corp’s new gold strike and the big gains that are possible, the uranium sector, as well as how the world’s biggest producers including Cameco are doing after Kazakhstan cut uranium production. And stocks which are likely to rise.

Yes, there are other things going on in the world besides cryptocurrencies! And you can hear about it all in our interview:

Read More @ TheDollarVigilante.com

Christmas in an Amazon Culture

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from BATR:

“Oh for the good old days when people would stop Christmas shopping

when they ran out of money.” Author Unknown

Remembering the days when you shopped until you dropped seems to be from a time when socializing meant actually interacting with other people. Toys “Я” Us has lost its appeal because the reverse dynamics of spoiling the toddlers resists the challenge of braving the elements and cold temperatures to put wrapped presents under an artificial tree. Now, if it cannot arrive at the door delivered by USPS, UPS or FedEx; it’s just not desirable. The consumer culture has made a giant leap into the cyber space of emptiness and irrelevancy. Spending money and spreading the wealth no longer operates under the same rules that enriched the growth in the (PCE) personal consumption expenditures. The void of satisfaction in buying trendy gadgets and stylist apparel feeds a basic isolation from meaning or contentment.  

The Federal Reserve acknowledged, years ago; Don’t Expect Consumer Spending To Be the Engine of Economic Growth It Once Was. Be that as it may, the easy of placing an order online that sells its wears with free delivery has diminished the old concept that retail commerce actually impacts the expansion of prosperity in your own community.

This description of circumstances and forecast of developing trends should be apparent to anyone familiar with the changing landscapes in the shopping malls. Still the far more profound question about the very nature of the celebration around the Christmas season is an even more pronounced topic then the extinction of the friendly and helpful department store clerk.

Long ago the devotion to observe the birth of Jesus Christ has been lost by the majority in this society. Even among professed Christians, the lack of focus and recognition that Christmas is less of a religious observance than the more important holy day of Easter.  

In order to illustrate this analysis, a review about Christmas – Philosophy for Everyone by Scott C. Lowe (Editor) of Better Than a Lump of Coal, argues accordingly.

“The philosophical arguments presented such as Aristotle’s ‘virtue ethics’ (“Lying to Children About Santa: Why It’s Just Not Wrong”), Foucault’s social formation theories (“Making a List, Checking it Twice: The Santa Claus Surveillance System”), or Hume’s testimony of Miracles (‘Jesus, Mary and Hume: On the Possibility of the Virgin Birth”) are easily accessible to all audiences interested in the ultimate Christmas debate: secular or religious. For those more philosophically trained or inclined, the utilization of these philosophical works within the context of the great Christmas debate provide an alternative dimension into classic philosophical arguments of ethics and sociological structures, not typically revealed in academic literature.

The remaining question to be asked following each of these essays is: Has the secular nature of Christmas overtaken the religious underpinnings of the celebration in so far as we come full circle from a Pagan celebration of Winter Solstice, to the birth of Jesus Christ, to a new Commercial Christmas?”

Clearly our confused culture has abandoned much of the traditional canons of veracity and now operates under an extreme system of a dominating political correctness that offers little room for authentic individualistic values. What better example of this homogenized humanity than Jeff Bezos on Amazon’s culture: ‘We never claim that our approach is the right one’.

“A word about corporate cultures: for better or for worse, they are enduring, stable, hard to change. They can be a source of advantage or disadvantage. You can write down your corporate culture, but when you do so, you’re discovering it, uncovering it — not creating it. It is created slowly over time by the people and by events — by the stories of past success and failure that become a deep part of the company lore. If it’s a distinctive culture, it will fit certain people like a custom-made glove. The reason cultures are so stable in time is because people self-select. Someone energized by competitive zeal may select and be happy in one culture, while someone who loves to pioneer and invent may choose another. The world, thankfully, is full of many high-performing, highly distinctive corporate cultures. We never claim that our approach is the right one — just that it’s ours — and over the last two decades, we’ve collected a large group of like-minded people. Folks who find our approach energizing and meaningful.”

Bezos is certainly correct when he says that Amazon has collected a large group of like-minded people and more significantly that the Amazon culture does not contend to be the “right one”. This is exactly the point with the systematic decoupling of the human element in business transactions, much less than converging upon the spiritual and religious component in society.

Amazon is analogous to the dominance of the Roman Legions. The only difference is that in the technological age of immediate satisfaction, the fulfillment factor does not need to fear the wrath of corporal punishment, but only the loss of a fleeting pleasure.    

According to the Telegraph, With Amazon’s growing dominance, investors must learn to love the new conglomerates asks:

“The latest financial trend making a comeback is the global conglomerate, but this time it’s got a digital twist. US tech giants are ever-expanding into businesses beyond their core operations, creating sprawling businesses operating in many different areas. But the big issue for those of us that remember the fate of last century’s mega-conglomerates, such as Tiny Rowland’s Lonrho and the Hanson Trust, is that things did not end particularly well and most ended up being broken up into their constituent parts. So, given that history tends to repeat itself, will the new digital titans end up with the same fate?”

Read More @ BATR.org

Oil Prices Could Soon Drop 50%

by Jim Rickards, Daily Reckoning:

Oil has had a spectacular run the past two years. From $29.42 per barrel on January 15, 2016, oil has risen to $57.36 per barrel as of last Friday, a 95% gain in less than 23 months.

Much of this gain reflects the determination of the world’s two largest oil exporters – Saudi Arabia and Russia – to limit output in order to firm up prices. The duopoly of Saudi Arabia and Russia has proved much more effective than OPEC at maintaining the discipline needed to control oil prices.

OPEC members such as Iran and Iraq are notorious for cheating on OPEC quotas. The duopoly is more disciplined.

Yet, this kind of manipulation is a two-edged sword.  Saudi Arabia and Russia have as much interest in not letting prices get too high as they do in not letting them get too low.

Right now oil prices are at the high end of the range the duopoly consider acceptable. Oil prices have nowhere to go but down once Saudi Arabia and Russia do some cheating of their own.

Investors who move now stand to reap huge gains as the duopoly drive prices lower in order to protect their market share, and once again shut-in the capacity of their competitors in the fracking industry.

 This infographic neatly illustrates the market dominance of two oil producers: Saudi Arabia and Russia. Together they produce 21 million barrels of oil per day, over 25% of global output. The two countries can effectively set the global price of oil by increasing or decreasing output in tandem. The duopoly have proved more effective than OPEC at price targeting to hurt the fracking industry while not reducing their own revenues more than necessary.
This infographic neatly illustrates the market dominance of two oil producers: Saudi Arabia and Russia. Together they produce 21 million barrels of oil per day, over 25% of global output. The two countries can effectively set the global price of oil by increasing or decreasing output in tandem. The duopoly have proved more effective than OPEC at price targeting to hurt the fracking industry while not reducing their own revenues more than necessary.

Despite the ebbs and flows of oil supply and demand, and technical aspects of trading, the overriding dynamic in global energy markets is straightforward. In any market, there are price takers and price makers. The only price makers in global energy markets are Saudi Arabia and Russia, if they act together.

Saudi Arabia and Russia, (the “duopoly”) together produce 25% of the world’s oil exports. That’s more than the next six major oil exporters combined, and those others have nowhere near the degree of coordination as the duopoly.

Equally important is that Saudi Arabia has the lowest production costs of any major producer, about $4.00 per barrel. It’s certainly the case that Saudi Arabia likes higher oil prices, but oil could sink to $10 per barrel, and Saudi Arabia would still make money while most other exporters would lose money or cease production.

The duopoly face a familiar dilemma that could confront any business. On the one hand they like high prices and the revenue that goes with it.

On the other hand, high prices have two perils…

The first is that high prices encourage competition in the form of marginal output that can take market share. The second is that high prices can produce a recession in developed economies that reduces oil consumption across the board.

Obviously the duopoly would like higher prices, but this just encourages output from marginal producers especially those using hydraulic fracturing technology (“fracking”) in places like the Permian Basin in Texas.

The solution to this dilemma is an optimization plan using linear programming. The way to model this is to ask: “What is an optimal price that destroys competition andmaximizes revenue at the same time?”

Saudi Arabia ran this program in mid-2014. They concluded that the optimal price is $60 per barrel.

Of course, just because the computer says $60 does not mean you can stick the landing in the real world. There are many factors that go into oil pricing including geopolitics, central bank induced inflation or disinflation, and technical trading patterns.

In particular, once a price moves radically in a macro market there is a tendency to “overshoot;” something that is quite common in currency markets for example.

Read More @ DailyReckoning.com

Gold, The Economy, Cryptocurrencies And Irrational Exuberance

by Dave Kranzler, Investment Research Dynamics:

The current tax legislation isn’t some thoughtful reform to benefit Americans. It’s a quickly planned looting through a broken window in our nation’s character. – John Hussman

John Hussman wrote a must-read essay titled:  “Three Delusions:  Paper Wealth, A Booming Economy and Bitcoin (link).”   The crypto/blockchain delusion has exceeded the absurdity of the dot.com and housing bubble eras.   I was shorting fraud stocks happily in both eras.  I’m short a company  now called Riot Blockchain.  If you look at its description in Yahoo Finance, it bills itself as a developer of technologies applied to animal (“non-human”) medicine.  It recently changed its name to Riot Blockchain from Bioptix Inc.  Prior to calling itself Bioptic Inc, it called itself Venaxis.  Just the name change to Riot “Blockchain” moved the stock from $4 to $40…insanity.

The Company changed its name in early October to Riot Blockchain.  Based on this, Canaccord was more than happy to fleece investors by raising $37 million for Riot in a private placement.  But that’s okay I guess because one has to be a “sophisticated” investor with the financial qualifications to have your money taken from you by Wall Street and Bay Street in order to invest in private placements.

Fundamentally this system is dissolving. The Government economic data, like GDP, CPI and employment  is worthless. The numbers produced by the Government are rigged to support political propaganda about the economy and the financial system. Economic reports released by the private sector generally contradict the Government’s reports.

Silver Doctors invited me to participate in their weekly Metals & Markets podcast. We chatted about gold, cryptocurrencies and the economy. Gold is currently the only asset that has not participated in this “Irrational Exuberance 2.0.” Of course, gold ran from $250 to $1900 from 2001 to 2011. We discuss why now is time to move investment funds back into gold for its next cyclical bull move in the context of a much bigger secular bull market in real money:

Read More @ InvestmentResearchDynamics.com