By: Richard (Rick) Mills, Ahead of the herd - 17 May, 2019
On Monday, upon digesting the escalation of the trade war, the S&P 500 and the Dow suffered their worst day since Jan. 3; more ominously, the yield curve between 10-year and 3-month Treasury notes re-inverted, after dipping in March into negative territory for the first time since 2007. MarketWatch reported the yield on the 10-year note fell to 2.402%, below the 3-month note’s 2.406% yield. An inverted 10-year/ 3-month yield curve is a reliable recession-indicator.
Middle East tensions, an escalating trade war, and a constitutional crisis that is brewing in the United States over the Trump administration’s legal troubles.
Add it all up and now is as good a time as ever to buy physical bullion (coins and bars) as a safe haven. Or even better, in terms of potential upside imo, take a look at junior gold stocks. Full Story
By: Peter Schiff, President and CEO Euro Pacific Capital - 17 May, 2019
General George Custer met his doom charging into a battle he thought he could win, against an opponent he did not understand. Based on his views about the fast-emerging trade war with China, it looks to me that Donald Trump, another blonde with a very high opinion of himself, is charging into an economic version of the Little Bighorn. By mistaking the real nature of international trade, the costs of tariffs, the effects of currency movements, and the supposed ease with which the United States could quickly re-establish itself as a low-cost manufacturer, Trump risks shredding the safety nets that have undergirded the U.S. economy for decades and plunging us into a war we are ill-equipped to fight. Full Story
Although most of the precious metals sector has trended lower in recent months, Gold has held up well. It and the other, weaker components of precious metals got a boost on Monday when China retaliated with tariffs of its own.
There has been little follow through since.
This begs the question, will a trade war lead to a new bull market in precious metals? Full Story
- Despite the lengthy government shutdown, the official GDP figure blasted above 3% amid strong factory orders. - Strong economic indicators lead our guest to anticipate blowout GDP revisions; more signs of national economic strength. - Record US corporate buyback numbers in the 1st quarter were elevated. Full Story
Since the latest the crisis in 2008/2009, central banks around the world have been doing their best to expel risks from financial markets. By lowering interest rates, fixing them at extremely low levels, or issuing more credit and money, monetary policymakers make sure that ailing borrowers are kept afloat. In fact, central banks have put a “safety net” under the economies and the financial markets in particular. As it seems, this measure has been working quite effectively over the last ten years or so. Full Story
If you own gold in the form of a financial derivative product – whether through a futures contract, exchange-traded fund, or offshore account – you’re not getting the full protection or versatility of physical gold ownership. At the end of the day, gold is a tangible asset that you should be able to touch, transport, and discretely barter and trade with should the need arise.
Of course, gold and other precious metals aren’t the only assets that can help you prepare for black swans. Full Story
By: Gary Christenson, The Deviant Investor - 15 May, 2019
We don’t know the future, but central bankers will “print,” politicians will spend, debt will expand, and prices will rise. Gold and Silver will “catch a bid” and rise into a “Jim Sinclair Rhino Horn” pattern.
The coming gold and silver price spike will be exciting, depressing, and worrisome. The media will scream in disbelief, “Who could have seen this coming?”
From James Sinclair: “The party ends in mid-2019.” Full Story
Thus, now is the time to get positioned ahead of the coming rally. Similar to 2010, COMEX gold just fell nearly $80 from late February to late April and COMEX silver is actually down year-to-date. If 2019 is indeed shaping up to be 2010 on steroids, are you positioned for the gains to come or have you allowed yourself to be shaken out due to fear or, worse, ambivalence? Full Story
In a recent edition of Credit Bubble Bulletin, Doug Noland, the long-time critic of contemporary monetary policy, writes about the odd times in which we live from a financial perspective. “Such a precarious time in history,” he laments. “So much crazy talk has drowned out the reasonable. Deficits don’t matter, so why not a trillion or two for infrastructure? Our federal government posted a $691 billion deficit through the first six months of the fiscal year – running 15% above the year-ago level. Yet no amount of supply will ever impact Treasury prices – period. A Federal Reserve governor nominee taking a shot at ‘growth phobiacs’ within the Fed’s ‘temple of secrecy’, while saying growth can easily reach 3 to 4% (5% might be a ‘stretch’). Larry Kudlow saying the Fed might not raise rates again during his lifetime. Little wonder highly speculative global markets have become obsessed with the plausible.”
In that essay, Noland goes on to note having been influenced by the highly regarded Dr. Kurt Richebacher (1918-2007). Although he actually worked directly with the Austrian economist/banker, my connection came only as an appreciative reader of the Richebacher Letter (in pre-internet times) and his Wall Street Journal editorials. Richebacher concerned himself regularly with the interplay between financial market credit leverage, ordinary investors and the real economy.. Full Story
We have deviated, these past several weeks, from matters monetary. We have written a lot about a nonmonetary driver of higher prices—mandatory useless ingredients. The government forces businesses to put ingredients into their products that consumers don’t know about, and don’t want. These useless ingredients, such as ADA-compliant bathrooms and supply chain tracking, add a lot to the price of every good. Of course higher prices are reflected in the Consumer Price Index. And people say it is inflation.
We have also discussed a nonmonetary driver of lower prices. Every productive business is constantly working to remove useless ingredients too. They are not allowed to remove government-mandated useless ingredients, but all other ingredients are open season. In the research for his Forbes article on falling wages, Keith discovered that dairy producers found ways to eliminate 90% of the ingredients that go into producing milk between 1965 and 2012... Full Story
So what does this mean? Besides being a strain on international relations—a tariff is essentially a tax that must be paid to the U.S. government before a shipment can clear customs. But here’s the kicker: Tariffs are typically paid not by the exporting company but by the importer. In other words, it’s U.S.-based companies that are picking up the tab—then passing the extra expense on to American consumers.
With the exception of the U.S. Treasury, which collects the tariff payments, few stand to benefit here... Full Story
Unfortunately, two predictable things will now happen. China will face a credit crisis and the dollar will likely strengthen. Dangerous times for all of us. it’s not hard to imagine all the new risks that come with turning off the trade taps (if that is the real agenda). We can’t know for certain of course, but Trump is certainly playing from a position of strength. He picked a fight he is going to win. The charts already say the U.S. trade deficit will start falling, so it’s baked in the cake. Full Story
Hot, hot, hot. How else to describe Bitcoin and the cryptocurrencies of late. Bitcoin leaped another 10.1% this past week to over $6,000 and is now up almost 67% in 2019. With further gains this weekend, Bitcoin is approaching $7,000. Yet there still appears to be little explanation as to what is driving this. This past week it was reported that hackers stole some 7,000 Bitcoins with a value of $40.7 million (at the time). Could it be that less supply helped push the price of Bitcoin higher? Nonetheless, it is no surprise that we are now seeing all sorts of forecasts that the new crypto bull is here and we are off to $20,000 once again. The market cap of all the cryptos has returned over $200 billion (current $210 billion) with Bitcoin alone at $122.6 billion constituting 58% of the market. We now have 14 cryptos with a market cap of over $1 billion up from 12 a week ago. And finally, there are 2,169 cryptos listed at Coin Market Cap (www.coinmarketcap.com). Still seems like an incredible number of cryptos and they can’t all survive. The uptrend breaks at $6,000 and that could send Bitcoin back down towards $5,000. The RSI is almost constantly over 70 which suggests that Bitcoin is overbought. But in a strong bull these states can stay that way longer than shorts can stay solvent. Given the recent hack, one has to wonder why anyone would get involved in this market. Clearly all of the issues have not yet been resolved, let alone regulatory issues.
Gold continues to work on what we believe is an E wave of a larger ABCDE-type pattern that got underway with the top in July 2016 at $1,377. Since then, gold has been on a roller coaster ride but has failed at all attempts to take out that level. Full Story
Still, I won’t bet on it by going short (because I’m not that risk-taking). Fever can run hot longer than one imagines before insanity causes everyone’s heads to explode. As long as stock buybacks continue to be the one-trillion-dollar-per-year hot-air balloon lifting market indices, then the market can possibly rise even if real apocalyptic events like an asteroid impact were to happen. It can rise until the monumental corporate cash piles from repatriation and tax savings are spent (which will simply have to be spent a lot faster in the event of an asteroid impact) …. or just until the corporate principals have used company cash to buy themselves out over enough time to make that legal, to where they can, then, let the smoldering shells of their corporations crash with companies having nothing to show for all the cash spent, except safe, wealthy executives and board members, who will use the cash they withdrew to buy their corporate stocks back at fire-sale prices after the crash while mom and pop, who rushed into the flames (as always), move to trading at Goodwill for some decent rags to dress their burns. Full Story
By: John Mauldin, Thoughts from the Frontline - 12 May, 2019
- Underfunded Future - Pension Fund Underfunding Is a Local Problem - Make the Children Pay - The Strategic Investment Conference and Possible Recessions Full Story
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