The Global Reset Scam

By Alasdair Macleod – Re-Blogged From Gold Eagle

[This is a darker post than I usually send your way. It deals not only with inflation & hyperinflation but also currency collapse and what it might look like on the other side (actually quite optimistic). –Bob]

This article takes a tilt at increasing speculation about statist global resets, and why plans such as those promoted by the World Economic Forum will fail. Central bank digital currencies will simply run out of time.

Instead, the collapse of unbacked fiat currencies will end all supra-national government solutions to their policy failures. Already, there is mounting evidence of money beginning to flee bank accounts into stocks, commodities and even bitcoin. This is an early warning of a rapidly developing monetary collapse.

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PMs: Money For the Long Haul

By John Ing – Re-Blogged From Gold Eagle
All in all, with risks of higher taxes, healthcare spending, technology regulation, climate change and a festering Trumpian Republican party, America’s reputation is taking a battering. Adding to this concern is that while inflation would be welcomed because it helps solve the government’s finances, the US dollar remains at risk. Although a weaker dollar would help US exports, already the combination of a Democrat government together with expectations of mounting twin deficits has weakened the dollar of late and the greenback has actually fallen 10% from its peak. And as the pandemic accelerates around the world, there is a move away from dollars while America’s dollar obligations keep mounting. We believe that the growing risk of more dollar deterioration could trigger an avalanche of foreign outflows which to date have financed America’s current account deficit. Borrowings more from the future is a recipe for disaster.

China Unloads Dollars As Gold Price Tests Support

By Stefan Gleason – Re-Blogged From Gold Eagle

Since posting new record highs in early August, the gold market has consolidated above $1,900/oz support.

A close below the $1,900 level would carry bearish implications for the near term.

Alternatively, a move back above $2,000/oz would likely be followed through to the upside with a rally to fresh highs. Silver, in turn, could be expected to run to new multi-year highs above $30/oz.

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The Pound’s Future In A Dollar Collapse

By Alasdair Macleod – Re-Blogged From GoldMoney

In recent articles for Goldmoney I have pointed out the dollar’s vulnerability to a final collapse in its purchasing power. This article focuses on the factors that will determine the future for sterling.

Sterling is exceptionally vulnerable to a systemic banking crisis, with European banks being the most highly geared of the GSIBs. The UK Government, in opting to side with America and cut ties with China, has probably thrown away the one significant chance it has of not seeing sterling collapse with the dollar.

A possible salvation might be to hang onto Germany’s coattails if it leaves a sinking euro to form a hard currency bloc of its own, given her substantial gold reserves. But for now, that has to be a long shot.

And lastly, in common with the Fed and ECB, the Bank of England has taken for itself more power in monetary matters than the politicians are truly aware of, being generally clueless about money.

Conclusion: the pound is unlikely to survive a dollar collapse, which for any serious student of money, is becoming a certainty.

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Decline of the U.S. Dollar Could Happen at ‘Warp Speed’

Stephen Roach, a Yale University senior fellow and former Morgan Stanley Asia chairman, tells MarketWatch that his forecast for a sharp deterioration of the U.S. dollar could be a very near-term phenomenon, not an event that looms off in the distance.

“I do think it’s something that happens sooner rather than later,” the economist told MarketWatch during a Monday-afternoon interview.

His comments come as the financial expert has been warning for weeks of an epic downturn of the buck that could signal the end of the hegemony of the greenback as a reserve currency — an event that would ripple through global financial markets.

Stephen Roach

The Crisis Goes Up A Gear

By Alasdair Macleod – Re-Blogged From Gold Eagle

Dollar-denominated financial markets appeared to suffer a dramatic change on or about the 23 March. This article examines the possibility that it marks the beginning of the end for the Fed’s dollar.

At this stage of an evolving economic and financial crisis, such thoughts are necessarily speculative. But an imminent banking crisis is now a near certainty, with most global systemically important banks in a weaker position than at the time of the Lehman crisis. US markets appear oblivious to this risk, though the ratings of G-SIBs in other jurisdictions do reflect specific banking risks rather than a systemic one at this stage.

A banking collapse will be a game-changer for financial markets, and we should then worry that the Fed has bound the dollar’s future to their fortunes.

The dollar could fail completely by the end of this year. Against that possibility a reset might be implemented, perhaps by reintroducing the greenback, which is not the same as the Fed’s dollar. Any reset is likely to fail unless the US Government desists from inflationary financing, which requires a radically changed mindset, even harder to imagine in a presidential election year.

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Gold Sees Safe-Haven Gains As Stocks Fall Sharply And Deutsche Bank Plummets

By Mark O’Byrne – Re-Blogged From Gold Eagle

Gold rose to a two week high and was higher in most currencies today after Washington’s threat of tariffs on Mexico exacerbated fears of a global trade war and recession, which saw a ‘flight to quality’ and gains for safe haven gold.

Spot gold jumped 0.9% to $1,298.80 an ounce this morning, its highest since May 15. Gold bullion has risen over 1.2% this month and appears headed for its first monthly gain in four months. This is important from a technical perspective and the fundamentals of growing risk aversion and robust demand should lead to further gains in June.

European trading has seen a clear flight to quality after President Trump unexpectedly politicised tariffs by slapping 5% on all goods coming from Mexico.

The increasingly hopeless case of a U.S. and China trade deal looked even further away after China drew up an “Unreliable entities” list of foreign parties (presumably mostly U.S.) that harm Chinese firms.

Stocks are red across the board globally with the S&P 500 breaking down sharply below its 200 day moving average (DMA). 2776 is a key level and Wall Street and Wasshington will not want a close below this level. Market intervention is quite possible, if not likely.

A weekly close below the 200 day moving average (DMA) could lead to follow through selling on Monday which could get ugly given the economic backdrop.

Financial stocks are particularly under pressure including UBS and embattled Deutsche Bank with the latter posting new “all time” lows of around €6. A whiff of contagion is in the air.

US and German bond yields hitting recent lows indicate the Fed might be backed into a rate cut sooner than they have been guiding with an inverting yield curve being a good barometer of trouble ahead

The greenback has also benefited somewhat from the risk off trade, in the face of this, silver and particularly gold are holding up well despite the recent sell off.

$1,300/oz and $14.60/oz are the respective hurdles approaching for both. Weekly closes over these levels should see follow though buying and further gains.

How far down we go, nobody knows, but it makes sense to stay cautious and prepared.

Fasten your seat belts it could be a lively Friday afternoon and weekend…

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The Tragedy Of The Euro

By Alasdair Macleod – Re-Blogged From Silver Phoenix

After two decades, the euro’s minders look set to drive the Eurozone into deep trouble. December was the last month of the ECB’s monthly purchases of government debt. A softening global economy will increase government deficits unexpectedly. The consequence will be a new cycle of sharply rising bond yields for the weakest Eurozone members, and systemically destabilising losses in the bond portfolios owned by Eurozone banks

The blame-game

It’s the twentieth anniversary of the euro’s existence, and far from being celebrated it is being blamed for many, if not all of the Eurozone’s ills.

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The Biggest Of Big Pictures

By Alasdair Macleod – Re-Blogged From Gold Eagle

I have had a request from Mrs Macleod to write down in simple terms what on earth is going on in the world, and why is it that I think gold is so important in this context. She-who-must-be-obeyed does not fully share my interest in the subject. An explanation of the big picture is also likely to be useful to many of my readers and their spouses, who do not share an enduring interest in geopolitics either.

That is the purpose of this article. It can be bewildering when a casual observer tries to follow global events, something made more difficult by editorial policies at news outlets, and the commentary from most analysts, who are, frankly, ill-informed. Accordingly, this article addresses the topic that dominates our future. The most important players in the great game of geopolitics are America and China. But before launching into an update, I shall lay down the disciplines required for an informed analysis.

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Making Italy Great Again

By Peter Schiff – Re-Blogged From Euro Pacific Capital

This week, market watchers around the world are justifiably fixated with the high-stakes, high-drama political developments unfolding in Italy. While a political crisis in the world’s 9th largest economy (International Monetary Fund figures, 4/17/18) would normally not be enough to cause an international meltdown, given how thin the global economic ice has become as a result of ever-increasing debt loads, even small disruptions can create systemic problems. But from my perspective, what makes the Italian drama so interesting is that it parallels so precisely developments in the United States. It’s amazing that more Americans do not realize, that when looking at Italy, they are looking at a fun house mirror reflection of the United States.

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‘Nightmare Scenario’ For EU Bond Markets As Anti-Euro Italian Government Takes Power

ByAmbrose Evans-Pritchard – Re-Blogged From http://www.Gold-Eagle.com

Firebrand populists of Left and Right are poised to take power in Italy, forming the first “anti-system” government in a major West European state since the Second World War.

Source: Wikimedia Commons

Leaders of the radical Five Star Movement and the anti-euro Lega party have been meeting to put the finishing touches on a coalition of outsiders, the “nightmare scenario” feared by foreign investors and EU officials in equal measure.

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Europe, Brexit And The Credit Cycle

By Alasdair Macleod – Re-Blogged From http://www.Silver-Phoenix500.com

Europe’s financial and systemic troubles have retreated from the headlines. This is partly due to the financial media’s attention switching to President Trump and the US budget negotiations, partly due to Brexit and the preoccupation with Britain’s problems, and partly due to evidence of economic recovery in the Eurozone, at long last. And finally, anyone who can put digit to computer key has been absorbed by the cryptocurrency phenomenon.

Just because commentary is focused elsewhere does not mean Europe’s troubles are receding. Far from it, new challenges lie ahead. This article provides an overview of the current state of play from the European point of view, and seeks to identify the investment and currency risks. We start with Brexit.

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New Eastern Energy Cartel: Replacement To The Dead Petro-Dollar

By Jim Willie – Re-Blogged From http://www.Silver-Phoenix500.com

The Petro-Dollar is dead. It had served so well for over 40 years in maintaining the USDollar as global currency reserve, while keeping tight the controls on geopolitical power. The link between crude oil and the USDollar has been broken, painfully evident since 2016 with a harsh price decline that cannot rise about the $50 level. It remains stuck below that level despite heavy collusion in a demonstration that OPEC is dead defunct also. A void has been created in the energy sector, a most important sector. Enter Russia & China to fill the void. Both the crude oil market and the natural gas market have new alliances which feature nations acting in a cooperative manner.

The common element is Russia on the production side, complete with pipeline arrays. The common other element is China on the demand side with large customer needs and financial influence. This article describes the two emerging organizations, which the Jackass calls the Oil Consortium and the NatGas Cartel. It will serve the Eurasian Trade Zone. It will function outside the USD payment system. It is ripe for Gold payment structure in the near future. In no way do these qualify as coffin nails for the Petro-Dollar. The funeral for the corrupted abused hegemon USDollar might have taken place with the Trump charade in Saudi Arabia a month ago. The emerging energy organizations signal the new dawn after the funeral without eulogy.

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US Dollar Testing Long-Term Support

By Mike Golembesky – Re-Blogged From http://www.Gold-Eagle.com

The US Dollar has continued to fall hitting a low of 92.72 on Monday, July 31st. The US Dollar also broke through shorter term support levels and is now closing in on long term support that could very well define the longer term trend over the next several years.

When most financial writers (to which I include myself) refer to the US Dollar they are typically referencing the DXY index. The DXY index is composed of 6 currency pairs that are based mostly in Europe. The Euro vs. the US Dollar makes up 58% of the DXY index with the Great British Pound, Swedish Krona and Swiss Franc making up an additional 19.7% of the index combined.

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Shrinkflation – Real Inflation Much Higher Than Reported

By Mark O’Byrne – Re-Blogged From http://www.Gold-Eagle.com

  • Shrinkflation – Real inflation much higher than reported and realised
  • Shrinkflation is taking hold in consumer sector
  • Important consumer, financial, monetary and economic issue being largely ignored by financial analysts, financial advisers, economists, central banks and the media.
  • Food becoming more expensive as consumers get less for price paid
  • A form of stealth inflation, few can avoid it
  • Brexit is the scapegoat for shrinkflation by the media and companies
  • Consumers blame retailers rather than central banks
  • Gold hedge has doubled in value since 2007 

Shrinkflation: no one left untouched

600 new words entered our official lexicon this week as the Oxford English Dictionary announced the latest new additions to their online records.

One of the words reportedly up for consideration was shrinkflation. It did not make the final cut and as a result continues to be defined by the authority as ‘a portmanteau, made from combining shrink: ‘to become or make smaller in size’, with the economic sense of inflation: ‘a general increase in prices and fall in the purchasing value of money’.

In order for a word to be accepted into the OED it must have been in use for at least five years. But the latest list suggests that this isn’t the case and exceptions can be made. The inclusion of ‘superbrat’, a word which is usually associated with the behaviour of John McEnroe in the 1970s, actually dates back to the the 1950s.

Yet, shrinkflation continues to elude the world’s authority on the English language. This seems bizarre to us given both the word and the phenomenon and something consumers have been experiencing for a number of years.

Although it is understandable in the context of an important consumer, financial and economic issue which is being largely ignored by financial analysts, financial advisers, economists and the media.

We first covered the shrinkflation phenomenon back in 2014 when we reported how  Dr. Philippa Malmgren had highlighted this ‘shrinkflation’ trend in a new book.

Shrinkflation: A New Phenomenon?

As we mentioned last week, shrinkflation is a phenomenon that is not unique to the current financial crisis. In 1916 The Seattle Star ran a front-page story on the issue, ‘“[Inspectors] went from bakery to bakery Thursday checking up on the bread situation…And here is what they found: ten-cent loaves of bread have shrunk from 32 ounces to 22 ounces, and standard 5-cent loaves, that used to weigh 16 ounces, now average 11 ounces.”

Search Graph for Shrinkflation (Google)

Granted, back in 1916 the word ‘shrinkflation’ was not in use but it had a place firmly in the economy. Use of the word shrinkflation has been picking up pace since at least 2012. We can see this by the examining the search history for the phrase on Google.

You can clearly see a peak in the search for the term in November 2016. It was at this point when news of the newly designed Toblerone hit the British newspapers. Mondelez, Toblerone’s manufacturers had announced they would be reducing the bars from 170 grams to 150 grams in the UK which would affect the shape.

Mondelez’s justification for the change was due to an uptick in ‘many ingredients’ prices’, the company specifically blamed the drop of the euro against the Swiss franc in January, and an increase in cocoa prices over the last three years.

Cocoa Prices – Money Week

It’s not just Toblerone fans who are feeling the pinch on chocolate bars. Creme Eggs and Quality Street (other British high street favourites) have been shrinking, with price remaining the same.

Other household items and food prices have also been affected.

Brexit Is The Scapegoat

Even though we can go back nearly 100 years to witness shrinkflation and see evidence of it in our household items and online searches, it is only in the last year that manufacturers and the media have managed to find a reason for its existence.

Brexit is being blamed – as it is being blamed for a number of woes being experienced in the UK at present.

Brexit seems to be bearing the brunt of the blame for the recent shrinkages, thanks to the impact of the referendum of the price of sterling. You don’t need to have a PhD in economics to understand the effect this has on prices.

12 months since the vote sterling is still weak, it is 15% down against the US dollar, and 14% against the euro. Things are expected to get worse, with HSBC analysts expecting the pound to hit parity with the euro by the end of the year.

There is little doubt that a weak currency will impact the cost of raw goods and materials which make up chocolate bars and other items. However shrinkflation existed even when the pound was strong.

No Sign Of Easing Up

In 2015 the Irish Times reported on this very topic and referred to a 2014 Which? survey:

Aunt Bessie’s Homestyle Chips were reduced in size from 750g to 700g, while a box of Surf with Essential Oils washing powder fell in size from 2kg to 1.61kg. In 2014 there was 750g of mixed vegetables in a Birds Eye Select bag; today it is 690g. Cif Actifizz Multi-Purpose Lemon Spray and Domestos Spray Bleach Multipurpose Cleaner were reduced in size from 750ml last year to 700ml today…

‘The shrinkage does not end there. In previous years, Which? has recorded one- litre tubs of Carte D’Or ice cream turning into 900ml tubs, while a litre of Innocent smoothies became 900ml. Magnum ice creams, which used to be 360ml, are now 330ml, and the size of a bar of Imperial Leather soap fell from 125g to 100g, a reduction of 20 per cent…

‘The list goes on. A packet of 48 Persil washing tablets turned into a packet of 40, a decline of 16.6 per cent, while 56 Pampers Baby Wipes used to be a packet of 63, an 11.1 per cent reduction.’

This was well before the EU referendum. It was impossible to blame a weak currency, instead this was and remains all about the impact of real inflation on consumer prices. This is despite having been told for years that inflation was very low.

UK Inflation Expectations (FT)

Inflation expectations are relatively low amongst households in the UK, EU and U.S.

Only now are we beginning to see both officials and individuals wake up to the presence of inflation in the UK. In May consumer prices accelerated faster than BoE expectations. They hit a four-year high of 2.9% and are expected to exceed 3% in the coming months.

In the UK, there are some concerns and dissent has increased in the BoE’s monetary policy committee (MPC) over the suitability of its record low interest rate policy in regard to rising inflationary pressures. It has been some time since we have seen any sign of concern regarding inflationary issues, from members of the MPC.

Meanwhile in households it looks like it has taken the appearance of a chocolate bar to drive the message home that businesses are experiencing price pressures. Unfortunately this has merely come out as anger towards companies rather than the central banks and governments who are ultimately responsible for this inflationary issue.

Unjust for consumers or time to take responsibility?

Which? magazine and consumer action groups have tried to bring retailers to account for what are considered to be misleading practices.

In Ireland, the Consumer Association’s Chief Executive stated

“I don’t know if we can say consumers are being deliberately misled but they are being put in a position where it becomes very difficult to make informed decisions.”

“I think the worst example of this is the widespread shrinking of products. The content gets smaller but the price and the packaging stays the same. These are price increases by stealth, and by any measure inflation of this nature is abnormal in the current environment. I think they are appalling.”

As we have seen with quantitative easing, bank bailouts and the overall financial crisis consumers seem to be relatively disinterested in fighting back against these practices that ultimately cost them more.

A YouGov survey found that 46 per cent those polled would prefer to pay more for an item than see it shrink. Yet 36 per cent said they’d be satisfied if the pack got smaller, but the price stayed the same.

The same survey run by YouGov Portion Sizes and Health found that firms risk losing over a third of their customer base if they cut pack sizes by 15 per cent.

While there is uproar on Facebook pages about this topic, the concerns of some consumers are not being voiced by politicians, economists, central bankers or the media.

Depite the zeitgeist of the moment, this isn’t about retailers taking advantage of consumers. Shrinkflation is a very serious byproduct of a practice which has been going on for many years now.

Shrinkflation is just inflation in stealth mode and is the consequence of currency debasement on a scale that the world has never seen before.

It brings the economy’s problems literally to the kitchen table.

We are finally at a point where those who have so far been apparently untouched by the financial crisis i.e. the middle classes who still have jobs, they have seen their homes increase in value and they still go abroad twice a year, are beginning to see their cost of living increase.

As are the working classes, pensioners and those on low salaries or fixed incomes.

They will soon recognise that no one is left unharmed by the monetary and economic policies which followed the financial crisis.

Easy monetary policy is wealth ignorant. It gives little regard to how you spend your money and where you hold your cash. That’s why savers have to make room for those real assets which cannot be shrunk down and magicked away.

Investments such as gold and silver by their very nature are immune to the shrinkflation effect and are an important hedge against it.

Next time you’re considering that bar of Toblerone at the supermarket checkout, just imagine how much is missing compared to when you would have bought with the proceeds of your first payslip.

Then consider how much a bar of gold would have changed since then, the fact is that it hasn’t. You would still have the same sized bar, with the same gold content and it is worth a lot more now.

Gold in USD – 10 Years

Gold is twice the price it was before the crisis in 2007. While many household goods and products are higher in price or the same price but a much smaller size.

Shrinkflation is happening and real inflation is much higher than is being reported or people realise.

Your purchasing power and your wealth can be preserved from the ravages of shrinkflation, just don’t expect it to happen courtesy of central banks and governments.

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Brexit One Year Later, In Five Charts

By Frank Holmes – Re-Blogged From http://www.Gold-Eagle.com

One year ago, British voters cast their ballots in favor of leaving the 28-member European Union, defying multiple opinion polls leading up to the Brexit referendum that said the “remain” camp would notch a narrow victory.

In a pre-Brexit Frank Talk last year, I wrote that Brexit would be regarded as the most consequential political event of 2016. President Donald Trump’s surprise election notwithstanding, I stand by my earlier comment.

 

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Contagion from the 2 Friday-Night Bank Collapses in Italy?

By Don Quijones – Re-Blogged From Wolf Street

This is how desperate the Italian Banking Crisis has become.

When things get serious in the EU, laws get bent and loopholes get exploited. That is what is happening right now in Italy, where the banking crisis has reached tipping point. The ECB, together with the Italian government, have just this weekend to resolve Banca Popolare di Vicenza and Veneto Banca, two zombie banks that the ECB, on Friday night, ordered to be liquidated.

Unlike Monte dei Pachi di Siena, they will not be bailed out with public funds  only. Senior bondholders and depositors will be protected. Shareholders and subordinate bondholders will lose their shirts. However, as the German daily Welt points out, subordinate bondholders at Monte dei Pachi di Siena had billions of euros at stake, much of it owned by its own retail customers who’d been sold these bonds instead of savings products such as CDs. So for political reasons, they were bailed out.

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Business Cycles Are Credit Cycles

By Alasdair Macleod – Re-Blogged From http://www.Silver-Phoenix500.com

This article gets to the heart of why central banks’ monetary policy will never succeed. The fundamental error is to regard economic cycles as originating in the private sector, when they are the consequence of fluctuations in credit. It draws on the author’s submission of evidence to the UK Parliament Treasury Committee’s enquiry into the failure of monetary policy in the wake of the 2008 crisis.

Summary

  • It is incorrectly assumed that business cycles arise out of free markets. Instead, they are the consequence of the expansion and contraction of unsound money and credit.
  • Monetary inflation transfers wealth from savers and those on fixed incomes to the banking sector’s favoured customers. It has become a major cause of increasing disparities between the wealthy and the poor.

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The Decline And Fall Of The Euro Union

By Alasdair Macleod – Re-Blogged From http://www.Gold-Eagle.com

This article identifies the headwinds faced by the EU in the wake of Brexit. Without the UK, not only does the EU lose much of its importance on the world stage, but the Commission’s budget is left with an enormous hole. That is the decline. The fall is well under way, with capital flight significantly worse than generally realised, as a proper understanding of TARGET2 imbalances shows. Not only is the ECB running out of options, but without major support from Germany, France and Italy, Brussels itself faces a financial crisis. In a highly unusual move, Jamie Dimon of JP Morgan in a letter to his shareholders this week backtracked on his earlier pre-Brexit threat to move jobs from London, declaring that the problem is Europe itself.

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2017 Economic Forecast: Global Headwinds Look Like Mother of All Storms

By David Haggith – Re-Blogged From GREAT Recession Blog

Headwinds that are starting to assail deep structural flaws in the US and global economies form the basis for my 2017 economic forecast, which looks like an all-out economic crisis building throughout the world. Some of these headwinds are global; some more locally focused within the United States, but that which brings down the US economy wounds the world anyway. Ultimately, global concerns threaten the US, and US concerns threaten the globe. We’re all in this together, even as we seem to be flying apart in political whirlwinds everywhere and fracturing national alliances all over the world.

Even in the US where the Trump Triumph has ignited consumer and business hopes and inflamed the stock market, time is not on Trump’s side. Trump’s own key advisors — like Steve Bannon and Larry Kudlow — have stated unequivocally that Trump’s plans must happen quickly if they are going to save the US economy. Trump, himself, campaigned on the endless refrain that the US economy was rapidly approaching catastrophe. That’s why we needed to elect him. If we take the architects of these hope-inspiring plans at their word, 2017 is a make-or-break year for the US, and the clock is ticking against their success.

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The Fed’s “Third Mandate”

By Andrew Hoffman – Re-Blogged From http://www.Gold-Eagle.com

Lately, the Cartel has been throwing everything – including the kitchen sink – at Precious Metals; in silver’s case, vigorously defending its latest “line in the sand,” at the 200 DMA of $17.96/oz; and in gold’s, at its 200 day and 200 MONTH moving averages, both of which are roughly $1,266/oz.  And despite, as I mocked yesterday, the dollar index “rising” this week – due to heightened fear of a Eurozone breakup – they’ve been having an immense amount of trouble holding them down.

Yesterday, we saw the newest Cartel machination in action – of capping Precious Metal gains; no surprise, via the “Cartel Herald” algorithm, at the 12:00 PM EST “cap of last resort”; when Treasury bond auctions go, LOL, “well” – which I mock due to the fact that auction data is so comically easy to rig, to garner the desired “market” reaction.  Conversely, if such auctions go “badly” – i.e., a lower sale price than the prevailing market price – Precious Metal prices are smashed.  And of course, either way, PPT-supported stock prices are unaffected, subject only to the ubiquitous “dead ringer” algorithm, which “coincidentally” is centered around the Fed’s 10:00 AM EST “open market operations.”

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China Disaster To Trigger Gold Run, Trump To Appoint 5 of 7 Fed Governors

By Mike Gleason – Re-Blogged From http://www.Gold-Eagle.com

Mike Gleason (Money Metals Exchange): It is my great privilege to be joined now by James Rickards. Mr. Rickards is editor of Strategic Intelligence, a monthly newsletter, and Director of the James Rickards Project, an inquiry into the complex dynamics of geopolitics and global capital. He’s also the author of several bestselling books including The Death of Money, Currency Wars, The New Case for Gold, and now his latest book The Road To Ruin.

Jim is a portfolio manager, lawyer, and renowned economist having been interviewed by CNBC, the BBC, Bloomberg, Fox News, and CNN, just to name a few. Jim, we really appreciate your time and welcome back. It’s great to have you on again.

Jim Rickards (The James Rickards Project): Great to be with you.

Mike Gleason: Well, first off, Jim, you just published an article at the Daily Reckoning regarding China that I want to have you comment on. Now, since the election of Donald Trump who is advocating for import taxes on goods from China and elsewhere, most of the focus has been on trade and China’s efforts to devalue their currency. A trade dispute with China could certainly have significant repercussions in the U.S., but you raise a host of considerations beyond tariffs and currency markets. Talk for a minute about the internal politics of China, and then if you would, share some of the macroeconomic shifts you see developing between the U.S., China, and Russia, because things seem to be heating up here.

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Europe Eyes Sweeping Cash Ban

By Clint Siegner – Re-Blogged From http://www.Gold-Eagle.com

The global war on cash rolls on. The cabal of bankers seeking more transaction fees, busybody political leaders, and central bankers who want to experiment with negative interest rates recently threw India into turmoil by eliminating the two largest denomination bank notes.

Now they are preparing a similar assault on Europeans’ ability to transact privately and without giving bankers a cut. European Union officials just published a “Proposal for an EU Initiative on Restriction on Payments in Cash.”

War on Cash

 

Predictably, the restrictions are being sold to citizens as a means of fighting terrorism – much like a host of other privacy and liberty-destroying power grabs in recent decades. This despite a telling admission contained in the proposal: “There remains the lack of readily available and solid evidence on legitimate versus illegitimate cash transactions.” Ban the use of cash first, ask questions later.

Officials may, however, come to regret the timing of their proposal. Many European citizens will have trouble reconciling why leaders are willing to clamp down severely on cash, but not on the flood of refugees pouring in from the Middle East. Can they really be serious about terrorism?

Anti-EU movements are surging across the continent, with important elections coming this year in both France and Germany. Anger and frustration is already threatening to tear the EU apart. Now EU officials are floating another measure that promises to be controversial.

In Germany, 79% of transactions are done in cash. Many there aren’t going to take restrictions lying down. Some see the war on cash for what it is – bureaucrats using the lever of fear to once again ratchet up controls and restrict privacy.

The EU bureaucrats may just see the day when citizens stop using paper euros to make payments, but not because of the restrictions they hope to impose. It could instead be the result of the EU and its common currency being dumped.

A European setback for the bankers and politicians behind the move to de-monetize cash would be good news for bullion investors everywhere, including the U.S. Attempts to regulate the trade of physical gold and silver will not be far behind any restrictions on cash. Precious metals are an obvious target because they are a premier form of private, off-the-grid, and portable wealth.

With these draconian proposals gaining momentum across the globe, you can bet we will continue to follow the war on cash carefully.

CONTINUE READING –>

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French Election Could See Euro Break Up

By Mark O’Byrne – Re-Blogged From GoldCore

David McWilliams, economist, writer and journalist, has warned that the coming French election may lead to the euro breaking up and that Ireland should have a ‘plan B’ and ‘print punts’ in order to be ready for the collapse of the “single currency.”

David McWilliams at Ireland’s Banking Inquiry

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Debt Surge Producing Fake Recovery

By John Rubino – Re-Blogged From http://www.Silver-Phoenix500.com

What do the following headlines have in common?

US wages grow at fastest pace since 2009

Euro area economy ended year with strongest growth since 2011

Surge in home prices is beating the one in mortgage rates

Manufacturing in U.S. Expands at Fastest Pace in Two Years

German Inflation welcomed back

Obviously they’re all favorable, with the possible exception of German inflation – though even that is “welcome”. Taken together they paint a picture of a global economy that’s finally returning to the kind of solid growth and steady, positive inflation that most people consider both normal and good.

 

Unfortunately, the reason for the improvement is emphatically not good: In 2016 the world borrowed a huge amount of money and spent the proceeds. The result is “growth,” but not sustainable growth.

Consider:

Federal Debt in FY 2016 Jumped $1.4 Trillion, or $12,036 Per Household

(CNSNews.com) – In fiscal 2016, which ended on Friday, the federal debt increased $1,422,827,047,452.46, according to data released today by the U.S. Treasury.

At the close of business on Sept. 30, 2015, the last day of fiscal 2015, the federal debt was $18,150,617,666,484.33, according to the Treasury. By the close of business on Sept. 30, 2016, the last day of fiscal 2016, it had climbed to $19,573,444,713,936.79.

According to the Census Bureau’s latest estimate, there were 118,215,000 households in the United States as of June. That means that the one-year increase in the federal debt of $1,422,827,047,452.46 in fiscal 2016 equaled about $12,036 per household.

The total federal debt of $19,573,444,713,936.79 now equals about $165,575 per household.

(The News PK) – Global debt sales reached a record this year, led by companies gorging on cheap borrowing costs.

The bond rally that dominated the first half of the year helped entice borrowers that issued debt via banks to take on just over $6.6tn, according to data provider Dealogic, breaking the previous annual record set in 2006.

Companies accounted for more than half of the $6.62tn of debt issued, underlining the extent to which negative interest rate policies adopted by the European Central Bank and the Bank of Japan, as well as a cautious Federal Reserve, encouraged the corporate world to increase its leverage.

Corporate bond sales climbed 8 per cent year on year to $3.6tn, led by blockbuster $10bn-plus deals to finance large mergers and acquisitions.

The remaining debt included sovereign bonds sold through bank syndication, US and international agencies, mortgage-backed securities and covered bonds. The figures exclude sovereign debt sold at regular auction.

“The low cost of financing with record-low interest rates simply made building up leverage tempting,” said Scott Mather, chief investment officer for core fixed income at Pimco.

(Reuters) – Global debt levels rose to more than 325 percent of the world’s gross domestic product last year as government debt rose sharply, a report from the Institute for International Finance showed on Wednesday.

The IIF’s report found that global debt had risen more than $11 trillion in the first nine months of 2016 to more than $217 trillion. The report also found that general government debt accounted for nearly half of the total increase.

Emerging market debt rose substantially, as government bond and syndicated loan issuance in 2016 grew to almost three times its 2015 level. China accounted for the lion’s share of the new debt, providing $710 million of the total $855 billion in new issuance during the year, the IIF reported.

To sum up: Emerging market borrowing in 2016 was triple the year-earlier level. Corporate borrowing was the highest since 2006. And the US somehow managed to add another $trillion of government debt in the late stages of a recovery, when tax revenues are usually strong enough to shrink or eliminate deficits.

Since every penny of that new debt was presumably spent, it should come as no surprise that the latest batch of headline growth numbers have been impressive. Which is the basic problem with debt-driven growth: The good stuff happens right away while the bad stuff evolves over time – in the form of higher interest costs that depress future growth – making it hard to figure out what caused what.

That’s bad for regular people who have to live through the resulting slow-down or crisis. But it’s fine for the people who made the borrowing decisions because they get credit for the growth pop but won’t be around – having retired with huge pensions and high prestige – before the secondary effects really kick in.

This time, however, the cause-and-effect dynamic is being accelerated by a spiking dollar and rising interest rates, both of which raise the cost of debts that are denominated in dollars and/or have to be refinanced in the year ahead. So the mother of all financial crises that has been inevitable for a couple of decades has, thanks to all this new debt, taken a giant step towards “imminent.”

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12 Financial Experts for 2017

By Daisy Luther – Re-Blogged From Freedom Outpost

What lies ahead for the economy this year? Will the economy finally collapse as predicted by many or will the early positive signs in stock markets around the world continue and the global economy will flourish?

I’ve taken a lot of heat for being “gloomy” and for “fear-mongering” lately when I’ve said that President-Elect Trump is inheriting a mess of epic proportions and that we may still be in for a rough financial ride. While I do think that Trump is a far better choice than Hillary Clinton ever could have been, when a situation has been declining as long as ours has, it would take an absolute miracle to turn it around without some pain.

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Why Europe Must End In Tears

By Alasdair Macleod – Re-Blogged From http://www.Gold-Eagle.com

The latest consequence of economic mismanagement in Europe was the failed attempt at constitutional reform in Italy this week. The Italian people have had enough of their government’s economic failure, and is refusing to give it more power.

The EU and the euro project have been an economic disaster for all participants, including Germany, which will eventually be forced to write off the hard-earned savings she has lent to other Eurozone members. We know, with absolute certainty that the euro will self-destruct and the Eurozone will disintegrate.

We know this for one reason above all. The political class and the ECB are guided by economic beliefs – I cannot dignify them by calling them reasoned theory – which will guarantee this outcome. Furthermore, they insist on using statistics that are incorrect for the stated function, the best example being GDP, which I have criticised endlessly and won’t repeat here. Furthermore, the numbers are misrepresented by government statisticians, CPI and unemployment figures being prime examples.

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On December 14th Whirlybird Janet Will Be In A Very, Very “Hot Seat”

By Andrew Hoffman – Re-Blogged From http://www.Gold-Eagle.com

It’s Friday night, after another week of financial market ignominy has passed; fortunately, without further damage to those holding REAL money. Which fortunately, is likely to be extremely limited going forward, given how low Precious Metal “valuations” have been driven, amidst the most bullish fundamental environment imaginable. Heck, whilst the paper gold price has been mercilessly attacked – as countless fiat currencies crash, amidst an environment of unprecedented economic and political instability – physical demand has exploded.

To wit, physical gold is trading around $1,700/oz in India; whilst Chinese physical premiums have surged to their highest level since April 2013’s “Alternative Currencies Destruction” raid; which, I might add, caused May 2013 to be Miles Franklin’s best ever month. To that end, yesterday was the single strongest day of Shanghai Exchange physical gold offtake all year; and November, the year’s strongest month for U.S. Mint gold Eagle sales – surpassing…drum roll please…October, which saw a dramatic demand surge following the Cartel’s blatant October 4th attack, just after China’s markets closed for the “Golden Week” holiday.

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There Will Never Be A Sound Currency System

By Egon von Greyerz – Re-Blogged From http://www.Gold-Eagle.com

Most people have no idea what money is. They believe that if they have 100 dollars or euros, that this represents real value as well as durability. Few people realise that their currency which they call money has nothing to do with real money at all. All paper currencies are ephemeral and return to their intrinsic value of zero. This is because reckless governments cling on to power by printing or borrowing endless amounts of fiat money in the hope that they will placate the people and buy votes. Fiat money as the name indicates, can never be real money. It is issued by edict and is not backed by anything but debt and liabilities.

Power Corrupts And Money Corrupts

It is a lethal combination which not only destroys people but also nations. And sadly, we have now reached a point in history when the unlimited amounts of fiat money that have been created will also destroy continents.

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Next Financial Crisis Will Come From Europe!

By Chris Vermeulen – Re-Blogged From http://www.Silver-Phoenix500.com

A financial system stability assessment report from the International Monetary Fund (IMF), about one bank in Europe identified Deutsche Bank AG (NYSE: DB) as the TOP bank that poses the greatest systemic risk to the global financial system. Systemic risk was identified as a major contributing factor in the ‘financial crisis’ of 2008. This is essentially the risk of contagion by the failure of one firm leading to failures throughout its industry.

On February 24th I talked about DB (Deutsche Bank) as the next major bank to fail. Since then price has plunged 31% and it’s likely headed much lower yet.

IMF: The Top Bank That Poses Global Financial Risk Is DEUTSCHE BANK! Continue reading

Is Stockman Right? Is This The Big One?

By Andrew Hoffman – Re-Blogged From http://www.Silver-Phoenix500.com

(September 26, 2016) It’s early Monday morning, on what could not only be a historically bad week for global financial markets, but the “beginning of the end” of the manipulated worldwide perception that “everything’s OK.”  Most of the world’s 7.4 billion denizens know this already, having watched their savings, currencies, standards of living, and political and/or social stability decline substantially since the 2008 financial crisis.  Which also goes for the majority of Westerners, I might add.  However, Western “intervention operatives” – like the PPT, ESF, Fed, and gold Cartel – have been more successful at manipulating markets to defer such perception.  Moreover, having the world’s reserve currency enables the inflationary hell the vast majority are experiencing; and in some cases, like Venezuela, hyperinflation; to be temporarily averted, in lieu of a more gradual, “frog-in-a-pot” type syndrome.  This is why gold, in the “average currency,” is trading at, near, or in many cases well above previous all-time highs.  Which of course the “evil Troika” of Washington, Wall Street, and the MSM won’t dare discussing, in their cumulative desperation to have you believe the PPT-supported, “record-high” Dow Jones Propaganda Average is indicative of a stability that simply does not exist.

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Rejoice…Central Banks Think You’re On To Something

By John Stepek – Re-Blogged From http://www.Gold-Eagle.com

Central banks have got the economy and markets covered.

They know what they’re doing. Their theories are backed up by decades of academic research and expert advice.

Queen Elizabeth inspecting gold bars in Bank of England. Source: Money Week

Expert advice, as we all know, is completely apolitical, changes rarely, and never, ever does a complete U-turn, like – I don’t know – telling us all to start eating butter after years of telling us not to, or something crazy like that.

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Why This Could Be the End of Europe as We Know It

By Justin Spittler – Re-Blogged From Casey Research

The world’s biggest economy is unraveling.

Regular readers know we’re talking about the European Union (EU). The EU is an economic union made up of 28 countries. It was put together after World War II to keep European countries from going to war with one another.

Over time, it turned into the world’s biggest economic experiment. And, right now, that experiment is going awry.

As you probably heard, the United Kingdom voted to leave the EU a month ago. The “Brexit,” as folks are calling it, shook financial markets from London to New York City. It knocked more than $3 trillion from the global stock market in two days.

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UK’s Prime Minister Commits To Successful Brexit

By John Browne – Re-Blogged From http://www.Silver-Phoenix500.com

Despite months of fear mongering by former Prime Minister David Cameron and his allies in late June, accompanied by doomsday global economic forecasts offered by the International Monetary Fund and the Obama Administration and a steady drumbeat of anti-Brexit news stories by the BBC, the British people delivered an unexpected event to the global financial system by voting to take Britain out of the European Union. Despite the forecasts of doom and gloom, the people voted for freedom, democracy and common law.

Most of the elites continue to warn of dire consequences for Britain. Moreover, many believe that the separation process will be long, messy and perhaps even farcical. Many argue that Britain will seek some sort of reconciliation, once it realizes the true costs of its hubris. However, a July visit to the UK convinced me otherwise.

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Stats, Europe, & US Markets

By David Chapman – Re-Blogged From http://www.Gold-Eagle.com

More Questionable Numbers – The Latest US Jobs Report

The June nonfarm payrolls came in at a stunning up 287,000, following a revised downward May nonfarm payrolls of 11,000. The surprise number gave way to a ‘wow’ moment, and the stock market soon rallied to new all-time highs.

The Bureau of Labor Statistics (BLS) conducts two job surveys each month. Actually, one is carried out by the US Census Bureau (household survey), and the other by the BLS (establishment survey). The two reports don’t necessarily jibe, as differences abound. The household survey conducts interviews with individual households, while the establishment survey does the same, only with businesses. Two surveys, two separate results.

The nonfarm payrolls reported is from the establishment survey, but the household survey determines the unemployment rate and other statistics. The key to the most recent numbers is that many of the jobs were in leisure and hospitality, which tend to be low paying and part-time. The labour force participation rate rose, as more people came looking for work and that helped push up the unemployment rate.

Canada’s equivalent of nonfarm payrolls were not encouraging. Job loss was small, but full-time jobs were replaced with part-time jobs. Not a healthy sign.

The Economist and the Italian Job

Esteemed magazine The Economist has joined the ranks of the concerned over the deteriorating banking situation in Italy, where there are some US$400 billion of non-performing loans (20% of Italy’s GDP) on Italian banks’ books. The Economist points out many of the same problems we noted a week earlier, including the inability under current EU rules to provide a direct taxpayer bailout to the banks. Instead it has to be a bail-in.

Trouble is, much of the non-performing loans are held not by institutions as one would expect, but by individuals. Previous attempts at bail-ins have resulted in suicides and demonstrations. What the article does not get into is the potential for contagion, and the growing problem of EU banks in general, where many of the biggest banks are in trouble as their stock prices have plunged precipitously.

The EU is plagued with infighting, anemic growth, high debt, deflation and some $10 to $12 trillion of debt trading at negative interest rates. Bonds issued by the EU, Germany, Switzerland and the Netherlands trade at negative yields. And then there is Brexit, and maybe even an Auxit (Austria).

Brexit Revisited

A week can’t go by without talking about Brexit. The United Kingdom has a new prime minister in, Theresa May, and how she got there was worthy of the Kremlin. She has promised to be a tough negotiator on Brexit, but so has the EU. The UK powers want to take their time. The EU wants to hurry. The clash could be interesting, and the Brexit promises to be with us for some time.

US Election Season – Now the Real Fun Begins

The final run of the US election season kicks off next Monday July 18, with the Republican National Convention (RNC) in Cleveland. The Democratic National Convention (DNC) kicks off on July 25 in Philadelphia. Once the conventions are out of the way, three months of mudslinging will follow. The conventions themselves could be controversial, with heavily armed police and protestors preparing to clash.

Both current candidates for president are extremely low in approval polls, with the winner likely to be whoever is less despised than the other. Currently the Democratic candidate (Hillary Clinton) leads the Republican candidate (Donald Trump) by either a wide margin or a narrow margin. The final leg of the campaign to Election Day on November 8, 2016 promises to be volatile and potentially violent.

Weekly Market Review

Stocks

The US stock market (S&P500 and Dow Jones Industrials) has roared to new all-time highs. Ok not all of it, as the NASDAQ and especially the Dow Jones Transportations have not yet joined the party. A divergence? A non-confirmation? Time will tell.

The roaring jobs market and the realization that the Fed is probably one and done with regards to interest rate hikes have helped fuel the run to new all-time highs. But the rally to new highs has been very narrow, reminiscent of the famous ‘nifty-fifty’ rally of 1972-1973 that culminated in a 50% collapse in the markets into 1974. There have also been net withdrawals from equity funds, and some evidence that it is instead central banks buying.

The market rallied to new all-time highs, with only shallow corrections seen in the past couple of years (under 20%). We take a look at the various cycles impacting the US stock markets and muse about a possible 90-year cycle of major depressions, with the last one seen in the ‘dirty thirties’ with the 89% drop in the markets into 1932.

Currencies

The US Dollar Index continues to tread water following Brexit, with little movement this past week. The euro also had little movement, although the Japanese yen fell quickly from its high. We look once again at the Canadian dollar and its amazing tracking with WTI oil prices. The fact that the Canadian economy continues to be weak and the BoC has lowered its growth forecast has not helped.

Gold and Precious Metals

Gold had a corrective week, but so far it is shallow and all trends remain intact. Silver actually gained small on the week, and the gold stocks hit new 52-week highs once again before closing off small. Platinum and palladium joined the party, and both made new 52-week highs, joining gold, silver and the gold stocks.

Gold has been rising on negative interest rates, anemic growth, high debt and the central banks running out of ammunition to deal with the crisis. But the market has at short term become overextended, so a correction would be healthy. We examine two schools of thought about the current market:

One that believes that the current rally is a correction to the long breakdown from the highs of September 2011, and the other that believes that the correction down from September 2011 was itself a major correction to the bull market of 2001-2011. We are now embarking on a new bull phase to the upside.

Strangely, both scenarios are generally aligned — and both could see new all-time highs for gold and silver in the end. The recovery in gold stocks has been remarkable. Moreover, in a space of 9 months the TSX Gold Index (SPTTGD) has already recovered 50% of what it lost from September 2011 to its bottom in September 2015.

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Brexit Fears are Deliberately Overblown

By John Browne – Re-Blogged From Euro Pacific Capital

As the June 23rd BREXIT (the UK-wide referendum to leave the EU) vote draws near, the polls indicate a close result. Those urging a vote for the UK to remain inside the EU are suggesting increasingly dire economic consequences that would follow a YES vote by the British people to leave. Voices from London, Brussels, and Washington have all put immense pressure on British voters to bend to the will of the elites. To listen to their commentary, one would think that apocalypse was just around the corner. But is there any substance to their warnings?

The Pro-EU membership camp is led by Prime Minister David Cameron, supported by most of his cabinet, the Bank of England, the BBC and the massive support from the UK and EU governments that have funded enormous advertising campaigns against separation. Given this weight of their power, it is amazing how strong the support for a British exit (BREXIT) has remained.

When Britain first joined the European Economic Community (the precursor to the EU) in 1973, the primary motivation was the hopes of increasing British trade through participation in the world’s largest free-trade zone. However, the hope that the union would simply be a free-trading zone of sovereign countries has morphed into a drive for an EU superstate that has relentlessly pushed for greater regulations on businesses and people and greater control of local laws that have nothing to do with trade.

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Gold – A Reasonable Correction?

By Alasdair Macleod  ReBlogged From Gold Money

Gold weakened during May by about $100…from a high point of $1300 to a low of $1200. For technical analysts this is entirely within the normal correction zone of a third to two-thirds of the previous rise, which would be 84 to 167 dollars.

So the price decline is technically reasonable…and therefore doesn’t in itself signify any underlying challenge to the merits of a long position in gold. However, when looking at short-term considerations, we should look at motivations as well. And those clearly are the profit to be made by banks dealing in the paper bullion market, which they can simply overwhelm by issuing short contracts out of thin air. This card has been played successfully yet again, with the bullion banks first creating and then destroying nearly 100,000 contracts, lifting the profits from hapless bulls in the COMEX market.

The banks get the money, the punters get the experience…and the evidence disappears. The futures market is demonstrably little more than a financial casino, where the house, comprising the establishment banks, always wins. Financial markets are not about free markets and purposeful pricing, which is why the vast majority of outsiders, including hedge funds, those Masters of the Universe of yore, usually lose. This leads us to an important conclusion: the fall in prices has less to do with a change in outlook for the gold price, and more with the way a casino-like exchange stays in business.

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Euro Breaks Above $1.13 After Staggeringly Weak Jobs Report

By Joseph Adinolphi – Re-Blogged From http://www.MarketWatch.com

Report likely takes June rate hike off the table, analysts say

Bloomberg
Friday’s abysmal jobs data drove the dollar lower.

The euro traded above $1.13 on Friday for the first time in more than two weeks after official U.S. data showed the rate of jobs growth decelerated last month to its slowest level since late 2010.

Labor Department data showed the U.S. economy added just 38,000 jobs last month, the slowest pace of growth since September 2010. The number was far short of the 155,000 jobs economists polled by MarketWatch had expected.

The Biggest Bubble In History Will Lead To An Even Bigger Collapse

By Egon von Greyerz – Re-Blogged From http://www.Gold-Eagle.com

In a world full of bubbles that will all burst, it is of course impossible to forecast which will be the first ones to cause havoc for the world economy. One of the biggest bubbles that would clearly bring down the financial system is the bond market. Here we have a $100 trillion market which has grown exponentially in the last 25 years and which has virtually gone vertical since the 2006-9 crisis.

Desperate governments are raising money as if there was no tomorrow in the hope that they can keep the world afloat for another few years. But as I have stressed so many times, you can create neither economic stability nor wealth by printing money or increasing the debt burden.

Governments cannot afford interest rates above zero.

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US Greenback To Rise

By IM Vronsky – Re-Blogged From http://www.Gold-Eagle.com

As all monetary students well know, the value of a country’s currency is determined by many factors. Among these are Fundamental Factors, Technical Factors and Pure Political Policies (the latter based upon the immediate “needs” of the politicians in power).  Consequently, it is a daunting task to ACCURATELY forecast the future value of a nation’s currency vis-à-vis other currencies.

As I am NOT a politician, I will only focus upon the US Dollar’s Fundamentals and the Technical Factors in an attempt to forecast the future value of the US greenback.

Fundamental Factors

  • The US$ has long been the world’s universal Reserve Currency.
  • The Euro is well-nigh imploding as the Euro Union is close to collapsing.
  • Banks worldwide are close to bankruptcy.
  • The China Factor
  • Rising US Interest Rates to Fuel Greenback Higher

Technical Factors

  • Based purely upon the Technical Analysis of US$ charts.

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Eurozone Is The Greatest Danger

By Alasdair Macleod – Re-Blogged From http://www.Silver-Phoenix500.com

World-wide, markets are horribly distorted, which spells danger not only to investors, but to businesses and their employees as well, because it is impossible to allocate capital efficiently in this financial environment. And with markets everywhere disrupted by interventions from central banks, governments, and their sovereign wealth funds, economic progress is being badly hampered, and therefore so is the ability of anyone to earn the profits required to pay down the highs levels of debt we see today. Money that is invested in bonds and deposited in banks may already be on the way to money-heaven, without complacent investors and depositors realising it.

It should become clear in the coming weeks that price inflation in the dollar, and therefore the currencies that align with it, will exceed the Fed’s 2% target by a significant amount by the end of this year. This is because falling commodity prices last year, which subdued price inflation to under one per cent, will be replaced by rising commodity prices this year. That being the case, CPI inflation should pick up significantly in the coming months, already reflected in the most recent estimate of core price inflation in the US, which exceeded two per cent. Therefore, interest rates should rise far more than the small amount the market has already factored into current price levels.

Most analysts ignore the danger, because they are not convinced that there is the underlying demand to sustain higher commodity prices. But in their analysis, they miss the point. It is not commodity prices rising, so much as the purchasing power of the dollar falling. The likelihood of stag-flationary conditions is becoming more obvious by the day, resulting in higher interest rates at a time of subdued economic activity.

A trend of rising interest rates, which will have to be considerably more aggressive than anything currently discounted in the markets, is bound to undermine asset values, starting with government bonds. Rising bond yields lead to falling equity markets as well, which together will reduce the banks’ willingness to lend. In this new stagnant environment, the most overvalued markets today will be the ones to suffer the greatest falls.

Therefore, prices of financial assets everywhere can be expected to weaken in the coming months to reflect this new reality. However, the Eurozone is likely to be the greatest victim of a change in interest rate direction. The litany of potential problems for the Eurozone makes Chidiock Titchborne’s Elegy, written on the eve of his execution, sound comparatively upbeat. Negative yields on government debt will have to be quickly reversed if the euro itself is be prevented from sliding sharply lower against the dollar. Bankrupt Eurozone governments are surviving only because of the ECB’s money-printing, which will have to restricted, and government borrowing exposed to the mercy of global markets. Key Eurozone banks are undercapitalised compared with the risks they face from higher interest rates, so they will do well to survive without failing. There is also a growing undercurrent of political unrest throughout Europe, fuelled by persistent austerity and not helped by the refugee problem. And lastly, if the British electorate votes for Brexit, it will almost certainly be Chidiock’s grisly end for the European project

We know the powers-that-be are very worried, because the IMF warned Germany to back off from forcing yet more austerity on Greece, which is due to make some €11bn in debt repayments in the coming months. The only way Greece can pay is for Greece’s creditors to extend the money as part of a “restructuring”, which then goes directly to the Troika, for back-distribution. It will be extend-and-pretend, yet again, with Greece seeing none of the money. Greece will be forced to promise some more spending cuts, and pay some more interest, so the fiction of Greek solvency can be kept alive for just a little longer.

One cannot be sure, but the IMF’s overriding concern may be the negative effect Germany’s tough line might have on the British electorate, ahead of the referendum on 23rd of June. That is the one outlier everyone seems to be frightened about, with President Obama, NATO chiefs, the IMF itself, and even the supposedly neutral Bank of England, promising dire consequences if the Brits are uncooperative enough to vote Leave.

All this places Germany under considerable pressure. After all, her banks, acting on behalf of the government and Germany’s populace, have parted with the money and cannot afford to write it off. Greece is bad enough, but Germany must be even more worried about the effect that a Greek compromise will set for Italy, which is a far larger problem.

Officially, the Italian government’s debt-to-GDP ratio stands at 130%, and since the public sector is 50% of GDP, government debt is 260% of the Italian tax base. It is also the nature of these things that these official numbers probably understate the true position.

If the Eurozone is the greatest risk to global financial and systemic stability, Italy looks like being the trigger at its core. The virtuous circle of Italian banks, pension funds and insurance companies, funding ever-increasing quantities of debt for the government, is failing. Pension funds and insurers cannot match their liabilities at current interest rates, and importantly, the banks are under water with non-performing loans to the tune of €360bn, about 18% of all their lending. It also represents 19.4% of GDP, or because the NPLs are all in the private sector, it is 39% of private sector GDP.

Within the private sector, NPLs are more prevalent in firms than in households. And that is the underlying problem: not only are the banks undercapitalised, but Italian industry is in dire straits as well. The Banca D’Italia’s Financial Stability Report puts a brave gloss on these figures, telling us that the firms’ financial situation is improving, when an objective independent analysis would probably be much more cautious.

All financial prices in the Eurozone are badly skewed, most obviously by the ECB, which will be increasing its monthly bond purchases from next month to as much as €80bn. So far, the price inflation environment has been benign, doubtless encouraging the ECB to think the inflationary consequences of monetary policy are nothing to worry about. But from the beginning of this year, things have been changing.

Because the recent pick-up in commodity prices will begin to show in the dollar’s inflation statistics, markets will begin to smell the end of negative euro rates, in which case Eurozone bond yields seem sure to rise steeply. Given their extreme overvaluations, price volatility should be considerably greater than that of the US Treasury market. Imagine, if instead of yielding 1.5%, Italian ten-year bond yields more accurately reflected Italy’s finances, by moving to the 7-10% band.

This would result in write-downs of between 40%and 50% on these bonds. The effect on Eurozone bank balance sheets would be obvious, with many banks in the PIGS needing to be rescued. Less obvious perhaps would be the effect on the ECB’s own balance sheet, requiring it to be recapitalised by its shareholders. This can be easily engineered, but the political ramifications would be a complication at the worst possible moment, bearing in mind all EU non-Eurozone central banks, such as the Bank of England, are also shareholders and would be part of the whip-round.

Assuming it survives the embarrassment of its own rescue, the ECB will eventually face a policy choice. It can continue to buy up all loose sovereign and corporate debt to stop yields rising, in which case the ECB will be signalling it has chosen to save the banks and member governments’ finances in preference to the currency. Alternatively, it can try to save the currency by raising interest rates, giving a new and darker meaning to Mario Draghi’s “whatever it takes”. In this case insolvent banks, businesses and the PIGS governments could go to the wall. The choice is somewhat black or white, because any compromise risks both a systemic failure and a collapse in the euro. And there is no guarantee that if the banks fail, the euro will survive anyway.

The ECB is likely to opt for supporting the banks and over-indebted governments, partly because that is the mandate it has set for itself, and partly because experience after the Lehman crisis showed it could expand money supply without destabilising price inflation. But the danger, once it dawns on growing numbers of investors and bank depositors, is stagflation. In other words, rising goods prices, falling asset prices, and interest rates not being allowed to rise enough to break the cycle, all combining to further undermine the euro’s purchasing power.

Financial and economic prospects for the Eurozone have many similarities to the 1972-75 period in the UK, which this writer remembers vividly. Equity markets lost 70% between May 1972 and December 1974, cost of funding was reflected in a 15-year maturity UK Treasury bond with a 15.25% coupon, and monthly price inflation peaked at 27%. There was a banking crisis, with a number of property-lending banks failing, and sterling went through a bad time. The atmosphere became so gloomy, that there was even talk of insurrection.

This time, the prospects facing the Eurozone potentially could be worse. The obvious difference is the far higher levels of debt, which will never allow the ECB to run interest rates up sufficiently to kill price inflation. More likely, positive rates of only one or two per cent would be enough to destabilise the Eurozone’s financial system.

Let us hope that these dangers are exaggerated, and the final outcome will not be systemically destabilising, not just for Europe, but globally as well. But a wise man, faced with the unknown, believes nothing, expects the worst, and takes precautions.

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Financial Armageddon Looms On The Horizon As The EURO UNION IMPLOSION Nears

By IM Vronsky – Re-Blogged From http://www.Gold-Eagle.com

History is testament that an ill-conceived fetus is doomed to a handicapped crippled adulthood. Thusly, many rational pundits perceive the hodge-podge jumbled union of many European nations, known as the Euro Union. But just as oil and water cannot be blended nor melded into a stable liquid, it logically follows that the haphazard mixture of many radically diverse nations are likewise immiscible…and will probably collapse in the not too distant future.

Implosion of the European System

“…Europe is made up of a good number of historically distinct nations whose diversity of political cultures, even though this diversity is not necessarily marked by national chauvinism, has sufficient weight to exclude recognition of a “European People” on the model of the United States “American people.” THIS IS A MUST READ:   http://monthlyreview.org/2012/09/01/implosion-of-the-european-system/ )

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How Stupid Do You Have To Be

By John Rubino – Re-Blogged From http://www.Silver-Phoenix500.com

“Of course, there are true copper-bottomed mistakes, like spelling the word “rabbit” with three m’s, or wearing a black bra under a white blouse, or, to make a more masculine example, starting a land war in Asia.” — John Cleese

We all make mistakes, but some are bigger than others. An example of a serious one that’s both potentially catastrophic and easily avoided is to lend money for long periods during a time of rising debt and financial instability. Who, for instance, would commit capital for 30 years to Italy by buying that country’s long-dated government bonds? “No one” is the sane answer, yet those bonds do find buyers.

Even higher on the crazy scale is the following:

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Why Puerto Rico Defaulted And Greece Did Not

By Michael Pento – Re-Blogged From http://www.Gold-Eagle.com

The Caribbean island of Puerto Rico is in the throes of a debt crisis that recently reached a breaking point when it missed a $422 million bond payment due May 2nd. When asked in a subsequent interview about the likelihood of making future payments on the remaining $72 billion of debt, Puerto Rican Governor Alejandro Garcia Padilla noted that the U.S. territory “does not anticipate having the money.”

Even a cursory review of Puerto Rico’s finances confirms Padilla’s claim of insolvency. The government is expecting deficits to grow from $14-$16 billion over the next five years, and for revenue to fall by $1.7 billion over that same five-year period. To makes matters worse the U.S. territory’s unemployment rate is a lofty 12.2 percent.

The problem is simple:  Puerto Rico’s debt burden is equal to over 100% of its GDP when including the $43 billion worth of unfunded pension liabilities. This situation is exacerbated by falling population growth and perpetually shrinking GDP.

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Brexit Vote

By Alasdair Macleod – Re-Blogged From http://www.Silver-Phoenix500.com

David Cameron, Britain’s Prime Minister, has negotiated terms with the other EU member states, which he feels justified to put to voters in an in/out referendum called for 23rd June. At this early stage in the campaign, the terms are not sufficient to give a clear lead in favour a vote to stay, contributing to a slide in sterling on the foreign exchanges. However, if voters do vote to leave the EU, it won’t be just sterling which suffers, but the euro will face considerable challenges as well.

It is thought that arranging for the referendum to be held at the earliest possible date will limit disaffection with the EU. Within this time-scale, the strategy is to emphasise the dangers of Brexit, highlight the advantages of being able to influence EU policies from within, and to emphasise the security benefits of being in as opposed to out. It is essentially a weak and negative campaign strategy designed to scare the electorate against change. Negative campaigns are a weak strategy, which tend to wane through repetition.

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Sell The Bonds, Sell The Stocks, Sell The House —–Dread The Fed!

By David Stockman – Re-Blogged From http://www.DavidStockmansContraCorner.com

There is going to be carnage in the casino, and the proof lies in the transcript of Janet Yellen’s press conference. She did not say one word about the real world; it was all about the hypothetical world embedded in the Fed’s tinker toy model of the US economy.

Yes, tinker toys are what kids used to play with back in the 1950s and 1960s, and that’s when Janet acquired her school-girl model of the nation’s economy.

But since that model is so frightfully primitive, mechanical, incomplete, stylized and obsolete, it tells almost nothing of relevance about where the markets and economy now stand; or what forces are driving them; or where they are headed in the period just ahead.

In fact, Yellen’s tinker toy model is so deficient as to confirm that she and her posse are essentially flying blind. That alone should give investors pause—-especially because Yellen confessed explicitly that “monetary policy is an exercise in forecasting”.

Accordingly, her answers were riddled with ritualistic reminders about all the dashboards, incoming data and economic system telemetry that the Fed is vigilantly monitoring. But all that minding of everybody else’s business is not a virtue—-its proof that Yellen is the ultimate Keynesian catechumen.

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Q&A with Mr. Silver Market

By GE Christenson – Re-Blogged From http://www.Silver-Phoenix500.com

Q:      Most people do not value silver and prefer to invest in bonds from big governments.  Why?

A:       Most people would prefer to follow the herd because following the herd is comforting and often correct.  Occasionally it is disastrous.  I suspect the next few years will see the herd slaughtered.  (Bubbles always pop and bonds are in a bubble.)

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Q:      Silver has gone down for almost five years.  Will it continue to drop?

A:       Probably not, but if you are stacking for the long term, you care little!  Silver was valuable and minted into coins 2,000 years ago in the Roman era.  It will remain valuable 1,000 years from now, long after the Federal Reserve, the EU, the Bank of Japan, and dollars, yen, euros, and pounds have been forgotten.

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Q:      The global financial system is based on debt and is no longer backed by gold or silver.  Why?

A:       Banks are far more profitable if they are not constrained by a gold standard.  Also politicians can easily spend, buy more votes, and receive payoffs under a fiat paper currency system not backed by gold.  Military contractors profit from the wars that would probably not happen under a gold standard.  Borrow and spend is the “battle cry” of politicians and bankers because it works for them – at least for now.

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Q:      Former Federal Reserve Benjamin S. Bernanke was critical of gold.  Why?

A:       Consider the source, his loyalties, and what he was selling.  Does the Chairman of Wal-Mart encourage people to shop at Target?  Do Ford managers buy Chevys?  Does the Pope advocate for Muslims?  Do US Presidents discourage military adventures or Wall Street?

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The Mark Of The Beast?

By Bill Holter – Re-Blogged From http://www.Gold-Eagle.com

There were many questions to a recent interview I did last Friday (released Sunday) asking about what a “cashless” society would mean so I’ve decided to expand on it.  As it turns out, the timing was very good (by mistake) because over the weekend Europe announced plans to discontinue the 500 euro note.  This was immediately followed on Monday with a trial balloon by Larry Summers calling for the end to the $100 bill.  You can certainly see where they are headed!

First, let’s look at why they want to do this and then move on to what exactly it will mean to you and me.  If we take Larry Summers at his word (something I hesitate to do!), discontinuing the $100 bill will hamper corruption and terrorism.  He also talks about the use of cash for tax evasion purposes.  It is said drug dealers would be put out of business if cash were banned.  Maybe so but then you must ask yourself “who” is at the heart of supply and generates “dark” cash flow for funding?  Wouldn’t this be like shooting yourself in the foot?

As for terrorism, I agree there are some crazies out there who want to do some very radical things.  However, I would ask you the following questions.  How many “terror attacks” have actually been false flags?  And who actually funds some of these terror organizations?  Have you ever “followed the money” to see who actually funds ISIS or even formed Al Qaeda years ago?  Enough said I think.

Now let’s get to the REAL reasons to ban currency.  First and foremost, those in power understand the viability to the current system is now very limited.  In other words, they know the system is going to come down.  On one hand the West has already passed legislation for “bail ins”.  On the other hand, how best would it be best to corral capital into these banks they know will be bailed in?  Now your putting the dots together!

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Euro Bond Crisis Returns As Germany Pushes Euro Sovereign Debt Bail-in Clause

By Mark O’Byrne – Re-Blogged From http://www.Silver-Phoenix500.com

European Banks holding European sovereign debt may have to take haircuts and be part of bail in plans should that same debt default, according to a plan being pursued by German government advisers. In another attempt to shelter German tax payers from the largess and excess of fellow European neighbouring countries’ national banks, the move could trigger a run on billions of euro of sovereign debt of said banks. In an article penned by the Telegraph’s Ambrose-Evans Pritchard, one of the council’s dissenting members describes the plan as the “fastest way to break up the Eurozone”.

The plan, by The German Council Of Economic Experts, calls for banks to be bailed in should losses occur from a sovereign default before the European Stability Mechanism steps in to stabilise the situation.

Italian and Spanish banks hold vast amounts of their national government debt; in Italy’s case they are supporting the Italian treasury. Should that debt default, which is a very real possibility, then Italian banks would have to take significant losses first, only then would the ESM be allowed to step in.

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