All ASSET BUBBLES MUST BURST… Today’s guest, John Rubino, shares his thoughts on why this current bubble economy has lasted so long. During our chat he elaborates on how Central Banks and Governments are trapped into experimenting with more ways to keep the economy afloat. Unfortunately, the music has to stop at some point and the only people that will be left standing will be holders of sound money.
In this update we are going to review a small but important range of commodities / lead indicators which strongly suggest that the seemingly endless bullmarket in US equities is living on borrowed time and will end sooner rather than later, and given how long it has lasted and how extremely overvalued it has become, the downturn will likely start with a crash phase.
Regardless of what the eventual impact of the Coronavirus epidemic is, US stockmarkets in particular seem to be in a state of denial about the actual real-world consequences of the Chinese shutdown and impact on the global supply chain and corporate profitability everywhere, and some elements even seem to be gloating about China’s misfortune and predicament, completely oblivious to the fact that this is going to have a negative impact on almost everyone.
There are no safe assets. In 2002 we recommended our investors to hold up to 50% of their financial assets in physical gold. Today in 2020, I consider that up to 100% is the right figure since there are no safe assets except for physical precious metals.
We are now at the end of the only truly global asset bubble in history, fuelled by a debt explosion of epic proportions. Never before have all major economies peaked together, powered by quadrillions of credit creation, money printing and derivatives.
UBER-OPTIMISTIC INVESTORS WILL BE SHOCKED
Although the magnitude of this bull market is greater than anything seen before, the psychology of the current market is similar to previous speculative bubbles whether we take 1929, 1973, 1987, 1999 or 2007. At the stock market peak of these periods, psychology reached uber-optimism. In 1929 for example, the Yale economist Irving Fisher stated in the New York Times: “Stock prices have reached what looks like a permanently high plateau”. Three years later the Dow had lost 90%.
One of the advantages of being a sexagenarian is that after forty years investing in stocks, bonds, commodities, and currencies you have a pretty good idea when something is not exactly “right.” If you have lived a good, normal life and you still have decent control of over your mental faculties and bodily functions, you remember moments in time that impacted your sensibilities, not unlike your first crush on a girl, or that final exam, or an authoritarian coach’s dressing-down.
However, given my chosen profession, nothing gets more indelibly etched into one’s psyche than a big price “move” in something one owns. Be it a loss or a win, one can recall all the inputs that created that “move” and, sometimes elatedly and sometimes sadly, one can recall all of the ramifications and repercussion from the “move.” You will, later in life, regale in the joy (or sorrow) of recounting the story of the “move” until people roll their eyes in angst upon being subjected to their ninth or tenth serving.
By Clint Siegner, Money Metals News Service – Re-Blogged From Headline Wealth
The U.S. Department of Justice investigation of criminal activity in the precious metals markets has taken an interesting new turn.
According to Bloomberg, prosecutors are targeting the bank itself and not just the individual traders involved in rigging prices. If convicted, the bank as an institution could be held accountable for years of structured and pervasive cheating.
The DOJ investigation of JPMorgan’s metals trading desk began more than two years ago. It came on the heels of a guilty plea by Deutsche Bank.
Deutsche Bank copped to spoofing prices and agreed to turn state’s evidence. DB then handed over hundreds of thousands of pages of documents, along with chat logs and voice recordings which featured traders gleefully conspiring with one another to cheat clients and other market participants.
This is probably the most important article I have penned. It is about the destiny of three individuals who all followed different tides. We are today at the point when the consequences of taking the wrong tide will be ruinous whilst the right one will be extremely propitious.
I have quoted Brutus’ speech in Shakespeare’s Julius Caesar many times in the last twenty years. But I believe that it is today more relevant than at any time in history, when it comes to economic affairs.
There is a tide in the affairs of men.
Which, taken at the flood, leads on to fortune;
Omitted, all the voyage of their life
Is bound in shallows and in miseries.
On such a full sea are we now afloat,
And we must take the current when it serves,
Or lose our ventures.
Shakespeare – Julius Caesar
The moral of the story will be obvious. The outcomes are so vastly different that anyone who reads about the three human destinies below will easily sympathise with the one who took the tide that “leads to fortune” rather than the two who ended up “in miseries.”
Intense sunshine beamed down upon the canyons of Wall Street, illuminating potholes, dark alleys, secrets and mass delusions. Most people paid no attention because phones, the impeachment circus, Facebook posts, stock prices, and money worries distracted them.
It was a normal day. I took a random walk down Wall Street, checked my phone for useless news and accidentally stepped into a cosmic wormhole or time-warp.
Perhaps it was only a deep hole in the sidewalk. Like Alice, I fell head over heels, and dropped my precious phone. My New York financial world faded, and blackness enveloped me.
To my surprise, I landed softly on my feet in a huge underground cavern with marble floors and dim glowing lights. Stunned by the silence instead of New York street noise and pollution, I stared in awe at the blemished walls of the cavern. It smelled like ancient mold and burnt toast.