Historic Week for Wall Street, Gold Market as Dollar Slides Toward “Junk”

Wild price action and unprecedented interventions once again characterized this holiday-shortened trading week.

Oil prices whipsawed lower Thursday on concerns about expected oil production cuts from Russia and Saudi Arabia. But the general trend for most other assets, including metals and equities, was up – way up.

Stocks finished out the week with the major averages posting their biggest weekly gains in decades in the space of just four trading days. Investors went on a buying spree based on hopes that we will soon see a definitive peak in coronavirus cases and begin the process of restarting the economy.

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A Look At Futures Contracts

Mark J Lundeen – Re-Blogged From Gold Eagle

Every bull market advance eventually sees its last all-time high. No one rings a bell when it happens, but from that point on things begin to change for the worse for the bulls.

The Dow Jones’ BEV chart below begins at the -54% bear-market bottom of the 2007-09 credit crisis. We don’t see a -54% BEV value as I began this series on the March 09, 2009 bear-market bottom. So instead we see a 0.00%, as the first data point of all BEV series begins at zero percent.

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Fed Encourages Runaway Debt as “Minsky Moment” Approaches

By Clint Siegner – Re-Blogged From Gold Eagle

Federal Reserve officials like to pretend they can use interest rates like a motorcycle throttle on the U.S. economy. They can either rev things up by dropping interest rates or slow things down by moving rates higher.

The public has been led to believe the central planners can do whatever is needed with rates to keep things purring along.

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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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Economic Stagnation

By Gerald Peters – Re-Blogged From http://www.Silver-Phoenix500.com

So we have once again seen official reports about sub-par economic growth. Some are constantly perplexed as to why growth is so weak. I believe it will eventually become more obvious to everyone that debt is one of the major problems causing our current stagnation.

Looking at the above chart, we see GDP growth rates have been getting weaker each decade. The economy used to grow at 7 or 8 %…then 5 or 6%…then 4%…then 3%. Currently. There is only 2% growth. Moreover, after the next recession we will be lucky to see 1% growth as the norm. Follow the trend and we see that the US economy will probably be at 0% economic growth after 2030. To be sure after 2040 we will probably see negative growth as the norm. By the way, the chart of retail sales growth looks the same. This trend has continued regardless of which political party controls the White House or Congress.

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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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What’s Different About Monetary Policy?

By Keith Weiner – Re-Blogged From http://www.Gold-Eagle.com

Many people agree that it’s important to move to a free market in money (i.e. the gold standard). They also say that it’s just as important to fight bad taxes and regulation. In their view, government interference in the economy is like friction in a car. The more friction you add, the slower the car goes. One source of friction is much the same as any other.

Let me explain why it doesn’t quite work that way, using a few examples.

Suppose the government imposes an expensive tax on employers based on the number of full-time employees. Full time is defined as working at least 30 hours per week. Employers respond to this tax by reducing the hours of as many employees as possible below the threshold. The law still harms employers, but less than intended. If the law were a bullet aimed at the chest of the employer, it ends up causing a flesh wound.

Another example is a law that makes it illegal for startup companies to pitch their deals to non-accredited investors. Accredited investors form organized groups that entrepreneurs can safely go to and raise capital. It’s cumbersome, and it leaves some entrepreneurs out in the cold, but as with the employer tax, everyone works to minimize the damage.

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December FED Rate Hike?

cropped-bob-shapiro.jpg   By Bob Shapiro

It looked as if the FED had decided to go all in with money printing. And, it looked like the FED officials were lying through their teeth with all the jawboning since Janet Yellen became FED Chief. Not only was the FED continuing with ZIRP and QE money expansion, but also Negative Interest Rates. But something may have changed the last couple of weeks.

Since a month ago, interest rates have gone up. It’s not enough to call it a spike, but up nonetheless.

US Treasury Yields 110815

Short rates – on 3 month T-Bills – went from a low of -0.04% to a recent high of 0.06%, although they have settled back a little to 0.04%. However, over the rest of the yield curve, from 6 mo and 2 year up to the 10 and 30 year maturities, yields are up by a quarter percent or more.

The odds of the FED actually raising rates “officially” at their December meeting, are starting to look good.

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Silver’s Deep Undervaluation

By Adam Hamilton – Re-Blogged From http://www.Silver-Phoenix500.com

Silver is finally showing some signs of life after suffering a dark year.  The epically-bearish sentiment that bludgeoned this metal to major secular lows is cracking, with a strong rebound rally now underway.  And this recent buying is likely just the earliest vanguard, as silver remains deeply undervalued relative to its primary driver gold.  Silver will need an utterly massive upleg to fully mean revert to normal levels.

Silver has been out of favor for a long time, the last few years.  And 2015 didn’t give beleaguered silver investors much hope.  By late August, July’s extreme gold-futures shorting attack had dragged silver down to a major 6.0-year secular low.  Down 9.9% year-to-date at that dark nadir, silver was left for dead by traders.  The despair was real, as it certainly felt like silver was doomed to keep grinding lower forever.

Silver’s slumber was certainly vexing, but this metal was way overdue for a rebound rally as I predicted at the time.  And indeed that’s come to pass.  Since silver’s dismal lows in late August, this metal has surged 14.4% at best.  Fully 4/5ths of these impressive gains came in the first two weeks of October alone.  This strong rally blasted silver above its 50-day moving average to challenge its critical 200dma.

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It’s The US Dollar, Stupid!

By Ed Bugos – Re-Blogged From http://www.Gold-Eagle.com

Don’t let the bull-tards tell you the stock market over here is falling because of China’s problems, or Grexit, or fear of the nebulous Fed rate hike. We’ll just see about that last one now anyway!

The US asset bubble is the biggest one on the planet today, and it just went pop. The currency too has rallied over the past few years on the fairy tale that everyone else is inflating while the US is about to tighten, which may have been more plausible if they just started telling it now, and the dollar had not yet gained 65% on the Yen, 35% on the CAD, 30% on the Euro or 25% against a basket of trade weighted currencies -on exactly that story. They have been talking that game for a long time in fact. The worst part about it is that it hasn’t been true, at least not until now. The Fed has expanded money the most in the post 2008 environment -more than the ECB, more than the BOC, BOE, SNB, RBA, and probably more than the BOJ if my suspicions are correct.

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The Rise Of The Paper Machines

By Gary Christenson – Re-Blogged From http://www.Gold-Eagle.com

Since 2011 the financial markets have been dominated by rises in paper markets and declines in commodity markets.

Group One Paper Examples:  T-Bonds, US Dollar Index, S&P 500 Index

Group Two Commodity Examples:  Crude Oil, Sugar, Wheat, Gold, Silver

Group One markets are “paper” markets in fiat debt, fiat currency, and paper equities.  They are heavily influenced by “money printing,” Quantitative Easing, High-Frequency-Trading, futures, central banks, and political agendas.

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China vs the 1930s US

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

Many people believe the Chinese are on the cusp of replacing the U.S. in many fashions, I believe this myself.  There are others out there who believe the Chinese economy and financial markets will crash and burn with all the rest when the derivatives chain finally breaks, I don’t disagree with this either.  Let’s look at what the Chinese have done, what they are doing and where they may end up.  The spoiler is this, I believe you can equate the Chinese to where the United States stood in the late 1920′s and early 1930′s.

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Trading The Parabolic Dollar

By Adam Hamilton – Re-Blogged From http://www.Gold-Eagle.com

The mighty US dollar has been red-hot in March, rocketing higher on the incredible divergence of major central-bank policies.  While the Federal Reserve’s first rate-hike cycle in 9 years looms, the European Central Bank has started aggressively monetizing sovereign debt for the first time ever.  The resulting yield differential has catapulted the dollar parabolic, portending a major reversal and fantastic trading opportunity.

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The Euro May Be Riskier Than You Think

By Alasdair Macleod – Re-Blogged From http://www.Silver-Phoenex500.com

Finance ministers in the Eurozone appear to have had a free lesson in game theory from Professor Yanis Varoufakis, the Greek finance minister. At the time of writing Greece’s future in the Eurozone is far from secured, but it appears that Greece has achieved something.

He gave his fellow finance ministers a deal they dared not refuse, though it still has to be ratified by some parliaments, including Germany’s today. Varoufakis almost certainly understands that the Eurozone is in a weaker position than the bureaucrats and finance ministers themselves believed. It was important for them to become aware of this reality, which was central to his approach.

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Duck Quacks And Golden Echo’s

By Rick Mills – Re-Blogged From http://www.Gold-Eagle.com

The US Dollar, on a slippery slope for years, has reversed and broken out against every major currency and developing economy currency. A global wide quantitative easing (QE) is happening. Almost every central bank (Sweden’s Riksbank became the 14th central bank to ease monetary policy in 2014) is now creating money as fast as they can potentially leading to a global liquidity storm.

A strong dollar helps Americans by making imports cheaper and curbing inflation –  U.S. import prices fell 2.8% in January, are now down 8% yoy and January’s consumer price inflation is expected to be less than 1%.

However a strong US$ hurts U.S. based multinationals who have overseas earnings in those very same currencies that have taken such a severe beating versus the soaring U.S.$.

Over 85% of companies have lowered guidance for 2015 and the S&P 500 looks ready to turn over – despite

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Countdown To “Grexit”

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

After declining for an incredible 47 of the past 51 days, the Baltic Dry Index has officially breached its all-time low of 554 – set in 1986, 29 years ago. Sure, propagandists will try to blame tanker “oversupply” rather than plunging end user demand – just as they blame the catastrophic oil price plunge on “oversupply” of high cost oil, rather than said “under-demand.” However, the fact remains that both the Baltic Dry Index and oil price are freefalling – in both cases, catalyzing massive corporate and investment losses; layoffs; and defaults.

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Choosing Sides In The Eurozone Mess

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

This past week was filled with geopolitics 24/7 until Friday, when they finally spilled all over the markets. The market action was extremely ominous in my opinion and especially the last hour into the close. Very shortly I believe we will be faced with huge market “gaps” which will be the topic for tomorrow, today let’s discuss how the current geopolitical situation will detonate the leverage.

It’s not as if the geopolitical situation wasn’t already hot enough before the Greek vote, now the world has a polarizing event to deal with.  This past week was

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Business Cycles and Government Decisions

cropped-bob-shapiro.jpg   By Bob Shapiro

Economic conditions tend to run in cycles. Pressures build, official efforts are made to contain any perceived bad effects, and at some point, the pressures overwhelm all opposition. The cave-in frequently, but not always, sets pressures in motion in the opposite direction.

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The Dollar in FOREX Markets

cropped-bob-shapiro.jpg   By Bob Shapiro

The paper currencies of all countries fluctuate in exchange rate for several reasons, mostly (but not always) due to government policies.

The exchange rate for the Euro (since 1999 when the Euro was introduced) vs the US Dollar, started around $1.18, dropped to $0.83 in 2001, jumped up to $1.60 in 2008, and now is back just below where it started, today at $1.1275 per Euro.

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Creating 35 Million New Jobs

cropped-bob-shapiro.jpg   By Bob Shapiro

According to the Bureau of Labor Statistics (BLS), the US has 156 million people 16 and over, who make up the civilian labor force – 8.7 million of these are out of work. If you add in those Americans who are working part time but want full time and those Americans who have given up hope of finding any job, there are closer to 35 million Americans either unemployed, work part time because they can’t find a full time job, or have given up hope of finding any job.

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Gold Stocks

cropped-bob-shapiro.jpg   By Bob Shapiro

I have been following the monetary metals, Gold and Silver, for over 40 years, as the US government and the FED have debased our currency, the US Dollar. Other countries also make bad choices with most governments on Earth spending more than their income (through taxes). Even the Little Country That Could, Switzerland, gave up Gold backing of their Franc several years ago, and in a recent referendum, Swiss voters defeated a proposal which would have required the Central Bank to buy enough Gold to give the Franc only a 20% backing.

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The End of the Dollar Standard

cropped-bob-shapiro.jpg   By Bob Shapiro

The Eurozone can be thought of as a 2-tier confederation. The northern countries have stronger economies, have trade surpluses, and have lower debt to GDP. The southern countries – often referred to as the PIIGS (Portugal, Ireland, Italy, Greece, and Spain) – have been in and out of economic crisis after crisis for many years.

A few years ago, I was in preliminary contact with the government of Portugal. I prepared a 24 page report for them outlining how they could reverse the tailspin that the country was in.

One feature of my plan was for them to build up their holdings of Gold

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Dollar Competitiveness – Part II

cropped-bob-shapiro.jpg   By Bob Shapiro

We saw yesterday that, although the Dollar has been strong versus the currencies of our trading partners, over the long haul – 60 years – Americans have been savaged by our government’s policies which have caused this fall in the Dollar’s international purchasing power. This fall is on top of the rise in prices domestically – the CPI increases.

Today we look at who wins and who loses by a cheapening Dollar and by the policies which cause it.

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Dollar Competitiveness – Part I

cropped-bob-shapiro.jpg   By Bob Shapiro

The US Dollar has been “strong” on foreign exchange markets for the past six months, with the USD Index having risen from 79 to 88, a gain of almost 11½%. That’s an increase in the value of the Dollars in your pocket (or bank account) compared to the currencies of our major trading partners around the world. If the value of your money could grow at a 23% annual rate year after year, you’d be rich in no time flat.

US Dollar 111614

Alas, this is not the way the world works. The Dollar got down to 79

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