Hillary Almost Proposed ‘A Universal Basic Income’ In 2016, And The Idea Is Catching Fire Among Grassroots Democrats

Should you get free money from the U.S. government every month simply for being alive?  That may sound like a crazy idea to many of us, but the truth is that this will likely be one of the biggest political issues in the 2020 presidential election.  At this point, 40 percent of all Americans already “prefer socialism to capitalism”, and the concept of a “universal basic income” is starting to catch fire among grassroots Democrats.  Many liberals are convinced that the time has come to fight for the right to “a minimum standard of living”, and one study by a “left-leaning” group found that giving every adult in the country $ 1,000 each month would increase the size of the U.S. economy by more than 2 trillion dollars

Giving every adult in the United States a $ 1,000 cash handout per month would grow the economy by $ 2.5 trillion by 2025, according to a new study on universal basic income.

The report was released in August by the left-leaning Roosevelt Institute. Roosevelt research director Marshall Steinbaum, Michalis Nikiforos at Bard College’s Levy Institute, and Gennaro Zezza at the University of Cassino and Southern Lazio in Italy co-authored the study.

What an incredible idea, eh?

All we have to do is give out free stuff and the economy grows like magic.  And the study also discovered that the larger the universal basic income is, the more the economy would grow.

So why not make it $ 10,000 a month for everyone?

Well, it turns out that there is a catch.  According to the study, the economy only grows if the universal basic income is funded by deficit spending.  If we have to raise taxes to pay for it, there is no positive benefit to the economy at all

These estimates are based on a universal basic income paid for by increasing the federal deficit. As part of the study, the researchers also calculated the effect to the economy of paying for the cash handouts by increasing taxes. In that case, there would be no net benefit to the economy, the report finds.

Oh.

What a bummer.

Getting free stuff from the government always sounds like a great idea until you realize that we are going to end up paying for it one way or another.

Unfortunately, that little detail isn’t stopping potential Democratic presidential candidates such as Mark Zuckerberg from “exploring” the idea.  And actually, it is being reported that Hillary Clinton almost made a “universal basic income” part of her platform in 2016

In her new book “What Happened,” and in a recent subsequent interview with Vox Editor-in-Chief Ezra Klein, Clinton explains how she seriously considered including a version of universal basic income — a radical solution to poverty, currently being tested in cities and countries around the world — as one of her platforms in the 2016 US presidential election.

The platform would have been called “Alaska for America,” in homage to the state’s Permanent Dividend Fund. Every year since 1982, Alaskans have received a yearly check — typically ranging from $ 1,000 to $ 2,000 — as a kickback from the pot of money that has been set aside in case oil reserves dry up.

If the left is ever able to get this implemented, do you think that we will ever be able to take it away?

Over time, government just keeps getting bigger and bigger and so does our national debt.  In fact, we just hit a major milestone in that regard.  According to CNS News, we just surpassed the 20 trillion dollar mark for the first time ever…

The federal debt officially surpassed $ 20 trillion for the first time on Friday, as the debt subject to the legal limit set by Congress jumped $ 317,645,000,000 in one day–following President Donald Trump’s signing of a spending-and-debt-limit deal that will fund the government through Dec. 8.

If the left wants a “universal basic income”, they are going to have to get the money from somewhere.  Our budget deficit is already larger “than the entire GDP of Argentina”, and hard working Americans are already being taxed to death.

The truth is that the money simply isn’t there.  As it is, we need to dramatically cut back our borrowing because the path that we are currently on leads to national suicide.  Just consider the following numbers

Here’s the problem: the national debt is growing MUCH faster than the US economy. In Fiscal Year 2016, for example, the debt grew by 7.84%.

Yet even when including the ‘benefits’ of inflation, the US economy only grew by 2.4% over the same period.

This is not even close to the realm of being sustainable.  We are steamrolling toward an inevitable financial collapse, and yet most Americans don’t seem to care.

And thanks to our rapidly aging population, our entitlement spending is set to absolutely explode in coming years.  The following comes from David Stockman

The Federal spending machine is almost entirely on autopilot and heading for disaster owing to ballooning populations and debt. Ten years from now the combined cost of mandatory programs and debt service will reach $ 5.12 trillion compared to just $ 2.87 trillion during FY 2018.

Entitlement spending will be nearly double — even if Congress took a 10-year recess!

As shown below, that means the Federal spending share of GDP is now inexorably climbing toward 30% owing to baby boom retirements, even as revenue under current law is stuck at about 18% of GDP. The CBO’s latest projection of the widening fiscal gap — soon more than 10% of GDP annually — leaves nothing to the imagination.

There is no such thing as “free money”.  In the end, we all have to pay for any “free stuff” that the government gives out.

But the “free stuff army” is going to continue to demand more free stuff from the government, and the Democrats are going to be more than happy to give it to them.

To many of you this may sound like complete and utter insanity, but the truth is that the path that we are already on is completely insane as well.  If we don’t find a way to right the ship, it is just a matter of time before it goes under, and anyone that tries to tell you otherwise is not being straight with you.

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

The Economic Collapse




11 Facts That Prove That The U.S. Economy In 2017 Is In Far Worse Shape Than It Was In 2016

There is much debate about where the U.S. economy is ultimately heading, but what everybody should be able to agree on is that economic conditions are significantly worse this year than they were last year.  It is being projected that U.S. economic growth for the first quarter will be close to zero, thousands of retail stores are closing, factory output is falling, and restaurants and automakers have both fallen on very hard times.  As economic activity has slowed down, commercial and consumer bankruptcies are both rising at rates that we have not seen since the last financial crisis.  Everywhere you look there are echoes of 2008, and yet most people still seem to be in denial about what is happening.  The following are 11 facts that prove that the U.S. economy in 2017 is in far worse shape than it was in 2016…

#1 It is being projected that there will be more than 8,000 retail store closings in the United States in 2017, and that will far surpass the former peak of 6,163 store closings that we witnessed in 2008.

#2 The number of retailers that have filed for bankruptcy so far in 2017 has already surpassed the total for the entire year of 2016.

#3 So far in 2017, an astounding 49 million square feet of retail space has closed down in the United States.  At this pace, approximately 147 million square feet will be shut down by the end of the year, and that would absolutely shatter the all-time record of 115 million square feet that was shut down in 2001.

#4 The Atlanta Fed’s GDP Now model is projecting that U.S. economic growth for the first quarter of 2017 will come in at just 0.5 percent.  If that pace continues for the rest of the year, it will be the worst year for U.S. economic growth since the last recession.

#5 Restaurants are experiencing their toughest stretch since the last recession, and in March things continued to get even worse

Foot traffic at chain restaurants in March dropped 3.4% from a year ago. Menu prices couldn’t be increased enough to make up for it, and same-store sales fell 1.1%. The least bad region was the Western US, where sales inched up 1.2% year-over-year and traffic fell only 1.7%, according to TDn2K’s Restaurant Industry Snapshot. The worst was the NY-NJ Region, where sales plunged 4.6% and foot traffic 6.3%.

This comes after a dismal February, when foot traffic had dropped 5% year-over-year, and same-store sales 3.7%.

#6 In March, U.S. factory output declined at the fastest pace in more than two years.

#7 According to the Bureau of Labor Statistics, not a single person is employed in nearly one out of every five U.S. families.

#8 U.S. government revenues just suffered their biggest drop since the last recession.

#9 Nearly all of the big automakers reported disappointing sales in March, and dealer inventories have now risen to the highest level that we have seen since the last recession.

#10 Used vehicle prices are absolutely crashing, and subprime auto loan losses have shot up to the highest level that we have seen since the last recession.

#11 At this point, most U.S. consumers are completely tapped out.  According to CNN, almost six out of every ten Americans do not have enough money saved to even cover a $ 500 emergency expense.

Just like in 2008, debts are going bad at a very alarming pace.  In fact, things have already gotten so bad that the IMF has issued a major warning about it

In America alone, bad debt held by companies could reach $ 4 trillion, “or almost a quarter of corporate assets considered,” according to the IMF. That debt “could undermine financial stability” if mishandled, the IMF says.

The percentage of “weak,” “vulnerable” or “challenged” debt held as assets by US firms has almost arrived at the same level it was right before the 2008 crisis.

We are seeing so many parallels to the last financial crisis, and many are hoping that our politicians in Washington can fix things before it is too late.

On Monday, the most critical week of Trump’s young presidency begins.  The administration will continue working on tax reform and a replacement for Obamacare, but of even greater importance is the fact that if a spending agreement is not passed by Friday a government shutdown will begin at the end of the week

Trump has indicated that he wants to tackle the repeal and replacement of Obamacare and introduce his “massive” tax plan in the next week, all while a shutdown of parts of federal government looms Friday.

By attempting three massive political undertakings in one week, investors will have a sense of whether or not Trump will be able to deliver on pro-growth policies that would be beneficial for markets.

If Trump can pull off the trifecta, it could restore faith that policy proposals like tax cuts and infrastructure spending are on the way. If not, look out.

Members of Congress are returning from their extended two week spring vacation, and now they will only have four working days to get something done.

And I don’t believe that they will be able to rush something through in just four days.  The Republicans in Congress, the Democrats in Congress, and the Trump administration all want different things, and ironing out all of those differences is not going to be easy.

For example, the Trump administration is insisting on funding for a border wall, and the Democrats are saying no way.  The following comes from the Washington Post

President Trump and his top aides applied new pressure Sunday on lawmakers to include money for a wall on the U.S.-Mexico border in a must-pass government funding bill, raising the possibility of a federal government shutdown this week.

In a pair of tweets, Trump attacked Democrats for opposing the wall and insisted that Mexico would pay for it “at a later date,” despite his repeated campaign promises not including that qualifier. And top administration officials appeared on Sunday morning news shows to press for wall funding, including White House budget director Mick Mulvaney, who said Trump might refuse to sign a spending bill that does not include any.

And of course the border wall is just one of a whole host of controversial issues that are standing in the way of an agreement.  Those that are suggesting that all of these issues will be resolved in less than 100 hours are being completely unrealistic.  And even though the Trump administration is putting on a brave face, the truth is that quiet preparations for a government shutdown have already begun.

The stage is being set for the kind of nightmare crisis that I portrayed in The Beginning Of The End.  The stock market bubble is showing signs of being ready to burst, and an extended government shutdown would be more than enough to push things over the edge.

Let us hope that this government shutdown is only for a limited period of time, because an extended shutdown could potentially be catastrophic.  In the end, either the Trump administration or the Democrats are going to have to give in on issues such as funding for Obamacare, the border wall, Planned Parenthood, defense spending increases, etc.

It will be a test of the wills, and it will be absolutely fascinating to see who buckles under the pressure first.

The Economic Collapse




China Net Imported 1,300t Of Gold In 2016

BullionStar

China-Gold-2015-355x355

For 2016 international merchandise trade statistics point out China has net imported roughly 1,300 tonnes of gold, down 17 % from 2015. The importance of measuring gold imports into the Chinese domestic gold market – which are prohibited from being exported – is to come to the best understanding on the division of above ground reserves in and outside the Chinese domestic market. 

Kindly be advised to have read my posts the Mechanics Of The Chinese Domestic Gold Market. If segments in this post are unclear please click the links provided.

The last bits of data are coming in from the countries that export gold to China, with which we can compute the total the Chinese have imported in 2016. There are four main gold exporters to China, which are Hong Kong, Switzerland, the UK and Australia (it’s not publicly disclosed how much South Africa exports directly to China ). Let’s start discussing the largest gold exporter to China.

Hong Kong

Since 2011 when the gold price slowly started to decline and China embarked importing gold at large, Hong Kong has been the main conduit to the mainland. According to data by the Hong Kong Census And Statistics Department (HKCSD) the special administrative region net exported 771 tonnes of gold to China in 2016, ranking first once again. Net exports were down 10 % compared to 2015.

Hong kOng China gold trade yearly

As I mentioned in November 2016 there were rumors that part of the bullion exports from Hong Kong to China were fake – over-invoiced to move capital out of the mainland – which overstated the flow of gold into China. Let’s investigate if the data by the HKCSD can substantiate this rumor. The net amount of bullion going from Hong Kong to China is the residual of exports (materials lastly fabricated in Hong Kong) plus re-exports (materials not altered in any way, shape or form but merely re-distributed by Hong Kong) minus imports (materials imported into Hong Kong from China through processing trade). If one is to engage in over-invoicing exports from Hong Kong are more suitable than re-exports, because the origin of exports are harder to track. For re-exports the origin of the material must be recognized by the HKCSD, which makes any illegal scheme more difficult to conceal.

Hong Kong China gold monthly

Notable is that from February through August 2016 there was an increase of gold exports relative to re-exports from Hong Kong to China (see dark green bars in the chart above). Usually the shipments from Hong Kong to China are re-exports, so the increase in exports was remarkable. But the HKCSD data is no hard evidence any transfers were overstated.

In another example: if we look at the composition of Hong Kong’s export and re-export to the UK in 2016, we can see something similar, the majority were exports.

Hong Kong UK gold trade

I doubt Hong Kong’s flow of gold to the UK has been overstated; UK residents have no motive to surreptitiously move capital abroad. And if the data on Hong Kong’s shipments to the UK are accurate, why can’t the data on Hong Kong’s shipments to China be accurate? Thereby, the Chinese customs department is not retarded. I’m quite sure the Chinese customs department is aware of over-invoicing schemes and as a consequence it can strictly monitor cross-border gold flows. My conclusion is that net shipments from Hong Kong to China in 2016 have likely been close to 771 tonnes. If I do ever find hard evidence it was less I will report accordingly.

Switzerland

Most likely Hong Kong’s position as the largest gold exporter to China will slowly fade in the coming years, as the State Council is stimulating gold freight to go directly to Chinese cities (hoping the Shanghai International Gold Exchange will eventually overtake Hong Kong’s role as the primary gold hub in the region). Consequently, gold exports to China are increasingly bypassing Hong Kong.

In December 2016 we got a preview of what is about to come: Switzerland net exported an astonishing 158 tonnes directly to China, up 418 % from November 2016, up 168 % from December 2015, and 106 tonnes more than what Hong Kong did.

China Switzerland Hong Kong China gold import export

It will take more time before Hong Kong’s role as supplier to China is fully over though. In the past years a significant part of gold exports to China has been used to quench Chinese jewelry demand. The core of the Chinese jewelry manufacturing industry is located in Shenzhen, which is right across the border from Hong Kong. But as far as I know there aren’t many flights going directly from Switzerland, Australia or the UK to Shenzhen yet. Hong Kong on the other is well connected; so in the near future Hong Kong’s airport is more convenient to supply gold from abroad to Chinese jewelry manufacturers.

Screen Shot 2017-02-13 at 12.50.56 pm

In total the Swiss net exported 442 tonnes directly to China mainland in 2016, up 53 % from 288 tonnes in 2015.

The United Kingdom

Direct gold shipments from the UK to China have been tepid in 2016. Only 15 tonnes have been net exported to the mainland over this time horizon. Noteworthy though, in December 2016 the UK exported 172 tonnes to Switzerland, which in turn moved 158 tonnes to China – as I mentioned in the previous chapter. So although the UK didn’t directly export metal to China in December, it sure was the main supplier.    

Uk gold china switzerland

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The gold price and the UK net flow remain correlated.

Australia

Not all data from the Australian Bureau of Statistics (ABS) has been released for 2016, but from what we have Australia seems to have exported less to China than in 2015. From January through September direct shipments amalgamated to 53 tonnes, while Australia directly net exported 78 tonnes to China over the same months in 2015. (ABS has notified me they changed the way how they disclose gold export data, but they failed to clarify the details. Until I get more information I will stick to my own formula to compute Australia’s direct export to China, which was confirmed to be accurate by ABS early 2016.)

It can be Australia’s direct exports where strong in last three months of 2016 as the price of gold went down over this period and the Chinese increase gold purchases on a declining gold price.

Final Notes

Combining gold trade data by Hong Kong, Switzerland, the UK and Australia, reveals China has imported at least 1,281 tonnes in 2016. Though this figure excludes Australia’s exports for October, November and December, so I’m estimating total Chinese gold import will reach roughly 1,300 tonnes.

Largest Gold Exporters to China

According to the data at my disposal there have been practically zero tonnes of gold imported from China by other nations across the globe than the ones discussed above. Signalling there is very little gold being exported from the Shanghai International Gold Exchange (SGEI) located in the Shanghai Free Trade Zone. Possibly foreign central banks buy gold on the SGEI and ship it home as monetary gold which doesn’t show up in any customs reports. However, in the history of the SGE/SGEI a mere 3 tonnes has been traded in 12.5 Kg bars, all the rest was in smaller bars, mainly 1 Kg. And I assume central banks would prefer large bars. All in all I think that up till now the SGEI has mainly been used by Chinese banks to import gold from the Shanghai Free Trade Zone into the domestic market.

Weekly Volume 12 Kg Bars Traded On SGE

Total gold supply in China in 2016 was at least 1,753 tonnes (domestic mine output was 453 tonnes plus 1,300 tonnes import) while the China Gold Association discloses consumer demand at 975 tonnes. Meaning, Chinese institutional demand was at least 778 tonnes ( 1,753 minus 975), depending on the amount of scrap supply and disinvestment.

A few weeks ago I estimated Chinese gold import 2016 would aggregate to 1,300 tonnes, to which I calculated 5,000 tonnes of gold have been moved into the Chinese domestic market from 2007 through 2016 on top op the imports to satisfy Chinese consumer demand. In my post The West Has Been Selling Gold Into A Black Hole I explain how I think this will strengthen a forthcoming gold bull market.

chinese-gold-supply-and-demand

Last but not least: SGE withdrawals for January 2017 came in at 184 tonnes, down 18 % from January 2016.

Shanghai Gold Exchange SGE withdrawals January 2017

That’s all folks!

The post China Net Imported 1,300t Of Gold In 2016 appeared first on Koos Jansen.

Koos Jansen




What Changed in 2016… and What Didn’t

rodneyI try to stay away from financial news on the television. All that yelling and hype makes me tired, and I realize later that it was mostly meaningless. I know they must make everything sound like it will change the world to keep viewers tuned in, but I have better ways to spend my time.

Instead, I read a lot, from varying sources, so that I can bring the best information and analysis to you. In addition to Economy & Markets, I also write a weekly publication called the Dent Digest, which is distributed to our subscribers. In it I try to bring together the relevant stories of the week, including both the well-known and the not-so-obvious.

As the year draws to a close, I find myself asking what really changed over the last 12 months. So I perused my Dent Digest issues for the year.

Beyond the personal (kids got older, I turned 50, we became empty-nesters, etc.) and the political (Trump and GOP Congressional control), there were a few overriding economic themes in 2016.

Some things changed, but others stayed the same.

What Changed

The Brexit vote changed the course of history. After many wars on the Continent, European leaders developed economic cooperation as a way to bind their futures together, hoping to make armed conflict a thing of the past.

It worked.

Outside of small, but still deadly, conflicts in Eastern Europe, the past 70 years have been among the most peaceful in European history.

But the cooperation led to super-national organizations that could force policies on member nations. That might sound great to the bureaucrats that meet in nice hotels, but everyday citizens aren’t so keen on having people that never visit their cities or provinces telling them how to regulate their businesses.

The pushback on the EU was a long time coming. Britain was always the unruly child in the brood, but the Brits won’t be the last to demand more self-determination. As Europe comes to grips with the trend away from consolidation, it will be harder to maintain economic cohesion, and will tarnish, if not outright ruin, the euro.

Oil rebounded sharply this year, moving from the low $ 30s to the low $ 50s. OPEC members flooded the market with supply to drive out American frackers, which sort of worked, but then the frackers honed their efficiency.

As oil prices climb, more American producers are jumping back into the game. The latest OPEC agreement to cut supply might hold prices up for a little while, but to paraphrase the old saying, “The cure for high oil prices is high oil prices.”

With more money to be made, more producers will jump in, adding to supply and limiting the upside run. I don’t see oil prices breaching $ 60, but a drop back to the $ 30s is very possible.

Puerto Rico defaulted. Like Brexit, this is a game-changer.

As the Commonwealth’s legislature and the federal courts sort through the financial ashes after the meltdown, they will develop a framework for how other highly indebted public entities (cities, counties, states, school districts) will approach debt restructuring.

I think they will quickly sacrifice private bondholders, even though they have a clearly superior legal claim, in favor of public workers and retirees. This fight will play out in state capitols around the nation, pitting public employees against taxpayers and investors. It will get ugly.

What Didn’t Change

The Fed spent the entire year fretting over raising rates.

A year ago, Janet Yellen & Co. estimated that short-term rates would move from 0.5% (which we reached last December) to 1.75% by now.

Right. I didn’t buy it back then, either.

Without strong economic growth or inflation, there was no reason to push up short-term rates. The longer the Fed waited, and the worse the economy performed, the lower long-term interest rates fell. But as we entered the third quarter, the Fed started talking about higher rates anyway, and then Trump happened. So, rates climbed, more or less putting us right back where we started the year.

The Fed finally pushed up rates by a mere 0.25% this month, but given that growth should disappoint yet again in 2017, I don’t think they’ll raise rates three times in 2017 as they forecast, just like they didn’t push up rates this year.

As I mentioned, part of the Fed’s problem was anemic growth. Fed governors expected the U.S. to be growing by 2.5% to 3% by now. That didn’t happen. GDP increased 0.8% in the first quarter, and 1.4% in the second. We jumped 3.2% in the third quarter, but the annual pace will most likely still come in around 1.9% or so. That’s not enough to excite anyone, and probably won’t change in the next 12 months.

As with previous years, we’ll experience quarters of stronger growth from time to time, only to drop back again in later quarters. Escape velocity won’t happen anytime soon.

The U.S. dollar not only remained the dominant currency on the planet, but it also gained ground during the year.

As we’ve pointed out for some time, the U.S. might face a long slog of low growth, but we look like a race horse compared to the economies of Europe and Japan, and China is quickly decelerating. Harry has written many times that we’re the best house in a bad neighborhood. We’ll still be the strongest currency in 2017… and 2018…

One area that surprised me was housing. We started the year with a bit of a slump, which could have turned into an ugly rout. But it didn’t. Instead, housing stabilized and even expanded a bit.

I’m still cautious about housing, but it gets support from an underappreciated factor. The sector is much smaller than it was during the boom. Retail construction constituted 5% to 6% of the economy in the mid-2000s, but now sits around 3%. We’re building homes at a rate consistent with previous recessions, not expansions. It’s as if those in the industry remain hesitant, which is probably wise. When the next economic shoe falls, home prices should roll over again.

The biggest things that didn’t change are the ones that drive economies around the world and are difficult to adjust – populations and productivity.

We built our research on how many people are at each stage of life and what they buy. These are qualities that cannot be dialed up or toned down through economic policy.

My kids are out of the house. I need less stuff and I’m reconfiguring my annual budget to prepare for retirement (even though it’s a long way off!). No Fed policy or government program will change those things.

As long as individuals control their own economic destiny, demographics will drive growth.

We’re at the end of the eighth year of the economic winter season, with another six years to go. As we’ve seen for some time, legislators and central bankers will keep trying to move the pieces around the chessboard, but it won’t do much good. I guess that’s one more thing that will never change.

Image RJ sig

 

 

 

 

Rodney
Follow me on Twitter @RJHSDent

P.S. A few spots are still available to our Network membership. Take advantage of this offer while you still can – the doors close on Saturday. 

The post What Changed in 2016… and What Didn’t appeared first on Economy and Markets.

Rodney Johnson – Economy and Markets ()




What You Should Know About Gold Eagle Sales in November 2016

Investment demand for Gold Eagles surged during the last day in November pushing sales to a new monthly record. Not only did Gold Eagle sales for November reach a new record high for the year, it surpassed sales during the same month last year by 52%.

It seems as if investors are once again taking advantage of lower gold prices. I had planned to publish the article on Wednesday (last day of the month) showing that November sales hit a new record high, but the U.S. Mint updated their figures yesterday reporting another 20,000 Gold Eagles oz were sold on the 30th.

So, as of Nov 29th, the U.S. Mint Gold Eagle sales reached a new high for the year of 127,500 oz. Then they sold another stunning 20,000 oz in one day for a total of 147,500 Gold Eagle oz for November:

US Mint Gold Eagle Sales 2016

Even though the price of gold has sold off, some investors take this as an excellent buying opportunity. Again, to see 20,000 oz of Gold Eagles sold in one day suggests that some investors aren’t following the negative sentiment that the “Gold trade is over.”

Some Precious Metals Investors Are Throwing In The Towel Due To Narrow-Minded Thinking

One of the benefits of running one’s own website is the ability to say or write whatever comes to mind. I have no producer or owner over my back censoring what I write or say to keep either advertisers or investors happy. This is by far one of the most gratifying aspects of writing articles for the SRSrocco Report site.

That being said, I have to share my opinion on the recent change in precious metals sentiment. I have heard on several interviews and from other sources, that many of the hardcore precious metals investors have “thrown in the towel.” I hear of people selling their gold and buying stocks or investing in the next best industrial metal… PALLADIUM.

Of course, people are more than free to do whatever they desire, but I have to say, selling all of one’s gold and buying Palladium or jumping into the stock market is the most STUPIDEST thing a hard asset precious metals investor could do. While I see no problem with an individual, holding substantial gold resources, selling some of their yellow metal to buy Palladium for a short-term trade, selling all of ones gold to get into the next best TRADE OF THE CENTURY in Palladium or in the stock market is like going all in on the 17th century Holland Tulip Bubble.

Nothing has changed since the 17th century Tulip Bubble that also destroyed the ability of people to act rationally. At the peak during the Holland Tulip Mania, some tulips were selling for 10 times the annual income of a skilled craftsman (Source: wikipedia)

According to Wikipedia about the Tulip Mania:

…. the growing popularity of tulips in the early 17th century caught the attention of the entire nation; “the population, even to its lowest dregs, embarked in the tulip trade”.[6] By 1635, a sale of 40 bulbs for 100,000 florins (also known as Dutch guilders) was recorded. By way of comparison, a ton of butter cost around 100 florins, a skilled laborer might earn 150 florins a year, and “eight fat swine” cost 240 florins.[6] (According to the International Institute of Social History, one florin had the purchasing power of €10.28 in 2002.[35])

Tulip Bulbs Bubble

As we can see from the chart, investors lose all economic and financial sense when asset prices start to go insane. Instead of using some restraint and wisdom, they drop all reason and jump in on the rising bandwagon.

Again, I have heard that a percentage of precious metals investors are throwing in the towel because they believe Trump will make American great again, so there is no need for owning gold. Sure, maybe owning some silver would be okay due to the increased industrial consumption, but why is the silver price selling off???

The reason precious metals sentiment has fallen is due to the fact that many investors look at the world too NARROWLY. Each week a different news story or event changes how many people think and their reactions. This is the typical FICKLE nature of the public.

In 2006, I realized from my research that the collapse of the U.S. economy and financial system was going to happen. So, I sold my business and moved out to the country. Not only do I believe in owning precious metals, I also believe that it is prudent to be able to grow as much as ones own food.

So, I wasn’t surprised in 2007-2008 when the U.S. and global markets nearly disintegrated. However, I was surprised by the amount of monetary printing and fiscal insanity that the Central Banks have embarked upon since 2008.

Thus, the propping up the markets by the Fed and Central Banks have postponed the inevitable. Thus, the NAYSAYERS and the BELLY ACHERS have taken the higher ground by criticizing the precious metals analysts for being so wrong on their forecasts, while at the same time totally disregarding the massive paper and digital monetary intervention.

Lastly, the one thing Central Banks can’t do, is stop the LAWS OF NATURE…. THERMODYNAMICS.

Each year, according to thermodynamics, it becomes more expensive to produce oil, nature gas and coal. However, as the price of oil continues to trend lower over the next five years (plus), U.S. and global oil production will plummet. While the Oil Industry will not go down without a fight, they will likely do whatever they can to continue producing oil at a loss. Thus, they will steal energy from wherever they can get it.

Unfortunately, this will not stop the coming SENECA CLIFF life decline of the global markets and financial system.

Precious Metals News & Analysis – Gold News, Silver News




Q1 – Q3 2016 China Net Gold Import Hits 905 Tonnes

BullionStar

chinese-gold-supply-demand-data-q1-q3-2013-2014-2015-2016

Withdrawals from the vaults of the Shanghai Gold Exchange, which can be used as a proxy for Chinese wholesale gold demand, reached 1,406 tonnes in the first three quarters of 2016. Supply that went through the central bourse consisted of at least 905 tonnes imported gold, roughly 335 tonnes of domestic mine output, and 166 tonnes in scrap supply and other flows recycled through the exchange.

Core Supply & Demand Data Chinese Gold Market Q1-Q3 2016

Chinese gold demand is still going strong this year, albeit less than in 2015. The most likely reason for somewhat lower demand has been the strength in the price of gold in the first three quarters of this year, to which the Chinese reacted by somewhat subduing purchases. From 1 January until 30 September 2016, the gold price went up 24 % in US dollars per troy ounce, from $ 1,061.5 to $ 1,318.1; measured in renminbi the price went up 28 % over the same period.

Now I have proven the gold on Chinese commercial bank balance sheets has little to do with physical gold ownership of these banks, but mainly reflect back-to back leases and swaps, we can be positive that data on withdrawals from the vaults of the Shanghai Gold Exchange (SGE) reflects Chinese wholesale gold demand. For now that is, as future developments can always alter our metrics.

Below is a chart showing withdrawals from the vaults of the SGE and the price of gold in yuan per gram. The most significant trends of recent years are still in effect; in the short term, when the gold price is falling Chinese wholesale gold demand increases (2013 and 2015), when the gold price is rising Chinese demand declines (2016). This trend is supported by SGE premiums that have an inverse correlation with the price of gold. When the price of gold declines, SGE premiums escalate and vice versa – I will show charts further down. Furthermore, in the long term we can observe consistent growth in Chinese gold demand due to the opening up and development of the domestic market since 2002.

shanghai-gold-exchange-sge-withdrawals-september-2016
Exhibit 1. SGE withdrawals versus the gold price in yuan per gram.

SGE withdrawals in the first three quarters of 2016 accounted for 1,406 tonnes – still very impressive – down 29 % from 1,986 tonnes in 2015, which was a record year. Annualized SGE withdrawals are set to hit 1,877 tonnes in 2016.

Notable, “known net import” by China is relatively strong compared to SGE withdrawals in 2016. Total net import in the first three quarters of this year has aggregated to 905 tonnes – annualized 1,206 tonnes – or 64 % of SGE withdrawals, versus an import/withdrawals ratio of 53 % in 2015. As mine supply to the SGE is fairly constant, recycled gold through the SGE must be lower this year than last year. As a rule of thumb, we use the equation:

SGE withdrawals = domestic mine output + import + recycled

For Q1-Q3 2016 that gives:

1,406 tonnes = 335 tonnes + 905 tonnes + 166 tonnes

The largest net exporter to China is still Hong Kong, having transhipped 608 tonnes to the mainland from January until September 2016, up 5 % compared to 2015. The volume Hong Kong exports to the mainland has been quite constant since 2014, while in 2013 China’s special administrative region was a substantial larger supplier.

(There have been rumors that Hong Kong ’s export to China is overstated in the official data by the Hong Kong Census & Statistics Department, caused by fake exports. In the chart below you can see that the share of exports relative to re-exports from Hong Kong to China this year has increased from previous years. Potentially this signals fake exports, as it’s easier to over invoice an export than re-export, though I haven’t found hard evidence for this scheme. When I do I will report accordingly.)

hong-kong-china-gold-trade-yearly-september-2016
Exhibit 2. Hong Kong cross-border gold trade with China mainland. Any potential “export scheme” can have nothing to do with “round-tripping” as Hong Kong’s gross import from China is very low.
hong-kong-china-gold-trade-monthly-september-2016
Exhibit 3. Monthly Hong Kong cross-border gold trade with China mainland. The exports/re-exports ratio has fallen since July. 

The second largest exporter to China is Switzerland, having supplied a net 229 tonnes so far this year, which is 22 % more than last year. Clearly, direct shipments from Switzerland to China have replaced shipments via Hong Kong.

Direct net exports by the UK to China mainland have collapsed by 92 % this year compared to 2015, from 210 tonnes to a mere 18 tonnes. The reason being, the UK has been the largest net importer globally this year, which is related to the strength in the gold price early this year. UK net gold trade is a proxy for Western institutional supply and demand.

uk-net-gold-flow-gld-change-vs-gold-price-september-2016
Exhibit 4. Monthly UK net gold flow and GLD inventory change versus the gold price in US dollars per troy ounce. Note, the strong correlation between the price and UK net flows.

Australia’s direct export to China is down this year as well (in the first eight months, data for September has not yet been released). I’ve computed the data as described in my post Australia Customs Department Confirms BullionStar’s Analysis On Gold Export To China. Following this method, the land of down under has sent 50 tonnes of gold directly to China during the first eight months of this year, down 23 % from 65 tonnes in 2015.

Despite press releases suggesting Russian gold enterprises are strengthening ties with the SGE, I have identified only one shipment of 30 Kg by the Russian Federation directly to China in 2016. In 2013 the Russians directly net exported 50 Kg to China.

screen-shot-2016-11-25-at-9-23-50-pm
Exhibit 5. Gold export Russia to China.

Data on gold export from South Africa to China is not publicly available.  

chinese-monthly-gold-supply-demand-data-september-2016
Exhibit 6. Chinese monthly gold supply and demand data.
chinese-gold-supply-demand-data-q1-q3-2013-2014-2015-2016
Exhibit 7. Chinese gold supply and demand data for Q1-Q3 2013, 2014, 2015 and 2016.

In exhibit 7 we can see that, although the level of SGE withdrawals in 2016 is lower than in 2013, 2014 and 2015, net imports are higher than in 2014. It’s very difficult to know the exact explanation for relative high imports this year. Though, in my opinion, it’s connected to increased Chinese ETF demand, which grew by 34 tonnes and is all required to be stored in SGE vaultsand less gold being recycled through the SGE.

Since 2014, when the Shanghai International Gold Exchange (SGEI) was erected, there is possibility SGE withdrawals are inflated by withdrawals from vaults in the Shanghai Free Trade Zone; gold that is allowed to be exported abroad – the free trade zone is not part of the domestic market. But as far as I know any activity on the SGEI lacks foreign enterprises that buy gold to withdraw and export. A couple of months ago a source at a large Chinese bank told me the SGEI is mainly used by Chinese banks to import gold into Chinese domestic market. In addition, I haven’t bumped into any large importers from China. Occasionally India imports a few hundred Kg, but that’s it.

The emblematic difference between “Chinese gold demand as disclosed by GFMS” and SGE withdrawals – displayed in exhibit 7 – is due to GFMS’ incomplete metrics. For decades this consultancy firm has been denying the existence of institutional supply and demand in above ground gold, which is far more important to price formation than retail sales and mine supply, the predominant flows published by GFMS. The essence of this swindle can be read in my blog post The Great Physical Gold Supply & Demand Illusion. I also have a few more blog posts in the pipeline that discuss GFMS’ most recent gold supply and demand data.

All supply and demand data presented above excludes purchases by the People’s Bank of China, which sources physical gold in the international OTC market. 

SGE Premiums November Highest Since 2013

I expect November to be a very strong month for SGE withdrawals. Mentioned in the introduction segment of this post, there is a trend in Chinese wholesale gold demand in relation to the gold price. Whenever, the gold price is climbing, Chinese gold demand is subdued, accompanied by low SGE premiums; in contrast, when the gold price is decreasing, SGE withdrawals and premiums in China shoot up. The relationship between the gold price and SGE withdrawals can be viewed in exhibit 1. Below in exhibit 8 & 9, readers can see the relationship between “SGE end of day prices and premiums”.

shanghai-gold-exchange-sge-gold-premium-2009-novemner-2016
Exhibit 8. SGE end of day prices and premiums.
shanghai-gold-exchange-sge-gold-premium-2009-november-2016-ma
Exhibit 9. SGE end of day prices and premiums, including moving averages which make the inverse correlation more visible.

Note, the gold price on the SGE and the premium have an inverse correlation.

I already mentioned that SGE withdrawals in the first nine months of 2016 have been somewhat subdued due to a rally in the gold price. However, high premiums at the SGE in November forecast elevated withdrawals for the month. Since Trump got elected on November 9, and price of gold started tumbling, SGE premiums have broken a three-year record. This signals strong demand. In the next chart from Goldchartsrus.com we can see the premium on the SGE’s most traded physical contract Au99.99 has risen since November 9 and reached 3 % by 24 November. Levels not seen since 2013 (exhibit 8).

sgepremiums-november-2016
Exhibit 10. Intraday SGE premium (Au99.99 versus XAUUSD)

Although the relationship between the gold price and SGE premiums has been in place for years, Reuters reports the high premiums in November are caused by worries on import restrictions. From Reuters:

Gold premiums in top consumer China jumped to the highest in nearly three years this week on worries over a supply shortage that traders said were due to Beijing’s efforts to restrict import licenses.

“While we don’t have the exact numbers, we hear that they (Chinese government) have limited the number of importers,” said Dick Poon, general manager at Heraeus Precious Metals in Hong Kong.

To me this statement doesn’t make sense to me. At this moment that are 15 banks approved by the PBOC to import gold. Limiting the number of importers would cause less importers to import more gold in order to balance the domestic market (supply gold from abroad when necessary). In the Measures for the Import and Export of Gold and Gold Products drafted by the PBOC in March 2015 it states:

… An applicant for the import … of gold … shall have corporate status, … it is a financial institution member or a market maker on a gold exchange [SGE] approved by the State Council.

… The main market players with the qualifications for the import … of gold shall assume the liability of balancing the supply and demand of material objects on the domestic gold market. Gold to be imported … shall be registered at a spot gold exchange [SGE] approved by the State Council where the first trade shall be completed.

The Chinese government could lower imports by distributing less “import licences” to approved banks. As, every approved bank still needs to submit for a license for every gold import batch. Logically, lowering imports would be done by the PBOC through handing out less licences.

From the PBOC:

There shall be one Import … License of the People’s Bank of China for … Gold Products for each batch … and the License shall be used within 40 work days since the issuing date.

If the PBOC wanted to lower imports, it would simply hand out less licences. No need to “limit the number of importers”.

Either way, I expect SGE withdrawals to be strong for November.

The post Q1 – Q3 2016 China Net Gold Import Hits 905 Tonnes appeared first on Koos Jansen.

Koos Jansen




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The Earth’s Crust Will Be Shaken By More Than 100,000 Earthquakes That Humans Can Feel In 2016

Earth From Space 2017 - Public DomainDid you know that our planet will be hit by more than 100,000 earthquakes of magnitude 3.0 or greater this year alone?  Earlier today, I came across a report that contained this amazing fact, but it was so incredible that I felt that I had to go and verify it myself.  So I went to the official USGS website, and I found out that this is actually true.  Overall, there are about half a million earthquakes around the globe each year, but it is only when a quake is of about magnitude 3.0 or greater that humans actually feel them.  As the very large earthquakes in Italy and Myanmar within the last 24 hours have demonstrated, the shaking of our planet is getting worse, and this is something that I have written about over and over again.  So why is this happening?  Why does the crust of our planet seemingly become more and more unstable with each passing year?

We need to start addressing those questions, because there aren’t too many things that can do more damage to a community than a major earthquake.  Very early Wednesday morning, a magnitude 6.2 earthquake struck central Italy.  It is being reported that it sounded “like a bomb” went off, and it looks like this is going to end up being the worst natural disaster to hit Italy in many years.

This earthquake rattled buildings in Rome, it could be felt in Naples to the south, and it is even being claimed that it could be felt all the way up in Bologna in the north.

The epicenter of the quake was a charming little Italian town known as Amatrice.  According to Mayor Sergio Pirozzi, “the town is no more” at this point.  You can see some amazing photographs of the destruction for yourself right here.  Homes, churches and businesses collapsed in heaps of rubble, and at this moment rescuers are engaged in a frantic race against time to pull survivors from the wreckage…

Rescue teams using bulldozers, and aided by townspeople with their bare hands, were still poring through the piles of rock, metal and wood late Wednesday looking for possible survivors. Police near the town of Ascoli said they could hear cries for help from under the rubble but lacked the heavy equipment to move the rocks, according the RAI radio.

“We need chain saws, shears to cut iron bars, and jacks to remove beams: everything, we need everything,” civil protection worker Andrea Gentili told the Associated Press.

So far, the death toll stands at 159 people, but that number is going to go way up as more bodies are discovered.  The following was reported by Reuters

One hotel that collapsed in the small town of Amatrice probably had about 70 guests, and only seven bodies had so far been recovered, said the mayor of the town that was one of the worst hit by the quake.

But as destructive as the Italian quake was, it wasn’t even the largest earthquake on the globe on Wednesday.  A huge magnitude 6.8 earthquake struck Myanmar, but because that earthquake was much deeper it didn’t do the same level of damage as the quake in Italy did…

A powerful earthquake shook Myanmar on Wednesday, killing at least three people and damaging nearly a hundred ancient Buddhist pagodas in the former capital of Bagan, a major tourist site, officials said.

The U.S. Geological Survey said the magnitude 6.8 quake was centered about 25 kilometers (15 miles) west of Chauk, a town south of Bagan. It was located fairly far below the Earth’s surface at a depth of about 84 kilometers (52 miles), it said.

Sadly, most Americans couldn’t care less about what goes on in places like Italy or Myanmar.  I know that may sound terrible, but it is true.

However, Americans should care, because this global rise in earthquake activity is affecting us as well.  In fact, the USGS now says that human activity may at least be partially to blame for the “dramatic increase in seismicity” that we have been witnessing in the United States in recent years…

On Monday, for the first time, the U.S. Geological Survey has released an analysis of the magnitude of “human-induced” earthquakes. That such a thing as human-induced earthquakes can exist is scary enough, but the “dramatic increase in seismicity” in places such as Oklahoma has forced the USGS to consider the threat more broadly.

“By including human-induced events, our assessment of earthquake hazards has significantly increased in parts of the U.S.,” said Mark Petersen, chief of the USGS National Seismic Hazard Mapping Project, in a statement. “This research also shows that much more of the nation faces a significant chance of having damaging earthquakes over the next year, whether natural or human-induced.”

And I wanted to note that there was a magnitude 3.9 earthquake in Colorado on Tuesday.  We have started to see sizable earthquakes in many portions of the country where they are not expected, and this is going to continue to get worse as the shaking of our planet intensifies.

There is one more thing that I wanted to share with you all today.  I don’t know if this is related to anything, but a blood red moon was photographed directly behind the new World Trade Center tower last night.  To some people this is just a meaningless coincidence, but there are others that consider it to be a very ominous sign.

This summer, things have been relatively calm and peaceful in America.  Donald Trump and Hillary Clinton have dominated the headlines, but other than the election there really hasn’t been a major crisis that has grabbed the attention of the nation.

But of course all of that could change in a moment.  Despite all of our advanced technology, the truth is that we are still virtually defenseless against a major natural disaster.

Scientists tell us that it is inevitable that a great New Madrid earthquake will shake the center of the country.  They also tell us that it is inevitable that there will be a major earthquake in southern California, that volcanoes on the west coast will erupt again, and that the Yellowstone supervolcano could wipe out much of the country in a single day.

As global seismic activity continues to rise, it is just a matter of time before a string of historic disasters hits this nation.

Unfortunately, I am convinced that this could happen a lot sooner than most people would dare to imagine.

The Economic Collapse




The Stock Market Crash Of 2016: Stocks Have Already Crashed In 6 Of The World’s 8 Largest Economies

Network Earth Continents - Public DomainOver the past 12 months, stock market investors around the planet have lost trillions of dollars.  Since this time last June, stocks have crashed in 6 of the world’s 8 largest economies, and stocks in the other two are down as well.  The charts that you are about to see are absolutely stunning, and they are clear evidence that a new global financial crisis has already begun.  Of course it is true that we are still in the early chapters of this new crisis and that there is much, much more damage to be done, but let us not minimize the carnage that we have already witnessed.

In general, there have been three major waves of financial panic over the past 12 months.  Late last August we saw the biggest financial shaking since the financial crisis of 2008, then in January and February there was an even bigger shaking, and now a third “wave” has begun in June.  Not all areas around the globe have been affected equally by each wave, but without a doubt this new financial crisis is a global phenomenon.

The charts that I am about to show you come from Trading Economics.  It is an absolutely indispensable website that is packed full of useful data, and I encourage everyone to check it out.

Let’s talk about China first.  The Chinese economy is the second largest on the entire planet, and since this time last year Chinese stocks are down an astounding 40 percent

Chinese Stocks

As things have started to unravel in China, the Chinese have been selling off U.S. debt and U.S. stocks like crazy.  The following comes from Bloomberg

For the past year, Chinese selling of Treasuries has vexed investors and served as a gauge of the health of the world’s second-largest economy.

The People’s Bank of China, owner of the world’s biggest foreign-exchange reserves, burnt through 20 percent of its war chest since 2014, dumping about $ 250 billion of U.S. government debt and using the funds to support the yuan and stem capital outflows.

While China’s sales of Treasuries have slowed, its holdings of U.S. equities are now showing steep declines.

Unfortunately for China, their economy just continues to slow down, and George Soros is so alarmed by this and a potential “Brexit” that he has been selling off stocks and buying enormous amounts of gold in anticipation of an even bigger global downturn.

Japan has the third largest economy in the world, and over the past year Japanese stocks are down a total of 26 percent from the peak…

Japan Stocks

Personally, I have been extremely alarmed by what has been happening in Japan lately.  Japanese stocks were down almost 500 points last night, and overall the Nikkei is down a whopping 1,800 points so far in June.

Of course the Japanese economy as a whole is essentially a basket case at this point.  For a detailed analysis of this, please see my previous article entitled “Watch Japan – For All Is Not Well In The Land Of The Rising Sun“.

Germany has the fourth largest economy in the world, and over the past year their stocks have fallen 19 percent from the peak of the market…

German Stocks

The key thing to watch for in Germany are serious troubles at their biggest bank.  I wrote a long article about the slow-motion implosion of Deutsche Bank last month, and just this week Deutsche Bank stock hit an all-time low.

The fifth largest economy on the planet belongs to the United Kingdom, and since last June their stocks have fallen about 13 percent

British Stocks

One week from today, the “Brexit” vote will be held in the UK, and if they vote to leave the EU that could have very serious economic and financial implications for them and for the rest of Europe as well.  For an in-depth look at this, please see my previous article entitled “June 23, 2016: The Brexit Vote Could Change EVERYTHING And Plunge Europe Into Financial Chaos“.

France has the sixth largest economy in the world, and over the past year French stocks are down 20 percent from the peak of the market…

French Stocks

The French economy is really struggling these days, and we have not heard much about it in the U.S. media, but there have been tremendous riots in major cities in France in recent weeks.

The seventh largest economy on our planet belongs to India.  Even though India is facing some very serious economic problems, their stocks are doing okay for the moment.  Even though stocks in India are down over the past 12 months, we have not seen a major financial crisis over there just yet.

But there is definitely a major crisis in the eighth largest economy in the world.  Italian stocks are down a staggering 32 percent from the peak of the market.  That means approximately a third of all stock market wealth in Italy is already gone…

Italian Stocks

Earlier this year, I wrote about the horrifying collapse of the Italian banking system that has greatly accelerated since the start of 2016.  It looks like virtually all of their big banks will ultimately need to be bailed out, and this threatens to become a far bigger crisis than the crisis in Greece ever was.

And let us not leave off the ninth largest economy in the world.  Not too long ago, CNN ran an article entitled “Brazil: Economic collapse worse than feared“.  So not only are they admitting that the ninth largest economy on the globe is collapsing, they are also admitting that it is even worse than what the experts had anticipated.

So did I leave anyone off the list?

Ah yes, I haven’t even addressed what has been going on in the United States yet.

U.S. stocks did crash last August, but then they recovered.

Then they crashed again in January, but then they recovered again.

Now U.S. stocks have been taking another tumble here in June, but we are being assured that there is nothing to worry about.

Meanwhile, the underlying numbers for the U.S. economy just continue to get worse and worse and worse.  If you have any doubt about this, please see the article that I posted yesterday entitled “15 Facts About The Imploding U.S. Economy That The Mainstream Media Doesn’t Want You To See“.

Hopefully this article will clear a lot of things up.  In this piece, I have presented undeniable evidence that a new global financial crisis has begun over the past 12 months.  We have not seen global stock declines of this nature since the great financial crisis of 2008, but much worse is still to come.

I would love to be wrong about that last part.

It would be wonderful if the worst was now behind us and good times for the global financial system were ahead.

Unfortunately, every single indicator that I am watching is telling me just the opposite.

*About the author: Michael Snyder is the founder and publisher of The Economic Collapse Blog. Michael’s controversial new book about Bible prophecy entitled “The Rapture Verdict” is available in paperback and for the Kindle on Amazon.com.*

The Economic Collapse




June 23, 2016: The Brexit Vote Could Change EVERYTHING And Plunge Europe Into Financial Chaos

Brexit - Public DomainOn June 23rd, a vote will be held in the United Kingdom to determine if Britain will stay in the European Union or not.  This is most commonly known as the “Brexit” vote, and that term was created by combining the words “Britain” and “exit”.  If the UK votes to stay in the European Union, things over in Europe will continue on pretty much as they have been.  But if the UK votes to leave, it will likely throw the entire continent into a state of economic and financial chaos.  And considering how bad the European economy is already, this could be the trigger that plunges Europe into a full-blown depression.

So if things will likely be much worse in the short-term if Britain leaves the EU, then it makes sense for everyone to vote to stay, right?

Unfortunately, it isn’t that simple.  Because this choice is not about short-term economics.  Rather, the choice is about long-term freedom.

The EU is a horribly anti-democratic bureaucratic monstrosity that is suffocating the life out of most of Europe a little bit more with each passing year.  So if I was British, I would most definitely be voting to leave the EU.

And in recent days, the campaign to leave has been rapidly picking up steam.  In fact, two of the latest major surveys show that “leave” has taken the lead

An ORB poll for the Telegraph showed 48 percent of Britons would vote to remain in the European Union, while 49 percent would vote to leave.

A YouGov poll for the Times of London showed 46 percent preferred to leave, while 39 percent wanted to remain.

Two other recent polls have “leave” ahead by 10 points, and there is another that actually has “leave” winning by 19 points.

The “leave” movement got a big boost just recently when the Sun officially endorsed that position.  The following is an excerpt from the editorial that announced this decision…

WE are about to make the biggest ­political decision of our lives. The Sun urges everyone to vote LEAVE.

We must set ourselves free from dictatorial Brussels.

Throughout our 43-year membership of the European Union it has proved increasingly greedy, wasteful, bullying and breathtakingly incompetent in a crisis.

Next Thursday, at the ballot box, we can correct this huge and ­historic mistake.

It is our last chance. Because, be in no doubt, our future looks far bleaker if we stay in.

I must say that I agree entirely with the Sun.  However, everyone needs to understand that a Brexit would be incredibly painful for the UK and for the rest of Europe in the short-term.  I think that Ambrose Evans-Pritchard of the Telegraph made this point very well in his recent column…

Let there be no illusion about the trauma of Brexit. Anybody who claims that Britain can lightly disengage after 43 years enmeshed in EU affairs is a charlatan or a dreamer, or has little contact with the realities of global finance and geopolitics.

So what could we potentially see happen?

Well, for one thing big banks like Morgan Stanley are warning that the euro and the British pound could take big hits

The pound and the euro will be hit on a Leave vote, but even if Britain decides to stay in the EU, there will be only “modest gains.” Morgan Stanley expects the pound “to weaken immediately on a vote to Leave, but by year-end we think Euro could weaken even more.”

Secondly, there is a very strong probability that financial markets all over Europe could horribly crash, and the European Central Bank and the Bank of England are already promising to provide artificial support for the markets if that happens.  The following comes from Reuters

The European Central Bank would publicly pledge to backstop financial markets in tandem with the Bank of England should Britain vote to leave the European Union, officials with knowledge of the matter told Reuters.

The preparations illustrate the heightened state of alert ahead of the June 23 referendum, which will help determine Britain’s future in trade and world affairs and also shape the EU. The pound and euro have lost value on fears a Brexit could tip the 28-member bloc into recession.

Such an announcement from the ECB would come on June 24 if an early-morning result showed that British voters had chosen to leave the EU, according to the sources.

But no matter what the consequences are, British voters should do what is right for their future and for the future of their children.

If that means leaving the EU, then so be it.

Needless to say, the prospect of “leave” winning has many among the European elite in full-blown panic mode.  For instance, just consider what the current chairman of the Bilderberg Group is saying

Just day after their mysterious annual meeting in Dresden, it appears The Bilderberg Group’s gravest concern is Brexit. While everything from The Middle East to Donald Trump was on the agenda, the remarks this week from AXA CEO (and Chairman of The Bilderberg Group) Henri de Castries that there is an “extremely high” probability that the U.K. will vote to leave the European Union and investors will face “a true landscape of uncertainties,” suggest the establishment is concerned.

If you are not familiar with the Bilderberg Group, please see my recent article on them.  Certainly the potential of a coming “Brexit” was high on the list of priorities during their recent conference, and it has been documented that the Bilderberg Group played a key role in the creation of the European Union in the first place.  So of course they are not exactly pleased that their grand experiment may now be unraveling right in front of their eyes.

Meanwhile, even without taking into account a potential “Brexit” things just continue to steadily get worse over in Europe.  On Tuesday, European stocks hit their lowest levels since the stock market crash that ended in February, and the stocks of both Deutsche Bank and Credit Suisse hit all-time record lows

The truth is that those extremely prominent European banks are headed for a collapse even without a “Brexit”.  But if there is a “leave” vote, that will just accelerate the process.

And let us not forget that major stock indexes all over Europe are already in a bear market

Meanwhile, German stocks are in a bear-market, with the DAX down 23.2% from its April 2015 peak. The French CAC 40 is down 21.8%. The Spanish Ibex 35 and the Italian MIB are down 31.4% and 32.6% respectively.

Here in the United States, the smart money is dumping stocks like crazy right now, and major investors such as George Soros are feverishly buying gold.

So why are these things happening?

Do those “in the know” have some information regarding what is about to happen over in Europe?

For a long time, I have been sounding the alarm about Europe.  If the British people vote to stay in the European Union on June 23rd, the crisis in Europe will certainly continue to escalate, it will just be at a slower pace.  But if the British people vote to leave (which they should) that could be the trigger that changes everything.

I don’t know exactly what is going to happen on the 23rd, but without a doubt we should all be watching the outcome very, very closely…

*About the author: Michael Snyder is the founder and publisher of The Economic Collapse Blog. Michael’s controversial new book about Bible prophecy entitled “The Rapture Verdict” is available in paperback and for the Kindle on Amazon.com.*

The Economic Collapse