This Could Crash 95% This Year

There are two types of stock bubbles – normal stock bubbles of five years or so and shorter-term, more extreme bubbles – and we’re currently in the midst of both kinds.

Both are characterized by irrational behavior…

A complete break from any fundamentals.

On Thursday, I’ll talk more on Thursday about how this is the case with the stock bubble. But today, let’s compare the cryptocurrency bubble to five other quick-and-nasty bubbles that have wiped out investors in the past. I’m talking, of course, about the tulip bubble, the South Sea and Mississippi bubbles, the internet bubble, and the recent China bubble. All of them have something in common, and that’s really bad news for those latecomers to this Bitcoin bubble.

Listen to my latest video for the details…

The thing with this crypto bubble – and all the bubbles, stock and short-term alike, that have come before it – is that it ultimately results in a shakeout. It destroys all the flotsam and jetsam lurking in the market in question. And it presents once-in-a-lifetime wealth-building opportunities.

Take Amazon for example. During the dot.com boom it went to $ 113 per share. Then the crash brought it tumbling down to just $ 5.50 a share – down 95%. It survived though, and today one share goes for more than $ 1,300. That’s a 240 times gain!

The same kinds of opportunities will present themselves once this crypto bubble has burst. We believe one cryptocurrency in particular is in a good place to survive the shakeout ahead. Think of it as the Amazon of the cryptocurrency world. We recently shared details of this little gem with Boom & Bust subscribers in four new special reports. If you haven’t seen them yet, you can find them here.

Harry
Follow Me on Twitter @harrydentjr

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Harry Dent – Economy and Markets ()




Stocks Markets Charge Ahead; Gordon Chang: Blowup w/ China, N. Korea Could Change Almost Everything

Happy New Year and welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.

Coming up we’ll hear a wonderfully insightful interview with Asian expert Gordon Chang. Gordon shares his views on Donald Trump’s much-hyped Tweet about the size of his nuclear button, gives his very studied view on the state of the Chinese economy and what the state of all of the Asian geopolitics will mean for the global markets. Be sure to stick around for my very interesting conversation with Gordon Chang, coming up after this week’s market update.

Precious metals markets are off to a strong start in the New Year.

The gold market shows a 1.2% gain this week to bring spot prices to $ 1,319 an ounce. The first key technical level to watch going forward from here is $ 1,350 – gold’s high mark for 2017. After that, the $ 1,375 and $ 1,400 levels will come into play. A breakout above $ 1,400 would represent a multi-year high and likely induce some strong momentum buying for the first time in years. But for now the yellow metal still remains mired in a long-term basing pattern.

Turning to silver, prices currently come in at $ 17.24 per ounce and are higher by 1.5% for this first week of 2018. Platinum was the laggard in the PM space in 2017 but is a leader in the first few trading days of 2018 – posting a gain of 4.0% this week to trade at $ 970. Its sister metal palladium made a new all-time high on the heels of a 3.0% weekly advance and currently trades at $ 1,095 an ounce as of this Friday morning recording.

On Wednesday, the Federal Reserve released the minutes from its December meeting. Metals initially sold off as the dollar strengthened, but those market reactions both reversed on Thursday.

Policymakers raised the Federal funds rate by a quarter point this past December. But as the meeting notes reveal, opinion is divided over whether to continue raising rates at a gradual pace this year. The consensus forecast is for the central bank to push through three rate hikes in 2018. Traders are now putting the odds of a March hike at close to 70%.

The GOP’s tax cut passage may tilt the Fed slightly more hawkish. Fed economists now project modestly higher GDP growth thanks to the tax cut stimulus.

The fiscal stimulus should help push inflation rates up toward the Fed’s 2% target by the end of the year – and perhaps beyond. In recent weeks, inflation-correlated assets such crude oil, precious metals, and resource stocks have perked up while interest rate sensitive assets such as bonds have struggled.

The stock market, of course, keeps chugging ahead – where it finally stops, no one knows. Momentum chasers keep buying, which pushes prices higher, which creates more momentum to chase. The stock market has long past the point of being a place for value investors – at least when it comes to the major averages such as the Nasdaq and S&P 500. Valuations are now in bubble territory.

Investors may look back on 2018 as the opportunity of a lifetime to switch from overvalued stocks to undervalued precious metals.

The supply and demand fundamentals for precious metals are set to improve in 2018. Low gold and silver prices over the past few years have severely hurt the mining industry. It has continued to operate existing mines – sometimes at losses – even as it has slashed exploration and development of new projects. That will mean years of stagnating or even declining output ahead.

Metals Focus projects mining output of gold in 2018 will show a slight decrease from 2017. Analysts expect a more significant drop could occur in 2019.

A similar pattern is expected to play out in silver, though it’s more difficult to forecast since few primary silver miners exist. Demand for silver is also more variable, with investment demand being the biggest wild card.

Commodity markets analysts at TD Securities believe silver may be the metal to own in 2018. They forecast silver prices will hit $ 20 this year. That would be an important technical level to hit. Yet $ 20 per ounce silver would still be less than half of its all-time high. You can’t say that about gold or most any other commodity or asset class on the planet right now.

From a value perspective, silver looks compelling. Stacking more silver may be a great new year’s resolution for investors to keep in 2018.

Well now, without further delay, let’s get right to this week’s exclusive interview.

Gordon Chang

Mike Gleason: It is my privilege now to welcome in Gordon Chang, author, television pundit, and columnist at the Daily Beast. Gordon is a frequent guest on Fox News, CNBC, and CNN, among others, and is one of the foremost experts on Asian economics and geopolitics, having written books on the subject and it’s great to have him back on with us.

Gordon, it’s a real honor to have you on again, and thanks so much for your time today. I know it’s been a busy week for you given all of your media appearances, and we’re grateful that you could join us today. How are you?

Gordon Chang: I’m fine, thank you, and thank you so much, Mike. I really appreciate the opportunity.

Mike Gleason: Well, there are many things to cover here given all that’s going on right now. We certainly appreciate your expertise, particularly when it comes to the developments in Asia. There’s a lot going on in that part of the world with big implications for investors. Let’s start with North Korea. That’s obviously been at the forefront of the news this week with tensions getting ratcheted up again.

Kim Jong-Un and President Trump are both bragging about their nuclear arsenals. The over the top posturing on both sides makes it hard to gauge just how seriously the threat of nuclear exchange should be taken. The market seems to have stopped paying attention for the most part. Please give us your thoughts on the matter. Is there any likelihood the disagreement over North Korea’s nuclear weapons program will escalate beyond words, Gordon, or is this war only going to be fought on Twitter?

Gordon Chang: If you look at Twitter, this certainly is a matter of concern, but I think the reality is much different. Right now, Kim Jong-Un, the ruler of North Korea, is feeling sanctions. We saw a hint of that in his New Year’s address where he referenced it, at least indirectly, and at one point he actually called the sanctions an existential threat.

What he’s trying to do right now with his overture to South Korea is to get the South Koreans to shovel money into his regime. What he would like in return for sending two figure skates to the winter Olympics in South Korea next month would be for South Korea to lift sanctions to resume inter-Korean projects, like the Kaesong Industrial Complex, and also for more North and South Korean aid.

I don’t think that those expectations are realistic. Some of what he wants would be a violation of UN sanctions, and President Trump’s policy has been to cut off the flow of money to Pyongyang so it can’t launch missiles or detonate nukes. This is going into, I think, a very crucial period, because if you look back in history, and I’m talking seven decades, we have seen North Korea engage in military provocations shortly after making peace overtures. And this whole concept of the Olympics and his opening of dialog with South Korea, that’s a peace overture.

Mike Gleason: We’ve got two huge wild cards at the forefront of all this with President Trump and Kim Jong-Un being rather unpredictable, to say the least. Is Trump’s tit-for-tat responses to his adversary here going to make diplomacy harder to achieve as our allies might have a hard time joining in full force to combat the North Korean threat?

Gordon Chang: I think on Tuesday, the second of his two tweets certainly made diplomacy harder. I think it was a setback for the American position. You’ve got to remember that in the morning, the first tweet was actually quite constructive. In the first tweet, President Trump talked about how sanctions were biting the North Korean regime.

What Trump needs to do, and this is not just among friends, but also neutral countries and potential adversaries like Russia and China, the backers of North Korea, what he needs to do is to get them to cut off the flow of money to the North. Any time that he talk about sanctions, that’s important. That’s good for us, but Tuesday evening in that exchange of messages, we saw President Trump with his tweet about button size. This was a setback in the sense that we’re no longer talking about what’s important for diplomacy, which are sanctions. We’re now talking about infantile behavior on the part of the American president. That’s not a good thing.

Mike Gleason: Now, let’s talk about North Korea’s much larger neighbor for a bit. Chinese officials just held the Communist Party’s National Congress, a gathering held once every five years to formalize the party leadership. Some think the event may be significant in that it will mark a turning point, the theory being that officials there worked hard to prevent a slowdown in the Chinese economy until after Congress has concluded, and now that it is done, a much-needed correction could be underway. Do you see National Congress as meaningful, Gordon, and what are you expecting for the Chinese economy in the year ahead? Because as we know, what happens in China has far-reaching effects on markets globally.

Gordon Chang: The Congress was important I think because Xi Jinping outlined a very expansive notion of Chinese power. That’s going to be I think an overstretch. I think that their commitments now are far bigger than their resources. This has implications, of course, for the economy and the strains on it. This year, this whole issue is going to be deleveraging. Chinese officials have been talking about deleveraging for years. They haven’t been able to accomplish it. And that’s largely because they are not willing to undertake structural reforms. They’re not willing to see the economy go into a recession.

In 2016, the last year where we really had good numbers, the World Bank thinks that the Chinese economy grew not at the 6.7% pace that the official national bureau statistics claimed. They actually released a chart in the middle of 2017 and with a little arithmetic, you can see that the World Bank thinks that the Chinese economy grew by 1.2%. Also, that 1.2%, although it might be shockingly low to many people, is consistent with the most reliable indicator of Chinese economic activity. That’s the overall consumption of energy.

In 2016, overall energy consumption increased, but only by 1.4%. So, we’re talking an economy that is growing maybe now a little bit better than 2016. Maybe we’re talking 2%. I don’t know. But the point is that they’re accumulating debt at a pace which is about six, seven, maybe eight times faster than they are producing output. They can do that for a little while because they control the banks, they control the big state enterprises, they control the markets, but they can’t do that forever.

Mike Gleason: You haven’t been terribly optimistic about the Chinese economy, and for good reason. However, from a certain point of view, there is a massive amount of central economic planning going on everywhere. You just alluded to that. Obviously, there’s a lot of that going on here in the U.S., of course. We’ve seen some extraordinary maneuvers from the U.S. Federal Reserve over the past decade, and the truth is that we almost certainly don’t know the full extent of what our central bank has been doing to intervene in markets. If history is a guide, all of the tampering could lead to serious trouble.

It probably isn’t fashionable to ask since most are talking about strength in the U.S. economy, but it is at least possible that there are bubbles waiting to pop in both the US and China. Admittedly, there are lots of differences between the two nations, and the potential for central bank policy errors is just one piece of the equation. What are your thoughts? Is the risk of a bubble bursting lower here than in China?

Gordon Chang: Well, I don’t know if it’s lower. In China, there’s going to be a bubble bursting. It could be a lot later than I think, but it will burst. Of course, in the United States, when you have a run up in the economy, you’re going to have a rundown at some point. But whether it’s going to be a 2008 style burst, I just don’t think so.

In any event, from the Chinese perspective, they look at the U.S. economy. They’re extraordinarily dependent on us. For instance, in 2016, the last year for which we have complete figures, a full 68% of China’s merchandise trade surplus related to sales to the U.S. When the U.S. is doing well, Chinese exporters do well, but there’s a real risk in the U.S. doing well, which I think people don’t talk about. And that is, the Chinese are able to hang on because they’ve been able to control the renminbi, but with the Federal Reserve tightening, that is putting pressure on the Chinese currency. It makes it much more difficult for Chinese technocrats to manage in a difficult environment already.

If you talk to the American citizen, they might even not know what the Federal Reserve is. They certainly don’t follow what’s going on in terms of interest rates for the most part, but if you go to China, many housewives can tell you a lot about what the Fed is doing because it affects their pocketbook in a very immediate way.

China has been able to staunch the outflow of currency. In 2015, it was about $ 1 trillion according to Bloomberg. 2016, probably a little bit more than that. Last year, a lot less because of extraordinary capital controls, some of them announced, some of them not. With the Fed tightening, that makes it very difficult for China to maintain those controls, which are difficult even under the best of circumstances. I think it’s going to be a very difficult environment for Beijing this coming year, much more difficult than it was in 2017 or 2016.

Mike Gleason: If we recall back to late summer of 2015 when the Chinese stock market had a sharp and deep correction, it had major implications for markets around the world, including the U.S., so they certainly are interconnected. If the Chinese markets were to be the first to falter, you would have to think that U.S. investors would feel that, as well, just like it did two and a half years ago.

Speak to that and then also comment about the likelihood that the Chinese and thus the world will be able to right the ship this time, like they did last go around, when they were able to prevent that snowball from really getting going.

Gordon Chang: Well, of course, any major downturn, especially a sharp one in China, is going to ripple through global markets. It will be felt here, but we’re relatively, I think, in good shape because China is less important to the global economy than people think. Yes, there’s a lot of growth there, but China has been taking growth away from other countries through predatory trade practices.

So, if it were to disappear down a dark hole, yes, we’d all be shot, but I think in six months, we’d realize, “Hey, this wasn’t so bad,” because when you have Chinese producers not able to flood the global markets as they have been, producers in other countries will take up that slack and there will be, I think, better conditions elsewhere, including the United States. So, I think that the effect of China’s problems really, I think are just exaggerated in people’s conceptions.

With regard to the second question, I think that central banks are not in as good a position today as they were in 2008, 2009 to take up the slack. And so I see things better of course in many, many, many ways than the last decade, but I don’t think that we’re going to get the relief efforts from central authorities that we did last time. But I think the economies are better than they were before, so I’m a relative optimist about the rest of the world, but we’ve got to remember, though, that geopolitical problems in North Asia could actually be the one thing that takes all of our assumptions and makes them incorrect.

Mike Gleason: Getting back to capital controls, Chinese citizens have certainly had a big appetite for cryptocurrencies like Bitcoin and others as they look to flee the local currency. Any developments there to update us on when it comes to the government cracking down and trying to prevent people from diversifying with cryptos?

Gordon Chang: I don’t think there’s been really very much in the way of developments in the last week or so. The most important thing is that the Chinese authorities are very suspicious of crypto-currencies. They are going to continue to try to attack Bitcoin and others. They may let up every once in a while, but I don’t think that they have given up in any event, because this is where Chinese technocrats view the last stand. They’ve got to protect the renminbi. If they don’t, it’s all over, and not only for the Chinese economy and financial system, but also for the political system. So, they’re going to do everything possible to make sure that currency doesn’t leave China.

As we saw in 2017, they were really determined. Now, they’re going to pay a big price, or actually many big prices, for their currency controls. What they did was they solved their immediate problem. These guys are looking at the short-term. They don’t look at the long-term. So, you can expect for them to go after Bitcoin, go after the crypto-currencies, go after any other conceivable way to get money out of China. The Chinese authorities are going to attack it. So, any sort of optimism short-term about Beijing changing its views I think is just misguided.

Mike Gleason: China recently launched an oil futures contract, which is denominated in yuan but convertible into gold. This looks to us like another assault on the supremacy of the Petrodollar, what we’ll see if the gold backing is enough to lure some of the energy trade away from the established markets. If you’ve been following that development, please give us your comments. Is the yuan a significant threat to the dollar here, Gordon?

Gordon Chang: No. If we’re talking 50 years, 60 years, 70 years down the road, yeah, it could very well be a threat to the dollar, but not now. Renminbi usage around the world over the last couple years has been in decline, and it will remain in decline as long as China has those capital controls announced and unannounced. By the way, having unannounced capital controls makes China look like a Banana Republic.

So, as much as they’re going to try to encourage use of the renminbi, it’s just not going to have significant success until they’re willing to open up their capital account. And I don’t see that (happening) any time soon because there’s just too much pressure on the currency for them to do that. So, they can devise whatever instrument they want. They might make a little bit of in road here and there, but long-term, renminbi usage probably will continue to fall. That’s just because if you can’t get the money out, you’re just not going to want to use that as a medium of exchange.

Mike Gleason: We often talk about how the Asian world is full of very strong hands as it relates to gold and that much of the precious metals that leave the West and head East don’t come back. Any thoughts there about what that might mean for the western world if we do have a big rush into precious metals as a safe haven investment during an economic and market downturn, given that so much gold has left western in recent years and gone over to China?

Gordon Chang: What leaves will come back. The U.S. has a strong economy. It’s relatively stable. Asia right now is a place of geopolitical danger, and I think that there’s going to be a long-term reversal. Right now, there’s just too many hot spots along the periphery of China. One of those situations is going to go wrong. I can’t tell you which one. It could be India. It could be South China Sea. It could be East China Sea. It could be North Korea. We don’t know, but if you’re looking at safe havens, Asia is not it.

Mike Gleason: Well, as we’re getting close here, Gordon, any final comments that you want to leave us with? Maybe give us an idea of what you’re watching most closely here over the coming weeks and months in terms of the geopolitical theater in Asia, and then the impact that it’s likely to have on U.S. investors.

Gordon Chang: The most important thing will be the attitude of the Trump administration towards China. There are a number of items on the agenda which could derail relations. For instance, the section 301 investigation into China’s intellectual property theft and a number of other investigations. There’s going to be continuing friction between the United States and China, not only over North Korea, but other matters. This is not going to be good for the markets. I can understand markets not discounting this now, but when things happen, I think that we will see sharp reversals. This is just the thing to keep in mind in terms of geopolitical risk, because it’s the one thing that could change almost everything, or even everything overnight.

When it comes to geopolitical risk, I think that there’s a mis-perception of things. The one thing that really concerns me is war talk in the United States. There’s an assumption in Washington among many people that the United States can strike North Korea without consequences. That could very well be true, but we’ve got to remember that in August of 2017, the Chinese said that if the United States were to strike North Korea first, it would come in and aid North Korea.

While although there could be no consequences to an American attack on North Korea’s missile and nuke sites, we could very well end up in an exchange of nuclear weapons, not only with the North Koreans, but with the Chinese and perhaps the Russians, as well. So, all of these scenarios are there. Of course, the extreme scenarios, the extremely good ones and the extremely bad ones usually don’t come to pass, but we’re at a time where it resembles in many ways the prelude to the Cuban Missile Crisis of 1962.

There are extraordinarily large number of ways that all of this can go wrong. I’m not saying it will, but I don’t think people have started to think about the consequences of some of the courses of action that they’re recommending. The United States can peacefully disarm North Korea, not use force in doing that, but there’s no political will in the United States to do that – which is essentially to impose cost on North Korea’s backers, primarily Russia and China. It is easier to start a chain of actions that could lead to global conflict than it is to go after North Korea’s backers. That’s a very dangerous situation.

Mike Gleason: Well, very good summary there to close us out. Gordon, it’s been a truly fascinating conversation. I really enjoyed it. It was great to have you on. Once again, I’m really glad you were able to find time for us this week with everything going on. Continued success to you in the new year, and I would love to have you on again in the future as this all unfolds. Thanks again and have a great weekend.

Gordon Chang: Thank you so much, Mike.

Mike Gleason: Well, that will do it for this week. Thanks again to Gordon Chang, Daily Beast columnist. You can follow him on Twitter @GordonGChang or check out his book The Coming Collapse of China.

And check back next Friday for the next Weekly Market Wrap Podcast. Until then, this has been Mike Gleason with Money Metals Exchange, thanks for listening and have a great weekend, everybody.

Precious Metals News & Analysis – Gold News, Silver News




What Tax Reform Could Mean for Stocks

There’s an old joke that the Founding Fathers wisely chose a patch of land located along the Potomac River as the site of our nation’s capital because it’s a place so miserably humid in the summer and so bitterly cold in the winter that our elected representatives would choose to stay away most of the year, thus have fewer opportunities to make a mess of things.

Alas, centralized heat and air conditioning made the swamp habitable, and Washington, D.C., has been infested ever since.

Most of what our government does is, at best, a waste of time and, at worst, downright harmful. But Congress (mostly) got something right in its tax reform package, which the Senate approved earlier this month.

The bill is by no means perfect. It falls far short of its stated goal of simplifying the tax code, which remains as convoluted as ever. And some taxpayers – particularly high-earners in California, New York, and New Jersey – will get hosed and actually end up paying more of their money to government. For most individual taxpayers, the reform package is a nonfactor, neither much of a positive or much of a negative.

But the corporate rate reduction is a very big deal, with significant implications for the broader market and the recommendations I make to my Peak Income subscribers in particular.

America’s largest multinational companies have close to $ 3 trillion essentially “trapped” offshore. They don’t bring it home because doing so means giving 35% of it to the government. Instead, companies essentially borrow against their offshore cash by issuing bonds.

What do you think will happen to new bond issuance once all of that offshore money starts making its way back home?

It will pretty much grind to a halt. (In case you’re wondering why so many Wall Street bankers have been lukewarm, at best, towards the bill, here’s your explanation. It will all but kill their lucrative bond underwriting business, as their largest customers will no longer need their services.)

The bill also limits the amount of interest that companies can write off on their taxes, which further disincentivizes them to borrow.

So you’re going to have a major curtailing of new bond issues… at a time when demand for income from Baby Boomers is as strong as ever. That’s a recipe for low bond yields and high bond prices for a long time to come.

The situation isn’t quite as extreme in the tax-free municipal bond market, but you’re still likely to see fewer new bond issues coming down the pipeline.

Congress is removing the tax-free status of bonds used for things like sports stadiums and other “special purposes.” Meanwhile, personal income taxes won’t be falling enough to make munis less attractive to high-income Americans. (Remember, the lower the tax rate, the less important it is to have tax-free income.)

A relatively tight supply of muni bonds should keep prices high for the foreseeable future.

But it’s not just bonds that will be affected. Lower taxes means more cash on hand for dividends and buybacks, particularly for the large multinationals looking to repatriate their offshore cash hoards.

We’re talking about a lot of money that’s likely to get dumped into the stock market one way or another.

Anticipation of corporate tax reform has been a major driver of the Trump Rally. This bull market – like all bull markets – will end, sooner, probably, rather than later.

But I also believe this market has at least one last major hurrah left in it, which is what told Peak Income readers when recommending this month’s addition to our income portfolio.

Normally, I recommend safe, stable income plays that you should be able to hold for multiple years… maybe even decades. But this month I’m presenting an opportunity to profit from one last surge in the U.S. stock market.

I’ve said for months that I expect overseas markets to outperform over the next several years, and that’s still my working hypothesis. But over the next six months or so, I expect U.S. stocks to beat the pants off of pretty much everything else.

And so I’ve told readers to target an all-American fund chock full of some of the biggest names in the S&P 500 Index, familiar names like Facebook, Alphabet/Google, and Amazon.com.

I see this as shorter-term trade. We’ll be out of it long before we see a bear market, but we’ll be in it long enough to enjoy a nice payout. This fund trades at a 10% discount to net asset value and yields 11%. A total return in the 20% neighborhood is doable.

Click here to learn more and subscribe to Peak Income today.

In case you missed it, click here to see what I mean.

charles sizemore helicopter money

Charles Sizemore
Editor, Peak Income

The post What Tax Reform Could Mean for Stocks appeared first on Economy and Markets.

Charles Sizemore – Economy and Markets ()




Markets Eye Tax Bill, IRS Fishing Targets Bitcoin; Gerald Celente: Middle East Wild Cards Could Drive Up Gold

Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.

Coming up we’ll hear from the one and only Gerald Celente of the Trends Journal. Gerald weighs in on the rise of cypto-currencies, the massive volatility he sees ahead in the crypto world and the key geopolitical ticking time bomb that he sees having a big effect on gold prices. Don’t miss another outstanding interview with Gerald Celente, coming up after this week’s market update.

Gold and silver markets lost ground this week as investors drove the stock market up to new highs – again.

With tax cuts ne aring passage in the U.S. Senate, investors preemptively celebrated. The Dow Jones Industrials surged by more than 700 points through Thursday’s close. It’s the biggest week for the Dow since the Trump bump last November.

Getting the corporate tax rate down to 20% would certainly help boost earnings and could lift economic growth up to 4% per year. That’s the upside. The downside to the GOP tax plan is that the Joint Committee on Taxation estimates it will add $ 1 trillion to federal deficits.

If growth projections disappoint, that number could be even worse. If the pessimistic scenario plays out, then the U.S. dollar stands to take a big hit.

Right now, most investors are focused on the optimistic scenario. Tax cuts should give at least some kind of boost to the economy in 2018.

The risk for bulls is that the boost has already been priced in to the stock market. They may also have to contend with some negative side effects of deficit-fueled tax stimulus. For one, inflation could come perking back up in the months ahead.

For now, inflation expectations remain relatively muted and inflation hedges are struggling to garner investor interest. This week, gold futures contracts experienced a large net liquidation as speculators unloaded positions.

As of this Friday recording, the yellow metal trades at $ 1,274 an ounce, posting a weekly loss of 1.2%. Silver is down 4.1% this week to bring spot prices to $ 16.36. Platinum is off 1.0% to $ 936 per ounce, while palladium is up 2.0% to trade at $ 1,025.

With the exception of palladium which touched a multi-year again high earlier this week, precious metals markets are mired in trading ranges. Hard money continues to be overshadowed by crypto-money. The leading crypto-currency Bitcoin spiked to about $ 11,000 this week before retreating.

Many holders of bitcoins are sitting on some enormous profits. Those gains translate into tax liabilities whenever bitcoins get sold or traded for goods or services. Some Bitcoin aficionados may be under the false impression that Bitcoin transactions are private and untraceable – and therefore outside the reach of the IRS.

Well, on Thursday the IRS won a federal court case that forces the leading crypto-currency exchange Coinbase to hand over information about its customers. More than 14,000 customers who engaged in transactions involving at least $ 20,000 in Bitcoin will have their records turned over to the IRS. They could face back taxes and penalties which require them to sell more of their Bitcoin in order to pay.

If the IRS expands its probes of cypto-currency transactions next year, a lot more people who may have recently jumped on the crypto-currency bandwagon could be in for an unpleasant reality check courtesy of the tax man.

Taxes also apply to any realized gains on physical precious metals, of course. But unlike digital currencies, tangible currencies don’t automatically generate records that can be obtained by bureaucrats or exploited by data thieves. In an era when your financial privacy is under constant threat, you can rest assured that your gold and silver coins won’t be digitally tracked or hacked into.

You don’t have to worry about losing your digital key as with crypto-currencies. There are lots of sad stories of people who are locked out of their bitcoins, or who died without being able to pass them on to their loved ones. Because they aren’t tangible, there’s no hope of ever recovering lost bitcoins without any digital records of their existence.

It is less likely, but still possible, to lose track of your precious metals holdings. That’s why you need to be careful and deliberate in where you store them. People who take to hiding their gold coins in obscure places – perhaps behind walls or beneath floor boards or in the ground – risk forgetting about them in old age, or dying without loved ones knowing where to look.

One viable alternative to storing your entire metals stash at home is to store at least some of it in a secure storage facility. Money Metals Depository offers segregated storage at the lowest fees in the industry, as low as $ 96 a year. For more information on our storage programs, just call us at 1-800-800-1865 or visit MoneyMetals.com/depository.

Well now, without further delay, let’s get right to this week’s exclusive interview.

Gerald Celente

Mike Gleason: It is my privilege now to welcome Gerald Celente, publisher of the renowned Trends Journal. Mr. Celente is perhaps the most well-known trends forecaster in the world and it’s always great to have him on with us.

Gerald, thanks for taking the time and welcome back.

Gerald Celente: Thanks for having me on.

Mike Gleason: Well, Gerald, to start off here, we still have the equities markets ripping and roaring and there is seemingly no news that can derail the train. So, as we head into the end of the year, what does your forecast show for the crowd on Wall Street? Is the party going to end anytime soon?

Gerald Celente: Well, as they go through with this tax deal, it’s just going to bring more money to the bigger corporations and you saw what the corporations have done with the profits from the past, what do they do with them? They reinvested them into the stock market rather than building their companies and investing in capital improvements.

So, giving them more money will give them more stock buybacks. The more stock buybacks, the higher the market goes. I mean that’s the reality of it. So, if the tax breaks go through the way they’re being planned, we’re going to see more stock buybacks, more cheap money to reinvest back into the markets.

Again, we’re looking at a very small segment of the population that’s really playing the markets. For example, only 10% of Americans are in the markets at the range that makes any difference, so that 10%, for example, that’s playing, they have about in equity about $ 350,000 (on average). The rest of society that has money into it, the so called middle class, of those that have any money in it, and again the 10% own over 90%. For the rest of the society, they only have about $ 15,000 in equity.

So, the markets are just going to keep going up if the cheap money keeps existing. Again, that’s going to also see what happens when they raise interest rates, which are about a 99% sure shot now, later in December. And if the cheap money flows stop, then the markets stop. It’s as simple as that, but we don’t think a 25 basis point increase is going to have much of an impact.

Mike Gleason: Clearly the world has a problem with crooked bankers and corrupt politicians. We talked about this a bit when we had you on back in August. The two aren’t unrelated, of course. Bankers and politicians have a very long and dark history of collusion.

On one hand, if history is a guide, there isn’t much reason to expect anyone will be held to account for their crimes. “They are too big to jail,” as former Attorney General Eric Holder might say. On the other hand, we can’t help but be a little bit hopeful. It looks to us like some of these crimes, such as the Uranium One deal, are getting harder to ignore.

What do you make of the recent news? Are you feeling any more optimistic about some of these crooks actually going to prison?

Gerald Celente: No, quite the opposite. Look at the new Fed chair that’s coming in. He’s already saying that the banking regulations in place now are too tough and tough enough. So, if under the current regulations nobody went to jail and they soften them, they could steal more, and get fined, and also accused of less crimes.

So, no, it’s going in the opposite direction. Under the new administration, they’re not draining the swamp, they’re just filling the swamp with different swamp creatures. I mean look at the Trump White House. Who’s running it? Mnuchin and Cohn on the financial end and those are both Goldman Sachs guys. It’s just more of the same.

Mike Gleason: The rise of cryptocurrencies, Bitcoin in particular, is making waves in the precious metals markets. Some of the demand for gold and silver has been diverted to Bitcoin. People see it as another form of honest money and there is plenty of excitement over the huge price gains. Lots of people are wondering what the rise of Bitcoin might mean for precious metals over the longer term.

Now, our take is that Bitcoin offer hope as honest money and we are certainly fans of anything that can circumvent central bankers. Gold and silver, on the other hand, are proven stores of value with a track record extending back thousands of years and they are totally off the grid. Physical metals work with or without electricity or an internet connection and they can be used without leaving digital tracks behind.

What are your thoughts on the relationship between Bitcoin and bullion?

Gerald Celente: Well, we’ve been writing a lot about it now in our Trends Journal. One of the points that we keep making is that we see this isn’t a fad, it’s a trend in the cryptocurrency world, but the volatility’s going to be enormous.

Again, when you look at volatility in gold … I remember, back in 1980, I bought gold in the highest point of the trading day at $ 875 an ounce and then it went down from there. It was down for, what, almost 20 years.

So that’s the kind of thing you’re going to see in cryptocurrencies, as well. You’re going to see great volatility. They’re not going to go anywhere, but in looking at it, you see what happens when there’s geopolitical unrest. For example, you saw what happened in Zimbabwe, when they were getting rid of Mugabe, who had been running the joint since 1980. All of a sudden, Bitcoin over there spiked.

So, you’re going to see that kind of thing, but, again, there’s definitely playing a role as another safe haven asset of sorts, relative to gold and silver, but the volatility aspects in the crypto world are far higher and far greater than any of the precious metals. Also, in the cryptocurrencies, or what we call “Millennials’ Gold.”

My generation was gold, this generation, they’re looking more at digital. It’s a digital world. You’re in China, you don’t pay anything with cash or credit cards, it’s an app. So, it’s a different world.

However, saying all that, again, the big point is, you’re going to see a lot of the cryptos come and go. There’ll be some for the long term. The volatility will be enormous, but we don’t see them going away in the long term. And when you look, again, at particularly gold, the central banks around the world are buying it up in much greater proportions now, although the public is buying less physical gold.

So the demand for physical gold among the central banks, particularly Russia, China, will continue. And the crypto markets will have their place, but again, the volatility’s real, something we’ve been forecasting for quite some time and you can see it in the numbers.

Mike Gleason: One of the potential drivers for Bitcoin prices moving forward… it looks like the CME Group, the people behind the COMEX Exchange will soon launch a futures contract for Bitcoin. Lots of people in the crypto space are excited that the market will be opened up to “institutional money” and expect additional demand will be good for the Bitcoin price.

That might be true, but we have a dim view of the COMEX and how crooked the markets for gold and silver have become. According to the recent Wikileaks memo, they showed evidence that gold futures were first launched in the early 1970’s to help to rig the gold price, trade volatility, and discourage ownership for physical gold. 40 years later, we can look back and see precious metals futures worked exactly as intended.

In light of that and in light of this news now, what are we going to see a Bitcoin future exchange mean and can you comment about whether this will be good news or bad news for the cryptos?

Gerald Celente: Well, you summed it up. You’re going to see a lot more volatility. Again, I remember, going back to 1980 with the volatility of the gold markets and how also, though, and this is very important. Because of the futures trading, that’s what really drove the prices up.

What we expect to see is that you’re going to see a real surge and a price drive, higher, but you’re also going to see a greater downward collapse of the prices as well. Again, you see it with the futures contracts in many different fields, naked shorts, all of a sudden, the whole market changes in a flash.

So it can be very easily manipulated by bigger players. And again, with cryptos, it’s a bit more difficult considering how difficult it is to buy them, the periods of time you have to wait in order for you to buy them, so it’s going to be a little harder to manipulate, but they’ll figure a way how to do it.

So, expect, when the CME futures happen, and also other futures exchanges opening around the world, much more volatility. So what we see is a real spike up and a real sharper spike down.

Mike Gleason: Getting back to the Fed a little bit here. Jerome Powell was recently tapped to replace Janet Yellen as Fed chair, as you mentioned earlier. Powell looks like another garden variety central planner to us. He’s an attorney with decades of experience spread across Wall Street to Washington D.C. Obama installed him on the Board of Governors at the Fed in 2012.

Give us a little bit more about what your take is on Powell and can we expect any difference happening with the monetary policy?

Gerald Celente: Well, again, Powell has already made clear that the bank regulations are too difficult already for the banksters. So, what that means is that the bigger banks will have less regulation, more trading opportunities.

Again, who made up this thing that banks are supposed to be investment banks. Banks were there just as commercial banks. When I was a kid growing up, banking was boring. Banks used to open up at like 10:00 in the morning and be closed by 3:00. I mean, really. I know it sounds like ancient history, and it is when you get older, but there was no such thing as an investment bank.

So, what he’s going to do is the that the bigs are going to be bigger, more manipulation in the system, and again, he is a proponent, he says, of raising interest rates. However, we don’t see them going up that high. And as long as interest rates remain low, the Ponzi scheme on Wall Street continues.

I mean, there’s only one factor that’s driven the markets. It’s cheap money. Period. Paragraph. The rich have gotten richer and everybody else has gotten poorer. Those are the facts. Median household income in the United States is below 1999 levels.

Do you realize you have five people in the world, five people, that have more money than 3.5 billion people, half the world’s population? Same thing in the United States. Buffett, Gates, and Bezos. Three people have more money than half of the American population combined.

So, Powell is just one of the white shoe boys. He’s going to keep the club going and it’s going to go in the same direction it was going before. Again, the bubble can happen because it is a bubble and it’s only being pumped up by this monetary methadone. That’s all it is. It’s a fix.

There’s wild cards that would change this in a flash. And the wild cards, for example, could be what’s going on in the Middle East, with the new crown prince over there in Saudi Arabia saying that Lebanon and Iran have declared war against Saudi Arabia, which they never have. And you know how he became a crown prince, don’t you, that everybody’s bowing down to? You must remember when you were a kid. A princess kissed a frog and the frog became a prince and then a king.

I mean, who’s making this garbage up? Crown prince. Give me a break, man. They just made the Saudi government up in about 1934. It’s an oligarchy. It’s one of the most repressed nations on earth and they’re starting wars. They’ve slaughtered over 10,000 Yemenis. 50,000 Yemeni children are going to die this year because of the war conditions started by Saudi Arabia, supported by the United States. We just sold them another $ 7 billion worth of armaments.

Again, now that the Arab League, minus Syria, Qatar, and Iran, and Iraq, are declaring a new Arab NATO and a war against terrorism. A war against terrorism? Hey, it’s the Saudis that gave the money to Al Qaeda and ISIS to overthrown Qaddafi in Libya and Assad in Syria.

But, again, the presstitute news doesn’t bring these facts out. Going back to gold, gold is the ultimate safe haven in times of geopolitical economic instability. And geopolitical and economic instability in the Middle East could bring down the markets and drive up gold prices.

Remember, Saudi Arabia needs oil at $ 100 a barrel for its economy to break even, to balance its budget. We were playing with $ 40, $ 50, now $ 60 oil since 2014. They’re in great financial straits. You look at the numbers, man. Anybody. All they have to do is look at them. Look at the oil revenue coming in from 2006 to Saudi Arabia to 2017 and it’s lower now in 2017 than it was even back in 2006.

Going back to gold. Our forecast of gold has been steady since 2013. November 2013, we said, “Gold prices have to stabilize over the mid $ 1,400’s.” $ 1,450, $ 1,480, $ 1,460, $ 1,470. Then it would spike to $ 2,000. Absent that, we saw a downside risk of gold at around $ 1,150. Saying this constantly. We maintained that forecast.

We see gold coming under more pressure even though we see interest rates coming up and most people are expecting it. There’s an opportunity cost for holding gold. Bond yields go higher, become more attractive, gold less attractive.

However, in this time of economic and geopolitical uncertainty, we still maintain that gold is the ultimate safe-haven asset in this geopolitical and economic climate.

Mike Gleason: Well, finally, as we begin to close here, Gerald, anything else that you’re focusing on as we head towards the final month of 2017 and start looking at 2018? What’s on the horizon and what are you watching most closely?

Gerald Celente: What we’re watching most closely, really, is the events in the Middle East. People are talking a lot about North Korea. We’re not so concerned about that, because if the United States does anything to North Korea, in terms of war – and by the way, again, we’re getting a one-sided story. The United States keeps launching these massive military maneuvers. Matter of fact, there’s going to be a new one in December with about 16,000 U.S. troops, hundreds of aircraft, and also naval forces on their shores.

So the United States is provoking North Korea and North Korea’s made it very clear they’re not going to give up a nuclear weapon because they saw what the United States did to Qaddafi and Hussein when they gave up their nuclear capability.

What we’re saying is that North Korea’s not on our radar as being the hot spot that could explode, because if the United States launches war against North Korea, say goodbye to South Korea. What do you got? 24 million people living in Seoul, Korea, about 35 miles away from the North Korean border? Say goodbye to Japan. It’s not going to happen.

Again, (North Korea) that’s a country, by the way, with a GDP smaller than West Virginia’s and a population the size of Texas. They don’t have the wherewithal to withstand the long war, so what they’ll do is, they’ll go all out and destroy anything anywhere near them.

Again, while the focus is on North Korea and everybody’s pumping up this king over there, or the crown prince, excuse me, who’s really the de facto leader at 32 years old, in Saudi Arabia, as the new enlightened guy over in the region, we see just the opposite. So that’s where our focus is really on, very heavily now.

And looking at the real news and really reading through and sifting through the propaganda that’s being sold by their government, our government, and other governments, and repeated by the presstitute media, those reporters that cut paid to put out by their corporate Johns and their Washington whoremasters.

Mike Gleason: Well, thanks so much for your time again today and we appreciate it, as always, and love getting your candid and unfiltered comments on the state of things. Now, before we let you go, please tell listeners how they can get their hands on the Trends Journal and the other great information that you put out there on a regular basis at the Trend Research Institute.

Gerald Celente: Well, the new Trends Journal will be out this week. You could got to TrendsResearch.com or TrendsJournal.com. And not only do we put out the Trends Journal, we do Trends in the News Broadcast, we have Trends Monthly, Trend Alerts each week. Money back guarantee, the only place you’ll read history before it happens. TrendsResearch.com or TrendsJournal.com.

Mike Gleason: Well, thanks again, Mr. Celente, for being so generous with your time, as always. Have a great weekend and we’ll look forward to our next conversation. Take care.

Gerald Celente: Thank you for having me on and thank you for all that you do.

Mike Gleason: Well, that will do it for this week. Our sincere thanks, again, to Gerald Celente, publisher of the renowned Trends Journal. For more information, the website again is TrendsResearch.com. Be sure to check that out.

And check back here next Friday for our next Market Wrap Podcast. Until then, this has been Mike Gleason with Money Metals Exchange. Thanks for listening and have a great weekend everybody.

Precious Metals News & Analysis – Gold News, Silver News




How A North Korean Electromagnetic Pulse Attack Could Kill Millions And Turn America Into A Post-Apocalyptic Wasteland

This is why North Korea’s test of an intercontinental ballistic missile is so important.  North Korea had test fired a total of 22 missiles so far this year, but this latest one showed that nobody on the globe is out of their reach.  In fact, General Mattis is now admitting that “North Korea can basically threaten everywhere in the world”, and that includes the entire continental United States.  In addition to hitting individual cities with nukes, there is also the possibility that someday North Korea could try to take down the entire country with an EMP attack.  If the North Koreans detonated a single nuclear warhead several hundred miles above the center of the country, it would destroy the power grid and fry electronics from coast to coast.

I would like you to think about what that would mean for a few moments.  Suddenly there would be no power at home, at work or at school.  Since nearly all of our vehicles rely on computerized systems, you wouldn’t be able to go anywhere and nobody would be able to get to you.  And you wouldn’t be able to contact anyone because all phones would be dead.  Basically, pretty much everything electronic would be dead.  I am talking about computers, televisions, GPS devices, ATMs, heating and cooling systems, refrigerators, credit card readers, gas pumps, cash registers, hospital equipment, traffic lights, etc.

For the first couple of days life would continue somewhat normally, but then people would soon start to realize that the power isn’t coming back on and panic would begin to erupt.

The intercontinental ballistic missile that North Korea just launched traveled almost 1,000 kilometers and reached a maximum altitude of 4,500 kilometers.  We have been told for decades that this would never be allowed to happen, but now it has happened

This is concerning for one big reason: according to General Mattis, the North Korean ICBM “went higher, frankly, than any previous” and “North Korea can basically threaten everywhere in the world.” This was confirmed by North Korea missile analyst, Shea Cotton, who cited Allthingsnuclear author David Wright, and who told the BBC that the initial estimates of the ICBM test mean that North Korea can now reach New York and Washington DC.

If we had been working hard to develop our anti-missile technology all these years, this wouldn’t be a problem.

But at this point we are way behind the Russians in this regard, and there is a very real possibility that a missile launched by the North Koreans could make it through the very limited anti-missile defenses that we do have.

Once upon a time, discussions about a North Korean EMP threat were mostly hypothetical, but now that has completely changed.  North Korea has clearly demonstrated that they are able to deliver such an attack, and last September Kim Jong Un publicly admitted that North Korea intended to develop this capability

But most reporters missed a key threat that appeared at the bottom of Kim’s public statement, when he bragged that North Korea had harnessed “a multi-functional thermonuclear nuke with great destructive power which can be detonated at high altitudes for super-powerful EMP (electromagnetic pulse) attack according to strategic goals.”

So now we know. Launching an electromagnetic pulse attacks against its enemies is one of North Korea’s strategic goals. And for North Korea, the United States is the top enemy.

And like I said earlier, all it would take would be a single well placed nuclear detonation to fry electronics from coast to coast.  The following comes from the Daily Mail

Theoretically, a sufficiently powerful bomb detonated at an altitude of 249 miles would wipe out all electronics in the US, save the southernmost top of Florida and the easternmost states – as well as affecting Canada and Mexico.

Without power, nothing would get distributed.  That means that very rapidly there would be no food, no water and no medicine available in your community.  An article posted by Fox News this week used the term “post-apocalyptic” to describe what we would be facing…

It all starts to sound very post-apocalyptic when you realize this means no lights or other electric-powered devices in homes and businesses, no water filtration, no regional food hubs, no transportation grid – none of the things we take for granted in modern civilization.

Like I stated earlier, things would be relatively fine for a few days, but then once everyone realizes that the power isn’t coming back on there would be chaos on a scale unlike anything we have ever seen before.  The following comes from an article by Mac Slavo

The first 24 – 48 hours after such an occurrence will lead to confusion among the general population as traditional news acquisition sources like television, radio and cell phone networks will be non-functional.

Within a matter of days, once people realize the power might not be coming back on and grocery store shelves start emptying, the entire system will begin to delve into chaos.

Within 30 days a mass die off will have begun as food supplies dwindle, looters and gangs turn to violent extremes, medicine can’t be restocked and water pump stations fail.

So what kind of a “mass die off” would we be talking about?

Well, some of the top experts in the field believe that “up to 90 percent of all Americans” could end up dead if the power outage lasted long enough…

William Graham, chairman of the former EMP commission and its former chief of staff, Peter Vincent Pry, warned the hearing that such an attack could “shut down the US electric power grid for an indefinite period, leading to the death within a year of up to 90 percent of all Americans.

Others believe that the figure would be lower, but pretty much everyone agrees that the death toll would be in the millions.

This is one of our greatest strategic vulnerabilities, and our power grid could be hardened against an EMP attack for just a few billion dollars.  This is something that I am pushing very hard for, but right now it is just not a priority for our leaders in Washington.

In fact, they have actually pulled funding from the commission that was looking into the EMP threat…

On Sept. 30, the Congressional Commission to Assess the Threat of Electromagnetic Pulse to the United States of America shut its doors after a failure to secure funding from Congress.

Sometimes I find it difficult to come up with the words to describe how incredibly foolish Congress is being.

An EMP attack is a greater threat than ever before, and yet Congress didn’t even want to come up with a little bit of funding for the commission that was working on a plan to protect us.

This is yet another example that shows that we need new leadership on Capitol Hill, because right now the people that we have “representing” us in Washington seem to be completely and utterly clueless about almost everything.

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




Why America’s Retail Apocalypse Could Accelerate Even More In 2018

Is the retail apocalypse in the United States about to go to a whole new level?  That is a frightening thing to consider, because the truth is that things are already quite bad.  We have already shattered the all-time record for store closings in a single year and we still have the rest of November and December to go.  Unfortunately, it truly does appear that things will get even worse in 2018, because a tremendous amount of high-yield retail debt is coming due next year.  In fact, Bloomberg is reporting that the amount of high-yield retail debt that will mature next year is approximately 19 times larger than the amount that matured this year…

Just $ 100 million of high-yield retail borrowings were set to mature this year, but that will increase to $ 1.9 billion in 2018, according to Fitch Ratings Inc. And from 2019 to 2025, it will balloon to an annual average of almost $ 5 billion. The amount of retail debt considered risky is also rising. Over the past year, high-yield bonds outstanding gained 20 percent, to $ 35 billion, and the industry’s leveraged loans are up 15 percent, to $ 152 billion, according to Bloomberg data.

Even worse, this will hit as a record $ 1 trillion in high-yield debt for all industries comes due over the next five years, according to Moody’s.

Can you say “debt bomb”?

For those of you that are not familiar with these concepts, high-yield debt is considered to be the riskiest form of debt.  Retailers all over the nation went on a tremendous debt binge for years, and many of those loans never should have been made.  Now that debt is going to start to come due, and many of these retailers simply will not be able to pay.

So how does that concern the rest of us?

Well, just like with the subprime mortgage meltdown, the “spillover” could potentially be enormous.  Here is more from Bloomberg

The debt coming due, along with America’s over-stored suburbs and the continued gains of online shopping, has all the makings of a disaster. The spillover will likely flow far and wide across the U.S. economy. There will be displaced low-income workers, shrinking local tax bases and investor losses on stocks, bonds and real estate. If today is considered a retail apocalypse, then what’s coming next could truly be scary.

I have written extensively about Sears and other troubled retailers that definitely appear to be headed for zero.  But one major retailer that is flying below the radar a little bit that you should keep an eye on is Target.  For over a year, conservatives have been boycotting the retailer, and this boycott is really starting to take a toll

Target has been desperately grasping at ideas to recover lost business, including remodeling existing stores and opening smaller stores, lowering prices, hiring more holiday staff and introducing a new home line from Chip and Joanna Gaines. But Target stock remains relatively stagnant, opening at 61.50 today—certainly nowhere near the mid-80s of April 2016, when the AFA boycott began.

In the past, retailers could always count on the middle class to bail them out, but the middle class is steadily shrinking these days.  In fact, at this point one out of every five U.S. households has a net worth of zero or less.

And we must also keep in mind that we do not actually deserve the debt-fueled standard of living that we are currently enjoying.  We are consuming far more wealth than we are producing, and the only way we are able to do that is by going into unprecedented amounts of debt.  The following comes from Egon von Greyerz

Total US debt in 1913 was $ 39 billion. Today it is $ 70 trillion, up 1,800X. But that only tells part of the story. There were virtually no unfunded liabilities in 1913. Today they are $ 130 trillion. So adding the $ 70 trillion debt to the unfunded liabilities gives a total liability of $ 200 trillion.

In 1913 US debt to GDP was 150%. Today, including unfunded liabilities, the figure becomes almost 1,000%. This is the burden that ordinary Americans are responsible for, a burden that will break the US people and the US economy as well as the dollar.

The only possible way that the game can go on is to continue to grow our debt much faster than the overall economy is growing.

Of course that is completely unsustainable, and when this debt bubble finally bursts everything is going to collapse.

We don’t know exactly when the next great financial crisis is coming, but we do know that conditions are absolutely perfect for one to erupt.  According to John Hussman, it wouldn’t be a surprise at all to see stock prices fall more than 60 percent from current levels…

At the root of Hussman’s pessimistic market view are stock valuations that look historically stretched by a handful of measures. According to his preferred valuation metric — the ratio of non-financial market cap to corporate gross value-added (Market Cap/GVA) — stocks are more expensive than they were in 1929 and 2000, periods that immediately preceded major market selloffs.

“US equity market valuations at the most offensive levels in history,” he wrote in his November monthly note. “We expect that more extreme valuations will only be met by more severe losses.”

Those losses won’t just include the 63% plunge referenced above — it’ll also be accompanied by a longer 10 to 12 year period over which the S&P 500 will fall, says Hussman.

A financial system that is based on a pyramid of debt will never be sustainable.  As I discuss in my new book entitled “Living A Life That Really Matters”, the design of our current debt-based system is fundamentally flawed, and it needs to be rebuilt from the ground up.

The borrower is the servant of the lender, and our current system is designed to create as much debt as possible.  When it inevitably fails, we need to be ready to offer an alternative, because patching together our current system and trying to re-inflate the bubble is not a real solution.

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




Popocatepetl Violently Erupts, And Authorities Warn A Bigger Eruption Could Threaten More Than 20 Million People In Mexico City

Mt. Popocatepetl is one of the most important volcanoes on the entire planet, and yet most Americans are not familiar with it.  In ancient Aztec, Popocatepetl means “smoking mountain”, but to the locals the 5,426-meter-high volcano is simply known as “Don Goyo”.  A catastrophic eruption of “Don Goyo” would be a nightmare scenario for the more than 20 million people living in the Mexico City metropolitan area, and that is why authorities are watching Mt. Popocatepetl very closely at the moment.  In fact, we are being warned that the eruption that just took place could be a precursor to an even larger eruption

Chilling footage showing the violent eruption emerged online amid fears there could be more.

A huge plume of smoke blasted three kilometres in to the air from the summit of Popocatepetl after a series explosions over the course of 24 hours.

Surrounding towns were blanketed with ash and debris and authorities are now warning a bigger eruption could threaten the 23.6million inhabitants in the Mexican capital, located just 35 miles (56km) away.

This latest eruption actually resulted in what is known as a “volcanotectonic earthquake”.  Such quakes are caused by the movement of magma, and scientists are very concerned about what that might mean.

“Don Goyo” has been spewing ash regularly since early this month, and at this point local residents are being told to remain indoors

Locals have been warned to avoid outdoor activities and to keep doors and windows shut, and it is not yet clear when they can leave their homes.

It has been emitting ash since the beginning of the month, reports suggest, before a string of explosions.

Of course the activity at Mt. Popocatepetl has been ramping up for quite a while.  Back on September 19th, a magnitude 7.1 earthquake that affected Mexico City also triggered a minor eruption of the volcano.

But minor eruptions can be handled.  What we want to avoid is the kind of catastrophic eruption that has given Popocatepetl legendary status.  In fact, we are told that at one time enormous mud flows from the volcano buried entire Aztec cities

Historians tell us that Popocatepetl had a dramatic impact on the ancient Aztecs. Giant mud flows produced by massive eruptions covered entire Aztec cities. In fact, some of these mud flows were so large that they buried entire pyramids in super-heated mud.

But we haven’t witnessed anything like that in any of our lifetimes, so it is hard to even imagine devastation of that magnitude.

In addition to Mexico City’s mammoth population, there are millions of others that live in the surrounding region. Overall, there are about 25 million people that live in the immediate vicinity of Popocatepetl. Thankfully, we haven’t seen a major eruption of the volcano in modern times, but at some point that will change.

Our planet is becoming increasingly unstable, and the magnitude 7.3 earthquake that just hit Iraq is yet more evidence of this fact.

A catastrophic eruption of Mt. Popocatepetl would be a disaster unlike anything North America has seen in centuries, and it would almost instantly collapse Mexico’s economy.

This isn’t getting a lot of attention from the mainstream media in the United States, but this is a major story.  Great shaking is taking place all along the “Ring of Fire”, and that potentially has dramatic implications for people living all over the globe – including the west coast of the United States.

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




The Mainstream Media Is Talking About A Coming Middle East War That Could Involve Saudi Arabia, Iran, The U.S. And Israel

People better start waking up and paying attention to what is happening in the Middle East, because the situation is becoming quite serious.  If things go badly, we could be facing a major regional war which would involve not only Saudi Arabia and Iran, but also potentially the United States and Israel.  Yesterday, I quoted an article in the New York Times that warned that tensions between the Saudis and the Iranians were raising “the threat of a direct military clash between the two regional heavyweights”.  And now Jake Novak of CNBC is saying that a “direct conflict between Saudi Arabia and Iran, as opposed to the proxy war they’re fighting in Yemen, looks inevitable.”

I put those last two words in bold so that there wouldn’t be any confusion.  In fact, Novak is warning that the Saudis “are marching ever closer towards a wider regional war”.  Novak understands the dynamics of the Middle East, and he realizes where things could be headed if cooler heads do not prevail.

Saudi Arabia and Iran have already been fighting proxy wars against one another in Syria and Iran for quite a while, but a direct military conflict between the two could literally be a nightmare scenario.

One of the primary characters in this ongoing drama is Saudi Arabia’s extremely hawkish crown prince Mohammed bin Salman.  He hates Iran with a passion, and he has already said that he believes that a peace dialogue with Iran is impossible.

And over the past several days, events in Saudi Arabia and Lebanon have moved talk of war to the front burner

First, the kingdom squarely blamed Iran for a missile attack on Riyadh from Yemen that was thwarted by the U.S.-made Patriot anti-missile system. The Saudis called that attack “direct military aggression by the Iranian regime and may be considered an act of war.”

Second, the Saudis accused Lebanon of — figuratively at least — declaring “war” against it because of aggression from Hezbollah. That statement spurred even Saudi ally and Egyptian President Abdel Fattah al-Sisi to publicly urge for calm.

In an article yesterday, I discussed the “purge” that is currently taking place in Saudi Arabia.  Many believe that this purge is all about removing any potential obstacles to a war with Iran.  Mohammed bin Salman and his father have made dealing with Iran their number one strategic priority, and they have even enlisted the Israelis as allies in their cause…

As is already well-known, the Saudi and Israeli common cause against perceived Iranian influence and expansion in places like Syria, Lebanon and Iraq of late has led the historic bitter enemies down a pragmatic path of unspoken cooperation as both seem to have placed the break up of the so-called “Shia crescent” as their primary policy goal in the region. For Israel, Hezbollah has long been its greatest foe, which Israeli leaders see as an extension of Iran’s territorial presence right up against the Jewish state’s northern border.

If Saudi Arabia and Iran go to war, it is probably inevitable that Hezbollah will strike Israel at the same time, thus getting the Israelis directly involved in the conflict.

Not only that, if a major regional war does erupt in the Middle East it would almost certainly mean that the U.S. would have to get involved as well.  Here is more from Jake Novak of CNBC

But if full blown war breaks out directly between the two countries, it’s hard to see the U.S. being able to sit it out without at least some form increased weapons support and other aid. Then it will be up to Iran’s possible allies, like Russia and China to make the next move.

If you are thinking that this sounds like the type of scenario that could cause World War III to erupt, you would be correct.

The Iranians and the Saudis both have weapons of mass destruction, and so a direct conflict between the two would seem to be unthinkable.

But rational thinking does not always prevail in the Middle East.  The conflict between Sunni Islam and Shia Islam has a long and bitter history, and the bad blood between the Saudis and the Iranians is never going to subside until one side or the other ultimately prevails.

Let us hope that a “hot war” between Saudi Arabia and Iran does not erupt any time soon, because such a war would not be good for the United States whatsoever.  Pretty much every scenario that you can imagine ends with enormous numbers of innocent people dead, and such a conflict could ultimately be the spark that sets off World War III.

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




Mexico Monetizing the Silver Libertad Coin Could Bring Trouble

Recently, there was a debate in the Mexican Congress on the proposal to monetize the Silver Libertad Coin. The debate took place during a forum for “The Promotion of Savings for Mexicans.” If Mexico decided to monetize its Silver Libertad Coin, it could have a severe impact on the silver market and price.

How much of an impact would the monetization of the Mexican Silver Libertad have on the market? There could be serious ramifications if we consider the vast amount of silver consumed by the minting of Mexican silver coins in the past. Before I get into that data, let’s look at the following text from the article, The Mexican Congress Debates the Monetization of the ‘Libertad’ Silver Ounce, on Hugo Salinas Price’s plata.com site;

The central feature of the proposal is that the Central Bank of Mexico (Banxico) shall determine a value in pesos for the “Libertad” silver ounce; and that this value shall be slightly higher (by a percentage that would be defined in the corresponding Law) than the price of silver in the international market, in order to provide Banxico with an assured profit in minting and placing these coins in monetary circulation.

….if the price of silver should shoot upward, Banxico would have to issue new, higher quotes for the “Libertad” silver ounce (according to the formula to be established by Law). In this way, again, the coin will remain “in circulation”, and since it has no nominal price stamped on it, it will avoid ending up – like all the old silver coins that had stamped values – at the refineries.

Most of those old silver coins, once their content was worth more than the peso stamped value on their faces, ended up in the refineries. The holders of the coins sold their coins at a profit, for their silver content.

This won’t happen with the “Libertad” silver ounce, whose value will be adjusted upward, and benefit the saver, who will thus retain his purchasing power no matter what may happen with inflation. Thanks to owning silver “Libertad” ounces, the public’s savings will float on the ocean of currency through the years.

The important feature in the proposal to monetize the Silver Libertad was that the Central Bank of Mexico would adjust the value of the coin based on the price of silver, rather than striking a permanent numerical value on the face of the coin. By basing the value of the Silver Libertad on the market value of silver, this would protect the Mexican citizen from the ongoing devaluation of the Peso.

For example, the Mexican Peso has devalued 93% versus the U.S. Dollar since the mid-1970’s:

Mexican Peso (Monthly Spot - in US$ )

The Mexcian Peso was valued at $ 0.8006 to the U.S. Dollar in the mid-1970’s but is now trading at $ 0.0570. Thus, the Mexican Peso has lost 93% of its value in just the past 40+ years. We can see the devaluation of the Mexican currency much better by looking at the relationship between the amount of silver contained in each coin versus the number of Pesos struck on the face of the coin.

The following table came from the MexicanSilverCoins.net site:

Silver Content of the Mexican Peso by Year(s)

The Peso minted between 1869-1913, contained 0.786 (oz) of silver in the one-ounce coin. The value struck on the front of the coin was 1-Peso. However, if you look down to 1950, the 1-Peso coin only had 0.1286 (oz) worth of silver in it. The amount of silver contained in the 1-Peso coin was six times less in 1950 than compared to 1913.

Now, by examining the amount of silver in the 1913 1-Peso of 0.786 (oz) versus the 100-Peso (1977-1979) of 0.6426 (oz), we can see that there was only 0.00642 (oz) of silver backing 1-Peso in the late 1970’s than the 0.786 (oz) of silver backing the 1-Peso in 1913. Please understand that the Central Bank of Mexico stamped 100-Peso on the face of the coin with only 0.6426 (oz) of silver contained in it.

Thus, the Mexican Peso lost 99.2% of its silver content between 1913 and 1977.

Mexico Minted A Vast Amount Of Silver Coins In The 1900’s

While I knew the Official Mint Of Mexico produced a lot of silver coins in the past, I had no idea the huge amount until I looked up the data. According to figures put out by the SilverAgeCoins.com, the Mint of Mexico produced a great deal of Silver Pesos and Silver 50 Centavos in the early to mid part of the 20th Century:

Silver Pesos and Centavos

I focused on the mintage figures for these two coins in 1943. Total Silver Pesos & 50 Centavos minted in 1943 were 89.2 million coins. However, the total silver contained in these two coins minted that year was 26.5 million oz (Moz):

Mexico Silver Peso & Silver 50 Centavos (silver content):

1943 Silver Peso = 47,662,000 x 0.39 (oz) = 18,588,180 oz

1943 Silver 50 Centavos = 41,512,000 x 0.19 (oz) = 7,887,280 oz

1943 Silver Coins = 89,174,000 = 26,475,460 oz

I did not do extensive research on all the silver coins produced by the Mint of Mexico in 1943, but I would imagine there were others. For example, I found on the same website listed above that 3,955,000 of the Mexican Silver 20 Centavos were produced in 1943 as well. However, the amount of silver in each of the 20 Centavos was only 0.08 (oz), which netted a total of 316,400 oz of silver consumed.

Regardless, the Mint of Mexico produced one heck of a lot of silver coins during that period. Now, if we consider that the Mexican government consumed 26.5 Moz of silver to mint the Silver Peso and Silver 20 Centavos coins for a total population of approximately 20 million in 1943, how much silver would they consume to protect the value of its current 130 million citizens?

Big Trouble For The Silver Market If Mexico Monetizes Its Silver Libertad Coin

As I stated in the previous section, the Mint of Mexico consumed 26.5 Moz of silver in producing their Silver Peso and Silver 50 Centavos coins in 1943. That being said, let’s look at Mexico’s total silver mine supply during the same year. According to the information put out by the U.S. Bureau of Mines, Mexico produced 86.4 Moz of silver in 1943:

Minerals Yearbook, 1943

Thus, Mexico consumed 30% of its domestic mine supply just to produce two of its silver coins in 1943. Furthermore, the population of Mexico at the time was approximately 20 million. Thus, the Mint of Mexico consumed 1.3 oz of silver in the Peso & 50 Centavos coins for each citizen. That’s a lot of silver.

Now… let’s fast forward to present day. The amount of Silver Libertads, the Mint of Mexico, produces today, are a fraction of what they were in the past. According to the data put out in the 2017 World Silver Survey, there was only 800,000 oz of Silver Libertads produced in 2016:

Table 2: Silver Fabication: Coins and Medals (Including the Use of Scrap)

As we can see, the Mint of Mexico produced 800,000 oz of Silver Libertads versus 40.3 Moz of Silver Eagles fabricated by the U.S. Mint last year. The irony about those two figures is that the U.S. had to import silver to produce the 40.3 Moz of Silver Eagles as its domestic mine supply was only 35 Moz. On the other hand, Mexico produced 186 Moz of silver in 2016, more than five times that of the United States.

Something is seriously wrong here. Why is Mexico exporting all of its silver for worthless fiat money if its citizens could acquire domestically minted Silver Libertads to protect their wealth in the future? I would imagine the U.S. government has something to do with controlling Mexican officials in keeping their citizens entirely in the dark about silver as MONEY and a STORE OF VALUE.

If the proposal to monetize the Silver Libertad gains traction in Mexico, the silver market would be in serious trouble. Here’s why. Currently, Mexico produces about 186 Moz of silver:

Mexican Silver Production 2007-2016

If the Silver Libertad was monetized and 30% of Mexico’s silver production was used to produce these coins, as it was in 1943, it would consume nearly 56 Moz of the country’s domestic mine supply. Moreover, with a population of 130 million in Mexico, 56 Moz of Silver Libertads would amount to less than a third of an ounce of silver for each citizen.

While it is an excellent idea that the Silver Libertad is monetized as protection for Mexican citizens against the ongoing devaluation of the Peso, it will be an uphill battle in state politics. Unfortunately, the world depends on a lot of silver coming from Mexican mines to supply the global jewelry, electronics and investment industries. If its citizens consumed a significant portion of Mexico’s silver production in acquiring vast numbers of Silver Libertads, it could severely impact the silver market and price.

It will be interesting to see how far this proposal to monetize the Silver Libertad goes in the Mexican government.

Precious Metals News & Analysis – Gold News, Silver News




Category 6? If Hurricane Irma Becomes The Strongest Hurricane In History, It Could Wipe Entire Cities Off The Map

Meteorologists have been shocked at how rapidly Hurricane Irma has been strengthening, and they are already warning that if it hits the United States as a high level category 5 storm the devastation would be absolutely unprecedented.  Of course we are already dealing with the aftermath of Hurricane Harvey, and many experts are already telling us that the economic damage done by that storm will easily surpass any other disaster in all of U.S. history.  But there is a very real possibility that Hurricane Irma could be even worse.  According to the National Hurricane Center, at 5 PM on Friday Irma already had sustained winds of 130 miles per hour.  But it is still very early, and as you will see below, next week it is expected to potentially develop into a category 5 storm with winds of 180 miles per hour or more.

I suppose that it is appropriate that such a powerful storm has a very powerful name.  In old German, the name “Irma” actually means “war goddess”

The name Irma is a German baby name. In German the meaning of the name Irma is: Universal, from the Old German ‘irmin’. War goddess.

Irma began forming on Wednesday, and it intensified at a faster rate than any storm that we have seen in nearly 20 years

Hurricane Irma formed early Wednesday in the warm waters off the coast of West Africa — and took just 30 hours to strengthen to a Category 3. That’s the fastest intensification rate in almost two decades. By Friday afternoon, the storm had also grown noticeably larger in size with a well-defined eye, a classic sign of a strong hurricane.

Though Irma poses no immediate threat to land, the outlook is ominous: In the Atlantic, Irma is expected to pass through some abnormally warm waters — the primary fuel source for storm systems. The official National Hurricane Center forecast says it will remain at major hurricane status for at least the next five days, and, in a worst-case scenario, Irma could eventually grow into one of the strongest hurricanes ever seen in the Atlantic.

So how powerful could Irma eventually become?

According to Michael Ventrice of the Weather Channel, Irma could easily become a “super typhoon” with “sustained speeds of over 180mph”

Veteran USA forecaster Michael Ventrice posted the track model on Twitter overnight and warned it looked like the storm could be a “super typhoon”, with sustained speeds of over 180mph.

He wrote: “These are the highest windspeed forecasts I’ve ever seen in my 10 yrs of Atlantic hurricane forecasting.

“Irma is another retiree candidate.”

The scale we have right now really never envisioned storms that powerful.  In fact, some have suggested that we need to add a “category 6” to describe the kind of “super storms” that are now developing in the Atlantic.

One of the reasons why Irma is so unique is because it is a “Cape Verde hurricane”

There are a few factors that worry hurricane forecasters more about this storm when compared to the myriad other tropical storms and hurricanes that tend to form in the Atlantic.

First, it’s a so-called Cape Verde storm, having formed off the west coast of Africa. These storms tend to be the ones that go on to affect the U.S., after gathering strength for many days during their march across the ocean. For example, Hurricane Andrew, which was the most recent Category 5 storm to hit the U.S. in 1992, was a Cape Verde-type storm.

Because they begin at a relatively low latitude and move west rather than northwest, it can be harder for upper level winds blowing across North America to pick up and steer these types of storms away from the U.S. coast.

Let us hope that this storm does get steered away from our coastlines at some point, but so far that is just not happening.

Many hurricanes are often weakened by wind shear, but that isn’t happening to Irma either.  In fact, CNN is reporting that “Irma will remain in a low-shear environment for the next several days”…

A strong high-pressure ridge to the north of Irma, over the Atlantic, is steering the storm to the west and limiting the wind shear in the upper levels of the atmosphere, which has allowed the storm to grow so quickly. Wind shear is like hurricane kryptonite, and prevents storms from forming or gaining strength.

Unfortunately, Irma will remain in a low-shear environment for the next several days, so there isn’t much hope that Irma will weaken any time soon.

Basically, conditions are nearly ideal for a “super storm” to develop, and if Irma does make it to the U.S. the destruction that it causes could be absolutely off the charts.

Of course at this point there is no guarantee that it will ever reach the United States.  But if it does, and if it is still a category 5 storm when it arrives, we could be facing an event unlike anything that we have ever seen before.

Do you remember Hurricane Katrina?  Well, scientists now know that when it hit New Orleans it had already been downgraded to just a “low category 3” storm

To put this all in perspective, Katrina was a Category 5 hurricane out over some hot spots in the Gulf. But when it hit New Orleans, scientists now know, Katrina had winds at a low Category 3, and much of them Category 2, including the “left side winds” that then came down from the north and pushed the surge-swollen waters of Lake Pontchartrain over and through NOLA’s levees. (Hurricanes spin counterclockwise in the northern hemisphere, so when Katrina came ashore just east of New Orleans, its winds hit the city from the north.)

Only three Category 5s have come ashore in the United States in the past century — the 1935 Labor Day Hurricane, Camille in 1969 and Andrew in 1992.

And Hurricane Harvey was just a category 4 storm.

If Hurricane Irma were to make landfall as a category 5 storm with sustained winds of 180 miles per hour, it would rip buildings and everything else in its path to shreds.

Next week we shall find out what happens.  Let us hope for the best, but let us also get prepared for the worst.

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