Economic Slowdown Confirmed: The U.S. Economy Lost Jobs Last Month For The First Time In 7 Years

Don’t worry – even though the employment numbers are terrible the mainstream media insists that everything is going to be wonderful for the U.S. economy in the months ahead.  According to the Bureau of Labor Statistics, the U.S. economy lost 33,000 jobs during September.  That was the first monthly decline in seven years, and as you will see below, overall 2017 is on pace for the slowest employment growth in at least five years.  But the Bureau of Labor Statistics insists that the downturn in September was due to the chaos caused by Hurricane Harvey and Hurricane Irma, and they are assuring us that happier times are right around the corner.

Economists were projecting that we would see an increase of around 80,000 jobs last month, and we need to add at least 150,000 jobs each month just to keep up with population growth.  So the -33,000 number was a huge disappointment.

But even though we lost 33,000 jobs last month, the Bureau of Labor Statistics says that the unemployment rate fell from 4.4 percent to 4.2 percent.

Yes, I know that doesn’t make any sense at all, but that is what they are telling us.

Perhaps if several volcanoes go off inside this country, terrorists detonate a dirty bomb in one of our major cities and Godzilla invades the west coast next month the unemployment rate will drop all the way to zero.

Of course I am being facetious, but I just want to point out the absurdity of what we are being told.  There is no way in the world that the official unemployment rate should be at “a new 16-year low”.

In the end, perhaps September will end up being a bit of an anomaly.  But as I mentioned above, we have been witnessing a broader trend build for months.  According to CNBC, we are on pace for “the slowest jobs growth in at least five years”…

In addition to September’s rough month, the July number was revised lower from 189,000 to 138,000 though August got a bump higher from 156,000. In all, though, 2017 thus far has seen the slowest jobs growth in at least five years.

Let that sink in for a moment.

Employment is not booming.  In fact, things haven’t been this slow “in at least five years”.  An economic slowdown is here, and yet most people are totally oblivious to what is happening.

And let me share something else with you.  The following chart shows the average duration of unemployment since the late 1940s…

This chart shows that workers remain unemployed far longer than they did in the “good old days”, but I want you to pay special attention to the very end of the chart.

The duration of unemployment is really starting to spike up again quite dramatically, and that is a very, very troubling sign for the U.S. economy overall, because spikes in this number almost always correspond with recessions.

But the Bureau of Labor Statistics says that we don’t have anything to be concerned about.  In fact, they are blaming all of the bad numbers from last month on Harvey and Irma

Our analysis suggests that the net effect of these hurricanes was to reduce the estimate of total nonfarm payroll employment for September. There was no discernible effect on the national unemployment rate. No changes were made to either the establishment or household survey estimation procedures for the September figures. For both surveys, collection rates generally were within normal ranges, both nationally and in the affected states. In the establishment survey, employees who are not paid for the pay period that includes the 12th of the month are not counted as employed. In the household survey, persons with a job are counted as employed even if they miss work for the entire survey reference week (the week including the 12th of the month), regardless of whether or not they are paid. For both surveys, national estimates do not include Puerto Rico or the U.S. Virgin Islands.

And the “experts” that are being quoted by the mainstream media are assuring us that “the labor market remains in good shape”

“Despite the decline (in job gains), it’s really clear that the labor market remains in good shape,” says Joel Naroff of Naroff Economic Advisors.

The unemployment rate, which is calculated from a different survey than the headline job totals, edged lower. That’s because gains in the number of people employed outpaced an increase in the labor force, which includes people working and looking for jobs. In that survey of households, workers are counted as employed even if they were temporarily idled by the storms.

Hopefully they are right.

Hopefully happy times are here again and an economic boom is right around the corner.

Unfortunately, the longer term trends tell an entirely different story.  Our economic infrastructure has been gutted, we have shipped millions of good paying jobs overseas, the middle class is slowly being eradicated, and we are living in the terminal phase of the greatest debt bubble in human history.

We have been able to maintain our ridiculously inflated standard of living for an extended period of time by borrowing absolutely colossal mountains of money year after year.  But no debt bubble lasts forever, and this one will not either.

The debt-fueled “prosperity” that we see all around us today is an enormous temporary illusion, and when the illusion collapses the economic pain is going to be greater than anything we have ever seen before in modern American history.

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




Time to Get Defensive If You’re in the Stock Market; David Morgan: Fed’s Tightening

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

Coming up we’ll welcome back our good friend David Morgan of the The Morgan Report. David has some interesting things to say about the dollar, shares his research on the inverse correlation between stocks and metals and gives us his thoughts on when he expects to see gold and silver finally breakout. Don’t miss another wonderful interview with the Silver Guru, David Morgan, coming up after this week’s market update.

As trading for the third quarter winds down today, investors should prepare to face some new headwinds in the fourth quarter.

Beginning in October, the Federal Reserve will engage in so-called Quantitative Tightening. The Fed will allow some of its bond holdings to leave its balance sheet as they mature.

It may not sound too dramatic. But over the next year hundreds of billions of dollars will effectively be pulled out of the financial system. That could have dramatic consequences.

Nobody knows for sure what level of stimulus withdrawal will finally cause the stock market to break down from its long uptrend. But there’s no doubt that Fed stimulus has been a big contributor to its rise since 2009. Take away the punch bowl and the party can’t be expected to last much longer.

The S&P 500 index did close Thursday at yet another slight new record high. So in spite of the coming threats of Quantitative Tightening and a likely rate hike in December, stock market investors are as complacent as ever.

They will eventually pay a price for their complacency. Bull market gains that take years to accumulate can be wiped out in a fraction of that time during a stock market crash.

Major crashes tend to occur every few years. The last one was the financial crisis of 2008. Before that we had the tech wreck of 2002. In 1998, long-term capital management triggered a mini crash that nearly got out of hand. And of course in October 1987, the market crashed seemingly in an instant, without warning or reason.

It’s prudent to get defensive in your investments, even if you’re too early. Better to miss out on a few more points of upside in an overextended market than to be caught unprepared and undiversified when it finally takes a big plunge.

Plus, when you diversify into alternative assets such as physical precious metals, you aren’t just sitting on the sidelines. You are invested in markets that have tremendous upside potential in their own right, regardless of which direction the stock market heads. On that note, be sure to stick around for my interview with David Morgan coming up shortly as he will shed some light on what happens to metals when we get those corrections in the equity markets.

Over the past three weeks, metals markets have pulled back. Gold prices currently check in at $ 1,285 per ounce, down 1.0% for the week. Silver shows a weekly drop of 1.2% to bring spot prices to $ 16.84. Platinum is down 1.7% to trade at $ 921, while palladium is up 1.4% to $ 938 an ounce as of this Friday morning recording.

Yes, this week the per ounce price of palladium surpassed platinum for the first time in 16 years. Congratulations to Money Metals writer and regular podcast guest David Smith, who predicted palladium would return to a 1:1 ratio with platinum way back when palladium was trading at about half the price of its sister metal.

It remains to be seen if platinum will return to a 1:1 ratio with gold and eventually get back to a more historically normal premium. Platinum prices have traded at a discount to gold for going on three years now. That’s very abnormal and David Morgan will have some comments on that as well in my interview with him this week.

We can’t rule out the possibility that platinum may be down for the count, never to return to its glory days. But it’s probably still too early to bet against several decades of cyclical history.

Silver bugs might argue that even if platinum prices recover to historic norms, silver has superior upside potential and has more utility as money. They have a point. Silver is a money metal while platinum and palladium are niche industrial metals used mostly in the automotive industry.

We have always urged precious metals investors to first acquire a foundational position in gold and silver bullion before venturing into platinum or more speculative metals such as rhodium. There’s a time and a place in life for speculation, whether in metals or in stocks. But there’s never a good time to completely abandon a long-term diversified investment strategy in favor of chasing a hot market.

Regardless of what October and the rest of the fourth quarter bring, don’t let market movements tempt you out, or scare you out, of your core positions.

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

David Morgan

Mike Gleason: It is my privilege now, to welcome back our good friend David Morgan, of The Morgan Report. David, it’s always a real pleasure to have you on with us. How are you, sir?

David Morgan: Mike, I’m doing well. Thank you for having me.

Mike Gleason: Well, first off, let’s discuss what’s been driving the recent pullback in your view. Gold was over $ 1,350 not too long ago and is now is decisively back under $ 1,300, as we’re talking here on Wednesday afternoon. Silver has pulled back, and is moving toward the lower end of its year-long trading range, and has a 16 handle, once again. So what do you make of the recent market action, and what’s behind it David?

David Morgan: Well, it’s a lot of, algorithms that trade all these markets. You can’t get around that fact. The second thing is, a lot of people are — in my view — been on the lazy side, which means they just generally off the technical analysis doesn’t work, because it’s a manipulated market. Well, actually it works fine, if you ever took the time to read The Silver Manifesto, with my co-author, Chris Marchese, you would definitely find out that technical analysis is a tool. It’s not perfect, but it’s something to pay attention to.

So, when we have a support or resistance level, it normally takes three tries to get through that level, either from the upside or the downside. Recent times, $ 1,300 was the level that had to be tested three times, for gold to have that $ 1,300 breakout. It did it. Third try it went through. It got up to $ 1,350. I warned my members at that time that normally, a breakout level is tested at least one time, and forecast it would see $ 1,300 or below. And it was moving higher, higher, higher, and there were a lot of articles about gold is at a 11-month high, gold is at a 12-month high.

And I don’t want to say I get it right every time. I’m not trying to imply that. What I’m trying to imply is that technical analysis does have some benefit, and that there are some general principles that work most of the time, this being one of them. The last one that cinched it for me, and this is one that you’ve got to combine as much knowledge as you can, and throw out the junk and keep the diamonds, then that is what the Commitment of Traders look like. And the Commitment of Traders look very unsatisfactory at the time that gold was getting in this 11-month, 12-month high area.

It looked to me like, based on the COT, that it was also due to come back. So, that’s the reason … I mean as trite as it sounds, it’s absolutely the most honest and truthful thing you can say about why a market was up or down, it’s because there’s more sellers than buyers, that’s why the market goes down, or there’s more buyers than sellers and that’s why the market moves up. I don’t care if it’s wheat. I don’t care if it’s rice. I don’t care if it’s a stock or an ETF, gold or silver. It does not matter.

If there’s buying pressure, it goes higher. If there’s selling pressure, it moves lower. It’s that simple. What everyone wants to know is why, and that is too difficult to announce, because there could be individual reasons. Someone might have an emergency and they sell a bag of silver because that’s all the savings they have, or whatever. So I don’t want to go down this rabbit hole too far, Mike, but I want to state, is you can generally say, “Oh, yes. The Fed announced they’re going to raise rates and they’re going taper back on their balance sheet,” and all this stuff, and everyone says, “Well, that’s the reason.”

Well that’s a reason, and it may be one of the major reasons, but it’s not necessarily all reasons. So I’ll leave it at that.

Mike Gleason: Well, I know you don’t want to thump your chest too hard, but I’ll sing your praises a little bit, here. You’ve been very good at calling both short term tops and long-term tops, and people that follow you will know that as well.

I’m curious to get your read on sentiment in the broader precious metals community, because while we’re definitely still seeing more retail customers buying than selling, we are seeing an increase in people selling metal than we’re accustomed to. Around the world, though, particularly in Asia, physical demand is strong and may even be increasing.

Now, you interact with traders and investors in the futures markets, and you talk regularly with mining industry executives and shareholders, which gives you an even broader perspective. You often talk about how these markets tend to either wear you out or scare you out. Is that happening, or are you seeing some optimism, here?

David Morgan: Too much optimism. Sentiment really changed from … and especially in the silver market. There’s a small market. It seems as if, from my experience, which is 40 years, that the silver folks are a little more volatile than the gold folks, just like the metals themselves. And so you can go from extreme pessimism to extreme optimism in silver, very rapidly. And that’s what took place, generally speaking, over the last few months. We saw, gold unable to breach the $ 1,300 level. Once it did, it was a quick trade, if you were nimble enough. And if you could only capture $ 50, then so be it.

Regardless of that setup, sentiment got very, very high, very, very quickly once the mainstream press came out there with the, gold setting these 11-month highs. And normally, in a real free market, if you get a new high that’s pretty bullish. The problem with a long trending market like gold or whatever, some stocks, is there’s a lot of overhead resistance.

I mean, there are people out there bought at $ 1,400, people out there bought at $ 1,500, people are out there that bought at $ 1,600. And that’s many months and months ago. I know that. Nonetheless, some are sitting there, just waiting for it to hit those levels, just to sell it and get rid of it, because they’re very unsatisfied with what the gold market has done for the last several years. And the same thing holds true with the silver market.

So, sentiment swang really broadly. And the other thing, I’d like to ask my own question and answer it, if you don’t mind, Mike, because this is one that I get quite a bit. I had a gentleman that I admire. He’s very close to the mining sector. And I’d consider him highly intelligent, and he knows quite a bit about the silver market, and he said “I just don’t understand why silver’s at this price. It’s been in a deficit,” and on and on. So what he was implying was that we have this continuous deficit in the silver market. And a lot of people, even some very well established people that are good friends of mine, do produce factual, verbatim quotes from major silver studies, that claim that silver’s at a deficit.

However, even though that’s true and a fact, you have to be very careful with that word, because the word deficit, by definition of some of these silver studies, refer to the fact that there is a difference between the amount of silver mined, and the amount of silver that’s requested for all investment, be it monetary investment or industrial demand. What they don’t talk about is the 165 million ounces of silver, roughly speaking, that comes through in recycling, every year.

So the easiest, most straightforward, most commonsense way to look at, “Where’s all the silver coming from? We’re in a deficit. Where’s all the silver coming from?” is to look at the facts. And the facts are simply this. From 1999 to 2006 we were in a silver deficit, and all the silver that was required for whatever demand, industrial or monetary, came from the aboveground stockpile, which went from 2 billion ounces to 500 million ounces, in those 15, 16 years. Roughly 100 million ounces a year is what was eaten away at the aboveground stockpile.

Now, from 2006 to present day, roughly 10, 11 years, the silver aboveground supply has continued to grow, year over year over year over year. Which means that we’re now basically where we started in 1999, which is roughly 2 to 2.2 billion ounces of silver, aboveground. Which means we have built, on an average basis, about 100 million ounces of fine silver, aboveground, year over year. The word deficit just means the definition I gave you.

Well, there’s a couple definitions of deficit. Excuse me, I wanted to backtrack that statement. What I’m trying to say is, deficit, in the dictionary, means that there’s a shortage, quote-unquote. But the way deficit is used in some of these financial articles means that the demand, the investment demand, is bigger than mine supply. Well, that could be true, but you could still have a greater supply, if you factor in the recycling of the product like silver.

So, hopefully I made that very clear. We had a deficit that drew the stockpiles down. We’ve had a surplus build over the last 10, 11 years, and that’s where the silver is coming from. There is not enough total demand to take all that build out. Now, this is where it gets finer and, it’s in my reports and everything else. I mean, how much is the float? And the answer is, there’s very little silver unaccounted for.

I want to be clear. I don’t want to scare people. I realize there’s massive amounts of silver just sitting there, that nobody wants. You know, almost every ounce, to an ounce, is accounted for, one way or another. But, it’s just like a float in a stock market investment — and I hope I’m not getting too complex or, I want to keep it simple — but just, the idea that you have to be in a deficit, for silver to be a good investment is ludicrous.

Because, one, you never buy gold. The aboveground stockpiled gold grows every single year, bar none. Every year there’s a bigger gold supply than there was the previous year. And secondly, there’s so many derivatives and other things out there, that really obfuscate the exact amount of silver demand and gold demand that’s out there, and I think everybody that listens to Money Metals Exchange in these podcasts knows exactly what I’m talking about, so I’ll stop there.

Mike Gleason: David, let’s talk a little bit about market correlations. You pointed out something in the most recent issue of The Morgan Report that most metals investors will not be aware of. Gold and silver prices are correlated with the U.S. dollar, of course. So, if the dollar weakens, metals tend to move higher. But metals prices are even more closely correlated with the stock markets. If the equity markets are moving higher, that is bad news for metals, and if share prices fall, gold and silver typically move higher.

Of course, if we get a major liquidity crisis, a la 2008, then all bets are off, but this correlation would certainly explain some of the lackluster performance we’ve seen in the metals. The dollar’s had a terrible year, but that really hasn’t helped gold and silver all that much. Talk a bit about those correlations, if you would, and then give us your thoughts on where things stand with the equity markets, in general.

David Morgan: Well, thank you for that. A lot of these people, and they’re good friends of mine, and some are very technically savvy, nonetheless, a fact is a fact. Now, one is Ian McAvity, and Ian has passed away. God bless him, he was a wonderful guy and I got to know him on a personal level, on a cursory basis, but I’ve known him for years. But he would make the argument that, gold is the anti-dollar and he would show his chart work, of which he did a massive amount. His letter, basically, was nothing but a technical report, which was a good one.

Anyway, he would take a dollar chart, he would flip it upside-down and say that’s a gold chart. Then he’d lay a gold chart on top of it, and it correlated pretty darn well. So, that’s saying it’s not dollar correlated. But if you look at the math, and you’re objective, the correlation is even better if you use the stock markets. And to me, that makes more sense, because the stock market is basically, and purportedly these days, because the financialization of everything that’s taken place in the last decade or longer really has distorted what the financial markets are, versus what the underlying assets are, which is basically every business that’s a public entity in the country, or world, if you go to the world stock markets. We’re talking U.S., for right now.

So it’s really distorted. It doesn’t, however, negate the fact that the most negatively correlated asset class to gold is the stock market. It’s pure fact if you objectively look at the numbers. If you run the data, that’s what it tells you. So, why I did that was, one, to just lay it on the line. And secondly, to give a bit of comfort, maybe, to other analysts or deep thinkers, or people that really pay attention to these markets, or have a lot invested in these markets, and want to get the best information they can obtain, that this is part of the reason.

You see this new, higher and higher and higher stock market, that would imply a lower and lower and lower gold price, which are not correlated 100 percent. The only thing correlated to 100 percent would be the same thing, you know, the stock market correlating to itself. Regardless, gold is actually fighting the good fight, meaning it’s broken out into a one-year high. It’s pulled back from that level, but that’s against an ever increasing, higher and higher and higher stock market, which means, if you keep your emotions in check and just look at it, what it’s telling us is that gold is actually doing pretty darn well, in view of all that it’s correlated against, and how much headwinds it has to fight.

Mike Gleason: Yeah, despite the recent pullback, it’s still up 11 percent for the year. I was just running those numbers this morning. So yeah, absolutely, that’s a very good point. It is fighting the good fight.

Now, cryptocurrencies have been getting a lot of headlines this year, and they have been stealing some of the thunder from gold and silver, at least some new money is going into those, instead of the precious metals. At the end of the day, the surge in the cryptos are a vote against government fiat money.

Now we can debate that cryptocurrencies are really not backed by anything, and that gold and silver have stood the test of time as money, throughout history, and are really a better alternative. But let’s talk about the movement that’s taking place, of people seeking dollar alternatives, here for a minute, and what it might mean for the central planners and the governments throughout the world.

What’s your take on all of this, and what does it say about the confidence in the system, David, or lack thereof?

David Morgan: Well I’ll try to answer this from the top, down. First of all, I’m really free market, that means anyone, anywhere is really able to make their own decision, have their own motives and these cryptos are not, I mean, I’m pretty neutral on them. But, to answer your question more specifically, it is an alternative. There’s no doubt about that. There is some debate about whether or not these are truly exempt from, let’s say government interference.

I would take the viewpoint — and it’s somewhat studied, it’s not my expertise, believe me — that some of the small ones are definitely outside the purview of any government. They’re just too small. No one’s going to bother with them. On the other hand, some of the larger ones could be, and some are, under let’s say, more interference or potential interference, than you might think. For example, on the Bitcoin thing, and I’m not anti-bitcoin, I think Bitcoin’s here to stay. I think Ethereum is here to stay. I think some of the major ones are here to stay. I think the crypto world is going to definitely change the financial landscape, if it hasn’t already. It probably has.

But I also want to be a realist, and there’s ups and downs to any market, and the Bitcoin, and there’s some people have gone to prison for what they’ve done in the bitcoin world, and there’s also some potential tax issues, depending on what jurisdiction someone is in. So, it’s not the alternative to government fiat that some people may have either been led to believe, still believe, or don’t understand properly. So, that’s a caveat.

The other part of it is … (that they’re) un-backed, well, some are, some are not. I mean, this gets a little bit muddled because, for example, there was this ACC chain that’s still talked about quite a bit. The first block was really based on tea. And tea is really revered in China. I mean, it’s a pretty highly traded commodity. There’s different grades of it, and there’s all this stuff that goes along with it. But this block chain used tea. It’s a tangible, I mean, it’s a foodstuff, if you will, or at least it’s a beverage.

And so, these ideas of being able to digitize real assets, I think, is definitely something people need to pay attention to. Regardless of your philosophical bent, and mine’s more towards specie money, gold and silver… what’s been in history, what works, what works about power and that type of thing. That’s a bias of mine.

The reality is that the crypto space is going somewhere. You’ve got to be extremely careful, as far as just buying at a cheap price and watching something go up doesn’t mean it’s a good investment. It means that the market is extremely hot, which it is. So you want to be careful. But I am neutral to positive on it. Of course, full disclosure, I am involved at, more in a cursory level, but not at a high level, on a silver-only backed crypto that would monetize it. And even there, let me just say that, even though I’ve got skin in the game, and I could win or lose on this investment, that I would recommend it only for disposable income.

In other words, if you have X amount of silver, I would say just as a suggestion, no more than one-tenth X would be used in a format like this, where you can really spend it. I mean, let’s face it. If silver starts to move well, and you’ve bought in, your average price is, let’s say, $ 20, and it’s sitting at $ 30. And you’ve got this in a crypto platform and you’re familiar with that and how it works. You know, you want to buy your gas, groceries, go out to dinner, whatever, you know, it’s kind of a convenient thing to do. And that’s one thing that kind of holds the silver market back, somewhat. And that is, some of the older investors are like, “Well, how do I sell it?” Well, as James Turk has always said, from Gold Money, “Well, you can spend it.”

Mike Gleason: Let’s change gears here a bit and talk about the platinum group metals. Palladium has been a huge outperformer, but platinum is lagging. Now, the two metals share significant demand from the automotive industry, so it’s worth breaking down for our listeners why the two metals are performing so differently. Address that, if you would. And then also, talk about maybe, the potential impact on electric vehicles that that might have on the platinum group metals, in terms of demand for catalytic converters.

David Morgan: Sure. Platinum is used as a catalytic converter for diesel engines. And with the Volkswagen revelation that took place several months ago, about them fudging the software for their EPA requirements in the U.S., this took a lot of wind out of the diesel bandwagon. So that’s one headwind. Platinum is also used as jewelry in Japan, mostly. It isn’t used in jewelry many other places. Yes, it’s everywhere on the planet, but I mean, primarily platinum is pretty well known in Japan as jewelry.

Palladium has basically all the attributes of platinum and, at one time, sold at a pretty steep discount to platinum. Right now, they’re almost par. But, if you look at what the in-the-ground amount of platinum and palladium are, platinum and palladium are basically about the same. I used to say that palladium was actually less than platinum. I went back and bought the studies, and there aren’t many, on the PGMs, and I studied those studies.

It’s pretty apparent to me, from the best research that I can get ahold of, that they pretty much mine about the same amount, but palladium is far more used, because there’s a lot more gas catalytic converters that are demanded, than diesel catalytic converters. So that’s a bigger demand, and they sell for the same price, and they mine at the same amount, that would put a push on the palladium.

Electric vehicles certainly will impact both those markets to the negative, but they’re such thin markets, and there’s not a huge aboveground surplus of either one, that that dynamic could change pretty quickly. And the one space I hold out for, and this is basically with quotation marks around it, because I have not looked at it in a long time, was years ago the cold fusion meme that was going around, using palladium. Whether that’s true or false I really can’t see at this point, but we never know whether our new technologies available to some of these metals that are more exotic than, let’s say, just the precious metals.

So, I am still pretty bullish on palladium, not so much on platinum. But overall, those are two metals that you really don’t need to get into. You’re better served by gold and silver. But if you have a high net worth, or you really like them for whatever reason or other. Last comment, Mike, and I’ll hand it back to you.

It was a pretty easy trade for years, and I’ve done it several times. Whenever platinum sold at a discount to gold, you could just do a spread trade, which is easier on the pocketbook, and you can be pretty patient with them. So, you would just go the reverse, you would go long platinum and short gold, and as the spread narrowed you’d make money. For some reason or another, I did not do it this time, and I’ve very grateful for that, because the spread between gold and platinum has continued to favor gold, and whether this will invert like it has historically remains to be determined. So that’s a trade I haven’t done, and I’m shying away from. I don’t see that as an opportunity anymore, and it just kind of shows you that there isn’t a lot of monetary demand for either of the platinum group metals.

Mike Gleason: Well, as we begin to wrap up here, David, give us your thoughts on the events you’re going to be watching most closely, in the months ahead, when it comes to the metals markets. We spoke earlier about the stock markets as a potential catalyst for metals … there are plenty of geopolitical events with the potential to move markets. North Korea and Trump’s tax cuts, to name a couple. What do you think metals investors should focus on? Where do you see them going here, towards the end of the year? And what are people likely to be talking about, in the coming months?

David Morgan: Well, the stock market’s key, as we discussed earlier. So, if the stock market does a big ho-hum nothing for the whole month of October, then obviously – and at that point I would say obviously – the favored move would be for the metals to continue down to the end of the year, not up. On the other hand, if we get a correction, meaning 10 percent or more move down in a general equities market like the DJI or the S&P, that would be very much favorable to the metals, and you would expect to see gold and silver trade up, into the end of the year. So, the stock market is key, so watch it for the month of October.

If nothing happens, going forward I still think that we cannot get through all of 2018 without a breakout in the metals, and I think that if we don’t get a pullback in October, we probably will in the spring of 2018. This stock market is, as I’m almost remiss to say, I’ve said it so many times, but it’s overvalued. It’s been that way for a long time. At some point, it’s got to give. And now the Fed’s sort of pushing it a bit, with their idea that they’re going to take care of their balance sheet, and maybe even increase interest rates.

They’re putting a lot of pressure on the markets, and whether or not they know what they are doing, and that could be argued, nonetheless they make these announcements and they take them back. And they hint, and then do this, and then they don’t. And I understand all that. But what I also understand is, they are in a box. They are painted into a corner. There’s not a whole lot they can do. So, sooner or later, they’re going to have to do the one and only thing that they really can do, which means you know, another Quantitative Easing type of situation, regardless of what they name it, or what kind of program.

And, when you see Mr. Fischer that left the Fed, who was one of the, what I would call “truth-tellers,” at least, he knows what’s coming. He’s not going to say much publicly, but he basically wants to distance himself, before this thing starts to unravel further.

And one last thought, and I’ll sign off, Mike. And that’s, this increase in interest rates. There’s lots of thoughts regarding the increase in interest rates. Historically, classically, increasing the interest rates is to cool off the economy. You brought interest rates down, the economy recovers, there’s more jobs, there’s more velocity of money, people are happier, they’re spending, that type of thing. So that’s a real recovery, which we haven’t ever seen, since 2008, but that’s the idea.

So once you get that reviving of the economy, then it starts to overheat and then you have to start increasing interest rates, which cools off the economy. Well, why are they increasing interest rates? Certainly not because the economy is robust, no matter how many times they say it on national television. The reason they’re doing it is that everybody’s escaping the U.S. dollar. So much of the external to the United States debt markets are in negative interest rates, which means you have to pay a bank to hold your money. A positive interest rate of any currency looks really good, even if it’s a dollar.

So this is really one the reasons that very few even suggest to think about, is that the dollar is being held up, quote-unquote, by the fact that it’s a positive rate of return, versus other currencies that you’re offering a negative rate of return.

Mike Gleason: Well, outstanding insights as usual, David. We always appreciate having you on, and getting your thoughts on these important matters. Now, before we let you go, let people know how they can learn more about The Morgan Report, and what it is that they’ll get if they sign up to become a member. And, by the way, we just re-upped our own membership with you, this week.

David Morgan: I actually saw that. Thank you. Well, basically I want to make sure everyone knows that we cover all minerals. I mean, we do cobalt, lithium, vanadium. We’ve done the rare earth elements, we’ve done uranium, we’ve done some of the energy metals. We don’t focus on oil or gas, but we do the energy metals, exotics, everything and the precious metals. And yes, we spend a lot of time on the precious metals. We look at a unique sector that makes money, regardless of what the price of gold and silver are. Those are the very lucrative investments, especially in the top tier of the portfolio.

And our success is your success. I mean, people want to know how I invest. Well, that’s how I invest. You get The Morgan Report, you pretty much see a breakdown. I do have a bit of a — I won’t say tout, I don’t like the word — but there is a speculation that you know about, Mike, that could be a game changer. Certainly performed pretty well, it’s got a long ways to go.

And there was an announcement made by a major Fortune 500 company that’s very interested in technology and it was a very big boost to the holders of this particular special situation that’s in The Morgan Report, and I think it’s only going to get better. But that’s just a future-looking statement based on the fact that I own it and I’ve studied it. That doesn’t mean it will necessarily manifest.

Mike Gleason: Yeah, that is an exciting technology, and a good tease there. Well, that will do it for this week. Thanks again to David Morgan, publisher of The Morgan Report. To follow David, just visit TheMorganReport.com. We urge everyone to, at the very least, go ahead and sign up for the free email list and start getting some of his great commentary on a regular basis.

And, if you haven’t already, be sure to check out either The Silver Manifesto or Second Chance: How to Make and Keep Big Money During the Coming Gold and Silver Shock Wave, both of which are available at MoneyMetals.com and other places where books are sold. Be sure to check those out. Thanks so much David, look forward to catching up with you again, very soon.

David Morgan: Thank you, Mike. I appreciate you having me.

Don’t forget to check back here next Friday for our next Weekly Market Wrap Podcast. Until then, this have been Mike Gleason with Money Metals Exchange, thanks for listening and have a great weekend everybody.

Precious Metals News & Analysis – Gold News, Silver News




Why It’s Time to Think Like a Roman

Years ago, when I was earning my master’s degree from the London School of Economics, I was known to skip out of lectures a little early on Fridays, throw on a backpack, and do some exploring on the weekends.

With just about anywhere in the U.K. or Europe accessible within a few hours, my decision on where to go was usually made by price. (I was, after all, on a grad student’s budget.)

Train tickets to northern England were cheap, so one September weekend I decided to hike along Hadrian’s Wall, the ancient boundary between Roman Britain and the barbarian north.

The wall stretches for 73 miles, mostly through sparsely inhabited farmland. It’s beautiful – in a harsh, rugged sort of way.

“Why here?” I asked myself as I hiked the Hadrian’s Wall Path.

There were other sites that could’ve worked as a defensive fortification. The island is thinner and a wall would be easier to defend further north in the Scottish lowlands. Or why not simply forget the wall, push northward, and conquer all of Scotland too?

No one really knows why the Romans built the wall exactly where they built it, but I have my own theories.

It came down to an analysis of risk versus reward.

Any military excursion puts lives and treasure at risk. But the added return of pushing into modern-day Scotland was minimal. (And the Scots wouldn’t invent golf or Scotch whiskey for another thousand years.)

Financing a war where the only spoils would be sheep and a craggy, windswept land inhabited by barbarians made little sense. The Romans were far better off drawing lines and consolidating what they already had.

That’s basically how I feel about the high-yield corners of the stock market right now.

It’s not that I think a crash is necessarily imminent; if I did, I’d recommend to my Peak Income readers that we lighten up on our existing income-producing positions, and I am distinctly not doing that…

This is more a feeling that, at current prices, the potential upside of adding new positions might not be worth the potential downside, particularly now that we’re in one of the market’s most dangerous seasonal periods.

Major corrections can come at any time of year, of course, but they tend to happen around September and October.

And, furthermore, we now have 22 open positions in the portfolio, many of which are recent additions. Before I added anything new this month, I thought it reasonable, and smart, to let what we have season a little.

So, in this month’s issue – in a more detailed and comprehensive way than I ever have before – I go through our existing portfolio recommendation by recommendation, to review why we own what we own and what our game plan should be going forward.

If you aren’t already a subscriber, it’s a perfect time to try Peak Income. If you missed it, I give “buy” or “hold” signals for all 22 positions in our model portfolio, and I re-recommend one of my earliest picks, laying out all the reasons for all the moves.

What I also really tried to drive home in the September issue is why bond yields are extremely important to what we do. All income-focused securities tend to react similarly to market conditions, which makes sense. They’re subject to the same buying and selling pressures from investors.

Lower bond yields mean higher bond prices… and higher prices for anything tied to bonds. A lot of our success so far in Peak Income – we currently have three positions with greater than 20% gains, seven others in double-digits, and only one showing a loss – has come from being willing to buy what I call “private income funds” at times when other investors panicked about falling bond prices.

Their overreaction was our opportunity.

Today bond yields are higher than they were two weeks ago, but the trend throughout 2017 has been one of falling yields.

I’m always looking out for catalysts that might cause yields to spike. And, at the moment, our biggest risk, oddly enough, is a functional government.

One of the reasons bond yields have slumped is that Mr. Market is losing faith that the pro-growth Trump agenda, including tax cuts, will pass. Slower growth means lower inflation, which, in turn, means lower bond yields and higher bond prices.

So a do-nothing government actually works in our favor.

I’m not going to suggest we sell everything and run for hills if Congress and President Trump suddenly discover how to work together. But I’d definitely be on high alert for a yield spike and would likely keep our stop-losses even tighter than usual.

That, too, is risk versus reward thinking, and it’s why I sometimes need to remind myself to do as the Romans did.

Charles Sizemore
Editor, Peak Income

The post Why It’s Time to Think Like a Roman appeared first on Economy and Markets.

Charles Sizemore – Economy and Markets ()




Hurricane Harvey Will Render Some Parts Of Texas ‘Uninhabitable For An Extended Period Of Time’

Do you remember what Hurricane Katrina did to New Orleans?  Well, now we are watching the same thing happen to southeast Texas.  On Friday, Hurricane Harvey made landfall as a category 4 hurricane.  It is the first hurricane to make landfall in the United States in 12 years, and it is the most powerful storm to hit the state of Texas in at least 50 years.  One meteorologist is saying that what we are witnessing is “worse than the worst-case scenario for Houston”, and another stated that this storm “could easily be one of the worst flooding disasters in U.S. history”.

It would be difficult to overstate the devastation in the Houston area at this moment.  Hurricane Harvey has ripped roofs off of homes, turned vehicles over and snapped thousands of trees.  Thousands have been rescued from their homes and vehicles, and it is being reported that so far five people have died.  In fact, one woman’s dead body was actually spotted floating down the street.

According to the National Weather Service, over 24 inches of rain fell in Houston in just a 24 hour period.  More rain continues to fall in southeast Texas, and meteorologists are running out of adjectives to describe the nightmare that is currently unfolding…

“It’s catastrophic, unprecedented, epic — whatever adjective you want to use,” Patrick Blood, a National Weather Service meteorologist, told the Chronicle. “It’s pretty horrible right now.” The newspaper reported the weather service said five people have died in the Houston area in unconfirmed flood-related deaths.

The latest forecasts are telling us that we could see a total of 40 to 50 inches of rain in southeast Texas by Thursday, and so some areas will actually receive a “year’s worth of rain” in less than a week…

“A year’s worth of rain may fall in the span of a few days near the Texas Gulf Coast,” reported Weather.com. “A multi-day deluge of the Texas Gulf Coast with catastrophic and life-threatening flooding and destructive winds through could leave areas uninhabitable for an extended period of time, the National Weather Service has warned.”

Did you catch that last part?

The National Weather Service is actually saying that some portions of Texas could be “uninhabitable for an extended period of time” as a result of this storm.

It appears to be inevitable that more people are doing to die before this is all over.  Authorities are trying to rescue as many people as they can, but there just aren’t enough resources.

As the water continues to climb, some people are actually climbing into their attics in a desperate attempt to save themselves, but that is a very bad idea…

“We are getting calls from people climbing into their attic. This is along I-45 between downtown and Clear Lake,” Lindner said. “This is along Berry Bayou, Beamer Ditch, Turkey Creek, portions of Clear Creek, Vince Bayou, Little Vince Bayou in Pasadena,” he said. “Pretty much the entire southeast side of Harris County has had 13 to 15 inches of rain in three hours.”

Lindner said they’re also seeing flooding along portions of Hunting Bayou, downtown along Buffalo Bayou, Brays Bayou and Keegan’s Bayou.

Chief Art Acevedo tweeted,” have reports of people getting into attic to escape floodwater do not do so unless you have an ax or means to break through onto your roof.”

This is already being called “a once in a 500 year flood”, and the experts are already telling us that the total economic damage is going to be in the tens of billions of dollars.

Earlier this month, I wrote about an unusual series of events that would happen over a 40 day period starting with the recent solar eclipse, but of course at the time I couldn’t account for additional unexpected events such as Hurricane Harvey.  And I find it very interesting that this hurricane began forming just about the same time as the eclipse.  The following comes from Wikipedia

The eighth named storm, third hurricane, and the first major hurricane of the 2017 Atlantic hurricane season, Harvey developed from a tropical wave to the east of the Lesser Antilles on August 17. The storm crossed through the Windward Islands on the following day, passing just south of Barbados and later near Saint Vincent. Upon entering the Caribbean Sea, Harvey began to weaken due to moderate wind shear and degenerated into a tropical wave north of Colombia early on August 19. The remnants were monitored for regeneration as it continued west-northwestward across the Caribbean and the Yucatán Peninsula, before re-developing over the Bay of Campeche on August 23. Harvey then began to rapidly intensify on August 24, re-gaining tropical storm status and becoming a hurricane later that day. Moving generally northwestwards, Harvey’s intensification phase stalled slightly overnight from August 24–25, however Harvey soon resumed strengthening and became a Category 4 hurricane late on August 25. Hours later, Harvey made landfall near Rockport, Texas, at peak intensity.

As a result of this storm, thousands could be trapped in their homes without power for an extended period of time.

Do you think that those that have been storing up food and emergency supplies all this time will be glad that they have done so?

Of course the answer to that question is obvious.  If you wait until disaster strikes to get prepared, it will be too late.  A whole lot of people down in Texas are going to end up in some very desperate situations because they never believed that something like this could ever happen to them.

For those of you that would like some helpful advice on getting prepared for future disasters, I would encourage you to check out a book that I co-authored with Barbara Fix entitled “Get Prepared Now”.  Barbara is a highly respected prepping expert, and she is also getting heavily involved in my campaign for Congress.  So much of the information in that book is timeless, and my hope is that we can encourage as many people as possible to start getting prepared because very troubled times are ahead of us.

Please pray for the people in Houston and throughout the entire southeast Texas area.  We truly have not seen a storm like this since Hurricane Katrina, and many portions of the Texas Gulf Coast will be changed forever by this disaster.

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 Dow Closes At A Record High For The 9th Straight Time But Experts Warn That A Stock Market Crash Could Be Imminent

The bigger they come, the harder they fall.  On Monday, the Dow Jones Industrial Average closed at a record high for the ninth straight session.  It has been a remarkable run, but many experts are pointing out that big trouble is brewing under the surface.  As you will see below, 79 components of the S&P 500 have already dropped more than 20 percent below their 52-week highs, and it is mostly just a handful of high flying tech stocks that are still propping up the market at this point.  Over the past several weeks, I have been documenting so many of the prominent voices that are loudly warning about an imminent stock market crash, and in this article you will hear some more of these warnings.  There is no way that stock prices can keep going up like this, and when the inevitable correction does arrive it is going to be exceedingly painful for millions of investors.

When the market is about to turn in a major way, one of the key things to watch is market breadth, and according to Brad Lamensdorf market breadth has now turned “exceedingly negative”

Market breadth, a measure of how many stocks are rising versus the number that are dropping, has turned “exceedingly negative,” according to Brad Lamensdorf, a portfolio manager at Ranger Alternative Management. Lamensdorf writes the Lamensdorf Market Timing Report newsletter and runs the AdvisorShares Ranger Equity Bear ETF HDGE, -0.70% an exchange-traded fund that “shorts” stocks, or bets that they will fall.

“As the indexes continue to produce a series of higher highs, subsurface conditions are painting an entirely different picture,” Lamensdorf wrote in the latest edition of the newsletter.

When Lamensdorf uses the phrase “exceedingly negative”, he is not exaggerating at all.  As I mentioned above, 79 components of the S&P 500 are already in a bear market

According to an analysis of FactSet data, 79 components of the S&P 500 are trading at least 20% below their 52-week high; a bear market is typically defined as a 20% drop from a peak.

Another key measure that I like to keep my eye on is Robert Shiller’s cyclically adjusted price-to-earnings ratio.  At this point, it is roughly at the same level as it was just before the stock market crash of 1929, and the only time it has been higher was during the peak of the dotcom bubble.

This is why so many investors are making extremely large bets that a major correction is imminent.  History tells us that stocks are likely to only go down from here.  And when stocks do start falling, the price action could become quite violent.  In fact, Barry James is comparing this current market to the Yellowstone supervolcano

Warning: A correction in the market is “inevitable” and there are three key factors that could spark chaos on Wall Street, according to James Advantage Fund president Barry James.

The investor likened the market to Yellowstone National Park’s famous supervolcano, which many believe is close to eruption.

Of course not everyone agrees with James.  Michael Wilson of Morgan Stanley insists that everything is just fine and that “there continues to be a level of skepticism that seems out of whack with what is actually happening”.

In the end, we will see how the coming months play out.

Over the past several years, there have been two primary trends that have been relentlessly driving up stock prices.  One of these trends has been an unprecedented level of stock buybacks.  And so far this year, hundreds of billions of dollars worth of stock buybacks have already been announced

Through May, some $ 390 billion in buybacks have been announced this year, $ 13 billion more than at this time in 2016, according to figures compiled by Jeffrey Yale Rubin at Birinyi Associates, a stock market research firm.

June 28 was the biggest single buyback announcement day in history. That was when 26 banks disclosed buybacks worth $ 92.8 billion, largely a response to having just passed the stress tests administered by the Federal Reserve Board. That figure blew past the previous record of $ 56.4 billion announced on July 20, 2006.

Secondly, central banks have been pumping trillions upon trillions of dollars into the global financial system, and this has perhaps been the biggest reason for the surge in stock prices.  But now central banks are starting to pull back, and that could mean big trouble very soon.  The following comes from Matt King

With asset prices displaying a high degree of correlation with central bank liquidity additions in recent years, that feedback loop makes the economy, upon which both corporate profitability and bank net interest margins depend, more reliant on central banks holding markets together than almost ever before. That delicate balance may well be sustained for the time being. But with central banks beginning to move, however gingerly, towards an exit, is it really worth chasing the last few bp of spread from here?

Throughout our history we have seen financial bubbles come and go, but we never seen to learn from our mistakes.  Right now, Warren Buffett is sitting on nearly 100 billion dollars in cash in anticipation of being able to buy up financial assets for a song after a crash happens, but meanwhile multitudes of ordinary Americans continue to pour vast quantities of money into stocks even at such absurd valuations.

Despite all of the warnings, many will be caught unprepared when the music stops playing.  Just like all of the other financial manias in our history, this one will come to a bitter end too.  The following comes from the New York Times

In the late 1960s the mania was for the “nifty 50” American companies like Disney and McDonald’s, which had been the “go-go” stocks of that decade. In the late 1970s it was for natural resources, from gold to oil. In the late 1980s it was stocks in Japan, and in the late 1990s it was the dot-com boom. Last decade, investors flocked to mortgage-backed securities and big emerging markets from Brazil to Russia. In every case, many partygoers were still in the market when the crash came.

In life, timing is everything, and those that got out of the market in time are going to end up being very happy that they did so.

But those that stay in too long are going to see their “paper wealth” disappear in a blinding flash, and there won’t be any way to get it back once it is gone.

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




Remember This Milestone: The Dow Jones Industrial Average Hits 22,000 For The First Time In U.S. History

The Dow hit the 22,000 mark for the first time ever on Wednesday, and investors all over the world greatly celebrated.  And without a doubt this is an exceedingly important moment, because I think that this is a milestone that we will be remembering for a very long time.  So far this year the Dow is up over 11 percent, and it has now tripled in value since hitting a low in March 2009.  It has been quite a ride, and if you would have told me a couple of years ago that the Dow would be hitting 22,000 in August 2017 I probably would have laughed at you.  The central bankers have been able to keep this ridiculous stock market bubble going for longer than most experts dreamed possible, and for that they should be congratulated.  But of course the long-term outlook for our financial markets has not changed one bit.

Every other stock market bubble of this magnitude in our history has ended with a crash, and this current bubble is going to suffer the same fate.

But many in the mainstream media are still encouraging people to jump into the market at this late hour.  For example, the following comes from a USA Today article that was published on Wednesday…

“It’s still not too late to get in,” says Jeff Kleintop, chief global investment strategist at Charles Schwab, based in San Francisco. “The gains are firmly rooted in business fundamentals, not false hopes.”

I honestly don’t know how anyone could say such a thing with a straight face.  We have essentially been in a “no growth economy” for the past decade, and signs of a new economic slowdown are all around us.

But even though price/earnings ratios and price/sales ratios are at some of the highest levels in history, some analysts insist that the stock market still has more room to go up

On the flip side, investors with time to ride out any short-term market storm should not rule out getting in the market now. Economies around the globe are improving and are boosting the profitability of corporations in the U.S. and abroad, says Chris Zaccarelli, chief investment officer at Cornerstone Financial Partners in Charlotte, N.C.

Zaccarelli won’t even rule out Dow 25,000 by the end of 2018.

Personally, I believe that it is far more likely that we would see Dow 15,000 by the end of 2018, but over the past couple of years the bulls have been right over and over again.

But the only reason why the bulls have been right is because of unprecedented intervention by global central banks.

Today, the Swiss National Bank owns more than a billion dollars worth of stock in each of the following companies: Apple, Alphabet, Microsoft, Amazon, Exxon Mobil, Johnson & Johnson and Facebook.

So where does a central bank like the Swiss National Bank get the money to purchase all of these equities?

It’s easy – they just print the money out of thin air.  As Robert Wenzel has noted, they simply “print the francs, exchange them for dollars and make the purchases”.

If I could create as much money as I wanted out of thin air and use it to buy stocks I could relentlessly drive up stock prices too.

Our financial markets have become a giant charade, and central bank intervention is the biggest reason why FAANG stocks have vastly outperformed the rest of the market.  The following comes from David Stockman

Needless to say, the drastic market narrowing of the last 30 months has been accompanied by soaring price/earnings (PE) multiples among the handful of big winners. In the case of the so-called FAANGs + M (Facebook, Apple, Amazon, Netflix, Google and Microsoft), the group’s weighted average PE multiple has increased by some 50%.

The degree to which the casino’s speculative mania has been concentrated in the FAANGs + M can also be seen by contrasting them with the other 494 stocks in the S&P 500. The market cap of the index as a whole rose from $ 17.7 trillion in January 2015 to some $ 21.2 trillion at present, meaning that the FAANGs + M account for about 40% of the entire gain.

Stated differently, the market cap of the other 494 stocks rose from $ 16.0 trillion to $ 18.1 trillion during that 30-month period. That is, 13% versus the 82% gain of the six super-momentum stocks.

If global central banks continue to buy millions of shares with money created out of thin air, they may be able to keep this absurd bubble going for a while longer.

But if the Fed and other central banks start pulling back, we could see a market tantrum of epic proportions.  In fact, almost every single time throughout history when the Federal Reserve has attempted a balance sheet reduction it has resulted in a recession

The Fed has embarked on six such reduction efforts in the past — in 1921-1922, 1928-1930, 1937, 1941, 1948-1950 and 2000.

Of those episodes, five ended in recession, according to research from Michael Darda, chief economist and market strategist at MKM Partners. The balance sheet trend mirrors what has happened much of the time when the Fed has tried to raise rates over a prolonged period of time, with 10 of the last 13 tightening cycles ending in recession.

“Moreover, outside of the 1920s and 1930s, there is no precedent for double-digit annual declines in the balance sheet/base that will likely begin to occur late next year,” Darda said in a note.

President Trump is going to get a lot of credit if the stock market keeps going up and he is going to get a lot of blame if it starts going down.

But the truth is that he actually has very little to do with what is really going on.

This stock market bubble was created by the central banks, and they also have the power to kill it if they desire to do so.

And once this bubble bursts, we may be looking at a crisis that makes 2008 look like a Sunday picnic.

Goldman Sachs and others are already warning that this stock market rally is on borrowed time.  Let’s hope that it can continue at least for a little while longer, but in the end there is no possible way that this story is going to end well.

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 Boomers Are Aging Fast… Time to Make Money Now

If you’ve followed my writing for any length of time, you know how much respect I have for Harry and his demographic work.

Believe it or not, Harry, and his approach to forecasting, gave me the confidence to help launch Peak Income – an income newsletter – at a time when most investors were terrified of yield-focused investments.

The consensus two years ago was that inflation and higher bond yields were just around the corner, which would’ve meant a rough ride for the kind of investments I recommend.

In retrospect, that claim seems almost absurd. Inflation is still dead on arrival and bond yields have gone mostly sideways for the past two years.

But, back then, investors were legitimately concerned about the alternatives unfolding.

It was my knowledge of demographic trends, learned from my years working with Harry, which allowed me to go against the grain and start scoring very respectable returns for my readers.

Right now, as I wrote in the July issue of Peak Income, I’m following his lead again. My approach this month has to do with the power of perhaps the greatest demographic trend of all: the aging of the Baby Boomers.

We’re talking about the economic power of the nearly 110 million people born between the late 1930s and 1961, and how to generate a steady flow of income now, and later.

Specifically for my Peak Income readers this month, we’re looking at the “landlords” of the places – skilled nursing facilities, senior housing, and hospitals – that many Boomers will likely spend time in in the coming years.

Take a look at the “Nursing Home Wave.”

The chart below takes the number of Americans born every year, adjusted for inflation, and pushes the data out 84 years – the peak age for nursing home spending – so we can forecast peak demand for nursing homes.

A few things jump off the page immediately.

This simple demographic model shows that demand for nursing homes has actually been in decline for over a decade. But 2017 represents the absolute nadir of the chart. From this point on, demand for nursing homes is set to rise virtually every year until the mid-2040s.

This demographic model is not intended to be as precise as a sniper’s bullet. I prefer to think of it more as a shotgun. You point it in right direction, and it’s likely to hit its target.

But what this model tells us is that demand for senior care is set to rise for a long time to come.

Now, there are factors that can complicate an investment in this space.

In the healthcare landscape right now, despite constant debate about repealing and replacing Obamacare, most health insurance stocks are sitting near new 52-week highs. And Americans certainly aren’t getting any younger or healthier.

Demand for healthcare has never been stronger… and it’s only going to get stronger still with the aging of the Boomers.

At the same time, the sector of investments I target this month have taken a beating as of late.

I don’t know exactly the reasons why. I suppose there’s the perpetual worry about Medicaid reimbursement. Nursing home and assisted-living facility operators live under the constant threat of having the fees they collect for their services slashed at the government’s whim.

When Medicaid decides to cut its reimbursement rate, there’s really nothing a nursing home can do. They either accept the lower revenue… or close their doors.

But not even Medicaid fears can explain the weakness in this sector.

If you’ve invested for any length of time, you know that the market often makes little sense.

But that’s OK.

In fact, it’s good that the market is irrational. Were it perfectly rational all the time, like Spock from Star Trek, there wouldn’t be any profit left for us.

This investment yields close to 8% right now, and if it gets back to its 52-week high, which I see as a very good possibility, you can expect returns of 30% on top of the dividend.

Click here to learn how to take advantage right now.

charles sizemore helicopter money

Charles Sizemore
Editor, Peak Income

The post The Boomers Are Aging Fast… Time to Make Money Now appeared first on Economy and Markets.

Charles Sizemore – Economy and Markets ()




It’s Time to Kick This New Mafia in the Balls

Just look at this chart!


If you were born in 1980, you only have a 50% chance of making more money than your parents.

But if you were born in 1950, you had a 79% chance, according to research that Raj Chetty and his team of economists did.

That’s one hell of a drop!

Upward mobility in the U.S. has almost halted. Of course, this is no news to us… and we can point a finger to at least one of the culprits.

Our colleges and universities.

They have essentially become strongholds for a new mafia, one that dons academic caps and gowns!

As I told 5 Day Forecast readers last Monday, the “Intelligentsiosi” have become bloated, greedy and mad with their own success.

Glowing campuses with grand buildings and exquisite landscaping…

Endless tenure and dreamy retirement plans for overpaid paper pushers, and sometimes professors as well…

Uncontrolled bureaucracy…

It’s all become a statue to their egos!

Unfortunately, there are two sets of victims of these crimes.

The first are the students trying to get a start in life. The poor suckers must clamp an iron ball of debt around their ankles just to get through the front door of these higher education institutions… unless their parents are rich enough to fund these stratospheric costs.

If the ball doesn’t drown them right out school, then they lug it around for decades while they slowly chip away at it.

It’s no wonder upward mobility is vanishing faster than crack in a whore house.

The second set of victims is the rest of us and the American economy!

The situation is now so far out of hand as to boggle the mind. In fact, our healthcare costs, which are twice as expensive as anywhere else in the world, now pale in comparison to how our education costs are rising. See for yourself…

There is no conceivable, valid justification for such inflation!

Education is an information industry!

As we meander through the tail end of the information revolution, the costs of accessing any information continue to decline rapidly. Yet the cost of a college degree is still rising like a rocket to the moon.

What the hell?!

People like me and many leading-edge experts could be streamed across college campuses at nominal costs, adding to what’s on offer from the local professors… and how could they be better than the best experts in the world when appropriate?

Computers and technology cost exponentially less today than a decade ago.

TVs and books tend to cost less as well.

So why the hell are costs for education still rising?!

Can’t these Intelligentsiosi see that their actions are robbing Americans of the opportunity for social and economic improvement?!

Upward mobility in the U.S., once one of the easiest accomplishments in the developed, is now ranked as one of the hardest.

Europeans and Canadians don’t have this problem. Their education costs aren’t so horrific, nor are their healthcare costs.

What happened to enabling more Horatio Algers?

Empowering penniless immigrants or citizens so they can rise to success against all the odds?

It seems to me these “wise” guys are more interested in landscaping than the American dream.

Back in the ’90s, when I lectured to successful small business owners at TEC (now Vistage) and YPO (Young Presidents Organization), most were self-made millionaires… not trust-fund brats.

Innovation depends on the ability of the lowest to rise to the top. It survives best from adversity.

Successful people tend to become complacent, so their kids often stumble when they’re adults. Just look at Lindsey Lohan. Perfect example.

But by withholding the opportunity for higher education – by putting the price tag way out of reach of anyone but the wealthy – we’re killing the golden goose.

It will be the end for our great country if we don’t have a revolution in education, at the very least.

Luckily, we WILL have a revolution.

Right now, the 250-year political and social revolution is converging with our economic winter season. The last time this happened was in the late 1700s. The result was democracy and capitalism – the two greatest breakthroughs of modern history.

Yes!

I’m talking revolution!

The real deal.

The three greatest impediments to democracy and capitalism are:

1) Special interests, that have taken over democracy.

2) Central banks hi-jacking free markets.

3) Unaffordable higher education, and healthcare.

I graduated from Harvard, but I refuse to send a penny of my substantial charity contributions to them. Still, they have a foundation and fund that is off the charts. So why do they have to charge so much for tuition?!

They do it because they can.

These bad fellas have had the Baby Boomers by the balls for decades. Now they’re holding Millennials hostage: “Pay up or live in your parents’ basement for the rest of your life!”

I can’t wait for the broader bubble to burst because it’ll will cascade across sectors, industries and the world.

It will finally bring everything back down to reality!

Mark my words: A revolution is coming in higher education and everywhere else. It will be painful.

And it can’t come soon enough.

Harry
Follow me on Twitter @harrydentjr

The post It’s Time to Kick This New Mafia in the Balls appeared first on Economy and Markets.

Harry Dent – Economy and Markets ()




Former Reagan Administration Official Is Warning Of A Financial Collapse Some Time ‘Between August And November’

If a former Reagan administration official is correct, we are likely to see the next major financial collapse by the end of 2017.  According to Wikipedia, David Stockman “is an author, former businessman and U.S. politician who served as a Republican U.S. Representative from the state of Michigan (1977–1981) and as the Director of the Office of Management and Budget (1981–1985) under President Ronald Reagan.”  He has been frequently interviewed by mainstream news outlets such as CNBC, Bloomberg and PBS, and he is a highly respected voice in the financial community.  Like other analysts, Stockman believes that the U.S. economy is in dire shape, and he told Greg Hunter during a recent interview that he is convinced that the S&P 500 could soon crash “by 40% or even more”…

The market is pricing itself for perfection for all of eternity.  This is crazy. . . . I think the market could easily drop to 1,600 or 1,300.  It could drop by 40% or even more once the fantasy ends.  When the government shows its true colors, that it’s headed for a fiscal blood bath when this crazy notion that there is going to be some Trump fiscal stimulus is put to rest once and for all.  I mean it’s not going to happen.  They can’t pass a tax cut that big without a budget resolution that incorporated $ 10 trillion or $ 15 trillion in debt over the next decade.  It’s just not going to pass Congress. . . . I think this is the greatest sucker’s rally we have ever seen.”

But even more alarming is what Stockman had to say about the potential timing of such a financial crash.  According to Stockman, if he were to pick a time for the next major stock market plunge he would “target sometime between August and November”

The S&P 500 is going to drop by hundreds and hundreds of points sometime over the next few months as we drift into this unexpected crisis. . . . I would target sometime between August and November because that’s when the rubber is going to meet the road on a debt ceiling increase when they are out of cash.  Washington is going to end up in vicious political conflict over what to do about the debt ceiling. . . . It is going to be one giant fiscal bloodbath the likes of which we have never seen.

That really got my attention, because those are the exact months during which the events that I portrayed in The Beginning Of The End play out.

Without a doubt, the U.S. financial system is living on borrowed time, and we cannot keep going into so much debt indefinitely.  In 2017, interest on the national debt will be more than half a trillion dollars for the first time ever, and it will be even higher next year because we are likely to add at least another trillion dollars to the debt during this fiscal year.

Meanwhile, the financial markets just keep becoming more absurd with each passing day.

Just look at Tesla.  This is a company that somehow managed to lose 620 million dollars during the first quarter of 2017, and it has been consistently losing hundreds of millions of dollars quarter after quarter.

And yet somehow the market values Tesla at a staggering 48 billion dollars.

It is almost as if we are living in an “opposite world” where the more money you lose the more valuable investors think that you are.  Companies like Tesla, Netflix and Twitter are burning through gigantic mountains of investor cash without ever making a profit, and nobody seems to care.

Commercial mortgage-backed securities are another red flag that is starting to get a lot of attention

The percentage of commercial mortgage-backed security (MBS) loans in special servicing hit 6.6% to close April, Commercial Mortgage Alert reported, citing Trepp data. The five basis point move higher from March came as the past-due rate on Fitch-rated commercial mortgage-backed securities (CMBS) climbed by nine basis points to end April at to 3.5%.

Both MBS and CMBS rates hit their highest levels since 2015.

During the crisis of 2008, regular mortgage-backed securities played a major role, and this time around it looks like securities that are backed by commercial mortgages could cause quite a bit of havoc.

One of the reasons for this is because mall owners are having such tremendous difficulties.  The number of retail store closings in 2017 is on pace to shatter the all-time record by more than 20 percent, and Bloomberg is projecting that about a billion square feet of retail space will eventually close or be used for another purpose.

So needless to say this is putting an enormous amount of strain on those that are trying to rent space to retailers, and a lot of their debts are starting to go bad.

In 2007 and early 2008, a lot of the analysts that were loudly warning about mortgage-backed securities, a major stock market crash and an imminent recession were being mocked.  People kept asking them when “the crisis” was finally going to arrive, and leaders such as Federal Reserve Chairman Ben Bernanke confidently assured the public that the U.S. economy was not going to experience a recession.

But of course then we got to the fall of 2008 and all hell broke loose.  Investors suddenly lost trillions of dollars, millions of jobs were lost, and the U.S. economy plunged into the worst recession since the Great Depression of the 1930s.

Now we stand poised on the brink of an even worse disaster.  The U.S. national debt has almost doubled since the last crisis, corporate debt has more than doubled, and all of our long-term economic fundamentals have continued to deteriorate.

The only thing that has saved us is our ability to go into enormous amounts of debt, and once that debt bubble finally bursts it will be the biggest standard of living adjustment that Americans have ever seen.

So I don’t know if Stockman’s timing will be 100% accurate or not, but that is not what is important.

What is important is that decades of exceedingly foolish decisions have made the greatest economic crisis in American history inevitable, and when it fully erupts the pain is going to be absolutely off the charts.

The Economic Collapse




Time to Think Like a Surfer

I took up surfing in my early 30s.

It didn’t last long. But I learned a tremendous amount from the experience (least of which is that I suck at surfing).

Well, it’s time to think like a surfer.

Your sole focus is to catch the wave.

The best surfers can see the waves building, just like we can in the markets, but they only care about where the biggest, best waves will crash. That’s where you get the ride.

And if you catch the biggest wave in the right place, you get the ride of a lifetime.

Look at this fourth and largest wave building in the stock market. It’s the wave of a lifetime for investors, and it’s rolling onto our shores right about now…

Remember, all the action comes when the wave crashes, not as it’s building. As the swell grows around you, you can go with the flow and harness the energy of the wave with little effort. That’s when you become one with the universe, sitting there on your board, surrounded by dark water, rolling up and down as the power builds beneath you. That’s why surfers get addicted.

Then, at the perfect moment, all the wave’s pent up energy releases in a roaring spray of water and power.

That’s where we want YOU to be when the greatest market wave of your lifetime comes crashing to shore!

That’s when the greatest profits come.

That’s when the greatest innovations spring up.

The smartest people (I include surfers in this group) and the greatest innovators understand this. They don’t look at a good economy as the best opportunity for success. Seeds of radical innovation only grow in the most challenging conditions.

That’s why the best traders are most often short sellers rather than long buyers… just ask Paul Tudor Jones or George Soros.

That’s why people who are prepared for the crash make out like bandits in the aftermath.

While writing my latest best seller, The Sale of a Lifetime, I created a bubble model for stocks. It follows the Masters and Johnson male orgasm study of the late 1950s.

Bubbles build exponentially and then burst twice as fast, deflating back to their point of origin (or close).

Exactly like the ocean waves that surfers spend their lives hunting for.

And precisely what smart investors spend their lives waiting for!

Central Banks have extended this wave beyond all expectations, but it’s now showing signs of peaking. It looks like it’s getting ready for that big crashing later this year.

You can either paddle out past where this massive 40-foot wave (at least you’ll be safe)…

Or you can ride it all the way down and create extreme wealth.

This is one of those defining moments.

The choice is entirely yours.

But know that our best investment services are designed to not only to profit from the upside (as the swell builds), but to also rake it in during the downside, when it comes crashing down like Holy Hell!

Harry
Follow me on Twitter @harrydentjr

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Harry Dent – Economy and Markets ()