Americans Buying Gold/Silver: Big U.S. Pricing Advantage

Two years ago in this space, I penned an essay discussing how Americans – and other countries that are “dollarized” – where the local currency is either the USD or pegged to it – had a significant advantage when it came to getting the most for their money when exchanging dollars for precious metals.

Lately I looked into this issue again and the good news is – it’s still a good deal. In relation to a lot of other folks, even better than before! But the bad news is that this might not be the case much longer…

The Cando Disadvantage

The Canadian Dollar is known in the trade as a “Cando”. In 2008 it traded at US$ 1.10, which meant that at the time, Canadians could buy 10% more metal than Americans. In 2012 it had a high of US$ 1.01. In 2016 it bottomed at US$ 0.58 (ouch!), and today still trades at about 80 cents on the dollar. As the chart shows, Canadians get about 20% less gold and silver for their money than their southern neighbors (us).

Canadian Dollar vs US Dollar 01/12/2018 (Chart)

Courtesy stockcharts.com

Zim and Ven, racing for the bottom.

Then there’s the perennial currency basket case Zimbabwe – now entering its second hyperinflationary blowout in just the last couple of decades. Zim is currently playing touch and go with Venezuela to see if the latter’s “bolivar fuerte” (strong bolivar), transacted by the pound on a produce scale rather than from a wallet, will incinerate itself first.

Zimbabwe Banknotes

Zim’s previous “Paper Promise”- Angling for a rematch?

Bolivar Fuerte

Back in the day when the term “strong bolivar” meant something…

Fall in the Value of the Venezeulan Bolívar (Chart)

But not now… (Courtesy Sources listed)

Emerging Markets Purchasing Power Disadvantage

Buyers in Emerging Markets, in which gold prices are making new highs relative to their own fiat paper, are also paying more for their stash. Nevertheless demand there is rising as well – which as previously noted – is an important “tell” regarding the health and durability of the ongoing bull market. This is because even when facing a less advantageous exchange rate, emerging market gold customers are still solidly on the buy.

Additional evidence indicates that we are just now entering the second year of what could become a lengthier – and considerably more powerful than-expected upside run.

Gold vs Emerging Market Currencies

Courtesy allstarcharts.com

We say this in part because of some serious work done by Bob Hoye’s Institutional Advisors along with the Technical observations of Ross Clark They note that for the last 50 years, important lows for gold have taken place on a regular basis, stating, “The most recent (low) was in December 2016, one year after a premature low at 7.2 years in December 2015.”

In a January 2018 public domain post, they stated,

After an initial surge off the cycle lows, the price tends to move methodically higher for the first two years. During that period, we have found that a lower 20-week moving average envelope provides support. This was most recently tested in December 2017… Except for 2002, a trailing one-week stop after the 55th week, kept participants in the market until the first week after the top.

You might want to commit that last part to memory. If the 8-year cycle pattern continues to play itself out, not only could this nascent gold bull have a long ways to run in terms of time and price, but an attentive investor could use the kind of trailing stop-loss discussed, in order to stay with the trend as long as possible, holding onto significant gains before offsetting all or most of their holdings for a good profit.

Now for the Bad News…

The U.S. dollar has been “king of the hill” since its establishment as a backstop for the so-called petrodollar, in an agreement with Saudi Arabia and other oil producing countries as a result of the 1970’s oil spike. That idea was to create a stable and reliable revenue stream for oil exporters. The price of oil was thus set in dollars, in the process establishing the unit of account as the world’s reserve currency. Even so, the petrodollar’s purchasing power is, to some extent, predicated upon the rate of inflation and the value of the dollar on the FOREX.

Things worked well for quite awhile, but in recent years, for a number of reasons, the status quo has been increasingly called into question. A detailed rationale is beyond the scope of this report, but here are a few of the elements:

  • Profligate creation of dollars by the Federal Reserve, many of which have “migrated” offshore, driving down the recipients’ purchasing power.
  • Massive debt growth at all levels of the U.S. body politic – leading inevitably to more dollar creation in an attempt to pay the bill.
  • Unnaturally low interest rates since the 2008 melt-down, obscuring the “signals” given by rates that indicate if a given investment makes “dollars and sense”, leading to soaring mal-investment and speculation.
  • A changing geopolitical landscape, wherein the BRIC countries – Brazil, Russia, India and China (plus others) – have tired of the constraints placed upon them by restrictive U.S. policies.
  • The launch and coming build-out of The New Silk Road from Asia to Europe and the Middle East, encompassing 40 per cent of the world’s population in an economic-financial-political paradigm less-incumbent on the West’s wishes.
  • Lessening dependence on the US dollar as the world’s reserve currency in favor of loans and payments denominated in Chinese yuan, Russian rubles, commodities…and gold.

All these factors and more mean that right now and continuing during the coming years, the U.S. dollar is going to be buying less of just about everything, and that includes precious metals. The key elements of this sea-change as they relate to you?

  • Lower U.S. dollar-denominated gold and silver purchasing power.
  • Increased global demand for these metals, especially in the many countries seeing their local currencies strengthen vis a vis the dollar.
  • Depleting gold reserves due to a lack of big discoveries.
  • Lower head-grades across the board.
  • Increased cost of production due to environmental and “country risk”.

And this…

Weekly Gold with 50 Day Golden Cross (Chart)

Note established 50 day MA (blue line) “Golden Cross”

While just about everything in life is based upon probabilities, the odds right now strongly favor that the next leg of the secular bull run in the metals is underway. Four years of a cyclical bear market 45-50% retracement (2011-15); an 8 month initial bull counter-trend rally (most of 2016); and finally 18 months of retracement and consolidation (mid-2016 to December, 2017) have already taken place.

Taken together, this alignment of factors makes a compelling argument for completing your metals’ acquisition plan in a timely manner. And if you have still have yet to get started… what’s your excuse?

Precious Metals News & Analysis – Gold News, Silver News




Is Stimulus Responsible for the Recent Improved Trends in the U.S. and Japan?

Maybe.

Since central banks began their B.S. back in 2001, when the Bank of Japan first began Quantitative Easing efforts, I’ve warned that it wouldn’t be enough… that none of them would be able to commit to the vast sums of money they’d ultimately need to prevent the Economic Winter Season – and its accompanying deflation – from rolling over us.

Demographics and numerous other cycles, in my studied opinion, would ultimately overwhelm central bank efforts.

Well, $ 12 trillion later – after the U.S. and Europe jumped on the QE bandwagon in early 2009 – I have to admit I didn’t expect that level of QE…

And here we are, at the start of 2018, with the Dow above 25,000 and flying like a kite on the Trump rally that we called in November 2016!

With U.S. markets not suffering losses more than 5% all throughout 2017!

With the U.S. economy seemingly gathering steam, especially in 2017, and the Japanese economy improving steadily since 2014.

So, was I wrong?

Are such high levels of artificial stimulus more important than demographic trends in spending, workforce growth, and productivity, which clearly dominated in the real economy before QE? Is global stimulus finally taking hold and are we on the verge of 3% to 4% growth again?

Or is there something else going on here?

Yes! Central banks have taken over the markets and economy. They’ve put us on an endless stream of crack and stimulus to keep us going. And now nothing else “seems” to matter as much – not even the most fundamental demographic trends in spending.

As long as the markets see low rates and almost-free money, and companies just buy back their stocks instead of investing in real growth, everything seems to keep chugging along all sunshine and roses.

But I maintain that you cannot live indefinitely off such something-for-nothing policies?

Fundamentals should still mean something in our economy…

And my Generational Spending Wave (immigration-adjusted births on a 46-year lag), which predicted the unprecedented boom from 1983 to 2007, as well as Japan’s longer-term crash of the 1990s forward, does point to improving trends in 2016 and 2017 assuming the peak spending has edged to 47 up for the Gen-Xers.

The declining births of the Gen-X generation (1962 – 1975) caused the slowdown in growth from 2008 forward after the Baby Boom peaked in late 2007, right on cue. But there was a brief, sharp surge in Gen-X births in 1969 and 1970. Forty-seven years later, there was a bump… right in 2016/17.

Or, was it this two-year blip in demographics?

My research would suggest it’s more the latter.

After all the economy and stock markets were stalling in 2014 and 2015, despite all the massive stimulus – and those were at the bottom of the first demographic wave down in spending.

The next wave down bottoms between 2020 and 2022 and doesn’t turn up strongly until 2025. The worst year of demographic decline should be 2019.

Japan has had a similar, albeit larger, surge in demographics against a longer-term downtrend.

Its Millennial generation brought an end to its demographic decline in spending in 2003. But the trends didn’t turn up more strongly until 2014, and now that they have, it’ll only last through 2020 before turning down dramatically again for decades.

Prime Minister Abe is being credited with turning around Japan with his extreme acceleration in QE and his “three arrows” back in 2013. All that certainly would have an impact, but I don’t believe that’s what is most responsible for the improving trends. Rather, demographics is the key here as well, and this blip Japan is enjoying won’t last for more than three years! And this Millennial bounce should have been stronger for Japan.

If demographics does still matter more, we should start to feel the power of demographics in the U.S. as we move into 2018.

If our economy starts to weaken for no obvious reason, and despite the new tax reform free lunch, then we will know that demographics still matter… and that central bank stimulus isn’t all it’s cracked up to be.

And it’s clear that the stock market is expecting Trump’s 3% – 4% growth rates. That’s why it is flying so high. What happens if this just doesn’t happen?

Harry
Follow Me on Twitter @harrydentjr

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Harry Dent – Economy and Markets ()




6 Reasons to Bet on the U.S. Dollar in 2018

I love the gold bugs!

They’re steadfast in warning that you can’t live on perpetually-expanding debt… or money printing… or zero interest policies. Mainstream economists have been lulled into believing such things don’t have serious consequences, while history clearly says otherwise. Gold bugs aren’t fooled.

But that’s where my love for gold bugs ends.

They have two fatal failings.

The first is that they believe gold is always a storehouse of value… and mostly in inflationary times like the 1970s.

It is NOT outside of such strong inflationary periods, as I’ve explained in numerous previous issues of Boom & Bust, The Leading Edge, and Ahead of the Curve Webinars;and practically all of my best-selling books, and even the gold eBook I wrote to explain exactly this point.

The second is their… I can only call it “seeming ignorance”… about the U.S. dollar.

They’re smart people, so I just don’t understand how they can’t better understand the value and power of the world’s reserve currency.

And, quite frankly, it was laughable recently when Peter Schiff, who I have often debated, accused ME of not understanding the dollar. Ha!

That’s why, in the first Boom & Bust issue of 2018, which subscribers received earlier today, I explain why the U.S. dollar is the real ultimate safe haven (and in so doing prove that Peter’s comment was an unqualified pot shot).

The reality is that I’ve been right about both gold and the dollar since the 2008 crisis. He and his fellow gold bugs have maintained that gold prices would soar to the moon, and dollar prices tank, as the greatest money printing scheme in history unfolded.

However, gold collapsed after peaking in late 2011, and has remained stuck in a low range ever since… and is heading much lower in the next few years.

In the meantime, the dollar has mostly appreciated since early 2008, and as I showed paid readers, I have reason to believe that it’s going to have a substantial rally again in 2018 before it finally becomes more fairly valued. After that it could be more up or down, but still could lean towards the upside.

Really, gold bugs get three very important things dead wrong:

  1. They think that because we have been printing money at unprecedented rates, the dollar will crash; likely dropping close to zero. Either they’re smoking some good pot or they don’t understand that currencies trade relative to each other, and therefore cannot drop to zero, unless they fail like in Zimbabwe – which is rare.
  2. They believe money printing at such high rates will cause hyperinflation at some point, especially when central banks continue to escalate their efforts exponentially during the next financial crisis. The trouble with that is, it’s been nine years since QE and unprecedented stimulus efforts began, and countries the world over have barely been able to stave off deflation! That’s because we’re in a deflationary period of declining money velocity from the aftermath of the greatest debt bubble in history. And if we fall into an even deeper crisis (as they and I predict), especially after such massive money printing, it will be a sign that none of it works.

    Tell me, how are central banks going to sell their plan to Joe Public to go from printing $ 12 trillion globally to $ 100 trillion to stave off the next crisis after the last $ 12 trillion failed? There’s just no way!

  3. And perhaps the most egregious of all: They think that governments are on a never-ending inflation campaign to devalue the dollar and make their debts cheaper to pay off. I’ll grant you, there is an element of truth to that. After all, who wouldn’t want to make their debts cheaper? But the fact of the matter is that the dollar hasn’t been devalued to the extent they expound.

    They’re always throwing around the classic chart that shows that adjusting the dollar for the expansion of dollars since 1900 has resulted in the green back being devalued 97%. It’s all utter tripe!

    They don’t understand – and neither do most economists – that the very productive process of rising urbanization and greater specialization of labor requires much more delegation of tasks and hence, much greater financial transactions by consumers – meaning more dollars relative to GDP – through physical currency and credit. Such productivity greatly outweighs the inflation of the money supply. If it didn’t, our standard of living adjusted for inflation wouldn’t have gone up more than eight times adjusted for inflation since 1900!

As I said, I’ve belabored points two and three in numerous places, so for the January issue of Boom & BustI focus on the one that’s gotten the least attention. And Charles Sizemore, our Boom & Bust Portfolio Manager, is positioning readers in a very interesting play that will profit from the strong year the dollar will have in 2018.

If you haven’t read your issue yet, do so now.

Harry

P.S. As this is the last working day of 2017, I’d like to take this opportunity to thank you for your time and support throughout this year. Happy New Year to you and your family. I warn that 2018 could be a rough year for the markets, for many reasons that I’ll elaborate on in the next few weeks, but with us by your side, I’ve no doubt it’ll be yet another profitable one for the books.

 

The post 6 Reasons to Bet on the U.S. Dollar in 2018 appeared first on Economy and Markets.

Harry Dent – Economy and Markets ()




Major Scandal: U.S. Congressman Says That There Was A ‘Concerted Effort’ Within The FBI To Help Hillary Clinton Win The Election

Did the FBI attempt to swing the outcome of the 2016 election in a certain direction?  I know that question sounds completely outrageous, but this is exactly what one member of Congress is now claiming.  For a long time we have known that elements within the Deep State have been actively working to undermine the Trump administration, but now solid evidence is emerging that the interference by the Deep State actually began during the presidential election.  As more details come out, this could easily become one of the biggest political scandals in U.S. history.

If you think that I am exaggerating, please consider what U.S. Representative Jim Jordan told Lou Dobbs just the other day

Rep. Jim Jordan: Listen you can’t make this stuff up. It gets worse each and every day… What deep down scares me, if this actually happened the FBI had a concerted effort with the people at the top to go after one party’s nominee to help the other party’s nominee. If that actually happened in the United States of America and everything each and every day points to more and more likely that that is what took place, it is sad for our country if that took place. And I think it did based on everything I am seeing. All the evidence points to that.

You can watch Jordan making these comments on YouTube right here

So what kind of evidence are we talking about?

Well, I am sure that Jordan has access to evidence that we currently do not, but one thing that we do have are extremely chilling text messages sent between FBI agent Peter Strzok and lawyer Lisa Page.  The following comes from Paul Joseph Watson

Amidst the 10,000 text messages sent between anti-Trump FBI agent Peter Strzok and lawyer Lisa Page is a bizarre exchange revealing how the two, almost certainly with Deputy FBI Director Andy McCabe, discussed an “insurance policy” in case Donald Trump won the presidential election.

“I want to believe the path you threw out for consideration in Andy’s office — that there’s no way [Trump] gets elected — but I’m afraid we can’t take that risk,” Strzok wrote to his mistress, adding, “It’s like an insurance policy in the unlikely event you die before you’re 40.”

Strzok needs to be brought before Congress as soon as possible so that he can explain exactly what he meant in those messages.  Because there is no way that an FBI agent should ever make statements like that, and even those in the liberal media are saying that this “looks very bad”

What kind of “insurance policy” were high level members of the FBI discussing to prevent Trump from winning the election less than three months before it took place?

As the Daily Beast’s Lachlan Markay, hardly a Trump cheerleader, notes, “This looks very bad.”

As Congress digs into this scandal, I would expect more shocking details to emerge.

It is imperative to remember that the establishment absolutely loathes Trump.  The hate everything that he stands for, and they are not willing to wait around until the 2020 election in order to get rid of him.

For the establishment, the goal is to personally destroy Trump and the movement that he represents.  In the past, it would have been unthinkable for television news anchors to talk hopefully about the possibility of the president and his team going to jail, but that is precisely what happened on MSNBC just a few days ago…

As the “noose” of Robert Mueller’s probe into the Trump team’s contacts with Russia is “tightening,” members of the administration are starting to understand they’re going “to jail … for the rest of their lives,” MSNBC’s Mika Brzezinski said Tuesday.

“Knowing them, I think they’re shocked that the noose is tightening,” Brzezinski said. “I don’t know if they were arrogant or incredibly un-self aware and really dumb about what the job was about, how important it was, and how under the microscope every move you made would be. I think they just thought they’d go in there and riff through it. And I think they’re shocked that the noose is tightening and that people might go to jail.”

“You’re exactly right,” her co-host and fiancé, Joe Scarborough, agreed.

“For the rest of their lives,” Brzezinski added, perhaps hopefully.

President Trump is not going to prison, and the entire Russian collusion investigation is a giant witch hunt.

Everyone knows this, but the establishment is so desperate to get rid of Trump that they will grasp at anything that even sounds remotely plausible.

And at this point, the entire Republican Party has become fair game for the psychopaths at MSNBC.  For example, during one recent segment Democratic pollster Fernand Amandi actually referred to the GOP as “a domestic terror group”

“And I think Joy, this is emblematic, this CHIP scenario, where you mentioned 9 million children, children, without health insurance. I think if you take a step back, one has to ask themselves, and I think the American people should ask themselves the broader question, what has the Republican Party, in the last 10 years, done to help the American people? What have they done? This is not a political party. This is a domestic terror group.

This kind of hateful rhetoric has got to stop.

Does Amandi really believe that Republicans should be rounded up and put in prison?  Because that is what happens to people that commit acts of domestic terror.

Or maybe he would like to see us all shipped off to Guantanamo Bay.  It is this sort of tyrannical thinking by the radical left that resulted in tens of millions of deaths in Stalin’s Russia and Mao’s China.

We are literally locked in a battle for the future of this nation, and if we lose, things are not just going to go bad for Trump and other high level members of the Republican Party.

If we ultimately lose this struggle, it will be a nightmare for all of us that truly love liberty and freedom, and America as we know it today will cease to exist.

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




Imports From China Hit Record High As U.S. Trade Deficit Continues To Explode

It should upset you that virtually everything stocking the shelves of our major retailers seems to have been made somewhere else.  As a nation, we are consuming far more wealth than we are producing, and that is a recipe for national economic suicide.  This week we learned that imports from China hit an all-time record high in October, and that was one of the primary reasons why our trade deficit hit a staggering 48.7 billion dollars during that month.  Year after year we buy far more stuff from the rest of the world than they buy from us, and this is systematically impoverishing us.

Let me put this another way.  The amount of money that leaves our country each month is far greater than the amount of money that comes into it.  When you grasp this concept, it becomes easy to understand why major exporting nations such as China have become so wealthy, and why we are drowning in debt.

Sadly, most Americans don’t understand the trade deficit, and so they don’t understand how important news like this really is.  The following comes from Bloomberg

The U.S. trade deficit widened in October to a nine-month high on record imports that reflect steady domestic demand, Commerce Department data showed Tuesday.

The surge in imports probably reflected merchants preparing for the holiday-shopping season. Consumer goods imports increased almost $ 800 million, including a $ 303 million gain in cell phones and other household goods, as well as more inbound shipments of furniture, appliances, toys and clothing.

Since China joined the WTO in 2001, the United States has lost more than 70,000 manufacturing facilities and millions of good paying manufacturing jobs.  Formerly great manufacturing cities such as Detroit now resemble war zones, but until Donald Trump came along nobody seemed to really care very much about what was happening.

Of course the Chinese are going to keep taking advantage of us for as long as they can.  They slap all sorts of tariffs and fees on our goods, and meanwhile we allow them to flood our shores with their products.  As a result, our trade deficit with China keeps hitting record high after record  high

Record imports from China helped drive up the U.S. trade deficit 8.6 percent in October as retailers stocked up for the holidays, the Commerce Department reported Tuesday.

Goods and services coming into the U.S. from China, Mexico and the European Union all hit record levels, which boosted the trade gap to $ 48.7 billion from $ 44.9 billion in September. It’s the highest monthly trade deficit recorded since President Trump took office.

President Trump is precisely correct when he says that our trade agreements are not fair to American workers and American businesses.  We will always need to trade with the rest of the world, but we need to do so in a way that is fair for both sides.  As a member of Congress, I will fight tirelessly for American workers, and if you believe in what I am trying to do I hope that you will join the team.

We simply cannot stand by and do nothing.  Our trade deficits are absolutely killing our long-term economic future, and the only way that we have been able to maintain our standard of living is by going on the greatest debt binge in human history.

If we truly want to make America great again, we need to start making things in America again, and we need to start sending leaders to Washington that understand these issues.

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




Goodbye American Dream: The Average U.S. Household Is $137,063 In Debt, And 38.4% Of Millennials Live With Their Parents

Once upon a time the United States had the largest and most vibrant middle class in the history of the world, but now the middle class is steadily being eroded.  The middle class became a minority of the population for the first time ever in 2015, and just recently I wrote about a new survey that showed that 78 percent of all full-time workers in the United States live paycheck to paycheck at least part of the time.  But most people still want to live the American Dream, and so they are going into tremendous amounts of debt in a desperate attempt to live that kind of a lifestyle.

According to the Federal Reserve, the average U.S. household is now $ 137,063 in debt, and that figure is more than double the median household income…

The average American household carries $ 137,063 in debt, according to the Federal Reserve’s latest numbers.

Yet the U.S. Census Bureau reports that the median household income was just $ 59,039 last year, suggesting that many Americans are living beyond their means.

As a nation, we are completely and utterly drowning in debt.  U.S. consumers are now nearly 13 trillion dollars in debt overall, and many will literally spend the rest of their lives making debt payments.

Over the past couple of decades, the cost of living has grown much faster than paychecks have, and this has put a tremendous amount of financial stress on hard working families.  We are told that we are in a “low inflation environment”, but that is simply not true at all

Medical expenses have grown 57% since 2003, while food and housing costs climbed 36% and 32%, respectively. Those surging basic expenses could widen the inequality gap in America, as a quarter of Americans make less than $ 10 per hour.

Getting our healthcare costs under control is one of the biggest things that we need to do.  As I talked about the other day, some families have seen their health insurance premiums more than triple since Obamacare became law.

As the cost of living continues to rise, an increasing number of young people are discovering that the only way that they can make ends meet is to live with their parents.  As a result, the percentage of adults age 26 to age 34 that live at home continued to rise even after the last recession ended…

The share of older Millennials living with relatives is still rising, underscoring the lingering obstacles faced by Americans who entered the workforce during and after the Great Recession.

About 20% of adults age 26 to 34 are living with parents or other family members, a figure that has climbed steadily the past decade and is up from 17% in 2012, according to an analysis of Census Bureau data by Trulia, a real estate research firm.

A staggering 59.8 percent of younger Millennials (18 to 25) are now living with relatives, and overall an all-time record 38.4 percent of all Millennials are currently living with family.

If so many of our young people are unable to live the American Dream, what is the future of this nation going to look like?

Consumers are not the only ones that have been struggling to make ends meet.  Corporate debt has doubled since the last financial crisis, and it now stands at a record high of 8.7 trillion dollars

Fueled by low interest rates and strong investor appetite, debt of nonfinancial companies has increased at a rapid clip, to $ 8.7 trillion, and is equal to more than 45 percent of GDP, according to David Ader, chief macro strategist at Informa Financial Intelligence.

According to the Federal Reserve, nonfinancial corporate debt outstanding has grown by $ 1 trillion in two years.

“Everything is fine until it isn’t,” Ader said. “We don’t need to worry about that until we’re in a slowdown and profit declines.”

And let us not forget government debt.  State and local governments all over the nation have piled up record amounts of debt, and the debt of the federal government has approximately doubled over the past decade.

But the fact that we are now 20 trillion dollars in debt as a nation does not tell the full story.  According to Boston University professor Larry Kotlikoff, the federal government is facing a fiscal gap of 210 trillion dollars over the next 75 years…

We have all these unofficial debts that are massive compared to the official debt. We’re focused just on the official debt, so we’re trying to balance the wrong books…

If you add up all the promises that have been made for spending obligations, including defense expenditures, and you subtract all the taxes that we expect to collect, the difference is $ 210 trillion. That’s the fiscal gap. That’s our true indebtedness.

We were the wealthiest and most prosperous nation in the history of the planet, but that was never good for us.

We always had to have more, and so we have been on the greatest debt binge in human history.

Now a day of reckoning is fast approaching, and those that believe that we can escape the consequences of our actions are being extremely delusional.

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




Bill Gates, Jeff Bezos And Warren Buffett Have More Money Than The Poorest 50% Of The U.S. Population Combined

The problem is not that we have a few people that are rich – the problem is that we have so many that are poor.  As you will see below, three extremely wealthy individuals have as much money as the poorest half of the nation combined.  In a free market capitalist society, there are always going to be some that do better than others, and there is nothing wrong with that.  But in our society today, there are so few that are doing well.  At this point a majority of all Americans are living paycheck to paycheck, and “one in five households have zero or negative net worth”

In the United States, the 400 richest individuals now own more wealth than the bottom 64 percent of the population and the three richest own more wealth than the bottom 50 percent, while pervasive poverty means one in five households have zero or negative net worth.

Those are just several of the striking findings of Billionaire Bonanza 2017, a new report (pdf) published Wednesday by the Institute for Policy Studies (IPS) that explores in detail the speed with which the U.S. is becoming “a hereditary aristocracy of wealth and power.”

That means that if you have no debt and a single dime in your pockets, you have more wealth than one-fifth of the entire country.

Okay, so let’s talk about the three men that have more wealth than the poorest 50 percent of the U.S. population combined.  Those three men are Bill Gates, Jeff Bezos of Amazon.com, and Warren Buffett.  I don’t want to take anything away from what those three have accomplished, because we need more risk takers and entrepreneurs.

Sadly, the level of small business creation has fallen in every presidential administration going all the way back to George H.W. Bush, and the percentage of Americans that are self-employed is hovering near all-time record lows.

As a nation, we desperately need to return to a culture that encourages free market capitalist thinking.  We want young men and women to create, invent, innovate and start new ventures.  But instead, today our culture encourages young people to become dependent on the government and on the big corporations, and as a result the middle class is evaporating.

As I discussed above, at this point 20 percent of all U.S. households have “either zero or negative wealth”

The rise at the wealthiest end of society comes as one in five US households live in what the report’s authors call the “underwater nation”, with either zero or negative wealth. Inequality is even more stark among minorities. Three in 10 black households and 27% of Latino ones have zero or negative wealth, compared with 14% of white families.

In recent years, unprecedented intervention by global central banks has created an absolutely enormous stock market bubble, but the real economy has continued to struggle.

Just look at what is happening to Sears.  This week they announced that they lost between $ 525 million and $ 595 million during the 3rd quarter of 2017.

How in the world do you do that?

If they had their employees doing nothing all day but flushing one dollar bills down the toilet, I still don’t think that they could lose that much money in three months.

Sears is going to sell 140 stores in a desperate attempt to stay afloat, but many believe that this is simply delaying the inevitable.  In fact, one prominent analyst named Bill Dreher believes that Sears will never be profitable again

One Wall Street analyst is beginning to doubt whether Sears Holdings will ever be profitable again, as the 124-year-old retailer struggles for liquidity and same-store sales evaporate.

“Sears’ operational performance is clearly NOT improving, and we grow increasingly concerned whether the company will ever return to profitability,” wrote Susquehanna analyst Bill Dreher in a note to clients Wednesday. “Further highlighting the company’s weakened position is the reality that manufacturers are increasingly demanding tighter payment and/or withholding products.”

Once upon a time, Sears was the number one shopping destination for the middle class.

But like the middle class in America, the best days for Sears are now long gone.

If we want to restore our economy to greatness, we need a vibrant middle class.

And in order to have a vibrant middle class, we need to have a system that encourages entrepreneurs and small businesses.  Free markets work if you allow them to, but unfortunately today we are strangling our entrepreneurs and small businesses with rules, regulations, red tape and oppressive levels of taxation, and until we change our ways we are going to continue to get the same very poor results.

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




THE U.S. STOCK MARKET: Highly Inflated Bubble To Super-Charged Tulip Mania

Investors need to be concerned that the U.S. Stock Market is well beyond bubble territory as it has now entered into the final stage of a Super-Charged Tulip Mania. Not only are stock prices inflated well above anything we have ever seen before, but valuations are also reaching heights that are totally unsustainable. Unfortunately, these highly inflated share prices and insane valuations seem normal to investors who are suffering from brain damage as years of mainstream propaganda have turned the soft tissue in their skulls to mush.

Also, we are way beyond “Boiling Frogs” now. Yes, we passed that stage a while back. Today, the typical U.S. investor has been fried to death. Investors now resemble a super-crisp chicken-wing with very little meat on it but at least will offer, one hell of a crunch. Please realize I don’t mean to be harsh about my fellow investor. However, when I look around and see what 99% of the market is doing, it reminds me of a famous line from the movie Aliens. The star of the movie, after being found lost in deep space for many years, said the following in a meeting, “Did IQ’s drop sharply while I was away?”

We find out in the rest of the movie that the so-called Mainstream experts were totally wrong about their assessment of the situation. However, billions of dollars were still spent and many lives lost because high-level individuals infected with stupidity (in the Aliens Movie) still controlled the shots. No different than today.

Regardless, the U.S. Stock Market has entered into the last stage, which I call the Super-Charged Tulip Mania. In this stage, it wouldn’t matter if the North Koreans launched a nuclear missile and declared war on the rest of the world, the universe and all Aliens floating around in space. By God, the Dow Jones Index would look at these as a catalyst to reach the next important psychological level of 25,000 points. Reaching that new level wouldn’t really be that hard as the Fed would just need to hire a few dozen more trading geeks and provide them with an endless supply of Hot Pockets and Starbucks. Easy-peasy.

Okay… it’s time to get serious. Here are a group of charts that show just how insane the markets and valuations have become today.

JP MORGAN & CATERPILLAR: Exponential Share Price Increase & Insane Valuation

Let’s take a look at two of the companies listed in the Dow Jones Index. JP Morgan Chase has benefited immensely from the U.S. Government bailout of the garbage assets such as Mortgaged Back Securities after the housing and banking collapse in 2008. JP Morgan has seen its share price surge four times from $ 25 in 2012 to over $ 100 currently:

J.P. Morgan Chase Stock

Furthermore, if an investor was lucky enough to buy a bunch of JP Morgan stock back in 1983 at $ 2.50 a share, he or she wouldn’t be complaining a bit today. JP Morgan’s stock price is up a stunning 3,933% over the past 34 years. If we look this chart, we can see that the share price is now moving up in an exponential trend. Sadly for JP, all exponential trends never last. While they may continue higher a bit longer, all will collapse sooner or later.

Another stock that has moved into the exponential territory, is Caterpillar. After years of falling sales, Caterpillar has emerged out from the ashes to increased sales, profits and with it… a skyrocketing share price:

Caterpillar Stock

Not only is Caterpillar’s share price up more than double to $ 137 since the beginning of 2016, but its current PE Ratio (Price to Earnings) is also at a staggering 95. Let me tell you, Caterpillar’s PE Ratio of 95 is nearly six times higher than its median PE Ratio over the past 13 years. Moreover, Caterpillar’s net income Q1-Q3 2007 was higher ($ 2.5 billion) than Q1-Q3 2017 ($ 2 billion), but its stock price was only $ 55 in 2007 versus the $ 137 today. So, what gives?

Again… these stock prices may continue higher for a while, but nothing heads up in a straight line for long.

APPLE STOCK: From Nose-Bleed To Outer-Space Brain Crushing Levels

It’s no surprise that Apple’s share price has reached a level that would make any Las Vegas bookie extremely jealous. And why shouldn’t it? What other company has actually brainwashed people into believing that they need to stand in line overnight to purchase the newest I-phone model at $ 1,000 a pop? Even though Caterpillar’s share price is up almost 3,000 percent over the past 36 years, who stands in line for a new Caterpillar Earth Moving machine? Or how about the latest Nike sneaker?

Amazingly, Apple’s stock price is up an earth-shattering 46,648% since it starting trading at $ 0.40 in 1984:

Apple Stock

It is also quite astonishing to see Apple’s stock up more than 15 times at $ 172 compared to its low set in 2009 at $ 11. We must remember what was going on in the first quarter of 2009. The Dow Jones Index was falling to a gut-wrenching low of $ 6,600 as CNBC’s Mad Money, Jim Cramer was telling everyone that “There’s no end in sight to how far the market would fall.” Ole Jim was finally throwing in the towel. Back then, I also wondered how the hell did the CNBC talking heads could continue to get out of bed, get in front of the camera, and deal with what looked like the end of the world. What a difference in eight years… ah?

Today at CNBC land, there’s nothing but BIG SMILES and BACK SLAPS. Everyone is wondering when the Dow Jones will finally reach the 25,000 level. I gather all it would take to get us there would be the following three incidents; 1) A war with North Korean, 2) A Saudi Arabia Royal Government Coup and, 3) A tidal wave that floods New York City.

THE DOW JONES & EXXONMOBIL: Watch Out Below!!

The Dow Jones and ExxonMobil are two of my favorite indicators which show that something is seriously wrong in the market. First, let’s look at ExxonMobil. While ExxonMobil’s stock isn’t moving up exponentially, as is Caterpillar, JP Morgan, and Apple, its share price is still well above its ratio to the oil price. If we go back to 2005, when the oil price was trading at the same as it is today, ExxonMobil’s share price was only $ 35. However, ExxonMobil’s share price is over $ 83. You can see the oil price (BLACK line) versus ExxonMobil’s share price (PURPLE area):

Exxon Mobil Stock

While it’s true that ExxonMobil’s share price has increased as a result of its massive stock-repurchasing program over the past decade, the company also spent over $ 220 billion in profits to reduce its outstanding shares from 6.3 billion in 2005 to 4.2 billion currently. Thus, company management thought it was a better decision to spend nearly a quarter of a Trillion Dollars to buy back its stock, rather than to use it for exploring, developing and producing more oil.

For ExxonMobil to finally be able to enjoy a tiny bit of free cash flow this year after it paid its shareholder dividends, it had to gut its capital expenditures by nearly two-thirds since 2012. By cutting its capital expenditures by $ 22+ billion, how does it expect to replace its oil reserves going forward? Good question. However, there isn’t a good answer as the low oil price has put the U.S. oil industry into a horrible predicament with no real solution.

If Americans understood how dire the situation has become in the domestic oil industry, they wouldn’t be pushing up the value of the Dow Jones to new record highs. Why? Without energy, there is no economy or financial assets. Sure, if we went back to using human and animal labor, there would still be some small valuations. Maybe the Dow Jones Index would be trading at say 100-200 points, but nowhere near the 23,500 level today.

The Dow Jones Index chart below shows how one index can become a Super-Charged Tulip Mania while the other index can be driven down to bottom-basement cesspool levels:

Dow Jones Stock

First, can you imagine owning the Dow Jones Index trading at a measly 850 points in 1981? It took the Dow nearly a century to reach 850 points in 1981, but it was able to increase 850 points in the past two months. Amazing things can happen to market prices and valuations when we have massive Central Bank money printing, Mainstream propaganda and societal brain damage.

Second, as the Dow Jones Index reached 23,500 points, the VIX Index (volatility) fell to a new record low of 9.14 (shown at the bottom right-hand side of chart). Think of these two indexes as an oversized stretched rubber band. At some point, the rubber band will snap back, and the fun will begin.

THE UNLOVED METALS: No Bubble Here… Just A Lot Of Frustration

While the first group of charts provides clear evidence of bubbles and tulip manias, this last group reveals quite the opposite. And out of the three following metal charts, silver is by far, the most unloved. Yes, that’s correct. A metal that has been money for more than 2,000 years has performed the worst when we compare it to copper and gold. Let’s take a look at copper first.

Even though the copper price fell from its high back in 2011, it has surged over 50% in the past two years. However, if we go back to 1981, the copper price is only up 312% over the 36-year period:

Copper Price

In 1981, the copper price was trading at $ 0.75, but today with all the massive money printing, the king base metal is only trading at $ 3. Now compare the 312% copper price increase versus the Dow Jones Index at 2,548% and Caterpillar at 2,990%. Thus, an investor was paid much more handsomely to invest in industrial stocks than in copper over this 36-year period.

Now, if you think copper under-performed the stock market, wait until you see gold. The gold price today is only up 207% since it was traded for $ 400 in 1981:

Gold Price

I would imagine some precious metals investors would claim that taking the $ 400 figure (1981) as a baseline would be disingenuous as gold was coming off its high in 1980. Okay, I will give you that. But, even if we used the low of $ 275 reached in 2001, the increase would still only be 350% during that 16-year period. Thus, gold’s 350% increase from its low in 2001 is still anemic compared to gains made by the Dow Jones Index or the other stocks mentioned above.

Either way, both copper, and gold have severely underperformed the gains experienced in the broader markets. Sadly, it’s even worse when we look at the last metal in this group. While copper and gold at least enjoyed triple-digit percentage gains over the past 36 years, the current silver price hasn’t even surpassed double-digit gains. As of the end of trading last week, the silver price only gained a paltry 99% from its trading level of $ 8 in 1981:

Silver Price

This chart reveals the frustration felt by many silver investors. However, there is a good side to this story. And that is… BUBBLES POP while DEPRESSED ASSETS SURGE. You have to think about the metals in this fashion. Gold and silver are behaving like the VIX. The more the VIX index goes down, the more the stock market rises. But, when the bubble markets finally pop, then the VIX will shoot back higher (as seen in the RED SPIKES in the DOW chart above), taking the precious metals prices up with it.

This next market crash will not resemble anything similar to what took place during the 2008-2009 U.S. banking and housing market collapse. When the markets cracked in 2008, EVERYTHING went down together. Instead this time around, as the markets tank the precious metals will surge to new highs. We must remember, there really isn’t much in the way of safe assets to move into during the next market crash. So, as investors flee from bloated STOCKS, BONDS, and REAL ESTATE, to the tiny gold and silver market, fundamentals won’t matter either… LOL. Yeah… we could see some ridiculous high gold and silver prices as investors finally receive precious metals religion.

Precious Metals News & Analysis – Gold News, Silver News




The Economy Is Okay? U.S. Retail Store Closings Hit A New Record High As West Coast Homelessness Soars

If the U.S. economy is doing just fine, why have we already shattered the all-time record for retail store closings in a single year?  Whenever I write about our “retail apocalypse”, many try to counter my arguments by pointing out the growing dominance of Amazon.  And I certainly can’t deny that online shopping is on the rise, but it still accounts for less than 10 percent of total U.S. retail sales.  No, something bigger is happening in our economy, and it isn’t receiving nearly enough attention from the mainstream media.

Back in 2008, a plummeting economy absolutely devastated retailers and it resulted in an all-time record of 6,163 retail stores being closed that year.

So far in 2017, over 6,700 stores have been shut down and we still have nearly two months to go!  The following comes from CNN

More store closings have been announced in 2017 than any other year on record.

Since January 1, retailers have announced plans to shutter more than 6,700 stores in the U.S., according to Fung Global Retail & Technology, a retail think tank.

That beats the previous all-time high of 6,163 store closings, which hit in 2008 amid the financial meltdown, according to Credit Suisse (CS).

Just within the last week, we have learned that Sears is closing down another 60 stores, and Walgreens announced that it intends to close approximately 600 locations.

Overall, about 300 retailers have declared bankruptcy so far in 2017, and we are on pace to lose over 147 million square feet of retail space by the end of the year.

Oh, but it is all Amazon’s fault, right?

Meanwhile, mainstream news outlets are reporting that homelessness is “exploding” out on the west coast.

For instance, we are being told that there are “400 unauthorized tent camps” in the city of Seattle alone

Housing prices are soaring here thanks to the tech industry, but the boom comes with a consequence: A surge in homelessness marked by 400 unauthorized tent camps in parks, under bridges, on freeway medians and along busy sidewalks. The liberal city is trying to figure out what to do.

But I thought that the Seattle economy was doing so well.

I guess not.

Down in San Diego, they are actually scrubbing the sidewalks with bleach because the growing homeless population is spreading hepatitis A everywhere…

San Diego now scrubs its sidewalks with bleach to counter a deadly hepatitis A outbreak. In Anaheim, 400 people sleep along a bike path in the shadow of Angel Stadium. Organizers in Portland lit incense at an outdoor food festival to cover up the stench of urine in a parking lot where vendors set up shop.

Over the past two years, “at least 10 cities or municipal regions in California, Oregon and Washington” have declared a state of emergency because homelessness has gotten so far out of control.

Does that sound like a healthy economy to you?

The truth is that the financial markets have been doing great since the last financial crisis, but the real economy has never really recovered in any sort of meaningful way.

With each passing day, more Americans fall out of the middle class, and the homeless populations in major cities all over the nation continue to grow.

We truly are in the midst of a long-term economic collapse, and if we don’t find a way to fix things our problems will just continue to accelerate.

So don’t be fooled by the mainstream media.  They may be trying to convince you that everything is just wonderful, but that is not the reality that most people are facing at all.

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