Swiss America Blog Archive


4.12.19 - Silver's Turn to Rally

Gold last traded at $1,290 an ounce. Silver at $14.99 an ounce.

NEWS SUMMARY: Precious metal prices traded mixed Friday despite a weaker dollar. Stocks rose after positive corporate news that included strong bank earnings and Disney unveiling a new streaming service.

Gold Has Been Rallying. Now It’s Silver’s Turn. -Barrons
Silver has been a lackluster performer this year, but as investors' appetite for gold improves, silver might share in the yellow metal's prosperity. 'It is difficult to be pessimistic about silver at these levels,' with prices that don't provide an incentive to boost supply, says Maria Smirnova, senior portfolio manager at Toronto-based Sprott Asset Management....'We expect silver to outperform gold,' says Smirnova,. 'Silver has lacked retail investment demand, so a sustained rally in gold will lead to the speculators coming and buying silver.'....The World Silver Survey found that global investment in silver bars and coins grew 20% last year, with bar demand alone up 53%. The study also revealed a third consecutive annual decline in global production of the metal. It fell 2% in 2018, to 855.7 million ounces. 'Silver is cheap, at $15 [an ounce] as it is not encouraging new supply,' says Smirnova."

Read Swiss America's 2019 Silver Report to discover the reasons why silver may present the opportunity of a lifetime.

MMT Modern Monetary Theory flunks the smell test -Baum/Marketwatch
"Perhaps you've heard or read something recently about Modern Monetary Theory...that is sweeping the nation, aided and abetted by progressive members of Congress in their push to guarantee free everything. Modern Monetary Theory, or MMT, is based on the notion that deficits don't impose any constraints on countries that borrow in their own currency, such as the U.S. or Japan. MMTers believe that the government can spend money on public priorities, such as keeping everyone employed, without raising revenue; that the only limit on government spending is inflation; and that interest rates should be permanently set at zero....Instead of the Federal Reserve acting to stimulate or curtail economic growth by lowering or raising interest rates, MMT delegates that role to the federal government....MMTers seem to gloss over the issue of how the government's spending initiatives would be financed...MMTers assume that the Fed will accommodate the spending by printing money....Why, oh why would anyone assign the most important economic-management function to the political class? The economy is too important to be left to the politicians."

Prepare for $80 oil this summer, RBC warns -CNBC
"International oil prices will average $75 a barrel in 2019, and consumers may find themselves contending with bouts of $80 crude this summer, RBC Capital Markets said. The global investment bank revised its oil price forecast higher Thursday, pointing to a cocktail of market conditions. Those include steep OPEC supply cuts, robust demand, geopolitical risk and investor positioning that leaves crude futures with plenty of room to run. 'We see price risk asymmetrically skewed to the upside spurred by geopolitically infused rallies that could shoot prices toward or even beyond our high-end, bull-case scenario and test the $80/bbl mark for intermittent periods this summer,' RBC strategists Michael Tran, Helima Croft and Christopher Louney said in a research note....The global balance of supply and demand would have been looser if not for 'the ferocious degree of Chinese buying.' RBC estimates that China has stocked away 310,000 barrels per day since U.S. energy sanctions on Iran started in early November."

Winning the War on Poverty -Brooks/New York Times
"Jesus said the poor will always be among us, but there are a lot of people in Canada testing that proposition. According to recently released data, between 2015 and 2017, Canada reduced its official poverty rate by at least 20 percent. Roughly 825,000 Canadians were lifted out of poverty in those years, giving the country today its lowest poverty rate in history. How did it do it?....About 15 years ago, a disparate group of Canadians realized that a problem as complex as poverty can be addressed only through a multisector comprehensive approach...So they began building citywide and communitywide structures. They started 15 years ago with just six cities, but now they have 72 regional networks covering 344 towns. They begin by gathering, say, 100 people from a single community. A quarter have lived with poverty; the rest are from business, nonprofits and government. They spend a year learning about poverty in their area, talking with the community...First, they don't want better poor; they want fewer poor. That is to say, their focus is not on how do we give poor people food so they don't starve. It is how do we move people out of poverty. Second, they up their ambitions. How do we eradicate poverty altogether? Third, they broaden their vision. What does a vibrant community look like in which everybody's basic needs are met. After a year they come up with a town plan. Each town's poverty is different. Each town's assets are different. So each town's plan is different....The Tamarack Institute, which pioneered a lot of this work, serves as a learning community hub for all the different regional networks. Paul Born is the head of the institute...he doesn't think you can really do social change without a methodology, without creating communitywide collective impact structures. But in many American communities we're mostly scattershot. That's the problem with our distrust and polarization. We often don't build structures across difference. Transformational change rarely gets done."

RealMoneyBlog - Free daily/weekly email


4.11.19 - China & Russia Consider a Gold Standard

Gold last traded at $1,293 an ounce. Silver at $14.86 an ounce.

NEWS SUMMARY: Precious metal prices retreated Thursday on profit-taking and a firmer dollar. U.S. stocks fell as investor focused on upcoming bank earning reports and the lack of progress on a U.S.-China trade deal.

Are Russia and China Considering a Move to a Gold Standard? -Economic Policy Journal
"Russia is buying gold. A lot of gold. Within the span of a decade, the country quadrupled its reserves. Gold buying last year exceeded mine supply for the first time, so Russia is about to become a net importer of the metal...Are the Russian authorities preparing for a renewed clash with the United States and are they attempting to reduce their vulnerability to financial sanctions? Or do they fear a homegrown financial crisis? Others suspect something bigger may be at play. The sheer size of the purchases might reveal bolder motives, with Moscow preparing its first salvo in the coming battle for a monetary reset. What makes the recent moves especially significant is the fact they are being replicated in Beijing. According to official data, China raised its bullion reserves to 60.62 million ounces in March...China may actually end the year as the top buyer after Russia. Right now it looks like a close race....Perhaps Russia and China are setting up for an old-fashioned gold standard money. Whatever is going on, it is clear they both like gold - and so should you."

the fed Trump is Right to Blow Up the Fed -The American Conservative
"Last week, President Donald Trump set the economics community aflame by suggesting that he will appoint businessman and presidential aspirant Herman Cain to the Federal Reserve Board. Even more than political economist Stephen Moore, the critics maintain, Cain represents a threat to the cabal that has controlled the central bank for decades. Why? Because Cain is a successful executive who founded a real business, took risks, and created jobs, things most academic economists will never ever do....Those worried about the independence of the Federal Reserve Board should reconsider. Independence from what exactly? While the Fed is meant to be independent from the executive branch on a day-to-day basis, it is certainly not independent of Congress or the law...Case in point: the dubious notion that we should seek a 2 percent rate of inflation. Anybody who cares to read the 1978 Humphrey Hawkins law will know that the Fed is directed by Congress to seek full employment and then zero inflation. Not 2 percent, but zero....Quantitative easing, to take another example, represents a vast inflation of the financial markets and housing, yet Fed officials actually appear in public and talk about the conundrum presented by 'low inflation.'....Not only are these pro-inflation policies in violation of the letter of the Humphrey Hawkins law, but they have contributed to increased volatility in the financial markets....The basic problem with the Fed today is that it has gradually fashioned a new set of rules for itself, particularly since 2008, on which Congress has never been consulted....Quantitative easing, 'Operation Twist,' and the explicit 2 percent inflation target are just three example of how the Federal Reserve Board is operating outside of its legal authority. It’s high time that President Trump put some new faces at the Fed and started asking questions about what policies it follows and why."

Stock market’s central-bank joy ride is coming to an end -Marketwatch
"Welcome to the calm before the storm....Our call of the day, from Hussein Sayed, chief market strategist at broker FXTM, agrees, as he says it’s time for investors to start holding Wall Street itself responsible for further stock market gains. 'The boost provided to equity markets from the shift in central banks seems to be exhausted with the S&P 500 standing 1.7% away from an all-time high. Investors hoping for an interest rate cut may not see one coming any time soon, suggesting that they shouldn’t continue betting on monetary policy to push equities further,' he told clients Thursday. Pundits have been telling us for a while that central banks can’t keep rescuing this stock market after years of easy-money policies, though the Fed managed to do just that at the start of the year. In Wednesday’s minutes from its March meeting, the U.S. central bank showed no indication of any cuts to come, with some members even saying they’d consider a hike, depending on data....'The index has risen 15.2% so far year-to-date, and for the rally to be sustained, investors need assurance that we’re not going to hit an earnings recession. A dovish Fed won’t be enough to keep the party on,' he says. Last word goes to asset manager Guggenheim Investment, which told clients in a recent research note...stocks could get crushed due to lofty valuations and one more thing - lack of central bank firepower."

Overcoming the Democrat Matrix -Ponte/WND
"'The Matrix' depicts a future Earth in which most of humankind has lost a war with their own proudly-created artificial intelligence computers. These machines have imprisoned humans in both pods and an illusion – The Matrix, a virtual-reality dream world controlled by the machines that most people mistake for reality....Would humans prefer to be ruled by computers? Many apparently would, according to a January 2019 poll conducted by the Center for the Governance of Change at Spain’s IE University. More than one in four of the 1,600 Europeans polled said that they would like an artificial intelligence to 'make important decisions about the running of their country.'....Given the dishonest, arrogant, smug and self-serving stupidity of power-hungry human politicians and Eurocrats nowadays, we can understand why many would prefer Artificial Intelligence to no intelligence at all....Like Facebook, Google wants to become The Matrix, controlling an artificial reality where leftist views are amplified while conservative voices are silenced. These Silicon Valley tyrants pretend that objective algorithms impose political correctness fairly - but biased humans write the algorithms, which Google and Facebook refuse to let outsiders analyze. Computer scientists have discovered that artificial intelligence, even when well-intended, conjures its own biases such as racism or partisanship from the tiniest glimmers of conscious or unconscious prejudice in its human programmers. The leftists’ desire to be society’s 'Dominatrix' is the essence of the Democrat Matrix."

RealMoneyBlog - Free daily/weekly email


4.10.19 - Retirement Planning: '7 Deadly Sins'

Gold last traded at $1,313 an ounce. Silver at $15.24 an ounce.

NEWS SUMMARY: Precious metal prices rose Wednesday on safe-haven buying and a flat dollar. U.S. stocks traded mixed as investors digest company earnings and the Fed's latest meeting outlook.

Gold Critics: Please Explain What Money Is -Tamny/Real Clear Markets
"Owners of Bitcoin have endured a wild ride in recent years. While the coin could fetch $900 when 2017 began, one year later its value briefly moved above $20,000. At present, one Bitcoin exchanges for roughly $5,000....So while Bitcoin fails in the present as a dollar replacement, its volatility instructs. Who among us would comfortably enter into a transaction in which the medium of exchange facilitating the transaction is bouncing around in the most erratic of ways? Gold didn’t emerge as the primary definer of money by coincidence, but instead because its value is so remarkably stable...While roughly 2,000 metric tons of the yellow metal are mined each year, there are already around 200,000 metric tons of gold above ground. Gold is the 'constant' simply because any sales or discoveries of it are highly unlikely to alter its price in material fashion. A dollar, euro, pound, or yuan defined in terms of a gold ounce takes on characteristics of stability that give money its sole purpose as a medium of exchange....The problem is that since the early 1970s, money has floated without definition. While a dollar was exchangeable for 1/35th of an ounce of gold in August of 1971, it now buys roughly 1/1300th of an ounce. A dollar that used to purchase almost ½ of a barrel of oil now purchases 1/60th. Readers get the picture. Since the early ‘70s the dollar has exhibited volatile qualities that bring to mind Bitcoin in modern times....Gold proponents merely want to revive money’s historical purpose as a stable measure of value...Re-linking currencies to gold would imbue them with the stability that would render them most useful as money. Yet critics abound....Your move, gold critics. If stable money is problematic, please explain what money is. Better yet, please explain why money that has erratic, Bitcoin qualities is superior to money that is more of a constant measure of value."

central bankers The Insolvent Thinking of Central Bankers -Forbes/Forbes
"Despite decades of disappointing data demonstrating that central banks cannot guide the pace of economic activity in the way a thermostat does the temperature of a room, political and economic leaders still persist in pursuing this fantasy...Had central banks and their political masters sought the goal of stable currencies - and had the U.S. dollar remained fixed to gold - the material well-being of the world would probably be double what it is today. Money is a claim not for something specific, such as a coat, but for anything on sale in the marketplace...In effect, money is a receipt for the value of goods and services we produce and may wish to sell. This is why counterfeiting is illegal...When governments engage in excess money printing, the result is inflation, which is an invidious stealth tax. Central banks and governments do not create resources. They take resources from the rest of us for their own purposes. It's preposterous to think that a new round of futile bank stimulus by the ECB will lead Europe to sustainable growth....The Federal Reserve repeatedly tried to stimulate the U.S. economy during the 1970s by engaging in 'loose money,' and the result was a generation of terrible inflation and stagnation. Again, in the early 2000s, prodded by the Treasury Department, our central bank weakened the dollar, which led to the debacle of 2008–09. After the immediate panic in the fall of 2008 the Federal Reserve engaged in quantitative easing, quintupling its portfolio with Treasury bonds and packages of mortgages. Result: the worst economic recovery from a sharp downturn in American history."

Baby boomers commit the ‘7 deadly sins’ of retirement planning -Marketwatch
"'Boomer Expectations for Retirement,' a new annual study from the Insured Retirement Institute - a trade body for the annuity industry - makes shocking reading. In a nutshell, about 11% have at least $500,000 saved for their retirement. The remainder don’t even have that. Nearly half don’t have any retirement savings at all. None....Here are an astonishing seven 'deadly sins' of retirement planning which have led so many to this dismal situation. Here are seven things not to do when planning for your retirement. 1. Not saving enough - or anything. 2. Draining your retirement savings. 3. Not calculating a retirement savings goal. 4. Underestimating health costs. 5. Ignoring long-term care costs. 6. Mishandling your retirement date. 7. Not setting affairs in order. Possibly the most astonishing revelation in the survey is buried in the footnotes: About two-thirds of boomers have taken no steps to protect themselves if they suffer diminished capacity or dementia. They haven’t spelled out their wishes for their care and end of life."

Have we learned nothing from socialism? -Washington Examiner
"Unfortunately, the dark clouds of socialism are again gathering in many countries, based on the same old promises of a utopian system guaranteeing equality and that governments are the answer to all societal problems. Politicians, who unscrupulously seek the favor of voters for their own benefit, are making the same old 'heaven on earth' promises. Sadly, there are politicians and bureaucrats in Washington and Brussels, supported by ivory tower academics, media pundits, and Hollywood luminaries who believe socialism is viable. It is critical that current generations look back at what socialism produced in the last 70 years. Where is there one successful socialist system? For a time, Scandinavian countries were able to use the production from a successful capitalist system to support a new socialistic system, but that experiment has ended because it proved to be unsustainable. Other so-called socialist systems, such as those in Cuba, North Korea, and Venezuela, provide nothing but hunger and misery to their citizens, while their 'visionary' leaders live lives of luxury. Once the richest country in South America, Venezuela under socialism has become one of the poorest. The loss of individual freedoms to unnecessary government intrusion and its control over all aspects of peoples’ lives is at stake...The reality is that no socialist country has been able to sustain its lofty promises. As former British Prime Minister Margaret Thatcher pointed out, 'the problem with socialism is that eventually you run out of other peoples’ money.'....We must prevent a repeat of history’s failures. If we do not, we will doom our children and grandchildren to a bleak future."

RealMoneyBlog - Free daily/weekly email


4.9.19 - Conversation with a young socialist

Gold last traded at $1,308 an ounce. Silver at $15.21 an ounce.

NEWS SUMMARY: Precious metal prices rose to 1-week highs amid dollar weakness. U.S. stocks fell for a second straight day Tuesday as investors worried about corporate earnings to be released later this week.

Gold scales fresh high as dollar wilts -Reuters
"Gold rose on Tuesday to its highest in more than a week, supported by a retreating dollar and increased buying by central banks....'Seeing something of a correction in the U.S. dollar, which has been helpful laterally. 'Gold seems to have found a floor,' said Ross Norman, chief executive at Sharps Pixley. Central banks had extended 2018’s record levels of gold buying into this year, he said. 'So every day there may be small and minor countries with modest amounts to buy, but collectively it tells you something.'....New orders for U.S.-made goods fell modestly in February after non-farm payrolls data last week signaled a slowdown in wage growth. 'The decline in wage inflation takes the pressure off the U.S. Federal Reserve and lets it remain dovish and delay rate hikes or maybe switch gears, and that’s supportive for gold,' said Ilya Spivak, senior currency strategist at DailyFX."

fox news The Latest Attack on Capitalism by Democrats -Fox News
Swiss America chairman Craig R. Smith and Jonas Max Ferris of MaxFunds discussing recent calls for capitalist reform by billionaires as well as numerous 2020 Democratic presidential candidates. Mr. Smith does not agree with statements this weekend by democratic presidential hopeful Mayor Pete Buttigieg that corporations are to blame for governmental abuses or that his call for "democratic capitalism" is anything but another name for socialism.

JPMorgan: The Business Cycle No Longer Exists -Zero Hedge
"The amount of mental acrobatics that Wall Street analysts have to perform to justify continued buying of stocks even as bonds scream deflation, the yield curve screams contraction, Europe and China are already one foot in a recession, and earnings are set for their first profit contraction in 3 years, is simply staggering....In order to justify JPMorgan's 3,000 price target in the S&P, in an interview with Barron's, the bank's chief U.S. equity strategist Dubravko Lakos-Bujas said that while many strategists and investors try to predict the end of the business current cycle, he boldly claimed that it may be time to reconsider its very existence. That's right: with the US poised to enter its longest expansion on record in June (absent a recession in the next month or so, which looks unlikely except in retrospect) and with rising concerns that the economy is now extremely 'late cycle', JPMorgan's solution is to ignore the business cycle entirely, as central banks have now effectively taken over micromanaging the global economy. 'We are all used to using the word 'cycle', Lakos-Bujas told Barron’s. 'The reality is that maybe the word 'cycle' is no longer even relevant, given that we have so much unconventional central-bank involvement.'"

Conversation with a young socialist -Boudreaux/Tribune
"Recently near my office at George Mason University I ran into a student of mine who was showing his friend around campus...The friend - call him 'Jack' — wore a T-shirt emblazoned with the famous image of Che Guevara. Inferring from my economics lectures that I’m no great admirer of Guevara...he asked me why I object to Guevara. I replied simply that 'Guevara was a socialist and I disapprove of socialism.' 'Why?' Jack asked. 'Because socialism has never delivered on its promise to enrich the masses - quite the opposite - and it always turns into tyranny. Just look at the Soviet Union, Cuba and Venezuela. Even what we might call 'socialist-lite' countries do rather poorly.' Jack’s look turned defensive. But before he could respond, I asked what he meant by socialism. Jack admitted that he wasn’t sure...He just wants to live in a society that’s 'more just.' I asked Jack for a specific example of an injustice in America today that would disappear under socialism. 'Inequality!' he answered immediately. Opining that it is 'unjust' for one person to have multiple times more wealth than others, Jack expressed his desire for massive income redistribution. I then asked a follow-up question...'What’s your college grade point average so far?' Jack replied, '3.85.' 'Very impressive!'...I pressed on, asking if he favors grade redistribution: transferring 'A' grades from students with 'unjust' amounts of A’s to students with very few high grades. Being an intelligent young man, Jack saw where I was headed. He replied 'That’s different. I earned my good grades.' To which I replied: 'Yes. So what makes you think that very rich people such as Jeff Bezos and Lady Gaga did not earn their great wealth?'"

RealMoneyBlog - Free daily/weekly email


4.8.19 - The Most Seductive Four-Letter Word on Earth

Gold last traded at $1,301 an ounce. Silver at $15.21 an ounce.

NEWS SUMMARY: Precious metal prices rose Monday on safe-haven buying and a weaker dollar. U.S. stocks fell - pressured by declines in Boeing and General Electric - as Wall Street looks ahead to the start of the corporate earnings season.

China Is on a Big Gold-Buying Spree -Bloomberg
"China’s on a bullion-buying spree as Asia’s top economy expanded its gold reserves for a fourth straight month, adding to investors’ optimism that central banks from around the world will press on with a drive to build up holdings. Prices advanced back toward $1,300 an ounce...In tonnage terms, last month’s inflow was 11.2 tons, following the addition of 9.95 tons in February, 11.8 tons in January and 9.95 tons in December. China, the world’s top gold producer and consumer, is facing signs of a slowing economy, even as progress is being made in trade negotiations with the U.S. Last year’s bullion buying by emerging-market central banks was the most robust in a long time as countries diversified reserves, Ed Morse, Citigroup Inc.’s global head of commodities research, said in a Bloomberg TV interview on Monday. The bank’s positive on gold, targeting $1,400 by year-end....Governments worldwide added 651.5 tons of bullion in 2018, the second-highest total on record, according to the World Gold Council."

healthcare The Most Seductive Four-Letter Word on Earth -Craig R. Smith/SATC
"Promises, promises. Each passing day seems to bring yet another outlandish promise from yet another 2020 presidential candidate - usually laced with that magical, seductive four-letter word: FREE. 'Free Medicare for all,' promises Democratic Socialist Representative Alexandria Ocasio-Cortez, with at least five other democratic presidential hopefuls chiming in with the same promise. 'Free college for all,' promises Socialist Bernie Sanders in his proposed College For All Act, which he claims will provide $47 billion per year to states and eliminate undergraduate tuition. 'Free Social Security for all,' promises Democratic New York Senator Kirsten Gillibrand, along with her pathway to free citizenship for all immigrants 'in the country now'....Clearly these promises by democratic candidates revolve around the most politically expedient, yet virtually impossible word to deliver on: FREE! The truth is, there is no such thing as a 'free for all' government program, every freebie must be paid for in one of two ways; more taxation or more borrowing. Socialism promises a lot, but delivers little. Ask any Venezuelan. Will previously prudent, capitalist investment strategies now become high-risk socialist gambles? The answers to these questions may well be decided between now and November 2020 as our nation engages in a serious debate over the merits of capitalism vs. socialism. No wonder wise American investors are hedging their future by diversifying their investment strategy to reflect the new risks socialism may bring to our savings." Full story

Wealth inequality is a national emergency -Dalio/CBS News
"One of the most successful investors of all time is somebody you probably have never heard of, despite his net worth of $18 billion. Ray Dalio predicted the 2008 financial crisis. Now he sees a prolonged period of sluggish economic growth and the threat of a confrontation between the U.S. and China. But there's a greater danger Dalio wanted to warn us about....Dalio, who grew up middle class, is alarmed about the growing divide between the haves and have-nots. He points out that over the span of a decade, America's lowest paid workers had just a 14 percent chance of rising to the middle class...I think the American dream is lost.... I want a system in which the best ideas win out. And I would describe it as tough love, and I want to get there through radical truthfulness. In other words, people say what they honestly mean And radical transparency allows people to see things for themselves....Ray Dalio has agreed to donate half his $18 billion fortune to charity to help mend the system that made him rich. With the right and left at each other's throats, Dalio warns time is running short. Capitalism needs to be reformed. It doesn't need to be abandoned. So, like anything, like a car, like anything, a plane, a school system, anything, it needs to be reformed in order to work better."

The Federal Reserve has lost control of the financial markets -Marketwatch
"If you can’t believe your own eyes based on the action in the bond market over the past six months, then allow me to provide you further proof that central banks are not in control anymore....Central banks are not even in control of their own currencies, despite strong belief to the contrary....As the Fed began to increase interest rates, many were certain that it will be a catalyst for the dollar to rally strongly....Yet, most who believe that the Fed controls this market seem to be in disbelief, as the dollar 'should' have been rallying when the Fed was tightening. You see, commonly understood economic theory suggests that reducing the available debt through the quantitative tightening (QT) process 'should have' caused the dollar to rally. But, clearly, that is not what happened....The markets have moved completely opposite the 'manipulation' attempts by central banks. They have proven themselves powerless in the face of market forces. The market will do what the market will do despite the actions of the central banks...But I can assure you that those who maintain these fallacious beliefs will feel significant financial pain when the next crash does occur, and the Fed will be powerless to stop it....The Fed will likely be forced to lower rates in 2019 unless it wants to lose all confidence in the market."

RealMoneyBlog - Free daily/weekly email


4.5.19 - A Tax So High It May Take Your Breath Away

Gold last traded at $1,295 an ounce. Silver at $15.08 an ounce.

NEWS SUMMARY: Precious metal prices traded steady Friday despite a firmer dollar. U.S. stocks rose modestly following a better-than-expected U.S. jobs report which did little to lift investor sentiment.

Trump Picks Gold Standard Advocate Herman Cain For Federal Reserve Board -Kitco
"U.S. President Donald Trump is planning to nominate Herman Cain, former Republican presidential candidate and a long-standing gold bug, for a seat on the Federal Reserve Board, according to media reports. 'Trump plans to announce his selection very soon, said three people, who asked not be identified discussing the nomination because it hasn’t been announced,' Bloomberg reported on Thursday. Cain is an ardent supporter of the return to the gold standard. He spoke about it in detail during his 2012 Republican presidential nomination campaign...In a 2012 op-ed piece for the Wall Street Journal, Cain laid out why he supports the return to the gold standard. 'However imperfect a gold standard may be, it remains the best among all alternatives...Economic growth was stronger, unemployment rates lower, the price level more stable, and recessions less frequent and less severe than under the present system … A gold standard is to the moochers and looters in government what sunlight and garlic are to vampires,' Cain wrote."

CO2 A tax so high it might just take your breath away -Crudele/New York Post
"I’m starting to feel that the people who create our tax laws don’t only want to take away some of our money - they want it all. Consider this. New Jersey will soon have something called the rainfall tax...Jersey also allows people to gamble in casinos, at the racetrack, on their phones and wherever lottery tickets are sold, which add up to hidden taxes on people. And, if things go right, the state will also let you do all this while smoking heavily taxed marijuana....Then there’s the 'congestion pricing' tax on cars going into Manhattan, which means that theaters and restaurants will probably be losing carloads of customers who prefer to drive rather than take public transportation....That gets me to my breathtaking, you’ve-got-to-be-kidding tax to end all taxes - a carbon dioxide tax. Not a carbon tax, which is CO but rather a CO2 tax. This is the colorless, odorless gas that people exhale after they’ve taken in oxygen. It’s also the thing that plants need for photosynthesis....Now, I’m not suggesting a big tax on carbon dioxide - just a little, bitty one. Let’s say 1/100 of a cent for every discharge. People take 17,000 to 30,000 breaths a day. For slow breathers, that would only come to $1.70 a day. But if you want to breathe a lot, it’ll cost you $3....If you calculate the amount for light breathers who don’t exercise, this tax would raise $575 million a day, or $209.8 billion a year...Was I right? Isn’t this an idea that takes your breath away?"

Strong Jobs Headline Hides Broad-Based Weakness -Zero Hedge
"Despite the stronger than expected headline jobs print, which allayed fears over the unexpectedly poor February number, there was pervasive weakness everywhere...A closer look behind the headlines in today's jobs report suggests that there may have been some political 'massaging' to goalseek a goldilocks number. First, the Household Survey showed that the number of employed workers actually declined by 201K to 156.748K...The March jump was entirely due to part-time workers, which rose by 60K, while full-time workers dropped by 190K, the biggest monthly decline since August 2018....For U.S. manufacturing workers, the sum of regular and overtime hours was the lowest in 18 months. The shorter workweek trimmed average weekly earnings by 0.2% m/m, leaving year-on-year growth at 1.3%, lowest in 40 months....Today's report confirmed the crushing influence of Amazon as the retail workforce is now the smallest it has been since March 2016, and shrinking still....So where was the Growth? Here are the three key sectors: Professional technical services: +34K, mostly computer systems design (+11.5K), Healthcare: +61K, Food Services: +27K. In other words, Americans are eating themselves into obesity, at which point they need constant medical supervision. The good news: at least the American food epidemic will provide waiter/bartender and medical jobs for a long time to come."

Americans Hate Social Media but Can’t Give It Up -Wall Street Journal
"Americans have a paradoxical attachment to the social-media platforms that have transformed communication, a new Wall Street Journal/NBC News poll finds, saying they regard services such as Facebook to be divisive and a threat to privacy but continue to use them daily. Across age groups and political ideologies, adults in the survey said they held a negative view of the effects of social media - even though 70% use such services at least once a day. Pollsters said they were surprised by the high and relatively uniform dissatisfaction with social media across demographic and political groups....A solid majority of respondents said social-media services such as Facebook and Twitter do more to divide Americans than bring them together....Concerns over privacy are prevalent across the country. 'That’s why I participate in very few things,' said Douglas Libby, 63, of Madison, Maine. 'I don’t have Facebook, I don’t tweet…I refuse to, just because I don’t want Uncle Sam or Big Brother looking over my shoulder.'"

RealMoneyBlog - Free daily/weekly email


4.4.19 - JPMorgan: "Start Building Hedges"

Gold last traded at $1,296 an ounce. Silver at $15.12 an ounce.

NEWS SUMMARY: Precious metal prices eased slightly on mild profit-taking and a firmer dollar. U.S. stocks traded mixed as investors awaited more news on a potential trade deal between China and the U.S.

Gold: Set to glimmer as investors seek refuge in safe-havens -FXStreet
"Gold is positioned to become a likely prime destination for safety in the second quarter of 2019 amid deteriorating global macroeconomic conditions and rising geopolitical risks. The yellow metal swerved back and forth in Q1...But with the narrative around slowing global growth dampening appetite for risk and the Federal Reserve solidifying its dovish policy U-turn, the outlook for Gold is looking increasingly bright. There is an expectation that the metal’s near-term performance will be heavily influenced by risk sentiment and the Dollar’s valuation. Investor risk sentiment remains strained by ongoing US-China trade developments and Brexit drama, while Dollar bulls appear to be running out of steam....Heightened concerns surrounding the health of the US economy have not only pressured the Dollar but rattled its status as a safe-haven asset. Warning lights are flashing amber over the largest economy in the world entering a possible recession after the US Treasury Yield curve inverted for the first time since 2007."

fox business Can We Trust China to Abide by a Trade Agreement? -Fox Business
Swiss America Chairman Craig R. Smith and Veronique de Rugy of Mercatus Center discussing the latest progress on the U.S.- China trade negotiations, the impact trade tariffs have had so far, and whether or not China's currency manipulation will be addressed in the upcoming agreement.

JPMorgan: "Investors Should Start Building Hedges" -Zero Hedge
"Yesterday after the close, JPMorgan top quant Marko Kolanovic appeared on CNBC to reiterate his chronically bullish case, saying the S&P 500 could hit his year-end price target of 3,000 by the end of May (he had several caveats, noting that a U.S.-China trade deal had to be concluded coupled with Brexit that is 'not too disruptive' or is even pushed back.)....JPMorgan's 'other' quant, Nikolaos Panigirtzoglou published a report in which he said that while he maintains a risk-on and pro-cyclical stance (the alternative is risking being dubbed 'fake news' by Kolanovic), we warned that 'investors should start building up hedges against the risk of a repeat of the past two weeks' yield curve inversion episode.' Picking up on what he said two weeks ago, the Greek strategist then notes that 'yield curve inversion has been generally a bad omen for growth and recession risk, though with variable lags to risky asset prices historically.' The JPM strategist also cautions that forward-looking indicators are 'still pointing to declines rather than rises.' Similarly, JPM's Forecast Revision Index for Global GDP growth also keeps declining and is now at levels last seen a year and a half ago."

Brexit: Lurching towards an explosive crisis -Evans-Pritchett/Telegraph
"So we lurch towards a permanent customs union and British infeudation as a non-voting member of the EU legal and regulatory system. This can end only in acrimony and years of bitter conflict with Europe. Sooner or later an explosive issue will arise. It will become clear why a G7 industrial democracy with 65 million people cannot subcontract swaths of policy-making to a foreign power. The constitutional arrangement is not viable. It guarantees an abrogation crisis down the road. For good measure we are now more likely to get a radical-Left government as well, one with anti-globalist reflexes, confiscatory tax and anti-wealth policies, and possibly capital controls....At every stage of Brexit talks it has been the EU’s central objective to shoehorn Britain into the customs union and therefore into legal alignment. This prevents the UK from pursuing alternative economic policies....Brussels offers nothing in return for services - 80pc of the British economy, and 44pc of total exports - where this country has a competitive advantage and a surplus that helps to offset the imbalance....For this mess of potage the UK must accept profound restrictions on self-government....The public is in any case making up its mind. The latest YouGov poll suggests that 44pc of voters already prefer a no-deal Brexit if nothing is agreed by April 12 - against 42pc for Remain. There is no popular tide in favor of accommodation....Let us accept a no-deal, reshuffle the diplomatic pack, and determine what is true and what is not true...Let us put all our efforts into a free trade deal with the US and into membership of the Trans-Pacific Partnership. At least we will be a self-governing democracy."

RealMoneyBlog - Free daily/weekly email


4.3.19 - Should Gold & Silver Be Taxed?

Gold last traded at $1,295 an ounce. Silver at $15.10 an ounce.

NEWS SUMMARY: Precious metal prices were steady Wednesday on dollar weakness. U.S. stocks rose amid upcoming trade deal between the U.S. and China though softer payrolls and service economy data kept a lid on optimism.

The Fed Might Still Blunder Into a Recession -Bloomberg
"Federal Reserve Bank of New York President John Williams’s insistence that recession risks are not elevated reminds me that there remains plenty of room for the Fed to make a policy error and let the economy slip into recession....The Fed has shifted from forecasting rate hikes in December to zero increases for 2019. Such a sharp reversal of expectations only happens in an economy decelerating at a pace where a recession can’t be ruled out. This by itself suggests elevated odds of a recession compared with a year ago. The inversion of the Treasury yield curve should also be a red flag. Not, however, for Williams, who says there are 'a lot of reasons to think that it has been a recession predictor for reasons in the past that kind of don’t apply today.' In other words, Williams believes this time is different. Here’s the problem: If the Fed wants to keep this expansion alive, they need to be prepared to lower rates before the data makes a hard turn south....We should be watching for signs that the Fed wants fairly conclusive evidence of economic weakness before cutting rates. By then, though, it may too late to keep the next recession at bay."

collusion Collusion 'hunters' should become the hunted -Ponte/WND
"For more than two years now House Intelligence Committee Chairman Adam Schiff (D-Calif.) has claimed to have 'more than circumstantial evidence' that President Donald Trump 'colluded' with 'Russians.' Mueller spent 675 days and $25.2 million investigating this claim. His Democrat-donor investigators interviewed 500 witnesses, issued 2,800 subpoenas, executed 500 search warrants, and indicted 34 people and three companies. But Mueller found zero collusion by President Trump or his people with the Russian government. Yet Adam Schiff continues to accuse the president of collusion. And, as he has from the beginning, Schiff refuses to reveal his evidence....The Dossier was used to smear Trump, then to obtain warrants to spy on Trump associates...This almost certainly means that all information obtained directly or indirectly through use of these warrants and the Dossier, including the Mueller investigation itself, is what legal scholars call 'fruit of the poisoned tree' and must be thrown out. The Dossier was bankrolled not only by Clinton but also by the Democratic National Committee, in which Adam Schiff and Jerrold Nadler are card-carrying leaders and policymakers. All senior Democrat officeholders were accomplices in Russian collusion by their sinister connection to DNC funding of the Dossier. They illegitimately won House control through this Russian help. Every veteran Democrat in both House and Senate should resign immediately or be voted out because of their foreign collusion."

Investors Brace for Hit to Profits as Costs Rise -Wall Street Journal
"Investors are concerned that rising wages and energy costs will eat into corporate profits, threatening the decadelong bull market in stocks. Economists expect to see a strong month of wage growth when the Labor Department releases the March jobs report Friday. At the same time, energy prices have jumped...U.S. crude-oil futures prices rose 32% in the three months through March, logging their biggest one-quarter percentage gain since 2009. These costs threaten to push down corporate profitability, some investors say, creating another hurdle for the stock market just as a slowdown in the European and Chinese economies is chipping away at U.S. growth....Wages are back on the radar of small businesses. The share of owners who said labor costs were their biggest problem rose to 10% in February, the highest level since 1986."

Sales Of Gold And Silver Should Not Be Taxed -Forbes/Forbes
"When you exchange a $20 bill for two $10 bills, you don't pay sales tax on the transaction, even though, theoretically, you are 'buying' the tens. The notion is utterly preposterous. Yet if you purchase a gold coin that was created by the U.S. Mint and is legally usable for commercial transactions, in some states you have to pay sales tax on that coin. Uncle Sam also says people who buy and sell such coins are liable for capital gains taxes. Of course, you would never buy a silver dollar from the mint for, say, $35 and then use it to pay for a $1 candy bar, but the point is that such coins are legal tender. That's why the White House should follow the recommendation of the American Principles Project, an organization that, among other things, advocates sound money: 'President Trump should direct the U.S. Treasury Department to issue a rule ending taxation on U.S.-minted gold coins.' While we're at it, let's add silver ones as well. It's only a matter of time before Washington undermines the value of the dollar again, and people should be able to hedge themselves against such deprecation. And someday soon, Congress should allow Americans to use alternative currencies for domestic commercial transactions if they so wish."

RealMoneyBlog - Free daily/weekly email


4.2.19 - Fed Was Technically Insolvent Last Year

Gold last traded at $1,295 an ounce. Silver at $15.06 an ounce.

NEWS SUMMARY: Precious metal prices rose Tuesday on bargain-hunting despite a firmer dollar. U.S. stocks fell as a decline in consumer staples and Walgreens' shares dampened sentiment.

Why Is the Fed Paying So Much Interest to Banks? -Brown/TruthDig
"'If you invest your tuppence wisely in the bank, safe and sound, Soon that tuppence safely invested in the bank will compound, And you’ll achieve that sense of conquest as your affluence expands, In the hands of the directors who invest as propriety demands.' - 'Mary Poppins,' 1964 - When 'Mary Poppins' was made into a movie in 1964, Mr. Banks' advice to his son was sound. The banks were then paying more than 5% interest on deposits, enough to double young Michael’s investment every 14 years. Now, however, the average savings account pays only 0.10% annually - that’s one-tenth of 1% - and many of the country’s biggest banks pay less than that...That’s true for most of us, but banks themselves are earning 2.4% on their deposits at the Federal Reserve...That means we, the taxpayers, are paying $36 billion annually to private banks for the privilege of parking their excess reserves at one of the most secure banks in the world—parking them, rather than lending them out. The banks are getting these outsize returns while taking absolutely no risk, because the Fed, as 'lender of last resort,' cannot go bankrupt....The Fed, while declaring its 'independence,' is obviously not a neutral arbiter. It is working for the banks....A movement is also afoot to establish state- and city-owned banks that would have the ability to lend for infrastructure and other local needs. Local governments cannot get a risk-free 2.4% rate from the Fed for their demand deposits, but city- or state-owned banks could."

money The Fed Was Technically Insolvent Last Year. Why Didn’t Anyone Care? -Grant/Barrons
"In finance today, comfort trumps propriety. As necks are tieless, so are earnings 'adjusted.' As shirts are untucked, so are balance sheets encumbered. In the 21st century way of doing business, freedom of action is the beau ideal. Neither clothing nor rules should constrain it. Has anyone noticed that the Federal Reserve is solvent again? Unlikely, as few realized that it was technically insolvent. At the Sept. 30 reporting date, cumulative unrealized losses in the system’s open market account totaled $66.4 billion, almost twice the $39.1 billion of capital available to absorb that hypothetical loss. These are matters of form, not function, you will hear...Does any of this matter? It used to. A currency once derived its strength from the integrity of the balance sheet of the bank that issued it - the more liquid that institution’s assets, the more plentiful its capital, the more confident the market could be in the ability of the money-holding public to exchange its currency for gold, and vice versa. That was the classical, white-tie gold standard...Succeeding it is the paper-money, or blue-jeans, standard. The paper dollar owes its value to the say-so of the government alone. Since 2008, the blue-jeans standard has given way to a kind of knee-ripped jeans standard - quantitative easing, ultralow interest rates, along with the rest of the bag of worldwide radical monetary-policy tricks. Under the gold standard, people adjusted their affairs to the fixed value of the dollar. Under the paper system, the Fed adjusts the unfixed value of the dollar to the perceived needs of the people. This is a profound transformation, but it long ago lost its shock value....It’s a long way down, once things start slipping. Classically structured central banks start to look like Lehman Brothers, investment bankers like DJs, and cash flows like revenues. As for the quality of the money in which every investor keeps score, it, too, is slipping. Strangely, it’s what modern central bankers say they want."

Henry Hazlitt's Long-Term Economic Thinking -American Spectator
"Henry Hazlitt is considered to be one of the best financial journalists of the 20th century. 'He was a giant in financial journalism,' as Jim Grant pointed out in his 2014 Mises Institute lecture entitled 'Hazlitt, My Hero.' Aside from his journalism, Hazlitt was a prolific writer who summed-up economics in 'one lesson' in 1946. Economics in One Lesson was based, in part, on Frederic Bastiat’s essay, What Is Seen and What Is Not Seen, and delves into the importance of aspects of the economy that are never spoken about, because they never happen. Hazlitt goes one step further, summing up economics not simply as a series of transactions with hidden implications, but in terms of long-term effects outliving the short-term effects of every economic principle or policy....In his book, The Foundations of Morality, Hazlitt defines morality as 'not the subordination of the ‘individual’ to ‘society,’ but the subordination of immediate objectives to long-term ones.' As in his understanding of economics, he realized that the long-term interests of the individual would serve the long-term interests of society....Hazlitt’s most important lesson on morality: High integrity is required for the sustainability of an enterprise over the long term....'Modern capitalism is not an inevitable or inescapable system, but one that has been chosen by the men and women who live under it. It is a system of freedom.' (Foundations of Morality, 321.)....We need an Army of 'Hazlitts' today: men and women of courage and wisdom, who are unafraid to speak and write the truth."

Gold Quotes Every Precious Metals Investor Should Know -Daily Reckoning
"Gold is the everyman’s way to save. It holds its value over the long term. As such, it’s a hedge against the ever-falling value of the dollar. Within the hallowed pages of the DR, gold is the once and future money. As an homage to the yellow metal, we present you with quotes worth their weight in gold. We hope you enjoy them...'For more than two thousand years gold’s natural qualities made it man’s universal medium of exchange. In contrast to political money, gold is honest money that survived the ages and will live on long after the political fiats of today have gone the way of all paper.' - Hans F. Sennholz...'Gold would have value if for no other reason than that it enables a citizen to fashion his financial escape from the state.' - William F. Rickenbacker...'With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people.' - F.A. Hayek... 'The fate of the nation and the fate of the currency are one and the same.'- Dr. Franz Pick... 'The first requisite of a sound monetary system is that it put the least possible power over the quantity of money in the hands of politicians.' - Henry Hazlitt... 'If ever there was an area in which to do the exact opposite of that which government and the media urge you to do, that area is the purchasing of gold.' - Robert Ringer... 'We are in a world of irredeemable paper money, which I call I.O.U Nothing money - a state of affairs unprecedented in history.' - John Exeter... 'Of all the contrivances for cheating the laboring classes of mankind, none has been more effective than that which deludes them with paper money.' - Daniel Webster"

RealMoneyBlog - Free daily/weekly email


4.1.19 - Federal Spending Hits 10-Year High

Gold last traded at $1,294 an ounce. Silver at $15.09 an ounce.

NEWS SUMMARY: Precious metal prices were steady Monday on bargain-hunting and a flat dollar. U.S. stocks rose as upbeat manufacturing data out of the U.S. and China eased worries of a possible global economic slowdown.

Global gold demand will rise to four-year high in 2019 -Reuters
"Global demand for gold in 2019 will rise to the highest in four years as higher consumption by jewelers offsets a fall in purchases by central banks, an industry report said on Monday. The world will consume 4,370 tonnes of gold this year, the most since 2015 and up slightly from 4,364 tonnes in 2018, consultancy Metals Focus said....Helping gold prices to rise would be the end of interest rate rises by the U.S. Federal Reserve, along with political and economic uncertainty around the world...Gold is traditionally seen as a safe place to invest during periods of uncertainty."

Is The Stock Market As Confused As You Are About A Recession? -Roberts/Zero Hedge
"Let’s be clear here; no one wants the party to end. So, despite a struggling stock market over the last year, slowing economic growth, and a collapsing yield curve, there are still plenty of articles suggesting you should just ignore it all and remain invested....The Fed tends to stop hiking interest rates when they realize they have caused problems within the economy, like a sudden downward shift in housing, autos, and asset prices. Sound familiar? The problem with all of the mainstream claims that there is 'no recession in sight' is those claims are based on analysis of unrevised and lagging economic data....Take a look at the chart below. The green dots mark the peak of the market PRIOR to the onset of a recession. In 8 of 9 instances the S&P 500 peaked and turned lower prior to the recognition of a recession."

recession chart

"Being optimistic about the economy and the markets currently is far more entertaining than doom and gloom. However, it is the honest assessment of the data, along with the underlying trends, which are useful in protecting one’s wealth longer-term. The market, and the yield curve, are trying to tell you something very important."

Federal Spending Hits Highest Level Since Bank Bailout and Obama Stimulus -CNS News
"The federal government spent $1,822,712,000,000 in the first five months of fiscal 2019, the most it has spent in the first five months of any fiscal year since 2009, which was the fiscal year that outgoing President George W. Bush signed a $700-billion law to bailout the banking industry and incoming President Barack Obama signed a $787-billion law to stimulate an economy then in recession. At the same time that federal spending was hitting this ten-year high, federal tax revenues in the first five months of the fiscal year were hitting a four-year low of $1,278,482,000,000....The last time the Treasury spent more than that in the first five months of a fiscal year was fiscal 2009."

The Two Americas Have Grown Much Fiercer -Noonan/Wall Street Journal
"The past few years the character of our political divisions has changed...People are proud of their bitterness now. Old America used to accept our splits as part of the price of being us - numerous, varied, ornery. Current America, with its moderating institutions (churches) going down and its dividing institutions (the internet) rising, sees our polarization not as something to be healed but a reason for being, something to get up for....I will never forget seeing, on the cover of Time magazine, in October 1972, an essay by Lance Morrow that was ostensibly about the last days of the race between Richard Nixon and George McGovern but really about something bigger....He concluded with the observation that within the two Americas he saw 'one common denominator,' the sophistication of the people, their earnest desire, left, right and center, to find and support the best thing for America. It was written with a respect and warmth toward the American people that is not so common now....Nothing can be moderate or incremental, everything must be sweeping and definitive. It is all so maximalist, and bullying. In that environment people start to think that giving an inch is giving a yard. And so they won’t budge....There are the people who cannot consider God and religion and have to put that energy somewhere. America isn’t making fewer of the lonely, angry and unaffiliated, it’s making more every day. So I am worried...it grieves me."

RealMoneyBlog - Free daily/weekly email


3.29.19 - Homes Unaffordable in 70% of the Nation

Gold last traded at $1,298 an ounce. Silver at $15.11 an ounce.

NEWS SUMMARY: Precious metal prices rose Friday on bargain-hunting and a weaker dollar. U.S. stocks were lifted by renewed optimism on the progress of trade talks between Washington and Beijing.

Gold is setting up for a major rally years in the making -CNBC
"The charts are setting up for a bullish move that could take the yellow metal sharply higher, said Miller Tabak equity strategist Matt Maley Wednesday on CNBC’s 'Trading Nation.' 'Look at the chart on gold, it’s broken above its trend line going all the way back to those 2011 highs. That’s very positive,' he said. 'We’re really going to need for it to break above the key level which is a range of $1,360 to $1,380. If we get above that $1,380 level, that was the top in 2014, 2016, 2017 and 2018,' he said. 'Whenever you get multiple touches over several different years, if you can finally break above that level, it really takes off. In other words, it confirms that the long-term trend has changed,' Gold would need to rally 6 percent to get back to $1,380. It last traded above those levels in mid-2013."

Money How the Feds Sedated American Capitalism -Bonner/Bonner And Partners
"Want to know why tax cuts, spending increases, and EZ money from the Fed don’t work? Wonder how the feds could add $4 trillion in new money, suppress interest rates below zero for an entire decade, add $13 trillion in deficit spending, and still end up with the weakest expansion ever?....The biggest win-lose deals are very subtle. Most people don’t even know they’re being robbed. And yet, these hidden win-lose deals too greatly reduce net satisfaction, which shows up in lower incomes, less growth, and poorer people. Remember, win-lose is the opposite of a win-win. In a win-win deal, wealth is created as people do things for one another....For the last 30 years, capitalists could take advantage of a special win-lose deal offered by the feds. They didn’t need to work so hard… They didn’t need to save their money. They didn’t need to take chances. In effect, the feds took money from the public - via taxes, artificially low interest rates, debt, and printing-press money - and gave it to the elite....With the Fed’s fake money available to them, capitalists didn’t put their money and talents to work - in win-win deals - for the benefit of others. Because they didn’t have to. Win-lose financial tricks were much more profitable...But net of inflation and depreciation, real capital investment - the essential ingredient in a capitalist economy - fell to zero."

Average Americans can't afford a home in 70 percent of the country -CBS News
"Even with rising wages and falling mortgage rates, Americans can't afford a home in more than 70 percent of the country. Out of 473 U.S. counties analyzed in a report, 335 listed median home prices more than what average wage earners could afford, according to a report from ATTOM Data Solutions. Among them are the counties that include Los Angeles and San Diego in California, as well as Miami-Dade County in Florida and Maricopa County in Arizona....While average earners nationwide need to spend only about one-third of their income on a home, residents in Brooklyn and Manhattan must shell out more than 115 percent of their income. In San Francisco, residents must spend 103 percent, and in Hawaii's Maui County, it takes 101 percent. Homes were found to be affordable in Chicago, Cleveland, Houston, Detroit and Philadelphia....Unaffordability in the market has been the result of slower homebuilding and homeowners staying put longer. Both trends have reduced the supply of homes for sale in the market."

Democrats Love a Wealth Tax, But Europeans Are Ditching the Idea -Bloomberg/Yahoo
"Democrats are busy finding new ways to tax the rich. The most straightforward way to do that - an annual tax on household wealth - is an idea with deep roots in Europe that several 2020 hopefuls are hoping to import to the U.S. Yet of the 15 European countries that tried a wealth tax in recent years, only four still employ it. Most of those governments ultimately were underwhelmed by the amount of revenue raised and overwhelmed by the difficulty in collecting an accurate tax. Nevertheless, the idea is gaining steam among Democrats trying to unseat President Donald Trump in 2020. Senator Elizabeth Warren of Massachusetts was the first to come out with a detailed wealth tax proposal, and former Texas congressman Beto O’Rourke has expressed support for the concept. 'As long as there is a desire to tax, there’s a chance a wealth tax could happen here,' said Veronique de Rugy, a senior fellow at the conservative Mercatus Center. But 'we can’t assume we can do things better than other countries who have tried.' Democrats, seizing on the argument that the 2017 Republican tax overhaul favored the wealthy, are staking out positions that will require upper-income filers to pay more."

RealMoneyBlog - Free daily/weekly email


3.28.19 - Americans Retiring into Homelessness?

Gold last traded at $1,289 an ounce. Silver at $14.97 an ounce.

NEWS SUMMARY: Precious metal prices fell Thursday on profit-taking and a firmer dollar. U.S. stocks retreated as trade talks between China and the U.S. restarted while fears that the economy may be slowing down persisted.

U.S. GDP Growth Revised Down to 2.2% Rate in Fourth Quarter -Wall Street Journal
"The U.S. economy grew at a slower rate than initially estimated in the fourth quarter, closing a year of strong economic growth on a softer note as a key measure of U.S. corporate profits weakened. Gross domestic product, a broad measure of goods and services produced across the economy, rose at a 2.2% annual rate in the fourth quarter, adjusted for seasonality and inflation, the Commerce Department said Thursday. The agency had estimated earlier fourth-quarter growth at a 2.6% annual rate. Spending by consumers, state and local governments and businesses was revised lower...'The slowdown in GDP growth, from 3.4% in the third quarter, is a straightforward story about the end of the kick from tax cuts, which was never going to last long,' Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a note to clients, referring to the 2017 sweeping tax overhaul bill....U.S. growth has appeared to slow in the current quarter, depressed by growing global economic uncertainty and a partial federal government shutdown that lasted through late January. The first quarter ends on Sunday...Forecasting firm Macroeconomic Advisers on Thursday projected a GDP growth rate of 1.4% in the first three months of 2019."

Gold IRA Retirement crisis: Most Americans aren't saving enough, are you? -Fox Business
"Despite the fact that about half of Americans are participating in a retirement plan at work, most people are falling behind where contributions are concerned. That’s according to a study from researchers at Stanford Center on Longevity, which estimated that the majority of American workers aren’t on a path to be able to sustain a full-time retirement by the age of 65. In order to determine whether people of different age groups were on track to save enough, researchers used a formula from the Boston College Center for Retirement Research to determine what rates each group would need to save at (based on median income) in order to reach a salary replacement rate of 70 percent by the age of 65. Here’s what those rates look like: Begin saving at 25: Stash away 10 percent of income. Begin saving at 35: Stash away 15 percent of income. Begin saving at 45: Stash away 27 percent of income...Overall, families of all ages were saving a median amount of about 6 percent to 8 percent of income - below the level recommended for even the youngest workers....Millennials and Generation X workers lagged behind target goals more than individuals belonging to older generations."

"Having, First, gained all you can, and, Secondly saved all you can, Then give all you can," said John Wesley back in 1872. This is still wise advice today. And setting up a Precious Metals IRA is the smartest way to protect the long-term purchasing power of your savings and retirement funds. Swiss America can help you create a personalized, precious metals savings and retirement plan that will help preserve your family's wealth.

Why Americans Are Retiring Into Homelessness -OZY
"Research indicates that a growing number of people are falling into homelessness during the period meant to be their golden years. Researchers from the University of California at San Francisco (UCSF) interviewed 350 homeless adults aged 50 and older through population-based sampling in Oakland, California, over five years. UCSF researchers estimate that half of the single homeless adults are age 50 or older, compared to 11 percent in the early 1990s - a 354 percent uptick. This data is emblematic of a graying homeless population across the nation: America’s homeless elderly population is projected to nearly triple by 2030, according to new research encompassing New York City, Boston and Los Angeles County. And this problem spans the globe: A 2017 report on the U.K.’s homeless population found that the population of homeless people over 60 had increased 111 percent since 2009....Nationally, homelessness has been rising since 2017 following years of decline, according to the 2018 Annual Homeless Assessment Report...What’s more, the physical strain of living on the streets can cause people in their 50s to display geriatric conditions typical of those in their 70s and 80s....Today, the U.S. government spends roughly 30 percent of what it used to spend on subsidized affordable housing before the 1980s. 'Unless and until we’re prepared to accept the fact that we’re going to have large numbers of people in their 50s, 60s and 70s living and dying on our streets, we need to act,' says Margot Kushel, a UCSF professor of medicine who leads the HOPE HOME study." Comment by AJ Ali: "Thank you for this powerful story. We need to start loving our neighbor."

More Signs of a Housing Slowdown -Barrons
"More signs of weakness are emerging in the housing market...Price gains in January were two percentage points lower than the increase in January 2018, and they increased at the slowest pace since April 2015, according to the S&P CoreLogic Case-Shiller U.S. National Home Price index. Las Vegas was on top at a 10.5% year-over-year price increase, followed by Phoenix at 7.5% and Minneapolis at 5.1%. But several cities that had seen the strongest gains are now faring worse than average. In Seattle, annual price gains fell from 12.8% to 4.1% from January 2018 to January 2019, according to S&P. Price gains in San Francisco eroded from 10.2% to just 1.8% over the same span....February housing starts fell 8.7% to a 1.16 million annualized rate...Overall, single-family starts are down 10.6% this year, compared with 2018, while multifamily starts declined 8.5%."

RealMoneyBlog - Free daily/weekly email


3.27.19 - Fund Managers Increase Gold Bullishness

Gold last traded at $1,310 an ounce. Silver at $15.29 an ounce.

NEWS SUMMARY: Precious metal prices eased back Wednesday on a firmer dollar. U.S. stocks fell, tracking bond yields, as worries over a possible economic slowdown increased.

Fund Managers Increase Bullish Posture In Gold -Kitco
"Fund managers sharply increased their bullish positioning in gold futures during the most recent reporting week for data compiled by the Commodity Futures Trading Commission. Markets seemingly were factoring in a more dovish U.S. Federal Reserve even before policymakers gave markets a dovish surprise for the second straight meeting, analysts said....Traders monitor the data to gauge the general mood of speculators, although excessively high or low numbers are viewed by many as signs of overbought or oversold markets that may be ripe for price corrections. The CFTC’s most recent 'disaggregated' report showed that money managers increased their net-long position in gold to 30,475 futures contracts as of March 19 from 17,407 the week before....'Money managers aggressively covered their short gold positions and took out new long exposure as they anticipated the FOMC to sound a dovish tone,' said TD Securities. 'Indeed, the Fed delivered a significantly more dovish message than the market expected as it eliminated a hike this year.'"

volatility chart Nothing To Fear But Complacency Itself -Lebowitz/Zero Hedge
"'The only thing we have to fear is fear itself' - Franklin Roosevelt March 4, 1933...We argue in this article that today, fear is exactly what we should fear as a wave of complacency rules the markets. Investors fear volatility. Low levels of implied volatility are the result of investors that are complacent and not protecting against risks....The graph is constructed by normalizing VIX (equity volatility), MOVE (bond volatility) and CVIX (US dollar volatility) and then aggregating the results into an equal-weighted index. Beyond the very low level of volatility across the three major asset classes, there are two other takeaways worth pondering. First, the violent nature in which volatility has surged and collapsed twice since 2018...Second, when the index reached current low levels in the past, a surge in volatility occurred soon after that....Given that volatility is cheap, wise investors should take advantage of this opportunity to buy options to hedge stock, bond and dollar positions....If history proves reliable, a violent reversal is a clear and present danger. Our greatest fear today is easily the apparent lack of it."

U.S. Stocks Fall as Treasury Yields Keep Dropping -Wall Street Journal
"U.S. stocks lost ground Wednesday as another drop in Treasury yields indicated that worries linger about the health of the global economy. The Dow Jones Industrial Average was recently down 200 points, or less than 0.8%, at 25459. The S&P 500 declined 1%....Anxiety about slowing economic growth has stoked fresh volatility in recent sessions. Stocks slid last week after a measure of the yield curve, the gap between short- and long-term Treasury yields, inverted for the first time in more than a decade....'Everybody is talking about the yield inversion,' said Mariann Montagne, a portfolio manager at Gradient Investments. 'Based on history, we get another year and a half or so before recession.'"

Economic illusions have permeated DC for too long -The Hill
"'Reality,' Albert Einstein observed, 'is merely an illusion, albeit a very persistent one.' Nowhere is this more true than in our nation’s capital. Unfortunately, when policymakers succumb to illusion - when what they 'know' simply isn’t so - they’re prone to pursue policies that range from ill-conceived to downright dangerous. Consider the following three examples: Illusion No. 1: Tepid economic growth in America is the 'new normal.' Although the Great Recession ended in June 2009, the subsequent recovery and expansion have been among the weakest on record....Achieving and sustaining faster economic growth requires fielding a growing and more productive labor force....The U.S. economy grew 3.1 percent last year, the fastest since 2005....Illusion No. 2: Current U.S. fiscal policy is sustainable. CBO estimates federal budget deficits will total $11.6 trillion over the coming decade. The problem is so severe that the debt will literally grow by $199,000 in the time it takes to read this single sentence....Within 10 years, annual net interest costs are expected to soar to $928 billion....Illusion No. 3: The rich don’t pay their fair share of taxes....According to the latest IRS statistics, the top 25 percent of taxpayers earn 68 percent of total adjusted gross income and shoulder 86 percent of the income tax burden....While the illusion is that the rich don’t pay their fair share, the reality is that they pay far more than is commonly understood."

RealMoneyBlog - Free daily/weekly email


3.26.19 - $1,360 Gold Rally 'Sooner-Than-Expected'

Gold last traded at $1,315 an ounce. Silver at $15.42 an ounce.

NEWS SUMMARY: Precious metal prices eased back Tuesday on profit-taking and a firmer dollar. U.S. stocks rose as a decline in Treasury yields stabilized, easing fears of an economic slowdown.

Gold To Rally To $1,360 'Sooner-Than-Expected' -TD Securities/Kitco
"'Gold set to rally towards our $1,360/oz target sooner-than-expected,' TD Securities commodity strategists wrote in a note on Monday. 'Given that the market is increasingly pricing in a U.S. rate cut this year, the US dollar is on a weak footing and considering that equities are generally more worried about growth, gold could well move into a higher trading range sooner than expected.' The latest boost to gold prices came from the drop in rates across the yield curve, noted TD Securities. 'Gold jumped to its highest in some three-weeks as the Fed adjusted the dot plots to signal no more interest rate hikes this year, global growth concerns grew, the USD dollar migrated lower and the yield curve inverted, adding upside risk to gold into $1,360/oz territory,' the strategists pointed out. Going forward, gold investors should pay close attention to global macro releases that focus on inflation and growth, the note added. 'A global easing cycle … could risk triggering competitive devaluations.'"

green deal The Green Bad Deal -Ron Paul/Ron Paul Institute
"The recently-proposed Green New Deal is proof that climate change is for progressive Democrats what terrorism is for neoconservative Republicans: a ready-made excuse to expand government and curtail liberty. This radical plan would authorize the US government to seize control of major sectors of the US economy, phase out gasoline-fueled cars, make buildings 'energy efficient,' and even replace air travel with rail travel. Supporters of the Green New Deal claim that the science regarding the risk of climate change is 'settled.' However, the science is far from settled. Many of the claims regarding climate change have been debunked. Like all forms of socialism, the Green New Deal suffers from what Ludwig von Mises identified as the 'calculation problem.' Knowledge of the most efficient use of resources is conveyed by prices set in a free market...When government uses force to remove resources from the marketplace, it makes it impossible for the price system to function...That is why every attempt at government management of the economy inevitably reduces the people's standard of living. Congresswoman Alexandria Ocasio-Cortez has dismissed concerns regarding the almost 100 trillion dollars ten-year cost of implementing the Green New Deal by suggesting that Congress simply make the Federal Reserve pay for it by creating new money...Modern Monetary Theory is not modern. The Federal Reserve has facilitated the growth of government by printing money since its creation. It is no coincidence the birth of the Federal Reserve was immediately followed by the rise of the welfare-warfare state....Ironically, the Green New Deal also would likely damage the environment. History shows that the most effective way to protect the environment is with a free-market economy that respects property rights."

Free Markets Are Moral, Not the 'Lesser of Two Evils' -Reason
"Some critics view socialism as something warm and fuzzy (free health care, like in Sweden!), while others drip with hostility at the inequality of market-based economic systems. There was widespread agreement, however, that U.S.-style capitalism has somehow failed....Many social conservatives dislike capitalism because it undermines their cultural values by promoting materialism, vulgarity and hedonism. Even those in the political center, who might be expected to boisterously defend the market, have some doubts. They seem to view capitalism as a 'lesser of two evils' and not a good in itself....Market capitalism lets individuals and companies make society's key economic decisions as they pursue - gasp! - profit. Every modern 'capitalistic' system has extensive government regulation of the private sector. They all tax people and provide redistributionist programs. Nothing is pure, but people like me - that is, libertarians - believe there should be lower taxes, fewer programs and less government control of the economy. Whatever their ultimate societal vision, self-described socialists believe there should be more government control, more programs and more redistribution. They are winning the day because our side keeps making excuses for markets and the flaws in our society. Yet market capitalism truly is moral, even though it cannot provide what some moralists seek, which is something approaching Nirvana....A system that lets us make our own decisions about our own lives is more moral than one that transfers them to powerful strangers. Freedom is better than coercion. Prosperity is more uplifting than poverty. 'The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries,' Winston Churchill said in 1945."

Apologies to President Trump -The Hill
"With the conclusions of special counsel Robert Mueller’s probe now known to a significant degree, it seems apologies are in order. However, judging by the recent past, apologies are not likely forthcoming from the responsible parties. In this context, it matters not whether one is a supporter or a critic of President Trump. Whatever his supposed flaws, the rampant accusations and speculation that shrouded Trump’s presidency, even before it began, ultimately have proven unfounded. Just as Trump said all along....We in the media allowed unproven charges and false accusations to dominate the news landscape for more than two years, in a way that was wildly unbalanced and disproportionate to the evidence. We did a poor job of tracking down leaks of false information. We failed to reasonably weigh the motives of anonymous sources and those claiming to have secret, special evidence of Trump’s 'treason.' As such, we reported a tremendous amount of false information, always to Trump’s detriment....Apologies to the American people who did not receive the full attention of their government while political points were being scored; who were not told about some important world events because they were crowded out of the news by the persistent insistence that Trump was working for Russia....'Sorry' hardly seems to be enough. Will anyone be held accountable?"

RealMoneyBlog - Free daily/weekly email


3.25.19 - Fed's "Inadvertent Sense Of Panic"

Gold last traded at $1,321 an ounce. Silver at $15.54 an ounce.

NEWS SUMMARY: Precious metal prices rose Monday on safe-haven buying and a flat dollar. U.S. stocks struggled as worries over the global economy overshadowed news that the special counsel found no collusion with Russia on the part of President Donald Trump.

Gold rises as U.S. recession fears boost safer assets -Reuters
"Gold prices rose on Monday as investors' appetite for riskier assets faded on concerns about a potential U.S. recession and decelerating global growth, increasing appeal for the bullion alongside yen and bonds. The metal last week posted its third consecutive weekly gain and rose 1 percent, the most since the week ended Feb. 1. 'Market is in a risk aversion mode. It seems that the data from Friday night, of U.S. and Europe, didn't come as expected,' said Michael McCarthy, chief market strategist, CMC Markets. Data on Friday showed that U.S. manufacturing activity unexpectedly cooled in March and businesses across the euro zone performed much worse than expected this month, fanning concerns on global growth. 'If data continues to be as weak as forecast then there is very good chance we could see significant higher gold prices,' McCarthy said, adding that the inversion of yield is a sign of concern. 'Volatility fueled by uncertainty and with plenty of Fed speakers expected to reinforce the dovish rhetoric from the central bank, the U.S. dollar will be limited on the upside.'"

DovishFed Next: Trump's Promise on the Fed? -New York Sun
"President Trump's plan to nominate Stephen Moore to a governorship of the Federal Reserve could come to be seen to be as important as the justices he's named to the Supreme Court...During the 2016 campaign, though, Mr. Trump made an issue of monetary policy, and this is the first substantive signal we've had that he might redeem that pledge. Few issues have so riveted these columns as the monetary problem - how to work our way back from the wilderness of fiat money, meaning currency unmoored to gold or silver. How can we return to a system more in line with what the Founding Fathers of America intended and signaled in the Constitution and in statute?....What we like about Mr. Moore is that he is prepared to ask basic, even radical questions about our monetary system, such as whether we need the Federal Reserve in the first place. He posed that question in a Wall Street Journal interview, in which he favored a monetary rule and said: 'I think we should have a discussion in this country about whether we need a Fed.'....Mr. Greenspan called the question 'very interesting' in an era when central banks were losing the power to affect long-term rates. The ex-chairman then suggested that some mechanism has got to be in place - a gold standard, he offered, or a currency board - because otherwise, 'all of history suggests' that 'inflation will take hold.'....Mr. Greenspan then pointed out that 'we did very well in the 1870 to 1914 period with an international gold standard.' And, without the Federal Reserve. Could Mr. Moore pursue such questions from the Fed’s board? We'd like to think so."

Trader Warns Yield Curve Inversion Confirms Fed's "Inadvertent Transmission Of A Sense Of Panic" -Zero Hedge
"It isn't all that meaningful to debate whether the inverted yield curve in the U.S. that occurred Friday will lead to a recession a year from now...The point is, it was a clear sign that investors perceive that there is trouble lurking now. And you need to trade accordingly. It is a mistake to watch how the shape of the Treasury curve evolves and start parsing the U.S. data in isolation. Because if you do that, it is in fact reasonable to conclude that the market has probably overreacted. As has the Fed. If not in deed, in how they conveyed their message. They inadvertently transmitted a sense of panic. But it just isn't possible to escape the fact that how the rest of the world is faring directly affects the U.S. economy and asset prices....As far as equities are concerned, the S&P 500 traded conveniently down to and settled at its first major technical level at 2800. It was instructive that I heard more people discuss how much further it can fall and still be 'corrective.'"

Congress’s Mean Girls Are Trump’s Offspring -Noonan/Wall Street Journal
"A basic fact of this presidential cycle: When Donald Trump walked through the door, he burst off the jambs and made the opening bigger and more jagged, forever. Now almost anyone can walk through. A second fact is that the Democratic Party has been tugged dramatically to the left....In 2016 voters who wanted major change, who wanted greater economic equality or more-expansive programs, knew that if they hired Bernie Sanders he'd come in and push things in the direction they desired....Now that's changed...If a hard-line lefty were chosen as the nominee next year, extreme things would seem quite possible. The new lefties are a minority in the House but have become the face of the party, its brand. Rep. Alexandria Ocasio-Cortez is more famous than candidates for president. The left has the energy, the excitement, the media pull....Rep. Ilhan Omar of Minnesota surely meant to oppose U.S. policy toward Israel but somehow couldn’t quite manage to do it without being obviously anti-Semitic....Ms. Ocasio-Cortez is quick—quicker—to aggression. Her default position, behind the smiles and hugs and warmth and dancing, is the pointed, accusatory finger....I think we all know where this started, the political brutishness, the ignoring of traditions and norms. Donald Trump is both origin and rationale. The mean girls of Congress have learned at his knee. They have taken their tactics from him...They have a taste for it, and a talent. They are good at being the thing they supposedly despise. They are not the antidote...but an iteration of it."

RealMoneyBlog - Free daily/weekly email


3.22.19 - Yield Curve Inversion Predicts Next Recession

Gold last traded at $1,313 an ounce. Silver at $15.42 an ounce.

NEWS SUMMARY: Precious metal prices rose Friday on safe-haven buying despite a firmer dollar. U.S. stocks fell sharply as jitters over the global economy were sparked by dreadful manufacturing data out of Europe and the Fed's cautious outlook on the U.S. economy.

Stocks, Bond Yields Fall Amid Anxiety Over World Economy -Wall Street Journal
"Global stocks and bond yields slid Friday as weak manufacturing data deepened investors’ anxiety about the health of the world economy. Signs that momentum continues to cool across major economies have challenged investors, raising questions about whether a soft patch of data could mark the start of a more persistent downturn. A report Friday showed factory output in the eurozone fell in March at the fastest pace in six years, while a gauge of U.S. manufacturing activity slipped to its lowest level in nearly two years....Meanwhile, stocks across the world retreated, with the S&P 500 losing 1.2% and benchmark indexes in France, the U.K. and Germany sliding more than 1% apiece. 'The global economy has clearly become an issue, with big headwinds there,' said Tim Anderson, managing director at broker-dealer TJM Investments....'The market is polarized: Half thinks we are in a bull market recovery and the other half thinks we are in a bear market rally,' said Eoin Murray, head of investment at asset manager Hermes....In another sign of pessimism, traders doubled down on bets that the Fed will go as far as lowering rates soon - something they haven’t done since the midst of the financial crisis in 2008."

YieldIvert Yield Curve Inverts For The First Time Since 2007: Recession Countdown Begins -Zero Hedge
"The most prescient recession indicator the market just inverted for the first time since 2007. Don't believe us? Larry Kudlow last summer explained the reason investors focus on the 3-month to 10-year spread is that it has preceded every recession in the last 50 years. On six occasions over the past 50 years when the three-month yield exceeded that of the 10-year, economic recession invariably followed, commencing an average of 311 days after the initial signal. And here is Bloomberg chart showing how the yield curve inverted in 1989, in 2000 and in 2006, with recessions prompting starting in 1990, 2001 and 2008. This time won't be different."

Gold rises as growth concerns dent risk appetite -CNBC
"Gold edged higher on Friday as weak economic data from the euro zone exacerbated fears of a global slowdown, weighing on risk sentiment and putting bullion on track for its best week in nearly two months. 'There is some safe demand that has surfaced,' said Jim Wyckoff, senior analyst at Kitco Metals. 'The U.S. Federal Reserve suggested U.S. economic growth was slowing, which has spilled over into notions that the rest of the world economy might be experiencing slower growth. That was highlighted by the PMI data out of the European Union, auguring for some trepidation in the world’s stock markets.'....'Price action in gold continues to lend strength to our view that expected data deterioration will help spark a gold rally as interest rates continue to fall in the context of a slowing global economy,' analysts at TD Securities wrote in a note."

How Socialism Destroyed Venezuela -Economics21.org
"Many in the media have blamed Venezuela’s worsening humanitarian crisis on corruption, mismanagement, falling oil prices, or U.S sanctions - anything but the rise of socialism in what was once the wealthiest country in South America. Yet corruption and mismanagement were the direct result of increased government control of the economy - socialism - and in reality, lower oil prices and U.S. sanctions have little to do with the crisis. Instead, the mass starvation and exodus faced by Venezuelans are the natural consequence of the socialist policies implemented by dictators Hugo Chavez and Nicolas Maduro. There are three main policies implemented by Chavez since 1999 that produced the current crisis: Widespread nationalization of private industry, currency and price controls, and the fiscally irresponsible expansion of welfare programs....Perhaps the most harmful part of the Venezuelan socialist project is the part that the international media and leftist figures used to praise most frequently: welfare programs. The socialist regime created social 'missions' aimed at tackling poverty, illiteracy, healthcare, and more. But despite enjoying higher government oil revenues due to a tenfold rise in oil prices from $10 a barrel in 1999 to more than $100 in 2008, the regime financed a growing deficit by printing more currency. Expansive welfare programs and massive public-works projects provided ever-growing opportunities for still greater corruption. Printing money to pay for endless state programs unsurprisingly led to high rates of inflation. Socialism run rampant - not cronyism, corruption, falling oil prices, or U.S. sanctions - caused the crisis in Venezuela."

RealMoneyBlog - Free daily/weekly email


3.21.19 - Social Security Reform, Without Tax Hikes

Gold last traded at $1,307 an ounce. Silver at $15.43 an ounce.

NEWS SUMMARY: Precious metal prices eased back Thursday amid Fed dovishness and dollar volatility. U.S. stocks rose as Apple and Micron surged to lead the tech sector higher.

Gold hits 3-week high as Fed defers rate hikes -Reuters
"Gold climbed to a three-week peak on Thursday as the U.S. Federal Reserve ruled out chances of any interest rate hike this year, while a surprise cut in U.S. growth forecast added to concerns on global economic slowdown....Having downgraded the U.S. growth, unemployment and inflation forecasts, the Fed brought its three-year drive to tighten monetary policy to an abrupt end, abandoning projections for any interest rate hikes this year. 'The Fed was even more dovish than expected and that added to concerns that U.S. growth, and therefore global growth, is hitting a patch of weakness,' said Kyle Rodda, a market analyst with IG Markets in Melbourne. 'U.S. dollar is well off its highs from yesterday and the Treasury yields are coming down which means going into bonds or assets of that nature yields less and gold becomes more attractive.'"

dominos A Central Banking Domino Effect Is in Motion -Wall Street Journal
"Abrupt changes in the policies of the world’s largest central banks have rippled through smaller economies, leaving them with the prospect of low and even negative interest rates for years to come. The danger is that these easy-money policies could fuel destabilizing bubbles in real estate and other asset markets. They may also leave banks with little ammunition to respond to the next economic downturn....With financial markets so interconnected, problems in small countries can quickly spread to larger ones. On Wednesday, the Federal Reserve left its key policy rate in a range between 2.25% and 2.5% and indicated that it is unlikely to raise rates this year. In late 2018, officials had signaled they expected between one and three increases this year. Two weeks ago, the European Central Bank went further, saying it would launch new stimulus to support the eurozone economy via cheap loans for banks. It also said it expected to keep its key interest rate at minus 0.4% at least through 2019, a longer horizon than before....It isn’t just Europe that is affected by the actions of big central banks. On Thursday, Bank of Korea Gov. Lee Ju-yeol signaled he would maintain the current pause in policy tightening, saying the Fed’s 'more-accommodative-than-markets-expected' statement would allow his bank 'more leeway' in taking action."

Social Security reform is long overdue, but massive tax hikes are not the answer -Fox Business
"House Democrats are considering pushing a massive tax hike on American workers, regardless of their income level, as part of a bill to expand Social Security. There’s no question that Social Security faces significant funding issues, but there are better ways to reform the program than increasing payroll taxes on every employer and worker. According to the Social Security and Medicare Trustees, Social Security is facing a $13.2 trillion cash shortfall between 2034 and 2092. Medicare is in even worse financial shape facing a $37.7 trillion funding shortfall over the next 75 years, but the issues with Medicare are a topic for another time....Back in December 2016, then-Rep. Sam Johnson, R-Texas, introduced the Social Security Reform Act. The Social Security Reform Act would have made the program solvent, creating a $600 billion surplus while still expanding benefits, phasing out the tax on benefits, and providing an increased cost-of-living adjustment (COLA) for lower-income individuals...The Social Security Reform Act would have simply increased the retirement age to 69 from 67 and means-tested benefits for survivors, among other tweaks, to ensure the viability of the program. Social Security has to be reformed if the program is to remain viable, but House Democrats’ plan falls far short of a serious proposal because the so-called 'solution' is more of the same from the far-left: tax increases."

Americans Are Still Confused About What Socialism Actually Is -Reason
"It is a good idea for people living in a self-governing democracy to have discussions about basic political philosophy even if the debates can become overheated in a world dominated by social media. As King Solomon wrote in Ecclesiastes, 'What has been will be again, what has been done will be done again; there is nothing new under the sun.' The same ideas and temptations are always with us, so reprising musty old debates is healthy....Socialistic governments of all types obliterate the incentive to work and invest, so they end up just taking things away....The Democratic Socialists of America website, which argues that 'working people should run both the economy and society democratically to meet human needs.' You don't think that idea - people apparently should vote on how other people's businesses are managed - could lead to draconian results?....Western democracies have passed socialistic programs such as Social Security and Medicare - and that hasn't led to gulags. True enough. Wealthy, capitalistic nations have the excess wealth to afford costly entitlements. But look at the resulting debt levels. These Ponzi schemes are unsustainable and do an iffy job providing comfortable retirements and health care for the masses. They embody many flaws of socialism, even if they have not led to disaster. That could change because Democratic socialists want to expand them much further. Polls say large percentages of Americans have a vaguely warm view about socialism. The best response is to highlight its failures in its many forms, especially as some politicians use the term in a positive way. Let the debate continue."

RealMoneyBlog - Free daily/weekly email


3.20.19 - Ad Rigging: Google Fined $1.7 Billion

Gold last traded at $1,314 an ounce. Silver at $15.51 an ounce.

NEWS SUMMARY: Precious metal prices eased back slightly Wednesday ahead of Fed statement. U.S. stocks fell after President Trump said U.S. tariffs on Chinese goods would likely not end soon.

Buy Gold, Sell Stocks Is the 'Trade of Century' -Bloomberg
"One of last year’s best-performing hedge funds says the 'trade of the century' is to buy gold and sell stocks as risk assets are due for another meltdown. It’s only a matter of time until the bearish bet pays off big, according to Crescat Capital LLC...The investment company says it’s ready to capitalize on an end of the economic cycle as indicators warn that a recession is imminent in the coming quarters. The consensus is pointing to a recession in 2020 or 2021, Tavi Costa, a global macro analyst at Crescat, said by phone. 'We think it’s a lot closer than that and we have a number of macro timing indicators that we look at.' Among the warning signs, Crescat cites corporate insiders who are currently selling stocks hand over fist - indicating a potential stock bubble burst. In early 2017, those investors heavily sold shares while the S&P 500 continued climbing. That happened again in 2018. With the smart money selling once again, 'the third time should be the charm for the stubborn U.S. market,' Crescat wrote to clients over the weekend....'Soon the buy-the-dip mentality and bull-market greed will turn to fear. Selling will beget more selling. That’s how bear markets work,' Crescat wrote. 'There is so much more ahead to profit from the short side of the market. The bear-market rally is running out of steam!'"

gold A growing list of companies from FedEx to BMW are warning about the world economy -CNBC
"With an ongoing trade war between the U.S. and China, Brexit uncertainty weighing on Europe and the U.K., and new weakness out of Japan, a group of business leaders say it’s harder than ever to rake in profits. This week, top executives at FedEx, BMW, UBS and others described bleak global business conditions while discussing quarterly results. Fitch Ratings also 'aggressively' cut its forecast for the year. The head of UBS was the latest to blame the world’s backdrop for weaker-than-expected results. Chief executive Sergio Ermotti told a conference in London Wednesday that it 'one of the worst first-quarter environments in recent history,' Reuters reported. 'Slowing international macroeconomic conditions and weaker global trade growth trends continue, as seen in the year-over-year decline in our FedEx Express international revenue,' FedEx Corp. Chief Financial Officer Alan B. Graf, Jr. said in the firm’s quarterly earnings report....Samsung also joined in on Wednesday. 'We are expecting many difficulties this year such as slowing growth in major economies and risks over global trade conflicts,' Samsung Co-Chief Executive Kinam Kim said."

A Recipe for Massive Government Spending -Rickards/Daily Reckoning
"Leading Democratic presidential hopefuls Elizabeth Warren, Kamala Harris and Bernie Sanders have expressed desires to increase income taxes to 70% or even 90% on the rich, impose 'wealth taxes' on their net worth and impose estate taxes that are equally onerous when they die....Don’t assume you’re exempt just because your annual income is lower. Those tax thresholds are on wealth, not income, and could include stocks, bonds, business equity and intangible business equity for doctors, dentists and lawyers....The leading Democratic candidates for president and numerous members of Congress have come out in favor of Medicare for All, free child care, fee tuition, a guaranteed basic income even for those unwilling to work and a Green New Deal that will require all Americans to give up their cars, stop flying in planes and rebuild most commercial buildings and residences from the ground up to use renewable energy sources only. The costs of these programs are estimated at $75–95 trillion over the next 10 years. To put those costs in perspective, $20 trillion represents the entire U.S. GDP and $22 trillion is the national debt....The big spenders have a simple answer to the complaint that we can’t afford it. Their answer is, 'Yes, we can!' That’s because of a new school of thought called Modern Monetary Theory, or MMT. This theory says that the U.S. can spend as much as it wants and run the deficit as high as we want because the Fed can monetize any Treasury debt by printing money and holding the debt on its balance sheet until maturity, at which time it can be rolled over with new debt....There are serious problems with MMT (not the ones Jay Powell and mainstream voices point to). But very few analysts can really see the flaws."

Google Fined $1.7 Billion in EU for Restricting Rivals’ Ads -Wall Street Journal
"Alphabet’s Google was fined $1.7 billion by the European Union for limiting how some websites could display ads sold by its rivals, the tech giant’s third antitrust penalty from the bloc since 2017. Wednesday’s decision, which is smaller than the total of $7.67 billion levied against Google in two previous decisions, is the last among formal charges the EU’s antitrust regulator has so far filed against the tech giant, drawing to a close at least one part of the nearly decadelong investigation into the company....'Google has cemented its dominance in online search adverts and shielded itself from competitive pressure by imposing anticompetitive contractual restrictions on third-party websites,' said Margrethe Vestager, the EU’s antitrust chief. 'This is illegal under EU antitrust rules,' she added. Even though Google has stopped this behavior in 2016, Ms. Vestager said that 'at a minimum our decision requires Google to put a stop to those restrictions or any other restrictions with an equivalent effect and not to reinstate them.'"

RealMoneyBlog - Free daily/weekly email


3.19.19 - Investing Amid Schizophrenic Politics

Gold last traded at $1,306 an ounce. Silver at $15.37 an ounce.

NEWS SUMMARY: Precious metals prices rose Tuesday on safe-haven buying and a weaker dollar. U.S. stocks gave back most of their gains after a report stated China may be walking back some trade offers.

Gold prices edge up on tepid dollar -Reuters
"Gold prices rose for a third consecutive session on Tuesday as the dollar weakened on expectations that the U.S. Federal Reserve will maintain a dovish tone at its monetary policy meeting this week. The dollar, which eased marginally against major currencies, traded close to a two-week low posted in the previous session. Traders currently expect there will be no U.S. rate hikes this year, and are even building in bets for a rate cut in 2020. Federal Reserve Chairman Jerome Powell will speak at a news conference on Wednesday....SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose about 1.1 percent on Monday, its biggest one-day percentage gain since Jan. 18."

digging How to invest when politics goes schizophrenic -Ponte/WND
"For most of America’s history, we have been governed by two political parties of one mind. Both Republicans and Democrats were mostly practical, centrist and pro-capitalist. Even liberals eager to tax business were careful not to kill the goose that laid the golden eggs of jobs and prosperity. But with the 2018 election, this secure political environment for investors has changed. In our newly schizoid politics and economics, one of America’s two parties is now largely controlled by self-described socialists who hate the free market and want to destroy it. History is again up for grabs in class warfare, and every future election will be Russian roulette, with the fate of American free enterprise hanging on whether capitalist or anti-capitalist politicians win. How long can our nation, divided against itself, continue to stand?....What happens to investing in America now that one political party is determined to control or destroy every company, except those crony entities such as Solyndra that funnel huge campaign contributions to the Democratic Party in a partisan taxpayer-money-laundering scheme? What is an investor to do when politics - not product quality or business competence - determine a company’s success or failure?"....Investors can rethink and escape America’s new socialist schizophrenia, as Craig R. Smith and I explain in our latest free White Paper, Protecting Your Wealth In Today's America.

Fed Faces Crucial Decision on Its Portfolio Mix -Wall Street Journal
"Markets have cheered the Federal Reserve’s imminent announcement that it will stop shrinking its asset portfolio later this year, but determining that date is just one challenge facing central-bank officials....Specifically, they need to decide the right combination of Treasurys of varying duration to hold - whether mostly short-term bills or a mix that also includes more longer-term notes and bonds....Fed Chairman Jerome Powell has signaled the central bank is prepared to announce Wednesday, after its two-day policy meeting, when it will end the runoff of its $4 trillion portfolio later this year....Before the 2008 crisis, the average maturity of the Fed’s Treasury holdings was less than four years. Now, it’s around nine years. The average maturity of all Treasury debt outstanding is nearly six years....Officials aren’t eager to discuss the possibility of selling mortgage bonds because they don’t want to do anything to disturb an already fragile housing market."

Andrew Yang, a presidential candidate who’s attracting support from Millennials -SF Gate
"The unlikely presidential run of Andrew Yang, who is proposing a $1,000-a-month 'freedom dividend' to every adult in America, rolled Friday into San Francisco, where some 3,000 supporters listened to the New York tech entrepreneur warn about how artificial intelligence and robotics are taking jobs. The 44-year-old son of Taiwanese immigrants who met each other at UC Berkeley has already surpassed expectations - virtually nonexistent when he got into the race - by inspiring enough donations to qualify for the Democratic primary debate in June. Yang outlined his idea for guaranteed universal income to a young, exuberant crowd of mostly Millennials at an outdoor soccer field lined with food trucks on Mission Bay Boulevard North. He said the idea has not only had wide historical support - including from founding father Thomas Paine, the Rev. Martin Luther King Jr. and Nobel Prize-winning economist Milton Friedman - but it has already been implemented in Alaska, which uses oil revenue to fund it. 'What they are doing with oil money in Alaska, we can do for all of us around the country with advancing technology,' Yang told the crowd, many of whom waved 'Yang Gang' and 'Humanity First' signs....Yang’s growing grassroots popularity during his first-ever campaign is remarkable considering how his main platform, universal basic income - also known as the freedom dividend - involves taxing tech companies to pay all adult U.S. citizens $1,000 per month. His idea, which he calls human-centered capitalism, is to offset impending job losses caused by robotics and artificial intelligence."

RealMoneyBlog - Free daily/weekly email


3.18.19- Why Gold Is Still The Best Basis For Money -Forbes

Gold last traded at $1,301 an ounce. Silver at $15.32 an ounce.

News Summary: Precious metal prices rose Monday, building on last week's rally, as investors eye Fed meeting. U.S. stocks struggle for direction as traders await Fed statement due later this week.

Why Gold Is Still The Best Basis For Money- Forbes
"To understand why gold works, as a standard of monetary value, you have to understand what makes good money. Today's cryptocurrency enthusiasts are rediscovering what monetary thinkers have always known: that the best money is stable money, or, as I like to term it, Stable Money -- money that is stable in value....Ideally, a currency would be perfectly stable in value. The market economy is organized via prices, profit margins, returns on capital and interest rates. Changes in the value of the currency derange this process, creating chaos and havoc....In practice, such idealized perfection is not quite possible, so we have to go with the next best thing. The next best thing is gold: the thing that most closely approximates this ideal of stability of value....Gold's performance as a standard of Stable Value has been exemplary. It is, actually, a lot better than one might rationally expect. The things that the gold standard made possible -- such as the extraordinary stability of bond yields during the nineteenth century -- have never been replicated under fiat currencies....Economies work best when currencies are stable in value. Once we know what the goal is, we then look for a way to achieve it; and the best way has always been to base a currency on gold. Nobody has found a better way, even in the form of a proposal; and nobody has ever needed to find a better way, because gold has always worked very well."

market bear A Recession Is Coming, And Maybe a Bear Market, Too - Bloomberg
"The recessionary indicators are numerous. Tighter monetary policy by the Federal Reserve that the central bank now worries it may have overdone. The near-inversion in the Treasury yield curve. The swoon in stocks at the end of last year. Weaker housing activity. Soft consumer spending. The tiny 20,000 increase in February payrolls, compared to the 223,000 monthly average gain last year. Then there are the effects of the deteriorating European economies and decelerating growth in China as well as President Donald Trump’s ongoing trade war with that country. There is, of course, a small chance of a soft landing such as in the mid-1990s. At that time, the Fed ended its interest-rate hiking cycle and cut the federal funds rate with no ensuing recession. By my count, the other 12 times the central bank restricted credit in the post-World War II era, a recession resulted.... At present, I don’t see any major economic or financial bubbles that are just begging to be pricked. The only possibilities are excess debt among U.S. nonfinancial corporations and the heavy borrowing in dollars by emerging-market economies in the face of a rising greenback. Housing never fully recovered from the subprime mortgage debacle. The financial sector is still deleveraging in the wake of the financial crisis. Consumer debt remains substantial but well off its 2008 peak in relation to household income."

"Kicking The Can Down The Road Forever": Nobody In Charge Wants 2019 To Actually Begin- Zero Hedge
"As we crawl towards the end of Q1 it becomes evident that the main theme for 2019, besides appalling far-right violence, is that nobody in charge wants 2019 to actually begin. What do I mean by that? That all we see everywhere is can-kicking rather than decision making. For example, look at Brexit. After last week’s drama of the UK having now said No to EU membership, No to PM May’s Withdrawal Deal, No to No Deal, No to a second referendum, and No to Parliament testing out alternatives to May’s deal, this week we are either going to see May’s deal reheated and presented once again...For a second example, look at UK-China trade relations. The news from the South China Morning Post today is that the Trump-Xi summit to sign this 'trade deal' --on which I have been voluble in my scepticism-- is now not going to take place in March, or even in April. Now it is apparently going to happen in June. The reason? The same one that led to my scepticism: no agreement from China on the structure of enforcement mechanisms that will mean the deal means something. Of course, that is also epic can-kicking....Furthermore, the US Federal Reserve, when they meet this week, will also try to send the message that doing precisely nothing is exactly the right action to take....In short, 2019 is aping 1984: not just on the invasive/repressive technology front, where China is leading the way, but in that its vision of the future being a boot kicking a can down the road – forever."

Expectations of weaker economy unites small business owners- Fox Business
"Although small businesses vary widely in terms of size, industry and issues, they do appear to be generally united by a growing uneasiness about the economy. Several surveys and economic reports released in recent weeks show that company owners have more trust in their businesses than the national or local economy, and that they're running their businesses more conservatively in response to uncertainty about overall business conditions. In a survey by the U.S. Chamber of Commerce and MetLife taken in January, 53 percent of the 1,001 randomly selected small business owners questioned said they believe the national economy is in good shape, down from 58 percent in a survey taken in the last quarter of 2018. Fifty-three percent said their local economy is in good health, down from 56 percent. A small business index that accompanied the survey fell to 65.6 from 69.3 in the fourth quarter. 'The change is largely due to a decline in economic outlook and expectations (both national and local), but small business owners report their fundamental operations remain strong,' the chamber and MetLife said."

RealMoneyBlog - Free daily/weekly email


3.15.19 - Is Income Inequality Fair?

Gold last traded at $1,302 an ounce. Silver at $15.32 an ounce.

News Summary: Precious metal prices rose Friday on a weaker U.S. dollar and renewed optimism over a U.S.-China trade deal. U.S. stocks continued higher as investors digested comments from Chinese Premier Li Keqiang.

Commerzbank Sees $1,400 Gold, $16.50 Silver By Year-End - Kitco
"Commerzbank looks for gold to climb as high as $1,400 an ounce and silver to $16.50 before the end of 2019. Gold started the year strongly, nearly reaching $1,350 an ounce last month, helped by a U.S. Federal Reserve that made a dovish U-turn and now appears cautious about hiking interest rates again. However, the metal subsequently gave up much of its gains and was trading at $1,303.60... Silver, which has followed gold up and back down, was at $15.35. Analysts pointed out that gold hit its yearly highs in 2014, 2015 and 2018 during the first three months of the year. However, they say they do not think the metal has peaked in 2019, calling the recent pullback a 'pronounced correction,' with more upside to come. 'We are still convinced that gold will climb noticeably during the course of the year,' Commerzbank said. 'This is supported by the premature end to the Fed’s rate-hike cycle, the continued ultra-expansionary monetary policy of the ECB [European Central Bank], possibly stronger demand in China and India again and a possible revival of investment demand in the West. What is more, central banks remain important buyers. Gold is likely to rise to $1,400 per troy ounce by year’s end.'"

money Is Income Inequality Fair? -Williams/Zero Hedge
"Some Americans have much higher income and wealth than others. Former President Barack Obama explained, 'I do think at a certain point you've made enough money.'....Democratic presidential hopeful Sen. Elizabeth Warren, in calling for a wealth tax, complained, 'The rich and powerful are taking so much for themselves and leaving so little for everyone else.'....A system that requires that one serve his fellow man to have a claim on what he produces is far more moral than a system without such a requirement....Bill Gates, co-founder of Microsoft, with a net worth over $90 billion, is the second-richest person in the world...Millions of people around the world voluntarily plunked down money to buy Microsoft products...If Gates and others had followed President Obama's advice that 'at a certain point' they'd 'made enough money' and shut down their companies when they had earned their first billion or two, mankind wouldn't have most of the technological development we enjoy today....The only people who benefit from class warfare are politicians and the elite; they get our money and control our lives. Plus, we just might ask ourselves: Where is a society headed that holds its most productive members up to ridicule and scorn and makes mascots out of its least productive and most parasitic members?"

U.S. manufacturing sector slowing as economy loses momentum - Reuters
"U.S. manufacturing output fell for a second straight month in February and factory activity in New York state was weaker than expected this month, offering further evidence of a sharp slowdown in economic growth early in the first quarter. The reports on Friday extended the streak of weak economic data and underscored the Federal Reserve’s 'patient' stance toward further interest rate increases this year. Fed officials are scheduled to meet next Tuesday and Wednesday to assess the economy and deliberate on the future course of monetary policy. The U.S. central bank raised rates four times last year....In a separate report on Friday, the New York Fed said its general business conditions index fell 5.1 points to a reading of 3.7 in February. It was the third consecutive monthly reading below 10, which the New York Fed said suggested 'that growth has remained quite a bit slower so far this year than it was for most of 2018.'"

Explosion of global debt biggest risk to world's financial system, Bank of Canada warns- Financial Post
"The Bank of Canada’s senior deputy governor says an explosion of global debt over the last decade is a top concern that she argues is holding back economic growth and creating vulnerabilities in the world’s financial system. The global financial system is in better shape than it was in 2007 before the financial crisis, but unknowns such as ongoing U.S.-China trade tensions could knock things off course, Carolyn Wilkins said in a speech Thursday in Vancouver. Wilkins also warned that high debt loads usually become an 'amplifying factor' when it comes to an economic downturn....'The global development that concerns me the most, though, is rising debt,' Wilkins said in her speech at an event hosted by the University of British Columbia’s economics department and CFA Society Vancouver....She said the combined global debt owed by governments, businesses and households now amounts to US$240 trillion, which is US$100 trillion higher than just before the financial crisis and more than three times the world’s gross domestic product. Government debt, she added, has 'skyrocketed' over the past 10 years, while corporate borrowing has “exploded” and now displays some risky qualities....Wilkins added it’s important for policy-makers around the world to continue efforts to conduct stress tests on different parts of the financial system, and, when necessary, put in safeguards."

RealMoneyBlog - Free daily/weekly email


3.14.19 - Free-Market Climate Solutions Needed

Gold last traded at $1,295 an ounce. Silver at $15.17 an ounce.

NEWS SUMMARY: Precious metal prices eased back Thursday on profit-taking and a firmer dollar. U.S. stocks traded mostly lower following weaker-than-expected housing data and Facebook's 2% slide after a worldwide outage of its apps, Instagram and WhatsApp.

$1,700 Gold Is On The Horizon, Says Analyst -Kitco
"A potential correction in the equities market, coupled with rising U.S. debt levels, will play in gold's favor, said Jay Taylor of J. Taylor's Gold, Energy & Tech Stocks. 'I think we need to get through $1,350, $1,360 [an ounce], and then the first major target that I see, and I'm not sure of the timing, I think we're looking at $1,700,' Taylor told Kitco News on the sidelines of the Metals Investor Forum in Toronto. Taylor noted that this target is unlikely to be met this year, adding a one to two year time horizon."

bears How to Think About Stocks and Bonds in a Bear Market -Wall Street Journal
"Being surprised at equities’ ups and downs is like visiting Chicago in January and being shocked by 8 inches of snowfall. Similarly, when you invest in stocks, be prepared to occasionally lose a large pile of money....Staying the course when the sky turns dark requires a more systematic approach, and being able to execute it depends almost entirely on one’s frame of mind. How do you get to that healthy place in your mind? Your psychological investment overcoat is the fundamental equation of happiness: Well-being = Reality minus Expectation....The lower your expectations, the better you will feel when things head south, and the better you feel the more likely it is that you will see your strategy through....So, my advice is to mentally vaporize 75% of your portfolio, and when the crunch inevitably transpires, you will be psychologically well-prepared. In investing, to paraphrase the redoubtable Yankee catcher, psychology is destiny."

The Only Way to Drain The Swamp... -Bonner/Bonner And Partners
"The only way the White House could make a real cut in spending would be to propose an across-the-board cut... and bypass Congress, selling the idea directly to the American people. The president would have to use his histrionic genius by going on TV and explaining what is really going on... and that the real beneficiaries [of rising debt] are the Swamp Critters, not the American people)....We are now at the tail end of a boom. GDP growth rates have been going down for at least 30 years. Averaged over the last 10 years, the real GDP growth rate now is only 1.5%, not 3%. And there’s no evidence - none - that the trend of the last 10 years is reversing. And why would it? The burden of debt is still growing, not shrinking. And interest rates are rising, not falling… making the debt burden heavier....The real crisis will begin, no matter which party is in power, when the stock market crashes. Then, growth rates will go negative... and federal borrowing will soar....Government revenue… now running about $3 trillion… will fall to $2 trillion. And federal spending… now running about $4 trillion… will rise to about $5 trillion. The feds will not be able to finance that $3 trillion gap without pushing up interest rates. But higher rates will sink the economy into a depression, further reducing federal revenues. So, the feds will resort to the 'printing press' - aka, the Fed. We don’t presume to know what will happen in any detail. But some trends are almost impossible to reverse. Instead, they have to run their course... all the way to the grim end."

Forget the Green New Deal. We need free-market climate solutions -Kasich/USA TODAY
"There’s a lot of talk these days about the Green New Deal, a progressive Democratic response to the challenge of climate change. While it is intended to improve our environment, many Republicans and even some Democrats fear that it would stifle economic growth and kill jobs, set off a massive redistribution of wealth, and dangerously centralize federal government power. But for all those problems, the Green New Deal is serving an important purpose by provoking a more vigorous level of public debate...The time has come for people who understand the need to be good stewards of our economy as well as our environment to put forward a responsible program. I am convinced that conservatives and moderates, including many Democrats, can agree on a commonsense set of policies. They would be based on responsible economic principles of free-market capitalism and personal choice, not coercion. They would actually reduce regulation and lighten the heavy hand of government, while stimulating job growth and the economy, encouraging innovation, benefiting working-class Americans and - most important - protecting and improving the environment we share with the world....It’s time for free-market moderates on both sides of the aisle to come up with answers of their own."

RealMoneyBlog - Free daily/weekly email


3.13.19 - American Capitalism Is Fine, Thank You

Gold last traded at $1,309 an ounce. Silver at $15.45 an ounce.

NEWS SUMMARY: Precious metal prices rose Wednesday on technical and safe-haven buying as well as a weaker dollar. U.S. stocks rose as tech shares performed and Boeing regained some of the sharp losses from this week.

Gold hits 2-week high on safe-haven appeal -Reuters
"Gold scaled a near two-week peak on Wednesday, after reclaiming the key $1,300 level in the previous session, as investors opted for the safe-haven metal after British lawmakers rejected an amended exit deal, while a weaker dollar lent further support....The British Parliament rejected Prime Minister Theresa May’s deal to quit the European Union for a second time, deepening the country’s political crisis days before the planned departure date on March 29. 'The ongoing Brexit uncertainties has diminished risk appetite as investors are increasingly unnerved on the potential of a 'hard Brexit' deal,' said Benjamin Lu, analyst with Singapore-based Phillip Futures....Meanwhile, U.S. consumer prices rose for the first time in four months in February...The disappointing U.S. data, which followed a spate of weak reports from other economies, cascaded concerns on slowdown in global growth. 'We are optimistic on gold in long-term perspective. Markets are going to be more interested in safe-haven assets in light of volatility from a slowing economy,' Lu of Phillip Futures said."

protect your wealth Protecting Your Wealth in Today’s America -Craig R. Smith/Swiss America
"How you invest your savings requires new thinking. Some once-prudent investment strategies have become high-risk gambles, and those who unwisely still use them may see their capital suffer....The old America was a land of free market capitalism. Business and the state were largely separate. Both of our two dominant political parties were practical, centrist, and pro-capitalist. People could invest their money with confidence that, whichever side won the next election, little would change in government’s limited taxation and regulation of businesses. The political future was predictable and optimistic for investors....But 19 years into the 21st Century, economic data reveal a foreboding, transforming landscape....A February 2019 Harvard-Harris poll found that 64% of registered voters believe the Democratic Party now supports socialism, not capitalism. And, according to its liberal pollster Mark Penn, 57% of Democrats themselves 'agree that their party is now socialist.'....As America’s wealth is transferred from the productive free market to an anti-productive, ever-bigger government, investors must rethink how and where to put their savings. Consider just a few of the changes affecting traditional investments..." To read the full story, request the Free White Paper

American Capitalism Is Fine, Thank You -Jindal/Wall Street Journal
"Liberal politicians, abetted by the mainstream media, regularly document the alleged shortcomings of free-market capitalism. Politicians like Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez point to rising inequality and a supposed lack of upward mobility to make the case for socialism. Today, American Democrats have a more positive view of socialism than capitalism, and less than half of young adults have a positive view of capitalism...Years of wage stagnation and diminished economic prospects have soured many Americans on the system that made the U.S. the world’s largest economy....The problem isn’t market dynamics, but the increased government intervention in the economy that discourages competition. Rather than relying on innovation, many companies often now seek to exploit licensing arbitrage opportunities and engage in other rent-seeking behaviors. They try to beat competitors through regulatory capture and crony capitalism rather than making better products for less....For consumers, this means fewer meaningful choices. For new producers, the goal is often not to displace an incumbent firm but to be purchased by one. Even many tech entrepreneurs hope to sell to Google or Facebook rather than become the next big thing....The American tradition has always emphasized creating new wealth over simply preserving past gains. Each generation has been confident that they will do better than their parents; aspiration, not redistribution, is the quintessential American trait....For all its faults, capitalism allocates resources more efficiently than other systems. Free markets maximize growth, offering producers the closest approximation of a merit-based system matching talent and effort with tangible rewards."

The US Government Will Be Scanning Your Face At 20 Top Airports -BuzzFeed News
"According to 346 pages of documents obtained by the nonprofit research organization Electronic Privacy Information Center...US Customs and Border Protection is scrambling to implement this 'biometric entry-exit system,' with the goal of using facial recognition technology on travelers aboard 16,300 flights per week - or more than 100 million passengers traveling on international flights out of the United States - in as little as two years...This, despite questionable biometric confirmation rates and few, if any, legal guardrails. These same documents state - explicitly - that there were no limits on how partnering airlines can use this facial recognition data. CBP did not answer specific questions about whether there are any guidelines for how other technology companies involved in processing the data can potentially also use it....'I think it’s important to note what the use of facial recognition [in airports] means for American citizens,' Jeramie Scott, director of EPIC’s Domestic Surveillance Project, told BuzzFeed News in an interview. 'It means the government, without consulting the public, a requirement by Congress, or consent from any individual, is using facial recognition to create a digital ID of millions of Americans.'....In the US, there are no laws governing the use of facial recognition. Courts have not ruled on whether it constitutes a search under the Fourth Amendment. There are no checks, no balances. Yet government agencies are working quickly to roll it out in every major airport in the country. It’s already being used in seventeen international airports....'This is opening the door to an extraordinarily more intrusive and granular level of government control, starting with where we can go and our ability to move freely about the country,' said Edward Hasbrouck, a consultant to the Identity Project civil liberties group. 'And then potentially, once the system is proved out in that way, it can literally extend to a vast number of controls in other parts of our lives.'"

RealMoneyBlog - Free daily/weekly email


3.12.19 - Centrist Versus Polarized Politics

Gold last traded at $1,297 an ounce. Silver at $15.40 an ounce.

NEWS SUMMARY: Precious metal prices rose Tuesday as slowing growth weighed on the dollar. U.S. stocks traded mixed with the Dow falling as shares of Boeing dropped over 11% so far this week.

Gold prices climb as dollar weakens -Marketwatch
"Gold prices gained on Tuesday, looking to recoup most of the previous session’s losses, with the dollar weakening in the wake of monthly U.S. inflation data, as investors await a vote by U.K. lawmakers on Prime Minister Theresa May’s Brexit plan. Prime Minister May won last-minute concessions from the European Union over the Brexit divorce deal late Monday in a bid to win support for her plan in a parliamentary vote later Tuesday....The dollar fell more steeply shortly after data revealed that the U.S. consumer-price index climbed 0.2% in February, matching market expectations....That softer tone to the dollar helped buoy gold, analysts said. A cheaper buck can be a positive for commodities priced in the greenback by making them less expensive to users of other currencies."

global growth Global Economy Hits Its Weakest Spell Since Financial Crisis -Bloomberg
"The global economy’s sharp loss of speed through 2018 has left the pace of expansion the weakest since the global financial crisis a decade ago, according to Bloomberg Economics. Its new GDP tracker puts world growth at 2.1 percent on a quarter-on-quarter annualized basis, down from about 4 percent in the middle of last year. While there’s a chance that the economy may find a foothold and arrest the slowdown, 'the risk is that downward momentum will be self-sustaining,' say economists Dan Hanson and Tom Orlik....The OECD’s latest composite leading indicator - published Monday - indicates easing momentum in the U.S., the U.K., Canada, and the euro area as a whole, including Germany and Italy....'The cyclical upswing that took hold of the global economy in mid-2017 was never going to last. Even so, the extent of the slowdown since late last year has surprised many economists, including us.' say Hanson and Orlik."

Web inventor urges users to seek 'complete control' of data -AFP/Yahoo News
"World Wide Web inventor and British scientist Tim Berners-Lee on Monday slammed the increasing commodification of personal information and appealed for internet users to strive to maintain "complete control" of their data. Berners-Lee, credited with creating the web in 1989, is on a mission to save his invention from a range of problems increasingly dominating online life, including misinformation and a lack of data protection. 'You should have complete control of your data. It's not oil. It's not a commodity,' he told a small group of journalists gathered at Europe's physics lab CERN, where he first came up with the idea for the web 30 years ago. When it comes to personal data, 'you should not be able to sell it for money,' he said, 'because it's a right'....People needed to do more to protect themselves and their data and not to simply expect that governments will look out for their best interests, he argued."

As politics around the world pull apart, can the center rally? -Christian Science Monitor
"Around the world, politics are polarizing. From Brexit to Brasilia, from the District of Columbia to the Danube, leaders are ruling from the further reaches of the political spectrum. In today’s belligerent global mood, is there any fruitful ground for a moderate politician to plow? Starbucks founder Howard Schultz thinks so; he says the U.S. two-party system is broken, and he’s planning an independent bid for the presidency....Are these the tentative hints of a new direction, a sign that the populist pendulum may have swung its full arc? Or are they destined to be crushed by angry voters seeking radical solutions from demagogues? 'The problem with centrism is that its style of moderation and compromise is not in fashion at the moment,' says Pascal Perrineau, a veteran French political analyst. 'But its strength is that it seeks solutions beyond the tired old left-right divide. One can imagine new political space emerging from the wreckage of the old system.'....Both parties have been pulling away from the center for a number of years. Conservatives dominate the Republican Party at all levels, and it is liberals such as new Rep. Alexandria Ocasio-Cortez from New York who are providing the Democrats with energy and policy ideas such as the Green New Deal....'The vast majority of people … want answers that improve their daily lives rather than angry, adversarial rhetoric,' says Will Tanner, the young founder of 'Onward,' a reformist Conservative Party think tank in London."

RealMoneyBlog - Free daily/weekly email


3.11.19 - Young Americans Embrace Socialism

Gold last traded at $1,291 an ounce. Silver at $15.27 an ounce.

NEWS SUMMARY: Precious metal prices eased on mild profit-taking and a flat dollar. U.S. stocks rose as strong gains in tech shares like Apple and Facebook offset a steep decline in Boeing.

China's Gold-Buying Spree Extends To Third Month -Zero Hedge
"After China's official gold reserves rose for the first time in around two years (since Oct 2016) in December, Beijing appears to have joined the global gold rush, increasing its gold reserves for the third month in a row in February to 60.26 million ounces. China has long been silent on its holdings of gold as many countries are turning away from the greenback. Goldman Sachs has flagged central-bank buying as a plank supporting its bullish outlook for gold, which it expects to rally to $1,400 an ounce over six months. China is also trying 'to diversify its reserves' away from the greenback, according to Jeffrey Halley, senior market analyst at currency broker OANDA. The analyst told the South China Morning Post that the state of affairs in global politics, including a trade war with the US, are driving China’s interest to buy gold as a 'safe haven hedge.'....One wonders if Alasdair Macleod is on to something when he notes that if the yuan is to replace the dollar for China's trade, officials will have to back it with gold."

Gen Z Poll: Young Americans are embracing socialism -Axios
"Generation Z has a more positive view of the word 'socialism' than previous generations, and - along with millennials - are more likely to embrace socialistic policies and principles than past generations, according to a new Harris Poll given exclusively to Axios. Why it matters: The word 'socialism' does not carry the same stigma it did in the past, now that it has been resurrected by celebrity politicians like Bernie Sanders and Alexandria Ocasio-Cortez. Young people's political views often change as they grow older, but their support for socialistic policies is a sign that the old rules of politics are changing fast. Gen Z and millennials are projected to make up 37% of the electorate in 2020, and what they're looking for in a presidential candidate is shifting. The top three voting issues for Gen Z, according to the Harris poll, are mass shootings, racial equality, and immigration policy and treatment of immigrants. Millennials' top issues are access to health care, global warming/climate change and mass shootings. Gen X's top issues are: access to health care, terrorism/national security and the national debt - the same top issues for boomers and older."

The 2020 presidential race could weigh on ‘FAANG’ stocks -CNBC
"As 2020 presidential campaigns accelerate, the dominance of Silicon Valley technology companies is likely to remain a key issue for Democratic candidates, Bank of America analyst Justin Post said in a note to investors on Monday. 'Campaign focus on FAANG regulation [is] likely here to stay,' Post said. Sen. Elizabeth Warren last week unveiled a plan to break up the biggest tech companies if she is elected president. The Massachusetts Democrat is especially focused on four of Wall Street’s beloved 'FAANG' stocks: Facebook, Amazon, Apple and Google-parent Alphabet. The group also includes Netflix. 'The giant tech companies right now are eating up little, tiny businesses, start-ups - and competing unfairly,' Warren told CBS on Sunday. 'We’ve got to break these guys apart,' Warren added. 'It’s like in baseball: You can be the umpire or you can own one of the teams, but you don’t get to be the umpire and own the teams.'....'It is not capitalism to have one giant that comes in and dominates, a monopolist that dominates a market,' Warren said."

Massive Power Outages Turn Deadly in Venezuela -Wall Street Journal
"At least 15 people have died as a result of a massive electricity outage that has crippled Venezuela, as doctors struggled to assist patients, telecommunications networks were wiped out and the sale of basic goods was paralyzed amid rising political turmoil. Power returned sporadically to parts of the country after electricity first went out on Thursday afternoon. But another massive outage on Saturday plunged the capital, Caracas, back into darkness and sparked at least one looting attempt at a food market. Failure to restore power could put hundreds of patients who require medical equipment such as dialysis machines, incubators and artificial ventilation in critical condition, said doctors and health-advocacy organizations. Meanwhile, the food supply is at risk of collapsing, raising concerns of widespread hunger and looting. 'What we’re seeing is a really severe breakdown in Venezuelan society and especially the state infrastructure,' said David Smilde, a Venezuela expert at Tulane University....'The only person responsible for this catastrophe is the dictator Maduro.'....Some markets were selling food at half price before it spoils, said Maria Fernanda Sosa, a Caracas resident who said she saw people running to stock up on what they could. 'It’s like a doomsday or something,' said Ms. Sosa, who is relying on canned tuna and bread. 'These have been the most trying days I can remember.'....Thousands of Venezuelans took to the streets on Saturday to protest Mr. Maduro, who is facing the biggest challenge yet to his hold on power as more than 50 countries, including the U.S., recognize opposition leader Juan Guaidó as the legitimate president. Mr. Maduro’s authoritarian government has retained power thanks to support from military leadership."

RealMoneyBlog - Free daily/weekly email


3.8.19 - The Rise of Low-Tax Socialists

Gold last traded at $1,299 an ounce. Silver at $15.36 an ounce.

NEWS SUMMARY: Precious metal prices jumped higher Friday on safe-haven buying and a weaker dollar. U.S. stocks fell after the U.S. employment data grossly missed expectations, adding to growing concerns that the global economy is slowing down.

Gold boosted by Chinese market fears, weak jobs data -Marketwatch
"Haven gold jumped Friday, boosted by fresh signs of cracks for global stocks, led by China, and after a weak reading for U.S. hiring rattled investors across risk markets. Dow futures were knocked back some 200 points after the Friday employment report showed the weakest job creation in 17 months, with only 20,000 new names added to February payrolls. The U.S. had been adding more than 200,000 new jobs a month for the past year....Tumbling 4.4%, Chinese stocks logged their worst one-day percentage drop since October on Friday, after the nation reported a 20% drop in February exports on the heels of a 9.1% gain in January. China’s news added to concerns about global growth. Investors were still reeling from a more dovish-than-expected European Central Bank, which announced new measures to support a slowing economy on Thursday. Finally, uncertainty was lingering over a U.S.-China trade deal, a boost to precious metals."

Fed game The Fed Is Playing a Dangerous Game -Maulden Economics
"Following Fed policy has been whiplash-inducing over the last year. It was just two months ago that Jerome Powell set off a market panic by suggesting the FOMC would do what it thinks is right and let asset prices go where they may. They were promising at least two if not three more rate hikes in 2019. The stock market fell out of bed. Fast-forward to now and it seems the market won and got the 'Powell Put' it wanted. The Fed has given up its tightening dreams and might even loosen policy. It is even (gasp!) losing its fear of inflation. Nassim Taleb in his book Antifragile argues that preventing small 'crises' from happening on a regular basis eventually causes a very large crisis. It’s analogous to not allowing small forest fires to clear out undergrowth. Eventually you get one very large fire which is far more destructive. The Fed assuming a 'third mandate' to protect asset prices is similarly dangerous....Powell is now bent on pleasing investors, the exact opposite of the impression he so carefully gave last December. Why the change? My best guess is Powell simply got cold feet. He is worried about recession on his watch and wants to prevent it if he can, or at least make the Fed look less responsible for it....Right now, investors seem happy to have the Fed back on their side. I think we may regret having that wish granted."

US households see biggest decline in net worth since the financial crisis -CNBC
"Americans' net worth fell at the highest level since the financial crisis in the fourth quarter of 2018 as sliding stock market prices ate into the household balance sheet. Net worth dropped to $104.3 trillion as the year came to an end, a decrease of $3.73 trillion, according to figures released Thursday by the Federal Reserve. The fall amounted to a drop of 3.4 percent. Much of the slide came due to Wall Street's woes, as the stock market suffered a precipitous decline that started in October and briefly reached bear market status. Equities skidded as investors began to fear that the Fed would keep raising interest rates even as economic conditions began to deteriorate. By the time the market drop ended in late December, households saw $4.6 trillion worth of equity value deteriorate....Overall, financial assets totaled just over $85 trillion at the end of the year, while real estate value was $29.2 trillion."

The Rise of the Low-Tax Socialists -Reason
"Democrats, under the influence of energetic democratic socialists, have recently begun trotting out ideas for new government spending: Medicare for All, the Green New Deal, expanded Social Security benefits, and free public college are the big ticket items. Yet when it comes to taxes - the means by which government pays for things - the Democrats have been comparatively quiet....Sometimes, reporters will ask proponents of new spending how they would pay for their ideas, which is another way of saying, 'who would you tax, and by how much?' An increasingly popular answer amongst prominent Democrats is that this is no longer a question worth asking...Asked about financing the Green New Deal, Sen. Kamala Harris (D–Calif.) took issue with the premise of the question, insisting that it was better understood as an investment.'It's not about cost,' she said. One recent estimate put the price tag of the Green New Deal as high as $90 trillion. That figure is a cost. Harris and her peers just don't want to acknowledge it. And in response, they have adopted a partial form of democratic socialism that promotes all sorts of new spending, but not the broad middle class taxes that typically go along with it. These Democrats represent a peculiar, American strain of pop democratic socialism - call it low-tax socialism....The 70 percent top marginal tax rate floated by Ocasio-Cortez would apply to income earned over $10 million, affecting only about 16,000 Americans each year. In countries like Denmark, Sweden, and Finland, marginal tax rates of near 60 percent hit earners deep into the middle class. Denmark's 60 percent marginal rate applies to income over 1.2 times the national average, which in the U.S. would hit earners making just $60,000 a year - not exactly millionaires and billionaires....The low-tax socialists, or at least those running for office, have tended to sidestep this aspect of the Nordic model, focusing on new spending and new benefits, and implying that the rich - and only the rich - will pay....This a telling dodge. It assumes that Americans won't go for democratic socialism if it means that middle class taxes will have to substantially rise."

RealMoneyBlog - Free daily/weekly email


3.6.19 - How the Feds Socialized Capitalism

Gold last traded at $1,287 an ounce. Silver at $15.08 an ounce.

NEWS SUMMARY: Precious metal prices steadied Wednesday as mixed data weighed on the dollar. U.S. stocks traded lower as investors sought further indications that a China trade deal could be reached.

Atlanta Fed keeps U.S. first-quarter GDP growth view at 0.3 percent -Street Insider
"The U.S. economy is growing at a 0.3 percent annualized rate in the first quarter, based on data on domestic construction spending in December released on Monday, the Atlanta Federal Reserve's GDPNow forecast model showed. This matched the pace for first-quarter gross domestic product that the Atlanta Fed's GDP program calculated on Friday. U.S. nonresidential structures investment is likely 2.7 percent lower in the first quarter from a prior estimate of a 0.8 percent drop, while residential investment is expected to fall 11.0 percent from a projected 13.2 percent decline calculated on Friday, the regional central bank said. Earlier Monday, the Commerce Department said construction spending declined 0.6 percent after an unrevised 0.8 percent increase in November. Economists polled by Reuters had forecast construction spending rising 0.2 percent in December."

socialist How the Feds Socialized American Capitalism -Bonner/Bonner And Partners
"Mike Pence told the crowd at CPAC (Conservative Political Action Conference) that 'we will never be a socialist country.' What was that? A prediction? Or just political BS? Already, America’s medical system - 17% of the economy - is largely socialized. So is the education system - another 7.3%. And its national pension system… Social Security… is run by the feds and takes up about 5% of GDP. If you add in all the industries and activities that are required by the feds, or heavily controlled by them… the total comes to about half the GDP. How much of an economy do you have to socialize before you have a socialist country? We don’t know. And we don’t want to find out....GDP growth rates have been going down for 40 years. Smoothing them out by averaging them over a trailing 10-year period, we see the blazing-hot rates in the 1960s and 1970s… around 4% and 3.5%. But now? Over the last decade, average yearly growth rates have cooled to just 1.5%....In the 1930-1940 period, also known as The Great Depression, U.S. government debt increased from $17 billion to $43 billion, a $26 billion increase. But it produced $300 billion worth of real additional annual GDP. In the 2008-2019 period, real GDP increased by only $3 trillion at a cost of $13 trillion of extra debt. In effect, they socialized capitalism. The elite speculate. When there are losses, they are dumped onto the middle classes… as debt."

When Did Everyone Become A Socialist? -New York Magazine
"Polls said a majority of New Yorkers, including Queens residents, favored Amazon’s arrival. As did the mayor, the governor, and the editorial pages of the New York Times and the Daily News....Alexandria Ocasio-Cortez was offended not only by the tax break that greased the Amazon deal but by the company’s corporate makeup: monopolistic, anti-union, run by literally the richest man in the world. Amazon was the face of modern American capitalism, and that was disqualifying enough...Led by the 29-year-old congresswoman, the deal’s opponents cranked up a relentless online noise machine and booed the company away. Democratic socialism secured its first big victory. Until very recently, it wasn’t that socialism was toxic in a red-scare way. It was irrelevant, in a dustbin-of-history way. But then came Bernie Sanders’s 2016 candidacy, then the membership boom of DSA, then the proliferation of socialist cultural products like Chapo, and then, finally, the spectacular rise of Ocasio-Cortez....Among New York’s creative underclass - cash poor but culturally potent - it feels like everything but socialism is now irrelevant. 'I’ve noticed that there’s a kind of baseline assumption in the room that everyone is a socialist,' says Marissa Brostoff, 33, a grad student at CUNY. 'And if they’re not, it’s because they’re an anarchist.' The word socialism has become a kind of blank canvas on which young leftists project their political desires...calling yourself a socialist sounds sexier than anything else out there, without necessarily advocating anything too risky."

Gold Prices See Corrective Rebound -Kitco
"Gold prices are moderately higher in early U.S. trading Wednesday, on a short-covering and bargain-hunting rebound following recent strong selling pressure that pushed the market to a five-week low earlier this week. April gold futures were last up $4.10 an ounce at $1,288.80. May Comex silver was last up $0.055 at $15.16 an ounce. The just-released ADP national employment report for February showed a rise of 183,000, which was close to market expectations for a rise of 185,000. The markets showed little reaction to the report....The international trade deficit in goods and services widened 19% in December to $59.8 billion to the highest since 2008, the Commerce Department said Wednesday."

RealMoneyBlog - Free daily/weekly email


3.5.19 - How Fed Policy Punishes the Young

Gold last traded at $1,286 an ounce. Silver at $15.15 an ounce.

NEWS SUMMARY: Precious metal prices traded mixed Tuesday on a firmer dollar. U.S. stocks slipped as investors weighed ongoing trade negotiations between China and the U.S. along with strong earnings from Target.

Don't Believe The Hype - Expect A Worsening of US-China Relations -Zero Hedge
"If you receive your news via Donald Trump tweet, or courtesy of proclamations by Larry Kudlow, you’d be forgiven for eagerly anticipating a groundbreaking U.S.-China trade deal to be announced imminently, and thinking such a deal will save the global economy from rolling over into a serious downturn as well as pacify geopolitical tensions between the number one and number two economies in the world. However, if you expect these things, I don’t think you’re paying attention. Trump seems fanatically obsessed with the stock market, and Xi’s been dealing with an economy in a tailspin. It’s certainly possible they come up with some sort of agreement they think will restore confidence in the global economy and convince people the last few months were nothing more than a 'glitch.' It’s also important to understand this positive outcome appears to be assumed by the stock market and investors generally. Anything less might be seen as a colossal disappointment....It seems many people wish to believe the trade war is some Trump-driven wild goose chase and that once he signs a deal or is out of office things will go back to the way they were with U.S.-China relations, but this is wrong....What we’re looking at is a very serious, long-term geopolitical confrontation that will resolve itself only after much pain on all sides. Either the U.S. will consolidate its dominance as the sole superpower on earth replete with a global empire of vassal states, or China, Russia and others will succeed in ushering in a more multi-polar world and a possible bifurcation of the global economy. My money’s on the latter....At the root of China-U.S. tensions is a struggle for global power and dominance, and I don’t see either side giving in on their ambitions any time soon. Prepare accordingly."

China gold China on gold-buying spree amid global push to end US dollar dominance -RT
"Beijing has joined the global gold rush, increasing its gold reserves for two months in a row to 59.94 million ounces. China has long been silent on its holdings of gold as many countries are turning away from the greenback. China’s national gold reserves rose by 38 million ounces (nearly 12 tons) at the end of January from 59.56 million ounces at the end of December 2018, according to data released by the People’s Bank of China. The value the country’s holdings of the precious metal reached US$79.3 billion, increasing by more than $3 billion compared to the end of last year....Meanwhile, China’s foreign exchange reserves rose by $15.2 billion in January to $3.088 trillion. That is nearly $6 billion more than economists polled by Reuters expected. The surge came as the yuan hit its highest level against the US dollar in over six months, driven by hopes for progress in US-China trade talks....China is also trying 'to diversify its reserves' away from the greenback, according to Jeffrey Halley, senior market analyst at currency broker OANDA. The analyst told the South China Morning Post that the state of affairs in global politics, including a trade war with the US, are driving China’s interest to buy gold as a 'safe haven hedge.'"

The Fed's "Wealth Effect" Has Enriched the Haves at the Expense of the Young -Charles Hughs Smith Blog
"The Fed is the mortal enemy of the young generations, and thus of the nation itself. 'The wealth effect' generated by rising stock and housing prices has long been a core goal of the Federal Reserve and other central banks....As Chris Hamilton explains in his recent essay Economic Doom Loop Well Underway, 'the wealth effect' has enriched the already rich at the expense of the young who didn't get the opportunity to buy the assets the Fed has pushed to the moon at pre-bubble prices. That privilege was largely reserved for those who bought a decade or two ago, before the Fed made boosting asset prices the implicit goal of all its policies....The wealth effect has benefited the haves at the expense of the have-nots, the young who can no longer afford to buy homes or start families unless Mom and Dad provide the capital. The nation is losing an entire generation as a result of the Fed's cargo-cult like obsession with boosting the wealth of the haves. The wealth effect is the most generationally lopsided policy possible, the equivalent of a 'tax on youth.'"

Want to Leave a Legacy? Be a Mentor -New York Times/Jane Brody
"Encouraged by a grandfatherly professor at Cornell, in my sophomore year I gave a speech asking my fellow students 'when you come to the end of your days, will you be able to write your own epitaph?' I urged them to focus on establishing meaningful goals and the legacy they may want to leave when their physical lives end. By legacy, I did not mean money, structures or any other tangible object. I meant the positive impact they might have that would help to keep them alive in the memories and lives of others. Thus, when I read Marc Freedman’s new book, “How to Live Forever: The Enduring Power of Connecting the Generations,” it spoke volumes to me. It reminded me of that dear professor, George Eric Peabody, who was in effect my mentor, encouraging me to step out of my comfort zone and develop talents I never knew I had....Mr. Freedman points to a vast untapped resource of mentors in this country that could be deployed, to the mutual benefit of mentor and mentee. All it takes is getting the two together, a task made more challenging by the growing segregation of older adults in senior citizen communities devoid of children. 'Older people are uniquely suited for a mentoring role,' he said in an interview. 'The critical skills for nurturing relationships - emotional regulation and empathy - blossom as we age.' And, of course, those who are retired also have more time to devote to younger people, be they grandchildren, neighbors or strangers....Dr. George Vaillant, psychiatrist and professor at Harvard Medical School, who led the study for four decades, reported in his book 'Aging Well' that middle-aged and older people who invested in the well-being of the next generation were three times as likely to be happy as those who didn’t make such an effort. They also lived longer."

RealMoneyBlog - Free daily/weekly email


3.4.19 - Fed Trapped, Stocks Doomed

Gold last traded at $1,287 an ounce. Silver at $15.10 an ounce.

NEWS SUMMARY: Precious metal prices dipped Monday amid volatile sentiment and a firmer dollar. U.S. stocks zig-zagged lower as Wall Street digested weak U.S. economic data while trade talks with China neared the finish line.

Socialism’s millennial fans don’t even know what it is -New York Post
"Anyone who isn’t a socialist at 20 has no heart, but anyone who isn’t a conservative by 40 has no brain: That old epigram is certainly playing out in today’s Democratic Party. Millennials - ignorant of socialism’s appalling economic and human-rights history - increasingly embrace socialism and its naively unrealistic prescriptions for ending all human want. Yet so are a growing number of veteran Democratic pols who should know better, but are clearly terrified by the growing star power of the likes of Bernie Sanders and Alexandria Ocasio-Cortez. Gallup reports that 57 percent of Democrats have a positive view of socialism. But do they even have any idea what they’re talking about? The same poll shows respondents supporting small business and free enterprise and rejecting the idea that government is doing too little....True socialism is reflected in Venezuela, Cuba and the Soviet Union. All are or were economic disasters and brutally repressive states....Young people might be forgiven for their ignorance. Their elders should be leading - not meekly parroting them in fear."

So, The Fed Doesn't Target The Market, Eh? -Zero Hedge
"There is a specific reason why 'financial types' have a preoccupation with the Federal Reserve's balance sheet. The preoccupation came to light in 2010 when Ben Bernanke added the 'third mandate' to the Fed - the creation of the 'wealth effect.' '...Higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.' -Ben Bernanke, Washington Post Op-Ed, November, 2010....So, not surprisingly, when the economy begins to show signs of deterioration, the Fed acts to offset that weakness. This is why the slowdown in global growth became an important factor behind the central bank’s decision to put plans for interest rate increases on hold....The problem for the Fed is they have now become 'liquidity trapped.' What is that? Here is the definition: 'A liquidity trap is a situation described in Keynesian economics in which injections of cash into the private banking system by a central bank fail to lower interest rates and hence fail to stimulate economic growth.'....If a recession were to occur, the Fed's main lever for stimulating economic activity, interest rate reductions, will have little value. Given the amount of debt outstanding and the onerous burden of servicing it....For the Federal Reserve, they are now caught in the same 'liquidity trap' that has been the history of Japan for the last three decades."

chart

"....The biggest risk to investors currently is the magnitude of the next retracement. As shown in the chart the range of potential reversions runs from 36% to more than 54%. It’s happened twice before in the last 20 years and with less debt, less leverage, and better-funded pension plans."

The Fed Faces a New World -Barrons
"Central bankers have no popular mandate. They are not elected and are only indirectly accountable to the public. Yet they are granted the 'independence' to take unpopular decisions, at least up to a point....As Philipp Carlsson-Szlezak and Paul Swartz of Bernstein Research put it in a recent note, 'Central banks cannot escape their political underpinnings.' In the years after the financial crisis, the political environment probably constrained the Federal Reserve’s ability to boost the U.S. economy. Things may now be shifting in the other direction....It wasn't long ago that prominent politicians criticized Ben Bernanke for 'printing money' and Janet Yellen for keeping interest rates too low....The changing political environment could cause a shift in Powell’s stated priorities. He has repeatedly claimed that wage growth should equal inflation plus productivity growth, but not exceed it. That, however, is a recipe for keeping the labor share of income constant. It would not reverse the decline since 2000. The only way to raise workers’ pay relative to the value of what they produce is for wages to grow by more than inflation plus productivity."

Adding to Social Insecurity -Wall Street Journal
"House Democrats propose to increase the entitlement burden. Memo to young workers: The Democrats you recently elected want to raise Social Security benefits for retirees while taxing you more to pay for it...Among the many tax increases Democrats are now pushing is the Social Security 2100 Act sponsored by John Larson of House Ways and Means. The plan would raise average benefits by 2% and ties cost-of-living raises to a highly generous and experimental measure of inflation for the elderly known as CPI-E. The payroll tax rate for Social Security would rise steadily over two decades to 14.8% from 12.4% for all workers, and Democrats would also apply the tax to income above $400,000. The political pitch is that this would make Social Security more financially secure, but it would do the opposite. Social Security financing is increasingly stretched as fewer workers are available to support each baby boomer retiree. Social Security’s trustees reported in 2018 that filling the looming financing gap would require an 'immediate and permanent' payroll tax increase to 15.18%, a 17% benefit cut, or some mix of both....This is before the new benefits that Democrats want to add....As lifespans increase, the U.S. needs more working seniors contributing to the economy...Higher marginal tax rates on Social Security benefits and income also discourage healthy seniors from working....Millennials may want to consider that they could pay more than half of everything they earn to the government for most of their working lives."

RealMoneyBlog - Free daily/weekly email


3.1.19 - Think Socialism is The Future?

Gold last traded at $1,299 an ounce. Silver at $15.27 an ounce.

NEWS SUMMARY: Precious metal prices retreated Friday on speculative profit-taking and a firmer dollar. U.S. stocks traded up slightly following downbeat consumer sentiment and data showing U.S. manufacturing fell to the slowest pace since November 2016.

Why gold is down for the month, but still on track to reach $2,000/oz. -Marketwatch
"Gold notched a multimonth peak just over a week ago on the back of uncertainty linked to Brexit, the U.S.-China trade dispute, and global economic growth. But prices on Thursday suffered a loss for the month on the heels of four monthly gains - the longest upward streak since 2016. 'Prices have run up to the top end of the trading range they have held for the past five years,' says Rob Haworth, senior investment strategist at U.S. Bank Wealth Management, pegging the 'top end' at $1,350 to $1,400....'Central bank choices about composition of their reserves send important signals to financial markets about relative safety of currency alternatives,' says Trey Reik from Sprott, which manages the Sprott Physical Gold Trust. 'Whenever gold allocations are on the rise, central bank authority is augmenting the [money-like qualities] of gold.'....'Central bank buying is quite bullish as they are massive institutional players…and even a small allocation to gold can be quite significant in terms of additional physical demand,' says Mark O’Byrne, research director at precious metal brokerage GoldCore....'A $22 trillion national debt and the lack of any will to rein in massive spending is making America’s creditors nervous and…the risk free status of U.S. Treasuries will come into question.' That may lead to higher demand for haven gold. 'Given the scale of the risks,' O’Byrne believes gold is 'more than likely' to climb to a record high of $2,000 within the next 24 months."

capitalism Think socialism is the future? -Forbes/Fox News
"Is America experiencing a socialist moment? Given the current political environment, you’d be forgiven for thinking so. The Green New Deal - a comic book collection of absurdist ideas to combat global warming - would devastate the economy with unprecedented government controls. Yet it has been endorsed by numerous Democrat presidential candidates. So, has the idea of a total government takeover of health care; Democrats sugarcoat (oops, sugar is a no-no, so let’s use the word disguise) this form of socialism by dubbing it Medicare for All, even though this program currently offers a robust private insurance option....And hardly a day goes by without new schemes for higher taxes such as a 70 percent income tax rate and a wealth tax. This hostility to capitalism was on display in New York City where local politicians led by avowed socialist Rep. Alexandra Ocasio-Cortez, D-N.Y., gleefully led the charge to scuttle a deal with Amazon that would have brought in 25,000 new jobs where the average pay would have been an eye-popping $150,000....Most ominous, and hardly given much attention, was how all these socialist programs would be paid for in addition to growth-killing new taxes: Ocasio-Cortez let the cat out of the bag when she casually tossed out the idea of simply printing more money. In a documentary I helped produce, 'In Money We Trust?' now being shown on public television, we underscore the truth of Lenin’s observation that the best way to undermine the existing social order was to debauch the currency....The disturbing trends seem to confirm the declaration of a Washington Post columnist: 'It’s time to give socialism a try' as if we should ignore the ugly experiences of the Soviet Union, Maoist China, Cuba, North Korea and Venezuela. Fortunately, as these socialist nostrums are being put forth, Americans are waking up to their true nature: a horrific loss of liberty and the opportunity to get ahead and a precipitous decline in our standard of living."

Michael Cohen Makes History -Noonan/Wall Street Journal
"Michael Cohen is, famously, a lowlife and screwball who’s made his living as an enforcer, liar and thug. He is going to prison essentially for these things. He has taken to implying his turning on Donald Trump is linked to an inner moral conversion, which may be true but is conveniently timed: He has nothing to lose and some form of leniency to gain. But I found his testimony before the House Oversight and Reform Committee credible overall, and I suspect most everyone in America did, because no one, friend of the president or foe, love him or hate him, thinks Mr. Trump has a high personal character or an especially admirable back story. And that was Mr. Cohen’s subject. Democrats say the purpose of the hearing was to get at the truth, Republicans say it was to disrupt the Trump presidency, and both are correct....What is amazing though is that such a rebuke - such an attack on the essential nature of a president, and by an intimate - has no equal in our history....Were the hearings step one in an ultimate impeachment attempt? We’ll see. The 7½ hours came across like the artillery bombardment before the charge. Older Democrats will counsel that the way forward is to spend the next year weakening the president - 2020 is coming, a move to impeach will cause grave national trouble. Will they prevail?....Mr. Cummings, in his 23rd year in the House...put a fair-minded face on the hearing. His closing remarks were powerful and humane, and seemed targeted not only at Mr. Cohen but perhaps at the newer members of Congress. We are here to improve our democracy, he said...He hoped all of us can get 'the democracy we want,' and pass it on to our children, 'so they can do better than we did.' Amen."

US Real Spending Crashes In December As Savings Rate Soars -Zero Hedge
"Following government shutdown delays, data for Dec and Jan spending and income has just been released and its a bloodbath. Confirming the collapse in retail sales that was called an outlier, December personal income fell 0.1% MoM (against expectations of a 0.3% rise) - the worst drop since Jan 2013; while personal spending plunged 0.5% MoM in January - the worst drop since Sept 2009! What was bizarre is that as published by the BEA, the data revealed income data for January, but all the spending data for January was missing, as only December data was included. On a YoY basis, spending grew 4.0% in December - the weakest since Aug 2017; and in January incomes grew 4.3% YoY - back to the flattest in two years. Finally, the reason why the economy collapsed in December is that as a result of the plunge in the market and the government shutdown, US consumers stopped spending and the savings rate soared by the biggest monthly increase in 5 years, and the second biggest since the financial crisis."

RealMoneyBlog - Free daily/weekly email


Previous Months

2019

February
January

2018

December
November
October
September
August
July
June
May
April
March
February
January

2017

December
November
October
September
August
July
June
May
April
March
February
January

2016

December
October
September
August
July
June
May
April
March
February
January

2015

December
November
October
September
August
July
June
May
April
March
February
January

2014

December
November
October
September
August
July
June
May
April
March
February
January

2013

December
November
October

Follow Us

Share Page

Weekly Charts

Current Spot Prices

Gold$1275.40
Silver$14.96
Platinum$903.00

Special Offers

 
  • About Swiss America
  • The moment you contact Swiss America, our team of trained professionals stand ready to serve you…
 
© 2019 Swiss America Trading Corp. All Rights Reserved.   |   Privacy Policy   |   Site Map   |   Contact Us   |   Mobile Version
SWISS AMERICA and Block Logo are registered trademarks of Swiss America Trading Corp.