Swiss America Blog Archive


2.9.18 - Market's Bumpy Ride Is Just Beginning

Gold last traded at $1,315 an ounce. Silver at $16.18 an ounce.

NEWS SUMMARY: Precious metal prices ended the week modestly lower amid epic market volatility. U.S. stocks had their worst week in a two years; with major indexes plunging 10% then recovering to end the week down over 6%.

Why gold could soon get a boost from the wild market volatility -CNBC
"Some market watchers are bullish on the yellow metal despite its decline. Bill Baruch, president at Blue Line Futures, told CNBC's 'Trading Nation' on Thursday he has a positive outlook at current levels. He calls it a buying opportunity should gold fall further. Here are his reasons why. * At its 2018 high, gold was up nearly 10 percent from its December lows; it's now up a little over 6 percent from its December lows around $1,241 per ounce. * Gold's 100-day moving average, at $1,294 as of Thursday evening, represents about 2 percent below where gold was trading on Thursday. At this level, around $1,300, would be a solid buying opportunity and technical support. * The dollar has room to fall here, and any significant decline would be a key catalyst in gold breaking higher in the next three to six months. Bottom line: Commodity trader Bill Baruch is bullish on gold at these levels despite the recent weakness and sees a buying opportunity around the $1,300 level."

inflation The Age of Inflation Is About to Begin -Bonner/Bonner And Partners
"The New York Times has noticed the world-as-we-have-known-it is coming to an end. 'World braces as an era of easy money draws to an end,' is the front-page headline this morning. The world-as-we-have-known-it was created by the trio - Greenspan, Bernanke, and Yellen. Over the last 30 years, they aided and abetted the adding of trillions in new chips- fake money, borrowed at fake rates - to the nation's gambling stock....But the defining feature of the Easy Money Era was fraud. The money was counterfeit. Interest rates were phony. As a result, asset prices were falsified....There is no chance- none - that the Fed will follow through on its 'normalization' of interest rates. Instead, when the stock market crashes... and the economy goes into recession… the Fed will quickly turn back to the tried-and-true panacea: the old miracle elixir, that snake oil known as EZ money. But... there's a catch. In the coming crisis, monetary policy alone will not be enough; the Fed doesn't have enough room to cut interest rates...the critical fraud is shifting from monetary policy to fiscal policy (government deficit spending). Yes, the Age of Inflation is coming. Fiscal stimulus. Big spending by both parties."

Senate Budget Deal Is Bipartisanship At Its Worst -Investors
"Big Government: Nothing brings together the two political parties in Washington like a bill that lets them spend more taxpayer money. Just look at the back slapping going on after the Senate agreed to a budget-busting bill....Mainly what this bill does is blow up the 2011 spending caps - imposed by Republicans in Congress in exchange for lifting the debt ceiling - that have served as an effective check on lawmakers' unquenchable desire to spend more money, a desire equally shared on both sides of the aisle....Not only does the bill open the spending floodgates, it suspends the debt ceiling for a year, without getting any sort of spending restraint in exchange. It's also 'riddled' with corporate welfare goodies, according to one analysis.In other words, it violates just about every principle 'fiscally responsible' Republicans claim to hold dear....This unfortunate turn of events reminds us of a quip from conservative author and journalist M. Stanton Evans, who once observed that: 'We have two parties here, and only two. One is the evil party, and the other is the stupid party. Occasionally, the two parties get together to do something that's both evil and stupid. That's called bipartisanship.'"

The Stock Market's Bumpy Ride Is Just Beginning -Fortune
'The 'new normal' is beginning to look a lot like the old normal....It took just a minor uptick in wage growth data to trigger these financial shockwaves: average hourly earnings rose to 2.9% year-over-year in January from December’s 2.7%. Financial markets are beginning to lose faith in the reassuring narrative of the last several years. In the aftermath of the global financial crisis, the Fed and other major central banks injected enormous amounts of liquidity into financial markets....Parts of the corporate sector will come under stress if funding costs rise faster than expected, bringing additional volatility. Expect greater volatility in FX markets as well....Reversing 10 years of massive quantitative easing and zero/negative interest rates is an unprecedented experiment. It would be folly to assume they can pull it off smoothly, without shocks or accidents....The new normal will look a lot like the old normal. But getting there will be a bumpy ride."

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2.8.18 - Gold's Bull Market Enters Phase Two

Gold last traded at $1,319 an ounce. Silver at $16.34 an ounce.

NEWS SUMMARY: Precious metal prices steadied Thursday on bargain-hunting and a flat dollar. U.S. stocks fell sharply as rising interest rates and volatility kept investors on edge.

Gold's Bull Market Enters Phase 2 -Turk/King World News
"Every bull market for each type of financial instrument has three phases: 1) Accumulation of an undervalued asset by so-called 'smart money' that recognizes the undervaluation, 2) Growing public participation as the uptrend gains increasing attention, and 3) Inevitable speculation that leads to overvaluation of an asset and eventual resumption of a new downtrend. Gold is now in the early stages of phase 2. The gold price has been in a rising uptrend from its low of $1,050 in December 2015. This climb has occurred within a multi-year base during which gold has been accumulated because it was and still is undervalued. With gold's breakout this year above $1,300, its 2-year base should now be viewed as a launching pad that will take gold much higher in the months and years ahead as phase 2 inevitably morphs into phase 3. How much higher depends on what central banks do.Right now central banks want more inflation, and they are getting it. In 2017 crude oil - the price of which is a reliable forecast of rising inflation - rose by 12.5%. This year it has already risen 6.4%....If central banks continue their policies that debase national currencies, then expect a much higher gold price. But again, how much higher depends on how badly every central bank eats away at the purchasing power of each national currency. It also depends on one other basic element. What is gold's fair value? I use mathematical models based on historical results to calculate gold's value. These models are explained in my latest book, 'The Money Bubble: What To Do Before It Pops.' Using these models we can calculate that gold's fair value presently is about $11,000 per ounce."

stock market Is the Stock Market Loaded for Bear? -Project Syndicate
"As 2018 progresses, business leaders and market participants should - and undoubtedly will - bear in mind that we are moving ever closer to the date when payment for today's recovery will fall due. The capital market gyrations of recent days suggest that awareness of the inevitable reckoning is already beginning to dawn. Market participants could easily be forgiven for their early-year euphoria. After a solid 2017, key macroeconomic data - on unemployment, inflation, and consumer and business sentiment - as well as GDP forecasts all indicated that strong growth would continue in 2018. The result - in the United States and across most major economies - has been a rare moment of optimism in the context of the last decade....Meanwhile the market is mispricing perennial structural challenges, in particular mounting and unsustainable global debt and a dim fiscal outlook, particularly in the US, where the price of this recovery is a growing deficit. In other words, short-term economic gain is being supported by policies that threaten to sink the economy in the longer term. The Congressional Budget Office, for example, has forecast that the US deficit is on course to triple over the next 30 years, from 2.9% of GDP in 2017 to 9.8% in 2047, 'The prospect of such large and growing debt,' the CBO cautioned, 'poses substantial risks for the nation and presents policymakers with significant challenges.'"

Bitcoin is 'The Biggest Speculative Mania in History' -Hedgeye Video
"In this special webinar, hedge fund manager and MacroVoices podcast host Erik Townsend joins Hedgeye CEO Keith McCullough for an in-depth discussion of Bitcoin, cryptocurrencies and why blockchain is 'one of the most-important breakthroughs of all time.' According to Mr. Townsend's Blockchain Debunked Research Report, "The design of Bitcoin's Blockchain DLP is seriously flawed, not scalable, and generally only worthwhile as a proof-of-concept prototype or until something better comes along....I believe that first-generation cryptocurrencies including Bitcoin will likely be outlawed and lose most if not all of their value. Finally, I'll describe why government-backed digital currencies based on the same underlying technologies will likely dominate the financial landscape in the future.'"

A Progressive Experiment That's Doomed to Fail -Greenhut/American Spectator
"Most conservatives are familiar with the goings-on in San Francisco, where stringent rent-control laws have led to the least affordable rents and most unaffordable home prices. Parts of the 'City by the Bay' resemble an open-air cesspool, given the homeless problem caused by myriad public policies. It's magnificently beautiful, though, so the city remains a magnet despite its officials' best efforts to destroy it. But what happens to a city that has few natural advantages, a less-desirable climate and nothing in particular to draw people to it? Apparently, Stockton - an historic San Joaquin Valley agricultural and port city 80 miles east of San Jose - is trying to cram every conceivable bad experiment into its 64.75 square miles. The latest idea is to offer a 'universal basic income' to a few dozen residents to see what happens when you give people money for nothing....This is one of those cases where the concept makes a certain amount of sense in the philosophical realm, while being borderline crazy in the real world....Leave it to Californians to go down this road, when a simpler path is so much better. Note that our state has the highest poverty rate in the nation, according to the Census Bureau's cost-of-living adjusted model....Our current public policies have destroyed middle-class and manufacturing jobs through excessive regulation and high taxes. They've destroyed many low-income jobs by raising minimum wages and passing union-backed work rules....Stockton is like many other California cities, only worse. It’s trying to show us what not to do. As a Stockton property owner and someone who really likes the city, I'm saddened by this kind of misbegotten experimentation."

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2.7.18 - Why Are Stocks Wobbly?

Gold last traded at $1,314 an ounce. Silver at $16.23 an ounce.

NEWS SUMMARY: Precious metal prices eased slightly Wednesday on a firmer dollar. U.S. stocks whipsawed lower then higher as the wild ride on Wall Street continues.

Gold Wins, Bitcoin Loses -Bloomberg
"Bitcoin was never really going to cut it as a true currency. Its astronomical volatility - which is a problem if you want certainty about the value of your transactions or wealth - means that the likes of the Uzbekistani soum or the Ethiopian birr stand a better chance of supplanting the greenback. Still, Bitcoin's disconnection from anything happening in the real world ought in theory to be its greatest virtue. The potential to provide negative beta - to move in the opposite direction of other assets in a portfolio, and thus take the edge off any swings and dips - has long been the best argument for investing in gold, Bitcoin's shiny physical avatar. While the S&P 500 Index fell 7.8 percent from its peak on Jan. 26 to its trough Monday, gold's drop was a modest 0.7 percent, only bettered among major assets by the 0.4 percent fall in U.S. 10-year Treasuries. Bitcoin crashed 35 percent, making it look more like a short-volatility ETF than a worthwhile hedge against market turmoil....A genuine crisis in financial markets is precisely the event to sort the sheep from the goats in terms of whether gold or Bitcoin is a better haven asset. After the past week's test, it's a metal that's proved its mettle."

stocks Why Stocks Are Wobbly -Steve Forbes/Forbes
"Why have stocks been tumbling for the past week? Three reasons. 1) The dollar. Markets are finally waking up to the implications of the weak dollar, which has been declining for months. The greenback’s slide has been nowhere as bad as it was in the early 2000s, but the trend isn’t good. Treasury secretary Steven Mnuchin let the cat out of the bag a few days ago when he called for a dollar devaluation. As he soon learned, this is a no-no. You aren't supposed to be so open and blunt....An unstable and weak dollar does to marketplace prices what a virus does to a computer: It corrupts information....2) Overhanging trade cloud. Our economy and those of most countries today are intricately tied to one another other in an incomprehensibly complicated array of supply chains and financial links. To seriously disrupt or blow up this incredibly varied and complex ecosystem would do immense damage to all of us....We want new deals and updates of previous deals, and we want action to be taken against trade abuses, such as China’s pilfering of companies' trade secrets. But we don't want to blow up NAFTA or descend into a 1930s-style protectionist conflagration....3) The economy. The fear is that the Federal Reserve may try to slow the economy before it 'overheats.' The Fed still labors under the illusion that prosperity causes inflation. The only cause of inflation is the Fed and the Treasury department undermining the value of the dollar....In a free-market economy there will always be disruptions - new things upending incumbents, overinvestment in some hot area that leads to a shakeout...The President should publicly admonish our central bank to leave the economy alone."

Governments Hate Bitcoin and Cash for the Same Reason: They Protect People's Privacy -Reason
"Officials want to track every financial transaction you make, and they see cryptocurrencies and cash alike as barriers to achieving that goal. Publicly fretting about Bitcoin and other cryptocurrencies, last month, Treasury Secretary Steve Mnuchin assured an audience at the Economic Club of Washington that 'one of the things we will be working very closely with the G-20 on is making sure that this doesn't become the Swiss numbered bank accounts.' He specifically cited the difficulty cryptocurrencies pose to tracking transactions as a major concern. Soon afterward, India's finance minister, Arun Jaitley, sounded an even stronger note, saying, 'The government does not consider crypto-currencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system.' Why are government officials sounding such similar notes of hostility to increasingly popular non-state cryptocurrencies?....'The rich have many ways of hiding assets and making them safe from states and from the taxman,' author John Lanchester wrote in a New York Times Magazine column about the push to abolish cash. 'Cash is one of the few ways in which ordinary citizens can enjoy a tiny taste of the freedom, privacy and security that the rich take as their due.'"

Get Ready for Most Cryptocurrencies to Hit Zero -Bloomberg
"The tumble in cryptocurrencies that erased nearly $500 billion of market value over the past month could get a lot worse, according to Goldman Sachs Group Inc.'s global head of investment research. Most digital currencies are unlikely to survive in their current form, and investors should prepare for coins to lose all their value as they're replaced by a small set of future competitors, Goldman's Steve Strongin said. 'The high correlation between the different cryptocurrencies worries me,' Strongin said. 'Because of the lack of intrinsic value, the currencies that don't survive will most likely trade to zero.' Today’s digital coins lack long-term staying power because of slow transaction times, security challenges and high maintenance costs, according to Strongin....Strongin was more upbeat about the blockchain technology that underlies digital currencies, saying it could help improve financial ledgers."

The Progressive Future: Money For Nothing -Pontification Blog
"In 2012 the City of Stockton in California's Central Valley declared bankruptcy. Now, six years later, it is about to become the first American city to experiment with 'universal basic income,' simply giving people money for nothing, no questions asked. This is the next great liberal utopian scheme: give everybody a guaranteed income from the government whether they need it or not, as Craig R. Smith and I document in our book Money, Morality & The Machine. While President Donald Trump is trying to make jobs easier to get, the Left aims to make working unnecessary. When families become hooked on free lifelong income of, say, $1,300 every month, Progressives believe a majority will vote for Democrats forever to keep the free cash coming. Stockton, of course, does not have the nearly $2 Billion needed to pay each of its 320,000 residents even $500 a month for 18 months. Its ambitious young Mayor Michael Tubbs, 27, a Democrat and former intern in President Barack Obama's White House, has been offered a $1.2 Million private grant to fund such an income for at most 133 families, who will be studied to see how it changes them....Will giving people what they used to have to earn destroy their work ethic? Will people use it to buy food and opportunity, or booze and California’s recently legalized recreational marijuana? Will beneficiaries become more free, or freeloaders? Full story

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2.6.18 - U.S. Banks Shut 1,700 Branches in One Year

Gold last traded at $1,337 an ounce. Silver at $16.68 an ounce.

NEWS SUMMARY: Precious metal prices stabilized Tuesday on profit-taking and a firmer dollar. U.S. stocks gyrated as investors digested yesterday's wild price swings and rising market volatility.

Gold Steadies Near 6-Month High as Other Markets Flash Red -Bloomberg
"As the equities selloff spread from Asia to Europe, gold proved its status as a safe haven...But across other risk markets, screens flashed red as everything from bitcoin to Japanese stocks headed lower. 'The recent rout in equity markets should be supportive of gold, although not immediately,' John Sharma, an economist at National Australia Bank Ltd., said by email. 'The muted reaction stems from the recent strong jobs numbers, which indicate increased confidence about the economy.' Much will depend on whether the rout continues and the outlook for inflation, traders said. 'Gold may for the first time in maybe ten years be acting like an inflation trade,' Darius Tabatabai, portfolio manager at London-based Arion Investment Management Ltd. 'People are starting to worry about inflation a bit, and that could be good for gold.'"

correction Dow trades in wild 934-point range -CNBC
"U.S. stocks traded in a wide range Tuesday as the major indexes tried to recover from a recent steep sell-off. The Dow Jones industrial average traded 61 points lower after rising as much as 367 points. The index also fell as much as 567 points at its session low....On Monday, the Dow dropped 1,175.21 points, having briefly declined more than 1,500 points during the session. Other major indexes closed sharply lower. The sell-off kicked into action on Friday, after the latest nonfarm payrolls report saw interest rates in the U.S. jump....'Widespread and excessive optimism left stocks vulnerable to increased volatility as bond yields have moved off their lows,' said Bruce Bittles, chief investment strategist at Baird. 'While there is some early evidence that selling pressures are becoming exhausted, and stocks could soon see relief, the broad market is seeing meaningful deterioration.'....The Cboe Volatility index - widely considered the best fear gauge on Wall Street - broke above 50 before sliding down to 25.17. It closed at 37.32 on Monday. The surge in volatility also triggered massive selling in other volatility instruments."

Roboadvisor Websites Crash, Lock Out Traders From Their Accounts -Zero Hedge
"As the Dow plunged 1,600 points during intraday trading Monday, millions of investors rushed to check on their portfolios to survey the damage from one of the worst selloffs since the financial crisis. But customers of roboadviser firms Betterment and WealthFront were furious to find that both companies' servers crashed during today's stock-market route, locking thousands of customers out of their portfolios. As Bankinnovation pointed out, Betterment and other roboadvisers automate most of their functions, which is why they're so much cheaper than hiring a traditional, human financial advisers. But the downside to this is that these services, which have soared in popularity over the past five years, don't have much experience with market routes like what happened today."

Banks Shutter 1,700 Branches in Fastest Decline on Record -Wall Street Journal
"Banks are closing branches at the fastest pace in decades, as they leave less profitable regions and fewer customers use tellers for routine transactions. The number of branches in the U.S. shrank by more than 1,700 in the 12 months ended in June 2017, the biggest decline on record. Branch numbers fell again in the second half of 2017, according to related data submitted to bank regulators and reviewed by the Journal. That would add to the thousands of locations closed following the financial crisis, and is the longest stretch of closures since the Great Depression....Banks say they carefully consider which branches to close, examining deposit levels at each branch and commute time to the nearest location. 'We continue to evolve and optimize our branch network to ensure that we're operating as efficiently and effectively as possible,' a Capital One spokeswoman said. For decades, banks needed to add new locations to grow, pushing the number of U.S. branches to a peak in 2009. But in the aftermath of the financial crisis, some started closing branches to save money - and then kept closing them to contend with low interest rates and higher regulatory costs."

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2.5.18 - How to Thrive in Any Market

Gold last traded at $1,337 an ounce. Silver at $16.68 an ounce.

NEWS SUMMARY: Precious metal prices rose Monday on safe haven buying despite a firmer dollar. U.S. stocks resumed their sell-off, pressured by the fast rise in interest rates last week.

How to Thrive in Any Market -Denning, Mayer/Bonner And Partners
"Editor's Note: As Bill often reminds readers, nobody knows precisely what the future holds. That's why a diversified portfolio is essential for any investor. Today, Bill Bonner Letter coauthor Dan Denning and Bonner Private Portfolio editor Chris Mayer discuss how investors can thrive no matter what the market does. Dan Denning (DD): In the July 2017 issue of The Bill Bonner Letter, Bill and I published an asset allocation strategy for readers. The idea of negative correlation is, I think, key to a traditional asset allocation strategy (60:40 stocks and bonds). But given central bank intervention has caused nearly all assets to go up (distorting values), does asset allocation make any sense anymore? Chris Mayer (CM): Interesting question. I like having an asset allocation because I think psychologically, it helps you get through rough patches. And I think re-balancing is the key. It forces you to buy more of things when they haven't done well, which is usually when they're cheaper. And vice versa. I don't think it's an exact science. I think it's more a personal decision, based on what your goals are. DD: What do you think of the strategy we recommended in The Bill Bonner Letter last July? To refresh: 25% in cash, 19% in bonds, 25% in stocks, 30% in tangible assets/real estate/precious metals, and 1% in cryptos. Initial thoughts? CM: I like it. I’m not a fan of cryptos - too speculative for me. I don't own any and I just don't have any interest in them. I'm happy people have made money owning them, but they're not for me. I like what Bill has written about before: one-third in gold, one-third in cash, and one-third in carefully selected stocks. It's simple."

crash Investors, it's time to buckle up -CBS News
"You know it's a bad day on Wall Street when the talk isn't about tech sector earnings, impressive GDP growth estimates or solid job market progress that's finally pushing up wages. Instead, it's all about the biblical warning of the 'Mark of the Beast,' given the Dow Jones industrials ominous loss of 666 points on Friday - the worst point decline since Lehman Brothers collapsed in October 2008....In the context of the perfection that has been the post-election uptrend - with stocks enjoying a historic, no volatility rally - the selloff was jarring. And its cause, an accelerating surge in long-term interest rates, is a big deal. The 10-year Treasury yield has pushed up to 2.8 percent from 2.4 percent at the end of 2017....The selling was catastrophic with no midday rebound, no dip buyers and no silver lining heading into the weekend. Decliners outpaced advancers by 9 to 1, and all 11 major S&P sector groups closed in the red. The dramatics continued after the close as Yellen, on her way out the door, slapped Wells Fargo (WFC) with regulatory action over it governance....The good news: Stocks are oversold in the short-term and due for a relief rebound. The bad news: The resulting bounce could be one of the last exit opportunities ahead of what's likely to be deeper declines as the cost of credit continues to rise....Buckle up."

Bitcoin Bloodbath Builds - Now Among Biggest Crashes Ever -Zero Hedge
"Bitcoin's collapse has continued through the morning to a low price of $7141. Meaning it is down over 63% from its record highs - one of the biggest drops in history. And if the VIX-BTC correlation has anything to say - there is more to come. After surging to $20,000 less than three weeks ago, Bitcoin tumbled below $8,000 again overnight following a report from Chinese media that China will block all websites related to cryptocurrency trading and initial coin offerings (ICOs) – including foreign platforms – in a bid to finally quash the market completely, according to Sina....Meanwhile, reports are rolling in that crypto-related content are being actively blocked by Chinese search engines....NYU economist Nouriel 'Dr. Doom' Roubini, after taking a very, very long sabbatical from the media scene - told Bloomberg TV that Bitcoin is 'the biggest bubble in human history' and that this 'mother of all bubbles' is finally crashing."

New Fed chairman Powell has his hands full -CNBC
"Jerome Powell, who was sworn in Monday, is the 16th person to hold the position of Federal Reserve Chairman. He faces an immediate set of challenges: a wobbly stock market, rising interest rates and the fallout from one of his predecessor's final acts - the removal of four Wells Fargo board members. Powell, 65, took the oath of office at 9 a.m. ET, succeeding Janet Yellen, who left the position Friday after serving a four-year term. President Donald Trump chose not to reappoint Yellen and instead turned to Powell, a former Fed governor expected mostly to continue to current Fed path. 'I am humbled and honored by this opportunity to serve the American people,' Powell said in a statement....'As I begin my term, I want to stress my commitment to explaining what we're doing and why we are doing it,' Powell said....Markets widely expect the Fed to hike interest rates three times this year, with the first coming at the March meeting."

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2.2.18 - Inflation Fears Hit Stocks Worldwide

Gold last traded at $1,337 an ounce. Silver at $16.70 an ounce.

NEWS SUMMARY: Precious metal prices fell Friday on short-term profit-taking and a strong dollar amid growing inflation fears. U.S. stocks fell sharply after upbeat jobs data caused bond yields to spike higher.

Treasury Rout Sinks Stocks as Rate Angst Deepens -Bloomberg
"The selloff in U.S. assets picked up steam as strong jobs data increased the likelihood the Federal Reserve will lift rates next month. Equities headed for the worst week in two years and Treasuries tumbled to a four-year low....U.S. hiring picked up in January and wages rose at the fastest annual pace since the recession ended, as the economy's steady move toward full employment extended into 2018. Equities are being tested by the surge in bond yields, with some fund managers saying 3 percent U.S. 10-year rates would signal a bond bear market. The level is seen by many stock-watchers as a potential trigger for a correction in equities. In Europe, a bond selloff deepened across the continent, and equities dropped for a fifth straight day, the longest streak since November....'People are finally starting to reprice reflation, it’s about time,' Jeanne Asseraf-Bitton, head of global cross-asset research at Lyxor Asset Management, said by phone."

Smart money is presently taking some of their profit off the financial table and tucking it into safer havens. Our 2018 issue of Real Money Perspectives, The Future of Money, explains the wisdom of owning the world's most stable form of money - physical gold and silver.

money A Weak Dollar Is an America-Last Policy -Constable/PJ Media
"A weak dollar is not an America-first dollar. It is an America-last strategy....'For all intents and purposes, the ‘unofficial’ weak dollar policy became ‘official’,' states a recent Academy Securities report. 'Trump's view on trade is simple. We want to export more. A weak dollar means more exports. Therefore, weaken the dollar.'....Since late 2016 the dollar index has lost more than 12 percent, according to data from the St. Louis Federal Reserve....If weakening the currency was the way to increase prosperity, then every country would try to do the same at each other's expense. It would quickly become a race to the bottom that in the end would leave no country better off than at the start. The policy of competitive devaluation once got dubbed 'beggar-thy-neighbor' because it only works at the expense of a country's trade partners....The goal of trade is not to shaft the other party but rather it is for both sides to benefit from the transactions....By definition, a decline in the value of the dollar is inflation, as John Tamny, director of FreedomWorks' Center for Economic Freedom, has mentioned to me more than once....The longer-term effect of less capital would be lower growth, fewer jobs, and higher inflation."

Bitcoin Bust: Loses Half Its Value in Six Weeks -Wall Street Journal
"Bitcoin plunged below $8,000 on Friday, extending its sharp rout since the start of the year in a selloff triggered by a widening regulatory crackdown on cryptocurrencies. In morning trading in New York, bitcoin had recovered to about $8,900, down 3% on the day after slipping below $7,700 shortly before 8 a.m. That was the lowest level since November. At its low point, the digital currency had fallen about 60% from a record high of $19,783 in December, according to research site CoinDesk Inc....Bitcoin's sharp swings illustrate just how much the digital currency remains a highly illiquid and volatile investment, particularly relative to stock, bond or currency markets....The current mood is a far cry from the end of last year, when cryptocurrency investment mania hit feverish levels....Even Facebook Inc. is cracking down. The social media giant said this week that it would stop running ads promoting cryptocurrencies and ICOs. 'I don’t think this is the end of the line for cryptos, but I'm certainly not touching any until more stability can be reached,' said Alex Beene, a 30-year-old from Nashville."

The Left's Rage and Trump's Peril -Noonan/Wall Street Journal
"The State of the Union speech was good - spirited, pointed, with a credible warmth for the heroes in the balcony, who were well chosen....The thing about the heroes in the balcony is it reminds you not of who the president is but of who we are....The Democrats in the chamber were slumped, glowery. They had chosen to act out unbroken disdain so as to please the rising left of their party, which was watching and would review their faces....The social justice warriors, the advancers of identity politics and gender politics, the young who've just discovered socialism - they run on rage. But rage is a poor fuel in politics....Trump's position is more precarious than his people see. He has too much relished the role of divider. When you're running for office you are every day dividing those who support you from those who don't, and hoping your group is bigger. But when you win you reach out to your enemies with humility, with patience - with love! - and try to drag 'em in to sup in your tent....Special counsel Robert Mueller will likely, before November, report his findings to the Justice Department...You have to assume Mr. Trump will be harpooned, and the question is whether it's a flesh wound or goes deeper. If it goes deep the Democrats may well win the House, in which case he will be impeached. Trump supporters don't view this with appropriate alarm....The president’s supporters should be frank with him about his flaws."

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2.1.18 - Former Fed Head Greenspan Sees Twin Bubbles

Gold last traded at $1,347 an ounce. Silver at $17.15 an ounce.

NEWS SUMMARY: Precious metal prices steadied Thursday after rising 3.2% in January on a weaker dollar. U.S. stocks whipsawed lower then rebounded on upbeat Facebook earnings ahead of key jobs data on Friday.

Former Fed Chair Alan Greenspan Sees Bubbles in Stocks and Bonds -Bloomberg
"The man who made the term 'irrational exuberance' famous says investors are at it again. 'There are two bubbles: We have a stock market bubble, and we have a bond market bubble,' Alan Greenspan, 91, said Wednesday on Bloomberg Television. Greenspan, who led the Federal Reserve from 1987 until 2006, memorably used the phrase to describe asset values during the 1990's dot-com bubble. Greenspan's comments come as stock indexes remain near record highs, despite selling off in recent days, and as the yields on government notes and bonds hover not far from historic lows. Interest rates are expected to move up in coming years as the Fed continues with a campaign to gradually tighten monetary policy. 'At the end of the day, the bond market bubble will eventually be the critical issue, but for the short term it's not too bad,' Greenspan said. 'But we're working, obviously, toward a major increase in long-term interest rates, and that has a very important impact, as you know, on the whole structure of the economy.'"

The Next Maestro -Lebowitz/Real Investment Advice
"There is something god-like in the idea of creating something out of nothing - especially money - which fits with the progression of status among Federal Reserve (Fed) members. The idea that their stature and judgement is beyond reproach has been in play for some time. Alan Greenspan: The absurd notion of central bankers as rock stars was popularized by Alan Greenspan. He achieved celebrity status by advancing in ways never before seen, the interventionism of the Federal Reserve....Ben Bernanke: So desperate to follow suit after he stepped down as Fed Chairman in 2014, he could not wait for someone to write his story so he penned his own in the self-aggrandizing 'Courage to Act'....Janet Yellen: In her time as the Chairman, Yellen was the beneficiary of much good fortune and did nothing to make waves (or right the ship). The disparity between the rich and poor has never been wider as Yellen assisted in hollowing out the middle class by adhering to a 'saver-punishing' low-rate policy."

Fed Chair chart

"Jerome Powell: Will the latest chairman of the Fed, Jerome Powell, have the courage to act? Mr. Powell has a choice to make. He can do what's best for the country or he too can aim to become a 'pop culture phenomenon' and keep the charade going, but he cannot do both. Time will tell....The incongruence of this passion among the power-elite who manage the printing presses of the world's largest economies is akin to the contrast between pride and humility. Anyone who thinks themselves qualified to manage the monetary policy of the complex system of a major economy lacks requisite humility and is too deceived by pride to be thus qualified. A proud man is always looking down on things and people and, of course, as long as you are looking down, you cannot see that which is larger - the best interests of people or democracy.'"

India Just Caused the Price of Bitcoin to Slide Again -Fortune
"The Indian government is to ban the use of Bitcoin and other cryptocurrencies for payments, finance minister Arun Jaitley has announced, kicking Bitcoin's already-sliding value further down the slope. At the same time, Jaitley indicated that the government has a different attitude toward the blockchain technology that underpins cryptocurrencies and can be used for a variety of other purposes. 'The Government does not consider cryptocurrencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system,' Jaitley said Thursday in his 2018 budget speech. 'The Government will explore use of block chain technology proactively for ushering in digital economy.' The news likely contributed to a 12% drop in Bitcoin's value over the last 24 hours, leaving the most popular virtual coin at the $8,830 mark."

Review: Envisioning 'Capitalism Without Capital' -Wall Street Journal
"Why is an airliner like a song? Both can be capital assets, according to Jonathan Haskel and Stian Westlake. An airliner is tangible capital, a song intangible. The two British authors argue that the growing importance of intangible capital requires us to change the way we think about business in postindustrial economies....The historical view of 'capital' as something tangible persists and limits our thinking, the authors argue. In 'Capitalism Without Capital,' the authors choose a broad definition and explore its implications. In so doing, they provide insights into some puzzling questions. For example, why is Uber, a company with few assets and huge losses, so popular with investors? Why are stock-market prices soaring at a time when capital investment, as typically measured, is creeping upward at only a 4% annual rate? There are lots of possible answers to these questions, but the authors start by offering two broad responses: 'We are now trying to measure capitalism without counting all the capital'; and 'the basic economic properties of intangibles makes an intangible-rich economy behave differently from a tangible-rich one.'....They find that today's much-debated inequality is increased dramatically by what occurs at high income levels and results partly from the growing importance of intangibles. Entrepreneurs like Bill Gates and Mark Zuckerberg built companies capitalized with intangibles and quickly became wealthy on the scalability of their assets....Alongside calls for improving education and encouraging research and development, Haskel and Westlake think that 'government should create the conditions for a shift from debt to equity financing,' partly through changes in tax policy, which now favors debt with interest deductibility."

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1.30.18 - Bitcoin & Taxes: What You Need to Know

Gold last traded at $1,343 an ounce. Silver at $17.22 an ounce.

NEWS SUMMARY: Precious metal prices rose Tuesday on dollar weakness and safe haven buying. U.S. stocks tumbled for a second day on growing interest rate and valuation jitters.

Gold gains ground as stocks falter in global pullback -Marketwatch
"Gold futures rose Tuesday, finding support on global weakness in stocks and weaker Treasurys as yields continued to rise. 'As concerns rise over receding monetary support from central banks, there is a danger that the stock markets could hit the reverse gear. If so, this should be good news for safe haven gold and silver, which tend to go up during times of market turmoil,' said Fawad Razaqzada, market analyst at Forex.com, in a note....Global equities were weaker with the Dow sinking more than 300 points at its low. Treasurys remained under pressure, with the yield on the 10-year note pushing back above 2.7%. Yields rise as debt prices fall....The U.S. dollar index, a measure of the U.S. currency against a basket of six major rivals, was off 0.3% at 89.07. A weaker greenback makes dollar-denominated assets more attractive....The Federal Reserve's rate-setting panel begins a two-day policy meeting that is expected to underline investor expectations for a March rate increase."

stock market Measuring the Bubble -Hussman Funds
"'Measure what is measurable, and make measurable what is not so.' - Galileo - Last week, the U.S. equity market climbed to the steepest valuation level in history, based on the valuation measures most highly correlated with actual subsequent S&P 500 10-12 year total returns, across a century of market cycles....From present levels of valuation, we fully expect the S&P 500 to lose value, on a total return basis, over the coming 12-year horizon....The most reliable measures of valuation are now an average of 3.0 times their historical norms. By the completion of every previous market cycle in history, stock prices have approached or breached those norms. So yes, I expect that the S&P 500 will lose approximately two-thirds of its value over the completion of this market cycle. The short-run issue is just that nothing prevents the speculative inclinations of investors from driving valuations even higher....Recognizing that valuations matter profoundly over the long run, yet are nearly useless over the short run, is central to navigating complete market cycles....As Didier Sornette correctly observed in Why Markets Crash, 'The collapse is fundamentally due to the unstable position; the instantaneous cause of the crash is secondary.' My sense is that investors are going to learn this again the hard way....My impression is that future generations will look back on this moment and say '… and this is where they completely lost their minds.'"

State of the Union 2018: Americans' views on key issues -Pew Research
"President Donald Trump will deliver his first State of the Union address on Tuesday - a speech that millions of Americans will watch closely. Earlier this month, about three-in-ten (31%) said in a Pew Research Center survey that this year's speech is 'more important' than those in past years...Here is a look at public opinion on important issues facing the country, drawn from the Center’s recent surveys: 1. The economy and jobs: Americans' views of economic conditions are more positive than they have been in recent years. An October survey found 41% of Americans rating economic conditions in the country as 'excellent' or 'good,' near the highest point in a decade....2. Taxes: The public has mixed expectations for the tax law recently passed by Congress and Trump. About as many say the law will have a mostly positive effect on them and their families (29%) as say its effect will be mostly negative (27%)....3. Terrorism and global threats: Defending against terrorism continues to rank among the public's leading priorities for the president and Congress...Americans' views of the campaign against ISIS specifically have sharply improved....4. Immigration: Most Americans say immigrants strengthen the country with their hard work and talents (65%)...Republicans and Democrats are on opposite sides of the issue of expanding the border wall (72% of Republicans favor, 85% of Democrats oppose)."

Bitcoin and Taxes: What You Need to Know -Fortune
"The IRS is now receiving 2018 returns, giving taxpayers until April 27 to file and pay. The process won't be much different from last year, though if you're one of the millions of investors who jumped into the cryptocurrency craze, you may have extra work to do. Here’s a plain English Q&A from Fortune's The Ledger on how the IRS handles profits and losses related to bitcoin and other types of digital money. This is not tax advice - for that go see an accountant or, better yet, a tax lawyer - but a quick overview of the main issues. I made money in 2017 selling cryptocurrency. Do I have to declare it? Yes, no matter what your Internet chat group might say about bitcoin being beyond government control, the reality is crypto profits are income and Uncle Sam expects his cut. How much do I have to pay? In the eyes of the IRS, cryptocurrency is property like shares or physical assets. That means you pay the long-term capital rate (typically 20%) if you sold it after a year, or the ordinary income rate if you sold it before then. What if I just sent some of my bitcoin (or Ethereum, etc) to a store or a friend? Tough luck - any time you divest cryptocurrency, it's a taxable event. The IRS doesn't care if you sold bitcoin for cash or bought a muffin with it; if it was worth more than you paid for it, you owe tax. What if I traded one type of cryptocurrency for another? Again, tough luck. The IRS recently closed a potential loophole for 'like kind exchanges' that let people swap assets of the same kind without triggering a tax obligation."

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1.29.18 - U.S. Economy Hostage to Stock Market

Gold last traded at $1,340 an ounce. Silver at $17.12 an ounce.

NEWS SUMMARY: Precious metal prices dipped Monday on short-term profit taking and a firmer dollar. U.S. stocks fell as inflation fears sent interest rates near 3-year highs.

All That Glitters Is the Dollar's Weakness -Bloomberg
"The metal's recent rise isn't about inflation rising or cryptocurrencies falling. Gold has been on a tear of late, climbing more than $100 per troy ounce in the last six weeks, briefly exceeding the 2017 high of $1,359 in the process. Coincidental with that have been three important market moves: the weakening of the U.S. dollar, sharp downturns in cryptocurrencies and a rise in bond yields....The recent sharp price drop in cryptocurrencies may highlight the timeless allure of safety that gold has, but the crypto pond is still too small to be relevant. More fundamental might be the recent uplift in bond yields....Gold is not far below the highs of 2016 around $1,400. A clear break through that ceiling might point to a return to the levels seen during 2010-13 as the sovereign debt crisis raged."

Bitcoin future Blockchain's Broken Promises -Roubini/Project Syndicate
"Boosters of blockchain technology compare its early days to the early days of the Internet. But whereas the Internet quickly gave rise to email, the World Wide Web, and millions of commercial ventures, blockchain's only application - cryptocurrencies such as Bitcoin - does not even fulfill its stated purpose. The financial-services industry has been undergoing a revolution. But the driving force is not overhyped blockchain applications such as Bitcoin. It is a revolution built on artificial intelligence, big data, and the Internet of Things. Already, thousands of real businesses are using these technologies to disrupt every aspect of financial intermediation. Dozens of online-payment services – PayPal, Alipay, WeChat Pay, Venmo, and so forth - have hundreds of millions of daily users....Now, compare this real and ongoing fintech revolution with the record of blockchain, which has existed for almost a decade, and still has only one application: cryptocurrencies....Worse, cryptocurrencies in general are based on a false premise. According to its promoters, Bitcoin has a steady-state supply of 21 million units, so it cannot be debased like fiat currencies. But that claim is clearly fraudulent, considering that it has already forked off into three branches: Bitcoin Cash, Litecoin, and Bitcoin Gold. Besides, hundreds of other cryptocurrencies are invented every day, alongside scams known as 'initial coin offerings,' which are mostly designed to skirt securities laws. So 'stable' cryptos are creating money supply and debasing it at a much faster pace than any major central bank ever has....More fundamentally, its promise of decentralized transactions with no intermediary authority amounts to an untested, Utopian pipedream. No wonder blockchain is ranked close to the peak of the hype cycle of technologies with inflated expectations."

Roubini goes on to write that he believes both bitcoin and blockchain technology represent a massive bubble. The debate over bitcoin and other cryptocurrency prices continues daily. Get the facts so you're better equipped to come up with your own conclusions about the cryptocurrency craze in our free 2018 Real Money Perspectives newsletter, The Future of Money.

Is the U.S. Economy Hostage to the Stock Market? -Samuelson/Real Clear Markets
"The stock market is going gangbusters - but whether this reflects the economy's underlying strength or runaway speculation is a question that stumps many experts....The boom is undeniable. In 12 out of the first 15 trading days of 2018, stocks reached record highs, with an overall gain of 6 percent, worth about $1.9 trillion, according to Wilshire Associates...Some experts conclude that stocks are overvalued. Writing in the Wall Street Journal, economist Burton Malkiel - author of the classic 'A Random Walk Down Wall Street' - asserts that 'all asset classes appear overpriced.' Economist Mark Zandi of Moody’s Analytics says stocks could be overvalued by as much as 20 percent. What these economists are saying is that euphoric investors are pushing prices higher because they believe everyone else is pushing prices higher. Herd mentality prevails. But sooner or later, this self-deception becomes obvious....The reality is that stock-market booms and busts are often driven by financial innovations that initially seem to make investing safer, argues financial consultant Scott Nations in his absorbing new book, 'A History of the United States in Five Crashes.' For example: In the early 2000s, the 'securitization' of mortgages - the packaging of home loans in bond-like securities - was supposed to reduce risk by informing investors of varying loan quality. Perversely, this lulled investors into a false sense of confidence that justified many dubious loans. When this became clear, the economy and stocks collapsed....What seems clearer is that the market remains vulnerable to unexpected economic and political shocks. A significant decline in stocks would undermine confidence and spending. Main Street is, to some extent, hostage to Wall Street."

Funding the Great Border Wall -Pontification Blog
"'Good fences make good neighbors.' - Robert Frost, poet - President Donald Trump's proposed wall on America's southern border, say Progressive critics, is 'a medieval solution to a 21st Century problem.' But much of our current problem comes from a Progressive welfare state that allows illegal aliens to pick our taxpayers' pockets while contributing little or nothing to our country. Much comes from Leftist eagerness to overwhelm our democracy with illegal voters who do not share our values, giving permanent power to Democrats rejected by Americans. California is preparing to make the voter registration of illegals virtually automatic this coming April Fools' Day....The formerly-Golden state California - home to one-third of America's welfare recipients and one-quarter of its illegal aliens - is the model of our Progressive authoritarian future, unless President Trump's wall can change this....If neither the country of Mexico nor the Democratic Party will agree to pay for the border wall, President Trump does have other ways and means of doing so....American Thinker pundit Rufus Dickerson proposes 'crowdfunding' the wall, which if paid for only by 62 million Trump voters would cost each $396....'Dreamers' brought here as children are beginning to embrace President Trump's offer of a path to citizenship for 1.8 million of them in exchange for building his wall, reports the San Francisco Chronicle. Walls work; Israel's new wall has reduced terrorist attacks by up to 95 percent, and China is now expanding its ancient Great Wall along the border with North Korea. Even Mexico enforces a strong, modern barrier on its southern border with Guatemala to deter illegals."

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1.26.18 - America's Hidden Depression Revealed

Gold last traded at $1,352 an ounce. Silver at $17.44 an ounce.

NEWS SUMMARY: Precious metal prices rose Friday for a fourth consecutive week as the U.S. dollar resumed its downward trajectory. U.S. stocks rallied on upbeat earnings reports despite disappointing GDP data.

The World Is Going To See Gold Repriced Thousands Of Dollars Higher -Embry/KWN
"There has been constant rhetoric concerning fake news coming from all quarters. However, I believe one of the major fake news stories concerns the strength of the world economy. The governments grind out bogus economic statistics, and the alleged mainstream press embellishes the numbers and reinforces the impression that all is well. Among the worst are prestigious publications like the Economist, the Financial Times and the New York Times. As an example, the Financial Times had the gall to run a headline a month or so ago titled, 'The unfortunate exit of an exemplary Fed Chair.' The article went on to extoll Janet Yellen's stewardship of the US Fed during her time as Chairman. Nothing could be further from the truth. She and her colleagues in the other Western central banks have fueled a historic financial bubble, which is going to end disastrously for everyone. Fortunately for wise investors who want safety in these out of control financial markets, gold and silver and their respective equities remain an obvious haven in the coming storm. As I mentioned last week, the usual suspects have intensified their efforts to suppress the prices of gold and silver as well as the equities of those companies that mine them. As a result, they are now so mispriced with respect to virtually every other asset on the planet, that to not buy them at this juncture will be seen in retrospect as a serious mistake....With the Chinese and the Russians relentlessly accumulating physical gold in their reserves year after year, this could become a major issue with regards to the US dollar in the future and it will ultimately guarantee gold will be repriced thousands of dollars higher than what is being quoted today."

America's Hidden Depression -Bonner/Bonner And Partners
"The Davos crowd was told that the world economy is minting one new billionaire every two days...Eighty-two percent of the world's wealth generated last year went to the 'One Percent.' That leaves 18% for the bottom 99%. Many of the 99 percenters must have gotten nothing at all... or less than nothing....Looking at the economic picture in the U.S., we are meant to see happy people getting richer, with a bubbly stock market, low consumer price inflation, and jobs for whomever wants one. That is the picture the news media, the financial press, Wall Street, and the Trump administration draws. But what we see is claptrap. The dots don't connect. In a labor pool with barely any increase in average wages, if some wages are going up, other wages must be going down....In the bottom half of the U.S. population, 117 million adults earn an average annual wage of $16,000 a year. These people are worse off than they were at the end of the last century... and probably worse off than they were when the Fake-Money Era began in 1971....We asked our research department, headed by the able Joe Withrow, to comb through the U.S., county by county, and tell us where people were better off... and where they weren't. His report can be read in full HERE"

map

"In addition to the expected evidence came a revelation: GDP growth is largely counterfeit....Per Joe: GDP includes 'all private and public consumption, government outlays, investments, private inventories, paid-in construction costs, and the foreign balance of trade.' Can you spot the problem? 'GDP measures include government outlays... but those outlays exceed tax receipts by a wide margin every year....That means GDP records the Fed's fake money as 'growth' - twice....What is most surprising to us about this study is that even in counties where the Deep State and its crony industries are in full flower, most people are withering. Could that be true? Could nearly three-quarters of U.S. counties really be in depression? And what does GDP really mean?"

Trump warns Davos on unfair trade -Reuters
"U.S. President Donald Trump took his 'America First' message to the world's elite on Friday, telling a summit of business and political leaders that the United States would 'no longer turn a blind eye' to what he described as unfair trade practices. Trump became the first sitting U.S. President to address the annual conclave of the rich and powerful at the Swiss ski resort of Davos for 18 years, closing the summit with a mostly upbeat speech that declared the United States 'open for business'. 'Now is the best time to bring your money, your jobs, your businesses to America,' he said, singling out tax cuts and curbs to regulation as boosting the investment climate. He said he would always promote 'America First', as he expected other world leaders to do on behalf of their own countries, but added: 'America First does not mean America alone. When the United States grows so does the world.' But he swiftly turned to a theme of demanding tougher enforcement of trade rules, accusing unidentified countries of unfair practices, including stealing intellectual property and providing state aid to industry. 'We will enforce our trade laws and restore integrity to the trading system. Only by insisting on fair and reciprocal trade can we create a system that works not just for the United States but for all nations,' Trump said."

"Biggest Theft In Crypto History": Over $400M Stolen -Zero Hedge
"Earlier today we reported that cryptocurrencies tumbled overnight after one of the most popular - if unlicensed - Japanese exchanges, Coincheck, halted withdrawals of funds and cryptos amid broad confusion as to what prompted the halt. Additionally, Coincheck said it had stopped deposits into NEM coins, a hint that something was very wrong with what until last night was the 10th-largest cryptocurrency by market value, and which tumbled nearly 20% overnight, dragging the rest of the sector lower as news of the Coincheck fiasco spread....And then, the worst case scenario was confirmed by Coincheck itself told financial authorities that it had lost 500 million NEM cryptocurrency coins in today's cyberheist, which at the current exchange rate amounts to roughly $400 million, according to Nikkei. NEM Foundation president Lon Wong also confirmed Coincheck was hacked, calling the stolen funds 'the biggest theft in the history of the world', as quoted by CryptoNews. According to Wong, the hack had nothing to do with NEM and the blame lies exclusively with Coincheck....The hack, at recent NEMUSD exchange rates, would make it even bigger than Mt. Gox - which lost a total of $350 million in 2 hacks, one in 2011 and 2014 - by $50 million....Paradoxically, cryptocurrencies have risen as the Coincheck hack news spread amid expectations the thieves will convert their stolen NEM coins into another cryptocurrency."

Are Insecure Jobs Fueling the Opioid Crisis? -Charles Hugh Smith/Of Two Minds Blog
"The economy no longer generates secure, purposeful jobs for the working class, and so millions of people live in a state of insecure despair. The opioid epidemic is generating a lot of media coverage and hand-wringing, but few if any solutions, and this is predictable: if you don't face up to the causes, then you can't solve the problem. If we are going to have an honest conversation about the opioid epidemic, then we need to recognize the real causes of the epidemic: 1. The Pharmaceutical industry falsely claimed synthetic opioids were non-addictive...2. Our sickcare system is very good at over-prescribing painkillers as a substitute for treating the source of the pain, which is often complex...3. The economy no longer generates secure, purposeful jobs for the working class, and so millions of people live in a state of insecure despair....If we don't face up to the essential role of meaningful work in human fulfillment and security, then we'll never solve our addiction epidemic and all the related social ills."

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1.25.18 - Gold Confiscation Offers a Vital Lesson

Gold last traded at $1,357 an ounce. Silver at $17.53 an ounce.

NEWS SUMMARY: Precious metal prices rose near 18-month highs Thursday as the U.S. dollar slid to 3-year lows. U.S. stocks soared further amid better-than-expected corporate earnings from Caterpillar and 3M.

Gold Is Heading Towards a Four-Year High -Bloomberg
"Gold could hit levels last seen in 2013 if the dollar extends its slide and equity markets reverse. Bullion at $1,400 an ounce is 'achievable' in the next two months, Stephen Innes, head of trading for Asia Pacific at brokerage Oanda Corp., said in an interview Thursday. The Bloomberg Dollar Spot Index plunged to the lowest since 2014 after Treasury Secretary Steven Mnuchin endorsed the currency's drop at the World Economic Forum in Davos. And while global equity markets have repeatedly hit all-time highs in recent months, gold is also on the march, rising to as much as $1,366.15 an ounce on Thursday, its best mark since August 2016....Gold has climbed more than 8 percent since the middle of December as the dollar slumped and investors sought protection from a potential tumble in share markets and a resurgence of inflation....With these signals from the U.S. government and other central banks, 'we're getting into a structurally weak dollar, and on a macro level, we could be moving into a cyclical bear market beyond 2018,' Innes said. 'All I can possibly see right now, given this overriding weaker dollar narrative, is for gold to go higher in the short term.'"

gold coin Confiscation of Gold by the Federal Government: A Lesson -Pollock/Real Clear Markets
"Historically as well as now, people in America tried to protect themselves against the government's devaluation of their dollars by holding gold; and formerly, by buying Treasury bonds which promised to pay in gold. The fundamental thought was and is the same that many holders of Bitcoin and other 'cryptocurrencies' have now: hold something that the government cannot devalue the way it can its official currency. Unfortunately for such an otherwise logical strategy, governments, even democratic governments, when pushing comes to shoving, may use force to control and even take away what you thought you had. The year 1933 and the new Franklin Roosevelt presidency provide vividly memorable, though little remembered, examples. First the U.S. Treasury defaulted on its promises to pay gold bonds in gold; then under notable executive orders, the U.S. government confiscated the gold of American citizens and threatened them with prison if they didn't turn it in. It moreover prohibited the future holding of any gold by Americans, an outrageous prohibition which lasted four decades, until 1974. All this may seem unimaginable to many people today, perhaps including Bitcoin enthusiasts, but in fact happened. Said Roosevelt in explanation, 'The issuance and control of the medium of exchange which we call 'money' is a high prerogative of government.'....Roosevelt's Executive Order 6102, 'Requiring Gold Coin, Gold Bullion and Gold Certificates to Be Delivered to the Government,' of April 5, 1933 marks an instructive moment in both American monetary and political history...It's a prudent idea to protect yourself against the government's perpetual urge to depreciate its currency...What governments, even democratic ones, are willing to do when under sufficient pressure, is a lesson Bitcoin holders and everybody else can usefully consider." Full story

Mr. Pollock's excellent article brings up an important point regarding the ends to which the U.S. government has gone to keep the economy afloat during adverse economic times. One small point we would add is that the Gold Confiscation Executive Order 6102 allowed for one exemption; jewelry and "gold coins having a recognized special value to collectors of rare and unusual coins." Learn more about the wisdom of owning some of these classic American gold coin treasures in our free report Timeless Truth About Gold and Silver.

IMF Calls for Global Talks on Cryptocurrencies -Bloomberg
"The International Monetary Fund is calling for global coordination on cryptocurrencies as it warned of the risks from surging prices. 'Greater international discussion and cooperation among regulators, yes, would be helpful,' IMF spokesman Gerry Rice told reporters Thursday in Washington....'When asset prices go up quickly, risks can accumulate, particularly if market participants are borrowing money to buy,' Rice said. The IMF is not alone in recommending greater coordination on digital currencies. Treasury Secretary Steven Mnuchin last week called for the Group of 20 nations to prevent cryptocurrencies from becoming the digital equivalent of an anonymous Swiss bank account. The U.S. wants to ensure 'bad people cannot use these currencies to do bad things. Cryptocurrencies can pose considerable risks as potential vehicles for money laundering, terrorist financing, tax evasion and fraud,' he said....Managing Director Christine Lagarde in September cautioned that cryptocurrencies could eventually become a headache for central bankers as they increase in popularity. 'Not so long ago, some experts argued that personal computers would never be adopted, and that tablets would only be used as expensive coffee trays. So I think it may not be wise to dismiss virtual currencies,' she said."

Mnuchin's weak dollar position is 'a hidden tax' -Dalio/CNBC
"Hedge fund kingpin Ray Dalio ripped Treasury Secretary Steven Mnuchin's advocacy of a weak dollar, saying the position threatens the economic recovery. Dalio described a weak dollar as 'a hidden tax on people who are holding dollar-denominated assets and a benefit to those who have dollar-denominated liabilities.'....More specifically, Dalio said a weakened dollar would do five things: Reduce Americans' buying buyer around the world; devalues debt and hurts foreign holders; provides paper wealth to holders of assets like stocks; increases inflation and boosts domestic activity....The dollar fell against its global competitors and is down more than 11 percent over the past 12 months. President Donald Trump himself has said that a weak dollar is preferable for the U.S. economy at this point."

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1.24.18 - US Welcomes Weaker Dollar; Gold Spikes

Gold last traded at $1,356 an ounce. Silver at $17.48 an ounce.

NEWS SUMMARY: Precious metal prices rose sharply Wednesday as US embraces soft-dollar policy. U.S. stocks traded mostly higher amid upbeat corporate earnings despite some tech weakness.

Gold hits 4-month peak after US welcomes weaker dollar -CNBC
"Gold prices hit the highest in more than four months on Wednesday after a U.S. official welcomed a weaker dollar and investors sought insurance against uncertainty. The dollar index touched fresh three-year lows after U.S. Treasury Secretary Steven Mnuchin said a softer dollar was good for the United States. A decline in the dollar makes commodities priced in the greenback cheaper for buyers using other currencies....'It's the weaker dollar, it's the inflation focus and it's also to some extent the market is continuing to look for a hedge against a world that's becoming incredibly complacent with stocks at record highs,' said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen....U.S. President Donald Trump is due to speak Friday at the World Economic Forum in Davos, Switzerland, and investors are concerned he will use the speech to signal a more protectionist policy stance....In other precious metals, silver gained 1.1 percent to $17.23 per ounce."

body armor Only Good Things Are In Store For Gold In 2018 And Beyond -Tocqueville/Kitco
"After a solid year, gold is looking very positive in 2018 and beyond, according to Tocqueville Asset Management. In a recently published year-end investor letter, Tocqueville's senior portfolio manager John Hathaway said that a new gold rally could be triggered by several factors, including extreme valuations of financial market assets, a worsening U.S. fiscal position, and rising inflation pressures. 'Renewed interest in gold will be triggered by financial-market losses,' he said in the letter. 'Valuation excesses signify systemic risk.'....Hathaway reminded investors that risks and costs of holding physical gold are low, which makes it 'a cheap insurance on a possible significant retreat from current valuation extremes.' Another important driver for gold is the growing U.S. deficit, which is projected to increase even more under the new tax bill....'If we are correct, the implication would be a widening spread between nominal and real interest rates, along with a weakening U.S. dollar and a rising USD gold price,' Hathaway said....'When the make-believe world of synthetic gold, algorithmic trading, ETFs, fake interest rates, and passive investment collide with the realities of an uncontrollably rising budget deficit and mismatches between surrogates and underlying assets, gold (the real asset) will benefit,' the report summarized."

The World's Priciest Stock Market -Schiller/Project-Syndicate
"It is impossible to pin down the full cause of the high price of the US stock market. That alone should remind all investors of the importance of diversification, and that the overall US stock market should not be given too much weight in a portfolio. The level of stock markets differs widely across countries. And right now, the United States is leading the world. What everyone wants to know is why - and whether its stock market's current level is justified. We can get a simple intuitive measure of the differences between countries by looking at price-earnings ratios. I have long advocated the cyclically adjusted price-earnings (CAPE) ratio that John Campbell (now at Harvard University) and I developed 30 years ago....What's driving the US stock market higher than all others? It's not the 'Trump effect,' or the effect of the recent cut in the US corporate tax rate. After all, the US has pretty much had the world's highest CAPE ratio ever since President Barack Obama's second term began in 2013....Part of the reason for America's world-beating CAPE ratio may be its higher rate of share repurchases, though share repurchases have become a global phenomenon. Higher CAPE ratios in the US may also reflect a stronger psychology of fear about the replacement of jobs by machines."

One Reason the Crypto Crash Is Temporary -Brown/Bonner And Partners
"I told you that the crypto market would experience some pullbacks and high volatility. We're seeing that today. Bitcoin, the world's first cryptocurrency, dropped about 30% this week. But despite these pullbacks, I've also told you that these new crypto assets still have a long way to run in the years ahead. And the reason why can be summed up in one word: blockchain....Blockchain technology is also known as distributed ledger technology....Historically, companies, governments, and individuals all keep their records in one centralized database. Imagine a room with racks of computers that store information. But centralized databases can be manipulated… Records can be changed, hard drives can fail, data can be lost, and the records represent only one party's view of any given transaction. In the world of blockchains and distributed ledger technology, the exact opposite is true. The transactions recorded on the ledger represent a transaction that takes place between the parties involved and is confirmed by the blockchain network via a consensus. Once a transaction is written to the ledger, it is immutable. It cannot be changed. The value and utility that a well-designed blockchain provides is remarkable. Immutability, secure transactions, privacy, transparency, the reduction or elimination of fraud....That’s why I'm so excited about this technology. It has the potential to rewrite our entire society the way the internet did more than 20 years ago."

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1.23.18 - Why the IRS Fears Cryptocurrencies

Gold last traded at $1,336 an ounce. Silver at $16.91 an ounce.

NEWS SUMMARY: Gold prices rose Tuesday as the dollar slumped to fresh two-year lows. U.S. stocks rallied to fresh highs amid upbeat corporate earnings and a political deal to fund the federal government until Feb. 8th.

The Gold-Based Monetary System Is On Its Way -King World News
"It's only January, but we've likely already seen 2018's most significant event, and it's not the government shutdown. Rather, it was the disclosure of a fundamental architectural flaw in the design of the computer chips that are the backbone of virtually all of our technologies. The flaw potentially affects almost every industry. And it could dramatically lessen our ability to deal with resource scarcities, which I’ve long argued will determine what kind of future we have. It also likely gives China a chance to gain further ground on us. If you were bullish on gold and commodities before, you should be wildly bullish now. I certainly am. But I'm also more alarmed about the world, and America's position in it, than ever before. Especially scary is that the U.S. shows no signs of being scared....There's no easy fix through security patches. While you definitely should install the patches being offered, the trade-off is that they slow computers down. Because the flaw is in the hardware design itself, the only real solution is to redesign the computer chips that are at the heart of all computer systems, the central processing units (CPUs)....The latest word is that China will begin trading a yuan-based oil contract soon after the lunar New Year, some time in late February. The trading will take place in the same Shanghai free trade zone where China allows gold to trade. China knows time is getting short. The gold-based monetary system is on its way. It all raises the chance that gold's explosive take-off could come this year."

gold Panicky Bitcoin investors struggle to withdraw cash -The Sun
"There are mounting fears that Bitcoin investors will struggle to get their cash out after the cryptocurrency's value fell 40 per cent in a single month. Many are looking to put their money in gold instead, with some European gold traders reporting a 'five fold increase' in demand amid fears Bitcoin could collapse entirely. But it could be bad news for investors tied up in Bitconnect who fear they will lose their money after the controversial trader announced it was shutting down. It assured customers they would be able to withdraw at a 'recent exchange rate' but 'continuous cyber-attacks' have prevented them from doing so, Fortune reports. Concerned investors have since taken to social media to complain they fear losing anything from a few thousand dollars to their entire 'family savings'. Adding to fears, some panicked investors have reportedly been tricked into handing over the contents of their cryptocurrency wallets by scammers presenting themselves as Bitconnect 'customer support'. Wall Street veteran Peter Boockvar has warned of an impending 'epic crash' which could slash 90 per cent off Bitcoin, currently valued at around $10,000 (£8,300). He told CNBC the cryptocurrency's value could fall to between $1,000 (£718) and $3,000 (£2,154) over the next year. This uncertainty is driving Bitcoin owners to invest in the more reliable gold, according to Daniel Marburger, director of Coininvest."

Why the I.R.S. Fears Bitcoin -New York Times
"Many, including the Federal Reserve chairwoman Janet Yellen and the billionaire investor Warren Buffett, have warned about a 'Bitcoin bust' that could rival the dot-com crash of 2000 and wipe out speculators. But the bigger concern about cryptocurrencies may be the damage they could do, in the long run, to government finances through lost tax revenue....One approach would be for the government to accept the difficulty of directly taxing cryptocurrency transactions and to offset the revenue losses by raising tax rates. The basic economics of taxation tells us that the economic losses from taxes increase exponentially with the tax rate, so this response would transform revenue losses into a lower gross domestic product. More likely, the United States would take a tougher approach and attempt to ban cryptocurrencies. This solution throws the baby out with the bath water. While cryptocurrencies open opportunities for tax evasion and illegal operations, they also offer drastic reductions in the cost of financial transactions, especially for the poor, and less reliance on banks, which can increase the power of the Federal Reserve to control money supply and reduce the risk of bank runs. A smarter response would be for the government to switch from taxing income when it is received to taxing income when it is spent. Many economists support moving to this kind of consumption tax, but it would require a major overhaul of the tax code."

Will Americans Soon Be Totally De-Voted? -Pontification Blog
"We all know why Democrats were eager to use a government shutdown to force a path to citizenship for Latino aliens called 'Dreamers' who were brought here at age 16 or younger by illegal alien parents. These DACA (Deferred Action for Childhood Arrivals) 'kids' are a 'critical component of the Democratic Party's electoral success,' wrote former Clinton communications director Jennifer Palmieri in a memo from the left-of-center Center for American Progress Action Fund. No wonder President Barack Obama imposed DACA by what he admitted was an unconstitutional Executive Order after Congress refused to enact it into law. Now up to 36 years of age and numbering up to 3.6 million, these potential voters are inclined to vote two-to-one in favor of Democrats. Democrats thus far have refused to negotiate whether Dreamers, if made legal immigrants, can sponsor their parents and other relatives as legal residents and, soon thereafter, voting U.S. citizens…moving them ahead of other applicants....Many of these Dreamers could begin voting this year. On April Fool's Day, the State of California launches what its Department of Motor Vehicles calls 'exciting changes' that will provide automatic voter registration to anyone getting a California Driver License, without requiring any evidence of citizenship such as a birth certificate. California law prohibits asking voters at a polling place for an I.D. In other words, the once-Golden State, rushing its new law, is de facto letting non-citizens vote in the 2018 elections....DACA is in the Spanish idiom toma y daca, 'give and take.' American taxpayers give, and the Democrat-privileged 'Dreamers' take, turning our nation into a nightmare where we shall soon be outvoted - or 'de-voted,' as Craig R. Smith and I detail in our book Money, Morality & The Machine. Full story

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1.22.18 - Washington D.C. - Malfunction Junction

Gold last traded at $1,331 an ounce. Silver at $16.98 an ounce.

NEWS SUMMARY: Precious metal prices inched higher Monday on safe haven buying and a weaker dollar. U.S. stocks hit fresh peaks as investors shrugged off the third day of U.S. government shutdown.

Shutdown extends into workweek, as Senate talks continue -Associated Press
"The government shutdown is set to sow more disruption and political peril Monday after the Senate inched closer but ultimately fell short of an agreement that would have reopened federal agencies before the beginning of the workweek. Senate Majority Leader Mitch McConnell and Democratic leader Chuck Schumer said negotiations were still underway, with a vote to break a Democratic filibuster on a short-term funding bill scheduled for noon Monday. Under the proposal taking shape, Democratic would agree to a three-week spending measure - until Feb. 8 - in return for a commitment from the Republican leadership in the Senate to address immigration policy and other pressing legislative matters in the coming weeks. But Democrats appeared to be holding out for a firmer commitment from McConnell. 'We have yet to reach an agreement on a path forward,' Schumer said late Sunday. McConnell’s comments followed hours of behind-the-scenes talks between the leaders and rank-and-file lawmakers over how to end the display of legislative dysfunction, which began Friday at midnight after Democrats blocked a temporary spending measure. Democrats have sought to use the spending bill to win concessions, including protections for roughly 700,000 younger immigrants brought illegally to the U.S. as children."

gold Book Review: Nathan Lewis's Brilliant "Gold: The Final Standard" -Tamny/Real Clear Markets
"Near the end of his enlightening, myth-slaying and brilliant new book, Gold: The Final Standard, Nathan Lewis writes that 'hardly anything is created without combining goods, services, labor and capital from all over the world.' His simple statement says it all, and is a good jumping off point for a review of his essential history of quality money. In writing about the global cooperation required for the creation of goods and services, Lewis was making a much bigger point about money: it's best when it's least evident. Money is not wealth; rather money is an agreement about value that facilitates the exchange of wealth. When the value of money is unchanging, we're much more capable of trading without fear of being on the losing end of what is, by its very name, mutually enhancing. Applying all of this to the quote from Lewis that begins this review, stable money is crucial because in facilitating trade, it's propelling our individual specialization....Lewis's conclusion in the final chapter of Gold is that 'The free market economy has, inherent within it, the assumption that money is stable in value.'....Bitcoin's extraordinary volatility instructs. Precisely because its value is very much a moving target, it doesn't in any reasonable way fulfill the role of 'money.' The latter once again facilitates exchange, but Bitcoin's volatility renders it a very dangerous coin to exchange or invest with. The chances to lose, and lose BIG, are too great....People need to read Gold: The Final Standard, then read it again and again. So much information is within this brilliant book, and so much misinformation is exposed. Thank goodness for Nathan Lewis." Read full book review

Gold edges up as dollar slips after U.S. government shutdown -Reuters
"Gold prices edged higher on Monday as the dollar wallowed near three-year lows following a U.S. government shutdown, although bullishness in the wider financial markets capped the precious metal's gains. World stocks shrugged off the shutdown in Washington, with investors seemingly confident the conflict between President Donald Trump and Democrats can be resolved swiftly. 'We did see gold reach four-month highs last week on fears an agreement wouldn't be reached and indeed that came to pass. The fact that gold is a bit soft this morning suggests it was largely in the price,' said Mitsubishi analyst Jonathan Butler....Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose over 2 percent last week, their best week since the week ended Sept. 3."

Cryptocurrencies Are Crashing Again... -Zero Hedge
"From South Korean bank blocks to Bulgarian Ponzi scheme shutdowns and a Bali bitcoin crackdown, you can take your pick as to what is driving the sudden plunge in cryptocurrencies this morning. Ethereum is back below $1000, Bitcoin is back to a $10k handle, and Ripple is down 30% from the weekend's highs. Weakness began around 6amET but really accelerated at around 8am ET...With Bitcoin and Ethereum breaking key support levels...The catalyst for the move is uncertain at best with numerous headlines over the weekend: OneCoin offices were raided and its servers seized in Sofia, Bulgaria, on Jan. 17 and 18, as yet another step in a series of international raids and court cases against the highly-controversial altcoin....Bitcoin exchanges are under fire in India, as many of the nation's top banks have suspended or greatly curtailed functionality on exchange accounts....The biggest Nordic bank sent a memo to all its employees on Monday informing them that they will not be allowed to trade in Bitcoin and other cryptocurrencies....Year-to-Date, Ethereum remains the only big winner of the major cryptos."

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1.19.18 - Wells Fargo Glitch Empties Accounts

Gold last traded at $1,333 an ounce. Silver at $17.03 an ounce.

NEWS SUMMARY: Precious metal prices rose Friday on U.S. government shutdown worries. U.S. stocks traded mixed as blue chip stocks fell and politicians attempt a budget deal before midnight deadline expires.

Wells Fargo Glitch Leaves Customers With Empty Bank Accounts -CBSlocal
"Many Wells Fargo customers got a terrifying shock after finding their checking accounts drained due to a series of errors by the embattled bank. The Jan. 17 glitch reportedly emptied several customers’ accounts after processing their online bill payments twice and doubling transaction fees. According to CBS News, the banking error also triggered overdraft fees on many checking accounts as customers around the country were mistakenly informed they had a zero balance. The bank's phone lines were reportedly jammed through the night as angry customers demanded answers for the embarrassing mistake. Wells Fargo later put out a brief statement on Twitter explaining the situation. 'Some customers may be having an issue with their Bill Pay transactions. We are working to fix the issue and resolve this tonight. Thanks for your patience.' -Wells Fargo. The social media outrage was immediate as customers replied to the statement, many who were left without a way to pay for any goods. 'Utterly ridiculous, overdraft and in negative, four payments taken out twice...at gas station to be told that Wells Fargo card has been rejected only then found out by logging into online wells fargo account. SERIOUSLY!!! I wonder who will compensate the customers for the stress of this!!!' - Maheen Khan"

In November 2014, Swiss America chairman Craig R. Smith wrote the bestselling book, Don't Bank On It! The Unsafe World of 21st Century Banking. Since then Americans have witnessed (and often experienced first-hand) one crisis after another related to the pitfalls of keeping their money safe from; cyberhacking, banking glitches and the government's ongoing war on cash. Discover why it is wise to have alternative forms of money readily available so that your financial life remains in your own control in any situation - request a FREE Executive Summary of DON'T BANK ON IT!

Venezuela Venezuela's economy on the brink of collapse -CNNMoney
"You can't get $1 out of the bank in Venezuela, I tried. Four hours. Four banks. Six cents. This was a typical day in Caracas, Venezuela, capital of the world's most miserable economy. In most of the world, getting a little money out of the bank is an errand, something forgettable. In Venezuela, for millions of people, it is complicated, tedious and surreal, or just impossible. I moved here a year and a half ago to cover the country's economic crisis as a freelance journalist. I knew how bad things were, but I never imagined the constant daily struggle to achieve even the simplest of tasks. As Venezuela has sunk to new depths, prices have skyrocketed, and the currency, the bolivar, has become next to worthless. Supermarkets and banks have become scenes of confusion and chaos: Are they open? Do they have money or food? How much can I get? Inflation is so rampant - some experts say it ran above 4,000% last year - that it has devoured people's salaries. As I write this, one dollar fetches about 191,000 bolivars, according to the black market exchange rate that everyone uses....At 1:23 p.m., I finally presented my check and got the hard-earned cash: 10,000 bolivars, or 6 cents....With my 10,000 bolivars in hand four hours later, I met a friend for a coffee. My cappuccino cost 35,000 bolivars."

Gold bounces higher on risk of U.S. government shutdown -Marketwatch
"Gold prices climbed Friday, attempting to erase a loss for the week, as the risk of a U.S. government shutdown helped the precious metal rebound from the biggest one-day decline in more than a month. 'With the dollar struggling to gain ground and at the mercy of political uncertainty in Washington, the yellow metal is likely to remain buoyed,' said Lukman Otunuga, research analyst at FXTM. 'Taking a look at the technical picture, Gold continues to fulfill the prerequisites of a bullish trend as there have been consistently higher highs and higher lows,' said Otunuga. 'There is a possibility that a new higher low has been created at $1,324.15 and as such could provide a foundation for bulls to elevate prices back towards $1,340. A decisive breakout and weekly close above $1,340 could pave a path towards $1,360,' he said....The House on Thursday passed a one-month spending bill that would keep the government funded through Feb. 16. But the stopgap measure lacks support to clear the Senate and the current interim funding bill expires at 12:01 a.m. Eastern Time on Saturday. U.S. economic data released Friday was downbeat, with consumer sentiment for January falling to a six-month low."

A protracted cryptocurrency crash would 'spill over' into stocks -CNBC
"A sustained sell-off in the cryptocurrency market will hit the stock market where it hurts, one major Wall Street firm warns. It's a scenario investors are underestimating, according to Wells Fargo Securities' Christopher Harvey. 'We see a lot of froth in that market. If and when it comes out, it will spill over to equities,' the firm's head of equity strategy said Tuesday on CNBC's 'Futures Now.' 'I don't think people are really ready for that.' Harvey's comments came as bitcoin, the cryptocurrency market's largest player, tanked. It plummeted 20 percent over two days, recouped much of those losses and then plunged below $10,000 Tuesday afternoon on Coinbase....In a worst-case scenario, he sees it affecting technology stocks first and then financials. Harvey believes investors don't recognize how much exposure they may have to the cryptomarket through stocks."

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1.18.18 - New Bull Market in Gold Has Begun

Gold last traded at $1,329 an ounce. Silver at $17.08 an ounce.

NEWS SUMMARY: Precious metal prices rose Thursday on safe haven buying and a weaker dollar. U.S. stocks retreated a day after the Dow closed above a new frothy peak of 26,000.

The Next Great Bull Market in Gold Has Begun -Rickards/Daily Reckoning
"A new, long-term, secular bull market in gold has begun. This new trend will take gold past $1,400 per ounce by the end of 2018, past $4,000 per ounce by 2020 (if not sooner) and ultimately to $10,000 per ounce or higher by the mid-2020s. This bull market actually began on Dec. 17, 2015, when the dollar price of gold sank to $1,051 per ounce. That's OK. Bull markets begin slowly, almost unnoticed in the gloom of the prior bear market. The biggest gains often come after a few years when the crowd catches on and the price action gains momentum. This new bull market in gold is the real deal and should last until 2028 or beyond. The moves so far have been relatively small compared with what's ahead. This is the perfect time to make your allocation to physical gold, gold mining shares and gold royalty companies or 'streamers.' The last secular bull market began on Aug. 25, 1999, when gold bottomed at $252 per ounce. From there, it began a spectacular 12-year run until peaking at just under $1,900 per ounce on Sept. 2, 2011. The 1999–2011 bull market represented a 655% gain over the starting price, easily outpacing stocks, bonds, emerging markets and other competing asset classes."

We agree! An exciting new bull market in gold is now upon us, which should lift both bullion and classic U.S. gold coin prices. However, that's just one of six good reasons to add to your gold holdings this year which are detailed by respected financial analyst Axel Merk in our FREE 2018 Real Money Perspectives newsletter, The Future of Money.

shutdown Washington's Dare Game -Fox News
"A blame game will consume Washington if the government shuts down this week. But first, lawmakers from both sides of the aisle must play the dare game. Republicans will essentially dare Democrats to vote no on an interim spending plan to avoid a shutdown. If Democrats vote yes, the government remains open. But if Democrats cast nay ballots, Republicans will try to turn that decision against vulnerable lawmakers in the midterm elections. By the same token, Democrats will dare Republicans to reject the same stopgap plan. This is a hope that the GOP - wielding majorities in both the House and Senate and President Trump occupying the White House - will present themselves as incapable of governing. A nay vote by Republicans could trigger a government shutdown. Democrats will cast the shutdown as emblematic of the bedlam associated with the Trump presidency. The irony is that neither side truly wants to stumble into a government shutdown this weekend. But Republicans and Democrats alike are daring the other side to do so....So first, there's the dare game. We'll likely know today which side won the dare. But if the government shuts down, we may have to wait until November to see who emerged victorious in the blame game."

Cryptocurrency Crash Sparks Bitcoin's Nouveau Riche to Run to Gold -Bloomberg
"Amid the wild Bitcoin ride that's wiped more than 40 percent off the cryptocurrency’s price in a month, a pattern may be emerging: sellers are switching out of digital gold and into the real thing. Bullion dealer Sharps Pixley regularly sees trades north of a million pounds, while sales of gold coins at Frankfurt-based CoinInvest jumped fivefold as the largest digital asset collapsed after surging 1,400 percent last year, according to Director Daniel Marburger. The current price swings across seemingly every cryptocurrency are bringing to the fore a question that has loomed over the industry since its inception: to what extent can a virtual asset be a store of value? By swapping out of digital gold and into the real thing, some investors may be providing an answer. Customers as young as 25 come in carrying laptops holding bitcoin they accumulated when it traded at $1 or below. One had 1,000 bitcoin he intends to turn into physical metal. The company doesn't take possession of bitcoin. Customers buy via an intermediary. 'Bitcoin is a bit of a lobster pot - it's easy to get in, but hard to get out,' said Ross Norman, a gold dealer with a store tucked in a corner of London frequented by the upper classes. 'Gold also offers investors 4,000 years of history as a store of value, and that’s looking quite appealing right now.'"

Banking Expert's Big Bitcoin Warning: How I Lost It All -Motley Fool
"Back in 2013, Matt Koppenheffer bought some Bitcoin when it was trading at just $768. And he never sold. With Bitcoin trading at about $16,250... Mr. Koppenheffer should be sitting on a 2,016% gain. Instead, he has zero... and some big recommendations for those wanting to profit off the Bitcoin frenzy. Even though he never sold a single bit of his Bitcoin, the exchange he used, VirWoX, began charging account inactivity fees - in Bitcoin - that munched away at his balance until he had nothing left. So much for long-term investing in Bitcoin, right? Matt is a colleague of mine who was the banking and financial services bureau chief for the Motley Fool, and host of 'Where the Money Is,' one of the top-rated business podcasts on iTunes. He recently showed me his account statements. It was amazing to see his balance head downward even as Bitcoin soared upward! As Matt told me, 'Don't make the same mistake as I did. It's still the Wild West when it comes to Bitcoin wallets and trading, so don't make any assumptions. Be careful!'"

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1.17.18 - Dow 26k: Market's "Euphoria Phase"?

Gold last traded at $1,328 an ounce. Silver at $17.04 an ounce.

NEWS SUMMARY:Precious metal prices hovered near 4-month highs Wednesday on a flat dollar. U.S. stocks rebounded on better-than-expected major bank earnings.

Bitcoin Sinks 50%, Below $10,000 -Bloomberg
"Bitcoin tumbled below $10,000, bringing its loss to almost 50 percent from a record set only a month ago, as increased scrutiny from regulators around the world weighs on the digital-coin craze. The largest cryptocurrency dropped 10 percent to $9,610.05 as of 9:33 a.m. in New York, its first foray below $10,000 since Dec. 1, according to consolidated pricing data collated by Bloomberg. It has fallen from a record $19,511 reached Dec. 18, and seen more than $140 billion shaved off its market value. The selloff this week brings more trauma to a digital-coin market that has lost more than $300 billion in value just since Jan. 13. After a dizzying rally pushed Bitcoin higher by 1,400 percent last year, the latest plunge cast doubt on the viability of cryptocurrencies and the blockchain technology that underpins it. The most recent signs of a regulatory clampdown have come out of Asia, a hotbed of bitcoin trading. In South Korea, regulators warned they may shut down cryptocurrency exchanges, while China is said to have intensified its curbs on trading of the digital coins. In the U.S., the Securities and Exchange Commission asked at least 15 funds to pull applications this month for bitcoin-related exchange-traded funds."

Get the facts about the cryptocurrency craze in our free 2018 Real Money Perspectives newsletter, The Future of Money.

crash Is Dow 26,000 a sign that stocks are getting risky?-Shell/USA Today
"The Dow Jones industrial average's more than 1,000-point rise from 25,000 to "26K" in the past seven trading days has some investment pros warning that the nearly nine-year-old bull market may be entering its "euphoria phase" - which typically marks the final stage of a long, upward climb for stocks....This stretch of a bull market is characterized by higher share prices, rising investor optimism and fresh cash being funneled into the stock market by investors who fear missing out on gains despite the market's lofty levels....Main Street investors, who have been on the sidelines for most of the nine-year bull run after getting burned in the last market crash in 2008-09, are turning more optimistic. Last week, the number of individual investors who said they were "bullish" jumped to nearly 60%, the highest reading in more than seven years, according to the American Association of Individual Investors....Too much exuberance could be a dangerous thing, as it suggests Wall Street has gone from not just positive on stocks but 'all in,' says Brad McMillan, chief investment officer for Commonwealth Financial Network. 'We seem to be seeing that now.'"

A Weak Dollar Stirs A Toxic Stew -Alhambra Partners
"The dollar appears to be starting another downleg, breaking support last week to make a new low for this bear move. Next support is at the rising trend line at about 86 but a countertrend rally seems likely before a test of that level....A weaker dollar generally means stronger commodity prices and that is exactly what we've seen since the start of the year. Gold, in particular, has resumed its uptrend, not a particularly positive sign for future US growth. This is the easiest way to see how a weak dollar tends to offset the positives of tax reform. We experienced this before in the George W. Bush administration which paired a tax cut with a weak dollar policy and we know what that got us....I suspect markets - especially stocks - are in for a bit of a reality check. Expectations for growth are sky high and if I'm right about tax reform being a short tern negative, we are set up for disappointment....I am increasingly concerned about the impact of the falling dollar...A falling dollar drives investment to hard assets like gold, real estate and commodities."

Peak Gold Production Could Drive Prices Up -Money Morning
"Peak gold represents a watershed event for the yellow metal....In short, peak gold is the year in which gold miners extract as much of the yellow metal out of the ground as they ever will. Since 2015, production from gold mines has been flattening, according to data from Metals Focus. If the estimates for 2017 prove correct, peak gold happened in 2016. Metals Focus foresees a further decline this year. 'We're pretty close to [peak gold] if we're not at it,' World Gold Council Chair Randall Oliphant told Bloomberg last September at the Denver Gold Forum. Peak gold will fundamentally change the gold market by permanently restricting supply. And that in turn will serve as a major catalyst to gold prices and gold mining stocks for... well, forever....The shrinking supply is bound to drive prices up as gold-buying demand at least remains steady in 2018 and beyond. This is the perfect storm gold investors have been waiting for."

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1.16.18 - China Downgrades US Credit Rating to BBB+

Gold last traded at $1,334 an ounce. Silver at $17.15 an ounce.

Why cryptocurrencies cannot be digital gold -Forster/Financial Times
"I struggle to understand why so many are still cheerleading for crypto, especially the technorati. The entire edifice is so evidently internet bubble 2.0, plus a huge concomitant energy-hogging environmental impact. Digital 'assets' that can't be censored or counterfeited may be a technical marvel, but are not fit for purpose as currencies and none of it is scalable. Cryptos' underpinnings are worse than those of the dotcom era, as billions of people were already getting value from the internet at the time of that bubble. Crypto is not 'digital gold', justifying market capitalizations equivalent to the world's gold holdings. Gold and other precious metals have no substitutes - there is only one periodic table. While there may be scarcity of any given cryptocurrency, there is an infinite number of possible cryptocurrencies and so no sustainable scarcity value. Millions will be burnt financially when the bubble bursts. Everyone needs to be educated about this Ponzi-like madness."

Mr. Forster poses some very good arguments. Because the jury is still out on the future of bitcoin and cryptocurrencies, now is the time to understand the pros and cons before taking action. Get the facts in our free 2018 Real Money Perspectives newsletter, The Future of Money.

Aloha Aloha Apocalypse – How Prepared Are You? -Pontification Blog
"'Ballistic missile threat inbound to Hawaii,' said the warning sent Saturday morning to 1.4 million island state residents. 'Seek immediate shelter. This is not a drill.' But the terrifying alert from Hawaii's Emergency Management Agency was the result of a test in which 'an employee pushed the wrong button' during a shift change, Governor David Ige (D) later announced. Within three minutes the U.S. Pacific Command confirmed that North Korea had launched no missile at Hawaii, so cool and steady President Donald Trump continued his golf game in Florida. In Hawaii, however, the badly-mismanaged, state-caused alert spread for 38 minutes before being fully countermanded. Residents are accustomed to dire warnings, such as the tsunami warning that once caught my wife and me on Maui....What could make us safer today? America needs to become more decentralized, resilient, and self-reliant, not dependents on ever-bigger, more centralized government handouts that could vanish in national emergencies...If we do this, the warning of Hawaii could prove to be a sobering blessing."

Dow Industrials Top 26000 for First Time -Wall Street Journal
"The Dow Jones Industrial Average crossed 26000 for the first time Tuesday, just seven trading sessions after closing above its last 1000-point milestone. The blue-chip index gained 273 points, or 1.1%, to 26076 shortly after the opening bell. If the Dow industrials close above 26000, the jump from 25000 would be the fastest 1000-point leap in its 120-year history. Tuesday's historic rise builds on the Dow's 25% gain last year and its seemingly unstoppable climb to start 2018....'We have a high level of confidence in fourth-quarter earnings numbers,' said Tom Wright, head of equities at JMP Securities. 'But there's an even higher level of optimism around what forward guidance will be now that we have a new corporate tax structure."

2018: The Year of Living Dangerously -Rickards/Daily Reckoning
"I'm calling 2018 'The Year of Living Dangerously.' That description might seem odd to lot of observers. Major U.S. stock indexes keep hitting new all-time highs. 2017 went down as the first calendar year in which the Dow Jones industrial average was up for all 12 months....To understand why 2018 may unfold catastrophically, we can begin with a simple metaphor. Imagine a magnificent mansion built with the finest materials and craftsmanship and furnished with the most expensive couches and carpets and decorated with fine art. Now imagine this mansion is built on quicksand. It will have a brief shining moment and then sink slowly before finally collapsing under its own weight....What happens when you print $8.3 trillion in money and only get $2.1 trillion of growth? What happened to the extra $6.2 trillion of printed money? The answer is that it went into assets. Stocks, bonds, emerging-market debt and real estate have all been pumped up by central bank money printing....'Inflation' is not in consumer prices; it's in asset prices....Student loan debt is over $1.4 trillion, and default rates are over 20%....The tax bill will add $2 trillion or more to the deficit, something the U.S. can ill afford....A catastrophic wave of emerging-market defaults is coming....A war is coming between the U.S. and North Korea, probably by this summer."

China Downgrades US Credit Rating From A- To BBB+ -Zero Hedge
"Chinese credit rating agency Dagong downgraded US sovereign ratings from A- to BBB+ overnight, citing 'deficiencies in US political ecology' and tax cuts that 'directly reduce the federal government's sources of debt repayment' weakening the base of the government's debt repayment....'Deficiencies in the current U.S. political ecology make it difficult for the efficient administration of the federal government, so the national economic development derails from the right track,' Dagong said adding that 'Massive tax cuts directly reduce the federal government's sources of debt repayment, therefore further weaken the base of government's debt repayment.'....'The virtual solvency of the federal government would be likely to become the detonator of the next financial crisis,' the Chinese ratings firm said....'The market's reversing recognition of the value of U.S. Treasury bonds and U.S. dollar will be a powerful force in destroying the fragile debt chain of the federal government,' Dagong said."

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1.12.18 - Gold's Amazing Rate-Driven Rally

Gold last traded at $1,334 an ounce. Silver at $17.14 an ounce.

NEWS SUMMARY: Precious metal prices rose to 5-week highs Friday on strong fundamentals and a declining dollar. U.S. stocks rose as J.P. Morgan Chase, BlackRock and Wells Fargo all reported better-than-expected quarterly earnings.

Gold Confounds Skeptics With Rate-Driven Rally -Seeking Alpha
"The yellow metal is on track for its fifth straight weekly gain....Many stock market and gold bulls view rising rates as a confirmation that the U.S. economy is improving. This has provided them with an extra incentive to increase their holdings in both asset categories. Gold, however, is also benefiting from the gradual increase in inflation. This steadily rising inflationary pressure is clearly reflected in the extended rally in crude oil price and has only recently begun to be reflected in gold and other commodity prices...Consequently, when oil prices are on the upswing gold prices normally follow the lead soon thereafter....It should also be mentioned that as the dollar's value weakens, the euro currency rises, which also serves to boost demand for gold by making dollar-priced bullion cheaper for European investors....Market forces remain technically favorable for continued rising prices, and the historical pattern for a bullish January for gold is also to the metal’s benefit."

crypto Why blockchain is a belief system -Alphaville/Financial Times
"In an interview with Fox Business on Tuesday, JP Morgan CEO Jamie Dimon back-pedaled on his September claim that bitcoin is a fraud 'worse than tulip bulbs'. He said 'he regretted' making the remarks because they dismissed the technology in broad terms....According to Bloomberg, Dimon 'believes in blockchain' - a turn of phrase that speaks volumes about the state of the technology being advocated. However, 'blockchain' as a phrase is entirely meaningless. For the most part it is just a bundle of pre-existing technologies brought together in a cryptocurrency context to solve a problem most of the regulated financial system does not have: a lack of trusted intermediaries....To all other extents and purposes, blockchain in its original bundle is not cheaper to run, not more efficient to operate and certainly not faster than the conventional settlement system. Proof of this comes in bitcoin's own payment dysfunctionality. Moreover, since banks don't actually want or need immutable ledgers or trustless systems, that leaves only one aspect of the technology with any potential use: its resilience and security features against hacking. Ironically, this feature is often the first thing dropped by those adapting the tech for official business due to its expense."

The Gift Horse Of Government Shutdown -Daily Caller
"The threat to shut down the government if Republicans don't provide for some sort of legal status to the so-called Dreamers. To which I say: Don't look a gift horse in the mouth. Regardless of where you stand on immigration - wall up or open borders - the proper response to Democrat threats of government shutdown is: 'You promise?' The short of it is this: If Congress doesn't pass a bill to fund the government by January 19, the government will 'shut down.' In order to pass such a measure, Republicans need at least some Democrats. But Democrats are refusing to support any such spending bill unless it includes legal status for the so-called Dreamers and Republicans refuse to do that without border security measures that Democrats so far say they will not support. The president should view this not as a bind - but as a boon. The Democrats are threatening something that libertarians have longed for, but have never had the political clout to carry through. If libertarian-leaning members of Congress can't find the chutzpah to corral this Democratic gift horse, let's hope President Trump brings his best bravado to the stand-off, and says 'make my day' and not 'make a deal.'....Now it would be better to make targeted cuts than having an untargeted government shutdown. But a government shutdown might actually get that conversation started about getting us to a smaller, more sustainable government. Something more like what the Founders envisioned when they wrote the Constitution."

Pew: US media bias ranks worst in the world -Washington Examiner
"More than in any other country, Americans on both sides of the political aisle believe the media does a poor job covering political issues fairly, according to a blockbuster new survey of media consumption in 38 nations. What’s more, the Pew Research Center's study found that supporters of President Trump believe the media is doing a worse job covering politics than the supporters of any of the other international political leaders in countries surveyed....The survey found that just 21 percent of Americans supportive of Trump and Republicans believe the media is fair. Some 55 percent of those who don’t back Trump also believe the media is fairly covering politics in the U.S."

North American Bitcoin Conference No Longer Accepting Bitcoin Payments -Slate
"The North American Bitcoin Conference, which will take place in Miami next week, is no longer allowing people to pay for tickets with cryptocurrencies due to 'network congestion and manual processing' issues. The ticketing page for the conference notes that it had accepted such forms of payment up until 14 days before the event, but that bitcoin transactions would not be possible for last-minute buyers because of 'print deadlines.' Moe Levin, the conference's organizer, told Bitcoin.com, 'We wish this was easier, but no ticketing options exist which can handle large volumes of ticket sales, and transaction fees on the Bitcoin blockchain exceed $30 at certain times of the day.' His team is reportedly trying to find a way to implement cryptocurrencies with lower transaction fees, such as bitcoin cash, into the payment system. Yet, as Levin notes, it's difficult to set up crypto payments when ticketing services like Eventbrite don't accept bitcoin yet. The news underscores concerns that Bitcoin is, at the moment, virtually useless for making payments. A number of vendors have actually stopped accepting it for purchases due to its wildly fluctuating value and high transaction fees."

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1.11.18 - Economists Credit Trump for U.S. Growth

Gold last traded at $1,322 an ounce. Silver at $16.96 an ounce.

NEWS SUMMARY: Precious metal prices rose Thursday on momentum trading and a sharply lower dollar. U.S. stocks rebounded as investors bet that 2018 earnings and economic growth would pick up steam.

6 Reasons Why Gold Is Headed Higher In 2018 -Kitco
"Following are six elements working in favor of the gold market bulls and that should continue to support upward price movement in the precious metal. 1. Rising Government Bond Yields. A feature in the marketplace this week is rising world government bond yields (falling prices)....2. Technically Bullish Euro Currency: The weekly Euro currency futures chart shows prices in a longer-term uptrend and just recently hitting a three-year high....3. Bearish U.S. Dollar Index: A drop in prices below chart support the 2017 low would produce major longer-term technical damage to suggest another leg down in the USDX in the coming months....4. S&P 500 Looking Toppy: The weekly continuation chart for nearby S&P 500 futures does show bearish divergence with the Relative Strength Index (RSI)....5. Nymex Crude Oil Market is On Fire: The raw commodity sector leader, the oil market, hit a three-year high this week....6. Gold Charts are Bullish: The yellow metal sees prices are in a longer-term uptrend...The recent rally in prices has given the bulls some fresh technical momentum."

crypto It Is Silly Season in the Land of Cryptocurrency -The Atlantic
"The excitement about bitcoin and blockchain is sort of like the dot-com bubble - if nobody in 2000 was quite sure what the internet was for. In October, the Colorado biotech company Bioptix changed its name to Riot Blockchain. The company's valuation doubled within a few days....Weeks later, the British company Online PLC changed its name to Online Blockchain. The company's shares jumped 400 percent. In December, the Long Island Iced Tea Corporation - which, as you might expect, sold iced tea - rebranded itself Long Blockchain. The company's shares promptly rose nearly 300 percent. On Tuesday this week, the legacy photography company Kodak announced the launch of KODAKCoin, a 'photo-centric cryptocurrency to empower photographers and agencies to take greater control in image rights management.' The stock rose 80 percent in a matter of hours. It is officially silly season in the land of cryptocurrency. To borrow a reference from the show Portlandia, this is the 'put a bird on it' stage of crypto, where seemingly every multinational company, small business, and fledgling entrepreneur is desperately slapping blockchain onto press releases and venture-capital pitches....At the most basic level, blockchain is a record of information stored on a network of computers. When people use a cryptocurrency like bitcoin to buy a pizza, a kilogram of illegal drugs, or a yacht, these digital transactions are approved by a network of computers around the world running bitcoin software. Each batch of these transactions - a 'block' - gets a cryptographic code, a copy of which is posted to every computer in the network. These blocks are permanently linked to each other in a 'chain' of publicly approved transactions that cannot be edited. Thus, blockchain....Even blockchain's biggest defenders can't say what the technology’s most obvious consumer use-cases are going to be, because they plainly don't exist yet. It is possible they never will....The investor appetite in all things blockchain will encourage an orgy of trial and error. It is inevitable that many of these ideas will shortly prove themselves to be pointless."

Bitcoin Tumbles After South Korea Prepares Bill To Ban Crypto Trading, Raids Largest Exchanges For Tax Evasion -Zero Hedge
"South Korea’s justice ministry said on Thursday it was preparing a bill to ban cryptocurrency trading through its exchanges. 'There are great concerns regarding virtual currencies and justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges,' said Park Sang-ki at a press conference, according to the ministry’s press office. He added that he cannot disclose details about the proposed shutdown of virtual currency exchanges but will jointly work with the government task force. Ripple is down 25% today and now down 20% YTD....Reuters reported that in the latest crackdown against the frothy sector, South Korea's largest cryptocurrency exchanges, including Bithumb and Coinone, were raided by police and tax agencies this week for alleged tax evasion. An official at Coinone, one of the country's largest crypto exchanges, told Reuters that 'a few officials from the National Tax Service raided our office this week.' He added that 'local police also have been investigating our company since last year, they think what we do is gambling,' said the official, who spoke on condition of anonymity. He said Coinone was cooperating with the investigation. On Wednesday tax authorities also raided, Bithumb, the second largest virtual currency operator in South Korea. 'We were asked by the tax officials to disclose paperwork and things yesterday,' an official at Bithumb said, requesting anonymity due to the sensitivity of the issue....As a result of Bitcoin's record surge last year, demand for cryptocurrency in South Korea has exploded, drawing college students to housewives and sparking concerns about a gambling addiction."

Economists Credit Trump for U.S. Growth, Hiring and Stocks -Wall Street Journal
"Economists surveyed by The Wall Street Journal say President Donald Trump has had generally positive effects on U.S. economic growth, hiring and the performance of the stock market during his first year in office. The professional forecasters also predicted 2018 would see solid growth and a continued decline in the jobless rate. One factor: the tax cuts signed into law by Mr. Trump in December, which most economists say will boost the economy for several years at least. Asked to rate Mr. Trump’s policies and actions to date, a majority of economists said he had been somewhat or strongly positive for job creation, gross domestic product growth and the stock market. Most also said he had been either neutral or positive for the country’s long-term growth trajectory, while his influence on financial stability was seen as largely neutral....Looking forward, the economists surveyed in recent days had high hopes for 2018. On average, the forecasters predicted GDP would expand a healthy 2.7% this year."

History Proves You Can’t Drain the Swamp -Bonner/Bonner And Partners
"We now have a great treasure trove of historical research proving that you can't drain the Swamp! It's almost impossible. The rich get richer. And richer. And richer. The Swamp gets deeper. And deeper. And deeper. Then, suddenly, a 'leveling' comes along - plague, war, revolution... or the collapse of government....Many are the economists - especially in the pages of The Wall Street Journal - who claim that the recent tax cut will help everyone by 'stimulating' the economy. Maybe. But the U.S. economy has been so stimulated with cheap money already, it practically has the shakes. Someone has to pay for the resources the feds use. So unless there is a spending cut - which there ain't - the tax cut is better understood as a payoff to the rich than a boon to the economy. It shifts the burden of the government from today's rich political campaign contributors onto future generations, unknown bondholders, and unaware consumers. Who will ultimately pay? We don’t know... but it won't go unsettled forever. How long can this go on? Well... according to Walter Scheidel’s book, The Great Leveler, it can go on for a long time... until it can't go on anymore....Once entrenched and in control of the government, the insiders don't roll over. You can't drain the Swamp, in other words; the whole system has to blow up first. When that happens, debts will be erased. Assets will be wiped out. And the rich will hide their wealth... or lose it."

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1.10.18 - Safe Haven Buying Lifts Gold Prices

Gold last traded at $1,319 an ounce. Silver at $17.03 an ounce.

NEWS SUMMARY: Precious metal prices rose Wednesday on safe haven buying and a weaker dollar. U.S. stocks retreated following China's plan to reduce purchasing of U.S. Treasury debt.

China moves to shutter bitcoin mines -Financial Times/CNBC
"China is moving to eradicate the country's bitcoin mining industry over concerns about excessive electricity consumption and financial risk, reflecting authorities' judgment that cryptocurrencies are not a strategic industry. A multi-agency task force has instructed provincial governments to 'actively guide' companies in their respective regions to exit the cryptocurrency mining industry, according to a document seen by the Financial Times. The move to pressure miners follows China's shutdown of local bitcoin exchanges and its ban on initial coin offerings. Miners create new bitcoins by solving complex math problems whose solutions are used to validate new bitcoin transactions....China mines about three-quarters of the world's bitcoins, according to Liao Xiang, chief executive of Lightningasic, a Shenzhen-based mining operation. Chinese miners have taken advantage of cheap electricity in regions rich in coal or hydroelectric power, including Xinjiang, Inner Mongolia, Sichuan and Yunnan."

China Markets Turmoil On China Treasury Purchase Halt News -Zero Hedge
"It was a relatively quiet session until a little after 5am ET when all early-morning market moves were superseded by aggressive cross-asset reaction - largely in the form of dumping anything US-linked - to a Bloomberg report that China is reconsidering its UST holdings. The dollar, US equity futures and US Treasurys all sold off on the report, while spot gold spiked higher....The dollar pared its weekly gains, and is back to a 92.00 level, as the UST curve steepens while the yen extends a rally on growing speculation the Bank of Japan may taper its unprecedented monetary easing, a process which was unveiled on Monday night. Treasury yields spiked on news that Chinese officials reviewing foreign-exchange holdings are said to have recommended slowing or halting purchases of Treasuries, with the yield rising as high as 2.59%...Reduced asset purchases by the world's top central banks, rising commodity prices and looming U.S. debt sales all support the case for higher bond yields, but until now they have proved resilient. The move in benchmark Treasuries on Tuesday - into what bond veteran Bill Gross declared a bear market - has left traders weighing where yields will go from here and what impact the change will have on other assets. And, as Jeff Gundlach discussed last night, once 10Y yields rise above 2.63%, all bets are off, even for the S&P."

Global Asset Allocation Update: Speculation Rampant -Alhambra Partners
"The extreme overbought condition of the US stock market persists so I will continue to hold a modest amount of cash....And there is no doubt that speculation is rampant in the global economy. Everyone knows about the recent purchase of an alleged Da Vinci painting for nearly a cool half billion dollars. But that is merely the latest example from the art world....Bitcoin is a product of the same speculative tilt to the global economy, a token that entitles you to exactly nothing of value. Yeah, yeah, I've heard about the revolutionary (how does one sneer in print?) blockchain technology that underlies Bitcoin and other cryptocurrencies. In fact, I've spent numerous hours reading detailed research on the topic and have yet to find a problem for which it is the ideal solution. Indeed, I haven't come up with anything for which it is a better solution than what currently exists....With this as context does anyone believe that the Fed raising the Fed funds rate – a market that basically doesn't exist anymore – to 1.5% will do anything to deter this useless activity? The Fed set out on this monetary policy experiment with the goal of coaxing people into taking risk in the hopes that it would raise asset prices and create economic activity. In other words, it is just that same old trickle down theory gussied up in a new monetary policy disguise. With endorsements from most every liberal economist – and plenty of conservative ones – it is the socially acceptable voodoo economics....Gold has also performed well in the weak dollar environment and long term momentum is still positive."

Gold taps highest levels in four months as dollar sinks -Marketwatch
"Gold prices climbed Wednesday to touch their highest levels in nearly four months, as the dollar tumbled against major rivals. February gold advanced $6.80, or 0.5%, to $1,320.50 an ounce after tapping a high of $1,328.60 - the highest intraday level since Sept. 15, FactSet data show. The ICE U.S. Dollar Index - a gauge of the greenback against a half-dozen rivals - slid 0.4% on the heels of a three-session uptrend for the currency. The dollar fell more than 1% against the yen, after the Bank of Japan’s move this week to trim long-dated government bond purchases....The recent downdraft for the buck also comes as a number of Federal Reserve members have stirred some doubt about the pace of interest-rate increases in 2018 - with some pointing to it potentially exceeding the two or three that the market has priced in - due to concerns that recent fiscal stimulus measures could overheat the economy....Then on Wednesday, bonds continued their selloff after Bloomberg reported that China is considering halting or cutting its purchases of U.S. government paper. Sources told the news outlet that China found that U.S. bonds were becoming less attractive and that trade tensions with the U.S. could provide a reason to stop buying American government paper."

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1.9.18 - What Bitcoin is Teaching about Economics

Gold last traded at $1,313 an ounce. Silver at $17.01 an ounce.

NEWS SUMMARY: Precious metal prices eased back Tuesday on profit-taking and a firmer dollar. U.S. stocks touched fresh record highs on optimism ahead of earnings season.

Bubbles pervade world economy -Lachman/AEI
"In 1933 Sir John Templeton, the renowned fund manager, famously remarked that the investor who says 'this time is different' has uttered among the four most costly words in the annals of finance. He might well have been speaking about modern policy-makers and investors, who try to convince themselves that the bubbles in the global economy will have a happier ending than previous ones. Bubbles are much more pervasive today than in the run-up to the 2008 financial crisis, when they were contained to the US housing and credit markets. Now they can be found in almost every part of the world economy....That the world is much more indebted than it was on the eve of the Lehman Brothers crisis aggravates matters further. High levels of Chinese non-public sector debt, Italian sovereign debt, and emerging market corporate dollar-denominated debt are especially troublesome. Changes in leadership at the Federal Reserve and US Treasury mean neither institution has the experience to craft a swift and decisive response to the bursting of a global bubble....Long before Templeton issued his 'this time is different' warning, Leo Tolstoy wrote that 'happy families are all alike; every unhappy family is unhappy in its own way.' When analysts look back on 2018's global financial markets, they might find that Tolstoy's dictum was as relevant as Templeton’s as a cautionary tale for both investors and economic policy-makers."

gold Gold Is Beating Everything Since the Fed Raised Rates -Bloomberg
"Gold’s outperformed most major assets since the U.S Federal Reserve last month raised interest rates - even bitcoin. 'Since the December hike, gold is beating stocks, the dollar and bitcoin,' Bloomberg Intelligence analyst Mike McGlone wrote in a note. 'Unless greenback weakness reverses, gold should shine.' The metal’s sparkling performance in the face of tighter rates, though counter-intuitive, has become the norm. Gold prices have been turning higher soon after the Fed raises rates ever since the global financial crisis. Since Dec. 12, the day before the Fed moved, gold climbed 5.7 percent to $1,314.36 an ounce, last week touching the highest level in three months. The S&P 500 Index gained 3.1 percent in the same period and bitcoin was down 14 percent. Gold's advance was driven by the dollar, which fell 1.5 percent."

Bitcoin is teaching libertarians everything they don't know about economics -Washington Post
"Bitcoin changes prices too quickly to be a currency and processes transactions too slowly to be a payments system, but it is juuust right for teaching libertarians everything they don't know about economics. Not that they're paying attention. If you listen to bitcoin's biggest backers, it's supposed to be our gleaming future, one where we can make money just by holding it, move it anywhere in the world for free, and no longer have to depend on banks or governments to do the right thing....The first thing they don't understand is that money isn't just a store of value. It's also a medium of exchange...And if it's going to be much of one, then it not only has to avoid losing too much value, but also gaining too much. Otherwise, why would you ever spend it? You wouldn't....The second thing they don't get is that trust makes economies more and not less efficient. Bitcoin is best understood as an attempt to rewrite the rules of our money and our financial system so that your savings are safe no matter what happens in Washington or on Wall Street or whatever digital version of them springs up. To make it so nobody has to trust anybody....Bitcoin is a revolutionary technology built on reactionary economics. That first part has blinded people to the second - how could something so clever be so useless? - but it's true. Bitcoin's strictly limited money supply harks back to a time when money was a shiny rock you dug out of the ground, not a piece of paper with a dead president (or treasury secretary) on it."

Retirement Tips: 4 signs you're the target of a Ponzi scheme -Fisher/USAToday
"Yes, there are clever crooks trying to scam you. Always were. Always will be! And with the internet, it's increasing. So protect yourself by learning to recognize the four common traits of the criminals running these scams....Protecting yourself means knowing the signs that an 'investment' is actually a Ponzi scheme. 1) CUSTODY OF MONEY - Custody is the biggest red flag. Never allow any investment decision-maker to literally get their hands on your money....2) NO BAD YEARS - Invest only with those who’ve had visibly bad years. Madoff claimed consistent 10% - 12% returns for decades. Never happens....3) JARGON - If you can't understand in simple English, run. This cycle's hot innovation is phony Bitcoin jargon, over 1,700 of these ponzis....4) REFERRALS - Finally, they sell through your friends and through relatives. Most Ponzi schemes target the five Cs: churches, charities, communities and country clubs, to gain trust."

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1.8.18 - Which Asset Bubbles Will Pop First?

Gold last traded at $1,320 an ounce. Silver at $17.17 an ounce.

NEWS SUMMARY: Precious metal prices steadied near 3-month highs Monday on a firmer dollar. U.S. stocks stalled as investor paused to reflect after pushing indexes to new highs last week.

Visa bans cryptocurrency backed cards -CNBC
"Visa ended its relationship with a large cryptocurrency card provider on Friday, causing thousands of people's transactions to be declined and scrambling to figure out how to access their money. The card provider, WaveCrest, confirmed in an email to CNBC that it was required 'to immediately close all Visa cards.' 'As a licensed E-Money Institution, WaveCrest is required to safeguard funds to cover all of its issued electronic money and we can confirm that these funds are safe and available for redemption through other channels,' the statement read. Visa said in a statement that 'it recently terminated a single prepaid card issuer in Europe from our network for violating Visa's operating regulations. That issuer, WaveCrest, was required to close its Visa card products, some of which were linked to cryptocurrency wallets.'....Now these cards are invalid."

Will cryptocurrencies ever spend like other government-backed currencies? Visa has decided the answer is no for now. Some financial analysts are calling cryptocurrencies like bitcoin a ‘bubble’, others refer to it as a ‘mania’ - still others are convinced it is the future of money. In our 2018 newsletter, The Future of Money, we explore this exciting (but also risky) new world of cryptocurrencies so you can decide for yourself. Request a Free copy

climate 2018 Predictions - Part Three Ice and Fire: Coming Weather & Climate -Pontification Blog
"Days ago, as the Northeast was battered by some of the coldest weather in a century, global warming huckster Al Gore claimed that the chill was a sign that Earth is getting warmer, not colder. Global warmists say that snow happens when warmth evaporates water into the air, where it freezes into snow...But January 2018's record cold caused relatively little snow. It was mostly just Arctic cold that could cause frostbite in minutes, or even death. Severe cold is far more frightening than global warming. It is evidence that Earth's climate may be returning to 'normal,' which is much, much colder than the 20th Century's balmy climate. We soon may pray for ways we can warm the planet....Dr. John A. Eddy studied another solar cycle in which roughly every 1,000 years the Sun seems to turn up its thermostat for a period of around 150 years, then rapidly cools, causing Earth to plunge back to drastically colder temperatures....This latest period of a warmer-than-usual Sun, if Eddy's cycle continues, is now overdue to end abruptly. What could this change be like? Like recent weather....Just as leaked emails exposed deceit in the 2016 election, leaked 'Climategate' emails between warming-advocate scientists exposed their boasting to one another about how they have rigged data to 'hide the decline' in world temperatures..." Full story

Which of these asset bubbles will pop first? -Crudele/New York Post
"There are any number of bubbles in financial assets right now. This seems like a good time to guess which are going to pop first. Here are the candidates: Bonds: There’s no doubt that bond prices will decline in 2018. But will the bond market bubble - which has been building for more than 10 years - actually blow?....The stock market: Stocks have not been acting in a rational way. In normal times, the stock market is like the tide. There's a high tide when people make money, but then the water recedes, which is when people take profits....If you believe in the 'Don’t fight the Fed' mantra, know that the stock market is going to get slapped in the face in 2018. Bitcoin: - or 'bitcon' - is a confidence game. A scam. It will exist and move higher for as long as extremely wealthy people are willing to prop it up in hopes that suckers remain confident that bitcoin has some value....Art: A $450 million painting (the Leonardo da Vinci sold last month)? Please! The market for high-end art is in such a bubble that Whistler would be embarrassed to tell his mother....Real estate: Any house affected by the tax law changes - meaning anything that you will need a $1 million mortgage to buy - should have a problem."

Cryptocurrencies are plunging, led by ripple -CNBC
"Ripple crashed more than 30 percent on Monday. It traded at $2.18, according to Coinmarketcap.com. Other cryptocurrencies also fell on Monday but not the extent of ripple. Bitcoin was off by 15 percent, while ethereum fell 8 percent according to Coinbase....But contrary to many digital currencies, ripple has been working with large institutions, giving it an aura of legitimacy and practicality. However, cryptocurrency enthusiasts say that centralization is the exact opposite of what the technology of the digital currencies should be about. 'The reason ripple is surging so much is it's a bubble,' said Erik Voorhees, CEO of digital asset exchange ShapeShift and a vocal advocate for bitcoin as a way to separate money and the state. 'Testing crypto with banks doesn't make sense. The whole idea of crypto is you don't need banks.'"

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1.5.18 - The Rise of Bitcoin Rivals

Gold last traded at $1,322 an ounce. Silver at $17.27 an ounce.

NEWS SUMMARY: Precious metal prices steadied near 4-week highs Friday on a firmer dollar. U.S. stocks hit fresh record highs as investors shook off disappointing December jobs report.

After Dow 25,000, the Party Has to End. But When? -New York Times
"In the midst of a long-running bull market that is now reaching momentous proportions, most investors may well have forgotten that just two years ago, during the first five trading days of 2016, the market dropped 6 percent. It was the worst five-day start to a year ever and supposedly a harbinger of bad times. We know where that ended. Spurred by Donald Trump's election that November, market indexes surged to record levels and went far higher this year....And that may not be such good news for investors. 'If there are any certainties, one will be that this party will eventually come to an end,' according to James Stack, a market historian and president of InvesTech Research. 'A correction would be healthy. The longer we go without one, the greater the risk this will end badly. A lot of people will get hurt. And when it ends, it will end badly, and with high volatility.'....'Most bull markets die by the sword of the Fed,' Mr. Stack said."

RMP18 What is the Future of Money in 2018? -Real Money Perspectives
"2017 was a transformational year for America. A new president, major tax reform, record breaking asset prices and the rise of cryptocurrencies. Will 2018 bring another year of strong economic growth and record asset prices? Or, is it perhaps wise to be a bit more cautious this year? Is smart money taking some of their profits off the financial table to tuck it into safer havens? Our 2018 issue of Real Money Perspectives offers readers a panoramic view of the terrain ahead from some of the world’s brightest financial minds of our time. Cryptocurrencies, like bitcoin, have become the latest rage. Some are calling bitcoin a ‘bubble’, others refer to it as a ‘mania’ - still others are convinced it is the future of money. Together we will explore this exciting new world of cryptocurrencies so you can decide for yourself." Request a Free copy

7 reasons why investors should go for gold in 2018 -Marketwatch
"The big story for investors in 2017 was the broad-based rally in stocks. Simply by owning equities of any shape or size, you likely made out very nicely....Amid this risk-on rally, many investors likely overlooked gold. However, 2018 is increasingly shaping up to look like a breakout year for the precious metal. Here’s why: 1. A new floor: From a technical perspective, gold hasn’t looked this good in a long time....2. Short-term momentum....3. Asset rotation....4. Strong global demand....5. Weak production....6. Soft dollar....7. Cryptocurrencies can't compete: Lest you think the crypto craze sapped demand for gold, it's important to remember that the nice appreciation for the precious metal in 2017 came even amid bitcoin's big run...Goldman Sachs reported 'no discernible outflow of gold' as traders and institutional investors were given another fashionable way to play the crypto market. Gold is a haven for a reason, and no fashionable asset craze can change that."

The Rise of Bitcoin Competitor Ripple -New York Times
"The explosion in Ripple's value over the past month is the starkest illustration yet of how the mania around Bitcoin has spilled over into a broader universe of virtual currencies. These coins - with names like Cardano, Stellar, and Iota - are generally new twists on the Bitcoin technology, which uses a decentralized network of volunteer computers to keep a record, known as a blockchain, of all transactions....While most of these currencies were worth nearly nothing a year ago, many are now responsible for creating billionaires - albeit with rapidly fluctuating fortunes. If this is a tulip fever, the fever has spread to chrysanthemums and poppies....'This is beyond insane,' said Jeremy Gardner, an investor who previously worked at the virtual currency hedge fund Blockchain Capital, which invested in Ripple. 'There’s absolutely nothing driving this rally except rampant FOMO (Fear Of Missing Out), misinformation, and speculation.' Ripple, whose tokens are known as XRP, is far from the only virtual currency being fueled by the hysteria....'An impossibly long list of things already needs to go right for XRP to become a reserve currency for banks,' Ryan Selkis, a virtual currency analyst, wrote in a post on Thursday. But, Mr. Selkis added, that doesn't mean Ripple's price won't keep ascending. Why? 'Because this is crypto, and everyone in the industry is now slinging crack crypto cocaine to retail addicts,' he wrote."

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1.4.18 - How the IRS Will Target Bitcoin

Gold last traded at $1,321 an ounce. Silver at $17.26 an ounce.

NEWS SUMMARY: Precious metal prices rose Thursday on growing bullishness and dollar weakness. U.S. stock indexes rushed to new, all time highs on investor confidence and strong jobs data.

Dow Crosses 25,000 for First Time -Wall Street Journal
"The Dow Jones Industrial Average jumped past 25,000 for the first time Thursday, on pace to notch the fastest run to a fresh 1000-point milestone in history....Thursday's moves marked the latest feat for a rally that has repeatedly wrong-footed skeptics and sent stock indexes around the world to multiyear highs. The Dow industrials hit five thousand-point milestones last year, the most such records in its 120 years. Faster economic growth around the globe and improving sentiment from consumers and businesses - both of which were elusive for many years since the financial crisis a decade ago - have helped power this rally in recent weeks. A raft of economic data in the first days of the new year continued to suggest steady expansion in the U.S., China and Europe....'A big question for this year is how quickly the Fed is going to get back to neutral,' said Mark Heppenstall, chief investment officer at Penn Mutual Asset Management."

IRS How the IRS Will Target Bitcoin Users -Nessman
"On November 28, a federal judge ordered Coinbase, a company that facilitates transactions in crypto-currencies like Bitcoin, to comply with an IRS summons to identify more than 14,000 user accounts....It's safe to say that the Coinbase summons is only the tip of the iceberg in a market with the capital value of Bitcoin now approaching $300 billion....To predict how the IRS crackdown will unfold, it's important to understand how the agency views transactions in crypto-currencies. In 2014, the IRS announced that Bitcoin and other 'virtual currencies' would be treated as property for federal tax purposes. This means that the concepts of capital gains and capital losses apply. For instance, if the value of the cryptos you hold increases, the gain in value must be computed and reported each time you sell, spend, or otherwise dispose of them. On the other hand, if you simply buy and hold cryptos, no tax is due. Capital gains tax will be due on the gains. This would be assessed at a top rate of 20%....If you get paid in crypto-currency, that income is considered ordinary income at the dollar value of the crypto-currency you received at the time you received it."

Bitcoin investors will crawl back to gold when crypto-craze uncertainty creeps in -RT
"The hype around digital currencies like bitcoin may have stolen a chunk of the demand for gold, but the precious metal has proven itself a liquid and efficient investment, according to Agnico Eagle Mines CEO Sean Boyd. 'I actually think you can build a much stronger case for gold in an environment where bitcoin is drawing this kind of investor interest,' Boyd said, highlighting unaddressed risks, still posed by virtual currencies. Boyd's Agnico Eagle Mines is a Canadian-based gold producer with operations in Canada, Finland and Mexico and exploration and development activities extending to the US. Our sense is that investors are starting to do their homework, revisiting the high-quality gold equities, so there is a sense that gold's about to turn here. We wouldn't be surprised to see gold between $1,400 and $1,500 within the next 18 months or so,' he said."

So What Comes Next & How Can We Prepare For It? -Charles Hugh Smith/Peak Prosperity
"So what happens next? Can central banks raise rates without popping the bubbles the system needs to remain solvent? Or can they keep yields near zero and keep pushing asset valuations higher for years or decades to come? I hate to spoil the ending, but the short answer is: these are incompatible goals. The central banks cannot raise yields and push asset valuations higher, nor can they eliminate the systemic risk generated by extreme valuations and leverage....Extreme financial policies generate unintended consequences as a result of being extreme: a moderate policy wouldn't have the 'whatever it takes' impact, but it also wouldn't jam all the levers to maximum. Once the levers are on maximum, the extremes generate instability and blowback, as those who benefit from the extremes are incentivized to go even deeper into speculative gambles in the mistaken belief that 'the central banks have my back' while those who did not benefit express their dissatisfaction in the political arena, a dynamic that is often dismissed or derided as 'populism.' Central banks have suppressed measures of volatility in an effort to mask the rising risk that their policy extremes will trigger."

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1.3.18 - Why The Fed Can't "Normalize" Markets

Gold last traded at $1,318 an ounce. Silver at $17.26 an ounce.

NEWS SUMMARY: Precious metals prices steadied near 3-month highs Wednesday on a firmer dollar. U.S. stocks rose to all-time highs as rising blue chip stocks propelled the tech sector higher.

Gold looks strong for 2018 -FX Street
"After moving sideways for most of November then suddenly dropping at the beginning of December, the precious metal surged to finish off 2017 strongly which continued for the first few days in 2018. Three interest rates hikes by the US Federal Reserve last year as well as three more planned hikes this year have not been enough to subdue the gold price and the usual pattern of higher rates, lower gold prices may be falling by the wayside....'As global complacency over the trajectory of U.S. rates continues to be astoundingly low, precious metals in general should continue to benefit,' said Jeffrey Halley, senior market analyst at Oanda Corp. in Singapore....'We should tap the short term opportunities to go long as gold has crossed $1,300 with a momentum. It may act as a support, while $1,340 could be an immediate resistance level and we might reach $1,400 in the first quarter this year.' said Mark To, head of research at Hong Kong’s Wing Fung Financial Group."

flag The European Union Attacks America: How Will Its New Military Endanger Us? -Pontification Blog
"To protect a battered Western Europe from Soviet invasion after World War II, the United States created the North Atlantic Treaty Organization, NATO, and extended our military nuclear umbrella over its members. This freed Western Europe from the cost of national defense, allowing its nations first to recover, then to build welfare states envied by American liberals that were, in effect, subsidized by American taxpayers. Our European NATO allies are happy with this arrangement, taking offense when President Donald Trump asks them to pay the promised 2 percent of GDP. 'Countries that are immensely wealthy,' said Mr. Trump on December 18, 'should reimburse the United States for the cost of defending them.' Most of Europe’s nations are being dissolved into the new empire of the European Union, in which national borders no longer control immigration or trade. As Craig R. Smith and I explain in Money, Morality & The Machine, this 'Superstate,' as founder Jean Monnet envisioned it, was to be created piecemeal, by deception, with Europeans denied a democratic vote on whether to undo their national identity. The EU would be - and now is - run by an elite of unelected progressive Eurocrats. The European Union is largely controlled by Germany, which is using it to try conquering the continent for the third time in 100 years - this time by economics and the Euro currency. No wonder that in June 2016 the United Kingdom, seeing it was being colonized, voted to Brexit, to leave the EU....On December 14, 2017, 23 of the EU's 28 members in the European Parliament agreed to PESCO, 'Permanent Structured Cooperation,' which creates military cooperation, then integration, and ultimately replacement of national militaries with a unified military under EU command outside of NATO. For this, these nations have the money. The five EU members not agreeing to join PESCO are Denmark, Ireland, Portugal, Malta, and the United Kingdom, which is still trying to leave the EU. This EU military, we argued, is designed to disarm nations and give the European Union the power to crush all future attempts of members to secede....The new autonomous European military dangerously weakens America's hand." Full story

You Can't "Normalize" Markets that Depend on Extreme Monetary Stimulus -Charles Hugh Smith Blog
"Central banks are now trapped. In a nutshell, central banks are promising to 'normalize' their monetary policy extremes in 2018. Nice, but there's a problem: you can't 'normalize' markets that are now entirely dependent on extremes of monetary stimulus. Attempts to 'normalize' will break the markets and the financial system....Lenders make money by issuing credit to borrowers. The incentives are clear: the more credit they issue, the higher their income. Given this incentive, it’'s easy to convince oneself that a marginal borrower is creditworthy, and that a speculative investment is a safe bet. This is especially true if the government guarantees the loan, for example, a home mortgage....By lowering interest rates and bond yields to near-zero, central banks deprived institutional owners who rely on stable, high-yielding safe investment income - insurers, pension funds, individual retirement accounts, and so on - of exactly what they need: safe, stable, high-yield returns...the only way to earn a high return is to buy risk assets - assets such as stocks and junk bonds that are intrinsically riskier than Treasury bonds and other low-risk investments....This traps the central banks in a strategy of pushing risk assets - already at nose-bleed valuations - ever higher, as any decline would crush the value of the collateral underpinning the titanic mountain of debt the system has created in the past eight years and hand institutional owners losses rather than gains....In Part 2: So What Comes Next & How Can We Prepare For It?" [Stay tuned for Part 2 summary on Thursday]

The Three Most Economically Significant Stories of 2017 -Forbes
"2017 was an eventful year...I will bypass such stories as the record-setting stock market, the Bitcoin mania, and the welcome reduction of the stupidest tax in the country - the tax on corporate income - by 40%. Here are my nominees: 1) The mugging of United Airlines (UAL) passenger Dr. David Dao on April 9. Needing one more ticketed passenger to deplane to make room for a United employee, and declining to offer more than $800 to repurchase a seat, the UAL crew summoned airport security to drag the screaming, moaning Dr. Dao off the jet, inflicting multiple injuries on him as horrified passengers uttered futile protests....The free-market solution would have been for United to keep raising its bid price for a seat until a passenger voluntarily agreed to accept the price. The lesson: Free markets solve problems peacefully and are the hallmark of a civilized people. 2) The shooting of Rep. Stephen Scalise on June 4....The shooter was infected with the progressive/socialist ideology that the government ought to be doing more to help Americans economically. Therefore, people who resist the growth of government are, by definition, evil people who, if they oppose Big Government, should be overcome by force....The lesson: progressivism/socialism, which uses force in our socio-political relationships, is tearing American society apart. 3) The increasing acceptance of socialism by millennials....96 years ago, the great Austrian economist Ludwig von Mises published Socialism: An Economic and Sociological Analysis. In it, Mises logically demonstrated that even if saints and geniuses were put in charge of the economy, socialism inevitably would fail because of the absence of market prices to coordinate economic activity. Learned scholars may know a lot, but they will never know what Joe Lunchbucket values as well as Joe knows....The lesson: Millions of Americans despise the very property rights that protect us and underlie civilization itself, and instead favor government having the power to run our economic lives in spite of overwhelming evidence of its incompetence to do so."

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1.2.18 - How Can Millennials Ever Retire?

Gold last traded at $1,316 an ounce. Silver at $17.20 an ounce.

NEWS SUMMARY: Precious metal prices rose Tuesday on safe haven buying as the U.S. dollar's 2017 slump continued. U.S. stocks kicked off the new year on a high amid growing optimism.

Investors bet big on silver for 2018 -Business-Standard
"Investors have started betting big on silver amid hopes of a sharp upswing in its prices in calendar year 2018....Considering silver was a weak performer in 2017, leading global investment bank Goldman Sachs forecasts silver to fare better than gold in 2018. 'Typically, silver tends to outperform gold at the current state of the business cycle, as it is more strongly leveraged to global growth, given its significant industry use....'Silver prices are likely to move up by 17-20 per cent in 2018 due to rising industrial demand. Since global industrial growth is looking to remain extremely positive, we believe the silver consumption to go up this year. This gives us reason to believe that silver prices would move up from here,' said Jayant Manglik, president, Religare Securities. Globally, silver demand is directly linked with industrial growth due to two-thirds of this metal consumed in industries."

gold vs dollar Gold Rallies Most in Seven Years, Fed, Dollar Uncertainty Loom -Wall Street Journal
"Gold rallied 14% in 2017, the best annual performance since 2010, as a weakening dollar and political tensions around the world helped lift prices. The gains are striking given how U.S. stocks soared last year, and cryptocurrencies like bitcoin became more mainstream - potentially stealing investor dollars away from bullion. On top of it all, the Federal Reserve raised interest rates three times in 2017. When interest rates rise, gold often struggles to compete against yield-bearing assets like Treasurys. But jitters over a mix of market risks prevailed, buoying gold prices throughout the year. Now, as investors decide where to allocate money in 2018, one of the biggest questions for gold is whether the Fed will stick to its plan of raising rates three more times this year....Many investors are eyeing inflation figures and are unconvinced the Fed will actually increase rates three more times in 2018, CME Group data show. Roughly 60% of traders tracked by the exchange group expect two or fewer rate increases. Adding to the uncertainty, Fed governor Jerome Powell is set to succeed Chairwoman Janet Yellen in February....The precious metal climbed in 11 of the last 12 trading sessions of 2017 as the dollar fell. Gold closed the year above $1,300 - a key technical and psychological level for many investors....'Gold has been unbelievably resilient given everything that’s being thrown at it,' said Mark Lacey, head of global commodities and resource equities at Schroders."

Central Banks Move on Cryptocurrencies? -Daily Reckoning
"Will 2018 be the year central banks start buying cryptocurrencies?....Are not central banks the sworn enemies of cryptocurrencies? But our agents report strange murmurings... and illicit rumors begin to swirl... G7 central banks cannot presently trade cryptocurrencies. These are the shabby dregs of the financial world. They are unwashed behind the ears… and lack the official aroma of respect. But that may soon change...'“In 2018, things will be different,' says Eugéne Etsebeth, formerly of the South African Reserve Bank. 'G7 central banks will start buying cryptocurrencies to bolster their foreign reserves,' he affirms....Here is a voice not of the bitcoin glee club or the moon-mad fringe… but a former central banker… a totem of the establishment....Peter Smith, CEO of Blockchain: 'I think this year will be the first year we start to see central banks start to hold digital currencies as part of their balance sheet.'....Of course, central banks' adoption of cryptocurrencies 'will happen in the dark,' returning to our former central banker Mr. Etsebeth. 'Old habits die hard,' he concludes. And that is precisely why nothing central banks do would surprise us… including buying cryptocurrencies… while denouncing them publicly."

Will Millennials Ever Be Able To Retire? -MillerOnTheMoney
"My oldest granddaughter (early 30’s) recently asked me that question. She and her husband have two children, a new home and are still paying off their college loans. My response, 'Sure, but when, and at what lifestyle, depends on many things; including decisions you make today.' It's easy for young people to look at retirement as something they need to address 'tomorrow'; saving is put off - too many bills to pay. 'Tomorrow' does come - the day of retirement reckoning is here before you know it. I wish the colleges required all students to take a course called, 'The magic of compounding interest'. Investor.gov provides a great Compound Interest Calculator. I used this tool for all data calculations, assuming a 4% compounded rate of return....As always, it's a matter of choices. A quick summary: Focus on living below your means. Buy appreciating assets and minimize depreciating assets. Compounding is magic, start as early as you can. You will never get rich working 40 hours a week. Both spouses must work together toward their common goal. It's NEVER too late to start! The formula works for those who work hard to achieve their goals. Making and keeping some New Year's Resolution's might be a giant first step."

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