1.8.21 - Investors Brace for Inflation with Gold
Gold last traded at $1,842 an ounce. Silver at $25.08 an ounce.
NEWS SUMMARY: Precious metal prices softened Friday on profit-taking and a firmer dollar. U.S. stocks rose on momentum buying despite downbeat jobs data.
Investors expected to turn to gold as they brace for inflation in 2021 -Kitco
"For many market players, 2020 will go down in the history books as the year of unprecedented stimulus measures. According to the International Monetary Fund (IMF), $12 trillion has been pumped into global financial markets....The Federal Reserve, which has led the way in central bank stimulus, has seen its balance sheet balloon to record highs above $7 trillion.
If 2020 saw historic monetary and fiscal stimulus, analysts, economists, and investors are now wondering what the fallout will be, with many expecting to see higher inflation, especially as economic activity picks up in the second half of the year....
'Price pressures could increase, for example, due to the release of pent-up demand as consumers increase spending on items that they had been forced to delay consuming because of lockdowns and restrictions on movement. They could also increase due to higher production costs from persistent supply disruptions,' the IMF said in its report....
While inflation is expected to remain subdued, many analysts say that it won't take much to drive gold prices above the 2020 all-time highs.
'The amount of negative debt out there is massive. $18 trillion is a disgusting number,' said Steve Dunn, head of exchange-traded products at Aberdeen Standard Investments.
Dunn added that bond yields are expected to go even deeper into negative territory as inflation picks up. He added that in this environment, gold is becoming more attractive as a safe-haven asset.
'Rising inflation pressures in a low interest rate environment tell a very good story for gold prices in 2021,' he said."
Biden Tax-Increase Agenda Revived as Democrats Win Senate -Wall Street Journal
"Democratic control of the Senate gives President-elect Joe Biden a much stronger chance of raising taxes on corporations and high-income households.
Until this week's Georgia runoff elections, Mr. Biden's plans for tax increases were running into solid opposition from the Republican-controlled Senate. But now, Democrats will hold the White House, Senate and House simultaneously for the first time in more than a decade, and they are poised to use that power.
During his presidential campaign, Mr. Biden proposed raising taxes on corporations, estates and high-income households, reversing key parts of the 2017 tax cuts passed by Republicans and reprising policies that the Obama administration couldn’t get through Congress....
Now, some of Mr. Biden's ideas are much more likely to become law, said Steve Wamhoff of the progressive Institute on Taxation and Economic Policy, who said that the president-elect's plans are less far-reaching than some Democratic alternatives and are broadly popular with the public.
'The issue was always, could Democrats get something on the floor? And the answer to that is now clearly 'yes,' Mr. Wamhoff said. 'Biden did win after campaigning on raising taxes on corporations and raising taxes on the rich.'
Even so, Democrats face a series of tough challenges to turn those proposals into law with narrow legislative margins, a weak economy and a still-raging pandemic....
The Senate will be divided 50-50, and Democrats will have Kamala Harris breaking ties as vice president. That means they can’t lose a single vote, pushing them to look for policies that unite progressives eager to address income inequality and moderates worried about the effects of tax increases on the economic recovery. The same dynamic holds in the House, where Democrats have a slim margin."
2020: The year of retreat. 2021: The year of reset. -Smith/Market Herald
"No one could've predicted what an extraordinary year 2020 would be.
The COVID-19 pandemic caused a global economic shift of a scale not seen since the Second World War - plunging markets, governments, and most of the world's population into turmoil.
And as if the coronavirus wasn't destabilising enough, a rollercoaster U.S. election and growing trade tensions with China are keeping uncertainty high....
The concern, then, becomes that the inflow of stimulus money and government incentives may have some unintended consequences...We've been seeing this irrational exuberance in the market.
Speaking to this, Tom Piotrowski is predicting inflationary forces that haven't been seen for some time.
'Raw material prices are now beginning to be impacted; lumber prices have doubled over the last couple of months; steel prices have moved higher - quite substantially - evidenced in the underlying strength of iron ore prices,' he explained.
'These outcomes will eventually feed their way through to user prices, and that presents a challenge for central banks,' he said....Hard assets will continue to appreciate in value thanks to an influx of stimulus monies, there'll be challenges ahead, too - not least of all in restoring a souring relationship with China."
World's Top Economies Brace For $13 Trillion Debt Maturity Vortex -Zero Hedge
"Seven top economies plus several major emerging markets economies 'face the heaviest bond maturities in at least a decade, much of the borrowings to dig their economies out of the worst slump since the Great Depression,' according to Bloomberg, adding that these governments will need to roll over at least half of this debt in 2020....
Despite surging coronavirus infections, hospitalizations, and deaths weighing on the global recovery as the vaccination rollout is much slower than first anticipated, central banks will continue to pin interest rates near zero to keep borrowing costs low to allow these countries to roll over their pandemic debt.
The largest government debt refinancing will be in the US, with $7.7 trillion of debt coming due, followed by Japan with $2.9 trillion. China has $577 billion coming due, Italy has $433 billion, followed by France's $348 billion. Germany has $325 billion....
The bottom line: With sovereign yields plunging to record lows, it is only reasonable that governments across the world flood the market with as much debt as possible, to roll over 2020 pandemic debt, and also attempt to thwart a double-dip recession. As long as sovereign yields stay low, global debt will soar."
Real Money Podcast
Jan 7, 2021
1.7.21 - The U.S. Dollar Getting Crushed by Fed
Gold last traded at $1,915 an ounce. Silver at $27.20 an ounce.
NEWS SUMMARY: Precious metal prices steadied Thursday as upbeat data boosted the dollar. U.S. stocks hit all-time highs as Congress confirmed the election of Joe Biden as president and traders looked past the unrest in Washington.
Gold's Climb Adds Momentum to Year-End Rally -Wall Street Journal
"Investors are pouring back into gold, lured by a weak U.S. dollar and surging Covid-19 infections that are muddling the outlook for a swift global economic recovery.
Most actively traded gold futures for February delivery climbed more than 3% in the first two trading sessions of the year, settling at $1,954.40 a troy ounce Tuesday. The gains add further momentum to the haven metal's year-end rally, with cautious investors piling into a variety of precious metals, including silver and platinum.
Gold posted its best annual performance in a decade in 2020, climbing more than 24%, though it remains well below the record $2,069.50 hit in August. It retreated later in the year, when investors shifted into riskier assets like stocks, expecting vaccines to fuel a broad economic rebound. However, growing worries in the new year about a new strain of the coronavirus in Europe and the U.K. have boosted the appeal of havens including gold in recent sessions.
A falling U.S. dollar has also lifted the metal. Since gold is bought and sold with dollars, a weaker dollar makes gold cheaper for foreign investors. Wall Street firms, including Goldman Sachs, broadly predict the dollar will tumble in 2021, dragged on by negative real yields - or the return on bonds when adjusting for inflation - with the Federal Reserve keeping interest rates at record-low levels....
'A Democratic sweep would mean control of the Senate and would almost certainly result in much larger stimulus packages this year, which would be very good for gold,' said Tai Wong, head of base and precious metals derivatives trading at Bank of Montreal....
Silver prices also posted strong gains to start the year, rising around 1% Tuesday. Silver, which is also used in industrial products such as electronics, notched a 47% gain in 2020, buoyed both by demand for precious metals and signs of improvement in the manufacturing sector."
Waiting for the Last Dance: The Hazards of Asset Allocation in a Late-stage Major Bubble -Grantham/GMO
"The long, long bull market since 2009 has finally matured into a fully-fledged epic bubble. Featuring extreme overvaluation, explosive price increases, frenzied issuance, and hysterically speculative investor behavior, I believe this event will be recorded as one of the great bubbles of financial history, right along with the South Sea bubble, 1929, and 2000.
These great bubbles are where fortunes are made and lost - and where investors truly prove their mettle. For positioning a portfolio to avoid the worst pain of a major bubble breaking is likely the most difficult part. Every career incentive in the industry and every fault of individual human psychology will work toward sucking investors in.
But this bubble will burst in due time, no matter how hard the Fed tries to support it, with consequent damaging effects on the economy and on portfolios. Make no mistake - for the majority of investors today, this could very well be the most important event of your investing lives. Speaking as an old student and historian of markets, it is intellectually exciting and terrifying at the same time....
It is a privilege as a market historian to experience a major stock bubble once again. Japan in 1989, the 2000 Tech bubble, the 2008 housing and mortgage crisis, and now the current bubble - these are the four most significant and gripping investment events of my life...Fortunes are made and lost in a hurry and investment advisors have a rare chance to really justify their existence. But, as usual, there is no free lunch. These opportunities to be useful come loaded with career risk....
The combination of timing uncertainty and rapidly accelerating regret on the part of clients means that the career and business risk of fighting the bubble is too great for large commercial enterprises...So, don't wait for the Goldmans and Morgan Stanleys to become bearish: it can never happen. For them it is a horribly non-commercial bet....
As often happens at bubbly peaks like 1929, 2000, and the Nifty Fifty of 1972 (a second-tier bubble in the company of champions), today’s market features extreme disparities in value by asset class, sector, and company. Those at the very cheap end include traditional value stocks all over the world, relative to growth stocks."
The U.S. dollar is getting crushed - here's why you can thank the Fed -Marketwatch
"The U.S. dollar fell sharply versus major currencies, with bears taking the Federal Reserve's reassurance that it won't be soon tapering its bond purchases as a green light to sell the currency.
'The latest blow to the dollar came from the Fed, which vowed not to touch policy even if the outlook for the U.S. economy brightens as it now expects,' said Joe Manimbo, senior analyst at Western Union Business Solutions....
The dollar index has dropped nearly 13% since March, when it spiked to a more-than-three-year high as the COVID-19 pandemic plunged the U.S. economy into recession and sparked a bout of chaos in financial markets, driving global investors into the safety of the world’s reserve currency.
A falling dollar is typically seen as a positive for U.S. and global equities as well as the world economy. It's also seen as the potential missing ingredient for a bullish turnabout in commodities priced in the dollar....
Of course, other central banks are also employing extraordinary measures aimed at supporting their economies. And while a weaker dollar is viewed as generally positive for the U.S. and global economy, it's been a source of consternation for some rivals, including the European Central Bank."
Banks are denying financial services based on 'morality' -Wald/The Hill
"A disturbing trend has developed in which banks are declining to work with entire industries based on the desires of activists. Some of these industries that have been rejected by banks in recent years include private prison operators, gun makers and oil and gas companies. These decisions all followed pressure from progressive campaigners, but if the trend continues it could lead to discrimination and debanking of controversial or disliked industries of all kinds. This is not in America's best interest, and this is why the government should adopt a proposed new regulation to stop it.
Banks are creating a new version of redlining, this time against legal industries, for political and ideological reasons and blaming it on vague risks to the banks' reputations. Now, the Acting Comptroller of the Currency has proposed a regulation, based on the Dodd-Frank Act, that would make it illegal for banks to use category-based risk evaluations to deny access to financial services. This may be the last chance to protect the American economic system from overarching political grievances.
Take the energy industry, for example, which desperately needs this rule to avoid catastrophe for the United States. Six of the largest U.S. banks already have committed not to fund new exploration and production projects in the Arctic. In fact, oil companies are not pursuing new Arctic drilling, but the bank policies seem like a foreshadowing of more to come, and that could lead to real problems.
Debanking fossil fuel firms could lead to a disastrous energy shortage in the United States. We already are seeing dangerously low investment commitments for new exploration from energy firms hit hard by historically low oil prices....Moreover, denying oil firms access to financial services or financing based on anything other than financial considerations could trigger a national security crisis.
In more general terms, banks are incapable of making qualitative judgments based on notions of morality. A situation in which banks refuse service based on possibly ephemeral perceptions of morality and societal good is a divergence from the open and generally capitalist system to which we have strived since our nation's founding."
Real Money Podcast
Jan 6, 2021
1.6.21 - Where U.S. Government Stimulus Money Went
Gold last traded at $1,906 an ounce. Silver at $26.95 an ounce.
NEWS SUMMARY: Precious metal prices eased back Wednesday on routine profit-taking and a firmer dollar. U.S. stocks traded mixed as Wall Street kept an eye on two runoff elections in Georgia that will determine control of the Senate.
Where the U.S. Government's Stimulus Money Went -Bonner/Rogue Economics
"Today, with the corpse of 2020 still unburied… having barely cooled to room temperature… we will attempt a dissection. Trigger warning: It ain't gonna be pretty. Let us begin by getting out the Sawzall to open up the cranial cavity. Surely, there was something wrong in there....
Early in the year, COVID-19 sent almost everyone into a panic. Already, there were signs of mental distress. All over the world, governments - rather than make a serious effort to identify and protect their vulnerable citizens - closed down their economies. Travel and leisure industries - any business where people congregate- were hit especially hard.
But they weren't the only ones. Offices and parking lots emptied out. Gasoline sales slowed to a trickle. The whole economy tightened up. Instead of growing by 4%, as forecast, the global economy shrank by 4%....
During the entire year, the loss of income caused by the lockdowns toted to less than $300 billion. But the feds pumped an additional $4.4 trillion into the economy. Dear readers will notice that the two numbers have little to do with each other.
One explanation is that members of Congress cannot add and subtract. A better one is our chief insight for the year ahead: Inflate or die. The feds have gotten the nation into a classic debt trap. When you owe too much money, every setback is a crisis. You either borrow more… or you admit that you can’t pay your bills.
But sovereign governments have a third option. They have 'printing presses,' on which they can create the cash they need (thus inflating the currency). That does not solve the problem. But it distorts and delays it....
What happened to all that money the feds put into the system? Like water, it has to go somewhere. Some of it was used to buy drugs. Some bought new cars. Some paid off political debts and bought off cronies. Some went into normal consumer spending.
But much more went into capital markets. For, while the Main Street economy turned down, Wall Street turned up. Worldwide, stocks were worth about $80 trillion when the crisis began. Less than a year later, they are worth $100 trillion.
Huh? How come stocks can be worth $20 trillion - 25% - more… in less than 12 months… while the companies they represent are seeing fewer sales and lower profits? The feds' new money went....into pie-in-the-sky inflation."
Time To 'Reset' Your Investment Portfolio In 2021? -Gleason/Seeking Alpha
"If global elites have their way, 2021 will be the year of the 'Great Reset.'
They believe now, after the coronavirus and lockdown policies have inflicted a heavy toll on the public, is the perfect opportunity to implement their technocratic vision. Their longstanding plans to transform economies in the name of various 'sustainability' and 'equity' goals are being aggressively implemented....
The reset that is coming may not necessarily be the one that globalist central planners are trying to impose, however. Markets have their own way of resetting according to economic, political, and monetary realities. The Federal Reserve is currently embarked on a campaign to raise the inflation rate....
What could go wrong? Given that the stock and bond markets are priced for low inflation, the entire financial system could go through a great (and painful) repricing to reflect accelerating currency depreciation.
The U.S. dollar may fail to rally under conditions that would have signaled tighter monetary policy in previous eras, begetting even more inflation.... Investors who have heavy exposure to the U.S. dollar via bonds, money market funds, and the like, may need to reset their portfolios before inflation wrecks their value...
The ultimate alternative to a depreciating fiat currency that is being printed into oblivion is hard currency - gold and silver. Precious metals investors can also benefit from reevaluating their assumptions, strategies, and holdings from time to time - and the New Year may be a good impetus....Gold and silver will ultimately rise as the value of the dollar 'resets' lower."
How Government Decrees Are Hurting Economy -Regan/American Consequences
"Right now, the U.S. national debt is at $27.5 trillion, which averages out to about $220,130 worth of debt per taxpaying citizen.
And as I've said before… Anyone who has taken an Economics 101 course knows that printing this much money and pushing it into the hands of American citizens is not a realistic solution, and it's definitely not going to help the economy…
This week on the American Consequences podcast, I spoke to Neil Grossman, famed mathematician and former executive director at JPMorgan Chase, who explained that taking a look at the stock market today is incredibly misleading… yet that's exactly what lawmakers are pointing to as proof that stimulus is working…
Recently, Neil wrote an article where he states that 'bloated assets eventually explode,' meaning that the current state of the U.S. economy is poised for disaster. 'We're spending money like a drunken sailor,' Neil wrote. And despite a soaring stock market, our economy is only hanging on by a thread.
As Neil explained, the money that's being pumped into the economy is never really making it to Main Street…That money is going to Wall Street, pushing up the stock market, but is not being redistributed into the rest of our economy.
What we're actually seeing is investors taking on more risk in their investments because they know that the Fed will be there to just keep printing money.
The dance between Wall Street, the Fed, and now Congress is not a real means to stimulate the economy and assist the average American citizen. It's just a way to get reelected in the future...It's abundantly clear that Congress and the Fed do not care about fixing the U.S. economy… or do not know how to."
Is 70 Really the New 60? -Scientific American
"We often hear that 60 is the new 50 and 70 the new 60. It is a bromide born out by old photos. Just check out images of your grandparents or great-grandparents (depending on your age) and notice their stooped and soft bodies, their lined faces and how they seem anchored in their chairs when they were barely pushing 60. What a contrast with vigorous, gym-going sexagenarians of today!
Recent studies comparing populations born in different decades have looked beyond these surface impressions to nail down actual physical and mental differences in the ways we are aging. This research has identified particular areas of improvement. But these gains are not across the board, and they appear to depend on social, behavioral and economic factors.
A pair of new studies from Finland - one looking at physical aging and one looking at cognitive aging - strikingly demonstrates some of the details of generational change. The research compares adults born in 1910 and 1914 with those born roughly 30 years later. The two age groups were assessed in 1989 and 1990 and in 2017 and 2018, respectively. The beauty of this work is that both birth cohorts were examined in person at age 75 and again at 80 with the same substantial battery of six physical tests and five measures of cognition.
The later-born group could walk faster, had a stronger hand grip and could exert more force with their lower leg. Such metrics are reliable predictors of disability and mortality. On cognitive tests, the later cohort had better verbal fluency, clocked faster reaction time on a complex finger-movement task, and scored higher on a test matching numbers to symbols....
There are many reasons that people are aging better, including improved medical care and a drop in smoking, but the factors that loomed largest in the Finnish study of physical function, were that the later-born adults were more physically active and had bigger bodies, which suggests better nutrition...Education is a powerful influence on aging and health, says Luigi Ferrucci, scientific director of the U.S. National Institute on Aging: 'With more education, you are probably going to have a larger income, which means you are more likely to go to the doctor, have good nutrition and have a job that is not eviscerating your body.'"
Real Money Podcast
Jan 5, 2021
1.5.21 - Market Morality and Lockdown Policies
Gold last traded at $1,941 an ounce. Silver at $27.15 an ounce.
NEWS SUMMARY: Precious metal prices rose further Tuesday as a weakening dollar boosted bullish sentiment. U.S. stocks traded near flatline following sharp losses from the previous session, as traders turned their focus to two key elections in Georgia.
Gold Prices Confirming Breakout, Silver and Platinum Leading -Thorson/FX Empire
"In last Wednesday's gold update, I noted the likelihood of a November bottom and a pending breakout in precious metals. Gold is breaking higher confirming that outlook and the potential for an advance towards $2300. The trends in silver and platinum are even more bullish and could explode higher.
The daily chart of gold has broken clearly above the intermediate trendline, confirming a cycle breakout and subsequent 6-month low in late November. Precious metals should rally into at least March, but April or May is more likely before correcting into the next 6-month low. My minimum target for this advance is $2300.
Silver is also confirming a cycle breakout. The bullish divergence in late November (prices remained above the September high) suggests robust momentum behind silver moving into this advance. Consequently, I think prices could surge sharply higher over the next 3 to 4-months. I have a minimum target of $35.00, but $42.00 or higher is a real possibility by April or May."
Welcome to the Era of Nonstop Stimulus -Gramm/Solon/Wall Street Journal
"Spending didn't speed the last recovery, but Biden's team is keen to keep the money flowing endlessly....
With President-elect Joe Biden now making it clear that the recent $900 billion stimulus will 'at best only be a down payment' and the now $3.3 trillion of total stimulus spending 'is just the beginning,' it sounds like America is headed into a program of permanent stimulus....
In 2009, federal spending as a share of gross domestic product surged by an unprecedented 4.2 percentage points to reach 24.4%, the highest level since World War II....To further help the economy, the Fed initiated a massive monetary easing. The Fed purchased, or offset by purchasing other securities, more than 55% of all federal debt issued during 2010-13 - far more than the 10% of government debt the Federal Reserve purchased during the entirety of World War II.
Yet the greatest stimulus, the biggest deficits and the largest monetary accommodation were no match for the negative onslaught of Mr. Obama's program of tax, spend and control. Economic growth from 2010-13 averaged less than 2.1%, half the 4.2% average growth rates in the four-year periods following the previous 10 postwar recessions....
The suggestion that anything less than stimulus levels of spending is economically harmful is effectively a call for a new era of permanent stimulus. This appears to be what Messrs. Biden and Lew, and future Treasury Secretary Janet Yellen, are now proposing.
Because Mr. Biden’s proposed program is little more than Mr. Obama's tax, spend and regulate agenda on steroids, and because his appointees are merely grayer retreads of the Obama administration, it is excessively optimistic to believe that his stimulus will do any more good for the economy than Mr. Obama's did.
In reality, stimulus spending has nothing to do with good long-term economic outcomes and everything to do with political outcomes. What is socialism except a permanent stimulus? When private investment buckles under confiscatory taxes and productivity falters with the decline of private innovation, socialism employs unending stimulus to substitute public 'investment' for real private investment, and public initiative for private initiative in research and development funding. Mr. Biden and Bernie Sanders's 'Unity' document is a ready-made playbook for this program....
With or without permanent stimulus, if tax, spend and control policies are about to return, the economy won't stay strong. And if private investment and individual initiative falter under such a program, a permanent stimulus will be demanded."
Why the Georgia runoff elections for the U.S. Senate could turn into a 'big deal' for markets -Marketwatch
"The runoff elections for two U.S. Senate seats in Georgia next Tuesday have the potential to inject volatility into a high-flying stock market that has mostly looked past political turbulence in Washington this year.
Market participants say any complacency among investors could be misplaced, since if the Democrats win both senate seats, then the incoming administration of President-elect Joe Biden would have control of both chambers of Congress and may move to reverse the corporate tax cuts of 2017, putting company earnings and stock prices under some pressure.
However, a Democratic victory could also boost equities by raising expectations for more aggressive fiscal stimulus measures next year, on top of the billions of dollars deployed already by Congress.
These are reasons why the Georgia runoff elections could turn into a 'big deal' for Wall Street, Michael Reynolds, investment strategy officer at Glenmede, said in an interview.
'If we get a shot in the arm with a larger fiscal package, you need to balance that out with the specter of increasing corporate tax rates,' said Reynolds....
So the outcome of the Jan. 5 run offs could generate volatility in a frothy stock market that many investors see as having baked in most of the good news, including a coronavirus vaccine rollout, more fiscal stimulus, and further economic recovery in 2021.
In particular, the risk of higher tax rates for corporations could upset investors' pent-up expectations for a rebound in earnings growth next year."
The morality of markets and lockdown policies -Tarwater/Washington Examiner
"Adam Smith is often referred to as the father of free market economics due to the publication of his 1776 book, An Inquiry into the Nature and Causes of the Wealth of Nations. But many readers do not realize that Smith, by training, was a moral philosopher. In fact, his work in free market economics stems from his beliefs about morality....
In The Wealth of Nations, therefore, he investigated why some nations had wealth and others did not. His findings laid the foundation for what today we call free market capitalism.
Economists have long recognized several common themes among nations that experience significant growth and high GDP per capita. These include the presence of competitive markets, limited regulation, low taxes, and a legal system that enforces its laws evenhandedly. The Frasier Institute in Canada and the Cato Institute work together to publish an annual report that measures how well each country in the world consistently implements these themes in its nation's policies.
A quick perusal of the latest Economic Freedom of the World report shows that many of the countries that have the highest GDP per capita also score among the highest countries for economic freedom. Similarly, those countries that are most closed economically have the lowest GDP per capita. This data suggest that a nation's policies on economics have the potential to encourage not only real economic growth but more importantly, moral goods that stem from that growth.
In an attempt to combat COVID-19, many countries (and smaller municipalities) are considering policies that 'lock down' their economies. However, like all economic decisions, these choices have secondary effects. They not only stifle economic growth, they secondarily lower the standard of living for the nation's citizens and, consequently, limit their access to medical services and shorten their life expectancy.
If Smith is correct and it is morally good when a nation establishes policies that raise the standard of living for the majority of its citizens, then surely it is morally dubious when a nation introduces policies that guarantee that this standard of living decreases. In short, lockdown policies are not just economic or medical. They are necessarily moral in nature."
Real Money Podcast
Jan 4, 2021
1.4.21 - 2021: Gold Roars Out of Blocks!
Gold last traded at $1,951 an ounce. Silver at $27.52 an ounce.
NEWS SUMMARY: Precious metal prices lurched up over 2% Monday on safe-haven buying and a sharply weaker dollar. U.S. stocks fell sharply on the first trading day of 2021, following a wildly volatile year for investors.
Seeking $2,401 Gold in 2021 -Baillie/FX Empire
"Through all its thrashing machinations, Gold just completed the Second Decade of the 21st Century with a ten-year net gain of +34% from $1422 on 31 December 2010 to $1902 on 31 December 2020. We now look for Gold in the first year of the Third Decade to reach $2401 for a gain of +26%....
Now let's expand upon our seeing the price of Gold in 2021 reaching 2401, i.e. +26%. Across the 50-year span since Nixon's nixing of the Gold Standard at $35/oz. back in 1971, the yellow metal has recorded 19 down years and 31 up years, including 14 years of gains bettering +20%. And with the currency debasement pedal stomped all the way to the metal, Gold ought to be in top gear....
The technicals might be regarded as overbought, but the fundamentals as more overwhelming positive, and the fuel to get there being Gold becoming less underbought than 'tis!
Happy New Decade to all of our valued readers through every Saturday since The Gold Update commenced on 14 November 2009! Here’s to Gold threading its way to 2401 in 2021!"
Gold Roars Out of Blocks in 2021 as Yields, Dollar Decline -Bloomberg
"Gold surged above $1,900 an ounce as lower U.S. real yields and a weaker dollar helped the precious metal build on its biggest annual advance in a decade.
Bullion climbed to the highest level in almost two months after renewed declines in real yields boosted gold’s allure. Real yields - the difference between nominal benchmark bond yields and the rate of inflation - were at -1.092% on Friday, near last year's nadir.
The decline in real rates is being driven by a rise in inflation expectations, with investors betting that vaccine distribution, further central bank support, and continuing government aid will see demand rebound in 2021.
'Investors are looking for assets which benefit from higher inflation,' said Giovanni Staunovo, an analyst at UBS Group AG. 'The reflation element is also supporting gold today.'
Bullion is also rallying as a gauge of the U.S. currency languishes at the lowest level since 2018 after sliding for three quarters. The gains in the haven come even as U.S. and global stocks are at all-time highs amid expectations that measures to combat the pandemic will reignite growth and boost corporate profits. Gold is also being supported by renewed inflows into exchange-traded funds, following withdrawals in November and the first weeks of December."
Homebuyers Face Affordability Crisis, Worst In 12 Years -Zero Hedge
"Between record-low mortgage rates, Congress' fiscal stimulus checks, record debt-fueled demand, and extremely low supply, the housing market entering 2021 is in bubblelicious territory, surpassing levels not seen since the 2006/7 housing bubble.
Of course, surging home prices mean that millennials can't afford to buy as this has pushed affordability to a 12-year low.
Bloomberg, citing a new report from Attom Data Solutions, said homebuyers in the fourth quarter had to spend at least 30% of their wages to afford the average American home, the largest share of any quarter since 2008.
Thanks to the Fed, which has been on an MBS buying spree, purchasing more than $100 billion in mortgage-backed notes in November - borrowing costs are now below 3% for a 30-year loan, have spurred a buying frenzy, driving up prices across the country as bidding wars for homes erupt amid shrinking supply, as per a new Goldman Sachs report.
'The future remains wholly uncertain and affordability could swing back into positive territory,' said Todd Teta, chief product officer at Attom. 'But, for now, things are going in the wrong direction for buyers.'
And the wrong direction indeed as more millennials than ever are living with their parents....If this isn't a bubble... Then what is?"
In 2021, All the World's a Stage -Noonan/Wall Street Journal
"We got through 2020 with pictures of normality in our heads. In a few months they'll start to come true.
You have to go into this year with dreams, there's no other way to do it. We're still in an epic struggle, and it will be a while before things settle down into some approximation of normal. Dreams are how we got through 2020, or maybe not dreams precisely but a picture you kept in your head that helped you keep going, that captured what you missed and will have again. It was a picture of When the Pandemic is Over and we carried it in our psychic wallets....
My friend the professor would see this: He and his students are in a room, and he is teaching them. For what seems like forever they've been postage-size faces on Gallery View on Zoom, which is how they see him. But in his head they're together and know each other and he's Mr. Chips again, not Max Headroom....
My vision of 2021, the picture I held of that future, came into my head in early summer. This would come: We are gathered in a darkened theater, 1,500 of us, for the first time since March 2020. The orchestra starts, the curtain rises, and on the stage a crowded old railroad coach is in full cry. The train conductor booms, 'River City next station stop!'...It's Professor Harold Hill, the Music Man....
The great comeback of 2021 is surely coming, at least according to the new picture I have in my head, and it will be led and fed by the idea of pent-upness. There's so much pent-up desire for joy out there. Surely it will begin to explode in late spring, with vaccines more available and a spreading sense that things are easing off, and be fully anarchic by summer.
Growth will come back, people will burst out, it's going to be exciting. Businesses will start to come back to office buildings and see if that works...We will call old friends for dinner and meet at crowded restaurants and everyone will be grateful for each other....
There will be much wreckage to get through, no point in not seeing that. It is odd that after almost a year the government doesn't seem to have its hands around the number of small-business closings. Yelp reported that 60% of its listed small businesses that had closed as of August would never reopen. An estimated 164,000 had closed, 98,000 of them permanently...What guts it will take the owners and workers of small business to keep going, or start again, or shift weight and go into something else, something new.
The theologian Paul Tillich wrote about the difference between fear and anxiety. Fear is of something, you can name it and face it, and in the facing of it lift your own morale, show yourself what's in you. Anxiety is amorphous; it doesn't quite have an object, it's a state. And so it's harder to shake and no empowering necessarily comes from it....
America has been through so much this year - world-wide illness, lockdowns, death, sickness, searing arguments about how to handle it all. We tried to do what we had never done before, close everything down to fight a disease and each day, in real time, face the economic, social and cultural repercussions. The personal ones, too. It's going to be the work of years to dig ourselves out fully, but there are many reasons to believe we can and will."
Real Money Podcast
Dec 31, 2020
12.31.20 - Expect Widespread Stimulus Fraud
Gold last traded at $1,894 an ounce. Silver at $26.34 an ounce.
NEWS SUMMARY: Precious metal prices steadied Thursday in thin, pre-holiday trading. U.S. stocks traded mostly lower as Wall Street wrapped up one of the most volatile years for the market in recent memory.
Thanks to new law, expect more widespread stimulus fraud -Washington Examiner
"We've all heard the apocryphal quote attributed to Albert Einstein: 'Insanity is doing the same thing over and over again and expecting different results.' Einstein might not have actually said it, but the quip nonetheless describes what Congress is doing right now with COVID-19 stimulus efforts to a T.
Remember that the $900 billion behemoth bill legislators just passed is actually their second major 'stimulus' effort. The new spending bonanza comes as a follow-up to the $2 trillion CARES Act Washington passed in March - yet it hasn't fixed any of the first bill's glaring problems.
The CARES Act sent 1 million stimulus checks to dead people and untold thousands more to random European citizens. So, too, its uber-expanded welfare system lost more to unemployment fraud than the entire unemployment system paid out in 2019. And while many conservatives misguidedly view the Paycheck Protection Program as the saving grace of the CARES Act, the grant program ostensibly intended to help small businesses stay afloat was also rife with fraud and co-opted by big, wealthy corporations.
Of course, Congress decided to fix essentially none of this in the new bill.
'The new Covid-19 relief plan for small businesses that President Trump signed this week doesn't address some weaknesses in the original stimulus legislation that allowed companies with checkered histories to get billions of dollars in payments,' the Wall Street Journal reports.
'Nearly 1,500 companies that received about $2 billion in PPP loans have faced allegations of violating government regulations or of criminal conduct,' it continues. 'Another 432 firms laid off workers after getting approved for nearly $1 billion in loans.'"
Gold on course for best year in a decade -CNBC
"Gold prices were little changed in holiday-thinned trade on Thursday, but the yellow metal was en route to register its best annual performance in a decade. Spot gold last traded at $1,897.40 per ounce, up more than 24% for the year, its best since 2010.
'We look for a move towards $1,950 in the first quarter of 2021, with the expansionary monetary and fiscal policy pushing inflation expectations up and with U.S. real rates falling further,' said UBS analyst Giovanni Staunovo.
The dollar index fell to a more than two-year trough, making gold cheaper for other currency holders....Unprecedented stimulus measures and low interest rates to cushion economies from the impact of the pandemic this year have benefited gold, as it is seen as a hedge against inflation.
Silver fell 0.6% to $26.44 per ounce but was up more than 48% this year, its best performance since 2010."
Morgan Stanley's Top 10 Surprises For 2021 -Zero Hedge
"While we all could use a year without surprises, it would be a surprise itself if we didn't get any in 2021. As such, Morgan Stanley's chief rates strategist Matthew Hornbach discusses 10 scenarios which 'would surprise consensus and thus could move global macro markets in meaningful ways.'
Surprise #1: Developed Market (DM) liquidity avoids Emerging Markets (EM) and drives a DM asset bubble...fear of missing out creates the most buoyant DM asset price bubble of all time.
Surprise #2: A divided government agrees on an infrastructure package: While a Democrat-controlled Senate would be a surprise, a bigger surprise in 2021 could be a bipartisan agreement on an infrastructure plan.
Surprise #3: ECB strategy review advises greater housing weight in HICP....
Surprise #4: BoJ rate cut once again on the table....
Surprise #5: EUR/USD positive correlation with equities reverses...EUR becoming a funding currency could catalyze this scenario.
Surprise #6: Immigration causes the northern lights to shine brightest: Canadian growth could meaningfully outperform versus dour market expectations driven by pent-up migration flows, raising the attractiveness of Canadian assets to foreign investors."
How to Become a Better Investor Than the Rest -Bonner/Rogue Economics
"First, I have been publishing investment advice since 1980. But I only became interested in investing itself, not economics, when I became serious about my children’s and grandchildren's money.
It's one thing to make money in a business or profession. It is quite another thing to protect your fortune by investing it properly.
Investing is not economics. Economics is the study of how people work together to build wealth… what kind of conditions help them… what kind of circumstances and policies hinder them… and why some people prosper and others don't....
Two of the investment letters we publish in the U.S. more than doubled the performance of the S&P 500 over a 10-year period. Could it be luck? Well, there may be some luck involved. But it seems unlikely for lightning to strike twice in such a small place.
Time, patience, energy, hard work, and discipline - in almost every aspect of life, these qualities pay off. I believe they pay off in the investing world, too. That is, it makes sense to invest the time and effort to try to discover what stocks are really worth.
And if you work at it long and hard enough, I think you can beat the market....Most investors are not doing their homework. They're using their tribal brains to try to beat the stock market. This leads them to make serious errors of judgment as to the value of companies.
The prudent investor, with a sharp pencil and a sharp mind, profits from these errors by buying, or selling, the mispriced equities....
Most investors use their small-scale, small-group brains. They buy and sell investments based on what someone told them… or rumors… or what they read in the papers… or half-baked ideas of all sorts. They root for stocks like they root for a football team....
Taken together, stocks are almost never really worth a price-to-earnings (P/E) ratio of greater than 20. The only exception might be when you have a fast-growing economy. Then you can expect the stream of income to increase.
But if the market is trading at more than 20 times earnings, there is likely more downside ahead than upside....When the animal spirits run wild, markets - bonds, U.S. stocks, contemporary art, real estate - head toward bubble territory. That's when you should sell out of these things rather than try to pick the absolute top."
**Swiss America Trading will be closed New Year's Day. We hope you have a wonderful holiday.**
Real Money Podcast
Dec 30, 2020
12.30.20 - 2020: The Year Liberty Was Torched
Gold last traded at $1,890 an ounce. Silver at $26.48 an ounce.
NEWS SUMMARY: Precious metal prices rose Wednesday on safe-haven buying and dollar weakness. U.S. stocks rose as the market tried to reclaim record highs in the final days of 2020.
Gold Analysis - Year in Review and Forecast -Kenjaev/FX Empire
"What a year for Gold, we have witnessed a sudden excitement of Gold investors and Central Banks as the Covid-19 pandemic hit the World economy and forced many states to lock their borders and hibernate.
Regardless of the beginning of the uptrend on January 1, 2016, and the beginning of the new motive wave on August 27, 2018, the true excitement started on March 17, 2020. The hike of March 17 this year was similar to the one on August 12, 2010, when the US Dollar collapsed.
This year, when the new coronavirus was spreading in drastic speed and caused a Global pandemic, Gold hit the new ATH at $2072 on August 06, 2020. Central Banks of some countries when the pandemy started filled their basket with Gold.
The new year ahead might surprise with the new Gold-bull-movement as countries which opened the border during the pandemic are going for another lockdown amid a spread of the new virus strain."
King Dollar Is Abdicating and That's OK -Wall Street Journal
"There are many reasons to expect a weaker U.S. dollar next year and perhaps for longer, but none more important than the new policy stance of the Federal Reserve.
The U.S. dollar briefly rallied in March due to its haven role in investment portfolios. Since then, it has dropped around 12% against a trade-weighted basket of currencies as the U.S. turned out to be even harder hit by the coronavirus pandemic than most major economies.
As vaccines are rolled out and the global economy snaps back, this trade won’t necessarily run in reverse. Rather, currencies of countries that export commodities and manufactured goods are likely to keep strengthening against the dollar, as would be seen in a typical global recovery. Some Asian exporters already are quietly intervening to limit their currencies' rise.
But this time, reasons to expect a weaker dollar run even deeper....
After all, the Fed pledged in August to let inflation run above its 2% target for an extended period and not to respond to falling unemployment with pre-emptive rate increases. Meanwhile, peer central banks around the world continue to target inflation rates of around 2% while falling well short of that.
If markets take the Fed at its word, they won't bid up the dollar as they normally might in response to robust inflation or growth data out of the U.S. This is why TS Lombard economist Steven Blitz calls the new framework an effective end to the traditional 'strong dollar' policy of the U.S. government....
Consider, for instance, the likely market reaction to a large stimulus package early in the Biden administration. Big doses of deficit spending are typically seen as dollar-negative because they mean the U.S. will have to import more foreign savings.
Investors whose net worth is concentrated in dollars should make sure they are diversified...The perennially strong dollar may be a thing of the past."
Ways Covid-19 Has Changed the World Economy Forever -Bloomberg
"Economic shocks like the coronavirus pandemic of 2020 only arrive once every few generations, and they bring about permanent and far-reaching change.
Measured by output, the world economy is well on the way to recovery from a slump the likes of which barely any of its 7.7 billion people have seen in their lifetimes. Vaccines should accelerate the rebound in 2021. But other legacies of Covid-19 will shape global growth for years to come.
Some are already discernible. The takeover of factory and service jobs by robots will advance, while white-collar workers get to stay home more. There'll be more inequality between and within countries. Governments will play a larger role in the lives of citizens, spending - and owing - more money. What follows is an overview of some of the transformations under way....
In the longer run, a big rethink in economics is changing minds about public debt. The new consensus says governments have more room to spend in a low-inflation world, and should use fiscal policy more proactively to drive their economies. Advocates of Modern Monetary Theory say they pioneered those arguments and the mainstream is only now catching up.
Central banks were plunged back into printing money. Interest rates hit new record lows. Central bankers stepped up their quantitative easing, widening it to buy corporate as well as government debt.
All these monetary interventions have created some of the easiest financial conditions in history - and unleashed a frenzy of speculative investment, which has left plenty of analysts worried about moral hazards ahead. But the central-bank policies will be hard to reverse, especially if labor markets remain fractured and companies continue their recent run-up in saving.
And history shows that pandemics depress interest rates for a long time, according to a paper published this year. It found that a quarter-century after the disease struck, rates were typically some 1.5 percentage points lower than they otherwise would have been."
2020: The Year The Tree Of Liberty Was Torched -Whitehead/Zero Hedge
"No doubt about it: 2020 - a terrible, horrible, no good, very bad year for freedom - was the culmination of a terrible, horrible, no good, very bad decade for freedom.
Government corruption, tyranny, and abuse coupled with a Big Brother-knows-best mindset and the COVID-19 pandemic propelled us at warp speed towards a full-blown police state in which nationwide lockdowns, egregious surveillance, roadside strip searches, police shootings of unarmed citizens, censorship, retaliatory arrests, the criminalization of lawful activities, warmongering, indefinite detentions, SWAT team raids, asset forfeiture, police brutality, profit-driven prisons, and pay-to-play politicians were accepted as the norm.
Here's just a small sampling of the laundry list of abuses - cruel, brutal, immoral, unconstitutional and unacceptable - that have been heaped upon us by the government over the past two decades and in the past year, in particular.
The government failed to protect our lives, liberty and happiness. The predators of the police state wreaked havoc on our freedoms, our communities, and our lives....
The courts failed to uphold justice. With every ruling handed down, it becomes more apparent that we live in an age of hollow justice, with government courts more concerned with protecting government agents than upholding the rights of 'we the people.'....
COVID-19 allowed the Emergency State to expand its powers. What started out as an apparent effort to prevent a novel coronavirus from sickening the nation (and the world) became yet another means by which world governments (including our own) could expand their powers, abuse their authority, and further oppress their constituents....
The takeaway: Everything the founders of this country feared has come to dominate in modern America. 'We the people' have been saddled with a government that is no longer friendly to freedom and is working overtime to trample the Constitution underfoot and render the citizenry powerless in the face of the government’s power grabs, corruption and abusive tactics.
America was meant to be primarily a system of local governments, which is a far cry from the colossal federal bureaucracy we have today. Yet if our freedoms are to be restored, understanding what is transpiring practically in your own backyard - in one's home, neighborhood, school district, town council - and taking action at that local level must be the starting point."
Real Money Podcast
Dec 29, 2020
12.29.20 - Home Prices Surge, People Flee Cities
Gold last traded at $1,877 an ounce. Silver at $26.11 an ounce.
NEWS SUMMARY: Precious metal prices rose Tuesday on safe-haven buying and a weaker dollar. U.S. stocks traded mostly lower as traders weighed the possibility of even more fiscal stimulus being approved by Congress.
5 Reasons Why High Yield Investors Need Gold -Seeking Alpha
"Gold has millennia of history and intrinsic qualities that make it an excellent store of wealth in the midst of economic uncertainty and runaway spending and money printing.
The market value of gold has numerous fundamental tailwinds, making it arguably one of the most attractive investments right now on a risk-adjusted basis. In particular, it makes for an essential portion of a high yield portfolio these days for the following 5 reasons:
1) Economic conditions increase safe haven value
2) Inflation is coming
3) The Gold-to-M1 ratio favors gold
4) The Gold-to-S&P 500 ratio favors gold
5) Gold diversifies High Yield well....
As long as the future is inflationary (which history and current trends strongly point to) and contains growth in it (which the history of the United States and the momentum of the advancement of knowledge and technology favor), the combination of the two in a portfolio should provide very attractive risk-adjusted returns.
With the stock market's detachment from the state and risks of the economy, Ray Dalio's timeless wisdom should motivate us all, now more than ever, to maintain holdings in what history has proven time and again to be true money: gold."
Super Bowl Advertisers Gravitate to Humor in a Hard Time -Wall Street Journal
"Madison Avenue is expected to rely more heavily on its funny bone in the upcoming Super Bowl, despite the upswing in Covid-19 cases and other challenges that have engulfed the country this year.
The laundry list of issues has forced many brands to think hard about what tone to strike during the biggest night on television. But with fewer than seven weeks until the planned Feb. 7 kickoff, a consensus approach has begun to emerge: relief.
Ad-agency executives say the country is looking for a reprieve from its problems, including the surging virus, an uncertain economy and political divisiveness.
'People want to laugh and they want to feel normal again,' said Susan Credle, global chief creative officer at Interpublic Group of Cos.' FCB, which is crafting several big-game ads this year.
Candy-maker Mars Inc. will air a comedic ad in the first quarter of the game featuring its M&M candy characters....
Comedy has long played a significant role in Super Bowl commercials, of course, but ad executives anticipate that more brands are likely to employ a humorous approach for Super Bowl LV....
'We are finding that celebrities who wouldn't necessarily want to do commercials before are willing to be part of it because they are not working,' said Rob Reilly, global creative chairman of Interpublic's McCann Worldgroup. McCann has enlisted a high-profile celebrity to appear in one of the Super Bowl ads it is creating....
Avoiding creative fumbles, such as jokes that go too far or political references that don't go over well, can be harder today because the divisiveness in the country has made it hard to predict which commercials will prompt backlash."
U.S home prices surge to 6-year high as more people flee cities -Marketwatch
"The cost of buying a home surged again in October, a closely followed index showed, and prices rose at the fastest rate in six years in a clear sign the housing market is still booming despite a raging pandemic.
A measure of home prices in 20 large cities rose at a 7.9% yearly pace in October, according to the S&P CoreLogic Case-Shiller price index. That's up from 6.6% in the prior month.
A broader measure by Case-Shiller that covers the entire country, meanwhile, showed a similarly large 8.4% increase in home prices over the past year. That's also up sharply from 7% in the prior month.
Prices have risen at the fastest clip since 2014 owing to record-low mortgage rates and an influx of people leaving cities to escape the coronavirus and find more space. A short supply of homes for sale has also been a contributing factor....
The biggest yearly increases in home prices took place in Phoenix (12.7%), Seattle (11.7%) and San Diego (11.6%).
The smallest increases occurred in New York (6%) and Chicago (6.3%) and Las Vegas (6.4%) - cities that have been hit hard from the virus or whose local economies have suffered the most.
'The data from the last several months are consistent with the view that COVID has encouraged potential buyers to move from urban apartments to suburban homes,' said Craig J. Lazzara, global head of index investment strategy at S&P Dow Jones Indices."
Why Bill Uses the "Royal We" -Bonner/Rogue Economics
"From time to time, dear readers write to question Bill's use of the 'royal we' in his writings. Far from being an affectation, Bill explains that it is, in fact, the 'common' we… used with no delusions of grandeur whatsoever.
The Queen uses the 'royal we' to signify that she is not speaking for herself, but for the Crown… an institution that was around for hundreds of years before she was born and will, presumably, outlast her by hundreds more.
Here at the Diary, we do not use the 'royal' we. We use the 'common' we… a plebian, down-market, gutter kind of we, with no pretension to grandeur, nor even mediocrity.
For here we are, writing from a house we didn't build… in a country that is not ours… wearing clothes we didn't design… looking out on rain we didn't cause…
…and passing along ideas that are not original. Even when we think we have had a new idea, we discover later that someone had the same idea 2,000 years ago.
Not one molecule in our body, thought in our brain, or feeling in our heart is of our own making. It would be vanity to use first-person singular; there is nothing singular about who we are or what we do.
No, we have neither scepter nor orb; all we have is a laptop computer.
We wear no royal purple. We favor brown and grey. We dress in dull colors so we may think in vivid ones.
We have no throne, no influence, no privilege, no position, and no armed guards to protect us.
We speak not for the Crown, but for all those common people who try to put two and two together....'We' speak for them all - as best as we can.
As time passes, the conceits of youth… the illusion of timelessness… the passions and competitions - to have the biggest bank account, the biggest car, the biggest house, the biggest muscles, and the biggest you-know-what - all get dropped along the way, like discarded pianos on the Oregon Trail.
All that is left is the shriveled up, naked reality… of time, love… and death....So let us at least speak for a group… not of royals, but of commoners… and use 'we' in sympathy with all those sinners, geniuses, half-wits, saints, and jackasses that came before and will come after us…"
Real Money Podcast
Dec 28, 2020
12.28.20 - Silver Price to Shine in 2021
Gold last traded at $1,876 an ounce. Silver at $26.36 an ounce.
NEWS SUMMARY: Precious metal prices zig-zagged Monday on a firmer dollar. U.S. stocks rose in the final trading week of 2020 as President Donald Trump signed an economic relief bill.
Silver price to shine the brightest in 2021 -Kitco
"The silver market is garnering a lot of attention heading into 2021 and according to Main Street retail investors, it is the precious metal they will be keeping an eye on in the new year.
Investors have been waiting a long time for silver to finally live up to its reputation and outperform gold. For the fifth consecutive year, retail investors see the grey metal as the top asset in the precious metals sector.
This year, 1,015 people participated in Kitco News' Outlook 2021 online survey. A total of 568 Main Street voters, or 56%, said they expect silver to fare better than other metals in the year ahead.
The bullish outlook for silver come as the precious metal has seen a historic rally since falling to $12 an ounce due to financial market turmoil due to the COVID-19 pandemic. Since its lows, silver prices have rallied more 115%.
In comparison, gold prices are up 25% from its March lows around $1,500 an ounce.
Many analysts also see silver outperforming gold prices in 2021. Low interest rates, a weaker U.S. dollar and rising inflation pressures will drive both gold and silver, which are both seen as monetary metals. However, improving economic activity next year will add another pillar of support for silver.
Some analysts see potential for silver prices to retest their all-time highs above $50 an ounce."
Market Edges Toward Euphoria, Despite Pandemic’s Toll -New York Times
"Investors of all stripes piled into stocks this year, creating levels of froth reminiscent of the dot-com boom. Analysts say there's room to go higher, but some worry about a bubble.
Already notable for its mostly unstoppable rise this year - despite a pandemic that has killed more than 300,000 people, put millions out of work and shuttered businesses around the country - the market is now tipping into outright euphoria.
Big investors who have been bullish for much of 2020 are finding new causes for confidence in the Federal Reserve's continued moves to keep markets stable and interest rates low. And individual investors, who have piled into the market this year, are trading stocks at a pace not seen in over a decade, driving a significant part of the market’s upward trajectory.
'The market right now is clearly foaming at the mouth,' said Charlie McElligott, a market analyst with Nomura Securities in New York.
The S&P 500 index is up nearly 15 percent for the year. By some measures of stock valuation, the market is nearing levels last seen in 2000, the year the dot-com bubble began to burst....
'We are seeing the kind of craziness that I don't think has been in existence, certainly not in the U.S., since the internet bubble,' said Ben Inker, head of asset allocation at the Boston-based money manager Grantham, Mayo, Van Otterloo....
Perhaps the clearest example of unbridled investor enthusiasm comes from the market for I.P.O.s. With more than 447 new share offerings and more than $165 billion raised this year, 2020 is the best year for the I.P.O. market in 21 years, according to data from Dealogic....
For companies that went public in December, shares on the first day of trading jumped roughly 87 percent, on average, as of the week that ended Dec. 18. That’s the highest since early 2000, when the tech bubble began to burst.
'It's not as obvious a bubble as 20 years ago,' said Jay Ritter, a finance professor at the University of Florida who studies initial public offerings. 'But we're close to bubble territory.'
The market appears overheated by another gauge that investors often use to determine how cheap or expensive a stock is: its price relative to the profits it’s expected to make. Currently, the so-called price-to-earnings ratio for S&P 500 companies is above 22, and has been for much of the year. The last time the market was consistently above that level was in 2000."
Covid-19 Propelled Businesses Into the Future. Ready or Not. -Wall Street Journal
"Spurred by the pandemic, business changes that normally might have taken years unfolded in months. Now, shifts that began as temporary fixes are likely to become permanent.
For many who crossed the digital divide this year, there will be no going back.
The Covid-19 pandemic forced Americans to collectively swap the physical for the digital world in a matter of months. As retailers learn to operate without stores, business travelers without airplanes, and workers without offices, much of what started out as a temporary expedient is likely to become permanent.
'Covid has acted like a time machine: it brought 2030 to 2020,' said Loren Padelford, vice president at Shopify Inc. 'All those trends, where organizations thought they had more time, got rapidly accelerated.' Merchants using the company's e-commerce platform shot up more than 20% between January and June to 1.4 million, according to broker Robert W. Baird & Co.
The reverberations are already apparent in everything from the stock market to corporate spending patterns to the decline of physical cash....
In many ways, digitization is simply the next chapter of a process under way for a century: the dematerialization of the economy. As agriculture gave way to manufacturing and then services, the share of economic value derived from tangible material and muscle shrunk while the share derived from information and brains grew....
The shift from physical to virtual commerce went hand-in-hand with the rise of remote and contactless payments and the decline of cash. The virus prompted some bastions of cash such as casinos to introduce more cashless technology."
What They Don't Tell You About Electric Vehicles -American Spectator
"Would you wait 15 minutes to get a fast-food hamburger?
Electric cars will make you wait longer. This includes even those touted as being capable of receiving a 'fast' charge in 15 minutes or so. Because you'll have to wait for the car plugged in ahead of you to 'fast' charge.
This assumes you're second in line. If you're third... To achieve the same capacity to charge as many electric cars as a gas station is capable of refueling in an hour, it would be necessary to at least quintuple the physical size of the charging station to compensate for the quintupling of the time it takes to recharge each electric vehicle (EV) versus the time it takes to refuel a non-electric car.
At a gas station, a car occupies its spot at the pump for about five minutes; thus, in 15 minutes it is possible for a single pump to refuel three cars. But if it takes 15 minutes to recharge a single EV, it would take two more places to plug in - and the space for those additional two cars - to equal the throughput capability of the gas station’s single pump.
The problem there is that the faster you recharge a battery, the more you reduce its life - and increase the odds of a fire. There is a reason why you trickle charge batteries - if possible....
There's another problem, unique to things powered by electricity.
You cannot just pour in electricity, as you do with gasoline. Electricity doesn't sit ready to go in storage tanks, underneath the pumps. It has to be transmitted as demanded - via cables from the generating source - and this requires cables of much greater capacity than your household extension cord.
This is why it is not possible to 'fast' charge an EV at most private homes. You can reduce the waiting time from eight or more hours but not to 15 minutes. Not without upgrading your house to commercial-grade electric capacity. And then there's that increased risk of burning your house down.
And a word about 'fast' charging - which even where feasible is only partial charging. You cannot fully 'refill' a battery quickly - as you can fully refuel a non-electric car's tank.
Which means more frequent charging....These are basic EV facts, but most people aren't aware of them."
Real Money Podcast
Dec 24, 2020
12.24.20 - A Christmas Poem For a Most Bizarre Year
Gold last traded at $1,879 an ounce. Silver at $25.79 an ounce.
NEWS SUMMARY: Precious metal prices rose Thursday in thin, pre-Christmas trading. U.S. stocks rose slightly as Wall Street tried to wrap up the holiday-shortened week on a high note.
What Is In Store For Gold In 2021? -Aslam/Forbes
"The precious metal is up nearly 22% year-to-date, but it has been under selling pressure for the past three days, as traders have been busy booking their profits as 2020 comes to an end. There is no doubt that this year has brought glory for gold traders as the gold price made an all-time high of $2,075 in August this year....
The big question for investors and traders is whether the gold price is going to make another record high next year....The answer is very much dependent on a few factors. Firstly, it is all about containing the coronavirus and any other future variant of these viruses... If the coronavirus situation doesn't come under control, traders will seek shelter in safe-haven assets, and gold prices will likely move higher.
Secondly, the economic data, the stock market, and businesses' actual health are completely out of sync. That is because the U.S. stock market is still sitting near its record high while enterprises are consistently forced to close.
Something that is surely going to influence the gold price is the trend in the dollar index, which is determined by the Federal Reserve's monetary policy stance."
A Christmas Poem For A Most Bizarre Year -Resler/Real Clear Markets
"Every Christmas season, I have composed a 'review and outlook' for the economy set to the rhythm and meter of Clement Moore's classic, 'A Visit from St. Nicholas.' This, my 37th annual rendition, is primarily a 'review' of what has been undeniably the most bizarre year in a lifetime. The poem ends with a brief but, as always, hopeful outlook for the year ahead.
’Twas the Night Before Christmas
’Twas the night before Christmas, all calm and serene,
As moonlight bathed the marsh grass in a silv'ry sheen.
But my spirit was troubled and lacking in cheer
For we’d come to the end of a truly bizarre year.
First, we’d endured a month-long impeachment trial
Brought by those annoyed mainly by Donald Trump’s style.
Although for acquittal most Senators voted
To Trump’s removal would his foes stay devoted.
At the year’s start, our economy was quite strong,
But no one foresaw how fast it’d go terribly wrong.
For, unseen to all, a global pandemic did loom
That would bring a quick end to our decade-long boom.
Hoping to avert a fate we’d all come to dread,
We halted most commerce to slow the Covid's spread.
With shutdowns and lockdowns the world over decreed,
Economies collapsed with incredible speed.
Policymakers quickly sprang into action
Budgeting trillions to give spending some traction
The Fed did its part, setting interest rates low
And vowing also to let its balance sheet grow.
That these bold and quick actions did help I'm quite sure,
But the pandemic's left wounds that will surely endure.
Dining and travel could take years to recover,
While new ways of spending we’ll surely discover.
School closures and remote learning have come at high cost
And it’ll take years to make up what our school kids have lost.
The real estate market has also been altered,
As big cities shrink ’cause their leaders have faltered.
We'll keep meeting remotely with Facetime or Zoom,
Though something gets lost when we're not in the same room.
Social distance and masking have become the new norm
And we're told the virus will spread unless we conform.
Daily, we heard the count of deaths and new cases
All duly sorted by region, ages, and races.
Rarely though did the press give context or perspective,
So the policy response too oft proved defective.
The self-righteous claimed we must - 'follow the science.'
And insisted their rules get total compliance.
But true science is complex with many dimensions,
That advances through debate and often dissensions.
And if a pandemic wasn't enough of a curse,
Late in the Spring things took a turn for the worse.
When Mister George Floyd died 'neath the knee of a cop
The outrage that followed brought chaos no one could stop.
Protesters and marchers in cities large and small
Cried out demands of 'equal justice for all.'
But too often all that hollering and hooting
Gave way to lawless riots, arson and looting.
This deadly brew of disease and social unrest
Has put long-held traditions and norms to the test.
And when we tried voting modes not used in the past,
We found more ballots than ever had somehow been cast.
Trump challenged the outcome through appeal and recount
But Biden's vote margin prov'd too wide to surmount.
So early next year a new President takes charge,
Still the challenges ahead remain just as large.
Our future will again be more hopeful and bright,
When, at last, we can end this dread Covid blight.
And thanks to 'Warp Speed,' that day soon may arrive,
And, once more in good health we will prosper and thrive."
Covid-19 vaccine: Will the U.S. trust it? -CNBC
"The U.S. began vaccinating the population against the coronavirus last week, but mass adoption is not a guarantee. Nearly 4 in 10 Americans say they would 'definitely' or 'probably' not get a vaccine, according to a Pew Research Center survey of 12,648 U.S. adults from Nov. 18 to 29.
While this is better than Pew results from September, which showed that nearly 50% of respondents were leaning toward not getting the vaccine, it still falls short of what is needed to adequately protect the country. To achieve herd immunity, about 70% of the population needs to be vaccinated or have natural antibodies, experts say.
Widespread mistrust could be a product of the fact that the Covid vaccine was researched and developed in just eight months, breaking the speed record of four years.
Or it might have something to do with the fact that if anything goes wrong with the vaccine, the drugmakers that produced them - Pfizer, BioNTech and Moderna - have total immunity against lawsuits related to injuries resulting from the vaccine until 2024.
Central to closing this trust gap is a robust and reliable national education campaign. The Department of Health and Human Services will spend $250 million on this effort."
**Swiss America Trading will be closed Christmas day. We hope you have a wonderful holiday.**
Real Money Podcast
Dec 23, 2020
12.23.20- Relevance of Gold as a Strategic Asset
Gold last traded at $1,865 an ounce. Silver at $25.36 an ounce.
NEWS SUMMARY: Precious metal prices rebounded Wednesday on safe-haven buying and a weaker dollar. U.S. stocks traded mixed after President Donald Trump criticized the new Covid-19 relief package, which could delay deployment of funds.
The relevance of gold as a strategic asset -World Gold Council
"Gold is a clear complement to stocks, bonds and alternative assets for well-balanced US investor portfolios. As a store of wealth and a multi-faceted hedge, gold has outperformed many major asset classes while providing robust performance in both rising and falling markets.
Gold can enhance a portfolio in four key ways - 1) generate long-term returns, 2) act as an effective diversifier and mitigate losses in times of market stress, 3) provide liquidity with no credit risk and 4) improve overall portfolio performance....
The increased relevance of gold - Investors have embraced alternatives to traditional stock and bond investments in pursuit of diversification and higher risk-adjusted returns. The share of non-traditional assets among global pension funds, for example, increased from 7% in 1998 to 23% in 2019 - this is 30% in the US. And a similar pattern can be seen in the portfolio composition of individual investors.
Gold allocations have been recipients of this shift. Gold is increasingly recognized as a mainstream investment as global investment demand has grown by an average of 14% per year since 2001 and the gold price has increased by almost six-fold over the same period....
Beating inflation, combating deflation - Gold is long considered a hedge against inflation and the data confirms this. The average annual return of 10% over the past 49 years, has outpaced the US consumer price index (CPI).
Gold also protects investors against extreme inflation. In years when inflation was higher than 3% gold’s price increased 15% on average (Chart 3). Over the long term, therefore, gold has not just preserved capital but helped it grow."
This Man Lost Everything Betting on Stocks -Roche/Pragmatic Capitalism
"The headline of this article is something you'll very rarely, if ever, see in the financial press. You're much more likely to hear something along the lines of:
'Joe Schmo made $1,000,000 buying Tesla stock'... 'Jane Doe retired early buying Bitcoin'....Most of this is survivorship bias that promotes an imprudent gambler's mentality. Let me explain.
Back in 2015 there was a great study from Longboard called The Capitalism Distribution. They found, unsurprisingly, that roughly 80% of the markets entire gains came from 20% of all stocks from 1989-2015. 80% of stocks had a 0% gain.
JP Morgan came to similar conclusions in a research paper titled 'The Agony and the Ecstasy - the Risks and Rewards of a Concentrated Stock Investing'. In a study ranging from 1980-2013 they found: 'The median stock underperformed the market with an excess lifetime return of -54%.' In other words, in most cases, a concentrated holder would have been better off invested in the market....
This is why I am a big proponent of treating our 'investment portfolios' like 'savings portfolios'. What most of us do on the stock market is an allocation of savings as opposed to actual investment, which is technically what a firm does when it spends for future production. Yes, we want to get wealthier when we allocate our assets. But most of us need to do so in a manner that not only optimizes our upside, but does so without haphazardly risking the downside along the way. After all, this is literally our life's savings. It shouldn't be treated like money we take to Vegas for a weekend....
I think there's two very important lessons to remember when reading these kinds of articles: 1) Stock picking is very, very difficult and most of us benefit from some degree of diversification. 2) Given the relatively high potential of catastrophic loss in stocks make sure to never bet more than you can afford to lose."
How to End Lockdowns Next Month -Dr. Bhattacharya/Sunetra Gupta/Wall Street Journal
"The approval of several Covid-19 vaccines is an impressive technological development that should rapidly end the lockdowns and allow normal life to resume. But authorities like Anthony Fauci and Bill Gates argue that lockdown restrictions may have to continue through the fall and even into 2022, notwithstanding the catastrophic harms the lockdowns have caused, especially to young people, the poor and the working classes.
The imminent dissemination of vaccines can help end lockdowns by the end of January. The Great Barrington Declaration, which we wrote with Martin Kulldorff of Harvard Medical School, provides the key idea: focused protection of people who face a high risk of mortality should they become infected.
The risk of mortality from Covid-19 infection is now well established by seroprevalence studies conducted world-wide...There is a sharp age gradient in the survival rate after infection. At least 99.95% of people under 70 survive infection; that figure is only 95% for 70 and older.
Covid-19 is thus especially deadly for the old and others with chronic conditions. But the lockdowns are deadly as well. The harms include plummeting childhood vaccination, worse cardiovascular disease outcomes, and less cancer screening, to name a few. It’s impossible to quantify the total deaths they have caused and will cause, but it’s safe to conclude that for people under 70 without chronic conditions - especially children and young adults - Covid-19 is far less deadly than a lockdown....
Some 50 million people in the U.S. are over 65. The number of vaccine doses expected to be available over the next two months will be enough to vaccinate every elderly person who wants to be inoculated, as well as health-care workers and other vulnerable people. With a 90%-plus efficacy rate in protecting against Covid-19 symptoms, we will achieve near-perfect focused protection.
At that point, the lockdown should end immediately and forever. For healthy young and middle-aged people, especially for minorities and the poor, the lockdown's harm far outstrips the harms from infection."
Goldman Says Bitcoin's Surging Popularity Won't Harm Gold -Bloomberg
"Gold and Bitcoin can coexist, according to Goldman Sachs Group Inc., which said, while the largest digital currency may be pinching some demand from the oldest of havens, the precious metal's standing will endure.
'Gold's recent underperformance versus real rates and the dollar has left some investors concerned that Bitcoin is replacing gold as the inflation hedge of choice,' the bank said in a note. While there's been some substitution, 'we do not see Bitcoin's rising popularity as an existential threat to gold's status as the currency of last resort.'
Bitcoin has seen a blistering rally this month, exceeding $23,000 per token on Thursday, having only surpassed the $20,000 milestone for the first time on Wednesday. Its ascent has prompted debate about whether the upstart will cut into gold's role....
Institutions and wealthy investors avoid cryptocurrencies due to 'transparency issues, while speculative retail investment causes Bitcoin to act as an excessively risky asset,' Goldman said. 'We do not see evidence that Bitcoin's rally is cannibalizing gold's bull market and believe the two can coexist.'
Bitcoin has more than tripled this year, while gold’s up 24% after setting a record above $2,075 an ounce in August."
Real Money Podcast
Dec 22, 2020
12.22.20 - Rand Paul's Speech Goes Viral
Gold last traded at $1,865 an ounce. Silver at $25.36 an ounce.
NEWS SUMMARY: Precious metal prices fell Tuesday on profit-taking and a firmer dollar. U.S. stocks drifted lower after Congress approved a long-delayed coronavirus relief package.
Gold, Past And Future -Seeking Alpha
"Gold, at various times and to various degrees, has correlated with inflation. Inflation is most commonly measured according to the CPI (consumer price index), but the CPI does not capture the effect of the prevailing interest rate....
It would not be unreasonable to expect that, in the present situation, gold and inflation might behave in a similar fashion to 2008-9 where both trended higher....
In the short-term, there is room for the momentum indicators to move higher, but there is resistance at $1900 and then at $1960. If that resistance can be overcome, then new highs are likely....
In summary: Gold, the Fed funds rate, and inflation (relative to the 2y T-yield) are repeating the pattern from 2008-9, which implies that gold will rise over the next several years."
"Sen. Rand Paul, R-Ky., addressed the Senate Monday afternoon as his colleagues prepared to vote for a $900 billion coronavirus relief package and told his fellow Republicans who backed the stimulus that they are no better than the Democrats they criticize who align themselves with socialism.
'To so-called conservatives who are quick to identify the socialism of Democrats: If you vote for this spending monstrosity, you are no better,' Paul said.
The House passed the relief package and lawmakers tacked on a $1.4 trillion catchall spending bill prior to the Christmas holiday. The relief package will send a $600 direct stimulus payment to most Americans, along with a new round of subsidies for hard-hit businesses, restaurants and theaters.
'If free money was the answer... if money really did grow on trees, why not give more free money?' he said. 'Why not give it out all the time? Why stop at $600 a person? Why not $1,000? Why not $2,000? Maybe these new Free-Money Republicans should join the Everybody-Gets-A-Guaranteed-Income Caucus? Why not $20,000 a year for everybody, why not $30,000? If we can print out money with impunity, why not do it?'....
The House voted 359-53 in favor of the relief bill. The bill combines coronavirus-fighting funds with financial relief for individuals and businesses. The 5,593-page legislation - by far the longest bill ever - came together Sunday after months of battling. Treasury Secretary Steven Mnuchin, a key negotiator, said on CNBC Monday that the direct payments would begin arriving in bank accounts next week."
Want Real Economic 'Stimulus'? End Economy-Killing Lockdowns Now -Issues & Insights
"Congressional negotiators, we're told, are inching ever closer to a deal for what's being called a 'second round of stimulus spending.' Sorry, but what’s planned has nothing to do with supercharging the economy. Want to really 'stimulate' growth? End the foolish COVID-19 lockdowns that have decimated small businesses and hundreds of thousands of jobs.
The sound you'll no doubt soon be hearing is hundreds of Washington, D.C., politicians and policymakers clapping themselves on the back for the pending stimulus package.
As it now stands, the $900 billion-plus deal is likely to include 'direct payments to all Americans, funding for vaccine rollout and delivery, and an extension of unemployment benefits as well as much-needed aid to small businesses,' according to The Week.
But this is not 'stimulus' by any means. It is the economic equivalent of putting a dying patient on life support. So call this bill what it is. Government relief for a problem the government itself caused through mandated lockdowns....
It's the old Keynesian fallacy writ large. That government spending boosts the economy. It's false. It's the functional equivalent of transferring money from one pocket to the next and pretending you now have more money to spend. You've been 'stimulated.'
Not true. A major study of U.S. economic data under COVID-19 published by the National Bureau of Economic Research in November concluded that 'that traditional macroeconomic tools - stimulating aggregate demand or providing liquidity to businesses - have diminished capacity to restore employment when consumer spending is constrained by health concerns.'
Just as bad, the same study found that the Paycheck Protection Program spent an average of $377,000 for each job saved, and that school closures were seriously damaging the future income prospects of low-income minority students....
Already, policymakers view the COVID-19 pandemic not as a tragedy, but as a massive opportunity to increase the size of government, raise taxes to stratospheric levels, and limit long-cherished freedoms for people around the world.
They're arguing for a 'Great Reset,' in which global bureaucratic and political elites, along with corporations closely tied to governments, will make the world's economic decisions - not free markets, not supply and demand. This is no mere conspiracy idea; it's well on its way."
The Cyber Threat Is Real and Growing -Rogers/Wall Street Journal
"The SolarWinds breach could be the most significant cyber incident in American history. Russian intelligence - likely the SVR, the foreign-intelligence branch - infiltrated and sat undetected on U.S. government networks for nearly 10 months. It was a sophisticated, smart and savvy attack that should alarm the public and private sectors.
We may not know the full extent of the damage for some time. Don't be surprised if more government entities disclose that they too were victims of this attack. Don't be surprised either if it emerges that private companies were hit. SolarWinds says it has more than 300,000 customers, including 400 companies in the Fortune 500. That's a lot of potential victims.
It appears that this was purely an intelligence-gathering effort. The SVR sat on government networks collecting as much data as it could, whenever and however it wanted. It was less like tapping into phone lines and more like breaking into the library and wandering around.
Every country conducts espionage. That's not the alarming part. What is truly scary is that the Russians are inside the house now. Who knows where they've planted malware, corrupted or deleted data, locked users out of systems, or destroyed systems entirely? Turning off the system and uninstalling SolarWinds software isn’t enough. It may take years and thousands of hours to unpack fully where the Russians hid themselves and their code....
The U.S. needs to respond in a smart, considered manner. Shutting off the lights in Moscow isn't an appropriate or proportional response. Disrupting the networks of the SVR or GRU - Russian military intelligence - may well be. If the U.S. doesn't define red lines today and demonstrate that there are consequences for crossing them, we will continue to be the victim of cyberattacks. The breaches will only get worse....
The SolarWinds damage is done, but it isn't too late to strengthen our cyber defenses, work to deter foreign actors, and prepare for future breaches. And there will be more."
Real Money Podcast
Dec 21, 2020
12.21.20 - Americans in Full Revolt Against Lockdowns
Gold last traded at $1,878 an ounce. Silver at $25.71 an ounce.
NEWS SUMMARY: Precious metal prices rose on safe-haven buying despite a firmer dollar. U.S. stocks fell as enthusiasm over a coronavirus stimulus deal was overwhelmed by worries over a viral new Covid strain in the U.K.
Gold and silver now in a perfect storm scenario -Wagner/Kitco
"Sadly, the events that began in March when the Covid-19 epidemic officially became a global pandemic has led to the current state of the economy. Actions by the Federal Reserve and the U.S. Treasury have resulted in a perfect storm of events that have taken gold to its highest price ever in August 2020. The fundamental events that have led to the series of massive rallies in gold and silver are still very much with us....
The timeline for the vaccines to become available to the general public is still many months away. This means that the economic contraction which has affected millions of Americans leaving them unemployed, and the millions of Americans that we're able to stay in their homes due to the moratorium on eviction are still in an extremely fragile and tenuous situation....
The fundamentals which have been at the root of recent gains throughout the year in gold remain fully intact at least until the beginning of the second quarter of 2021. More alarming is the fact that once the vaccine is available and enough individuals have created a herd immunity, the economic fallout that will occur will continue to grow, and the financial repercussions that this will cause will continue.
This is why I believe that we currently have a perfect storm scenario in which gold pricing will continue to rise, and over 2021 will trade to a new record high, as the U.S. dollar's value will continue to diminish."
How Stimulus Kills the Economy -Bonner/Rogue Economics
"The 'experts' most in demand are those that tell the lies the public wants to hear. Such as… how to bail out the U.S. economy....The experts say that if we just give people money, they will spend it. Businesses will make sales. Consumers will consume. It will look like a healthy economy again.
But where do the feds get the money? Never mind. You know as well as we do that they don't have any. The federal government is already scheduled for a $2 trillion deficit this fiscal year.
The feds will 'print' the currency...And, ultimately, one way or another, the 'money' the feds distribute today has to come from the people tomorrow. Well, that may not be so bad… If drawing on the resources of tomorrow helps us out of a problem today… what's so bad about that?
But wait… The burden of today's letter is that the funny money does funny things to the economy. That is, the 'stimulus' actually depresses investment and output. Over the long haul, people will be worse off, not better.
According to Bonner's Law, bad capital drives out good capital. Free money is not just a fraud, but a curse. There is no example in history where giving people printing-press money - that is, money not connected to real products and services - ever did any lasting good....
Experts argued that classical theories of money and economics were all wrong. The new Modern Monetary Theory (MMT) taught that the government was the source of all money… and that it should spend its money creating a better world for everyone.
They insisted, too, that the government - with its armies of Ph.D. economists - should decide how high stock prices should be… how much it should cost to borrow money… what the rate of 'inflation' should be… how many people should be unemployed… and what the 'capacity' of an economy ought to be.
Above all, they learned that when capitalism fails, the experts need to get to work. They need to give the people money. A bailout. A giveaway.... Not only do the giveaways turn valuable capital into a consumable… they also reduce the economy's ability to produce. Everyone - except the insiders - gets poorer."
Americans Are in Full Revolt Against Pandemic Lockdowns -Tuccille/Reason
"Echoing New York Gov. Andrew Cuomo, New York City Mayor Bill de Blasio warned city residents this week to prepare for a 'full shutdown' as part of ongoing efforts to slow the spread of COVID-19. The two elected officials better not hold their breath waiting for compliance. Evidence from around the country shows that many Americans are thoroughly sick of impoverishing, socially isolating lockdown orders, and are revolting against the often-hypocritical politicians who issue them....
From coast to coast, businesses and individuals are ignoring restrictive rules that threaten their livelihoods, stifle social contact, and threaten to strangle the necessary interactions of everyday life.
'Another shutdown just isn't an option for us,' the Seven Sirens Brewing Company of Bethlehem, Pennsylvania, announced last week on its Facebook page. 'We, and thousands of other small businesses throughout the country simply will not survive. […] After speaking with our bank, staff members, families, attorneys, and local government officials…we have decided we will not comply with future shutdown mandates. We will continue to operate with the same, proven-safe measures we implemented 5 months ago.'....
On the West Coast, many restaurants also open their doors to customers despite state orders to the contrary. 'While some of the larger chains and corporations are following the orders, many of the mom and pop shops say going to takeout only would put them out of business,' ABC News reported last week.
The city council in Solvang, a tourism-fueled community in Santa Barbara County, recently voted to ignore shutdown orders that threaten locals' livelihoods....
'As of today, 17% of restaurants - more than 110,000 establishments - are closed permanently or long-term' as a result of this year's economic distress, the National Restaurant Association announced on December 7. Fatigue with lockdown orders was predicted by experts months ago, and voiced by the public in growing numbers....
In distress and after due consideration, many Americans have decided that they shouldn't comply. Individually and in organized groups, often with the support of their communities, people are pushing back against lockdown orders that they find more threatening than COVID-19."
3 in 4 say 2020 pushed the country into an 'existential crisis' -StudyFinds
"From the pandemic to the presidential election, there's no question 2020 has been a turning point moment in United States history. Unfortunately, most believe the year's problems haven't left them in a good position moving forward. A new survey finds nearly eight in 10 Americans say 2020 caused an existential crisis for the country.
The OnePoll survey asked 2,000 Americans about their experiences throughout this tumultuous year and finds that 77 percent agree 2020 has sent the U.S. into crisis over its identity. Baby boomers are the most likely to agree with this statement (82%), compared to 76 percent of Generation X and 75 percent of millennial respondents.
As America deals with its major issues, it's no surprise that 65 percent of respondents feel like they've had their own personal crisis at some point during 2020. The survey, commissioned by Vejo, finds 68 percent of Americans said the year has left them feeling defeated....
With all of these events adding up, over half of respondents have felt too overwhelmed throughout the year to take proper care of their health and wellness. Fifty-six percent said they've been struggling now more than ever to find a wellness routine that works for them."
Real Money Podcast
Dec 17, 2020
12.17.20 - California Is the Grinch Killing Christmas
Gold last traded at $1,884 an ounce. Silver at $25.94 an ounce.
NEWS SUMMARY: Precious metal prices traded sharply higher Thursday on safe-haven buying and a weaker dollar. U.S. stocks rose as investors monitored progress on additional stimulus aid.
Gold jumps over 1% as surging virus cases renew stimulus hopes -CNBC
"Gold prices gained more than 1% on Tuesday, bolstered by expectations of more coronavirus relief aid in the United States as mounting COVID-19 cases renewed concerns over the pandemic’s economic toll.
'There is the possibility of getting stimulus passed and that is what the gold market has been waiting for,' said Jeffrey Sica, founder of Circle Squared Alternative Investments. 'Most people have come to terms with the fact that the vaccine will stop the next wave, but will have very little to do with the current wave.'
A staggering COVID-19 U.S. death toll put pressure on lawmakers to roll out relief aid, buoying optimism around a $1.4 trillion bill. Gold, regarded as a hedge against likely inflation and currency debasement, has risen over 22% so far this year amid the unprecedented stimulus unleashed globally....
Silver jumped 2.7% to $24.45 an ounce, and palladium gained 1.9% to $2,336.62. Both metals rose more than 3% earlier in the session.
'Silver’s dual roles as a precious metal and an industrial material makes it more appealing during times when economic activity is expected to rebound,' said Fawad Razaqzada, market analyst with ThinkMarkets."
California Is the Grinch Killing Christmas, Small Businesses, and Maybe Even the Democratic Party -Bridge/American Consequences
"Governor Gavin Newsom has locked down California as though a tropical storm were about to make landfall. Yet the 'safety' measures mostly target the 'small guy,' and this hypocrisy could be the Democratic Party's undoing.
Residents of America's largest state once took pride in the maxim that commanded 'as goes California, so goes the country.' Today those words sound more like a curse than the promise it once held. But it didn't have to be that way.
Gavin Newsom, resembling a Roman consul drunk on power on the edges of empire, has announced stay-at-home measures that may ultimately prove deadlier than the pandemic it was meant to halt. Here are just some of the businesses his regime has ordered to be shuttered: hair salons and barbershops, personal care services, movie theaters, wineries, bars, breweries and distilleries, family entertainment centers and amusement parks....
Like so many other Democratic leaders who have taken draconian steps to halt the virus, Newsom's brutal strategy assumes people cannot be trusted to protect themselves… Therefore, the brilliant idea of wrecking the economy in the name of 'safety' is considered the best possible solution. That's a cold slap in the face to his constituents, coming as it does in the middle of the holiday shopping season, which is make-or-break time for many small businesses....
If there was a single story that captures the palpable anger and frustration that has gripped citizens in this state of some 39 million souls, it would be hard to top that of Angela Marsden, the owner of Pineapple Hill Saloon and Grill in Los Angeles. In an effort to keep pace with the ever-mutating anti-COVID regulations, Marsden spent over $80,000 to construct an outdoor patio so she could keep serving customers amid the pandemic. With the latest lockdown measures, however, city officials denied her permission to serve clients on location – even in the parking lot. Unfortunately, the story does not end there.
To add insult to injury, the city granted permission for a film company to set up a large outdoor eating pavilion for its employees just yards away from where Marsden had built her outdoor patio....
Meanwhile, not even the Grinch governor could abide by his own rules. Last month, Newsom and his bejeweled wife were photographed at a lavish birthday party for some lobbyist at the upscale French Laundry restaurant, which included about a dozen people from several households – and not a surgical mask in sight. In other words, exactly the type of gathering - minus the filet mignon and Dom Perignon - Newsom's administration has cracked down on.
California's harsh response to the coronavirus, combined with the double standards from elitist Democrats, is already having consequences. First, conservatives are reportedly fleeing the state in droves....Gavin Newsom is playing with fire, and if he's not careful he may just destroy California and the Democratic Party with it."
Winning The (Keynesian) Beauty Contest -Calhoun/Alhambra Partners
"One of the hardest things to understand as an investor is that markets sometimes - often - don't line up with economic reality. Markets rarely reflect current economic conditions and at times they seem to discount a future that seems highly unlikely at best, and delusional at worst. That seems to be the case today, as stocks sit near all-time highs and the economic recovery falters in the face of the renewed virus outbreak....
The title of this article is a reference to the Keynesian beauty contest view of markets...Investing is not like the lottery where the numbers are what they are and you win or you don’t. Investing is much more like poker where the cards are important but how the other players react is much more so. In investing, the data is important but much more important is how Mr. Market reacts to it.
Markets don't reflect the economy of today. Markets move based on the majority's view of how the present will change in the future. An investor's job is to judge whether that future is realistic, whether the economy can bridge the divide between where we are and where everyone thinks we’re going....
Commodities have rallied strongly over the last month, even as the economic recovery has moderated. The V portion of the recovery is obviously over but markets - people - look ahead and they are increasingly positive about the post-pandemic future. That doesn't mean they'll be right of course, but economics is, more than anything, about human behavior, so maybe the markets are making the future rather than just reflecting some misplaced hope about it....
Right now, the dollar is in a downtrend and growth is rising. What has changed with the economy is the second derivative – the improvement is continuing but it is decelerating. Disposable personal income is up 5.7% over the last year with the help of various government income support programs.
The savings rate hasn't been this high since the 1970s. Some of that is no doubt precautionary, but some is due to a desire to avoid crowds and forced lockdowns. Regardless of the reason, savings is future investment or consumption so this isn’t a bad thing....
Gold is still in a bull market but the correction from August continues...The long-term bull market is intact with real rates still in a downtrend."
If There's No Inflation, Then Why Do Inflation Expectations Keep Going Higher? -Zero Hedge
"Despite the very tame CPI reading, alternate measures of inflation were telling a different story. Chief among them are inflation expectations as priced by the Treasury bond market. Well, this week we again got another inflation data print that showed a rather subdued inflation backdrop....
Inflation expectations across the short to intermediate legs of the yield curve are hitting cycle highs again. Moreover, the message from the most inflation sensitive assets is confirming the message from inflation expectations.
This setup reminds us of the Groucho Marx/Richard Pryor line, 'who you gonna believe, me or your lying eyes?'....
Along with those inflation expectations, small stocks are outperforming big tech. Small stocks tend to be more sensitive to changes in inflation than larger firms....
We are getting similar confirmation within stock market sectors. Materials companies are outperforming consumer staples companies right on queue with inflation expectations rising....
Finally, the copper to gold ratio is telling us the same thing, that the bond market’s inflation expectations aren't operating in a bubble....So who are you going to believe, the inflation indexes or the bond market? And, does it even matter? Financial asset prices are clearly choosing to believe in the bond market's take."
Real Money Podcast
Dec 16, 2020
12.16.20 - Is This the End of Cities in America?
Gold last traded at $1,856 an ounce. Silver at $24.96 an ounce.
NEWS SUMMARY: Precious metal prices steadied Wednesday on momentum buying and a weaker dollar. U.S. stocks traded mixed as traders weighed progress in U.S. fiscal stimulus talks and disappointing economic data.
GOLD: Fire Insurance For Burning Currencies -von Greyerz/Gold Switzerland
"After an extraordinary rally, gold recently entered an anticipated correction phase, which both math and history suggest is about to re-enter a continued trend dramatically upward. A primary driver for such sustained precious metal strength is an historically undeniable (as well as approaching) paradigm shift toward rising inflation....
It is critical to first distinguish true vs. popular notions of inflation. From the Austrian School to Milton Friedman, the true definition of inflation has always been understood (and measured) by money supply. As the supply increases, inflation follows. The popular/media-driven definition, however, uses consumer prices as measured by such broken scales as the CPI to measure inflation....Dishonesty at the policy level is nothing new. Since Nixon welched on the Gold Standard in 1971, policy makers have been acting like college party boys without a chaperone....
COVID and the misguided policy reactions thereto, have only accelerated such insane debt levels and the creation of fake money to pay for it—all of which points to more inflation—namely, the kind that kills currencies and sends gold prices significantly upward....
But Where’s the Inflation?....'Price inflation' went to places like the S&P, not the deliberately false CPI. This explains why the DOW and S&P can break new highs as the real economy endures record lows....The next (and desperate) option, however, is to make one's currency weaker, inflate the same, and pay yesterday’s debt with tomorrow’s inflated/printed currency, a policy now openly embraced by the Dr. Frankensteins at the Eccles Building in D.C.
In the current paradigm shift, gold will rise not because gold only rises in inflationary periods (after all, gold recently hit new highs in an openly deflationary global setting). Instead, gold will rise simply because currency purchasing power will tank (and is already tanking) as inflationism progresses from a slow trot, to a cantor and then to a full gallop.
That is, gold will rise because currencies (diluted daily via money printing) are falling by the second. This is not an opinion, but a mathematical certainty."
Russian government hackers compromised U.S. agencies, including Treasury and Commerce -Washington Post/MSN
"Russian government hackers breached the Treasury and Commerce departments, along with other U.S. government agencies, as part of a global espionage campaign that stretches back months, according to people familiar with the matter.
Officials were scrambling over the weekend to assess the nature and extent of the intrusions and implement effective countermeasures, but initial signs suggested the breach was long-running and significant, the people familiar with the matter said.
The Russian hackers, known by the nicknames APT29 or Cozy Bear, are part of that nation’s foreign intelligence service, the SVR, and they breached email systems in some cases, said the people familiar with the intrusions, who spoke on the condition of anonymity because of the sensitivity of the matter. The same Russian group hacked the State Department and the White House email servers during the Obama administration....
The Russian Embassy in Washington on Sunday called the reports of Russian hacking 'baseless.' In a statement on Facebook it said, 'attacks in the information space contradict' Russian foreign policy and national interests. 'Russia does not conduct offensive operations' in the cyber domain.
All of the organizations were breached through the update server of a network management system made by the firm SolarWinds, FireEye said in a blog post Sunday....
'This is a big deal, and given what we now know about where breaches happened, I'm expecting the scope to grow as more logs are reviewed,' said John Scott-Railton, a senior researcher at Citizen Lab at the University of Toronto’s Munk School of Global Affairs and Public Policy. 'When an aggressive group like this gets an open sesame to many desirable systems, they are going to use it widely.'"
Is this the end of cities in America? -The Hill
"This is the year that officially ended the boom of cities that started in the 1990s. The mirage of cities buffeted by white-collar jobs and supported by wealthy citizens willing to take on just one more tax increase is officially kaput. It is easy to blame the deluge on the coronavirus, but in reality a unique combination of factors heralded the end of the growth in places like New York while introducing population booms in medium-sized cities and suburbs across specific regions of the country. Significant populations of each social class decided it was no longer worth living in major metropolitan areas.
What developed this year is a cascade of residents leaving large cities in blue states. Among the biggest losers this year, in terms of total population loss, were New York, San Francisco, Los Angeles, Chicago and the District of Columbia. New York lost at least 300,000 residents this year. San Francisco saw 90,000 postal changes of address out of the city, while its median apartment rent took a nosedive of 20 percent in 2020. Los Angeles recorded more than 25,000 moves out of the city, while Chicago logged over 20,000. Even the District of Columbia lost 15,000 residents. Other cities that had sustained growth in the last decade also face severe drops in interest.
Residents who fled large cities in blue states overwhelmingly relocated to red-state cities, mostly in the Sun Belt or the West outside of California. Phoenix, already booming before the coronavirus, retained its spot as the fastest growing city in the country; its metro population now displaces Boston. The other overall winners in the demographic game this year are Nashville, where home prices continue to surge while real estate inventory is down 40 percent; Las Vegas, which tempted Bay Area techies to follow the Raiders to Sin City; Charlotte, which now has a larger population than San Francisco; and the greater Charleston area, which is likely the home of Boeing’s next expansion and has benefited from manufacturing jobs moving south....
The trend is comprehensive: Mega-cities that have been traditionally led by the Democratic Party face the steepest loss in population while mid-level cities either stemmed the decline or have booming populations. For young people leaving college, or those entering into the middle of their careers, there is little allure left in these concrete jungles. The safe cities inspired by Rudy Giuliani that emerged in the 1990s are no more, with surging poverty and violent crime."
Covid-19 Vaccine Trial Volunteers Note Occasional Harsh Side Effects -Wall Street Journal
"Jocelyn Edwards wasn't sure she got Moderna Inc.'s experimental Covid-19 vaccine or a placebo when she received her first of two doses in August. Hours after the second shot, she said she was sure it was the genuine article.
'I woke up around midnight freezing,' said the 68-year-old retired nurse. 'For the next 24 hours I had intense chills, serious neck pain, headache, all my joints were aching.' She had a fever that peaked at 102.4 and poured out so much sweat that she lost 3 pounds, she said. The following day she woke up and felt fine. Ms. Edwards, like the other 30,000 volunteers who took part in Phase 3 clinical trials for Moderna’s Covid-19 vaccine, wasn't told whether she got the vaccine or a placebo....
As the first vaccine from Pfizer Inc. and BioNTech rolls out this week and the next one from Moderna looks poised to start reaching people soon, some Americans have expressed reservations about getting vaccinated. One concern has been possible side effects. While the data show that some Moderna and Pfizer trial volunteers experienced side effects, even those who had harsh reactions recommend the shots....
Pfizer's vaccine, which uses technology similar to Moderna's, showed similar side effects, according to data released last week. Among its volunteers aged 18 to 55 receiving their second dose, 15.8% got a fever, compared with 0.5% of the placebo group; 35% got chills versus 4% of placebo recipients; and they also got more headaches and were more fatigued than those who got the placebo. Volunteers in both trials who received the vaccine also reported pain at the injection site more frequently than placebo recipients....
In both the Pfizer and Moderna trials, most side effects were reported as mild or moderate, and they occurred at a lower rate in older volunteers.
'It's a really good sign that there is a signal from your body that there is something different inside you,' said Paul Duprex, director of the Center for Vaccine Research at the University of Pittsburgh. 'It's being recognized by your immune system to make all important SARS-CoV-2 antibodies.' The FDA granted Pfizer’s vaccine an emergency-use authorization on Friday and health-care workers started receiving the vaccine this week....
To reach herd immunity for Covid-19, public health authorities estimate that 60% to 70%, but possibly as low as 50%, of a given population would need antibodies to protect against infection. If Americans decline to be vaccinated in large numbers for any reason, including fear of side effects, it may cost the nation a chance to stamp out the disease."
Real Money Podcast
Dec 15, 2020
12.15.20 - Fake Science Destroying the Economy
Gold last traded at $1,853 an ounce. Silver at $24.54 an ounce.
NEWS SUMMARY: Precious metal prices rebounded sharply Tuesday on bargain-hunting and a weaker dollar. U.S. stocks rose on economic relief hopes and Covid-19 vaccines began to roll out nationwide.
The Covid-19 vaccine’s 2 big challenges -VOX
"The US has authorized a coronavirus vaccine. That doesn't guarantee a quick end to the pandemic. America has, finally, authorized a Covid-19 vaccine for the general public. Priority groups - health care workers and people in nursing homes - are now starting to get a vaccine. And if things go right, most of the country could be vaccinated by the end of next summer.
But that's the caveat: if things go right. The development and authorization of a vaccine don't mean that the US is guaranteed to get people inoculated quickly, or even that the country is on a certain path to conquer the coronavirus. Experts caution, instead, that the country still faces two major challenges in its vaccination efforts.
First, the US has to manufacture and distribute a vaccine to more than 300 million people. As Johns Hopkins Center for Health Security senior scholar Crystal Watson told me, 'This is going to be the largest mass vaccination campaign that the US has ever attempted.' It's an effort so big, some experts have compared it to a New Deal. The logistical challenge isn't just to produce all the vaccine doses required, it's also shipping and storing them around the US at cold temperatures, and then administering them to people....
But even if the US is able to pull off a feat of logistics, a second challenge looms: People will need to be persuaded to get a vaccine. That this will happen is not guaranteed. Polls suggest as many as half of Americans are resistant to getting a Covid-19 vaccine. Those hesitant people will need their concerns addressed, including worries about whether the quick development process sacrificed safety, what common side effects are expected, and what rare side effects may pop up....
On the second challenge, experts say, the US is falling behind. When I asked if the country is prepared on the public opinion side for widespread Covid-19 vaccination, Texas State University medical anthropologist Emily Brunson told me, 'No, we're not.' So far, no real federal education and awareness campaign is underway. 'It would have been ideal to begin months ago,' Brunson said.
Experts caution that how the US deals with both these challenges could determine if Covid-19 remains a widespread problem by late 2021 or even 2022. It's what will decide whether we get back to normal, and how many lives are saved - or unnecessarily lost - along the way....
'If we do [vaccination] right, it can be positive and have long-term implications for public health generally,' Brunson said. 'But the opposite is also true: If this is done badly, you run the risk of undermining public trust in your entire public health system.'"
Ranking Asset Classes by Historical Returns (1985-2020) -Visual Capitalist
"Mirror, mirror, on the wall, is there one asset class to rule them all?
From stocks to bonds to alternatives, investors can choose from a wide variety of investment types. The choices can be overwhelming - leaving people to wonder if there's one investment that consistently outperforms, or if there's a predictable pattern of performance....
The top-performing asset class so far in 2020 is gold, with a return (21.9%) more than four times that of second-place U.S. bonds. On the other hand, real estate investment trusts (REITs) have been the worst-performing investments. Needless to say, economic shutdowns due to COVID-19 have had a devastating effect on commercial real estate.
Over time, the order is fairly random with asset classes moving up and down the ranks. For example, emerging market stocks plummeted to last place amid the global financial crisis in 2008, only to rise to the top the following year. International bonds were near the bottom of the barrel in 2017, but rose to the top during the 2018 market selloff....
Upon reviewing the historical returns by asset class, there's no particular investment that has consistently outperformed. Rankings have changed over time depending on a number of economic variables. However, having a variety of asset classes can ensure you are best positioned to take advantage of tailwinds in any particular year. For instance, bonds have a low correlation with stocks and can cushion against losses during market downturns.
If your mirror could talk, it would tell you there's no one asset class to rule them all - but a mix of asset classes may be your best chance at success."
The Fed's Fake Science Is Destroying the Economy -Bonner/Rogue Economics
"The government is broke… already headed to a $2 trillion deficit for fiscal year 2021. Its pockets are empty. Its bank account is overdrawn. It has already looked under the seat cushions; there is nothing there. How, then, could it possibly help people in need? That's just one question…
'And why should it?' is another. Why does anyone think giving out fake money to offset a real downturn is a good idea? Or even giving out real money, for that matter?
If the economy needs a reset… a recession to reprice assets and clean out bad investments and bad businesses… why stop it?
Why should the unemployment rate be below 5% and not above 10%? Why should the Dow be near 30,000… rather than closer to 15,000? Why not just let the chips fall where they may, in other words?
Where’s the science behind that?....
Economics is no real science. It is mostly quackery mixed with flimflam.
But its practitioners nevertheless have Ph.Ds. And in the 20th century, they tried to upgrade their discipline from a subset of moral philosophy - don-t spend more than you earn! - to a pseudo-science, with numbers… formulae… sigmas… alphas… and deltas, too.
The foundational science of today's money system - monetarism - was a terrible mistake. It failed to appreciate the importance of the traditional gold standard. It thought it could do better with the Federal Reserve standard.
But while the U.S. dollar of 1913 (when the Fed was created) was just as good as the dollar of 1791 (when the dollar was created), the dollar of 2020 is worth, relatively, only about 3 cents! Why?
Because in a crisis, the temptation to 'print' more money is always irresistible. The Fed's balance sheet - a measure of how much printing is going on - was only 6% of U.S. GDP in 2008. By the end of 2021, it will likely be near 50%. Where's the science behind that?"
The New Frontier of Aging -Conley/MEA
"Policymakers better take note. My friend Andrew Scott, co-author of 'The 100-Year Life,' outlines the following in his essay for the International Monetary Fund entitled The Future of Aging for Policymakers.
'In 1965 there were 129 million people over 65 in the world; today there are nearly 750 million, and this figure is expected to reach 2.5 billion by 2100. The number of centenarians is also rising - from 20,000 in 1965 to a projected 19 million by 2100.'
The message is clear: anyone looking at what they think is a static society today better recognize that we are ill-prepared for people living this long. I'm not peddling fear here. I'm suggesting that employers start thinking about how they will seek out smart, motivated 75-year-olds who still 'got it.'
I'm suggesting that the future of housing will be very different from the recent past (although much like the distant past), with multigenerational households proliferating.
I'm also suggesting that certain places in the world are going to become havens for the 'young old' ('yolds'). People will move from focusing on their livelihood in the suburbs to moving to a 'lively 'hood.' Sun City and Rossmoor Leisure World represent the past, not the future....
One hundred years ago, 'adolescence' was an academic theory, and 'retirement' was ten years from becoming a mainstream concept. 'Midlife' didn't exist as a life stage. Over the 21st century, we're going to see remarkable changes in longevity and how we view a well-lived life."
Real Money Podcast
Dec 14, 2020
12.14.20 - Gold to Move 'Way Past' All-Time Highs
Gold last traded at $1,827 an ounce. Silver at $23.87 an ounce.
NEWS SUMMARY: Precious metal prices steadied Monday on a sharply weaker dollar despite upbeat vacccine news. U.S. stocks tried to shake off a downtrend on stimulus progress hopes and a vaccine rollout.
Billionaire Investor says gold prices to move 'way past' all-time highs -Kitco
"Silver may be Thomas Kaplan's first love as he sees the potential for the precious metal to eventually push to $100; however, he is also not giving up on gold as he sees the yellow metal in the third-wave of a secular bull market that will take it 'way past new highs.'
Many investors turned bullish on gold in mid-2020 as central banks and governments flooded financial markets with massive liquidity to support the besieged global economy, devastated by the COVID-19 pandemic; however, Kaplan noted that gold was already in a bull market long before the pandemic hit.
'All the pandemic has served to do is to make people now understand that the question of money and what is money when clearly it can be printed at will,' he said. 'The debasement of currencies is obviously very, very bullish for gold.'
Not only is gold backed by solid fundamentals as a monetary metal, but Kaplan noted that gold looks good from a supply and demand outlook. He said that he sees the industry struggling to replace the ounces of gold that it has produced."
Federal Government Spending Nearly Twice as Much As It's Taking In -Nextgov
"Two months into fiscal 2021, the federal government has spent nearly twice as much money as it has taken in through revenue after posting a 14th consecutive month of deficit spending.
According to the Treasury Department spending data released Dec. 10, the federal government ran a $145 billion deficit in November, driven heavily by spending on Social Security benefits, health care and national defense. Combined with October’s $284 billion deficit, the federal government has spent $887 billion in fiscal 2021 - nearly twice the $457 billion it has captured thus far through taxes and other forms of revenue.
The government's deficit spending follows a record-breaking fiscal 2020, wherein agencies combined to spend a record $6.5 trillion, with a total deficit of $3.1 trillion. A sizable portion of spending in late fiscal 2020 was driven by spending on coronavirus relief packages and some decreases in collected revenue. Congress is currently considering another COVID-19 relief bill worth more than $900 billion."
How to fix the post-COVID economy and keep the socialists at bay -Tucker/Fox News
"The year 2020 has been a tough one for a lot of Americans, but it's been especially difficult for the experts who claim to analyze data for a living. A lot of these people (pollsters, public health experts) have been exposed as frauds.
If you still don't know that dishonest people can easily manipulate data to tell you any story they want to tell you, consider the condition of our economy...People at the very top are thriving, but many other Americans are withering away. Tens of thousands of independent businesses have been shut down for good, entire sectors of the economy have been wiped off the map....
So what is our government's solution to the disaster they created? Well, more money from the Federal Reserve, printed out of nowhere and backed by nothing. Trillions of new dollars spent to fix a problem they created, and more on the way soon. Keep in mind, this is stimulus money, designed to help those hurt by the lockdowns. In many cases, it did help and it will help. But in many other cases, the money has gone to people with the right political connections....
You can't keep printing trillions of dollars without getting serious inflation. There's no getting around it. The people making these decisions know that perfectly well. But that's the secret: They want inflation. In fact, they need inflation. Why? Because they've gotten rich from debt. That's the real economy. Leverage is their entire business model. So for the finance class, inflation is the only way out of all that debt. When money is worthless, you owe less. Meanwhile, hard assets - like upscale real estate on Martha's Vineyard - will be worth more.
So inflation may crush you, but it will make the people making the decisions richer. Everyone else - regular wage earners, people living on fixed income, every middle-class retiree in the country, anyone who bothered to live like a responsible person and save money - will be in serious trouble when inflation arrives.That's not speculation. It's coming, and anyone who's paying attention knows it's coming."
[Ed. Note: On Friday, Dec. 11, 2020, Tucker Carlson had a very interesting interview with Ned Ryun discussing how, given all the proposed increased spending by Democrats in 2021, inflation could easily spin out of control into hyperinflation. If/when that happens, precious metals could become your only practical means of preserving wealth.]
Vision and Breathing May Be the Secrets to Surviving 2020 -Scientific American
"We are living through an inarguably challenging time. The U.S. has been facing its highest daily COVID-19 case counts yet. Uncertainty and division continue to dog the aftermath of the presidential election. And we are heading into a long, cold winter, when socializing outdoors will be less of an option. We are a nation and a world under stress.
But Andrew Huberman, a neuroscientist at Stanford University who studies the visual system, sees matters a bit differently. Stress, he says, is not just about the content of what we are reading or the images we are seeing. It is about how our eyes and breathing change in response to the world and the cascades of events that follow. And both of these bodily processes also offer us easy and accessible releases from stress.
Huberman's assertions are based on both established and emerging science. He has spent the past 20 years unraveling the inner workings of the visual system...And a small but growing body of research makes the case that altering our breathing can alter our brain.
This growing understanding of how vision and breathing directly affect the brain - rather than the more nebulous categories of the mind and feelings—can come in handy as we continue to face mounting challenges around the globe, across the U.S. and in our own lives.
According to Dr. Andrew Huberman: 'You can't control your heart rate directly. You can't control your adrenals with your mind. But you can control your diaphragm, which means you control your breathing, which means you control your heart rate, which means you control your alertness. You can control your vision, which thereby controls your level of alertness, your level of stress and your level of calmness. Vision and breathing are essential as levers or entry points to autonomic arousal because they are available for conscious control at any point.'"
Real Money Podcast
Dec 11, 2020
12.11.20 - Science Is But a Hypothesis
Gold last traded at $1,839 an ounce. Silver at $23.97 an ounce.
NEWS SUMMARY: Precious metals climb higher Friday on growing safe-haven demand. U.S. stocks traded lower amid setbacks on U.S. fiscal relief package.
Why is gold considered valuable, even today? -ZME Science
"Few metals throughout history can boast the same desirability as gold. It has served as a hard currency for virtually every civilization that had access to it, fueled exploration and exploitation, and directly underpinned the dominant economic policy for at least two centuries.
It is, by and large, one of the most valuable and impactful metals humanity has ever used, despite it being quite soft and very shiny. So what exactly made gold so valuable and expensive, and why did various peoples show such interest in beating it into coins? Surprisingly, it's not so much the properties that gold has, it's what other elements don't have. The fact that it's pretty and shiny also helps, too....
Ultimately, what you want in a coin is for it to be a small but dense repository of value so you can carry a lot of purchasing power easily, long-lasting so you can store it and it won't just waste away, distinctive (so it's easy to tell it's the real deal), in limited supply to some extent (either through natural or policy constraints), and safe to handle.
Which brings us neatly to gold. There are around 118 elements on the periodic table, most of them natural, some of them only seen in the lab for fractions of a second at a time. Not many of them are usable for coinage, because not many of them share in those traits listed above....
Gold is, to this day, seen as a solid repository of value. But the inability to control its supply (to either increase or decrease it) when needed shackled governments and rulers in regards to their fiscal policy. Once you link your coinage to gold and silver, your economy is at the mercy of how much of them is available in your area.
In olden, golden times, this wasn't much of an issue; economies were pretty small, local things that moved quite slowly, had low output, and limited technological ability. Gold's longevity, scarcity, portability, the fact that it was verifiable and safe to use made it an ideal tender, despite its limited supply....
Gold's properties made it ideal for the minting of coins...Gold has value because people say it has value - for its uses, its looks, or its association with status, wealth, and power."
Science Is But a Hypothesis -Bonner/Rogue Economics
"Now in its tenth month in the U.S., the coronavirus is becoming as familiar as bad breath. And many of the things we knew for sure about it in March… well… we're not so sure anymore.
At first, we were told that face masks weren't important. Later, we were told that the public health officials simply lied scientifically; they were afraid people might buy up all the available masks… thus depriving the 'first line defenders' of their precious armor.
Then, face masks became compulsory. 'The science' tells us that they help prevent the spread of the coronavirus. But if that were so, how come places that require face masks don’t have lower case counts?
According to the COVID Tracking Project, there is no difference in caseloads between places where face masks are required by law… and places where they are not.
We don't know whether face masks help or not. But neither do the 'scientists.' Today, we write with no new information. Instead, we have an old observation: Science is overrated.
Every society has its elites - people with brains, ambition, talent, and confidence. These elites turn to government to get power. Then, they use that power to get money.
But science is never fixed… never solid… never, ever figured out. Instead, it drifts on a river of uncertainty… picking up useful insights along the way… but never knowing where it is going, and never arriving at its final destination. One hypothesis is put forward. And then, discredited, another takes its place....
Scientists never know anything for sure. Everything is a hypothesis. And it is only valid until it is disproven. Always and everywhere is doubt....
Dear Readers who have been doing their homework also know that the 'science' supporting lockdowns… close-outs… and button-ups is weak, at best.
Wearing a mask may or may not prevent you from spreading the virus… or from getting it; we don't know. But we also know that the Constitution was written to limit the power of the feds - even when there's a nasty bug going around."
‘Suicide Is A Very Real Threat’: Pandemic Depression New, Growing Disorder Linked To COVID-19 -CBS
"Pandemic depression is a new disorder linked to COVID-19 and it’s growing. Research shows people in major metropolitan areas, like Philadelphia, are being hit harder by mental health challenges.
It’s not just physical ailments as emergency departments are also being bombarded with the emotional fallout from the pandemic. Over a six-week period this summer in Montgomery County, 400 people went to hospitals because of self-injury or suicidal thoughts.
A new study in Britain shows school lockdowns are having a big impact on children.
'We found quite a substantial increase in ratings of depressive symptoms during lockdown,' said Duncan Astle, a developmental psychologist for the University of Cambridge.
The research tracked about 200 elementary students before and after the lockdown and found a 70% chance that depression increased with isolation.
'What the data suggests is you can’t simply pluck a child from one context and isolate them from it without it having knock on consequences,' Astle explained.
Hannah Smith’s decline started with the cancelation of a cheering championship.
'I had no motivation for anything, even school work,' Hannah said. 'I didn’t care. I didn’t get up and do anything.'"
The Best Is Yet to Come -Laffer/American Consequences
"There is little that I can say or write about the current wonderful state of affairs of the U.S. that Debbie Downers can't rebut. If you are hell-bent on making the negative case, there's no changing your mind. But if you're open to facts and logic, there's one hell of a good case to be made for being grateful for all we do have and to be optimistic about the future. And as an 80-year-old economist, I firmly believe that the glass is half full....
In the 1950s and 1960s, it was against the law for any store to sell products at a discount below the manufacturer's suggested retail price ('MSRP'). There was no Walmart, Costco, or Home Depot. Deregulation worked miracles, and we're a lot better off as a result. Today, retail price competition is the standard, and consumers are the winners.
Airlines and trucking were deregulated under President Jimmy Carter and championed by Senator Ted Kennedy, if you can believe it. Forty years later, real airline prices have dropped by half, and Americans travel by air five times more frequently. To boot, the reduction in airline prices has not come at the cost of safety, reduced wages, or lower customer satisfaction. And if you think air travel is better, just look at what Uber and Lyft are doing to make taxi prices and services better… Wow!....
After some 40 years of literal stagnation, real median household income is at the highest level ever recorded as of 2019, and just posted the largest year-over-year increase at 6.8% from 2018 to 2019. Purchasing power for Americans is rising to unprecedented levels....
The impact of the coronavirus on both U.S. health and the economy could have been a lot worse than it was for two reasons. First, the economy was in an exceptionally strong state when the virus hit...Second, the medical facilities in the U.S. were also up to the challenge of a pandemic and responded quickly and effectively."....
The best is yet to come for America."
Real Money Podcast
Dec 10, 2020
12.10.20 - Locked Down in La La Land -WSJ
Gold last traded at $1,835 an ounce. Silver at $23.99 an ounce.
NEWS SUMMARY: Precious metals remained stable Thursday as the ECB expanded its bond-buying program by 500 million Euros. U.S. stocks traded mixed as U.S. jobless claims see sharp rise.
Gold Markets Continue to Look Very Healthy -Lewis/FX Empire
"Gold markets have rallied a bit during the trading session on Tuesday to break above the 50 day EMA. Ultimately, this is a market that is going to go looking towards the $1900 level, which is a large, round, psychologically significant figure, and a target for buyers....
The $1800 level is of course a large number that people will be paying quite a bit of attention to due to the fact that it was the scene of a major breakout previously. I do like the idea of buying dips going forward and I have no interest in shorting gold. The US dollar falling will continue to help gold, and I think that it is only a matter of time before that continues.
I am looking for value and I think that a lot of people will be as well. Gold has recently pulled back roughly 20%, and that of course will continue to attract a lot of value hunting for longer-term traders out there."
Saxo Bank Unveils Its 'Outrageous Predictions' For The Year Ahead -Zero Hedge
"Saxo Bank has released its 10 Outrageous Predictions for 2021. The predictions focus on a series of unlikely but underappreciated events which, if they were to occur, could send shockwaves across financial markets:
1. Amazon 'buys' Cyprus, 2. Germany bails out France, 3. Blockchain tech kills fake news, 4. China’s new digital currency inspires tectonic shift in capital flows, 5. Revolutionary fusion design catapults humanity into energy abundance, 6.Universal basic income decimates big cities, 7. Disruption dividend creates Citizens Technology Fund, 8. A successful Covid-19 vaccine kills companies, 9. Sun shines on silver, which sizzles on solar panel demand, 10. Next-generation tech supercharges frontier and emerging markets.
It's an exercise in considering the full extent of what is possible, even if not necessarily probable, and particularly relevant in the context of this year’s unexpected Covid-19 crisis. Inevitably the outcomes that prove the most disruptive (and therefore outrageous) are those that are a surprise to consensus. Commenting on this year's Outrageous Predictions, Chief Investment Officer at Saxo Bank, Steen Jakobsen said:
'Our not-so-outrageous prediction is that 2021 will bring the beginning of a reality check to the idea that 'extend and pretend' can stretch to infinity and beyond, even as markets have been pricing in that very expectation. Covid-19 has accelerated all major super-trends....'
The Outrageous Predictions 2021 publication is available here....
9. Sun shines on silver, which sizzles on solar panel demand...2021 brings the usual suspects that power silver higher on its hard asset/precious metal side as the US dollar weakens, and as investors are faced with the harsh reality of no relief in sight from negative real interest rates. This is exacerbated as inflation suddenly jolts higher in 2021 and policymakers are slow to respond, wanting to offer maximum support for their still-recovering economies. With a Covid-19 vaccine in rapid rollout by the middle of the year, the excessive liquidity and over-easy policy drives a powerful bid into any hard asset.
Turbocharging the rise in the silver price in 2021, even relative to gold, is the rapidly rising demand for silver in industrial applications. In fact, a real silver supply crunch is on the cards in 2021, and it frustrates the full throttle political support for solar energy investments under a Biden presidency, the European Green Deal, and China’s 2060 carbon neutral goal, among other initiatives.
Another challenge on the supply side for silver is that more than half of mined silver supply is a by-product of zinc, lead and copper mining, making it tough for miners to meet the surging excess proportional demand for silver.
Trade: Long silver as the price races to an all-time high of $50 per ounce in 2021."
Locked Down in La La Land -Finley/Wall Street Journal
"On Sunday, Gov. Gavin Newsom's stay-at-home order shutting down nonessential businesses took effect across Southern California (the Bay Area locked itself down last week). 'Essential' is essentially a term of liberal politics.
During the state's first stay-at-home order this spring, cannabis shops were classified as essential. Ditto entertainment production. But hair salons and outdoor dining? Nope - unless of course these businesses cater to the state's entertainment industry.
A Los Angeles restaurant owner who had to close her outdoor patio posted an emotional video on social media late last week begging Gov. Newsom and Mayor Eric Garcetti to let her and other mom-and-pop restaurants reopen. Right across the street from her, she pointed out, a film studio had set up an outdoor cafeteria for its production workers.
Big-shot producers like Steven Spielberg and Jeffrey Katzenberg donate heavily to Democrats. But the Hollywood dispensation probably owes more to the political clout of production unions, including the Teamsters, which are worried studios will move production to other states like Georgia if they can't film in California....
Asked last Thursday about the scientific evidence to support the state's business closures and whether a ban on outdoor dining could lead to an increase in private gatherings, Mr. Newsom replied, 'The evidence you ask? Very significant evidence, overwhelming evidence.' He couldn't cite any.
Meantime, Democratic legislators led by Assemblywoman Lorena Gonzalez - a Teamsters member who championed the state's AB5 law reclassifying hundreds of thousands of independent contractors as employees - have sent a letter to Gov. Newsom beseeching him to reopen playgrounds, noting the disparate impact the closures have on low-income families without backyards. Maybe once kids, parents and small-business owners start paying union dues Mr. Newsom will start to care about their interests."
7 things to raise kids with flexible, resilient brains -Harvard psychologist Lisa Barrett/CNBC
"A child's brain is not a miniature adult brain. It is a brain born under construction that wires itself to the world. And it's up to parents to create a world - both physical and social - that is rich with wiring instructions.
Based on years of research in neuroscience and psychology, here are seven parenting rules to help your kid build a brain that is flexible and therefore resilient.
1. Be a gardener, not a carpenter. - Carpenters carve wood into the shape they want. Gardeners help things to grow on their own by cultivating a fertile landscape.
2. Talk and read to your child. A lot. - Research shows that, even when children are just a few months old and don't understand the meanings of words, their brains still make use of them.
3. Explain things. - It can be exhausting when your child is constantly asking, 'Why?' But when you explain something to them, you've taken something new and novel from the world and made it predictable.
4. Describe the activity, not the person. - When your son smacks your daughter in the head, don't call him 'a bad boy' Be specific: 'Stop hitting your sister. It hurts her and makes her feel annoyed. Tell her you are sorry.'
5. Help your children to copy you. - Have you noticed how some tasks that seem like work to you (i.e., cleaning the house or weeding a garden) can be play to a child? Children learn naturally by watching, playing, and most of all, by copying adults.
6. Expose children (safely) to lots of people. - Along with people that your kids may normally encounter - grandparents, aunts and uncles, friends, other kids - try to exposing them to as much diversity as you can, especially when they are infants.
7. Applaud agency. - Children love to try things on their own without your help, like getting dressed or assembling puzzles. This is good. You want them to develop a sense of agency."
Real Money Podcast
Dec 9, 2020
12.9.20 - How to Invest in Gold -WSJ
Gold last traded at $1,829 an ounce. Silver at $23.69 an ounce.
NEWS SUMMARY: Precious metal prices eased back Wednesday on profit-taking despite a weaker dollar. U.S. stocks traded mixed amid rising optimism around a $916B fiscal stimulus proposal and a coronavirus vaccine.
How to Invest in Gold -Ramkumar/Wall Street Journal
"Gold is an alternative to stocks and bonds that many investors use as a safe haven: an asset that can hold its value during times of market volatility or economic uncertainty. There are several different ways you can invest in gold from futures contracts to exchange-traded funds, and many on Wall Street recommend having at least a small portion of your portfolio invested in the metal through one of these methods.
When investors say they own gold, that typically means they hold one of the following assets: physical gold bars or coins; gold exchange-traded funds; gold futures; or shares of gold miners. There are nearly 200,000 metric tons of gold above ground in the world worth more than $11 trillion at today’s prices, according to the World Gold Council.
A main reason to consider buying gold as an investment is to cushion your portfolio from volatility and economic uncertainty...Gold prices tend to rise when investors are worried about the economic outlook or geopolitical shocks, helping offset possible declines in stocks during times of market turbulence.
You can also use gold to hedge against rising inflation. Higher consumer prices mean it would take more dollars to purchase the same amount of gold, boosting the metal’s price. Climbing inflation also means the dollar would weaken. A weaker dollar makes it easier for someone overseas to purchase dollar-denominated assets like gold.
Gold can also be used to bet on falling interest rates. Lower rates make gold more appealing by diminishing the returns you would expect from government bonds."
The Biggest Janet Yellen Red Flag -Tamny/Real Clear Markets
"In Phishing for Phools, a 2015 book that George Akerlof co-authored with Robert Shiller, the authors wrote without even a hint of irony that people 'do not do what is really good for them, they do not choose what they really want.' Please think about the previous bit of absurdity from the two economists.
If they're to be believed, we're all just a collection of idiots. That's what their allegedly careful economic analysis concludes. Explicit in the authors' disdain for the hoi polloi is that we're all easy marks for manipulative advertisers who, backed by copious funds, can easily trick us into buying all manner of things we don't need. Better yet, they can allegedly trick us into doing what we otherwise wouldn't do....
Akerlof, the co-author of what might be one of the most ridiculous books on 'economics' ever written, is married to Treasury secretary nominee Janet Yellen. Much more important, Akerlof recently told the New York Times that he and Yellen have 'always been in all but perfect agreement about macroeconomics.' If so, it might be useful for the senators questioning Yellen at her Treasury confirmation if near 'perfect agreement' between her and her husband includes admiration for Phishing for Phools?....
While Yellen is surely smart in the book sense, there's absolutely nothing remarkable about her economic knowledge. In truth, her ideology is very unoriginal, and is rooted in the hard-to-credit view that economic growth can be engineered via the forced redistribution of wealth from producers to consumers."
Our National Debt Denial -Cochrane/National Review
"The U.S. has avoided a debt crisis for decades. That doesn't mean it can't happen, absent real policy changes.
Does debt matter? As the Biden administration and its economic cheerleaders prepare ambitious spending plans, a radical new idea is spreading: Maybe debt doesn't matter. Maybe the U.S. can keep borrowing even after the COVID-19 recession is over, to fund 'investments' in renewable energy, electric cars, trains and subways, unionized public schools, housing, health care, child care, 'community development' schemes, universal incomes, bailouts of student debt, state and local governments, pensions, and many, many more checks to voters.
The argument is straightforward. Bond investors are willing to lend money to the U.S. at extremely low interest rates...What could go wrong? This scenario requires that interest rates stay low, for decades to come, and remain low even as the U.S. ramps up borrowing. The scenario requires that growth continues to outpace interest rates. Most of all, this scenario requires that big deficits stop....
Yet an end to big borrowing is not in the cards. The federal government borrowed nearly $1 trillion in 2019, before the pandemic hit. It borrowed nearly $4 trillion through the third quarter of 2020, with more to come....
The end must come in sharp and sudden inflation or default. And that is a catastrophe. When Washington can no longer borrow, our normal crisis-mitigation policies disappear - the flood of debt relief, bailout, and stimulus that everyone expects - together with our capacity for military or public-health spending to meet the roots of the crisis.
Yes, the U.S. prints its own money and Greece does not. But that fact only means that a crisis may end in sharp inflation rather than chaotic default. And it is not obvious that the U.S. government will choose inflation over default."
Remote Work Is Here to Stay and That's a Good Thing -Tuccllle/Reason
"Since the beginning of the pandemic, businesses able to shift their employees to remote work have done so with varying degrees of eagerness. Telecommuting became a lifeline for operations that were resistant to work-from-anywhere arrangements in the past but found them to be the only way to continue operating amidst lockdown orders and public fear of infection. But will the changes stick for the long term? Or will workplaces revert to their pre-pandemic forms?
It's looking more and more like there's no reason for some of us to change out of pajamas; the evidence suggests that remote work has been a boon for many people and is here to stay. That has big implications for expanding people's choices about where they live and why. But it may also widen the divide between those can work where they live and those who must live where they work.
'More than 20 percent of the workforce could work remotely three to five days a week as effectively as they could if working from an office,' the U.S.-based consulting firm McKinsey & Company reported in November...'If remote work took hold at that level, that would mean three to four times as many people working from home than before the pandemic and would have a profound impact on urban economies, transportation, and consumer spending, among other things.'....
Part of the stickiness of remote work arrangements may be that their time has come. The technological capability has existed for many years for desk-based jobs to be performed from anywhere, yet managers were often hesitant about allowing employees out of their sight. COVID-19 overcame that hurdle for many businesses.
The pandemic has helped workers and organizations overcome inertia related to the costs of experimentation, as well as inertia stemming from biased expectations about working from home. Importantly, too, the experience has proven positive for workers and employees alike....'Many workers report being more productive at home than on business premises, so post-pandemic work from home plans offer the potential to raise productivity as much as 2.4 percent,' say BFI researchers....
For those who do benefit from increased acceptance of remote work, life should become a bit easier. People will enjoy increased opportunities to live where they want while working jobs that appeal to them. Couples won't have to prioritize one partner's employment over another's. Able to do our jobs from where we please, life for many of us will, happily, reflect a bit more of what we want rather than what we have to do to get by."
Real Money Podcast
Dec 8, 2020
12.8.19 - Facts - Not Fear - Will Stop the Pandemic
Gold last traded at $1,870 an ounce. Silver at $24.60 an ounce.
NEWS SUMMARY: Precious metal prices advanced again Tuesday, gaining over 5% so far in December, amid rising uncertainty and a falling dollar. U.S. stocks fell as traders kept an eye on negotiations for additional fiscal stimulus while the U.S. coronavirus caseload continued to rise.
Gold Prices Have Soared. Expect More of That in 2021. -Saefong/Barrons
"Gold prices have climbed sharply in 2020, but they are still off more than 10% from the record high in August. The moves cap a year rocked by a pandemic that led to economic restrictions and fiscal stimulus measures, feeding the precious metal's appeal as a haven investment.
Many of these same reasons are expected to lift prices in the new year. 'It is likely that the uncertainty of how the economy is going to recover and how fast and large the recovery will be, coupled with increasingly historical levels of fiscal and monetary stimulus, puts gold on the path of a bull run for several years,' says Ed Moy, a former director of the U.S. Mint, who is currently chief strategist at gold seller Valaurum....
For the year, soaring debt ratios in major economies and 'monetary and fiscal stimulus leading to increases in money supply' were the top two factors for gold's rise, says Peter Grosskopf, chief executive officer of Sprott. 'Heightened uncertainty and fear due to the pandemic' ranked third, though he believes Covid-19 accelerated the first two factors.
To Moy, however, the pandemic and the economic uncertainty it caused, increased demand for haven assets, and the limited supply of gold, along with massive amounts of stimulus measures in a short period, were the key reasons for gold's gain this year....
Grosskopf sees the recent pullback in gold as 'a healthy correction and a buying opportunity,' for investors. In 2021, prices should rally to more than $2,000, with a climb to fresh record highs by mid-year, he says."
No, the World Economy Will Not Return to "Normal" -Bonner/Rogue Economics
"Investors believe - correctly - that more money is on the way. And though the bailout is meant to fill nearly all the glasses at the bar, stock market investors expect to get especially sloshed. The other reason (if the word can be used in such a loony context) stock prices are so high is that investors expect a vaccine will soon bring the coronavirus to heel, allowing the world economy to return to 'normal.'
This is extremely unlikely. Normal is not on the menu. Debt has reached such high levels that any return to normal interest rates will be disastrous.
So vaccine or no vaccine, the feds have to keep printing more and more money, just to keep interest rates low (they use it to buy bonds, thereby driving up bond prices… and driving down interest rates). This will create more distortions, crises, crashes… and ultimately, a total collapse of the U.S. economy.
But the debacle will take years to fully express itself. 'Normal,' we predict, will not return during our lifetimes.
When the money gets out of whack, so do prices. In the 1999 bubble, it was dot-com stocks. In the 2007 bubble, it was the mortgage finance companies. And now?....
Tesla produces electric cars. Its margins are determined by the difference between the cost of making the cars and the money it brings in from sales and service - now about 6 cents per dollar of revenue. And its future depends, mostly, on how many cars it can sell.
Today's stock market valuation suggests that the company would have to generate $600 billion in sales in order to justify the current share price...About $1.8 trillion in sales revenue. ...Goldman Sachs is setting a new price target for Tesla - over $700 billion. At that price, an investor relying on current net income to make himself whole will wait more than 1,000 years!....
But Tesla is just one of many stocks that are trading in cuckoo land. The averages are at their highest levels since… well, since they were last in cuckoo land, in 1999 and 2007. And it seems unlikely that Mr. Market would take prices back to the cuckoo land of 1999 and 2007… without wanting a rerun of the crashes of 2000 and 2008, too.
What will Tesla be worth then?"
Why the US dollar could be the big loser of 2021 -Horowitz/CNN
"The US dollar is on the back foot, and Wall Street doesn't expect that to change any time soon.
What's happening: The dollar has weakened by nearly 12% against a basket of top currencies since peaking in March. Last week, it hit its lowest level since April 2018. The last time the greenback was on the skids like this was 2017. The slump can be explained by a few factors, strategists say.
Faith in the global recovery: When the US and global economy are performing strongly, the dollar - a safe-haven currency - tends to weaken....
Central bank policy: The Federal Reserve has made clear it will keep interest rates low and keep printing money for as long as necessary to stimulate the US economy....
Tariffs have contributed to a stronger dollar in recent years... In disputes with countries like China, President-elect Joe Biden is expected to rely more on other tools. That's a positive for global growth, and a negative for the dollar....
Another effect: Other currencies like the euro have been rapidly appreciating in part because of the dollar's decline...'This is a broad-based dollar weakening move driven by global reflation repricing,' said George Saravelos, a Deutsche Bank analyst."
Facts - Not Fear - Will Stop the Pandemic -Dr. Bhattacharya/AIER
"The media relish negative news. 'If it bleeds it leads' still holds, and perhaps it's never been truer than in the COVID-19 era. Every day the news highlights the spread of the virus and tells the sad stories of some of its victims.
And yet, much of the media does not pay sufficient attention to the good news regarding improved treatments and survival of patients with the coronavirus....
The case fatality rate from the virus has dropped sharply since March. The infection survival rate is 99.95 percent for people under 70 and 95 percent for people over 70. Hospitals are much better equipped to handle patients, with improved ventilator protocols, improved management of outpatients and new therapeutic strategies to provide relief and recoveries. Moreover, thanks to multiple ongoing clinical trials around the world, there may soon be a safe and effective vaccine.
By contrast with their focus on COVID deaths, the media have paid scant attention to the enormous medical and psychological harms from the lockdowns in use to slow the pandemic.
By lockdowns, we mean the all-too-familiar shuttered schools and universities, closed playgrounds and parks, silent churches and bankrupt stores and businesses that have become emblematic of American civic life these past months. The relative dearth of reporting on the harms caused by lockdowns is odd, since lives lost from lockdown are no less important than lives lost from COVID infection. But they’ve received much less media attention....
Internationally, the lockdowns have placed 130 million people on the brink of starvation, 80 million children at risk for diphtheria, measles and polio, and 1.8 million patients at risk of death from tuberculosis. The lockdowns in developed countries have devastated the poor in poor countries. The World Economic Forum estimates that the lockdowns will cause an additional 150 million people to fall into extreme poverty, 125 times as many people as have died from COVID....
Finally, the neglect of the good COVID news breeds panic and fear, which is never a good public health strategy...With wise and informed policy choices, we can reduce its ultimate toll of death and human misery."
Real Money Podcast
Dec 7, 2020
12.7.20 - Hype Surrounds ESG Investing
Gold last traded at $1,858 an ounce. Silver at $24.41 an ounce.
NEWS SUMMARY: Precious metal prices traded sharply higher Monday on safe-haven buying and a weaker dollar. U.S. stocks traded mostly lower as Covid-19 cases continued to rise and Wall Street searched for clues on additional fiscal aid.
Is Gold Bullish Again? -Rosputnia/FX Empire
"Gold is a safety hedge in an uncertain world. There is no surprise we saw a massive sell-off with Covid vaccines being announced. Both vaccines are still waiting on final FDA approval. The real game-changer however could be Johnson & Johnson’s vaccine which only requires one shot and no special refrigeration outside that already widely required for current vaccines. Johnson & Johnson are expected to have interim data on its vaccine sometime in January which could mean emergency use authorization as soon as February.
So overall, the vaccine news is still very promising. However, the damage to the economy is already done and it will take years to recover after COVID. Despite massive stimulus key economic data is very weak. Last week gold rebuilt its correlation with the greenback. MA200 turned out to be a buyers zone....
Formation of higher low or kind of base formation is needed to have confidence in buying gold. However, we already can identify a bullish setup: Cycles point we are close to the bottom and new rally. The seasonal indicator is turning to the upside. The valuation model shows gold is undervalued...There are early signs gold is getting ready for the next wave up with another flagging formation....Lets not forget the huge government debt and potential asset bubble. Gold and Dollar are both means of safe haven."
The Hype Surrounding Environmental, Social, And Governance Investing -Wright/AIER
"ESG (environment, social, and governance) funds are the hottest investments going. The only problem is that they are like free trade coffee - the consumer (investor) pays more for the same product. They might 'feel good' in the process but their feelings are irrational because they are paying for a brand label rather than anything substantive.
A recent study by Barclays shows that while one in four investment dollars are currently in mutual funds labeled ESG, most investors do not realize that those funds are virtually indistinguishable from non-ESG-labelled funds in terms of portfolio composition or returns. Only fees differ and, unsurprisingly, are considerably higher for ESG-labeled funds - on average almost 0.75 percent vs. less than 0.50 percent for non-ESG-labeled funds.
P.T. Barnum once claimed that there is a sucker born every minute but thanks to population growth and an increasingly complex world, it is closer today to every second....
Organic food fraud is small potatoes compared to ESG-labelled funds. If they charge just 0.25 percent higher fees for essentially nothing extra in return, irrational investors are gifting the fund managers big bucks, billions of extra fees per year in an industry with $18 trillion under management.
No, I do not think we need additional government regulation, I think we need investors (citizens, neighbors) who are rational and informed, who care about actual outcomes and not just feeling good through virtue signalling. It is no virtue, after all, to invest in something merely because it is labelled something that sounds or seems good....
So what is ESG really about? I doubt anything substantive but, perhaps, someday ESG-labelled funds will actually be ESG funds, or in other words will meaningfully differentiate between ESG and 'wicked' companies. But then, as the Financial Times recently pointed out, they will face a conundrum. To the extent ESG successfully diverts investment away from 'wicked' companies, their share prices will decline, i.e., they will become inexpensive and hence set up to outperform so long as any subset of investors continues to maximize returns/minimize waste. Meanwhile, the shares of ESG companies will get wicked expensive as more and more money piles into them....
In the end, then, the hip hop group Public Enemy was actually the investing public’s friend; when it comes to ESG, 'Don't Believe the Hype' because investors 'Can't Truss It.'"
America's hidden depression -Rabouin/Axios
"There is a recovery happening. But it's helping some people immensely and others not at all...Two big reasons: 1. Big business, investors, and the wealthy are thriving. But restaurant and bar employees, hotel and airline staff, and other service workers are in a pretty hopeless situation right now: A 'depression' is an apt description of what they're facing - especially folks in rural and middle America who are parents.
700,000 Americans have been filing unemployment insurance claims every week for 37 weeks - nine months. Plus, 20 million people are still on the pre-pandemic unemployment rolls. 2. As Axios has been telling you, government statistics - because of the way they've always been reported - understate lots of red flags.
The official unemployment rate has been dropping, but that's because: It never really counted gig economy workers well in the first place. Its data collection abilities have been severely crimped by the pandemic. Lots of people are falling out of the labor force - not working and not looking. What's next: 13.4 million people are on pandemic unemployment programs that expire at the end of the year - 27 days from now. That's unheard of, and incredibly bad."
Walter Williams Achieved Goal of Dying While Teaching -Sowell/Townhall
"Walter E. Williams (1936-2020) loved teaching. Unlike too many other teachers today, he made it a point never to impose his opinions on his students. Those who read his syndicated newspaper columns know that he expressed his opinions boldly and unequivocally there. But not in the classroom.
Walter once said he hoped that, on the day he died, he would have taught a class that day. And that is just the way it was, when he died on Wednesday, December 2, 2020.
He was my best friend for half a century. There was no one I trusted more or whose integrity I respected more. Since he was younger than me, I chose him to be my literary executor, to take control of my books after I was gone.
But his death is a reminder that no one really has anything to say about such things. As an economist, Walter Williams never got the credit he deserved. His book 'Race and Economics' is a must-read introduction to the subject. Amazon has it ranked 5th in sales among civil rights books, 9 years after it was published....
Despite his opposition to the welfare state, as something doing more harm than good, Walter was privately very generous with both his money and his time in helping others. He figured he had a right to do whatever he wanted to with his own money, but that politicians had no right to take his money to give away, in order to get votes....
We may not see his like again. And that is our loss."
Real Money Podcast
Dec 4, 2020
12.4.20 - Bears Vindicated As Dollar Spirals
Gold last traded at $1,834 an ounce. Silver at $24.11 an ounce.
NEWS SUMMARY: Precious metal prices rose Friday on bargain-hunting and a weak dollar. U.S. stocks seesawed amid a disappointing jobs report and worsening pandemic.
Gold Prices Rise as the Dollar Continues to Slide -FX Empire
"Gold prices rebounded for a second consecutive trading session after recapturing the 200-day moving average. The dollar index closed at a 31-month low paving the way for higher gold prices. The US Beige book was darker than expected as regions in the US show no growth. ADP private payrolls came in softer than expected but failed to weigh on US yields.
Resistance is seen near the former breakdown level at 1,851. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. The current reading on the fast stochastic is 31, up from 18, which reflects accelerating positive momentum.
Private companies added 307,000 jobs in November below the 475,000 expected. The October figure was revised higher to 404,000. This was the smallest gain since July’s 216,000."
Dollar Bears Vindicated as Spiral Accelerates -Bloomberg/Yahoo Finance
"It's turning into a week of vindication for proponents of a weaker dollar as the case they've been making for years may be gaining steam.
The greenback is spiraling lower, probing levels last seen in April 2018, judging by a Bloomberg index. The tumble is part of a broader move across financial markets to price in brighter growth prospects for 2021 and the potential for superior investment opportunities outside the U.S., in large part as hopes for a coronavirus vaccine build.
Dollar bears are feeling encouraged by the breadth of the currency's declines this week: The euro, the Australian and Canadian dollars and the Korean won have all touched their highest levels in more than two years, while the Swiss franc is at its strongest since 2015. The pound is at the highest in a year, even amid the uncertainty surrounding Brexit.
'We are seeing money being put back to work after the defensive positions held in the dollar,' said Chris Turner, a currency strategist at ING Groep NV. 'Vaccine news is adding weight to the view of a synchronized global upturn in 2021; the dollar can fall another 5-10% next year.'
More weakness in the greenback may come as asset managers build record short bets. The Congress’s renewed focus on fiscal stimulus in recent days delivered the latest blow to the dollar."
Coronavirus-Stimulus Efforts Pick Up Speed -Wall Street Journal
"Democratic leaders signaled Wednesday they were prepared to reduce their demands for the next round of coronavirus relief, fueling hopes that an agreement could be reached with Republicans by year's end to boost struggling businesses and households.
House Speaker Nancy Pelosi (D., Calif.) and Sen. Chuck Schumer of New York, the chamber's Democratic leader, said that a new, bipartisan $908 billion coronavirus relief proposal released Tuesday should serve as the starting point for talks to try to resolve months of disagreement with GOP leaders and the White House.
Democrats had coalesced earlier around a $2.4 trillion bill passed in the House, which contains measures including funding for state and local governments and food stamps, among others, which GOP proposals have excluded. Republican leaders' most recent bill cost around $500 billion. But on Tuesday, a new bipartisan group unveiled the $908 billion proposal, designed to help buoy workers and businesses through March....
Senate Majority Leader Mitch McConnell (R., Ky.) didn't comment on the Democratic leaders' statement, but he said earlier in the day that they were showing 'a new willingness to engage in good faith.'....
'The president will sign the McConnell proposal that he put forward yesterday,' Mr. Mnuchin said Wednesday. Mr. Mnuchin said the White House was reviewing the new bipartisan proposal. President Trump hasn't weighed in on the discussions, but White House press secretary Kayleigh McEnany said Wednesday that Covid-19 aid was a priority."
Tesla Isn’t A Car Company -Calhoun/Alhambra
"The most common view of stocks is that they are overvalued and a fall - a large fall - is inevitable. And there is no stock that embodies that view more than Elon Musk's Tesla Incorporated.
It was once known as Tesla Motors but Musk changed the name in early 2017. At the time of the change the stock traded for about $50 and it was expensive for a car company. Today it trades for $585 and it is not, as I have been told repeatedly by every Tesla bull I've encountered, an automobile company....
Of the FANMAG stocks everyone is so enamored with (Facebook, Apple, Netflix, Microsoft, Amazon, and Google), only one trades for more than 10 times sales (Microsoft at 11 times). Amazon, the stock all value investors have shunned due to its 'insane' valuation is the cheapest of the bunch at just 4.7 times sales.
Tesla stock, meanwhile, trades at a nose bleed inducing 21.5 times sales. Not being a mere car company allows investors - and I use that term very loosely - to imbue the company with qualities that cannot be quantified. Tesla is whatever investors can imagine might emerge from the obviously brilliant mind of Elon Musk. Tesla is indeed 'not a car company'. It is an abstraction and therefore un-valuable, if not invaluable....
Tesla is not an isolated case. Indeed, I think global financial assets in general are viewed in very much the same way as Tesla. 'Investing', as practiced by the new indexers, is no longer an exercise of valuing assets and liabilities, assessing business plans, or understanding industry dynamics. It no longer requires knowledge of such fundamental metrics as price/sales, price/earnings, or, heaven forfend, such anachronistic concepts as book value....
Tesla has been a wildly profitable speculation, exhibiting classic momentum characteristics. Its price is rising because its price is rising. And that describes large parts of the markets today, where uninformed speculation has driven prices to levels that are hard to justify based on realistic expectations about the future....
Markets today are dominated by speculators, people who don't know what they own and don't care, as long as the price goes up. We are not speculators. We are investors and we think it matters quite a lot how one achieves portfolio returns. From Tesla to Bitcoin to any of the other of today's overly popular assets, a rising price does not magically transform a speculation into an investment. I don't know when fundamentals will matter again, but I am certain they will. And when they do Tesla will be just a car company again."
Real Money Podcast
Dec 3, 2020
12.3.20 - Stocks: "100% Loss Probability"
Gold last traded at $1,839 an ounce. Silver at $24.10 an ounce.
NEWS SUMMARY: Precious metal prices traded mixed Thursday on upbeat jobs data and a weaker dollar. U.S. stocks steadied as investors monitored progress on a stimulus deal as well as new economic data.
Stocks Are "Overbought And Frothy" Warns Wall Street's Most Accurate Analyst -Zero Hedge
"Two weeks ago we dubbed Morgan Stanley's Michael Wilson, the bank's chief US equity strategist, Wall Street's most accurate forecaster. Here's why:
Over the past year, Morgan Stanley's Michael Wilson has done something virtually none of his colleague have been able to do: he called market moves correctly before they happened and also timed the market's inflection points with uncanny precision: turning bullish at the depths of the March crisis, when most of his peers were apocalyptic, then remaining bullish until just over a month ago, when he warned "brace for a very difficult trading environment over the next five weeks" - which followed with the early September tech dump - and then two weeks after he again correctly predicted that US stocks were due for their second 10% correction in as many months as "investors were a bit too complacent on the uncertainty surrounding the election outcome, unlikely passage of a fiscal stimulus before the election and second wave of Covid-19", the S&P 500 has indeed fallen 9% while the Nasdaq and Russell 2000 have fallen 10% and 7%, respectively.
He was, again, right.
Then, at the start of November, he reversed his bearish bias, when as we reported he predicted that "the correction we expected is now mostly finished and adding to equities on further weakness this week is recommended."
Since then, the S&P is up +13.5% to a new all time high, the Nasdaq is up +10.8% also to a record high, and after today's Pfizer news, the Russell has exploded 16% higher.
In short, he was right again.
Wilson ... cautioned that in the last few remaining weeks of 2020 he saw the risk of yet another drawdown in stocks, which would be the third 10% correction since September. This will be catalyzed by the market's realization of the "bad news" that "the vaccine won’t be ready for mass distribution for another 3-4 months as case counts and deaths increase." Still, once this small correction is in the rearview mirror, which perhaps may even trigger additional Fed easing during the Dec FOMC meeting when the Fed is expected to extend the maturity of its TSY purchases, Wilson remains "a steadfast bull on a 12-month view in terms of both the earnings outlook and the market."
Citi Warns "100% Probability Of Loss" In Most "Euphoric" Market Since Dot Com Bubble -Zero Hedge
"Sometimes 'greed' is not good. The last time the market was this 'extreme' in its greed did not end well, but as FOMO dominates any downside fears, Citigroup's Panic-Euphoria indicator - which tracks metrics from margin debt to options trading and newsletter bullishness - has reached its highest since the August tumble and equaled its highest since the peak of the dotcom bubble.
'Current euphoric readings signal a 100% probability of losing money in the coming 12 months if we study historical patterns - indeed, we saw such levels back in early September as well right before a selloff in stocks.'
All of this exuberance as Bloomberg notes that uncertainties from the timing of further fiscal stimulus to the roll-out of a vaccine to the pace of economic recovery remain...As Peter Boockvar, chief investment officer at Bleakley Advisory Group, warned: 'The Bull boat right now is standing room only.' When does FOMO morph into OHNO?"
How Much Debt Is Too Much? -Ragan/Project Syndicate
"The new conventional wisdom in these unconventional times is that advanced-economy governments can take advantage of today's ultra-low interest rates to borrow and spend without limit in order to support the economy. But the fact is that there is always a limit, and it may come into view sooner than many realize.
As the COVID-19 pandemic rages, governments in advanced economies have opened their coffers to support households and small businesses, spending on the order of 15-20% of GDP in many cases. Cumulative debt levels now exceed GDP in many developed countries; and, on average, debt as a share of GDP is approaching post-World War II highs....
In this strange world of ultra-low interest rates, what limits are there on government borrowing? According to advocates of Modern Monetary Theory (MMT), there are none, at least not for countries that issue debt in their own currency and have spare productive capacity. After all, the central bank can simply print money to pay off maturing debt, and this should not result in inflation as long as there is sizable unemployment. No wonder MMT has become the go-to idea for politicians advocating government spending to alleviate every problem.
Of course, any 'theory' that promises a free lunch should be approached with skepticism....The monetary financing advocated by MMT is just smoke and mirrors....Advanced economies will not become Zimbabwe any time soon - if ever. But some of them are permeated by divisive politics that typically encourages higher spending but not higher revenues - as many an emerging market can attest. If so, it would not be surprising to see somewhat higher inflation in a few years. This is not an argument for immediate austerity...Public spending, however, must be sensible, not based on magical monetary thinking."
All the Happiness Money Can Buy in the Winter of Covid-19 -Carmichael/Bloomberg/Yahoo
"As the saying goes, money can't buy happiness. That certainly seems to be true in 2020 - rates of depression and anxiety are up, even though many households have more cash on hand than usual. Savings rates in the U.S. spiked to a previously unfathomable 34% in April and sat at a still-high 14% in September.
There must be some way to use this extra cash to brighten our spirits. Even if gyms, cafes, hotels and restaurants aren’t safe. Even if travel is restricted. Even if the best things in life are free....
To find out whether it's realistic to throw money at the problem of Covid-induced unhappiness, I called Elizabeth Dunn, a psychology professor at the University of British Columbia and a coauthor of 'Happy Money: The Science of Happier Spending.'
One area she says is definitely worth the money: exercise. Physical activity is really good for our emotional well-being; it can be just as effective as medication in treating depression, studies have found, even if it’s just 30 minutes of walking three times a week....
A raft of studies have linked spending time in nature to better mental health. And, of course, Covid transmission rates are far lower outdoors, making it possible to socialize relatively safely as long as you stay outside....
Another way to invest in happiness is to buy experiences. We're happier buying experiences than material goods, several studies have suggested....
Another way to buy an experience is to buy more free time. People feel much happier when they outsource tasks they find unpleasant, Dunn's research shows....
The last and best way to buy happiness: Help others. A tranche of Dunn's research focuses on what academics call 'prosocial spending' and its powerful effects. Charitable donations bring us joy; we feel even better when we can see the tangible effects of our giving. So make a donation to your local food pantry, or send a DoorDash order to a friend going through a hard time."
Real Money Podcast
Dec 2, 2020
12.2.20 - Gold Price Jumps 2% on Dollar Slide
Gold last traded at $1,826 an ounce. Silver at $23.96 an ounce.
NEWS SUMMARY: Precious metal prices extended gains Wednesday on bargain-hunting and a flat dollar. U.S. stock retreated from historic highs on a stimulus stalemate and declining jobs data.
Gold jumps 2% on dollar slide, stimulus bets -CNBC
"Gold prices jumped over 2% on Tuesday, rebounding from a five-month low in the previous session, and silver soared nearly 5% as the dollar fell and as U.S. stimulus bets due to mounting COVID-19 cases eclipsed the optimism around a vaccine-led economic recovery....
'We saw gold recapture the $1,800 level and a lot of that has to do with the weakening dollar trade,' said Edward Moya, senior market analyst at OANDA. 'The unwind of the gold trade has run its course' and we are likely to see more efforts from the U.S. Congress to support the economy. Making gold more attractive to investors holding other currencies, the dollar fell on expectations of more U.S. stimulus, with focus shifting to Federal Reserve Chair Powell's testimony before the Senate Banking Committee...Powell highlighted challenges of production and mass distribution before the economic impact of a vaccine becomes clear....
'The bottom was in for gold now and we see prices north of $2,000 next year,' said Daniel Ghali, commodity strategist at TD Securities. 'Gold's actually now in a new regime' with vaccines a likely catalyst for higher inflation expectations as the economy recovers, supporting gold longer term, especially amid lower real rates, Ghali added. Silver gained 4.3% to $23.58 per ounce, having earlier risen as much as 4.9%."
Economic outlook 'extraordinarily uncertain' -Powell/CNBC
"Federal Reserve Chairman Jerome Powell emphasized the importance of the lending programs it has deployed during the coronavirus pandemic, telling senators in testimony to be delivered Tuesday that they've been integral in keeping the economic fallout from being worse....
Many of the key programs that the central bank has used since March are expiring at the end of the year, and the Fed will be forced to return the funding that supports them....Addressing the economy, Powell provided a lukewarm outlook that he again said will be dependent on the progress of the virus, which has been spreading rapidly lately.
'As we have emphasized throughout the pandemic, the outlook for the economy is extraordinarily uncertain and will depend, in large part, on the success of efforts to keep the virus in check,' he said. 'The rise in new COVID-19 cases, both here and abroad, is concerning and could prove challenging for the next few months. A full economic recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities.'....
Powell repeated that the Fed stands at the ready to use its policy tools. In addition to the lending and liquidity programs, the Fed has cut its benchmark borrowing rate to near zero and is buying at least $120 billion of bonds a month."
Dow 30,000: 'The Fed Did It' Narrative Becomes Even More Ridiculous -Tamny/Real Clear Markets
"There are so many reasons the Federal Reserve will never be abolished, but none of them have anything to do with its existence being necessary...The Fed began as a lender of last resort in 1913 to solvent banks, but it's never fulfilled that role. With good reason. If you're a financial institution with quality assets, you don't need the Fed to help you through near-term cash crunches. Private lenders line up to liquefy that which is well run.
The Fed regulates banks. Ok, and what's the point there? The same central bank has bailed out Citi how many times? At least five by the count of those in the know. It's just a reminder of the obvious: the Fed's regulators can't see around the corner in order to detect trouble spots ahead of time for the banks they oversee. If they could, they wouldn't be Fed regulators. They would be stunningly rich investors....
The Fed aims to influence the short rate for credit? Oh please. The Fed exists to buy government debt. Sure, but that's government buying from government, which means it's a wash. As always, imagine if the Fed didn't exist. All of the above functions would likely still be federal functions to the detriment of the U.S. banking system and the U.S. economy more broadly....
Wealth extracted from the private sector and that is utilized by the Fed can influence markets to a degree...Hence, to pretend our central bank can stimulate economic growth or engineer happy times of the economic kind is as lamebrained a belief as the one that says Congress can stimulate economic growth by extracting wealth created in the private sector, only to redistribute it to favored constituents....
In reality, a stock's value is a market speculation on all the dollar's a specific company will earn over its existence. The view in November 2020 is that Apple's future is bright, but Chevron'’s isn't....In short, markets work. They reflect reality. Not only is 'the Fed did it' an insult to American ingenuity on par with Barack Obama's 'you didn't build that,' such a stance ignores the basic truth that if U.S. stock markets were rigged by the Fed, they would be too depressed to be worth rigging."
The death of the department store and the American middle class -Del Rey/VOX
"The collapse of America's middle class crushed department stores. Amazon and the pandemic are the final blows....Across the US, department stores are shrinking or shuttering altogether. In 2011, US department stores employed 1.2 million employees across 8,600 stores, according to estimates from the research firm IBISWorld. But in 2020, there are now fewer than 700,000 employees in the sector, working across just over 6,000 locations.
The reasons for the struggles are both shared and unique. Since the Great Recession began in late 2007, the vast majority of income growth in the US has gone to high-income households, squeezing middle-class households and altering where they spend money. As a result, chains that sell brands at sharp discounts like TJ Maxx, Ross, and Dollar General have become more popular, siphoning away shoppers from full-price department stores like Macy’s and JC Penney that were designed to cater to a stronger middle class of yesteryear.
Department stores are also facing the reality that they are no longer the main way most shoppers discover or access new brands - which was once perhaps their main appeal as onetime innovators....
'The department store genre has been taking the great American shopping mall down with it, slowly but inevitably,' said Mark Cohen, the director of retail studies at Columbia University who was previously the CEO of multiple department store chains in the US and Canada.
What happens when an entire sector of retail, one that employs more than half a million people, is in free fall - and is slowing or dragging down shopping malls like with it?...We're about to find out....The communities across the country that depended on these stores and malls as job creators will have to get creative to rebuild around their ruins."
Real Money Podcast
Dec 1, 2020
12.1.20 - Inequality And The Gold Standard
Gold last traded at $1,814 an ounce. Silver at $23.96 an ounce.
NEWS SUMMARY: Precious metal prices rebounded sharply Tuesday amid bargain-hunting and a weaker dollar. U.S. stocks rose as investors cheered upbeat fiscal relief news despite the Fed's "extraordinarily uncertain" economic outlook.
Are Precious Metals Starting a 10-Year Bull Market? -Thompson/FX Empire
"After a prolonged bear market, commodities reached a major inflection point in 2020. In response to the global pandemic, governments began unprecedented money creation. Ultimately, I believe this will lead to a decade of sharply higher inflation and a 10-year bull market in precious metals...We saw similar periods of commodity outperformance during the 1970s and 2000s....
I believe precious metals and commodities are starting another bull market that could last well into 2030. From a technical set up, I believe we are in a similar position to 2004. Though gold could drop a little further near-term, I think prices are going much higher over the next 10-years....Longer-term, buying gold at or below the rising 200-day MA is historically a favorable opportunity....Silver is shaping up to be an excellent long-term buying opportunity, in my opinion."
Inequality And The Gold Standard -Howden/Mises Institute
"The income inequality debate is not as straight forward as it is commonly framed. It is not just a question of one group getting a larger piece of the pie, but of increasing the size of the pie so that everyone can benefit....
Relying on data from Berkeley economist Emmanuel Saez, Cassidy shares the following graph showing changes in real income growth over the past century (1913-2013). First let's look at the top 1 percent. There seem to be about three distinct periods their incomes have gone through. The first from 1913 to roughly 1973 is more or less flat. Real incomes for the top 1 percent were no higher in 1973 than they were around 1930. After 1973 however there is a sharp and mostly uninterrupted spike upwards which seems to stop around the year 2000. After 2000 their real incomes have ebbed and flowed, primarily in response to capital gains and losses on their stock portfolios.
Compare this with the bottom 99 percent. There seem to be about four distinct periods of real income growth. From 1913 until the end of the Great Depression, real income remained more or less constant. The 1940s, 50s and 60s saw a rapid increase in real income growth, far more rapid than what the 1 percent experienced. This came to a sudden end around 1973 and a stagnation until the early 1990s. Then from 1993 onwards we see the same final stage as the 1 percent. Increasing real incomes....
The one year that probably pops out for people who think income inequality is a bad thing is 1973. So what happened in 1973?...What was the biggest event to occur in 1973?...The most important thing to happen in 1973 actually happened in 1971, August 15th to be exact. On that date Richard Nixon closed the gold window. The US dollar was convertible by foreign governments into gold under the then-existing Bretton Woods system at the great price of $35 per ounce...No longer was the US dollar tied to gold and the US no longer had to worry about spending beyond its means...The US dollar still functioned on a fixed exchange rate standard relative to gold until 1973....1973 was also the year that set off the most inflationary episode in America's history....
All this takes us back to the original question: why did income inequality increase so much after 1973? We can look to two factors both related to the loss of the gold exchange standard in 1971 and the arrival of flexible exchange rates two years later....The reason why there is growing income inequality since 1973 is a direct result of this monetary mayhem. All this new money needs an entry point into the economy....The 99 percent that have become relatively poorer over the past 40 years are those who get access to this new money last."
Biden Era Brews As the Times Plumps Socialism -Stoll/New York Sun
"Anyone under the illusion that Joe Biden's victory over Bernie Sanders in the Democratic presidential primary had vanquished the threat of socialism from American shores can get a reality check by picking up the Sunday New York Times, which features four articles pressing the anti-capitalist agenda....
'Boeing's 737 Max Is a Saga of Capitalism Gone Awry,' is the headline over one such article, by a business reporter for the Times...Absent from the article is any mention of how alternatives to capitalism do at building safe aircraft. Not so well, it turns out....How did the Russian airline turn things around? 'Soviet aircraft have been replaced by Western-built jets.'...
Elsewhere in the Sunday Times, under the headline “'What Facebook Fed the Baby Boomers,' is a long article about what the Times calls 'disinformation,' 'hyperpartisan fearmongering' and 'conspiratorial misinformation.'...
The Times article headlined 'The Rich Kids Who Want to Tear Down Capitalism' reports on an heir who 'wants to put his inheritance toward ending capitalism.' This is some sort of trend. The inheritance angle may help explain it. People who are already rich and who are aspiring to become less so are understandably more prone to be hostile to capitalism than the larger number of people who are hoping one day eventually to become rich thanks to the opportunities that the free enterprise system provides."
Retiring Retirement: The Rise Of Life's Third Age -Dychtwald/Morison/Forbes
"Worldwide, nearly a billion people are in or near retirement, and they enjoy many more options and opportunities for how to spend their newfound time affluence....We now believe the word 'retirement' is reaching the end of its line. It's far too small and narrow for what is now emerging....
A compelling philosophy has emerged from the European tradition of adult education that provides a simple yet visionary orientation. Referred to as the 'third age,' this point of view has three 'ages' of man, each with its own special focus, challenge, and opportunity.
In the first age, from birth to approximately 30 years of age, the primary tasks of life center around biological development, learning, and survival....In the second age, from about 30 to 60, the concerns of adult life focus on issues pertaining to the formation of family, parenting, and productive work...Until the last century, most people couldn't expect to live much beyond the second age, and society at that time was thus centered on the concerns of this age.
However, with the rise in longevity and the coming of the age wave, a new era of human evolution is unfolding, the third age. There are new purposes to this third age of life....Will the Boomers use their experience and assets to help shape a future based on mindfulness and generosity of spirit? Or will they act only to promote their own interests?...
A few years ago, when we interviewed renowned psychologist and author of Emotional Intelligence Daniel Goleman, PhD, he reflected, 'The legacy to the boomer generation won't be the 'me first' image of their early years, but rather the potential huge surge in volunteerism that might characterize their later years. It's not how you begin the act, it's how you leave the stage that people remember.' "
[Ed. Note: PBS debuted an excellent 1-hour TV special last weekend entitled: Life's Third Age hosted by Ken Dychtwald, co-author of new book What Retirees Want: A Holistic View of Life's Third Age.]