Time to get your Bitcoin, Gold and Silver?
Ever since I first heard of Bitcoin, my moods have oscillated with emotional highs and lows between optimism, and pessimism. I got involved about thirty months ago, mostly out of mere curiosity. However, I first learned of Bitcoin, about 7 years ago, and perhaps because back then, there was a lot of hype, I was highly suspicious of it. I asked myself… What was this new technology? What are its implications? What are its strengths or weaknesses? Will it succeed?
Like you I had so many questions. But I didn’t know enough to commit to it.
However, I had some experience of cryptographics when, as a former software developer, early in my studies, I wrote cryptography software using a simple alphabetic replacement system. For those not familiar with this, it was the simplest form, which involves letter substitution.
Let’s take the Alphabet.
As you can see from the above, you can shift each letter a number of times. In the above example from A to G, from B to H, etc. etc., to encrypt or decrypt the text.
As long as you know the shift count, you can simply unscramble the text. This however would be laughed at by any modern cryptographer, worth their salt. We know which letters in the English language are used most frequently, so having a few guesses at the piece of text would quickly, reveal the key (the number of letters shifted – 6 in the above example)
During the second world war, the Germans of course used two characters to denote a character in their encrypted messages, with random coded substitution, and it wasn’t until the British managed to get hold of an Enigma machine from a captured U-boat, to send to Bletchley Park where they worked on the decryption that they were finally able to decrypt the messages, and listen in on German U-boat communications, so helping bring the war to a speedier close. And cryptography is at the heart of global communication, and Bitcoins and other Alt-Coins. It is also at the heart of Apple’s attempts to restrict U.S. authorities from gaining information from devices, that are encrypted, by fighting a court decision forcing it to build software for the authorities to allow access – Apple of course designed its software because of increasing concern at the intrusive political and authoritarian institutions of all Governments, some of whom appear to have carte-blanche access to whatever communication traverses the globe – at least according to Edward Snowden.
Lately however, I have been doing further research into Crypto-Currencies, and both the theory and the practice.
What fired my enthusiasm for this research was listening to an interview, between a sceptic, and an enthusiast.
As a result, I began looking at a number of Web-sites, and following up on this conversation. To see what’s happening in the Bitcoin and crypto-currency space. After much thought, and research, I realised that there are at least 7 Network Effects which might lead to wider acceptance:
1. Speculation –
People buying to make a fast buck. This drove early adoption, taking the price to almost $1200 at one point.
2. Merchants –
Companies accepting it for goods, simply because people hold them, and they are convertible into fiat-currency or money at known rates. In the world there are over 100,000 merchants already accepting the coins, including major providers such as Microsoft, and Target in the U.S..
3. Consumers –
These are using it because merchants are accepting it, and they are now doing so in ways that allow consumers to gain discounts of upto 35%, even on web-sites such as Amazon.
4. Miners –
There are a number of crypto-currency miners, with computing power approaching 1 Exahash, which is about the equivalent of 10,000 of the top 5 supercomputers in the world
5. Developers –
These will use the above processing power to build out the infrastructure, to produce software that is more secure than all the others and to build functionality in the hope of receiving Bitcoins or Fiat.
6. Financialisation –
The Banks and CFTC have already discussed using the Bitcoin Network and blockchain technology for transfer of financial instruments denoted in Bitcoin. And one of Max Keiser’s former regulars, decided to invest heavily in building out the technology for this process almost eliminating Brokers and brokerage fees.
7. World Reserve Currency –
IF, or rather, WHEN the US. Dollar crashes, then people will hold their reserves in an alternative or alternatives. Gold and Silver are obvious candidates, but also increasingly Bitcoin crypto-currency, is a candidate rather than some other Fiat currency, because of the current currency wars, which could turn into trade wars, and then hot wars..
This is still to happen but, the instability in the Middle-East and around Africa, is a sign of things to come.
If the price of Bitcoin, begins to rise towards, four, five, then six figures, more and more people will hold their reserves in Bitcoin, and other fiat currencies will recede in value – including other currencies such as: British Pounds, Euros, Japanese Yen et-al..
This will accelerate the acceptance and expand the wider use of crypto-currencies in general, and Bitcoin in particular. The rise of Bitcoin, and the fall of the U.S. Dollar therefore, will be as much an opinion of the dollar, as it is of Bitcoin
So, as more and more of these people and organisations, developers, merchants, financial organisations, miners and finally those who hold their nation’s reserves increase their use of Bitcoin, then the value will explode exponentially, and the price speculated in the header will be a distinct possibility.
But, the alternatives to Bitcoin – Alt-coins – and of course Gold and Silver may take up some of that slack. Gold appears to be in increasing demand, at least amongst 4 particular countries. India, China, Russia, and Turkey alone out of the world’s 200+ nations, currently (according to Mike Maloney quoting a Zerohedge article on 3/3/2016) are already consuming the entire planetary output of gold – and then some. The excess demand is currently being met by Western Central Banks reserves.
Canada which has suffered in recent months as the oil price has tanked, perhaps made pledges to its people, that were based – at least in part – on an expected almost permanent high oil price, so the fall to circa $30/bbl, and subsequent rise to around $54/bbl is causing problems for those states with Tar-sand production, which is a high production cost energy item, and thus costs may already be exceeding revenue from such operations. Those modest Canadian Gold reserves were apparently sold off in one month or less. The reserves stood at a mere 1.7 tonnes according to February 2016 reports, but by Feb 29th, the remainder was just 77 ounces, which is a pitiful amount. This is down from 1,000 tonnes that the Canadian Central Bank reported in 1965, but since the end of the Bretton Woods agreement (15/8/1971) these have been replaced by U.S. Dollars in the main. It took Canada, 20 years from 1965 to reduce those reserves by 50%, and the last 30years to rid themselves of the rest of this Keynesian Barbarous relic. Which begs the question… What will the Canadian Government use for currency/money, when the dollar collapse occurs?
But what might trigger this Tsunami? Anyone who is not a Keynesian, has to study – observe – what happens in the real world. Economics is one of those dry dusty subjects given to study by essentially – Nerds – I count myself amongst them. The original economists: Adam Smith, John Gresham, Ricardo, and the other early economists, studied markets and what happened in them. They then formulated ideas based on those observations.
But since the dawn of the Federal Reserve, and the end of WWI, economists have been looking for ways to manipulate the economy to serve politicians, who as the old saying goes – “Don’t want it to happen on my watch.” IT, being a recession or a depression.
But what causes depressions? Think about it for a second. A new idea comes along. Lots of people begin to provide that service or product. Lots of small businesses are built. Over time, these small businesses get swallowed up by competition, over decades ultimately half a dozen huge corporations provide that product or service, freeing up people to do other things – (unemployment) and concentrating the industry into a few corporate hands.
When this happens, the unemployed inventive ones with access to capital invent new products or services, to replace, or make better what went before. Perhaps even to the point where what went before, gets replaced almost completely – such as cars replacing trains, which replaced horses and canals. But for the additional products, you need additional consumers, not hundreds of millions, retiring, or on the verge of retirement, looking to save, rather than spend.
Since the end of WWII, the computer has gone through several metamorphoses – from Mainframe, to mini-computer, to PC, to Laptop, to smartphone and tablet computer. They each in their turn improved on previous designs, made them smaller, more productive, cheaper and widely available due to cost reductions.
But for industry to grow (so they can grow the share price) they need new products, new markets, or lower costs, and it is this last item, that means doing either more with the same, or the same with less that is causing the problem… As that means fewer workers. We are at one of those inflexion points. Apple, and Samsung, Sony and just a few others in China and the Far-East, now dominate the smartphone and tablet industry. HP, IBM and other American behemoths have shrunk or got out of the computer business altogether. Britain’s Computer industry has gone from a handful to one, producing designs for chips in smartphones, and tablets (but also increasingly servers for server farms).
The capital sitting in corporate bank accounts should be going into research, but research can take years to produce anything, and corporate execs need to deliver share price rises today, tomorrow, next week, next month, and at the end of the financial year. Not maybe, in three years time if the research proves fruitful. Much easier to buy up a new corporation that has already proved up the technology, and can be tacked on to existing business.
And so to force companies and large holders of capital to invest, we have the prospect and reality of NIRP – Negative Interest Rates Policy – already in place in 3 countries in Europe: Switzerland, Sweden, and Denmark. The ECB and Japan too is trying them, but none of them appear to be working to the extent they would like. In Switzerland, the Tax collecting service even told its taxpayers not to pay up-front, so that the money held on deposit at the banks wouldn’t be “charged”. This is monetary madness. Anyone with 6, 7 or 8 figures in a bank account should be worried. And those living from week to week, or month to month, will need to grow their income rapidly as the dollar declines.
JP Morgan (according to Satyajit Das, finance expert and author of “A Banquet of Consequences”) has speculated – sorry modelled – that -3% (negative 3%) might be necessary for the dollar. But with Bank notes, people can just take that cash out of the bank and keep it under the mattress so to speak. So Central Banks want to get rid of banknotes, and that is why they are starting with large denomination notes – the €500 note, the $100 bill et-al.
India has edged towards this by eliminating the 1,000 and 500 rupee notes, which in a country that still largely uses cash for transactions, and hundreds of millions still don’t have a bank account. This has led to mass demonstrations and mass hysteria. It may lead to social unrest as people rebel against this edict.
The Bankers use euphemisms, and downright lies to attempt to achieve this, but the moment that the U.S. does that, all those dollar bills overseas will return to U.S. shores, and the trickle of deals away from the dollar – the 30 countries that now have bilateral trade deals with China, Russia, India, and the middle-east, for oil, and commodities outside of the dollar, will become a flood – fleeing from the dollar. To what?
We can but speculate, but to my mind, Bitcoin will be one of them, and of course Gold and Silver. Of course, we may yet see governments attempt to outlaw the ownership of Bitcoin, Gold or Silver, just as was tried once before in 1933. THAT moment may arrive far sooner than many think.
Bitcoin – are there any drawbacks? What are the Risks? What if…?
The total number of Bitcoins is limited to 21,000,000, so I hear, which sounds a lot, until you realise how many transactions there are in the world, and how much economic value people have added to the planet over the centuries. Money therefore is used to value those objects – Buildings, Corporations, and the time value of Labour, to all the products and services we take for granted in our modern world. So a modern money must be the measure we use to assign our value to these. IF therefore, Central Banks can just conjure up currency out of their printing presses, or computers, they are esentially stealing value to be created out of human labour. Whether that is a corporation that took 50 years to build, or it is someone’s work, the value of the currency itself therefore, should also reflect its time value to produce. THAT is why both Gold and Silver served our purposes so well over the millennia.
Think of the worldwide number of large corporations, sky-scrapers, huge mines, roads, motorways, bridges and tunnels built since the dawn of the Industrial age, together with their cost in materials, time, energy, and lives lost. That value runs into the hundreds or even thousands of trillions of U.S. dollars.
$200,000,000,000,000 – is reputedly, the total currency debt of the world – divided by 21,000,000 Bitcoins is 9,523,809.5238095 per Bitcoin, and that is in dollars alone.
This assumes that all other currencies go to zero, and we only use Bitcoin for our financial transactions.
Which means theoretically, it could go higher, when you add in Pounds, Yen, Euros, Rubles, Yuan, Dinar, Riyahls etc. etc.
Of course this is perhaps unrealistic, but not outside the bounds of possibility.
We also need to consider what are the pitfalls.
As Bitcoin is more widely adopted, over time there will be inevitable losses – people storing their coins on a smart-phone or flash-drive and losing it, or not backing it up, or finding out that electronic storage and strong magnets are not a good mix, or someone dying with their coins held in a smartphone, that no-one else knows about, which gets wiped and re-sold on, or given to a partner, relative or someone, who has no real interest in such electronic coins. There will be other ways that currency could be lost, so shrinking the pool of available coins, which might also lead people to not adopting them, out of fear of loss. There are those who speculate the earth could receive an Electro-Magnetic Pulse (EMP) which could lead to a major fault in the global telecomms infrastructure, killing digital coins – but with the Banks and Governments so keen to rid the world of ALL paper currencies, there is little choice except for those stand-bys of the last 5 millennia – Gold, Silver and Bronze.
Could Bitcoin go higher? Will it?
Could Bitcoin really go higher than the $1,000,000 speculated on? These are unknowns. The theoretical maximum of 21 million coins assumes that all the coins are mined, but which according to Trace Mayer, Bitcoin Expert, would take upto 140 years, as the mining rate halves every 4 years. The first such halving was in 2013 – Did this cause a price spike? (Basic law of Supply and Demand?) We don’t know for sure, but possibly; the next such halving is next year in 2017. It is possible that this time, people will front run it this time, to try to maximise their positions ahead of the reduction causing another price spike.
As I have said several times, there are about 80 different crypto-currencies. I hold over 10, and receive daily interest into my crypto-currency accounts – as can you (See below). I also have an app on my smartphone, in which I have deposited some of these coins to spend, with a QR Scan Code to make using them easier, just like I might with ApplePay(®) or the PayPal App and it is possible that I will be able to do this with all the others shortly.
There are already ways to exchange these different crypto-currencies, on exchange sites (listed below)
So, now do you think it is time to maybe check out this new currency system?
Where do I get Bitcoin, or these crypto-currencies?
Bitcoin, is available in so many places now it is almost impossible to recommend one or two sites over others, but the one site I do recommend, mostly because they set-up a number of crypto-currency [Alt-coin] accounts, simultaneously, for the price of an e-mail address, and you receive FREE daily deposits into them – albeit very small sums to begin with, but with loyalty bonuses, increasing with time and other ways to improve deposits. For those keen to promote or evangelise the site, additional bonuses are given in increasing amounts for more referrals.
You can earn upto 10 crypto-currencies, including Bitcoin, and Litecoin FREE at… Qoinpro.com, for the price of an e-mail address. Backing both horses in a two horse race may seem like wasting money or effort, but it depends on your view of risk…and the potential rewards. And in investing circles, NOT losing money is the first rule to financial security.
You can buy Gold and Silver with your crypto-currencies at: https://www.vaultoro.com or with Fiat at https://www.bitgold.com or https://www.libertysilver.ee. At Liberty Silver, because it is based in Estonia, which does not charge V.A.T. on silver coins, as long as you purchase and arrange collection from their site (done via a courier) you can still legally buy your coins VAT free.
And you can trade between different crypto-currencies here at: https://shapeshift.io or at https://btc-e.com or even learn how to trade from your fiat to BTC here http://www.coindesk.com/information/how-can-i-buy-bitcoins/
Apologies to Gloria Gaynor, for the title and the introduction…It has been some months since my last piece, and there’s been a lot of water under the bridge since then.
There’s a number of reasons for this, not least because I had a heart attack, followed by triple heart by-pass surgery leaving me away from a keyboard, and more interested in my own health, rather than the health of the world economy which was the main one.
But as my health improves, my interest in matters economic, political and financial return.
While the political seismic shift of the U.S. election, and the inauguration of President Trump has left many foaming at the mouth, because of the media attention and focus on his shortcomings, rather than on their balanced interpretation of what he might bring to the presidency. There are many who see him as a racist, sexist, homophobic xenophobe, and they have little doubt that he will be one step away from being the devil incarnate.
For those away from California, the University Campuses and the metropolitan areas with their somewhat extremist liberal views, that is where jobs and dwindling incomes are the main topic of political discourse as the financialisation of the economy has meant that jobs in Fin-Tech, or Software have done rather well, while mass immigration has pegged workers incomes as a result of Mexicans and other migrants working in the grey economy, and competing for the entry level jobs that historically went to students, before they went onto the middle-management positions in well run corporations, but whereas changes in corporate management structure has meant that many of those well-paid middle-management and engineering jobs, the “high value-added” jobs, have gone with the industry outsourced to the Far-East, and the corporate profits earned overseas, held off-shore as corporation tax is now amongst the highest in the world at 35%. Apple reputedly holds over $1Billion overseas, yet borrows huge sums in the U.S. to reduce earnings and thus taxes at home.
I’ve also been researching Trump’s plans to reform the U.S. through major reformation of the U.S. tax code, which depending on his spending plans, and the revenue neutral elements of the tax code, he may or may not struggle to get through both houses.
What Trump’s victory changes most is the timing of economic collapse because his economic plan is bound to bring a temporary lift, even as it worsens some of the structural flaws. The effect of the flaws that have been written about elsewhere, will take more time to develop than the improvements, but probably not much more time.
So, let’s start with the positives:
Positive Economic Changes That Are Certain To Result From The Trump Triumph
Here is a list of economic changes, which I think are certain to bring a little boost to the US economy in 2017 and will likely delay the apocalyptic predictions:
It is certain that Trump’s tax plan will happen. While it may not happen entirely, something very close to it will certainly happen because Republicans have never seen a tax-reduction plan they didn’t like.
Republicans hold certain economic truisms as tightly as Biblical dogma: they believe tax cuts will pay for themselves and so will not create a huge worsening of the national debt. Every time they make tax cuts, they claim the cuts will stimulate investment, which will stimulate the economy, which means more businesses will produce more revenue, which means there will actually be more tax revenue, not less.
Whilst this may have been true at the end of the second world war, but before the Vietnam war, it hasn’t been true since.
They have never made tax cuts without increasing the federal deficit under any president since. This fact, however, never kills this dogmatic belief. Republicans also believe with religious fervour that targeting tax cuts to the rich in the form of corporate tax breaks and particularly capital gains cuts, will create new jobs and trickle down wealth to the middle class and the poor. The fact that real middle class wealth has stagnated or even shrunk since the mid-eighties, doesn’t seem to have registered.
Belief trumps truth. Since Reagan, when Republicans have control of the entire legislature and the executive branch [and will be changing the balance of the Supreme Court,] it is absolutely certain the world will see major tax reductions that will come as their third and greatest round of trickle-down economics. The plan coauthored by Larry Kudlow has all of his support with conservatives and Republicans, too. Even if Trump were removed from office, most of that plan would be introduced.
The stock market will rise…for a little while, at least. What we DO know from trickle-down economics is that it certainly does stimulate the stock market. The money that is saved on capital gains and corporate taxes and that is repatriated in corporate income from overseas largely goes into speculative gambling in stocks. Very little of it goes into capital formation, investment in new equipment, corporate construction or business expansion.
Even before any of Trump’s proposed changes have happened, we are witnessing how the mere hope of such changes has caused a huge jump of circa 15% in stock-market speculation (both volume and prices) as investors try to reposition themselves for this new reality. There was a brief stock market slump, once people started to question whether Trump’s plans would be enacted, but it didn’t last long because, as soon as Trump got into office, he moved rapidly via serial executive orders to start implementing many of his promises, quickly building faith that he will carry out most of them rapidly and with great determination.
It is unlikely though, that Trump’s infrastructure stimulus plan will make it off the ground in 2017. While Republicans are certain to approve tax breaks, they are not big on massive government spending increases. Trump will find some strong resistance among Republicans to his increased spending; at the same time, Democrats remember well how Republicans battled against Obama’s plans to increase infrastructure spending in order to stimulate the economy. According to junior Republicans who eventually came out against Speaker of the House John Boehner, this was partly because Boehner and the Republican old guard didn’t want Obama to get the credit for economic improvement. They put the good of their party over their nation’s good. So, Trump will likely find a lot of resistance there, too, as Democrats return this tactic.
Spending will certainly increase in one area — the military. Republicans have proven for decades that no deficit is too big if it is going toward building a stronger military especially as the media’s latest bogey-man – Vladimir Putin – receives the public ire, as they are fired up with their false agenda stories of interference in Western democratic independence.
They’ll also find support among Democrats for this, who have just as many wealthy donors in the military-industrial complex as Republicans do. They’ll also find a lot of support among the religious conservatives — because conservatives like for America to be the strongest nation on earth. Besides being macho, defense and security have a strong argument behind them in a world full of terrorists. While Trump might wish to improve relations with Russia, he will be restricted by a aggressive media. He is also antagonizing relations with China.
The US, under Obama, was already acting more aggressively in the South China Sea in order to keep China from controlling secondary trade routes. Trump will build on Obama’s lead there, and his trade battles with China may intensify conflict with China overall. Trump has stated loud and clear that the US military will be ready to look out for Japan’s national interests. At the same time, North Korea is picking a fight in order to beat its chest, which presses Trump to take some action against them. That may come about just as sanctions, but could involve some military sabre rattling or counter-measures from the US that could escalate matters. Trump will take a greater lead than Obama did against terrorists in the Middle East, as he was critical of Obama’s restrained and somewhat ineffective efforts. Expect a more aggressive anti-terrorist policy therefore. That means, as under Reagan, increased military spending will be more important than increased infrastructure spending, but military spending also stimulates the economy by creating jobs and boosting a number of major stocks. Making something to use once – such as a missile, bomb or bullet, is always though, a waste of money.
Economically, those are all strong short-term positives, regardless of what they bring further down the road. BUT… the U.S. is already in what Austrian Economists call a “crack-up boom” according to the data being collected by one commentator – Cliff High – suggesting that the economic collapse WILL happen on Trump’s watch, probably later this year. (See this:)
In spite of these certain positive economic changes for 2017, there remains a countervailing globalist force that has already presided over numerous economic failures of its own making. These people will relentlessly attack Trump, and they will seek to pin their own failing recovery on him. Such an entrenched counterforce makes it impossible to say how much temporary good Trump’s economic policies can bring. Trump starts in a world where globalists have long ruled the nation’s central bank, which they have positioned to create US economic hegemony. Trump can change that over time, but probably doesn’t have enough time before the collapse is triggered. Also, his lineup of Goldman Sachs executives in all financial offices of the US says that he won’t. Globalists are also deeply entrenched in US intelligence agencies and the military leadership, where they have engaged in relentless nation building as they seek to shape the world toward the interests of their own corporate, political and financial establishment while also working in alliance with the interests of the UK and the rest of Europe.
They will do anything they can to restrain Trump’s plans to drain the swamp in Washington as well as his plans to align with Russia on terrorism in the middle-east, and his plans to diminish nation-building efforts. How far and how quickly he can push against their resistance depends entirely on his and his followers’ ability to overcome deeply entrenched globalist powers that have steered the nations of “the West” for decades. All globalists in the world will oppose Trump.
Globalist are first trying to groom and massage Trump into their ways. They are also trying to thwart him through fake news in the media, slanted stories, political attacks, and by stirring up chaos and counter-revolution wherever possible. Even Obama has formed a foundation to try to muster as many protests against Trump as possible. And the Clinton Foundation has been behind many international wars and humanitarian crises that have been used to the ends of the U.S. (See this piece:)
To the extent those efforts fail to stop or change Trump, the financial establishment will, in the very least, try to make him the scapegoat for the failure of their past eight years of badly misguided recovery efforts.
If they cannot impeach him, as some are already working toward, the ultimate risk for Trump and his supporters is that the establishment will assassinate him. This risk is real enough. For the first time in the history of the US (that I am aware of), we witnessed the nation’s largest mainstream news source (CNN) actually releasing one of the most important non-news stories it could trump up during the inauguration, which was a “what-if” story about how US leadership roles would be assigned if Trump was assassinated on the day Obama’s leadership expired but just before Trump got inaugurated.
That such a concern made it as a main CNN story shows there are many mainstream thinkers who see assassination as a realistic possibility, not as some hysterical conspiracy theory. CNN saw it as enough of a likelihood already in the public mind to make it useful fake news (fake in the sense that it filled news time but is not news at all, but (for the moment) pure fiction that teases liberal minds with a kind of “final solution” hope). Trump is Hitler, according to liberal mass hysteria (just as much as Hillary Clinton was Hitlery to conservatives). Both sides routinely demonize their opposition. As the flagship of the liberal media, CNN planted deep the implied seed of hope that Trump might be taken care of with a final solution aimed just at him. Of course, they would deny that they were raising incendiary hopes among liberal Trump haters.
Now that the revolution and counter-revolution have begun, there is no way I can say which force will dominate by the end of 2017, given the immensity of the forces, the entrenchment of the old guard, the resolution of the Trump revolutionaries, the huge flaws existing in the US and global economies, and the economic headwinds that will hit the U.S. down the road. What I can point out is that the globalists clearly begin with the upper hand by far, and they are certainly not going to give up. In fact, they are only beginning to implement their strategies to overcome Trump because they did not believe they would lose the election.
One of the things I learned about in early 2016 was how the Federal Reserve board held two back-to-back “emergency, closed-door meetings” (as described on the Fed’s own published calendar) followed by an immediate “emergency meeting” between Fed Chair, Janet Yellen, and the President and Vice President of the United States. After those meetings, the stock crash that had begun in January and somewhat recovered in February evaporated, and stocks moved continuously toward recovering all lost ground. We were never told what any of those meetings were about, but meetings between the Fed chair and the president rarely happen, and meetings including the V.P. almost never happen. That indicates some level of emergency that the vice president also needed to be fully informed on.
It has also been my belief all along that, if Trump did win (which I believed a better likelihood than Hillary), the Federal Reserve would capitalize on it. I have no doubt that globalists have plans for every contingency. With their recovery failing again (as we saw GDP cascade in the final quarter of 2016), the establishment would be more than happy to let it crash after the election, but most likely not until after Obama was out of office and it was likely they could blame it on Trump.
I have said for years that the Fed’s “recovery” during the Obama administration can only live as long as artificial life support continues. That support still continues intensely through the Fed holding indefinitely the huge expansion of its balance sheet (which leverages out to an historically enormous pool of new money continuing to float the economy) and through the Fed’s continuance of extremely low interest rates. (While raising interest rates now, still remain the lowest they have been in modern history, outside of the Great Recession.)
I’ve believed that, if globalists got a Trump victory, they would even collapse the economy deliberately, if it were not already failing, because they would love to decapitate their newly risen opposition by making people believe that the entire global economy collapsed because of Trump’s interruption to their plans. They would hope that would slam a lid on revolutionaries against globalism, teaching them once and for all that their individualism and nationalistic, anti-socialist ways bring only rapid calamity.
I think they recognize that, if a global collapse happens on Trump’s watch, many people will look desperately for a global solution from those who appeared to be having success with restoring the economy before he came into office. Many people do not see that the Fed’s recovery was only kept alive by endless and massive administrations of artificial life support. Many people also do not see or believe that the economic flaws of the US and many other nations are fatal or even important — such as the size of national debts, the vanity of fiat currencies, the dangers of financing national debts with massive infusions of such currency. They don’t believe that expanding personal debt to individual limits leads to enslavement as does national debt — enslavement to bankers. They even believe that banks and government have done the right things to reduce the risks of another economic crisis like we had from 2007 to 2009 in the Great Recession.
In fact, the opening title to this piece was carefully chosen, because there are many like me, who have been expecting and preparing for this forthcoming collapse even as jobs have been harder to come by and incomes were reduced by mass immigration. Even my wife has had to apply for her own job, as the corporation she works for wanted to reduce the numbers in her department, all in this ever increasing effort to reduce costs, grow revenue and grow shareholder value.
But despite my best efforts to interest her in this subject matter, she continues to bury her head in the sand, just (if I can be politically incorrect for a moment) because like most women, she is more interested in personality, rather than policy, and she believes the politicians will figure it out, and she won’t have to worry about it because she can’t do anything about it anyway (so she says).
So, it will not be hard to find a majority of the populace that will join the mainstream media and the establishment politicians in blaming Trump when the entire global economy goes down the toilet. Trump’s provocative mouth, his brazen plans, his sometimes brash execution of those plans, along with his narcissism and often clownish behavior, make him a ripe target as a grand scapegoat. (I think even most conservatives would have to admit to themselves here that, if Trump were carrying out a totally liberal agenda, they would find plentiful stock for ridicule in Trump’s showy, boastful, and brash behavior. It won’t be hard for his opponents to do the same.)
So, if the establishment doesn’t assassinate him (now a mainstream idea), they will likely make him a scapegoat to carry away their own sins. All of that places the likelihood of the start of an economic collapse sometime later in 2017 as a racing certainty.
This entry was posted in Crypto-Currencies, Bitcoin, Litecoin, Alt-Coins, Currencies, Currency collapse, Geo-Politics, International Economics, Investing, Political Economy & Finance, Precious Metals, Technology Investing.
Then… and NOW…(upto 2014)
The big decline in the precious metals prices from 2011 to today, punctuated by a sharp reversal beginning in early 2016, appears to already be undergoing a final exhaustive bout of selling. The big decline remains to be the most important development for gold and silver investors. Why? Because this decline’s end is likely to present the ultimate buying opportunity for precious metals and for PM mining stocks over the next decade.
Before elaborating on this all-important issue, let’s briefly discuss the current events. The USD Index has rallied as it moved higher recently, due in large part to Fed jabbering about rate hikes, and the final 0.25% rise recently, after Gold reached its March 2016 interim high, with further talk of 3 more rate hikes in 2017, this dampened enthusiasm in the paper markets ensuring those with derivatives on their side could short the metals and thus drive down the price to interim lows, but the New Year will probably reverse that, as the festive season ends.
I’ve previously said that it was possible that we would see something like that in the short term. That’s exactly what happened – metals and miners moved a little lower especially in recent weeks. BUT, just before Xmas is when people are buying gifts for friends and family, not thinking about their portfolios, so markets quite often, soften at this time of year. So, for the brave, a VERY good time to buy metals and/or stocks (as I did today) in those companies with good assets, strong management and good fundamentals, with a longer term strategy for improvement in what should be a rising market for PMs – especially as the Trump win, will probably mean rising inflation for that nation in the medium term – if he keeps his promises.
Those companies who report in British Pounds, will also have a major boost to their bottom line, as profits reported in pounds sterling will reflect the recent decline in the pound’s value versus the dollar, in which many commodities are priced on international markets.
I’ve discussed the final bottom target for gold in previous posts, at circa 50% of the most recent high ($1925 – in 2011) – Here we discuss WHEN gold is likely to bottom.
Today’s price of $1129.85 is not quite at the lowest point – that was $1065 in the middle of 2015, but this pull back from the $1320 area of a few months ago, serves to mark what could be the nadir of a cup and handle formation on the Gold Chart, though it might more likely resemble a shallow bowl, as this decline extends for another year of the secular bear, in a longer term Bull market.
What may seem odd, on a quite different chart – is the one I’ve posted several times since the start of this blog, featuring the comparison of the last two decades with the late 1960s to 1981.
Why? Because, in a globalized economy with interconnected financial markets, no asset can move totally independently from other ones – and this is especially the case with gold and the Dollar. In most cases when the USD plunges a lot, gold is likely to rally a lot and when the USD soars, gold is likely to decline substantially. That’s likely to change in the final stage of the precious metals bull market, but it doesn’t seem we are quite at that point yet.
Therefore, the million-dollar question can be asked differently: when is the USD Index likely to form a very important top in the near term?
In my opinion, it’s most likely to happen in late January or early February 2017, with the second half of January being the most probable target. Trump’s Presidency begins at the peak of a long bull market in DOW stocks, due to Fed Funds Rates being as low as they are, with ESF (Exchange Stabilization fund) intervention and interest rate rises, which will begin to affect costs of doing business, in America, which will add to those corporation’s costs, yet do little to stimulate consumer spending which features so large in the overall picture in the U.S..
Let’s start with the discovery. What was the key thing that happened in the USD Index in the past few years? It rallied sharply and broke the all-important 100 level, or rather – it tried to – break above it, but failed and declined substantially. There were other attempts and they failed as well and were followed by an even bigger decline.
Since history rhymes, the big question is: “When did we see something similar?” Almost 20 years ago – in 1997. That’s the only time in the past 20+ years, when the weekly RSI was well over 80 (besides late 2014 and early 2015). This fact alone is something that should get your curiosity, but the big number of other similarities and how precise the key one is, should get your attention.
After the USD Index initially moved above 100 in August 1997, it declined sharply and it took several months before the next rally begun. The rally started after the USD moved to the 50-week moving average. That’s exactly what we saw in the more recent past – in 2015. What happened next in 1998? The USD tried moving above 100 a few more times, but finally declined substantially and this time the decline took the USD to a new low. Again, the same thing happened in 2015 and 2016. The shape of the rallies and declines was not identical, but it’s nothing to call home about – after all, very different events accompanied both time frames.
Up to this moment, the above analogy can be viewed as interesting, but perhaps not particularly important. What changes everything is an additional analogy – the size (in terms of both the price and extent) and shape of the 1975 – 1977 Gold price decline. The entire price trend, from 1968-1975, you would be able to guess by looking at the chart above, is eerily similar, to the period from 2000 to 2016, just merely extended over a few more years in these latest charts. Of course, the moves are not 100% identical, but are so close that we can view them as such.
In light of such significant similarity, we simply can’t ignore the likelihood that what followed the previous USD bottoms are going to follow these as well – especially as, so far this similarity is playing out near-perfectly.
Plotting the 1998 – 1999 rally on the current situation provides us with approximately 104 as the USD next target, but let’s focus on something different. How is the USD Index moving after the bottom?
Back in late 1998, the USD Index moved sharply higher, above the trend line and topped close to 97. Then it declined below 94, but the key thing is that it declined below the target line by approximately as much as it had previously rallied above it (in other words, the trend line continued to rally through the middle of the short-term decline). The bottom was formed more or less at the rising support line based on the previous important bottoms.
What happened earlier this year? Pretty much the same thing – the USD Index moved sharply above the rising trend line (the exact copy of the line from 1998 – 1999), then it declined below it by approximately as much as it had rallied above it previously, and bottomed. The bottom was formed more or less at the rising support line based on the previous important bottoms. The similarities are indeed extraordinary and the implications are very important. As far as the shape of the upcoming rally (the way the USD gets to its target) is concerned, we don’t have to see identical performance, just as the way in which the USD tried to move above 100 in 1998 wasn’t very similar to the way it tried to move above the same level in late 2015 and early 2016.
Still, the rally is very likely to end in a similar way to what we saw back in 1999 in terms of length and the size of the rally. So, when and how high is the USD Index likely to move? At the first sight we see that the target is at approximately the 104 level.
As far as time and the WHEN question is concerned, we saw the bottom in the dollar on May 3, 2016.
In technical analysis terms too there’s a big indicator. It’s the target based on the big reverse head-and-shoulders formation that started to form in late 2015 and was completed just a few days ago.
The size of the “head” in the head-and-shoulders and reverse-head-and-shoulders patterns is the size of the rally that’s likely to follow. We already saw the breakout (at about 96) so we can use this technique. We mark the size of the “head” and the target based on it. As discussed, this technique points to 104 as the next major target.
Given the likelihood that we’ll see a big rally in the USD Index in the coming weeks, there is a very good possibility that we’ll see gold at new lows. It seems that we still have time to prepare for the ultimate buying opportunity in gold, silver and mining stocks, but this time is rapidly running out. New Year’s Eve may be your last best chance.
So, will gold continue to plunge if the USD continues to rally, like it did in 1999 – 2001? Not necessarily. If could very well be the case that prolonged strength in the USD Index will not really be due to the inherent strength of the USD (or the U.S. economy), but due to weakness in the Euro (if the latter continues to exist, that is) and in other major currencies. George Soros, has reported that Brexit may cause the break-up of the Euro-area, and I have a sneaking suspicion, on this (as on many other things) he maybe right.
If this is the case, gold is likely to rally due to the demand from these other country’s Central Banks and investors fleeing the Euro. Consequently, the discussed analogy has important implications for the next few years.
The USD Index could continue to rally, but not necessarily due to the demand for dollars, but the lack of demand for other currencies. Especially if the EU implodes, then all bets are off.
One other thing that happened in recent weeks, was the events in India, where the Premier Modhi, used vague worries about the Black Market and Terrorism to attack both the currency markets, and the Gold markets simultaneously,… The abolishment of the 1,000 and 500 Rupee notes, and the slap down of the Gold markets were a sign that those behind the financial systems are terrified, that we the people will not give the government their taxes to pay down the debt, and these banksters might actually need to work for a living instead… (he said cynically)
Summing up, while the short-term indications for the precious metals sector remain range bound, the medium-term trend remains bullish and it seems that the final bottom will be formed in the first months of 2017, with the second half of January 2017 being the most probable time frame.
Meanwhile, it seems that any potential profits on my long positions will stagnate further before this trade is over and the up-trend resumes.
Here’s how we got here…
And, here, we hear how it will play out from one of the world’s best investors…
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After posting this, I came across this item in King World News web-site, that draws a similar comparison, to the one, I spotted some several years ago…
In it we see the image below…Note: The image uses a logarithmic scale on the left, not Gold price… And suggests the 8-fold price rise we saw last time, from trough to peak, will be less than the next mania phase… We might conclude that it might be 10 x the low price of last year, taking the Gold price to circa $10,000… Remember where you heard it first…
And Alex Jones is in sparkling form, as usual…
The fightback begins.
August 27th, 2016
With several countries already having negative interest rates in place and more considering a move in that direction, people around the world are becoming increasingly concerned about the possibility of gold ownership being banned, particularly in the West. This would represent a decisive move by those elite who wish to impose a New World Order, where they are the Kings, and we are the subjects, cut-off from one of the last vestiges of safety for investors against the monetary madness unfolding across the planet.
“When you recall that one of the first moves by Lenin, Mussolini, and Hitler was to outlaw individual ownership in gold, you begin to get a sense that there may be some connection between money, redeemable in gold, and the rare prize known as human liberty.”
— Howard Buffett
However, according to reports, at least one nation, is considering backing a new currency with Gold, and from a very unlikely source – Robert Gabrielle Mugabe’s Zimbabwe. The only questions that follow from this are: Where will Mugabe get that gold? And what will he use to acquire it? Legally? By contract? Or by sequestration or nationalisation?
But this right to own Gold, and/or Silver and to use these as money, is under threat all over the world, the Bankers wish to impose their divine right to rule. With anonimity, comes liberty. Only when we have to provide a Chip based card, or have a RFID chip inserted in your arm or provide your identity card, and be part of some vast people database do we give up that liberty. As Mayer Amschel Rothschild (née Bayer) once famously said:
“Give me control of a nation’s money, and I care not who makes its laws.”
And Benjamin Franklin once said:
“Those who give up their liberty for more security neither deserve liberty nor security”
When, we allow those in power to reduce our choice of money to only that which the Bankers will allow, then we become nothing more than serfs, who will be condemned to serve these Banking and Financial wizards.
It is time to take back our freedoms. President Lincoln in his inaugural address said this:
“This country, with its institutions, belongs to the people who inhabit it. Whenever they grow weary of the existing government, they can exercise their constitutional right of amending it, or their revolutionary right to dismember or overthrow it.”
– Abraham Lincoln – Mar 4th 1861
This desire to control us involves, a desire to control countries too, for the furtherance of the globalist goals. This involves forcing multi-culturism on people and extends to member states of Europe, which is why those who objected to this in Britain, voted with such rare clarity.
Here below, the Prime Minister of Hungary, in a speech that has been sub-titled in English for the five-eyes crowd, tells of the real agenda in Europe
IF, we abolish the Nation State, those Bankers and the people who own those Banks, can control the people by controlling the money. If we take back our right to accept money (not just currency) then we fight against domination by a self-styled oligarchy of cabalistic omnipotence.
This video below, lays out in immense detail why we need to have access to precious metals, in the coinage, and in denominations that we can use for everyday purchases – including government payments and payments of taxes.
In times of monetary experiments, gold represents essential insurance.
Governments that destabilize their own currencies have always been aware of gold’s significance in this particular regard. In order to prevent capital flight into gold and the associated further devaluation of their fiat currency, they have banned gold ownership at times throughout history. In the framework of the audacious monetary experiments taking place around the world, potential gold bans due to its safe haven status should be on the investor’s radar screen as well.
Gold buyers need to know what could potentially be in store for them, should governments which regard safe haven currencies as a thorn in their side once again decide to restrict access to them. For this reason we have taken a look at historical precedents.
Roosevelt’s ban of gold ownership
Gold is a safe haven commodity, i.e., it defends personal wealth when legal tender is no longer capable of rendering this service.
In the course of the Great Depression, president FDR (Franklin Delano Roosevelt) signed the Emergency Banking Act of March 9, 1933. As an amendment of the Trading with the Enemy Act of 1917, which prohibited trade between US citizens and declared enemies of the state, the Emergency Banking Act empowered the government to confiscate all gold coins, gold bars and gold certificates held by the population, under the precondition that this was necessary for the protection of the US currency system.
This precondition of course provided plenty of leeway in terms of its interpretation, and consequently citizens were asked just one month later already to hand their gold over to the US government. Compensation was set at the then prevailing fixed gold exchange rate of $20.67 per ounce. Once collected, it was revalued to $35.00 – resulting in a huge 69.3% gain for the Fed.
Due to the government’s inflationary monetary policy, depreciation pressure on the dollar increased quite quickly. in 1934. At the time of the compulsory conversion many Americans accepted the new regulation without demur, as they believed that it would help to improve the economic situation and their money would therefore not be debased.
The penalties for illegal gold ownership were horrendous. There was either a fine of up to USD 10,000 (equivalent to approximately $190,000 today) or a jail term of up to ten years. In spite of this, the population is estimated to have delivered only around 30% of its gold holdings and the black market in gold flourished.
As it was almost impossible to control all households to find out whether they were in possession of gold, holding it was relatively safe. Many US citizens moreover stored gold overseas, such as in Switzerland, or bought numismatic coins, which were exempted from the ban. President Dwight D. Eisenhower subsequently expanded the ban on gold ownership to include gold held abroad and President John F. Kennedy tightened the noose even further. He prohibited the ownership and purchase of numismatic coins that were minted before 1933 as well. In addition, all gold coins stored by US citizens abroad had to be repatriated. The rather flimsy pretext for this was that the government had to protect US citizens against counterfeits.
But silver, silver will be gold on steroids. 75 years ago, after the confiscation of silver from America’s currency, and other nations began the process of taking away our liberty, 5 BILLION ounces were stored in vaults. Those silver ounces have been used over the intervening period, and in the world’s silver vaults now – the NYMEX, the LBMA etc, are barely enough to furnish industry for 3 months, let alone 10 years without mining another ounce. It now has 10,000 uses and counting, with the PV cell, Electronics, Plastics, Glass, Ceramics, Surgical Instruments, Anti-bacterial, anti-fungal and disinfective with hundreds of other uses, and it now comes out of the ground in the ratio to gold of 9:1 compared to the 15 or 16:1 of history. In fact the British Pound Sterling was just that – a pound weight of Sterling Silver (925), and it will never be any cheaper, than it is today.
Other gold prohibitions in the 20th century took a roughly similar course, such as for example in the Weimar Republic in Germany in 1923, in France in 1936, in India in 1963 and even in Great Britain in 1966. The next year Prime Minister Harold Wilson, devalued the British pound from $2.80, to $2.40:£1.0.0.
Not all gold bans were the result of misguided monetary policy. While the ban in the Weimar Republic was tied to the great inflation, in France the reason was capital flight in the wake of the election victory of socialist politician Leon Blum. In India the trigger for the gold ban was capital flight as well, in the wake of the Sino-Indian border war of 1962; in Great Britain it was connected to rising industrial gold demand and the associated increase in the scarcity of gold.
What happened prior to the 20th century? In antiquity and the Middle Ages private gold ownership was often prohibited as well, such as e.g. between 1292 BC and 1186 BC in ancient Egypt. This privilege was reserved to pharaohs and priests, as they performed their religious duties as representatives of the gods. In Sparta gold ownership was prohibited because the population was not supposed to take part in business life at all. In 404 BC gold ownership even became punishable by death and raids on homes were a daily occurrence.
The ancient Romans under Julius Caesar were slightly more modern by comparison: An upper limit for gold ownership decreed in 49 BC can be seen as a reaction to “misguided interest rate policy”. After Caesar suspended all interest payments, Romans started hoarding their money, which was of course not the decree’s intention. The gold ban in the Chinese Empire was also closely tied to monetary policy errors. The Middle Kingdom created fiat money in the 11th Century and in this context immediately prohibited gold ownership. Some years later, a currency reform was enacted in the wake of massive inflation. The intention of the ban was to keep Chinese citizens from saving their wealth with the help of gold. Now, the Chinese government, perhaps reminded of the possible outcome of such a decree, extol their populations to hold between 5-10% of their monies in precious metals.
However, in the context of these gold bans we should keep in mind that gold still had an official monetary role in most of these cases. The Bretton Woods system remained in force almost 30years, from 1944, until 1971, when the Gold Window was closed, though it wasn’t fully abandoned until Dr Henry Kissinger’s discussion wiith King Faisal, to use dollars for the purchase of oil, and only thereafter the global monetary system’s ties to gold were cut completely. As gold no longer plays this important role, a gold ban is less likely, but from the perspective of governments trying to pay down impossible debt loads, not outside the bounds of possibility. However, what IS ever more likely in view of governments’ rising need for revenue is more taxation of gold trading. Governments certainly have the option to lower the attractiveness of investing in gold in this way.
Since gold has currently no official monetary role, a prohibition of gold ownership appears unlikely, but not impossible, especially if any of the major currencies collapses, and the price of precious metals rockets. Repressive measures with respect to gold ownership and trading will only become more likely once the gold boom gains significant momentum and its impact broadens to the point of becoming a veritable gold rush. Such a development would naturally go hand in hand with a loss of confidence in paper currencies.
If voices start to raise the issue that “Similar to cash, gold is used to finance criminal activity.” or that gold “is damaging the economy”, alarm bells will ring. However, in the event of a gold ban, it shouldn’t be expected that governments would be able to confiscate all gold, as this would require conducting comprehensive house to house searches, and thus uneconomic controls. If one wants to be on the safe side, one can purchase gold in forms that have traditionally often been exempted from bans, such as numismatic coins or smaller denominations.
This sense of impending doom though, took on a new urgency in recent days, as a report on the BBC, was made that the German government, suggested to its citizens, prepare for the unexpected. This vague statement, was suggested by some that the reason was because of potential terrorists threats. And the people were encouraged to stock up on food, water, flashlights, money/currency, batteries, sterilizing tablets etc. etc.
But… Is this because in reality, it is rumoured that a certain huge bank is on the brink of failure?
– Reluctant Preppers – In the long run, we are all dead…
But in the meantime, we WILL suffer. (KirkbyAnalytics.com)
After posting this piece, I came across a piece by Hugo Salinas-Price, that made me think, there is hope…
The piece begins as follows:
The Night That Is Upon Us and the Dawn of a New Era – Hugo Salinas Price
A speech by Hugo Salinas Price at the inaugural ceremony of the Fourth Convention of the Association of Mining Engineers, held in the city of Durango, State of Durango, Mexico, on August 25, 2016.
At what point in History does humanity find itself? Where are we? In the course of the past centuries, the study of the physical sciences, born in the 16th Century when the Englishman Francis Bacon established the “Scientific Method”, has had such enormous success and has so greatly influenced humanity, that Science has become a materialist world-religion.
The central problem of our times is that official economists attempt to apply the “Scientific Method” when designing economic policies for governments, and this method is not applicable to human activity. The “Scientific Method” cannot be applied to social concerns, because physical matter and human beings behave in totally different ways. Matter cannot choose, and human beings do choose their behaviour. So, while action applied to matter produces predictable results, action applied to human beings must consider the fact that human being do choose, they do have options, and thus their behaviour cannot be predicted successfully, cannot be quantified nor expressed correctly in equations. The world’s economists ignore this fundamental fact, and so they formulate economic plans for the State that always turn out as counter-productive, because their plans produce results that are always quite the opposite of what they expected.[More…]
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Bloomberg – Russia’s Only Escape From More Deficit Pain Is Economic Growth http://bloom.bg/2aWh4Tf
Of course, to grow any economy, and improve the living standards of an economy’s citizens, the economy must grow over and above the growth in population.
When an economy stagnates, but the population does not, the citizens are essentially sharing a cake amongst more people, so all other things being equal, everybody gets a smaller slice – which means they get poorer.
When people invest in businesses, and raise the output of goods and services, the economy grows, and people are richer, but ONLY, if the rate of growth in output is more than the population growth.
This conundrum, is at the heart of economists problems. The rate of growth of the economy.
During the early Industrial Revolution, the increase in automation added lots more goods and freed up people who were moving from agriculture, to industry. These individuals were released from agriculture because it too was mechanising..
In a service based economy, it is difficult to grow the output, because it is more difficult to automate.
A restaurant frees up people from the drudgery of cooking, setting and laying the table, and washing dishes, but it produces not much additional value, because those citizens, cannot improve their own output by not doing these tasks because they are involved in waiting for food, between courses etc..
However, if we replace these waiters and waitresses with automatons, (Artificial Intelligence servers) and an experienced waiter to resolve difficulties, then those staff are released to produce more goods, and services elsewhere. THIS is the way to improve productivity in the economy.
However, when people are released from one industry to work in another, they have to be able to move their skills easily, and in an increasingly technological world, the time to retrain may take years. It is simply not cost-effective to retrain a 55+ year old, if he or she is going to retire perhaps two years after gaining the skills, but has (or would have) taken 4 or more years to gain the necessary expertise.
This is the problem, for economists, and politicians, because money can flow like water from one part of the economy to another, but people don’t move quite so easily.
That is at the heart of the European Union’s (EU) freedom of movement dictum. As one economy expands, people moving in, will dampen wages, and lower output per person. That’s the theory anyway,.
However, large corporations, when they use cheap money to merge with, or to take over in a hostile fashion, other corporations, do not add much value, if the people displaced do not have capital to build businesses, because their savings have been depleted by poor wages, poor interest rates, high taxation or other methods of losing value.
But, in the near future, we are about to see a positive explosion in technological advances, that will likely revolutionize the world economy. Artificial Intelligence, Virtual Reality, Augmented Reality, Robotics, Spintronics, Thorium Energy production, and Solar Energy production coupled with storage technologies to move the energy that hits the Earth during the day, to those parts of the energy demand curve usually later at night, to heat or cool homes, or to drive factories such as Tesla’s Giga-Factory in Nevada.
This factory, which Elon Musk, has committed to producing 500,000 vehicles per annum in, by late 2017, will catapult demand for Lithium Carbonate, critical in building the batteries for his car for everyman. Warren Buffet, who made a major investment in China’s BYD a similar automotive corporation with aspirations to produce huge numbers of electric powered vehicles using Li-ion cells, will also require huge amounts of Lithium Carbonate.
By the end of the year, according to Reuters, BYD should have 10 GWh of battery production capacity, which it expects to increase to 34 GWh by 2020 with a new factory in Brazil—about the same capacity as Tesla’s.
Other Tesla rivals rushing to the battery production scene will be iPhone manufacturer Foxconn and LG Chem, which is already one of the top three battery makers.
Samsung is also hot on the trail, having just acquired Magna’s battery production division.
According to Credit-Suisse, the lithium industry is “poised for significant volume growth,” which could lead to shortages of supply. As a result producers of lithium are set to enjoy significant earnings throughout the decade.
Elon Musk’s aspirations, if met, will require as much Lithium as is currently produced world-wide, and such demand will also be required by BYD, and the other major manufacturers working to catch up, such as: BMW, Mercedes, General Motors, Ford et-al.
“The key drivers of the continued growth in the market are electric vehicles (“EV”), which have been pioneered in Nevada in recent years, but the larger catalyst for global mass market uptakes is EV technology in China.
Deutsche Bank has forecasted that global sales of EVs in 2025 to be 16 million vehicles per annum (current sales are just 2 million).
This increase should lift lithium consumption in EV’s 8-fold from 25-kilo tonnes (Kt) of Lithium Carbonate Equivalent (“LCE”) in 2015 to 205Kt in 2025.
This along with the other increases in global lithium demand is expected to increase LCE demand to around 535Kt of LCE by 2025.
This new demand is being driven by the improved economics of electric vehicles and energy storage products.
In particular in the last five years lithium-ion costs have dropped from US$900/kWh to US$225/kWh.”
In the world, there are essentially 4 major producers of Lithium. Albemarle being the biggest in Nevada, but right next to it, is a junior Lithium explorer, with capital from major investors, who see this as a huge financial opportunity to grow output to meet this expected demand. And at a mere $1.66-1.70 range on the day I was writing this, it values the business at $114.27m (Source: Bloomberg)
Some Lithium miners, are lying about their resources, and others, simply lack the expertise to bring the Lithium salts to production.
From this small company’s web site they have this to say:
[Our Company] has an option to become the largest claims holder with over 15,020 acres (6,078 hectares) in Nevada’s Clayton Valley and land positions both north and south of Albemarle’s Silver Peak mine, North America’s only lithium producer.
Clayton Valley North covering approximately 5,480 acres (2,217 hectares) in northern Clayton Valley, Nevada. The claims are contiguous to private lands and placer claims belonging to the lithium production facility of Albemarle Corporation. Historic drill information and a geophysical survey show the Property covers basin-fill sediments which are similar to the sediments currently producing lithium brines. Two Albemarle production wells lie along the boundary. Two holes are proposed within the Clayton Valley North claims as offsets to the production wells to test the complete stratigraphic section. Drilling and exploration are active in the basin and the permitting process is well established.
[Our Company] has also acquired the Clayton Valley South Expansion, totalling approximately 9,540 acres (3,861 hectares). The property is strategically located between and contiguous with the Silver Peak lithium mine operated by Albemarle Corp. on the northern boundary, the Clayton Valley South project operated by Pure Energy Minerals Ltd to the east and the Neptune property owned by Nevada Sunrise Gold Corporation to the west.
But Eric Anderson, CEO of the lithium engineering consultancy TRU, was bearish on lithium investment as early as 2009, when a flood of new projects were being planned.
“I made this statement that people snickered at—that plants would be built and closed . . . because of the hype surrounding the industry,” says Anderson.
Anderson’s lithium predictions have been largely vindicated. Demand rose more slowly than some expected—still currently between 5 and 10% per year—and new operations have been plagued by problems.
In 2012, Galaxy Resources suspended production at its Mt. Cattlin mine in western Australia. In 2013, RB Energy Inc. opened a new lithium carbonate plant in Quebec, only to suspend operations in 2014.
Nevada-based Western Lithium, which has been repeatedly floated as a potentially convenient supplier for Tesla, has taken shareholders on a very bumpy ride, and is not yet online.
According to Anderson, Western Lithium, like many new lithium operations, simply aren’t working with the right raw materials. Though lithium isn’t rare in the environment, the cost of extraction varies greatly with its concentration and form.
With existing technology and present prices, truly profitable lithium comes only from the evaporation of highly concentrated brine. Those sorts of brine deposits are nearly all in southwest South America, and controlled by established players.
The three biggest lithium producers are Sociedad Quimica y Minera, based in Chile, American FMC Lithium, which controls the ominously-named Hombre Muerte mine (Dead Man Mine) in Argentina, and the U.S. based Albemarle, which recently acquired competitor Rockwood Holdings. Albemarle is developing lithium brine holdings around Magnolia, Arkansas too—the only American deposits that Anderson thinks might make economic sense in the near future.
Together, these three companies provide more than 90% of the world’s lithium, and have absorbed much of the rising demand simply by bringing untapped capacity online.
A dearth of technical talent seems to be another widespread problem. The Bolivian state has faced serious management and technical hurdles in extracting the massive, high-density lithium deposits in the other-worldly salt flat Salar de Uyuni.
Similarly, Chinese producers Quinghai Lithium and Citic Guoan MGL, hoping to exploit sources near Tibet, have experienced major hurdles, and plans to expand Chinese capacity to 60,000 tons a year by the end of this year have been revised downward by half.
Elon Musk however, is eyeing a “complete transformation of the entire energy infrastructure of the world to completely sustainable zero carbon,” and what he’s talking about here is lithium-battery production on a mind-blowing scale.
Tesla is planning to produce more lithium-ion batteries in this factory than in the entire global marketplace combined.
Lithium—the lightest and most versatile of the metals—is the backbone of this exploding battery market.
Lithium is already a key part of our everyday lives, but as batteries become the rule of the day in a new global energy picture, demand for lithium is soaring—and we are only at the beginning of this curve.
Battery manufacturers across the board are moving to lithium because it has the highest electric output per unit weight.
And nowhere will this demand soar more than with the production of hybrid, plug-in hybrid and electric vehicles used by everyone from Toyota, Honda, Nissan, Renault, and Mitsubishi to Ford, Chevrolet and GM.
By the end of the year, according to Reuters, China’s BYD should have 10 GWh of battery production capacity, which it expects to increase to 34 GWh by 2020 with a new factory in Brazil—about the same capacity as Tesla’s.
Other Tesla rivals rushing to the battery production scene will be iPhone manufacturer Foxconn and LG Chem, which is already one of the top three battery makers.
Samsung is also hot on the trail, having just acquired Magna’s battery production division.
According to Credit Suisse, the lithium industry is “poised for significant volume growth,” which could lead to shortages of supply.
As a result producers of lithium are set to enjoy significant earnings throughout the decade.
Therefore, this little company, stands to be able to produce Lithium Carbonate, even quite possibly at the Albemarle facility which we know meets Tesla’s Standards, and it has even been suggested, Musk might be interested in buying the whole company to guarantee Lithium for his Nevada Giga-Factory, and his future plans.
And, the name of this Lithium junior placed to take advantage of this rapid surge in demand is: Lithium X (TSXv.LIX) and LIXXF in the U.S.) .
And remember, we’re not Investment Advisors, so nothing in this piece should be considered a recommendation. Prices of shares can go down as well as up. We do not hold, and have no short-term intentions to do so.
Over the last few days, I have been reading, and hearing some concerning stories, that suggest the end of the Dollar as World Reserve Currency is merely weeks, or at most months away.
As of late, certain banks were recently being bailed out, because the banks loaned out currency to people to buy property, which collapsed in price in the aftermath of the 2008 crisis – Italian Banks were the most recent recipients of ECB largesse. But most large Western Banks, are in an impossible position, Deutsche Bank being the most recent one facing the threat of failure, but perhaps even one of Wall Street’s grand-daddy banks.
That bank, even now, according to one economic and geopolitical forecaster is on the brink of failure with a derivatives book of 349:1 leverage on its assets – If you were aware and remember, Lehman Bros, was a mere, a MERE 73:1 when it finally failed.
BUT, as to how this dollar problem has affected the International Trade scene, has remained largely ignored by the financial media and journalists.
Countries who sell to the U.S., have been getting paid in, as one commentator put it – “toilet paper”. Indeed, Fed Chairman Ben Bernanke said as much, at the time of the 08 crisis, when he said that they have a printing press, that can create dollars essentially at zero cost, which means, that that, is ultimately their value. But, those dollars, because of the Bretton Woods agreement, are used to settle International Trade agreements, between for example Saudi-Arabia (for its oil) and India for its I.T. services, or Brazil, and its coffee, in exchange for Australian wine. As a result, China has told the U.S. that the International dollar has to go, and a U.S. treasury dollar has to replace it, but that its value will have to be halved over a period of approximately 2 years.
I hear that circa 20 International Container Ships are anchored off-shore in the Pacific, because the providers of those goods, now do not want the U.S. dollar in payment, and that other reasons are being given for the lack of access to Port Authorities in Los Angeles and points north.
In its place for International Trade, will be the SDR, which will be partly (circa 40%) backed by Gold, as I mentioned in my last piece, the Americans, who have been trying to control the price of Gold on the COMEX, will have to have Gold revalued on International Markets, and as at this particular point in time, the price is under negotiation. However, my finger in the air best guesstimate, would be circa $5,000/oz, with a rise to closer to $10,000 as the world economy adjusts, and people rush to buy.
The revaluation will be an overnight affair, rather as FDR’s gold revaluation took place once it was safely stored at the Fed, after he issued his now famous Executive Order 6102 on 3rd April 1933, confiscating the nation’s gold, forcing Americans to surrender their gold (excluding jewellery) on pain of a $10,000 fine, and/or 10 years in the pokey. Silver was also confiscated the following year. But even then, it is estimated that barely 30% fully complied.
However, because of International Trade, this revaluation of Gold and SDR currency introduction, needs to take place in a safe, secure, standard way to minimize shocks to the world economy, and trade.
In the wider world, all International Trade would now be carried out in SDRs, which would include the Chinese Yuan, and as stated would be valued based on a basket of currencies as per my previous post, but backed ultimately by Gold.
It is not widely known, but there are families in the Far-East, who collectively, like the Rothschilds and Rockefellors, have huge dynastic wealth, which some estimates put at 100,000 to 150,000 tonnes of Gold. (I think this is slightly exaggerated but not by much)
In fact one Japanese Army officer, claims to have discovered some of this wealth hidden, in a cave system, when they invaded other islands and nations in the second world war. A solid gold buddha of circa 24″ high, and weighing hundreds of pounds was one such piece, reputed to have been discovered. Details of all such finds are obviously viewed suspiciously by those behind the veil, and generally have scorn poured on them, in efforts to hide these truths that might embarrass the legal owners, if nothing more than but for their sheer ostentatious displays of wealth.
When these events unfold, the price of both Gold and Silver, and to some extent all commodities, will shoot up on international markets, at least when priced in Fiat currency terms. But derivatives books, will also be affected, meaning banks will undoubtedly be affected. Bank Accounts that in Britain and America are currently backed by insurance, that the British Banking Regulator – the FSA – has been pushing on local radio, and the FDIC supposedly insures for Bank accounts in the U.S., may be “bailed in” as happened in Cyprus, as banks fail, and we are likely to see a change to International trade of the major contracts into the SDR, to make trade more equitable.
America currently has a $500 billion annual trade deficit. Britain too, has just suffered a further imbalance to our trade book, and costs and inflation, can only go one way, if events transpire as I suspect. But at least Brexit, will make things easier for us to adapt as a nation.
In the events leading up to this introduction, we could see an overnight re-valuation of gold, to an unprecedented level, with further rises as those with huge sums of money, rush to transfer their wealth from Federal Reserve Notes, to Gold (and silver). Rumours suggest an initial price of circa $5,000/oz, but if that occurs, we may see a stampede towards precious metals from other asset classes. And what price silver? Possibly $400-$500 per oz.
Which brings me to the other concerning development suggesting these events are moving apace. It has come to my attention that Bank Accounts with large sums of money in them, are being frozen by the Banks, and their “Anti Fraud” departments. Two such acquaintances of mine have informed me that they cannot access their accounts and when questioning this, they have been told, that they are under investigation. Nothing else is divulged. No further information given.
Is this the first step in the events leading up to the re-liquidating of the Western Banking System to stop those with large sums from spreading them around several banks, and thus limiting the FSA’s and the FDICs liabilities? We can at this point but guess…
BUT… are the Banking elite, attempting to ensure that the banks remain in service post crisis? Moving large sums from one account to another, could be the straw that breaks the camel’s back… Is that why access has been frozen?
Imagine for a moment, you are unable to access your bank account, and your salary for a moment…
How would you fare if your Bank-Card and your Credit card stopped working?
How would you buy groceries, purchase milk, bread, fuel for your car? Pay the children’s school meals bills? How would you pay the Window Cleaner? The Taxi Driver? The Bus Company? Would these people and companies, still provide their services and goods, on a credit basis until things get back to normal?
For one person, they perhaps could do that, but when the whole local economy is cashless… How do they, and you just survive?
Whilst I am not advocating mass panic, it would be prudent to have available (however you define that) at least one month’s money (currency) at your disposal. If you haven’t bought Gold or Silver, in a reasonable quantity yet, there may be still a little time. Crypto-currencies too, because a banking collapse is a very real possibility, on the scale of 2008 or worse, much worse.
The people of America will feel the pain the hardest, but Britain, Japan and Europe too – excepting perhaps the northern germanic nations, and close neighbours, who will suffer considerably less. We even may see a figure similar to Donald Trump, advocating that he (or she) alone has the solution, all the people need to do is follow them, and then we will have travelled back in time to 1932, when Adolf Hitler arose to great acclaim, and sealed the west’s and his nation’s fate.
Of course, having sufficient staple foods, water, perhaps fuel – like bottles of Gas for camping stoves etc. – tanks of fuel for the car, and candles, matches, canned fruit, vegetables, and batteries as well as water purification tablets, will all make life more liveable, if the SHTF moment arrives.
Time to prepare, and that is not an idle request.
This is a tough topic, because people either don’t want to believe it or are not capable of, because they lack the knowledge to comprehend what is being said. If you have read quite a few of my former posts, you will have a better understanding than most. If you have not, you will do what millions of jews did in 1936 in Austria, Poland and Germany as the Nazis began their pogrom. Nothing.
When you understand that the U.S. can only operate based on debt/credit, not physical dollars, you finally see that the USA is a huge Ponzi scheme built on nothing more that their ability to borrow money. Their status as the world reserve currency has allowed them to borrow money that they do not have. Japan, Russia and China have extended and pretended, and now the credit card is maxed out.
The government says that there are 10 trillion dollars sitting in the US Banking system that they can go to and easily withdraw. How can that be true when there only exists 1.4 trillion of real money in circulation (dollars and coins) and more than one half of that is outside the US. This does not include the trillions more that they owe other countries – Japan – $1.4 trillion, China – $1.1 trillion – and goodness knows how much in the Middle-east for the oil money that has been re-circulated into Treasury’s. If the US’ creditors were to all come at once, and ask for their money there would be less than $1 dollar for every $1000 dollars owed.
The world economy will collapse, and that is the way that all great empires based on fiat currencies end. People I talk to like my wife and friends have really no clue what is coming. When I try to talk to them, they just say well we can’t do anything, to stop it, and shut me up.
The video below, is long and it was cut to half of its original length, but it is the single most logical and credible documentary I have ever watched on the future of the US economy, and where the U.S. goes, so goes the world. It makes me furious that the Federal Reserve and the Treasury, decided to bailout the corrupt bankers instead of the citizens.
Instead of bailing out the banks, the Fed could have paid the debt off for every consumer in the country and freed up trillions of dollars for them. Instead they padded the pockets of the banking elite. I wanted to “Try” in a legal sense, someone for dereliction of duty, and Treason. Now, they are setting things up to try one last historic cash grab. Negative Interest rates, Digital only money, or stealing the pensions over certain sums are all possibilities, as well as cut-backs in state and local government support.
The bailouts, drove the stock market to all time highs so that those behind the scenes, can make a killing, by shorting the hell out of it. But they have to have someone to sell to… those on the outside – and guess who THEY are?
I think Donald Trump will not be allowed to take office. If elected (if the election is not stolen) he may be assassinated first. I am over 60 years old and a former Lecturer In Business and Information Technology. I have run several small businesses over the last 30+ years, and I have watched hundreds of hours of video on the economy and financial systems of the world, and done more than 15 years research into past financial failures going as far back as the Roman Empire.
Dr. Paul Craig Roberts is one of the people I have followed, along with Dr Ron Paul, Bill Bonner, Addison Wiggin, Rick Rule, Jim Rickards, Byron King, and many others in this sphere. Theodore (Ted) Butler, of Butler Research who raised the subject of price manipulation in the precious metals markets with Andrew Maguire, the whistle-blower who raised it with the SEC, about the book I produced “The Coming Battle” on the formation of the Federal Reserve, Economics and Finance – had this to say, he said, “It’s an impressive work”.
People do not want to acknowledge that the fall of fiat currencies is nothing new. The phrase “it’s not worth a Continental.” is a hangover from the days when the Southern Confederacy, produced its own currency during the Civil War, which literally became worthless, and the US has made it this far ONLY because they are the reserve currency of the world.
There have been 440 economies based on fiat currencies in modern history… They have all come to the same demise, FAILURE. In fact, the IMF has already discussed with the five major currencies in use around the world to create a new world currency as early as this autumn – the “Special Drawing Right” which will also include the Yuan, and is a system of creating a currency out of the currency basket of the six biggest currencies – The Pound, Yuan, Yen, Euro, U.S. Dollar and 40% Gold. This could be issued by the IMF to governments as early as 1st November.
Having an education in Business and Computer Science with 2 Post-Grad Diplomas in Business Computing and Information Technology, and I taught Quantitative Analysis, Business Law, and the Organisation in its Environment to Business and I.T. students, I do not believe that the US is exempt from the natural laws of economics.
Watch the video; it explains why people have a hard time accepting the true outcome of a situation that has played out the same way again and again throughout history. Research ‘normalcy bias’ and as I said at the beginning, don’t be like the Jews in Europe, who couldn’t believe it would come to that…
I keep hearing from Americans that the US is different. That is true. The US is much deeper in debt than any country at any time in history except post WWII. If you doubt that, watch the entire video. You cannot deny the logic!!
Watch and learn…
And here below, Harry Dent, talks about the future and his demographic analysis.
In the US, 75 million Americans were born from 1947, to 1962, and 8 million other people joined them from overseas. Those 83 million began retiring at age 65 in 2012, though many who were retiring early, sold their stocks, and other investments, as early as 2005. Back in 1974 they were aware of the number of baby-boomers coming through, and brought in the Employee Retirement Income Security Act of 1974 (“ERISA”)., which allowed people to defer their pension entitlements until 70.5 years of age. Since 1947, that means, that next year 2017, all those pension companies, who have not taken their client’s pensions – yet – will be forced to sell their stocks, and buy government securities – annuities – and receive a lump sum, which may be used to perhaps buy assets such as property – but they may also buy Gold and/or Silver.
The stock market, already under duress as those between 65 and 70.5 who are already retiring are selling, and this added number will undoubtedly lead to a sell off in markets if they have not already fallen.
Negative Interest Rates, if they arrive soon, will mean many will opt to buy Gold, Silver and any other asset that is likely to appreciate or provide a yield. Property, normally a high yielding asset has already been bid up to asphyxiating levels, and as Mike Maloney of GoldSilver.com recently commented, that the top of the market – properties over $10m, are already sitting unsold on the markets. Those with the most are usually first to exit the burning theatre… the rest will head for the exits in a great rush – too late, and trample each other in the panic.
Property will probably fall 40-60% in the worst areas, stock-markets will be off 60%+ and the DOW and Gold will probably be a 1:1 relationship, or worse a 1:2… (Dow 5,000? Gold $10,000?)
Jim Rickards thinks Gold could go higher – to $14,000, and historically the Gold:Silver ratio was 15-16:1 for many decades, it rose to 83:1 in recent years as the 5 billion ounces taken out of circulation when silver was demonetised, that has been sitting in bullion warehouses since 1964, was sold off at the rate of circa 100-200 million ounces a year since, driving down the price for 50 years. But now, all that has gone and that deficit will need to be provided by miners, meaning the price will need to go much higher to encourage large investments..
Silver is up 50% from $13.60/oz in November to over $20.41 as I write, but both Gold and Silver may have one last biggish pull-back, I suspect before the Autumn buying season, then we may see another big move higher, or even a short-covering spike, as the commercials, who have been shorting the paper markets the most, have to buy back their paper and take a loss.
Harry Dent believes Gold may visit the $700/oz range, but I will be scooping it up if it does, and I feel the Chinese, Indians, and others in the far-east all 2.9 billion of them, will be joining me.