Economics.

Global Capitalism, in the Age of No Capital

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DollarsThis piece began out of musings on how the current world economic system, could be overturned (or if we were starting from a clean slate) beginning with a new system. to develop a system, that serves everyone.

Some people have been speaking of the end of Capitalism, as though what we have now is Capitalism.

(Like HERE in the UK Guardian)

https://www.theguardian.com/books/2015/jul/17/postcapitalism-end-of-capitalism-begun.

But, I just think many people don’t really understand what Capitalism is…

The word, “Capitalism”,  derives from the word “Capital”.  This word is just a posher, more accountant friendly version of the word for “savings”.  And to have savings, you have to have a monetary system, that means that the money in everyday use (currency) retains its value over very long periods of time, and is garnered from the excess production by workers, or businesses who save that money.

This money can then be pooled, typically by Banks in individual savings accounts, to allow larger projects to be funded, and corporations to borrow this, to grow their business, or to finance those larger projects.

Of course, there can be savings made by corporations too, who produce in excess of current demand, and this “Retained Earnings” to use accountant speak, is then available for investment in new products or services, which adds value to the business, and enriches the lives of the many.

But, going back over 45 years to the 1970s, when I was a teenager, and just starting out in life, there were two forms of accounts. The type of account where money was deposited for immediate use (a current account) and money that was “saved for a rainy day” and was typically deposited into a “Savings Account”.  In some instances, these were 90 day accounts.  These accounts paid a higher rate of interest, than normal savings accounts, which were called “time deposits”, because these funds were deposited for a period of time – in this case 90 days.

That meant that the depositor, had to give 90 days’ notice, to get access to their savings, or forfeit interest earned.

However, back on 15th August, 1971, the last link between real money (Gold and Silver) was severed, when Richard Milhous Nixon, President of the U.S., closed the “Gold Window” temporarily, which meant that foreign nations could no longer demand Gold in exchange for dollars at the Bretton Woods rate of $35.00 for 1 oz of Gold.

That day ushered in Corporataucracy, though we didn’t realise it at the time.  In a world where a Bank can just press a few keys on a computer, or have its Central Bank (owned by these ultra-large corporate banks) create funds out of thin air by “Computer Keystrokes”, or the “Printing Press”, the large corporations and governments, can borrow increasingly larger sums of currency, without others having to make those savings out of current production or consumption.   This disconnect, means that current consumption, does not have to be forgone to pay for some new project, which reduces the need for savings – but also reduces interest rates, as capital is no longer needed, but it also tends over time to lead to increasing concentration of the means of production, into the hands of those with access to this line of credit, and the desire for huge capital sums.

The rise of these mega-corporations like Apple, Google, Facebook, Uber, Walmart, and here in the UK, BAe, TESCO, Sainsbury’s, Asda, and Morrisons, have all risen, by building large concentrated infrastructure, which is capital intensive.  Most of these corporations can borrow large sums cheaply, because their revenue streams, are constant, and thus they quickly create surpluses in their respective bank accounts.

For these large corporations, that money going into their current accounts, which is vulnerable to loss – IF – their Bank has financial difficulties so needs to be used or given back to shareholders, but is vulnerable, until such time..  So for many companies, this almost forces them to invest in newer premises, and growth in newer overseas markets, to use that currency, or risk financial loss as it sits there earning next to zero interest.

The alternative would be to return that surplus to the investors, which would raise share-prices, and distribute income, but in a world where money is too cheap because it is limited only by the bank’s willingness to hit the right keys on their computers, corporations who have large and dominant shareholdings by the families that created them, have little need for raising risk capital from shareholders, and thus the risk is transferred from the company, (and its shareholders) to the lending institution, while the share price rises, increase the power and wealth of these family shareholders. VW/Audi, Porsche, TESCO, Morrisons, and Sainsbury, are all businesses, where the original family owners are still large shareholders of the business. This is particularly true where the huge sums borrowed jeopardize the stability of the Bank doing the lending and a Black Swan event places a strain on the Banking system.

This risk, is later transferred to the State as Banks use their own freely created Capital, to acquire other smaller banks, consolidating markets, and then when they become systemic, they transfer that risk to the tax-payers as they become “Too Big to Fail”, “Too Big to Jail”.

I believe, that a number of events in the economic, political and financial spheres, may be about to undermine this.

Banking – Politics – Economics –  Changes Making the World a Different Place…

The rise of Islam, as I mentioned HERE: , threatens the wider economy, as religious doctrines amongst its followers, limit the number and range of economic activities which in themselves, could destabilise the western world’s economies to the point of failure.

However, this post is about the other events.

Bullion and Bitcoin.

The last eight years, has seen the rise of Crypto-currencies, like Bitcoin, and a concern among many about the extra $3.5Trillion, put into the monetary system, by the Federal Reserve, driving the rise in demand for precious metals Gold and Silver.

Bitcoin, and other crypto-currencies, could be about to usurp the power of the Bankers (See: My Post on this topic HERE , which if it occurs, means that because the Banks can’t just lend more and more money (currency) into existence, they have to earn the trust of depositors, and use their limited funds wisely. But inevitably, these inventive Bankers will use their political influence to ensure that they get the outcome they need. Probably outlawing crypto-currency trading, and using it for certain purposes.

The East, has for the last one and a half decades, been accumulating Gold in Central Bank Vaults, while the West, has been ridding itself of this substance, that Keynes according to legend discussed as a “barbarous relic”.

However, Gold as the final arbiter of the value of money (See This:  or This – ) can stem the flow of funds to large corporations, who would have to rely on available funds from savers, and increased economic activity, would have to produce those surpluses, which means the increasingly automated world, will need more savers, driving up real wages, to buy the products and services of automation, their prices would need to be more competitive too growing sales, and as Henry Ford recognised, salaries would need to rise encouraging savings to accrue.

And for those past the first flush of youth, or perhaps in retirement, the savings rates paid would go up, and that would help those having to live on retirement incomes.

But, it might also mean,  that for the first time in a long time, America, would not be able to rampage around the world, laying down the law, and interfering in all those countries, that require expensive military hardware, that the U.S.  can just buy with the funny money, that is hot off the computer or printing presses.

Mike Maloney’s take on things is that the printing presses will drive the world to take up the SDR sooner rather than later. The SDR, for those who don’t know it, is the “Special Drawing Right”. It was first created by the IMF during the 1970s, as a certificate for a basket of the major currencies. And the Yuan, has just been added to that basket, but the Chinese are pushing to add Gold to it too, and that will drive demand for Gold.

You can see Mike Maloney with David Morgan, precious metals dealer, and financial guru, discussing matters here:

And for when this happens, Silver will ride on Gold’s coat-tails, But the rush for silver will probably overtake the price rise in gold, by a factor of 5 to 1… And this explains WHY…

Beware The Ides of March…

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Can You Trust Your Bank

Students of Literature, will recognise the title from the warning given to Julius Ceasar, as epitomised in the Shakespearean play of that name.

It was a warning to the general, to beware, by a soothsayer (who remains nameless). A warning that apparently he ignored. Of course, as the conspirators – the Senators, stabbed at Ceasar, and Marcus Brutus a former long-time friend plunged his knife into the man, Shakespeare’s Ceasar uttered those now immortal words – “Et tu Bruté” (And you Brutus?)

Of course, in the modern era, the last major play, that resembles this drama, is the death of John Fitzgerald Kennedy on November 22nd 1963, as he was brutally slaughtered by a conspiratorial cabal operating in the upper echelons of the power political scene in America.

Who all these conspirators are, has remained largely unspoken… But some people, are doing what should have been done 50+ years ago, by the Dallas Police, before the CIA and the FBI took over the post assassination conspiratorial machinations, to cover up their involvement, and to plant the idea in the public’s mind, that “it was a lone gunman” a Russian Sympathiser, who spent three years in Russia, but who was in receipt of $200 per month from the FBI as an informer, and who received special training by the CIA to learn Russian, before he allegedly dropped out by going to Russia and staying there for three years…

Those invoved in the Conspiracy carefully massaged the images and the Warren Commission headed up by the very man, that Kennedy had fired just a few months earlier as Head of the CIA to ensure the story remained “on message”.

Of course George Herbert Walker Bush, when asked where he was at the time of the shooting, had vague recollections of where he was, despite someone of that name making a call to J. Edgar Hoover’s office – Head of the FBI just hours after the shooting proving he was in a hotel in Dallas. And his recollections apparently varied on subsequent questioning of the same incident, The same George H. W. Bush who went on to be Carter’s head of CIA, and then Vice President, during the 8 years that Ronald Reagan was President, and almost made it to the presidency when President Reagan was shot, by a lone nutter… But the President in true Cowboy hero fashion, survived.

JFK’s brother Robert Kennedy who also later ran for political office also met a sudden death when yet another lone nutter (CIA – MK-Ultra participant?) allegedly shot him at close quarters as he emerged from the hotel kitchen into the glare of waiting reporters, TV cameras and waiting dignatories – and CIA operatives?

Here is the best documentary I’ve seen on this and other subjects…

JFK Jr., had his 3rd birthday just three days after his father’s death, and after growing up and becoming by, all accounts, an honourable man, handsome, suave, considerate and latterly a pilot and publisher of a magazine called “George” – Was this a clue to the mystery surrounding his father’s demise?Why George?

And of course, John F Kennedy Junior ALSO met an untimely demise, when his plane came down late in the evening, as his plane disappeared off his flight path and plunged into the Atlantic, just 1 minute after he called in to the Martha’s Vineyard Airport, to say he was at 2,500 feet and ready to descend to the airport… But he never made it, falling out of the sky almost vertically just 60 seconds later… Meanwhile, George Bush Junior, for the three days, was nowhere to be found… Hmmmm… “Curiouser, and Curiouser”…cried Alice…

You can get a better description of events here…

So what does this have to do with the Ides of March?

Well, as President Trump has already made known to the world, some of the things he wants to do is to “Drain the swamp”, and began the process, though CIA leaks have been made to discredit him, but even the MSM have had to eat some of their words. However, many things seem to be happening that suggests he won’t see out his full-term – one way or another…

Already people are setting Trump up for a fall… Here’s how Zero-Hedge put it


Roberto Gualtieri, chairman of the European Parliament’s economic and monetary affairs committee, also criticized Trump. “Some first concrete confirmations of a new more unilateral policy stance by the new U.S. administration, including on sensitive financial markets regulatory issues, raise concerns and require both thorough reflection and action from the EU side,” he told the committee.

Meanwhile, Draghi deflected accusations lobbed at him over the weekend by German finmin Schauble, who said not Germany, but the ECB and Mario Draghi, are responsible for the undervaluation of the euro:

And SGTReport who holds views similar to my own, regarding the economy,  believes  much the same with regard to Trump’s likely outcome, as those behind the scenes are attempting to undermine, discredit, or if they can’t impeach him, probably develop a plan to slay him, when they produced this video…

 

And of course #Pizzagate is just another FAKE News story…

Err.. Maybe.


And of course, it was Trump and those Russian hackers who stole the election… Except it wasn’t…

 

BUT, at least Trump is fighting back, and so are the Americans…

Those evil Bankers, Oil-men, Military Corporate CEOs and multi-million share-holders, and those working for them in the secretive security organisations – all 16 of them, are now going to have their teeth pulled as the fight-back begins…As Ron Paul, that arch-enemy of the Federal Reserve has already had his £0.02 worth..

http://www.zerohedge.com/news/2017-03-08/arizona-senate-committee-passes-bill-treat-gold-money-remove-capital-gains-tax

So, if you’re in the markets, now might be prudent to lower your risk somewhat… Events have a habit of coming out of the blue, and given recent rises to bubble territory… and Cliff High’s, Jim Rickards’ and Bill Bonner’s and JIm Willie’s and Peter Schiff’s, David Morgan’s and Dr. Paul Craig Robert’s warnings a pull-back is long overdue.

UPDATE

This is an important adjunct to the above piece, as events come into focus:

The 15th March (Ides) is the day that Netherlands goes to the polls to elect a new leader. One in which the populist Geert Wilders is steadily making progress in the polls and is looking increasingly likely to win. BUT as Turkey and the Dutch go head to head over the latest political intrigue, will this mean Wilders gets more of the sympathetic vote, against the population concerned about the (as they see it) invasion of Islamists guaranteeing him the  vote?

The second concerning thing is the reaching of the $20 Trillion debt ceiling in the U.S. on that date, while also the Federal Reserve on that day too will decide whether to raise interest rates for just the 3rd time in 10 years.

And, in the UK, after the House of Commons rejected the amendment voted for by the House of Lords, this frees the PM’s hands to announce the formal Brexit process.

And finally, Clif High – researcher, has been announcing over the last two months that March onwards is likely to be tumultuous, and after all that, I found this…(below)

Anyone who has been reading this blog for any length of time, will know my feelings on Precious metals, and this just threw petrol on the bonfire.

 

 

 

 

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Just Another Fake News Story?

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Whilst browsing the internet, I come across many things, that deserve a wider audience, but am unable to offer any further evidence of these sometimes outlandish claims. Not so today.

This piece linked to below, really revolves around a much talked about subject, and one I have myself been involved in writing about, so this piece would appear to add further credence to the mystery.

http://themillenniumreport.com/2016/10/treason-who-did-911-and-why-did-they-do-it/

Who was responsible for 9/11?  WHY did they carry out the attacks of the World Trade Center (WTC)?  And if two planes brought down buildings one and two, how did building 7, a block or two away, across a wide expanse, collapse vertically, and yet was still upright when a BBC news anchor with a live link behind her, showing the building – that could be seen by all those sufficiently awake to notice, – was still visible, while we were being told that the building had already gone down?

The piece linked to above reads like an episode of: “The Bourne Trilogy” with a cast of characters taken from: Politics, Corporate Energy, Mafia and Banking Interests across the western world. I wrote too in the book  “The Coming Battle – 2013”  that events were spiralling out of control.

General Wesley Clark in a video interview explained that he was told in advance of plans to intervene in seven middle-eastern countries, all based on the lie of 9/11… The latest in a long line of black-ops “False-Flag” events, that were used to sway American -and in this case – worldwide opinion to permit those with their own agenda to influence events. And he also discussed what happened next and he recalled how the decision was taken back in 1991 –

It used to be that the propagandists with people inside the military and secret service industries, could modify the News agenda to get the outcomes that they wanted, and due to secrecy laws, their misdeeds would go unpunished for thirty years or more until after the secret documents could be widely accessed. BUT, the Internet has changed all that. The Mainstream News Organisations (MSM) exist to make money for their shareholders and senior management teams – and the corporations that advertise and market their wares on them, are generally large multi-nationals – the very corporations that the MSM is supposed to be keeping a beady eye on, in its role as defender of the public and the customer,  are the very same ones using politics to pursue their own agenda.

As ever, “He who pays the piper, calls the tune.”

So, as corruption apparently swirls around the world, I hear of imminent plans to rid the world of physical coins and notes – particularly in America, where many of the U.S.’s states, and institutions are seemingly hell-bent on destroying the last vestige of freedom – the freedom to spend as you like – by outlawing payment in anything other than digital means.

So will Gold and Silver be once more used to “Barter” with?

Will the closure of your bank, be the event that makes you take action?

Will the ATM closing, or your Bank closing one weekend and not re-opening again on Monday make you take action?

Will the disappearance of your pension fund make you take action?

The time has come.

 

 

 

The Last Chance Saloon…

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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…

http://kingworldnews.com/worried-action-gold-silver-just-read/

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…

kwn-goldpricecomparison1970-2000-20161021-1024x665

And Alex Jones is in sparkling form, as usual…

W.

The Eighth Wonder of the World… And a Curse.

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“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.” [Albert Einstein]

EyeOfTheStorm-Now

  1. 2008 – 2012
  2. 2012 – 2016
  3. 2016 – ? (2018-20?)

We are emerging from the eye of this particular storm…into more turbulent times ahead.

Uncertainty in politics, breeds uncertainty and volatility in economics and markets. People postpone major purchases until they have a clearer idea of how things will unfold. And businesses too, judge the future and make investment decisions accordingly. But the Debts built up during the 2008 crisis, have still to be repaid, and will now begin to unwind, or lead us into hyperinflation.

Having money in a bank account, that earns interest, is a distant memory for many people, as interest rates around the world have been reduced, eliminated or worse.

Britain’s and Western National Debts, have an interest charge levied on them, which is being, at least in part, controlled by the Federal Reserve, who came to Europe’s aid (again!) when it loaned $15 trillion during the heat of the last financial crisis. Britain too loaded itself up to the neck with debt, to help its banks, and latterly, International Banks from Greece, Spain, Ireland, and Portugal. and its current account is, as I have mentioned an enormous debt of — £1.7 Trillion. At a modest 0.0025% (¼%) that translates as …

Drumroll… £4,250,000,000 per year. (£4.25 billion…) However, even a modest increase to say 2% p.a. over the next 2 years, will likely kill the British economy, and with it, any hopes of a full recovery.

At 2% our debt repayments are: £34,000,000,000 – (£34 billion) enough to build approximately 50 new hospitals and staff them for a few years. Who said being a banker was easy?

But this image from Raoul Pal, tells the even bigger picture (even if it is a couple of years old).

Debt-2-GDP-Ratio

Whose debt is biggest?

The debt to GDP ratio includes pension and other obligations.  Is this why Britain’s politicians are so keen to import foreigners, to help pay off this debt?

Those savers who have worked hard all their life, and tucked away a little for their retirement, are earning precious little from their savings. Funds that perhaps they have ear-marked for a retirement home, a secure retirement future knowing that their money is safe in a Bank, or where they can get at it quickly, in the event of an emergency, to meet unexpected bills are shortly going to experience the greatest loss of value in their lives, through inflation.

In a world where money is finite: interest rates serve the function of allocating money to its competing potential users. Those that require investment money will bid for this scarce resource, driving up interest rates, in times of high demand. This rising interest rate trend signals to the business community, that there is high demand for money, and this can indicate that businesses are expanding, or that competition is increasing (usually early in the market cycle) and those who seek to spend for their current enjoyment, begin to realise that they cannot afford higher payments, and thus this slows the economy as spending is curbed.

When currency is infinite as is with Fractional Reserve Lending: the only brake on increased amounts is the Banker’s concerns as to whether they will get paid back, or not – and thus it might threaten their balance sheet. This leads to booms… and busts.

This has been the state of affairs ever since this practice was formed, but became worse when the world left the Gold Standard, and the U.S. finally severed the last remaining link to Gold on August 15th 1971, when Richard Milhous Nixon, closed the Gold Window.

Almost three years later Louise Auchincloss Boyer, fell from her 10th story window, just days after a story that she was alleged was to be the source of, that “All the Gold in Fort Knox has gone.” Her death was judged suicide… (Link: You can read the full story – Here )

Britain’s debt is even worse than I feared.

Late on Saturday night, I was researching Britain’s National Debt, and to my surprise and horror, I found it was even worse, than I suspected.

Anyone who has a mortgage, or variable rate loan, ought to be on pins and needles, as interest rates are set to rise, for a number of reasons.

Deutsche Bank’s chief economist David Folkerts-Landau just released a scathing report, aptly titled: “The ECB Must Change,” in which he calls the ECB out from a banker’s perspective, which is now eerily similar to a layman’s.

“After seven years of ever-looser monetary policy there is increasing evidence that following the current dogma, broad-based quantitative easing and negative interest rates, risks the long-term stability of the eurozone…

…Already it is clear that lower and lower interest rates and ever larger purchases are confronting the law of decreasing returns…. but the ECB’s response is to push policy to further extremes. This causes mis-allocations in the real economy that become increasingly hard to reverse without even greater pain. Savers lose, while stock and apartment owners rejoice…

Thereby ECB policy is threatening the European project as a whole for the sake of short-term financial stability…. The longer policy prevents the necessary catharsis, the more it contributes to the growth of populist or extremist politics…

A returning to market-based pricing of sovereign risk will incentivize governments to begin growth-friendly reforms and to tackle fiscal stability. Flagging the move should dampen adverse reactions in financial markets.

We believe that normalising rates would be seen as a positive signal by consumers and corporate investors. The longer the ECB persists with unconventional monetary policy, the greater the damage to the European project will be.”

Japanese Rate Rises?

And even in Japan, interest rate rises are being discussed:

Bank of Japan policy board member Takehiro Sato went public in a speech to business leaders two weeks ago. Here are some key quotes showing what amounts to complete opposition to the Bank of Japan’s current course:

“When there is a negative spread, shrinking the balance sheet, rather than expanding it, would be a reasonable business decision… leading to restraining loans to borrowers with potentially high credit costs and raising interest rates on loans to firms with poor access to finance.”

As for those borrowers, think SMEs, entrepreneurs, everyone from the middle-class down, and virtually everyone but the corporate interests that have succeeded in regulatory capture worldwide.

“A weakening of the financial intermediary functioning could affect the financial system’s resilience against shocks in times of stress.”

He also said:

“There is also the risk that financial institutions that have problems in terms of profitability or fiscal soundness will make loans and investment without adequate risk valuation… I detect a vulnerability similar to that seen before the so-called VaR (Value at Risk) shock in 2003.”

Taken together, Mr. Sato is essentially saying that negative rates are stunting the chances of economic growth, removing any chance to soften the blow when it comes, and is setting us all up for wealth destruction across the board, giving policy makers no capability to react if a downturn begins.

Japanese politicians seem to be taking the ball and running with it. A key policy chief of the opposition party is now calling for Prime Minister Abe and the BoJ to begin raising rates.

In particular, the new platform cites how these policies hurt savers, along with its failure to boost inflation, wages, and has a negative crash in trade balances.

And in America too, are Interest Rates set to rise?

Gerardo Del Real, the Outsider Club’s newest expert, is spot on on how this will pan out for the U.S. . Just last week, he had this to say, which bears repeating:

“So what to do? Understand that the big money, the portfolio managers, pension funds, and insurers cannot continue to invest exclusively in negative-yielding assets.

Understand that a trickle of the trillions they manage will work its way to the U.S. markets, the dollar, and gold. Not because they’re gold-bugs, but because they will have no choice.

Understand that of those three options — the U.S. stock market, the dollar, and gold — gold is the smallest market and therefore the most susceptible to the largest moves.

Within the gold market, the junior resource market — especially the junior gold companies — has been absolutely decimated, and provides the best risk-reward proposition.” (See my last post – Apocalypse Now)

Few people are more reviled by everyday people than bankers, and rightfully so.

They hide usury in the fine print and send Court Sherriffs to evict you from your home in their stead.

They distort and manipulate markets for their own gains, from LIBOR, to the gold fix, to silver prices, to exchange rates, and on and on.

Then, with the corruption of a wink and a nod, they use regulatory capture to remove all risk and collect cushy bailouts while manufacturing and commercial jobs disappear, wages shrink, and with it the tax base as neighborhoods fall into squalor.

Throughout the 80s, the North of England – Northumberland, Merseyside, Greater Manchester, South Wales were all hit hard as deep mined coal pits closed, and the industries that had grown up with them, went with them.

A piece written just over 100 years ago, after a Banking Panic in the U.S., brought about largely by the tactics of the Banks, and which surprisingly, our recent “Credit Crunch” appeared to be a mere replication writ large goes as below.

The writer, George Howard Earle, Jr. of the Real Estate Trust Company, in 1908 wrote:

A Central Bank as a Menace to Liberty

The solution of the problem of a central bank, with power to control the currency of the United States, to be at all adequate, must depend upon and be controlled by ultimate political principles.

The same principle that underlies the never-ending conflict between the advocates of a strong centralized government and what are called “states rights,” governs this question.

Taught in the school of experience and adversity, the early English and American patriots learned the salutary lesson that the development of peoples, as well as their happiness, depended more upon liberty – that is, the power to control and govern themselves, rather than to be controlled or governed by anybody else – than upon any other single thing; and they, therefore, in drafting our Constitution, always viewed government as an evil made necessary by the weakness and defects of human nature, and never extended it beyond that necessity.

Under the plan of freedom, of self-reliance, self-dependence, self-government, we have become the greatest, the happiest, the most powerful people of the world; but notwithstanding these proofs to justify the work of the Fathers, we have more and more concluded that we could have done a great deal better.

We are rapidly tending in the opposite direction, which must 506 inevitably destroy liberty by vesting all discretion in some form of central government, rather than in the people as individual, independent entities.

Starting with the theory that government but existed because of the defects of mankind, and was but an evil wherever it exceeded the necessity of restraining evil human tendencies, we have now reached the higher light wherein we produce schemes of regulating everything, until liberty is but a name, and we govern ourselves by theories entirely independent of the characteristics of the people to whom our systems are to apply.

It is difficult to find any one, nowadays, who has not some “counsel of perfection,” and founded on it, some theory of government that would work perfectly with a perfect race, in whom neither self-interest nor passion existed and that, consequently, did not need any government at all.

The same could be said of any central authority, whether in Britain, or further across Europe.

All control passed to others, means they will meddle. And in meddling, they will postpone the inevitable, but each time they postpone, the crisis merely gets bigger, and more unstable. Eventually, there is no-one big enough to stop it.

We will shortly find out, if this will be in the next credit crisis. Those who have salted away bit-coins, gold and silver, will fare best. Those who have borowed to feed their insatiable habit to spend, will not surprisingly, not do well.

Money, real money (Gold and Silver) takes time to make, is hewed from the ground at great expense, and whilst its value varies with the day, the month and the year, it’s value never disappears totally and increases over time – even if in fits and starts..

Credit created out of a Banker’s pen, printing plates, or these days computer, can disappear in a cloud of smoke. Over 200 currencies have disappeared since the dawn of the printing press, and fractional reserve lending, but Gold and Silver are still an ounce of Gold, and a Pound of Sterling Silver, from which Britain’s derived its name, and now our currency takes its name.

Central Bankers, therefore are more the problem, than the cure.

Here, Daniel Hannan – discusses the implications for the future with Emma Reynolds who puts forward the case to remain.. Daniel Hannan puts forward his reasons for wishing to leave.

A vote to Remain is a vote for…
Big Government
BIG Corporations
BIG Banks
and BIG BROTHER.

Britain, grew into the world’s superpower, in the 1800s, and now leader of the 64 nation Commonwealth, by extolling those things that we Brits hold dear. The law grew up from natural laws – “Common Law”, where people devised the behaviours they supported, and those they despised. Law was a higher source of guidance in man’s affairs, and it wasn’t handed down from  “on high” – i.e. from those holding the reins of power – as has been the case in most of the world – and particular the Eurasian legal systems – Roman Law, Napoleonic Law, or Regal Law.

This piece lays out the historical context.

Apocalypse Now?

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GlobaDebtlPyramid

The image above shows how all the wealth of the world, is really built on an inverted pyramid of real wealth. That means, all those products above the green zone, are not real wealth, but paper claims on wealth. When the next financial crisis occurs, the value of all those products, will equal the value of those in the green-zone. They’re all derivatives – which means either the derivatives lose their value, the Gold and Silver raises its value, or some combination of the two.

Our figure heads, whether of Royal Blood, Presidential or Prime Ministerial appointees, have a large coterie of advisers, and those who pull the strings and influence events, behind the scenes.

Since, I began studying Markets, Politics, and Economics, in my student days in the 1980s, there has been a growing awareness of the Deep State. And those bankers who are part of it, manipulate the currency for their own ends. LIBOR, EURIBOR, COMEX prices and even asset values.

See: Banking Puppet-Masters

The power behind the throne, goes back far longer though, than most people recognise, and this group of people dictate the way that democracy, and politics is carried out from behind the curtain, particularly in the U.S. and the British upper class, who before them, were essentially the experts at this behind the door control.

During the early days of Banking, many of these Banking families – Rothschild, Morgan, Chase, Barclays, Seif, Warburg, Baring, and others, provided the finance, that allowed (or denied) what those figure heads could do.

In the days of the Royal Households of Europe, this essentially meant the ability to raise finance to fund an army, and wage war. For the financiers, it often meant funding both sides, and backing both horses in a two horse race.

It was usually a winning proposition for the bankers, whoever won the war. The debt remained, due to capitalism’s basic principle – “The Law of Contract” – even if the basic tenets of contracts have been watered down over many years, to allow people (mostly women) to change their minds… as on-line retailers are currently finding to their cost.

Baron Rothschild, famously got wind of Wellington’s win at Waterloo in 1815, ahead of the rest of the City of London, and sold off his holdings. Only for those who saw him, to react in his wake and follow suit. Rothschild then went on a wild buying spree, buying up assets for essentially “pennies on the dollar” as the Americans might say. When the dust settled, a huge transfer of wealth had occured from those shareholders who sold to the Baron and his family.

And so the model that bankers follow has remained to this day. Bankers know more about the inner financial position of their clients, than any other group of individuals. They wouldn’t use that knowledge to strike, when the iron is hot… Would they?

Banks loan out currency driving up property and corporate asset prices to unsustainable levels, only for the the currency supply to tighten, and thus cause a crisis, so that assets get sold off on the cheap. In the most recent example, we saw house prices rising inexorably, as Banks increasingly lent to those who might be considered high risk – the “sub-prime” market many have heard of. They then took advantage as the dead hand of property – mortgage holders took advantage as buyers defaulted on their mortgage payments, and the banks got thousands of homes on the cheap. Hank Paulson, allegedly made $5 billion in the sub-prime mortgage debt bomb. In a world without fiat currency, interest rates would adjust according to monetary demand, and cool things, or only allow those projects with highest return to be funded.

As an example, in the last crisis, bankers loaned to businesses such as Neil Mitchell, who bought a hotel, using finance and set about redeveloping it. In the final weeks before opening, his Bank, HSBC, used their restructure arm – and removed his financial support, causing his business to fail before it had even begun trading. They took the mortgaged asset (his hotel), completed the minor works still left to do, and now run a Hotel making them an income from all Mr Mitchell’s hard work. Imagine how frustrating it is for him, and all the other business owners like him who don’t have access to the information, that the Banks have, and withold from their sheep, waiting to be sheared in the next financial crisis.

During the final stages of the previous supercycle of commodities, that lasted from the mid 1960s to the early 1980s (about 18years) prices of most commodities rose manyfold. and in the Banking Sector, quite a few mid-size Banks folded in the 1973 Banking crisis. Then the UK. FT-30 stock market famously fell 83% reaching 156 and the UK government felt obliged to prop up failing industries and nationalised many of them – British Steel, British Airways, British Leyland, to name but a few.

Since the early 1980s, the thinking has changed – failed businesses should be sold off to their stronger competitors, as the Banks and other financial institutions – AIG, Fannie Mae, Freddie-Mac, Bear-Stearns, Lehman Bros, Lloyds, TSB, RBS, Northern Rock, and others were. (Though recent news regarding Bear-Stearns may concern many of its former investors.)

I’ve been thinking something similar to the 1970s will happen again, ever since I began studying this commodities super-cycle at the start of the millennium…Back then, Gold, and Silver went up just as it did in the 70s. Inflation took off in the late 60s, and early 70s, rising almost 8-fold for Gold, before pulling back by almost half.

Over the next 4-5 years (1974-79), prices fell first by close-to 50%, and then from 76 onwards, began rising, shallowly at first, but with increasing momentum, rising 8-fold again from the mid-cycle lows to peak at $850/oz in 1981 for Gold, and close to $50 for silver..

That, by my reckoning, if repeated, would take us to circa $8,500 for Gold, and $500 for silver by 2018/19 or in the years either side of these..

I put that forecast into print (on-line of course) as long ago as 2005. But as Jim Rickards and James Dale Davidson state, the next FOMC meeting on June 16th, will be critical. If they raise rates, this will suggest that the economy is healthy (Ha!) If not, we may see a major sell-off in the markets, preparation for QE4.. and that will probably send Gold (and Silver) eventually skywards…

Jim Rickards has even gone on record as suggesting a price for Gold of almost $14,500 for Gold. Wherever it goes, the price will be multiples of where it is now.

And this image below – compares the cycles from 68-76, with the period from 2000 – 2014. Anyone cannot fail to notice the similarities, merely the length of time is different.

Gold Price - 1968-2014

It has often been said, that history repeats itself, and many say that it doesn’t repeat, but it rhymes. The difference is, this time it really IS different… In the 1970s the super-cycle was essentially limited to Europe and the English speaking peoples – North America, Australasia, Southern Africa, and the suppliers of those commodities in Africa, who borrowed heavily as commodities rose, and then had control of those assets sold when commodity prices inevitably fell in the early 1980s causing national solvency crises in those indebted countries…This time the whole world, with 2.5 billion Asians and another several hundred million South Americans will be involved.

IF, or rather WHEN, the global meltdown begins, the governments and their Central Bankers, will have two options…

1. Do nothing (Unlikely)
2. Intervene with more monetary stimulus.

It is my view (and that of many others) that they will intervene.

What might trigger the Global Collapse?

As I’ve said before, a decision by Saudi-Arabia to sell oil in a currency other than dollars will bring an end to the agreement put in place in 1975, which propped up the dollar, and made it King Dollar.

The decision by the KSA, might (almost certainly, would) incur the wrath of the US of A, so along with an agreement to sell in an alternative currency, would also need some other nation’s military to back it up… China? Perhaps, but unlikely – at least not yet. Iraq’s leader Saddam Hussein, and Libya’s leader Colonel Muammar el-Qaddaffi, both attempted to sell oil in currencies other than dollars, and the outcome is there for all to see. A similar situation might prevail in the Saudi peninsula, which could trigger a spike in oil prices if major oil facilities were involved, and this would disrupt world markets and possibly trigger the meltdown.

Another potential trigger is a major nation defaulting on a payment to the Central Banks and the bond holders – such as triggered the Cyprus banking collapse, and the next domino Greece which put the PIIGS in jeopardy as the Banking crisis unfolded…

Another potential trigger is a major bank becoming insolvent. This could be caused because a business or country, with bank support, and perhaps large outstanding loans, fails, causing a major loss, over and above the banks ability to absorb those losses, causing a cascade.

It might be a major loss on a trade by a trader (similar to the London Whale) which affected JPM-Chase costing it $6.2billion in 2012, or as was directly the cause of the Barings Bank failure in February 1995, when Nick Leeson lost £827 million (circa $1.19 Billion at current exchange rates) a Bank that had held the English Monarch’s finances since King George V.

However, less well known according to Wikipedia, is the allegation that Barings Bank’s near insolvency in November 1890, as a result of a debt crisis in Argentina, caused the credit crisis of the early 1890’s and quoted from a book by John T. Flynn – written in 1932 “The preceding year [in 1890] the great Baring failure had shaken London and the rest of the financial world. America was shielded from its most virulent effects because of a bountiful wheat crop. But the following year all the forces of business disturbance were assembling, though the country as a whole hardly realized it. Gold was leaving the country at an alarming rate.”

As usual, when the financial world faces a crisis, Gold [and silver] is the safe haven of choice of large swathes of the investing world. And this sudden interest, drives prices higher… often much higher.

Barings also stands accused of supporting the south in the American civil war, and the Louisiana purchase, plus supporting France in the Napoleonic wars. As I have said, Banks will support whatever is in their interest, whether that is good for the rest of us – or not.

A solution going begging?

In my last post, I referred to a producing junior Gold miner, quoted right here in the UK. A company, I have been following for some 12 years. A company that has seen many twists and turns as management changes, and investments in different countries and ore bodies has impacted the scale and ownership of this company’s assets. But Geopolitics has also been a major factor. However, with the only mine, smelter and refinery of its type in the whole of sub-Saharan Africa, which to build such a facility from scratch, would run to $500-750 million.

The company has land holdings in 5 countries – with 2 producing mines. Not all of which are wholly owned, but like in many jurisdictions, jointly owned to a greater or lesser degree with state governments.

The producing Gold mine, comprises a shallow underground operation, currently mining at a depth of circa 200m and processing ore through a single facility utilising a combination of crushing, conventional sag milling, combined gravity and CIL process, electro-winning and bullion smelting.

A recent fund raising, to allow phased refurbishment of plant ran in two phases: the re-capitalisation of the mining fleet and refurbishment of one of the two mills, brought the mine back into production targeting a production rate of 2,500 oz of Gold per month (about 30,000 oz per annum). This was exceeded with Gold production re-commencing in October 2009, and the production for the financial year to end of the Financial year 2014 was almost 59,000 oz of gold, down slightly, from the previous year. Figures for 2015 are due in several weeks, and thus will give us an indicator of current affairs and cost structure.

The second phase of the programme included, refurbishment of the second mill and expansion of the leach circuit. In June 2011, the Company announced that the Phase 2 construction programme was completed with Mill 2 being successfully commissioned on time and within budget. Further, in March 2014 a pilot plant to recover gold from 13Mt of tailings was commissioned.

In its current mines, it holds reserves and resources totalling in excess of 3million ounces, in 2 countries, with controlled costs, and evidence of more potential in several of its holdings.

A recent management change has also reduced costs, such that all-in costs (C3) are now almost at break-even (@ circa $1250/ozt) Though of course, Gold’s NY price rose, earlier in the year, breaching $1300 before Janet Yellen’s dovish speech suggested that a rate hike was on the cards, and the markets saw this as an opportunity to buy the dollar. This strengthened the dollar on international currency markets, and Gold fell back as a result. Currently close to $1210/ozt (02-Jun-16). But, if the expected rate hike doesn’t materialise, it will also be taken by the markets as economic weakness, and a sign that more QE may be required. That may cause a sell-off in the dollar, and will send Gold up again.
Few opportunities exist in life to make huge sums of money, but this is one such time.

If you want to know more about this junior miner, and its prospects then respond in the comments box below, supplying your e-mail, and I will supply a fuller picture, details in reply.

The Road To Serfdom?

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China’s Gold Hoard – is bigger than they claim – MUCH bigger.

In the last 12months, the World economy, has taken a distinct turn for the worse…Starting last summer, the Federal Reserve announced it would begin normalising interest rates. (read: raising them, by baby steps)

They intimated in FOMC minutes, last year that they expected to increase rates by 4 times in the next twelve months. As it is, some nine months later, they have managed to raise by just 0.25% and they now feel that they will manage only 2 increments by year end.

As the Fed Funds rate was raised by 25 points last year, the DJIA fell from its new all time high at almost 18,300 in early May 2015 to 15,670 in August 2015, and early February this year, before bouncing higher on interest rate movement

However, several commentators – Doug Casey, Jim Rickards, Bill Bonner, James Dale Davidson and others have commented that many large corporations are actually borrowing money at low interest rates to buy back their own shares, to maintain the illusion of prosperity, by reducing the number of shares in issue, which increases the value of those shares that remain.

The FT100 which peaked at just over 7,100, for only the second time since 2000, in 2015, has generally bounced around in a downward direction, reaching 5,500 in February this year, before some of the Brexit talk began in earnest, in recent weeks, and bouncing up to 6,400 mark in April. However, recent Brexit fears have again driven markets down towards 6,250 (6,262.85 as I write), and the trend appears down.

Indices around the world rose yesterday, except in Turkey, Argentina, China and Colombia where they continued their downward slide. Several Economies in the Americas – notably Brazil and Venezuela, are experiencing rising inflation. Indeed, a Sky News report, quoting the IMF suggested inflation in Venezuela, could rise to 4,500% over the next 3 years, unless something is done to change things.

Socialism, is once again being proven to be a failure. This has echoes of the 1970s, when Britain too faced its own crisis. And America too seems to be heading down this road.

See this:

A Letter to America… Don’t follow the European model… Daniel Hannan – MEP.
(A warning also to Remainians?)

In Venezuela, as Britain then, they have huge reserves of oil, but as new exploration, and fracking – particularly in American states, raised production, their levels last seen 30-40 years ago, at around 9-10 million bopd.

Prices went from $121 bbl to $28, over the winter period, but as the traditional summer driving season begins in America, coupled with rising vehicle numbers in India and China, and some slacking off of production, as several American oil producers have succumbed to the lower prices, oil has bounced back to the $48/barrel mark, and should remain in this $50-70 region for the foreseeable, unless, some of those new producers collapse even at these prices, and demand remains firm.

Both Brazil’s and Venezuela’s oil industries have suffered partly to corruption issues, but also there appears to be some involvement by America’s dark state, at least according to Nomi Prinz, ex Goldman-Sachs employee, and now author of several books as she appeared with Max Keiser, on the Keiser Reporton Tuesday.

All it will take is one large domino to fall in the next few weeks, and the prediction by James Dale Davidson (See Pic) will no doubt come to fruition.

EconomicPrediction-May-24th-2016

The IMF appears to be very concerned about world events spinning out of control, as the chief plate spinner extraordinaire – Madame Lagarde – appears to be struggling to keep all the world’s plates from crashing. She will undoubtedly have to run to keep all these increasingly unstable plates on the top of their poles.

Talk in the markets has also begun discussing QE4… Is this likely, as Gold has stumbled at the $1300 level, and pulled back? From a trading perspective, the Gold (AU) RSI (Relative Strength Index) hit 70, which suggests a temporary over-bought status, but this pull back will prove ephemeral too – perhaps lasting until the end of summer.

As George Soros, Hank Paulson, China, India, and many American Billionaires wiith their finger on the pulse, sense the mode shift, and begin buyng Gold again, while mainstream buyers sit on the sidelines – for now. However, the World Gold Council reported the strongest first quarter on record for Global Gold Demand. And the COMEX ratio of owners to ounces hits an new all time high – 500:1, meaning only the first person in 500 will get physical possession of their physical ounces, if they demand delivery. The rest will go begging.

When the general public gets involved, in this new gold bull, this will translate into direct increases to the bottom line for Gold miners, and the sector that gains most on such moves are the juniors. One such junior producer in Africa, has already experienced an almost 100% improvement over the last 5months from its extreme lows.

Although four nations already have taken steps down the road of Negative Interest Rates (NIRP) – Japan, Switzerland, Sweden and Denmark, with the U.S. also now considering this, if this happens, the rush to Gold (And by association – silver) will ensue, and the rise I predicted some years previously to happen in the 2018-19 period will come true..

I will be discussing the above miner in more detail in a future post.

But Jim Rickards latest prediction for the Gold price is over $14,400 per ounce.( See below)

EconomicPrediction-May-25th-2016

I think he may be slightly over pessimistic, but not by much.

And all other commodities will rise in similar fashion. If you haven’t got Gold, then your Dollars, Pounds, Yen or Yuan, or whatever currency you use, will be worth concomitantly less. and even a median income will feel like serfdom.

Time to put circa 20% of your wealth into precious metals. (in my humble opinion.)

But here Daniel Hannan, explains how the English speaking peoples made the world. (Even if some of them, are out to steal it from us)

 

Until next time.