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“This Is A Scary Time” – CEO Explains The Single Biggest Reason Why People Are Buying Gold And Silver

May 16, 2016

“This Is A Scary Time” – CEO Explains The Single Biggest Reason Why People Are Buying Gold And Silver

We can talk about technical charts, supply and demand fundamentals, and price manipulation, all of which point to significant increases in the value of gold and silver for the foreseeable future.

But according to Golden Arrow Resources CEO Joseph Grosso, who is credited with the discovery of the largest silver deposit in history, the single biggest reason that retail investors, institutional players and governments around the world are gobbling up physical precious metals, resource stocks and ETF’s at unprecedented levels is that they are scared to death of the state of the global economy and where it will go next.

Like an expecting father waiting for five years to see a baby being born, we are at the inception of a mining economy… There is a pause, a slight pause towards the U.S. dollar and that pause is allowing the oldest currency in the world, gold and silver [to rise] and that is now in favor.

…Because there is fear. When there is fear, that’s when gold does best.

… Right now, this is a scary time… People want to hop out [of traditional assets] and find safety in precious metals.

In the following interview with SGT Report the level-headed Grosso explains that there is still hope for America and the U.S. economy, but there will be a lot of pain before it gets better, the consequence of which is an environment that has historically boded well for precious metals as safe haven assets.

(Watch at Youtube)

…click on the above link to read the rest of the article…

Economic Collapse Logistics For The Government

May 14, 2016

Economic Collapse Logistics For The Government

When a national currency collapses, the government goes into survival mode and does what is necessary to insure its continued existence. The state power becomes all important and citizens become expendable. The state exists for it’s own fulfillment.

When the monetary system collapses along with the banks, the government will still need a way to pay government employees to insure they continue enforcing the governments will. If all government employees suddenly decided to stay home the few officials that remained at their desk would be ordering 300 million people around with no way to enforce their orders. To maintain control of the population it is necessary for government minions to continue doing their job of enforcement.

This means the government would need the means to continue fulfilling the needs of government employees to insure their compliance and obedience. As long as people get the things they need to survive day to day they will continue to do as ordered to continue that supply.

The government would need to insure that a payment system and banking system would remain functioning after a collapse. The banking system may not look like the current one but something would have to take it’s place. Once the currency has failed it would be necessary for the government to issue a new currency. It may not be accepted by the majority but it is only necessary for it to be accepted by the government minions. This would allow the government to remain in control.

If the government employees know they will still be able to get food, clothing, gas and other items they need when normal citizens cannot, they will be inclined to stay on the job and do the governments bidding in order to maintain their standard of living. This would be a necessary control mechanism in the event of a collapse.

…click on the above link to read the rest of the article…

The Strange Idea of Negative Interest

April 14, 2016

The Strange Idea of Negative Interest

This article addresses the role of demurrage (negative interest) in the design of new currencies. But it takes a roundabout route with diversions around the zero and negative interest rates being currently applied to fiat money; and a detour via positive interest which is itself a stranger idea than we have been led to believe. It suggests that demurrage is worth a place in the designer’s kitbag, but not for the reason normally postulated.

The basic idea of interest is simple. It’s a special type of rent. If we loan out something we have no immediate need for ourselves, it seems reasonable that the borrower should pay us rent for its use. So interest is a rent on money.

A fundamental problem with the rent rationale in general occurs when the ‘property’ concerned is a public good – a commons which has been enclosed – or where it has been secured by violence or some other unfair means. In that case we might feel a little aggrieved at having property we feel we should have a degree of proprietorship over sold or rented back to us. This is the way many people feel about water for example.

Another issue arises when the property owner has (and will have) no need for the property themselves and have acquired it only for its rental value. Seeking a store of value via investment is understandable but when the asset class created is a ‘stuff of life’ good, tensions are sure to arise because investors are affecting the price of essentials. The more they can corner the market the more they can increase the cost of basic living. This seems to be increasingly the case with housing.

…click on the above link to read the rest of the article…

Adam Trexler: A New Way to Hold Gold (2016 Update)

April 11, 2016

Adam Trexler: A New Way to Hold Gold (2016 Update)

Right alongside the bills in your wallet

What if you could carry and exchange gold in the exact same manner as you do with the dollar bills in your wallet?

Two years ago, we introduced the precious metals community to a company called Valaurum, which has developed a technology that’s making this possible.

From that write-up:

Democratizing Gold

In short, a fractional gram’s worth of gold is affixed to layers of polyester, creating a note – called an “Aurum” – similar in dimension and thickness to a U.S. dollar bill. This gold (usually 1/10th or 1/20th of a gram) is commercially recoverable. So an Aurum offers similar potential as a coin or bar, in terms of providing a vehicle for storing and exchanging known, dependable increments of precious metals – just in much smaller (and more affordable) amounts than commercially available to date.

The big idea here? In a world where a 1oz coin of gold costs over $1,200, an Aurum will let you hold a few dollars’ worth of gold in a single note. If you’ve got pocket change, you can be a precious metals owner.

And you don’t have to change your behavior. You can store and transport an Aurum in your billfold along with your dollars.

Understanding the Aurum

As the saying goes, a picture’s worth a thousand words. Here’s a picture of an Aurum designed for Peak Prosperity that the Valaurum team produced for us:

You’ll see that with even just 1/20th of a gram of gold involved, it’s enough to make the Aurum appear to be “made of” gold. The characteristic luster, color, and shine of the 24-karat gold used is immediately apparent.

…click on the above link to read the rest of the article…

Japan Desperately Needs a Stronger Dollar, China Desperately Wants a Weaker Dollar: The Fed Can’t Please Both

April 10, 2016

Japan Desperately Needs a Stronger Dollar, China Desperately Wants a Weaker Dollar: The Fed Can’t Please Both

The FX market is about to blow up in the Fed’s face, and there’s nothing they can do about it.

Foreign exchange (FX) is a zero-sum game: if one currency weakens, another must strengthen. Since the value of a currency is relative to other currencies, all currencies can’t weaken together: at least one currency must strengthen as others weaken.

That one strengthening currency has been the U.S. dollar (USD) since mid-2014. The USD has strengthened by 20%, while the Japanese yen and the euro weakened by 20%. Many developing-economy currencies (rand, peso, real, etc.) have fallen off a cliff, suffering 40% to 50% (or even more) declines against the U.S. dollar.

Why does any of this matter? Simply put, the stock market is a monkey on a leash held by central banks–just give the leash a little tug, and the monkey jumps. Bonds are a gorilla–harder to control, but still manageable–but foreign exchange is King Kong, trading $5 trillion a day and impossible to control beyond short-term manipulations.

Currencies set the underlying trend, not just for bonds and stocks, but for entire economies. A weakening currency makes a nation’s exports cheaper in other countries, and the theory is that expanding exports will boost the overall economy–especially if that economy is stagnating or in recession.

A weakening currency also makes imports more expensive in the domestic economy, pushing inflation higher–precisely what every central bank in the world desires, on the theory that inflation will make people spend more (since their money is losing value) and reduce the costs of borrowing (which is presumed to stimulate more borrowing and spending).

This is why everybody seems to want a weaker currency. But as noted above, every currency can’t go down; if some weaken, others have to strengthen.

…click on the above link to read the rest of the article…

Gold – The Best Defense Strategy

April 10, 2016

Gold – The Best Defense Strategy

The War on Cash is on!

If you are used to making visits to your bank to make your credit card payments, you may find this no longer an option in the future. Some banks are no longer accepting (or limiting their acceptance) of cash deposits. The war on cash forges on. Paper money, which is indeed more or less worthless, is slowly being taken out of circulation and being replaced by digital currency.

Burning_Money

Photo credit: Stephen Krow

This shift presents of course the same fundamental problem as paper money itself: “digital money” is also not backed by gold or other precious metals or any asset representing real value. The whole concept of digitizing our transactions is being marketed as a convenience, a hassle-free payment method and a transparent, easy new way to smoothly run our lives and businesses, without the burden of carrying cash around.

However, the realistic flip side of this joyful argument is more ominous than we might at first realize: Now, account monitoring or freezing, and confiscations will be easier than ever. And of course, by eliminating cash, central banks are getting rid of the last existing barrier to negative interest rates.

The Global Economy is Stuck… Gold is on a Roll

In the first quarter of 2016, the gold price rallied by 14.3%, and in February alone, it jumped 9.6% – this was the highest single-month increase in four years. 2016 has so far not shown any positive changes on the economic front. Growth remains rather slow, much slower than projected by government authorities and the various mainstream market experts and gurus. So what has driven the demand for the precious metal? It goes back to the basics: Risk!

Gold, June 2016 futures, daily – click to enlarge.

…click on the above link to read the rest of the article…

Jim Rickards: The New Case For Gold

April 4, 2016

Jim Rickards: The New Case For Gold

A powerful set of arguments for owning the yellow metal

Monetary expert Jim Rickards returns this week to share the insights from his latest work The New Case For Gold, a detailed and highly-researched study of the fundamentals likely to drive the price of gold bullion in the years to come.

Rickards is quite confident that the price is going higher — much higher in fact — as the current world fiat currency regimes falter, to be replaced by ones backed (at least in part) by bullion.

On the way to that outcome, expect the price to be subjugated to the interests and aims of the largest players on the geopolitical chessboard:

Is there gold price manipulation going on? Absolutely; there’s no question about it. That’s not just an opinion.

I spoke to a PhD statistician who works for one of the biggest hedge funds in the world. I can’t mention the name but it’s a household name, you would know the fund. This guy is a PhD statistician. He looked at COMEX opening prices and COMEX closing prices for a 10-year period and he was dumbfounded. He said…This is the most blatant case of manipulation I’ve ever seen. He said if you went into the aftermarket, bought after the close and sold before the opening every day, you would make risk-free profits. He said statistically that’s impossible unless there’s manipulation going on.

I spoke to Professor Rosa Abrantes-Metz at the New York University Stern School of Business. She is the leading expert on globe price manipulation. She actually testifies in some of these gold manipulation cases that are going on. She wrote a report reaching the same conclusions. It’s not just an opinion, it’s not just a deep, dark conspiracy theory. Here’s a PhD statistician and a prominent market expert lawyer, expert witness in litigation qualified by the courts, who independently reached the same conclusion.

…click on the above link to read the rest of the article…

The Future of Money

April 4, 2016

The Future of Money

The cartels and state organs are frantically trying to co-op, outlaw, corral or control this disruptive technology.

To say that the future of money is blockchain-based crypto-currencies and payment platforms is to state the obvious nowadays. If this wasn’t the case, then why are Goldman Sachs et al. (i.e. the global too big to fail banks) rushing to patent their own proprietary versions of blockchain technologies? Why are banks investing heavily in companies that are trying to establish a global blockchain platform for banks?

The reason is that banks understand their core reason to exist is threatened by peer-to-peer, decentralized payment platforms and currencies. If payments no longer need to be routed through a centralized trusted institution, then one core function of banks disappears.

If peer-to-peer lending and securitization becomes easier and cheaper due to the blockchain, then banks’ function of allocating capital also vanishes.

Gordon White and I discuss The Future of Money (and its connection to meaningful work) (1:11 hrs; be forewarned we cover a wealth of topics, from philosophy to higher education to gardening to creating value in an economy that is being disrupted.)

Since money–currency that serves as a medium of exchange–no longer needs to be issued by central banks/states, central banks/states are also in danger of being mooted/bypassed as enterprises and people realize they can escape the relentless destruction of their purchasing power by inflation-seeking central banks/states.

If you aren’t familiar with blockchain technologies and crypto-currencies, and how these innovations are disrupting centralized banking and state-issued currencies, here are a few articles to start with:

Why Wall Street Is Embracing the Blockchain—Its Biggest Threat

…click on the above link to read the rest of the article…

The Pitfalls of Currency Manipulation – A History of Interventionist Failure

March 30, 2016

The Pitfalls of Currency Manipulation – A History of Interventionist Failure

The G-20 and Policy Coordination

Readers may recall that the last G20 pow-wow (see “The Gasbag Gabfest” for details) featured an uncharacteristic lack of grandiose announcements, a fact we welcomed with great relief. The previously announced “900 plans” which were supposedly going to create “economic growth” by government decree seemed to have disappeared into the memory hole. These busybodies deciding to do nothing, is obviously the best thing that can possibly happen.
Yuan, weekly – since the sharp move in USDCNY in August, market participants have begun to worry about the yuan and China’s shrinking foreign exchange reserves – click to enlarge.

There have been rumors though that they did at least strike some sort of sub rosa agreement with respect to the future course of yuan manipulation. In other words, some kind of policy coordination between China and other major currency issuers has quite possibly been agreed upon, even if only tacitly. Officially, China merely used the occasion to “reassure trading partners on foreign exchange”:

“Chinese policymakers on Thursday ruled out an imminent devaluation of the yuan as they seek to reassure trading partners ahead of the G20 summit that they can manage market stability while driving structural reforms.”

When global stock markets swooned in late August 2015 and again in January 2016, the decline in the yuan’s exchange rate was widely blamed as the cause. Considering various central bank policy decisions announced since the G20 meeting, it does appear as though a coordinated move aimed at halting the yuan’s slide and support wobbly risk asset prices has been underway.

…click on the above link to read the rest of the article…

Hugh Hendry: “If China Devalues By 20% The World Is Over, Everything Hits A Wall”

March 26, 2016

Hugh Hendry: “If China Devalues By 20% The World Is Over, Everything Hits A Wall”

Once upon a time Hugh Hendry was one of the world’s most prominent financial skeptics, arguing with anyone who would listen that the status quo is doomed and that central planning will never work.

Most famously, back in 2010 during a BBC round table discussion with Jeffrey Sachs and Gillian Tett when discussing Europe’s crashing experiment with the single currency, he said that we should “purge this system of its rottenness. Let’s take on a recession. It’s going to be tough, people are gonna lose their jobs. They are going to lose their jobs anyway. We can spread this over 20 years, or we can get rid of it over 3 years” before concluding “I recommend you panic.”

Ultimately everyone did panic, which led to the single biggest episode of global QE and negative rates ever seen, resulting in ever louder speculation even among the most “serious” people that central bankers are now powerless.

But perhaps most notably, Hendry was one of the biggest China bears, certain that the country’s massive overcapacity, insolvency and bad debt problems will result in disaster (back then China only had about 200% debt/GDP, it has since risen to over 350%). His Chinese skepticism led to his fund generating a 40% profit by late 2011.

And then after a poor two year performance spell, Hendry had a historic burnout and threw in the towel on bearishness, infamously saying he can no longer “look at himself in the mirror“:

“I may be providing a public utility here, as the last bear to capitulate. You are well within your rights to say ‘sell’. The S&P 500 is up 30% over the past year: I wish I had thought this last year… Crashing is the least of my concerns.

…click on the above link to read the rest of the article…

Presenting The Complete Global Currency Swirlogram

March 25, 2016

Presenting The Complete Global Currency Swirlogram

In case you missed it, DM central banks are locked in a truly epic FX deathmatch.

Sluggish growth and trade and the attendant global deflationary supply glut have left the world stuck in a nauseating, perpetual hangover from the financial crisis. Subpar inflation and disappointing growth have become the norm in developed markets and that’s lured central bankers into a mad Keynesian dash for the bottom.

The Fed got a head start on the race in 2008 and so naturally, the FOMC is set to try and normalize first. Unfortunately, dollar strength plays havoc with an EM complex that’s already coping with collapsing demand from China, a cloudy outlook for commodity currencies, and a laundry list of idiosyncratic domestic issues (see Turkey and Brazil for instance).

And so, in this increasingly confusing environment wherein one round of DM easing begets another and wherein strange dynamics persist such as the perverse trading pattern of the BRL- which rallies every time the government looks set to collapse entirely only to be reined in by central bank sales of reverse FX swaps so excessive currency strength doesn’t keep the CA from adjusting – we present the following swirlogram from Deutsche Bank whose analysts have taken the average of several models to determine where the world’s currencies stand on the spectrum from overvalued to undervalued.

Average:

New Rules for the Monetary Game

March 21, 2016

New Rules for the Monetary Game

NEW DELHI – Our world is facing an increasingly dangerous situation. Both advanced and emerging economies need to grow in order to ease domestic political tensions. And yet few are. If governments respond by enacting policies that divert growth from other countries, this “beggar my neighbor” tactic will simply foster instability elsewhere. What we need, therefore, are new rules of the game.

Why is it proving to be so hard to restore pre-Great Recession growth rates? The immediate answer is that the boom preceding the global financial crisis of 2008 left advanced economies with an overhang of growth-inhibiting debt. While the remedy may be to write down debt to revive demand, it is uncertain whether write-downs are politically feasible or the resulting demand sustainable. Moreover, structural factors like population aging and low productivity growth – which were previously masked by debt-fueled demand – may be hampering the recovery.

Politicians know that structural reforms – to increase competition, foster innovation, and drive institutional change – are the way to tackle structural impediments to growth. But they know that, while the pain from reform is immediate, gains are typically delayed and their beneficiaries uncertain. As Jean-Claude Juncker, then Luxembourg’s prime minister, said at the height of the euro crisis, “We all know what to do; we just don’t know how to get re-elected after we’ve done it!”

Central bankers face a different problem: inflation that is flirting with the lower bound of their mandate. With interest rates already very low, advanced economies’ central bankers know that they must go beyond ordinary monetary policy – or lose credibility on inflation. They feel that they cannot claim to be out of tools.

…click on the above link to read the rest of the article…

Money is not a store of value. It is a claim upon value

March 15, 2016

Money is not a store of value. It is a claim upon value

Note: This was originally published as a response to the Aeon Conversations piece ‘What is Money‘

Money is not a store of value. It is a claim upon value. This might sound like pedantic semantics, but it is crucially important, especially if you’re trying to alter how it works.

Imagine a Coca Cola bottle with Coke in it. That bottle is a store of value. If I open it and drink the Coke, it will kickstart energy processes in my body and help me to carry on surviving. Now imagine a piece of paper next to the bottle that says ‘whoever holds this is entitled to claim this bottle of Coke’. That’s a claim upon value. If a group of people come to believe in the validity of that claim, the note can be passed around as a means to metaphorically ‘transfer’ Coke value, or – more accurately – to transfer access to Coke value. That’s then a form of money.

The fundamental difference between the note and the Coke can be tested by a simple experiment. Burning them. Imagine I drop the Coke into a furnace and it evaporates away. Nobody can ever drink it now, and we have destroyed value. The note is simultaneously rendered meaningless. It’s just a piece of paper saying you can claim a non-existent thing.

Now imagine that instead of incinerating the Coke, I burn the note instead. The Coke remains, and no value is destroyed. All that has happened it that I’ve destroyed my claim to that value.

…click on the above link to read the rest of the article…

Will Gold and Silver Become the Underground Currencies of the Future?

March 15, 2016

Will Gold and Silver Become the Underground Currencies of the Future?

QUESTION: Martin … the reasoning behind goldbugs … advising people to buy gold to thwart the cashless society that govts will soon impose on us all. Do you think gold and silver will become the underground currency of the alternative economy as people try to get around the official cashless economy or not?

thanks
Regards
P

ANSWER:They probably will to some extent, but it will be very limited. Gold and silver have lost their mobility. You can no longer hop on a plane with a briefcase full of metal. The more likely outcome is that gold and silver will simply be a hedge against government. It is unlikely that everyone will simply be using them at the local Starbucks.

Government will make transactions in gold or silver illegal and equivalent to money laundering. These people are not about to let anything circumvent their dreams. Nevertheless, their plans are by no means sustainable. The more likely outcome will be that they collapse and we move to some new political system. However, keep in mind that this could take until 2032 for a complete reboot.

In France, a train that passes through Switzerland and Liechtenstein is routinely stopped. The French financial police enter and search bags and luggage for valuables. You cannot travel with valuables worth more than $10,000. They will confiscate whatever they can. In Italy, if you look like you have a lot of gold chains on they will pull you over and weigh them.

The likelihood that you will be able to travel with gold is about zero. The likelihood that you will be able to go to the local grocery store and buy food with silver or gold coins is also zero.

…click on the above link to read the rest of the article…

2008 Revisited?

March 6, 2016

2008 Revisited?

NEW YORK – The question I am asked most often nowadays is this: Are we back to 2008 and another global financial crisis and recession?

My answer is a straightforward no, but that the recent episode of global financial market turmoil is likely to be more serious than any period of volatility and risk-off behavior since 2009. This is because there are now at least seven sources of global tail risk, as opposed to the single factors – the eurozone crisis, the Federal Reserve “taper tantrum,” a possible Greek exit from the eurozone, and a hard economic landing in China – that have fueled volatility in recent years.

First, worries about a hard landing in China and its likely impact on the stock market and the value of the renminbi have returned with a vengeance. While China is more likely to have a bumpy landing than a hard one, investors’ concerns have yet to be laid to rest, owing to the ongoing growth slowdown and continued capital flight.

Second, emerging markets are in serious trouble. They face global headwinds (China’s slowdown, the end of the commodity super cycle, the Fed’s exit from zero policy rates). Many are running macro imbalances, such as twin current account and fiscal deficits, and confront rising inflation and slowing growth. Most have not implemented structural reforms to boost sagging potential growth. And currency weakness increases the real value of trillions of dollars of debt built up in the last decade.

Third, the Fed probably erred in exiting its zero-interest-rate policy in December. Weaker growth, lower inflation (owing to a further decline in oil prices), and tighter financial conditions (via a stronger dollar, a corrected stock market, and wider credit spreads) now threaten US growth and inflation expectations.

…click on the above link to read the rest of the article…

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