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IMPORTANT TOM CLOUD PRECIOUS METALS UPDATE: Including Gold & Silver Eagle Best Buy Prices

IMPORTANT TOM CLOUD PRECIOUS METALS UPDATE: Including Gold & Silver Eagle Best Buy Prices

As the global contagion continues to cause a great deal of uncertainty in the markets, I thought it was a good idea for precious metals dealer Tom Cloud to provide a new update.  Tom starts off the video saying that in his 44 years in the industry, he has never seen anything like the current situation in the precious metals markets.

Tom stated that one of his wealthier clients last week took money out of the banking system and purchased a large sum ($millions) of physical precious metals.  Unfortunately, there still are only a fraction of financial planners that advise their clients to own a percentage of physical gold and silver in their portfolio. I believe investors should be increasing the typical 5-10% of precious metals in one’s portfolio to at least 20-25%.

Tom also went on to say that some leading financial analysts are calling for a 30% drop in U.S. GDP by Q2 2020.  This is no longer a recessionary event.  Rather, we are heading into a Depression, the likes we haven’t seen for nearly eight decades.  Very few Americans are prepared for what’s coming.

With investment demand for physical precious metals at near-record levels, Gold and Silver Eagle premiums are some of the highest ever.  It is quite amazing to see Silver Eagles buy prices more than $10 over the spot price.  One large online dealer is selling its Silver Eagles for nearly $12 over spot. Thus, Silver Eagle premiums are ranging between 50-80% over spot.

I also wanted to provide an update on the Gold & Silver Eagle BEST BUY prices.  I spoke to Tom yesterday for about a half-hour.  He told me that Silver Eagle premiums increased again, but CLOUD HARD ASSETS still has the lowest prices versus the top leading online dealers:

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

Repocalypse: The Second Coming

Repocalypse: The Second Coming 

This little monster that feeds beneath the surface of global banking at its core briefly raised one ugly eye out of the water as 2018 turned into 2019. I wrote back then that the interest spike we saw in the kind of overnight interbank lending known as repurchase agreements (repos) was just the foreshock of a financial crisis being created by the Fed’s monetary tightening. I said the Fed’s continued tightening would eventually result in a full-blown recession that would emerge, likely out of the repo market, sometime in the summer. In the very last week of summer, the Repo Crisis raised its head fully out of the water and roared.

When I first wrote of these things at the start of 2019, the Fed had only been up to full-speed tightening for three months, and already it was blowing out the financial system at its core. The stock market had just crashed with the onset of full-speed tightening just as I had said it would. It fell hard enough to where the only index holding just one nostril above the icy water was the S&P 500 at a 19.8% plunge. Even that holdout briefly dipped its last air-hole under water in the middle of the day (i.e., below 20%), but didn’t stay below for the count. All other major indices and most minor ones took the full polar-bear plunge into the deep, dark water by this day in December. 

If not for the obvious bullish bias in all reportage everywhere (except alternative media), the market would have been declared a new bear market at that time (based on the market’s own historic standards where a 20% fall is a bear market), and any bull market after that would be a new bull market, not what is now called “the longest bull market on record.”

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

Monetary Looting

Monetary Looting

The United States has historically bragged about its free and transparent markets. But what the Fed is doing today is pulling a dark curtain around the financing of this so-called free and transparent market. The public has no idea which Wall Street firms have received this $3 trillion or why they can’t borrow it elsewhere. This kind of obfuscation by the Federal Reserve could actually stimulate distrust in the U.S. banking system. The Fed admitted as much in its most recent Federal Open Market Committee (FOMC) minutes, writing that participation in the Fed’s loan program “could become stigmatized.”

– Wall Street on ParadeIs the Fed’s $3 Trillion in Loans to Trading Houses on Wall Street Legal?

The business model of Wall Street is fraud.
– Bernie Sanders

Financial services as currently structured is the most pernicious, predatory and corrupt industry on earth. Moreover, it’s the deliberately complex and opaque nature of the industry which then limits public debate when some problem arises and governments and central banks are called upon to take emergency measures to “save the system,” which is just a euphemism for enormous sums of corporate welfare being funneled to people and institutions who couldn’t survive otherwise.

It is systemic looting on a massive scale and the primary patrons of this ongoing and seemingly endless scheme are central banks. In the U.S. this means the Federal Reserve, which recently came back into the “market” with enormous new interventions in both the repo market and via renewed balance sheet expansion. I’ve read many of the smart takes on the repo crisis and still don’t feel confident I know precisely what’s going on. This is intentional.

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

When It Becomes Serious You Have To Lie: Update On The Repo Fiasco

When It Becomes Serious You Have To Lie: Update On The Repo Fiasco

Occasionally, problems reveal themselves gradually. A water stain on the ceiling is potentially evidence of a much larger problem. Painting over the stain will temporarily relieve the unsightly condition, but in time, the water stain will return. This is analogous to a situation occurring within the banking system. Almost three months after water stains first appeared in the overnight funding markets, the Fed has stepped in on a daily basis to “re-paint the ceiling” and the problem has appeared to vanish. Yet, every day the stain reappears and the Fed’s work begins anew. One is left to wonder why the leak hasn’t been fixed.  

In mid-September, evidence of issues in the U.S. banking system began to appear. The problem occurred in the overnight funding markets which serve as one of the most important components of a well-functioning financial and economic system. It is also a market that few investors follow and even fewer understand. At that time, interest rates in the normally boring repo market suddenly spiked higher with intra-day rates surpassing a whopping 8%. The difference between the 8% repo rate recorded on September 16, 2019 and Treasuries was an eight standard deviation event. Statistically, such an event should occur once every three billion years. 

For a refresher on the details of those events, we suggest reading our article from September 25, 2019, entitled Who Could Have Known: What The Repo Fiasco Entails.   

At the time, it was surprising that the sudden change in overnight repo borrowing rates caught the Fed completely off guard and that they lacked a reasonable explanation for the disruption. Since then, our surprise has turned to concern and suspicion. 

We harbor doubts about the cause of the problem based on two excuses the Fed and banks use to explain the situation. Neither are compelling or convincing.  

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

The Battle of the ‘Flations has Begun

The Battle of the ‘Flations has Begun

Inflation? Deflation? Stagflation? Consecutively? Concurrently?… or from a great height (apologies to Tom Stoppard).

We’ve reached a pivotal moment where all of the narratives of what is actually happening have come together. And it feels confusing. But it really isn’t. 

The central banks have run out of room to battle deflation. QE, ZIRP, NIRP, OMT, TARGET2, QT, ZOMG, BBQSauce! It all amounts to the same thing. 

How can we stuff fake money onto more fake balance sheets to maintain the illusion of price stability? 

The consequences of this coordinated policy to save the banking system from itself has resulted in massive populist uprisings around the world thanks to a hollowing out of the middle class to pay for it all. 

The central banks’ only move here is to inflate to the high heavens, because the civil unrest from a massive deflation would sweep them from power quicker. 

For all of their faults leaders like Donald Trump, Matteo Salvini and even Boris Johnson understand that to regain the confidence of the people they will have to wrest control of their governments from the central banks and the technocratic institutions that back them.

That fear will keep the central banks from deflating the global money supply because politicians like Trump and Salvini understand that their central banks are enemies of the people. As populists this would feed their domestic reform agendas.

So, the central banks will do what they’ve always done — protect the banks and that means inflation, bailouts and the rest. 

At the same time the powers that be, whom I like to call The Davos Crowd, are dead set on completing their journey to the Dark Side and create their transnational superstructure of treaties and corporate informational hegemony which they ironically call The Open Society.

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

The Bank’s ‘Stress’ Tests

THE BANK’S ‘STRESS’ TESTS

MY REPORT ON THE BANK OF ENGLAND’S LATEST (NOVEMBER 2018) STRESS TESTS WAS PUBLISHED BY THE ADAM SMITH INSTITUTE ON AUGUST 3RD.

The purpose of the stress tests is, in essence, to persuade us that the banking system is in good shape on the basis of a make-believe exercise which purports to show what might happen in the event of a supposed severe stress scenario as modelled by a central bank with a dodgy model and a vested interest in showing that the banking system is in great shape thanks to its own wise policies.

We are expected to believe that the central bank has managed to rebuild the banking system despite enormous pressure placed on it by the institutions it regulates, whose principal objective is to run down their capital ratios (or equivalently, maximise their leverage) in order to boost their returns on equity and resulting short-term profits, and never mind the systemic risks and associated costs imposed on everyone else or the damage their high leverage did in the Global Financial Crisis.

These latest Bank of England’s stress tests were published in the Bank’s November 2018 Financial Stability Report, the core message of which was that the UK banking system was doing just great, but that a No-Deal Brexit would be a disaster. Wrong on both counts.

I will focus here on the first issue, the state of the banking system.

In essence, the Bank paints a reassuring picture of bank resilience. The message is that the UK banking system is now so strong that it could sail through another crisis that is more severe than the last one and still be in good shape. How do we know this? Because the stress tests tell us, claims the Bank. However, the truth is that the Bank’s stress tests are useless at detecting bank fragility.

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

As China’s Banking System Freezes, SHIBOR Tumbles To Lowest In A Decade

As China’s Banking System Freezes, SHIBOR Tumbles To Lowest In A Decade

One trading day after we reported that China was “Hit By “Significant Banking Stress” as SHIBOR tumbled to recession levels, and less than a week after we warned that China’s interbank market was freezing up in the aftermath of the Baoshang Bank collapse and subsequent seizure, which led to a surge in interbank repo rates and a spike in Negotiable Certificates of Deposit (NCD) rates…

… China’s banking stress has taken a turn for the worse, and on Monday, China’s overnight repurchase rate dropped to its lowest level in nearly 10 years, after the central bank’s repeated liquidity injections to ease credit concerns in small-to-medium banks: The rate fell as much as 11 basis points to 0.9861% on Monday, before being fixed at exactly 1.000%.

Seeking to ease funding strains after the Baoshang collapse and to unfreeze the financial channels in the banking sector, the PBOC has been injecting cash into the financial system to soothe credit risk concerns in smaller banks following the seizure of Baoshang Bank, which sent shockwaves through China’s markets.

Also helping drive the rate lower is China’s move to allow brokerages to issue more debt, said ANZ Bank’s Zhaopeng Xing, quoted by Bloomberg. As a result, at least five brokerages had their short-term debt quotas increased by the People’s Bank of China in recent days, according to filings.

The improved access to shorter-term debt will cut costs for brokerages compared with alternative funding sources such as bond issuance. The flipside, of course, is that the lower overnight funding rates drop, the greater the investor skepticism that China’s massive, $40 trillion financial system is doing ok, especially since the last time overnight funding rates were this low, the near-collapse of the global financial system was still fresh and the S&P was trading in the triple-digits.

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

International Monetary Fund: Storm Clouds Of The Next Financial Crisis Are Gathering

International Monetary Fund: Storm Clouds Of The Next Financial Crisis Are Gathering

The International Monetary Fund is sounding the alarms of another global crisis.  IMF is warning that the storm clouds are currently gathering for another financial crisis.

According to a report by The Guardian, David Lipton, the first deputy managing director of the IMF, said that “crisis prevention is incomplete” more than a decade on from the last meltdown in the global banking system.  Not only that but on an individual basis, people are largely unprepared for a major financial downturn. “As we have put it, ‘fix the roof while the sun shines.’ But like many of you, I see storm clouds building and fear the work on crisis prevention is incomplete,” Lipton said.

Lipton said individual nation states alone would lack the firepower to combat the next recession while calling on governments to work together to tackle the issues that could spark another crash.

“We ought to be concerned about the potency of monetary policy,” he said of the ability of the US Federal Reserve and other central banks to cut interest rates to boost the economy in the event of another downturn, while also warning that high levels of government borrowing constrained their scope for cutting taxes and raising spending. –The Guardian

Lipton said individual nation states alone would lack the firepower to combat the next recession while calling on governments to work together to tackle the issues that could spark another crash.  Which is an odd position to take considering the central banks and governments of the world cause recession and economic crises in the first place.

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

Bernanke, Geithner & Paulson Warn: “We’ve Forgotten The Lessons Of The Financial Crisis”

Late last month, the Fed declared that six of the country’s biggest banks needed to scale back their plans for returning cash to shareholders to strengthen their capital buffers, a striking reminder that banks shouldn’t be overeager to put the legacy of the financial crisis behind them. Perhaps this is why, during a private round table discussion last week that Timothy Geithner, Henry Paulson and Ben Bernanke, three officials who helped combat (and many would argue also helped cause) the financial crisis warned that the lessons of the financial crisis are already being forgotten, according to the Associated Press,

Paulson, who was Treasury Secretary when Lehman Brothers filed for bankruptcy in September 2008, said that as banks scramble to return money to their investors, “it’s important that people focus on the lessons” of the crisis. “We are not sure people remember everything they need to remember.”

GEithner

The roundtable took place ahead of a meeting in September at the Brookings Institution (former Fed Chair Bernanke’s current employer) where officials from the Fed, Treasury and other federal agencies will discuss how the US can prepare for the next crisis. The meeting appears to be a counterbalance to the Trump administration’s “deregulatory zeal” as lawmakers and leaders of federal agencies work to undo or sideline some aspects of the Dodd-Frank Wall Street reform bill. Though all three men agreed that the reversal implemented so far by the Trump administration had been “sensible.”

Still, while the safeguards implemented by the law will help the banking system fend off smaller crises, an extreme crisis could pose an existential threat.

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

Turkish Lira Tumbles To Record Low As “Ticking Time Bomb” Looms In Banking System

Having exercised his newly-omnipotent capabilities to alter central bank decrees and appointing a puppet cabinet, Turkish President Erdogan is now urging the general public to borrow in the currency in which they are paid, but, as Bloomberg reports, that warning came too late for the country’s energy companies.

Turkish power producers are emerging as one of the biggest risks to the nation’s banks after they plowed billions of dollars into new power generation, distribution projects and deals over the past 15 years. Now, with the lira depreciating faster than they can raise electricity prices, some utilities earn less per year than what they have to repay in foreign-currency loans, according to the Ankara-based Electricity Producers’ Association.

Domestic banks are the most exposed to loans in foreign currencies, JPMorgan Chase & Co. said in a note in May.

The NPL ratio for the banking industry rose to just over three percent in the week ended June 29 for the first time since October, according to data from the banking watchdog.

“A realistic estimate of non-performing loans are around 7-8 percent,” saidAtilla Yesilada, an economist for GlobalSource Partners in Istanbul. “There is no feasible scenario of lower loan rates through 2020 either. We can expect a default wave post-state of emergency,” Yesilada said. The state of emergency is due to expire on July 18.

At least $6.1 billion of loans taken out by energy companies are known to be in the process of being restructured or refinanced, including about $4 billion of debt owned by Bereket Enerji, which is selling power plants to cut its liabilities. Companies across various industries have agreed, or are still in talks, to reorganize at least $24 billion of loans.

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

Nomi Prins: The central banking heist has put the world at risk

“The 2008 financial crisis was the consequence of a loosely regulated banking system in which power was concentrated in the hands of too limited a cast of speculators,” Nomi Prins tell me. “And after the crisis, the way the US government and the Federal Reserve dealt with this corrupt and criminal banking system was to give them a subsidy.”

Such strong, withering analysis is, perhaps, unexpected from someone who has held senior roles at Wall Street finance houses such as Bear Stearns and Goldman Sachs. But Prins is no ordinary former banker.

Prins has chronicled the closed and often confusing world of high finance through the 2008 crisis and beyond

The US author and journalist left the financial services industry in 2001. She did so, in her own words, “partly because life was too short”, and “partly out of disgust at how citizens everywhere had become collateral damage, and later hostages, to the banking system”.

Since then, Prins has chronicled the closed and often confusing world of high finance through the 2008 crisis and beyond. Her writing combines deep insider knowledge with on-the-ground reporting with sharp, searing prose. Alongside countless articles for New York Times, Forbes and Fortune, she has produced six books – including Collusion: how central bankers rigged the world, which has just been published.

Her main target in the new work is “quantitative easing” – described by Prins as “a conjuring trick” in which “a central bank manufactures electronic money, then injects it into private banks and financial markets”. Over the last decade, she tells me when we meet in London, “under the guise of QE, central bankers have massively overstepped their traditional mandates, directing the flow of epic sums of fabricated money, without any checks or balances, towards the private banking sector”.

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

Bartlett Naylor: The Banks Are Becoming Untouchable Again

Bartlett Naylor: The Banks Are Becoming Untouchable Again

Regulations? We don’t need no stinking regulations!
When the dust settled after the Great Financial Crisis, we learned that the big banks had behaved in overtly criminal ways. Yet none of their executives would be held criminally accountable.

And while legislation was passed in the aftermath to place restrictions on the ‘Too Big To Jail/Fail’ banks, it was heavily watered down and has been under attack by finanical system lobbyists ever since.

To talk with us today about the perpetual legislative warfare pitting citizens on one side and lobbyists (and many lawmakers) on the other, is Bartlett Naylor. Naylor is a veteran of the Wall Street wars. He spent a number of years as an aid to Senator William Proxmire at a time when Proxmire was head of the Senate Banking Committee. Naylor himself served as that committee’s Chief of Investigations.

Sadly, Naylor sees the banks winning out here. More and more of the prudent restraints placed on the banking system are being dismantled, as further evidenced by the recent bill President Trump just signed:

The President signed S2155 last week. This bill has 40 or so provisions in it. The most troubling one reduces what’s known as enhanced supervision for a class of banks that are between $50 billion and $250 billion in assets.

Enhanced supervision means tighter capital controls. Capital is assets minus liabilities — the amount of net worth, if you will, of the particular bank. You think of banks of being very solid; but in fact, they’re in hock. They are highly leveraged. 95% of their assets are financed by debt. They really don’t own that much. They mostly owe things.

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

Banking System Has Huge Problem – Peter Schiff

Banking System Has Huge Problem – Peter Schiff

Money manager Peter Schiff says even though Deutsche Bank is the most systemically dangerous bank in the world (according to the IMF), that is just the tip of severe global financial problems. Schiff explains, “I think it’s a problem, and it’s not just Deutsche Bank. Deutsche Bank could be the weak link of a chain. If you remember back to when we had the financial crisis (2008). First, you had the sub-prime mortgages blowing up, and everybody was like don’t worry about it. It’s contained. I said it’s not contained, it’s just showing up first in the sub-prime market because these are the weakest mortgages. The entire mortgage market has a problem.  I think the banking system has a huge problem because it’s lived off of the life support of artificially low interest rates. As that is removed, it’s like pulling the plug off of someone who has lived off life support. The irony is you have so many analysts that think higher rates are good for the banks. . . . Low interest rates saved the banks. You can’t have it both ways. It can’t be low interest rates helped the banks, and high interest rates will help the banks. It’s one or the other. I think higher interest rates are going to crush the banks. I think it’s going to destroy the value of their loans and their collateral. It’s going to lead to defaults . . . All those banks that we’re too big to fail in 2008 are much bigger now, and it’s going to be a lot more difficult to bail them out.”

Schiff issues a stark warning, “This is not going to end well, and I don’t think the Fed is going to be able to save us again. If you get it wrong this time, you’re done. You are down for the count. You just can’t hold and hope.

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

Daniel Nevins: Economics for Independent Thinkers

Daniel Nevins: Economics for Independent Thinkers

It’s time we stop trusting the ‘experts’

Economists are supposed to monitor and analyze the economy, warn us if risks are getting out of hand, and advise us on how to make things runs more effectively — right?

Well, even though that’s what most people expect from economists, it’s not at all how they see their role, warns CFA and and behavioral economist Daniel Nevins.

Economists, he cautions, are modelers. They pursue academic lines of thought in order to make their models more perfect. They live in a universe of equations and presumptions about equilibrium states and other chimerical mathematical perfections that don’t exist in real life.

In short, they are the wrong people to advise us, Nevins claims, as they have no clue how the imperfect world we live in actually works.

In his book Economics For Independent Thinkers, he argues that we need a new, more accurate and useful way of studying the economy:

However far you go back, you can find economists who had a more realistic approach to how humans actually behave, than the way that mainstreamers assume they behave in the models that the Fed uses to pick winners and losers.

You mentioned credit cycles, business environment, and behavioral economics. What I’ve done is to say, “Okay. We know that the modeling approach, the systems of equations approach doesn’t work. But instead of starting completely from scratch, what can we find in the economics literature that is maybe more realistic?”

And the interesting thing is that if you look at the work that was done, the state of the profession before the 1930s, before Keynesianism took hold, you can find a lot of work that was quite sensible.

 

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

Stressful Year Ahead for Spanish Banks

Stressful Year Ahead for Spanish Banks

The “spillover effects.” 

Just how much more stress Europe’s banking system can bear will be one of the big questions of 2018. This year was already a pretty stressful year, what with two major Italian banks being put out of their misery while, another, Monte dei Paschi di Siena, was brought back from the dead. In Spain, 300,000 shareholders and subordinate bondholders mourned the passing of the country’s sixth biggest bank, Banco Popular, which was acquired by Santander for the measly price of one euro.

Now, a whole new problem awaits. A report published by Spain’s second largest lender, BBVA, has warned about the potential impact on the sector’s profitability of new rules on provisions due to come into effect in early 2018.

Until now, banks only had to report losses when loans began deteriorating — i.e. when the defaults began. But the introduction in January of a new accounting rule, known as IFRS 9, will force banks in Europe to provision for souring loans much sooner than at present. One direct result will be that banks will have to hold more capital on their books, and that will have a detrimental impact on their profits.

If next year’s stress test by the ECB sets the same macroeconomic conditions and parameters as those used in 2014, banks holding just over one-fifth of the market share in Spain — measured in risk-weighted assets — would have to undertake provisions exceeding 200 basis points, the BBVA report predicts. That would leave some entities with a solvency rating lower than 9% — i.e., on the brink or even below the minimal level required by European regulation.

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

Olduvai IV: Courage
In progress...

Olduvai II: Exodus
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