Home » Posts tagged 'simon black'

Tag Archives: simon black

Olduvai
Click on image to purchase

Olduvai III: Catacylsm
Click on image to purchase

Post categories

Why the price of silver could skyrocket

Why the price of silver could skyrocket

By the mid-6th century BC, Darius the Great was ‘King of Kings’, ruling over the vast Achaemenid Empire.

By that time, gold and silver had already been in use by earlier civilizations for thousands of years.

There are cuneiform tablets that are nearly 4,000 years old from ancient Sumeria which record commercial transactions made in gold and silver.

And subsequent civilizations– the Babylonians, Egyptians, Lydians, etc. all used gold or silver in commerce.

Did you know? You can receive all our actionable articles straight to your email inbox… Click here to signup for our Notes from the Field newsletter.

But Darius had a unique idea.

He borrowed the idea of minting gold and silver coins from the Lydians… but then established a fixed exchange rate between the two metals.

Darius decreed that one gold “daric” was worth 13.5 silver coins– one of the first examples in history of a fixed, bimetallic standard.

His idea caught on. And for thousands of years afterward, later civilizations established a fixed gold/silver ratio.

In ancient Greece during the age of Pericles, gold was valued at 14x silver. In ancient Rome, Julius Caesar valued gold at 12x silver.

It remained this way for centuries.

Even in the earliest days of the United States, eighteen centuries after Caesar, The Coinage Act of 1792 established a ratio of 15:1.

(According to the law, one US dollar is supposed to be 24.1 grams of silver, or 1.6 grams of gold. So those pieces of paper in your wallet are not dollars– they are technically “Federal Reserve Notes”.)

In modern times there is no longer a fixed ratio between gold and silver, though its long-term average over the last several decades has been between 50:1 and 80:1.

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

FDIC asks Americans to keep their money in the banks

FDIC asks Americans to keep their money in the banks

Yesterday the Chair of the FDIC released an astonishing video asking Americans to keep their money in the bank.

Accompanied by soft piano music playing in the background, the official said:

“Your money is safe at the banks. The last thing you should be doing is pulling your money out of the banks thinking it’s going to be safer somewhere else.”

Amazing. I was half expecting her to waive her hand and say, “These aren’t the droids you’re looking for…”

As I’ve written before, there’s $250 TRILLION worth of debt in the world right now: student debt, housing debt, credit card debt, government debt, corporate debt, etc.

And let’s be honest, some of that debt is simply not going to be paid.

Millions of people have already lost their jobs. Millions more (like the 10 million waiters and bartenders across America) are barely earning anything right now because their businesses are closed.

A lot of those folks have no emergency savings to fall back on during times of crisis, so they’re going to be forced to choose: pay the rent, or buy food.

The government has already suspended evictions and foreclosures, which is a green light for people to stop paying the rent or mortgage.

And that means banks will take it in the teeth.

This is what happened back in 2008– millions of people across the country stopped paying their mortgages, and the banking system nearly collapsed as a result.

Today it’s a similar situation; a lot of people are going to stop paying their mortgages, credit cards, auto loans, etc. And that directly impacts the banks.

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

Banks are going to drown in an ocean of defaults

Banks are going to drown in an ocean of defaults

On November 6, 2000, then US presidential candidate George W. Bush told a crowd of cheering supporters, “they misunderestimated me.”

Now, if English is not your native language, allow me to clear the air: ‘misunderestimate’ is not a word. But then again, George W. Bush was legendary for hilarious slip-ups like this.

There are entire books dedicated to his ‘Bushisms,’ the ridiculous made-up words and incomprehensible sayings that became routine for the 43rd US President.

‘Misunderestimate’ seems to be a conflation of the words ‘misunderstand’ and ‘underestimate’. And while that was utterly hysterical 20 years ago when Bush first said it, ‘misunderestimate’ may be the most appropriate word of today.

The entire world has completely ‘misunderestimated’ the Corona Virus.

In terms of misunderstand– that’s obvious. There’s so much that we don’t know about the virus (officially known as SARS-CoV-2) and the disease that it causes (COVID-19).

For example, a group of researchers published a “peer-reviewed” research paper earlier this month stating that the virus had split into multiple strains.

(Peer-reviewed is a type of self-regulation among academics; it means the paper had been evaluated by other experts before it was published.)

But other specialists in the field strongly disagreed with the paper’s conclusions.

Swiss biologist Richard Neher described the research as, “wrong, misleading. . . downright dangerous inferences,” while Australian virologist Ian Mackay called it a “weak paper and poor science.”

Another peer-reviewed study released in the Journal of Medical Virology concluded that the virus originated from snakes. But plenty of experts disagreed with that assertion too.

The scientific community has learned so much about SARS-CoV-2 since it first surfaced a few months ago.

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

Start thinking about silver before it becomes popular again

Start thinking about silver before it becomes popular again

In 663 BC, King Ashurbanipal of the Assyrian Empire invaded Egypt and sacked the city of Waset (located in modern day Luxor on the Nile River).

Ashurbanipal vanquished the city, purportedly seizing more than 75 metric tons of silver for his personal collection.

At the time in the ancient world, the prevailing ratio between gold and silver was 1:2. In other words, 75 metric tons (= 75,000 kilograms) of silver was worth 37,500 kilograms of gold, equal to $1.76 billion in today’s money.

That 1:2 gold/silver ratio had held for thousands of years across Persia, Mesopotamia, and Ancient Egypt, possibly since as early as 3,000 BC.

Did you know? You can receive all our actionable articles straight to your email inbox… Click here to signup for our Notes from the Field newsletter.

But over time it has changed periodically.

By the time of Alexander the Great in the 300s BC, the Gold/Silver ratio had shifted to 1:13. Mining techniques had advanced at that point, so the ancients were able to produce higher volumes of silver than ever before.

Under Julius Caesar in Ancient Rome, one ounce of gold was worth 12 ounces of silver. In the time of Mohammed and the early days of the Islamic Caliphate in the 600s, the ratio was 1:16.

Even in the early history of the United States, the Mint and Coinage Act of 1792 established a gold/silver ratio 1:15.

(According to the law, one US dollar is defined as 1.604 grams of pure gold, or 24.1 grams of pure silver. So those pieces of paper in your wallet are not technically US dollars, but ‘Federal Reserve Notes’.)

In our modern times, the ratio average is around 55 ounces of silver per ounce of gold.

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

Gold’s long-term gains have even outperformed Warren Buffett…

Gold’s long-term gains have even outperformed Warren Buffett…

Warren Buffett, despite his extraordinary investment success, has a rather famous and long-standing love/hate relationship with precious metals.

Maybe it started with his dad– Congressman Howard Buffett of Nebraska– who, as a staunch advocate for the gold standard, argued to his colleagues on Capitol Hill that “paper money systems have always wound up with collapse and economic chaos.”

Warren himself acquired a record-setting 128 million ounces of silver back in the late 1990s… which he later sold at a profit in the early 2000s.

But to listen to him talk about precious metals these days, he’s always negative.

Buffett often quips that if you took the world’s entire supply of gold and melted it together, it would form a cube of about 68 feet (~21 meters) per side and be worth around $9 trillion.

With that same $9 trillion, you could buy every share of Apple, Disney, Google, Microsoft, JP Morgan, Exxon Mobil, all the farmland in the United States, all the developable land in Manhattan, and still have more than a trillion dollars left over.

This is Buffett’s central argument: gold doesn’t produce anything. So it’s much better to invest in a productive asset like a business, farmland, etc.

Sure, I’d rather own a profitable, productive asset than a pile of metal.

But Buffett is completely wrong to compare gold to productive assets… they’re apples and oranges.

Gold isn’t an ‘investment’. It’s an insurance policy against paper currencies will lose value over time. So a MUCH better comparison for gold is CASH.

Using Buffett’s same thought experiment, would an investor with $9 trillion rather have all that money sitting in a bank earning 0%? Or buy all the productive assets I mentioned above?

Clearly it’s more attractive to own productive assets than cash sitting in a bank.

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

How Anti-Fragile are you?

How Anti-Fragile are you?

I arrived back home to Puerto Rico late last night after traveling back from our Total Access event in Las Vegas.

It was probably around 11:15 pm when I climbed into bed. And, within minutes, just as the sound of the waves outside was carrying me off to sleep, the whole house started violently shaking.

It turned out to be a magnitude 6.0 earthquake, about 20 miles off the west coast of the island.

I lived in Chile for seven years before this– one of the world’s earthquake capitals– so I’m no stranger to seismic activity.

But earthquakes are EXTREMELY rare in Puerto Rico… as in, they almost NEVER happen. People simply do not expect them.

Hurricanes, tropical storms, etc., sure, those are common occurrences here.

And you might remember that Puerto Rico was almost wiped out from 2017’s Hurricane Maria. It devastated the island and much of the Eastern Caribbean, and two years later they still haven’t recovered.

Today there’s supposed to be some Tropical Storm coming through, which, by comparison to Hurricane Maria, is barely a bit of drizzle.

But the government here is on pins and needles, and so anxious to show that they’re ready for anything that they closed schools, many government offices, and even called up the National Guard…

I can’t help but feel bad for them. They’re so scarred from Hurricane Maria two years ago that they overreact in desperation at the first warning sign of a storm.

And then, in an instant, something completely unexpected happened: Puerto Rico was hit with a 6.0 earthquake, and the government has no idea how to react.

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

Here’s a dirty secret few people know about gold

Here’s a dirty secret few people know about gold

In 1962 in a picturesque setting in Santa Barbara, California, two local entrepreneurs opened a low-cost, roadside inn where the nightly room rate was just $6.

They called it Motel 6.

And today the chain has grown to over 1,400 locations.

If you want the most straightforward explanation for why you should own gold, consider your local Motel 6.

It’s noteworthy that, today, the very same Santa Barbara location now rents its rooms for nearly $90 per night.

That’s a 15x increase in 57 years, an average increase of roughly 5% per year.

Are the rooms 15x bigger, or 15x nicer? Not really.

The reason the price has increased so much is because of inflation– the gradual erosion of the US dollar’s purchasing power over the past several decades.

This is why it’s important to have a conversation about gold.

Unlike paper currencies, gold has a 5,000 year track record of keeping up with inflation.

In fact, when priced in gold, a room at the Motel 6 has actually gotten cheaper.

Back in 1962, an ounce of gold would buy you about 6 nights at the motel. Now, despite the 12-fold increase in the price of a room, one ounce of gold will buy you 21 nights there.

That’s because the price of gold has largely outpaced the rate of inflation and the decline in the purchasing power of the US dollar.

Gold is a fantastic long-term store of value. It’s also an insurance policy– a hedge against paper currency, systemic risk, and uncertainty.

And there’s plenty of those in the world.

But there’s also a number of catalysts emerging right now that could send gold prices substantially higher in the near future, so it may be worth considering gold right now as a speculation.

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

Four ways that Uncle Sam will respond to its $75 trillion insolvency

Four ways that Uncle Sam will respond to its $75 trillion insolvency

Last week I told you that the US government recently reported a negative net worth of MINUS $75 TRILLION.

That’s not a type-o. According to the Treasury Department’s annual financial report for Fiscal Year 2018 (which they just published last week), the US government is hopelessly bankrupt.

Now, I’m not talking about this trying to stoke fear and panic.

Quite the opposite– I’m hoping that this conversation results in calm optimism. But the point is that it’s an important conversation to have… because a number as large as $75 trillion absolutely has consequences.

Did you know? You can receive all our actionable articles straight to your email inbox… Click here to signup for our Notes from the Field newsletter.

To believe that any nation can be so desperately insolvent without suffering any negative impact is just plain foolish.

Debts have to be paid. Obligations have to be met. So at some point, with numbers these gruesome, something has to break down.

This is not a dire prediction or wild conspiracy theory. It’s an arithmetic certainty.

Remember, this isn’t even my analysis. The government itself acknowledges its $75 trillion insolvency. The Social Security Administration acknowledges that its trust funds will run out of money in 15 years.

This is happening. So let’s take a look at the government’s very narrow playbook:

1) Ignore the problem

Politicians are already acting as if nothing is wrong.

Sure, occasionally you’ll hear someone complain about the debt, or there will be a debt ceiling showdown. But no serious alarm bells are ringing.

And because they don’t make a big deal over the debt, no one else does either. Everyone just goes along as if there’s not a problem.

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

If Donald Trump is the King of Debt, these guys were the Kings of Inflation

If Donald Trump is the King of Debt, these guys were the Kings of Inflation

Maximilian Bern had saved up 100,000 German marks for what should have been a modest, but comfortable retirement.

But in 1923, he withdrew every last cent, and spent it all on one purchase: a subway ticket.

He rode around his city one last time before returning home, and locking himself in his home, where he died.

He didn’t kill himself. He starved to death… simply because he could no longer afford food. A single egg at the market would cost millions of marks, more than Maximilian Bern had saved over his entire life.

This was one of the most famous episodes of hyperinflation, certainly in modern history.

In the wake of World War One, Germany (known as the Weimar Republic) was completely broke.

The War to end all Wars had bankrupted them; and on top of losing the war, Germany was forced to make ‘reparation payments’ to the victors, including France, the UK, etc.

That took Germany’s overall war debt to impossible levels. So in a feeble attempt to keep the economy afloat and meet its war debt obligations, the German government printed massive amounts of paper money.

Prior to World War I, one US dollar was worth 4.2 German marks.

By 1923, a single US dollar was worth 4.2 TRILLION marks.

We’ve seen this in our own lifetime in places like Zimbabwe, and now Venezuela.

I remember the first time I went to Venezuela the official exchange rate was four bolivars to the US dollar—and the black market rate was eight to one.

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

Europe is so weak it can’t even handle 0% interest rates

Europe is so weak it can’t even handle 0% interest rates

Europe’s leading economic policy makers have officially thrown in the towel.

Last week, the European Central Bank admitted economic conditions are so dire that it already has to reverse its monetary policy.

I’ll get back to that in a minute…

Following the Great Financial Crisis in 2008, central banks printed trillions of dollars and pushed interest rates to their lowest levels in human history. Low interest rates (and lots of new money sloshing around the system) mean people should go out and buy things that would otherwise be out of reach… new houses, new cars, businesses, etc.

And, in theory, all of that activity creates jobs and helps the economy grow… in theory.

Ten years into this monetary experiment, central banks did create growth…

US Gross Domestic Product (GDP) was about $15 trillion in 2008. Current GDP is about $22 trillion. That’s $7 trillion of economic growth.

Impressive… until you figure the cost of that growth.

Over the same period, the US national debt increased from $10 trillion to $22 trillion.

So, it took $12 trillion of debt to create $7 trillion of economic growth.  

The marginal utility of all of this new debt is decreasing (remember this point for later). And it’s the same story all over the world. 

The US economy is so dependent on cheap money, it can’t even handle 2% interest rates (the Fed hiked rates from 2.25% to 2.5% last December and stocks fell 20%).

But Europe is even worse. Europe has negative interest rates. And the European economy is so weak (it grew 0.2% in Q4), it can’t even handle ZERO percent interest rates.

Last week the ECB announced it would keep interest rates negative. And it’s starting its third round of cheap loans to banks (who, in turn, are supposed to lend to businesses and households).

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

Reason #437 to own gold: The Fed wants Negative Interest Rates

Reason #437 to own gold: The Fed wants Negative Interest Rates

And just like that, it seems we’re headed back to quantitative easing…

After cutting interest rates to nearly zero following the 2008 crisis, the Federal Reserve starting raising rates near the end of 2015 (from 0.25% to 2.5% today).

Following the most recent hike in December 2018, Chairman Powell seemed hell bent on further tightening, saying “some further gradual increases” were in the cards.

Then the stock market promptly fell nearly 20%. 

Investors were in panic mode and calling for the end of the world.

The pain was too much…

Last month, the Fed left rates unchanged… and Powell removed any language about further hikes.

Already Powell is capitulating.

The new chief economist for the International Monetary Fund praised the move, saying she sees “considerable and rising risks” to the global economy.

And no surprise here, but Paul Krugman also supported the Fed’s policy. He’s also worried about a possible recession… but more worried the Fed won’t be able to cut rates low enough.

Central banks tried raising interest rates, but the market wouldn’t take it.

Now, the market is putting the likelihood of a rate hike this year at ZERO… and it’s expecting a rate cut next year.

Both the European Central Bank and the Bank of Japan were supposed to start tightening policy and raising rates… now, they are both considering cutting interest rates even deeper into negative territory.

And after a 20% drop in US stocks, the Fed has taken its foot off the pedal. But the people still want more…

The President of the Federal Reserve Bank of St. Louis thinks current interest rates are “too restrictive.” He too wants lower rates.

The San Francisco Fed agrees – they were singing the praises of negative interest rates in a recent research paper, saying they would have helped the economy recover even faster after 2008.

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

Get Ready– they’re coming for your money

Get Ready– they’re coming for your money

Every so often throughout history, the peasants grab their pitchforks and come for the elite. It happens when the wealth gap grows too extreme… when people feel like they are getting left behind, with no opportunity to advance.

Central banks around the world have printed trillions of dollars over last decade, and pushed interest rates to zero, and sometimes below. And all of that stimulus went directly into the pockets of the wealthy.

Since 2009, the world’s billionaires more than DOUBLED their combined wealth. All the billionaires in the world had $3.4 trillion in 2009. By 2017, they amassed $8.9 trillion.

Mark Zuckerberg multiplied his wealth almost 20 times over, from $3 billion in 2009, to over $58 billion in 2019.

$8.9 trillion is a massive, almost incomprehensible amount of wealth.

But it really shouldn’t be that surprising if you think about it… these people are wealthy for a reason. Typically, they are pretty good at making money. And with the snowball effect, if you give them more time, they will probably make even more.

For the last ten years, we’ve seen a huge asset price inflation in everything from the stock market, to bonds and real estate, and even fine art and wine.

But if you’re a wage earner without assets, you’ve been left out. Wages andmedian household wealth have stagnated.

And this is a global issue…

The combined wealth of the poorest half of the world–3.8 billion people–fell by 11% just last year, according to Oxfam, a group working to alleviate poverty.

The New York Times claims the richest 8 people on the planet have more wealth than the poorest 3.8 billion.

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

Yet another MAJOR reason to buy gold

Yet another MAJOR reason to buy gold

For almost a year now, I’ve been advising you that gold production is plunging…

By itself, declining gold production isn’t a huge deal.

It takes hundreds of millions of years for minerals to form deep in the earth’s crust… but humans only need a few decades to extract it.

That’s why mining companies need to constantly explore for new deposits.

And that’s where the problem comes in… mining companies haven’t been exploring.

Large mining companies have been cutting their exploration budgets for years. By the end of 2016, exploration budgets hit an 11-year low.

Part of the reason for the decline in exploration has been the stagnant gold price and general, investor disinterest toward the gold mining sector.

If you look at a chart of the Gold Miners ETF (GDX), the price hasn’t gone anywhere for five years.

And gold prices have likewise languished; today’s price of $1,290 per ounce is down 30% from the 2011.

To fight the tough times, miners slashed their exploration budgets.

That means, when the demand for gold picks up again (which I think we’re starting to see now), there won’t be enough gold supply.

You don’t have to just take my word for it…

Pierre Lassonde, the billionaire founder of gold royalty giant Franco-Nevada and former head of Newmont Mining –

If you look back to the 70s, 80s and 90s, in every one of those decades, the industry found at least one 50+ million-ounce gold deposit, at least ten 30+ million ounce deposits, and countless 5 to 10 million ounce deposits.

But if you look at the last 15 years, we found no 50-million-ounce deposit, no 30 million ounce deposit and only very few 15 million ounce deposits.

So where are those great big deposits we found in the past? How are they going to be replaced? We don’t know.

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

It’s official: the Federal Reserve is insolvent

It’s official: the Federal Reserve is insolvent

In the year 1157, the Republic of Venice was in the midst of war and in desperate need of funds.

It wasn’t the first time in history that a government needed to borrow money to fight a war. But the Venetians came up with an innovative idea:

Every citizen who loaned money to the government was to receive an official paper certificate guaranteeing that the state would make interest payments.

Those certificates could then be transferred to other people… and the government would make payments to whoever held the certificate at the time.

In this way, the loan that an investor made to the government essentially became an asset– one that he could sell to another investor in the future.

This was the first real government bond. And the idea ultimately created a robust market of investors who would buy and sell these securities.

When a government’s fortunes changed and its ability to make interest payments was in doubt, the price of the bond fell. When confidence was high, bond prices rose.

It’s not much different today. Governments still borrow money by issuing bonds, and those bonds trade in a robust marketplace where countless investors buy and sell on a daily basis.

Just like the price of Apple shares, the prices of government bonds rise and fall all the time.

One of the most important factors affecting bond prices is interest rates: when interest rates rise, bond prices fall. And when rates fall, bond prices rise.

And this law of bond prices and interest rates moving opposite to one another is as inviolable as the Laws of Gravity.

Back in the 12th century when Venice started issuing the first government bonds, interest rates were shockingly high by modern standards, fluctuating between 12% and 20%. In France and England rates would sometimes rise beyond even 80% during the Middle Ages.

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

Why buy gold now? Because I don’t know

Why buy gold now? Because I don’t know

From 2000 through 2012, the price of gold increased every year, rising from around $280 an ounce to nearly $1,700. It was an unprecedented run.

Then, in 2013, gold took a nose dive, losing over 27% of its value.

It was widely reported that the Swiss National Bank, the former bastion of monetary conservatism, lost $10 billion that year just on its gold holdings.

As you probably know, central banks hold a portion of their reserves in gold. The practice goes back to when central banks actually had to have gold on hand to trade in and out of paper money (or even trade for goods and services).

And central banks still hold reserves in gold today, even though they don’t need it to transact like they used to.

So that begs the question, did the Swiss National Bank actually lose $10 billion? It still had every ounce of gold in its vaults. And gold, after all, ismoney.

Plus, the SNB wasn’t holding gold to speculate…

Today, central banks hold gold as a hedge against fiat money. These are the guys with their fingers on the printing press… so they know exactly the effect they have on money.

And right now, banks are buying up gold hand over fist. Central banks currently hold 20% of all the gold ever mined—33,000 metric tons.

And JPMorgan Chase says they’ll buy another 650 tons this year and next.

Why?

Gold is for the I don’t knows.

And right now, there are a LOT of I don’t knows.

Markets have been going crazy over the past few months.

After a record bull run for stocks, we are now seeing massive volatility with the Dow regularly jumping 500+ points in a single day. Just yesterday, the Dow fell a whopping 800 points.

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

Olduvai IV: Courage
In progress...

Olduvai II: Exodus
Click on image to purchase