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“Panicking” Central Banks to Power Gold Higher

Panicking Central Banks to Power Gold Higher

This week, Your News to Know rounds up the latest top stories involving gold and the overall economy. Stories include: Institutions will be the drivers of gold demand, Ray Dalio issues warning about the greenback, and silver believers could soon be rewarded.

Institutional demand will power gold prices as central banks panic

As Egon von Greyerz notes via ZeroHedge, uncertainty has been the theme across the board this year, and it is unlikely to dissipate any time soon. von Greyerz believes that the uncertainty is tied to the end of a cycle, and while the full timeline of the cycle isn’t entirely clear, its social and economic aspects are directly tied to the abolishment of the gold standard in 1971.

This accelerated the precarious path that the Federal Reserve set for the U.S. when it was created in 1913, one of perpetually expanding debt and an economy based on faith. That there is no solution to the debt issue has been painfully demonstrated by various administrations. The Clinton administration from 1998-2001 and the current Trump administration have been among the most vocal regarding the issue, yet neither has been able to prevent the U.S. national debt from roughly doubling every 8 years.

von Greyerz sees central banks as being on exceptionally shaky grounds, as the aforementioned untethering started the fall of fiat currencies. Most of them have lost around 85% against gold since 2000, and all of them have lost upwards of 97% of their value since 1971. While the U.S. dollar stands out as exceptionally long-lasting, von Greyerz sees economic factors that are beginning to threaten it.

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

China is killing the dollar

China is killing the dollar

Introduction

On 3 September, China’s state-owned Global Times, which acts as the government’s mouthpiece, ran a front-page article warning that

“China will gradually decrease its holdings of US debt to about $800billion under normal circumstances. But of course, China might sell all of its US bonds in an extreme case, like a military conflict,” Xi Junyang, a professor at the Shanghai University of Finance and Economics told the Global Times on Thursday”[i].

Do not be misled by the attribution to a seemingly independent Chinese professor: it would not have been the front page article unless it was sanctioned by the Chinese government. While China has already taken the top off its US Treasury holdings, the announcement (for that is what it amounts to) that China is prepared to escalate the financial war against America is very serious. The message should be clear: China is prepared to collapse the US Treasury market. In the past, apologists for the US Government have said that China has no one to buy its entire holding.

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

The U.S. Dollar Collapse Is Greatly Exaggerated

The U.S. Dollar Collapse Is Greatly Exaggerated

The US Dollar Index has lost 10% from its March highs and many press comments have started to speculate about the likely collapse of the US Dollar as world reserve currency due to this weakness.

These wild speculations need to be debunked.

The US Dollar year-to-date (August 2020) has strengthened relative to 96 out of 146 currencies in the Bloomberg universe. In fact, the U.S. Fed Trade-Weighted Broad Dollar Index has strengthened by 2.3% in the same period, according to data compiled by Bloomberg.

The speculation about countries abandoning the U.S. Dollar as reserve currency is easily denied. The Bank Of International Settlements reports in its June 2020 report that global US-dollar denominated debt is at a decade-high. In fact, US-dollar denominated debt issuances year-to-date from emerging markets have reached a new record.

China’s dollar-denominated debt has risen as well in 2020. Since 2015, it has increased 35% while foreign exchange reserves fell 10%.

The US Dollar Index (DXY) shows that the United States currency has only really weakened relative to the yen and the euro, and this is based on optimistic expectations of European and Japanese economic recovery. The Federal Reserve’s dovish announcements may be seen as a cause of the dollar decline, but the evidence shows that the European Central Bank (BOJ) and the Bank Of Japan (BOJ) conduct much more aggressive policies than the U.S. while economic recovery stalls. Recent purchasing manager index (PMI) declines have shown that hopes of a rapid recovery in Europe and Japan are widely exaggerated, and the Daily Activity Index published by Bloomberg confirms it. Furthermore, the balance sheet of the ECB is at the end of August more than 54% of the eurozone GDP and the BOJ´s is 123% versus the Federal Reserve’s 33%.

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

Peter Schiff: Government Tries to Replace the Economy With a Printing Press

Peter Schiff: Government Tries to Replace the Economy With a Printing Press

Peter Schiff recently spoke at the “virtual” Los Vegas Money Show and explained why we are near the endgame for the dollar.

Peter opened up his talk speculating that the Money Show could be close to the end of its run.

I think the money that most people have, or at least what they think is money isn’t going to be money much longer.”

What in the world is he talking about?

The looming dollar crisis.

The dollar is going to fall through the floor and inflation is going to ravish the United States. What’s about to happen is that the world is going to go off the dollar standard and go back to the gold standard. That is where we are headed.”

Peter warned that we’re about to see a loss of wealth on an unprecedented scale.

He reiterated that this isn’t about COVID-19. We were already on the cusp of a crisis. The coronavirus simply made it worse.

It’s one of many problems,  but it’s not why we’re about to go through this massive economic collapse. But it is the monetary and fiscal policy response to COVID-19. The government’s cure is what’s going to kill the economy.”

In fact, the problems started long before the pandemic. As Peter reminds us, interest rate cuts and QE were already ongoing before the government shutdowns started last March. In fact, it goes back much further than that.

Everything the US government did in the aftermath of the 2008 financial crisis was a mistake. All the monetary policy was wrong. All the fiscal policy was wrong. As a consequence, we never actually recovered from that crisis.

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

Dollar’s Purchasing Power Drops to Lowest Ever. Inflation Heats Up, as Fed Wants, After Simultaneous Supply & Demand Shocks

Dollar’s Purchasing Power Drops to Lowest Ever. Inflation Heats Up, as Fed Wants, After Simultaneous Supply & Demand Shocks

“We’re not even thinking about thinking about” slowing the decline of the dollar’s purchasing power — and thereby labor’s purchasing power.

A supply shock and a demand shock came together during the Pandemic, and it produced chaos in the pricing environment. There was a sudden collapse in demand in some segments of the economy – restaurants, gasoline, jet fuel, for example – and a surge in demand in other segments, such as eating at home, and anything to do with ecommerce, including transportation services focused on it.

These shifts came together with supply-chain interruptions and supply chains that were unprepared for the big shifts, leading to shortages in some parts of the economy – the supply shock. There were empty shelves in stores, while product was piling up with no buyers in other parts of the economy.

The sectors surrounding gasoline, jet fuel, and diesel fuel – oil and gas drilling, equipment manufacturers, transportation services, refineries, etc. – were thrown into turmoil as demand vanished, leading to a total collapse in energy prices. In April, in a bizarre moment in the history of the oil business, the price of the US benchmark crude WTI collapsed to negative -$37 a barrel.

Since then, the price of crude oil has risen sharply (now at positive +$41 a barrel), as demand for gasoline has returned to near-normal while demand for jet fuel remains in collapse-mode, as people are driving to go on vacations, instead of flying, and as business travel is essentially shut down.

As a result, for a few months, all of the inflation data was going haywire, with some prices plunging and others spiking. This is now being worked out of the system.

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

The Dollar’s Ongoing Fall From Grace Will Soon Catapult Precious Metals to Even Greater Heights

The Dollar’s Ongoing Fall From Grace Will Soon Catapult Precious Metals to Even Greater Heights

gold vs dollar

I have been telling readers to put savings into gold and silver for well over 14 years now, and in that time, precious metals have had spectacular rallies as well as intense corrections. Weak hands have been selling and strong hands have been buying and holding for some time now. We have done this with the expectation of something far more than just a parabolic event; some of us have been predicting an economic crisis the likes of which have not been seen in almost a century.

Specifically, in 2018, I warned that there was a dramatic shift in Federal Reserve policy that would puncture the massive debt bubble they had been building since 2008. The crash of the “Everything Bubble” would inevitably lead to a spike in metals prices.

In an article published in January 2018, I warned that the Fed would increase the speed of its balance sheet cuts and interest rate hikes and that this would trigger an initial implosion in the U.S debt bubble and the dollar, along with flirtations with a stock market plunge. By the end of 2018, we saw exactly that.

By mid-2019, the Fed had reversed its fiscal tightening policies, but of course, it was too late; Pandora’s box had already been opened and economic instability was increasing. I continue to believe that this action on the part of the Fed was absolutely deliberate and that they knew they were initiating the beginnings of a crisis. The minutes of the October 2012 Federal Open Market Committee even reveal that Jerome Powell openly discussed what would happen, years before he became the Fed Chair.

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

Peter Schiff: The Dollar Crash Will Take Down the Entire US “House of Cards”

PETER SCHIFF: THE DOLLAR CRASH WILL TAKE DOWN THE ENTIRE US “HOUSE OF CARDS”

Peter Schiff says the new historic and record-breaking fall in gross domestic product numbers coupled with unemployment and the Federal Reserve’s excessive money creation will cause a dollar collapse. Once that happens, the entire house of cards that is the United States will fall.

Schiff says we should be prepared for the fall of the U.S. by the end of this year. According to a report by RT, Schiff, the ignorance of Americans is still present. People are not waking up, unfortunately. That ignorance is likely to remain the case until the fall becomes a crash, which I don’t think will begin until the Dollar Index breaks 80,” wrote  Schiff in a Tweet. ” At its current rate of decline that level could be breached before year-end, perhaps by election day.”

Remember, election time could be a gigantic planned disaster too, and Americans look like they’ll fall for that too.

Government Warning: “One Way Or Another, The Economy Is Going To Lockdown Again”

While the dollar continues to fall, gold, silver, and cryptocurrencies are all going up. This is a signal that people are leaving centralized systems for those that are decentralized and not controlled by the ruling class or elitists who think of us as their slaves.  According to Schiff, gold will supplant the dollar because the euro and other currencies are not ready to take its place.  They are also centralized and in the control of the same people who control the creation of U.S. dollars. “No other currency will take the dollar’s place, real money will take its place, particularly gold, because gold was there before the dollar,” he said, noting that the greenback “did a lousy job, and now gold is taking its spot back.”

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

Peter Schiff: The Dollar Is Not Just Going Down; It’s Going to Crash

Peter Schiff: The Dollar Is Not Just Going Down; It’s Going to Crash

As gold was closing in on its all-time record price last week, Peter Schiff appeared on the Claman Countdown and warned about the looming dollar crisis.

Claman set up the interview pointing out that Peter predicted this big move up in gold months ago and asked, “What’s your new prediction about the dollar?”

Peter said it’s not really a new prediction, but perhaps it’s more timely.

The dollar’s not just going down. It is going to crash.”

Prior to the interview, Claman mentioned that the Dow was up, but Peter said there is another way to look at it.

Priced in real money, gold and silver, the Dow is actually down. And what gold is telling you, and silver, is that the dollar is losing value. It’s losing purchasing power.”

The dollar had been drifting lower against other fiat currencies over the past several weeks. At the time of the interview, the dollar index was just a few ticks off its March low.

But I think the dollar is going to keep drifting down until it collapses,” Peter said.  “And this is going to usher in a real economic crisis in America, unlike something we’ve ever seen. Because it’s going to force the Fed to choose between saving the dollar, and dumping all the bonds its been buying, letting interest rates rise sharply, forcing the US government to slash spending right now and abandon all these stimulus plans, or just let inflation ravage the entire economy and wipe out a generation of Americans.”

Claman asked Peter what is the trade given what’s coming down the pike. Peter said his advice is “to get out of Dodge.”

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

World on Verge of Spinning Out of Control – John Rubino

World on Verge of Spinning Out of Control – John Rubino

Financial writer John Rubino says gold is at new all-time highs, silver is vaulting upward and there is no end in sight for the massive money printing around the world.  Rubino say’s if you look deeper, you can see the “real message” in the unfolding events.  Rubino explains, “It’s fun to be a gold bug and see your stacks getting more valuable, but the real message here is the world is on the verge of spinning out of control.  That’s what gold and silver are signaling.  We’re just a mess with no way out of this because even before the pandemic hit, we were running deficits in the U.S. of a trillion dollars a year.  That is an emergency level of government borrowing, but we were doing it in the 10th year of a recovery or expansion.  Normally, everybody is back at work, paying taxes, government debt goes way down and sometimes it even turns into surpluses, but that wasn’t happening this time, which is a sign the monetary experiment that began in 1971 when we went off the gold standard and went to all fiat currencies everywhere was ending.  We are no longer able to manage economies with this much debt just by printing new currency and borrowing more money.  The system was going to break down anyway, but the pandemic has come along and accelerated the process.”

Rubino goes on to say, “So, now people ask:  Is there a pain free way of getting out of this and getting back to normality?  And the answer is probably no.  We have to get rid of this debt somehow.  I think the global debt to GDP is in the 350% to 400% range, which is the highest ever. 

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

Is the Dollar Overvalued or Undervalued?

Is the Dollar Overvalued or Undervalued?

The latest claim running around is that the dollar is overvalued relevant to its trading partners, and it will decline as the economy recovers due to imports. You really have to wonder if these analysts are just working from home and have lost all sense of the world because they are locked down. In that forecast, they are ASSUMING that the world economy will recover as if nothing has taken place.

This is the typical analysis that simply focuses on domestic numbers and assumes that if you import more goods, then the dollar must decline. This theory is up there with thinking raising interest rates will be bearish for the economy and the stock market. Interestingly, both the economy and the stock market rallied as long as interest rates were RISING!

This is not a world that you can judge simply by looking at trade statistics. It is pure sophistry. In 2018, exports of goods and services from the United States made up about 12.22% of its gross domestic product (GDP), while US imports amounted to 15.33%. We have allocated trade according to the flag the company flies, and then you will see that the US has a trade surplus. Moreover, I assisted the Japanese on how to reduce their trade surplus buying gold in New York, taking delivery, and exporting it to London and selling it there. It does not matter what is exported; the statistics only look at dollars — not goods. This theory about trade to claim the dollar will decline is laughable.

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

Goldman Warns “Real Concerns Are Emerging” About The Dollar As Reserve Currency; Goes “All In” Gold

Goldman Warns “Real Concerns Are Emerging” About The Dollar As Reserve Currency; Goes “All In” Gold

In his morning critique of goldbugs’ resurgent optimism about the future of gold, which has exploded alongside the price of precious metals, which in turn have been tracking the real 10Y rate tick for tick…

… Rabobank’s Michael Every argued from the familiar position of one who views the modern monetary system as immutable, and bounded by the “Venn Diagram” confines of the dollar as a reserve currency and financial assets as a bedrock of modern household wealth, of which as Paul Tudor Jones recently calculated, there is just over $300 trillion worth, compared to just $10 trillion in total gold value.

Indeed, according to Every, the surge in gold is meaningless because “if you buy gold, technically that is going to make you money. And yet that money is still going to be priced in US DOLLARS – and that gives the whole game away.”

Like fans of the England football team, gold fans can dream of the distant past when gold was the centre of the global monetary system; but they can keep dreaming if they think those days are ever going to return. Gold may be an appreciating asset, but all the evidence suggests that it won’t be one that is of any direct relevance to day-to-day life, finance, and business. Your currency won’t be tied to it. You won’t get paid in it. You won’t spend in it or save in it (other than to the switch back to US Dollars). You won’t be doing deals in it or importing in it.”

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

Predictions Of The Dollar’s Demise Are Likely Premature

Predictions Of The Dollar’s Demise Are Likely Premature

Predictions of the dollar’s demise are likely premature and overblown. This post is in response to the rising interest in both precious metals and cryptocurrencies. Several factors are driving this trend. One is the idea governments have targeted cash and wish to move us towards a “cashless” society where they control our every move. Another is rooted in the idea inflation is about to raise its ugly head as currencies are debased. 

I contend that for several years currencies have been trading in a hyper-manipulated state. It should be noted that fiat money is often sheltered from the storm of volatility by both politics and because it exists in a rather closed system. Wealth is contained within this system of fiat money by laws and rules that discourage freedom of movement. It is the coordinated collusion of the major central banks that have allowed this charade to exist. The fact it has not been recognized or acknowledged does not alter or guarantee the system will continue. The failure or major repricing of any of the world’s four major reserve currencies will destroy the myth that major currencies are immune to the fate that has haunted fiat money throughout history. When the nations granting these currencies prove unable to control their budgets history shows their currency is destroyed and crushed under the weight of debt.

Central Bank Balances Have Exploded

One thing the global economy doesn’t need with all the uncertainty that is currently floating around is unstable currency markets. When you consider just how destabilizing currency swings can be it is easy to see how a strong dollar could obliterate the global economy. It should not be a surprise in our current situation that behind the curtain central bankers could be busy manipulating currencies so they trade in a narrow range that will not rock the boat.

The new deal is a bad old deal

The new deal is a bad old deal

So far, the current economic situation, together with the response by major governments, compares with the run-in to the depression of the 1930s. Yet to come in the repetitious credit cycle is the collapse in financial asset values and a banking crisis.

When the scale of the banking crisis is known the scale of monetary inflation involved will become more obvious. But in the politics of it, Trump is being set up as the equivalent of Herbert Hoover, and presumably Joe Biden, if he is well advised, will soon campaign as a latter-day Roosevelt. In Britain, Boris Johnson has already called for a modern “new deal”, and in his “Hundred Days” his Chancellor is delivering it.

In the thirties, prices fell, only offset by the dollar’s devaluation in January 1934. This time, monetary inflation knows no limit. The wealth destruction through monetary inflation will be an added burden to contend with compared with the situation ninety years ago.

Introduction

Boris Johnson recently compared his reconstruction plan with Franklin D Roosevelt’s New Deal. Such is the myth of FDR and his new deal that even libertarian Boris now invokes them. Unless he is just being political, he shows he knows little about the economic situation that led to the depression.

It would not be unusual, even for a libertarian politician. FDR is immensely popular with the inflationists who overwhelmingly wrote the economic history of the depression era. In fact, FDR was not the first “something must be done” American president, a policy which started with his predecessor, Herbert Hoover. But the story told is that FDR took over from heartless Hoover who had failed to step in and rescue the economy from a free-market catastrophe, by standing back and letting events take their course instead.

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

How to Squash this Stealthy Attack On Your Wealth

How to Squash this Stealthy Attack On Your Wealth

gold dollar

You’re losing the war against your wealth.

In 1935, the official price of one gold ounce was $20.67. Today it’s around $1,770.

price of gold

Price of gold 1935 vs. 2020

What happened?

The ounce of gold didn’t change. One troy ounce of gold still weighs one troy ounce.

gold coin

One ounce in 1935 is still one ounce in 2020

What changed is the number of dollars it takes to buy one gold ounce. That stack on the left might look big compared to the paltry $20.67 on the right. It’s going to get a lot bigger.

The chart below shows the price of gold going back to early last century. The tiny blip in 1935 was a 69% increase in price at the time. It’s barely noticeable today.

physical gold

Likewise, a $100 move in the price of gold will someday look like a tiny blip. Don’t let an endless stream of media panics distract you from what’s really going on. That stack of dollars can grow infinitely.

As the stack of cash grows, gold stays the same. Double the number of dollars needed to buy an ounce of gold and the ounce stays the same. It’s the dollar that’s worth less.

purchasing power

Consider this. $1,000 was a lot of money in the early 1900s. If an ancestor of yours had put $1,000 worth of cash away for you, today, it would barely pay for one month of rent at a downmarket apartment. Back then, it was a large sum of money.

However, if your ancestor had put $1,000 worth of gold into an envelope for you, it’s worth more than $80,000 today.

There’s a war against your wealth. The dollars you use to measure the wealth haven’t held up over time. Gold has.

With the U.S. government set to run a record deficit of $3.7 trillion in 2020, according its own CBO (Congressional Budget Office), it may soon take even more dollars to buy the one gold ounce.


TOM CLOUD PRECIOUS METALS UPDATE: U.S. Dollar Troubles Ahead & Are Banks Safe?

TOM CLOUD PRECIOUS METALS UPDATE: U.S. Dollar Troubles Ahead & Are Banks Safe?

In the newest precious metals update, Tom Cloud discusses the platinum market, U.S. Dollar troubles, and is your money safe in banks.  Tom says that more individuals and companies are moving some of their cash out of banks and into physical metals than he as ever seen before.  Americans are becoming increasingly worried about their ability for the FDIC to insure their money at banks.

Tom Cloud discusses why the U.S. Dollar is in trouble, A dollar crash is virtually inevitable, Asia expert Stephen Roach warns:

Stephen Roach, one of the world’s leading authorities on Asia, is worried a changing global landscape paired with a massive U.S. budget deficit will spark a dollar crash.

“The U.S. economy has been afflicted with some significant macro imbalances for a long time, namely a very low domestic savings rate and a chronic current account deficit,” the former Morgan Stanley Asia chairman told CNBC’s “Trading Nation” on Monday. “The dollar is going to fall very, very sharply.”

His forecast calls for a 35% drop against other major currencies.

Tom told me during our phone chat that he believes the industry will suffer from even more substantial shortages of physical gold and silver bullion products when the next BIG WAVE of buying hits the market.  I totally agree.  Tom stated that during late March and in April, he saw more new clients purchasing physical gold and silver than he has seen in quite a while.

The biggest issue that concerns Tom and some of his clients is the safety of their FDIC insured money in banks.  Individuals and companies who hold a significant amount of funds in banks are becoming worried that the FDIC will not have the funds to protect customers when there is a RUN on the BANKS.  I believe this is coming in time.  Especially when the U.S. Dollar gets into trouble.

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

Olduvai IV: Courage
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Olduvai II: Exodus
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