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The Halftime Report

Some may breathe a sigh of relief that 2020 is now half over.  It has been a challenging year on many fronts.  But it should be of some comfort for our clients and friends to know that, as forecast, gold is the big winner.  

Here’s a brief 2020 halftime report along with charts of gold and silver in the first six months.

Gold outperformed just about everything in the first half of the year by climbing about 17 percent.

Stocks?  Not so great.  They are still down for the year, although extraordinary liquidity operations pumped stocks up in the second quarter. 

But the second quarter was another strong one for gold, which gained 9.5 percent.  Silver gained 25 percent. 

What do we expect for precious metals in the second half of 2020?  It seems very clear: there’s more of the same ahead.  That’s because the gold price is a referendum on the quantity and quality of the US dollar.

Apply this examination to other things.  Suppose there is a bumper crop of oranges this year, much more than in the years before.  Of course, the price of oranges will fall with the increased supply or quantity.

Or suppose that the orange harvest is the same as in recent years, but the quality is really poor.  They may be pulpy or just not sweet, but the oranges are simply not good.  In such a case, buyers will find substitutes and the price will drop.

Now, suppose both that the orange crop is huge and that the oranges are crummy.  That’s the worst of both worlds for orange prices, which will fall even more.

As we have made clear repeatedly this year, at the hands of the Federal Reserve the quantity of US dollars has simply run through the roof.

Sharply rising US debt, coupled with the collapse in US productivity, are reflected in the declining quality of the dollar.

Protect yourself and profit with gold and silver as the dollar’s quantity keeps climbing and its quality keeps falling in the second half of 2020.

Contact Republic Monetary Exchange today and speak with one of our experienced precious metals professionals.

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Extraordinarily Uncertain

Federal Reserve chairman Jerome Powell has proclaimed the future “extraordinarily uncertain.”

It is one of the few times that he has spoken that we find ourselves nodding in agreement.

Here are some uncertainties that spring to mind:  Will people ever go back to movie theaters in the numbers they did before?  Or will they stay at home and watch Netflix? Will more and more companies discover they can cut commercial real estate expenses with employees working from home?  How will travel and hospitality recover?  What happens when the number of people defaulting on their rent climbs?  What replaces all the capital, the product of years of savings, when small businesses close and lose everything?  What happens to car sales if fewer people stop commuting?  What happens to tax revenue with depressed economic activity and million unemployed?  What happens to social welfare spending? 

What happens when—as shown in the following chart—almost half the adult population doesn’t have a job?

What happens?  Powell is right.  The future is extraordinarily uncertain.  

Or at least part of it is uncertain.

So instead of making wild stabs at guessing what the future will look like, let’s look at what we know for certain.

The US government has met the challenges of this year with unprecedented deficit spending.  It added $3.12 trillion to its national debt in just the first six months of this year.  That brings the unpayable national debt to $26.31 trillion.  

The Federal Reserve has made up, conjured up, printed into existence $3 trillion that it did not have on New Years’ Eve 2019.

And with the made-up money, it has purchased the corporate debt of private companies: Wal-Mart, Berkshire Hathaway, Phillip Morris.  It has purchased government securities, agency securities, and junk bonds.  

In other words, Washington’s bubble makers are blowing up bigger bubbles in government debt, in corporate debt, in agency debt.  They are doing so the way they always do it, with Fed money printing.   

Fed Chairman Jerome Powell

From Reuters:

“The Fed has cut rates to near-zero, bought trillions of dollars of bonds and rolled out nearly a dozen credit backstopping programs to boost the economy and steady markets. The Fed has also pledged that it will use the ‘full range of tools’ to support the U.S. economy.”

Using the full range of its tools is how they blew up the mega-housing bubble and the huge dot com bubble: by the artificial creation of money and credit.

The Dow Jones Industrial Average is down 3.5 percent this year.  We get that.  We don’t think a shut-down economy, smashed-up businesses, and broken-down employment is good for stocks, either.

But the one thing we know for certain is that every problem will be met by Washington with more deficit spending, and by the Fed with more money printing.

Every problem.  Of that we can be certain.

They are one-trick ponies.  That’s all they have.  They make the bubbles bigger, the economy less resilient, and the eventual meltdown more painful.

And they make gold go up.

No wonder, then, that gold is already up about 17 percent this year.  Gold is up almost 18 percent in terms of the euro and 25 percent in the British pound.

Gold has climbed 28 percent higher over the last 12 months, while silver has climbed 18 percent.

We’re just getting started.

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No Wonder the Super-Rich Are Buying Gold!

Gold Has Outperformed Every Major Asset Over the Past 12 Months!

It’s been said that the rich get richer and the poor get poorer.

There is no question the Federal Reserve policies have been stove-piping money to the wealthy.  At the same time, the middle-class has stagnated.  

But the rich are not just depending on the Federal Reserve.  

Now they are buying gold, too. 

According to Reuters, “Advisers to the world’s wealthy are urging them to hold more gold, questioning the strength of the (stock) rally and the long-term impact of global central banks’ cash splurge.”

Sound advice.  Gold is the top-performing major asset over the last 12 months.  As we write this (6/26), gold is up 25 percent over the 12 months.  Silver has gained 16 percent.

The Dow Jones Industrial Average is down almost 5.5 percent.

You will not be surprised to learn that Reuters reports that the ultra-wealthy are concerned with wealth preservation.  One private banker said of their wealthy clients that “in many ways they have a longer historic lens than some of our other clients, so they do worry about inflation.”

Reuters spoke with nine private banks that manage around $6 trillion in assets for the world’s ultra-rich, and that had advised clients to increase their allocation to gold. 

Reuters:

“Before the COVID-19 pandemic, most private banks recommended their clients hold none or just a tiny amount of gold.

“Now some are channeling up to 10 percent of their clients’ portfolios into the yellow metal as the massive central bank stimulus reduces bond yields…”

If you, like the super-rich, are interested in wealth preservation, speak with a Republic Monetary Exchange gold and silver specialist today.  They are experienced and knowledgeable and can help you prepare to protect yourself and profit in this era of massive government deficits and unchecked Fed money-printing.

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Three News Topics We Want Our Friends and Clients to Know

The Writing on the Wall?

Trump administration economist are bailing out right and left.  Some of that is the normal ebb and flow of politics as many try to burnish their credentials a bit by serving in the administration and then wish to return to private life.  

But economist Bob Wenzel at Economic Policy Journal looks at the numbers and suspects something else is going on.  Kevin Hassett, a top Trump advisor has announced his departure.  Wenzel says Trump has counted on Hassett and that “it is an odd time for him to leave with the economy a mess as a result of the lockdowns.”

Thomas Philipson, acting chairman of the White House Council of Economic Advisers, is leaving at the end of the month.  Others leaving include “Andrew Olmem, special assistant to the president for economic policy and deputy director of the White House National Economic Council; Eric Ueland, who served as the White House director of legislative affairs and played a key role in negotiations with Congress over the stimulus; and Joe Grogan, director of the White House Domestic Policy Council.”  

Wenzel says, “I will allow readers to make their own guess as to what is going on but it doesn’t look good.

“Hug your gold coins.”

Point made, Bob.  

Thanks.

IMF Downgrades Its Ridiculous Growth Forecast

The International Monetary Fund has slashed its forecasts for GDP growth for both the US and the global economy.

In April, the IMF was forecasting US GDP to shrink by 5.9 percent this year.  It is now calling for an 8 percent contraction in 2020.

In April the IMF forecast the global economy would contract by 3 percent.  It now expects global GDP to fall by 4.9 percent.

That would be the worst collapse since the Great Depression.

We thought the earlier IMF forecasts were way off base.  30 million Americans lost their paychecks in April.   That’s an awfully big hit for a workforce of 165 million people.  By the time its all added up total US job losses may have reached 40 million.

Dead People Cash In

Did you get your $1,200 check from the government?  Well, you are not alone. 

1.1 million “economic stimulus” checks amounting to $1.4 billion were sent to recently deceased people.  

The government couldn’t be expected to exercise too much care.  After all, it was in a big hurry to get the economy moving again.

And that’s a line we’ve heard before.  

You may remember that the US Federal Reserve sent $12 billion in cash to Iraq in 2007. Shrink-wrapped, washing machine-sized palettes of freshly printed $100 bills.

And it all disappeared.  Without records.  Without accounting.  It went into gym bags and hidey holes.  It went into the trunks of cars and into the private safes of Iraqi officials.  

It just went.  

$12 billion.

Said Paul Bremer, the American in charge of stuff in Iraq, “Our top priority was to get the economy moving again. The first step was to get money into the hands of the Iraqi people as quickly as possible.”

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Seeing is Believing!

We want to share a few charts today, first to illustrate this powerful gold bull market, and then to show some of the financial machinations going on behind the scenes that we believe will drive gold much higher. 

By some interpretations, the gold bull market was confirmed, if not born, in August 2018 with the low of $1,167.

Before the year was over, gold moved decisively above its 200-day moving average.  It has stayed above that trend line ever since, except for a quick drop in March.  That drop appears to have been a Wall Street phenomenon, with traders and hedge funds faced with massive margin calls in the COVID-19 lockdown stock market collapse.  They turned to gold for the liquidity they needed in the moment, but it was a brief affair and they wasted no time reestablishing their gold holdings.

That liquidity is a primary virtue of gold.  It is the world’s most liquid commodity, even in a crisis.

The next chart is a dramatic portrayal of the Federal Reserve in action.  Covering the same period as the gold bull market beginning in August 2018, it shows both the explosive growth of the money supply, MZM (in red) and Federal Reserve assets (in black).

Both are “hockey stick” charts, sudden turning straight up.  MZM, a broad measure of money supply, has grown about 35 percent over the period, to about $21 trillion.  

Fed assets, represents financial instruments, corporate and government bonds, stocks, funds, mortgage securities that the Federal Reserve has purchased out of money it created out of thin air, or more accurately by making a computer entry in an account somewhere.  

Fed assets have increased about 66 percent over the period to $7.1 trillion.  That outpaces gold’s gain of 52 percent from trough to peak.

The growth of both of these measures should leave even old and grizzled market veterans gasping for air.  The straight-up climb of both is relentless and unprecedented, even as the driving force behind a bull market.

The Federal Reserve has taken this country’s economy into very dangerous territory.  It is not enough for us to say that we don’t believe the Federal Reserve has any idea what it has done with these policies.  It is better that you should know that the Fed itself admits it doesn’t know what it has done.

We will simply leave you with the words of Fed chairman Jerome Powell just a few days ago:

“We’re not even thinking about thinking about the consequences of our actions.”

We think these charts makes that evident.

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Dollar Crash, Part III

The Fiddle-Dee-Dee Chronicles

We have written a couple of important posts lately about a coming dollar crash.  

In Dollar Breakdown Ahead! we cited former Yale economist Steven Roach, who says, ““U.S. living standards are about to be squeezed as never before.”

We followed up on Roach’s observations in “More on the Coming Dollar Crash”.  Roach says that there’s not much that Washington can do about the new dollar crash.  It’s already baked into the cake because of what they’ve already done.  Things like the Federal Reserve’s money printing, the $4 trillion deficit, and the $26 trillion national debt.  

(By the way, the national debt is growing so fast it is getting hard for us to keep up.  When we say its $24 trillion, it suddenly shows up as $25 trillion.  Once we start using that number, it’s too late.  Just the other day, on June 10, it broke above $26 trillion.  Since then they’ve added another $145 billion in red ink.  IN JUST A FEW DAYS!  You can follow the explosive growth of the debt on a daily basis at this US Treasury site.)

“The dollar is going to fall very, very sharply,” says Roach.  He thinks it could lose as much as 35 percent of its value.    

All of the things that Washington and the Fed have done lately have been ill-considered.  That’s not just our judgement.  They know it, too.  Fed Chairman Powell said that the Fed has “crossed a lot of red lines that had not been crossed before.”  He says “you do that and you figure it out afterward.”

Figure it out afterward?  That sounds to us like Scarlett O’Hara is in charge of monetary policy.  “Fiddle-dee-dee!  I’ll think about that tomorrow!”

Nothing they have done has fixed anything.  It has only pushed the confrontation with financial reality a little further down the road.  By then, the dollar and debt problems will be bigger.  The collapse will be even more destructive.  

Powell went to Georgetown Prep.  He has a degree from Princeton.  He has a law degree from Georgetown, where he edited the law journal.  Neither he nor Yellen and Bernanke before him can be called stupid.  But how could they be so disconnected from reality?  No wonder James Grant complains that the dollar used to be on the gold standard.  Now it’s on the Ph.D. standard.

Grant points out that Powell “does business in a building infused with the doctrines of the hundreds of doctors of economics on the Federal Reserve System’s generous payroll.”  Yet they don’t know what the consequences of their actions will be? 

Fiddle-dee-dee, indeed!  

We’ll, we are students of monetary history, so we’re just going to buy more gold!  

We advise you to do the same.

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Amazed at the Stock Market Bubble

We have reported to you recently about the Wall Street “smart money” buying gold.  Names like Dalio, Druckenmiller, Tudor Jones, Zell, Gundlach, Singer, Klarman, Einhorn, Mobius, Hendry, Zell…  See All the Smart Money is Buying Gold, and More About the Smart Money.

There are two more smart guys we want to mention.  We think it is important to share their views because they are both alarmed by what is going on in the stock market.

The first is Jeremy Grantham.  He’s the co-founder and chief investment strategist of Grantham, Mayo, & van Otterloo, a major asset management firm.  Grantham is best known for spotting speculative bubbles in the markets, including Japan’s stock market bubble in the 80s, the dot com bubble, and the housing bubble.

Grantham is “amazed” that the stock market could be so high.  That’s because the price/earnings ratio is in the top 10 percent in its history, while the underlying economy is in the worst 10 percent in its history.  The market and the economy have never been more disconnected, he says

Grantham calls it “one of the most impressive mismatches in history.”

“This will end badly,” says Grantham.  “it’s becoming the fourth real McCoy bubble of my career.”

There are a lot of other smart guys, but one of the smartest ones we know is David Stockman.  He was President Reagan’s budget director and a true financial whiz kid in his youth.  Now after a long career on Wall Street, he’s not only still smart, he’s also wise.    

David Stockman

Commenting on the current state of the economy and hopes for a recovery, Stockman says, “I think this will be a long, deep ‘L’ shaped bottom…. We went through a month in which 30 million people suddenly found themselves with no paycheck, in April, and the stock market had the best month in 52 years.”  

“Now what kind of sense does that make?”

We agree.  Not much.

“I do think we are near the end of the line of this whole phony Keynesian central banking regime,” says Stockman.  “Once confidence finally evaporates, there will be a massive stampede into real money.

Emphasis ours.  Real money.

We urge our friends and clients to avoid the stock market bubble, so clearly driven by Fed policies and not by economic growth and dynamism.

And we would like to help you beat the coming stampede into real money.  Contact Republic Monetary Exchange today and speak with one of our gold and silver specialists about protecting your family and your wealth.

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More on the Coming Dollar Crash

The dollar will crash under the staggering weight of its debt!

In fact, “The dollar is going to fall very, very sharply.”  That’s what Steven Roach says.  He’s very concerned.

We wrote about Roach last week (Dollar Breakdown Ahead!), calling him “a pretty sensible guy.” That was when he told Bloomberg News that “US living standards are about to be squeezed as never before.”

Well, that’s what happens when your currency crashes.  

Now Roach has taken the message to CNBC, where he said his forecast calls for as much as a 35 percent drop against other currencies.

If Roach is right, the price of gold will skyrocket!

“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,” said Roach, a Yale professor and former chairman of Morgan Stanley Asia.  

““These problems are going from bad to worse as we blow out the fiscal deficit in the years ahead,” he says.  He points to the Stagflation Decade of the 1970s as a model for what to expect:  weak or negative economic growth combined with rising prices.  

That’s the worst of both worlds!

The following chart shows the collapsing purchasing power of the dollar over 300 years by comparing it to gold.  You can see a bad crash of the dollar during the Civil War era, one from which it recovered when gold was restored to the monetary system.

The next dollar crash came with FDR’s gold grab in the 1930s.  That was followed by the crash when Nixon abandoned the gold standard in 1971.

There isn’t much that lawmakers and Washington can do about the new dollar crash, says Roach.  

But you can do something for yourself. Take steps to protect yourself and your family with gold and silver.  Speak with a Republic Monetary Exchange precious metals consultant today

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Showdown

Nobody can watch everything all the time.  There are too many channels.  And the domestic news has reached the outer limits.  In fact, it is mesmerizing: demonstrations and looting, a new country with its own warlords that spring right up in the middle of a major American city, yesterday’s parade of authority figures proven wrong today, bailouts for the cronies, the COVID-19 deaths and lockdowns, burgeoning deficits and staggering money printing, a presidential election season getting underway, and a stock market that lurches and stumbles, and reels and staggers.

It’s like trying to take your eyes off a train wreck.  We know.  We watch it, too.

Yet there are other stories being screened on the 2020 channels that we would all be wise to watch as well.  These are the geopolitical developments that threaten the world with financial chaos and war.  We’ll mention just one of the global hot spots—China—that it would pay to follow because dangerous geopolitics drive gold prices higher.

Tensions with China are running high.  Over Hong Kong…  the Wuhan Virus… the trade war.  Charges and counter-charges flying across the Atlantic.  The vital waterways of the South China seas are crowded with warships, raising the risk of an accident or incident. Chinese fighters briefly entered Taiwan’s airspace last week, while China is very upset with a US military flight over Taiwan, also last week.

The Senate Armed Services Committee just days ago approved a new military fund of $6 billion “to confront China.”  That’s the way that Defense News headlined the story.  The measure would enable U.S. military operations in the region it calls the “Indo-Pacific.”

US and China trade war

Don’t ask where the billions come from.  Last week the national debt just rolled right past $26 trillion.  (By the way, the Pentagon just announced plans to shovel $250 million more to Ukraine.  It’s a great comfort, we’re sure, knowing that while American cities burn and its shops and stores are looted, Ukraine will be protected.  Your tax dollars at work!)

We’ll save news about a few of the other hot spot like Russia, Iraq, and Korea for another day, and for now will simply urge you not to wait for an international showdown to invest in gold.  

Protect your wealth before it happens.

We now return control of your television back to you.

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Rising costs of food and goods

Grocery Prices Take Off

The authorities cannot print trillions of dollars, money unbacked by anything and conjured out of nothing, without impacting prices.

And that is probably the best reason today to buy gold.  Because the Federal Reserve has been printing money like there is no tomorrow.  

Last year at this time, in the middle of June, the Fed carried $3.8 trillion of assets on its book. That’s $3.8 trillion dollars worth of financial instruments, mortgage bonds, debt securities, government bonds.  

Now, twelve months later its assets have climbed to $7.1 trillion.  That means that in the last twelve months the Fed has purchased $3.3 trillion more.  It has printed $3.3 trillion in the last year.  Most of it in the last three or four months.

All that new money blows the stock market bubble back up for now.  That’s why they do it.  As David Stockman said, the Fed is the vassal of Wall Street and the banking cartel that created it in the first place.   Bubble after bubble.  The Fed “dances with them that brung ‘em.”

Sometimes a Fed money printing spree blows consumer prices higher.  Look back to the 1970s and double-digit consumer price increases.  

Sometimes the money printing inflates dot com stocks.  Another time it is housing prices.  The next time it’s the stock or the bond market.

This time it could very well be consumer prices that take off.  A hat tip to economist Robert Wenzel at Economic Policy Journal for pointing out news from the Wall Street Journal that we might have missed, the “Fastest-Rising Food Prices in Decades.”

Food prices increased 5.8 percent between March 1 and May 30, compared with the same time a year ago.

The Consumer Price Index reports that steaks, ribs and pork roasts are up 10 percent.  Just the April 2.6 percent increase in grocery prices is the biggest monthly increase since the inflationary 1970s.  

It would be fair to blame some of it on the coronavirus pandemic.  It certainly hit the meat industry hard.  But no matter what sector of the economy forms the biggest bubble, as Wenzel says, “It is only the beginning folks.

“Mad Jay Powell is pumping trillions of dollars into the economy that will be bidding for the goods and services out there.”

The best thing you can do is protect yourself with precious metals.  We know a thing or two about periods like this because we’ve lived them before.  Call or visit Republic Monetary Exchange today.

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Dollar Breakdown Ahead

“U.S. living standards are about to be squeezed as never before.”

Oh, great!  Exploding federal budget deficits are catching up with us.  The chickens are coming home to roost and a crash in the dollar is headed our way.

That’s according to a piece on Bloomberg News the other day, A Crash in the Dollar Is Coming.  It’s by Stephen Roach, an economist at Yale University now, before that with Morgan Stanley, and with the Fed.

We have followed Roach for a long time.  He writes a lot and is a pretty sensible guy.

Roach says, “The seeds of this problem were sown by a profound shortfall in domestic U.S. savings that was glaringly apparent before the pandemic.”  

Unemployed and panicked American’s quit spending with the onset of the pandemic, so the US savings rate did turn up sharply.  But it hasn’t been enough to offset the exploding federal deficit.  

The coming dollar downturn will be inflationary, according to Roach.  Couple that with the slowdown effect of the pandemic measures, and you have the worst of two worlds:  stagflation.  Rising prices and little or no economic growth.  

Oh, great.

And that’s not all.  According to Roach, the growing trade war will mean that much of what Americans buy will be diverted from low-cost to higher-cost producers.  That’s another tax on consumers.  And who will fund our deficits, buy US Treasury securities? Take China out of that picture as well.  Fewer buyers mean higher interest rates.

Oh, great.  But as Roach says, the privilege we’ve had with the dollar shouldn’t have been taken for granted.  And now a collapse of the dollar is headed our way.

Oh, well.  But what can you do?  

There is something you can do instead of sitting around muttering “oh, great,” and bemoaning the inevitable.  Take the vital steps needed to protect yourself and profit with gold and silver.  

You can do that!  

To get started actually doing something, call and speak with a Republic Monetary Exchange precious metals specialist today.

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Preparing for the Seen and Unseen

Cities burning, a plague on the land, businesses failing, millions unemployed.

That is what is visible.

What is hidden from most people is the destruction of our monetary system by mad money printing and a mountain of unpayable debt that is close to collapse.

That’s unseen.  For now.

We have written many times about the unseen destruction of out monetary system, overloaded by debt and undermined by made-up money.  It is one of our specialties.  Almost everything we have written over the past couple of years deals with termites, unseen, at work in our monetary system.

Now, just a few words about what is seen all around us.  From the COVID-19 shutdown to the riots in our streets, it is all very visible in the news.  We don’t write as much about things that everyone sees because, well, because everyone sees them.

But now it is time now to think about how to protect yourself from what is out in the open.  What looks like the fraying of our civil life.

Over the centuries people in such circumstances have turned to gold and silver.  In troubled times we think owning both is very wise.  But in addition to being underpriced relative to gold, silver has the advantage of providing y0u with smaller units of purchasing power that can be especially useful in the event of disruptions in the normal functioning of modern life.  

What kind of disruptions?

  • Civil Curfews
  • No-go zones
  • Banks and businesses closed because of riots, plunder, looting
  • Pandemic shutdowns
  • Urban fires
  • Failure of public utilities during periods of lawlessness
  • Failure of the power grid due to mismanagement or sabotage
  • Store shelves empty

We are not interested in being alarmist, but we are watching the same news you are watching.  So we want to be realistic about what can happen. There are places in our country that the fabric of social order has already been shredded, where civil order has come to an end.

How far will it go?  We don’t know.  Nobody does. That’s why we suggest you ask yourself some tough questions.

Are you prepared for a time when the ATMs no longer spit out cash on demand?  When banks aren’t open to cash checks?  When medical centers close because of violence?  When cyber-criminals attack the financial nodes of the digital world?  When deliveries to your gas station stop?  When a credit card is useless?  When you need to go somewhere else suddenly?  When you call the police and they don’t come?

Real money can come in mighty handy in times of crises.

Don’t get us wrong.  We do not think precious metals can fix everything.  But it is like the old saying that money doesn’t buy happiness… But it can buy you a better class of problems!

We think this is a good time to add silver to your portfolio.  For everyday monetary needs in a crisis.

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The World Keeps Turning to Gold

The policy responses to the COVID-19 virus continue driving investors and institutions around the world to protect themselves with gold.  Riots and looting will drive more people to gold.

They are watching governmental failure.  They are seeing deficit-funded spending soar.  They are watching digital money printing at speeds unthinkable only last year.

The latest numbers from the World Gold Council show that through the first 5 months of 2020 (through May), gold ETFs have added more gold than in all twelve months of the biggest growth year ever, 2009.

Over the past 12 months, assets in global gold ETFs have nearly doubled.

We repeat here a crucial point about ETFs we made in May (If It’s Paper It’s Not Gold):

“One of real gold’s primary virtues is that it is not somebody else’s liability.  Real gold that you own is not dependent on someone else’s promises, performance or solvency.  

“Not so with paper gold or other vehicles that purport to represent or to be based on the ownership of gold at some indeterminate place, time, and form.  This applies to futures, options, ETF’s, shares, forward contracts, and IOUs of all kinds.

“If you want the protection that gold offers, you want real gold.  Not paper.  Paper is not gold.”

We also recommend you review the events that began in March when the pandemic lockdown created shortages and the inability of other dealers to make timely delivery of gold and silver to their clients.  

ETFs were at the center of the disconnect between world gold prices, index prices and the other prices of gold that you may read about in the newspaper, and the real price for physical gold and silver you can take home and put in your safe.  

The Wall Street Journal coined a new term for gold because of this decoupling:  “unobtanium.” 

Republic Monetary Exchange was unlike many dealers.  Right through the period, we were still able to make immediate delivery to all our clients, just as we continue to do every day!

But we think the episode highlights the pitfalls of trying to replicate the value of real gold with ETFs and other paper representations about gold.  

As we have written before, one of the most important reasons to own gold and silver is to avoid major risks common to stocks, bonds, banks, and other financial assets and transactions:  the risk of insolvency and default.

All these financial markets and institutions carry a risk of insolvency and default.  That goes for ETFs, too.  Institutional risks throughout the world economy appear to be growing daily.    

But gold and silver are monetary commodities in their own right.  They are not claims to something else somewhere else down the road.  The value of an ounce of gold or silver is utterly indifferent to the issuer’s total debt, or the wisdom of its political leaders.   An ounce of gold is an ounce of gold no matter whose image or national motto is engraved on it.  

Its value is not contingent on someone else’s integrity.

The growth of gold ETFs shows a fast-spreading concern with the solvency of governments and the reliability of their money.

But only real gold and real silver will perform in a crisis.

Find out more about the importance of owning gold by speaking with a Republic Monetary Exchange precious metals specialist.  They are here to answer your questions and help you achieve your personal financial objectives.

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Gold and the Money Supply

Wonder why gold is headed higher?

Take a look at how much money the Federal Reserve is printing.  And how it pulls gold right along with it!

This chart above tracks the growing money supply (in black), using a broad measure of liquidity called Money of Zero Maturity.  It consists of cash, and cash-like instruments such as checking deposits, money market accounts, and small-denomination time deposits.

After having grown by less than a trillion dollars a year for the previous five years, suddenly Money Supply has grown by $4 trillion in less than six months!

That’s quite a magical money machine you have there, Mr. Powell!

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Silver Opportunities in the Bull Market

In a precious metals bull market like this, it usually takes silver a while to wake up! 

Silver is waking up now.

We like to alert you to great profit opportunities.  Gold goes first.  It leads the way.  But when silver starts moving, it really rips!

Silver has started moving!  The gold/silver ratio, which reached 130 to one in March, has fallen to 97 to one.

The gold/silver ratio is simply the price of gold divided by the price of silver.  It reflects how many ounces of silver it takes to equal an ounce of gold.  When silver appreciates faster than gold, the ratio moves down.  When gold appreciates faster the ratio moves up.

Using the gold/silver ratio as a trading strategy, one that keeps you fully invested in precious metals all the time is a powerful means of growing the total number of ounces of gold and silver you own.

An example for illustration purposes using the spot prices of the metals, ignoring transaction costs and premiums, can help make the strategy clear.  In March one could hypothetically have traded one ounce of gold for 130 ounces of silver.  The ratio of 130 to one was the highest gold to silver ratios in history. 

Now the gold/silver ratio has turned down.

The ratio has fallen because the silver market has awakened and the price of silver has begun moving faster than gold itself!  Now, an ounce of gold is equal to 97 ounces of silver; the ratio is 97 to one.  This is still a historically high ratio that has only been equaled twice in history, once during World War II and once in 1990. 

The following chart shows the ratio over the last 20 years. Since the two metals have different supply-demand fundamentals, their prices do not move in lockstep.  The ratio is always in motion, creating the opportunity to emphasize in your portfolio the one poised for the greatest percentage gains.

The gold/silver ratio strategy indicates that right now the metal poised for the greatest percentage gain is silver.  We are never surprised to see silver climb faster than gold.  We are never surprised to see the gold/silver ratio begin to turn lower.  It is a common feature of gold and silver bull markets.  

At some point those who use this strategy, trading gold for silver now, will trade back into gold when the ratio moves lower, thereby substantially increasing their total gold holdings.  Your Republic Monetary Exchange precious metals specialist can give you examples of this strategy at work.  Depending on your unique objectives it can make sense to be in the precious metal poised for the fastest appreciation.   

Speak with your Republic Monetary Exchange precious metal specialist to see if taking advantage of today’s gold/silver ratio, still at historic highs and beginning to turn lower, makes sense for you.  He will explain how to grow the number of ounces of precious metals in your portfolio.  Trading the gold/silver ratio is a simple strategy, one that many of our clients and I have used for years. 

We think it represents a tremendous opportunity.

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financial warfare

Financial Warfare

Don’t count on China helping fund much more of America’s growing mountain of debt.  Better to wonder how long it will continue holding all the US Treasury debt it currently has.

That’s because things are escalating between the US and China.  It has gotten to the point of official name-calling.

China holds $1.08 trillion of US Treasury debt.  Stated differently, China’s government is a creditor of the US government.  It has loaned the US more than a trillion dollars.  The only other country that loans Uncle Sam that kind of money in Japan.  It has loaned the US—the world’s biggest debtor–$1.27 trillion.

china-yuan-dollars

Right now, the US needs all the creditors it can find.  That’s because its borrowing appetite is off the charts, gorging on $4 trillion or more in fresh borrowing this year alone.  And when you need to fund a $27 trillion dollar national debt, you need all the lenders you can get to stay afloat.  

About $7 trillion of the US national debt comes from foreigners.  Including China.  Those countries don’t lend us that money just because they like us so much.  They do so because it meets their needs to have dollar reserves for settling cross-border commerce and debt obligations and to provide some underpinning for their own currencies.

But China could probably lighten up its Treasury holdings considerably.  Russia, until recently a major US creditor, dumped most of its dollars.  And put the money in gold instead.

So, here’s what’s on the agenda:  Trouble over Hong Kong.  More trade conflict.  Claims against China for COVID-19.  Congress has passed a human rights sanctions measure against China, now in the President’s hands.  Huawei.  China’s talk of retaliating against the Huawei ban with its eye on Boeing, Tesla, and Apple.  A growing pushback against Chinese students studying in the US.  Claims and counter-claims in the South China Sea’s shipping lanes.  Plus China’s considerable debt problem of its own.

Financial warfare is about to break wide open.

It’s not hard to imagine a sea lanes incident or accident that leads to hot warfare.  Especially in an election year.  When the tinder is ample and dry, it doesn’t take much to spark a conflagration.  (Look up the assassination of Archduke Ferdinand as an example.) 

Today there is more dry tinder in Sino-American relations that there was in the Balkans in 1914.  

Just as it’s a safe bet that gold prices will be higher next year, it’s a safe bet that China won’t still hold $1.08 trillion in US Treasury debt next year.  And that will mean more Fed money printing to fill the gap.

And that will make the higher gold price part of the bet a sure thing, too.

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It’s Not All That Complicated

It’s not all that complicated.  

For example, if the government spends like crazy and comes up with the money by just printing it, you should be suspicious of the long-term prospects of that money.

It’s not all that complicated.

We’ve tried to do a good job making fiscal and monetary policies simple.  Another example:  See out post on fiscal policy from early May that asked Is a US Debt Calamity Dead Ahead?  We reported that the US deficit for Fiscal Year 2020 was  going to explode.  It had been expected to run about a trillion dollars.  Then, suddenly that changed to $4.5 trillion.  That’s a lot of red ink.  It’s more than the five prior years’ deficits combined. 

Since the US was already unable to pay its debts, but has to keep borrowing more and printing more to keep the game going, of course a calamity is dead ahead.  If you doubt it, try the same kind of budget management at home.  

Calamity.  Not that complicated.  

Or take our recent commentary about monetary policy, What Hit Us?  We tried to show you how fast the Federal Reserve is printing money.  Pretty damn fast, to tell you the truth.  Fed officials like Kashkari and Powell have been quite outspoken about how they can print forever.  They sound proud of it, like accomplished counterfeiters might be proud of their handiwork.  Or maybe they know what a jam we’re in and they are putting on their brave faces.  But do dollars rolling off the Fed’s printing presses by the trillions make the dollars you’ve saved worth more or less?

Less.  Not that complicated

Michael “Mish” Shedlock

One of our favorite market commentators, Michael “Mish” Shedlock from Global Economic Trend Analysis, usually cuts through any fog and confusion, too.  And now he’s pointed out something that we, in the rush of domestic news, have not adequately reported.  Just how much of these same reckless fiscal and monetary policies are other leading economies engaged in?

Quite a lot.  Here’s a quick synopsis from Mish:

Japan:

Japan is considering a fresh stimulus package worth over $929 billion…. The package, to be funded by a second extra budget for the current fiscal year beginning in April, would follow a record $1.1 trillion spending plan deployed last month.  

China:

China will increase it’s budget fiscal deficit to a record 3.6% of gross domestic product this year, up from 2.8% in 2019.  This is the first time the ratio has exceeded 3% – a red line for decades.

European Union:

On April 23, the EU leaders announced ‘Unprecedented’ Stimulus Against Pandemic.  In addition, the EU is engaged in a stimulation policy of negative interest rates.  At the same time, the breakup of the EU is looking more likely.

Mish says, “given all this competitive currency debasement, I have a question: Got Gold?”

See?  It’s not that complicated.

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What Hit Us?

In this commentary we are sharing with you exactly the same message as on our radio messages this week.    

Except this is a little better because now we can also show you what we are talking about.  

It is especially important to see and understand this, because next year people everywhere are going to be wondering what hit us.

So here it is.

The Federal Reserve is printing dollars like Monopoly money!  

The Fed is printing trillions of dollars.  

Here’s a chart of Federal Reserve assets.  You notice that the graph has turned straight up.  It represents the things the Fed owns, financial instruments of one kind or another:  government bonds, mortgage securities and other debt instrument, including junk bonds.  

The Fed acquired all these things by purchasing them.

“Hey, wait a minute!” you might say.  “Where did the Fed get all the money to buy all those things?”  

Good question.  

It printed the money.  Well, it printed it digitally, actually.  But still it just made it up.

Monopoly money

It’s hard to comprehend how fast the Fed is printing money.  Go back and look when we shared this chart with y0u in the middle of April here.  At the time it showed Fed assets of $6 trillion.

Now they are up another trillion dollars, to $7 trillion.

The Fed has printed $2.7 trillion just since the first of March.    

Things are starting to move very fast.  You’ll want to check in on these commentaries more often now just to keep up.  And share them with your friends and family.

The world has experienced these bouts of crazed money printing before.  The always end very badly.  Always.  It is surprising that Fed officials don’t know that.  Or maybe they do.  Maybe they do, but they don’t care.  Or maybe they do, but they don’t feel they have any other choice.

In any case, it is a road to ruination.  Ask your Republic Monetary Exchange precious metals professional to share some examples from history of this kind of thing.  

For now, we’ll just tell you that what they are doing is bad for the cost of living. 

Very bad.  

But good for the price of gold.  

Very good!

Others are going to wonder what hit them.  But you’ll know.  

Just don’t wait to protect yourself.

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Central Banks Still Buying Gold!

The world’s central banks continued their diversification into gold with new acquisitions in the first quarter of 2020 (January – March).  The World Gold Council reports net new central bank gold purchases of 145 metric tons in the period.

We feature news about central bank gold buying because we believe it represents one of the most important global megatrends of our time.  Its primary impact is threefold:

  • Central bank gold purchases are a harbinger of growing “de-dollarization,” the waning role for the dollar as the world’s reserve currency.  As such they also signal a long-term decay in the dollar’s purchasing power.
  • The addition of gold to central bank reserves makes those nations less susceptible to US  foreign policy hegemony.  It is no secret that the rest of the world, including long-time US allies, are bristling at what they see as the heavy hand of US trade restrictions and sanctions that directly impact their economies.
  • The sheer quantity of central bank buying power has an unmistakable impact on gold’s trajectory.  Furthermore, gold in central bank reserves is gold in strong hands and is less likely to be sold. 

Although central bank purchases in the first quarter were nine percent above the five-year quarterly purchase average, they were eight percent lower than during the same quarter in 2019.

Russia announced that it suspended its gold buying program as of April 1.  The Central Bank of Russia has been the largest of the national gold buyers since 2005.  The World Gold Council says that “the bank gave no reason for the move.” However, petroleum and natural gas are Russia’s leading “cash crops,” so sharply lower energy prices this year have unquestionably impacted the country’s foreign currency earnings.

The Gold Council reported earlier that global investment demand for gold (bullion, coins, ETFs) in the first quarter of 2020 was 80 percent higher than the same quarter in 2019

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Jerome Powell

The Fed ‘Fesses Up

The Fed is doing what it did in reaction to the Panic of 2008.  The very measures that ran gold to stratospheric new highs in a few short years.

Only they’re doing much more of it.

But don’t just take it from us.  

Now you have it directly from Lawrence Powell, the chairman of the Federal Reserve.

And the gold market is responding the way it did last time.  By heading much higher.

Sunday night (5/17/20) on the CBS news show 60 Minutes, Powell confessed the whole money-printing scheme.  Here’s the exchange with anchorman Scott Pelley.

Fed Chairman Jerome Powell

Pelley: “In terms of size, Mr. Chairman, how does what the Fed is doing right now compare to the unprecedented action it took in 2008?”

Fed Chairman: “So the things we’re doing now are substantially larger. The asset purchases that we’re doing are a multiple of the programs that were done during the last crisis. . .

During that money-printing spree, after the collapse of Bear Stearns and Lehmann Brothers and as the housing market melted down, gold ran up almost $1,200 hundred dollars an ounce, from about $700 to $1900.  Silver rocketed from below $9 an ounce to almost $50.

Only this time, the Fed is creating even more money out of nothing than before and doing it much faster. (The Fed just prints it, said Powell, “We print it digitally.”)

As the interview continued, Chairman Powell assured Pelley that the Fed hasn’t done all it can do.  Despite the fact that the Fed has created $3 trillion out of nothing since the first of October, Powell says it can still do much more.

Fed Chairman:  Well, there’s a lot more we can do.  We’ve done what we can as we go. But I will say that we’re not out of ammunition by a long shot. No, there’s really no limit to what we can do with these lending programs that we have. So there’s a lot more we can do to support the economy, and we’re committed to doing everything we can as long as we need to.

Pelley: What would the Fed’s next steps be, potentially?

Fed Chairman: Well, to begin, the one thing we can certainly do is we can enlarge our existing lending programs. We can start new lending programs if need be. We can do that. There are things we can do in monetary policy. There are a number of dimensions where we can move to make policy even more accommodative. Through forward guidance, we can change our asset purchase strategy. There are just a lot of things that we can do.

Pelley: What would the Fed’s next steps be, potentially?

Fed Chairman: Well, to begin, the one thing we can certainly do is we can enlarge our existing lending programs. We can start new lending programs if need be. We can do that. There are things we can do in monetary policy. There are a number of dimensions where we can move to make policy even more accommodative. Through forward guidance, we can change our asset purchase strategy. There are just a lot of things that we can do.

Two things:

First, buckle up.  The Fed money-printing machine is going to shake this country to its foundations.

And two, contact your Republic Monetary Exchange gold and silver professional today.

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If it’s Paper, It’s Not Gold!

We wonder how much longer Bernie Madoff’s stunning stock swindle could have continued but for the financial environment suddenly shifting.

It all fell apart for Madoff with the Wall Street shakeout that included the failure of Bear Stearns and Lehmann Brothers in the fall of 2008.  Investors everywhere were in trouble and began selling their holdings.  By November, Madoff was swamped with billions of dollars of redemptions for clients that he couldn’t meet.

Bernie Madoff

Soon he was in jail.  Madoff may be eligible for release if he lives to be 201 years old.

Not likely.

We tell this story because while financial funny business may go on all the time, it is in time of upheavals and reorientations that it gets exposed.  Times like this.  As Warren Buffett put it, “When the tide goes out, you see who’s been swimming naked.’

We don’t have the time and expertise to be forensic accountants.  We aren’t in a position to investigate everything happening on Wall Street.  But with the tide has gone out in some of the markets, and monetary and fiscal policy as unhinged as they have ever been in our lifetimes, we think this is a good time to remind our friends and clients that if it’s paper, it’s not real gold.

One of real gold’s primary virtues is that it is not somebody else’s liability.  Real gold that you own is not dependent on someone else’s promises, performance, or solvency.  

Not so with paper gold or other vehicles that purport to represent or to be based on the ownership of gold at some indeterminate place, time, and form.  This applies to futures, options, ETF’s, shares, forward contracts, and IOUs of all kinds.

If you want the protection that gold offers, you want real gold.  Not paper.  Paper is not gold.

We bring this up now because there are questions about gold that is represented to be accounted for in some of the world’s financial centers.  

Often mistaken, a “Gold” ETF is actually just a paper ETF.

An account on the financial news website ZeroHedge is asking questions about the source and perhaps even the title to gold held by the world’s largest gold Exchange Traded Fund.  The report asks whether “the same gold bars are claimed by two distinct parties, the central bank which lent the gold and still accounts for it on its balance sheet, and an exchange-traded gold-backed ETF which thinks that it has title to those same gold bars.”

We don’t know all the facts, or where this story will lead, but here is a link to it, Amid Gold Market Turmoil, HSBC Taps Bank Of England For GLD Bars, if you’d like to know more.

We alerted you in March that some dealers were not able to make immediate delivery of gold and silver to their customers.  Because of the extreme demand for precious metals in these uncertain times, the prices for real gold and silver decoupled from the price of precious metals substitutes and paper benchmark prices.  The world gold and silver prices, index prices and the prices of ETFs that you read about in the newspaper were disconnected from the real price for physical gold and silver you can take home and put in your safe.  

Look, foreign governments are suspicious enough that they have been repatriating their gold from other national banks for some time now.  Americans have not been able to get a simple audit of the Federal Reserve or of our gold.  By the way, an audit is not just an inventory.  It goes beyond counting bars with the Fed or at Fort Knox.  An audit seeks to know if the titles have been compromised, it the gold has been pledged, promised, loaned, hypothecated, or re-hypothecated.  That seems to be where the real risk may be.

But there has been no audit.

This is no way to run a business.  Or a government.

Now, the tide has gone out on our financial system.  Big changes are headed our way.

You need gold and silver in these uncertain times to protect your wealth, yourself, and your family.

And by that, we mean real gold and silver.  That’s what we deliver here at Republic Monetary Exchange.  

We deal with real gold and silver.  That you own.  That you take with you.

Not paper.

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Gold Nuggets and News for May 2020

As we reach the midway of the month, here are some recent developments and news stories we don’t think our friends and clients should miss!

Food prices are starting to climb.

Here’s the headline from CNBC:  US grocery costs jump the most in 46 years, led by rising prices for meat and eggs.

“The Labor Department reported Tuesday that prices U.S. consumers paid for groceries jumped 2.6 percent in April, the largest one-month pop since February 1974.

“The price of the meats, poultry, fish and eggs category rose 4.3 percent, fruits and vegetables climbed 1.5 percent, and cereals and bakery products advanced 2.9 percent.”

It’s not illiquidity… It’s insolvency!

The problem on America’s financial landscaped is not something the Fed can fixed by just printing more money.  It’s not a problem of liquidity.  It’s a problem of insolvency.

That’s the view of Stanley Druckenmiller, the legendary hedge fund manager. 

“The consensus seems to be don’t worry, the Fed has your back,” Druckenmiller said recently. “There’s one problem with that.  Our analysis says it’s not true.”

Trillions in stimulus programs equal plenty of liquidity, but it doesn’t insure growth.  Stated differently, you can lower rates and pump money into the economy, but is it going to make people comfortable flying or make businesses want to expand capacity in the face of weak demand, or make people want to book cruises?  The stimulus programs aren’t enough to make the economy bounce back.  “It was basically a combination of transfer payments to individuals, basically paying them more not to work than to work. And in addition to that, it was a bunch of payments to zombie companies to keep them alive.”

Bloomberg characterized Druckenmiller’s views as “among the strongest comments yet by a Wall Street heavyweight on the bleak outlook facing the U.S.”

We’ve referred to Druckenmiller in these comments recently as among “the smart money” Wall Street figures who are buying gold.

If people don’t buy something, does the price go up or down?  If people don’t drive does gasoline go up or down?  If people don’t fly, do airfares go up or down?

Looping back to rising food prices for a moment.  The Consumer Price Index for April, released this week, was down 0.08 percent.  According to the Bureau of Labor Statistics, that’s the biggest monthly decline since December 2008.

But hold the phone a second!

Economist Robert Wenzel points out that the drop was in things that nobody is buying.  

But people still eat:

“A 20.6-percent decline in the gasoline index was the largest contributor to the monthly decrease. The indexes for apparel, motor vehicle insurance, airline fares, and lodging away from home all fell sharply as well.

“On the other hand,  food indexes rose in April, with the index for food at home posting its largest monthly increase since February 1974. The prices for food at home increased in the month by 3.5% and the prices for food away from home increased by 4.21%.

“The index for meats, poultry, fish, and eggs increased the most, rising 4.3 percent as the index for eggs increased 16.1 percent. The index for cereals and bakery products rose 2.9 percent in April, its largest monthly increase ever…. 

“Within a month or so, I expect the travel related price indexes to flatten out and then you are going to start to see major across the board indexes showing price increases given the money the Federal Reserve is pumping into the system.”

Republic Monetary Exchange  — Take delivery of your gold and silver today!

We are continuing to hear reports of other dealerships facing difficulty making delivery of gold and silver to their clients.  

Here at Republic Monetary Exchange we always recommend best practices and despite the difficulties others may have, we still have gold and silver in inventory.  

You can buy today and take delivery today!

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Gold Bull Room to Run 2016

How Long? (Before Gold Hits the New High)

Like Jeopardy!, today’s post comes in the form of a question.

How long?

It’s getting close, but how long?  

How long before gold makes a new all-time high?

We’re not trying to be tricky, since gold is already making new all-time highs all around the world. 

Gold has recently set new record highs in major currencies like the Australian and Canadian dollars, the Swiss franc, the euro, China’s yuan, the Russian ruble, the Korean won, the Swedish krona, the Indian rupee.

It has made new highs in lesser currencies as well, including the monetary units of – in  alphabetical order – Afghanistan, Argentina, Brazil, Chile, Columbia, the Czech Republic… and right on through to Vietnam, Vanuatu (that a South Pacific island nation, in case you’re prepping for a future Jeopardy! appearance), Yemen, and Zambia.  

But how long before gold makes a new all-time high in US dollars?

Gold traded as high as $1,900 in September 2011.  That means that with gold trading around $1,700 as we write, it will need to climb almost 12 percent to reach its all-time high.

That doesn’t appear to be a daunting task in this bull market.  After all, gold is up more than $650 an ounce since it low in 2016.  That a gain of 62 percent.

Twelve months ago, last May, gold traded at its low for the year of $1267.  It has appreciated more than 34 percent in a year.

As we identified long ago, gold is in a primary bull market.  

Whatever your feeling about the response of Washington and the Federal Reserve to COVID-19, the policies that have been implemented do not represent a change from those that have driven gold to its gains of the last few years.

They are a continuation of those liquidity and deficit spending policies.  We aren’t taking bets on when gold crashes through its old highs to new records.  It’s not a contest.  But it looks like it will be sooner rather than later.

To position yourself for profit and protection in the gold bull market, speak with an Republic Monetary Exchange professional today.  They are prepared to help you make gold and silver a part of your portfolio in a safe and secure way that will provide you with peace of mind.

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More About the Smart Money

Want to Know More? Hint: They are Gold Buyers!

Although we wrote about the “smart money” buying gold almost two weeks ago, we would like to loop back around to it again because of the importance of the subject for our friends and clients.

It started when we reported that newsletter writer Fred Hickey had tweeted this message:

“All the smart money: Dalio, Druckenmiller, Tudor Jones, Zell, Gundlach, Singer, Klarman, Einhorn, Mobius (and some who I know are loading up but are doing it quietly) are long gold and understand the simple concept Hugh Hendry explains here. Question is: What are YOU waiting for?”

It is a good observation.  We’ve been reporting to you all along as this crew of smart money began moving to gold.

For example in January 2019 we reported on Sam Zell this way:

“For the first time in his life Sam Zell is buying gold.

“It’s enough to make us sit up and take notice.  Sam Zell is a real estate billionaire many times over.  His Wikipedia entry repeatedly uses the word “largest” to describe Zell’s accomplishments.  

“His company, Equity Group Investments, Wikipedia tells us, “was the genesis for three of the largest public real estate companies in history, including: Equity Residential, the largest apartment owner in the United States; Equity Office Properties Trust, the largest office owner in the country; and Equity Lifestyle, an owner/operator of manufactured home and resort communities. With their entry onto the public markets in the 1990s, Zell became recognized as a founding father of the modern real estate industry.  In addition, Zell has created a number of public and private companies in various other industries.”

gold bars stacked in a pyramid

Those accomplishments pretty much guarantee Zell a spot on the smart money list.

About a year ago we reported on hedge fund manager and philanthropist Paul Tudor Jones when he proclaimed, “the best trade is going to be gold.”

“If I have to pick my favorite for the next 12-24 months, it probably would be gold. I think gold goes beyond $1,400… it goes to $1,700 rather quickly. It has everything going for it in a world where rates are conceivably going to zero in the United States.”

Badda-bing, badda-boom!  He got all that just right!

Last year David Einhorn, the founder of Greenlight Capital said, “I hold gold, and I am never going to get rid of it. I hope that I never have to use it.”

In January we reported that Einhorn explained his position this way:

“The bipartisan consensus is that deficits don’t matter – it implies we can always print our way out of trouble.  All told, we can count on aggressive fiscal and monetary policies in both good times and bad. Gold continues to be a hedge in our portfolio against adverse outcomes related to those policies.”

We also cited Ray Dalio and his attraction to gold back in January.  Dalio, the founder of the world’s largest hedge fund, Bridgewater Associates, says we’re going through a paradigm shift and you need to be forward looking.

“Get out of cash,” Dalio warned.  “Cash is trash.”  

He has a point.   

They all have a point.  They’re the smart money.

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Public Finance: Don’t Look Too Closely!

The exploding US debt and the frenzy of Federal Reserve money printing is a reminder that the whole enterprise of public finance is not something you want to look at too closely… unless you are prepared for some really ugly stuff.

You will come face to face with deceit, theft, cronyism, hypocrisy, waste beyond measure, string pulling and influence peddling, the raw exercise of political power for private gain, and enormous riches for the few and impoverishment for the many.

Estimates are that COVID-19 will add $8 trillion to the government’s debt load over ten years.  There’s a lot of room in $8 trillion dollars for the kind of corruption we described above.

The $2 trillion CARES Act stovepiped hundreds of billions of dollars to large corporations.  Companies that were perfectly capable of setting aside capital to protect themselves from predictable cyclical and other business challenges used their earnings for stock buybacks instead.  Then, having enriched their senior management with swollen values for their stock options, they turned to the taxpayers to bail them out. 

In other words, their profits are privatized while their losses are socialized. 

Perhaps an account of the CARES Act appropriations that we already reported encapsulates the nature of public finance.  While restaurant workers and store clerks and drivers and others – Americans 30 million strong – lost their jobs, right off the top the emergency spending bill provided $25 million for additional House of Representative salaries!

According to the Manhattan Institute, with the pandemic “stimulus” measures total federal spending will surpass $49,000 per household.  Since median household annual income in the US is $61,937, the government is taking the lion’s share of it… some in today’s taxes, some in tomorrow’s, some by means of currency destruction.

So far, we’ve been writing about the fiscal side of the picture, Washington’s borrowing and spending.  We’ll let Ron Paul speak to the monetary side of the picture:

“Each of the Federal Reserve’s responses to the coronavirus shutdown increases the distortions of the market caused by the Federal Reserve’s meddling with the money supply and interest rates,” says Dr. Paul.  “These increased distortions guarantee the inevitable crash will be much more severe than the current downturn. The one upside is that the next meltdown will likely lead to the end of the fiat money system and thus the end of the welfare-warfare state.”

Where will the buck stop for all this fiscal and monetary excess?  With the US dollar, of course.  It will have to be massively devalued along the way. 

But there is something you can do.  You can protect yourself and even profit from this destruction with sensible investments in gold and silver.  Your Republic Monetary Exchange professional can advise you on the steps to take.

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debt black hole

US Debt Calamity Dead Ahead?

Tell us something we didn’t know!

In big, bold type the scare headline on the Drudge Report reads, “TREASURY BORROWS TRILLIONS MORE.”

And that links to a Wall Street Journal scare headline that reads, “U.S. Treasury Expects to Borrow $4.5 Trillion in Fiscal Year as Stimulus Spending Soars.”

Here’s the story. 

During the current April – June 2020 quarter, the Treasury expects to borrow $2.999 trillion.  (Think how hard they must have worked the numbers to keep from going over $3 trillion!)  

That means that during the current quarter, the Treasury will borrow more than it did in the entire previous five years combined!

And that is scary.  But because you read these posts, you’ve seen in coming.

Two months ago (Charts and the Stampede to Gold), we wrote, “With businesses slowing down due to the Covid-19 pandemic, tax revenue will fall.  It will fall further still if a payroll tax cut is implemented.

“At the same time, government spending will rise at a relentless rate with new spending on health-related measures.  

“That means the red line (gross Federal debt) will turn steeply higher.”   

In fact, it’s $1.5 trillion dollars higher today!  Just four weeks later!

Actually, we have been telling you for a very long time that the US monetary system – having abandoned the discipline of gold – will wind up in a steaming pile of collapsing debt.  

It’s not as though this hasn’t happened to governments over and over again throughout history.  

But for some reasons our political classes and monetary authorities think this time it will be different.  But it is never different.

Oh, sure, they’ll come up with something to try to paper it over.  They are very clever.  A new dollar perhaps?  An International Monetary Fund scheme?  A currency represented as being backed by gold but that really isn’t?  

Who knows what they’ll come up with? 

But the smart money knows a flim-flam when it sees one.  We wrote about the “smart money” the other day.  (See our recent post All the Smart Money is Buying Gold.)

We’d like to include Jim Rogers in the smart money category.  He’s watching the money printing like we are and is buying precious metals again for the first time in years.  Rogers currently prefers silver, saying, “The gold-silver price ratio is near its record high and so I prefer silver to gold because it is cheaper [on a relative basis].”

Remember that the only gold and silver that will matter is gold and silver that you can hold in your hands.  Not precious metals stocks or ETFs or a paper gold promises.  

Make Republic Monetary Exchange your go-to advisors to protect yourself and your family with real money, gold, and silver, that you take delivery of.

read now: All the Smart Money is Buying Gold
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Look What They Are Doing to the Dollar!

Don’t Take Any Wooden Nickels

It’s time to take a closer look at the financial measures authorities around the world have taken in response to the Coronavirus.

Bloomberg estimates that between direct spending, new money and credit creation, bank guarantees and loans, governments have spent $8 trillion on “stimulus” measures.

That’s more than ten percent of global government debt, which totals over $70 trillion.

The US government alone has spent $2.3 trillion.  And that’s almost ten percent of existing US debt.

That’s not the end of it.  Washington has more spending already on the drawing boards: more aid, more cash, direct payment to farmers, government purchases of meat and other provisions, more payroll support, and infrastructure spending.

But wait!  There’s even more!

In a piece from the Mises Institute, The Fed Has Gone Nuts. And It Can Get Worse, business professor Peter St. Onge starts with what the Fed has already done:

“Pushed interest rates to zero and expanded into ‘unlimited’ buying of assets, now reaching to corporate bonds and local government bonds. These bring the same concerns we had in 2008: trillions in new money to dilute the spending power of current savers, along with the risk of ‘moral hazard’ where the government covers the losses for corporate, and government, irresponsibility.

“What’s more concerning is what the Fed might do next. Proposals are floating up for four very corrosive measures: negative interest rates; directly subsidizing bonds; writing Fed checks for corporate equity or for a universal basic income up to $72,000 per year; and letting poor countries effectively print their own US dollars.”

Now the group president Trump calls “the Squad” is getting behind something even crazier.  It’s a proposal that pops every few years.  In the latest incarnation it would have the Treasury mint two $1 trillion platinum coins, and add that amount, $2 trillion, to the government books against which it would write welfare checks to the American people.

Why platinum?  To pretend that this made-up coin is real money.  But they could use anything, plastic, paper, mulberry bark, or wood, print some numbers on it and call it trillions.  

But it wouldn’t be real money anymore that new digital bookkeeping entries on the Fed’s books represent additional real value.

Once upon a time the wise and experienced used to advise the young and foolish not to take any wooden nickels.  

These days Americans are apt to fall for just about anything.  

Here’s a chart a colleague shared the other day.  It represents the US money supply MZM (a measure of cash and cash-like deposits, Money of Zero Maturity) in green, against the gold price.

You can see that the money supply line that was already increased by a trillion dollars a year, turned straight up with the pandemic this year.

But notice that as the money supply climbs, it pulls gold right along with it! 

All of these shenanigans will end in ruination for the value of the dollar.

That’s why informed people refuse to take any wooden nickels.  They prefer to own gold and silver.

Contact us here at Republic Monetary Exchange today. And get out of the way of the coming dollar calamity.

The Fed is printing dollars like crazy!  

That’s one reason gold keeps marching higher!

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Silver Institute Report Calls for $19 Silver

The Gold-Silver Ratio Reaches Unprecedented Highs During Shutdown!

The Silver Institute, a trade association has released its annual report on silver, the World Silver Survey.

The report, produced for the Institute by a private research firm, forecasts the silver price to reach $19 this year.  That represents an increase of 20 percent over the next 8 months.  

We think that factoring in off-the-charts spending and money printing by the government, that forecast is conservative, substantially understating the upside for silver this year.  Our view is colored by our long experience of watching silver dramatically out-perform gold in bull markets gone by.

The challenges for the 2020 Silver Institute report was incorporating unknowns about the effects of the COVID-19 pandemics into its forecasts.

Factoring in what is known about virus-driven mine shutdowns, along with other projections, it concludes that new mine silver production will fall by 5 percent this year, with overall global supply falling by 4 percent. 

In then looks to the shutdown’s impact on end-users, including silverware and jewelry.  Not surprisingly, it expects industrial fabrication to fall by 7 percent, “as a result of lower visitors to retail stores and the appetite for discretionary spending taking a hit.”

silver to gold ratio May 2017

The offset is “strong interest in silver from retail investors.”  The report forecasts a significant 16 percent increase in investor demand for silver bars and coins.  

Strong demand from institutional investors will contribute to higher silver prices this year, as well.  The report cites stimulus measures (that would be deficit spending by governments and central bank money printing), negative interest rates, and the other global macroeconomic concerns that will drive institutional silver buying.  

The report also notes the historically high gold-silver ratio, which suggests that on a historical basis silver is hugely undervalued compared to gold.  The ratio as we write this is about 113 to one, meaning that silver is so inexpensive that it takes 113 ounces to equal one ounce of gold.

A gold-silver ratio is this stratospheric range is simply unprecedented in all history.  As you can see from the five-year chart above, the ratio catapulted in this range with the pandemic shutdown, and even briefly touched 125 to one in March.  

The World Silver Survey takes note of this anomaly, which will prompt additional investor inflow into silver.  Stated differently, “silver should also benefit from bargain hunting, on the back of its historically low relative value compared to gold.”

Finally, one commentator, echoing the call by Bank of America earlier this month for much higher gold prices, notes drily, “They can’t print silver, either!”

Speak with your Republic Monetary Exchange professional today about silver’s place in your portfolio for both profit and protection.

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All the Smart Money is Buying Gold

What is the smart money doing?  

For once it’s pretty clear.

They’re buying gold.

But don’t take it from us.

Fred Hickey writes a newsletter called The High Tech Strategist.  He’s been at it since 1987.  

Here’s a recent tweet from Hickey;

“ALL the smart money: Dalio, Druckenmiller, Tudor Jones, Zell, Gundlach, Singer, Klarman, Einhorn, Mobius (and some who I know are loading up but are doing it quietly) are long gold and understand the simple concept Hugh Hendry explains here. The question is: What are YOU waiting for?”

Hendry is a former fund manager who was asked in 2010 interview about the Greek sovereign debt crisis.  He answered succinctly (and correctly), “I recommend you panic.” The explanation from Hendry about gold that Hickey refers to is equally succinct:  In trying to debase the dollar to help the economy, the Fed will “definitely” help gold.  

The day before his comment about the smart money, Hickey tweeted this:

“With ink not yet dry on latest half trillion $ spending bill, this story of another planned spending splurge should scare the devil out of anyone concerned about deficits, national debt & unlimited QE (to “pay” for all this). Gold protects against such craziness.”

Hickey says that despite the sell-off, the stock market is still in a bubble, just like it was in 2000 and 2007.  In a recent interview, he said, “Just look at market cap-to-GDP which is supposedly one of Warren Buffett’s favorite indicators. It’s currently at 130%, a level that has only been seen twice: Today obviously, and in 2000. That means we’re still at bubble levels.”

In fact, Hickey says, we’re looking at the greatest downturn since the Great Depression.”

It is very likely that once gold runs through its all time high of just over $1,900 an ounce, more people will take notice and quickly propel gold much higher

We recommend beating the rush and buying now at these still advantageous levels.  Contact your Republic Monetary Exchange professional today.

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Economic Chaos!

Economic chaos has descended on the land.  

And in such a time, there is nothing like gold and silver.

But is it a time of chaos?  

Look around!

This is what you’ll see:

  • Crashing crude oil prices dropped into negative territory.  Interest rates are negative.  Both are not only unprecedented, they are unnatural!
  • Doug Noland from Credit Bubble Bulletin says, “Now on a weekly basis, we’re witnessing things that couldn’t happen – actually happen.”
  • David Stockman writes that “Lockdown Nation is heading into an economic collapse of biblical proportions.”
  • 26.5 million Americans filed for unemployment in the last several weeks.  Washington spends trillions it doesn’t have.  The Federal Reserve prints trillions more.

Economic chaos!

170 countries will have negative economic growth this year, according to the head of the IMF.

Biblical proportions.

A food crisis could be next. 

The Tyson Pork Plant in Madison Wisconsin has 58 confirmed positive cases as of Sun. 4/26

Tyson Foods, Inc. was forced to shut down a processing plant in Washington state.  The New York Times reported last week that meat processors “have become major ‘hot spots’ for the coronavirus pandemic… The health crisis has revealed how these plants are becoming the weakest link in the nation’s food supply chain, posing a serious challenge to meat production.”

In times of economic chaos, of revolutions, invasions, famine, monetary failure, governmental bankruptcy and collapse, owning gold and silver is not merely important…  

It’s crucial!

Find out what you need to do.  Your Republic Monetary Exchange precious metals specialist is available to speak with you in confidence about protecting your assets and your family in this period of economic chaos.  Contact us today.

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Things Fall Apart

“Things fall apart; the center cannot hold.” –W.B. Yeats

Here’s the headline: “The US is suffering the fastest deterioration in operating conditions for over 11 years.”

The economy is turning down even faster than anytime during the Great Recession.   

How could it not?  Is anyone surprised that with restaurants and gyms, barber and beauty shops, and so-called non-essential businesses shuttered, while doctors can’t treat their patients or perform elective surgeries, and dentists are furloughing their staffs, and schools and travel mostly shut down, and movie theaters and ball parks are closed…

… that 26 million people have filed for unemployment in the last five weeks?

The chief economist for one of the big bank holding companies just observed that “it would take a miracle to keep this from turning into the Great Depression II.”

But there will be no miracles.  The politicians and PhDs running policy are the exact same one who had the country $24 trillion in debt and the Federal Reserve holding trillions in assets it paid for by monetary fraud to begin with.  Before the coronavirus shutdown.

Oh, it was legal monetary fraud, but it was fraud nonetheless.  Why do you think the Fed so strenuously hides what it is doing?  Why do you think it is terrified of being audited?

So, the ones who sold us the map that marched us into this swamp are being hired as guides to march us out.  

So they come up with more spending.  And more money printing.

Sure, more debt will make us economically stronger.  And more legal counterfeiting will make America more resilient.

And here’s how deep the problem runs:  The governing classes are almost unanimous about these “remedies.”  

Having never gotten anything right yet, they are sure… absolutely sure… that ruining the dollar and burying the people in more debt is the exact right thing to do.

As Yeats said,” The best lack all conviction, while the worst are full of passionate intensity.”

So, here’s a quick update.  Today, as I write this, the national debt is $24.609 trillion.  

That’s up $1. 308 trillion just since January 1.  

In the same days, the Fed has purchased an additional $2.4 trillion of debt instruments including junk bonds  with money it just made up!

How could gold not keep marching higher?

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Stop the Presses! Bank Discovers Fed Can’t Print Gold!

Bloomberg:  “Gold to Reach $3,000—50% Above Its Record, Bank of America Says”

You’ve probably seen it in black and white movies.  Movies set in the old days when everyone read newspapers. 

Upon discovering the most unexpected and shocking news, uncovering a major corruption scandal, a plot, or crime, the intrepid reporter bursts into the newspaper building shouting, “Stop the presses!”

We have such a moment now!

The nation’s second largest bank has discovered that the Fed can’t just print gold like it can dollars!  

Stop the presses!

Stop the presses!!!

Bank of America has issued a new report raising its gold price target by 50 percent, from $2,000 to $3,000 an ounce.

The report is titled, “The Fed can’t print gold.”  

Here’s the payoff line: “As central banks and governments double their balance sheets and fiscal deficits respectively, we have also decided to up our 18 month gold target from $2,000 to $3,000 an ounce.”

“With the Fed committing to do whatever it takes to prevent widespread bankruptcies across the US, Congress injecting a $2tn fiscal stimulus plan, and economic growth on standstill until there is a cure or a vaccine, inflation could rise even if GDP does not, says
BofA.  “This backdrop should prove very positive for gold, in our view….”

“Another important point to remember,” according to the report, “is that, just as central banks are socializing risk in financial markets, governments are increasing their spending like never before during peacetime. Fiscal spending plans across developed economies are nothing short of breathtaking whether we look at them in dollar terms or as a percentage of each nation’s GDP.”

We’re glad to see others taking note of the unprecedented money printing and spending, but don’t mind noting that others (ourselves included, by the way) saw this period coming.  More than six months ago gold expert Ron Paul made an uncommon prediction.  Dr. Paul said that he expected gold prices to reach $3,000 by the end of this year, 2020, a year earlier than the BofA target.

In any case, we wonder what will happen to gold prices as more people wake up and a critical mass of the public starts to notice this new, hyper-overdrive, rocket-booster fueled, proton-pill juiced, steroidal-speed freak phase of Washington’s spending and Fed money printing.  

That will be a real stop the presses moment!

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U.S Mint Shuts Down

Coronavirus Closes Mint

The US Mint at West Point has shut down because of the Coronavirus.

The West Point facility mints American Eagle investment gold, silver, and platinum bullion coins.  The production halt comes at a time of surging investor demand for the gold and silver coins.

Many dealers across the country are already out of gold and silver inventory.  The are making promises to their clients about eventual delivery, but at unknown dates in the future.

Republic Monetary Exchange still has gold and silver available for immediate delivery.  But you must hurry.  Supplies are beginning to dry up.  

Officials say the West Point Mint intends to reopen eventually, but it remains closed for the foreseeable future.  The San Francisco US Mint shut down in March.

To repeat, for now, Republic Monetary Exchange still has gold and silver in inventory.  You can buy today and take delivery today!  

But the closing of the New York mint will exacerbate supply issues.  

Contact Republic Monetary Exchange today!

Consumer Prices to Double?

“We are in process of destroying the dollar.”  

So says George Reisman.  He is Professor Emeritus of Economics at Pepperdine University.  

Tweeting observations about the current economic developments, Reisman says you should “not be surprised if, a year from now, prices are 20 percent or more higher than they are today and that tens of millions of elderly people on fixed incomes suffer greatly as a result.”

“The recently enacted ‘stimulus’ legislation costing $6.2 trillion can be paid for only by the printing of new and additional money in that amount, which will represent an increase in the M1 money supply to substantially more than double its present height,” tweeted Reisman.

“This amount of increase in the money supply is sufficient by itself to double or more than double prices and totally destroy the finances of the elderly, if not by next year, then over the next few years.”

“We must not allow trillions to become the new billions, and then the new millions, and the paper dollar to become the new toilet paper,” says Professor Reisman.

We’ve Been Wondering the Same Thing!

You’ve probably noticed the “dead cat bounce” in the stock market.  

That’s a market term taken from the expression that even a dead cat will bounce if you drop it from high enough.  With America shut down, enormous amounts of capital destroyed in the process, and the chances of it returning to what things were like before increasingly remote, the term certainly applies.

We thought we would share the following from Brian Maher of The Daily Reckoning:

“It has made obvious — to all with open eyes — that the stock market is a crook’s game, a vast swindle.

“How else could the stock market regain so many of its initial pandemic losses… while 16 million Americans file unemployment claims… and second-quarter GDP may contract 40%?

“The Federal Reserve has expanded its balance sheet some $1.6 trillion these past four weeks.

“There is your answer.”

Money Supply Growth!  

And finally, the graph of the day.

This is a 10-year chart of the M2 US money supply.  M2 is a measure of cash, checking deposits, and other things that are thought to be cash-like, or near money, including money market accounts, and savings deposits.  

The money supply has been growing fast to begin with.  It doubled in the last ten years.

In fact, the chart has now turned straight up!

Doug Noland notes that “M2 has expanded more during the past six months than it did the entire nineties.”

Buckle up!  They’re printing dollars like there’s no tomorrow!

Wouldn’t it be wise to get out of dollars and into something that authorities can’t just print?

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Look What They’re Doing with the Money!

No Wonder Gold is Headed Higher!

The Federal Reserve is printing money like crazy!  

That’s not just an expression.  The Fed is unhinged!

The following charts say it all.  What it shows is completely unprecedented!  

It is a chart of Fed assets.  It represents what the Fed carries on its books, anything it has paid money for.  That includes government bonds, mortgage and other securities.  And now, as we have reported, even junk bonds.   

How does the Fed pay for the assets it buys?  It creates the money out of nothing.  It creates it out of thin air.  It buys assets in the afternoon with money that didn’t exist in the morning!

Perhaps not one person in a thousand understands this flim-flam.  We call it “printing money,” although it’s really done on computers.

On the left side of the chart you can see that Fed assets, which had been flat at about $800 billion dollars for a long time, suddenly started climbing.  This was the Fed’s response to the Mortgage Meltdown in 2008.

Eventually it printed enough to get Fed assets up to about $4.5 trillion, mostly buying trash from the big banks to bail them out.  

Of course, in diluting the value of the dollar by printing more of them, the Fed ran the price of gold to all-time highs.

Now, in response to the coronavirus shutdown, the Fed is printing money again.  Look at the right of the chart.  

The line has turned straight up!  

In a matter of a few days, the Fed has printed close to $2 trillion!

This is diluting, cheapening, the value of the dollar, much faster than anything the Fed has ever done before.  It is hard to comprehend how much money the Fed is printing in such a short period.  It took about three years last time to do what it has now done in weeks.

As we say, it is completely unprecedented.  It is train wreck for the purchasing power of the dollar.

But it will drive gold – and silver, too – much, much higher.

Speak with your Republic Monetary Exchange gold and silver professional today about the train wreck ahead of us.  Find out how to avoid the financial carnage and profit from this recklessness.

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Scoundrels Found in Washington!

D.C. Doesn’t Care About the Dollar or Debt

A lot of timely questions and second thought about the coronavirus and the lockdown are appearing in the news right now.  We think it is always wise to question everything government does, but as we’ve said many times, we are neither virologists nor epidemiologists.

Our expertise in money.  And we can see what is going on in Washington in this moment of our national crisis.  

It is not good.

We view it as hard evidence that the US debt problem will not be solved.  It will end in a tragic bankruptcy and the destruction of the dollar.  It will cause people to flee to gold and silver.  

But we’re getting ahead of our short story.

At the end of March, Congress passed and the President signed into law the CARES Act.  It is a $2.3 trillion emergency spending measure aimed at tackling the US economic shutdown and the coronavirus pandemic.

$2.3 trillion is a lot of money.  It is the largest relief bill in history.   Trillion-dollar deficits are new enough that they are still shocking to most thinking people.  But with the CARES Act, what was going to be a trillion-dollar deficit has exploded.  

The 2020 deficit now is on track to be more than $3.8 trillion!

But it is a crisis, right?  Who cares about the price tak if all that spending is necessary, right?  These are emergency appropriations, right?

Well, apparently not.  Former Reagan administration Budget Director David Stockman has gone through the 880 page bill.  We’ll pass along some of what he found in his own words:

$25,000,000 for additional salary for House of Representatives (blows your mind, right off the bat!)

$100,000,000 to NASA (because, who knows why?)

$20,000,000,000 to the USPS (because, why the hell not?)

$300,000,000 to the Endowment for the Arts (Ah, screw it – let’s do it! They’ll never know)

$300,000,000 for the Endowment for the Humanities (because, not that many people even knew that was a thing?)

$15,000,000 for Veterans Employment Training (for when the GI Bill isn’t enough)

$435,000,000 for mental health support (Man, oh man, that’s a lot of suicide hotlines)

$30,000,000,000 for the Department of Education stabilization fund (Whoa, that’s a big one! Wonder how much goes to the NEA?)

$200,000,000 to Safe Schools Emergency Response to Violence Program (I guess the virus is kind of violent)

$300,000,000 to Public Broadcasting (NPR has to be bought and paid for by somebody. That somebody is you.)

$500,000,000 to Museums and Libraries (Who the hell knows how we are going to use it?)

$720,000,000 to Social Security Admin (But get this – of this, only $200,000,000 is to benefit people. The rest is for admin costs.)

$25,000,000 for Cleaning supplies for the Capitol Building (Seriously, it’s on page 136)

$7,500,000 to the Smithsonian for additional salaries (Wait a minute, what about the virus?)

$35,000,000 to the JFK Center for performing Arts (See above)

$3,000,000,000 upgrade to the IT department at the VA (I guess $3 billion ought to cover it.)

$315,000,000 for State Department Diplomatic Programs (What the hell does this mean?)

$95,000,000 for the Agency of International Development (What is this? Let’s keep the money here and clean up the streets of S.F. and L.A.)

There’s much more like that, but we’ll stop there because you get the point.  The national debt was unpayable before this bill, but even that is not enough for the scoundrels in Washington.  They will even use a deadly crisis to fund their pet projects and to spend money that benefits their crony constituents.

They are not capable of acting statesmanlike, not even in a crisis.  They will not deal with our fiscal problems.  They will not address the debt.

They will tank the US dollar.

Buy gold and silver now.

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Do the Opposite of the Fed!

If they buy junk, you buy gold and silver!

Monetary policy in this country is coming apart at the seams.  In our last post, we commented on the Federal Reserve now venturing into junk bond territory.  

If the Fed is buying junk bonds for its portfolio, it’s like a screaming siren alarm going off in the middle of the night that you need to do the exact opposite.  If the Fed is buying risk assets, you must buy safety assets, gold and silver.  Go to the high end of the spectrum to protect your personal wealth while the dollar in being destroyed.   

By the way, it appears that the Federal Reserve does not even have the legal authority to buy junk bonds (more on that from Michael Shedlock, here).  But we’ve never thought legality would stop the Fed from doing something foolish.

Here’s the way the New York Times reported on the Fed’s new $2.3 trillion foray into dangerous territory:  “The Fed announced that it would use Treasury Department funds recently authorized by Congress to buy municipal bonds and expand corporate bond-buying programs to include some riskier debt.”

Get that?  “Riskier debt.”  

The lapdog press couldn’t even bring itself to use the word “junk” until the 28th paragraph, long after most readers are finished with the story.

The 2008 panic and the bursting of the mortgage bubble should still be fresh in the minds of many of our clients.  The mortgage industry and those that loaded up on subprime mortgages – we’re talking about you Lehman Brothers and Bear Stearns – learned that risk assets have, well, risk.  Especially headed into a recession.  As we were by the end of 2007.

So now, headed into a brutal recession thanks to the staggering economic costs of the COVID-19 lockdown, the Fed is following the example of Lehman and Bear.  

When the Fed is buying junk, it’s a good time buy precious metals.  A growing number of people are figuring that out.

Because of the extreme demand for precious metals, the prices for real gold and silver have decoupled from the price of gold substitutes and paper benchmark prices.  The world gold prices and index prices you read about in the newspaper are not the real price for physical gold you can take home and put in your safe.  There is not enough gold at those benchmark prices.

Most dealers are unable to make prompt delivery to their customers at any price.  

But Republic Monetary Exchange has gold and silver.  Today!  For immediate delivery!  Right here in Phoenix!  

But you must hurry.   We don’t know how long we will be able to meet the extreme demand.  

It is strictly first come, first serve!

Buy TODAY, take delivery TODAY!  

 Call your Republic Monetary Exchange gold and silver professional today.  Lock in your order and take delivery today.

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silver to gold ratio May 2017

Gold and Silver: It’s Going Fast!

Gold took a big jump on Thursday (4/9) when the Federal Reserve announced its latest monetary outrage.  

The Fed is ramping its money printing to manic levels so that it can even buy junk bonds!  

Junk bonds.  Bonds that aren’t even rated investment grade.    

The Fed is stepping off the financial precipice.

It’s a long ways down for the dollar.  

The CNBC story said that gold jumped $50 “on the view that the Fed initiatives could be inflationary.”

Could be?

Could be?

For all of its other excesses, the Fed now comes up with a new $2.3 trillion dollar plan that includes buying junk bond ETFs.  Even as the economy is crashing.  

What will the Fed do next?  Start buying stock in individual companies?  We’re getting close to that.  You think we’re in a pork fest now?  That will be Washington cronies going hog wild at the special interest trough!  

It’ll be Mussolini time in America.

Now more than ever, you need to and pay attention to your portfolio and contact Republic Monetary Exchange.  If the Fed is adding junk to its portfolio, you need to do the opposite and add the most enduring and valued money of the ages to yours:  gold and silver.

We advise you to act now!  Do not delay!  But take the following warnings to heart:

WARNING:  Our competitors are out of inventory.  Some are promising to deliver gold and silver to their clients at some unknown, unspecified date far off in the future.  

WARNING:  If you pay them now, they say, they will try to get you gold and silver in six or eight weeks or some other time down the road and deliver it to you then.

WARNNG:  We strongly advise you against doing that.  Especially in these volatile times.  And especially when Republic Monetary Exchange has inventory on hand for immediate delivery!

While other gold dealers are unable to make deliveries., Republic Monetary Exchange still has inventory.  

But it is going fast!  

It’s first come, first served!

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Good Advice from Rich Dad!

So, what are you going to do with your coronavirus stimulus money – otherwise known as the economic impact payment?  

Its money headed your way as early as mid-April, part of the $2 trillion bill Congress passed, and President Trump signed last month.

The economic impact payments amount to $1,200 for individuals, $2,400 for married couples and $500 for each qualifying child.

Robert Kiyosaki has some great advice for that money.  Use it to buy silver.

Not many people can claim to have had an impact on the public’s financial conversation of Robert Kiyosaki.  

Kiyosaki is the author of the author of Rich Dad Poor Dad, the best-selling personal finance book of all time.  He has taught tens of millions of people around the world to think about money and financial independence differently.  

His reach has been extraordinary.  Robert has authored 28 books which have sold more than 40 million copies.  But he does more than that, having created board games and software games to teach financial literacy both children and adults.  And then there is are speeches, interviews, articles, seminars…

Robert Kiyosaki understands paper money and the Federal Reserve.  And he loves silver!  He thinks it is among the best of all possible investments, especially in times like these.  “Silver is the most undervalued, lowest-risk, best investment of all asset classes,” he says.

Now he suggests that if the government gives you free money, you should use it wisely.  Don’t save dollars, says Kiyosaki.  Why save dollars when “Fed counterfeiting is printing trillions of fake dollars?”  

One of the things he recommends doing with your stimulus payment is buying silver.  “It’s the best buy for future security!”

We think that makes sense, too.  Afterall, the government is already $24 trillion dollars in the red.  When it passes a new spending bill, it has to borrow or print the money to fund it.  

Kiyosaki says he won’t stop buying silver until it hits $40 an ounce.

Talk to a Republic Monetary Exchange professional today to learn more about investing in silver.

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How Did We Get Here?

12 MONTHS OF MARKET CALLS, ADVICE, WARNINGS, AND RECOMMENDATIONS 

See Where We’ve Been and What We’ve Said about Where We’re Going! 

Here at Republic Monetary Exchange, we spend a lot of time and energy to see that our friends and clients get the very best market analysis possible.  And while we don’t claim modern-day Nostradamus status, we have a distinct advantage over others who attempt to look down the road as we have done:  We have been at this a long time and have seen a lot of monetary malpractice first hand, and have studied the precedents from other times and places.  

We thought that now, with America at an inflection point, not quite moving to restore our former state, and only on the verge of moving into a “brave new world,” it would be helpful to review some of the market calls, advice, warnings, and recommendations we have made over the past 12 months, beginning last April.  

We’ve taken short extracts from our popular blog posts over the year, highlighted essentials, and provided a link to the entire commentary.  

So here you go: 

IT’S THE TITANIC AND THE ICEBERG- FULL SPEED AHEAD
April 5, 2019

A look back at 4/5/19:  Even a year ago it was apparent that the Fed would have to revert to more QE money printing to try to inflate away the otherwise unpayable national debt.

The Federal Reserve “printed” almost $4 trillion during the Quantitative Easing episode.  Most of that hasn’t entered the consumer economy yet, but a lot of it has been stovepiped Wall Street’s way; hence the stock market bubble.  Watch out. 
There’s no reason that it won’t try to inflate away much of the national debt with more money printing.  
Of course, that will sink the dollar.  And send gold prices to the moon.    
The debtberg lies straight ahead.  Think of the Titanic.  We are perilously close and incapable of changing direction in time.  
You need to protect yourself and your family with gold. 

THE FED BUBBLE
April 12, 2019

the fed bubble

A look back at 4/12/19: It is impossible to know in advance what exactly will pop the latest central bank money bubble.  You can only know for sure that it will pop… 

None of this will be enough to keep the stock market bubble from popping, no matter how much it gets juiced.   You can juice a runner with something to keep him going, but not forever.  Eventually, he can’t be juiced any more.
We survey world events -- deep economic trouble in China, the European Union coming apart at the seams, trade hostilities growing – and add in a weakening domestic economy – and there is no shortage of pins to pop this bubble.
You’ll be happy to have moved to gold when the air comes out of stocks.  And wait until you see what happens then, even crazier Fed policies like “helicopter money” that we wrote about here, and even “Modern Monetary Theory,” the newest hyper-inflationary enthusiasm of people like Alexandria Ocasio-Cortez.  
We’ll keep you informed.  But get out of the way. 

Now.

MMT AND HELICOPTER MONEY 
April 26, 2019

A look back at 4/26/19:  We ourselves hoped against hope a year ago that Washington wouldn’t buy the Modern Monetary Theory nonsense.  But it’s being implemented today in the Fed’s Covid-19 policies.

You can’t believe how crazy things are in Washington.
Things haven’t been sound on the money front for a long time.  Certainly not since the Fed was created and we left the gold standard.
But things have gotten crazier than ever.  Now people in Washington and their academic minions are working on hyper-inflationary schemes you probably haven’t even heard of! 
Like “Helicopter Money.”  And “Modern Monetary Theory.”  That’s the one Alexandria Ocasio-Cortez likes.
The Fed’s printing press has been destroying the dollar anyway, but now the crazies want to get their hands on it.
…MMT is all the rage.  Academics who should know better (and they would know better if they had studied historical schemes like John Law’s Mississippi Bubble debacle three hundred years ago) are climbing aboard.  And politicians, many of whom will subscribe to any scheme that allows them to promise to give things to people and get re-elected, are falling all over themselves to sign up.
MMT hasn’t reached critical mass yet, but I suspect it will soon.  Remember the old saying that those whom the gods would destroy, they first make mad.
Protect yourself and profit from the madness of our times with gold.   

HANGING BY A THREAD
May 1, 2019

stock-market-hanging-by-a-thread

A look back at 5/1/19: We developed quite a reputation for our timely warnings about the stock market at the end of 2018.  And we earned that reputation again this year…

What took place in stocks late in the year can honestly be described as a bloodbath.  Only the most extraordinary policy reversal by the Federal Reserve was able to keep Wall Street, hedge funds, and their robot algorithms trading in the game.  
… Stock market valuations are an illusion, the product of the Fed’s monetary sleight of hand.  
In other words, the stock market is once again hanging by a thread.
Now you would think that after the dot.com bubble and the housing bubble, the people would be in no mood for a third Fed-engineered bubble in this young century.  But the people don’t really understand how these things work.  And the media doesn’t help them.
That’s why we take it as part of our job to help them figure it out with these posts, to show them the wizard behind the curtain.  

ANOTHER BUBBLE
May 8, 2019

A look back at 5/8/19:  Once again we pointed out last May that the stock market bubble would be popped… because that is the fate of all bubbles… 

This stock market is a bubble.  It’s not a bubble because we say it is a bubble.  It’s a bubble because like all bubbles it is driven by the artificial creation of money and credit.
And like all bubbles, it will meet its pin.
That pin could be anything.  Expected or unexpected.
Now, you would think that after the dot.com bubble and the housing bubble, the people would be in no mood for a third Fed-engineered bubble in this young century.  But as we have been saying, the people don’t really understand how these things work.  
And the media sure isn’t going to tell them. 

GOLD TAKES OFF!  NEW SILVER STRENGTH!
June 20, 2019

A look back at 6/20/19Last summer we identified the beginning of the new bull market…

We cannot be more clear:  These powerful moves in gold and silver are not accidents.  The world is growing more dangerous by the moment, and central bank authorities, not just at the Federal Reserve, but in Europe and around the world, know no other course but massive credit creation and money printing.  
It is a path of dollar destruction.  
It is a road of no return. 
We advise our friends and clients to add aggressively to their precious metal holdings now. 

TWO THOUGHTS FOR THE SECOND HALF OF 2019
July 2, 2019

A look back at 7/2/19:  A few months earlier, in April, we had advised clients that “so far this year, any pullback of gold below $1,300 has been a favorable opportunity to add to your holdings.”  

By June, with the new gold bull market underway, we raised our target, suggesting clients take advantage of any dips below $1,400.  We got a few such breaks in July.

Still, modesty demands that we chalk up to good luck that our clients had several opportunities to buy gold below $1,300 as we suggested before the bull market sprang to life in June….
We would like to suggest now that any pullback to $1,400 or below is a good gold buying opportunity.  But be warned:  it may not last.  There is a very real and broad-based rotation into gold taking place at the level of governments and major institutions globally.  
Something big is happening.  Take advantage of the price break while you can.  

THEY’RE BUYING GOLD
July 14, 2019

China adds gold in December

A look back at 7/14/19:  If you could watch only one indicator for the future of both the dollar (lower) and gold (higher) it should be what foreign central banks are doing…

Foreign governments and their central banks have lost faith in the US dollar.  
Trust in the dollar dates back more than a century when people used expressions like “sound as a dollar,” or “the dollar is as good as gold.” 
Although faith in the dollar lasted for a long time, today it is eroding rapidly.  
… Foreigners have reasons of their own for shying away from the dollar.   Things like the Iraq war didn’t help.  Economic sanctions that have replaced diplomacy are another reason that foreign nations are abandoning the dollar.
But those reasons wouldn’t really matter, and the dollar’s preeminence would last, if the dollar were still as good as gold.
But, of course, it is not.  
That’s why China added 10.3 tons of gold to its reserves in June.  That’s the seventh straight month that China added to its official gold position.  It is in addition to the 74 tons it added in the six months through May.  
The last year has seen China reduce its US Treasury holdings by around $70 billion.

THE BULL MARKET:  GOLD AND SILVER HEAD HIGHER!
August 3, 2019

Bull vs Bear Market Gold

A look back at 8/3/19In this post we confirmed the new gold and silver bull market was off and running...  

Other authorities, like gold expert and former presidential candidate Ron Paul, have joined us in identifying this as a gold and silver bull market.  
Let’s review what has happened.
Gold is up more than $400 an ounce since its low of $1046 in late 2016….
This market is just getting going.  Wait until you see what happens when large swaths of the public begin to realize they need to protect themselves from stock market bubbles, criminally destructive monetary policies around the world, and compounding government and corporate debt.  
Then you won’t need a textbook definition to recognize the bull market! 

DEFAULT RISK
September 10, 2019

A look back at 9/10/19:   Even before COVID-19, few Americans had a clue how their prosperity will be impacted by the rippling waves of default and bankruptcy that were already on the horizon.  But if it was bad before, now it is about to become overwhelming…

One of the most important reasons to own gold and silver is to avoid major risks common to stocks, bonds, banks, and other financial assets and transactions:  the risk of insolvency and default.
All these financial markets and institutions carry a risk of insolvency and default.  Those are risks that grow more threatening with each passing day.  
But gold and silver are monetary commodities in their own right.  They are not claims to something else somewhere else down the road.  The value of an ounce of gold or silver is utterly indifferent to the issuer’s total debt, or the wisdom of its political leaders.   An ounce of gold is an ounce of gold no matter whose image or national motto is engraved on it.  
Its value is not contingent on someone else’s integrity.

THREE MORE NUGGETS OF NEWS
September 24, 2019

A look back at 9/24/19:  We made a pretty good call when we warned our friends and clients about the October Effect in the stock market.  The DJIA hit a high of 27.000 at the beginning of October and began falling.  Hard.  Over the next three months, it fell to 21,700.  That’s a loss of more than 20 percent.  Same with the S&P500.

On the evidence, we believe the stock market is being floated on Fed policy and not on economic reality.  Indeed, the level of corporate debt is so high that there is a real risk of a prairie fire of defaults and bankruptcies sweeping corporate America in the event of a and economic downturn.
In any case, as September comes to an end, we want to warn stock market investors of the October effect.  Goldman Sachs is warning about October volatility, which it saying runs 25 percent higher than other months dating back to 1928.
The October Effect stock market crashes include the Panic of 1907, Black Tuesday (1929), Black Thursday (1929) Black Monday (1929) and Black Monday (1987).

IMPEACHMENT AND THE STOCK MARKET
October 1, 2019

Trumpflation and Gold

A look back at 10/1/19: Once again we warned that the stock market was being sustained by money manipulation and that a crash was inevitable, regardless of political developments…

President Trump says that if he is impeached, the stock market will crash.
We think that he is right.  
We also think the stock market will crash even if he is not impeached.
That is because stocks are kept aloft by monetary policy.  It is a neat trick, to appear to levitate the entire economy by monetary magic and the printing press, but that is an illusion that will shatter….
All evidence and precedent suggest another stock market crash is inevitable.  We urge you to avoid the risk and to move to the safe havens of gold and silver – no matter what happens with the impeachment.

GOLD COINS FOR BLACK SWANS
October 9, 2019

A look back at 10/9/19: We have insisted all along that the problems with our debt and monetary malpractice would be their own undoing.  They could be triggered by anything.  In this October post, long before anyone heard of COVID-19, we speculated about some of those triggers, including “the spread of disease like the flu epidemic of a century ago…”

A Black Swan is an unexpected event.
9/11 was a Black Swan event.
So, what will the next Black Swan events be?  It’s hard to say because they are unexpected….
Making a list of the possible trigger events for such a calamity is an inexhaustible exercise.  We write often about the financial possibilities since they loom larger and more certain with each passing day:  the ending of the dollar reserve system; unpayable sovereign and other debt; cascading government and private bankruptcies; bank failure; foreign dumping of US treasuries; runaway inflation and crippling stagflation.
But we need to allow for even less predictable Black Swans that can trigger these economic/monetary calamities.  Those include everything from the sudden outbreak of war, widespread crop failures, and the spread of disease like the flu epidemic of a century ago, to uncontrollable civil turmoil, power grid failures, earthquakes, volcanic eruptions, and even less likely events like an asteroid impact.
Unexpected?  Unlikely?  Precisely the qualities of the Black Swan events that order and reorder just about everything in our lives.

MONEY PRINTERS GONE WILD!
October 27, 2019

Trump Chooses the Printing Press

A look back at 10/27/2019:   The Fed didn’t announce it.  In fact, it tried to hide it.  But we noted a new round of Quantitative Easing in late October.  Now, less than six months later, it is proving to be bigger that anyone could have imagined…

The Federal Reserve has quietly launched a massive new round of money printing.  
We hope you will take time with this very important piece.  It should be shared widely.  It describes a new phase of Fed monetary management, a turning point that people will look back on as a crucial moment in the US economy, and one that will drive gold to new heights.
The Fed has quietly launched a new round of Quantitative Easing (QE), the most outrageous monetary experiment in American history.… 
This money supply growth and the new QE is a policy error that must result in serious consequences for the general economy, as well a much higher gold prices.
The Fed can create more dollars with a computer keystroke, but it can’t print more gold.
That’s why gold goes up.  

ANOTHER RATE CUT?  MORE THAN MEETS THE EYE?
November 3, 2019

A look back at 11/3/19:  We knew that liquidity trouble was brewing behind the scenes in the US economy and pointed it out in this post.  The depth of the liquidity problem is still not widely understood and has been overshadowed by the Fed actions of the last month.  But it will not go away…

The stock market is cruising along around all-time highs.  The economy, we are told, is doing great.  In fact, we are in the longest economic expansion in history, we are told.  On Friday we learned what the Fed would already have had a peek at, that employment was strong, with “blowout” numbers.
But if everything was hunky-dory, why did the Fed feel it was necessary to cut rates three straight times in a row?  
In September the Fed began providing billions of dollars to the repo market, the overnight and short-term borrowing market among financial institutions, banks and hedge funds, which found itself in a “liquidity event.”  
The Federal Reserve has tried to soft-pedal it, but in October it launched a massive new money printing program….
They don’t do this because they think everything is just fine.    
Nor was QE money printing a policy option created for times when everything is alright, either.
There is more to all this than meets the eye.  Extreme measures are being taken.  Extreme measures imply extreme conditions.  The Fed is acting like something big is brewing.  

BEWARE THE MOTHER OF ALL BUBBLES!
November 12, 2019

A look back at 11/12/19: We remember the money Americans lost in the popping of the dot com bubble, and the millions who lost their homes in the middle of the mortgage bubble.  So in November we wrote about the pain of the popping of the latest bubble.  Right now, during the lockdown phase of the Coved-19 pandemic, few are looking ahead at the pain this bubble will mean…

Market bubbles don’t just happen.  They are the result of the government or its financial arm artificially creating excesses money and credit conditions.  Fractional reserve banking, policies like Quantitative Easing, outright money printing, and interest rate manipulations are the tools they use to create these excesses, sending misleading signals to investors and businesses alike.
The pain of bubbles popping – the unemployment, the impoverishment of millions, the bankruptcies, the loss of families’ hard-earned financial security, even the loss of freedom and the ruin of entire countries – seem like they should be reason enough for bubble policies to be avoided in favor of sound, gold based monetary systems.  But the inevitable suffering of the people is never enough to stop the bubble-blowers.  

BUY GOLD SAFELY:  FACE TO FACE!
November 24, 2019

A look back at 11/24/19:  We must have been looking down the road when we wrote this piece.  But it’s only because we’ve seen it before… Other dealers and our competitors that can’t deliver precious metals and ask their clients to pay and wait for their gold and silver… eventually.

Don’t do that!  Republic Monetary Exchange makes immediate deliver!

We believe everyone should own gold and silver.    But we encourage people to use best practices in both buying and selling precious metals.
Said differently, we encourage people to use common sense.
We just don’t think it’s a good idea to buy gold and silver from boiler room operators or to send your money somewhere across the country to a voice on the phone.   At a place you know nothing about.
And then wait for weeks to get your gold.
You should be able to buy with confidence.  Face-to-face.  Getting your gold and silver right then for most of the commonly traded products.  On the spot upon receipt of good funds.  That’s how we do business.  Best practices.

WHAT IS THE FED SO AFRAID OF?
December 15, 2019

A look back at 12/15/19:   Of course, Federal Reserve officials knew more than we did about the extent of liquidity problems caused by their manipulations when we wrote about it in mid-December.  But we spotted their desperation and knew something was up…

The Federal Reserve is panicking.  Or at least it is acting like it, with moves of seeming desperation that are not clearly explained.
The Fed is quietly printing money like crazy.  But it isn’t saying what it is so afraid of.
For anyone steeped in the unhinged Keynesian theories that rule at the central bank, three interest rate cuts in 2019 are not internally logical.   The US economy is enjoying the longest sustained boom in history, now running 126 months.  And unemployment is said to be at a 50-year low.
Keynesian theory calls for lowering rates, deficit spending, and loose money when the economy is in contraction.  Not in an expansion.  
And now the Fed has cranked its money creation machines to eleven.  As the rock music parody motion picture Spinal Tap showed, eleven is even faster than the top rate of ten!
And indeed, the new money printing regime is faster than Quantitative Easing, the unprecedented monetary experiment that gushed forth almost $4 trillion beginning in the Great Recession.
Liquidity operations, more repo funding, more QE.  We refer to them generically:  more money printing.
What is going on in the Marriner Eccles Building in Washington?  Why has the Fed cranked the presses up faster than fast?
Although it’s all shrouded in mystery, we can suggest some possibilities.
Informed sources say the Fed is desperately trying to stop interest rates from flaring up… and spreading like wildfire.  

STANDING IN LINE TO BUY GOLD
January 22, 2020

A look back at 1/22/20:  No amount of standing in line has been able to help people trying to get gold from many of our competitors… They just don’t have the goods.  At Republic Monetary Exchange, we have inventory and continue to deliver for our clients…

It has happened before.   And it will happen again.  
We didn’t expect it to happen now.  But it did, in Germany earlier this month.
We’ve seen it before.  People standing in lines that snake around the block, that is, waiting for their turn to buy gold.  Hoping that they’ll get their turn before it’s too late.

THE CORONAVIRUS, BLACK PLAGUE, AND BLACK SWANS
January 28, 2020

A look back at 1/28/2020:  We left it to others to comment about the long-term outlook for the coronavirus, but we are well-situated to comment on the outlook for gold….

For now, we only wish to point out that the coronavirus outbreak is a classic “Black Swan” event. A Black Swan is an unexpected event that has an outsized impact. 
 9/11 was a Black Swan event.
Black Swan events are almost always destructive to the established order.  That would be things like government finances, trade, state currencies, and stock markets.  
They are almost always bullish for gold.

PANDEMIC – STOCKS, GOLD, AND CENTRAL BANKS
February 4, 2020

A look back at 2/4/20:  As the pandemic continued to unfold in early February, the stock market sell-off had only just begun. We wrote that there is no way out for the Fed.  There is no way out for the US economy as a whole, or for the monetary system.  There is only the opportunity for people to protect themselves individually…

If the Coronavirus has the deadly punch that many fear, its financial impact on the stock markets will be devastating and gold will rocket higher.  If Coronavirus proves to be less than a pandemic-level catastrophe, the central banks’ additional money printing will send gold higher as well.
The central banks are in a box of their own creation.  
The risk to stocks is extraordinarily high.  Gold is the only safe haven.  

CHARTS AND THE STAMPEDE TO GOLD
March 11, 2020

A look back at 3/11/20:  The Fed doesn’t know what to do other than try to force interest rates lower and “stimulate” the economy by printing money.  In March we provided a graphic representation of mirror image between the Fed’s artificially low interest rates and higher gold prices.  

Now the Fed has forced interest rates to never-before-seen lows, with the 10-year yield has actually dipped below .5 percent. Plunging rates in 2020 on the right side of the chart are impossible to miss.  They foretell higher gold prices. 
We would not like to have the job of persuading US Treasury bond buyers and auction bidders that loaning money to Uncle Sam for 10 years at for a paltry one-half a percent annual return is a good deal.  Especially since it is clear that the Washington big spenders are going to have to borrow an additional trillion dollars or more each year for the foreseeable future.  
A guaranteed loss is assured since it is the policy of the Federal Reserve to erode the purchasing power of the dollar at four times that rate each year. 

●    ●     ●

So there is a review of some of our market calls, advice, warnings, and recommendations from the last 12 months.  You will be well-informed by a review of these articles.  But remember, it is not enough to know.  One must act.

Bookmark our website.  Read our alerts.  We even encourage you to share these posts on Facebook and Twitter.

Then, when you’re ready to act, call or stop by Republic Monetary Exchange.  

But don’t wait until it’s too late!

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Record Demand for American Eagles

To protect their wealth, many Americans are reacting to unsettling conditions in prudent and time-tested ways.

They are trying to protect their wealth with precious metals.  

The US Mint reports record-shattering gold and silver coin sales for the month of March!

According to the latest numbers from Coin News, the Mint sold 142,000 ounces of American Eagle gold coins in March.  That’s up from 7,000 ounces the prior month.  It represents an increase of 1,135 percent over March 2019.

The silver sales reflect an even greater demand.  American Eagle silver coins sales totaled 4,832,500 ounces in March.  That’s up from 650,000 ounces in February.  It is an increase of 469 percent versus last March.

Coin News points to silver supply shortages from the US Mint in February and March.  “Silver Eagle sales in February 2019 were stunted when the coins temporarily sold out. However, the coins also temporarily sold out earlier this month (March) and were subsequently rationed.)”

Even with the blistering pace of US Mint sales, many dealers around the country are not able to make timely deliveries to their clients.

However, unlike others, Republic Monetary Exchange still has inventory and provides its clients with immediate delivery of gold and silver.  

Avoid the needless risk of placing and paying for orders elsewhere with dealers that are asking for advance payment and then promising delivery at some uncertain date in the future.  

Republic Monetary Exchange subscribes to best practices and can meet your gold and silver needs today, providing immediate delivery.  

Protect your wealth in these times of economic upheaval.  Republic Monetary Exchange Can Help. Contact us today!

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RME Has Gold and Silver

Others Have Long Delays… Can’t Deliver Metals Now!

Republic Monetary Exchange has gold and silver available now, even in these turbulent times, for immediate delivery.

Buy gold and silver today from Republic Monetary Exchange, and take delivery today!

WARNING:  Our competitors are out of inventory.  Some are promising to deliver gold and silver to their clients at some unknown, unspecified date far off in the future.  

WARNING:  If you pay them now, they say, they will try to get you gold and silver in six or eight weeks or some other time down the road and deliver it to you then.

WARNING:  We strongly advise you against doing that.  Especially in these volatile times.  And especially when Republic Monetary Exchange has inventory on hand for immediate delivery!

Because of the extreme demand for precious metals in these uncertain times, the prices for real gold and silver have decoupled from the price of gold substitutes and paper benchmark prices.  The world gold prices and index prices you read about in the newspaper are not the real price for physical gold you can take home and put in your safe.  There is not enough gold at those benchmark prices.

Most dealers are unable to make prompt delivery to their customers at any price.  

But Republic Monetary Exchange has gold and silver.  Today!  For immediate delivery!  Right here in Phoenix!  

But you must hurry.   We don’t know how long we will be able to meet the extreme demand.  

It is strictly first-come, first-serve!

Buy TODAY, take delivery TODAY!  

Call your Republic Monetary Exchange gold and silver professional today.  Lock in your order and take delivery now, not “sometime later”.

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Gold Briefs and Essential News

Goldman Sachs – “Time to buy the Currency of Last Resort”

Goldman Sachs gets it.  “We have long argued that gold is the currency of last resort, acting as a hedge against currency debasement when policymakers act to accommodate shocks such as the one being experienced now,” said the investment banking giant this week.

The company cited the 2008 precedent when the Federal Reserve announced its Quantitative Easing liquidity operations.  Over the next three years, gold surged to all-time highs.  

Similarly, in the current pandemic environment, the Fed has announced that it will use “its full range of tools” in liquidity operations.

Money Printers Gone Wild!  A Trillion Here, a Trillion There!

The coronavirus and bailout package in Washington could amount to more than a quarter of America’s Gross Domestic Product.   

Altogether the package could total $6 trillion!  

At the White House coronavirus task force briefing on Tuesday, Larry Kudlow, the President’s economic advisor, said measures would include $4 trillion in lending power for the Federal Reserve as well as the $2 trillion aid package.

“This package will be the single largest main street assistance program in the history of the United States,” Kudlow said.

US Output Drops at Fastest Rate in a Decade

The Purchasing Managers Index reports on the expected contraction of the US economy.  It’s business output index shows a sharp decline in March, following a decline in February.

“The service sector signaled an especially steep downturn in business activity, while manufacturers registered the sharpest drop in output since August 2009.

“Companies also reported the first contraction of new business since data collection began. The marked decrease in new orders stemmed from sharp falls in client demand following the outbreak of COVID-19, according to panel members.”

Republic Monetary Exchange Continues to Meet Client Needs!

While many – if not most – of our competitors across the country have found themselves unable to meet the needs of clients anxious to acquire gold and silver, Republic Monetary Exchange continues to provide its customers with the popular gold and silver products they seek.

Many of our competitors are out of gold and silver.  Either sold out, or without the inventory, market connections, and experience we have.  In any case, they are not able to deliver gold and silver.

Many dealers ask to be paid today for gold and silver that may be delivered at some indeterminate time in the future.  We recommend strongly against that.

We urge you to contact Republic Monetary Exchange today.  Speak with one of our precious metals experts and prepare now for conditions to come.  

Do not wait for more Washington red ink and trillions in printing press money to drive gold and silver prices to new highs.  Contact us today!

ONE ADDITIONAL NOTE:  We know that events have squeezed many people’s personal finances and that some may need to sell gold and silver.  Perhaps you’ve heard our advertising over the years, that in addition to offering the best prices to buyers of precious metals, because we operate a continuous two-way market, buying and selling, we are able to pay the most for gold and silver when you wish to sell.  

Let us help you, even if you didn’t buy your gold and silver from us.

Beware the Hyper-Inflating Fed

Don’t Get Quarantined in Dollars!

You do not want to risk being locked down in an incurable paper money economy.  One with no escape.  You need to be aware of just how grim the prognosis is for the Fed’s dollar.  

So today we share an observation from Tom Dyson, who writes a newsletter called Postcards from the Fringe.  Dyson is himself a veteran of the “repo” desk at Citigroup.

“The Federal Reserve’s balance sheet is about to EXPLODE higher,” he notes.  

Here’s why:

Dyson believes that between existing spending and the trillion-dollar deficit it is already running, a parade of stimulus schemers, and plunging tax revenue from a stalled economy, the Treasury is going to have to borrow another $10 trillion on top of the $23.5 trillion it already owes.  

But stand back and ask who is going to fund that debt?  Who is going to buy trillions of more treasury bonds?

Not China, says Dyson.  He’s correct.  China is up to its eyeballs in its own problems and not just the Coronavirus.  It’s a debt problem, staggering, to begin with, it grows with the health crisis and the slowdown.

Not the oil-exporting nations.  Not at these petroleum prices, for some below the cost of production.

Not emerging markets says Dyson.  They are having to dump their treasuries to support their plummeting currencies.

And not Wall Street.  “Asset managers are dumping their Treasury holdings to meet redemption requests and margin calls,” he writes.

So who does that leave?  It will be left to the Fed to “monetize the debt.”  That means magically turn the debt into money.  It must print money to buy US government bonds.  The Fed is not even making a secret of its willingness to print money until the cows come home.

“And that’s why the Fed’s balance sheet has started to hyperinflate,” says Dyson.  “It’s at $4.5 trillion now. If I’m right about the hole the government finds itself in right now, the Fed’s balance sheet will pass $10 trillion later this year… and then pass $20 trillion or $30 trillion in the next few years.”

If you don’t own gold and silver, then face it: your portfolio is quarantined in dollars.

And that is not a good place to be. 

Especially now!

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Stop Searching! RME has Gold and Silver In Stock TODAY

Others Sold Out!   Long Delays!  

Not Republic Monetary Exchange!  

Silver Eagles and other products are available For Immediate Delivery!  Buy Today… Take Delivery Today

Empty store shelves.  Staples of life missing from stores.  A stock market collapse.  Quarantines.  And the hunt for toilet paper seems to have suddenly become a leading topic in American life!

You are right if you feel an urgency to own gold and silver!

The events of the last few weeks have crystallized the importance of owning gold and silver.   Under the circumstances, people realize that means owning physical gold and silver.  Precious metals in their possession.  Gold and silver bullion and coins that they can get their hands on for-profit and for safety in times of trouble.

Many of our competitors are out of gold and silver.  Either sold out, or without the inventory, market connections, and experience we have.  In any case, they are not able to deliver gold and silver.

Some say pay them now, but it will be weeks before they can come up with your gold.  

That is a bad idea!  Do not do that!

Buy TODAY, take delivery TODAY at Republic Monetary Exchange!  Paper promises about gold or representations that someone somewhere has gold or gold shares or gold futures in your name that may or may not be delivered sometime in the future are no more comforting than someone somewhere else claiming to be holding toilet paper on your behalf in New York or Beijing when you need it now!

We are Republic Monetary Exchange. We’ve been around a long time, both buying and selling precious metals.  We have inventory for immediate delivery.  Now!  

And while we think everyone needs to own gold and silver, if you need to sell precious metals, remember because of our volumes and active market, we pay the most when you need to sell. 

Call us or stop by today to add more silver or gold while supplies last and premiums rise again.

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News and Views About the Markets and Economy

We know that even if you are unable to go to work, practicing social distancing, or even quarantined, that you still can’t read everything.  So here is a sampling for you of observations and insights from people we turn to from time to time.

Bretton Woods Research writes that we are only in the third inning of this process of Federal Reserve actions, falling oil, shutdowns, and adjustments.  It foresees a lot more downside for the stock market: “Depending on the length of the shutdown, it’s possible to see a downside scenario where the S&P 500 reaches 1750 almost 50% below the 2020 peak.”

That’s almost another 30 percent lower than we are today.

Veteran gold and silver analyst Jim Sinclair’s associate Bill Holter doesn’t pull any punches.  He says global bankruptcy will result from the world’s most over-leveraged shutting down for a month or more.  

“It is over folks,” says Holter.  “The system is coming apart at the seams and the ‘promises’ the world ran so smoothly on for so long are being laid bare. You might ask, which promises? The answer is ALL promises.

Holter points out that precious metals prices on the exchanges are for paper representations of the metals and are quite different from the actual prices for real gold and silver that you can hold in your hands.  “In the metals arena, you see paper pricing extremely weak. However, the real world shows something very different. The US Mint is out of both gold and silver eagles. Other sovereign mints are also running out of supply or already out.”

Conditions have been changing fast.   Be sure to check in with your Republic Monetary Exchange gold professional for current conditions and product availability.

David Stockman is keeping an eye on the growing roll of bailout-ees:  “They are talking about Bailouts for Everybody—airlines, shale producers, Boeing, corporate America, the banks, hotels, restaurants, cruise lines, casinos, small business, medium business, every business and some or all of the households of America in the form of helicopter money from Washington.”

We ask you to bear in mind that when Washington and the Fed bailout everybody when they pass out $1,000 check to everybody, everybody pays.  They really bail out nobody, because the burden is borne by the recipients.  By everybody.  The cost is hidden in the falling purchasing power of the paper money.

And that is extremely bullish for gold.

Even more unhinged, and more bullish for gold is the belief that we – Washington, the Fed, the US taxpayers – can bail out everybody.  Even so, the Fed announced its decision on Thursday (3/9) to make dollar loans to a slew of foreign central banks for the next six months.

ZeroHedge:

“How much dollars will be available? As per the release, the Fed will release up to $60 billion each for the Reserve Bank of Australia, the Banco Central do Brasil, the Bank of Korea, the Banco de Mexico, the Monetary Authority of Singapore, and the Sveriges Riksbank and $30 billion each for the Danmarks Nationalbank, the Norges Bank, and the Reserve Bank of New Zealand.”

We will end today’s discussion by looping back around to our own comments recently about the Plunge Protection Team, here.  Yesterday (3/18), White House economic advisor Larry Kudlow floated the idea of a sovereign wealth fund, that the Federal Reserve print money to buy stock.  Kudlow war purportedly limiting the idea to companies the seek government aid in the COVID-19 episode.  

But that kind of limitation will fall quickly.  We’ve seen these kinds of things before and we’ve seen this particular idea coming.  It is a reflection of the unmatched influence of the government’s Wall Street cronies.  Taken to its logical extreme, they basically want to empower the Fed to buy stocks and guarantee their stock market profits.  This proposal is advancing quietly, but quickly.  

As we said, “If it is allowed to do this, say goodbye to American prosperity.  Cronyism and influence peddling will run rampant in a carnival of corruption as state bureaucrats and officials decide which stocks to buy and at what prices.  As money flows to the influential and the well-connected, honest pricing, innovation and free-market competition will grind to a halt, product inferiority will rule the day and the living standard of the American people will fall hard.

“It will be Mussolini time in America.  

“Buy gold.  And if the government starts buying stocks, buy more gold.”

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Now What?

It could have been one of many other things, but the Coronavirus is the pin that popped the stock market bubble.  

Now the Federal Reserve has started another aggressive round of Quantitative Easing.  It does so under the general behavioral rule that when you’re holding a hammer, everything looks like a nail. 

Printing money is the Fed’s hammer.  It uses that tool for every crisis.  In the original QE program, the Fed created almost $4 trillion dollars.  In response, gold marched higher over the next three years, from just above $700 an ounce in 2008 to its all-time high of $1900 in 2011. 

Having already launched its new money printing binge last fall, before the Coronavirus, the Fed is now stomping on the accelerator.  As the red arrow points out, the Fed’s balance sheet, having leveled off somewhat at the end of last year, turned virtually straight up at the end of February.  And it will climb much higher from here.  Indeed, it is already on track for a new all-time high, past $4.5 trillion and headed quickly to $5 trillion.

What does that mean?  It means a heck of a lot of new money printing.  And that’s early in the crisis.  New inflation-funded spending initiatives are coming faster than anyone can track.

But the stock market sell-off and the business shutdowns in place and to come are so devastating, that nothing that could be considered “normal,” even on the scale of the prior liquidity easing will be effective.  

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Doug Noland of Credit Bubble Bulletin puts it this way:  

“I do doubt fiscal and monetary stimulus will resuscitate the Bubble in global leveraged speculation. Illiquidity and market dysfunction have been exposed. Huge losses have been suffered and ‘money’ will flee popular (and overcrowded) leveraged strategies (i.e. risk parity). I also suspect confidence in derivatives has also likely been shaken. Liquidity risk will be a persistent feature of global markets.” 

Warren Buffett described times like these in a more folksy way:  “When the tide goes out you see who’s been swimming naked.”

Make no mistake.  The tide has gone out.

Now we must hold our breath while we watch to see the financial trouble that will be exposed, in banks, funds, brokers, companies, pension plans, insurance companies, and investment products like annuities.  The criminal recklessness on display will extend to all levels of government.  

This is not an age of fiscal prudence or honest stewardship.  The politicians and government have established the standards of our age, with its fraudulent representations.  It taught generations of Americans that they, like the government itself, could spend their way to prosperity.  It taught that it could make up money out of thin air, that deficit doesn’t matter, that debt doesn’t matter either because we somehow owe it to ourselves.  They taught the people that they can all live at someone else’s expense.  And they even taught that honest accounting doesn’t matter and that something as routine and sensible as an audit was beneath the dignity of the world’s largest money manipulator, the Federal Reserve System.

Now all these lessons have to be unlearned.  After so many years of delusion, there is pain involved in confronting reality.  But reality always asserts itself in the end.

Now is the time to buy gold.  That is because gold is the only financial/monetary asset that is not someone else’s liability.  It is not a hopelessly indebted company or government.  It is not dependent on someone else’s honesty, prudence, or accounting practices.  It is not dependent on the pictures engraved on it, or on the country that minted it.  It is not a promise of performance that may or may not be met in the future.  

As J.P. Morgan said in congressional testimony over a hundred years ago, “Gold is money.  Everything else is credit”

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Global gold prices

The Gold Price During the Stock Market Blood Bath

A Look at the Price of Gold During the Stock Market Selloff

In February we described a familiar market pattern in a stock market collapse.  Stock investors forced to come up with cash to meet margin calls or to cover other losses often turn to gold as a source for their liquidity needs.

In Blood Running on Wall Street!, we wrote:

“Traders in markets with perfectly sound economic fundamentals can sometimes liquidate their positions in other things to meet margin calls in collapsing markets.  It appears that in the general carnage of the stock market, large investors scrambling for cash to meet margin calls took profits in gold, the most liquid commodity of all.

“To repeat, we have seen this kind of action before, and we know what happened then.  Gold fell hard – but only briefly – in the fall of 2008 during the stock market carnage of the mortgage meltdown. 

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“But that margin call selling opened a window of opportunity to buy gold at ‘sale prices.’  

“Of course, it didn’t last long.  Soon gold was racing to new all-time highs.  Three years later it was up well over 2 ½ times its October 2008 low.”  

Now. as the stock sell-off deepened, the pattern repeated itself last week.

On Thursday (3/12) an Investing.com story headline read, “Gold Loses $1,600 Support as Investors Sell to Save Bleeding Wall Street.”

“Gold lost its key $1,600 support on Thursday as investors cashed out their long positions in the yellow metal in a scramble to cover margins and losses on Wall Street amid the U.S.”

Bloomberg News wrote that gold selling showed, “how extreme the selling pressure has been in every corner of the markets.

The Investing.com story goes on to quote as an analyst who says, “Gold investors are scratching their heads as the fear trade is only seeing steady flows into Treasuries right now.”

We think moving into US Treasuries is an extremely bad move.  When the yield on the 10-year US treasury bond dipped to .5 percent last week we wrote that we think loaning money to the government is to guarantee to lose purchasing power.  That is because the Federal Reserve’s stated policy is to erode the purchasing power of the dollar at four times that rate.

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We strongly advise against seeking safety in the bond market.  Bear in mind that if interest rates rise in reaction to events, the result is a fall in bond prices.  Furthermore, since the correction in gold prices is widely agreed to be a result of margin call selling by those suffering losses in stocks, we view the lower price as almost certainly temporary and therefore an attractive buying opportunity.

One final note:  The COVID-19 crisis has produced almost universal calls for the Fed and the government to spend money and defer or reduce taxes.  The Fed and the administration are complying with both monetary and fiscal policies.  This is a certain sign that policymakers here and abroad will be flooding the US and the global economy with new liquidity.  An enormous amount of liquidity.  

Money pumping.  Liquidity Operations.  Open Market Committee interventions.  Quantitative Easing.  We prefer to call it “money printing.”  It is the artificial expansion of money and credit by the central bank.  Juicing the markets.  By any name, it will devalue the purchasing power of the dollar and other currencies.  

And it will drive gold higher.  That’s why we renew our call for our friends and clients to take advantage of today’s lower gold prices…

While you can.

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Charts and the Stampede to Gold

We’d like to step back from the daily reports of the wild swings and mounting losses in the stock market to let you ponder a couple of longer-term, big picture items.  We think the two charts that follow are mostly self-explanatory, so we will just tell you what they represent and otherwise keep out commentary to a minimum.

The first chart plots the relentless rise in the US federal debt (in red), now at $23.5 trillion dollars.  Because the value of the dollar is subject to the debt as is the Federal Reserve’s willingness to create more dollars to keep the debt game going, you can see that for years the rising debt pulls dollar gold prices higher. 

By the way, with businesses slowing down due to the Covid-19 pandemic, tax revenue will fall.  It will fall further still if a payroll tax cut is implemented.

At the same time, government spending will rise at a relentless rate with new spending on health-related measures.  

That means the red line will turn steeply higher.   And pull the gold line along with it.

The next chart shows the US Treasury 10-year bond rate back to 2015 (the blue line) compared to the gold price over the same period.  Their mirror image movement is impossible to miss.  Over the period, as interest rates have ticked up, gold has paused or moved lower; as interest rates have fallen, gold has moved higher.  

Plunging Rates

Now the Fed has forced interest rates to never-before-seen lows, with the 10-year yield actually dipping below 5 percent.  Plunging rates in 2020 on the right side of the chart are impossible to miss.  They foretell higher gold prices.

We would not like to have the job of persuading US Treasury bond buyers and auction bidders that loaning money to Uncle Sam for 10 years at for a paltry one-half a percent annual return is a good deal.  Especially since it is clear that the Washington big spenders are going to have to borrow an additional trillion dollars or more each year for the foreseeable future.  

A guaranteed loss is assured since it is the policy of the Federal Reserve to erode the purchasing power of the dollar at four times that rate each year. 

It can sometimes take a while for critical masses of the people to wake up, but at some point, the guaranteed loss of purchasing power will become apparent to everybody and cause a stampede into gold and silver.

Why not beat the rush?  Contact your Republic Monetary Exchange gold professional today.

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The Plunge Protection Team

After long years in Washington, the presidential candidate didn’t seem to know what it was.  Senator John McCain was caught up short when Ron Paul asked him in the 2008 Republican debates what his position would be on the President’s Working Group on Financial Markets.  

It’s doubtful most people of Capitol Hill, much less the American people, know any more than McCain about what we call the Plunge Protection Team.

We call it that because this high-level panel of government officials and the Federal Reserve chairman was created by President Reagan after Black Monday, the October 1987 stock market crash.  That sell-off amounted to a 23 percent stock market free-fall as measured by the Dow Jones Industrial Average.

The explicit mission of the Plunge Protection Team was “enhancing the integrity, efficiency, orderliness, and competitiveness of our Nation’s financial markets and maintaining investor confidence.”  

In other words, it was to protect the stock market from plunging. 

Of course, the only resources the government or the Fed has to buy stocks or options or index futures to try to blow up the stock market bubble are resources it takes from the American people.  Or it puts its regulatory apparatus to work to divert people’s economic activities into channels it believes best.

Think about that:  the wealth of the American people being put to work supporting the crony classes.  It’s actually even worse than that because it misleads the people about the true value of stocks.  It amounts to the government secretly going to work to pump the market up and persuade the people to buy our own stocks at levels unsustainable in a market free of the state’s fat thumb on the scales.  

So you will not be surprised to learn that in the current stock market blood bath, the Plunge Protection Team was assembled by phone.

On Monday (3/9) the Dow 30 stock index fell 2,014 points, a one-day total of 7.8 percent.  The S&P500 fell 7.6 percent.  In the aftermath of the selling panic, according to a report by Zero Hedge, the Plunge Protection Team joined a telephone conference called by Treasury Secretary Steven Mnuchin.

The following day, Tuesday, the Dow reclaimed 1,167 points, or 4.88%, while the S&P 500 gained 4.94 percent. It is impossible to know whether this is the result of government market intervention.  But a one-day intervention wasn’t enough to halt the hemorrhaging in stocks which continued on Wednesday.

Here is a lesson to be remembered in these times.  The government is like a blowhard huckster.  It is always trying to blow bubbles, to inflate markets and conditions.  It will use all the powers at its disposal to do so.  You have seen it push and pull on policy levers to inflate its earlier bubble in the dot com market and in housing.  The market always seeks to deflate away those excesses, even if it has to wait for something unexpected like the coronavirus to pop the government’s bubble.

We advise you once again to stay away from markets that are only sustained by gimmicky monetary policy.  

One other thing.  Already there is movement in Wall Street circles for the government or the Federal Reserve to step in and begin buying stocks to stop the sell-off and prop up the market.  This is the endgame of a syndrome that we have written about repeatedly:  that the Federal Reserve has become the towel boy of Wall Street, and believes it has the mandate to keep stock prices at a permanently high plateau.  

If it is allowed to do this, say goodbye to American prosperity.  Cronyism and influence peddling will run rampant in a carnival of corruption as state bureaucrats and officials decide which stocks to buy and at what prices.  As money flows to the influential and the well-connected, honest pricing, innovation, and free-market competition will grind to a halt, product inferiority will rule the day and the living standard of the American people will fall hard.

It will be Mussolini time in America.  

Buy gold.  And if the government starts buying stocks, buy more gold.

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Silver Eagles Spike; Gold is Headed Higher

The Unexpected

We expect gold to move much higher this year.

We expect it because we keep an eye on Washington.    

But you need to think about the unexpected, too.  

Monty Python, the comedy troupe had a routine about the fact that “nobody expects the Spanish Inquisition.”  We don’t expect it either.

But more realistically, nobody expected the coronavirus.  Nobody much expects most natural disasters. But they happen.  So do wars and revolutions, mostly unexpected.

So we urge you to prepare for the unexpected with gold and silver.  

Federal debt and money printing?  We know where that’s headed.  But we’re here to help you prepare for the unexpected, too.  Things like coronavirus and natural disasters.  Things that the last couple of weeks have demonstrated can rock a top-heavy stock market or threaten an entire economy.

The Spiking Sales of U.S. Mint Silver Eagles

The arrival of the unexpected may be responsible for spiking sales of US Mint Silver Eagles.  The move in recent days has been dramatic.  

In February the mint reported sales of 650,00 of the one-ounce silver coins for the entire month.  But it sold 750,000 in just the first five days of March!  

The surging sales is another sign of the developing gold and silver bull market and a growing public awareness of financial challenges on the horizon.  Be sure to speak with your Republic Monetary Exchange precious metals advisor about silver and the advantage of owning US silver Eagles.

At the same time ask to find out more about trading the gold/silver ratio, a powerful strategy to increase your precious metals portfolio.

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Gold Headed Higher

Gold is headed to an all-time high in dollar terms.  

So says Jeffrey Gundlach, CEO of Double Line Capital.  Gundlach, known as “the bond king,” told CNBC viewers on Thursday, (3/5) that gold is the thing to own.  “I turned bullish on gold in the summer of 2018,” he said.  The dollar getting weaker appears to be almost a policy of the Fed as it “panics” and slashes rates, he said.  

“The Fed slashing rates is clearly going to be dollar negative.  And that means gold is going to go higher.

“Gold is doing super well, even with the dollar unchanged,” he pointed out, raising the question of just how high gold will go as lower interest rates take their toll on the dollar.  

“Gold is at a record high in terms of the Euro and many other currencies.  And I feel it is almost a certainty that gold is going to tog to an all-time high versus the dollar as well.”

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Market Mayhem: A Close Look at the Fed Policy Responsible For It!

The Fed cut interest rates.  Stocks fell.  Gold climbed.

In an unscheduled emergency meeting Tuesday, the nation’s central bank cut the benchmark federal funds rate by a half-point to a range of 1%-1.25%.  It cut the discount rate as well.

It made the moves in response to COVID-19, the Coronavirus.  

Stocks fell.  The Dow lost almost 800 points.

Gold rocketed $43 higher.

It makes perfect sense.  In the last two weeks, the Dow has plunged below both its long-term and short-term moving averages, both of which have rolled over and turned down (the blue and red lines respectively on the following charts).

Gold, on the other hand, is above both trend lines.  Both trend lines are moving up.  And even in the face of margin-call selling of gold by stock traders that we wrote about last Friday was not enough to break support at the short-term trend line.  (“Traders in markets with perfectly sound economic fundamentals can sometimes liquidate their positions in other things to meet margin calls in collapsing markets.  It appears that in the general carnage of the stock market, large investors scrambling for cash to meet margin calls took profits in gold, the most liquid commodity of all.”  From our 2/29 commentary “What the Historic Wall Street Tumble Means for Precious Metals”)

We believe that Fed policy will mean still lower stock prices.  And much higher gold.  In this commentary, we would like to share with you why this is so.  

We might as well start with the C-virus.  People everywhere are wondering about the coronavirus and asking the same thing:  How bad will it get?

We wonder as well, but since there is little we can do about the public health impact, we confine most of our thoughts to the financial impact it will have.  

As far as that goes, the handwriting is already on the wall.  Wherever the medical calamity ends up on a scale of 1 to 10, from mild to unrestrained tragedy, the markets have made clear that the stocks cannot weather the storm, while gold continues to provide shelter like nothing else.

There are people in high places watching just as intently as we are, and though they have no more medical skills to bring to bear on the crisis than do we, they have intervened with more interest rate manipulation, nonetheless.

“The U.S. economy remains strong. However, the coronavirus poses evolving risks to economic activity. The Federal Reserve is closely monitoring developments…” So said Fed chairman Jay Powell.   That was before the Tuesday rate cut.

The Fed is always “monitoring the situation.” It is always “keeping a close watch on conditions.”  

For all that monitoring and watching, what can it actually do about what it sees?  Let’s take it from the beginning.

Prosperity is the result of production.  Cars, food, consumer goods, energy, clothes, entertainment, personal and professional services.  Wealth is the increase in these things.  Does the Fed produce any of these things?

No.  It can only print more money and credit.  And the creation of money and credit is not the creation of actual wealth.  

In fact, the Fed’s creation of more money and credit – by pouring money into the repo markets, or printing money to drive rates down – can temporarily inflate financial markets, but ultimately only lessens the value of the money you already have.

Seriously, if the Fed can plan and create economic outcomes, why exactly have we had the worst economic dislocations in the country’s history under its regime?  The Great Depression.   The Great Recession.  A housing bust that saw millions lose their homes.  The destruction of the dollar’s purchasing power.  Weak economic growth.  $23 trillion dollars in federal debt.  As much as ten times that hidden debt.  A stalled-out middle class.  A widening wealth gap. 

Is it possible that the Fed planned and created these outcomes intentionally?  Or is it more likely that the Fed created these consequences by failing to understand the fundamentals of markets and prices, of production and consumption?  Created them with a fantasy-land misunderstanding of its own ability to affect the interactions of hundreds of millions of producers far-flung across the country and around the world with its constant interventions, meddling in rates, bailing out reckless banks, and destroying the price discovery function of markets?

Columnist and best-selling author John Tammy points out that Fed stimulus is no different than another government spending “that shrinks the supply of resources that would otherwise be made available to private sector producers.  

“The Fed can only act insofar as the private sector creates resources that economic actors would seek in the marketplace, so ‘policy action’ by the Fed is by definition intervention on the part of non-market actors that pushes resources to where they wouldn’t otherwise go in a free economy helpfully free of government meddlers. Just as government spending happens to the detriment of private investment, production, and growth, so do Fed or central bank machinations take place at the expense of private, market-disciplined lending and investment, production, and growth. In short, the [Fed] intervention called for… will almost as a rule blunt any recovery from COVID-19.”

There is no question the coronavirus is suppressing economic activity.  But will you be more willing to go gambling in a palatial Singapore casino with the Fed’s lowering of the fed funds and discount rates?  More willing to fly to Korea or Italy?  Or even fly domestically?  Will Chinese suppliers of essential industrial parts and electronics in areas hard hit by the C-virus suddenly go back to work producing goods needed by foreign manufacturers now that the Fed has lowered rates?

“We do recognize a rate cut will not reduce the rate of infection, it won’t fix a broken supply chain. We get that,” said Powell. “But we do believe that our action will provide a meaningful boost to the economy.”

It will certainly provide a boost to prices.  It shrinks the supply of resources in the productive economy, as Tammy describes.  At the same time, following David Stockman, we might point out that the breakdown of global supply chains means higher production costs “… via a lot more cost (for inventories, second suppliers, shorter supply lines etc.,) and a lot less profit.”

At the same time, monetary policy dilutes the value of every other dollar in existence.

Economist Robert Wenzel summed up Fed policy this way:  “Money supply growth has been extraordinarily strong in recent months and this Fed action will result in even stronger money growth—which will add to the upward pressure on prices that has been slowly developing.” 

So the Fed has driven stocks down.  And gold up.  

More of the same is in the offing.

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What the Historic Wall Street Tumble Means for Gold and Silver

Blood Running on Wall Street Creates Buying Opportunity for Precious Metals

You might not have been too worried last Monday when the Dow Jones Industrial Average fell 227 points.  But you certainly must have taken notice of the carnage on Tuesday when it fell 1031 points.  The collapse was confirmed for any doubters by midweek because on Wednesday the Dow plunged another 879 points.  And then came the worst day in the history of the Dow, Thursday, February 27, when the Dow fell 1190 points.  

Friday’s loss of another 357 points capped off the week, the worst stock market performance since the last fiscal crisis, the Mortgage Meltdown in 2008.  Altogether the Dow had a loss of 12 percent for the week; the S&P fell 11 percent.  

Look closely at this, one of the ugliest charts we’ve ever seen, as the Dow falls off the cliff:

For our part, we wrote last Monday that New York stock brokerages that were calling for a mere correction in response to the coronavirus were guilty of “gross understatements.”

Even more absurd was the comment of Jim Cramer on Wednesday (2/26) as he urged his viewers to get off the sidelines and into the stock market.  “If you haven’t put anything to work, I think you’re playing with fire,” said the CNBC “Mad Money” host.

Huh?  If you are on the sidelines, avoiding the danger entirely, you’re playing with fire?

In early October we warned about the spread of disease (Gold Coins for Black Swans) when we wrote about unpredictable events that make gold a crucial part of your portfolio:

“Those include everything from the sudden outbreak of war, widespread crop failures, and the spread of disease like the flu epidemic of a century ago, to uncontrollable civil turmoil, power grid failures, earthquakes, volcanic eruptions, and even less likely events like an asteroid impact.

“Unexpected?  Unlikely?  Precisely the qualities of the Black Swan events that order and reorder just about everything in our lives.”

Since then, the unlikely events that have actually occurred are the fires that devastated Australia, a plague of locusts in Africa, and bats in Australia.  Outbreaks of Swine Fever and bird flu.  All that and earthquakes, too.  

Yet the worst of these unexpected events appears to be the COVID-19 outbreak.

The stock market has been whistling past the graveyard about the coronavirus from the beginning of the news from China.  

Last week it could no longer avert its gaze.  The Wall Street Journal summarized the bad news with a headline:  “The Week that Wiped $3.6 Trillion Off the Stock Market.”

Gold was caught in the crossfire.  Although it surged close to $1,700 on Monday as the virus news spread, it fell hard on Friday amidst what could be called a low-grade panic on Wall Street, finishing at $1,566.  

We Have Seen this Kind of Action Before

Traders in markets with perfectly sound economic fundamentals can sometimes liquidate their positions in other things to meet margin calls in collapsing markets.  It appears that in the general carnage of the stock market, large investors scrambling for cash to meet margin calls took profits in gold, the most liquid commodity of all.

To repeat, we have seen this kind of action before, and we know what happened then.  Gold fell hard – but only briefly – in the fall of 2008 during the stock market carnage of the mortgage meltdown.   

But that margin call selling opened a window of opportunity to buy gold at “sale prices.”

Of course, it didn’t last long.  Soon gold was racing to new all-time highs.  Three years later it was up well over 2 ½ times its October 2008 low.  

We haven’t liked what we have learned so far about COVID-19.  As we have said repeatedly, we are not epidemiologists and don’t pretend to know what even the experts themselves don’t yet know either.  But having spent a lifetime learning about how money reacts in a crisis, so we urge you to avoid any further bloodletting in the stock market as this pandemic plays out.  Take advantage of the dip in gold and silver prices while you can.

As we wrote in October, “Owning physical gold and silver is the single most important thing you can do to protect yourself from low predictable events that carry outsize impacts.”

Take action now.  We could be witnessing the beginning of the 2020 economic crisis. Analysts have been saying for years that the next one would be way worse than 2008. It’s still not too late. Contact Republic Monetary Exchange today and diversify your portfolio with physical gold and silver.

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Gold in the Age of Bernie

We are compelled to take our attention off the spreading of the Coronavirus for this post, simply to remind you of the presidential race.  It’s become something of a bidding war as the Democratic candidates outbid one another for what the intend to give the American people –  guaranteed jobs, national rent control, and free housing, free health care, free college, free daycare, yada, yada, yada.  

Next Tuesday, March 3, is Super Tuesday, with Democratic primaries in 14 states.  More than a third of the Democratic National Convention delegates will be awarded on Super Tuesday.  

Right now Bernie Sanders is the odds-on favorite to snatch the Democratic nomination according to all the betting markets.  Real Clear Politics places Sanders’ average among the markets at 55 percent.  

Michael Bloomberg is way behind at 21 percent.

How is the rise of Bernie Sanders affecting the outlook for the markets?  Frankly, it’s not good for stocks.  It is very good for gold.  

Goldman Sachs, which had an earlier target for gold to reach $1600 later this year, has raised its forecast.  The firm now calls for gold to climb to $1700 over the next three months, and to $1750 in six months.

The investment bank identifies three factors in its projection:

1) Fear-driven investment demand based on the coronavirus;

2) Large global savings glut, while gold has a better outlook for appreciation than bonds in the next recession; 

3) The rise of Bernie Sanders, with a policy of large tax hikes that can slam stocks, and a proposed wealth tax that makes gold especially inviting for high net worth individuals.

Jeffrey Gundlach, the man known as “the Bond King, and the CEO of DoubleLine Capital, also views Sanders as a threat to the stock market.  In an email to CNBC on Wednesday (2/26) Gundlach wrote, “If this stock market reversal is due exclusively to the virus, then why is United Healthcare down far more than (the S&P 500)? Why is healthcare as a sector broadly not outperforming? Answer to these questions: The market is digesting a better than 50 percent chance of Bernie getting the nomination.”

Senator Sanders’ plan to overhaul the economy runs up to at least $50 trillion.   He says the Medicare For All part of his plan would cost $30 trillion over ten years, but this week was only able to offer the means to fund $17.5 trillion of it.  That $17.5 trillion is necessarily the result of new taxes, and Sanders is just getting started.  

It reminds of Margaret Thatcher’s pithy observation that the problem with socialism “is that pretty soon you run out of other people’s money.”  

Of Sanders boosting investment demand for gold, Goldman Sachs says his “proposed wealth tax could incentivize high net worth individuals to buy physical gold bars and store them in a vault, where it is more difficult for governments to reach them.”

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The Bat Virus Lesson: Buy Gold

A lot of things aren’t yet clear about COVID-19.  But one lesson is clear:  Buy gold to protect yourself in a crisis!

People around the world get the flu every year.  Some people die from it.   The important public health question is just how lethal any spreading strain is.  

We don’t know the answer about this coronavirus.    

Estimates in the press range from 0.04 percent mortality to 2 percent. 

The difference is a factor of 50.  It matters a lot.

Two percent of the US population is 6,540,000.  That is a wartime level of magnitude.  0.04 percent is 130,800.  That’s more than twice the number of Americans that died in the Vietnam war.

Fortunately, those numbers must be adjusted by the percent of people who would actually fall victim to the coronavirus.  It is estimated that about ten percent of the US population get the flu in any given year.  In a particularly bad strain, that may rise to 25 – 30 percent.  

We’ve taken the time to look at these numbers to show just how little is known about this disease.  The range of possible consequences is simply immense.

But we do know that in a crisis, the world turns to gold.

That was evident on Monday (2/25) when both South Korea and Italy raised the alarm about the spread of the virus in those countries.  So much for the hope it would be mostly “contained” to China.  The Dow Industrials fell more than a thousand points.  It was the worst day single day in two years for both the Dow and the S&P 500.  Gold raced toward the $1,7o0 mark.  On the spot (physical cash markets) gold hit a high Monday of $1,688, a seven year high, before settling back a little to close at $1,671. 

In reviewing what we have written about the coronavirus so far, we would like to repeat our advice: to use this outbreak as time to pivot to caution with stock and bond holdings.  In January we looked down the road and wrote that from what we could see, the coronavirus “looks very worrisome indeed.  It may be much bigger than anything the world has experienced since the Spanish flu epidemic that claimed hundreds of thousands of American lives just over 100 years ago.”  (The Coronavirus, Black Plagues, and Black Swans)

On February 9 (In a Crisis), we wrote, “Some of our readers will recall all the things that were shut down after 9/11, especially air travel.  Today’s epidemic has us wondering how long these grids can function if whole cities and workers are quarantined.  We may learn from China’s experience.  In any case, we wonder what would happen if the increasingly stressed national electricity grid went down, or if transportation were broadly encumbered.  

“What would you do if a power grid interruption meant ATM machines stop spitting out cash?  Or if emergency health measures mean that banks and other business can’t open for some time?

“Tragedies can provide us valuable reminders.  When the questions have to do with the monetary system, the answer is that in a crisis you would be very happy to own gold and silver, the world’s most liquid commodities. Precious metals have weathered the storms and saved fortunes and even lives for people throughout the ages and around the world.”

As we write in the middle of the trading day on Tuesday (2/25) everything on our screens is red.  That means down.  The Dow is off more than 900 points.  And gold has given back some of its Monday gains.  We are grateful for that, because it means a more favorable buying price (for now!) as this crisis continues to unfold.

The eventual impact of COVID-19 is unknown.  But the centrality of gold in a global crisis is very well known.

If you have not reduced your exposure to stock and bond markets and spoken to a Republic Monetary Exchange gold and silver specialist about protecting yourself and your family with gold, we urge you to do so at once.

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Gold Prices Roar Higher

Market Looks Ahead, Doesn’t Like What’s Coming Our Way!

Gold prices screamed to seven-year highs on Friday.  Early Monday morning, investors woke up to see the Dow Jones hammered down over 700 points while gold continued its rise, reaching as high as $1,687, up over $40 per ounce from its previous close. This is as of print. This gold bull market seems poised to continue its vigorous run.

No wonder.  Have you been watching the news?

A deadly virus from China.  A plague of locusts in Africa, and bats in Australia.  Outbreaks of Swine Fever and bird flu.  All that and earthquakes, too.

These may not be biblical events, but they are reminders to protect your family’s wealth from the unexpected.  

The Drudge Report headline Friday was short and to the point about the coronavirus:  OUTBREAK SHIFTS, SPREADS.  “This new virus represents a tremendous public health threat,” said a CDC official on a call with reporters Friday.  

We have been raising the alarm about the coronavirus since January when we identified it as a classic black swan event:  “an unexpected event with an outsize impact.”  (See The Coronavirus, Black Plague, and Black Swans.)

But the COVID-19 virus, bats, and locusts aren’t the only developments to be concerned with.  They aren’t the only things driving gold higher.  Remember that the new gold bull market got underway last summer, well before the plagues.  

The factors driving gold include the skyrocketing US debt, global de-dollarization, Fed policy, and US interest rates.

And don’t forget the top-heavy stock market.  At the same time we wrote last week that the stock market has the “jitters,” Goldman Sachs was telling its clients that a near-term correction “is looking much more probable.”  Oppenheimer agrees, telling its clients “the impact of the coronavirus on earnings may well be underestimated in current stock prices.”

We think those are gross understatements.

On the interest rate front, the yield on the 30-year US Treasury sank to an all-time low on Friday.

Would you loan money to the US government for 30 years for an annual return of only 1.89 percent?  That’s a negative real return if the Fed succeeds in its target of debauching the dollar by two percent a year.  We think that as the global de-dollarization movement continues, the Treasury will be forced to pay far more than today’s rates to borrow enough to fund its debt.  Those higher rates mean huge capital losses in the bond markets.  

It’s shaping up to be a bloodbath, the financial equivalent of a global plague.

For those who have not already done so, we recommend our friends and clients move to safety now.  The stock and bond markets have had a powerful run, but they are no place to be as a crisis deepens.  

No other financial safe haven can even compare with gold.  It is universally desired in good times and bad.

Visit with your Republic Monetary Exchange gold and silver professional for specific suggestions based on your portfolio.

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Bubbles Always Pop

We don’t know who first said that the stock market is a bubble in search of a pin, but it’s an image that is both vivid and true.

It would be easy to excuse missing the current stock market bubble, if we hadn’t already suffered the popping of the dot.com bubble and the housing bubble in just the last 20 years.  When the dot.com bubble burst the Nasdaq lost 80 percent of its value.  When the housing bubble found its pin, millions of Americans lost their homes.

The current stock market bubble is sustained by the following beliefs:

  • The coronavirus doesn’t matter.
  • An economic slowdown in unlikely.
  • Deficits don’t matter.
  • The national debt doesn’t matter.
  • The Federal can really control interest rates.

Yet any one of those things can be the pin the bubble is in search of.   

Indeed, there are more pins than those.  In a new article, the popular economist Nouriel Roubini identifies geopolitical pins among the others.  

He writes that the markets are “blissfully in denial of the many predictable global crises that could come to a head this year.”  

“For starters, the United States is locked in an escalating strategic rivalry with at least four implicitly aligned revisionist powers: China, Russia, Iran, and North Korea.”

“As of early 2020,” says Roubini, “this is where we stand: the US and Iran have already had a military confrontation that will likely soon escalate; China is in the grip of a viral outbreak that could become a global pandemic; cyberwarfare is ongoing; major holders of US Treasuries are pursuing diversification strategies; the Democratic presidential primary is exposing rifts in the opposition to Trump and already casting doubt on vote-counting processes; rivalries between the US and four revisionist powers are escalating.”

Another observer, Charles Hugh Smith, addresses the topic of bubbles on his Of Two Minds blog.  His post The Fed Has Created a Monster Bubble It Can No Longer Ignore is worth reading.  

We’ll share two important points Smith makes:

“History has never recorded a bubble which settled magically onto a ‘permanently high plateau’ and stayed there for months or years.  So the Fed has finally reached the point of no return: either it accepts a painful bursting of the monster moral-hazard bubble it has created or it lets the monster lead the stampede over the cliff to a financial collapse that the Fed can’t rescue with the usual tools of lowering interest rates and bailing out banks.”

And:

“The problem is that bubbles always pop, and they pop regardless of what central banks do. This is contrary to the popular opinion that if only the Fed had saved Lehman Brothers, the Global Financial Meltdown of 2008 would never have happened.”

If you’d like a little more detail about the Fed’s role in creating bubbles, see our post Do You Really Think This Can End Well?  In it we wrote, “What we are saying is simply this:  The stock market is a bubble of enormous proportions.  The Fed will try to keep it inflated, but eventually it will fail.  Eventually rates will rise.”

“And as always, the bigger the bubble, the bigger the bust.

“That’s just one reason why you should own gold.”

Contact Republic Monetary Exchange today to learn how to protect yourself and your wealth before the bubble finds its pin.

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End the Fed and Avoid Economic Disaster!

Today’s comments come from former Congressman and presidential candidate Ron Paul.

“The only way to avoid economic disaster,” says Dr. Paul, “is to cut spending and audit, then end, the Federal Reserve.”

Dr. Paul is a well-known gold authority with a great track record for predicting the calamities that result from economic irresponsibility.  His warnings given before the 2008 mortgage meltdown, an unnecessary tragedy that cost millions of Americans their homes, should be studied by everyone – Fed officials in particular – who insist that financial bubbles can’t be identified in advance.  

For years, as a member of the House Banking Committee, Paul would hold Federal Reserve chairmen’s feet to the fire in their official congressional appearances.

At one such hearing, Congressman Paul asked Fed chief Ben Bernanke if gold was money.

“No,” said Bernanke.

“Then why do central banks hold it?” asked Dr. Paul.

Paul’s latest warnings about economic disaster come from his February 17 column about the administration’s new fiscal year 2021 budget proposal.  He writes:

“President Trump deserves credit for proposing an 11.6 billion dollars cut in funding for the Department of State and the US Agency for International Development (USAID). Foreign aid does little to help impoverished people overseas. Instead, it benefits foreign government officials willing to do the US government’s bidding. The State Department and USAID are extensively involved in US intervention abroad, including efforts to overthrow governments….

“Even if Congress agrees to all of President Trump’s cuts, federal deficits will still be over one trillion dollars for the next several years. However, President Trump claims the budget will balance in 15 years. In order to show a balanced budget by 2035, the administration assumes three percent economic growth for most of the next decade. This level of growth is unlikely to come to pass. Instead, the current boom will likely end soon, and the economy will experience another major recession. Signs that we are on the verge of a downturn include rising homelessness and the Federal Reserve’s bailout of the repurchasing market.”

Dr. Paul observes that if Fed interest policies remain unchanged, it will inevitably lead to a dollar crisis.  If on the other hand, the Fed lets rates normalize, the debt bubble will burst.  

As we have said in these discussions, the Fed has put itself into a box.

Read Dr. Paul’s latest column HERE.

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Stock Market Jitters

The Coronavirus is giving a lot of stock market professionals the jitters.   

No wonder.  An economic slowdown in China, spreading with the virus, spells trouble for highly-leveraged sectors of its economy, trouble that can snowball quickly to other sectors.  

And to other countries.

It’s wise to be defensive now.  Simply ask yourself how attractive is the thought of being quarantined in some foreign port on a cruise ship right now.  A slowdown in travel, hospitality, and trade will have wide consequences for stocks.

Consider supply chains as well.  Companies that depend on parts manufactured in China are drawing down thin inventories as the quarantines tighten.  The quarantine is already crippling some Korean automobile manufacturing dependent of Chinese suppliers.

You get the idea.  As the cliché goes, it really is a global economy.  That will become even more clear if the virus isn’t contained and dominoes start falling.

We think most people work way too hard for their money to swallow whole the empty assurances that this outbreak will be contained.  No matter what the WHO and the CDC and the Chinese bureaucrats say, the truth is they don’t really know.  Nobody really knows.

One thing we do know from the monetary philosophy that reigns at central banks:  they will try to offset any slowdown with additional liquidity.   Central bankers questioned about the risks of the coronavirus have made that clear.

It is no time to be complacent.  Protect your profits with gold.

As the world has discovered many times, gold is the best place to go in a crisis.  

Learn more and protect yourself from a jittery stock market.  Call Republic Monetary Exchange and speak with one of our gold and silver professionals. 

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Do You Trust Washington or Gold?

It’s time to review the latest numbers.  We hear from Washington that the economy is stronger than ever.  Perhaps.  But that doesn’t mean the American middle class is in good shape.  

So here are the disturbing facts:

Americans are so financially stressed that 32 percent of them run out of money between paychecks.  The percentages of those who run dry between paydays are worse among the poorest workers, but the problem of living from paycheck to paycheck is not limited to them alone.  For example, 31 percent of workers earning $100,000 to $129,999 suffer from the same syndrome: running out of money between paydays.

Americans are deeper in debt than ever before.  US household debt has passed $14 trillion dollars.  That’s $1.5 trillion more than late in 2008, when the economy cratered and millions of American lost their homes.  Meanwhile, and although the economy is in an record expansion now going on 127 months, credit card debt is at record highs.  Just in the last quarter alone balances rose 5 percent to $930 billion, while delinquencies are at an 18-month high.  Half of student loans are non-performing, in some state of deferral, grace period, or default.

Yet in a prolonged expansion and what is touted as the strongest economy ever, the chairman of the Federal Reserve had to lecture congress about its deficits.  Powell made the obvious point that the current deficit and debt trajectory is unsustainable.  

On Monday, President Trump proposed a federal budget for fiscal year 2021, one that comes with another trillion-dollar deficit.  And never mind that the proposal is claimed to put the government on track for a balanced budget in 15 years.  We are old enough hands that we have heard that sort of thing before.  In fact we have heard it more times than we can count.  

Here’s a reality check: the only budget that ever counts in Washington is the one for the current year.

And we don’t rely it in very much.

We don’t put much faith in anything that comes out of Washington.  As we said, we’ve are students of history and have ourselves been around for a long time.  

That’s why we put our trust in gold.

Shouldn’t you do the same?

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Market Quotes and Observations

Here are just a few observations about the markets from others, some new comments worth being shared.

The first is about the stock market from analyst David Rosenberg, founder of Rosenberg Research and Associates:

“While I cannot pick the date, I can tell you that this turbocharged debt cycle will end miserably, not unlike 2008 and 2001. Don’t try to time the inevitable mean-reversion trade…. In nearly 11 years the S&P 500 has soared nearly fivefold to multiples (on earnings, sales and book value — take your pick) we have only seen twice in recent history.”

“… there really is no reason to wait for the herd to head for the exits.”

David Rosenberg

The next is from an account by the editor of the Strategic Trader newsletter, E.B. Tucker.  We think the headline on the story says it all:

“Investing In Gold: The Biggest Upside With the Smallest Risk.”

As we have commented frequently, long past is any likelihood of the US government getting its financial house in order.  The rubber band of federal debt will be stretched until it snaps.  And if the government needs to print money and shove it out helicopter doors when it can no longer borrow– an updated version of the German inflation of the1920’s – it will do so.  

Société Générale analyst Albert Edwards looks as the debt “spiraling out of control” and has a few words on the subject worth reading:

“Does anyone seriously believe that any democratically elected government would be willing to raise taxes or cut government spending and future pension/health benefits in a bid to delay the fiscal time bomb? Of course they wouldn’t! And any government that attempts to do so will be hounded from office by an indignant public armed with pitchforks and much else besides.”

And finally, we’re not saying it is exactly like the seven Biblical plagues, but blogger Michael Snyder rounds up a few of the things going on all at the same time that could pass as curses:

“Global weather patterns have gone completely nuts, large earthquakes are popping off like firecrackers, it looks like the plague of locusts in Africa could soon develop into the worst in modern history, and a massive plague of bats is severely terrorizing parts of Australia.  On top of all that, African Swine Fever is wiping out millions upon millions of pigs around the globe, the H1N1 Swine Flu is killing people in Taiwan, there have been H5N1 Bird Flu outbreaks in China and in India, and the H5N8 Bird Flu has made an appearance at a poultry facility in Saudi Arabia.  Of course the coronavirus outbreak which is causing people to literally drop dead in the streets in China is making more headlines than anything that I have mentioned so far.”

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In a Crisis

The Coronavirus is a terrible event and a good reminder.  

We join the rest of the world in hoping that this outbreak is limited, as was its related coronavirus malady Severe Acute Respiratory Syndrome.  SARS also originated in China, and resulted in some 8,000 cases in 2002-2003, but fewer than 800 deaths.

That is quite limited compared to the biggest pandemic in history, the Spanish Flu of 1918.  That one infected a half billion people – and that is not a typo!  No one knows for sure how many lives it claimed, but estimates range from 20 million to 50 million victims, including as many as 675,000 Americans.  That was on a US population base of 103 million.

An equivalent US death toll today would be 2,144,000.  That’s like the entire population of Phoenix, Scottsdale, and Chandler combined.

While it remains to be seen what this virus will bring, it is beginning to concentrate peoples’ minds.  If you listen to radio talk shows or eavesdrop in a Starbucks, you hear concerned people wondering aloud what might happen next.  

As the coronavirus has spread in China, so too have quarantines.  We think an early outcome of a spreading disease and quarantines is problems with the grid.  That primarily means the power grid, but a broader definition should include the transportation grid and the communications grid.   

Some of our readers will recall all the things that were shut down after 9/11, especially air travel.  Today’s epidemic has us wondering how long these grids can function if whole cities and workers are quarantined.  We may learn from China’s experience.  In any case, we wonder what would happen if the increasingly stressed national electricity grid went down, or if transportation were broadly encumbered.  

What would you do if a power grid interruption meant ATM machines stop spitting out cash?  Or if emergency health measures mean that banks and other business can’t open for some time?

Tragedies can provide us valuable reminders.  When the questions have to do with the monetary system, the answer is that in a crisis you would be very happy to own gold and silver, the world’s most liquid commodities. Precious metals have weathered the storms and saved fortunes and even lives for people throughout the ages and around the world.

Contact Republic Monetary Exchange and speak with one of our precious metals professionals today, before a crisis.

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A Briefing for Gold Investors

The numbers are in for global central bank gold buying in 2019.  The World Gold Council reports, “Central banks were net buyers for a 10th consecutive year: global reserves grew by 650.3 tons, the second highest annual total for 50 years.”  

As you know, we believe central bank gold buying is among the most important megatrends of today’s financial world.  It eclipses in importance any other supply-demand fundamentals.  

The WGC also notes that the central bank buying trend is widespread, with at least 15 central banks acquiring a ton of gold or more last year.  Here is the chart from the report:

The Cost of the Coronavirus

Goldman Sachs is estimating that the coronavirus outbreak cost to China and the spillover effects on the rest of the world will reduce global GDP growth by two percent in the current quarter.

The firm expects that impact will be contained in the first quarter, writing, “Aggressive response from the authorities in China and elsewhere will bring the rate of new infections down sharply by the end of Q1.”

That’s the hope, anyway.

Is This a Hospital?  Or a Place Coronavirus Victims Go to Die?

Here’s a link to a Bloomberg News story that ran February 5 headlined, “China Sacrifices a Province to Save the World From Coronavirus.”

Hubei province has a population of 60 million.  Its capital is Wuhan, the epicenter of the coronavirus.  At the time the story was written, Hubei had 67 percent of all patients and had experienced 97 percent of all deaths from the coronavirus.

But amid all the reports and statistics, a photo in the Bloomberg story caught our attention for graphically portraying the possible scope of the outbreak.

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Pandemic – Stocks, Gold, and Central Banks

Stocks didn’t act on Tuesday (2/4) like the Coronavirus outbreak was an extinction-level event.  

But as usual, there’s more to the story than immediately meets the eye.

UBS customers were told that China’s stock sell-off “is an opportunity to buy that country’s stocks.”   

One headline said, “Stock Market Rally Soars as Coronavirus Fears Fade.”   Another read, “Coronavirus?  What Coronavirus?”

The Dow Jones Industrial Average, which lost 600 points on Friday, gained back 144 on Monday and 400 more on Tuesday, while gold sold off both days, down almost $27 on Tuesday.

It seems like there are a lot of virologists, epidemiologists, and public health experts working as stock analysts and running investment portfolios, because these voices are acting like they know a lot more than the rest of us about the still spreading virus.

But did anybody who really knows blow the all-clear whistle?

No.  In fact, as we have gone to great lengths to explain in these discussions, the only thing that lifts stocks these days is the gushing of liquidity from central banks.  So, to understand the market action of the last couple of days, we need only look for the money spigots being turned on full force.  That’s what gets the algorithm traders excited.

And if fact the world’s central banks are opening the floodgates.  The People’s Bank of China mainlined $174 billion into the markets on Monday.  The Federal Reserve and the European Central Bank are onboard as well.

This is what the central banks do:  They print money.  That’s it.  It’s their only tool.  It’s the hammer in the hands of central bankers who see every problem as a nail.

You could call it counterfeiting, since it is all just made up money; but unfortunately, it’s legalized counterfeiting.   (And of course, it’s actually digital money, but we use the expression “printing money” as a short-hand.)  

A writer at CNBC on Monday described the syndrome we’re discussing about as well as anybody in the mainstream media ever.  He wrote, “Central banks like the PBOC and its counterparts around the world — notably the U.S. Federal Reserve and the European Central Bank – have been bailing out economies and financial markets since the 2008 financial crisis. Trillions in digital money printing along with bargain-basement interest rates have been the main weapons of choice to combat recurring episodes of slowness.”

Of course, doing the same thing over and over without solving the underlying problem could be clinically diagnosed as a derangement.  Meanwhile, the real problem, financial bubbles of gargantuan proportion that will eventually pop, go unaddressed by the central bank bureaucrats.  

In any case, Wall Street follows the central bankers’ lead.  If they are going to print a lot of money to offset the slowdown from the Coronavirus outbreak, then the stock markets will go up.  At least for a couple of day.  And even hedge funds guys that understand the long-term effects are nimble and will sell gold even if just a trade for a day or two, for the liquidity they need to leverage up in front of the new, aggressive money pumping.

That’s about as concisely as we can describe the action of the past couple of days.  If the Coronavirus has the deadly punch that many fear, its financial impact on the stock markets will be devastating and gold will rocket higher.  If Coronavirus proves to be less than a pandemic-level catastrophe, the central banks’ additional money printing will send gold higher as well.

The central banks are in a box of their own creation.  

The risk to stocks is extraordinarily high.  Gold is the only safe haven.  We recommend our friends and clients take advantage of this break in the gold price.  It isn’t likely to last for long.

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Central Banks Buying Gold: What Happens Next?

The move by the world’s central banks to replace dollars with gold is one most important financial trends of our time.

Our friends and regular readers know we think it is of vital importance:  we have written about it many times and tracked the stunning increase of gold in central bank vaults.  

(For example, see comments here, here, and here.)

We have recommended our clients take advantage of this clear megatrend before it becomes widely recognized and prices begin to move up exponentially.

Former Reagan budget director David Stockman sees the same risk:  that Wall Street and hedge fund professionals will suddenly take notice and begin front-running the central banks in the gold market.  That means that, being assured of more gold buying, they will buy ahead of the Fed.  Front-running the Fed in one market or another has been Wall Street’s primary activity for decades now; it is what they do.  For years Wall Street has been shielded from losses and guaranteed profits by Federal Reserve liquidity policies.  Someone even coined the phrase “the Greenspan put,” for the Fed’s implicit willingness to manipulate interest rates to protect Wall Street from a stock market downturn.  

With changing Fed chairmen The Greenspan put morphed into the “Bernanke put” and then the “Powell put.”

It was that policy, the Powell put, that kicked in last year when Chairman Jerome Powell suddenly reversed the Fed’s tightening policy in favor of more money printing.  He was protecting the stock market.  In the same way the Fed has spent almost 40 years manipulating interest rates lower to protect the bond market.

In any case, Stockman, a long-time Wall Street professional after leaving the Reagan administration many years ago, thinks that a light will go off and Wall Street will begin trying to front-run the world’s central banks, buying gold before the world’s global governments bid prices higher.

We’ll let Stockman speak for himself.  What follows is from a recent interview he gave to Doug Casey’s International Man newsletter:

“I think that intelligent people can see that this system of balance sheet expansion and interest rate repression—and $17 trillion in bonds trading with sub-zero yields a few months ago—isn’t sustainable.

“Some central banks at least are trying to hedge their bets by reallocating their balance sheet to have a larger share of gold. As the crisis of what I call ‘Keynesian central banking’ becomes more and more intensive and acute, more central banks will be buying gold.

“Gold has a small trading value, or market cap, compared to something like a trillion dollars that turns over in the repo market every day. Or the five trillion dollars a day that turns over in the currency markets. Gold is a minor player, compared to that.

“If central banks begin to really stock up on gold, what’s going to happen is people will try to front-run them.

“This is the whole secret of what’s been ongoing for the last 20 years in other markets. The reason bond yields have gone to rock bottom is the central banks have been buying the bonds. So, the smart traders are buying what the central banks are buying.

“If the central banks are going to start buying gold, the same guys who have been buying the 10-year Treasuries or Bunds are going to start buying gold, and it’ll soar. The same way that bond prices have in last few years.

“In other words, the world is awash with massive artificial liquidity created by the central banks. It’s in the hands of traders, who move in split-second intervals and attempt to leverage anything that looks like it’s going up. Especially if they can put it on leverage that costs nothing.

“Maybe the next chapter is the whole system becomes unwound and the banks start buying more gold, and the frontrunners start buying more gold, and the price begins to multiply by breathtaking rates.”

Stockman has described a market prospect that it not only reasonable, it is very likely.  To “front-run” the Wall Street central bank frontrunners, speak with a Republic Monetary Exchange professional today. 

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CBO Announces Budget Deficit will Break $1 Trillion in 2020

Another reason gold goes up? More free stuff from the government!

It was no surprise around here, but the Congressional Budget Office just announced that the 2020 deficit will break $1 trillion.  For that reason, among others, gold will move higher.  

But what will the presidential election bring?

John Stossel has been following the campaign promises and tallied up the additional spending proposals of the remaining presidential candidates.  

Here is the breakdown of each candidate along with their proposed spending increases:

  • Donald Trump $267 billion
  • Joe Biden $532 billion
  • Pete Buttigieg $752 billion
  • Elizabeth Warren $2.8 trillion
  • Bernie Sanders $4.9 trillion

By the way, and not that it matters, but before she dropped out of the race Kamala Harris was the big-spending champion.  If you had a hangnail or a crack in a flowerpot, Harris would offer a federal program to fix it.  

We say not that it matters, because the Federal government is already bankrupt, and facing default.  It can’t sustain any more deficit financing without its creditors and the world’s dollar holders going on strike.  The Fed’s rescue of the repo markets is just one sign that we are ending the game-over phase.

But if y0u do like to keep score, that’s the breakdown for now.  “In the race to spend money, Bernie Sanders is the ‘winner.’  And you,” says Stossel, “are the loser.”

And that’s why you need to own gold and silver!

Click HERE to watch John Stossel’s report, MORE FREE STUFF 2020.

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How is the Coronavirus Affecting the Markets?

THE CORONAVIRUS, BLACK PLAGUE, AND BLACK SWANS

We are not epidemiologists.  

It is because we are dealers in precious metals and not epidemiologists, that we will leave it to others to speculate on the long-term outlook for the coronavirus, its strands, and mutations.  We are innately suspicious of all government reports and news releases, to begin with, and that certainly includes whatever information about the coronavirus that comes out of Beijing! 

But we don’t mind commenting on the outlook for gold.

For now, we only wish to point out that the coronavirus outbreak is a classic “Black Swan” event. A Black Swan is an unexpected event that has an outsized impact. 

 9/11 was a Black Swan event.

Black Swan events are almost always destructive to the established order.  That would be things like government finances, trade, state currencies, and stock markets.  

They are almost always bullish for gold.

The initial reactions of the markets confirm this.  The Dow Industrials quickly gave up a thousand points as the coronavirus story began to spread.  Gold moved up.

That is easy to understand.  Stock markets and paper money schemes display fragility in the face of the unknown.  Gold is robust, as its history of millennia shows.

“The Black Death” of London, 1665

The Black Plague decimated trade, emptied cities, produced starvation, and slammed shut the door on economic growth.  It produced periods of high inflation and other economic disruptions.  

Meanwhile, back in this century, here is the lead from a Wall Street Journal story, “Coronavirus Tests Market’s Faith in Global Economy,” this week:  

“Investors who began the year feeling largely sanguine about the stock market are struggling to make sense of whether a growing coronavirus outbreak could upend their bets on a global economic recovery.”

From Bloomberg came this headline, “Safe Havens Shine as Spreading Virus Spurs Rush to Buy Gold.”  From the story:

“ ‘News flow on the virus is pushing safe-haven buying,’ Gnanasekar Thiagarajan, director at Commtrendz Risk Management Services, said by phone from Mumbai. ‘In this kind of an environment, stock markets could tank and that fear is further adding to the risk-averse sentiment. The outlook is bullish for gold, targeting $1,610 in the near term.’ “

The coronavirus story is moving fast.  It may be no more deadly that was swine flu or sars.  On the other hand, what we know of it looks very worrisome indeed.  It may be much bigger than anything the world has experienced since the Spanish flu epidemic that claimed hundreds of thousands of American lives just over 100 years ago.

We urge you to take the appearance of the coronavirus into account and take steps to protect your wealth.  Use it to focus for a few moments, considering all the other so-called Black Swans events that can occur at any time:  tsunamis and earthquakes, nuclear accidents, wars, and terrorist events, illnesses, and famines.

Consider as well just a few of the things that January 2020 has brought along with it:

  • The deadly raging fires in Australia.  
  • Substantial earthquakes in Jamaica (7.7), Turkey (6.7), and the Solomon Islands (6.3).
  • The assassination of Iranian major general Qasem Soleimani.   
  • The impeachment trial of President Trump.
  • Flash floods in Jakarta, Indonesia,
  • A major shakeup at the top of the Russian government.
  • The coronavirus.

We think the coronavirus and its unknown impact, and all these other things are ample reasons to review your financial situation and take steps to preserve and protect your wealth with gold.

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How High Can Gold Go? Much Higher!

We’ve spilled more than a little digital ink here recently sharing the views of well-positioned people about how high the price of gold will go this year.  

A quick review:

Author Jim Rickards, says if the authorities let a debt crisis materialize, we can “watch gold soar to $14,000 per ounce or higher, not because they wanted it to but because the system is out of control.”  

A British fund manager has a new call, saying that “a bullish target for $7,166 is both logical and plausible.”  (The Gold Bull is Off and Running!)

One of our favorite forecasts is from Congressman Ron Paul.  Dr. Paul was long the leading gold authority on Capitol Hill.  But we especially note his forecast since it is very unusual for Dr. Paul to make any kind of price forecast.  Congressman Ron Paul thinks gold will double, reaching $3,000 by the end of 2020.  Furthermore, says Dr. Paul, when the big crisis hits, it is conceivable that his prediction of $3,000 gold will prove to be far too modest.  ($3,000 Gold at the End of Next Year!)  

More recently, we’ve shared the forecasts from people at the world’s largest hedge fund, Bridgewater Associates.  Greg Jensen, the $160 billion dollar fund’s Co-Chief Investment Officer told the Financial Times that gold could gain 30 percent this year, as global political uncertainties increase.   That forecast would put gold at $2,000 per ounce.  (The World’s Largest Hedge Fund Says “Gold to Surge!”)

gold and silver investments

We also commented on Bridgewater founder Ray Dalio’s observation that gold would be their top investment “for years to come.”   (Ray Dalio Warns “Cash is Trash” at World Economic Forum)

A lot of informed people are expecting gold to move much higher this year.  A McKinsey & Company consultant expressed the view shared by many of those cited above that ongoing global de-dollarization would be “good for gold.”  Veteran market analyst David Rosenberg said the other day that “gold is the place you want to be.”  Rosenberg said, “There is no such thing as a no-brainer, but this is close!”

Below is a one-year gold chart.  It paints a picture of a market poised to move higher.  You can see that gold broke out last summer (the birth of the bull market).  After consolidation at the end of last year, it has surged higher still.  For those technically minded, gold has broken convincingly over both its long-term (red line) and short-term (blue line) moving average trend lines.

The price movement traced in the chart is a response to objective economic and financial conditions:  De-dollarization.  A new generation of Quantitative Easing.  Unconstrained federal budgets.  Unfunded liabilities.  Trillion-dollar deficits.  Spending crazed politicians.  Monetary flapdoodle like Keynesianism and Modern Monetary Theory.  Negative interest rates.  Spend a few minutes pondering Washington’s behavior, the Federal Reserve’s folly, and fast-changing global financial realities, and we think Rosenberg is right:  Gold is the place to be.  

It’s as close to a no-brainer as we’ll ever see.

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Ray Dalio Warns “Cash is Trash” at World Economic Forum

We’ll Let Billionaires Say It For Us!

Every now and then something worthwhile slips out at the World Economic Forum in Davos, Switzerland, an annual meeting of the world’s wealthy.  We weren’t surprised that this year that it came from billionaire investor Ray Dalio since we ourselves have cited Dalio a few times here in these comments.  

Dalio is the founder of the world’s largest hedge fund, Bridgewater Associates.

Tuesday during an on-location CNBC interview at the World Economic Forum, Dalio warned “Get out of cash,” and “Cash is trash.”  

Once again, Dalio urged investors to own gold, just as he has done before.  He has stated that gold will be his top investment for years to come.  In the same Davos interview, he took a swipe a cyber-currencies. “There are two purposes of money, a medium of exchange and a store hold of wealth.  And bitcoin is not effective in either of those cases now.”

Just last week we quoted Greg Jensen, Bridgewater’s Co-Chief Investment Officer, who told the Financial Times that investors should make gold a cornerstone of their portfolios, as “most of the world is long equity markets in pretty extreme situations.” 

Jensen pointed to rising geopolitical tensions, saying “There is so much boiling conflict.” 

President Trump attending World Economic Forum, Jan 21, 2020

He talked about the precariousness of the dollar’s role as the global currency reserve.  “When you look at the geopolitical strife, how many foreign entities really want to hold dollars? And what are they going to hold?” he asked.  “Gold stands out.”  (See “The World’s Largest Hedge Fund Says “Gold to Surge!” 1/16/20)

As long as we are letting billionaires speak for us today, here’s one more.  David Einhorn is the founder of Greenlight Capital.

Here is how Einhorn explained why gold is one of his top positions: “The bipartisan consensus is that deficits don’t matter – it implies we can always print our way out of trouble.  All told, we can count on aggressive fiscal and monetary policies in both good times and bad. Gold continues to be a hedge in our portfolio against adverse outcomes related to those policies.”

“I hold gold, and I am never going to get rid of it. I hope that I never have to use it,” Einhorn said last year.  

To learn more about gold and silver for wealth protection and profit, speak with an RME Gold professional today.

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Germans Are Standing in Line to Buy Gold

It has happened before.   And it will happen again.  

We didn’t expect it to happen now.  But it did, in Germany earlier this month.

We’ve seen it before.  People standing in lines that snake around the block, that is, waiting for their turn to buy gold.  Hoping that they’ll get their turn before it’s too late.

It happened here in the United States, during the Carter presidency as inflation screamed along at double-digit rates and gold raced higher and higher every day.  People began standing in line to exchange their dollars for gold.   With every trip to the grocery store, people could see that their paper dollars were losing value.  Maybe they didn’t know anything about money printing, central banking, or the Federal Reserve.  But they knew they were going broke with dollars.  And they wanted gold.

President Jimmy Carter

So they stood in line waiting.  Hoping that there would still be gold for sale and that it wouldn’t be too much higher when it was their turn.

This has happened in the not-too-distant past. In 2013, thousands of people in China waited in line to buy gold.

But when it happened in Germany the other day, it wasn’t just because people were desperate to exchange their Euros for gold before prices went higher.  No, the people stood in line because they wanted to protect their financial privacy.  They stood in line because of Germany’s war on cash.

Just days ago, the German government implemented new restrictions on its citizens’ buying of gold.  It added strict new reporting requirements on the people, whose otherwise legal activity – buying gold – now demands new intrusive reporting to bureaucrats.  The measure requires dealers to record identification for buyers of precious metals in amounts of 2,000 Euros or more and includes criminal background checks for businesses.

A measure of this type is always represented as anti-crime provisions.  In Germany, the reporting requirements are called “anti-money laundering” provisions.  But they never really reduce crime.  Instead, they are intended to suppress the efforts of people to protect themselves from intrusive government and bizarre monetary schemes like negative interest rates.

For a negative interest rate regime to be effective, people must be forced to keep their wealth institutionalized, so that it can be automatically taxed at the negative rate.  

Imagine making a bank deposit of $10,000 dollars.  When you go to withdraw it, you are given only $9,800 dollars.  Forget earning an interest return!  You are charged for the privilege of making a deposit with the bank.  

That’s negative interest rate policy.

You may well ask yourself why anyone would deposit money with a bank only to be charged for doing so.  You are right.  Few people would willingly cooperate.  Unless they have to because cash is no longer allowed and all money must be held by banks.

Because negative rates are the latest enthusiasm of central bankers, and likely headed for the US soon, a war on cash is picking up steam in the US, just as it is in Germany.

During the 2008 economic panic, a photo captured a line wrapped around the building of the Indy Mac Bank in Pasadena. You’d think they were giving away free money, but in fact, it was a run on the bank as account holders desperately raced to withdraw the money from their accounts.

Watch the following video originally aired at the time in 2008:

There will be a run on gold again, perhaps sooner than most people expect, because of failing banks and because of the dollar’s collapse.  But the growing war on cash is just one more good reason to include gold and silver in your portfolio now.

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Why Are the ‘Super Rich’ Buying Gold Right Now?

The global ‘Super-rich’ are buying gold… physical gold. We’re talking the kind you hold in your hand… gold coins, gold bullion. 

That’s the story from the Drudge Report the other day.  The super-rich are reading the signs of the time.   They are taking steps to protect themselves with gold.

Well, they probably didn’t get to be the ‘super-rich’ by ignoring what’s going on in the economy. 

Deficits and debt.  Money printing and monetary manipulation.  Anomalies like negative interest rates and the desperate stovepiping of money to the overnight repo markets.  Wealth tax schemes and economic frauds like Modern Monetary Theory.  (Learn more about MMT in our commentary Helicopter Money and MMT.  Believe me, you need to know about this particular scam!)

Here at Republic Monetary Exchange, like the super-rich, our clients are also buying physical gold.  And silver, too.  That’s our business.

We deal in physical metals, real gold and silver.  You take them into your possession.  We don’t just give you a promise or a piece of paper.  You get the most trusted money of the ages, known and prized throughout the world and across the centuries.

stacked gold coins

That’s what we deal in and what the global super-rich are buying.  Because they recognize, and we recognize, that it is a world of counter-party risks, unpayable debt, unaudited central banks, defaults, and bankruptcies.  And all of those risks rise sharply in a financial crisis.

Goldman Sachs recently commented on the evidence of the Super Rich buying gold and storing it for themselves.  “This [data] is consistent with reports that vault demand globally is surging,” the firm notes.

“Political risks, in our view, help explain this because if an individual is trying to minimize the risks of sanctions or wealth taxes, then buying physical gold bars and storing them in a vault, where it is more difficult for governments to reach them, makes sense.”

The super-rich and Republic Monetary Exchange clients understand that gold and, to the extent it is a monetary commodity, silver too, is not someone else’s liability.  They are not IOU’s, or dependent on the solvency of some bank or company.  Or the honesty of some government or politician.

Gold and silver are their own value.   

You don’t have to be among the ‘super-rich’ to invest in gold and silver.  But if you have wealth you want to protect, contact us.

The knowledgeable precious metals professionals here at RME Gold can help you take the kind of measures the global super-rich are taking.

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The World’s Largest Hedge Fund Says “Gold to Surge!”

The co-chief investment officer of the world’s largest hedge fund says gold could gain 30 percent this year, as global political uncertainties increase.

That forecast would put gold at $2,000 per ounce.

Bridgewater Associates, located in Westport, Connecticut, manages $160 billion for its clients, some 350 of the world’s largest institutions.  Greg Jensen, the firm’s Co-Chief Investment Officer, told the Financial Times that investors should make gold a cornerstone of their portfolios, as “most of the world is long equity markets in pretty extreme situations.”

But Jensen’s recommendation is not just because of extreme stock valuations.  He cited growing income inequality in the US and rising tensions with China and Iran as some of the uncertainties that could prompt investors to look to so-called safe-haven assets.

Ray Dalio, Founder/CEO, Bridgewater Associates

“There is so much boiling conflict,” he said.

Jensen also said that the US dollar could lose its global reserve currency status.  That is an outcome we believe is inevitable (see here), one that will rock the American economy to its core, taking an enormous toll on the dollar.  “It’s definitely in the range of possibilities. And when you look at the geopolitical strife, how many foreign entities really want to hold dollars? And what are they going to hold? Gold stands out,” he said.  

Bridgewater founder and CEO Ray Dalio, cited many of these same factors last year as reasons to expect a major economic “paradigm shift.”  We reported on his observations in our post “Invest in Gold to Protect Yourself from Monetary Geniuses!”  last November.  That piece is worth reviewing 

“There will no longer be an attempt by any of the developed world’s major central banks to normalize interest rates,” Jensen said. That is a forecast for prolonged money-printing around the world.  

“People should be prepared for a much wider range of a potentially more volatile set of circumstances than we are mostly accustomed to,” said Jensen.

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Spending Our Way to Prosperity

It’s a headline we are all too accustomed to seeing: “Federal Spending Sets Record.”

It seems that federal spending is always setting a new record.  This time the story was on the Drudge Report the other day.  It reported that the federal government spent a record breaking $1,163,090,000,000 in the first three months – October, November, December – of this new fiscal year, FY2020.

How fast is the debt climbing?  By about $100 billion a month!

But it gets worse as we go along.  By some projections we are looking at today’s $23 trillion in federal debt exploding to $43 trillion by the end of this decade.  

The satirical website The Babylon Bee also had a story the other day that we wanted to share.  A story about the most recent televised presidential debate:

“Warning: Gang Of Known Criminals Holds Meeting To Discuss How Much Of Your Money To Steal”

“DES MOINES, IA—Authorities are warning that a gang of known criminals is currently holding a meeting to debate various plots to steal your money.

“The criminals are debating exactly how much of your money to steal. Some are suggesting stealing all of your money, while others would just like to steal most of your money. Whatever the case, they all agree on two things: A.) you have money and B.) it must be stolen.”

It’s true, that when politicians want money, they will go to any lengths to get it.  Sometimes they borrow it (and then they have to tax you later to pay back their borrowing).  Sometimes they tax you right upfront.  But often the easiest way to get the money they want is to simply print it up.  Since most people don’t understands how money printing destroys the currency and their savings, it allows the “gang of criminals” to slink away undetected.  

That matters to us since every act of money printing makes gold’s allure shine even more brightly.  And of course, since gold can’t be printed, politicians really don’t like it very much.

Anyway, we’d like to wrap up today with the common-sense reminder that a country cannot spend its way to prosperity.

And as long as we’re at it, we’d like to add that the lowest interest rates in history cannot long co-exist with the biggest debts in history!

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The Gold Bull is Off and Running!

As our regular clients and readers know, we, as well as others, identified the birth of the new gold bull market last year.  

Now there is additional new evidence that the bull is off and running.

Gold reached all-time highs last year in key foreign currencies:  the pound, the yen, and both the Canadian and Australian dollars.

Just days ago the price of gold hit an all-time high in the Euro!

But precious metals prices are still really attractive at these levels for Americans.  That’s because gold and silver are well below their all-time highs in terms of dollars.  

gold bars bullion

For now.

The new gold bull market is still young.  It has a long way to go!

One author of books on gold, Jim Rickards, says if the authorities let a debt crisis materialize, we can “watch gold soar to $14,000 per ounce or higher, not because they wanted it to but because the system is out of control.”

A British fund manager has a new call, saying that “a bullish target for $7,166 is both logical and plausible.”

Last week with the flare-up of US/Iran hostilities, gold hit $1613.  That was on Tuesday.   When gold closed Wednesday at $1557 we put out an Alert Recommendation to take advantage of the price break and add to your gold and silver positions.

How high gold will eventually go, we are not prepared to say.  After all, the authorities will face many new decisions between now and then.  We have only faint – or no – hope that they will make wise decisions.  Their foolish decisions are what will drive gold much higher, but we will report on them to you along the way, in any case.    

Meanwhile, we will leave you this additional bit of statistical corroboration for one of the chief dynamics that drive gold bull markets:  Fed money pumping reached a breathtaking $413 billion last quarter.  

That means the Fed grew its balance sheet by more than ten percent in three months.  

That’s a lot of money created out of thin air.  

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And that is not a wise decision.

SPECIAL ALERT! Gold Higher on Wars and Rumors of War!

Our Recommendation!

For now, it appears that the market is taking a breather in the matter of the US vs. Iran.  As we wrote yesterday, we are waiting for the next shoe to drop.

President Trump says Iran is “standing down.”  Perhaps.  But Iran is saying something different.

Iran’s Supreme Leader Ayatollah Ali Khamenei says that yesterday’s missile attacks on two US bases in Iraq amount to a mere slap in Uncle Sam’s face and are not nearly enough.

Khamenei tweeted, “The corruptive presence of the US in the region of West Asia must be stopped.”  The region “won’t accept the US presence,” says Khamenei.  “The US has caused war, division, sedition, destruction, and the demolition of infrastructures in this region.  Of course, they do this everywhere in the world.”

iran
Iran

So at this point, the most important question is what happens next between Iran and the US. 

We have cited the centrality of the confrontation between the US and Iran as a major key to the Middle East, an issue that will realign geopolitical bedfellows everywhere and diminish the US dollar’s global status, and as a powerful dynamic that will drive the gold price much higher.  

As we have repeatedly warned, this process is underway now.  We suggest that you review our commentaries on Iran, including Watch This One Carefully, (12/4/18), and Temperature Rising in the Persian Gulf, (4/22/19).

We sometimes marvel at the people the news networks put in a guest chair and expect us to listen to.  Instead of listening to 2o-something “political consultants” and armchair warriors, we prefer to let someone of more wisdom and experience read the tea leaves.  Someone with an informed view of not just tomorrow’s consequences, but the longer-term trajectory.

Colonel Douglas McGregor is storied for his military career, geopolitical knowledge, and his outspokenness.  He appeared on Fox News Tuesday evening.  “At this point,” said McGregor, getting to the heart of the matter, “certainly we could go to war with Iran.  Iran would suffer.  The Russians would undoubtedly join the fray at some point.  The Chinese, with inexhaustible piles of cash, will finance the Russians, and ultimately go to work to help the Iranians.”

Colonel Douglas McGregor

“Europeans will look at this as if we’ve lost our minds and they are probably right.  The Japanese, the Koreans will stay out of it, refuse to have anything to do with it.  And when the rest of the Middle East starts to be destroyed under hails of missiles, I imagine that our alleged strategic partners in the Arabian Peninsula will back away.”    

McGregor’s conclusion:  “Remember that when you destroy Iran, you are essentially opening the floodgates to Mr. Erdogan in Turkey and the Sunni Islamists that we have been fighting.  If you like ISIS, destroy Iran and you will get ISIS times 100.”

Every outcome McGregor has postulated – every one – also means irreversible damage to the US dollar and much higher gold prices.

At the risk of overdoing our criticism in this post, we must say that the mainstream media’s ability to see more than one thing at a time is very limited.  In an October post, Global Tensions, (10/20/19), we reported on the little-noted but renewed US military buildup Saudi Arabia.  “11,000 troops were sent to Saudi Arabia, a purported ally, in May.  Now another 3,000 have been added, along with two new fighter jet squadrons.  The most recent addition to US forces there also includes two Patriot anti-missile batteries and one high altitude area defense system.  US forces in Saudi Arabia have long been a powder-keg issue in the Islamic world.”

Meanwhile, few know that just days ago Iran, Russia, and China staged joint naval exercises in the Gulf of Oman.  It doesn’t much look like the actions of countries that intend to let the US exercise heremony in the region forever.  Rather, it is a not-too-subtle challenge.  

Nor to be overlooked is Turkey’s deployment of troops to Libya;  Turkey is providing arms to factions that, in turn, fly MiG’s from Russia.  And while there is much more to point out on the geopolitical scene – for example, Indonesia and China are now in a confrontation in the South China Sea – we will leave that for another day so that we still have room to point briefly to extraordinary monetary shenanigans by the Federal Reserve.

The Fed is engaged in a frenzy of “money printing.”  Just this week ZeroHedge reported that the Fed had provided $99 billion in new liquidity to the repo markets.  We will write more about this and the Fed’s reckless new Quantitative Easing in the days to come.  In the meantime, read our post What is the Fed So Afraid Of, (12/13/19), and our briefings on the topic from November, Inflate of Die, Part I and Inflate or Die, Part II.

Gold will spike in an instant in the event another shoe drops in the US-Iran face-off.  For now, gold has pulled back from its high of over $1600 reached on Monday, 12/6, following the assassination of Iranian General Soleimani.  Today gold closed at $1557.24.  

We recommend our friends and clients take advantage of the pullback to add to their gold and silver positions.

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2020: Off to an Explosive Start

“Do I have everyone’s attention now?”

If the gold market could talk, we imagine it would be asking something like that.  

Gold surged throughout December, ending 2019 at $1523. 

Priced in dollars gold rose 18.3% and silver by 15.1% in 2019.  Then, with the killing last week of a top Iranian military commander Qassem Soleimani, gold briefly hit seven-year highs, touching $1590.

It is significant that gold also made new all-time highs in the Euro.

Gold Sets New High in Euros

We have repeatedly expressed our view that 2020 will very bullish for gold.  Now we have had a glimpse of what the year ahead may hold.

As you can see on the following chart, gold has been up every single day since Christmas week, when it moved – and has stayed – above its 50-day moving average.

In a model of understatement, Moody’s senior analyst wrote clients on Monday that “a lasting conflict would have wide-ranging implications through the broad economic and financial shock that significantly worsens operating and financing conditions.”   Senior analyst Alexander Perjessy added, “A protracted conflict would potentially have global repercussions, in particular through its effect on oil prices.”

No kidding.

Both UBS and Goldman Sachs called for gold to outperform oil as conditions in the region worsen.  The global head of commodities research at Goldman Sachs said  “… history shows that under most outcomes gold will probably rally to well beyond current levels.”

Other analysts are predicting an ‘escalatory’ cycle lasting for months.

We share that view.  We have not seen the last of US-Iranian turmoil that dates back more than 30 years.  In fact, this is only the beginning.

We hope that gold’s price movement has grabbed your attention.  Don’t wait for the other shoe to drop to add to your gold and silver holdings.

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Gold Reacts to a Dangerous World!

Urgent Recommendation to Take Defensive Action!

Always a sensitive barometer and the financial world’s go-to sanctuary in a crisis, gold wasted no time reflecting the dangers implicit in the US-Iranian face-off.

Already in a bull market that began last summer, gold surged higher throughout December.  

Now, with the escalation playing out in Iraq and with threats and taunts being hurled from one side of the globe to the other, it has climbed even more.  On Friday (1/3) gold shot up more than $24 an ounce to finish at $1552.40.

Silver’s move has been more than impressive:  it has climbed more than a dollar an ounce over the last month to finish Friday at $18.05.

We consider the geopolitical situation to be grave.  Price action shows the markets agree with our assessment.  Events are at a point where they can easily spin out of control.  The US embassy has asked Americans to leave Iraq.  Iran has called the killing of General Suleimani an act of war.  We recommend you speak with an RME Gold professional about taking defensive measures now to protect your wealth.

As we wrote here in 2018,If things get hot over the Strait of Hormuz, it will realign the major powers of the world, creating explicit new alliances and sorely test America’s geopolitical dominance.  It will change the dollar’s role in international trade and send energy prices to crippling highs.”  (See our post Watch This One Carefully, 12/4/18).

Last fall we noted that such violence “will send gold prices to uncharted new highs.

“That’s because gold is the world’s currency of choice in times of crisis.

“Our point is simply that you can’t know exactly when someone will launch a deadly attack and start a war.  

 “Or decide to close the world’s shipping lanes.”

We wrote more about the Gulf shipping lanes in April.  See Temperature Rising in the Persian Gulf, (4/22/19), in which we noted we are moving to more than a war of words in the region:

 “It is normally in Iran’s interest to see the shipping lanes open. But there is no telling what Iran will do in extremis.  The threat to shut down the passageway is the only defense Iran has to any kind of attack.

The Strait of Hormuz is a sea-lane between Iran and the Arabian Peninsula. It links the otherwise landlocked Persian Gulf with the Gulf of Oman and the Arabian Sea, providing access to the world’s oceans.

“Twenty-one miles wide at its narrowest, the waterway is a critical chokepoint.

“The Strait accounts for nearly 20% of global oil trade, with Iran, Iraq, Kuwait, Saudi Arabia, Qatar, and the United Arab Emirates all relying on the Strait to ship their oil. Most of these shipments have Asian destinations: Japan, India, China, and South Korea.

“Now, imagine you run a powerful company that owns and operates supertankers that sail through the Persian Gulf. If hostilities break out and the Strait of Hormuz is shut down – even for a day – will you authorize your ships to sail in those waters? 

“Imagine you insure oil tankers. You will have very strict terms to suspend coverage for a company foolish enough to ship in the waterways of warfare.

“Either way, the flow of oil is interrupted.  Geopolitical alliances begin to shift as countries weigh their self-interest and seek advantage from an international incident.  Of course, oil prices explode.

“As does the price of gold.”

It is worth reiterating, that we can’t know exactly how things will escalate.  The range of possible responses from Iran is wider than most people imagine, ranging from military options and a standoff in the Strait, to ship sabotage and other covert options.  Larry Johnson, the former CIA analyst, reminds us of Iran’s “robust” cyber warfare capability that may have targeted US banking sites years ago.  In any case, one widely followed commentator who keeps a close watch on Iran says war is about 80 percent certain.  His view is that any form of Iranian retaliation for the death of Suleimani will be used as a US pretext to attack Iran.  Another warns of war “from the Mediterranean to the Indus.”

We do not know.  But we do know from long experience that things can move very, very fast.  

Do not delay implementing a sound plan to protect yourself and your wealth with precious metalsIf you detect some urgency in this recommendation, you are correct.  We will just warn once again that the Persian Gulf is dry tinder, which once sparked could lead to a dangerous conflagration.  

Gold and silver go up in response to dangerous geopolitical events, just as they do in response to economic mismanagement by Washington.  

Let us help you prepare for the fallout from our dangerous world and from Washington’s economic irresponsibility.  Resolve to take action now and contact us at once.

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Historical Quotes About Gold and Silver

We recently posted our “Historical Quotes About Gold and Money” that contained important quotes from various intellectuals. Today, we follow up with more wise words from wise people…


O gold! I still prefer thee unto paper, which makes bank credit like a bank of vapor.

—Lord Byron, Don Juan

Commodities such as gold and silver have a world market that transcends national borders, politics, religions and race. A person may not like someone else’s religion, but he’ll accept his gold.

— Robert Kiyosaki

. . . of silver no one ever yet possessed so much that he was forced to cry “enough.”

— Xenophon, “On Athens”

In contrast to political money, gold is honest money that survived the ages and will live on long after the political fiats of today have gone the way of all paper.

—Hans F. Sennholz

The Fed took a dollar and eliminated 98% of its purchasing power and they’re doing that more rapidly than ever but it just hasn’t been fully discounted. When it is, gold is going to be much, much higher.

—Ron Paul

Gold was not selected arbitrarily by governments to be the monetary standard. Gold had developed for many centuries on the free market as the best money; as the commodity providing the most stable and desirable monetary medium. 

—Murray Rothbard

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.

—Alan Greenspan

It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of rights.

—Ludwig von Mises

Gold will be around, gold will be money when the dollar and the euro and the yuan and the ringgit are mere memories. 

—Richard Russell

There can be no other criterion, no other standard than gold. Yes, gold, which does not change in nature, which is made indifferently into bars, ingots and coins, which does not have any nationality, which is considered, in all places and at all times, the immutable and fiduciary value par excellence.”

—Charles de Gaulle

If ever there was an area in which to do the exact opposite of that which government and the media urge you to do, that area is the purchasing of gold. 

—Robert Ringer

The gold standard was the world standard of the age of capitalism, increasing welfare, liberty, and democracy, both political and economic. In the eyes of the free traders its main eminence was precisely the fact that it was an international standard as required by international trade and the transactions of the international money and capital market. It was the medium of exchange by means of which Western industrialism and Western capital had borne Western civilization into the remotest parts of the earth’s surface, everywhere destroying the fetters of age-old prejudices and superstitions, sowing the seeds of new life and new well-being, freeing minds and souls, and creating riches unheard of before. It accompanied the triumphal unprecedented progress of Western liberalism ready to unite all nations into a community of free nations peacefully cooperating with one another.

—Ludwig von Mises

With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people

—F.A. Hayek

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2020 Monetary Predictions

Ten Things That Won’t Happen in 2020!

Below are our predictions for the New Year.  Read our Top Ten 2020 Predictions and in the end, you’ll discover a little surprise about our list!

10.  The Federal Reserve won’t stop managing the monetary system to benefit the banks that created it to serve their interests in the first place.

9.  Foreign central banks won’t increase their dollar holdings, although they will increase their gold holdings.

8.  Congress won’t reduce federal spending; it won’t stop creating trillion-dollar deficits; and, it won’t make a serious attempt to reduce the $23 trillion debt.

7.   The Washington establishment won’t hold most of its members to the same legal standards that it applies to the ordinary people.

6.  Washington Republicans and Democrats won’t stop trying to divide the people to win elections.  They will, however, concentrate their attention on smaller divisive issues while the fundamental issues of America’s freedom and prosperity go unaddressed.  

5.  The establishment’s lapdog press won’t bother to report accurately on the fate of the dollar.  Nor will their reporting on gold be accurate.

4.  The establishment lapdog press won’t blame the nation’s monetary problems on the Federal Reserve and the nation’s money manipulators.  It will blame the people instead.   

3.  While Washington may commission a study, launch a new bureau, or even appoint a bureaucrat, nothing meaningful will be done about the declining lifespan of the American people. 

2.  The monetary and fiscal policies won’t stop shrinking the American middle class.

1.  In a crisis, you won’t see people standing in line to exchange their gold for paper money like dollars.  It’s always the other way around.

Now here is the surprise…  

These are the exact same predictions we made last year, at the beginning of 2019.  

Well, actually, they aren’t exactly the same.  We made one change to number 8.  We had to change the national debt to $23 trillion.  Last year it was $22 trillion.  This proves the point of the prediction, that Washington won’t stop creating trillion-dollar deficits!

Because these predictions worked out so well, we dusted them off to re-issue them for 2020.  How accurate do you think these predictions will be when we look back on them next year?  

In the meantime, all we can say is buy gold, and have a Happy and Prosperous New Year!

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Gold Has Been Money for a Very Long Time!

Excerpts from The New World of Gold, by Timothy Green, published in 1981:

When Napoleon escaped from Elba in 1815 and was back in France raising an army, the price of gold in the London market jumped overnight from 4.6.6d an ounce to 5.7.0d.  ‘There was an extraordinary demand,’ a partner in Mocotta and Goldsmid, the London bullion house admitted.  The big buyer was Nathan Mayer Rothschild, under orders from the British Treasury to dispatch gold quickly to the Duke of Wellington.  Not until Wellington finally defeated Napoleon at the Battle of Waterloo did the gold price simmer down….

For over 6,000 years men – and women – have fought for it, died for it, cheated for it, slaved for it.  ‘Get gold,’ wrote King Ferdinand of Spain to his men in South America in 1511, ‘humanely if you can, but at all hazards get gold.…’

The civilizations of ancient Egypt and Rome were nourished by gold, wrestled from mines in conditions of unbelievable misery.…

As a gold dealer in Southeast Asia, busy selling bars to Chinese caught in racial strife in Indonesia put it, ‘Gold takes no account of race, religion, culture, or politics….”

What John Maynard Keynes called ‘this barbarous relic’ still clings tenaciously to men’s hearts.  It remains the only universally accepted medium of exchange, the ultimate currency by which one nation, whether capitalist or communist, settles its debts with another.

‘You have to choose,’ wrote George Bernard Shaw, ‘between trusting the natural stability of gold and the honesty and intelligence of members of the government.  And, with due respect for these gentlemen, I advise you, as long as the capitalist system lasts, to vote for gold.’

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Historical Quotes About Gold and Money

Some Important Things Said About Gold and Money…


“Good money is coined freedom.”

Swiss Proverb

“For 2,500 years the global electorate has identified gold as the most reliable standard of value—which means that gold, a specific amount of gold, is the best possible unit of account, the best proxy for all goods, services and financial assets that are involved in the banking system and exchange economy.”

Jude Wanniski

“Gold is money. Everything else is credit.”

J.P. Morgan

Those entrapped by the herd instinct are drowned in the deluges of history. But there are always the few who observe, reason, and take precautions, and thus escape the flood. For these few gold has been the asset of last resort.

Antony C. Sutton

A U.S. dollar is an I.O.U. from the Federal Reserve Bank. It’s not backed by gold or silver. It’s a promissory note that doesn’t actually promise anything.

P.J. O’Rourke

Specie [gold and silver coin] is the most perfect medium because it will preserve its own level; because, having intrinsic and universal value, it can never die in our hands, and it is the surest resource of reliance in time of war.

Thomas Jefferson

Governments lie; bankers lie; even auditors sometimes lie. Gold tells the truth.

– Lord Rees Mogg

Bitcoin is not an actual physical coin, and if computers are shut down, you can’t buy or sell them. That’s why nothing will ever replace gold and silver coins themselves, and all investors should have them at home or in a safe deposit box.

– Mark Skousen

With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people.

– F.A. Hayek

The question is would you rather put $10,000 in a box for 20 years or a few gold coins?

– Ron Paul

Paper money eventually returns to its intrinsic value—zero.

– Voltaire

The gold standard did not collapse. Governments abolished it in order to pave the way for inflation. The whole grim apparatus of oppression and coercion — policemen, customs guards, penal courts, prisons, in some countries even executioners — had to be put into action in order to destroy the gold standard. Solemn pledges were broken, retroactive laws were promulgated, provisions of constitutions and bills of rights were openly defied. And hosts of servile writers praised what the governments had done and hailed the dawn of the fiat-money millennium.

– Ludwig von Mises

The Golden Rule: He who has the gold makes the rules.

– Attributed to a 1967 Wizard of Id comic strip

I think there is a question mark over the durability of any power that relies as heavily as the United States on importing capital and borrowing from abroad.

– Niall Ferguson

. . . if we face a monopolist we are at his mercy. And an authority directing the whole economic system would be the most powerful monopolist conceivable.

– F.A. Hayek

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That Time of Year

This time of year, with holiday gatherings and celebrations, many of our thoughts center on family.    

For wealth protection, from generation to generation, nothing endures like gold.  In fact, someone called gold and silver “the superheroes of wealth preservation.”

Gold is one of the least reactive chemical elements;  it does not tarnish or rust.  It is handy to think of that as a metaphor for the fact the gold’s core value is impervious to corruption by the actions of its issuer.  The value of an ounce of gold is not dependent on whose picture or name is inscribed on it.  Nor does it depend on any government; governments come and go, but the value of gold persists.

If you had your choice of putting some government’s paper money in a box under your bed, or gold, to pass along to your children and grandchildren, you would be wise to choose gold.  

Gold ownership has traditionally been prized as a means of passing wealth along in families, in discreet, private ways.  

It is the only financial asset that is not someone else’s liability, not dependent on someone else’s promises.  

Gold’s special virtues have been recognized around the world and throughout the centuries.  So honored is gold that the wise men who followed a star made it among their gifts to a child born in a stable more than 2,000 years ago.

So this time of year, while so many of our thoughts center on family, choose to protect your family and all that you’ve worked for.  Find out why gold is the money of the ages, and why it makes a perfect gift for family members and loved ones.  

Speak with an RME Gold specialist today.  

And Merry Christmas from all of us at Republic Monetary Exchange!

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Greenspan The Maestro

Year-End Observations About Inflation, Deficit, and Gold

As we head to the end of the year, there are a couple of things we have intended to mention to you that we could not get to until today.  

So here they are:

“The Maestro,” former Federal Reserve Chairman Alan Greenspan was back in the financial media this week, remarking that if the deficit continues to rise, “inflation is inevitably going to rise.”  

Alan Greenspan
Alan Greenspan

That’s the sort of thing that should go without saying since the Fed is monetizing the deficit, printing money to cover the gap between exploding federal spending and revenue.

According to Greenspan, “Putting the federal budget on a sustainable path would aid the long-term vigor of the U.S. economy and help ensure that policymakers have the space to use fiscal policy to assist in stabilizing the economy if it weakens.”

As we have pointed out repeatedly, there is not any prospect for the budget being put on a sustainable path.  The most of the very few fiscal conservatives there once roosted in Washington have gone the way of the dodo bird. 

None of these financial realities are lost on investment banking giant Goldman Sachs, which is bullish on gold in 2020.  A Goldman Sachs analyst has taken note of Modern Monetary Theory, the newest inflationary rage on the left.  He writes, “In the next recession, our US economists do not expect governments to adopt direct monetary financing and expect inflation to remain firmly anchored,  But this doesn’t necessarily prevent an increase in debasement concerns if conversations around MMT become more widespread — a potential boost to demand for gold as a debasement hedge.” 

Maybe the word “direct” in carefully chosen here, since the latest surge in repo funding and the latest round of Quantitative Easing is effective Fed monetary financing of the US deficit already.

And in fact, just over a week ago, a Credit Suisse analyst said the Fed would begin a new round of money printing before the end of the year.  According to CNBC:

The fourth version of quantitative easing — often referred to as “money-printing” for the way the Fed uses digitally created money to buy bonds from big financial institutions — would be needed by year’s end to bridge a funding gap as banks scramble for scarce reserves, Zoltan Pozsar, Credit Suisse’s managing director for investment strategy and research, said in a note to clients.

“If we’re right about funding stresses, the Fed will be doing ‘QE4’ by year-end,” Pozsar wrote.

The new round of money printing has already begun.  Please see our essays from November, Inflate or Die, Part I and Inflate or Die, Part II.

We recommend you begin planning today for gold profits and wealth preservation in 2020.  Contact an RME professional today!

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More Gold Nuggets of News and Information

DOLLAR DEBASEMENT CONTINUES AT RECORD PACE!

The Federal Reserve is positively gushing dollars.  As the US money supply surges, it ultimately depreciates the value of the dollar.

Over the last 12 months, the M2 money supply has grown by an unprecedented $1.1 trillion dollars.

WASHINGTON CAN’T/WON’T BUDGET RESPONSIBLY!

Here are some quotes from Maya MacGuineas, The Hill, from 12/17/19:

“Later this week we will reach the expiration date on the current short-term continuing resolution that is funding the federal government and preventing a shutdown.”  

“This is no way to run a government. That the largest economic entity in the world is running without an actual budget in place should be shocking; that it has become routine is downright depressing. Yet we have entered a new fiscal year without a budget in 12 of the last 20 years…

“It is time for Congress and the president to, at the very least, take the Hippocratic oath to do no harm and not add more borrowing on top of our already massive national debt.”

EAST EUROPE’S NATIONALIST LEADERS OBSESSED WITH GOLD!

Gold is all that nationalist leaders in Eastern Europe can talk about these days.

Just this week, the Polish government touted its economic might after completing the repatriation of 100 tons of the metal.

In Hungary, anti-immigrant Hungarian Prime Minister Viktor Orban has been ramping up holdings of the safe-haven asset to boost the security of the nation’s reserves…

The gold rush mirrors steps by Russia and China to diversify reserves exceeding US$3 trillion away from the US dollar amid flaring geopolitical tensions with the US.

However, motivations in Europe’s ex-communist wing can vary.

Take the latest example. Former Slovak prime minister Robert Fico, who has a shot at returning to power, has urged parliament to compel the central bank into bringing home gold stocks stored in the UK.

The reason? Sometimes your international partners can betray you, Fico said, citing a 1938 pact by France, the UK, Italy, and Germany allowing Adolf Hitler to annex a chunk of what was then Czechoslovakia, and — more recently — the Bank of England’s refusal to return Venezuela’s gold stock over political differences.

“You can hardly trust even the closest allies after the Munich Agreement,” Fico told reporters. “I guarantee that if something happens, we won’t see a single gram of this gold. Let’s do it as quickly as possible.” – Bloomberg, 11/28/19

A TRILLION HERE, A TRILLION THERE!

With just two weeks left in 2019, the US Federal Debt has climbed to $23.108 trillion.

How can one imagine a number that large?  Consider for a moment that a trillion seconds ago was 31,709 years ago.  That was in the period known as Last Glacial Maximum when sheets of ice covered much of North America, Europe, and Asia.

So 23 trillion seconds ago was 729,325 years ago.   That takes us back to the Paleolithic or Old Stone Age, about a half-million years before homo sapiens evolved.

But in Washington, these days, a trillion dollars is just a rounding error!

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What Is the Fed So Afraid Of?

The Federal Reserve is panicking.  Or at least it is acting like it, with moves of seeming desperation that are not clearly explained.

Quietly, the Fed is printing money like crazy.  But it isn’t saying what it is so afraid of.

For anyone steeped in the unhinged Keynesian theories that rule at the central bank, three interest rate cuts in 2019 are not internally logical.   The US economy is enjoying the longest sustained boom in history, now running 126 months.  And unemployment is said to be at a 50-year low.

Keynesian theory calls for lowering rates, deficit spending, and loose money when the economy is in contraction.  Not in an expansion.  

And now the Fed has cranked its money creation machines to eleven.  As the rock music parody motion picture Spinal Tap showed, eleven is even faster than the top rate of ten!

And indeed, the new money printing regime is faster than Quantitative Easing, the unprecedented monetary experiment that gushed forth almost $4 trillion beginning in the Great Recession.

Liquidity operations, more repo funding, more QE.  We refer to them generically:  more money printing.

What is going on in the Marriner Eccles Building in Washington?  Why has the Fed cranked the presses up faster than fast?

Although it’s all shrouded in mystery, we can suggest some possibilities.

Informed sources say the Fed is desperately trying to stop interest rates from flaring up… and spreading like wildfire.  

By other accounts, among them that of the Bank of International Settlements, the central bankers’ central bank, the stepped-up money printing is funding the borrowing of private hedge funds so that they don’t have to sell anything.  

And we ourselves have wondered in these pages if a major bank is on the brink of failure, with the potential of setting off cascading failures.  That’s what happened in 2008 when the failure of Bear Stearns and Lehmann Brothers triggered the Great Recession.

Like flaring interest rates, either widespread hedge fund selling, or a major bank collapse are both capable of tanking the stock and the bond markets.

As the song said, “Something’s happening here.  What it is ain’t exactly clear.”  

We think that financial conditions are very dangerous and urge our clients to move to safety.  When the Fed starts printing money the best place – the only place – to be is in gold.

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Interest Rates: The Perfect Storm is Coming Our Way

We’ve probably used our share of clichés in these posts, but we don’t think we’ve ever resorted to “perfect storm.”  (If we have, we beg forgiveness!)

But sometimes it takes a cliché.  How better to describe the convergence of critical factors that together create a transcendent calamity, a disaster that is greater than the sum of its parts?  So if today we mean such an event, we’ll cop-out and just say “P.S.”

Because the P.S. book and the 2000 motion picture with George Clooney and Mark Wahlberg describe the real-life conditions of a 1991 tragedy driven by two powerful weather fronts and a hurricane, we will similarly limit our description of the coming economic P.S. to the confluence of three factors.

First, the US government deficit is spiking.  The Congressional Budget Office points out that for the first two months (October and November) of Fiscal Year 2020, the deficit is already $342 billion.  Annualize that and we would be looking at an unthinkable $2 trillion deficit of the year.  In any case, for the first two months of the new fiscal year, the deficit is up 12 percent over the same period last year. 

Here’s the thing to remember: Federal spending has risen twice as fast as revenue.

The second factor is closely related to the first.  We are not going to grow our way out of our deficit spending.  As we have pointed out several times, additional debt is not resulting in sufficient growth or productivity.  We call this the Doom Loop: how much growth do you get for each additional dollar of borrowing? “It is one thing,” we wrote, “if incremental indebtedness is producing more wealth.  But it is very serious indeed when debt is outpacing productivity.  And that is what is happening in the US today.”  

The point:  A dollar of new debt is not producing a dollar of additional GDP.

Thirdly, the Fed has already embarked on a massive new money-printing program. It has been pouring liquidity into the repo markets (the overnight and short-term borrowing market among financial institutions, banks, and hedge funds) since mid-September when overnight rates surged to 10 percent.  This dramatic policy response is an attempt to stamp out interest rate flare-ups. Earlier this week we reported that on one day alone the Fed added close to $100 billion in new liquidity to the financial markets.  The Fed is desperate to extinguish any signs of higher rates breaking out since normalization of interest rates means a bond market collapse and a breakdown of the stock market.  At the same time servicing US government debt in a higher interest rate environment will become impossible without unprecedented, full-tilt money printing and debt monetization.  But the markets are filled with well-grounded speculation that more bank-liquidity interest rate flare-ups are headed our way.  Very soon, according to those that watch such things carefully.  And those interest rate flare-ups can only be met by aggressive money printing, a stepped-up QE.

Here’s the takeaway:  The Fed has stomped on the money-printing gas, but it looks like it will have to push it even harder.

To recap:  Debt growing faster than revenue. New debt failing to result in sufficient growth justify the debt.  And because the debt is not matched by revenue or economic growth, it is being sustained by massive money-printing.

We won’t say it, but this has the makings of a P.S.

Gold is the only financial or monetary asset that is not someone else’s liability.  That makes a big difference in when you are seeking shelter from the storm.

How Do They Get Away With It?

It has long been said that a fool and his money are soon parted.  But we sometimes wonder how the money manipulators get away with it.

How did they get away with calling in all the American people’s gold in the early 1930s?  How did the get away with making it a felony to own monetary gold, a crime punishable by huge fines and imprisonment?  How did they get away with forcing people to relinquish their private gold to the government at $20.67 an ounce and once they had the gold, suddenly raising the price to $35 an ounce?

How does the Fed get away with creating trillions of dollars to provide liquidity to foreign governments and even private foreign banks?  How did it get away with creating trillions of dollars out of thin air to bail out the crony banks, while not bailing out millions of Americans as they lost their homes?

How do they get away with manipulating interest rates to boom Wall Street, while savers and pension plans and old people on fixed incomes are going bust and even taking outsized risks to earn a meaningful return?

How has the Fed gotten away with destroying 97 percent of the dollar’s purchasing power?  

We sometimes wonder how they get away with it.  

Well, here’s a partial answer.  Most people don’t know what’s going on.  A crypto-currency company in the British Virgin Islands commissioned a study of Americans in September 2019 that found that:

  • 29 percent of respondents think the US dollar is still backed by gold.  4 percent think the dollar is backed by oil.
  • 54 percent think the Federal Reserve is owned by the US government.
  • 26 percent thing that banks keep on hand 100 percent of the deposits made with them by customers.

Of course, none of these things are true.

At Republic Monetary Exchange, we take educating our friends and clients seriously.  We have found that the more people know about the essentials of money and gold, the better they prepare themselves and their families for the upsets that are only too predictable with unbacked paper and unbacked digital monetary schemes.  

Feel free to share our blog posts and articles.   The more people understand why gold remains the world’s preeminent monetary commodity, the more likely it is that we can one day replace monetary manipulation and deceit with monetary reliability and ensure a long-term prosperous future for ourselves and our fellow Americans.

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Gold in 2020

2019 has been a great year for our clients.    

And we think 2020 will be even better.   

Others agree.  In fact, Congressman Ron Paul thinks gold will double, reaching $3,000 by the end of 2020.  

That may be underestimating the power of this new bull market in gold.  Just last week a mystery buyer spent $1.75 million in the options market betting that gold will hit $4,000 by June 2021.

In any case, the signs warning of higher gold prices are all around, as Congressman Paul says.  

Ron Paul predicts $3,000 gold by the end of 2020

One of the warning signs we have written about is global de-dollarization.  2018 saw the most aggressive gold buying by central banks in 50 years.  Although it is long before the numbers for the year are all in, we already know 2019 has surpassed record 2018 central bank gold buying.  All the fundamentals driving this de-dollarization megatrend look to continue in force in 2020.

Another important warning sign is the compounding of global debt, on track to hit $255 trillion dollars by the start of 2020, just weeks from now.   That’s almost three times the global GDP.  Can it be paid back?  Of course not.  Debt is mounting faster than productivity.  A dollar of new debt is not producing a dollar of growth.  We call this “The Doom Loop,” a vicious circle that ends in a cataclysmic bust.

Think about this another way.  Debt is exploding both in the US and around the world.  And yet the Fed has cut interest rates three times this year?  Something is not right. 

If the demand for a good or service skyrockets and the supply stays the same, the price will have to rise.  It doesn’t matter what it is– new homes or prime rib or money.  It’s the law of supply and demand.

gold bars

But borrowing (debt), the demand for money, is climbing, while the price of borrowing money (interest rates) keeps falling.  

And in fact, the only way debt can be rising and rates falling is if somebody is printing more money.  So, let us call your attention to the manic new Fed money printing underway as we write.  Just last Tuesday, 12/3, the Federal Reserve added close to $100 billion in new liquidity to the financial markets.  Add to that the new Quantitative Easing (called by the Fed chairman “Not Quantitative Easing”) of $60 billion a month.  

It will all play out with the dollar losing more value.  Which will drive even more global de-dollarization.  And a tightening of The Doom Loop.

We encourage you to look ahead to the coming year.  And take steps now to protect yourself and profit with precious metals in 2020 and beyond.

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Fair Warning from the Stock Market!

Yet Another Market Sell-Off

There’s no telling how many warnings you’ll get.  Tuesday’s sharp sell-off can be considered a fair warning.

The stock market closed down.  The Dow Industrial were off 280 points at the close, but at one point during the session, it had dropped 450 points;  that follows a 268 point drop on Monday, a day that also registered the biggest S&P500 drop in months.

It was quite a sharp reversal for the stock markets with the S&P off to its worst start for a December since 2oo8.  And you probably remember 2008.  If not, maybe the term “Great Recession” will ring a bell.  

American manufacturing has been shrinking for four straight months.  Construction spending is down.  At the same time, hope for trades deals appears to be dashed once again.  

Baron Nathan Rothschild- The guy knew when to get out of a market.

We think you should take this warning seriously.  This is the longest bull market in stocks without a 20 percent correction in history.

While we’re at it we probably ought to remind you of what happened last December.  It was the worst December for stocks since 1931.  And in case you don’t remember 1931, two words:  Great Depression.

As we wrote recently about the market’s action at the end of last year, the S&P500 had traded as high as 2941 points in late September; by Christmas Eve it was 2350, a staggering 20 percent loss in only three months!  

Fair warning:  the more volatile the stock market, the more dangerous to you.  And the more important it is to own gold.

We will part with advice for stock market investors from Baron Nathan Rothschild who explained that he made his fortune because he always sold “too soon.”

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Washington Has (Your) Money to Burn!

It’s in your best interest to read this post. After all, it’s your money they’re burning.

How about the US Agency for International Development throwing $22,000,000 at a “sustainable local development” budget that includes the crucial mission of bringing Serbian cheeses up to international standards?

Or how about Operation Golden Potty?  $500,000.  And hooking fish on nicotine?  $708,466.

I’ll get to those in a moment.

Senator Rand Paul has released his new Waste Report.  No sensible American can be pleased by what it tells about your tax dollars at work.  The Federal Reserve’s monetary regime has so warped Washington’s understanding of money – after all, it can just “print” trillions of it if it wants – that throwing money away is like a sport in DC.

And since the Fed has provided Washington with interest rates so low – the government can borrow money for ten years at less than two percent – and that’s as good as free to politicians – they borrow like there’s no tomorrow.

But of course, everything Washington spends comes from the productivity of real people.  You.  Me.  Us.  When it prints money, it dilutes the value of the money we own.  When it borrows, it leaves us on the hook for repayment.  Every dollar Washington spends is a burden, a tax, on all of us.

At the risk of making your blood boil, here are some examples of your tax dollars at work, direct from Senator Paul’s Fall 2019 edition of The Waste Report:

  • Flushing Money Down the Drain:  From 2003 to 2017, according to the Office of Inspector General, the Washington Metropolitan Area Transit Authority spent “approximately $500,000 maintaining a single self-cleaning toilet located at the Huntington Metro Station.”  The OIG cannot definitively state how much was spent because Metro lost invoices for 2007, 2012, 2013, and 2014.
  • Your Money Going Up in Smoke:  The National Institutes of Health is sponsoring a nearly five-year project that involves actively addicting its subjects, Zebrafish, to nicotine.  The project, being conducted at the Queen Mary University of London, will cost the American taxpayer $708,466.58.
  • Blowing (Money) in the Wind:  The State Department [bought] an original Bob Dylan sculpture, for $84,375,61 to place in its embassy in Mozambique.
  • How Do You Spell “Waste” in Hieroglyphics?  The US government is investing up to $16 million to improve the quality of the Egyptian educational system.

There’s a lot more where that came from.  Millions on a program that includes unused textbooks rotting away in warehouses in Afghanistan.  Up to $300,000 on debate and Model United Nations competitions in Afghanistan.  The National Institutes of Health spending $4,658,865 over several years to study the connection between drinking alcohol, hurting yourself or somebody else, and winding up in the Emergency Room.  You don’t suppose?

Look, these cases are just symptoms, but they are symptoms of a much bigger problem, one that matters a great deal.  As a headline in The Hill read the other day, “Trillion-dollar deficits as far as the eye can see, and hardly a voice of caution to be heard.”

What will happen?  Eventually interest rates will go up and the debt that ballooned during the era of low rates will become unpayable.  The printing presses will run overtime to try to fix the problem, but that will only tank the dollar.  The markets will discount each new round of money printing by demanding still higher interest rates, tanking the economy, too. 

Gold prices will explode.  

Maybe the people will storm the castle walls with pitchforks, looking for the people that did this to America.  But it won’t matter, because the damage will already have been done.  

But what will matter to you and your family is that you protected yourselves and your wealth with gold.

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Negative Rates

There are a lot of reasons for this new gold bull market.   

One of the most important reasons is a new worldwide phenomenal:  negative interest rates.

History doesn’t record the successes of any financial regimes or monetary systems based on negative interest rates.  Ever.  That’s because there aren’t any.

Negative interest rates are so utterly foreign to any kind of normal human economic behavior that they can only be the creation of delusional central bankers.  

Or madmen.  But pardon me for repeating myself.

In a negative interest rate regime, you lend your hard-earned money, for example by depositing it in a bank or buying a bond.  And then, when you withdraw your deposit or cash in your bond, you get back less than you loaned.  You pay the borrower for the privilege of using your money.  A cartoon character like Wimpy might say, “I will gladly pay you $900 tomorrow for $1,000 today.”

Make sense?  Of course not!  But there is now a total of about $17 trillion in negative-yielding debt – both government and corporate bonds – around the world.  And it just keeps growing.

To make matters worse, it looks like negative interest rates are headed to the US.  Every time the Fed cuts rates it moves the US closer to negative rates.  And now, says Alan Greenspan, the longest-serving Federal Reserve chairman in history, they will inevitably show up here.  “You’re seeing it pretty much throughout the world,” he says.  “It’s only a matter of time before it’s more in the United States.”  Ron Paul agrees negative rates are headed here.  He identifies this massive build-up of negative interest rates as a symptom of “the biggest bubble in history.”  

No wonder that as negative interest rates spread, informed people turn to gold.  We have noted that as the reported amount of negative interest rate debt has climbed from $12 trillion to $13 trillion to $14 trillion, and now to around $17 trillion, gold has marched higher.

That’s not hard to understand.  If you had to choose between some unreliable borrower who offered you a negative interest rate for the use of your money, or gold, which would you choose?  

The question answers itself.  In the words of Greenspan, “Gold is a good place to put money these days given its value as a currency outside of the policies conducted by governments.”

The negative interest rate phenomena will end in a crash.  Such madness always does.  The world has been through episodes of monetary lunacy before, but usually, they are limited to one or two countries at a time.  A Venezuela here or a Zimbabwe there.  But this time the derangement has gone global.

The best possible safe haven – in fact probably the only safe haven for a monetary calamity of this global scale – is gold.

RME is here to help you avoid being victimized by unsustainable monetary fads and the central bank’s ruination of the dollar.

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De-Dollarization: The Global Monetary Mega-Trend

Nations around the world continue to demonstrate that they want more gold reserves and fewer dollars.

We have reported on this global megatrend regularly (see More Gold, Please!, The Fed Cuts Rates While the World Buys Gold, and De-Dollarization.

This shift away from dollars and into gold is a harbinger of things to come for two reasons.  

First, if one central bank decides to upgrade its reserves with the world’s most enduring money, it may only represent a political statement.  It is perfectly understandable if a heavily sanctioned state like Iran or Venezuela decides to avoid dollars for political reasons.  (Note, though, that US sanctions have proliferated to so many countries that the US is forcing the world’s turn to dollar alternatives.)

But those jumping on the gold-bandwagon include friendly countries like Hungary and Poland.  Most recently Poland has been ratcheting up its gold reserves, purchasing 125 metric tons over the past two years.  At the same time Poland is repatriating gold.  This week Poland announced that it has brought home to Warsaw 1oo tons of gold that had been held on its behalf by the Bank of England.  This is not a sign of long-term confidence in the post-war dollar reserve monetary order.

The global megatrend is also important because it represents a huge and stable base of gold holdings.

Central banks need to hold reserves against which they issue their own currencies.  Central banks can be described as strong hands; having made the decision to make gold a foundation of their monetary systems, and adding gold reserves at rates measured in hundred of tons, they can be expected to maintain that position.

To sum up, confidence in the global dollar-based monetary system is beginning to crack.  This loss of confidence is justified by trillion-dollar deficits, ballooning debts, both corporate and governmental, politics driven by giveaways, vote-buying, and spending sprees, and finally by a new surge in reckless Fed money printing.

At the same time, gold is moving into strong hands, holders not prone to liquidate their holdings.  There has been a years-long subterranean flow of gold from the West (the US and Europe) to the East (mostly China), also strong hands.

We would like to see our friends and client protect themselves and profit from advance knowledge of these trends.  Simply call or visit an RME professional to implement a sound strategy for the times ahead.

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Buy Gold Safely: Face-to-Face!

We believe everyone should own gold and silver. But we encourage people to use best practices in both buying and selling precious metals.

Said differently, we encourage people to use common sense.

We just don’t think it’s a good idea to buy gold and silver from boiler room operators or to send your money somewhere across the country to a voice on the phone.  Even worse- to a place you know nothing about.

And then wait for weeks to get your gold.

You should be able to buy with confidence.  Face-to-face.  Getting your gold and silver right then for most of the commonly traded products.  On the spot upon receipt of good funds.  That’s how we do business.  Best practices.

Although we think everyone should own gold for many reasons including wealth preservations, financial privacy, and insurance against monetary crises, we know that sometimes people will want to sell their precious metals.  As we’ve said many times, making good old-fashioned profits are just one good reason to invest in gold and silver.  And there are life situations and opportunities that mean people will want to sell their precious metals in a safe and secure manner.  

Never wait! Same-day payments when selling are a standard at Republic Monetary Exchange

That’s why we offer same-day payment on most liquidations.  Even if you didn’t buy your gold and silver from us.  You don’t have to pack and box up your precious metals, go off to the post office or shipping service, buy special insurance, and send them someplace far away to someone you’ve never met, just a voice on the phone.

At RME, you’ll get the most competitive prices whether buying or selling.  And as a courtesy to our clients, we provide on-site security facilitated by the Phoenix Police Department.  Our officers provide round-the-clock surveillance, so customers can feel safe during all business transactions.  Best practices.

Call and make an appointment to see us.  And deal in person with a knowledgeable Republic Monetary Exchange precious metals expert.  

Buy and sell gold and silver face-to-face.  Safe.  Convenient.  Secure.  

Republic Monetary Exchange.  We’ve been here for a long time. 

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Inflate or Die, Part 1

The Fed can’t stop printing money.  

Now it has discovered that the trillions of dollars it already “printed” can’t be neutralized or rolled back.  

The genie can’t be put back in the bottle.

The Fed tried that.  It tried to undo some of the trillions of dollars of funny money it created in Quantitative Easing.  That’s because even Fed officials know that if those trillions of dollars aren’t somehow unwound before they work their way into the general economy, they will eventually create a real Third World-style inflation here in the US.

Worse than that, the Fed not only can’t undo what it did in its QE money printing spree, it now is scrambling to print more money to replace what it tried to roll back last year.

The Fed is in a real bind.  A mess of its own creation.  And since we are all helpless victims of its policies, we are in a mess, too.

Here’s the story.  It can be seen in the chart below. 

The Federal Reserve reacted to the mortgage meltdown in 2008 by creating almost $4 trillion.  It was all just made up digital money.  It did this so that it could buy toxic mortgage and other bonds from the crony banks.  To help them out.  And, boy oh boy, did it ever help the crony banks out! 

The spree lasted from 2008 to 2014.  

This chart shows the assets on the Fed books after QE ended.  It had assets bumping along close to $4.5 trillion dollars.

Recognizing the inflationary potential of that liquidity when, under certain circumstances, it starts finding its way into the commercial banks and into the consumer economy and sets off a nightmare inflation, the Fed decided to undo what it had done.

It didn’t go well.  We’ll tell you what happened then and why it matters to you and the gold market in our next post, Inflate or Die, Part II.

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Inflate or Die, Part 2

Before the trillions of dollars of made-up digital “money” it created in 2008-2014 does its real damage, driving consumer prices to the moon, the Fed started to reduce its assets with a program called Quantitative Tightening.   They didn’t discuss it much, and the mainstream press didn’t say much about the risk overhanding the economy from QE either, but even the Fed knew that had created a huge problem with trillions of dollars of money it made up out of thin air in its Quantitative Easing program.  You can see on the chart below that Fed assets began to move lower in 2018 as the Fed targeted reducing its holdings by $50 billion a month

But by last fall, the stock market threw a fit.  Since it had been climbing for years on the backs of free money for Wall Street, as the Fed tightened and reduced its assets, the market began to collapse.   The S&P500 had traded as high as 2941 points in late September; by Christmas Eve it was 2350, a staggering 20 percent loss in only three months!  

Wall Street was on strike!  More free money, it told the Fed, or we’ll bring the whole stock market house of cards down.

The Fed got the message.  By Labor Day, as you can see on the chart, the Fed’s balance sheet began to grow once again.  Fast!

Not only did the Fed reverse gears, but it also stomped on the money printing accelerator!

Notice that the blue line, Fed assets, is now climbing faster than it came down.  The upward trajectory is steeper than the rate at which it declined in the first nine months of the year.  This illustrates the fact that with the new QE the Fed is printing at least $60 billion a month, which is more than the original QE that began in 2008.

Fed chief Jerome Powell says the new QE (which he refuses to call QE) is an interim measure.  But is it?

Fed Chairman Jerome Powell

The Fed knows it has to print money or the stock market will go into free-fall.  The Fed has become the guarantor of stock market profits.   The Fed has become Wall Street’s “Hey, boy!”  It is inflate, or die!  

Eventually, a critical mass of investors will figure that out.  Discovering that the market is only held aloft by the Fed, they will head for the door all at once.  And there is nothing the Fed can do at that point.

Well, there is one thing.  The Fed can begin printing money and buying stock itself.  That is a real endgame scenario.  Seriously, if that happens, it’s the end of American free enterprise.  Get out of the way!

One more thing.  And this is the reason for telling the whole story.  When the Fed prints new money, it reduces the value of every other existing dollar.   That’s inflation.  It’s a stealth tax, voted for by no one.  It appears to make everything cost more, but in reality, the dollar buys less and less.

That’s one of the reasons people buy gold.  

And in fact, you may remember when the market figured out last summer that the Fed was going to start a new round of inflation, the new gold and silver bull market was born.  Gold and silver prices took off!  

Here’s a chart that shows what happened.

The Inflate or Die Fed is in a fix.  The only beneficiaries of its dilemma are people with gold.  By its own logic, the Fed must continue to print more dollars.  That will drive gold higher.  Much higher.  If it stops printing money, the stock market will plummet.  And stock investors will rush into gold.  

Either way, your best choice is to own gold.

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Smart Investors are Buying Silver. Shouldn’t You?

Many of our clients are buying silver.  

Today we’d like to share with you one reason they are doing so and why we think it is a very good idea right now for you, too!

Silver American Eagle Coin
Most popular silver bullion: The beautiful American Silver Eagles

It is because silver today is very inexpensive.

Many of our clients probably know that silver has been used as money around the world, in fact that it has served as money longer and in more places than gold itself.  And silver is always prized in a crisis.    

Our clients are also taking advantage of the growing silver demand in high-tech applications.  

But the message that we would like to impress upon you today is this:

About 40 years ago, at the beginning of 1980, silver was $50 an ounce.  

In today’s dollars – because the Federal Reserve has sharply eroded the purchasing power of the dollar – that would be more than $156.00!

Silver Canadian Maple Leaf
From north of the border comes the popular silver Canadian Maple Leaf

At today’s prices, silver would have to triple to reach $50 an ounce.  But to reach the purchasing value in today’s dollar that silver had in 1980, it will have to increase more than nine times!

Another way of putting it is that silver today is only a third what it sold for 4o year ago.  

And it is only about 11 percent of the dollar value it had in 1980.

Oh, and by the way, silver came close to $50 again eight years ago.  It reached $49.80 in 2011.

We think silver is really underpriced today.  Many of our clients agree.

Don’t miss out at these prices!

Find out more by calling RME and speaking with one of our precious metals specialists. 602.955.6500.

Economy Quotes and Notes- November 2019

Money printing jumps… World debt dangers… US deficit balloons… Consumers grow wary… Rich investors prepare for stock market troubles.  Here’s some of the latest news about the fundamentals that drive gold and silver prices higher over time.  

Money Supply Explodes! “Nothing Short of Spectacular.”

With two months to go, 2019 M2 growth is on track to easily exceed 2016’s record $854 billion expansion. Recent M2 growth is nothing short of spectacular. M2 has jumped $329 billion in ten weeks, about an 11.5% annualized pace. Over 26 weeks, M2 surged $677 billion, or 9.3% annualized.

Credit Bubble Bulletin (11/9/19)

World Debt Warning!

Ratings agency Moody’s has issued a debt downgrade warning to the entire world…. It cut its global sovereign outlook to “negative” from “stable” for 2020, cautioning that “disruptive and unpredictable” politics was worsening the slowdown in growth.

Telegraph (11/11/19)

‘Unsustainable’ Budget Deficit Swells 34% in October

The federal government, which ended the 2019 budget year with its largest deficit in seven years, began the new budget year with a deficit in October that was 33.8% bigger than a year ago as spending hit a record.

The Treasury Department said Wednesday that the deficit last month totaled $134.5 billion, up from a shortfall in October 2018 of $100.5 billion.

Money and Markets (11/14/19)

American Consumer Comfort Crashes

Despite stocks soaring to record highs, The Bloomberg Consumer Comfort index fell last week to 58.0 from 59.1 a week earlier, and has now plunged 5.4 points in three weeks, the biggest such drop since 2008…

ZeroHedge (11/14/19)

Wealthy investors are bracing for a ‘significant drop’ in stocks

Even as the market ascends to new heights, wealthy investors are bracing for a turbulent period that could produce a “significant drop” in equity benchmarks in the near term.

That is according to a recent survey produced by UBS Wealth Management that finds that some 55% of deep-pocketed investors are preparing for a drop in the market before the end of the 2020.

Wealthy investors hold 25% of their portfolios in cash, far higher than the roughly 5% that UBS recommends on average.

MarketWatch (11/13/19)

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Beware the Mother of all Market Bubbles

Market bubbles don’t just happen.  They are the result of the government or its financial arm artificially creating excesses money and credit conditions.  Fractional reserve banking, policies like Quantitative Easing, outright money printing, and interest rate manipulations are the tools they use to create these excesses, sending misleading signals to investors and businesses alike.

The pain of bubbles popping – the unemployment, the impoverishment of millions, the bankruptcies, the loss of families’ hard-earned financial security, even the loss of freedom and the ruin of entire countries – seem like they should be reason enough for bubble policies to be avoided in favor of sound, gold based monetary systems.  But the inevitable suffering of the people is never enough to stop the bubble-blowers.  

It never is.  

Why do governments and central bankers alike engage in bubble economics and oppose sound, gold based monetary systems?  The answer is simple enough:  A gold-based monetary system disempowers them.  Since the government or the central bank can’t simple create gold out of nothing, in imposes an unwelcome discipline on governments and politician.  They are no longer free to buy votes in the way the have grown accustomed to, or to fund unaffordable foreign wars, or to enrich powerful cronies.

We are well past the days of a financially disciplined state.  For evidence, look no further than our trillion dollar deficits and $23 trillion in national debt.  

Two Fed bubbles  have already burst in this young century.  When the dot com bubble burst in 2000, the Nasdaq market lost 80 percent of its value.  When the housing bubble popped, it didn’t just cost millions of Americans their homes; between October 2017 and March 9, the stock market fell by over 50 percent.

But, lessons never learned, now the Fed is inflating the biggest bubble of all.

But it’s not the “Mother of All Bubbles” because we say so.  It’s because it’s bigger than any bubble that has gone before.

In any case, Joe Zidle, a chief investment strategist at Blackstone, trotted out the “Mother” term for our current bubble the other day, observing that global sovereign (government) debt is set to join a long list of historical bubbles. 

The end of a cycle comes with ample warning, observes Zidle.  “Many seemingly unrelated signs appeared during the housing bubble: skyrocketing property prices and excess speculation on raw land, the failure of auction rate securities, a money market fund breaking the buck (i.e., when its net asset value falls below one dollar) and the failure of an asset-backed hedge fund. In retrospect, the role that each of these phenomena played in the ensuing meltdown was obvious.”

Now Zidle surveys some of the warning signs in our current bubble.  They include $13 trillion in negative interest rate debt, the failure of the overnight repo market that the Fed keep inflating, the collapse of manufacturing, and an ongoing trade war.

These aren’t random and unrelated events.  “Every cycle ends with excesses. The warnings are normally subtle and usually dismissed.”

Among all the warning signs of this cycle’s excesses, sovereign debt stands out, says Zidle.  “Every cycle ends with excesses. The warnings are normally subtle and usually dismissed. This cycle’s excess is sovereign debt.”

He calls the bubble in sovereign debt, which is now approaching $70 trillion, the Mother of All Bubbles.

To invest in gold and silver safely now, call or visit with a knowledgeable RME Gold professional.  Don’t be caught up short when the Mother of All Bubble bursts.

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Buying Opportunity

We talk a lot about buying gold for safety.   To protect your wealth, with governments out of control, running huge deficits and printing money like crazy, we recommend people move to safety with gold, the world’s most enduring form of money.

After all, the world has been through governments and episodes like this countless times.  We know from experience that gold always come out on top.

But people buy gold for a lot of different reasons.  

Many of our clients buy gold and silver for good old-fashioned profit!  

They have had a great year!  And we think next year will be even better!

Now we’ve had a pullback in both gold and silver prices, one we welcome.  Since we are in a primary bull market that promises much higher prices ahead, we look at any correction or pullback as a gift, a buying opportunity.

But first, let’s look at how both gold and silver have done over the last 12 months.  

Gold finished on Friday (11/8) at $1463.  A year ago, it was $1200.  Over the last 12 months gold has gained almost 22 percent.

Silver finished Friday at $16.82.  A year ago, it was 14.25.  That’s an 18 percent gain.  

For comparison, the DJIA closed Friday at 27,681.  That’s a 5.7 percent gain for the past 12 months.  The S&P 500 has done a little better, up about 10 percent.  But note that neither have shown the appreciation over the past year of gold and silver, and both stock market indices are at all-time highs.

gold bars bullion

We think it makes much more sense to invest in gold and silver, both in new bull markets and both well below their earlier highs, than to buy stocks at the top of a long and exhausted expansion.

The price of gold is well below its high of $1900 set eight years ago; it will have to climb an additional 30 percent just to reach its prior high.  

Silver will have to almost triple before it reaches its prior high of $50.  

Gold has retraced almost exactly one-third of the powerful summertime breakout that took it to $1566 in September.  That would be a rather typical correction and creates an attractive entry level for buyers.

There are a lot of reasons that people buy gold, not the least of which is for profits.  The fundamental of debt, deficits, international de-dollarizaition, and renewed and aggressive “money printing” remain the background upon which gold will chart far higher prices.  But for those positioning for profit opportunities in 2020, now less than eight weeks away, we recommend taking advantage of this pullback in gold and silver prices.

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gold ingots

Invest in Gold to Protect Yourself from Monetary Geniuses!

Negative interest rates, the enthusiasm of central bankers near and far, are so self-evidently deranged, so utterly nuts, that we don’t feel obligated to say anything more about them that what we have already said here, here, and here.

But what else is crazy?  How about cutting interest rates more than ten years into the longest economic expansion in history?  With the stock market at record highs?  And with unemployment at long-term lows?

We’ve always said that spend-your-way-to-prosperity economics – the ruling dogma of Keynesian economics, the official religion of our ruling classes – is batty.  But even in by its own terms, loose money, lowering rates, and deficit spending are tools to be used in a downturn.  In times like these the Keynesian catechism calls for paying down deficits and an end to “stimulative” monetary policies.

Everywhere you turn, the authorities are demonstrating their idiocy.  

We’re not the only ones noticing it.  Ray Dalio, billionaire founder and CEO of Bridgewater Associates, the world’s largest hedge fund, has written a new piece called “The World Has Gone Mad and the System Is Broken.”

We cite a few of Dalio’s points as evidence of the malady:

  • “Money is free for those who are creditworthy because the investors who are giving it to them are willing to get back less than they give. More specifically investors lending to those who are creditworthy will accept very low or negative interest rates and won’t require having their principal paid back for the foreseeable future. They are doing this because they have an enormous amount of money to invest that has been, and continues to be, pushed on them by central banks that are buying financial assets in their futile attempts to push economic activity and inflation up.”
  • “At the same time as money is essentially free for those who have money and creditworthiness, it is essentially unavailable to those who don’t have money and creditworthiness, which contributes to the rising wealth, opportunity, and political gaps.”
  • “At the same time, large government deficits exist and will almost certainly increase substantially, which will require huge amounts of more debt to be sold by governments—amounts that cannot naturally be absorbed without driving up interest rates at a time when an interest rate rise would be devastating for markets and economies because the world is so leveraged long.”
  • “At the same time, pension and healthcare liability payments will increasingly be coming due while many of those who are obligated to pay them don’t have enough money to meet their obligations. Right now, many pension funds that have investments that are intended to meet their pension obligations use assumed returns that are agreed to with their regulators. They are typically much higher (around 7%) than the market returns that are built into the pricing and that are likely to be produced. As a result, many of those who have the obligations to deliver the money to pay these pensions are unlikely to have enough money to meet their obligations.”
Ray Dalio

So, says Dalio, “This set of circumstances is unsustainable and certainly can no longer be pushed as it has been pushed since 2008. That is why I believe that the world is approaching a big paradigm shift.”

So say we. That big paradigm shift means far higher gold prices, as the world makes the shocking discovery that the fantasies and manipulations of our monetary geniuses are a recipe for ruin.  As the late Henry Hazlitt noted long ago, “The monetary managers are fond of telling us that they have substituted ‘responsible money management’ for the gold standard. But there is no historic record of responsible paper money management … The record taken, as a whole is one of hyperinflation, devaluation and monetary chaos.  

The productive people, responsible people, savers, investors, the self-reliant and those not easily fooled by the central bankers and the Washington whack jobs, can protect themselves and their wealth from chaos with gold, the preferred money of the ages.

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Buy gold now

Gold News and Views

Gold Demand Fundamentals

gold has room to grow

The World Gold Council’s report on gold demand in the third quarter of this year (July-August-September) is out.  It highlights growing gold demand from Exchange Traded Funds:  “Holdings in gold-backed ETFs hit a new all-time high of 2,855.3 tons in Q3. Holdings grew by 258.2 tons during the quarter, the highest level of quarterly inflows since Q1 2016.”

The trade association says central bank gold buying remains “healthy.”  Although this year’s third quarter fell short of the blistering pace of the third quarter last year, in the first nine months of this year central banks have purchased 547.5 tons, an increase of 12 percent over the same period last year.

More on Deutsche Bank

We aren’t fixated on Deutsche Bank and its problems except to the extent that they could be the straw that breaks the over-leveraged and indebted financial system as did Lehman and Bear Stearns a little over 11 years ago.  See more here and here.

But it doesn’t have to be Deutsche Bank.  There are other candidates for a triggering event that can disclose deep and systemic global solvency issues far and wide.  As Warren Buffett put it, “when the tide goes out you find out who has been swimming naked.”

Deutsche Bank

The tide could be receding in China as well.  China’s banks are awash in bad loans, yet the central planners keep policies in place that assure more and more building of apartments for which there is no demand, shopping districts without shoppers, and mega-transportation projects with too few users.  Those aren’t brand new malinvestment problems in China, but with growth slowing there, serious problems may become visible.  Meanwhile, Hong Kong has slipped into a recession which doesn’t help Beijing.

Still, Deutsche Bank is worth keeping a close eye on.  If you are interested in knowing more, here’s a link to an article by Michael Snyder called “The Deutsche Bank Death Watch Has Taken A Very Interesting Turn.”  Snyder has followed the bank closely and suggests that “the final collapse could happen sooner rather than later.”

Buy the Break!

Central bank gold buying and solvency issues in sovereign nations and global banks, not to mention highly “accommodative” monetary policies from the Fed, are the kind of fundamentals that drive gold higher.  Because we share the view that we are in a primary gold bull market, we advocate aggressively buying any break in gold prices.   Speak with an RME Gold professional today about the latest developments and opportunities.

Another Rate Cut? More than Meets the Eye?

We don’t like to be suspicious.  We prefer to be able to take people at their word.  But there seems to be more going on in the economy than meets the eye.

Let’s start a long time ago.  

When the US was wracked with ruinous double-digit inflation, the new chairman of the Federal Reserve, Paul Volcker, decided to do something about it.  He raised rates fast and furiously until inflation was mostly wrung out of the system.

Fed Building
Federal Reserve Building

Whether or not you were harmed by his policies, and even if you disagreed with Volcker, you knew he was taking extreme measure in response to extreme conditions.

Last week, the Federal Reserve lowered its policy interest rates for the third time this year.  They lowered rates to Fed borrowers below the rate of inflation.  That means the real interest rate for Fed borrowers is below zero.  

We have to ask why.

The stock market is cruising along around all-time highs.  The economy, we are told, is doing great.  In fact, we are in the longest economic expansion in history, we are told.  On Friday we learned what the Fed would already have had a peek at, that employment was strong, with “blowout” numbers.

But if everything was hunky-dory, why did the Fed feel it was necessary to cut rates three straight time in a row?  Especially since this time last year they told us they would be raising rates.

If that’s all there were to it, we might set our skepticism aside.  

But wait!  As they say in the infomercials, there’s more!

In September the Fed began providing billions of dollars to the repo market, the overnight and short-term borrowing market among financial institutions, banks and hedge funds, which found itself in a “liquidity event.”  

The Federal Reserve has tried to soft-pedal it, but in October it launched a massive new money printing program.  

I mean a big one!

The Fed has quietly started its new round of QE at a rate of $60 billion a month.  That’s twice the rate that QE started with a decade ago.

Early on, in the depths of the housing bust and Great Recession with millions of people losing their homes, the Fed launched a money printing operation called Quantitative Easing.  It was “printing” $30 billion a month to bail out banks and fund US debt.  Before long that ratcheted up to $40 billion a month.  Soon it was $85 billion a month.

gold bars

Now the Fed has quietly started its new round of QE at a rate of $60 billion a month.  That’s twice the rate that QE started with a decade ago.  And they say that they intend to keep it up through next June.  We’ve written about it here, calling it a “backdoor bailout” of somebody, somewhere.  At the same time, the money supply is growing at double-digit rates as we recounted here.

So, again, we ask “why?”  Why the extreme Fed interventions?  If we are in an economic expansion of unequaled duration, then why the serial interest rate cuts usually reserved for a crisis?  

They don’t do this because they think everything is just fine.    

Nor was QE money printing a policy option created for times when everything is alright, either.

There is more to all this than meets the eye.  Extreme measures are being taken.  Extreme measures imply extreme conditions.  The Fed is acting like something big is brewing.  

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And that is usually time to move to the safety of gold.

Nowhere to Hide: Part II

Sometimes even otherwise bright people have a big gap in their common sense.  Absent-minded professors are the stuff of legend, while “pointy-headed intellectuals” have been accused of not being able to park a bicycle straight.

Robert Shiller is a pretty bright guy.  He’s a Yale economics professor (we don’t automatically discount him for that; we prefer to judge him on the merits of what he professes), a Nobel Laureate, and the author of the book Irrational Exuberance.

Robert Shiller, an American Economist, received the prestigious Nobel Memorial Prize in Economic Sciences

That book, published right at the top of the dot.com market bubble, made a cogent case the stock markets were over-valued.  A 2005 edition of Irrational Exuberance made the case that the real estate bubble would soon burst.  

We think Shiller is pretty capable, at least more so than the Keynesians and Modern Monetary Theorists found in most college economics departments and on the pages of the New York Times.  So we’re not accusing anybody of anything or calling any names here… just helpfully pointing out where something obvious might have been overlooked.

Shiller is back on bubble patrol, sounding out new warnings.  “I see bubbles everywhere,” he says.  The stock market is a bubble, he says.  The bond market is a bubble.  Shiller even thinks the housing market is in a bubble again.

Using a long-term valuation measure (the CAPE ratio) for stock prices, Shiller says we’re in a market bubble that “you know is going to decline.’  The bond market is just as threatening, he says.  “It seems to be related to people not paying enough attention thinking through the simple logic … this can’t keep going and it’s going to end badly.”

We share his views about both the stock and bond markets.  We have written about the bubbles in both many times.   And without a doubt, when the bond market crashes, it will mean interest rates have risen, which will have a negative impact on real estate.

So what is our problem with Shiller?  It is simple this:  Shiller doesn’t know where to go to escape the carnage of these inevitably bursting bubbles.  

“There’s no place to go,” he says. “You just have to ride it out.”

No.  

You don’t.

This is the second time in recent weeks that we have encountered this meme (see Nowhere to Hide, Part I here).  We aren’t sure yet, but are beginning to grow suspicious that this may be a new focus group-tested talking point or meme contrived by Wall Street: “Sure, the stock market is grossly overvalued, but you have to stay invested in it since there is nowhere to hide.”  We’ll be interested to see if the phrase starts showing up often in the financial press

We’ve had two stock market crashes already in this very young century.  This time, though, the stock and bond bubbles are bigger than ever.  That means the bust will be bigger than ever. 

In any case, Shiller is too despairing when he says that you have to invest in the stock market, “even though you expect the price to decline.”

That is simply bad advice.  It took decades for the market to recover from the 1929 crash.  It took the Nasdaq market 15 years to recover from the dot com crash.

Michael Shedlock of Mish’s Global Economic Forecast also takes a caustic view of Shiller’s advice, that you have to ride it out, that there is no place to hide.

Number one on Mish’s list of places to go is gold.  He says, “I do not care about books or past predictions.  I care about logic of the moment.”

“It is absurd to say there is no place to go,” says Mish.  “Choose wisely where to hide.”

We agree.  Let the professionals at RME Gold tell you about gold and the logic of the moment before the bubbles burst.

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Teetering on the Brink

What Have We Learned from Investment Bank Failures like Lehman Brothers and Bear Stearns?

If you wanted to watch the world economy collapse into a nightmare depression of currency failures and bankruptcy, you would start by looking for the failure of a major financial institution.

And when that happens, you would be glad to own gold.

Few people today know of the 1931 failure of Credit Anstalt, the Viennese banking giant founded by the famous Rothschild family of international financiers.  The conventional wisdom was that Credit Anstalt was impregnable.  When the bank teetered and fell, shockwaves were felt across Europe and around the world.  The ensuing panic made the Great Depression a worldwide calamity.   

Not everyone was blind to the unsound practices that brought Credit Anstalt to its knees.  Seeing that it was actually bankrupt, the great free market economist Ludwig von Mises refused several executive positions with the bank.  It is said that when Mises would walk down the street by the bank’s huge building edifice, he would tap it with his umbrella, saying, “You’ll be coming down soon!’ 

The failures of Bear Stearns and Lehman Brothers, the fourth largest investment bank in the United States, ushered in the Panic of 2008 and the bursting of the mortgage bubble.  

In each of these examples, central bankers and government authorities quietly scrambled to provide liquidity and bailouts to the so-called “too big to fail” banks.

Now the Federal Reserve has begun moving a monetary heaven and earth of liquidity into the banking system to deal with issues that are shrouded in mystery.

We don’t claim any special insight or inside knowledge about what may be underway, but we have a good alarm system that tells us all these Fed machinations mean something is up in the financial world.  Back in July we asked if Germany’s Deutsche Bank could be ‘the key log in the log jam.”  

“That’s the log that, once moved, sets the whole destructive torrent of all the other logs loose to destroy everything downstream in their path,” we wrote.

Deutsche Bank

At that time Deutsche Bank announced it was cutting 18,000 jobs; its share price cratered.  A week later we reported that its clients were pulling a billion dollars a day out from Deutsche Bank.

We’re not the only ones wondering if all this hyperactive Fed money printing is an attempt to “paper over” problems cascading down from Deutsche Bank.  MarketWatch reported in the summer that the bank had created a book of $53 trillion in derivatives instruments, although the bank claimed its own exposure was only $22 billion; we take that with a grain of salt having heard understatements of their own exposure from the banks last time around .  Last month Deutsche Bank invited bids to auction off some of its interest rate derivative contracts.   

Deutsche Bank may not be the next Credit Anstalt, or Bear Stearns or Lehman.  It’s just as likely, perhaps even more so, that the US government’s voracious borrowing appetite is running into supply troubles.  Perhaps Deutsche Bank’s troubles are simply pulling the curtain back on something larger.  We say larger because the Fed’s latest liquidity measures and Quantitative Easing are huge.  It appears that a backdoor bailout is underway somewhere.

In any case, something is amiss.  Something big.

Buy gold.

And stay tuned.

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Trump Chooses the Printing Press

Money Printers Gone Wild!

The Federal Reserve has quietly launched a massive new round of money printing.  

We hope you will take time with this very important piece.  It should be shared widely.  It describes a new phase of Fed monetary management, a turning point that people will look back on as a crucial moment in the US economy, and one that will drive gold to new heights.

The Fed has quietly launched a new round of Quantitative Easing (QE), the most outrageous monetary experiment in American history.  QE began in 2008 with the Fed’s frenzied purchase of US treasury bonds and toxic mortgage and other troubled bonds.  (It was mostly another example of crony capitalism; the Fed bought worthless mortgage paper from the banks, taking it off their books, and putting it on the books of the American people.)

The spree lasted until 2014, by which time the Fed had acquired about $4 trillion in assets.

Where did the Fed get $4 trillion to buy all those bonds?   It just made it all up.  We call it money printing, but that is an old-fashioned term.  It’s mostly just made-up digital money.  Bookkeeping entries.  

There were three rounds of QE, known as QEI, QEII, and QEIII.  The madness more or less came to an end in 2014.  But all that made-up money is still out there.  It represents a sort of Sword of Damocles hanging over the US economy.

Janet Yellen illustration by DonkeyHotey on Flickr
They should invite Janet back so she doesn’t miss out on all of the printing fun.

Recognizing the danger that all that made-up money would find its way from the Fed’s balance sheet into the hands of the commercial banks, setting off a nightmare rise in consumer prices, the Fed tried to mop up some of this crazed money with a program called Quantitative Tightening.  That necessarily involved higher interest rates, but when the stock market had a tantrum, the Fed apologized and stopped at once.

So, most of that QE funny money is still out there, an unresolved problem that can drive consumer prices (and gold) to the moon when it leaks out into the banking system and the general economy.

That’s all history, and it is bad enough.  But now the Fed has begun a new round of money printing.  They don’t like to call it Quantitative Easing, but it is.

Fed Boosts Amount of Liquidity Offered to Financial System

Besides bailing out crony institutions, flooding the overnight markets with Fed money, these “liquidity operations” in all their variety are aimed at driving down interest rates and keeping the stock market artificially high.  To that end, Fed Chairman Powell recently announced a new program to buy $60 billion of Treasury bills each month through the end of the second quarter of 2020.

Powell objected to calling it what it is, but we’re more direct.  Welcome to QE IV!

Fed Chairman Jerome Powell

A couple of paragraphs ago I said that made-up Fed money seriously threatens the consumer economy with higher prices when it leaks out of the Fed’s hands and into the general economy.  That’s when the money supply starts growing.  And gold starts to take off.  

And that is just what is now happening.  

The peerless Doug Noland, who blogs at Credit Market Bulletin, observed recently that US money supply is at last beginning to explode.

Noland writes, “Let’s focus on the extraordinary $575 billion M2 expansion over the past 22 weeks (that receives zero attention). This was the second strongest (22-week) monetary expansion in U.S. history, trailing only 2011’s “QE2” period (Fed expanded holdings by $600 billion) where M2 expanded as much as $616 billion over 22 weeks. M2 growth peaked at $530 billion (over 22 weeks) in February 2009 during the Federal Reserve’s inaugural QE operation.”

Factoring in other money fund liquidity growth, Noland discovers that we are experiencing “a blistering 11.9% annualized growth rate” in the money supply.  This is monetary inflation such as we haven’t seen for a very long time.

And it is very bullish for gold.

gold moves

We admit that all this is a little wonkish for some of our readers, so we have prepared a chart using Fed data that illustrates what we are talking about.

It shows money supply growth (M2 – a measure of cash and cash-like liquidity such as checking deposits, savings accounts, and money market funds) taking off earlier this year.  And just as you would expect, gold responded, surging powerfully throughout the summer.  Please note that while gold has been consolidating its gains around $1,500 an ounce, the money supply (the blue line) continues to climb.

Here’s the way the Wall Street Journal headlined a story about the Fed’s new policies on Friday, 10/25:

This money supply growth and the new QE is a policy error that must result in serious consequences for the general economy, as well as much higher gold prices.

The Fed can create more dollars with a computer keystroke, but it can’t print more gold.

That’s why gold goes up.  

It’s vital that you find out more.  Call or stop by and visit with an RME Gold professional.  Because this is a pivotal moment in monetary policy, feel free to share this post with family, friends, and colleagues.  

They may appreciate learning that the Fed’s money printing has gone wild.  They must not wait before protecting themselves and their families with the safety of gold, because the Fed is finally letting the much-feared inflation genie out of the bottle.

Bull vs Bear Market Gold

Driving the New Gold Bull Market!

Three Things You Must Not Miss!

It’s impossible to separate three of the most powerful drivers of the new gold and silver bull market.  They are joined at the hip and travel together.

First is the dangerous trajectory of geopolitical events – trade and currency wars, and their usual accompaniment, hot wars.  From the Persian Gulf to Hong Kong and the South China Sea, which we wrote about that in our last post, Global Tensions, to other hot spots few people are watching, international confrontations will play a key role in driving gold prices much higher.

Next, we look at the US dollar.  Nothing is as fundamental to the bull market as the mismanagement of the dollar, on the fiscal and monetary fronts.  The government’s spending and debt, and the Federal Reserve’s monetary schemes grow more unhinged with each passing day.  They are on a collision course with reality.  We have written about them often and intend to update you soon on the Fed’s latest bond-buying program.  

This new move of desperation, Quantitative Easing IV, is another round of what we call for convenience “money printing.” Were it not for out-of-control US borrowing and spending, the government would never have had to abandon the gold standard, to begin with. The Fed provides the means for the government to pull off its money-printing sleight of hand with schemes like this new QE. 

The third of the trouble triplets is the deterioration of the global dollar reserve standard.  We have written about the movement of foreign central banks away from maintaining their own reserves in US dollars, which has been the almost universal global reserve currency since the end of WWII.  Now central banks are falling all over themselves to replace their dollar reserves with gold.  This, too, we have written about before.  See here, here, and here.

Much of the reporting we have done on central banks moving out of dollars and into gold has focused on China and Russia.  But now, ominously, Germany has gotten into the act, adding gold to its reserves for the first time in more than two decades.

Bull markets are born in fits and starts.  But this new gold bull market is already underway.  These three factors  – worsening geopolitics, the government’s dollar debt and monetary mismanagement, and the ending of the global dollar standard – are a pretty heady fuel for our gold bull market.  

Germany buying gold

We knew Germany had gotten the message when it announced in 2013 that it would call home the gold it had stored with the US.  That was like an alert depositor making withdrawals from a troubled institution before the bank run gets going in earnest.  But now Germany is making it respectable for purported US allies to begin moving from dollar reserves into gold.

We hope you’ve gotten the message, too.

If not, speak with an RME Gold professional today.  They are prepared to help you make gold and silver a part of your portfolio in a safe and secure way that will provide you with peace of mind.

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Read More Gold Market Discussion Articles:

Asian Economic Slowdown

Nowhere to Hide

It’s a dangerous time for traditional investments and established financial institutions.  The headline from an October 20 Wall Street Journal story tells the tale:

Financial Markets Face Fresh Wave of Political Uncertainty:

‘There’s Literally Nowhere to Hide’ 

Investors spooked by widespread turmoil are seeking havens

The story highlights the battle over UK Brexit as “highlighting the extreme levels of uncertainty that some investors worry isn’t being properly accounted for with U.S. stocks near all-time highs.”

But the challenges are bigger than Brexit:

“The U.S.-China trade war, Britain leaving the EU and impeachment proceedings in the U.S. are just some of the major political obstacles facing investors. Adding to the uncertainty is the Turkish military operation in Syria, attacks on Saudi oil production, and social unrest spanning from Hong Kong to Barcelona.

“In response, some investors are boosting holdings of cash and other assets that tend to hold their value when markets turn rocky. Others are recommending strategies that could protect against a swift downturn.

It is an era of financial challenges, most of which we detail in our blog posts and briefings.  The Wall Street Journal tells us investors are “spooked,” need to “hide,” and are seeking “havens.”

Those of us that have made a lifelong study of these periods of “political uncertainty” and “turmoil” know that the haven they seek is real money, gold.

But, predictably, it is not until the 21st paragraph, the next to the last paragraph, that the word “gold” finally appeasers in the WSJ story.  And even then it is in the typically disreputable company:  “Esty Dwek, head of global market strategy at Natixis Investment Managers, said she favors gold and the Japanese yen given the ever-changing geopolitical backdrop.”

The Japanese yen?  They lump gold in with the Japanese yen, another notoriously troubled, unbacked, massively emitted, destined-for-worthlessness paper currency?

Oh well.  The establishment financial press can not help itself, any more than central bankers can stop responding to every problem with another round of “liquidity operations,” money printing under its endless variety of names:  monetary injections, quantitative easing, debt monetization, interest rate management, reserve adjustments, and more.

For those not mesmerized by the mainstream media and the failing institutions it serves, there is a haven of safety and place to profit.  We know, because this isn’t our first rodeo.  It’s not the only time the world has experienced political uncertainty and widespread turmoil.

Find out more about gold’s place in your portfolio.  Contact an RME Gold professional today.

Precious Metals Bull Market

Global Tensions

With global tensions running high, we think it is important to remember the role geopolitical standoffs and the outbreak of hostilities play in driving gold prices higher.  

When we say we’re keeping a sharp eye on the market, it includes tracking important developments on the international front.  One of the best examples of that kind is the role the 1979 Iranian revolution played in fueling one of history’s most powerful gold and silver bull markets.

Let me pepper you with a few such things that are on our radar screen today:

  • Old alliances shifting.  The Pentagon reported that US forces “came under artillery fire from Turkish positions” on October 11.  The gravity of this event cannot be overstated.  The US air base at Incirlik, Turkey is universally believed to host some 50 US nuclear weapons.  Since tensions are high enough that US military spouses and children have been relocated from the base, it is clearly not a good idea to leave dozens of B-61 hydrogen bombs in Turkey.     
The US air base at Incirlik, Turkey is universally believed to host some 50 US nuclear weapons.
  • The unrest and street rebellion in Hong Kong.  Incursions by the People’s Armed Police from Shenzen into Hong Kong and the fate Hong Kong dollar are things to watch for.  In any case, the Hong Kong protests have been going on for months now, just as disturbances went on in the streets of Iran persisted for months before the Shah was driven out and the rule of the Ayatollahs was established.   
Hong Kong riots, 2019
  • Vital waterways crowded with warships.  The Ronald Reagan Carrier Strike Group, maneuvering in the South China Sea, has been tailed by Chinese warships.  This is nothing new, but territorial claims in the South China Sea are being asserted ever more vigorously and the crowed waterways can quickly lead to an accident or incident.
  • The renewed US military buildup Saudi Arabia.  11,000 troops were sent to Saudi Arabia, a purported ally, in May.  Now another 3,000 have been added, along with two new fighter jet squadrons.  The most recent addition to US forces there also includes two Patriot anti-missile batteries and one high altitude area defense system.  US forces in Saudi Arabia have long been a powder-keg issue in the Islamic world.

These are all fuses that can ignite an explosion in gold prices.  Dangerous geopolitics drive gold prices higher. Don’t wait for an international incident to invest in gold.  Protect your wealth before it happens.  A month too early is better than a day too late.

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More Rate Cuts

The Federal Reserve’s Open Market Committee meets again at the end of the month.  This is the arm of the Fed that votes on, and sets, interest rate policies.

In a healthy economy, prices of things (including interest rates, which are the prices of money) are set by supply and demand.  This alleviates shortages and prevents surpluses, helps business prioritize production and compare resources, and enables consumers to make informed choices about real costs, spending, and savings.  

But the Fed pretends that it can do better.  And so, with each interest rate intervention it distorts people’s perception of reality.  For example, in the Fed’s housing bubble artificially low interest rates convinced homebuilders that there was much more real demand and ability to meet mortgage payments that there actually was.  The Fed sent false signals to the economy.  When the bubble burst, 500 banks went under; nearly 10 million Americans lost their homes.  

Probably the most irritating thing is the way that the Fed dresses all this up as though there is something scientific about what they do.  They are awash in high-priced economist and expensive consultants.  They gather a never-ending flood of statistics.  

Observing all this, James Grant says that instead of a gold standard, the US operates on “a Ph.D. standard.”

Still, for all the academic pretense, there is nothing scientific about what the Fed does.  No board or body argues about the freezing or boiling point of water.  32 degrees and 212 degrees Fahrenheit respectively.  That’s science.  In electronics, Ohm’s law is science.  In chemistry, the periodic table of elements.  In astronomy, Kepler’s laws.

But the Fed just apes the language of the physical sciences and makes up money supply and interest rate policy to serve favorite constituents, like Wall Street, money center banks, or powerful politicians.  

The Open Market Committee meets on Tuesday and Wednesday, October 29 – 30.  It voted to lower the Fed funds target interest rate to 1.75-2 percent during its September meeting, and many suspect it will cut rates again this month.

The analysts at Bretton Woods Research are level-headed and, believe there is a bias for lower rates:

“Odds of a rate cut later this month are presently greater than 65 percent.  Although there is just a 22 percent probability that the Fed will bring the policy rate down to 1.5% by December — completely rolling back Powell`s rate hikes from 2018 — we suspect the likelihood of further easing is greater than what futures markets currently suggest.”

The following chart represent the Fed fund rate and the gold price over the last year.  The Fed made plain that it was intent on a tightening policy until the stock market had a terrible temper tantrum in the second half of 2018.  With stocks falling hard, the Fed reversed its policy course and began cutting rates (blue line).  

As you can see in the following chart, gold surged as the Fed cut rates:

We expect more of the same.  Especially since the Fed has now quietly embarked on a new fourth round of Quantitative Easing.  More on that in days to come but suffice it to say that the Fed has quite simply gone off the edge.  It will collapse entire sectors of the economy in steaming, smoldering piles of wreckage.  Just like it did with the housing bubble.

Let us help you through the bubble-blowing of the Fed’s Ph.D. standard.  Speak with an RME Gold associate today about owning real gold and silver.  Simply call our office, (602) 955-6500, and you will be connected to one of our knowledgeable gold and silver professionals.

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Their Own Man Says So!

 “If the Entire System Collapses, Gold Will Be Needed to Start Over.”

De Nederlandsche Bank, Central Bank of the Netherlands

If we said something like, “Gold is the perfect piggy bank – it’s the anchor of trust for the financial system,” you would not be at all surprised.  

We’ve said things exactly like that many times.

But this time its not us saying it.  The statement comes from a central banker!  Spoken by someone in that community, it amounts to a stunning admission!

This surprising candor is from the central bank of the Netherlands, the sixth largest economy in Europe.  Its central bank, De Nederlandsche Bank (DNB), holds more than 600 metric tons of gold.  It explains, “A bar of gold always retains its value, crisis or no crisis. This creates a sense of security. A central bank’s gold stock is therefore regarded as a symbol of solidity.”

For all their money-printing shenanigans, many central bankers (although not all!) know exactly what they are up to.  There is no better example of this than Alan Greenspan, the Federal Reserve’s longest serving chairman.  Before he joined the Fed, Greenspan wrote quite lucidly about gold as real money and fiat, made-up central bank money as a path to economic peril.  After he left office, he returned to that view.  It was only while he wielded the power to boom and bust the economy at the Fed that he forgot what he had espoused.  And so, boom and bust the UUS economy he did for 19 years!  

Now the Fed is booming the economy again, but this time on a bigger scale than ever before.  That means that the next bust will be bigger than ever before.

De Nederlandsche Bank says, “In times of financial crisis, DNB’s physical gold stock functions as an ultimate reserve asset and as an anchor of trust. The gold stock serves to cover ultimate systemic risks. To ensure a wide geographical distribution, the gold reserves are held at different locations in the world.

“Shares, bonds and other securities are not without risk, and prices can go down. But a bar of gold retains its value, even in times of crisis. That is why central banks, including DNB, have traditionally held considerable amounts of gold. Gold is the perfect piggy bank – it’s the anchor of trust for the financial system. If the system collapses, the gold stock can serve as a basis to build it up again. Gold bolsters confidence in the stability of the central bank’s balance sheet and creates a sense of security.”

We could have said the same thing.  But sometimes its nice when their own man says so!

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Impeachment, the Goose, and the Golden Egg

As last week ended, stocks jumped on reports that on-again, off-again trade deals were perhaps on-again.   

Trump Tarriffs

We don’t know if the fact that he is besieged from within and without the White House has made the President any more eager for a deal or any more conciliatory.  Nor do we pretend to know what will happen with the impeachment movement.  In that regard please see out recent post Impeachment and the Stock Market.  We agree with Trump that if he is impeached the stock market will go down.  But we believe the stock market will go down in any case.

Although we don’t know what will happen with the impeachment, we do know that powerful forces are lining up against Trump.  

For all this agnosticism on our part, candor about what we do and do not know, we do know that Elizabeth Warren is polling better than ever.  Even considering the prospect of a Warren presidency has us wanting to share a thought with you about what the socialist juggernaut will mean.  And you can be sure that the socialist juggernaut is not just found in the presidential campaign.  It is very much alive in elsewhere in Washington.

Let us make it simple:  Experience from many places and many times makes clear that when the socialist state wants money, it intends to get it… at any cost.  If that means a capital destroying wealth tax, it will do it.  If that means tanking the stock market, it will do it.  If it means destroying the dollar and private businesses, it will do that, too.  If it means robbing your pension plans, bank accounts, or retirement funds, it will do it. 

Elizabeth Warren

It will kill the goose that laid the golden egg.  It will get the money.  

To fund their something-for-nothing, free money schemes, the socialists look first to the money in institutions.  They do that for the same reason that the bank robber gave when asked why he robs banks: “Because that’s where the money is!”

Whether it is socialists in the courts, congress, or the White House, it’s hard to miss the growing popularity of this wealth-destroying philosophy.  We’ll keep a close eye on its advance and update you from time to time.  In the meantime, let us repeat our warning:

They will get the money.  They will turn to the visible institutions first.   The paper and digital-bookkeeping dollar, made up out of nothing. Stock markets, businesses, banks, retirement accounts.  Savings.  Visible wealth.

The best wealth haven as this wealth-crushing juggernaut rolls along is your investment in physical gold and silver.

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Jim Rogers

Investment Legend Jim Rogers

Once or twice a year we check in to see what Jim Rogers says about things.  Rogers thinks the worst bear stock market of our lifetimes is headed out way.

We sample Jim’s opinion for several reasons, not the least of which is that he has a stellar track record.  During the brutal bear market of the 1970s, the Quantum Fund, which Rogers co-founded, beat the S&P by an incredible 4,150 percent, making it one of the best performing hedge funds ever.

Since there is no substitute for up-close and personal real-life experience, Jim Rogers has twice driven around the world, once by motorcycle, crossing primitive frontiers and backwater boundaries in search of investment opportunities.

So, what does Jim say about the US stock market?  The “worst bear market in my lifetime is coming,” he says.  “It has been over 10 years since we had a serious bear market in the United States.  I would suspect by the end of this year or next year, it will start,” Rogers says.  “These things always start small, where people are not looking and then they work to the major markets, and then you see them on the major news.”

Although he says he’s the “worst market timer in the world,” Jim keeps his eyes on the fundamentals.  He puts his money where his mouth in and says that he doesn’t own any US stocks now.  

Despite headlines to the contrary, all touting the stock market as the place for investors to be, that’s a pretty wise position.  Especially from the perspective of  those of us that understand gold.  

Measured by gold, the Dow has lost half its value since the turn of the century.  That’s according to newsletter writer Bill Bonner, who notes the US hasn’t gotten off to a very good start in the new millennium:

“Our guess is that America peaked out at the end of the last century. Since then, with Dubya’s $5 trillion war against Iraq… Obamacare… quantitative easing and a negative real fed funds rate for 10 years… transgenderism, the Kardashians, Lee Greenwood, trillion-dollar deficits, $22 trillion in federal debt, fake money, fake interest rates, and fake wars – it has been all downhill.”

“The Dow – the flower of American capitalism – has lost more than half its value (measured by gold).”

Speak to your RME professional today about a sensible plan to protect your wealth from the next crisis.  Simply call our office, (602) 955-6500, and you will be connected to one of our knowledgeable gold and silver authorities.

Gold Coins for Black Swans

A Black Swan is an unexpected event.

The term was popularized in a 2007 book by author and market trader Nassim Nicholas Taleb called “The Black Swan:  The Impact of the Highly Improbable.”

Before the discovery of Australia, he writes, it was universally believed that all swans are white.  But all it takes is the sighting of one black swan to invalidate what was commonly believed. Taleb uses the term now to represent events of low predictability and outsize impact.  He says that just about everything going on in our world can be explained by Black Swan events.  

What was widely understood about the world in 1914 didn’t help to explain the wars and carnage that followed the Black Swan assassination of an archduke.  The demise of the Soviet Union.  The rise of Islamic fundamentalism.  These are Black Swan event.

9/11 was a Black Swan event.

So, what will the next Black Swan events be?  It’s hard to say because they are unexpected.

It seems more than likely that some kind of economic/monetary calamity will be next, despite the fact – or maybe even because – the authorities insist everything is just fine.  But sudden, unexpected, high impact economic/monetary calamities occur often throughout history, thanks to the same economic practices and folly that our authorities persist in today.    

Almost every economic/monetary Black Swan event is a persuasive reason to own gold (and silver} coins and bars.

Making a list of the possible trigger events for such a calamity is an inexhaustible exercise.  We write often about the financial possibilities since they loom larger and more certain with each passing day:  the ending of the dollar reserve system; unpayable sovereign and other debt; cascading government and private bankruptcies; bank failure; foreign dumping of US treasuries; runaway inflation and crippling stagflation.

But we need to allow for even less predictable Black Swans that can trigger these economic/monetary calamities.  Those include everything from the sudden outbreak of war, widespread crop failures, and the spread of disease like the flu epidemic of a century ago, to uncontrollable civil turmoil, power grid failures, earthquakes, volcanic eruptions, and even less likely events like an asteroid impact.

Unexpected?  Unlikely?  Precisely the qualities of the Black Swan events that order and reorder just about everything in our lives.

The gathering in Armenia this week of 200 technology and security officials from 70 countries at the World Congress of Information Technology includes special attention to Black Swan events.  Organizers ask attendees, “Are we doing the kind of hard-nosed vulnerability assessments that are necessary of our increasingly complex and fragile infrastructure systems?”

Are you doing the kind of hard-nosed vulnerability assessments of your exposure to an increasingly fragile economic and monetary system?  Owning physical gold and silver is the single most important thing you can do to protect yourself from low predictable events that carry outsize impacts.

Speak with you RME Gold and Silver professional today.

Sell Stocks, Buy Silver!

Will Rogers offered this advice for making money.  “Take all your savings,” he said, “and buy some good stock and hold it till it goes up, then sell it. If it don’t go up, don’t buy it.”

Rogers was a humorist and could get away with giving that kind of advice.  We, on the other hand, take your money and wealth (and our own!) more seriously.  And we have never seen better advice than this:  

Will Rogers, 1936, source: WikiCommons

“Buy low, and sell high.”

Not many people do that of course.  Too often they do the exact opposite.  They buy high and sell low.

If you would like to buy low and sell high, we can’t think of better advice than to sell stocks now.  And buy silver.

That’s because silver is low.  And stock are really, really high.  

The all-time high of Dow Jones Industrial Average was 27,359 points.  That was last July.

As you can see, the Dow keeps bumping up against resistance in the neighborhood of 27,000, and can’t break through.  That stands to reason, since there is ample evidence that a slowdown is on the horizon.  September was the worst month for US manufacturing since the Great Recession; global growth has slowed; political turmoil worsens by the day, and the trade war is spreading.

Please make sure you see the report we featured recently here that corporate insiders are selling their company stock at a furious rate, on pace for a record not seen since the dot com bubble.  It reads in part, “Executives across the United States are shedding stock in their own companies at the fastest pace in two decades, amid concerns that the long bull market in equities is reaching its final stages.”

Think about this a moment:  Instead of paying dividends to their shareholder, they are using company earnings to buy back their stock and thus run the share price up, so they can exercise options and sell their own stock at higher prices.  What it should tell you is that corporate managers engaged in such practices have very short time horizons for their companies.   And they have their own best interests at heart.  Not yours.

So, if the stock market is high, you know what to sell.

But what is low?  What should you be buying?  Something that is not subject to corporate mismanagement and can’t be printed into worthlessness.

What is low right now that has proven itself as both a monetary and an industrial commodity?   Is there anything that stands up to government debt and bankruptcy? Prized for wealth preservation and financial privacy?

The answer is silver.  It meets all those important qualifications. And silver is just over a third its price of 40 years ago.   Think about that a moment.  How many other investments are less than a third the price they were almost 40 years ago?

Forgive us for repeating the point we made not so long ago.  “Today, everywhere you look, things are higher.  In 1980 the median price of a US home was only $47,200. Today it is $226,800. 

“Oil stopped out a $40 a barrel back in 1980.  Today it is $53.  

“At the beginning of 1980 the Dow Jones Industrial Average was 824.  Today it is around its all-time high of 26,500.  

“Everything is higher today.  Everything except silver.”

Call or visit an RME professional today.  

By the way, Will Rogers also said, “Remember, write to your Congressman. Even if he can’t read, write to him.”

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stock market warning signs

Another Warning About the Stock Market!

Stocks Down, Gold Up!

As September was winding down, we warned you about the risk of a coming sell-off in stocks, the seasonal danger known as the October Effect: “We believe the stock market is being floated on Fed policy and not on economic reality.  Indeed, the level of corporate debt is so high that there is a real risk of a prairie fire of defaults and bankruptcies sweeping corporate America in the event of an economic downturn.”

“In any case, as September comes to an end, we want to warn stock market investors of the October effect.”  Read the rest of the piece, Beware the October Stock Market.

As it happened, October blew in like a bear for stocks!  On Tuesday, October 1, the Dow Industrials lost 343 points on news of the economy contracting.  

As we write this in the middle of the trading day on Wednesday, October 2, the Dow continues to plummet, down another 558 points! [Update: The Dow closed down 494.42 points on 10/2]

Gold and silver are up.

gold moves

We don’t read tea leaves or crystal balls, but we do look closely at the economic fundamentals and what is going on behind the scenes in the markets.  Here’s an example of the sort of thing that goes into our assessments, Corporate Kingpins Are Dumping Stocks: “Executives across the United States are shedding stock in their own companies at the fastest pace in two decades, amid concerns that the long bull market in equities is reaching its final stages.”

“Corporate insiders — typically CEOs, chief financial officers and board members — sold a combined $19 billion of stock in their companies through to mid-September, according to data from Smart Insider, a U.K.-based group.”

“That puts them on track to hit about $26 billion for the year, which would mark the most active year since 2000.  That year executives sold $37 billion of stock amid the giddy highs of the dot-com bubble.”

We’re not going to load this commentary down with a raft of numbers that would leave your head swimming, but you should know that consumer spending growth is weak, weak, weak, as are exports and other revealing components of the economy.  

Our advice today is exactly the same it was last week when we wrote, “We have made the case repeatedly and the evidence confirms that we are in a long-term gold bull market.  Because markets never move in a straight line, we advise our friends and clients to use any price corrections or pullbacks to add to their portfolios.”

Gold and silver are below their September highs, but showing great strength in the face of trouble in the stock markets.  This is evidence that the smart money is moving out of stock danger and into the safety of gold.

We recommend you do the same at once!  Speak with your RME Gold professional today!

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Trumpflation and Gold

Impeachment and the Stock Market

President Trump says that if he is impeached, the stock market will crash.

We think that he is right.  

We also think the stock market will crash even if he is not impeached.

That is because stocks are kept aloft by monetary policy.  It is a neat trick, to appear to levitate the entire economy by monetary magic and the printing press, but that is an illusion that will shatter.

We have made the case for the illusory stock gains conjured by the Federal Reserve many times and in many ways.  See here, here, and here.

In the last few days, a few Wall Street professionals have been trying hard to make the case that the impeachment of the president could actually be good for stocks.  We think they are trying too hard to lipstick the pig.  The economic fundamentals still apply as time goes by; uncertainty and turmoil are good for gold, not for stocks.

Interest rates fell sharply throughout 1974, the year the Nixon impeachment proceedings began and the year of Nixon’s eventually resignation.  Lower rates didn’t help the stock market.  In fact, there is no nice way to put it:  Hard on the heels of Nixon repudiating the US promise to redeem dollars in gold, the stock market basically collapsed in 1973 and 1974. It didn’t matter what the Fed did.  It desperately tried everything from sharply higher rates to sharply lower rates. 

The Clinton impeachment took place in a qualitatively different period.  By the beginning of 1998 the scandal was racing along.  Clinton had denied his affair with intern Monica Lewinsky and had urged her to file a false affidavit and had coached his secretary to lie about related events.  In September, the Clinton report by Independent Counsel Ken Starr was released.  By October, the House had initiated formal proceedings.  

The stock market had suffered substantially already by the time of the Clinton impeachment in 1998, thanks to a variety of major financial developments:  the 1997 Asian Crisis, the Russian default and the 1998 collapse of the hedge fund Long-Term Capital Management.  In late August 1998 the Dow Industrials suffered its second worst one-day loss ever.  It fell 512 points that day, and was more than 19 percent below its all-time highs.

In the fall of 1998, the Fed funds rate was over 5 percent.  Unlike today, there was meaningful room to cut rates more.  The Fed obliged.

It is true that the market rallied in the final months of the Clinton proceedings, which wound down with his acquittal in January 1999.  But the Dow peaked nonetheless a year after the Clinton proceedings, in January 2000.  The dot com Nasdaq bubble also peaked early that year, crashing from 5,000 to 2,000, a 60 percent collapse.

Since the Fed had been relentlessly forcing interest rates down almost without interruption for nearly twenty years, the crashes of 2000 were inevitable.  Household debt to GDP climbed higher and higher.  As David Stockman wrote, the 90s boom was rooted in a massive credit bubble.

Like today, the easy credit of the era was powerful fuel for stock bubbles.  In fact, the dot come crash at the end of the Clinton presidency was only the first of three $5 trillion crashes in less than ten year.  It was followed by the housing bubble and the stock market bubble that burst in 2008. 

All evidence and precedent suggest another stock market crash is inevitable.  We urge you to avoid the risk and to move to the safe havens of gold and silver – no matter what happens with the impeachment.

And remember that although Nixon left the presidency amidst the proceedings, while Clinton remained and finished his second term, the years following both Nixon and Clinton saw the birth of powerful gold and silver bull markets that lasted for years.

Protect yourself from the fundamentals of this biggest-of-all bubble.  Protect yourself and profit with gold.   Contact your RME Gold professional today.

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Watching the Government Debt Fundamentals

If you watch the news about government spending and debt closely, you’ll understand why you need to own gold.

This is the end of one government accounting year and the beginning of another.  So in Fiscal Year 2019 the federal government added well over a trillion dollars to the national debt.

And nobody who knows anything about anything thinks next year’s debt will be any less.  Quite the contrary, if the widely expected recession materializes, tax revenue will fall thanks to slowing business conditions, while the government’s social welfare spending will skyrocket.  And we’ll be looking at little old trillion-dollar deficits in the rearview mirror.

US Debt

Same thing when interest rates normalize.  The interest on the federal debt will explode, exacerbating a situation that already is beyond control!

Ten years ago, the total on-the-books federal debt was less than $12 trillion dollars.  Now its $22.6 trillion, so we’ve been adding a trillion dollars a year to the debt for a decade now.

In fact, you may remember when the Tea Party came together to yell, “Stop!” to the exploding debt.  Anybody hear much about the Tea Party these days?  Do you hear anything much about the debt in the presidential debates?  Or do you hear promises about the next big government giveaways?

The following chart is one we have shown several times.  It is easy to understand and it tells the whole story.  The nation’s productivity – called GDP – is represented by the blue line.  The red line represents the visible, explicit portion of the national debt.

As you can see the dollar value of government debt has passed the total dollar value of the nation’s productivity.  And it is climbing at a steep rate. This is a very dangerous situation.  The government is spurting red ink from every vein and artery.

$22.6 trillion is an incomprehensible amount of money, more than the government will ever be able to pay.   The government must borrow every year just to pay the creditors that it borrowed from last year.  And just like someone taking cash advances from Visa to pay their MasterCard bill – it can’t go on forever. 

The government can only hope to print its way out of this mess.  If you listen carefully you will hear the drums beginning to beat already for new money printing.  It’s just what you would expect in the end-game.  Printing more paper money will devalue the dollar.  And make more people realize that they need gold and silver.

Because you can’t know exactly when the government’s spending and debt game of chicken will end, you must take steps now to protect yourself with gold and silver.

Before it is too late.

We have made the case repeatedly and the evidence confirms that we are in a long-term gold bull market.  Because markets never move in a straight line, we advise our friends and clients to use any price corrections or pullbacks to add to their portfolios.

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The Growing Wealth Gap

Protect Yourself and Profit!

America’s economic growth has been the envy of the world.  From the earliest days of the Republic, foreign observers could foresee the prosperity powerhouse that American would become.

A dependable monetary system based on gold and silver was a central component of America’s success.  This should have been no surprise.  An honest precious metal coinage has been the basis of economic success stories throughout history, from the Golden Age of Greece, to the Byzantine Empire, the Florentine Renaissance, and the British Empire upon which the sun never set.

The abandonment of gold and silver in America has likewise been accompanied by a diminishing economic vitality.

The founders of the new American Republic understood this and wrote into the Constitution gold and silver’s central role in the nation’s monetary system.

Unfortunately, gold and silver disappeared from out monetary system in two steps, in the 1930’s and 1970’s.  There was still some powerful forward momentum, but our growth trajectory has mostly slowed ever since.

Now the American middle class is being wiped out.

Here’s the evidence:

HEADLINE:  Income inequality in America the highest it’s been since Census started tracking it, data shows

(Washington Post, 9/26/19) — Last year, income inequality in America reached its highest level since the Census Bureau started tracking it in 1967, according to federal data released Thursday.

In the midst of the longest economic expansion the United States has ever seen, with poverty and unemployment rates at historic lows, the separation between rich and poor from 2017 and 2018 was greater than it’s ever been, federal data show.

HEADLINE:  Census: US inequality grew, including in heartland states

(Associated Press, 9/26/19) — The gap between the haves and have-nots in the United States grew last year to its highest level in more than 50 years of tracking income inequality, according to U.S. Census Bureau figures released Thursday.

Income inequality in the United States expanded from 2017 to 2018, with several heartland states among the leaders of the increase, even though several wealthy coastal states still had the most inequality overall, according to the figures.

The nation’s Gini Index, which measures income inequality, has been rising steadily over the past five decades.

It’s too bad that American is giving up its economic preeminence and marginalizing the middle class.  A strong middle class in vital to the freedom and prosperity of a country.  The wealth gap need not have grown as it has, but the governing classes convinced the people that they could spend their way to prosperity and print their way to riches.

What is to be done?  It is not clear that there is any pathway to restoring our former state, not if the people believe they are entitled to live at the expense of someone else.

You and I working together cannot restore America to fiscal prudence and monetary integrity.  

I wish we could, but we cannot.

Even so, you can take powerful steps to protect yourself and your family.  You can do this by giving gold and silver a central role in your own monetary system:  in your personal savings and investing.

If the nation won’t reclaim its dynamism with gold and silver, if the US refuses to return to gold and silver, even as other countries like Russian and China are doing so, you can do it for yourself.

Speak to your RME Gold representative today about a sensible plan to make real money a part of your future.   

Even if your country won’t do what the Constitution requires it to do.

P.S.  As we write, we are seeing a pullback in the gold price from recent highs of about $50 an ounce, as well a similar correction in silver.  In a bull market such as this, pullbacks from a recent run-up generally represent excellent buying opportunities.

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Three More Gold Nuggets of News

Fed Punishing Savers

Federal Reserve Building

After two rate cuts in three months, billionaire hedge fund founder Leon Cooperman has fired a shot at the Federal Reserve’s interest rate policy.  The Goldman Sachs veteran and founder of Omega Advisors says the Fed is “screwing savers” with the rate cuts.

He joins others who wonder why rates are being cut while the economy remains in a record-long economic expansion.  Financial writer Michael Snyder asks, “Why does the Federal Reserve keep slamming the panic button over and over if everything is okay?”

Reports that Elizabeth Warren poll numbers are rising has Cooperman warning that “They won’t open the stock market if Elizabeth Warren is the next president. You don’t make the poor people rich by making rich people poor.”  

Cooperman may have been exaggerating for effect, admitting that they will still open the market if Warren wins, but it will be “a helluva lot lower.  It would be a bear market and they go on for a year and go down 25 percent.”

Meanwhile, when the monetary authorities war on dollar savers with currency destruction, gold and silver represent superior alternatives for real savings.

Still More on Negative Rates

Denmark’s second largest bank has announced that beginning later this year it will introduce negative interest rates for its largest depositors.  Jyske Bank will charge 0.75 percent per annum for corporate and private client depositing more than 750,000 Danish kroner ($111,100 US).

interest rates and talk of gold

Why, exactly, anyone would pay someone else to borrow their money, is more than a mystery.  It is a symptom of monetary manipulation that has gone completely off the rails.  

Switzerland, long a paragon of monetary and financial prudence, has gone off the rails as well.  Its UBS ban will charge the same negative rate on deposit more of more than 2 million Swiss francs.

When Japan began imposing negative interest rates, hardware stores reported a run on safes.  It stands to reason:  if cash in the bank is a wasting asset, avoid the banks.

But bear in mind that paper money still carries a much larger risk of depreciation no matter where you store or save it.

Beware the October Stock Market

On the evidence we believe the stock market is being floated on Fed policy and not on economic reality.  Indeed, the level of corporate debt is so high that there is a real risk of a prairie fire of defaults and bankruptcies sweeping corporate America in the event of a and economic downturn.

stock market tumble

In any case, as September comes to an end, we want to warn stock market investors of the October effect.  Goldman Sachs is warning about October volatility, which is says runs 25 percent higher than other months dating back to 1928,

The October Effect stock market crashes include the Panic of 1907, Black Tuesday (1929), Black Thursday (1929) Black Monday (1929) and Black Monday (1987).

The October 1987 crash saw the market fall almost 23 percent in a single day.  Goldman Sachs tells its client that “October volatility is more than just a coincidence.  We believe it is a critical period for many investors and companies that manage performance to calendar year-end.”

The News

If you watch the news closely, you’ll understand why you need to own gold.

A week ago, we came within a hair’s breadth of a world-changing military encounter in the Middle East. 

The attack on Saudi’s oil refining operation could have metastasized into something out of control.  

And it still may.  How fast would it spread?  And where?    

The Strait of Hormuz is always vulnerable in the event of a military engagement with Iran  (read our April briefing, “Temperature Rising in the Persian Gulf”).

As we wrote last year, “If things get hot over the Strait of Hormuz, it will realign the major powers of the world, creating explicit new alliances and sorely test America’s geopolitical dominance.  It will change the dollar’s role in international trade and send energy prices to crippling highs.”

And it will send gold prices to uncharted new highs.

That’s because gold is the world’s currency of choice in times of crisis.

Our point is simply that you can’t know exactly when someone will launch a deadly attack and start a war.  

 Or decide to close the world’s shipping lanes.

Last year, there was a close encounter between the US and China when a Chinese ship came within 150 feet of a US destroyer in the South China Sea.  Such events are becoming uncomfortably common.  Last week, China mobilized forces after it accused a US destroyer of penetrating its territorial waters in around the disputed Paracel Islands.

Shipping in the South China Sea has grown increasingly crowded, an unavoidable result of China’s economic rise.  The area is also crowded with conflicting territorial claims that a Solomon could not fairly sort out.     

The point is that you cannot know when an accident or other incident will escalate and draw in the US. 

Speaking of China, you cannot know when China will dump a trillion dollars of US Treasury notes and tank the dollar.  But we know that weaponizing its dollar portfolio remains an ever-present trade war option in the eyes of China’s officialdom.     

If you watch the news closely, you’ll understand why you need to own gold, the world’s currency of choice, in a crisis.  

Rather than simply watching events begin to spin out of control, we urge you to take steps to protect yourself and your family now.

RME gold professionals are always only a phone call away. 

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More on Negative Rates

The Fed’s latest interest rate cut has us contemplating the insanity of negative interest rates.  Trillions of dollars of sovereign debt instruments around the world now bear negative interest rates.  

Imagine what that means.  

You work hard and save. Your savings represents capital, which is the lifeblood of economic growth.  Your deferred consumption allows for future prosperity.  Didn’t we all learn this as children in the tale of the grasshopper and the ants?

But in a negative interest rate regime, the ants are penalized for saving for the future.  Buy a negative interest rate bond for $1,ooo today and get $900 back at maturity.  In such a never-before-seen, topsy-turvy world it makes sense to consume today since saving for the future is a guaranteed loser.

Negative interest rates are a powerful means of destroying capital – and capitalism itself.  No wonder Jeff Deist, the president of the Mises Institute, has titled an article on the subject “Negative Interest Rates are the Price We Pay for De-Civilization.”

Yet observers from Alan Greenspan to Ron Paul tell us that negative interest rates are on their way here to the US.  We know that the Fed even considered implementing negative interest rates during the last financial crisis.

Since rational people would just hold on to their money themselves instead of lending it for a guaranteed loss, what is going on?  If it is so economically unnatural and unprecedented in human history, why is the world awash in trillions of dollars of negative yield bonds?

In short, it is the work of central banks like the Federal Reserve.  

In the financial centers and trading desks of the world’s banks, funds, and brokers, traders and fund managers are buying negative yield bonds precisely because they are speculating that there will be more foolish central bank intervention.

Remember that bond prices are like a teeter-totter.  When interest rates go up, the market price of bonds go down; when interest rates go down, the market prices of bonds goes up.  

So in the major financial centers  traders think that central banks will force rates even lower allowing them to profit by selling the negative yielding bonds to another sucker at higher prices.  

But they are walking on the razor’s edge.  And they have taken the entire world’s financial system along with them.

Here’s Deist: “Of course, it must be noted that rational purchasers of negative-yield bonds hope to sell them before maturity, i.e., they hope bond prices rise as interest rates drop even lower. They hope to sell their bonds to a greater fool and generate a capital gain. They are not ‘buying’ the obligation to pay interest, but the chance of reselling for a profit.  So purchasing a negative-yield bond might make sense as an investment (vs. institutional and central bank bond buyers, which frequently hold bonds to maturity and thereby literally pay to lend money).”

That’s fine.  And it works according to plan.  Until interest rates rise. 

Then instead of capital gains, the holders of trillions of dollars of negative yield bonds will suffer huge capital losses.  The losses, says Deist, of those holding trillions of dollars of bonds could be staggering.

It is, in other words, exactly what Ron Paul called it, a bond bubble – the biggest bubble in history.  Massive.  Global.

And when it pops it will take everything with it:  bonds, currencies, stocks, real estate… 

It will take everything with it except gold.

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Negative Rates

Fed Cuts Rates: We Think of Ron Paul and Negative Rates

The Federal Reserve Open Market Committee ended its September meeting with a decision to lower interest rates again.  The policy cuts the Fed funds rate by 25 basis points to a new target range of 1.75  to 2 percent.  The announcement on Wednesday afternoon (9/18) was accompanied by a broad hint that rates may be cut again before the end of the year.

As we watched the Chairman Powell’s announcement – which amounted to not much more than reading and repeating well-worn talking points — our thoughts turned to Ron Paul’s recent comments about negative interest rates.  

We’ll get to that in a moment, but first, we recently wrote (here) about Ron Paul’s prediction that gold would double by the end of 2020.  

We don’t mention it because we think it is a particularly bullish prediction.  Quite the contrary.  We could highlight many economic observers and technical analysts whose price target for gold are higher.  

Some are much higher.  

We thought you should see Dr. Paul’s prediction because it is unusual for the former congressman and Presidential candidate to voice such a specific prediction to begin with.

The suggestion that gold could reach $3,000 by the end of next year is not overstated in the least.  It is a cautiously moderate forecast.  As we would expect from Dr. Paul.

Indeed, Dr. Paul himself acknowledges that when the monetary crisis strikes, his call may prove to substantially understate the case.

Ron Paul Stock Market Bubble

We agree.  In fact, alert market watchers are already feeling the hot breath of the approaching monetary crisis breathing down their neck.  After all, we are now in an era of Quantitative Easing, trillion-dollar deficits, and hundreds of trillions of dollars in unfunded US government liabilities.  

Not to mention an era of negative interest rates.

Negative rates are such a profound anomaly that they remind us of every catastrophic economic scheme that has ever gone before.  Things like the South Sea Bubble and John Law’s Mississippi Bubble, both schemes of the 18th century.  Only this is the biggest bubble of all time.

Dr. Paul thinks that the US government and Federal Reserve will have us following much of the rest of the world into the negative interest rate abyss.  

“We will join the rest of them and go to total negative rates in hopes that that will be the solution,” Paul said on CNBC last week.  “We’ve never had as many currencies in negative interest rates. $17 trillion worth of bonds [are] in negative interest rates. It’s never existed before. And, that’s a bubble.”

“So, we’re in the biggest bond bubble in history, and it’s going to burst.” 

When confronted with the choice between real money – gold – and paying the government a fee to let it use your money, like Dr. Paul we believe that in a crisis rational people will opt for gold.  After all, as Dr. Paul asks, “How do you sell a bond that pays a negative rate? Who’s going to jump up and down?”

The long-term consequences of negative interest rates are incredibly destructive and immeasurable bullish for gold and silver.  

Stay tuned.

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this times a thousand is a trillion

Government Debt and Gold

The US government keeps its book not on the calendar year, but on a “fiscal year” (FY) that begins on October 1 and ends on September 30.  That means its FY2019 will end in just over two weeks, and then FY2020 begins.

Some of the financial press is reporting that it looks like FY2019 will result in a one trillion dollar federal deficit.

But there is no need to wait until the end of the year to see.  Treasury debt for the year passed a trillion dollars earlier this month.  Already, in the middle of the eleventh month of FY2019, the deficit is $1,023,500,000,000.

At the same time, the visible portion of the US debt has risen to $22,539,500,000,000.

How will all this debt ever be paid?  

US Debt trap

It won’t be paid.  In fact, the only way the US bonds (the government’s I.O.U.s) that come due today can be paid is by the issuance of new I.O.U.s tomorrow.  

It’s like paying your VISA card by borrowing on your MasterCard.  

Obviously, this can’t go on forever.  So, historically governments attempt to rid themselves of their debts in one of several ways.

One of the most common means that governments employ is to simply print more currency.  As long as the monetary system consists of government-issued money unbacked by anything tangible like gold, it can print as much money as it takes to pay its debts.

It wrecks the functioning of the economy when it does so.  It destroys capital and enforces financial ruin on its citizenry along the way.  But governments choose this path over and over again.  

And in fact, this old approach to the government’s spending and debt problem has been dressed up in new garb for 21st Century Americans.  If you watch the debates and the promises of the presidential candidates, and if you read the position papers of their supporters you will run across the term “Modern Monetary Theory.”

American debt

Modern Monetary Theory asserts that debt doesn’t matter, and governments can spend endlessly as long as they have a monopoly on the money system.  To mix the metaphors, it’s the same old snake oil in new bottles.

Another popular alternative of governments is to simply refuse to pay its debts in whole or in part.  Sometimes a government will admit candidly that it can’t pay its debts and that it is very sorry. 

That’s when the people sharpen their pitchforks, grab torches, and head for the castles. 

At other times governments announce that their debts aren’t actually debts at all.  If its debts aren’t real obligations, they need not be repaid.  

Already government apologists say this about the promises the government has made about things like Social Security.  They say these aren’t “real” debts.  But of course, when they create these programs, they employ language that if used by a private business would be considered nothing less than actionable fraud.  For example, our government uses terms like “insurance,” “reserves,” and “trust funds” for Social Security.  But the money has all been spent.  

I suspect that if you have paid into Social Security all your life on the promise that your benefits will materialize when you need them, you damn well consider it an actual debt.

But just so you know, the government looks at it differently.

With these prospects in mind, it’s good that more Americans are thinking about owning gold.  We are in an era of churning stock markets, free-stuff-for-everybody politicians, and rumors of wars.  

You need to protect yourself and your family with gold and silver.  The government can default on its debts.  It can destroy the value of your dollar savings by printing more dollars.   

But it can’t print more gold and silver.

So, where do you start?

Start with us.  Call or stop by.  We’re here to help.  We’ve been here a long time.  Our professionals will take time to answer all your questions and help you get started.

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More Gold, Please!

“Russia’s Huge Gold Stash is Now Worth More than $100 Billion”

Source: Bloomberg

Russia decided some years ago that it wanted more gold and fewer US dollars.  It was a smart move, as Bloomberg reported this week:

“The country quadrupled gold reserves in the past decade as it diversified away from U.S. assets, a move that has paid off recently as haven demand sent prices to a six-year high. In the past year, the value of the nation’s gold jumped 42 percent to $109.5 billion…”  

 Today Russia owns 2,219 tons of gold.  At the same time, Russia began adding gold to its central bank holdings, it began dumping US dollars.  In other words, it was selling dollars to buy gold.  Russia concluded correctly that the future of gold was brighter than the future of the dollar.  

Ten years ago, Russia held $180 billion in US Treasury securities.  Now the Treasury Department reports Russia’s dollar holdings as so low they are down in the asterisks, below the holdings of countries like Iraq and Columbia, and less than one percent of what both China and Japan own.  

But the de-dollarization move is not limited to Russia.  It is a global phenomenon.  Countries like Kazakhstan and Poland are moving out of dollars and into gold.  Turkey, Mexico, and India are buying gold as well. 

China’s central bank has been buying gold aggressively all year long, adding 100 tons since December, while its dollar holding has fallen some $70 billion over the last year.

Gold’s strength has been a windfall for gold owners.  Both China and Russia saw the dollar value of their gold reserves jump by $7.5 billion between July and August.

The US still has the largest gold reserves, but, of course, its gold holding has not been audited since the Eisenhower administration.  Actually, because that audit was never completed, it is probably more accurate to say that US gold reserves have never been audited.

In May, Congressman Alex Mooney (R-WV) introduced a bill in the House calling for a “full assay, inventory, and audit of all gold reserves, including any gold in ‘deep storage,’ of the United States at the place or places where such reserves are kept.”

A real audit is more than just an inventory.  It is not enough to count bars.  The title to our gold must be verified.  In that respect Mooney’s bill is thorough.  Because we know the propensity of governments to try to operate in secrecy – note how vigorously the Federal Reserve has resisted an audit – Mooney’s bill seeks to discover if the title to any US gold has been impaired or encumbered.  It mandates  “a full accounting of any and all sales, purchases, disbursements, or receipts… a full accounting of any and all encumbrances, including those due to lease, swap, or similar transactions presently in existence or entered into [in the past 15 years, and] an analysis of the sufficiency of the measures taken to ensure the physical security of such reserves.”

Assuming the gold is all present, accounted for, and with clear title, the $400 billion in US gold reserves is a very small base of liquidity upon which to rest a $23 trillion dollar national debt.

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Default Risk

One of the most important reasons to own gold and silver is to avoid major risks common to stocks, bonds, banks, and other financial assets and transactions:  the risk of insolvency and default.

All these financial markets and institutions carry a risk of insolvency and default.  Those are risks that grow more threatening with each passing day.  

But gold and silver are monetary commodities in their own right.  They are not claims to something else somewhere else down the road.  The value of an ounce of gold or silver is utterly indifferent to the issuer’s total debt, or the wisdom of its political leaders.   An ounce of gold is an ounce of gold no matter whose image or national motto is engraved on it.  

Its value is not contingent on someone else’s integrity.

That’s why it is such a high compliment to say that someone’s word “is as good as gold.”  It is claiming that there is no risk of their failure to abide by their word; there is no risk of default.

When investment advisors, money managers, and stockbrokers reluctantly agree that owning gold makes sense (a conclusion they often try to avoid), they try desperately to steer their clients into gold stocks or gold exchange-traded funds (ETFs).  They do so because it means that they still have control of their clients’ funds; their money stays in an account at the financial institution.

But with this advice, they deprive their clients of one of gold’s chief virtues.  All these “paper gold” investments still have a risk of default.

The Only Real Gold is Gold

What about Gold stocks?
Governments nationalize mines, expose them to wars, appropriate their profits with taxation.  At the same time mining companies can be guilty of fraud, mismanagement, and subject to disasters. 

…or Gold ETF’s (Exchange-Traded Funds)?
Bank holidays, risk of institutional mismanagement, insolvency, title challenges, and counter-party risk, hypothecation and re-hypothecation, outright fraud, government failure, and nationalization are among the risks that may impact paper claims to gold.

It’s Time to Put the Security of Your Wealth in Your Own Hands

In times like these, times of currency wars, unpayable debt, interest rate anomalies, sky-high government and business debt, central bank volatility and confusion, cultural stress and political polarization, state corruption, abuse of power and betrayal of trust, institutional failure, and widespread social and moral recklessness, protecting yourself and your wealth demands avoiding unnecessary risk.

You have probably heard it said that gold and silver are unique in the financial world because they are not someone else’s liability, they are not dependent on someone else’s promise or performance.

Make sure that you take advantage of these virtues.  Use gold and silver to protect yourself from default and insolvency risk.  Especially in times like these when those risks are heightened.

But you can only accomplish this risk avoidance with real, physical gold and silver that you take into your actual possession.  

We are here to help.

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Ron Paul: “$3,000 Gold at the End of Next Year!”

The new gold bull market is off to a powerful start.  According to gold expert and former Congressman Ron Paul, it will move sharply higher by the end of next year.

He confidently predicts that gold to reach $3,000 an ounce by the end of 2020.

Actually, says Dr. Paul, that’s a cautious prediction.  Especially since gold has already risen $500 from its 2016 low.  

We are in a period of a disintegrating monetary system, he says, “Warning signs are all around us!”  

Gold Eagles- Bullion

The endpoint of these monetary and debt problems can come upon people suddenly, as though in the dead of night when some event occurs that causes them to panic.

In the meantime, Dr. Paul asks skeptically, “If you have savings, are you going to put it in a C.D?” He points to the trillions of dollars of negative interest rates bonds proliferating around the world.  At some point, people will rush out of those instruments and want to buy real things.  

That is what the great economist Ludwig von Mises called “the crack-up boom.”  It’s the sudden awakening of the public that the currency itself is corrupt and headed toward worthlessness.  They become anxious to exchange their currency for anything tangible.  When that happens, prices will go up all over.  And liquid monetary assets like gold and silver are especially prized.   

In that event, says Dr. Paul, when the big crisis hits, it is conceivable that his prediction of $3,000 gold will prove to be far too modest.

Dr. Paul is the author of Gold, Peace, and Prosperity, End the Fed, and The Case for Gold.

Watch Ron Paul’s discussion, “Where Does Gold Go from Here?” on the Liberty Report.

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