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Three Items of Note

11 Nov
Jeff Sessions

Three Items of Note

Gold Market Discussion

Matthew Whitaker
Matthew Whitaker

1. WELL, NOW.  THIS IS DIFFERENT!

With President Trump’s firing of Jeff Sessions, the new acting Attorney General is Matt Whittaker.  Whatever else he may believe and ultimately do in his new position, we have learned that Whittaker has a more sensible view of the nature of money, the Fed, and gold than 99.9 percent of the Washington bureaucracy.   

Here are a couple of tweets from Whittaker in 2012 while he was in private law practice in Iowa.

On February 7, 2012 Whittaker tweeted:

“We need to begin to move to a gold/commodity standard.  The Federal Reserve’s explicit goal:  Devalue the dollar 33%.”

A few weeks later, on February 23, he tweeted:

“… the dollar is… fiat currency.  There is no inherent limit as to how far the price of gold in dollars can rise.” 

The next month, on March 23, Whittaker tweeted about gold again, this time making note of the Chairman of the Federal Reserve:

“Ben Bernanke’s shocking Gold Standard Ignorance.”

At least for now, Whitaker will directly supervise Robert Mueller’s Special Counsel investigation.  Whittaker is likely to be a central figure in the Washington for the rest of Trump’s presidency.

 

2. WHAT THE ESTABLISHMENT SEES

I want to share with you the outlook of the head of BlackRock, the largest asset manager in the world.  Blackrock was once called “the most powerful company that no one has ever heard of”.    

Larry Fink is the CEO.  His firm manages $6.4 trillion in assets. 

At a conference in Singapore last week, Fink spoke about the $1.3 trillion dollar deficit looming in Fiscal Year 2019.

“If indeed we do have that $1.3 trillion deficit, and the economy isn’t growing at three percent, we’re going to have a far bigger crisis in the coming years.  And then the fear of the ending of this (stock) bull market is probably going to be a reality.”

Fink says that forty percent of the US deficit is funded by “external factors.”  And yet the US is fighting with its creditors worldwide.  “Generally, when you fight with your banker, it’s not a good outcome.”

3. DOOMSDAY MACHINE!

David Stockman, US Budget Director under President Reagan, now says “the nation’s Fiscal Doomsday Machine is now unstoppable.”

Essential to Stockman’s argument are these points:

  1. The Federal government’s current fiscal year budget already has a projected deficit of, says Stockman, $1.2 trillion. 
  2. The Federal Reserve will be dumping $600 billion in bonds as it tries to unwind some of its QE swollen portfolio. 
  3. Currency speculators can be expected to dump hundreds of billions more in Treasury instruments.

By our calculation, that amounts to some $2 trillion of US Treasury bonds that the market will have to absorb in the current fiscal year.  That’s a pretty big task.

As careful watchers of the precious metals markets for a very long time, we have learned that when the government finds itself between a rock and a hard place, it does imprudent things and gold’s luster grows brighter

 

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