Friday, 17 November 2017

Everyone Understands That The Day Of Reckoning Is Coming

The only other times in our history when stock prices have been this high relative to earnings, a horrifying stock market crash has always followed. Will things be different for us this time? We shall see, but without a doubt this is what a pre-crash market looks like. This current bubble has been based on irrational euphoria that has been fueled by relentless central bank intervention, but now global central banks are removing the artificial life support in unison. Meanwhile, the real economy continues to stumble along very unevenly. This is the longest that the U.S. has ever gone without a year in which the economy grew by at least 3 percent, and many believe that the next recession is very close. Stock prices cannot stay completely disconnected from economic reality forever, and once the bubble bursts the pain is going to be unlike anything that we have ever seen before.

If you think that these ridiculously absurd stock prices are sustainable, there is something that I would like for you to consider. The only times in our history when the cyclically-adjusted return on stocks has been lower, a nightmarish stock market crash happened soon thereafter…

The Nobel-Laureate, Robert Shiller, developed the cyclically-adjusted price/earnings ratio, the so-called CAPE, to assess whether stocks are likely to be over- or under-valued. It is possible to invert this measure to obtain a cyclically-adjusted earnings yield which allows one to measure prospective real returns. If one does this, the answer for the US is that the cyclically-adjusted return is now down to 3.4 percent. The only times it has been still lower were in 1929 and between 1997 and 2001, the two biggest stock market bubbles since 1880. We know now what happened then. Is it going to be different this time?

Since the market bottomed out in early 2009, the S&P 500 has been on a historic run. If this rally had been based on a booming economy that would be one thing, but the truth is that the U.S. economy has not seen 3 percent yearly growth since the middle of the Bush administration. Instead, this insane bubble has been almost entirely fueled by central bank manipulation, and now that manipulation is being dramatically scaled back.


And the guys on Wall Street know what is coming. For example, Joe Zidle says that this bull market is now in “the ninth inning”

Joe Zidle, of Richard Bernstein Advisors, is arguing that the bull market has entered the bottom of the ninth inning.

“This is a late-cycle environment,” Zidle said on CNBC’s “Futures Now” recently.

“In innings terms, they’re not time dependent. An inning could be shorter or they could be longer. It just really depends,” the strategist said.

This bubble has lasted for much longer than it ever should have, and everyone understands that a day of reckoning is coming.

In fact, earlier today I came across an article on Zero Hedge that contained an absolutely remarkable quote from Eric Peters…

“We are investing as if 1987 will happen tomorrow, because it will,” said the CIO. “But we need to be long, or we’ll be out of business,” he explained, under pressure to perform. “So we construct option trades that are binary bets.” Which pay X profit if stocks rally, and cost Y if markets fall. No more and no less.

“What you do not want is a portfolio whose losses multiply depending on the severity of a decline.” That’s what most people have today. “At the last stage of the cycle, you want lots of binary bets. Many small wins. Before the big loss.”

“Are we at the start or the end of the ‘Don’t know what I’m buying’ cycle?” asked the same CIO. “No one knows.” But we’re definitely within it.

“When their complex swaps drop 40%, and prime brokers demand more margin, investors will cry ‘It’s not possible!’ But anything is possible.” The prime brokers will hang up and stop them out.

In case you don’t remember, in 1987 we witnessed the largest one day percentage decline in U.S. stock market history.

When it finally happens, millions upon millions of ordinary Americans will be completely shocked, but most insiders know that the other shoe is going to drop at some point.

In particular, watch financial stock prices very closely. Last month, Richard Bove issued a chilling warning about bank stocks…


One of Wall Street’s most vocal bank analysts is troubled by the rally in financials.

The Vertical Group’s Richard Bove warns that the overall market is just as dangerous as the late 1990s, and he cites momentum — not fundamentals — as what’s driving bank stocks to all-time highs.

“If we don’t get some event in the economy or in politics or in somewhere that is going to create more loan volume and better margins for the banks, then yes, they would come crashing down,” Bove said Monday on CNBC’s “Trading Nation.” “I think that the risk in these stocks is very high at the present time.”

It isn’t going to take much to set off an unstoppable chain of events. Our financial markets are even more vulnerable than they were in 2008, and the right trigger could unleash a crisis unlike anything we have ever seen in modern American history.

Unfortunately, most Americans keep getting fooled by the artificial boom and bust cycles that the central banks create. Right now most people seem to have been lulled into a false sense of security, and they truly believe that everything is going to be okay.

But every time before when the market has looked like this a crash has always followed, and this time will be no exception.


Wednesday, 15 November 2017

Alan Greenspan compares Bitcoin to Civil War Greenbacks and Continentals


Former Federal Reserve Chairman Alan Greenspan is the latest high profile financer to give his take on the controversial currency. In an exclusive interview on FOX Business Network’s “Mornings With Maria,” Greenspan said “Bitcoin is what used to be called fiat money.” He then compared Bitcoin to the currency issued by the Continental Congress after the American Revolution began.

“I would use the analogy of Continental currency. Continental currency in 1775 was issued with no backing and it sold at par in the marketplace for quite a while until they started to build up more and more printing of continentals.”

According to Greenspan, the perception of the cryptocurrency is not necessarily matching the reality, saying, “Human nature is such that if you get something such as Bitcoin, you think there is some value there whether there is or there isn’t. But that’s the same thing as a Continental, greenbacks in the Civil War, all of these currencies which didn’t have any backing.”

- Source, Fox Business

Monday, 13 November 2017

Ron Paul: The Government Burden Goes Way Beyond the Income Tax


Washington DC is not buzzing with activity so that taxpayers can be permitted to keep more of their earnings. Washington and the surrounding areas are some of the richest places in the entire country. 

While it may appear that government cuts taxes in one area, they always make sure to raise them in another. A new philosophy on the role of government is desperately needed. Ron Paul discusses on today’s Liberty Report.

- Source, Ron Paul

Friday, 10 November 2017

Fed Hikes Next Year Shouldn't Derail Gold Prices


George Milling-Stanley of State Street says in a run-up to a rate hike, investors tend to short gold, but any Fed hikes next year shouldn't derail prices.

- Source, CNBC

Wednesday, 8 November 2017

Keith Weiner: It’s Now Time For Gold To Enter Into The Mainstream Discussion

Physicists say that the universe is expanding. However, they hotly debate (OK, pun intended as a foreshadowing device) if the rate of expansion is sufficient to overcome gravity—called escape velocity. It may seem like an arcane topic, but the consequences are dire either way. If the rate of expansion is too low, then it will get slower and slower until expansion stops entirely, then finally, begin collapsing again in a Big Crunch. That’s bad enough. But the other possible fate of the universe is even worse. If the expansion is fast enough, then the universe will keep expanding forever. Things will get colder and colder, until the state called the heat death occurs.

If only economics had similarly vigorous controversies. It faces its own existential problems. For example, there is an analogous concept to heat death in the economics universe. Will credit continue to grow, and with it the economy? Or will some force—or law of economics—prevent slow and stop it?

There is a force that can cause the heat death of the economic universe. It is not the moralizing argument that faults man for the sin of wanting more material comfort, and condemns his desire for growth as hubris.

Everyone needs growth. Even the environmentalists couch their anti-growth policies. They want us to stop using energy, but cannot openly promote energy poverty as an ideal. So they talk in terms of sustainability.

Sustainability is an interest concept. For a process or system to be sustainable, it means that there is no reason why it cannot continue indefinitely (well at least until the sun goes red giant and engulfs the Earth, which may not happen because before that our galaxy is on a collision course with the Andromeda galaxy…)

Well, is our economy and its monetary system sustainable? How do you even approach this question in a rigorous way?

We submit one fact for your consideration. To service debt, you must generate income. If you fail to pay at least the interest when due, then the creditors suffer big losses. This impairs their capacity and appetite to lend to others, which suffocates businesses who need capital to expand. So the key is generating enough income to pay interest. We would add on top of that the need to amortize the principal too.

The analogy to heat death of the universe is a pretty good fit. Physicists are not looking at one probe that is moving out of the solar system and will chill down to near absolute zero when its power supply runs out of juice. Nor one object, such as Pluto. They are looking at the universe and all entities in it including all stars and all life on all planets.

Similarly, we as economists must look at the economic universe and all business enterprises and people in it. If one business is stranded with, e.g. an obsolete product such as mobile phone that can only do voice calls, it will fail and default on its debts. That is not under question. The question is: can it happen to the entire economy? If it does, then the monetary system will fall and everyone will lose their savings.

If it can happen what are the circumstances?

So far, we said income (that is net income, after cost of goods sold and all other expenses) must exceed debt service. And, perhaps including debt amortization.

Measuring these two quantities, much less estimating them years or decades in the future, would be quite a challenge. Just like measuring the velocities and distances of all objects in the universe.

Fortunately, we can look at something much easier. We know the economy is in motion today. So we just need to know the trend. If income is rising at least as fast as debt service, then we can say that the economy is sustainable.

We have been writing about this trend for the last month, though we did not describe it in this context. The variable we need to measure is none other than marginal productivity of debt! MPoD, as we will call it here for brevity, is a measure of how much new GDP is added for each freshly borrowed dollar.

The graph we published on Oct 15 is included again here.


Aside from the anomaly when MPoD moved up sharply in the wake of the great financial crisis (which we discussed here), it is an unmistakable falling trend. Post 2010, it is falling again from that higher level. This trend spans many decades, and it is no fluke.

A falling MPoD means we get less and less GDP for each borrowed dollar. Or conversely, we have to borrow more and more dollars to get a dollar of GDP. This is significant as growth in net income can be no greater than growth in GDP (but it is likely a lot slower, a whole ‘nother topic). This graph is saying that the income to debt ratio is falling.

We are getting close to our statement above, income must exceed debt service or else there will be a heat death of the economic universe. We have now proven income is growing slower than debt total. We have one more step, to prove income is growing slower than debt service.

Normally, debt service would grow proportionally with debt. It may seem fortunate that we don’t live in a normal universe, as we shall see in a moment. We live in an abnormal place, which is subject to one of the planks proposed by Karl Marx in his infamous Communist Manifesto.

“5. Centralisation of credit in the hands of the state, by means of a national bank with State capital and an exclusive monopoly.”

The central bank conducts what it calls monetary policy. The net result of monetary policy for 36 years so far is falling interest rates. Keith has written about the various ways that falling interest causes destruction in his series of articles on yield purchasing power.

However, in light of the heat death question, falling interest would seem to have the potential to save us. It is obvious that servicing the same debt at 1% interest has a lower monthly payment than at 10%. This is why many economists say there is no problem. We are told that, “debt service today is not a greater percentage of GDP than it was when the debt was much lower decades ago.” That may be true, and we won’t even get into if net income is the same percentage of GDP as it was (we would bet an ounce of fine gold against a soggy dollar bill it isn’t).

We want to make a different argument. If debt service depends on falling interest, what happens when interest hits zero? Here is another good analogy to physics, which also asks what happens at zero. In physics, nothing. Literally. Motion stops on even a molecular level at absolute zero.

What happens to an economy when interest—we mean the long-term bond rate—falls to zero? What happens when businesses can borrow at 0%? Well, obviously, debt service goes to zero (not including amortization of the principal). With no cost to borrow, businesses can borrow for activities that produce no economic value(!)

In a normal economic universe, interest is greater than zero. As we said last week:


“A dollar to be paid next year is worth less than a dollar in the hand today. One reason is that we are mortal beings. In order to be alive next year, we must remain alive every single day between now and then. There are natural reasons for time preference—the desire to have a good today, and not postpone it. We are also not omniscient. Something may come up, such as an illness, which forces us to consume what we did not plan to consume.


Another reason is, of course, risk. Unlike the magic machine in our example, a business enterprise may cease to make money for any number reasons including a new competitor or changing customer preferences.

For many reasons, a dollar to be paid next year is not worth a dollar today. A dollar to be paid in ten years is worth even less. Future payments must be discounted. The discount is related to the interest rate, and it shares many of the same causes.”

At zero, this economic law is violated. No one can act as if he had no time preference, which is exactly what zero interest requires him to do.

And zero, itself, is not sustainable anyway. Assuming that some amount of amortization is required, then the debt service becomes unbearable and the interest rate must keep falling.

When interest is positive, or even zero, business borrowing must fund activities that generate a positive return (even if only share buybacks). However, when interest goes negative, they can borrow to engage in capital-destroying activities. So long as the rate of destruction is below the rate of interest.

For example, suppose an enterprise destroys its investors’ capital at 1% per year. That’s bad. But what if it can borrow this capital at -2%? The investors lose 2% per year. But the business nets +1%. Positive one percent. What is profitable to do, will be done at large scale across the entire economic universe.

At negative rates, investors lose a bit of their capital every year. They are subsidizing businesses who are destroying it bit by bit every year.

Negative interest rates are not sustainable. A falling interest rate can make debt service cheaper. However, it does not solve the problem of falling marginal productivity of debt. The heat death of the economic universe looms closer every day (we make no prediction of the timing of this here, that will be the subject of a future series).

So now we can write an economic law:

If MPoD < 1, the economy is unsustainable

That is, the heat death of the economic universe is inevitable.

Note that MPoD was under 1 even as long ago as the 1950’s (we suspect this pathology began either around the time of President Roosevelt’s gold confiscation in 1933, or the creation of the Federal Reserve in 1913, but we don’t have the data going back that far).

Prior to the crisis of 2008, MPoD fell below 0.1. Even now with its post-crisis boost, it is well under 0.4, and falling.

It is time for gold to enter the mainstream monetary discussion. Interest rates and MPoD do not fall when there is a free market in money and credit. And the market will choose gold, if it is free to do so.

The prices of the metals ended all but unchanged this week, though they hit spike highs on Thursday. Particularly silver his $17.24 before falling back 43 cents, to close at $16.82.

It was not a gentle fall back. In about an hour and fifteen minutes on Friday morning (as we Arizonans reckon the time), the price of silver dropped from $17.16 to $16.76. Was this a case of the infamous manipulation we’ve all read about? We can’t tell you who did it, but we can show you a clear picture of what happened.

In any case, it seems that either Fed Chairman Appointee Powell is not good for silver, or else that the price of silver has little to do with continuation of current Fed (central) planning.

We will look at intraday gold and silver supply and demand fundamentals. But first, here are the charts of the prices of gold and silver, and the gold-silver ratio.


Next, this is a graph of the gold price measured in silver, otherwise known as the gold to silver ratio. The ratio fell a hair.


In this graph, we show both bid and offer prices for the gold-silver ratio. If you were to sell gold on the bid and buy silver at the ask, that is the lower bid price. Conversely, if you sold silver on the bid and bought gold at the offer, that is the higher offer price.

For each metal, we will look at a graph of the basis and cobasis overlaid with the price of the dollar in terms of the respective metal. It will make it easier to provide brief commentary. The dollar will be represented in green, the basis in blue and cobasis in red.

Here is the gold graph showing gold basis and cobasis with the price of the dollar in gold terms.


We see a rising cobasis (our measure of scarcity) along with a rising price of the dollar (i.e. falling price of gold, in dollar terms). This is not surprising; it is the typical pattern nowadays.

Our calculated Monetary Metals gold fundamental price moved down by $12.

Now let’s look at silver.


We also see the cobasis tracking the price of the dollar. Look at how they go down together on Wednesday and Thursday, and up together on Friday. Keep in mind that the contract roll is well underway, that it impacts the silver basis more than the gold basis. Mechanically, the roll involves selling the expiring contract.

- Source, Monetary Metals

Monday, 6 November 2017

Are We About to Get 1970's Inflation or Worse?


Jay Taylor and John Rubino discuss thoughts on the increase in the money supply, velocity of money and what it means for the Fed’s monetary policy in light of debt levels.

- Source, Jay Taylor

Friday, 3 November 2017

The Ultimate Panic Is About To Be Unleashed In Financial Markets

Egon von Greyerz: “We are currently standing before one of the most unique and frightening periods in history. Never have there been so many extremes in so many different areas. In the last 100 years everything seems to have grown and intensified much faster, including population, technology, inflation, debt, money printing, budget deficits, stocks, bonds, property prices. crypto currencies etc

“All of these areas are now in an exponential growth phase. The final stage of exponential growth is explosive and looks like a spike that goes straight up. A spike for a major sample like global population or the Dow never finishes with just a sideways move. Once a spike move has finished, it always results in a spike move down.

It seems that everything in the world is developing much faster today, such as computers and mobile phones or robots. The world assumes that this exponential growth in so many areas will continue or even accelerate further. But sadly, that is unlikely to be the case.

There is a more scientific illustration of how these exponential moves occur and also how they end.



Imagine a football stadium which is filled with water. Every minute one drop is added. The number of drops doubles every minute. Thus it goes from 1 to 2, 4, 8, 16 etc. So how long would it take to fill the entire stadium? One day, one month, or one year? No, it would be a lot quicker and only take 50 minutes! That in itself is hard to understand, but even more interestingly, how full is the stadium after 45 minutes? Most people would guess 75-90%. Totally wrong. After 45 minutes the stadium is only 7% full! In the final 5 minutes the stadium goes from 7% full to 100% full.

That is the simple explanation why we are seeing this very fast exponential move in so many areas. It is of course impossible to say exactly when the global stadium or individual stadiums will be filled especially since we don’t know the size of these stadiums. What we do know is that when it is full, the water level will not only stop rising but the stadium will collapse.

We are probably now in the final minute, or probably seconds, of the move since we are in the exponential phase that has lasted around 100 years.



If we look at a few examples of exponential growth, we can start with world population. For thousands of years global population grew very slowly but finally reached 1 billion in the 1850s. Since then it has gone up over 7x to 7.5 billion. Many “experts” now forecast that we will soon reach 15 or 20 billion.

Yes, global population could grow slightly from here but more likely is that we will see a major reduction in the coming decades. It could even happen a lot faster depending on the type of event that the world is facing. Looking at the size of the exponential move, 6.5 billion people have been added to world population since the mid 1850s. A normal correction to such an exponential growth would be 38% to 50%. This would mean that world population could go down between 2.5 and 3.7 billion to 3.8 to 5 billion people. This clearly sounds horrendous and improbable but looking at the chart, it is likely to happen. It is of course possible that we could see some further growth before global population goes down. But the risk of the downturn starting soon is much greater than a significant further increase.

The triggers for such a major reduction could be manifold like war, epidemic disease, economic collapse leading to poverty and famine or a combination of these events. For example, around 1340-50 there was the Black Plague that reduced the European population by up to 60% and world population by an estimated 30 to 50%. A nuclear war between North Korea and the US would eventually involve China, Russia, Iran, Pakistan, India and many other countries and would be just as devastating, probably leading to world population going down by much more than 60%. Likewise, a collapse of the financial system, which is not improbable, would be cataclysmic for the world.

It is absolutely clear that one or several of these events will take place in coming years but when exactly is of course impossible to say. Depending on the magnitude of the problem, including the geographical spread, it is very difficult to prepare for it for normal people. Very few have their private jet and residences in many parts of the world. However, for people who have savings, now is the time to take defensive measures if you haven’t already. I know of very old family wealth who for hundreds of years have kept their wealth in property, art and gold with 1/3 in each. With productive land, this has of course been a superb portfolio and will continue to do very well during the coming downturn. Gold and agricultural land are real wealth preservations assets, while some art today is a bubble asset and therefore will suffer. But 2/3 of the assets are likely to perform extremely well in coming years.



A contrarian or a risk averse investor can today look at any chart of stocks, bonds or property, which will all tell him that we are now at extremes. On a risk/reward basis, very few investors make money by buying at the very final stages of a move. Yes, it is true that anyone who bought into the Nasdaq in early 1999 had more than doubled his money by March 2000. The problem is that more than 95% of investors stayed in at that point and most did not get out until they had lost 50-80%.



As the superb Chairman of Sprott USA, Rick Rule, stated at the New Orleans Investment Conference last week: “Either you are a contrarian or you will be a victim.” The reality is that most people will be victims in coming years. Very few will realize that what we will see next is the end of a major era or cycle of a major degree. Whether it is a 300 year cycle or a 2,000 year cycle doesn’t really matter. Historians will know afterwards. What we need to focus on today is to protect ourselves against these risks rather than to become victims.

Back in 2002, we decided as a company that risk in the world would accelerate in coming years and it was the right time to protect ourselves and our clients. Gold at that time was unloved and undervalued. It had been going down for 20 years and nobody was interested. Gold bottomed in 1999 at $250, having gone down from the $850 peak in January of 1980.



The average investor obviously did not get very excited that gold had gone up $50 since 1999, and was $300 in February 2002. That was when we decided to put a significant percentage of our own funds into gold as well to recommend to our investors to do the same.

This is a typical contrarian investment. You buy an asset that is on nobody’s radar screen, and in the case of gold in 2002, 65% below its peak price 22 years earlier. But it is of course not enough just to buy something which is cheap. What you buy must also have an intrinsic value and the potential to grow substantially. Gold’s role as the only money that has existed and survived for almost 5,000 years makes it clear that function is likely to continue for many thousand of years to come.



Also, Greenspan’s easy money policy had started in 1987 when Fed Funds reached 10%. With a weak economy, and weak asset markets Greenspan started his stimulative policy and lowered rates down to 3% in 1992. They had gone under 2% in early 2002 when we bought gold. Eventually rates came down to 1% on Greenspan’s watch. When Bernanke then needed to sort out the mess during the great financial crisis, rates were lowered form 5% in 2007 to 0% in 2009 where they stayed until 2015.


- Source, King World News

Wednesday, 1 November 2017

Ron Paul: Don't Get Too Excited About Tax Cuts


The income tax should be 0%, just as it was for the first 137 years of American history. So tax cuts across the board are always a welcome development. However, tax cuts are just part of the big picture. What we need is a total cut in government's size and scope. Unfortunately, President Trump is not going in that direction.

- Source, Dr. Ron Paul

Monday, 30 October 2017

Michael Pento: The Central Banks Will Not Be Able To Control Inflation As The System Collapses



As Janet Yellen admits “the Fed does not understand inflation”, there will be absolutely no way to control it once hyperinflation sets in.

Michael Pento says the Fed won’t be able to contain inflation as Janet Yellen says “we really don’t understand inflation”.

- Source, X22 Report

Friday, 27 October 2017

Ted Butler: Fear of Silver Shorting Scotia to Sell Its Metals Division


News reports this week indicated that the Bank of Nova Scotia (ScotiaBank), Canada’s third largest bank, had put its precious metals operation, ScotiaMocatta, up for sale. Various sources said the unit had been for sale for a year or so and it was thought or hoped that Chinese interests might buy the business. It was also reported that the Bank of Nova Scotia would shrink the unit if no buyer could be found. The impetus for the sale was said to be a scandal involving smuggled gold from South America to the US. Somewhat ironic, and interesting, was that the sale “listing” agent was none other than JPMorgan.

http://www.reuters.com/article/us-scotiabank-gold/scotiabank-mulls-sale-of-gold-trading-unit-sources-idUSKBN1CN2CN

I believe there is more to this story than meets the eye and it involves the ongoing gold and silver price manipulation. About the only thing I find suspect in the news accounts is the motive for the sale. I was aware of the smuggling story, but ScotiaMocatta didn’t seem particularly exposed in this matter. I accept that the unit is up for sale, just not the motivation behind the sale. If my reasoning is correct, this could be a very significant development in the ongoing silver and gold price manipulation on the COMEX; on a par with JPMorgan taking over Bear Stearns in March 2008; which, in my opinion, was the most significant event in the silver market in decades.

Truth be told, I could never figure out why a leading Canadian bank would even want to buy and run a business not remotely in keeping with its core banking businesses – it was like trying to put a square peg in a round hole. The Bank of Nova Scotia has roughly 90,000 employees, whereas the ScotiaMocatta unit has less than 200 employees and accounts for a tiny fraction of the bank’s $2 billion quarterly profits.

I think the Bank of Nova Scotia’s real motivation for seeking to offload its ScotiaMocatta precious metals unit after 20 years of ownership is liability. It’s the fear of what is to become of a major short seller in silver (and gold) on the COMEX. By every count, ScotiaMocatta is one of the 7 potential dead men walking who hold large concentrated short positions. It’s not some alleged smuggling ring that is motivating the bank to dump the unit. The only wonder is what took the bank so long to come to this conclusion.

When it comes to the 8 largest concentrated shorts in COMEX silver and gold, JPMorgan, alone, is protected against financial ruin whenever silver prices explode due to its massive physical silver position. I see no evidence that any other entity has accumulated enough physical silver. Because JPM was so far ahead of the pack in recognizing that silver will soar in the future and began buying as much as it could starting six and a half years ago, it’s too late for the 7 others to jump onto the buy side now. That’s because such buying would set off a price spiral – about the very last thing a big short would want. JPMorgan has played this masterfully.

The best thing the Bank of Nova Scotia could hope to achieve now is to unload the problem on someone else, say an unsuspecting Chinese entity. The problem is that you can’t go from being, most likely, the 2nd largest silver short on the COMEX for years running, to suddenly closing out your shorts or getting long in a flash. You can’t just blink your eyes or click your ruby slippers and have the short position closed out – you must buy back the position or deliver physical metal, no easy task when you are talking perhaps upwards of 75 million ounces they hold short in COMEX silver futures (15,000 contracts). And just in case anyone is wondering – there is also no way that the Bank of Nova Scotia could ever admit to this and hope to unload the unit on anyone else. Hence, the BS smuggling cover story.

As to what has finally awoken ScotiaBank to the potential liability inherent in being a large short seller in silver and gold, there a number of explanations. Back in the summer of 2016, the open and unrealized losses to the 8 largest shorts in COMEX gold and silver combined amounted to $4 billion. By the end of last year, the 8 big shorts had succeeded in rigging gold and silver prices lower and with the price decline, the $4 billion open loss was extinguished. Still, at the gold and silver price highs of 2016, the $4 billion open loss had to be dealt with by the 8 big shorts. This meant that the unrealized loss had to be deposited with the clearing house by all shorts who were underwater, including the 8 big shorts (of which ScotiaMocatta was a card-carrying member).

This meant that ScotiaMocatta had to have deposited anywhere from $500 million to $750 million in unexpected margin calls in the summer of 2016, probably the most ever. Where did the margin money come from? In ScotiaMocatta’s case, from the parent bank. But since the demands for margin were so outside the bounds of what the parent bank was used to providing to its precious metals unit, it had to raise some eyebrows at the Bank of Nova Scotia. Large bank CFO’s and treasury officials tend to become concerned when they are pressed for sudden demands for many hundreds of millions of dollars. There is no way that the chief financial officer for ScotiaBank didn’t investigate why the ScotiaMocatta unit was hemorrhaging hundreds of millions of dollars. That person would have to ask what happens if prices continue to rise. Therefore, the bank came to realize what a potentially ruinous liability its precious metals unit was. Not only does the timeline fit regarding how long the unit has been up for sale, but I’m sure the parent bank came to appreciate the regulatory and general liability risk of being found to have manipulated the price of gold and silver for many years.

Only time will tell, but ScotiaBank trying to slip out the back wouldn’t seem to strengthen the dominant hand of the 8 big shorts in COMEX silver and gold. And it is upon the 8 big COMEX shorts that the price manipulation has always been based. I’ll make it simple – without the concentrated short position of the 4 and 8 largest traders in COMEX silver and gold, no manipulation would be possible. So any time a whiff of distress or disunity emerges from the big 8, it’s wise to sit up and take notice. Anything that might change how the real game has been played is, by definition, a potential game changer.

- Source, Ted Butler

Wednesday, 25 October 2017

Hugo Salinas Price to introduce the Libertad One Silver Ounce


*Please Click Image to View Video*

Hugo Salinas Price Interview, October 14, 2017, in Mexican TV Channel ADN40, speaking about his campaign to introduce the Libertad One Silver Ounce into circulation, as a vehicle for savings of the common folk.



Tuesday, 24 October 2017

The Bond Bubble and How Humanity Will Be Robbed By Banks Soon


In this video, Luke Rudkowski of "We Are Change" gives you the latest breaking news on the privatization of the U.S economic stock market, with the latest trends and analysis from Max Keiser. We also get into the wealth income gap, bitcoin, encryption and much more.

- Source, We Are Change

Monday, 23 October 2017

Dr. Ron Paul: The Idea of Liberty the Time Has Come


Dr. Ron Paul discusses his friend Murray Rothbard on liberty and honest money.

Murray N. Rothbard (1926-1995) was just one man with a typewriter, but he inspired a world-wide renewal in the scholarship of liberty. 


He speaks about how the idea of liberty is rising once again and how people are experiencing a massive shift in ideologies. In the end, liberty will win, as it always has throughout history.



- Source, Mises Media

Friday, 20 October 2017

The Bank Runs in Catalan Spain Have Begun, Situation Deteriorates


Civil society organizations in Catalonia call for a mass withdrawal of money from bank ATMs on Friday at 8am in order to pressure the Spanish government. Organizers don't especify how much money should be taken out nor what to do with it.

The action targets the five main banks in Catalonia: Caixa Bank, Sabadell, Bankia, BBVA and Santander. Organizers call on clients of Caixa Bank and Sabadell to show their disagreement with the banks' recent decision to move their headquarters out of Catalonia due to the escalating political crisis between governments in Barcelona and Madrid.

This is the first "direct and peaceful" action organized by Crida per la Democràcia (Call for Democracy). This is an umbrella group which includes among others the two main pro-independence organizations in Catalonia: the Catalan National Assembly (ANC) and Òmnium Cultural.

The mass withdrawal is also aimed at condemning the imprisonment of ANC and Òmnium presidents, Jordi Sánchez and Jordi Cuixart, held in custody on sedition charges since Monday.

- Source, Catalan News

Wednesday, 18 October 2017

Keiser Report: Artificial Intelligence


In this episode of the Keiser Report from Standing Rock reservation in North Dakota, Max and Stacy discuss artificial intelligence - aka AI - as the Iron Horse Apocalypse of the modern social media man. The two recall their recent experience interacting with a real self-driving car and the car's human operating system. They also discuss corruption, shakedowns and more financial news.

- Source, Max Keiser

Tuesday, 17 October 2017

FBI Uncovered Russian Bribery Plot Before Obama Approved Uranium One Deal, Netting Clintons Millions

As the mainstream media continues to obsess over $100,000 worth Facebook ads allegedly purchased by Russian spies in 2016 seeking to throw the presidential election, we're almost certain they'll ignore the much larger Russian bombshell dropped today in the form of newly released FBI documents that reveal for the very first time that the Obama administration was well aware of illegal bribery, extortion and money laundering schemes being conducted by the Russians to get a foothold in the atomic energy business in the U.S. before approving a deal that handed them 20% of America's uranium reserves...and resulted in a windfall of donations to the Clinton Foundation.

As we pointed out last summer when Peter Schweizer first released his feature documentary Clinton Cash, the Uranium One deal, as approved by the Obama Administration, netted the Clintons and their Clinton Foundation millions of dollars in donations and 'speaking fees' from Uranium One shareholders and other Russian entities.

Russian Purchase of US Uranium Assets in Return for $145mm in Contributions to the Clinton Foundation - Bill and Hillary Clinton assisted a Canadian financier, Frank Giustra, and his company, Uranium One, in the acquisition of uranium mining concessions in Kazakhstan and the United States. Subsequently, the Russian government sought to purchase Uranium One but required approval from the Obama administration given the strategic importance of the uranium assets. In the run-up to the approval of the deal by the State Department, nine shareholders of Uranium One just happened to make $145mm in donations to the Clinton Foundation. Moreover, the New Yorker confirmed that Bill Clinton received $500,000 in speaking fees from a Russian investment bank, with ties to the Kremlin, around the same time. Needless to say, the State Department approved the deal giving Russia ownership of 20% of U.S. uranium assets

Now, thanks to newly released affidavits from a case that landed one of the Russian co-conspirators, Vadim Mikerin, in jail, we learn that not only was the Obama administration aware the Russians' illegal acts in the U.S. but it may have also been fully aware that "Russian nuclear officials had routed millions of dollars to the U.S. designed to benefit former President Bill Clinton’s charitable foundation during the time Secretary of State Hillary Clinton served on a government body that provided a favorable decision to Moscow." Per The Hill:

Before the Obama administration approved a controversial deal in 2010 giving Moscow control of a large swath of American uranium, the FBI had gathered substantial evidence that Russian nuclear industry officials were engaged in bribery, kickbacks, extortion and money laundering designed to grow Vladimir Putin’s atomic energy business inside the United States, according to government documents and interviews.

Federal agents used a confidential U.S. witness working inside the Russian nuclear industry to gather extensive financial records, make secret recordings and intercept emails as early as 2009 that showed Moscow had compromised an American uranium trucking firm with bribes and kickbacks in violation of the Foreign Corrupt Practices Act, FBI and court documents show.

They also obtained an eyewitness account — backed by documents — indicating Russian nuclear officials had routed millions of dollars to the U.S. designed to benefit former President Bill Clinton’s charitable foundation during the time Secretary of State Hillary Clinton served on a government body that provided a favorable decision to Moscow, sources told The Hill.


Of course, when Schweizer's book first made Uranium One a political hot topic in 2015, both the Obama administration and the Clintons defended their actions and insisted there was no evidence that any Russians or donors engaged in wrongdoing and there was no national security reason for anyone to oppose the deal. That said, we now know that the FBI was aware of wrongdoing going back to at least April 2009 even though the deal wasn't approved until October 2010.

But FBI, Energy Department and court documents reviewed by The Hill show the FBI in fact had gathered substantial evidence well before the committee’s decision that Vadim Mikerin — the main Russian overseeing Putin’s nuclear expansion inside the United States — was engaged in wrongdoing starting in 2009.

The first decision occurred in October 2010, when the State Department and government agencies on the Committee on Foreign Investment in the United States unanimously approved the partial sale of Canadian mining company Uranium One to the Russian nuclear giant Rosatom, giving Moscow control of more than 20 percent of America’s uranium supply.

In 2011, the administration gave approval for Rosatom’s Tenex subsidiary to sell commercial uranium to U.S. nuclear power plants in a partnership with the United States Enrichment Corp. Before then, Tenex had been limited to selling U.S. nuclear power plants reprocessed uranium recovered from dismantled Soviet nuclear weapons under the 1990s Megatons to Megawatts peace program.

And guess who ran the FBI's investigation into this particular Russian plot? As The Hill notes, the Mikerin probe began in 2009 under Robert Mueller, now the special counsel in charge of the Trump case, and ended in late 2015 under the controversial, former FBI Director James Comey who was relieved of his duties by President Trump...

- Source, ZeroHedge, Read the Full Article Here

Monday, 16 October 2017

Michael Pento: Massive Global Defaults Coming in 2018


Economist Michael Pento says even though the stock market has made huge gains in 2017, don’t expect this to continue. Pento contends, “Year-over-year growth for the third quarter (Q3) is just 2.9%. . . . So, you have no more earnings growth. It’s very miniscule. GDP (Gross Domestic Product) according to the New York Fed for Q3, it’s 1.8%. If you look at the Atlanta Fed, it’s just a little bit above 2%. So, you are still stuck in that 2% range. 

There’s no real growth in GDP and no real growth in earnings. The only thing you have left (holding up the markets) is central banks, and that game is ending. You have central banks selling when there is a high risk of nuclear war, WWIII, stocks are trading at all-time record highs and 138% total market cap to GDP when the average is 50%. This is crazy. There is no way you can justify the level of stock prices without massive and unrelenting money printing, which is coming to an end.” 

On gold, Pento says, “You’ve got to have 10% physical gold in your liquid net worth. It has to be physical gold that you possess directly. I cannot stress that enough. . . . I like all precious metals. They are going to be in a massive and unprecedented bull market sometime in 2018.”

- Source, USA Watchdog

Saturday, 14 October 2017

Jim Grant: Trump Wants Low Interest Rates and Cheap Credit


CNBC's Rick Santelli discusses monetary policy with Jim Grant, the founder and editors of Grant's Interest Rate Observer.

- Source, CNBC


Friday, 13 October 2017

Craig Hemke: Comex Silver Deliveries Surge In September

Though Comex metal "delivery" remains a sham and circle jerk where The Banks simply shuffle paper warehouse receipts and warrants, we thought the latest totals for September were noteworthy enough to bring them to your attention.

Again, we've written about this on countless occasions and this post is not meant to imply that "the Comex is about to break" or that "there is a run on The Banks". Instead, September saw the continuation of two trends of which you need to be aware. Comex "deliveries" are up dramatically in 2017 and JPM continues to stand down.

First, take a look at the historical pattern of "deliveries" during the so-called "delivery months" of March, May, July, September and December. Below is a summary of the "delivery" activity for 2015:


The one way we've always quantified "deliveries" here at TFMR is to consider the total amount of stated "deliveries" at the end of each month versus the total number of contracts that had been left open and allegedly "standing for delivery" at the beginning of the process. For 2015, it looked like this:


As you can see, the only outlier in 2015 was the month of July where nearly 1,000 additional contracts materialized requesting immediate "delivery". Other than that, it was a rather orderly process.

Now, let's look at the summaries for 2016.




Again, a rather mundane year of silver "deliveries" with one exception. This time, the month of December saw an "oversubscription". Where Jul15 had seen "deliveries" exceed standing by 938 contracts, Dec16 saw the same exception to the tune of 924 contracts. Other than that, it was another somewhat orderly year.

So let's move on to consider the "delivery" action in 2017 to see if anything unusual is taking place:



Well now. This is beginning to look a bit different, isn't it? Go back up and review the data for 2015 and 2016. Note that only one month in five ever shows a "delivery" total in excess of the amount of contracts still open before First Notice Day. And now, if we include last December, we've seen this occur in four of the past five months with the most recent "delivery month" of September seeing the largest percentage "oversubscription" yet at 160.2%

And when we look at it in absolute terms, the "deliveries" for last month get even more interesting. Note that there were 4,103 contracts still open when the contract went off the board on August 30. At 5,000 ounces per contract, that's a total potential "delivery" obligation of 20,515,000 ounces of silver or about 638 metric tonnes. By the end of the month, the Comex had actually "delivered" 6,575 contracts for 32,875,000 ounces of silver or about 1023 metric tonnes.

So, what's the deal here? Why the sudden rush in 2017 to jump the queue and take immediate "delivery" instead of simply waiting until the next "delivery month"? Could it indicate wholesale physical tightness? Could it indicate a lack of trust amongst The Banks? Could it indicate absolutely nothing?

- Source Sprott Money, Read More Here



Thursday, 12 October 2017

Gold & Silver Overnight Strength: The September Smashing Looks Over

Gold and silver have shown strength in the overnight session. Here’s what went down…

First, here’s how it looks since last Friday’s BLS Report:



Overnight, gold performed well:


And silver performed well:


Although the GSR has clung to the 50-day average:


Here’s what we said about the two metals yesterday:

Gold & silver have been under constant price smashing since September 8th. Can the smashings continue, such as the way we saw the precious metals fall until the end of the year in 2016? They could, but the pressure on price has come much earlier this year than last. The silver price was still at $19 just a year ago. Are they really going to be able to push silver down $2 from here to end the year? Not likely. Yes there is silver (and gold) on the markets at the retail level, but there’s no way there would be much if any left after the rush into the metals if they push the price down that far.

Anybody looking to buy silver under $17 may have just lost that opportunity.

And gold is poised to retest $1300, so anybody looking to buy gold with a 12-handle can do so in paper, but the premium will likely push it over.

And, the banks are back today, so we have full market action.

Grab your popcorn. This is turning out to be a good one to watch…


- Source, Silver Doctors


Wednesday, 11 October 2017

Clive Maund: Gold and Dollar Market Update

Clive Maund sees that the dollar may rally here along with gold which it has done in the past on rare occasion. He also sees technicals such as moving averages in bullish alignment, conditions generally favor a reversal and rally.

Please read the rest here; Gold Market Update



- Source, Clive Maund



Tuesday, 10 October 2017

Keiser Report: Muted Inflation


In this episode of the Keiser Report from Aspen, Colorado, Max and Stacy take a look at the trillion-dollar mystery of muted inflation. While central banks are stumped, the Keiser Report suggests that the insanely concentrated wealth and flushing euros down the toilet could have something to do with it. Max interviews cryptographer Charles Hoskinson, of IOHK.io, about dissing ICOs, banning bitcoin and the future of proof of stake over proof of work.

- Source, RT


Wednesday, 4 October 2017

Bitcoin Surges Above $4400 As World Realizes Jamie Dimon & China Don't Matter

Bitcoin just topped $4400 for the first time since in over 3 weeks and has now erased all of the plunge losses from Jamie Dimon's "it's a fraud" and China's shuttering of all local exchanges.

It didn't take long for the world of crypto-currencies to shrug off Jamie Dimon's self-tighteous denigration of the decentralized currency that could directly 'disrupt' his cash cow businesses; and furthermore, as The South China Morning Post reports, China's bitcoin market alive and well as traders defy crackdown.



As SCMP reports, weeks after Beijing banned fundraising through token launches and ordered some bitcoin exchanges to shut, casting a chill over the cryptocurrency industry, traders say that the market is far from dead.

While several exchanges have announced that they will close by the end of this month, traders have now moved to buy and sell bitcoin directly with each other on peer-to-peer marketplaces and messenger apps.

Although the crackdown has dissuaded large swathes of less-experienced investors from participating in the trade, market participants point to the limits Chinese regulators ultimately face in controlling the industry, where many users are anonymous and difficult to track.

In the short-run, the crackdown has also created an arbitrage opportunity for investors, with the price of bitcoin in China now trading at a discount to overseas exchanges.

“They can’t set rules to stop me from investing in what I want to invest in. They say you are protecting me, but as long as I think this is good, they have no way to intervene,” said a Chinese bitcoin investor named Victor, who declined to give his full name citing current sensitivities.


“I can do over-the-counter trades or I’ll go offshore ... My wallet is my wallet. I’ve never registered my identification card.”

Over 15 exchanges, including the three largest players OkCoin, Huobi and BTCChina, have since announced that they will close their mainland businesses by the end of September.

Trading has spiked generally on peer-to-peer marketplaces, according to data website Coindance. On OTC platform LocalBitcoins, China trading volumes more than doubled in the week starting September 16 from the previous week to 74 million yuan.

It hit an all-time-high in the week starting September 23, reaching 115 million yuan in trades.

“The fact that bitcoin is still being traded is an indication that China isn’t looking to eliminate them, but reposition things in a way to have better control over them,” said Marshall Swatt, the founder of New York-based Coinsetter, a bitcoin exchange acquired by larger peer San Francisco-based Kraken in 2016.

- Source, Zero Hedge


Tuesday, 3 October 2017

Steve Keen on Currency, Savings, Debt and House Prices


Can We Avoid Another Financial Crisis? The short answer is NO, we cannot and will not. Professor Steve Keen goes on to provide the proof needed, to prove beyond a doubt that we are heading for another massive financial crisis and that there is no avoiding it. Prepare before it is too late, don't say you weren't warned.



Monday, 2 October 2017

Puerto Rico: Dr. Ron Paul on How Government's Make Things Worse Not Better


"I'm from the government, and I'm here to help", should send shivers down anyone's spine. 

Natural disasters are, and will always be, difficult to prepare for and bounce back from. Unfortunately, a mistaken belief and faith in government makes both preparing and bouncing back much worse than it has to be. Ron Paul helps to dispel the fantasy of government "help."

 - Source, Ron Paul


Friday, 29 September 2017

Gordon Long: The Markets Are in A Delusional Phase


Investor Gordon Long says the stock market hitting one all-time high after another, despite all the economic headwinds, shows the public is in a “delusional phase.” 

The latest nuclear war threat from North Korea shows the extreme delusion going on, and Long contends, “This is about as clear of an example as you are going to get. This is more serious than the Cuban Missile Crisis, and the fact the market has not even blinked during this tells you we no longer know how to price risk. It’s not being priced correctly... 

It’s almost pure speculation at this point, and maybe straight out gambling.” When is it all going to come crashing down? Long predicts, “I think there is a scare coming this fall. That scare will allow central banks to start more quantitative easing and other programs. 

They will be guaranteeing the markets and guaranteeing assets because they can’t have this pension system collapse, and it’s all in the stock market. I think we are talking about the spring of next year.” (When it all totally implodes.)

- Source, USA Watchdog


Thursday, 28 September 2017

China's ICO Crackdown Boosts Hong Kong's Hopes Of Becoming Blockchain Hub


China’s decision to shutter digital-currency exchanges based on the mainland, a strategy meant to extinguish the rampant fraud and abuse associated with initial coin offerings, or ICOs, is brightening Hong Kong's hopes of asserting itself as a hub for blockchain technology.

As Bloomberg reports, while China has at least nominally embraced blockchain technology - even building a prototype digital yuan – Hong Kong’s city government has gone a step further by encouraging blockchain startups to set up shop in the city. One firm run by Johnson Leung, who has found success in finance and shipping, and now runs a blockchain startup, is focusing on applications for container ship operators.


The city’s embrace of blockchain is its latest attempt to nurture a domestic technology industry that could compliment the city’s dominance in banking and shipping. But as Bloomberg notes, betting on blockchain, a technology that has generated a ludicrous amount of hype, much of it undeserved, could be a risky proposition. Despite Hong Kong’s status as a financial hub, the city, one of the most expensive in the world for average working families, has zero “unicorns” – a term for startups valued at over $1 billion.

Skeptics say it’s a risky bet on an unproven technology - one with more than its fair share of hype and, in some cases, fraud. But a growing number of Hong Kong entrepreneurs and policy makers are convinced the online ledger system that underlies cryptocurrencies like bitcoin will eventually reshape everything from financial services to supply chains. They say the city’s laissez faire approach toward regulation, along with its expertise in finance and logistics, make it a natural hub for blockchain startups.

“I don’t see why Hong Kong can’t be a leader of blockchain technology,” said Leung, who co-founded 300cubits.tech after more than a decade in the financial industry that included stints as a research analyst at JPMorgan Chase & Co. and Jefferies Group LLC. “It’s so new that it’s not like any country has a huge advantage compared to us.”

As Bloomberg explains, the city’s government has been throwing resources at the technology, developing its own digital currency and testing different blockchain use-cases.

The city’s monetary authority is developing its own digital currency and is testing blockchains for trade finance, mortgage applications and e-check tracking. Hong Kong’s securities regulator has joined R3, a global consortium that develops blockchain technology for financial transactions, while a government-backed research institute has worked on a blockchain-based system for tracking property valuations, among other initiatives. Hong Kong Exchanges & Clearing Ltd., the city’s publicly-traded exchange monopoly, plans to start a blockchain platform for early-stage companies and their investors next year.

“Blockchain is a very high priority for us,” said Charles d’Haussy, head of fintech at InvestHK, a government economic development agency...


- Source, Zero Hedge, read more here.



Wednesday, 27 September 2017

The Evil Plan By The Elites To Control Humanity


With continued uncertainty around the globe, today the man who has become legendary for his predictions on QE, historic moves in currencies, spoke with King World News about the evil plan by the elites to control humanity and $15,500 gold.

The Evil Plan By The Elite


Egon von Greyerz: “For news to be read and understood by a great number of people, it must be simple, sensational and forgettable. Most individuals are not interested in “heavy” news or complicated issues. Just compare television and newspapers today to say 50 years ago. At that time, newspapers had very few pictures. Instead, newspapers covered serious matters with in depth analysis. The same was true with television…

In Volatile Markets, Is Wealth Preservation King?

In a King World News interview I spoke with the man who predicted the Swiss National Bank would experience staggering losses and that the Fed would also experience massive losses that will destabilize the global financial system! His company is the only one in the world offering a precious metals investment service outside the banking system, with direct ownership and full control by the investor. He has also become legendary for his predictions on QE, historic moves in currencies, and major global events.

Egon von Greyerz continues: 

“In the 1960s there was serious news and many programs which raised important issues in society or politics, which many people listened to and grasped. But today everything must be dumbed down to the lowest common denominator of readers or viewers. For a paper to sell or a television station to receive advertising revenue, any news must be superficial and short. Most content must have an entertainment or gossip value. Same with television. All serious matters are either left out or covered very briefly. We are now in the age of instant gratification. People’s attention can only be kept by short, superficial language, lots of big images and constant change of focus. On television, no camera position must remain on one subject for more than a few seconds because people’s attention span only lasts for a brief moment.

Purposeful Dumbing Down Of The Masses…

This has led to most people either becoming ignorant or misinformed. The political correctness contributes to the misinformation since, to a great extent, a small group of individuals determine what is politically correct...


- Source, King World News, Read More Here


Monday, 25 September 2017

China and Russia Have a Long Term Plan and Its Gold


China and Russia’s geopolitical strategy has been evolving long enough for observers to understand it and the implications for the West. We can assume the strategic thinkers and intelligence agencies of all the major players have a reasonable grasp of the implications, including America, which is determined not to lose in this Great Game. That was the point behind Steve Bannon’s candid interview with Politico.

Bannon was deluded about the extent of America’s economic and financial power. He is now out. We are back to geopolitics being decided by the military. Meanwhile, China’s interests have almost certainly moved firmly towards dumping the dollar. This can only be done successfully by linking the yuan to the characteristics of physical gold, the market which China has effectively cornered.

If gold crosses the $1300 Rubicon, it may be taken as an early sign that China’s long-term plan of monetising her gold is progressing towards the next stage. The oil-for-yuan futures contract is due to be launched very shortly, allowing countries like Iran to buy gold freely, paid for by oil sales.

Alternatively, if China defers securing the yuan to gold, the dollar still looks like weakening against other currencies, reflecting a US economy isolated from the positive Asian story. The pace of the rise in the gold price might be slower, but the direction seems equally certain.

Eventually, gold will need to rise to a level where the Chinese are prepared to set a conversion rate. Expect China to use its control over physical gold markets to achieve it at a time of its own choosing. Leaving the $1300 price behind could well be the start of the move towards this objective.



Saturday, 23 September 2017

Bitcoin, Sour Grapes and Jamie Dimon

If I had a bitcoin for every time some pundit declared bitcoin is a bubble, I’d be a billionaire. There are three problems with opining that bitcoin and cryptocurrencies are bubblicious:

Everything is in a bubble now: stocks, bonds, housing, heck, even bat guano is bubblicious. Exactly what insight is being added by yet another guru repeating the BTC is a bubble meme?
What’s the value proposition in declaring BTC is in a bubble? Spotting bubbles is like shooting fish in a barrel; the value proposition is in identifying the price/time tipping point at which bubbles pop.

Declaring bitcoin is a bubble is starting to sound like sour grapes. Sour grapes defined: those who missed the 10-bagger (never mind the 100-bagger) feel better by dismissing the whole thing as a fad and a bubble, but as BTC continues marching higher, it looks like they missed the boat but are too proud to admit they didn’t grasp the significance of cryptocurrencies and BTC in particular.

Take J.P. Morgan CEO and President, Jamie Dimon.

He came out recently and called Bitcoin a fraud.

Well, here’s a quick question for you, Mr. Dimon: which words/phrases are associated with you and your employer, J.P. Morgan?

Looting, pillage, rapacious, exploitive, only saved from collapse by massive intervention by the Federal Reserve, the source of rising wealth inequality, crony capitalism, privatized profits-socialized losses, low interest rates = gift from savers to banks, bloviating overpaid C.E.O., propaganda favoring the financial elite, tool of the top .01%, destroyer of democracy, financial fraud goes unpunished, free money for financiers, debt-serfdom, produces nothing of value to society or the bottom 99.5%.

Jamie, if you answered “all of them,” you’re correct.

The only reason you have a soapbox from which you can bloviate is the Federal Reserve saved you and your looting machine (bank) from well-deserved oblivion in 2008-09. That, and the unprecedented, coordinated campaign by global central banks to buy trillions of dollars of bonds and stocks.

J.P Morgan would have done very well in the past eight years if they’d replaced you with a crash-test dummy. In fact, the shareholders would have done much, much better if the crash-test dummy had a Post-It note on its chest reading “buy bitcoin.”

Compare the return for an investor who “bought the dip” in J.P. Morgan stock (JPM) at $57 in early February 2016 and the investor who bought bitcoin (BTC) at $376 at the same time.

The buyer of JPM has certainly done well, earning a return of around 77% over the 19 months (JPM has risen from $57 to $91, a gain of $44, not counting dividends). But the buyer of bitcoin has earned about a 10-fold increase, gaining $3,200 per bitcoin at the current price around $3,560. (A few weeks ago, an owner of BTC could have skimmed an additional $1,000 per coin.)

The buyer of 1,000 shares of JPM for $57,000 gained $44,000 plus dividends, yielding a total of around $93,000, while the buyer of $57,000 worth of bitcoin at $376 (roughly 150 BTC) gained $478,000 and has a total of $534,000.

The buyer of JPM could sell his shares, pay the capital gains tax and buy a modest mid-sized car with the gains. The buyer of bitcoin could sell his bitcoins, pay the capital gains tax and buy a very nice house or flat in all but the most overvalued markets with his gain, and buy a brand-new vehicle with whatever cash is left.

Some initial coin offerings have made gains that make this mere 10-bagger look like small change.

And a lot of institutional fund managers are angry that they’ve missed out.

This might look like a speculative side-game, but for institutional money managers, it’s getting serious. As we all know, it’s becoming increasingly difficult to manage money such that the returns on the managed money exceed the return of an S&P 500 index fund.

If a passive index fund does better over five years than an actively managed fund, then what the heck are we paying the fund managers big bucks for?

- Source, The Daily Reckoning, Read More Here