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5.26.17 - Gold's Days of Glory Just Beginning
Gold last traded at $1,268 an ounce. Silver at $17.35 an ounce.
NEWS SUMMARY: Precious metal prices shot up 1% Friday amid geopolitical worries despite a firmer dollar. U.S. stocks drifted lower ahead of the 3-day Memorial Day holiday.
Gold at highest since May 1 on political uncertainty, dollar -Reuters
"Gold hit its highest in nearly four weeks on Friday as political uncertainty led investors to shun riskier assets in favor of bullion. 'We have had the political noise coming from Trump and the U.S. administration and there is a certain element of uncertainty in the markets in general, which is supporting gold. Equities are also down,' analyst Carsten Menke at Julius Baer in Zurich said. Leaders of the world's rich nations face difficult talks with Donald Trump at a G7 summit in Sicily on Friday after the U.S. president lambasted NATO allies and condemned German trade policies a day earlier. Gold is used as an alternative investment during times of political and financial uncertainty....Spot silver rose 1.4 percent to $17.36 and was on track to gain 3.3 percent this week, its biggest weekly rise since early January."
Globalization, Gold and the Return of History -WallStreetJournal
"Donald Trump’s first venture abroad has been notable for its calm, after the tumult he left behind in Washington. For investors worried that the U.S. president could destabilize the global trade and security regime, his willingness so far to stick to the script might have come as a relief....The long-term picture isn’t so benign for those who’ve profited from globalization, as former HSBC chief economist Stephen King sets out in a new book, Grave New World. Mr. King’s thesis is that the increased globalization of the past four decades is an anomaly in historical terms, and - in a nod to Francis Fukuyama - we’re seeing 'the return of history.' Unfortunately for investors it is tricky to play the Great Game of geopolitics....Perhaps the best alternative is to use part of a portfolio to hold insurance, in the form of what Mr. King calls a 'universally acceptable store of value,' physical gold. If the global trade and financial system retreats to national borders, gold becomes one of the few international assets. If everything turns out fine for free traders, the cost of the gold has to be thought of as an (expensive) insurance premium. 'We’re dealing with inherent deep uncertainty,' Mr. King says. 'It’s all very well assuming that globalization is the natural order of things, but it’s not. You should at least have a hedge.'"
Owning physical gold and silver is not a luxury, it's a necessary "hedge" for the "deep uncertainty" our world faces each day. Read our 2017 Gold Report and 2017 Silver Report to discover why right now is an excellent buying opportunity for both gold and silver.
Gold's Days of Glory Beginning as Dollar's Are Ending -GoldSwitzerland
"The best time to buy an asset is when it is unloved and undervalued like gold and silver were in the early 2000s. What few investors realize is that the current levels of gold and silver, when real inflation is taken into account, are very similar to where the metals were in 2000-2. Thus gold at $1,265 and silver at $17 is an absolute bargain and unlikely to remain at these levels for long....With most asset markets surging since 2009 why haven’t gold and silver. To answer that question, we need to take a slightly longer perspective. Since the beginning of this century, gold has outperformed most asset classes. The Dow for example is down 61% against gold since the beginning of 2000. Thus, gold has been an outstanding investment as well as being the ultimate wealth preservation asset in the 2000s....The dollar, which is a bankrupt currency, will tell us when markets and the economy will turn...The dollar should have crashed long ago but the competition is so poor with badly managed economies around the globe so the dollar has held up due to its reserve currency status. But the dollar’s glory days are now coming to an end. It seems the dollar peaked back in December 2016 and that it is soon starting its journey down to the intrinsic value of zero."
A renovation boom is turning homes into ATMs again -CNBC
"Fast-rising home prices and a record-low number of homes for sale have a lot of homeowners choosing to stay put - and put in a new bathroom or update the kitchen. Higher home values also mean they have more cash to take out of their homes. With mortgage rates so low for so long, most borrowers are opting for a second loan rather than refinancing their current mortgage to take cash out. Second loans, such as home equity lines of credit (HELOC), are booming. HELOC originations were up 10 percent year over year in 2016, hitting an eight-year high, according to Black Knight Financial Services, and they continue to rise....Ironically, the new boom comes just as the pain of the last home equity line boom is ending. These credit lines have a 10-year 'draw period,' when borrowers are required only to pay interest on the loans....One in 5 borrowers facing resets this year has less than 10 percent equity in their homes, making refinancing out of the loans difficult."
*Swiss America will be closed on Monday, May 29th, in observance of Memorial Day*
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5.25.17 - Why Gold & Silver Could Double in 2017
Gold last traded at $1,256 an ounce. Silver at $17.19 an ounce.
NEWS SUMMARY: Precious metal prices eased back Thursday on mild profit-taking and a firmer dollar. U.S. stocks rose to fresh highs led by big tech and Fed debt-cut hopes.
Fed Warns "Vulnerabilities" From Elevated Asset Valuations "Pose Risks To Financial Stability" -Zero Hedge
"In today's FOMC Minutes, Fed member issued yet another explicit warning to America's investing public (before they pull the pin on the balance sheet normalization) about asset valuations being 'vulnerable' and also piling on once again that commercial real estate values were 'elevated.' Of course, traders don't care and have bid stocks to the highs of the day....The Fed's explicit warning that 'vulnerabilities have increased for asset valuation pressures.'....Additionally, as America's retailpocalypse continues, The Fed warned once again on commercial real estate prices."
Inflation Isn't Evenly Distributed: The Unprotected Are Impoverished Debt-Serfs -CharlesHughSmith
"The Consumer Price Index (CPI) measure of inflation is bogus on a number of fronts, a reality I've covered a number of times: though the heavily gamed official CPI is under 2% for the past four years, the real rate is 7% to 12%, depending on whether you happen to live in locales with soaring rents/housing and healthcare costs....But the other reality is that inflation is not evenly distributed throughout the economy or populace: Those fully exposed to the skyrocketing costs of healthcare insurance and higher education are being reduced to impoverished debt-serfs."
"My insightful colleague Lance Roberts prepared this devastating chart that shows how debt-serfs deal with soaring prices - they borrow more to fill the widening gap between what they earn (stagnating) and the cost of living (skyrocketing)....Welcome to debt-serfdom, the only possible output of the soaring cost of living for the unprotected many who are ruled by a hubris-soaked, subsidized Protected Elite."
Government inflation data is extremely untrustworthy. Many experts are now warning about the risks of stealth inflation and stagflation (a rising cost of living coupled with a stagnant economy) which we ravaged our nation during the Jimmy Carter years in the late 1970s. President Trump's road back to making America great again has a major pitfall. Learn how to avoid it by reading THE INFLATION SOLUTION, a new Swiss America special report.
Silver And Gold Rally Will Happen -SeekingAlpha
"Today the Federal Reserve is trying to slowly raise interest rates, but the overwhelming debt they have created, is threatening to destroy our ability to repay, particularly if interest rates rise. As interest rates rise on our debt due, the payments increase to unsightly levels. The higher prices resulting from inflation are witnessed in gigantic increases in health insurance premiums, health insurance deductible payments, and food prices among many....Our dollar is worth less, and there will be more printing of money, because Congress can rarely agree to even reduce spending on a program, let alone an actual 'cut'. The Fed cannot print silver or gold. Precious metals are valued globally, and the mining process is slow and expensive. Gold is money and an investment. 'The case for gold is not as a hedge against monetary disorder, because we have monetary disorder, but rather an investment in monetary disorder.' (James Grant-publisher of the Interest Rate Observer)....Today Gold is at $1258 per ounce and Silver is at $17.20. I would not be surprised to see these prices double over the next 6 months as economic and international tensions mount."
China Can’t Sustain Its Debt-Fueled Binge, Moody’s Says -NY Times
"China has gone on a spending spree, borrowing money to build cities, create manufacturing giants and nurture financial markets - money that has helped drive the economic powerhouse in recent years. But the debt-fueled binge now threatens to sap the energy of the world’s second-largest economy. With its economy maturing, China has to pile on ever more debt to keep its growth going, at a pace that could prove unsustainable. And the money is increasingly flowing through opaque channels that operate outside the regulated banking system, leaving China vulnerable to blowups. A major credit agency sounded the alarm on Wednesday, saying the steady buildup of debt would erode China’s financial strength in the years ahead. The agency, Moody’s Investors Service, cut the country’s debt rating, its first downgrade for the country since 1989....By far, the biggest category of debt in China is corporate debt, which equals almost 170 percent of annual economic output. This debt consists overwhelmingly of loans by state-owned banks to state-owned enterprises."
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5.24.17 - Which is worse? Detroit vs. Puerto Rico.
Gold last traded at $1,253 an ounce. Silver at $17.11 an ounce.
NEWS SUMMARY: Precious metal prices rose Wednesday after Fed minutes revealed uncertainty about a June interest rate hike. U.S. stocks cheered the Fed's proposed gradual plan to trim balance sheet.
Arizona "Metals are Money" Law -CampaignForLiberty
"HB 2014 defines gold, silver, and other precious metals as legal tender and exempts them from capital gains taxes, thus allowing Arizona residents to use precious metals instead of Federal Reserve notes. Dr. Ron Paul testified before the Arizona Senate Finance Committee in support of the bill in March. 'Every supporter of free-markets should cheer Arizona’s passage of HB 2014. There is no more justification for forcing individuals to use government-created money than there is for forcing them to drive government-manufactured cars. In fact, as the Federal Reserve’s 114 years of failure shows, giving monopoly control over our money supply to a secretive central bank is the most dangerous form of government intervention,' said Dr. Ron Paul....'Campaign for Liberty is planning to work with activists across the country to get more state legislatures to follow Arizona's lead. We will also continue our critical work to change our nation's money monopoly by getting Congress to vote on -- and pass - Audit the Fed.'"
The Keynesian Cult Has Failed: "Emergency" Stimulus Is Now Permanent -CharlesHughSmith
"What do we call a status quo in which 'emergency measures' have become permanent props? A failure. The 'emergency' responses to the Global Financial Meltdown of 2008-09 are, eight years on, permanent fixtures. Everyone knows what would happen if the deficit spending, money-printing, zero interest rates, shadow banking, asset purchases by central banks and all the rest of the Keynesian Cult's program stopped: the status quo falls apart....The Keynesian world-view is doggedly simplistic. The economy is based on aggregate demand for more goods and services. People want more stuff and services, and as long as they have the means to buy more stuff and services, they will avidly do so (this urge is known as animal spirits). The greatest single invention of all time in the Keynesian universe is credit, because credit enables people to borrow from their future earnings to consume more in the present...But credit, aggregate demand for more stuff and animal spirits make for a volatile cocktail....The euphoria of credit expansion turns to painful contraction....The Keynesian answer is simple: the government should borrow and spend lots of money to replace all the money that the private sector is no longer borrowing and spending....In sum: nothing has worked as the Keynesians expected. Instead, state/central bank measures that were supposed to be temporary are now permanent, and the expansion of private-sector debt has failed to 'trickle down' to earnings....Clearly, the real-world economy does not function like the simplistic Keynesian coloring-book model."
Fed to wind down $4.5 trillion balance sheet -CNBC
"The Fed is holding a $4.5 trillion portfolio, known as its 'balance sheet,' of mostly government debt it accumulated in the years after the crisis. Until now, the central bank has been taking the proceeds it receives from maturing debt and reinvesting them in more bonds. In recent days, officials have been indicating that the balance sheet will be unwound, likely starting later in the year, raising questions from investors about how the process will work and what impact it will have....The Fed has used its balance sheet to keep interest rates low and the economy moving higher since the crisis. By buying up bonds, the Fed provided demand that held government yields back. In keeping the balance sheet large, it helped prevent a flood of bonds into the market that might have driven yields higher and pushed up borrowing costs....Fed watchers have worried that the process, if not done correctly, could be disruptive and drive up rates unexpectedly."
Detroit and Puerto Rico: Which Is the Worse Insolvency? -RealClearMarkets
"Puerto Rico’s unemployment rate is very high at over 12%. This not as huge as Detroit’s 22%, but Puerto Rico’s abysmal labor participation rate of 40%, compared to Detroit’s already low 53%, offsets this difference. This leaves Puerto Rico with proportionally even fewer earners with lower incomes to pay the taxes to pay the much higher debt. On a macro basis, then, it appears that the creditors of Puerto Rico can expect to do even more poorly than those of Detroit. How poorly was that? At its exit from a year and a half of bankruptcy, Detroit’s total debt had been reduced to $10.1 billion. Overall, this was 53 cents on the dollar, or a loss of 47% from face value, on average....As a macro estimate, if we take as a baseline Detroit’s average settlement of 53 cents on the dollar and multiply it by Puerto Rico’s 59% of Detroit’s ratio of per capita income to debt, we get a guess of 31 cents on average for all the creditors."
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5.23.17 - The Next Greek Tragedy: Asset Seizure
Gold last traded at $1,251 an ounce. Silver at $17.07 an ounce.
NEWS SUMMARY: Precious metal prices traded steady Tuesday despite profit-taking and a firmer dollar. U.S. stocks traded mixed amid Trump budget concerns and the latest UK terrorist attack.
$1,300 gold if the political situation in US worsens -ForexLive
"Safe haven buying has provided strong support to gold prices over the past six months. However rising geopolitical risks in the US and elsewhere are likely to propel prices even higher, despite the specter of a rate hike in the US next month. We see gold holding above USD1250/oz in the short term, and an increasingly possibility of it breaking through USD1300/oz this year if the political situation in the US worsens. Even without the support of safe haven buying, we still see an environment conducive to higher gold prices. Much has been debated about the impact of rising US interest rates on gold. However, we don't see this as a hindrance over the next 12 months. In fact, over the past seven rate hikes cycles (going back to the 1970s), gold has pushed higher in all but one case. Moreover, gold has outperformed in the cycles where interest rates were increasing relatively slowly. We are also seeing signs of an improvement in the physical market. While coming from a low base, physical demand in India and China have rebounded sharply in recent months."
Greek Authorities To Launch Mass Confiscation Of Safe Deposit Boxes, Securities, Homes In Tax-Evasion Crackdown -Zero Hedge
"Last week, the Greek parliament once again approved more austerity to unlock withheld Greek bailout funds in Brussels: a symbolic move, which has little impact without any actual follow through, like for example, actually imposing austerity. And while Greeks have been very good in the former (i.e. promises), they have been severely lacking in the latter (i.e. delivery). That may be changing. According to Kathimerini, Greek Finance Ministry inspectors are about to start seeking out the owners of all local undeclared properties, while the law will be amended to allow for financial products and the content of safe deposit boxes to be confiscated electronically. The plan for the identification of taxpayers who have 'forgotten' to declare their properties to the tax authorities is expected to be ready by year-end, according to the timetable of the Independent Authority for Public Revenue. What follows then will be a wholesale confiscation by the government of any asset whose source, origins and funding can not be explained....Once the necessary regulations are in place for the operation of an automatic system to collect debts, the tax authorities will be able to issue online confiscation notices and immediately get their hands on the contents of safe deposit boxes, confiscating cash, precious stones, jewelry and so on."
Trump has officially become a negative for the US dollar -CNBC
"Boosted by the Trump trade, the dollar had soared after his election on the prospect that lower taxes, fiscal stimulus, and deregulation would boost the U.S. economy. But that trade has reversed, and the dollar index is now down 6.6 percent from its post-election high and down 0.9 percent since the election. 'The Trump premium in the dollar has become a Trump discount. Global capital just doesn't feel safe coming to the U.S.,' said Robert Sinche, chief global strategist at Amherst Pierpont....Alan Ruskin, head of G-10 currency strategy at Deutsche Bank, said investors who are shorting the dollar do not appear to be concerned about the potential for a Fed rate hike in June to send the currency higher."
Mother Of All Short Squeezes About To Send Gold & Silver Prices Skyrocketing -KingWorldNews
"James Turk: 'Gold jumped higher early in the week, and after briefly falling back and retracing its advance, gold bounced right back. That was good news. But even more importantly, gold held its ground, and now today we are seeing upside follow through. This kind of trading action is rare. Typically after a big advance, gold gets whacked by its price manipulators. So it is not only refreshing to see what gold has done, but it is also a significant change in the way gold has been trading....Well, if I’m right, they can expect much higher gold prices. Remember, I am expecting a different kind of short squeeze. It’s not just about price. I am expecting a short squeeze where the shorts do not have the ability to deliver physical gold to meet the growing demand for metal. In the squeeze, the longs will be clamoring for metal, not paper. Keep in mind that I have been expecting gold to rocket higher as we enter into the delivery period for June gold options....If the gold price rises because of a short squeeze in the demand for physical gold, you can bet on the silver price rising too, and probably even faster than gold. There are a couple of reasons for this, but the main one is that the paper shorts in silver are even more unbalanced than they are in gold.'"
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5.22.17 - The Secret Saudi-Dollar Connection
Gold last traded at $1,261 an ounce. Silver at $17.19 an ounce.
NEWS SUMMARY: Precious metal prices extended gains Monday on bargain hunting and a weaker dollar. U.S. stocks rose after President Trump delivers on overseas deals to help stabilize the Middle-East.
The Price of Gold Doesn't Change, Things Change In Terms of Gold -Oliver/Myrmikan Research
"Despite gold’s four thousand year monetary history, during which its every attribute has been explored to the minutest detail ad nauseum, confusion continues to reign over the proper price for gold. In fact, as I had to explain on a recent panel at the Mines & Money conference in New York, the price of gold does not change - it is the price of other things that change in terms of gold. Gold has the most stable value of any substance, the reason the market has chosen it as money over thousands of years. As Karl Marx himself wrote: 'The truth of the proposition that, although gold and silver are not by Nature money, money is by Nature gold and silver, is shown by the fitness of the physical properties of these metals for the functions of money'....Gold is the most stable store of value and the safest depository of wealth - all other assets are mere speculations. Speculations can pay off, of course. Those holding gold were left behind in the NASDAQ bubble, the housing bubble, and now the everything bubble. All these bubbles have had as their foundation the global paper currency bubble. But gold always wins in the end. Empires rise and fall, but it is the gold coins of the preceding republican period that retain value. To determine where the 'price' of gold is going in dollar terms, therefore, requires an examination not of gold but the of dollar, which is now defined as a unit of liability of the Federal Reserve’s balance sheet."
Does this sound familiar? It should. We have been saying the same thing for many years; the real price of Gold never changes because Gold is the plumb line of all prices. In our 2017 newsletter, Volatility's Last Stand, Swiss America Chairman Craig R. Smith explains the importance of viewing gold as real money - the ultimate ‘numeraire.’
The Secret Saudi-Dollar Connection -Smith/Ponte/SATC
President Donald Trump was greeted and treated like a wise and welcome world leader and ally in Saudi Arabia. But the media said almost nothing of the secret connections that for 46 years have kept our two nations linked in a special, mutually-dependent relationship....After printing billions to fight the Vietnam War, he announced in August 1971 that the U.S. would no longer redeem dollars for gold. Without its gold anchor, the dollar tried to float but its value promptly sank by a third....Nixon then 'negotiated an agreement with Saudi Arabia that the Muslim nation would sell its oil only in exchange for U.S. Dollars,' as we explain in our latest book, Money, Morality, & the Machine. 'This shored up the dollar’s status as the global reserve currency, a tremendous boon to us because we exclusively manufacture legal U.S. Dollars,' we write. Our global economic dominance - with at least 40 percent of world trade in dollars - was made possible by the Saudi special relationship....This 'petrodollar' symbiosis has made Saudi Arabia the biggest purchaser of our weapons and one of the biggest buyers of our ever-growing debt. This was again on display during President Trump’s visit as American corporate leaders were on hand along with weapon sales of at least $110 Billion and total sales from U.S. companies that could top $350 Billion over the next ten years as the Saudis diversify away from oil. Full story
Trump's Budget Will Slash $1.7 Trillion In Entitlements, Cut Food Stamps By 25% -Zero Hedge
"More details from President Donald Trump’s first budget proposal are trickling out via a flurry of overnight reports from The Washington Post, Associated Press and Bloomberg News....The budget will slash $1.7 trillion in spending on entitlement programs, according to Bloomberg. Trump’s budget will include a massive nearly $200 billion cut to the Supplemental Nutrition Assistance Program, the modern version of food stamps, over the next 10 years – what amounts to a 25% reduction, according to The Washington Post. The food stamp cuts are part of a broader $274 billion welfare-reform effort, according to a report by The Associated Press....Predictably, Democrats are already up in arms over the proposal, even though a formal draft isn’t expected until Tuesday....To be sure, Republicans have also expressed some discomfort with the cuts, particularly Trump’s plan to whack $54 billion in discretionary spending."
Inside The Elite North Korean Cyber Warfare Cell Behind the Sony Hack -Newsweek
"North Korea's main spy agency has a special cell called Unit 180 that is likely to have launched some of its most daring and successful cyber attacks, according to defectors, officials and internet security experts. North Korea has been blamed in recent years for a series of online attacks, mostly on financial networks, in the United States, South Korea and over a dozen other countries. Cyber security researchers have also said they have found technical evidence that could link North Korea with the global WannaCry 'ransomware' cyber attack that infected more than 300,000 computers in 150 countries this month. Pyongyang has called the allegation 'ridiculous'. The crux of the allegations against North Korea is its connection to a hacking group called Lazarus that is linked to last year's $81 million cyber heist at the Bangladesh central bank and the 2014 attack on Sony's Hollywood studio. The U.S. government has blamed North Korea for the Sony hack and some U.S. officials have said prosecutors are building a case against Pyongyang in the Bangladesh Bank theft."
Many financial firms you are dealing with may be on the growing cyber-hit list! Call 800-289-2646 for your FREE copy of: AMERICA'S CYBER-HIT LIST.
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