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3.24.17 - Why The Fed Paid Banks Not to Lend

Gold last traded at $1,248 an ounce. Silver at $17.74 an ounce.

NEWS SUMMARY: Precious metal prices rose further Friday amid political uncertainty and a weaker dollar. U.S. stocks traded mixed on investor angst ahead of a key Congressional healthcare vote.

Gold set for 2nd weekly gain as dollar hampered by healthcare vote -Reuters
"Gold was on track for a second weekly gain on Friday as concern about the ability of U.S. President Donald Trump to push legislation through Congress held the dollar near seven-week lows, making bullion cheaper for holders of other currencies....The metal has risen 1.6 percent this week and on Thursday touched $1,253.12, its highest since Feb. 28. Gold, seen as a safe haven asset, has benefited from falls in the dollar, U.S. bond yields and stocks this week as Trump's difficulty in passing healthcare reform has undermined faith that he can deliver on promises of tax cuts and investment. Trump has set up a showdown with lawmakers by demanding support for the healthcare bill in a vote on Friday. 'This is a key event not just for gold but for all risk assets,' said Robin Bhar at Societe Generale. 'We should see some safe haven flows into gold if he can't get it passed because it means all his other programs have a low probability of succeeding,' he said."

deep state The Deep State's Dominant Narratives And Authority Are Crumbling -Zero Hedge
"The Deep State is fundamentally the public-private centralized nodes that collect, archive and curate dominant narratives and their supporting evidence, and disseminate these narratives (and their implicit teleologies) to the public via the media and to the state agencies via formal and informal inter-departmental communication channels....This is why the Deep State is fracturing: its narratives no longer align with the evidence....Narratives create an instant context that 'makes sense' of various data points and events. Narratives distill causal factors into an explanatory story with an implicit teleology - because of this and that, the future will be thus and so....Once the legitimacy of the expertise and authority is questioned, control of the narrative is imperiled....This is why the Deep State is in turmoil - its narratives no longer make sense, or are in direct conflict with other nodes' narratives or have been delegitimized by widening gaps between 'definitive' claims and actual evidence."

The Washington bureaucracy has become part of the Deep State, the 'Machine' that Craig R. Smith and Lowell Ponte discuss in their latest book Money, Morality & The Machine: Smith’s Law in an Unethical, Over-Governed Age. The outcome of President Trump’s battle with the bureaucracy could determine whether America’s Constitution and economy survive. It is literally a battle to the death, liberty versus the government our Framers tried so hard to control.

Get ready for the investor stampede back into gold: Commerzbank -Marketwatch
"The investor love affair with gold is just about to get a reboot. That's according to Commerzbank analysts, who cited the precious metal's revisit to the key $1,250-per-ounce level as one reason for renewed interest. Gold tapped intraday highs above that level on Wednesday and Thursday, but hasn’t managed to settle above $1,250-an-ounce - based on the most-active futures contracts - since March 1, according to FactSet....'Although this psychologically important threshold appears to be posing something of a challenge in the short term, the chances of the price rising above it are good,' said a team of analysts led by Carsten Fritsch, in a note to clients Thursday....If that [health care] vote stumbles for the administration, some investors worry that could run into trouble on goals closely linked to economic growth, which has been fueling an appetite for perceived riskier assets such as stocks."

Why the Fed paid banks not to lend -Marketwatch
"If the Federal Reserve has made a decision as to when and how it plans to pare its $4.5 trillion balance sheet, Chairwoman Janet Yellen gave no hint of it at her press conference last week....The bloated balance sheet is a problem of the Fed's own making: a result of a decision in October 2008 to pay banks interest on reserves (IOR), or the deposits they hold at the Fed. With the financial system teetering, the stock market in free fall and the economy in a deep recession, the Fed made an informed, albeit ill-conceived, decision to pay banks not to lend....So when will the Fed stop rolling over maturing securities in its portfolio? The Fed has no plans to shrink its balance sheet 'until normalization of the level of the federal funds rate is well under way,' according to the Dec. 14 meeting statement....As to when the Fed should embark on this effort, given the multitude of geopolitical and financial developments that intervene to throw the Fed off course, there’s probably no time like the present."

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3.23.17 - Dollar, Gold & Stocks: What's Next?

Gold last traded at $1,247 an ounce. Silver at $17.59 an ounce.

NEWS SUMMARY: Precious metal prices traded mixed Wednesday on a flat dollar ahead of tonight's health reform vote. U.S. stocks traded modestly higher as investors remained positive the new health-care bill would be delayed or result in passage.

The Single Biggest Long-Term Catalyst For Gold? Peak Production -ETFDailyNews
"What happens when the unstoppable force of robust global demand for gold meets the immovable object of a small, finite, rare and dwindling supply of physical gold? We have written about 'peak gold' and the ramifications of the underappreciated peak gold phenomenon for the gold market since 2008. The risk of falling gold production and a consequent reduction in supply are slowly percolating into the mainstream and analysts are asking whether 2015 or 2016 marked the year of peak gold production....From the Daily Reckoning: 'The most common argument for gold is fairly well-known. Trump’s massive new spending proposals will goose inflation, meaning a higher gold price. But while most investors focus on the potential for increasing demand, few consider if supplies will be able to meet that demand. And if supplies can’t keep up with demand, that should lead to much higher gold prices....By all indications, mine supply contracted in the fourth quarter of 2016 as well. That means 2016 was the first year of a fall in mine production since 2008.'"

gold chart

What's next for the Dollar, Gold & Stocks? -MerkInvestments
"Two rate hikes since last year have weakened the dollar....Where do stocks go from here?.... I see many parallels to 1987, including what I would call an outsized reliance on market liquidity ensuring that this bull market continues its rise without being disrupted by a flash crash or some a type of crash awaiting to get a label. Mind you, it’s extraordinarily difficult to get the timing right on a crash; that doesn’t mean one shouldn’t prepare for the risk....After the election, we believe the price of gold came down as the market priced in higher real interest rates in anticipation of lower regulations. We indicated that this euphoria will cede to realism, meaning that regulations might not be cut quite as much. We also suggested that any fiscal stimulus on the backdrop of low employment may be inflationary. That is, expectations of higher real rates might be replaced with expectations of higher nominal rates; net, bonds might not change all that much, but the price of gold may well rise in that environment....The Dollar...Our take is: if you introduce barriers to trade, we believe currencies of countries with current account deficits tend to suffer. The greenback qualifies, and the recent decline coincides with more protectionist talk coming from the Trump administration."

Fed research signals inflation overshoot possible, but is it tolerable? -Reuters
"The Federal Reserve has begun preparing the public and markets for higher inflation, but has left unanswered the question of how high inflation might go and for how long. A new research paper from economists at the Fed's Washington-based Board of Governors suggests that policymakers should allow prices to rise by around 3.0 percent annually during periods of high economic growth, so that the long-run average annual target of 2.0 percent inflation is achieved after several years of lower inflation....Fed Chair Janet Yellen last week, and a group of regional reserve bank presidents this week, signaled the Fed would not try to halt inflation at 2.0 percent, but only shift gears if above-target prices rises appear 'persistent.' 'Two percent is not a ceiling,' Chicago Federal Reserve bank president Charles Evans said in New York this week."

Like the government, the Federal Reserve could mess up a one-piece puzzle. We expect the Fed will remain behind the curve on inflation. But we want our readers to stay ahead of the curve, so we just released our latest FREE special report on the subject, THE INFLATION SOLUTION.

Vote looming, Trump struggles to win Obamacare repeal -Yahoo/Reuters
"U.S. President Donald Trump on Thursday was set to make a final push on Thursday to secure the votes to begin dismantling Obamacare in the House of Representatives, with signs that enough Republicans might defect to jeopardize one of his top legislative priorities. Trump has mounted an intensive campaign to garner support for the initiative and the effort is seen by financial markets as a crucial test of his ability to move his legislative agenda, including planned tax cuts, through Congress....Trump and Ryan need strong support from their side of the aisle and can only afford to lose 21 Republican votes....The House vote had been expected by about 7 p.m. (2300 GMT)."

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3.22.17 - It's Time to Buy GOLD NOW!

Gold last traded at $1,249 an ounce. Silver at $17.57 an ounce.

NEWS SUMMARY: Precious metal prices rose Wednesday amid geopolitical uncertainty and dollar weakness. U.S. stocks traded mixed as investors digested upbeat tech news and downbeat retail news on Sears bankruptcy fears.

If You Like Gold, It's Time To Buy It -Forbes
"As I said to open the week last week, markets were pricing in a world without disruptions. But disruptions looked likely. Still, the week came and went and stocks were little changed, but yields came in lower (despite the Fed's third rate hike) and the dollar came in lower (again, despite the Fed's third rate hike)....Gold jumped on the Fed rate hike last week, and Yellen's more hawkish tone on inflation. If she's right, gold goes higher. If she's wrong, and the Fed has made a big mistake by hiking three times in a world that still can't sustain much growth or inflation, gold probably goes higher on the Fed's self-inflicted wounds to the economy."

Did you catch that? Gold prices are set to rise, no matter what the Fed does. So why wait? Smart money is buying now, before gold's next big leg up. Stay ahead of the 2017 financial curve by reading The 2017 Gold Report: Early Edition and The 2017 Silver Report: The Infrastructure Metal. Call Swiss America now at 800-289-2646 to receive these new Research Reports ... Free Of Charge!

federal reserve Dollar Bulls Are Throwing in the Towel as Trump Wagers Evaporate -Bloomberg
"Four months after the dawn of the Trump trade, currency investors worldwide are capitulating. That’s the signal from Bank of America Corp.’s flow data, which blends positioning and sentiment surveys conducted with its hedge fund and real-money clients, and publicly available futures data. The bank’s takeaway is that bullish dollar positions put on after the election have completely disappeared. 'The dollar positions accumulated in the buildup and immediate aftermath of the U.S. election look to have been fully unwound,' Bank of America strategists led by Myria Kyriacou wrote in a research note....That also means the U.S. currency, which has almost retraced the 7 percent rally since Donald Trump’s election victory, will be stuck in a range barring any concrete fiscal policy, the kind of game-changing announcement that investors have been waiting for since day one of his presidency."

Don’t look now, but the market’s big money is eyeing the exit -Marketwatch
"Institutional investors with a collective half-trillion dollars under management now say that global stocks are the most overvalued since 2000. Making matters even worse is that by their own admission they are massively overexposed to stocks in their portfolios - suggesting the risk of a crush at the exits if this thing turns sour....A net 34% of money managers reported that they now considered global equity markets overvalued....This is by far the highest figure seen in the survey in the past 17 years, says Merrill Lynch. And the region they consider the most overvalued? The U.S....The explanation for this apparent cognitive dissonance - some might say schizophrenia - may lie in career risk. So long as stock markets continue to go up, money managers dare not miss out."

Trump optimism is showing signs of cracking -CNBC
"For the first time since the election, markets are doubting they will get the pro-growth policies of tax reform and stimulus promised by President Donald Trump and the Republican Congress. The repeal of Obamacare appears to have hit some snags and the GOP brought out Trump earlier Tuesday to serve as pitchman to House Republicans who may have been wavering ahead of Thursday's vote. Whether he won votes or not is unclear, but markets certainly took the lack of clear majority support as a negative....The stock market sold off sharply with many market leaders of the Trump trade lagging. The Dow was down as much as 200 points, but the underpinnings of the market were even weaker. The Russell 2000 small-cap index, for instance, fell 2 percent, and the Dow transports lost 1.7 percent. Financial stocks were the worst performers, down 2.6 percent."

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3.21.17 - A New California Gold Rush

Gold last traded at $1,246 an ounce. Silver at $17.58 an ounce.

NEWS SUMMARY: Precious metal prices pushed higher Tuesday on safe haven buying and a sharply weaker dollar. U.S. stocks convulsed for a fourth day as financial and industrial stocks led the way lower.

Gold climbs near a 3-week high as dollar drops -Marketwatch
"Gold prices headed higher Tuesday, as the U.S. dollar declined, especially against the euro, as traders eyed the presidential race in France and the U.K. prepared its exit from the European Union. The ICE U.S. Dollar Index, which measures the greenback’s strength against a basket of six currencies, dropped 0.7% to 99.737 - trading at its lowest levels since early February....'The political uncertainties over in Europe around French elections and Brexit are going to provide a lot of tailwinds for the gold rally,' said Naeem Aslam, chief market analyst at Think Markets. Over in the U.S., gold may also soon be getting a boost from political risk tied to the vote, likely Thursday, on health care reform, said Colin Cieszynski, chief market strategist at CMC Markets, told MarketWatch."

inflation solution Don’t look now, but inflation may be about to surge -CNBC
"All signs point to rising inflation, but investors aren't properly pricing that into their decision making, according to one portfolio manager. Inflation expectations are relatively low, economic data show, 'which is just silly,' Charles Bobrinskoy, head of investment group at Chicago-based Ariel Investments said, Monday on CNBC's 'Trading Nation.'....Looking forward, Bobrinskoy points to some key factors that could push inflation higher, including a strengthening economy and the Federal Reserve raising interest rates. What's more is 'there's a lot of cash, a lot of lending going on around the world … labor costs are going up,' and thus inflation is ticking higher....Rising inflation translates to a weaker currency. Said Bobrinskoy: 'We have the first president who's ever tried to talk down the value of the U.S. dollar; that's never happened before. And the dollar going down is what inflation is all about.'"

The Road Back To Making America Great Again Has A Major Pitfall. Learn How To Avoid It. Read THE INFLATION SOLUTION, Swiss America's newest special report. "President Donald Trump is re-igniting America's mighty rocket engine of free market capitalism. His urgent goal is to get people working and the economy growing again, even if this includes increasing government spending. But solving such problems with a flood of mostly-free market money will likely trigger another problem: inflation. President Trump faces millions of Progressives fighting to keep the system of economics and dependence on government that they have devised to politically dominate the United States." What will this political battle do to your wealth and the value of the U.S. dollar? Find out HERE

A New California Gold Rush? -PontificationBlog
"California’s 2017 record rains nearly washed away the state’s tallest dam, threatening 200,000 people downstream near this place that 163 years ago was named Oroville. 'Oro' is Spanish for gold. Prospectors rushed here from all over the world following news of the 1849 huge gold strike in northern California, soon to become America’s Golden State. This year’s heavy rains ended the state’s long drought, and they also opened millions of veins of gold that the ’49ers never found....What seems surprising is that so few have grabbed this opportunity. The California Gold Rush symbolized the spirit and energy that caused exceptional people to move to America, and then to move west to pan for gold and settle the frontier. Are we losing that adventurous, hopeful spirit?"Full story

Bank Bloodbath Batters Stocks; Bonds, Bullion Bounce As Trumpcare Vote Doubts Rise -Zero Hedge
"VIX is jumping as stocks sink...And Bank stocks are collapsing...With the Financials ETF breaking below a key technical level...Bank stocks have now gone nowhere since Dec 8th. Lots of chatter about selling due to doubts on TrumpCare passing on Thursday - which will delay the tax reform foundation that the market is settled on (and any banking system reform)."

The Unifying American Story -Brooks/New York Times
"One of the things we’ve lost in this country is our story. It is the narrative that unites us around a common multigenerational project, that gives an overarching sense of meaning and purpose to our history. For most of the past 400 years, Americans did have an overarching story. It was the Exodus story. The Puritans came to this continent and felt they were escaping the bondage of their Egypt and building a new Jerusalem....The Puritans could survive hardship because they knew what kind of cosmic drama they were involved in....As Philip Gorski writes in his new book, 'American Covenant,' which is essential reading for this moment, the Puritans understood they were part of one covenant and had ferocious debates about what that covenant meant....We have a lot of crises in this country, but maybe the foundational one is the Telos Crisis, a crisis of purpose. Many people don’t know what this country is here for, and what we are here for. If you don’t know what your goal is, then every setback sends you into cynicism and selfishness."

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3.20.17 - Trump To Control the Fed by 2018

Gold last traded at $1,234 an ounce. Silver at $17.43 an ounce.

NEWS SUMMARY: Precious metal prices touched 2-week highs Monday on G20 comments and a weaker dollar. U.S. stocks traded mixed amid political uncertainty and comments by Fed speakers regarding inflation concerns.

Gold hits two-week high as dollar falls after G20 trade message -Reuters
"Gold prices scaled a two-week peak on Monday as the dollar slumped to a six-week low after a G20 weekend summit that was dominated by the U.S. administration's protectionist stance on global trade. The precious metal has been rising since last Wednesday, when the dollar dropped after the U.S. Federal Reserve raised interest rates but stopped short of predicting a sharper acceleration in monetary tightening over the next two years....Gold has rebounded more than $35 from the low hit before the Fed policy announcement last Wednesday, while the dollar has fallen 1.7 percent from its high of 101.71 the same day."

secret war The Only Way to Stop Indians Buying Gold? Take Away Their Cash -Bloomberg
"It seems the only way to stop Indians from buying more gold is to take their money away. Prime Minister Narendra Modi’s government spent 16 months trying to persuade Indians to deposit their jewelry in the bank to earn interest, in an effort to curb soaring imports of the precious metal. But the program has only lured a tiny fraction of the $900 billion of gold that families and temples are estimated to have stashed away. On the other hand, Modi’s controversial decision to withdraw all high-value banknotes did the job instead. Coupled with a higher import tax, the abolition of 86 percent of the nation’s banknotes in an anti-corruption drive helped push gold imports down 39 percent last year to 558 metric tons....'We Indians don’t like to sell our gold,' said Samsher Aliyar, a 29-year-old Mumbai cab driver. 'My grandmother’s generation and even my parents aren’t going to deposit their gold with the banks as they consider it a part of their children’s inheritance.'....The damping effect of Modi’s banknote withdrawal may not hold back the tide of gold imports for long and the banks will need to improve the deposit system if it’s to have a meaningful effect."

The Secret War on Cash explains how India's decree imposing currency controls plunged the nation's 1.3 billion people into chaos and why India's “demonetisation” was a large-scale test of what globalist Progressives call the “cashless society” - their ideological vision of the human future. Get the full story in Swiss America's FREE 12-page 2017 White Paper: The Secret War on Cash.

Donald Trump Owns the Fed, the Dollar & Gold -Rickards/Daily Reckoning
"Donald Trump has the opportunity to appoint a higher percentage of the Board of Governors of the Federal Reserve system at one time than any President since Woodrow Wilson....In other words, Donald Trump will be able to shape the Fed’s majority. His influence goes further than that, however. Federal Reserve Chair Janet Yellen’s term is up in next January - just 9 months from now. Whoever President Trump appoints to replace her - the fourth appointment he’ll have - will be subject to Senate confirmation. Because that process takes time, that means the President will have to name Yellen’s successor around November or December....And if all goes accordingly, President Trump will have control of six or even seven seats on the Federal Reserve Board by the summer of 2018. Trump will own the Fed. Meaning, whatever the president wants monetary policy to be, he’ll get....Right now, in March 2017, my expectation is that Kevin Warsh will be the next chairman. He’ll have a big voice in filling the other vacant seats. These will be hard money, strong dollar people."

The Fed's Global Dollar Problem -Bloomberg
"The Federal Reserve might be doing the right thing for the U.S. economy by moving to bring interest rates back up to normal. But for foreign companies and governments that have borrowed trillions of U.S. dollars, the adjustment could be painful....As of September, non-bank companies and governments outside the U.S. had some $10.5 trillion in dollar-denominated debt outstanding, according to the Bank for International Settlements. That's more than triple the level of September 2004, the last time the Fed was about this far into a cycle of rate increases....An increase of one percentage point, for example, would take $500 billion off the value of the bonds included in the Bank of America Merrill Lynch U.S. Dollar Global Corporate and High Yield Index....In any case, the repercussions will likely come back and hit markets and growth in the U.S. as well. Which means that the Fed will have to keep all that dollar debt in mind as it decides what to do."

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