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8.15.17 - Personal Debt at All Time High

Gold last traded at $1,279. Silver at $16.71 an ounce.

News Summary: Precious metal prices eased back Tuesday on normal profit-taking following recent gains. U.S. stocks struggled as investors scaled back buying on retailer wreck.

Americans' debt level notches a news record high - Reuters
"Americans' debt level notched another record high in the second quarter, after having earlier in the year surpassed its pre-crisis peak, on the back of modest rises in mortgage, auto and credit card debt, where delinquencies jumped. Total U.S. household debt was $12.84 trillion in the three months to June, up $552 billion from a year ago, according to a Federal Reserve Bank of New York report published on Tuesday. The proportion of overall debt that was delinquent, at 4.8 percent, was on par with the previous quarter. However a red flag was raised over the transitions of credit card balances into delinquency, which the New York Fed said 'ticked up notably.' Loosening lending standards have allowed borrowers with lower credit scores to access credit cards, Andrew Haughwout, an in-house economist, said in the report. 'The current state of credit card delinquency flows can be an early indicator of future trends and we will closely monitor the degree to which this uptick is predictive of further consumer distress,' he said."

debt China's debt boom could lead to financial crisis, IMF warns - The Telegraph
"China’s economy is reliant on too much debt and the enormous boom in credit risks leading to a new financial crisis, the International Monetary Fund (IMF) has warned. GDP in the world’s second largest economy is set to grow by 6.7pc this year and 6.4pc next year, better than the 6.6pc and 6.2pc growth rates that the IMF forecast earlier this year. Stronger global growth has given China a lift, as has extra government spending. But in the years ahead, risks will grow as China’s extraordinary debt bubble keeps on building. Growth in China has been propped up by rapid increases in debt in recent years. 'Nominal credit to the nonfinancial sector more than doubled in the last five years, and the total domestic nonfinancial credit-to-GDP ratio increased by 60 percentage points to about 230pc in 2016,' the IMF found. Those debts are expected to rise to almost 300pc of GDP in 2022.... 'International experience suggests that China’s current credit trajectory is dangerous with increasing risks of a disruptive adjustment and/or a marked growth slowdown,' the report said. Its analysts studied 43 large credit booms and found that almost every single one resulted in a sharp slowdown or a financial crisis."

The Investment Bank Tipping Gold to Hit $1,400 - Bloomberg
"Gold prices are set to jump to a four-year high of $1,400 an ounce by the end of the year over mounting tensions between North Korea and the U.S., and surging demand in the world’s biggest consumers, according to the head of precious metals at a Russian investment bank. Bullion could rise to $1,360 within three months before climbing higher, fueled by global political risks and buying from China and India, said Evgeny Ananiev at VTB Capital JSC, the investment-banking unit of Russia’s second-largest lender VTB Group. 'We may see some correction, but I don’t think gold will drop below $1,200 as it’s well supported,' he said in a weekend interview in Goa.....'Fundamentally, we have been very bullish on the market,' said Chirag Sheth, an analyst at Metals Focus Ltd., an independent precious-metals research firm based in London....Sheth expects prices to advance to $1,400 in six to nine months as the situation in North Korea sees investors coming back to the market in search of a haven. The U.S. Federal Reserve, which was hawkish on interest rates, has now softened its stance, providing further support to bullion, he said."

Housing Bubble 2.0: Number Of Homebuyers Putting Less Than 10% Down Soars to 7-Year High - Zero Hedge
"A really long, long time ago.... the entire international financial system almost collapsed courtesy of a mortgage lending bubble that allowed anyone with a pulse to finance over 100% of a home's purchase price...with pretty much no questions asked.... As Black Knight Financial Services points out, down payments, the very thing that is supposed to deter rampant housing speculation by forcing buyers to have 'skin in the game', are once again disappearing from the mortgage market. In fact, just in the last 12 months, 1.5 million borrowers have purchased a home with less than 10% down, a 7-year high.....On the bright side, at least Yellen's interest rate bubble means that today's housing speculators don't even have to rely on introductory teaser rates to finance their McMansions...Yellen just artificially set the 30-year fixed rate at the 2007 ARM teaser's just much easier this way."

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8.14.17 - Investment Advice During Turmoil

NEWS SUMMARY: Gold surge ebbs as North Korea tensions ease, silver sustains. Stocks regain as fear subsides.

DALIO: Risks are rising, and everybody should put 5% to 10% of their assets in gold -BusinessInsider
"Geopolitical risks are rising, and everyone needs to consider an allocation to gold. That's according to a Bridgewater Associates note to clients released on Wednesday, penned by founder Ray Dalio and staffers Bob Elliott, Steven Kryger, and Neil Hannan. Bridgewater, based in Bridgeport, Connecticut, is the world's largest hedge fund firm, managing about $160 billion firmwide across strategies. 'When it comes to assessing political matters (especially global geopolitics like the North Korea matter), we are very humble. We know that we don't have a unique insight that we'd choose to bet on ... We can also say that if the above things go badly, it would seem that gold (more than other safe haven assets like the dollar, yen, and treasuries) would benefit, so if you don't have 5-10% of your assets in gold as a hedge, we'd suggest you relook at this. Don't let traditional biases, rather than an excellent analysis, stand in the way of you doing this (and if you do have an excellent analysis of why you shouldn't have such an allocation to gold, we'd appreciate you sharing it with us.)' Dalio has long been of the view that investors should have at least some allocation to gold, saying as much in an interview with Business Insider's Henry Blodget earlier this year."

chipped You will get chipped – eventually -CNBC
"You will get chipped. It's just a matter of time. In the aftermath of a Wisconsin firm embedding microchips in employees last week to ditch company badges and corporate logons, the Internet has entered into full-throated debate. Religious activists are so appalled, they've been penning nasty 1-star reviews of the company, Three Square Market, on Google, Glassdoor and social media. On the flip side, seemingly everyone else wants to know: Is this what real life is going to be like soon at work? Will I be chipped? 'It will happen to everybody,' says Noelle Chesley, 49, associate professor of sociology at the University of Wisconsin-Milwaukee. "'But not this year, and not in 2018. Maybe not my generation, but certainly that of my kids.'....This would go beyond paying with your smartphone. Instead, chipped customers would simply wave their hands in lieu of Apple Pay and other mobile-payment systems. The benefits don't stop there. In the future, consumers could zip through airport scanners sans passport or drivers license; open doors; start cars; and operate home automation systems. All of it, if the technology pans out, with the simple wave of a hand....Be it wearable technology or an embedded chip, the always on-always connected chip is going to be part of our lives."

Advice for investing during turmoil: 'Do less' -CNBC
"Michael Batnick of Ritholtz Wealth Management believes investors should 'do less' and focus on the long term to achieve success, especially during times of geopolitical crisis and high volatility like we've seen this week....'The important thing is to just do less, make less decisions. Never change a portfolio because of what happened yesterday,' Batnick said. 'Everybody tries to beat the market. Some people: it takes them a lifetime to figure out that they can't do it. Some people never figure it out. Some people figure it out really quickly. I was on the quicker side.' Batnick is the director of research at Ritholtz, which oversees around $550 million in assets and was founded in 2013 by Barry Ritholtz and Josh Brown."

When Cash Is King -SilverlightInvest
"Investor cash levels are near an all-time low. Meanwhile, Warren Buffett is sitting on a record amount of cash. How much cash do you have on the sidelines? How much should you have? Cash competes with other asset classes for investor wallet share. Right now, it's losing that battle. In the latest weekly survey of Bank of America Merrill Lynch high net worth clients, cash allocation fell to an all-time low of 10.4%. The previous low of 11% was recorded in April 2007. Cash does not appear to be an attractive asset if you know how to apply The Rule of 72—a math shortcut that allows you to figure out how long it will take to double your money at a specified level of return. Once upon a time, cash paid 5%. Really, it did. Back then, you could park in cash and double your money in 14.4 years (72/5 = 14.4). Presently, cash yields very little. You can get 1% or so. That's 72 years to double your money!....And yet the all-time ‘King of Investing,’ Warren Buffett, is compiling the biggest cash war chest in Berkshire Hathaway history....Cash becomes a progressively more appealing option as a cycle ages....The best investment opportunities are when others are scrambling to raise cash, when everyone else is selling and you are in the rare position to buy. That’s when cash is at its peak value as an asset—that's when cash is king."

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8.11.17 - A Debased Dollar Tilts Playing Field

NEWS SUMMARY: Precious metal prices trended higher on Friday, with gold gaining on safe haven buying and a weaker dollar. U.S. stocks rose as investors focused on tame inflation data rather than ongoing North Korea worries.

'Gold is about break out on the upside strongly,' -Gartman/CNBC
"The runup in gold prices is far from over, commodities expert Dennis Gartman told CNBC on Thursday. With tensions mounting between the United States and North Korea, investors have been moving into the precious metal and other safe haven trades. On Thursday, gold futures hit their highest level in two months, jumping about 1 percent. 'Gold is about to break out on the upside strongly,' the editor and publisher of The Gartman Letter said in an interview with 'Power Lunch.' Gartman has liked the commodity for years and believes right now investors should have about 10 to 15 percent of their portfolios allocated to gold. 'One never knows when geopolitical risks will arise. One never knows when something untoward will happen economically,' he said. 'The stock market looks a little vulnerable. The geopolitical circumstances are getting worse and worse.' Gartman added."

Uneven Final Currency Debasement to Zero Has Started -GoldSwitzerland
"Fake money has created a totally uneven playing field for most ordinary people. Money used to represent a medium of exchange that would facilitate bartering. Instead of exchanging goods or services, people would receive a piece of paper that was equal to the value of their goods or services....Eventually bankers started to cheat and issued a lot more money/paper than the counter value produced in kind. And that was the beginning of money printing....The problem with money printing is not just that it destroys the value of paper money, as creating money out of thin air also creates a totally uneven playing field. To produce goods or services requires a lot of hard labor for ordinary people. But governments and bankers have the upper hand because they just need some electricity which allows them to press a button to produce money....We are now not far from the point when the bubbles in stocks, credit and property will collapse. This will lead to a final futile attempt by governments to save the world by printing unlimited amounts of money. At that point, normal people will finally realize that the money they are holding is totally worthless. This will lead to protests, attack on government and bankers as well as social unrest....During the autumn of 2017, gold is likely to resume its uptrend to eventually much higher levels."

In the Age of Trump, the Dollar No Longer Seems a Sure Thing -NewYorkTimes
"When trouble flares and anxiety mounts, people who manage money traditionally entrust it to a seemingly indomitable refuge, the American dollar. Yet on Wednesday, in the hours after President’s Trump’s threat to unleash 'fire and fury' on North Korea if it continued to menace the United States, global investors sold the dollar. The same dynamic played out in June, as Saudi Arabia and other Arab nations imposed an embargo on Qatar, delivering a fraught crisis to the oil-rich Persian Gulf....Since the beginning of the year, the dollar has surrendered nearly 8 percent against a basket of major currencies....The dollar has in some sense become an international medium of expression about the American political environment. Its value offers a gauge of sentiment for Mr. Trump's prospects in achieving his economic goals, as well as worries about his potentially impulsive declarations....The fate of the dollar is now subject to the influences of a presidential administration that has given markets an expectation for the unexpected."

Americans are saving less as income lags spending -USAToday
"As average wage hikes across the U.S. continue to lag increases in spending, Americans are saving less or dipping into bank accounts to fuel their outlays. Some economists say that's an unsustainable dynamic that portends a downturn in consumer spending, which has been driving economic growth. From the second quarter of 2015 to the second quarter of 2017, personal disposable income increased an average of 2.8% a year while consumer outlays rose about 4% a year, BEA figures show. The gap between income and spending is pulled from savings. 'If you're relying on your savings to finance your spending, at some point you’re going to run dry,' says Gregory Daco, chief U.S. economist of Oxford Economics....So far, pay increases have been tempered, contributing to the lion's share of the sluggish income growth, says BEA economist Kurt Kunze....'When everything else is going up and your paycheck isn't, it's not even keeping pace with the cost of living,' he says."

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8.10.17 - Gold: Defensive Demand Growing

Gold last traded at $1,290. Silver at $17.06 an ounce.

NEWS SUMMARY: Precious metal prices rose Thursday on rising safe-haven demand amid ongoing geopolitical fears. U.S. stocks traded broadly lower as tensions with North Korea escalated.

Gold Prices Hit 2-Month Highs, Defensive Demand Continues -EconomicCalendar
"Gold prices have maintained a firm tone with a push to 2-month highs on Thursday as underlying demand for defensive assets remained an important feature. There were further tensions surrounding North Korea on Thursday with the Pyongyang regime claiming that missiles which could be used to target the Pacific island of Guam would be ready to launch by mid-August....Markets remained concerned over the risk of a US first-strike against North Korean nuclear facilities. Equity markets continued to lose ground on Thursday which provided further net support to gold, especially with bond yields tending to drift lower....The dollar overall drifted weaker which provided further support to gold prices."

gold Beneath Markets’ Calm Are Signs of Growing Investor Caution -NewYorkTimes
"President Trump threatened nuclear war with North Korea, and the markets yawned....But beneath the calm there were signs that investors...are becoming more cautious. The price of gold, a traditional safe haven investment, has been rising, and on Wednesday it continued its march, increasing more than 1 percent on the day. Gold’s strong move pushed it just barely ahead of the Standard & Poor’s 500-stock index for the year - up 10.47 percent, compared with 10.43 percent for the S.&P....Gold tends to outperform stocks when the markets are sliding, so it is unusual for such a conservative investment to beat equities when they have been on a tear as has been the case this year. What is driving this anomaly, some say, is a recognition that eventually investors will no longer be able to ignore recent headline risks - be it nuclear tensions with North Korea, a trade war with China or a debt ceiling crisis in Washington....Once investors return from vacation, the theory goes, and with no good earnings news to inspire them, they will be more sensitive to headline events. That could result in sharper moves downward in stock market indexes."

Financial Martial Law Is Coming -BonnerAndPartners
"JPMorgan Chase - the country’s biggest bank - has banned cash payments for credit card debt, mortgages, and car loans. It has also banned the storage of 'any cash or coins' in safe deposit boxes. And all U.S. banks now view large cash withdrawals as suspicious. Under the Bank Secrecy Act, if you withdraw $10,000 or more in a day, your bank is required to file something called a Currency Transaction Report with the Financial Crimes Enforcement Network (FinCEN)....And your bank is required to file something called a Suspicious Activity Report with FinCEN if it believes you are trying to avoid triggering a Currency Transaction Report by withdrawing smaller cash amounts. This puts all cash withdrawals under the microscope....And even if you manage to get your cash out of your bank, having it on your person also makes you a target of the authorities. Under civil asset forfeiture laws, police and federal agents can confiscate any cash you might have on you if they merely suspect it was involved in a crime."

Tax Reform: Republicans Too Often Are Cowardly And Incompetent -Steve Forbes/Forbes
"When Democrats hurl the charge that Republican tax-reduction proposals 'favor the rich,' too many GOPers quiver and quake and run for cover...Without investment, we don't progress, and living standards stagnate, then decline. Yet Republican senators decided to retain these anti-growth levies, lest they be accused of 'favoring the rich.'....All this is a sad commentary on a party that tells us it still admires Ronald Reagan. The Gipper would have gagged at such populist posturing. He understood - as too many Republicans these days do not - that voters want a growing economy and wages that grow right along with it....Republicans are fools to play the class-envy game. They will lose to the Bernie Sanders and Elizabeth Warren types every time. Voters want results, not a GOP version of socialism lite....The formula for prosperity isn't a new one: low tax rates and sound money....As for a big overhaul of the federal income tax code, forget it. It's too late now....Make simple cuts now, and go for major tax reform after next year's elections."

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