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1.17.20 - College Degrees No Longer Create Wealth

Gold last traded at $1,559 an ounce. Silver at $18.07 an ounce.

NEWS SUMMARY: Precious metal prices rose Friday on bargain-hunting despite a firmer dollar. U.S. stocks rose as strong global economic data and a solid start to the earnings season led to another week of gains.

Your pension is being robbed, gold is only salvation -Kiyosaki/Kitco
"A ballooning retiree population over the coming years is likely to force the government to print more money in order to support pensioners, and this will create a good environment for gold, said Robert Kiyosaki, author of Who Stole My Pension? How You Can Stop the Looting. 'In the next ten years, two billion old guys like me will retire. Two billion, all over the world. This is a global crisis,' Kiyosaki told Kitco News. 'I'm buying gold and silver, I love silver, because it's cheap.' He added that the government will have to print more money to cover a massive shortfall of money for retirees."

QE hell The Federal Reserve is stuck in quantitative-easing hell -Marketwatch
"Imagine doing the same thing over and over again, with little progress and no relief. Sounds like most people's vision of hell - or the Federal Reserve's current predicament. Since September, the central bank, through the Federal Reserve Bank of New York, has been purchasing securities hand over fist to alleviate short-term pressures in the overnight money markets. It has used repurchase ('repo') and reverse repurchase ('reverse repo') agreements to provide liquidity and keep overnight borrowing rates from spiking...Powell and the Fed have repeatedly denied this is a new phase of 'quantitative easing (QE),' three rounds of which added $3.6 trillion to the Fed's balance sheet in the years after the financial crisis....Danielle DiMartino Booth, CEO of Dallas-based research firm Quill Intelligence, says the Fed is on the cusp of enacting QE4, or may already be there....'The Fed will tell you it's all technical in nature,' she said. 'In their last minutes, they said that if they had to move into [longer] coupons, they would. So the table has been set.' This all comes, Booth believes, amid a weakening economy....Booth points out that by several measures, 'outside of the year 2000 the stock market has never been as overvalued,' which means stock markets more than ever hinge on the Fed's every move. 'We have certainly started to see some signs of slowing, and I think Jay Powell is trapped,' said Booth. 'The Fed is trying to keep a bucket full that's filled with holes.' Welcome to QE - or not QE - hell."

Political Turmoil to Be 'New Normal' for 2020 -Yahoo News
"'We all need to buckle up for 2020,' said Miha Hribernik, the Singapore-based head of Asia risk insight for Verisk Maplecroft. 'The rage that caught many governments off-guard last year isn't going anywhere and we'd all better adapt.' Many governments were caught by surprise by the scale and ferocity of the protests and ended up attempting to crackdown on the movements, deploying what human rights group have said were arbitrary arrests and indiscriminate violence. That response has ended up further radicalizing protesters and provoking more violent demonstrations, Verisk Maplecroft said in its Political Risk Outlook 2020....Hong Kong similarly rose from 117th to 26th after seven months of pro-democracy street protests, the firm said. Although prompted by a since-withdrawn bill that would have allowed extraditions to mainland China, Verisk Maplecroft added that the 'root cause of discontent has been the rollback of civil and political rights since 1997.' India and Iraq, which have both seen determined protests recently, ranked much lower on the list of worsening hot spots because they began last year with heightened levels of unrest."

College Degrees Used to Make Families Wealthier. That's No Longer True -Worth
"The conventional wisdom is that a college education all but guarantees access to the middle class and a higher standard of living for each successive generation. Yet new research from the Federal Reserve Bank of Saint Louis calls this equation into question. The numbers are stark. The college income premium still exists. But the wealth premium - the difference in net worth between college and non-college graduates - has plunged since 1940. Put simply: College graduates today are experiencing a profound struggle to generate wealth. The biggest culprit is likely the surging cost of higher education and an accompanying increase in student loan debt...This is a 'striking divergence between the income and wealth outcomes.'....'While the overall level of consumer prices has increased by a factor of four since 1978,' the report says, 'the cost of college tuition and fees has increased by a factor of almost 14 - more than triple the overall increase in consumer prices.' These two trends, the slump in household net worth and the drastic rise in student loan debt, are becoming increasingly acute...Total student loan debt has reached $1.46 trillion, compared to $870 billion for credit card debt and $1.27 trillion for automotive debt."

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1.16.20 - Bridgewater Sees Gold Price Spiking 30%

Gold last traded at $1,551 an ounce. Silver at $17.97 an ounce.

NEWS SUMMARY: Precious metal prices eased Thursday as upbeat economic data boosted the dollar. U.S. stocks rose after Morgan Stanley’s quarterly figures topped analyst expectations as investors cheered solid economic data.

Bridgewater sees gold spiking 30% to a record high -Markets Insider
"Gold could spike 30% to a record high of over $2,000 an ounce as central banks allow inflation and political fears mount, Bridgewater Associates boss Greg Jensen told the Financial Times. The Federal Reserve and other central banks won't clamp down on inflation or raise interest rates in the near term, supporting a higher gold price, said Ray Dalio's co-chief at the world's largest hedge fund. 'That's a big deal.' Gold could also benefit from the widening gap between rich and poor Americans, and rising tensions between the US and China, Iran, and others, Jensen told the Financial Times. 'There is so much boiling conflict, that gold being part of a portfolio makes sense to us.' In fact, rising inflation and soaring budget and trade deficits could lead to gold eventually replacing the US dollar as the world's reserve currency, Jensen told the newspaper. 'When you look at the geopolitical strife, how many foreign entities really want to hold dollars?' he said. 'What are they going to hold? Gold stands out because it's nobody else's liabilities as a possibility.'....US stocks are also 'frothy' after a decade of outperformance, Jensen told the newspaper, providing another reason to favor gold."

trade deal $95 Billion Centerpiece of the Trade Deal Is Already In Doubt -Bloomberg/Yahoo Finance
"China has pledged to buy almost $95 billion worth of additional U.S. commodities as part of a phase one trade deal. The market is not so sure. Prices fell for most raw materials that are part of the agreement...Traders said evidence of increases in shipments is needed for market gains. The pessimism was in contrast to comments at the White House by President Donald Trump, who said U.S. energy producers and farmers would benefit....'Signing the deal is the easy part,' said Ken Morrison, a St. Louis-based independent commodity trader. 'I have yet to hear a sound argument on how China will execute this deal.' China pledged to buy a total of $32 billion in additional agricultural products over the next two years, while it said it will also 'strive' for another $10 billion of purchases. That includes oil seeds, meat, cereals, ethanol and cotton. It also promised $52.4 billion in further purchases of American energy such as LNG, crude oil and coal over 2020 and 2021. However, the so-called phase-one deal that was signed in Washington Wednesday didn't specify whether the Asian nation will lift retaliatory duties it imposed on American goods such as oil, soybeans and LNG....'Without more concrete details, we are deeply concerned that all of this pain may not have been worth it,' the National Farmers Union, which represents almost 200,000 American farmers, said in a statement. 'Given the numerous deals that have been reached and then breached in the past two years, we are also skeptical.'"

The Fed Admits Being Forced To Fuel Asset Bubble -Zero Hedge
"The worst kept secret in the financial world is now not only accepted orthodoxy, but finally being discussed openly by, at least some, authorities. Central bank policies are directly driving asset prices and the bubbles therein. It's what they do. It has been so stunningly obvious that, at this point, it makes a mockery of things to deny it as an ongoing, and essential, part of how their strategy is implemented....In some ways it was refreshing that Dallas Fed President Robert Kaplan openly talked about it in an interview Wednesday. Although he did couch it in terms that implied it was a matter of some concern to him. But, of course, he went on to say, 'we've done what we need to do up until now.' 'My own view is it's having some effect on risk assets,' Kaplan said. 'It's a derivative of QE when we buy bills and we inject more liquidity; it affects risk assets. This is why I say growth in the balance sheet is not free. There is a cost to it.'...Their ability to drive investor behavior is so well established that what is going on in the markets can't remotely be seen as an unintended, or even unwanted, consequence....Stocks act as if they are bullet-proof. Stock buy-backs look like they are front-running the inevitable rather than being the cause of it. Reports of new all-time highs, need to include the word 'again.'....Most worryingly, I keep hearing from people who are sure that it's obvious where we go from here."

Trump Impeachment Trial Begins -Wall Street Journal
"The impeachment trial of President Trump on charges of abuse of power and obstruction of Congress will begin in the U.S. Senate on Thursday with a ceremonial reading of the House-passed articles and a solemn swearing-in of all 100 senators, who will pledge to do 'impartial justice.' The moment will mark the official start of the trial - only the third such proceeding against a U.S. president in history. At least two-thirds of the senators would have to vote to convict Mr. Trump to remove him from office. Mr. Trump has denied wrongdoing. At 2 p.m., Chief Justice John Roberts, who will preside, will arrive at the Capitol to be sworn in by Sen. Chuck Grassley (R., Iowa), the Senate's president pro tempore....'We will pledge to rise above petty factionalism and do justice for our institutions, for our states, and for the nation,' Senate Majority Leader Mitch McConnell (R., Ky.) said on the floor on Wednesday evening. After the swearing-in, the Senate will formally notify the White House of the pending trial and summon Mr. Trump, but he will be given time to reply....During the trial, all senators will be warned by the Sergeant at Arms to remain silent 'on pain of imprisonment' and will be expected to be present and seated at their assigned desks. 'It's a place apart from the normal Senate business,' said Sen. Dianne Feinstein (D., Calif.), who also was a senator during the Clinton trial. 'The minute you walk in, it's electric with significance,' she said."

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1.15.20 - 2020 Outlook: America At The Crossroads

Gold last traded at $1,544 an ounce. Silver at $17.80 an ounce

NEWS SUMMARY: Precious metal prices rose Wednesday on bargain-hunting and a weaker dollar. U.S. stocks rose ahead of the U.S. and China signing a so-called phase one trade deal amid upbeat corporate earnings.

Central Banks Continue "Remarkable" Gold-Buying Spree -Zero Hedge
"Central banks continued their remarkable gold-buying spree...and remain on pace to eclipse 2018's near-record purchases....In 2018, central banks purchased just over 650 tons. According to the WGC, that was the highest level of annual net central bank gold purchases since the suspension of dollar convertibility into gold in 1971, and the second-highest annual total on record....For the second month in a row, the People's Bank of China did not report any gold purchases. It's not uncommon for China to go silent and then suddenly announce a large increase in reserves. The World Gold Council called the scale of central bank gold purchases in 2019 'remarkable.' The central bank gold-buying spree is expected to continue into 2020 as countries continue to create a hedge against geopolitical risk and diversify their reserves away from the US dollar."

RMP2020 America At The Crossroads -Real Money Perspectives/Swiss America
"America was founded upon sacred principles, which built the world's strongest economy; but today our position as the world's leader is at risk. Our nation's social and economic divide is approaching a boiling point. Unless cooler heads prevail, we may soon face an even more disunited United States. Solutions demand unity and clarity of vision. In 2020 it will be important for investors to remove their rose-colored glasses and take a hard look at what is going on in the economic and political world. The problem with looking at the world through rose-colored glasses is all of life's red flags look just like ordinary flags. The truth is, no one can predict the economic or political outcome of 2020, which is precisely why wise investors cover all the bases; regardless of which way the political winds blow. Our goal in this 38th Anniversary Issue of Real Money Perspectives is to elevate your perspective so you may better navigate the future. CLICK HERE to request a free copy.

Weakening Dollar Could Lift Commodities in 2020 -Wall Street Journal
"A softening U.S. dollar could give commodity prices a boost this year. After a year in which a strong dollar weighed on commodity prices, some banks now predict the U.S. dollar is set to weaken in 2020, dragged lower by expectations that the Federal Reserve will keep interest rates steady after recent cuts. Lower interest rates make a currency less attractive to investors, as they offer lower rates of return. That could herald good news in 2020 for investors already betting that easing trade tensions between the U.S. and China and a pickup in global growth will lift demand for commodities like metals and crude oil....'When there's weakness in the dollar, the usual response is to pick up things that are priced in dollars,' said Tai Wong, head of base and precious metals derivatives trading at Bank of Montreal."

Bernie's Senior Economic Advisor Sees No Problem in Printing Unlimited Money -Youngberg/
"Much like I can create as many strong recommendations [for my economics students] as I want, Modern Monetary Theory notes that a country has a god-like power to create its own currency. Therefore, they argue, countries that control their own currency shouldn't bother budgeting. Budgeting is for us mere mortals. The theory turns out to be little more than a recipe for hyperinflation, but that didn't stop Stephanie Kelton, Bernie Sanders's senior economic advisor, from sending out this tweet: 'The carpenter can't run out of inches, The stadium can't run out of points, The airline can't run out of FF miles, And the USA can't run out of dollars.' Kelton conveniently does not mention that carpenters can run out of wood, the stadium can run out of seats, and the airline can run out of fuel. The ability of a country's economy to grow restrains the government's ability to print money without causing inflation. Money is spent to buy resources; if money far exceeds resources, inflation follows....And if a country created more money than its economy could possibly justify, its money would mean nothing (something too many countries have learned the hard way)....So it's true that the US can't run out of dollars. It is also true that you can't run out of zeros, which will be important if the nation has to measure inflation under MMT."

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1.14.20 - A Trade Deal Neither US/China Wanted

Gold last traded at $1,544 an ounce. Silver at $17.80 an ounce.

NEWS SUMMARY: Precious metal prices drifted lower Tuesday on profit-taking and a firmer dollar. U.S. stocks traded mixed despite J.P. Morgan Chase and Citigroup posting stronger-than-forecast quarterly results.

World's super-rich are hoarding physical gold -RT Business News
"The strategic case for owning gold remains strong, according to analysts at Goldman Sachs. They point to such factors as political uncertainty, recession fears and other worries among the global elite. Data from Goldman research showed that owning the physical metal seems to be the global elite's preferred way to hedge against tail events. Physical buying of gold has increased at a rapid pace in the past three years, statistics showed. 'Since the end of 2016 the implied build in non-transparent gold investment has been much larger than the build in visible gold ETFs (Exchange-traded funds),' Goldman said in a note sent to clients and seen by Yahoo Finance....'Political risks, in our view, help explain this, because if an individual is trying to minimize the risks of sanctions or wealth taxes, then buying physical gold bars and storing them in a vault - where it is more difficult for governments to reach them - makes sense.' The investment bank added: 'Finally, this build can also reflect hedges by global high net worth individuals against tail economic and political risk scenarios in which they do not want to have any financial entity intermediating their gold positions due to the counter-party credit risk involved.'"

dollar "This Is Insanity!" - Jim Rogers Warns Of "Horrible Time" Ahead -Zero Hedge
"The Fed has increased its balance sheet over 500% in the past decade; The Bank of Japan is printing money to buy bonds and stock ETFs; and The European Central Bank is mired in insane negative interests. And, according to legendary investor Jim Rogers, they will continue this 'madness' as long as its necessary. In an interview with RT's Boom Bust, Rogers exclaims, that interest rates around the world have never been this low: '... this is insanity, that's not how sound economic systems are supposed to work.' In 2008, Rogers notes that we had problems because of too much debt, however, 'since then the debt has skyrocketed everywhere and it's going higher and higher. We are going to have a horrible time when this all comes to an end.'...Rogers warns that central banks will print even more and buy even more assets. 'And that's when we will have very serious problems... We all are going to pay a horrible price someday but in the meantime it's a lot of fun for a lot of people.' When it comes to an end, Rogers laments, 'it will be the worst of my lifetime.'"

How the U.S. and China Settled on a Trade Deal Neither Wanted -Wall Street Journal
"U.S. talks with China to complete a first-stage trade deal had hit an impasse around Thanksgiving, raising fears a nascent accord would collapse again - and with it, hope for a halt to the nearly two-year-old trade war. Looking for a direct route to the president, Chinese Ambassador Cui Tiankai spoke with President Trump's son-in-law and adviser, Jared Kushner, say people familiar with the episode. The U.S. offer didn't roll back enough tariffs, he told Mr. Kushner. It was time to settle, Mr. Kushner responded...The agreement wouldn't force China to make economic-policy changes Washington had long insisted on. About two weeks later, both sides announced the compromise set to be signed at a White House ceremony Wednesday. The accord promises increased purchases of U.S. goods and services, greater access for American firms to China's banking, insurance and other financial sectors, an end to tariff threats - and a chance to reset relations between the world's largest economies. Even so, the deal isn't what either side said it had wanted. The U.S. doesn't get the fundamental reforms in Chinese economic policy it sought to help American businesses. And levies remain on about $370 billion of China’s exports....Chinese officials feel they have little to gain from a phase-two deal forcing Beijing to ease state control of the economy, and Mr. Trump recently said that a phase-two agreement probably wouldn't conclude until after the Nov. 3 election."

Yes, Democrats will 'debate' each other. But Trump (and his rivals) should be asked about THIS -Thomas/Fox News
"As high-minded as most Democrats try to sound when trying to remove President Trump from office, their real motives appear transparent. Out of touch doesn't begin to describe most people running for, or seeking to remain, in office. They consult pollsters for what people want to hear, instead of telling them what they need to hear. It's like gratifying children by allowing them to eat their dessert first and if they have no room or interest in vegetables, it's OK. Politicians, including the president, should be asked serious questions during this year's election campaign, instead of the media's fixation on impeachment, polls and the horse race. Here are a few that come to mind: 1. Government is bigger than ever, far larger and more intrusive than our Founders anticipated and warned us about...Would you be willing to identify them and if elected (or reelected) terminate them? 2. The national debt is $23 trillion and the deficit is at record highs...Do you have the courage to lead on this issue? 3. President Trump has wanted to pull American troops out of areas where wars never seem to end, but circumstances have prevented him from fully doing so...Should the U.S. be policing the world and if so, why? If not, why not?....There are other questions you might think of, but the answers to these would get the attention of voters, unlike the bad drama that is about to play out in Washington this week and who knows for how many more days and weeks to come?"

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