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6.28.17 - Let's Stress Test Government, Not Banks

Gold last traded at $1,249 an ounce. Silver traded at $16.79 an ounce.

NEWS SUMMARY: Precious metal prices rose Wednesday on bargain-hunting and a weaker dollar. U.S. stocks rose propelled by U.S. banking stocks and EU reflation outlook.

Gold mine output turning down this year. Is Peak Gold with us? -SharpsPixley
"The latest weekly Precious Metals newsletter from London-based specialist consultancy Metals Focus at last sees gold output growth grinding to a halt during the current year....The analysts see mine supply as holding up reasonably robustly, at least in the near-term, but even so they forecast that global gold mine production will fall marginally overall in 2017, bringing to a close nearly a decade of continued growth....We continue to see gold flowing from West to East as the expansion in Asian wealth in particular, and the propensity of the citizens in that region to accumulate gold as financial insurance will gradually see pricing power for precious metals moving eastwards."

location Pending Home Sales Tumble, Unchanged Since June 2013 -ZeroHedge
"After modest bounces in existing and new home sales (despite weakness in starts and permits and mortgage application declines), pending home sales in May tumbled 0.8% MoM and were revised even lower (-1.7%) in April. This dismal print was below all economists' expectations, missing by 4 standard deviations. This is the 3rd straight monthly drop and 2nd straight annual decline in pending home sales. The biggest MoM decline was in The West (down 1.3%), but Pending Home Sales are now unchanged since June 2013....NAR notes that prospective buyers are being sidelined by both limited choices and home prices that are climbing too fast. 'Monthly closings have recently been oscillating back and forth, but this third consecutive decline in contract activity implies a possible topping off in sales.'"

New computer virus spreads from Ukraine to disrupt world business -Reuters
"A cyber attack wreaked havoc around the globe on Wednesday, crippling thousands of computers, disrupting operations at ports from Mumbai to Los Angeles and halting production at a chocolate factory in Australia. The virus is believed to have first taken hold on Tuesday in Ukraine where it silently infected computers after users downloaded a popular tax accounting package or visited a local news site, national police and international cyber experts said. The malicious code locked machines and demanded victims post a ransom worth $300 in bitcoins or lose their data entirely, similar to the extortion tactic used in the global WannaCry ransomware attack in May....The aim of the latest attack appeared to be disruption rather than ransom, said Brian Lord, former deputy director of intelligence and cyber operations at Britain's GCHQ and now managing director at private security firm PGI Cyber. 'My sense is this starts to look like a state operating through a proxy ... as a kind of experiment to see what happens,' Lord told Reuters on Wednesday....Maersk was one of the first global firms to be taken down by the cyber attack and its operations at major ports such as Mumbai in India, Rotterdam in the Netherlands and Los Angeles on the U.S. west coast were disrupted."

Stress Test Government, Not Banks -FirstTrustOutlook
"The Federal Reserve just finished its annual round of large bank stress tests. The banks all passed - meaning they had enough capital to withstand a massive financial shock and deep recession. These stress tests are the political result of the government blaming banks, and not Fannie and Freddie, for the 2008 Panic and are designed to prevent another 'market failure.'....The biggest threat to prosperity has never been market failure; instead, the biggest threat is 'government failure.' Markets didn't fail in the Soviet Union, North Korea, Puerto Rico, Detroit, or Illinois. Government failed....There are three main types of government failure. One, government policies, even if well-intentioned, often cause poor investment decisions...Two, the tendency of government to kick the can down the road for others to fix later...And, three, the fact that government can't stop government entities from collapsing because they don’t operate like business....We won't hold our breath waiting for the government to stress test itself...because we already know what an honest assessment would say. The present course of government policy in many states - and the federal government as a whole - is unsustainable. Who’s going to stress test that?"

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6.27.17 - Could Google Crash US Stock Market?

Gold last traded at $1,246 an ounce. Silver traded at $16.65 an ounce.

NEWS SUMMARY: Precious metal prices rose Tuesday on safe-haven buying and a sharply weaker dollar. U.S. stocks headed lower amid Google fallout after the UK fined the tech giant billions for search tampering.

Top money manager says gold may hit $1,500 for the first time since 2013 -Marketwatch
"Gold prices have climbed by around 8% year to date - close to what they gained for all of last year. That comes as no surprise to Frank Holmes, chief executive and chief investment officer at U.S. Global Investors, and he sees lots of reasons why prices could rally further - potentially to as high as $1,500 an ounce. That would be a 20% rise from its current level of roughly $1,250....'The metal is responding to the typical demand drivers that I always discuss, like geopolitical uncertainty, a weak dollar, low interest rates,' said Holmes. 'Perhaps one of the most shocking things is that last week, for the first time since the November [U.S. presidential] election, gold was outperforming the U.S. dollar.'....The 'fear trade' - the idea that factors such as geopolitical turmoil, both here and abroad, and low-to-negative government bond yields drive the demand for safe-haven assets - is likely to continue to support gold, said Holmes."

cyber attacks Ukraine cyber attack: Chaos as national bank, state power provider and airport hit by hackers -Independent
"Ukraine’s national bank, state power company and largest airport are among the targets of a huge cyber attack on government infrastructure. Rozenko Pavlo, the deputy Prime Minister, said he and other members of the Ukrainian government were unable to access their computers....Images from other affected computers and disabled cash points showed what appeared to be ransomware, demanding a payment of $300 in Bitcoin to re-gain access to encrypted files. Analysts said the virus, named Petrwrap or Petya, appeared to work similarly to the WannaCry ransomware that infected more than 230,000 computers in 150 countries last month....'As a result of cyber attacks, these banks have difficulties with customer service and banking operations,' a statement said....Many ATMs were disabled, displaying the message left by hackers, as were tills in supermarkets....We are getting closer, clearly, to a state of war - a state of war that could be more complicated, probably, than those we've known until now."

The size and velocity of new cyber-attacks is growing quickly. As we reported in yesterday's blog, some experts fear Russia's attacks on the Ukraine are just a warm up test for planned attacks against the U.S. banking system, power grid and/or transportation systems. Read AMERICA'S CYBER-HIT LIST, a new Swiss America Research Report that reveals hundreds of the biggest U.S. firms that have been hacked in recent years and what you can do to protect your money.

Google Gets Record $2.7 Billion EU Fine for Skewing Searches -Bloomberg
"Google’s record-breaking $2.7 billion European Union fine could end up being just a fraction of the costs from the EU’s demand that it stop skewing search results to favor its own shopping site. While the penalty will barely make a dent in its $90 billion cash hoard, Google faces the prospect of less ad revenue and a regulatory backlash targeting other services from maps to restaurant reviews as well as the threat of even more penalties....Alphabet Inc.’s Google must 'stop its illegal conduct' and give equal treatment to rival price-comparison services, according to a binding order from the European Commission. It’s up to Google to choose how it does this and inform the EU of its plans within 60 days....Tuesday’s fines could just be the first in a series of EU antitrust penalties for Google, which is fighting on at least two other fronts, including its Android mobile-phone software and the AdSense online advertising service."

IMF trims economic forecast for US -FoxBusiness
"The International Monetary Fund has trimmed its outlook for the U.S. economy, citing the number of uncertainties that surround President Donald Trump's plans to boost economic growth. The IMF forecasts that the U.S. economy will grow this year at an annual rate of 2.1 percent. That would be an improvement over last year's lackluster 1.6 percent growth rate but down from the IMF's April forecast for growth this year of 2.3 percent. The IMF also trimmed growth for next year and said that the economy would have a hard time achieving the 3 percent growth goal set in the president's first budget. The IMF's annual review of the U.S. economy says that history would suggest that the growth acceleration projected by the administration is 'unlikely.'"

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6.26.17 - Puerto Rican Plague to Hit America?

Gold last traded at $1,246 an ounce. Silver traded at $16.63 an ounce.

NEWS SUMMARY: Precious metal prices dipped Monday following a huge sell order 'mistake' amid geopolitical uncertainty. U.S. stocks traded mixed on tech valuation concerns and international banking worries.

Huge sell order 'mistake' sends gold to six-week low -CNBC
"Gold tumbled to its lowest price in nearly six weeks as a large sell order and a stronger dollar hit sentiment on Monday, though losses were limited by political uncertainty around the world....'Clearly somebody sold it by mistake and bought it back quickly, triggering stops below $1,250,' said MKS trader Bernard Sin. 'Fundamentally, there is still a lot of uncertainty in the world, with Italian bank bailouts, Trump's policies and Brexit. The world is in geopolitical chaos and gold is still good insurance.'....In Italy, meanwhile, the state has come to the rescue of Monte dei Paschi di Siena and rival regional lenders Popolare di Vicenza and Veneto Banca, but the Italian banking industry remains saddled with 300 billion euros ($335 billion) of soured debts."

Last Friday we shared with readers five "P's" to keep in mind in today's "Everything Bubble"; "Proper Preparation Prevents Poor Performance." When gold prices take a sudden dip (for any reason - real or accidental) smart money seizes the opportunity to buy, knowing that solid fundamentals confirm true value. Learn more about the wisdom of owning gold and silver today by reading our free 2017 Gold and Silver Research Reports.

rate hikes The Best-Performing Asset Since The Fed Started Hiking Rates Is... -Zero Hedge
"...Gold! After all the concerns about interest-rate hikes curbing gold’s appeal, the metal has managed to retain its luster. Since Dec. 15, 2015, a day before the Federal Reserve began its current cycle of U.S. rate increases, bullion has climbed 18%. The barbarous relic has outperformed the broadest measure of US stocks (NYSE composite) as the long-bond is unchanged since Dec 2015 and commodities plunging back after inflation hope fades. As Bloomberg notes, non-interest-bearing gold is getting an added boost from speculation that the Fed will be slow to raise rates further, with 10-year Treasury yields near the lowest since November (below where they were at the start of the rate-hike campaign in 2015) and the yield curve has collapsed each time The Fed hiked rates...Perhaps the yield curve is reflecting the post-China-Credit-Impulse collapse in US macro data (no matter how hard and fast economists cut estimates, it's still disappointing)..."

Great recession fears as bankers warn next global crash could arrive 'with a vengeance' -Independent
"A new financial crisis is brewing in the emerging economies and it could hit 'with a vengeance', an influential group of central bankers has warned. Emerging markets such as China are showing the same signs that their economies are overheating as the US and the UK demonstrated before the financial crisis of 2007-08, according to the annual report of the Bank for International Settlements (BIS)....Chinese corporate debt has almost doubled since 2007, now reaching 166 per cent of GDP, while household debt rose to 44 per cent of GDP last year. In May, Moody's cut China's credit rating for the first time since 1989 from A1 to Aa3 which could potentially raise the cost of borrowing for the Chinese government."

How An Entire Nation Became Russia's Test Lab for Cyberwar -Wired
"Ahead of Ukraine’s post-revolution 2014 elections, a pro-­Russian group calling itself CyberBerkut - an entity with links to the Kremlin hackers who later breached Democratic targets in America’s 2016 presidential election - rigged the website of the country’s Central Election Commission to announce ultra-right presidential candidate Dmytro Yarosh as the winner....Yushchenko, who ended up serving as Ukraine’s president from 2005 to 2010, believes that Russia’s tactics, online and off, have one single aim: 'to destabilize the situation in Ukraine, to make its government look incompetent and vulnerable.' He lumps the blackouts and other cyberattacks together with the Russian disinformation flooding Ukraine’s media, the terroristic campaigns in the east of the country, and his own poisoning years ago - all underhanded moves aimed at painting Ukraine as a broken nation....But many global cybersecurity analysts have a much larger theory about the endgame of Ukraine’s hacking epidemic: They believe Russia is using the country as a cyberwar testing ground - a laboratory for perfecting new forms of global online combat. And the digital explosives that Russia has repeatedly set off in Ukraine are ones it has planted at least once before in the civil infrastructure of the United States."

Experts say America is woefully unprepared for such an attack. In this YouTube video watch hackers break into the US power grid. Read AMERICA'S CYBER-HIT LIST, a new Swiss America Research Report that reveals hundreds of the biggest U.S. firms that have been hacked in recent years and what you can do to protect your money.

Will America Die of Puerto Rican Plague? -PontificationBlog
"According to the Constitution, no U.S. state or territory such as Puerto Rico can escape a $74 Billion debt – run up by liberal-spending, vote-buying local politicians - by declaring bankruptcy. But the U.S. Congress opened the door last year via PROMESA legislation to something like Puerto Rican bankruptcy, thereby setting a precedent for states such as Illinois – whose irresponsible politicians have put them into an economic 'death spiral' - to renege on their debts as well. Will states 'Too Big To Fail' get bailed out by a huge wealth transfer from taxpayers and unpaid bond holders in more conservative states? Is America about to suffer a potentially fatal epidemic of fast-spreading, fevered-spending, debt-ducking Puerto Rican economic plague? How did this island of only 3.5 million people run up $74 Billion in debt? As Craig R. Smith and I explained in our book We Have Seen The Future And It Looks like Baltimore: American Dream vs. Progressive Dream, this island the Spanish named 'Rich Port' has become America’s Greece, an economic basket case....If profligate politicians are bailed out, irresponsibility with rule. Many will stop investing or buying government bonds. The dollar will lose value as trillions more are printed to finance folly." Full story

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