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9.19.17 - Fed Economist: 'No Evidence QE Works'

Gold last traded at $1,310 an ounce. Silver at $17.15 an ounce.

NEWS SUMMARY: Precious metal prices edged higher Tuesday as the dollar weakened ahead of Fed statement. U.S. stocks rose following President Trump's fiery speech to the U.N. regarding confronting North Korea's nuclear aggression.

Gold rises as dollar retreats ahead of Fed meeting -Reuters
"Gold rose from the previous day's two-week low on Tuesday as the dollar slipped ahead of a Federal Reserve meeting that is expected to provide more clues on the pace of U.S. monetary tightening....'Investors have a tendency to stay on the sidelines ahead of the Fed and other important events, so that trading becomes more technical,' ABN Amro analyst Georgette Boele said. 'If the Fed were to sound more hawkish this will likely push gold below $1,300 temporarily,' she said....The U.S. central bank is also expected to announce moves to shrink its $4.5 trillion asset portfolio, built up to spur economic growth in the wake of the financial crisis that began a decade ago....Worries over North Korea could still prompt price gains, analysts said. Its stand-off with the United States is likely to take center stage at the U.N. General Assembly meeting on Tuesday."

QE Fed economist: 'No evidence that QE works' as central bank starts unwinding program -CNBC
"The Federal Reserve is on the cusp of reversing the most ambitious monetary stimulus program in world history amid questions over how much impact it really delivered. There's little question that the program, known as quantitative easing or 'money printing,' boosted the stock market....The economic impacts, though, are less clear. For most of the period, GDP struggled to gain more than 2 percent. Wealth disparity grew, income gains were hard to come by and the Fed continually came up short on its inflation goal....St. Louis Fed economist Stephen D. Williamson writes, 'With respect to QE, there are good reasons to be skeptical that it works as advertised, and some economists have made a good case that QE is actually detrimental.'....History shows that central bank balance sheet reductions are often bumpy and lead to recessions. 'Clearly, there is a risk of a policy error which could trigger a sell-off in global financial markets.'"

Bitcoin’s Wild Ride Shows The Truth: It Is Probably Worth Zero -Wall Street Journal
"Behind every bubble is a good idea bursting to get out...A digital currency without borders that governments can’t control and that allows secret online transactions? I’m in. Bitcoin itself? Not so much. So is a single bitcoin worth $500,000, $5,000, $500 or $0? I’m inclined to say $0, especially if bitcoin’s value depends on it being adopted as a global digital currency to replace dollars. There is no chance whatsoever that bitcoin can displace the dollar, for the simple reason that it is badly designed. Bitcoin can handle a pathetically small number of transactions, and uses an inordinate amount of electricity to do so, making it entirely unsuitable to replace ordinary money. Even if bitcoin worked better, it is in a Catch-22 because of Gresham’s law, the nostrum that bad money drives out good. Given the choice of spending inflationary government-issued money or something which holds its value, everyone would spend the bad paper stuff and hoard the useful insurance because we can be confident that if a government currency collapses the shiny metal will roughly hold its value. It helps that history holds plenty of examples of currencies losing all their value to hyperinflation while gold could still be bartered for food and shelter....Gold has had thousands of years and a history of being used to back money to support its position. Bitcoin pioneered the cryptocurrency movement, but after eight years, the virtual currency is still struggling to find mainstream acceptance."

What Is Real Wealth? -Smith/Of Two Minds
"What is real wealth? Money, right?...Money is real wealth because you can use it to buy whatever you want. I would argue money in any form is only the means to acquire real wealth, which is the agency, opportunity and time to pursue your life's work. The conventional view of wealth is money and leisure has it all wrong....If 'wealth' is only an internal state, then let's measure friendship and being needed/wanted as the metrics of 'wealth.'....What money buys that is real wealth is freedom and control of one's life. This control over one's life is called agency. Agency is defined as 'the capacity of an actor to act in a given environment.'....Agency and responsibility are two sides of the same coin: each manifests the other. Opportunity is a form of wealth - and so is the wherewithal to take opportunities that arise....Humans are designed to be needed by others, to be part of something greater than themselves, and to gain dignity and pride by doing useful work - whether they are paid 'money' for this work or not. This is why so many of those with the 'money' to have endless leisure are miserable."

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9.18.17 - Will Gold Shine As Bitcoin Crashes?

Gold last traded at $1,310 an ounce. Silver at $17.15 an ounce.

NEWS SUMMARY: Precious metal prices traded lower Monday on profit-taking and a firmer dollar. U.S. stocks rose following a big defense sector deal ahead of a key Federal Reserve meeting.

Deutsche Bank: "Global Asset Prices Are The Most Elevated In History" -Zero Hedge
"In an extensive report published this morning by Deutsche Bank's Jim Reid, the credit strategist looks at the 'Next Financial Crisis', and specifically what may cause it, when it may happen, and how the world could respond assuming it still has means to counteract the next economic and financial crash....According to Reid, 'we're in a period of very elevated global asset prices - possibly the most elevated in aggregate through history.'....Current valuations are certainly stretched relative to nominal GDP through history....The cyclically adjusted Price/Earning (CAPE) ratio valuations are certainly stretched relative to nominal GDP through history. We have been more expensive but we are approaching the peaks of 2000 and 2007 and are in line with the most stretched valuations from the 1930s on this metric and higher than the 1929 crash point."

tax reform America Needs a “Tax Reformation” -Pontification Blog
"In today’s struggle between globalist collectivism and nationalist individualism, we need more than tax reform. We need a Tax Reformation that again puts the individual taxpayer above the government and reasserts the ancient Roman Cicero’s motto that the good of the people is the highest law....The United States, which began as a free enterprise nation, now imposes a 35 percent tax rate on businesses, the highest among advanced countries....President Donald Trump's wish to reduce business taxes to 15 percent is 'unrealistic' according to the left-of-center magazine The Atlantic. Yet 15 percent could bring 2.5 Trillion in overseas earnings home, and is the business tax rate in prosperous Germany, Luther’s homeland. The Left deems a 25 percent rate plausible. This is the business tax rate in Communist China - 10 percentage points lower today than in the 'capitalist' United States....The purportedly pro-business Republicans run Congress but have been hesitant to make President Trump’s tax cut proposals law....But if Democrats regain power because of Republican timidity or inaction, the rules will immediately be changed to raise taxes. Americans need again to see that lower taxes and smaller government - a Tax Reformation - are the path back to greater prosperity, freedom, individuality, and enterprise."

Will gold shine brightly again as bitcoin crashes? -The National
"In June I wrote about the many forces propelling gold prices to beat the S&P 500 so far this year, most critically a weakening US dollar and unpredictable new US president. For followers of the gold price it was the final break out above $1,300 last month that was most impressive and the quick sprint up in the price to $1,350 an ounce....The US Federal Reserve has now raised interest rates three times. You might expect higher interest rates to boost the dollar but rather this is seen as a sign of slowing growth opportunities for US assets and a negative for investors. Why then is the US stock market still so sky high? Well that's now down to a concentration of speculation into a very limited number of stocks in the Nasdaq. Lesser company stocks have already fallen....One event to look out for is the collapse of the cryptocurrencies, now under assault from central banks around the world worried about losing control over the global monetary system and a speculative bubble....But why should investors in overvalued global financial markets and hot-air speculations like digital currencies retreat into precious metals at this stage in the cycle? It’s an insurance policy against disaster and a diversification that always has a residual value. Gold or silver, at least in physical form, is the oldest form of money, a real asset that cannot be spirited away by plunging global stock markets, nor lost as computer code containing supposed riches. And all it takes is a relatively small number of investors around the world to decide to allocate five to 10 per cent of their wealth to gold and silver to radically improve its valuation."

Justice Department Begins Criminal Probe Into Equifax -Zero Hedge
"The U.S. Justice Department has opened a criminal investigation into whether top officials at Equifax violated insider trading laws when they sold stock before the company disclosed that it had been hacked, according to people familiar with the investigation. Equifax disclosed earlier this month that it discovered a security breach on July 29. The three executives sold shares worth almost $1.8 million in early August. The company has said the managers didn’t know of the breach at the time they sold the shares. Senator Heidi Heitkamp, a Democrat who sits on the Senate Banking Committee, said it was 'disturbing' that it appeared executives sold their stock before disclosing material information to the public. 'If that happened, somebody needs to go to jail,' Heitkamp said at a credit union industry conference in Washington. 'It's a problem when people can act with impunity with no consequences. How is that not insider trading?'....The total value of Equifax shares sold by Gamble, Ploder and Loughran 2 days after Equifax had discovered the data breach and 37 days before the company informed the public about the breach is $1.88 million."

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9.15.17 - Equifax Incompetency Being Investigated

Gold last traded at $1,325 an ounce. Silver at $17.70 an ounce.

NEWS SUMMARY: Precious metal prices eased Friday on mild profit-taking and Fed rate hike fears. U.S. stocks extended gains, despite geopolitical worries, as tech stocks rebounded.

The Golden Solution to America's Debt Crisis -Rickards/Daily Reckoning
"Right now, the United States is officially $20 trillion in debt. Over half of that $20 trillion was added over the past decade....Basically, the United States is going broke....The U.S. has a 105% debt to GDP ratio, trillion dollar deficits on the way, more spending on the way....We’re heading for a sovereign debt crisis....There’s only one solution left, inflation....The Fed could actually cause inflation in about 15 minutes if it used it. How? The Fed can call a board meeting, vote on a new policy, walk outside and announce to the world that effective immediately, the price of gold is $5,000 per ounce....Don’t think this is possible? It’s happened in the U.S. twice in the past 80 years....The first time was in 1933 when President Franklin Roosevelt ordered an increase in the gold price from $20.67 per ounce to $35.00 per ounce, nearly a 75% rise in the dollar price of gold....The second time was in the 1970s when Nixon ended the conversion of dollars into gold by U.S. trading partners. Nixon did not want inflation, but he got it. Gold went from $35 per ounce to $800 per ounce in less than nine years, a 2,200% increase....I call it the weird gold trick, and it’s never seen discussed anywhere outside of some very technical academic circles."

Investment Advice for My Children & Grandchildren -Merk/Merk Investments
"Hedge fund manager Ray Dalio likes to say he chose the first stock he ever bought because it cost less than $5 a share, given that his savings from caddying at the time were, well, five bucks. That story is a great icebreaker but also highlights with what’s wrong with our industry: when we think about investing, we immediately think about the stock market. Let’s take a step back. My oldest recently returned back to college having completed a summer job. Thanks to our 'Golden College Fund' (our kids’ college savings is in physical gold; please see this 2014 Forbes article 'The Golden College Fund' for details), our son in the fortunate position that he doesn’t have to pay off college debt with his earnings. If he did, paying off college debt - like any other debt- is a choice of whether one expects a higher rate of return with one’s investments (after tax) than if one were to pay off the debt. It’s also a choice of risk tolerance, as a debt-free person has much less to worry about."

college costs

"Talking about worrying: the advantage a college kid without debt over just about any other adult has is that he or she has no obligations, notably also no family to feed. I allege that financial stress is foremost a function of expenses, not income....In an era where central banks have elevated asset prices into what might be bubble territory, and fostered capital misallocation, investors need new tools to have a robust portfolio for what may lie ahead....Gold comes up many times in these discussions; it's not that gold is so much 'better' than many other investments, but it’s much easier to grasp the potential diversification benefits and understand the risks of gold than of a long/short equity or a long/short currency strategy."

Bitcoin is in a bubble, and here's how it's going to crash -CNBC
"Can bitcoin be a transformational, technology-based, currency and be in a bubble at the same time? Uh, yeah!....Most disruptive developments in technology and finance eventually inflate into speculative bubbles as investors and traders assume that the intrinsic value of these new vehicles will expand forever. As yet, bitcoin also fails as a currency in several ways. Money is defined by three characteristics: 1) A storehouse of value. 2) A unit of account. 3) A medium of exchange. It's hard to determine if bitcoin is a storehouse of value. Daily volatility tops 5 percent to 10 percent while its 'value' has skyrocketed. If it crashes, it will fail to meet criteria No. 1. It is a unit of account, but for whom? It may be a medium of exchange, but for now that is only for a very few users....Bitcoin is in a bubble, make no mistake. The episode, for some, will end badly while others reap the rewards of getting in on the action early and, more importantly, getting out before the bust."

Equifax used the word 'admin' for the login and password -CNBC
"Scores of accounts on Equifax's website in Argentina allegedly were protected by the same generic username and password: 'admin.' Researchers at Hold Security, a Milwaukee-based cybersecurity firm, found that after some guesswork, they were able to uncover personal employee information housed on Equifax's South American site, including names, emails, and Social Security equivalents of over 100 individuals. ....'You don't expect anything like that,' said Alex Holden, Hold Security's chief information security officer. 'An ability to lookup cases for individuals based on a single numeric ID and gender drew our attention.' The research came as Equifax sank deeper into a controversy over its handling of a data breach that could affect 143 million people. The credit reporting company is now facing multiple investigations. In a rare public acknowledgement, the Federal Trade Commission announced Thursday that it has opened a probe into Equifax's breach in the United States. Since it announced the U.S. data breach last Thursday, Equifax shares have fallen more than 30 percent through Wednesday's close."

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9.14.17 - Chinese Halt Trading: Bitcoin Crashes

Gold last traded at $1,329 an ounce. Silver at $17.78 an ounce.

NEWS SUMMARY: Precious metal prices traded steady Thursday on mixed economic signals and a flat dollar. U.S. stocks traded mixed as rising inflation increased odds of another Fed rate hike.

Your Social Security Number Isn't a Secret -New York Times
"The Equifax credit-reporting agency is being terribly, dangerously vague about its stunning loss of 'potentially' 143 million Social Security numbers. The data belong to roughly three-quarters of Americans with a credit report. Might as well be everyone. Whatever the company finally admits to, this much is certain: Social Security numbers are no longer a secret. These numbers were created for a single purpose: to track worker contributions to a national retirement fund. Until the 1970s, the cards even arrived printed with the warning 'Not for identification.' It's time we heeded that warning and stopped using the number for applications of any kind. For loans, for jobs, for cellphones. It’s going to be very expensive, but the jig is up....This fragile authentication arrangement based on Social Security numbers persists so that retailers and banks can offer easy credit. Walk in with a number and a name, walk out with a new TV and a credit card....Social Security numbers were never designed to be a security tool, and their usefulness for that purpose has run its course."

Your financial privacy is now officially a thing of the past. A Swiss America Research Report reveals how and why your money is more vulnerable today than ever before following the hacking of hundreds of the biggest U.S. firms in recent years. Read this urgent Free Report: AMERICA'S CYBER-HIT LIST

market ‘False Peace’ for Markets? A Trader Is Betting Millions on It -New York Times
"As investors celebrated yet another bounce-back from a market slip, Christopher Cole, a trader who runs a hedge fund here that makes bets on various forms of financial apocalypse, spotted something amid the sprawl of data and code that decorated the wall of screens before him. 'Optically, volatility is still very low, but fear is increasing,' Mr. Cole said....Now, just a month ahead of the 30th anniversary of Black Monday, when the Standard & Poor's 500 stock index plunged 20 percent, Mr. Cole is wagering on a similar calamity, underpinned by a vicious spike in the VIX and a steep sell-off in stocks. 'The fact that everyone has been incentivized to be short volatility has set up this reflexive stability - a false peace,' he said. 'But if we have some sort of shock to the system, all these self-reflexive elements reverse in the other direction and become destabilizing as opposed to stabilizing.'....'Volatility is an instrument of truth, and the more you deny the truth, the more the truth will find you through volatility,' Mr. Cole said. 'If central banks want to keep saving the day, that is fine. But volatility will then be transmuted through other forms like populism and identity politics and threaten the fabric of democracy."

In our free CRISIS TIMELINE report we explain why a growing number of bear-market signals and cyclical economic risk factors are all converging. Don't wait to prepare; prepare and then wait.

Venezuela Stops Accepting Dollars for Oil Payments -Fox Business
"The government of this oil-rich but struggling country, looking for ways to circumvent U.S. sanctions, is telling oil traders that it will no longer receive or send payments in dollars, people familiar with the new policy have told The Wall Street Journal. Oil traders who export Venezuelan crude or import oil products into the country have begun converting their invoices to euros....The measure is designed to bypass financial sanctions President Donald Trump's administration leveled against Venezuela's government last month for jailing political opponents and creating a super body of pro-government delegates that bypasses all institutions....The new payment policy hasn't been publicly announced, but President Nicolás Maduro's government had hinted it was moving in this direction after the U.S. Treasury Department banned any U.S. company or citizen from buying new Venezuelan debt....'To fight against the economic blockade there will be a basket of currencies to liberate us from the dollar,' Vice President Tareck El Aissami, who has been blacklisted by the U.S., said Friday."

Cyber Looms as Top National Security Threat, DNI Says -Meritalk
"Cybersecurity threats have risen to the top of the nation's national security concerns, according to U.S. Director of National Intelligence Daniel Coats, who spoke at the Billington CyberSecurity Summit on Sept. 13. 'What keeps me up at night now is the wide diversity of threats that we have from all across the world, including the ever-expanding list of cyber threats,' Coats said. 'It’s clear that cybersecurity has become one of the most important priorities for the director of national intelligence and the intelligence community. China continues to conduct cyber espionage against the U.S. government, our allies, and U.S. companies. Iran and North Korea are improving their capabilities to launch destructive cyberattacks to support their political objectives. And nonstate actors, notably terrorist groups like ISIS, are using the Internet to organize, to recruit, spread propaganda, raise funds, collect intelligence, inspire action, and coordinate operations.'....'The good news here is that the private sector is increasingly focusing on cyber intelligence and increasingly understanding the need for interconnectedness and the sharing of information,' said Coats."

Bitcoin Crashes After Chinese Exchange Says It Will Halt Trading -Bloomberg
"Bitcoin fell for a fifth day, the longest losing streak in more than a year, after one of China's largest online exchanges said it would stop handling trades by the end of the month amid a government crackdown on cryptocurrencies. The cryptocurrency has slumped as much as 22 percent since Sept. 7. It had risen more than four-fold this year amid greater acceptance of the blockchain technology that underpins the exchange method, global political uncertainty and increased interest in Asia....Bullish bets on the cryptocurrency are now considered the most crowded trade in financial markets, according to fund managers surveyed by Bank of America Merrill Lynch."

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