75 Years Out From Hiroshima, Silver Is Exploding The Futures Market and With Gold Will Decimate Global Currencies

75 years ago today, the first nuclear bomb was used in warfare, as the United States dropped "Little Boy" on Hiroshima, Japan. Three days later, the US did the same to the Japanese city of Nagasaki with a nuclear device known by the nickname "Fat Man." Together, the two bombs ushered in a quick end to World War II in the Pacific, with Japan surrendering on August 15, and formally signing the instrument of surrender on September 2, aboard the USS Missouri, harbored in Tokyo Bay.

The 13-kiloton blast on Hiroshima destroyed nearly 5 square miles of the Japanese city. Upwards of 70,000 died instantly, and tens of thousands later perished from injury and radiation sickness. Though no official count was ever undertaken, estimates near 150,000 total killed are common.

No other nuclear device has ever been used in military combat since the two that ended World War II. Today's nuclear weapons are orders of magnitude more powerful than the two dropped on Japan. According to a 2104 article by the Brookings Institute, the largest ballistic missile warhead in the US arsenal is 455 kilotons on the W88, carried by the Trident II SLBM. The B83 nuclear weapon, which is the largest nuclear weapon currently in the U.S. stockpile is estimated at 1.2 megatons, 1000 times more powerful than the Hiroshima bomb, "Little Boy."

While these explosions occurred 75 years ago, there's another explosion evident today, that being the one in the price of silver, which is up more than 50 percent in just the last 30 days.

Overnight, the price of an ounce of silver not only passed $27 an ounce, it surpassed $28 per ounce. As of this writing, the bid price on August silver futures is $28.22. As is the case with gold, getting physical metal at anywhere near the futures or spot prices is basically an impossibility.

For instance, there's little availability of gold in bars or coins of over one ounce at dealers worldwide. Typical prices for one ounce gold coins or bars carries a premium of roughly $100 beyond spot. Silver is even more dear, with 30-40% premiums common. Typical prices for one ounce coins or bars is $34 and higher.

Money Daily has outlined the reasons for silver and gold's spectacular gains this year in previous posts, mostly attributing the rise to destruction of fiat currencies by incessant central bank counterfeiting and negative real interest rates. Outstripping every other asset this year, precious metals are just beginning what is likely to become known as the greatest rally ever.

The Federal Reserve, trapped into a corner of their own making, cannot do anything except prop up their favored equity and fixed-income markets via special buying programs that are essentially illegal and serve only as a temporary reprieve for companies that are insolvent and should be headed to bankruptcy. Beyond the roughly 30-40% of listed companies that are technically "zombies" - meaning current profits are not enough to pay the interest on their debt - US and other significant international banks have been frantically ramping up their loan loss reserves while also having taken advantage of handouts from the Federal Reserve.

Gold and silver's ascent is a signal the the entire monetary system of the planet - all based on faith and credit - is about to collapse. As it is, stocks are only being kept afloat by the Federal Reserve's ZIRP and special bond-buying programs. Their next step is to buy stocks directly, another violation of their charter. The same is being done in Europe and Asia. Japan and Switzerland have been buyers of equities for years.

It's not just big money institutional investors who see the damage being done to the global currency regime. Ordinary people are losing faith in the dollar, euro, pound, Swiss franc, yen, and China's yuan, though the US dollar has been the hardest hit recently when measured against other currencies.

Gold has been making record highs against all other currencies for months and years. Just last week gold topped the all-time high against the dollar, signaling that the real rout of all currencies is just beginning. Silver hasn't even come close to its record high of $49 an ounce, though it certainly will, probably early in 2021, if not sooner. The rocket-like nature of silver's price explosion gives credence to current thinking that it is the gentleman's way of saying good-bye to other currencies.

There's an old adage that goes something like this:

Gold is the money of kings.
Silver is the money of gentlemen.
Copper is the money of commoners.
Debt is the money of slaves.

Smart money is on gold and silver replacing the fiat currencies within one to three years.

You can have your stocks, your bonds, your Federal Reserve Notes, but gold and silver are blowing them all away. If you don't own physical gold or silver or other tradable hard assets within the next few years, you're going to be out of luck and likely out of money.

Right now, the economic wheels are wobbling on their axles. When they finally fall off - and they will - chaos will ensue. We've seen nothing yet.

At the close, Wednesday, August 5, 2020:
Dow: 27,201.52, +373.05 (+1.39%)
NASDAQ: 10,998.40, +57.23 (+0.52%)
S&P 500: 3,327.77, +21.26 (+0.64%)
NYSE: 12,731.55, +119.46 (+0.95%)

Panic Sets in as US-China Trade Spat Intensifies

On the road, so this will be a drive-by posting...

On Monday, stocks suffered their worst session of 2019 after China, without warning, devalued their currency, the yuan, in response to US demands for increased tariffs on imports.

President Trump announced that he would tack on a 10% tariff on a variety of Chinese goods - many of them consumer staples - on September first. The response from China was not entirely unexpected, though it took Wall Street and stock traders around the globe, mostly by surprise.

Intraday, the Dow was lower by more than 900 points, but rallied slightly into the close. It was still one of the worst days in recent memory for all US indices.

As Tuesday's trading approaches, US futures have turned positive as China pegged its currency at a higher level overnight, to everyone's relief.

While Monday's panic may appear to be a one-off, the trade war continues to roil markets on a regular basis. Until the two major trading partners agree to play nice and work out some kind of long-term deal, these kinds of shock events will continue to plague investors.

At the close, Monday, August 5, 2019:
Dow Jones Industrial Average: 25,717.74, -767.27 (-2.90%)
NASDAQ: 7,726.04, -278.03 (-3.47%)
S&P 500: 2,844.74, -87.31 (-2.98%)
NYSE Composite: 12,497.31, -342.20 (-2.67%)

Fittingly, Bitcoin Nears $10,000 on Cyber Monday

Catching a ten-bagger is a noteworthy event in any trader's history, but believers in Bitcoin - the original and most prominent cryptocurrency on the planet - are enjoying their days in the sun as the currency heads for $10,000, currently trading for more than $9900 per digital coin.

Bitcoin ended 2016 at a mere $970.17, but it's gone completely bonkers in 2017 as more and more people adopt the digital currency as a hedge against the faults of fiat currencies of central bankers that are based on nothing but faith.

While bitcoin is similarly faith-based, it has properties that traditional currencies do not. It is anonymous, and also not subject to excessive printing of fresh fiat out of thin air. The number of bitcoins mined is capped at 21 million. There are only four million left to be mined. After that, there can be no more Bitcoins ever created, so the currency has an inflation governor that is rivaled only by gold, silver and other precious metals.

This advantage is not lost on holders and speculators in Bitcoin. As acceptance and adoption grows, the number of bitcoin holders naturally ratchets up the price. As of this writing, Bitcoin's market cap is higher than many major corporations, making the digital currency something that keeps central bankers on their toes.

Widespread acceptance of Bitcoin threatens the central bank stranglehold on global forex, currencies and commerce. While this speculative phase is phenomenal for early adopters (some who bought into the Bitcoin mania before it was even priced in triple digits), the long-term implications are other-worldly. If Bitcoin - or some other form of cryptocurrency continues to be established globally - it could conceivably rival currencies such as the US dollar, the euro, Japanese yen or China's yuan.

Just as gold and silver have been recognized as money, currency and stores of value for thousands of years, so too, Bitcoin has emerged as a potentially viable alternative for the 21st century.

At the Close, Monday, November 27, 2017:
Dow: 23,580.78, +22.79 (+0.10%)
NASDAQ: 6,878.52, -10.64 (-0.15%)
S&P 500: 2,601.42, -1.00 (-0.04%)
NYSE Composite: 12,390.78, -31.15 (-0.25%)

With Non-Farm Payrolls Up Next, Dow Closes 100 Points Away From 20,000

Negative forces were at work on Thursday, keeping the Dow Jones Industrial Average below the magic 20,000 mark once again.

Prior to the market open was the ADP jobs report for December, which, in anticipation of Friday's non-farm payroll report, reported that the US added 153,000 jobs in the month, below consensus analyst estimates of roughly 170,000 jobs.

That, in addition to the ongoing turmoil in Chinese yuan was enough to start US markets off on a very tepid tone.

By late morning, the Dow had sunk to what would be the lows of the day, off by 113 points to 19,811, but the plunge was not significant and very short-lived.

Also weighing on stocks was the retail sector as Macy's and Kohl's both reported sluggish holiday sales after the bell on Wednesday. Macy's plans to close 68 stores nationwide and displace over 10,000 workers. Sears chimed in as well, announcing store closures and selling its iconic Craftsman brand to Stanley Black & Decker for $900 million.

Still flirting with the 20,000 level, the Dow stabilized close to the 19,900 level as continued optimism at the prospects of a Trump-inspired stimulus kept spirits somewhat still ebullient, though subdued.

Since mid-December, the Dow Jones Industrial Average has been hanging onto gains and closing just below historic highs, though signs are evident that the rally may not have much stream remaining. Those clinging to gains from the post-election surge may be gradually trimming their positions, as stocks seem to have stalled after Christmas.

What everyone believes but is loath to admit is that stocks are not fairly valued. They are expensive and a significant decline of five to ten percent might be just what's needed to resume the climb to new records. In other words, a short-lived sell-off might present a buying opportunity. On the other hand, market participants are fearful that any decline in equity values could unleash an uneasy and still-hibernating bear.

Tomorrow's non-farm payroll report for December should be enough of a catalyst in one way or another. The wait continues...

At the close 1.5.16:
Dow: 19,899.29, -42.87 (-0.21%)
NASDAQ: 5,487.94, +10.93 (0.20%)
S&P 500: 2,269.00, -1.75 (-0.08%)
NYSE Composite: 11,244.07, -2.47 (-0.02%)

Another New NASDAQ Top; S&P Follows; Dow Lags

Anyone who thinks that technology companies aren't leading the market should just take a look at a comparison 1-year chart of the three major indices. Not only did the NASDAQ suffer a smaller decline (by about 5%), it has outperformed the Dow by 20% and the S&P by almost the same amount. Thus, it was no surprise that the tech-heavy index broke out further to new 14-month highs for the second straight day. The S&P followed along to a new 2009 and 14-month high as well, while the Dow gained, but is still 36 points below the closing top of 10,501.05 on December 14, that being just more than a week ago, the Dow stocks can be excused for their lack of enthusiasm, though not for long.

Today was also another day in which the US dollar rose and so did stocks. It appears that the overt efforts of central bankers to break down the dollar carry trade has been successful. Just a few weeks ago, the Dollar Index had broken down to long-term lows below 74.50. Today, when the stock markets were finished with their funny business, the index stood close to 78.30, a nifty 4.8% move in just over three weeks, which is a powerful rally for a currency. A look at the "Dixie" chart reveals that the move was predictable. with a triple bottom at 18-month resistance in the 74.25-74.45 area. The lows of 2008 - in the 72 range - now appear to be well in the past, a very positive sign that a strong US recovery is well underway.

That stocks have begun to trend higher on days of dollar strength is another very positive development and is actually the normal way US equity and currency markets usually operate. The risk trade of the recent past - at least we believe it to be unwinding - may have been a useful tool in economic revival, whether planned or unplanned. The cheap currency allowed nearly risk-free investment in hammered down US stocks, spurring economic growth from the inside out. If there's any validity to supply side economics - the jury's still out on that one - money should begin flowing (trickling, as they say) to Main Street any day now, in the form of a less-strident consumer, job creation and capital flows to small business. We can hardly restrain our excitement!

The one item that supply siders always fail to mention is that for all their praise and devotion to the "Reaganomic doctrine" are the outsize federal deficits which accompany their economic boom. The Reagan years were marred by the same lower levels of government receipts as today's, though this time the borrowing by Treasury has been much higher, for a longer period and aided by the Federal Reserve through their policy of quantitative easing. Digging the federal government out of a $12 billion (and growing) hole is going to take some time and the resultant higher stealth tax rates (read: Medicare, Social Security and marginal increases to the wealthiest Americans) are likely to be a burden for years to come. Or, the government could just keep on spending and borrowing, which seems to be the preferred practice in congress, as it not only keeps the economy floating along on a mountain of debt, it works wonders for re-election campaigns.

Eventually, the debt will either have to be paid down or repudiated, a term which usually comes along just prior to another nasty utterance, war. Owing oodles of money to the Chinese, it seems almost inevitable that we'll come to blows with our Far East creditors, though likely in a proxy fight in some place like Africa, Afghanistan or some other remote area which neither party really wants. Of course, there is another way. The world currencies could be - in fact, they constantly are - recalibrated to reflect more realistic exchange rates. Besides the US, Europe also has berated the Chinese recently about devaluing the Yuan, mostly to deaf ears. The Chinese know they are now in control of global economic destiny and they're not about to take second best. The best we can hope for is continued prosperity and that our business and political leaders grin and bear it. After all, life in the USA is still pretty top-notch for the majority of folks.

By the way, in case you're confused about the difference between the Yuan and the Renminbi, there isn't one. It's called the Yuan on international circuits, but the term "Renminbi" means "the people's money," so, in China that's how it's known.

Dow 10,464.93, +50.79 (0.49%)
Nasdaq 2,252.67, +15.01 (0.67%)
S&P 500 1,118.02, +3.97 (0.36%)
NYSE Composite 7,184.18, +37.03 (0.52%)

On the day, advancing issues managed to clamber over decliners, 4009-2497. New highs remained ahead of new lows, 459-100, though there have been more new lows appearing by the day, a sign that stocks are beginning to top out rather severely. With the rally on a nine-month run, the past two have hardly been stellar, and making new tops seems to be almost more struggle than it's worth, unless, of course, you're smart enough to be in the right stocks. Volume was slow again, as it should be. There's only one more full session - tomorrow - before Christmas and a three-day break in the action.

NYSE Volume 4,196,486,000
Nasdaq Volume 1,751,327,250

Commodities were mixed as colder weather encouraged buying in the energy complex, with oil up 88 cents, to $74.60. Gold continued to fall, losing $9.30, to $1,086.70. Silver followed along diligently, dropping another 4 cents in value, to $17.00.

Prior to the open, the government released its third and final revision to 3rd quarter GDP, which came in at 2.2%, something of a disappointment, as the prior readings were 3.5% (advance estimate) and 2.8% (second). As it turns out, GDP grew, but by something on the order of 60% less than we were originally told. That the advance estimate was politically-sensitive is likely, but so is this revision, guiding expectations lower in order to deliver better-sounding results when 4th quarter results are announced on January 29, 2010. That appears to be how this administration wishes to play the game, so one should not be too amped up when 4th quarter GDP comes in around 3.0%.

The NAR announced that existing home sales for November stood at an annual rate of 6.54 million units, up 7% from October. Prices are still falling, albeit slower than they have been, down 4.3% from the same month a year earlier.