Gold and Silver Well Engaged in the War Against Fiat Currencies

Since March of this year, gold have silver have made steady, if not spectacular gains in the face of the COVID pandemic, government shutdowns, media sensationalism, and international protests over racial injustice and wealth inequality.

Being safe havens in times of panic, price appreciation in the precious metals was expected, but the degrees by which both gold and silver have gained were only exacerbated by the fear narrative promulgated from government and media sources. Emergency measures taken by the Federal Reserve and other central banks and government "pandemic relief" packages approved by the US federal government and others around the world added to the allure of coins, bars, and jewelry made of shiny metals.

When the stock market crashed from February into March, the rush out of stocks took down the price of gold and silver with it. After all, we can't have real money maintaining value when the world's fiat economies are failing, can we? None the less, while the equity markets have rebounded nicely, the performances of gold and silver overshadow them. Mid-March, gold bottomed out at $1471.40 an ounce on the spot market. In the four months hence, it has ripped ahead, surpassing the previous all-time high against the US dollar this past Friday. On Monday, investors put their stamp of approval on the higher price regime by sending gold to a close in New York at $1943.00, though most of the gains were made overnight in Hong Kong and Shanghai markets.

Overnight, gold shot up again in Far East trading, vaulting above $1980.00 before being viciously slammed down in two short selling raids to a low of 1907.70. The smackdown took little time as has always been the case in these late night, early morning raids. The forces of fiat hegemony have few bounds, and the price of precious metals was getting a bit out of hand for their tastes, apparently.

Hard core gold bulls have been calling for a pullback - and another buying opportunity - and the overnight raids may have played right into their hands. Gold demand is not waning in the least and a price that's a little bit lower will only add to the gold rush that has been forming over the past year. The price hammering won't matter much at all in the long run - or even the short run. Taking the gold price down by five percent in two overt market actions is not going to deter anybody intent on acquiring physical metal. Besides, premiums range anywhere from $35 to $100 over the spot price, so anybody wanting to buy gold at the current spot or futures price ($1935.20 as of this writing) is going to pay the price it had risen to overnight in any case.

Thus, gold being on sale due to futures market mechanisms or manipulations will have little to bear on the real world. Perhaps when gold is selling for $2500 an ounce (within 6-12 months, almost for sure) the powers that be (for now) will try to send it careening south of $2000. That would be a real pullback that would take months, not minutes, to execute and certainly one that would not go unanswered by all interested parties, including the BIS, central banks, gold and precious metal funds, individual investors, and family trusts. It's likely that there will be wild gyrations in the price of gold as national currencies like the dollar, yen, pound, and euro are reduced to their intrinsic value, zero.

As for silver, the rise from the depths of March (11.94 an ounce) was nothing short of spectacular, the gain more than 100% to Monday's close at $24.62. It too ramped higher overnight, reaching $26.00 per ounce in Hong Kong before the same forces that took down gold put the hammer to silver, knocking it as low as $22.36.

The rise and fall in the price of silver is sadistic in a way. The last time gold set a record high was back in 2011. At that time, silver was $48 an ounce. When gold rocketed up on Monday, silver was roughly half of what it was nine years ago. As the phrase goes, silver has some "catching up" to do.

Being that silver is a much smaller market and the price about 1/80th that of gold, it's attraction to the masses is unmistakable. It's a metal and source of wealth that is obtainable by many, which makes it a natural target for the wealth hoarders and paper-chasers of the world. Expect the swings in silver to be even more wild than those in the gold or equity markets as the destruction of the global economy and fiat currencies commences over the coming months. Priced at $23.86 at this writing, silver is down only 85 cents from Monday's New York close. However, as is the case with gold, buyers are more than willing to pay outrageous premiums for delivery. One ounce bars and coins will continue to fly off eBay - the only place right now one can reliably buy silver with delivery guaranteed in under a week - at $32 and up. There's no stopping the physical market. No matter what happens in the spot or futures market, the real world will more than compensate with high premiums on restricted supply.

Tuesday morning's overnight raids notwithstanding, the recent rise of gold and silver as alternatives to fiat currencies is only the beginning of a fight that is destined to end with one side victorious, the other in tatters. Having had their way for decades, the central banks are fighting a losing battle, creating trillions in unbacked new currency to appease the wanton desires of both the wealthy and downtrodden.

Nobody likes fraud, and that is exactly what central banks have committed.

At the Close, Monday, July 27, 2020:
Dow: 26,584.77, +114.88 (+0.43%)
NASDAQ: 10,536.27, +173.09 (+1.67%)
S&P 500: 3,239.41, +23.78 (+0.74%)
NYSE: 12,553.13, +91.35 (+0.73%)

WEEKEND WRAP: US Dollar Scorched As Gold, Silver Shine; Bonds Bid, Stocks Flat, Oil Up

Shifting forces were at work the second last week of July, and while the winds of change didn't quite blow stocks away, the dollar's value, precious metals and bond yields saw wild swings.

Bloomberg's dollar index finished the week at 94.435, edging below the level seen at the trough of the March stock market lows (94.895), and lower for the year (96.389, 12/31/19). It was also the lowest recorded reading since September 2018 (94.220).

While the dollar may have been reeling against competing fiat currencies, it was dealt a knockdown blow by precious metals, especially silver, which had it's best week in more than 40 years. Spot Silver closed at 19.33 per ounce on July 17, traded as high as 23.00 on July 22 before settling into a close at 22.77 on the 24th, a gain of 17.80% in just five trading days.

Gold was also making headlines, with spot gold closing out the week at 1,902.02, a record closing price, surpassing the previous high in US$ of 1895.60 from 2011. While the dollar's weakness was a contributing factor in the rise of precious metals, it wasn't the only one. Continued strong demand, which many dealers are calling "unprecedented", massive purchases by the gold and silver ETF funds, and shortages due to mining shutdowns over the past four months have all been weighing on gold and silver prices.

With faith in fiat currencies and the governments that rule by them weakening, gold, silver, and other hard assets are beginning to be looked upon more favorably as the global economy melts away, multi-national protests persist, and unemployment rages. The first rise in initial weekly US unemployment claims in nearly four months sent shock waves across markets and had a dampening effect on stocks in particular.

WTI crude oil, which had remained moored around the $40/barrel mark for most of the month, was bid slightly higher during the week, closing above $41 for the first time since March. Producers, desperate for higher prices see the falling dollar as an aid to their plight. Global prices are in flux, especially with China buying directly from many producers, including Russia and Iran, bypassing the long-standing dollar hegemony completely. If the dollar continues to decline, the price of oil will certainly rise, affecting just about every finished product in some manner. The condition appears ripe for $50 oil and $2.00 gas at the pump though seasonal demand could keep a lid on prices through the fall.

Treasury yields fell on the long end, with the 30-year taking the brunt of the action, closing out the week at 1.23%, a decline of a full 10 basis points from the previous Friday reading. The benchmark 10-year note slipped from 0.64% to 0.59%, and persisted through Thursday and Friday at that level. Even the one-month maturity bill fell from 0.11 to 0.10%, cramming the entire complex into a 113 basis point box.

The shift in sentiment from bullish on stocks to mildly bearish was, in the main, attributable to the decimation in second quarter earnings as companies lost ground across the equity spectrum. Tech, energy, finance, consumer, and industrial sectors were all affected by the shutdowns and stay-at-home orders prevalent during the second quarter and that was reflected in some very dismal reports, especially from banks and finance stocks, which were forced to add significantly to credit loss reserves over the quarter.

With the reopening of most state economies in the US, there was hope for some relief and a return to pre-COVID conditions, but the recent rise of infections in many states has caused a reversal of the reopening protocols and has tempered enthusiasm for a quick recovery. The COVID crisis seems to have a long-lasting effect, not just on people's health but on the economy in general. The outlook for the fall is not particularly promising either.

Wrapping up this Weekend Wrap, here are the most current prices - including shipping - for select precious metal items on eBay:

Item: Low / High / Average / Median
1 oz silver coin: 27.11 / 46.85 / 35.34 / 34.97
1 oz silver bar: 28.00 / 51.95 / 34.33 / 33.75
1 oz gold coin: 1,850.00 / 2,045.42 / 1,982.27 / 1,995.10
1 oz gold bar: 1,985.22 / 2,019.69 / 2,006.68 / 2,010.15

At the Close, Friday, July 24, 2020:
Dow: 26,469.89, -182.44 (-0.68%)
NASDAQ: 10,363.18, -98.24 (-0.94%)
S&P 500: 3,215.63, -20.03 (-0.62%)
NYSE: 12,461.78, -49.09 (-0.39%)

For the Week:
Dow: -202.06 (-0.76%)
NASDAQ: -140.01 (1.33%)
S&P 500: -9.10 (-0.28%)
NYSE: +59.04 (+0.48%)

Bonds Signal Stock Rally Running On Fumes

Stocks had their worst day in six weeks on Thursday and the bond market was right there to confirm it.

The 10-year note closed with a yield of 0.59% on Thursday, the third-lowest close in history (lowest, 0.54%, 3/9/20). The 30-year saw its lowest close since the end of April, checking in at 1.24%.

Altogether, the treasury complex has been crammed down to a 115-basis point spread, significantly flattening the curve, a signal for more challenging times at hand.

Overall, bonds have not been playing along with the recent market recovery. As the NASDAQ soared to new highs, treasury bonds were latent, barely budging off the lows set down in March. What the flight into the safety of bonds tells the go-go equity community is that their rally has no long-term legs even though the Federal Reserve has set up more than a handful of equity-boosting schemes that buy up corporate, municipal, and junk bonds at overpriced levels just to keep the stock market rally going.

Because of the Fed's recalcitrance toward any kind of sanity in stocks, bonds prices will remain high and stocks will continue to rise. It's all part of the scheme by the government to keep stocks in bubble-land in order to not trigger a complete loss of faith in the Fed, debt-based fiat currency, fractional reserve banking and a crisis in public and private pensions, most of which are severely underfunded and heavily invested in Wall Street's darling stocks.

It's a recipe for disaster, or at least delaying a disaster until the bills come due and all the institutional money has left the building, leaving retail investors with smaller 401k accounts and pension funds with a big fat hole in their actuarial tables.

Anybody who has studied charts just a little bit should be able to point out the fallacies in the recent "V"-shaped stock market bounce and extrapolate out six months to a year of slower economic growth, or, putting it correctly, declining GDP, lower earnings for the S&P 500, rampant unemployment, and currency debasement on a level not seen since the Weimar Republic or the more recent hyperinflation in Zimbabwe.

According to the Shiller PE ratio - otherwise known as CAPE - stocks are currently trading at levels equivalent to those seen on Black Tuesday in 1929. Only during the dotcom mania of 1999-2000 was the CAPE ratio higher. The March downturn was barely a blip on the CAPE chart. Stocks were already overvalued. Today, as the recovery from the COVID crisis and government lockdowns has not even begun, they are even more overvalued, setting up a condition ripe for another waterfall event like the one in March.

All that's keeping stocks from imploding to more reasonable levels are the Fed's emergency measures and the massive stimulus already on the books from the federal government, with more on the way. At the federal level, the Fed's money printing and profligate spending by congress and the president are not about getting Democrats or Republicans elected in November. The graft and corruption hasn't taken sides. It's about all of them fearing for their coveted positions atop the gravy train, where they make the rules and don't have to keep them, where they benefit from insider knowledge, where they live in luxury while the rest of the country devolves into violence, disruption, and poverty.

Government officials, Fed operatives, and wealthy investors are getting their bread buttered on both sides while Main Street and Joe Sixpack get the crust and crumbs.

Trillions to Wall Street and a $1200 check for the rest of you. Sounds like a campaign slogan Bill Gates, Jeff Bezos, and Warren Buffet could get behind.

The solution is rejecting the false facade presented by Wall Street and their cohorts in Washington, DC. Cutting back on expenses, opting out of public education, becoming more self-reliant, and buying gold, silver, and hard assets will free Americans from the tyranny of monetary fakery and fiscal irresponsibility.

Have a nice weekend.

At the Close, Thursday, July 23, 2020:
Dow: 26,652.33, -353.47 (-1.31%)
NASDAQ: 10,461.42, -244.68 (-2.29%)
S&P 500: 3,235.66, -40.36 (-1.23%)
NYSE: 12,510.87, -58.23 (-0.46%)

Zucchini Won't Cure COVID-19, But It's Better Than Wearing A Mask; Gold Seeks New High

By most standards, this
zucchini is too big.

It is without regret that I post this missive.

Zucchini is rich in several vitamins, minerals, and other beneficial plant compounds and I have grown two huge ones.

One is already two-thirds eaten. The other - the larger of the pair - is pictured at right.

I cut most of the first one up and sauteed it in olive oil with ground black pepper and seasoned salt. It was quite good, especially considering that it was, by most accounts, too big, and cost nearly nothing to produce.

That is the point. While all of us from time to time chase the elusive riches in the markets, true value is found in seeds, of which every plant produces in bounteous plenty. From those seeds one can grow acres of fruits and vegetables, enough to feed an entire planet. It's been happening for eons.

Since our government has taken upon itself the task of further enslaving every non-elite member of society with the current mask-wearing-social-distancing-be-afraid-of-the-virus dictates, mandates, unconstitutional as they may be orders, it is incumbent upon every individual to do what he or she sees fitting to ensure one's own survival and that of family, friends, neighbors, co-workers, what have you.

Already interfering and directing almost every aspect of human life, our government officials find it now necessary to further encumber the still-breathing populace with face masks, business closures, and soon, a vaccine, which, by the latest measure, will require two shots followed by a booster, designed, I am certain, to make many more people ill or dead in a short period of time.

This is not a happy time in America, or, for that matter, in any part of the world ruled by ruthless dictators masquerading as champions of the common folk. The government has become the enemy and they're not alone. Other forces, like the people rioting, protesting, toppling statues, requiring everyone to bend a knee for people of color or some other such nonsense are also enemies.

The mainstream media, which has lied to everybody for decades about everything, is another enemy. Banks and finance companies which charge interest on loans we require because we don't earn enough money (or the government steals too much of it through taxes and fees) are another enemy.

Anybody who tells you that you must wear a mask, for any reason, is an enemy. If your grocery store says you cannot buy food for yourself or your family, they are an enemy. We are beset on all sides.

If there's any one action that speaks defiance it's raising one's own food. Planting a garden isn't hard. Maintaining one and producing edible food is, but it is well worth the effort.

Most of us were forced to stay home for some period of time recently. We were not asked. We were told. How many of us started gardens or even thought of putting a few seeds into some soil? Probably fewer than thought about putting some lead into a politician, official or other authority figure.

Some of us did. And now, we are reaping what we've sown. Some of us don't have to shop at Wal-Mart or Kroger's or any place that requires the wearing of a mask. We have our own food.

We're reminded daily that "we're all in this together." Nothing could be further from the truth. Every one of us is on our own. The police, for a large part, have proven ineffective at protecting or serving us. Our political authorities, well, we've already covered that.

We've been lied to about this virus. We've been lied to about the effectiveness of hydroxychloroquine, zinc, and vitamins C and D3 taken in appropriate dosages as a preventive. We've never been told by anybody in authority to strengthen our immune systems. They've lied and cajoled and twisted the truth to serve their own interests, as usual.

Anyhow, you may or may not get the message. In any event, here's the lowdown on the nutritional value of zucchini.

One cup (223 grams) of cooked zucchini provides:

Calories: 17
Protein: 1 gram
Fat: less than 1 gram
Carbs: 3 grams
Sugar: 1 gram
Fiber: 1 gram
Vitamin A: 40% of the Reference Daily Intake (RDI)
Manganese: 16% of the RDI
Vitamin C: 14% of the RDI
Potassium: 13% of the RDI
Magnesium: 10% of the RDI
Vitamin K: 9% of the RDI
Folate: 8% of the RDI
Copper: 8% of the RDI
Phosphorus: 7% of the RDI
Vitamin B6: 7% of the RDI
Thiamine: 5% of the RDI

It also contains small amounts of iron, calcium, zinc, and several other B vitamins.

That's a heck of a lot better than wearing a mask or spending $3000 for Remdesivir or getting shot up with something produced by Pfizer, or AstraZeneca, or Johnson & Johnson.

---

Gold is nearing it's all-time high in dollar terms, currently trending at $1880 an ounce in the front month futures market. The record spot price for gold came in 2011, when it reached $1895. Having already reached new highs in every other currency, the US dollar is the last fiat currency standing against real money.

---

-- Fearless Rick

P.S.: If you don't believe me, maybe you'll listen to Dr. Chris Martenson and Greg Hunter at USA Watchdog:



At the Close, Wednesday, July 22, 2020:
Dow: 27,005.84, +165.44 (+0.62%)
NASDAQ: 10,706.13, +25.76 (+0.24%)
S&P 500: 3,276.02, +18.72 (+0.57%)
NYSE: 12,569.07, +60.39 (+0.48%)

What's In Your Wallet? CapitalOne Stumbles Into Zombie Zone; Gold, Silver Continue Explosive Rallies

Among the 79 or so second quarter earnings reports released on Tuesday, one of particular note was that of Capital One, the credit card and banking behemoth of "last resort" for many.

The company is well-known for its marketing campaign slogan, "What's in Your Wallet" and is also a lender to many who may not qualify for a credit card or auto loan from more traditional loan originators such as the major banks, thus rendering it to a largely "sub-prime" status.

Thus, when the firm released second quarter results after the closing bell on Tuesday, there was a chorus of "told you so" types who saw Capital One's demise in the making months prior.

The company recorded a quarterly loss of $918 million, or $2.21 a share, compared with a profit of $1.63 billion, or $3.24 a share in the year-ago period on a GAAP basis.

Notably, Capital One boosted its provision for credit losses to $4.25 billion from $1.34 billion in the year-earlier period. It also reported $1.51 billion in net charge-offs. That's $1.5 billion of defaults across all of their business units, but in particular, credit cards.

Total net revenue fell to $6.56 billion from $6.business unit.96 billion a year earlier. Analysts targeted $9.22 billion. Those analysts have yet to be fired, but are likely nervous and rapidly revising their third quarter estimates on the consumer lending giant.

Net interest margin, was 5.78%, compared with 6.80% a year ago, a significant decline.

During the conference call, company representatives touted the effectiveness of their forbearance provisions during the COVID crisis. Borrowers were allowed to skip payments on credit cards, home loans, car loans. In its earnings report presentation, the company offered: "As of June 30, 2020, we have assisted 2% of active accounts,
representing 3% of loans outstanding."

Those 2%, 3% figures are leading numbers. When those figures reach 4% to 5%, Capital One will be in dire straits, because of the declining net interest margin, which is heading south of 5% in the current quarter. Capital One also reported that 92% of customers seeking forbearance were current. Put another way, 8% of those were already 30 days delinquent. With net interest margins collapsing and more people expected to go into delinquent status, Capital One will have to provision even more toward credit losses in the third quarter.

Capital One has become the canary in the coal mine for the banking industry, specifically, consumer-oriented banks, like Wells Fargo, Bank of America, Citi, and JP Morgan Chase. When the dominoes begin to fall, expect Capital One to be among the first, if not THE first, to tip over.

Combined with the 3.10 loss in the first quarter, Capital One's price/earnings ratio fell from a high of around 26 to 12 after last quarter to N/A this quarter, as, on a twelve-trailing-month (TTM) basis, they've lost 26 cents per share over the past year.

The current quarter doesn't look very promising for the company either. They lowered their dividend for the third quarter from 40 cents to 10. When they report their third quarter results on or about October 21, expect the dividend to be reduced to zero.

Like Countrywide, the sub-prime mortgage darling prior to the GFC of 2007-09, Capital One may be forced at some time to sell off business segments. If one were to ask the executives at Capital One "what's in your wallet?" the answer would be, appropriately, "other people's money." And if one were to extrapolate out how that's going to work when millions of their customers are out of work, the correct answer would be "not well."

Oh, well, just another banking crisis the Fed plans on postponing until just before the November elections. COVID-19 and the government response is gearing up for an exciting fall presentation.

Meanwhile, silver and gold continue a rally that has now caught the attention of the financial media, at last. The last time CNBC talked about precious metals was back in Spring of 2011, when gold and silver were headed to all-time highs. A mania was underway.

In October, 2008, when everything was crashing, silver bottomed out at $8.88 an ounce, and gold fell to 712.50.

By the peak in 2011, silver checked in at $48.70, more than a five-bagger by April, and gold struck $1895.00 in September. Now, the shining sisters are back for Act Two.

Silver was slammed down to $12 an ounce in March, but has rebounded smartly. On July 2nd it stood at $17.93. It's currently trading above $22, hitting $22.50 on futures markets overnight.

Also in March, gold got smacked down to $1474.25. Overnight, gold futures hit $1862.50, just $32 short of it's record closing high. As of this writing, gold futures are trending at $1858.90.

While gold and silver aren't exactly what people carry around with them (they used to be), astute followers of currencies and real money might want a couple of one ounce silver coins and a few gram-denominated gold pieces in their wallets.

At the Close, Tuesday, July 21, 2020:
Dow: 26,840.40, +159.53 (+0.60%)
NASDAQ: 10,680.36, -86.73 (-0.81%)
S&P 500: 3,257.30, +5.46 (+0.17%)
NYSE: 12,508.68, +115.70 (+0.93%)