Slow news day, Monday.
Looting in Chicago, armed man shot outside White House. Dow up, NASDAQ down, silver up, gold down.
About the only item of significance actually occurred after midnight, ergo, Tuesday, when the "Protectors of Fiat" (POF) managed to beat the price of gold back down below $2000, currently stumbling down $40, at $1988.90.
Why? The world's central banks cannot allow gold and silver to be priced at anything that might inspire people to want to hold them, so they allow some gains before shorting them back down to more "reasonable" levels.
It's a game, and the central banks are still winning, though that is all dependent on a majority of the population playing. Pricing everything in Federal Reserve Notes preserves the fantasy of control. They have none over people who have chosen to opt out. People who have had enough, who are home-schooling their kids instead of packing them off for daily trips to the government indoctrination centers, who have backyard gardens, own guns for personal protection, and invest in shiny metals rather than worthless electronic bits of paper contracts commonly known as stocks, are not playing.
These are people who do things for themselves, without assistance from government bureaucrats who only help to make everything more difficult and time-consuming. These people are not interested in creating a wealth nest egg based on fake money. They're interested in raising their families as they see fit, eating food they raise themselves, living life on their terms, not those of some government or central bank.
The people we see looting, protesting, rioting, tearing down monuments, and engaging in otherwise destructive activities are the opposite of those described above. They are useful idiots who measure themselves in fiat currency and rail against the same government from which they expect to receive all benefits: money, food, clothing, shelter, communications, everything.
They hurl insults over injustice, then ask for social justice. The loot stores in their neighborhoods, then complain when there is no bread on the shelves. They are the dregs of society, and they've always been there, just now they are emboldened by the biased mainstream media, communist infiltrators, and a left-leaning Democratic party which has sailed off on an election campaign without a rudder.
In the end, when the reality of a failed economy, fake pandemic, and burning cities collide, the useful idiots will cease to be useful and a culling will commence. Unless they change their ways - a doubtful expectation - they will no longer be useful to anybody and will be discarded one way or another.
At the same time, those who have opted out, the preppers, home-schoolers, backyard gardeners, gun-toters, silver and gold hoarders, will find their footing on the other side of the social equation.
In between these two mega-groups, millions of civil servants (a misnomer since 1980) will continue to exist, albeit at levels that will have to be readjusted to a new reality. Their privilege will be lost. Their pay, health care coverage, and pensions reduced. They will find that a life spent making other people more miserable doesn't end well. They will either learn new skills and survive or resist and die.
That's just the way it goes during a depression. And make no doubt about it, the United States - and most of the rest of the world - is in the early stages of what is likely to be known as the greatest depression.
The Federal Reserve and fellow central banks can't just continue conjuring up trillions of dollars out of thin air and handing it off to banks and oligarchs and the federal government can't continue to borrow far in excess of their tax revenues. States have been broken by this fake pandemic; the worst of them are bankrupt.
A great reset is upon us, and it will be painful for many.
Slow news day, but the gloom continues to descend, slowly, inexorably, deliberately.
At the Close, Monday, August 10, 2020:
Dow: 27,791.44, +357.94 (+1.30%)
NASDAQ: 10,968.36, -42.64 (-0.39%)
S&P 500: 3,360.47, +9.19 (+0.27%)
NYSE: 12,844.02, +78.22 (+0.61%)
Tuesday, August 11, 2020
Sunday, August 9, 2020
WEEKEND WRAP: Big Week for Silver; President Trump Delivers For America, Bypassing Inept Congress
We'll get to the good stuff in a few paragraphs, but first, for the record, the salient numbers.
Stocks had another mostly impressive week, slowed down slightly on Friday by the reality of the July non-farm payrolls data. While the July jobs number exceeded expectations with the creation of 1,763,000 employment positions. The unemployment rate fell from 10.6% to 10.2%, and it was that nagging reminder that millions of Americans are still out of work that took some steam away from Wall Street.
Led by an impressive 1000+ point gain on the Dow Industrials (+3.80%), stocks out-performed expectations in the face of continuing COVID-19 issues, the NASDAQ making another in a long stretch of record closes Thursday (11,108.07) before Friday's giveback.
Fixed income rallied alongside stocks, with the 10-year note recording a record low yield of 0.52% on Tuesday. The Treasury complex did, however, finish the week roughly where it started, with the 30-year at 1.23% and the 1-month bill off a mere one basis point to 0.08%.
Crude oil continued to trade rangebound, as WTI crude closed out the week at 41.22 Since mid-June, a barrel of WTI crude oil has been priced between $38 and $42 due to slack demand and a glut on the world market.
The real story was in the precious metals space, where silver stole the spotlight from gold. A little more than a week earlier, the price of gold in US dollars set an all-time high, but by Thursday's close of 2,069.40, was beginning to gain the attention of many more than the usual gold bugs. Finishing the week at 2,028.00, gold's rise seems to be an unstoppable force.
Silver was a runaway success on the week, reaching as high as $29.88 on the COMEX. even though it closed Friday at $27.54, it still managed a gain of $3.32, or 13.7%. Silver is up an incredible 51.24% in just the past 30 days.
GoldMoney.com's Allasdair Macleod believes bullion banks and fiat currencies have no way out as gold vaults past $2000 and silver powers forward as a secondary current.
Ted Butler reminds us that silver is also an industrial metal and an even more significant price move could develop if makers of solar panels and electrical devices get the idea that it's getting too expensive and move to buy up existing or future supplies.
In the physical world, premiums and shortages are widespread on both metals. Here are the most recent prices for selected items on eBay (including shipping, which is often free):
Item: Low / High / Average / Median
1 oz silver coin: 33.00 / 43.11 / 35.99 / 35.45
1 oz silver bar: 32.95 / 43.90 / 36.83 / 36.08
1 oz gold coin: 2,000.00 / 2,204.28 / 2,152.10 / 2,168.32
1 oz gold bar: 2,053.90 / 2,237.00 / 2,151.87 / 2,136.22
At the Close, Friday, August 8, 2020:
Dow: 27,433.48, +46.50 (+0.17%)
NASDAQ: 11,010.98, -97.09 (-0.87%)
S&P 500: 3,351.28, +2.12 (+0.06%)
NYSE: 12,765.84, +36.68 (+0.29%)
For the Week:
Dow: +1005.16 (+3.80%)
NASDAQ: +265.71 (+2.47%)
S&P 500: +80.16 (+2.45%)
NYSE: +300.79 (+2.41%)
The biggest news of the week, however, came Saturday afternoon, when President Trump took to the podium at his private golf course in Bedminster, New Jersey, to announce the signing of four executive orders after congress wasted weeks trying to negotiate a stimulus package.
Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows spent countless hours over the past three weeks trying to sway intractable, unbudging Democrats led by Nancy Pelosi and Chuck Schumer, senator from New York toward a workable compromise.
When discussions broke down entirely on Friday, the President was ready to act on his own and did so on Saturday.
The four executive orders are 1) to continue paying a supplemental federal unemployment benefit for millions of Americans out of work, lowering the amount from $600 a week to $400 through the end of 2020; 2) extending a moratorium on federal student loan payments; 3) recommendations for a continuation of a freeze on some evictions and foreclosures during the COVID-19 crisis, and; 4) deferral of the employee portion of the payroll tax from August 1 through the end of the year for people who earn less than $100,000.
Missing was the $1200 checks to eligible Americans that were promised by both sides, though many of the recipients of the government stipend were already receiving enhanced unemployment. Congress may step forward with a smaller, slimmed-down relief bill to address the needs of seniors and the self-employed and destitute.
Thus, President Trump stepped around congress and acted forcibly on his own, prompting cries of derision and unfairness from the liberal side and threats of lawsuits challenging his authority to distribute funds. However, the President seemed to be within his rights since the money, especially for enhanced unemployment payments, was already in the hands of the states. No further money was needed to be appropriated.
Finally, here's the late, great Robert Goulet, singing "The Impossible Dream," a song from the Broadway smash hit, "Man of La Mancha." Based on the novel, "Don Quixote" by Miguel de Cervantes, the 1965 musical by Dale Wasserman, lyrics by Joe Darion, and music by Mitch Leigh is a loose interpretation of Cervantes' greatest novel, itself a masterpiece of Western literature, published in two parts in 1605 and 1609.
The original 1965 Broadway production of "Man of La Mancha" ran for 2,328 performances and won five Tony Awards, including Best Musical. It has been revived four times on Broadway, becoming one of the most enduring works of musical theatre.
"The Impossible Dream" was the principal song from the show and it became an American classic. We present it here in tribute to President Trump. The lyrics aptly capture the essence of Trump's crusade against the deep state and successive campaigns for the presidency of the United States.
Enjoy.
The Impossible Dream
To dream the impossible dream
To fight the unbeatable foe
To bear with unbearable sorrow
To run where the brave dare not go
To right the unrightable wrong
To love pure and chaste from afar
To try when your arms are too weary
To reach the unreachable star
This is my quest, to follow that star
No matter how hopeless, no matter how far
To fight for the right
Without question or pause
To be willing to march
Into hell for a heavenly cause
And I know if I'll only be true
To this glorious quest
That my heart will lay peaceful and calm
When I'm laid to my rest
And the world will be better for this
That one man scorned and covered with scars
Still strove with his last ounce of courage
To reach the unreachable star.
Stocks had another mostly impressive week, slowed down slightly on Friday by the reality of the July non-farm payrolls data. While the July jobs number exceeded expectations with the creation of 1,763,000 employment positions. The unemployment rate fell from 10.6% to 10.2%, and it was that nagging reminder that millions of Americans are still out of work that took some steam away from Wall Street.
Led by an impressive 1000+ point gain on the Dow Industrials (+3.80%), stocks out-performed expectations in the face of continuing COVID-19 issues, the NASDAQ making another in a long stretch of record closes Thursday (11,108.07) before Friday's giveback.
Fixed income rallied alongside stocks, with the 10-year note recording a record low yield of 0.52% on Tuesday. The Treasury complex did, however, finish the week roughly where it started, with the 30-year at 1.23% and the 1-month bill off a mere one basis point to 0.08%.
Crude oil continued to trade rangebound, as WTI crude closed out the week at 41.22 Since mid-June, a barrel of WTI crude oil has been priced between $38 and $42 due to slack demand and a glut on the world market.
The real story was in the precious metals space, where silver stole the spotlight from gold. A little more than a week earlier, the price of gold in US dollars set an all-time high, but by Thursday's close of 2,069.40, was beginning to gain the attention of many more than the usual gold bugs. Finishing the week at 2,028.00, gold's rise seems to be an unstoppable force.
Silver was a runaway success on the week, reaching as high as $29.88 on the COMEX. even though it closed Friday at $27.54, it still managed a gain of $3.32, or 13.7%. Silver is up an incredible 51.24% in just the past 30 days.
GoldMoney.com's Allasdair Macleod believes bullion banks and fiat currencies have no way out as gold vaults past $2000 and silver powers forward as a secondary current.
Ted Butler reminds us that silver is also an industrial metal and an even more significant price move could develop if makers of solar panels and electrical devices get the idea that it's getting too expensive and move to buy up existing or future supplies.
In the physical world, premiums and shortages are widespread on both metals. Here are the most recent prices for selected items on eBay (including shipping, which is often free):
Item: Low / High / Average / Median
1 oz silver coin: 33.00 / 43.11 / 35.99 / 35.45
1 oz silver bar: 32.95 / 43.90 / 36.83 / 36.08
1 oz gold coin: 2,000.00 / 2,204.28 / 2,152.10 / 2,168.32
1 oz gold bar: 2,053.90 / 2,237.00 / 2,151.87 / 2,136.22
At the Close, Friday, August 8, 2020:
Dow: 27,433.48, +46.50 (+0.17%)
NASDAQ: 11,010.98, -97.09 (-0.87%)
S&P 500: 3,351.28, +2.12 (+0.06%)
NYSE: 12,765.84, +36.68 (+0.29%)
For the Week:
Dow: +1005.16 (+3.80%)
NASDAQ: +265.71 (+2.47%)
S&P 500: +80.16 (+2.45%)
NYSE: +300.79 (+2.41%)
The biggest news of the week, however, came Saturday afternoon, when President Trump took to the podium at his private golf course in Bedminster, New Jersey, to announce the signing of four executive orders after congress wasted weeks trying to negotiate a stimulus package.
Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows spent countless hours over the past three weeks trying to sway intractable, unbudging Democrats led by Nancy Pelosi and Chuck Schumer, senator from New York toward a workable compromise.
When discussions broke down entirely on Friday, the President was ready to act on his own and did so on Saturday.
The four executive orders are 1) to continue paying a supplemental federal unemployment benefit for millions of Americans out of work, lowering the amount from $600 a week to $400 through the end of 2020; 2) extending a moratorium on federal student loan payments; 3) recommendations for a continuation of a freeze on some evictions and foreclosures during the COVID-19 crisis, and; 4) deferral of the employee portion of the payroll tax from August 1 through the end of the year for people who earn less than $100,000.
Missing was the $1200 checks to eligible Americans that were promised by both sides, though many of the recipients of the government stipend were already receiving enhanced unemployment. Congress may step forward with a smaller, slimmed-down relief bill to address the needs of seniors and the self-employed and destitute.
Thus, President Trump stepped around congress and acted forcibly on his own, prompting cries of derision and unfairness from the liberal side and threats of lawsuits challenging his authority to distribute funds. However, the President seemed to be within his rights since the money, especially for enhanced unemployment payments, was already in the hands of the states. No further money was needed to be appropriated.
Finally, here's the late, great Robert Goulet, singing "The Impossible Dream," a song from the Broadway smash hit, "Man of La Mancha." Based on the novel, "Don Quixote" by Miguel de Cervantes, the 1965 musical by Dale Wasserman, lyrics by Joe Darion, and music by Mitch Leigh is a loose interpretation of Cervantes' greatest novel, itself a masterpiece of Western literature, published in two parts in 1605 and 1609.
The original 1965 Broadway production of "Man of La Mancha" ran for 2,328 performances and won five Tony Awards, including Best Musical. It has been revived four times on Broadway, becoming one of the most enduring works of musical theatre.
"The Impossible Dream" was the principal song from the show and it became an American classic. We present it here in tribute to President Trump. The lyrics aptly capture the essence of Trump's crusade against the deep state and successive campaigns for the presidency of the United States.
Enjoy.
The Impossible Dream
To dream the impossible dream
To fight the unbeatable foe
To bear with unbearable sorrow
To run where the brave dare not go
To right the unrightable wrong
To love pure and chaste from afar
To try when your arms are too weary
To reach the unreachable star
This is my quest, to follow that star
No matter how hopeless, no matter how far
To fight for the right
Without question or pause
To be willing to march
Into hell for a heavenly cause
And I know if I'll only be true
To this glorious quest
That my heart will lay peaceful and calm
When I'm laid to my rest
And the world will be better for this
That one man scorned and covered with scars
Still strove with his last ounce of courage
To reach the unreachable star.
Friday, August 7, 2020
July Jobs Number Shows 1.76 Million Gain, Unemployment at 10.2%; Markets Not Overly Impressed
While Friday looks to be an interesting day for traders of all stripes, next week could be one of the more volatile in some time.
Anticipation of July non-farm payroll data at 8:30 (at this writing, half and hour away) has put some pressure on equity futures, at their worst levels in weeks though the jobs data is not expected to be a major drag on stocks.
Perhaps more worrying is President Trump's late night executive order banning Americans from transactions involving China’s ByteDance (parent of TikTok) and WeChat (owned by Tencent). The order will go into effect in 45 days. The president's Working Group on Financial Markets (aka, Plunge Protection Team, or, PPT) has also made a recommendation to delist Chinese companies on US exchanges that are not become compliant with US accounting standards. There's a bit of dark humor here, as the Working Group is notorious for putting a bid under stocks when they're approaching collapse and the idea of US companies actually in compliance with GAAP standards is somewhat laughable when earnings reports are laden with one time charges, off-balance sheet transactions, pre-tax calculations and other accounting tricks designed to shield firms from investor backlash.
The president appears to have struck a nerve with his recent verbal and written attacks against communist China. They are a major trading partner, albeit the one-sided flow of money having headed to them over the past 40 years, and many companies are stuck with agreements and supply chain parameters that are being eroded as US-China relations deteriorate. A lot of money is at risk and the whole world knows it.
Beyond the president's trade and sleepless night antics, Chief of Staff Mark Meadows and Treasury Secretary have made little to no progress with steadfast Democrats - particularly NY senator Chuck Schumer and House Speaker Nancy Pelosi - who haven't budged on their demands for a much bigger and more encompassing stimulus bill currently under negotiation.
It's all politics all the time in Washington, but this struggle has implications that will likely have a major effect on the November elections. Apparently, the Democrats believe that by holding out on key tenets of their $3 trillion HEROES (Health and Economic Recovery Omnibus Emergency Solutions) act over the roughly $1 trillion proposal offered by the White House, they can lay blame on "stingy" Republicans and look good holding out for more free things for everybody.
Of course, the strategy is not without risks. Potential voters may see the Democrats holding out for too much and scuttling any chance of getting most Americans another round of $1200 checks and an extension - of any kind - on the added unemployment benefits that recently expired. Rightly, citizens should blame both sides, just for being politicians and using the American people as a foil for their election hopes. The White House has indicated that if a deal is not reached Friday, they will cease negotiations and let congress deal with it on its own. Republicans in the Senate should be a shamed of themselves for not being involved in some kind of compromise, but, of course, they have no shame left after doing nothing when they had the presidency and majorities in both houses from 2016 through 2018.
That said, it's looking like average working or laid off Americans are sure to suffer again for the foibles of feckless politicians. And people wonder why voter turnout is so low...
Getting closer to non-farm payroll data, here (An Effective COVID Treatment the Media Continues to Besmirch) is an excellent analysis by Steven Hatfill published on RealClearPolitics.com on August 4 about the effectiveness of hydroxychloroqine in the fight against COVID-19. Why is nobody listening to respected authorities like Hatfill?
Steven Hatfill is a veteran virologist who helped establish the Rapid Hemorrhagic Fever Response Teams for the National Medical Disaster Unit in Kenya, Africa. He is an adjunct assistant professor in two departments at the George Washington University Medical Center where he teaches mass casualty medicine. He is principle author of the prophetic book “Three Seconds Until Midnight -- Preparing for the Next Pandemic,” published by Amazon in 2019.
It's just after 8:30 now and the July non-farm payroll numbers are out.
As expected, the mangled data was benign at worst and positive at best, showing that the US added 1.76 million jobs during the month. The unemployment rate fell to 10.2%. For what it's worth, futures brightened up a bit on the announcement, but are still solidly in the red as the opening bell for the final trading day of the week approaches.
At the Close, Thursday, August 6, 2020:
Dow: 27,386.98, +185.46 (+0.68%)
NASDAQ: 11,108.07, +109.67 (+1.00%)
S&P 500: 3,349.16, +21.39 (+0.64%)
NYSE: 12,729.17, -2.39 (-0.02%)
Anticipation of July non-farm payroll data at 8:30 (at this writing, half and hour away) has put some pressure on equity futures, at their worst levels in weeks though the jobs data is not expected to be a major drag on stocks.
Perhaps more worrying is President Trump's late night executive order banning Americans from transactions involving China’s ByteDance (parent of TikTok) and WeChat (owned by Tencent). The order will go into effect in 45 days. The president's Working Group on Financial Markets (aka, Plunge Protection Team, or, PPT) has also made a recommendation to delist Chinese companies on US exchanges that are not become compliant with US accounting standards. There's a bit of dark humor here, as the Working Group is notorious for putting a bid under stocks when they're approaching collapse and the idea of US companies actually in compliance with GAAP standards is somewhat laughable when earnings reports are laden with one time charges, off-balance sheet transactions, pre-tax calculations and other accounting tricks designed to shield firms from investor backlash.
The president appears to have struck a nerve with his recent verbal and written attacks against communist China. They are a major trading partner, albeit the one-sided flow of money having headed to them over the past 40 years, and many companies are stuck with agreements and supply chain parameters that are being eroded as US-China relations deteriorate. A lot of money is at risk and the whole world knows it.
Beyond the president's trade and sleepless night antics, Chief of Staff Mark Meadows and Treasury Secretary have made little to no progress with steadfast Democrats - particularly NY senator Chuck Schumer and House Speaker Nancy Pelosi - who haven't budged on their demands for a much bigger and more encompassing stimulus bill currently under negotiation.
It's all politics all the time in Washington, but this struggle has implications that will likely have a major effect on the November elections. Apparently, the Democrats believe that by holding out on key tenets of their $3 trillion HEROES (Health and Economic Recovery Omnibus Emergency Solutions) act over the roughly $1 trillion proposal offered by the White House, they can lay blame on "stingy" Republicans and look good holding out for more free things for everybody.
Of course, the strategy is not without risks. Potential voters may see the Democrats holding out for too much and scuttling any chance of getting most Americans another round of $1200 checks and an extension - of any kind - on the added unemployment benefits that recently expired. Rightly, citizens should blame both sides, just for being politicians and using the American people as a foil for their election hopes. The White House has indicated that if a deal is not reached Friday, they will cease negotiations and let congress deal with it on its own. Republicans in the Senate should be a shamed of themselves for not being involved in some kind of compromise, but, of course, they have no shame left after doing nothing when they had the presidency and majorities in both houses from 2016 through 2018.
That said, it's looking like average working or laid off Americans are sure to suffer again for the foibles of feckless politicians. And people wonder why voter turnout is so low...
Getting closer to non-farm payroll data, here (An Effective COVID Treatment the Media Continues to Besmirch) is an excellent analysis by Steven Hatfill published on RealClearPolitics.com on August 4 about the effectiveness of hydroxychloroqine in the fight against COVID-19. Why is nobody listening to respected authorities like Hatfill?
Steven Hatfill is a veteran virologist who helped establish the Rapid Hemorrhagic Fever Response Teams for the National Medical Disaster Unit in Kenya, Africa. He is an adjunct assistant professor in two departments at the George Washington University Medical Center where he teaches mass casualty medicine. He is principle author of the prophetic book “Three Seconds Until Midnight -- Preparing for the Next Pandemic,” published by Amazon in 2019.
It's just after 8:30 now and the July non-farm payroll numbers are out.
As expected, the mangled data was benign at worst and positive at best, showing that the US added 1.76 million jobs during the month. The unemployment rate fell to 10.2%. For what it's worth, futures brightened up a bit on the announcement, but are still solidly in the red as the opening bell for the final trading day of the week approaches.
At the Close, Thursday, August 6, 2020:
Dow: 27,386.98, +185.46 (+0.68%)
NASDAQ: 11,108.07, +109.67 (+1.00%)
S&P 500: 3,349.16, +21.39 (+0.64%)
NYSE: 12,729.17, -2.39 (-0.02%)
Thursday, August 6, 2020
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%)
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%)
Wednesday, August 5, 2020
Bond Yield Collapse Boosts Gold Over $2000; Silver Rips Higher; The Argentina Treatment: New Normal for Debt Settlement
The name is Bond. Treasury Bond.
Anyone with a recollection of the classic 1963 initial intonation of the James Bond introduction from the film, "Dr. No," is likely to also have some memories of five percent interest at savings banks, CDs offering yields of seven, or stocks that were marked by quarter or half-point gains and losses.
Whether one relates to Sean Connery, Roger Moore, or even the contemporary Daniel Craig, the message remains the same. When the secret agent with the license to kill shows up, it's a sure thing that the bad guy is going to have a rough go of it.
The treasury bond market is relatable in similar fashion. Normally, when bonds announce their arrival at the scene of the financial panic of the day via lower yields, it is normally a signal for hard times ahead. These days, with the Fed put in place through various schemes, asset purchase programs, and nefarious back-room dealings, bond yields and the structure of the curve don't seem to matter very much. Stocks keep churning higher. Life - or whatever we're calling the continuing COVID crisis today - goes on.
On Tuesday, the evidence of stress was plain to see. Bond prices racked higher, sending the yield on the 10-year note to a record low, 0.52%. The 30-year crumbled to 1.19%, leaving the complex with a top to bottom spread of 110 basis points (1.10%). There's also inversion at the 1-year and 2-year level, the former yielding 0.14, the latter, 0.11. Even worse, the 3-year dipped to 0.10.
None of that bodes well for the US economy, but Wall Street barely batted an eyelash. Stocks gained across the board, though the day's rally could best be described as "nervous."
There's nothing good about the US or global economy, no matter how hard the Fed and the Wall Street, CNBC, Fox Business, and Bloomberg stock jockeys whip their mounts. There just isn't. Month-over-month data will show the occasional impressive uptick, but whatever the measure, it's from some dismal low point created by coronavirus and government edict.
So, when bonds make their ominous introductions, don't expect much to happen to stocks. Rather, look to precious metals for a suitable response. While bond yields were headed toward Hades in a handbag, gold and silver were launched to impressive levels. Gold vaulted past $2000 and silver gained almost two dollars on the day, ripping from $24.50 to beyond $26 the ounce. This is the natural reaction in the precious metals when storage costs become cheaper than real (negative) yields and price appreciation appears to be a no-brainer as opposed to declining interest rates.
The moves haven't slowed overnight either. Traders in the near and far East know currency and empire collapse when they see it and have made the requisite adjustment in the price of real money. Those expecting a slowing of precious metals' daring ascent are going to be disappointed. The recent spike - especially in silver, normally the more volatile of the pair - is the natural reaction to the global mess created by central banks and aided by coronavirus. The destruction of fiat currencies is a slow process, but the precious metals aren't wasting any time signaling the coming cataclysm.
While the recent gains may not be entirely sustainable, long term prospects for gold and silver are nothing short of magnificent. When every currency is backed by good faith and credit - and there is little left of those - a runaway response by precious metals is to be expected. Over the next two to five years, gold could easily triple or more; silver could be priced well over $100 per ounce as the gold:silver ratio executes a reversion to the mean.
There was more good news on the bond front.
Argentina finalized deal with creditors over $65 billion in long-term debt that has been hanging over the South American nation like the sword of Damocles since May, when a scheduled interest payment went missing.
The deal worked out has some interesting non-moving parts, most notably the swapping out of old bonds for new ones at a price of 55 cents on the dollar, with principal payments delayed until 2024, ostensibly to give Argentina time to get its fiscal house in order (or to find another way to screw over even more creditors).
No matter the case, the Argentina Treatment is likely to set a new standard - a "new normal" - for debt negotiations.
This is what credit card companies and home equity specialists will be hearing in coming months and years.
"I'm unable to meet my debt obligations, so I would like the Argentina Treatment. If you can see to it that 45% of my debt is forgiven, I'll gladly pay you back at two percent or so, beginning in three years. Or, would you rather have your financial institution pound sand?"
Not exactly a debt jubilee, but what some may call a suitable solution to decades of high-interest credit card debt and squeezed homeowners with no piggy bank left.
At the Close, Tuesday, August 4, 2020:
Dow: 26,828.47, +164.07 (+0.62%)
NASDAQ: 10,941.17, +38.37 (+0.35%)
S&P 500: 3,306.51, +11.90 (+0.36%)
NYSE: 12,612.09, +75.28 (+0.60%)
Anyone with a recollection of the classic 1963 initial intonation of the James Bond introduction from the film, "Dr. No," is likely to also have some memories of five percent interest at savings banks, CDs offering yields of seven, or stocks that were marked by quarter or half-point gains and losses.
Whether one relates to Sean Connery, Roger Moore, or even the contemporary Daniel Craig, the message remains the same. When the secret agent with the license to kill shows up, it's a sure thing that the bad guy is going to have a rough go of it.
The treasury bond market is relatable in similar fashion. Normally, when bonds announce their arrival at the scene of the financial panic of the day via lower yields, it is normally a signal for hard times ahead. These days, with the Fed put in place through various schemes, asset purchase programs, and nefarious back-room dealings, bond yields and the structure of the curve don't seem to matter very much. Stocks keep churning higher. Life - or whatever we're calling the continuing COVID crisis today - goes on.
On Tuesday, the evidence of stress was plain to see. Bond prices racked higher, sending the yield on the 10-year note to a record low, 0.52%. The 30-year crumbled to 1.19%, leaving the complex with a top to bottom spread of 110 basis points (1.10%). There's also inversion at the 1-year and 2-year level, the former yielding 0.14, the latter, 0.11. Even worse, the 3-year dipped to 0.10.
None of that bodes well for the US economy, but Wall Street barely batted an eyelash. Stocks gained across the board, though the day's rally could best be described as "nervous."
There's nothing good about the US or global economy, no matter how hard the Fed and the Wall Street, CNBC, Fox Business, and Bloomberg stock jockeys whip their mounts. There just isn't. Month-over-month data will show the occasional impressive uptick, but whatever the measure, it's from some dismal low point created by coronavirus and government edict.
So, when bonds make their ominous introductions, don't expect much to happen to stocks. Rather, look to precious metals for a suitable response. While bond yields were headed toward Hades in a handbag, gold and silver were launched to impressive levels. Gold vaulted past $2000 and silver gained almost two dollars on the day, ripping from $24.50 to beyond $26 the ounce. This is the natural reaction in the precious metals when storage costs become cheaper than real (negative) yields and price appreciation appears to be a no-brainer as opposed to declining interest rates.
The moves haven't slowed overnight either. Traders in the near and far East know currency and empire collapse when they see it and have made the requisite adjustment in the price of real money. Those expecting a slowing of precious metals' daring ascent are going to be disappointed. The recent spike - especially in silver, normally the more volatile of the pair - is the natural reaction to the global mess created by central banks and aided by coronavirus. The destruction of fiat currencies is a slow process, but the precious metals aren't wasting any time signaling the coming cataclysm.
While the recent gains may not be entirely sustainable, long term prospects for gold and silver are nothing short of magnificent. When every currency is backed by good faith and credit - and there is little left of those - a runaway response by precious metals is to be expected. Over the next two to five years, gold could easily triple or more; silver could be priced well over $100 per ounce as the gold:silver ratio executes a reversion to the mean.
There was more good news on the bond front.
Argentina finalized deal with creditors over $65 billion in long-term debt that has been hanging over the South American nation like the sword of Damocles since May, when a scheduled interest payment went missing.
The deal worked out has some interesting non-moving parts, most notably the swapping out of old bonds for new ones at a price of 55 cents on the dollar, with principal payments delayed until 2024, ostensibly to give Argentina time to get its fiscal house in order (or to find another way to screw over even more creditors).
No matter the case, the Argentina Treatment is likely to set a new standard - a "new normal" - for debt negotiations.
This is what credit card companies and home equity specialists will be hearing in coming months and years.
"I'm unable to meet my debt obligations, so I would like the Argentina Treatment. If you can see to it that 45% of my debt is forgiven, I'll gladly pay you back at two percent or so, beginning in three years. Or, would you rather have your financial institution pound sand?"
Not exactly a debt jubilee, but what some may call a suitable solution to decades of high-interest credit card debt and squeezed homeowners with no piggy bank left.
At the Close, Tuesday, August 4, 2020:
Dow: 26,828.47, +164.07 (+0.62%)
NASDAQ: 10,941.17, +38.37 (+0.35%)
S&P 500: 3,306.51, +11.90 (+0.36%)
NYSE: 12,612.09, +75.28 (+0.60%)
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