Friday, June 10, 2016

Gold World News Flash

Gold World News Flash

"Deliberately Overblown" Brexit Fears Backfire

Posted: 09 Jun 2016 11:19 PM PDT

Submitted by John Browne via Euro Pacific Capital,

As the June 23rd BREXIT (the UK-wide referendum to leave the EU) vote draws near, the polls indicate a close result. Those urging a vote for the UK to remain inside the EU are suggesting increasingly dire economic consequences that would follow a yes vote by the British people to leave. Voices from London, Brussels, and Washington have all put immense pressure on British voters to bend to the will of the elites.

To listen to their commentary one would think that apocalypse was just around the corner. But is there any substance to their warnings?

The Pro-EU membership camp is led by Prime Minister David Cameron, supported by most of his cabinet, the Bank of England, the BBC and the massive support from the UK and EU governments that have funded enormous advertising campaigns against separation. Given this weight of their power, it is amazing how strong the support for a British exit (BREXIT) has remained.

When Britain first joined the European Economic Community (the precursor to the EU) in 1973, the primary motivation was the hopes of increasing British trade through participation in the world’s largest free-trade zone. However, the hope that the union would simply be a free-trading zone of sovereign countries has morphed into a drive for an EU superstate that has relentlessly pushed for greater regulations on businesses and people and greater control of local laws that have nothing to do with trade.

It has been kept remarkably quiet, for instance, that the EU intends to divide the UK into eleven administrative regions, all reporting directly to Brussels. Although Scotland, Wales and Northern Ireland will remain intact as individual national regions, England will be split into eight regions. Worse still, the coastal counties of England will be teamed with regions in Portugal, France, the Netherlands and Germany, where they will remain in a minority role. Even the English Channel is to be renamed. Very little mention is of the EU proposal for EU-wide ID and tax numbers, likely heralding a heavy EU taxation regime.

Likewise, the proposals to create EU-wide armed forces have been put quietly on the back burner. England has a long and proud history of struggling for its sovereignty. In just the past two centuries she has stood alone against Napoleon and Hitler, before inspiring other nations to join the fray. The presence of French or German armed forces used to support a European police force in the UK will not sit well with the English.

All this and many more threats to the British people have been kept largely quiet. Instead, the main activities of the Pro-EU group have been concentrated on the economic and monetary catastrophe that would face the UK if it were to cut itself off from trading with the EU. Some call this, ‘Project Fear’. The actual underlying facts paint a somewhat different picture, one that makes the Pro-EU case appear misleading, even deliberately so.

The basic argument is that with about 50 percent of its current trade with the EU, the UK would face a catastrophic economic and monetary collapse if it left the EU. As a threat, this sounds potentially devastating. Doubtless it has persuaded some. But in the light of reality, a different and far less worrying image emerges.

The UK has the fifth largest national economy in the world, according to 2015 figures compiled by the International Monetary Fund. In its present state of economic stagnation, the EU can ill-afford to lose the UK. According to the March 2016 Statistical Bulletin from the Office for National Statistics, the UK has had a negative trade balance in goods with the EU that has averaged about $8 billion a month this first quarter. If the UK were to leave without being able to negotiate an independent trade deal, the EU economy might shrink by some $96 billion a year. The UK was the second largest net contributor to the EU budget last year. It follows that the 8 English regions (with Scotland, Wales and N. Ireland considered as 'relatively poor') may in aggregate be the second largest suppliers of future intra-EU money transfers from the so-called 'rich' to the poorer southern and eastern regions of Europe. In that sense, the EU needs the UK more than the other way round.

The Pro-EU camp ignore the trade balance issue completely and threaten, as did President Obama, that the UK would be left out in the cold, like Switzerland, and unable to negotiate its way out of a disaster. Switzerland is not an EU member and has an economy of less than a quarter the size of the UK’s. And yet from 2009-2013 she exported, on average, 4.6 times the value per person to the EU than does the UK (The Truth About Trade Outside the EU, William Dartmouth MEP, June 2015). With a negative EU trade balance, why would the UK be unable to negotiate, from outside, a trade agreement at least as good as that achieved by Switzerland?

[As an aside, over dinner many years ago, my occasional Lords and Commons golfing partner Dennis Thatcher asked me how the UK would survive alone in an era when world power blocks and corporations were getting bigger? I replied, “In the same way as Switzerland.” He retorted while hitting the table hard with his hand, “That’s just what Margaret thinks!”]

Further, the EU negotiates international trade agreements under the auspices of the World Trade Organization (WTO), in the primary interests of the EU, not of the UK. England has flourished by trading globally, especially with the U.S. and the British Commonwealth. The EU has no trade agreements yet with China or Japan. Outside the EU, the UK would be enabled to negotiate freely to trade with the entire world and be unfettered by the EU where it has a muted voice of 1 among 28 members. Furthermore, free of burdensome and costly EU regulations, the British economy likely would be re-energized, particularly among the vital job-creating small business sector.

In addition to economic collapse, the Pro-EU camp postulates that the British pound sterling, still one of the top five global trading currencies, would plummet following a BREXIT. However, many informed observers believe the international monetary system is on the cusp of a major collapse. In these circumstances, the vital interests of the Federal Reserve, European Central Bank, Bank of Japan and even the Bank of China would be to steady the ship to avert a collapse of fiat currency. Unimaginable amounts of central bank money could be deployed to save the pound, rendering it a false scare.

On the other hand, although the UK is not a member of the euro, a BREXIT indirectly could threaten the euro, now the world’s second currency.

Already a number of EU members are experiencing anti-EU sentiments among their people. The United Kingdom Independence Party (UKIP), which forced the BREXIT vote, is not alone. It is part of a sizable block, styled the Europe for Freedom and Direct Democracy (EFDD) group, in the EU parliament. It is comprised of representatives from the UK, France, Sweden, Italy, Poland, Lithuania and the Czech Republic. In addition, countries like Greece, Spain and Portugal are becoming very unhappy about the implications of Eurozone membership. A for BREXIT vote could ignite an implosion within the Eurozone rather than being a threat to Sterling. This may be what worries the international central banking and political elite most. It has led directly to massive global elite support for Cameron’s Project Fear.

If the British public wises up to David Cameron’s game of fear and vote for BREXIT, there will be some short-term shock and disruption in currencies, equities, bonds, precious metals and possibly employment. However, the global central bank and political elites could be expected to move very fast to avoid the development of deeper problems. Negotiations likely would be concluded very quickly to calm things down with minimal damage to the UK economy or its currency.

Gold, Silver and HUI Analysis

Posted: 09 Jun 2016 11:02 PM PDT

Ever since that abysmal payrolls number hit the wires, gold has performed exceedingly well. Additionally, it does seem as if there is some strong gold buying ahead of the upcoming “Brexit” vote, an event which has the potential to create a fair amount of chaos depending on which way it goes.

The Global Economy has Gold Investors Salivating

Posted: 09 Jun 2016 11:01 PM PDT

Guest Post from Goldco Precious Metals   Gold Naysayers – Negated Almost every pundit was agreed; the outlook for Wall St. was shaping up. Sure, gold had had an undeniably sunny first quarter of...

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Global Financial Meltdown Assured, Central Banks Desperate

Posted: 09 Jun 2016 10:30 PM PDT

Grant Williams – Oil: Peak demand – Gold: Peak Supply

Posted: 09 Jun 2016 10:15 PM PDT

Matterhorn AM

Something VERY BIG is afoot… at the COMEX

Posted: 09 Jun 2016 09:45 PM PDT

…The open interest for July of over 107,000 contracts is more than 50% of the entire open interest. This represents over 536 MILLION OUNCES! Do you realize this amounts to over 60% of total global production on just one bourse and in just one single month?

by Bill Holter, JS Mineset, SGT Report:

For more than three years we have watched the COMEX very closely. The initial clue to begin watching were the waterfall events where the amounts of paper gold and silver sold simply dwarfed what was being mined. I have said many times after the smackdowns, “first, no one has this much (gold or silver), second, no trader would ever sell in this fashion and destroy the price he will receive for the sale. Clearly the sales were done to affect price downward”. Each time I have written on this topic and suggested it would ultimately end with a delivery default I have been trolled. It looks very much like we will soon find out a default of delivery is not only possible but highly probable.

Starting with gold, last month (May) saw 221,000 ounces stand for delivery. This amount actually grew during the month which is highly unusual as the amount standing has ALWAYS dropped during delivery periods, this is the first time to my knowledge that the amount standing actually increased. For comparison, May 2015 delivered only 2,500 ounces. Looking back at June of 2015, the amount standing on first notice day was 509,000 ounces. The final amount delivered was 295,000. As I have written and questioned before, who would fully fund their account 100% to take delivery …and then “go away”? The answer of course is someone willing to accept a “premium” as a bribe to not take delivery.

This June as you know does look to be quite interesting. The initial amount standing was 49.119 tons or over 1.5 million ounces. The amount dropped on day two by about 4 tons but has since gained back nearly all of it to stand at 49.11 tons. (If I am not mistaken, this month is the largest month of gold contracts ever standing for delivery.) Over 40 tons have already been served so we know these longs could not be persuaded to “go away”. We have seen no evidence of delivery for March, April or May. If we add these together with June, we have 65.813 tons standing with only 51.12 tons of registered gold.

My point is this, someone very real and very big is standing for gold. This “someone” would not be bribed to go away last month and does not look like they will go way this month! Who is this long who all of a sudden cannot be bribed to stand down? As you know, I have speculated the Chinese (and Russia) have been positioning themselves to abandon the dollar as the reserve currency. I theorized nearly two years ago it was the Chinese who held the long month after month and rolled them …until they won’t and then demand delivery. I still believe this is the case as the open interest in silver has stayed so high, only pockets as deep as a sovereign could have sustained the losses. It also needs to be said again, no market has ever seen open interest expand to all time record highs …while the price was plumbing multi year lows. A reconciliation will come at some point, either open interest needs to be washed out or price skyrockets, one or the other.

Looking specifically at silver, we have a true potential atomic bomb in the works for July. COMEX claims to have 22,482,000 ounces registered and available for deliver. This number is an ALL TIME low for “registered” ounces. To put this number in perspective, it is less than $400 million dollars and only about 10 days of global production. Also in perspective, customers have already withdrawn 12,244,000 ounces of silver in just the first 8 days of June! Finally, the real shocker is the July contract. First, the open interest for July of over 107,000 contracts is more than 50% of the entire open interest. This represents over 536 MILLION OUNCES! Do you realize this amounts to over 60% of total global production on just one bourse and in just one single month? Obviously there will not still be 536 million ounces standing for delivery by July 1st, but as it stands now there are contracts open to deliver 24 ounces for every 1 ounce registered for delivery.

So, is a delivery default here and now in June or July? I am sure I will hear “they will never default, they will cash settle”. “Cash settlement” IS default, please do not delude yourself into thinking it isn’t. If you believe cash settlement is OK, what will you think AFTERWARDS when your cash will not buy metal? There is no way to tell if it is here and now but it certainly looks possible. Something has definitely changed. The longs of the past who would stand on first notice day only to mysteriously disappear during the delivery period seem to have changed or …are now different entities. It is clear by looking at past deliveries and current inventories that COMEX is not meant to be a major delivery hub. It has been “used” to “price” gold even though very little real metal changed hands. I believe this is about to change as actual gold being traded will become the pricing mechanism. The about face in the price action over the last six months and now the amounts standing tell you something very big is afoot. We already know that physical metal has been moving from West to East for years. I believe we are about to find out the pricing mechanism itself is being moved from West to East. Stay tuned!

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Standing watch,

Bill Holter
Holter-Sinclair collaboration
Comments welcome

A Day In The Life Of Several Hundred Laid Off Nomura Traders

Posted: 09 Jun 2016 06:50 PM PDT

Back in April, Japan's largest brokerage, Nomura, announced that it was quitting the European equity business. The decision was a cost cutting measure, and was made easier by the fact that the European operation hadn't made a profit since 2010.

Nomura isn't alone, Investment banks across the globe are cutting equity traders as a result of the current trading environment.

The following is what it was like for a group of London traders the day Nomura made the announcement that their services were no longer required, as chronicled by Bloomberg.

* * *

The fact that the division had only made one annual pretax profit since being bought from bankrupt Lehman Brothers Holdings in 2008 created an environment where traders would have to filter out the rumors of impending cuts quite frequently. However on April 11, it wasn't business as usual.

At One Angel Lane, Nomura’s stylish, eco-friendly European headquarters, employees have learned to filter out rumors of impending cuts. The division has only made an annual pretax profit once since it was bought from bankrupt Lehman Brothers Holdings Inc. in October 2008 -- a fact so often mentioned one half-expects it to be printed on employees’ business cards.


On April 11, though, the noise was louder than usual. A senior executive had let slip to a colleague at a barbecue that he was dreading the following week because the bank was shutting down equities. By the time media reports of unspecified job cuts in the U.S. and Europe appeared at lunchtime, all semblance of work had ground to a halt. Desk heads asked their managers what was going on. According to one of those doing the asking, they were told there was nothing to worry about.


That changed early the next morning when e-mails went round ordering staff to attend a compulsory meeting. Research analysts and salespeople caught the elevators up to the 11th floor; traders congregated on the third. By 9 a.m., it was official. Everyone was given an “at risk” letter, in which the firm offered to help them find alternative roles over the next 45 days, but they knew it was typically just a formality.

After listening to speeches by senior managers and human resources personnel, everyone was told to gather their belongings, leave key cards at reception, and exit the building. Most made their way to All Bar One and The Folly, the only pubs open in the city of London at that hour, to have a pint, and perhaps even to express a sigh of relief that there was no longer a daily worry about whether or not a job would be there the next morning.

The Folly, a pub operated by Drake and Morgan Bars and Restaurants

They made their way in dribs and drabs. Hundreds of displaced bankers, shuffling up Suffolk Lane to All Bar One and along Upper Thames Street toward the Folly, the only pubs in the City of London open that early on an overcast Tuesday morning.


The shell-shocked men and women sipping pints and consoling each other had become part of a growing population. Faced with a toxic blend of zero-interest rates, stiffer capital requirements and a collapse in trading revenue, banks including Barclays Plc, Deutsche Bank AG and Credit Suisse Group AG have announced large cuts to their European operations in recent months. Even U.S. firms, with higher profitability, are trimming staff.


Among the bankers who stayed in the pubs until late in the evening, seemingly attempting to stave off the inevitable by remaining in the financial district, there were at least some expressions of relief. Nomura had already conducted one round of restructuring, in 2012, following the appointment of Koji Nagai as chief executive officer. Unlike his predecessor, Nagai was openly skeptical about Nomura’s place in a saturated and tightly regulated European market. The whiff of insecurity pervaded the trading floor.


The bank went on a cost-cutting drive and, under the direction of a new compliance team hired from UBS Group AG, started to clamp down on even minor breaches to company rules. Staff members were chastised for sending presentations to their personal e-mail accounts to work on over the weekend. One group of traders was threatened with dismissal after being caught on closed-circuit TV stealing candy from a vending machine.

Knowing their fate was one thing, however one important question remained unanswered: would those that were let go still receive a bonus. Figuring that the financial year finished prior to being let go, many assumed that a bonus would still be provided - sadly, they were wrong.

For the newly unemployed, one question loomed large: Would they still get a bonus? Nomura’s financial year finished at the end of March -- well before any decision was announced regarding job cuts. Some traders and bankers assumed that, since they’d worked a full year, they would still receive an award.


They were wrong. On May 9, Nomura wrote to staff notifying them they would get nothing. Discretionary bonuses, the letters pointed out, were based on factors including future value to the company. Some bankers are now considering challenging the decision, citing a 2000 case in which a departing Nomura prop trader successfully sued the firm for 1.35 million pounds ($2 million). Nomura declined to comment on the bonus decision.

To top everything off, in addition to being fired and told no bonus would be paid out, some traders were summoned back to the office to face a disciplinary hearing. In trying to prepare for a future job search, they forwarded themselves documents they felt may be needed in the future, such as research reports, excel models, and even in one case, even a list of clients. Not only did the bank clamp down on those cases, which as a result will inevitably make it more difficult to find work in the future for those involved, the bank has yet to respond to those that simply asked for some work documents that may help in a future job search, even though Nomura had pulled out of Europe.

A second letter landed on the doorsteps of a handful of employees later that month, summoning them back to the office for a disciplinary hearing. In the hours before the cuts were announced, about five analysts had forwarded themselves documents they might need if they lost their jobs: research reports, Excel models and, in at least one case, a list of clients.


Nomura, like most banks, prohibits employees from forwarding any work documents to personal e-mail accounts. In tense meetings, the individuals explained themselves and asked for leniency. The bank is now considering what action, if any, to take. Possibilities include firing them for gross misconduct, thereby depriving them of severance pay and making it hard to find a job elsewhere; or handing out written warnings that will show up in a reference to a prospective employer. The analysts, who range from a junior associate to an industry veteran, fear that any measures will hamper their efforts to find alternative positions at a time when the industry is retrenching. Nomura declined to comment on the situation.


Separately, several former employees have asked the company to provide them with work documents they say will help them find roles elsewhere, such as their proprietary models and databases. They argue there is no reason for Nomura to refuse since it will no longer be competing in Europe. So far, no decision has been reached.

In the rush to leave One Angel Lane, many employees didn't have time to grab all of their belongings. Old family photographs, items of clothing and professional mementos lie in storage awaiting collection, a reminder of the human cost when a business fails.




Alasdair Macleod: The pensions mess -- Can gold help?

Posted: 09 Jun 2016 06:36 PM PDT

By Alasdair Macleod, St. Helier, Jersey, Channel Islands
Thursday, June 9, 2016

The British have recently seen two unpleasant examples of the cost of pension fund deficits.

A deficit at British Steel, estimated to be about L485 million, was followed by a deficit at British Home Stores of L571 million. In both cases, pension fund deficits have scuppered corporate rescue plans, because understandably no buyer will take on these liabilities.

These two cases are the small tips of a very large iceberg, and reflect problems not just in Britain, but anywhere where pension schemes exist. They have been brewing for some considerable time, but have escalated as a direct consequence of central banking's monetary policies. They are a crisis whose cause is concealed not only from the pensioners, but from trustees and investment managers as well.

This article lays out the problem and its scale, so far as it is known, and notes that a pension fund that has a holding in gold is a very rare animal. Indeed, one of the best known examples, the Teacher Retirement System of Texas, holds less than 1 percent of its $130 billion assets in gold. ...

... For the remainder of the commentary:


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Hitler Was Financed by the Federal Reserve and the Bank of England

Posted: 09 Jun 2016 06:20 PM PDT

by Gary Lite, 369 News:

The recent resolution of the parliamentary Assembly of the OSCE fully equalizes the role of the Soviet Union and Hitler Nazi Germany at the outbreak of the Second World War, except that it had the purely pragmatic purpose of extorting money from Russia on the contents of some of the bankrupt economies, intended to demonize Russia as the successor state to the USSR, and to prepare the legal ground for the deprivation of her right to speak out against revision of results of war.

But if we approach the problem of responsibility for the war, then you first need to answer the key question: who helped the Nazis come to power? Who sent them on their way to world catastrophe? The entire pre-war history of Germany shows that the provision of the "necessary" policies were managed by the financial turmoil, in which, by the way, the world was plunged into.

The key structures that defined the post-war development strategy of the West were the Central financial institutions of Great Britain and the United States — the Bank of England and the Federal Reserve System (FRS) — and the associated financial and industrial organizations set out a target to establish absolute control over the financial system of Germany to control political processes in Central Europe. To implement this strategy it is possible to allocate the following stages:

1st: from 1919 to 1924 — to prepare the ground for massive American financial investment in the German economy;

2nd: from 1924 to 1929 — the establishment of control over the financial system of Germany and financial support for national socialism;

3rd: from 1929 to 1933 — provoking and unleashing a deep financial and economic crisis and ensuring the Nazis come to power;

4th: from 1933 to 1939 — financial cooperation with the Nazi government and support for its expansionist foreign policy, aimed at preparing and unleashing a new World War.
In the first stage, the main levers to ensure the penetration of American capital into Europe began with war debts and the closely related problem of German reparations. After the US' formal entry into the first World War, they gave the allies (primarily England and France) loans to the amount of $8.8 billion. The total sum of war debts, including loans granted to the United States in 1919-1921, was more than $11 billion.

To solve this problem, debtor countries tried to impose a huge amount of extremely difficult conditions for the payment of reparations at the expense of Germany. This was caused by the flight of German capital abroad, and the refusal to pay taxes led to a state budget deficit that could be covered only through mass production of unsecured Marks. The result was the collapse of the German currency — the "great inflation" of 1923, which amounted to 578 (512%), when the dollar was worth 4.2 trillion Marks. German Industrialists began to openly sabotage all activities in the payment of reparation obligations, which eventually caused the famous "Ruhr crisis" — Franco-Belgian occupation of the Ruhr in January 1923.

The Anglo-American ruling circles, in order to take the initiative in their own hands, waited for France to get caught up in a venturing adventure and to prove its inability to solve the problem. US Secretary of State Hughes pointed out: "It is necessary to wait for Europe to mature in order to accept the American proposal."

The new project was developed in the depths of "JP Morgan & Co." under the instruction of the head of the Bank of England, Montagu Norman. At the core of his ideas was representative of the "Dresdner Bank" Hjalmar Schacht, who formulated it in March 1922 at the suggestion of John Foster Dulles (future Secretary of state in the Cabinet of President Eisenhower) and legal adviser to President W. Wilson at the Paris peace conference. Dulles gave this note to the chief Trustee "JP Morgan & Co.", and then JP Morgan recommended that H. Schacht, M. Norman, and the last of the Weimar rulers. In December, 1923, H. Schacht would become Manager of the Reichsbank and was instrumental in bringing together the Anglo-American and German financial circles.

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Released Gitmo detainees killing Americans in Afghanistan?

Posted: 09 Jun 2016 05:00 PM PDT

Stephen Yates, former deputy assistant to Vice President Cheney on reports that released Guantanamo Bay detainees were involved in attacks against Americans in Afghanistan. The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists , visionaries , free...

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Peter Schiff Warns "This Is The Point Where The Fed's Real Problems Begin"

Posted: 09 Jun 2016 04:45 PM PDT

Submitted by Peter Schiff via Euro Pacific Capital,

Stop me if you’ve heard this one before: A Fed official walks into a bar and says the economy is improving and rate hikes are appropriate. The patrons order another round to celebrate. Then disappointing data comes out, the high fives stop, and the Fed official ducks out the back…only to come back the next day saying the same thing. Anyone who pays even the smallest attention to the financial media has experienced versions of this joke dozens of times. Yet every time the gag gets underway, we raise our glasses and expect the punch line to be different. But it never is. Last week was just the latest re-telling.
For nearly a month the Fed’s bullish statements stoked optimism on the economy and raised expectations, based particularly on the most recent FOMC minutes, for a summer rate hike. But these hopes were dashed by the May non-farm payroll report, which reported the creation of only 38,000 jobs in May, the worst monthly performance in six years, based on data from the Bureau of Labor Statistics (BLS). The number missed Wall Street’s estimate by a staggering 120,000 jobs. If not for the 37,000 downward revision reported for April (160,000 jobs down to 123,000), May could have shown a contraction. This would have constituted a major black eye to the Obama Administration’s favorite talking point that its policies have led to 75 months of continuous job gains. (6/3/16, Democratic Policy & Communications Center).
To make the report even stranger, the plunge in hiring was accompanied by a drop in the unemployment rate to just 4.7%. Of course the fall in the unemployment rate was a function of another major drop in the labor force participation rate to just 62.6%, matching the June 2015 rate, which was the lowest level since the late 1970s (BLS). So the unemployment rate did not fall because the unemployed found jobs, but because they stopped looking. The market reaction was swift and sharp, as it always has been when a fresh shot of cold water has been thrown in the face of market boosters. The dollar fell hard and gold rose sharply.
But we can rest assured that despite any embarrassment that the Fed may be experiencing for having so gloriously misdiagnosed the current economic health, it will be right back at it in a few days, telling us about all the positive economic signs that are emerging and how it is ready and willing to start raising interest rates at the earliest opportune moment. Boston Fed president Eric Rosengren waited exactly 48 hours to start that campaign as he sounded bullish notes in a Monday speech in Finland. (6/6/16, Greg Robb, MarketWatch)
Given how many times this scenario has unfolded, leading to the point where even reliable Fed apologists like CNBC’s Steve Liesman have begun questioning the Fed’s credibility, one wonders what the Fed hopes to achieve by continuously walking into the bar with a new smile. But this performance is the only policy tool it has left. The Fed appears to believe that perception makes reality, so it will never stop trying to create the rosiest perception possible. It may view its own credibility as expendable.
There is also the possibility, however unlikely, that the Fed officials are not just trying to create growth through open-mouth operations, but that they actually believe that their policies are working, or are about to work. This would be as dogged a commitment to policy as medieval doctors had for bloodletting, which they thought was a useful therapy for a variety of ailments. Doctors at that time had all kinds of seemingly plausible reasons why the technique was effective. If the patient did improve after draining blood, it was taken as a sign of validation. But they would continue to apply the leeches even if the patient did not improve. Failure was simply a sign that more blood needed to be drained. Similarly, central bankers consider ultra-low, and even negative, interest rates as an ambiguous stimulant that will create growth when applied in large enough doses.
But what if modern central bankers, much like medieval doctors, are operating on a wrong set of assumptions? We know now that draining blood creates conditions that actually decrease a patient’s ability to fight infection and recover. Perhaps, one day, bankers will come to a similarly delayed conclusion about how zero and negative interest rates have prevented a real recovery that would otherwise have naturally taken place.
That’s because artificially low interest rates send false signals to the economy, prevent savings and investment, and encourage reckless borrowing and needless spending. They prevent the type of business and capital investment that is needed to create real and lasting economic growth. But don’t expect bankers, or their cheerleaders on Wall Street, the financial media, government, or academia, to ever make this admission. They do not believe in the power of free markets. They believe in government. Such a leap is simply beyond their powers of comprehension.
But there is another cycle here that is much more influential on the current market dynamic and should be much easier to spot. When the Fed talks up the economy and promises rate increases, the dollar usually rallies. When the dollar rallies, U.S. multi-national corporate profits take a hit, and the market falls. When the market falls, economic confidence falls and puts pressure on the Fed to maintain easy policy. This is a loop that the Fed does not have the stomach to break.
Because the Fed waited more than seven years to lift rates from zero, the cyclical "recovery" is already nearing its historical limit, if it's not already over. This could put the Fed into a position of raising rates into a weakening economy. Normally it does so when the economy is accelerating. Some identify this delay as the Fed's only policy error. But had it moved earlier, the recession would have simply arrived that much sooner. The Fed's actual policy error was thinking it could build a "recovery" on the twin supports of zero percent interest rates and QE, and then remove those props without toppling the “recovery.”
But despite all this, there are those who still believe that the Fed will deliver two more rate hikes this year. Given the anemic growth over the past two quarters, the recent plunges in both the manufacturing and service sectors, average monthly non-farm payroll gains of only 116,000 over the past three months (most low-wage, and part-time) and the stakes contained in the election that is just six months away, such a conclusion is hard to reach. Instead, I expect we will get the same bar gag we have been getting for the past year. Many of those who now concede that a June hike is off the table still believe July to be a possibility. I believe the Fed will go along with that hype until it can no longer get away with it…then it will start bluffing about September, or perhaps December.
The Fed has to keep talking about rate hikes so it can pretend that its policies actually worked. But the truth is that the Fed policies have not only failed, they have made the problems they were trying to solve worse, and raising interest rates will prove it. So the Fed resorts to talking about rate hikes, to maintain the pretense that its policies worked, without actually raising them and proving the reverse. This can only continue as long as the markets let the Fed get away with it or until the numbers get so bad that the Fed has to admit that we have returned to recession. That is the point where the Fed’s real problems begin.


THE MATTERHORN INTERVIEW – June 2016:“Oil Market: Peak Demand, Gold Market: Peak Supply”

Posted: 09 Jun 2016 04:39 PM PDT

“Oil Market: Peak Demand, Gold Market: Peak Supply”

One of the most engaging and bright analysts of our industry, Grant Williams, joins Lars in this podcast. Grant speaks about Oil, Gold and about ‘The Donald’, inter alia. Grant of course, together with his partner Raoul Pal, also initiated the RealVision TV channel producing high quality in-depth financial market interviews.


Posted: 09 Jun 2016 03:00 PM PDT

"Illuminati Exposed" | ORIGINS OF HUMANITY, PAST, PRESENT, FUTURE HUMANITY , There is a lot of information, and dis-information, conspiracy theory circulating the internet. Learn the truth about the 'Greater Darkness' in our world, today: The Financial Armageddon Economic Collapse Blog...

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Grant Williams – Oil: Peak demand – Gold: Peak Supply

Posted: 09 Jun 2016 02:36 PM PDT

THE MATTERHORN INTERVIEW – June 2016: Grant Williams

"Oil Market: Peak Demand, Gold Market: Peak Supply"

One of the most engaging and bright analysts of our industry, Grant Williams, joins Lars in this podcast. Grant speaks about Oil, Gold and about ‘The Donald’, inter alia.

[Video/Podcast] 37 mins


Lars Schall: Howdy, ladies and gentlemen, I'm now connected in Singapore … Read the rest

The Case for Gold Is Stronger Than Ever

Posted: 09 Jun 2016 02:09 PM PDT

This post The Case for Gold Is Stronger Than Ever appeared first on Daily Reckoning.

Thirty-four years after its first publication in 1982, The Case for Gold remains remarkably timely. The Case for Gold is the minority report of the U.S. Gold Commission and lays out a thorough and comprehensive defense of sound money.

Today, The Case for Gold remains a timeless piece of scholarship, offering successive generations both a prescient warning and a path to sound currency and a stable U.S. dollar.

When fellow Gold Commission member Lewis Lehrman and I submitted this minority report, it had been 10 years since Richard Nixon, by executive fiat, ended the last vestiges of the gold standard. Those intervening 10 years should have shown us again what all of human history teaches:

When a nation adopts paper (which can be printed without limit) as the basis of its monetary system, the results cannot be good for the people. The elites and the government can fare pretty well for a time, but the people suffer in the end. Paper money experiments, usually adopted as temporary expedients, do not end well for anyone.

The 1970s was a decade of economic malaise, resulting from the U.S. government's decades-long loose monetary policy. Outflows of gold throughout the 1960s led to President Nixon's decision to close the gold window in 1971, severing the final link between the dollar and gold.

The next several years witnessed the emergence of stagflation, as both inflation rates and unemployment rates rose in unison. Inflation rates soared into double digits by the end of the decade, while unemployment rates continued to rise, peaking at nearly 11% in the early 1980s. It was against this economic backdrop that the call came to establish the U.S. Gold Commission.

In 1980, Sen. Jesse Helms introduced an amendment to a Senate bill, and I introduced a similar amendment in the House, calling for the establishment of a commission to examine the use of gold in the monetary system. Although the legislation establishing the commission was signed into law by President Carter, his loss in the 1980 presidential election meant that President Reagan — a public supporter of the gold standard — would be responsible for appointing many members of the commission.

While President Reagan was sympathetic to the gold standard, he did nothing to restrain the anti-gold members of his administration. As a result, the Gold Commission was packed with establishment supporters of fiat money and the Fed. Thus, the deck was stacked against the pro-gold forces from the outset.

Despite the commission's ultimate endorsement of the fiat paper money system, the commission's work resulted in positive developments: the eventual adoption of legislation to authorize the minting of gold coins by the United States Mint and the publication of the commission's minority report as The Case for Gold. And the intellectual case for gold put forth in the commission's minority report provided the underpinnings for the continued drive toward a restoration of sound money.

Most of the historical research in The Case for Gold was undertaken by the eminent Austrian School economist Murray Rothbard. Rothbard was the leading scholar in America's monetary history. His work makes it is only too clear that government intervention into monetary affairs is at the root of all economic crises. The Case for Gold explains the numerous interventions, the disastrous effects of those interventions, and the steps needed to free the markets in order for gold to return to its rightful place as the ultimate commodity money.

We predicted in this report that without substantive change, the nation would experience continued economic hard times, economic cycles, dollar depreciation, government growth, and the continued diminution of human liberty. Despite periodic illusions of rising prosperity that turned out to be false booms, this prediction turned out to be indisputably true.

Since that time, nothing has worked to restrain government growth. Meanwhile, average Americans have less disposable income than anytime since the 1970s, and the dollar has fallen dramatically since 1971. Median income has barely risen in that entire period. A $1 trillion government debt of those days is now a $19 trillion government debt.

The banking system is broken. Taxpayers and savers are being looted daily at unprecedented levels to sustain a system of zombie banks, bad debt, high unemployment, low business creation, and bankrupt government. This is why many young people today despair for their future.

It could have been different. Back in those days, we could have, as a nation, embraced sound money and spared ourselves all this suffering. The means to make a change were right there, but the political will was lacking. Paper money makes life too easy for those who want to extend their rule over society. It lets leviathan out of its cage. It removes all discipline from the federal government that state governments, businesses, and households deal with every day.

How to make a change? In the 1982 report, we suggested many different paths to reform: competitive currencies, repeal of legal tender, redefining the dollar as a certain unit of gold, juridical changes that enforce the monetary clauses of the Constitution as they read in plain language, the application of standard free-enterprise competition to the banking industry, and more.

Any one of these reforms would have been an excellent step. Instituting all of them would have restored sound money and spared us the grueling and continuing economic problems that are slowly killing the American dream today.

Today, in light of technological developments, we can add more paths. The rise of digital networks could enable unprecedented monetary entrepreneurship, with digital currencies and new payment systems, as well as new banking and lending structures that bring together consumers and producers in genuine market relationships.

But it turns out that such development is seriously hobbled by regulations and monopolization. Simply put, free enterprise in money and banking is illegal. At a time when digital economics are revolutionizing all sectors, money and banking seem forever stuck in the analog age and the errors of the past.

I did my best during my 2012 presidential campaign and with my book End the Fed to make money a public issue. I sought to break the silence. The political class largely ignored what I was saying. As this economic reality becomes more evident, however, the political tides begin to change as well.

Not since The Case for Gold's initial publication in the early 1980s has discussion of gold been so widespread among the punditry class and within the financial press. Investment in gold is no longer the domain of long-derided "gold bugs," but rather an integral inflation hedge for ordinary investors ravaged by the decline in their purchasing power.

No less than Forbes magazine has called for serious consideration of a gold standard. And even former Federal Reserve governors are beginning to question the wisdom of the Federal Reserve's monopoly on currency creation and are calling for a free market in money.

I'm thrilled today that the young generation has become excited about the topic. They now see that the Fed is more than another Washington bureaucracy. They see it as a threat to their future. This is all to the good. There is also serious pressure on the Fed to be more public about its operations. Its power no longer goes unquestioned.

The Fed's paper money system is the major source of economic suffering today. It is the reason that Congress can't control its spending. It's why it can fund wars and the police state. The paper money monopoly distorts economic signals and causes booms and busts. It robs the American people with the insidious tax called inflation.

We must never forget that the Fed has the massive power it does only because of paper money. If it were restrained by a gold standard or monetary competition, the Fed would be a menace, but not a mortal threat. As it is, the Fed, and, by extension, the government itself, holds our entire economic future hostage.

The most conspicuous policy that has harmed the middle class was the Fed's "zero interest rate policy." The idea here was to inspire lending and give the economy a boost. It did nothing of the sort. Instead, it acted as a method by which the Fed was permitted to pay a rate of return on bank deposits in an environment that was risk-free for the industry.

This was several steps beyond the old "too big to fail" doctrine and one or two steps shy of total nationalization.

These are the types of extremes that the Fed has pursued to sustain an unworkable system. This is a predictable trajectory: from paper money to total government control. Each new step away from free-market money creates new problems that seem to cry out for more intervention, which creates more problems, and so on until the entire system unravels. And this is precisely what we are seeing.

The risks are very high for the middle class. The incredible bust of 2008 might turn out to be just a warm-up. Another, even worse meltdown threatens because rather than face reality, the Fed papered over problems. As a result, hyperinflation is a real possibility, and it is not possible for the Fed to simply pull a lever to stop it once it starts. Bank runs will continue to threaten. The dollar will continue to lose its purchasing power. Government will continue to grow.

A failed system has proven itself a failure too many times. I will once again issue this challenge: Reform the monetary system or strangle the future of freedom itself. This is the choice we face. It is not too late. And such reform has never been easier. The government should permit free enterprise a role in the management of money. Let the entrepreneurs take over where the Fed failed.

In an ideal world, we would see the dollar made good as gold. This would be the first action of a responsible Congress and president. But even without reforming the dollar, it should be legal for producers and consumers to migrate to other market-based systems of money and banking.

The need for reform has never been more urgent. The case for reform is fundamentally the same today as it was when it was first published. The principles never change. Freedom and sound money are inseparable. Money must be returned to the people to manage and be taken away from the government and its planning apparatus at the central bank. Socialism works in no area of life. Freedom works in every area.


Ron Paul
for The Ron Paul Institute for Peace and Prosperity

P.S. What's the latest on gold, oil, the Fed, or the stock market? What's China going to do next? You'll find the answers in the free daily email edition of The Daily Reckoning. It provides an independent, penetrating and irreverent perspective on the worlds of finance and politics. And most importantly, how they fit together. Click here now to sign up for FREE.

The post The Case for Gold Is Stronger Than Ever appeared first on Daily Reckoning.

What Congress Really Thinks of Voters

Posted: 09 Jun 2016 01:44 PM PDT

This post What Congress Really Thinks of Voters appeared first on Daily Reckoning.

BALTIMORE – Yesterday, the Dow rose over 18,000, the first time since April.

Hillary is riding high, too. She is a pro. She has the entire Deep State behind her – including almost every crony and zombie in the country… and a political machine that can turn out more claptrap than any in history.

While her opponent rambles incoherently and mindlessly, every phrase from Hillary's mouth is a carefully polished imbecility.

Still believe in democracy?

Battle of Wits 

We have on our desk an unremarkable book by an unremarkable man.

The Confessions of Congressman X is a slim volume of slim insights and thin commentary from a coward.

Not that we have anything against cowards. We duck and dodge along with everyone else.

In the Vietnam War, we had a student deferment… and a decent lottery number… along with millions of others.

(Despite our best efforts, we did get the benefit of a short, all-expense-paid ocean cruise, and more than enough beach time at Coronado Island, San Diego… courtesy of the U.S. Navy. Did we fail as a coward? Or fail as a hero? Like most people, it's probably a little of both. But we can confidently report that, although we may have run over an innocent fishing boat or two, on our watch at the radar screen, we never posed any real risk to the Viet Cong.)

And now, even in our battle of wits, we engage only with unarmed opponents… and even then only when we think we have overwhelming firepower… and when odds are at least three-to-one in our favor.

Like a playground bully, we look for weakling ideas to assault, preferably those with a major mental handicap.

Still, while we may cower behind a bush from time to time, we step right out in the open to give credit where it is due. We tilt our cap to real heroes… and save plenty of snide remarks, contempt, and mockery for the rest of us.

At least Congressman X has his eyes open. He offers "revelations" about the way Congress really works.

But he will not reveal his identity. Nor does he show any inclination to challenge the system in any way.

Get Along to Go Along 

Again, we are on his team.

Trying to improve the world – or even the U.S. Congress – is a lost cause. Besides, why bother, if you can take advantage of it as it is?

In his shoes, we would probably do what he is doing; better to enjoy his minor celebrity status, a good income, and the rich perks of a Member of Congress.

As they say in the Navy, "Rock the boat and you will soon be in the water." Here Congressman X tells us his career strategy:

To get along you have to go along. Grow old, hold your tongue, vote the party line, and one day maybe you'll get a key committee assignment or chair of a subcommittee. In the meantime, pay attention to the needs of your big donors.

In this election year, voters imagine that they have the fate of the nation in their hands.

They step into the polling station, their shoulders sagging under the weight of the responsibility and gravity of their commission, their hearts aflutter at the authority they wield.

But they are too faint-hearted to even dare think about what is really going on. Congressman X:

The voters… na├»ve, self-absorbed sheep who crave instant gratification. Most are mentally lazy and bore easily. It's all about style, not substance. Memorable slogans, catchy metaphors, bite-size non-thoughts. Entertain their emotions and you'll win their hearts.      

The average man on the street actually thinks he influences how I vote. But unless it's a hot-button issue, his thoughts are generally meaningless. I'll listen politely. But I follow the money.

Flattering Fantasies

We saw the laziness and cowardice on display at the University of Vermont commencement. [Catch up here.]

You remember the ubiquitous themes: The world needs to be fixed… the kids know how to make it a better place… all they have to do is "care."

It was all conceited nonsense. But the fellows in the robes didn't even care enough to ask if it was true.

Now, we see it almost everywhere. Self-serving myths and flattering fantasies rule the nation… and go unchallenged.

And nowhere more than in Washington, D.C. Congressman X again:

I'll tell you whatever you want to hear. In fact, I'll tell you with conviction and sincerity. In fact, I'd have to say that I've learned to fake things pretty well.

Is it a lie if I truly believe what I am saying? As far as I am concerned, whatever viewpoint I embrace is the truth.

Yes, dear reader, we are a lazy, pusillanimous nation. We live in the warm embrace of comforting illusions… and nurse at the sweet breast of someone else's money.

And why not?

It is easy to wallow in whatever cheap claptrap is popular. Much easier than opening your eyes and ears and trying to figure out what is really going on. And the Deep State rewards submission.

You could get a medal… or even a pension… from the Pentagon. You could get a job in Washington… or even a seat in Congress. Or you could collect a welfare check… a subsidy… a tax break… disability… Medicare… They can give you permits… licenses… parking spaces… and even fix your speeding tickets.

So, we worship our ersatz heroes… and try to put the real ones in jail.

Here, let's give the dishonorable Congressman X the final word:

I've come to the conclusion that the whole Washington scene is a diminishment of civilization. Our country is in free-fall to mediocrity and Congress is leading the way.


Bill Bonner
for Bonner and Partners

P.S. Another dollar crisis is coming. It's not a question of if, but when. And gold could soar to record levels when it strikes. If you own gold beforehand, you can preserve – and grow – your wealth. That's why we've produced a FREE special report called The 5 Best Ways to Own Gold. Don't buy any gold until you read it. We'll send you your report when you sign up for the free daily email edition of The Daily Reckoning. Every day you'll get an independent, penetrating and irreverent perspective on the worlds of finance and politics. And most importantly, how they fit together. Click here now to sign up for FREE and claim your special report.

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Gold Daily and Silver Weekly Charts - Big Deliveries at Big Price Resistance

Posted: 09 Jun 2016 01:01 PM PDT

Something VERY BIG Is Afoot!

Posted: 09 Jun 2016 11:58 AM PDT

Dear CIGAs, For more than three years we have watched the COMEX very closely. The initial clue to begin watching were the waterfall events where the amounts of paper gold and silver sold simply dwarfed what was being mined. I have said many times after the smackdowns, “first, no one has this much (gold or... Read more »

The post Something VERY BIG Is Afoot! appeared first on Jim Sinclair's Mineset.

The Ultimate Men In Black

Posted: 09 Jun 2016 11:35 AM PDT

The Ultimate Men In Black Documentary. There have been reports of MIB's for decades. What are they? Governement Agents? Something Else? The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists , visionaries , free investigative journalists , researchers...

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Kiwi Steals the Show

Posted: 09 Jun 2016 09:45 AM PDT

This post Kiwi Steals the Show appeared first on Daily Reckoning.

And now… today's Pfennig for your thoughts…

Good day, and a Tub Thumpin’ Thursday to you! 

Front and center this morning, the Reserve Bank of New Zealand (RBNZ) surprised most market participants by leaving their OCR (official cash rate) unchanged, when, as I told you it was widely thought that the RBNZ would be cutting rates at this meeting. Kiwi soared overnight, and flew past 71-cents, gaining more than one full cent. 

Calmer heads have taken over from the initial run up in kiwi, and the currency has backed off a bit, falling back below 71-cents, but still they have stolen the show overnight. The RBNZ openly talked about the conflict they are dealing with right now, with the overheated housing market, in need of higher interest rates, but that pushes kiwi stronger, which they don’t need right now. I think they did the right thing here. They certainly don’t want a housing bubble bursting on them at this time.

There was one rate cut overnight though. It came from the S. Korean Central Bank and their 25 Basis Points (1/4%) cut brought their  internal rate to 1.25%. This was their first cut in a year (June 2015 was the last one), and is probably their last one for this year. We don’t follow the S. Korean won much, but I thought it was worth our time today to mention the S. Korean rate cut, as it plays along well with all the other rate cuts around the world.

Overnight the dollar was on the selling blocks, but as the overnight session turned to the European session, the dollar has fought back some, and the currencies are drifting as I write, with some of them doing well, like Brazilian reals, and Swiss francs, but most of them have seen some of their lofty gains pared this morning. There’s not much in the U.S. Data Cupboard today or tomorrow, so we could very well see a lot of this “drifting” of the currencies.

Speaking of the Swiss franc… Sometimes I amaze myself with how much of a dolt I can be at times! Yesterday, I had talked about Swiss francs, and my whole intention of talking about their referendums was to mention that in a recent referendum the Swiss people voted down “helicopter money”. Good for them! And probably had something to do with the franc outperforming the euro. But I still think that PEXIT money is flowing here. Recall that I made up the PEXIT word, meaning “pound exit. Oh, by the way, there was another BREXIT poll yesterday, and the “leave vote” continue to push against the “don’t leave vote”, and that doesn’t play well with pound sterling.

There was other BIG news overnight and this came from the Eurozone, where the European Central Bank (ECB) announced that they were buying corporate bonds from around the world, bringing their balance sheet to three trillion euros. YIKES! Well, I know I’ve been a little harsh on the U.S. Treasury yield falling once again, but that’s nothing compared to the German 10-year Bund, which this morning has a yield of 0.002%! OMG! That’s zero, zilch, nada, nothing, a big fat goose egg of yield! Crazy, and I don’t mean the number one song of all time played on jukeboxes, by the great Patsy Cline, I’m talking nut case crazy for going this low in yields. Somebody do something! This is CRAZY! SERENITY NOW!

OK, I’m back from yelling at the wall! Well, speaking of the U.S. 10-year Treasury’s yield, it sits at 1.68% this morning for institutional trading. I’ve explained this before, but for those of you new to class, retail/individual buyers of a 10-year Treasury won’t get 1.68% yield, the bond dealer will take his cut of the yield and the buyer will receive less yield, which means he pays more in dollar price. So, it’s say a retail buyer receives 1.50% for a 10-year Treasury, and for the next 10-years the buyer will receive 1.50%, no matter what rates do in the next 10-years. Seems like a layup not to do this, don’t you agree?

Gold ran up $19 yesterday! It’s down a buck this morning in early morning trading. But the early morning yesterday had gold up $8, and so it added another $11 as the day went along. I’m concerned about what I’m seeing these days with the Shanghai Gold Exchange (SGE) withdrawals. Recall that I had been in agreement with gold researcher extraordinaire, Koos Jansen, in the thought that the gold withdrawals represented a good indication of Chinese demand. And using this as a guideline, I see that withdrawals are down 17.7% this year so far, and that tells me that Chinese demand so far this year is lagging their previous years. Makes sense to me, in that China has other problems right now, and need to place their attention on those problems, and not how much gold they put in their reserves.

I received my latest World Gold Council (WGC) update on Tuesday. And in it the WGC tell me that gold is back in favor with investors (like they needed to tell me that!) but that the preferred method of buying is in the gold ETF. (UGH!)  A near record 364 tonnes of gold flowing into ETF’s in the first QTR this year. Now that’s all fine and dandy, because when an individual buys a gold ETF, it represents so much gold that the trust company that administers the ETF then has to go out and buy, right? And no one fears that the Trust companies don’t fudge the numbers, right? Just like trust companies that administer pensions always kept up with the funding of the pension, right?

I prefer physical gold, and always will. And if you’re thinking that you can get physical gold out of an ETF, think again. I guess if you really push the right buttons and pay the piper, it will happen, but it’s very difficult to do. And if that trust company goes belly up, holding that piece of paper isn’t going to do you much good.

The price of oil slipped back below $51 in the past 24-hours, and put the hurt on the Russian ruble, but the Canadian dollar, and Brazilian real just shrugged off the slippage in the price of oil, and continued to push the currency appreciation envelope across the table.

So, I’ve been talking a lot this week about what I see with a coming recession, that may already be here, and I was reading my latest letter from Danielle Di Martino Booth yesterday, and in it she had something that caught my attention, as she took the Fed to task for causing “Fedspeak to be lost in translation”. She pointed out that household income expectations six months out, and credit card usage had begun to move in opposite directions, which to her is a telltale sign of budgetary stress”. And then she went on to question if the Fed employed someone that does forward looking comparisons.

But the cat is out of the bag here! If there are budgetary stress among consumers, it won’t be long before they aren’t spending like they need to keep the economy going. I did mention the other day that Consumer Credit (read: debt) for April did come down, from $28 billion in March to $14 billion in April, that means consumers took on less debt in April. Which is a good thing for them, but a bad thing for the economy.

So, like I said above, the U.S. Data Cupboard is lacking data reports today and tomorrow. Today we get the usual Weekly Initial Jobless Claims that have become something of a “forgotten data print” by the markets. And that’s about it!  Next week at this time, we’ll be talking about the Fed meeting that ended the day before, and probably without a rate hike, and probably with some dovish talk to explain why rates didn’t go higher, when all the Fed members (save for a couple of the doves) were out in force talking about a rate hike in June.

OK, this is the piece I talked about yesterday, regarding the newspaper article I clipped out of my paper at home, and brought into work, and then completely forgot about it while writing the Pfennig. UGH (again, what a dolt!) So, this is an article about how there are now just two triple A corporations in the U.S. Wait, What?  Really? Just two? Say it ain’t so David Nicklaus! Here’s the link to the whole article, written by David Nicklaus, or here’s your snippet: 

Once upon a time, before the era of shareholder activism, corporate executives regarded a triple-A credit rating as a badge of honor.

A top-notch mark from Standard & Poor’s or Moody’s meant you ran the bluest of blue chips. You not only could borrow more cheaply than everybody else, you had Wall Street bankers lining up to buy you lunch and beg for your business.

Then Michael Milken popularized the junk-bond market, making it easier for risky companies to raise money. Globalization and technological change rocked many industries, and pesky activists such as Carl Icahn pressured companies to return cash to shareholders.

Suddenly, being in the exclusive triple-A club seemed less important. By 2005, S&P gave its top rating to just six nonfinancial companies, down from 32 in 1980.

Now, with Exxon Mobil having been downgraded in April, Microsoft and Johnson & Johnson are the club’s last two members.

Chuck again. Holy Corporate downgrades, Batman! There are just two AAA rated corporations in the U.S., down from 32 of them in 1980!  I’m flabbergasted, aren’t you?  What ever happened to the era where Individuals building bond portfolios wanted high-quality names they could trust?  Here’s a key to what’s happened.. They don’t give stock options to Corporate Treasurers and CFO’s for a higher credit rating.. They do give them stock options based on a higher stock price..

And with that, I’ll get out of your hair for today, and hope you have a tub thumpin’ Thursday! Be good to yourself!


Chuck Butler
for The Daily Pfennig

P.S. Have you thought about investing in gold but don't know the best way to do it? Then you need to see the FREE special report we've produced called The 5 Best Ways to Own Gold. It answers all the questions you have. We'll send you your report immediately when you sign up for the free daily email edition of The Daily Reckoning. It combines hard-hitting information with charm and wit to bring you a unique perspective on the world. Click here now to sign up for FREE and claim your special report.

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Which Presidential Candidate is Better for Gold?

Posted: 09 Jun 2016 09:13 AM PDT

Hard Asset Alliance writes: Now that we’ve got the presidential race narrowed to three candidates, let’s examine which one might be better for gold investors. 2016 seems to be the year of the “alternative candidate,” and so hedge fund manager Dan Tapiero looked at how each candidate might impact the “alternative investment” of gold.

World Dictators Meeting in #Dresden #Germany during #Bilderberg2016

Posted: 09 Jun 2016 08:30 AM PDT

The World Dictators Caught In A Secret Meeting in Germany The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists , visionaries , free investigative journalists , researchers , Whistelblowers , truthers and many more

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Donald Trump's Election Night Remarks- FULL Inspiring Speech (6-7-16)

Posted: 09 Jun 2016 07:30 AM PDT

Tuesday, June 7, 2016: GOP Presidential nominee Donald Trump delivered post-election remarks at Trump National Golf Club Westchester in Westchester, NY. Donald Trump's Election Night Remarks- FULL Inspiring Speech The Financial Armageddon Economic Collapse Blog tracks trends and forecasts...

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Forget Dominic Chappell - it is Sir Philip Green who has a lot of explaining to do over the collapse of BHS

Posted: 09 Jun 2016 06:32 AM PDT

This posting includes an audio/video/photo media file: Download Now

MUST WATCH! Global Financial Meltdown Assured, Central Banks Desperate. By Gregory Mannarino

Posted: 09 Jun 2016 06:27 AM PDT

To put it simply: Fed will buy all the assets that are worth something with worthless fiat dollars. We're way too early, but people WILL say no and then the dollar crashes. The problem here is however that people don't get back the capital that they had in worthless dollar. This will be...

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George Soros, the billionaire 'who broke the Bank of England' opts for gold haven saying Brexit would spell end of EU

Posted: 09 Jun 2016 05:44 AM PDT

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Breaking News And Best Of The Web

Posted: 08 Jun 2016 06:20 PM PDT

Soros turns bearish. Stocks fall, gold continues to rise. Debt, as usual, continues to grow. Corporations start selling zero-percent bonds. Clinton wins California, clinches nomination. Major US/China trade war breaking out. Global bond yields still falling, China’s debt still rising. Doug Noland’s latest Credit Bubble Bulletin and David Stockman’s proposal to fix the big banks […]

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