Sunday, October 16, 2016

Gold World News Flash

Gold World News Flash


US 'False Flag' Against Russia Puts Hillary In

Posted: 15 Oct 2016 11:47 PM PDT

That U.S. General makes me sick. WE are the one doing the invading! What a class A Satan advocate. The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists , visionaries , free investigative journalists , researchers , Whistelblowers , truthers and many...

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More Good News For Gold Bugs: The Bottom Is Getting Closer

Posted: 15 Oct 2016 07:51 PM PDT

In the latest gold and silver commitment of traders (COT) report (click here for an explanation of what this report involves), paper players made big strides in bringing the market back into balance — and setting the stage for an eventual rebound. Speculators – who tend to be emotional and therefore wrong at the extremes […]

The post More Good News For Gold Bugs: The Bottom Is Getting Closer appeared first on DollarCollapse.com.

Statistician Warn Of "Systemic Mainstream Misinformation" In Poll Data

Posted: 15 Oct 2016 06:00 PM PDT

Submitted by Salil Mehta via Statistical Ideas blog,

Antagonism isn't perpetual

If you recently glanced at the polls and the election markets, then you would be forgiven to believe that a landslide election is looming.  It's likely not, and the spreads have the potential to revert in surprising ways between now and Election Day.  The drumbeat of negative news against Donald Trump may not cause further damage.  We've discussed numerously, starting on October 11 and October 12, that Hillary Clinton's runaway spread would revert (here, here, here, here). 

Of course that's a stand taken against a popular headwind, but also an opportunity to make money on an election bet that is mispriced.  For example, when we wrote the reversion article, the betfair ask that Mr. Trump's popular vote could remain in the 40's% was only priced at 1:6 odds.  Nate Silver's 538 site also reflected this, as shown below.  But we -and other academic statisticians- knew that this was faux election probability, and advised thousands to remain vigilant against planned mainstream misinformation

Incidentally, today's betfair bid is 20% higher; not many investments have risen 20% in just the past couple days.  And the wager could explode to 500% profit, exposing how steeply deluded the polls have been.  This article isn't merely about gambling, but goes to the heart of what makes polls different among one another, and across time.  And what should we be cautious of when interpreting the information, while almost never reading (and sometimes not having access to) all the underlying probability details of the poll generation?  In particular, we'll delve into the inconspicuous L.A. Times poll here, where for much of the past month they showed Donald leading Hillary.  How did they come to that, and what value is there in paying attention to alleged outliers?

Recently the New York Times (NYT) wrote a piece that the USC/L.A. Times (LAT) poll was biased against Hillary Clinton by at least 4 percentage points, through the exaggerated sampling of one Black Chicago youth.  The NYT thesis for sampling issues was not based on general theory at all, but only because the survey respondent was a feverish Donald Trump supporter.  Apparently the LAT has always been a good pollster until this one Black man became a Trump supporter; now the LAT poll is suddenly comprehensively terrible.  Right... Now the NYT was both smart and correct in pointing out the seeming anomaly, but also misdiagnosed the root cause of the puzzle.

The LAT should retain their entire sample, and not simply alter responses because the pollster doesn't like what he or she hears.  Removing select responses has that same effect, and this is partly why mainstream pollsters have systematically unfavored Republicans in nearly 2/3 of elections in the past several decades, where there have been a meaningful surprise in the general election outcomes.  And in every case where such a reversal of fate has led to an actual victory for the October polling-laggard, it was always a Republican who won.  This should give everyone pause to consider the strength of these "scientific" polls.  We can often see something be misrepresented, yet be masquerade as disciplined science.

Now the LAT pollster allows for some interesting statistical features that are not in other polls (many of which follow our blog).  For example, it allows the survey participant to partially self-weigh their own response, and factors in his or her own prior voting record.  These are worthy developments in most cases, including the case here of the 19-year old Black Trump supporter.  Polling has to fill in a lot of gaps, particularly this year where there are a greater than normal number of undecideds and non-responders.  This increases the error, not lessens it (per our viral article here read by >100 thousand including senior advisers of both parties).  And the fact that most other polls do not scale their survey responders accordingly, equally leads to a higher than expected favorability (based only on momentum) for those who for now agree with Ms. Clinton more so than Mr. Trump.

Of course we know across all polls this year there is a perception that Hillary has an polling edge when it comes to "perceived" favorability or social desirability (it's been noted that 10-15% of people have lost a friend due to the 2016 election); though this conflates with the overall bias going back many decades and so it's unclear how much additional bias comes from that.  But the NYT overestimates the overall edge that the LAT has if this one Black youth is completely off in his responses; it is only about 1-2 percentage points.  Not enough to close the nearly 5-10 percentage point difference the LAT has with the rest of the mainstream polls.  The NYT is correct that the overweighting by LAT may exist however, in that this one individual is weighted a little more relative to the typical person.  But this does not negate the data point altogether.  Does anyone credibly believe that not a single Black person is going to vote for Donald Trump?

The bottom line is that polls on the fringes (e.g., the LAT and to a lesser degree only the trends in the conservative-advocating Rasmussen both showing Mr. Trump leading for much of the past month) should be taken a little more seriously due to the informative value they provide in how the many undecideds and non-responders will ultimately vote.  In historical polling data people tend to make up their mind for candidates, and rarely does it lead to further subtractions from current polling levels.  It is doubtful therefore that somehow any new negative information about Donald would compel someone, at long last in these final weeks, to ultimately switch allegiances.  And while the theory of poll of polls works great to reduce the variance of errors, it does nothing to counter any systematic errors we may see hurtling through in the current election cycle.  This is a significant lesson that remains lost among political hacks keen to simply analyze the data.

Another note is that you should be wary of taking too seriously the political advice of people who so recently badly errored in the Primary elections!  This is not to cast a spotlight on any one individual, since the entire field of data journalism just saw a catastrophic result over the past year.  But it's clear from the polling and the prediction betting market levels that the grave lessons from the past have not yet been learned.  This summer's Brexit vote was just another example of election-eve overconfidence by pollsters and bookies.  But stateside we do see the promotion of false confidence on preposterous polling statistics.  The media ratings pursuit must inherent some blame, since news demands easily digestible insight that crookedly beguiles their patrons.  And if we expose the overshadowing uncertainty surrounding these election predictions, then no one would venture into paying further attention.  Even more reason for you to pay some attention to the outlier polls, especially this year!

 

The Crash of 2017. Not to be Delayed Any Longer - Harry Dent

Posted: 15 Oct 2016 04:00 PM PDT

One of our most popular and well researched guests, Harry continues to deliver on his predictions of deflation and a stock market bubble popping. He has a new book just released "The Sale of a Lifetime" putting his name on the line for his prediction. His take on gold may shock you, be sure to...

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The "World's Most Bearish Hedge Fund" Reveals Its Next Big Short

Posted: 15 Oct 2016 03:58 PM PDT

We have previously dubbed Shannon McConaghy's Horseman Global the world's most bearish hedge fund for one reason: as recently as a few months ago the fun had taken its net equity short position to an unprecedented -100%. At the end of September, it had modestly trimmed this short to a more modest -87.5%

What is perhaps just as impressive is that despite the fund's massive bearish bias, if only in equities, it has managed to keep its YTD return virtually flat, with more profitable than unprofitable months so far in 2016. The offset? A whopping 66% gross long position in bonds.

And while we have recently documented Horseman's pessimistic outlook on Japan, when it comes to the most bearish hedge fund in the world there are shorts, and then there are shorts. In its latest, October, letter to clients the fund reveals what it believes may be just one example of the latter, having taken its exposure in the sector to a massive -20%, and what - if true - could be the next "big short" idea.

This is what Russell Clark, CIO of Horseman, said in its latest letter to clients:

You fund made 1.44% net this month, with gains from the short book and the currency book offset by losses from bonds.

 

"I know he is a good general, but is he lucky?" is apparently a quote from Napoleon. I often think about this quote when looking at the investment management industry. There are numerous successful fund managers who I have looked at and met, who I would describe as more lucky than good. There are far more fund managers I have met who I would describe as good, but unlucky. In fact, the market will almost by definition create more unlucky managers than lucky managers, as almost all jobs in fund management tended to be created at market tops.

 

This is quite well known, and it is why most investors are always try to invest where no one else is, in some bombed out sector that lacks excitement. While I understand this, it has two very major problems. Firstly, how can you be sure it's totally bombed out? As my first boss pointed out to me, the difference between a stock that has fallen 80% and a stock that has fallen 90% is 50%. Secondly, liquidity at lows can mean you will not be able to exit for many years.

 

From my point of view, why don't we try and do the opposite? Pick out sectors that have been fashionable with managers that have been in the right place at the right time, and then short sell what they own. It has two big benefits. First I find timing this to be much easier. And second, at the top of the market liquidity is plentiful. The only issue is you have to be able and willing to short sell.

 

So how do you pick a sector or strategy that is at the top of the cycle? Perhaps the best sign of all is a fund that has grown assets rapidly. In the US, I find funds that have reached 20bn in AUM from 5bn in AUM within one or two years are typically great places to look. I feel that when a fund manager grows that quickly, they are typically focusing on maximising management fees over performance.

 

So what funds have we been looking at recently. As detailed in my recent note on Japan based US REIT funds, these funds look particularly egregious to me. Furthermore, they are raising assets even though US REITs in Yen terms have gone nowhere in the last few years. I find this an exciting area to short, and we have taken this sector to 20% of the fund this month. I find there are a number of equity income funds that have also grown rapidly over the last few years, and I am looking carefully at their long positions for short ideas.

 

My other observations about fund management has been that investors are pulling out of active strategies and buying passive strategies. There are good reasons for this, as the unpredictable shifts in momentum in the markets have caused active fund management to underperform significantly. However, it feels to me that passive strategies have grown too fast too quickly. I think active fund management is about to have its day in the sun.

 

Given that the Horseman Global fund is short equities and long bonds, that is about as active as you can get. Or in other words, I am getting bullish on bearishness!

Clark then gives the following drilldown on the US REITs sold in Japan to justify his bearish stance:

This month profits came from the short portfolio, in particular from the European and Japanese banks, automobile and consumer staples sectors.The long portfolio incurred a modest loss.

 

In Japan one perk of getting old is a gift of a silver cup from the prime minister in the year you celebrate your 100th birthday. As the Japanese population is aging, almost 32,000 people were eligible to receive the gift this year, up 4.5% from last year, the government decided to present cups made of silver plate rather than sterling, this year, reducing total spending on the gifts.

 

The birth rate in Japan has been low for many years (1.4 per woman versus 1.9 in the US and the UK) and the country has very little immigration. As a result the population is ageing. According to the estimate by the Internal Affairs and Communications Ministry, the ratio of people 80 or older accounts for 7.9 percent of the total population, which is more than the entire population of Sweden. The National Institute of Population and Social Security Research forecasts that people aged 65 or older will account for 36.1 percent of the total by 2040. For more information on Japan's depopulation please refer to Shannon McConaghy's notes entitled 'South West Japan Trip'. In our opinion depopulation is a major deflationary force as it suppresses domestic demand.

 

The generation of 21-year-olds entering the workforce is the first to have grown up in a broad state of deflation. Since their birth year in the 1995 residential land prices have fallen 47% including a fall over the last year. With the ratio of abandoned houses expected to rise from 16% to 28% by 2033 it is likely that land prices will continue to fall. With real estate making up 23% of the core consumer price index it is hard to see sustained inflation.

 

Deflation has also suppressed wage growth, with average monthly earnings falling 8% from Yen 315,000 in 1996 to Yen 289,000 in 2015, the most recent August data shows another decline in average monthly earnings YoY. In turn, tumbling expectations of future security have fuelled savings. A student from Tokyo recently interviewed by the FT said "I often surprise myself. I am more conservative than my grandmother, she lived in a time of war." Another student said: "Deflation lives in our minds and has become normal. I am sure that if you gave me Y100,000 now, I would save 99 per cent of it."

 

The Bank of Japan adopted 'Quantitative Easing' some 15 years ago. The resulting low domestic interest rates, have fuelled the 'Carry Trade', a strategy in which a Japanese investors seek foreign denominated assets that offer higher yields than domestic assets. But 'Carry Trades' are inherently unsustainable as they are founded on the belief that currency rates over time will not adjust back to reflect relative inflation and interest rate differentials. Examples include Japan's overseas investments into Australian dollar assets before the Global Financial Crises which swiftly lost money as the currencies corrected.

 

US-Reits sold in Japan have seen large inflows from Japanese investors recently as they offer ~25% yields. In our opinion they are riskier than generally perceived, please refer to Russell Clark's note entitled 'Japanese US REIT funds and the buy case for Yen' and 'Japanese US REIT Fund – an update'. We expect Japanese fund flows into US REITS to reverse at some point. Over the past few weeks we have built a 17% short position in US REITS. We remain positive on the Japanese Yen relative to the US dollar as carry trades collapse.

While Horseman is clearly bearish on Japan, however, its biggest net short exposure remains in the US, where it has a nearly -40% net position.

Finally, while hardly known for its longs, here is the breakdown of the fund's Top 10 long positions.

Anonymous - Putin EXPOSES World War 3 Plan 2016

Posted: 15 Oct 2016 02:31 PM PDT

 Putin's warning about the WW3 plan at St. Petersburg International Forum 2016We are Anonymous.We are Legion.We do not forgive.We do not forget.Expect us. The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists , visionaries , free investigative journalists ,...

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A few questions for Sharps Pixley CEO Ross Norman and other bullion bankers

Posted: 15 Oct 2016 11:43 AM PDT

2:50p ET Saturday, October 15, 2016

Dear Friend of GATA and Gold:

Ross Norman, CEO of London bullion dealer Sharps Pixley, yesterday disputed the 2013 study by a professor at the University of Western Australia that concluded that prices in the twice-daily London gold fixings were manipulated, a study publicized this week by the Sydney-based newspaper The Australian:

http://www.gata.org/node/16835

Norman wrote that the study had not discovered market manipulation at all but only that gold trading volume in London increases around the fixings because of the greater liquidity at those times:

http://news.sharpspixley.com/article/london-fixings-the-case-is-laid-bar...

Norman concluded: "It is no surprise that U.S. courts have seized upon the academic report, prompting a flurry of lawsuits to be filed in what is clearly looking like a pre-ordained desire for a guilty verdict in search of evidence to support it."

... Dispatch continues below ...



ADVERTISEMENT

A Lone Congressional Candidate Is Campaigning on the Gold Standard

The New York Sun just endorsed Connecticut Republican congressional candidate Daria Novak, based on her support for restoring the gold standard:

http://www.nysun.com/editorials/a-prosperity-heroine/89742/

Daria needs us to contribute $1,000, $500, $250, $100, $50, or whatever we can afford in the fiat money that is sleeping in our checkbooks. As the Sun wrote, "She vows to crusade" on the gold standard "as key to getting job creation, economic security, and upward mobility back at a sizzling rate." Novak has been endorsed by gold standard and sound money advocates George Gilder, Lawrence Kudlow, Jimmy Kemp (Jack Kemp's son), and Jeffrey Bell ... along with Steve Forbes, who calls Ms. Novak "the prosperity heroine."

To donate to Daria's campaign, please visit:

http://novakforcongress.org/donate/

Daria will personally thank all contributors.

Daria Novak is gold's lonely champion. Give her your backing and put a voice for gold in Congress.

This message was authorized by Daria Novak for Congress.



Not having seen the study, GATA has no position on it, but Norman's disparagement of the lawsuits brought against the bullion banks in the London fixes is weak. For of course the plaintiffs would not have sued if they lacked a "pre-ordained desire for a guilty verdict." Further, every lawsuit in the United States is brought "in search of evidence to support it." That's what the discovery and deposition processes in lawsuits are about.

Norman's response is also weak because according to a filing in one of the lawsuits Deutsche Bank has confessed to manipulating the gold market with other banks and has agreed to supply evidence against them:

http://www.gata.org/node/16380

More details are needed in this regard but Deutsche Bank has a big publicity department --

https://www.db.com/newsroom/en/news.htm

-- and thus has had every opportunity to dispute the filing but does not seem to have done so.

But Norman's response is weakest because he surely knows that the biggest complaints about manipulation of the gold market long have been directed against governments and central banks, which have intimate relationships with the London bullion banks.

How clarifying it might be if Norman, other bullion bankers, and all those who dispute or at least resent complaints of gold market manipulation could answer a few simple questions:

1) Are governments and central banks surreptitiously involved in the gold market, directly or through intermediaries, or not?

2) If governments and central banks are surreptitiously involved in the gold market, is it just for fun -- to see whose trading desk can outperform the others -- or is it for the traditional policy objectives of government intervention, to protect government currencies and bonds and national stock markets against adverse developments in free markets?

3) Is government subversion of free markets in the public interest? Even if governments should intervene in markets, should that intervention be open and accountable instead of deceptive, or would open and accountable intervention quickly lose effectiveness?

4) Are there any forgeries among the documents of this surreptitious intervention that are compiled here?:

http://www.gata.org/node/14839

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org

* * *

Join GATA here:

New Orleans Investment Conference
Wednesday-Saturday, October 26-29, 2016
Hilton New Orleans Riverside
New Orleans, Louisiana
http://neworleansconference.com/wp-content/uploads/2016/08/2016_Powell.h...

Help GATA by purchasing DVDs of GATA's London conference in August 2011 or GATA's Dawson City conference in August 2006:

http://www.goldrush21.com/order.html

Or by purchasing a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

http://tinyurl.com/zr4tjuc

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16

The Floodgates Begin To Open

Posted: 15 Oct 2016 11:11 AM PDT

It's now clear that what governments did to counter the Great Recession may have delayed systemic collapse, but did not resurrect the old normal. Growth around the world is anemic – which is to say debt continues to increase faster than the productive capacity to service it – and inflation (the other way to shrink […]

The post The Floodgates Begin To Open appeared first on DollarCollapse.com.

Donald Trump: Hillary Getting 'Pumped Up' Before Debate- Let's Take Drug Test!

Posted: 15 Oct 2016 10:09 AM PDT

Saturday, October 15, 2016: Wow! At a rally in Portsmouth, NH, Donald Trump suggests maybe Hillary Clinton is being 'pumped up' with drugs before the debates- we need a drug test!LIVE Stream: Donald Trump Rally in Portsmouth, NH 10/15/16 The Financial Armageddon Economic Collapse...

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5 Financial Charts On the Move

Posted: 15 Oct 2016 09:14 AM PDT

This post 5 Financial Charts On the Move appeared first on Daily Reckoning.

If you watch financial news or read any of the major business newspapers, you know charts get thrown around fast. A lot of them are noise. Some of them are not. That's why we want to begin offering you a breakdown of the charts and graphs we are keeping an eye on.

As there is more online than ever before, it's possible for an information overload.

We want to begin bringing you 5 charts to cap off each week, along with the occasional fun add ins. These graphs will be brief in description and give you the ability to take on the news, make your own decisions and know exactly what to watch for in the future.

Let's get the chart lines rolling…

Across the Pond

Bloomberg reported, the U.K 10-year bonds have hit their highest level since the BREXIT vote on leaving the European Union in June.

10 Year Treasury Bond

Amid British Prime Minister, Theresa May's comments at the beginning of October that the UK would seek to begin formal negotiations of exiting in March of 2017 the bond markets appear to be rattled.  This announcement also comes at a time when the pound is (dare we say it) taking a pounding.  

The fact that the chart above shows yields rising should signal that the U.K might just be set for a true "hard landing" to come.

Maybe Breaking the Law is Bad for Deutsche Bank

Deutsche Bank, after be slapped with a $14-billion-dollar price claim by the United States Department of Justice in September, after mortgage-related fraud continues to fall.  Maybe the U.K had a heads up on the 4th largest bank in Europe, second largest in Germany – and just decided to skip town.

Deutsche Bank

As the Wall Street Journal's Jenny Strasburg reported "The ride has been downhill: Deutsche Bank shares have fallen 45% this year and are now trading near €12. Not accounting for hedges and other factors that people familiar with the Qataris' investment say have softened their losses, the share-price decline alone implies a hit of around €1 billion."

This chart shows a troubling trend for Deutsche Bank, and what could be an even greater threat to the financial system.

As the Daily Reckoning's Managing Editor, Brian Maher noted, "Deutsche Bank may or may not be the iceberg that sinks the ship. But there are plenty others out there…"

U.S Prime Money Market Funds Take Hit

Assets of U.S prime money market funds have dropped considerably after new Securities and Exchange Commission rules are officially enforced as of today.

Prime Money Market LiborPrime Money Markets

Sourced via Zero Hedge

The rules are the final stage of domestic money funding reforms that were set in place following epic collapse of Lehman in 2008. You'll remember this being discussed as the global credit crunch.  This is important because major banking institutions and cash investors used prime money funds as alternative options to that of maintaining recorded bank accounts.

These swings were expected. The Fed noted in its September meeting, “Anticipation of the impending deadline for compliance with MMF (money market fund) reform measures continued to prompt net outflows from prime MMFs and put upward pressure on some term money market rates.”

The graph should resonate with the greater economy because, as Zero Hedge noted, "nearly $1 trillion in assets have rotated out of prime money markets into government funds."

Consumer Sentiment is Low – Inflation Expectations Even Worse

The University of Michigan’s released the preliminary results of its consumer sentiment survey.  Not surprisingly, it shows that consumer sentiment is at its lowest level since last September of last year, and the second lowest reading in the past two years.

Consumer Sentiment

Source: University of Michigan via WSJ

Consumer spending has the biggest impact on U.S economic growth.  Any drops in this sentiment could signal slowing economic growth and even a narrowing on household spending throughout the income spectrum.

What's even more hard hitting about the prelim survey results? Inflation expectations have hit a new record low.

Inflation Expectations

Source: University of Michigan — Business Insider

This is important because if expectations for inflation are believed to be higher in the future, Americans are likely to have a greater call to spend money currently.  These types of sentiments will, undoubtedly, be something that the Federal Reserve looks at when deciding on a potential rate hike in December.  It will also be something that the political candidates play into.

The report noted that "It is likely that the uncertainty surrounding the presidential election had a negative impact, especially among lower income consumers." While the presidential elections have given us all a bit of anxiety, the issues with inflation, jobs and consumer confidence is nothing new.

Gold Finally Settles

Presumably related to consumer sentiment and inflation charts featured above, gold prices have popped up to positive territory.  After a surge for the U.S dollar, gold is typically the place that markets seem to shy away from.

Gold October

Source: Market Watch

By the end of the second week in October, gold futures have ended on an upswing.  After a two-week downturn in October gold futures seems to have finally hit pace against the rising dollar.  On the news of Chinese exports falling, Gold saw risk aversion investors pick up.

Uncertainty, as was noted in the University of Michigan survey, tends to shy the markets back to safer seas.

As HSBC's Chief Precious Metals Analyst James Steel said in a recently published note, “gold prices tend to rise during periods of contraction in world trade,”

While these five charts might be just the beginning to a much broader story, they leave you a step in the right direction.  

Because if life imitates art, what do graphs imitate?

Regards,

Craig Wilson, @craig_wilson7
for the Daily Reckoning

Ed. Note: Sign up for a FREE subscription to The Daily Reckoning, and you'll receive regular insights for specific profit opportunities. By taking advantage now, you're ensuring that you'll be set up for updates and issues in the future. It's FREE.

The post 5 Financial Charts On the Move appeared first on Daily Reckoning.

The Gold Manipulators Not Only Will Be Punished, They Have Been Punished

Posted: 15 Oct 2016 08:21 AM PDT

I have not gone off the deep end and joined the “community” of boosters, promoters, pompom waving cheering squads and general cult figures who you can just tell not only want you to adore gold, but in some cases need you to act on your adoration and buy gold or gold stocks.  Read into that what you will, but the history of investors burned by the pitch, which tugs at peoples’ morals, sense of right and wrong and plain old common sense, is a long and storied one.

Gold is Oversold on Misplaced Expectations of a 2016 Rate Hike

Posted: 15 Oct 2016 08:12 AM PDT

Gold investors know that the metal has been under pressure due to expectations of a FED rate hike in 2016. Many believe that an increase in the FED funds rate would support the dollar and send prices for precious metals lower. This has been a key driver of the decline in the gold price to support at $1,250, the 200-day moving average.

Gold Stocks Corrections in Bull Markets

Posted: 15 Oct 2016 08:08 AM PDT

The gold stocks are clearly in correction mode. The large caps (HUI, GDX) have corrected 30% while the juniors (GDXJ) have held up well in comparison by correcting the same amount. Given a number of factors (the size of the previous advance, the recent technical damage, stronger US$ index and rising yields) the gold stocks should continue to correct and consolidate in a larger sense. To gauge a potential path forward we present a new analog chart and compare the current correction to those from past markets.

Sizing Up the Endgame

Posted: 15 Oct 2016 07:00 AM PDT

This post Sizing Up the Endgame appeared first on Daily Reckoning.

Last Sunday's debate raises some interesting questions, such as: would the Romans have elected Caligula if given the chance to vote? Can the Republican party recover from Donald Trump?

If the party poobahs "pull the plug" on Trump, as some are threatening to do (that is, cut off funds to his campaign), will they go down the drain with him anyway? Is the USA a nation or just the world's biggest comedy club?

And where is the Deep State when you really need it?

That odor wafting across the land is the smell of Republicans with their hair on fire. Yet the gloat of astonishment on Hillary's face as she witnesses the crack-up of her rival will eventually fade as she sees the wreckage awaiting her in the oval office. Weep for your country!

The only good to come out of this sordid election is the certainty that a lot of political debris will be swept away. Out of the miasma of idiocy and posture that is this election campaign, the hard-edged realities of our time will emerge and the TV audience will come to the stark recognition that it is not just another mere entertainment.

The other major nations of the world are not so much ganging up on America, as Hillary would have it, but reasonably attempting to ring-fence the mad bull that the USA has become — as the two candidates vie to start World War Three with China and Russia respectively.

The last resort of the scoundrels in today's version of the "yellow press" is to blame Russia for attempting to meddle in our election. War, it's just a shot away.

If there is one outstanding upshot of these "debates" it must be their staggering failure to reassure the American public that they can expect effective leadership through the hardships ahead. There must be many others out there like myself wondering who will emerge from the rubble?

I suspect it will be someone we haven't heard of before, just as Bonaparte was unheard of in France in 1792. This is not entirely a nation of clowns, though it feels like that lately.

The torment of who or what to vote for has become unbearable. I'd considered casting mine for Johnson / Weld, until Gary Johnson demonstrated that the front end of his brain is missing. Aleppo? Wasn't he one of the Marx Brothers? I sense that Jill Stein of the Green Party is more Social Justice Warrior than EcoWarrior, and the last thing I want is for the rest of America to become one big college campus rife with trigger warnings and micro-aggression persecutions.

Vote for Trump? Not if you chained me to the back bumper of a Toyota Landcruiser and dragged me over six miles of broken light bulbs. Hillary? Make that nine miles, and throw down some carpet tacks.

But the winner of the presidential election is sure to be the biggest loser because the global economy is in the process of tanking, and the global finance system is going down with it. Whoever presides over this fiasco from the White House is going to be a bigger bag-holder than old Herbert Hoover in 1929.

It is getting to be too late to sort out all the confusion sown by this horrific campaign. From here on its really more a matter of the dust settling. In background of it all looms the train-wreck of global finance, which will be the true determinant of what the American people will have to do in the years ahead.

During the weeks of the election distraction, the European banks struggle to conceal their insolvency while the politicians of Euro-land desperately try to paper over the cracks in these fracturing institutions. Few can tell what is actually happening in China's banking system, but it's sending out ominous tremors that are hard to ignore.

But be sure it is all daisy-chained right into Wall Street and the U.S. banks. The potential for wrecking markets and currencies around the world is extreme at this moment. It may only be a matter of whether it happens before or after the election.

Then we'll see what happens when financial institutions can't trust each other. Trade stops. Economies crumble. Pretenses evaporate. If it gets bad enough, the shelves of the supermarkets go bare in three days and you're living in a permanent hurricane disaster without the wind and rain. Believe me, that will be bad enough.

Hillary, if elected, will not get to play FDR-2. Rather, she'll be stuck in the role of Hoover, the Return, presiding over a freight elevator of an economy with a broken cable. Expect problems with the US dollar. Expect "emergency" actions. Expect the unintended consequences of those actions.

The good part of the story is that such an epochal crack-up will sweep the establishment out of power. In the present case, this means discrediting the crony-capitalist, revolving-door grifters of the Wall Street/Washington axis, plus the neo-con military empire-builders bent on starting World War Three for profit, plus the economic central planners of the Federal Reserve whose desperate meddlings have nearly destroyed the necessary operations and meaning of money.

And the cherries on top to get thrown out with the rest of this giant s**t sundae would be the campus cultural Maoists. In short, vote for Hillary and let history flush them all out of the system.

A vote for Trump would let the aforesaid villains and bunglers off the hook because supposedly Trump represents free market business interests, and if he got elected they would be blamed for the economic and financial cataclysm which has been in motion for going on for two decades — and has accelerated mightily under the genial Obama.

Whatever else you might say about free markets, had they been allowed to operate naturally, a lot of dead wood might have been cleared out of the financial forest by allowing failing institutions and companies to crash and burn. Instead, they were artificially propped up and hosed down with bailouts and other accounting frauds at all costs. The cost turns out to be the coherent workings of markets.

There can be little question that Hillary represents so much that has gone wrong in American public life under the Baby Boomer regime. The fact that she will be the oldest president ever at inauguration itself says a lot about the limitless cupidity of the Boomer political gen.

They just don't know when to stop. It's history's job to stop them now, nature's way, by seating them at the banquet of consequences for all their poisonous cookery and quackery.

Watching these lamebrain debates, you get the impression that the folks running things, including media stars like the debate moderators, lack the slightest clue about the gathering economic storm.

They are too busy reading the false weather reports posted by the Fed and the U.S. Bureau of Labor Statistics. Both Hillary and Trump seem to believe that we can winkle our way back to a 1962-style economy if we click our ruby slippers three times. That is not going to happen.

Now it's up to natural forces — and their galloping horsemen — to get the job done. So let us by all means throw our votes behind Hillary and let her rip so we can move on from there sooner rather than later and find new ways to remain civilized in the coming disposition of things.

Regards,

James Howard Kunstler
for The Daily Reckoning

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