Wednesday, October 5, 2016

Gold World News Flash

Gold World News Flash

The Hyperinflationary Death Watch

Posted: 05 Oct 2016 01:43 AM PDT

An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense – perhaps more clearly and subtly than many consistent defenders of laissez-faire – that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other. – Alan Greenspan Every hyperinflation is unique. No one wants the chaos it will bring. We are not rooting for it. Monetary crisis is always part and parcel or a extension of the inevitable cycles of history.

Gold Price Plunges on Rate-Hike Fears

Posted: 05 Oct 2016 01:39 AM PDT

Gold fell below $1,300 today for the first time since the Brexit vote in June, as the dollar index rose to a two-month high. Gold fell below $1,300 today for the first time since the Brexit vote in June, as the dollar index rose to a two-month high. At press time, gold was down $42, at $1,270.

USD, Gold and USB are testing their Outer Limits

Posted: 05 Oct 2016 01:36 AM PDT

USD came within a hair’s breadth of the upper Broadening Wedge trendline at 96.50 this morning, but now is beginning to sell off after reaching 96.39. Considering the corrective nature of the move, I did not expect the trendline to be broken. Nonetheless, I had monitored it for any unexpected outcome. A decline today beneath 95.26 may create a Bearish Engulfing Candle, which is a strong reversal pattern. The moves being made here may have a pronounced effect on various markets, which we will discuss further down the page. The main effect of a declining USD may be the withdrawal of foreign investors from risk markets.

FED Talk – Why rate hikes will not have a lasting impact on gold

Posted: 04 Oct 2016 10:15 PM PDT

The full report can be accessed and downloaded as PDF here at


Today's sell off in gold has led to concerns that the >20% year-to-date rally in gold prices could begin to reverse. In our view this is primarily the reaction to renewed expectations that the FED is indeed prepared to raise rates again, which has led to large sell orders and pushed gold below a key technical level at USD1302/ozt. However, the asymmetry in the gold price outlook remains clear. There is very little downside to prices from here even if the FED raises rates multiple times over the coming year or two. Indeed, we see several triggers that could push gold prices sharply higher from here over that time horizon.

Gold sold off more than 3% intraday today. The sharp price decline came on the back of hawkish comments from Federal Reserve Bank of Richmond President Jeffrey Lacker today and Federal Reserve Bank of Cleveland President Loretta Mester yesterday. Mr. Lacker said today in Charleston, "While inflation pressures may seem a distant and theoretical concern right now, prudent preemptive action can help us avoid the hard-to-predict emergence of a situation that requires more drastic action after the fact," thus urging the FED to raise rates before year-end. On Monday, Cleveland FED President Mester said in a Bloomberg TV interview that the economy is ripe for rate hike and highlighted that the November FED meeting should be considered a "live" meeting (although she added that she considers all meetings as "live") and a November rate hike compelling, despite its close proximity to the US presidential elections. These comments have sent real-interest rate expectations as measured in 10-year TIPS sharply higher which pushed gold prices sharply lower (see Exhibit 1). Tuesday saw unusually high activity in the gold futures market. The hawkish FED talk triggered large sell orders, which pushed gold prices below the key technical levels of USD1300-1302/ozt, exacerbating the sell-off. This is something we have witnessed before.



Since the beginning of the year, the FED has tried to appear hawkish while the actual policy outlook has in fact become ever more dovish. At the end of 2015 there were 4 rate hikes expected and telegraphed by the FED in the FED dot-plot. The FED dot-plot shows the forecasts of each of the 16 members of the FOMC. Each dot represents a member's view of where interest rates should be at for various timeframes, including a "long run" projection which represents where members think interest rates will be at the end of a hiking cycle. For 2016 the FOMC members expected 4 hikes (not including the first hike at the end of 2015). So far there have been none, and the FED members have continuously revised down their projections not just for this and next year, but also for the terminal (long run) rate. But every time after markets were disappointed by another zero round, some FOMC members came out with hawkish statements, and sometimes the FED minutes suggested that the FOMC became more hawkish. Every time the market reacted the same way: It pushed real interest rates higher and gold lower, and every time so far it was only temporary. Gold moved gradually higher, reflecting weaker interest rate projections. 



So what happens to gold when the FED actually raises rates? We think not much. The reason is that real-interest rates can't really move much higher from here even if the FED raises rates. The FED's own projection for terminal rates is now just 2.85%. The FED will most probably only raise rates if inflation reaches or exceeds its own target of 2%, which would imply that real-interest rates (currently at 0.04%) are capped at 0.85% over the long run. This upside limit on real interest rates sets the floor for gold prices and explains why its price outlook is skewed to the upside. Yes, if everything goes perfectly and the FED gets the chance to raise rates to its target over several years (without encountering any economic slowdown along the way) while maintaining a 2% inflation rate, then gold prices have a little bit more downside, but less than 10% (see Exhibit 4). 



In fact, there are many more potential drivers to the upside. 

1. The FED might increase its inflation target as already suggested by San Francisco Fed President John Williams. This means that real-interest rate expectations would become negative again even if the FED actually raises rates;

2. We start to experience an acceleration in broad based inflation as opposed to FED induced asset price inflation, pushing real rates back deep into negative territory;

3. The FED keeps delaying rate hikes and taking guidance for terminal rates even lower as it has done for years;

4. Any hiccup in the economy and the FED is forced to take rates lower instead of higher. Historically the FED has lowered rates several percentage points to counter recessions. At 0.5%, that would require steep NIRP;

5. Any renewed QE or new form of unconventional monetary policy such as 'helicopter money' would push gold prices sharply higher;

6. A renewed surge in longer dated energy prices (which bottomed in 1Q16, and we don't expect these levels to be retested) but is likely only to materialize in a few years.

Importantly, for gold to go higher from here it doesn't need any Malthusian thinking. None of the scenarios above require a renewed global meltdown of financial markets or an even bigger event, such as a full blown currency crisis. The FED itself has simply set the floor for gold prices by revising its own guidance for rates to a point where the most hawkish scenario is that real-interest rates can only move marginally higher from here.

ALERT: Markets to implode, only FX will be left

Posted: 04 Oct 2016 07:21 PM PDT

Warning to investors - traditional markets are flawed.  In one of many hypothetical futures, not so far in the future, FX may be the only game in town.  As we explain in Splitting Pennies - Understanding Forex - it's FX that drives the world, not stocks, bonds, commodities, or real estate.  Let's take a quick look at some of the cracks in traditional markets.

HFT Market to collapse, or drastically change

During the credit crisis HFT snuck in a huge business for themselves in the stock market via Reg NMS by manipulating 'order types' and 'latency'.  Well, that's all starting to unwind.  Top HFT firms are fearful that the SEC is about to 'spill the beans' according to Bloomberg:

Some of the biggest electronic traders are complaining that a new test in the U.S. stock market will compromise their top-secret strategies, one of their most valuable assets.  Citadel Securities and KCG Holdings Inc. are among a chorus of brokers questioning elements of a U.S. Securities and Exchange Commission experiment, which began Monday, designed to whip up more trading in small companies. Their complaint is that the test will force firms to publicly expose detailed trading data with only the thinnest veil of anonymity, allowing competitors to reverse engineer how their prized trading algorithms work.  For high-speed trading firms, complex computer code is the secret weapon for profiting from the market. Some brokers say they fear that in their test, regulators won't sufficiently mask their publicly reported trading data.  "It's going to take someone exactly three seconds to figure out who's who," said Jamil Nazarali, head of execution services at Citadel Securities, which is the market-making arm of billionaire Ken Griffin's Citadel LLC. Trading firms will "likely change their behavior to protect their intellectual property," making the test's results less meaningful, he added.

And, IEX is set to blow a hole in the dark pools of Wall St.

Big Banks collapsing - SOON

Previously to the "DB Crisis" - Europe's biggest bank, Douche Bank, is now probably insolvent at best, and at worst - will form a black hole so big that it will suck half of the worlds banks and assets into it when it implodes.  DB isn't just a bank, it's a financial powerhouse - a superbank.  For example, if you've ever bought a currency ETF, it was probably offered by DB:

(Note the big black X in the background - good choice DB!)

Hmm.. only 35 ETFs in the USA.  Anyway, creating an ETF isn't easy.  DB is registered in almost every country in the world, yes even in Malta.  They are in thousands of businesses.  Unwinding this behemoth will take decades.  Unraveling all of their crimes, money laundering, scandals, and derivatives is practically impossible.  Just one example of a $10 Billion dollar liability, in this case, just money laundering:

Almost every weekday between the fall of 2011 and early 2015, a Russian broker named Igor Volkov called the equities desk of Deutsche Bank's Moscow headquarters. Volkov would speak to a sales trader—often, a young woman named Dina Maksutova—and ask her to place two trades simultaneously. In one, he would use Russian rubles to buy a blue-chip Russian stock, such as Lukoil, for a Russian company that he represented. Usually, the order was for about ten million dollars' worth of the stock. In the second trade, Volkov—acting on behalf of a different company, which typically was registered in an offshore territory, such as the British Virgin Islands—would sell the same Russian stock, in the same quantity, in London, in exchange for dollars, pounds, or euros. Both the Russian company and the offshore company had the same owner. Deutsche Bank was helping the client to buy and sell to himself...Although the bank's headquarters remained in Germany, power migrated from conservative Frankfurt to London, the investment-banking hub where the most lavish profits were generated. The assimilation of different banking cultures was not always successful. In the nineties, when hundreds of Americans went to work for Deutsche Bank in London, German managers had to place a sign in the entrance hall spelling out "Deutsche" phonetically, because many Americans called their employer "Douche Bank."  

On the other side of the pond, Wells Fargo - previously one of America's 'trusted' banks, "Main St. bank" - is collapsing after the market learned that their great sales figures were based on a house of cards that was, well, fraudulent.  If you're not aware or not following this crisis, checkout this article for a simple explanation.

Real Estate Market Shaky, at best

With a major hurricane likely to hit Florida and possibly a direct hit on Miami, which already has a problem with high tides, hot markets such as Miami are feeling multiple pressures.

Manhattan apartment sales have plunged 20%

There are a lot more apartments available for purchase these days in Manhattan. And fewer people are buying.  Sales of previously owned condominiums and co-ops fell 20 percent in the third quarter from a year earlier as potential buyers grew cautious amid more choices, according to a report Tuesday from appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. There were 5,290 resale apartments on the market at the end of September, 53 percent more than the number available in late 2013, the lowest point for listings.

The swelling inventory is providing an opportunity to New Yorkers shut out of a market in which construction has been dominated by ultra-luxury condos aimed at the wealthiest buyers. Resales, particularly those priced at less than $1 million, were in chronically short supply in recent years, and those that made it to the market sparked bidding wars. Now, more owners are listing apartments to profit from climbing values, and they're finding lots of company.  "Rapidly rising prices over the years have pulled more sellers into the market hoping to cash out," Jonathan Miller, president of Miller Samuel, said in an interview. "But buyers are more wary. There isn't the same intensity of activity to burn through the new supply."

What's next?  

Hedge Funds, not capitalizing on the turmoil, and even losing

Well, hedge funds are having their worst year EVER, with fewer than one in five beating a basic market benchmark:

In fact, this has been the year investors wanted to do anything but try to pick stocks. Active fund managers had their worst first half ever, with fewer than one in five beating a basic market benchmark, according to data from Bank of America Merrill Lynch that go back to 2003.Stock pickers were done in by two major factors: following the crowd and an uneven pattern of correlations among stocks. The 10 most-crowded stocks lagged the 10 least-owned by a whopping 18 percentage points, which BofAML called "an atypically high spread."

So what's left?

Forex Markets to dominate the next 20 years

There's always Forex algorithms, which Wall St. simply afraid of, because they don't 'control' the FX markets.  Some FX strategies perform month in and month out like clockwork, a pension fund's dream - but why go with something that works when it's politically correct to lose with hedge funds (it's good for jobs, right?).

The point is that, FX is a money market - and a super set of other markets.  If the stock market completely crashes like 50%, investors will still have trillions in cash.  It will even create a dollar shortage.  But that cash has to go somewhere.  Some, will go to Euros, Swiss Francs, and other 'money'.  Bitcoin isn't a percent of a percent of a percent, although certainly money will flow into Bitcoin.  Bitcoin isn't viable alterantive to major FX currencies simply because of acceptability.  It's not possible to pay for goods in foreign countries in Bitcoin - but many accept US Dollars.  Until that changes - or until the United States of America ceases to exist as a country (which is probably the only event that could really obliterate FX markets) - then, FX is going to be the only game left in town.  Why?  Because, the US Dollar is supported by bombs.  As long as the US Army has enough gas in their tanks, and munitions in their supply, you can bet dollar markets will function.  Other markets, like real estate, don't have such protection.  But there's a good reason for that.  Because all markets DEPEND on FX.  Without a dollar market, the stock market couldn't exist.  If you want to be Wall St.'s next HFT firm, you first need to fund an account WITH DOLLARS.  

So, although many markets teetering on the brink of implosion, FX looking stronger than ever, and until there's a viable alternative (which considering alternatives, China, Russia, Bitcoin, etc... not a real solid candidate next 20 years) we can expect FX supremacy and US Dollar Hegemony for the long term.  So, if you're still naive to the realities of FX - now's a great time to start learning!

If you don't know Forex, checkout the book Splitting Pennies - Understanding Forex - or checkout Fortress Capital Trading Academy, who offers a great Introductory course.

Gold Price Closed at $1266.30 Down 3.26% and Silver Price Closed at 17.71 Down 5.76%

Posted: 04 Oct 2016 05:49 PM PDT

4-Oct-16PriceChange% Change
Gold Price, $/oz1,266.30-42.70-3.26%
Silver Price, $/oz17.71-1.08-5.76%
Gold/Silver Ratio71.4901.8442.65%
Silver/Gold Ratio0.0140-0.0004-2.58%
Platinum Price984.70-24.90-2.47%
Palladium Price698.50-9.75-1.38%
S&P 5002,150.49-10.77-0.50%
Dow in GOLD $s296.598.332.89%
Dow in GOLD oz14.350.402.89%
Dow in SILVER oz1,025.7154.505.61%
US Dollar Index96.120.540.56%
IMPORTANT NOTE: The following are wholesale, not retail, prices. To figure retail selling price, multiply the "ask" price by 1.035. To figure our retail buying price, multiple the "bid" price by 0.97. Lower commissions apply to larger orders, higher commissions to very small orders.
SPOT GOLD:1,269.20   
American Eagle1.001,303.471,311.721,311.72
1/2 AE0.50646.78669.501,339.01
1/4 AE0.25326.56341.101,364.39
1/10 AE0.10133.16138.981,389.77
Aust. 100 corona0.981,232.871,241.871,266.96
British sovereign0.24301.01314.011,333.94
French 20 franc0.19234.59238.591,277.93
Maple Leaf1.001,279.201,293.201,293.20
1/2 Maple Leaf0.50729.79666.331,332.66
1/4 Maple Leaf0.25323.65339.511,358.04
1/10 Maple Leaf0.10134.54138.341,383.43
Mexican 50 peso1.211,520.971,531.971,270.60
.9999 bar1.001,273.641,281.201,281.20
SPOT SILVER:17.80   
VG+ Morgan $B4 19050.7725.0027.0035.29
VG+ Peace dollar0.7720.0022.0028.76
90% silver coin bags0.7212,798.5013,084.5018.30
US 40% silver 1/2s0.305,059.255,209.2517.66
100 oz .999 bar100.001,760.001,795.0017.95
10 oz .999 bar10.00179.50184.5018.45
1 oz .999 round1.0017.6018.1018.10
Am Eagle, 200 oz Min1.0019.3020.8020.80
Plat. Platypus1.00999.701,029.701,029.70

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The Bond Market Is Flashing Red, Something Is About To Happen

Posted: 04 Oct 2016 04:21 PM PDT

 Corporations and financial institutions are continually laying off employees. Gold was brought below $1300. Subprime auto loans are back and they are getting ready to pop. NYC real estate is declining rapidly, there goes the real estate market. ISM employment crashes. US ends fiscal year with...

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Rothbard on the glorious effects of falling prices

Posted: 04 Oct 2016 04:14 PM PDT

Deflation has a bad name among today's economists, and this should be your first clue that it might be something good.  These educated Keynesians, as we've seen, can't see a bubble until it explodes in their faces, at which time their zombie economy starts to wobble and nightmare possibilities abound, the worst being "it" might happen, as it did in the 1930s.  They immediately turn to god (the FED chair) and pray that he or she will do what is right.  As we know, Ben Bernanke built his reputation making sure "it" doesn't happen here.   

In a speech delivered in circa 1976 and reprinted in The Rothbard Reader, Murray Rothbard gives us a different view of deflation.  First, what is it?  Deflation is falling prices, he says, veering for the sake of discussion from the usual Austrian school definition as a contraction in the supply of money.  Even Bernanke could accept deflation defined as falling prices.  What he doesn't accept is another assertion of Rothbard's: The trend in an unhampered free market economy is usually a falling price level.  It's the unhampered part Bernanke can't digest.  Unhampered would mean no FED, no FDIC, freedom of people to choose the money they wish to use — the usual unthinkable conditions for Keynesians.

Rothbard could think of those things quite naturally.  Falling prices are "glorious effects" of a robust free market, "even in the face of our general inflationary trend."
For example, TV sets on which in 1948 it was almost impossible to see the image, then cost something like $ 2,000. And now [in 1976] they are infinitely better in quality and cost about $ 100.00. So that if you look at the price per unit quality of TV sets and think of that in contrast to the general price level, there is a tremendous and magnificent deflation— if you want to use that term for TV sets. I think this deflation is a great thing. This is the way real income increases and should increase. The same thing happened to penicillin, which started out when first discovered with its price so high that it was only available to extremely wealthy people. Now, of course, it is used for almost every nosebleed.
Rothbard notes short-run aspects of deflation.  How about hoarding?  Again, what is it exactly?  Keynesians use it as a smear term, but he thinks hoarders are people who want to increase the real value of their cash balances.  Who wouldn't want to do that?

Another point: Deflation, he says, "sugarcoats the pill of recession."  In the 1930s unemployment hit 25%, but people who still had jobs — the 75% — saw the power of their dollars rise.  People could buy ordinary consumer goods at new low levels.  Rothbard's family bought all their furniture during the depression.

Deflation and fraudulent banking

Another advantage of deflation is its potential to wipe out the fractional reserve banking system.
When the public cottoned onto [the bankruptcy of the fractional reserve banks] in 1931, 1932, and 1933 and the banking system was in the process of being smashed in every state of the Union, that was a great and glorious day for those of us who are hard-money people. . .  
But then Roosevelt came into office, declared a bank holiday, and established the FDIC which bailed out the banks.  If not for the Federal Deposit Insurance Corporation, "deflation could finally and at long last smash the fractional reserve banking system."  The public knew it was a fraud so it would only be a matter of months "and the deed would have been done."  The system that was the source of a raft of evils including inflation, special privilege, and the business cycle, not to mention war, would have been sent to its grave.

Alas, Roosevelt spared the bankers instead of the public.

The presence of the Bill of Rights in the Constitution, Rothbard argues, shows that Americans don't trust the government, and this is no less true when it comes to government-managed money.  He reminds us that the state is "inherently an inflationary instrument."  Why is this so?  First, government operations are wasteful and serve bureaucrats rather than consumers.  It taxes (steals) wealth directly but there exists a line somewhere it dare not cross.  So how does the state pay for expenditures it cannot pay with tax receipts?  It turns to counterfeiting.

To counterfeit and get away with it, the state had to dress it up as monetary policy conducted by an "independent" central bank run by monetary scientists trained at the best universities.  Yet, almost no one sees the FED as a counterfeiter.  Certainly not your bought standard-issue economist.  In the mainstream such a notion is outrageous, or at least not politically correct.  But even Bernanke came clean in his infamous deflation speech of 2002:
The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services.
What do you call someone who can "produce as many dollars as he wishes at essentially no cost"?  Raise your hand if you like higher prices for the goods and services you purchase.  

Rothbard wants to do away with the government's monopoly control of money and believes it will require a mass movement from below to accomplish it.

Because of widespread insouciance, I believe the mass movement possibility will have to wait until the government creates a financial and economic catastrophe it can't patch up.  And that won't be long in coming.

Whom Is Gold Voting For?

Posted: 04 Oct 2016 02:32 PM PDT

This post Whom Is Gold Voting For? appeared first on Daily Reckoning.

"Whom is gold voting for?" wonders CNBC in half proper English. "Whom," of course, being The Donald or Herself.

"Some market participants say that a surprise Trump victory will cause considerable market anxiety," says the network, "leading safe havens like gold to surge.

"Others," it counters, "say that Trump’s antipathy for stimulative monetary policies will mean more rate hikes down the line, spiking the dollar and consequently hurting gold prices."

Citigroup thinks gold yanks the lever for Trump this fall: "We expect a Trump win would bring out higher volatility in gold and forex, which in turn should lead to higher volumes in other precious metals."

But that's not the half of it, according to John Ing, president and CEO of Maison Placements Canada. He predicts gold will spike $100 overnight if Trump wins. He compares the upcoming election to Brexit, when the "smart money" got taken for a ride:

"The smart money is expecting a Clinton victory. The smart money expected the U.K. to remain, and of course, that smart money looks pretty dumb."

(Margin note: Jim Rickards was the real smart money. He predicted Brexit, and his readers had the opportunity to double their money practically overnight if they took his advice.)

Gold's taking a riotous shellacking today — down $40! Immediate explanation: Cleveland Fed President Loretta Mester scared the horses yesterday with talk of a rate hike this November. If the data come in as she expects, she honked, the case for a move on Nov. 2 "would remain compelling."

Just so. But here's Jim's take: bilge water!:

"You can safely forget about a November rate increase. That Fed meeting is just days before the election, and the Fed will keep their heads down and not do anything that might have political ramifications."

Naeem Aslam, chief market analyst at ThinkMarkets, isn't buying her gabble, either:

“The sell-off that we are seeing for gold is mainly due to the reason that some Fed members have created noise again that November meeting could be live when it comes to the interest rate. Although it sounds extremely bizarre because we also have the U.S. election in that particular month, and I do not see the Fed combining the two risky events together.”

A good opportunity to "buy the dip"? Could be, according to Jim:

"I don't like the 'buy the dips' mentality for stocks, but it does offer opportunities for gold buyers. If you're not fully allocated to gold (I recommend 10% of investible assets), and you see a drawdown in the price, that represents a good entry point."

A $40 drop would certainly qualify.

So… For whom is gold voting this November? To be determined. But as chance has it, the stock market has a say of its own. And it's already flashing a winner…

As Bloomberg notes, the performance of the S&P 500 between July 31 and Oct. 31 "has a curious way of predicting the winner of the presidential election." Here it is:

"Should the S&P 500 record a positive return from July 31 to Oct. 31, it signals the re-election of the party in power, while a decline suggests replacement. The S&P ended September slightly below its July close, so the election results are at the mercy of the market’s October performance."

The pattern's held accurate over 80% of the time since 1944. It's only given false signals on two elections — 1968 and 1980.

And if the election were held today, it says Trump would win.

The S&P's been down for the last three months. Not by much (minus 0.33%). But still down. And it's tripping out of the gate so far this young month — the S&P's down another 13 points today.

If Trump's your man, another down month is just swell. If Hillary's your guy, you're down on two knees praying for a comeback. Hard.

But October has a pretty bad history.


Brian Maher
Managing editor, The Daily Reckoning

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The post Whom Is Gold Voting For? appeared first on Daily Reckoning.

The Six Presidents Causing U.S. Bankruptcy

Posted: 04 Oct 2016 02:17 PM PDT

This post The Six Presidents Causing U.S. Bankruptcy appeared first on Daily Reckoning.

Since Reagan came to power in 1981, the U.S. has had a total of five presidents who have spent ever increasing amounts of money to hang on to power and buy votes.

This has resulted in the most extraordinary money printing venture in history. It is not just central banks that print money. Governments that borrow vast amounts of money are also performing a printing function since money is created out of thin air. And even worse than that, the U.S. government neither has the intention, nor the ability to ever repay the debt with real money.

Thus the U.S. debt can only vaporise when the country defaults. Since there is no other way of eradicating this debt, a default by the U.S. is guaranteed to take place in coming years. But before that the Fed and the U.S. government will flood the market with jumbo jet money since helicopter money won't suffice. Jumbo jet money will create hyperinflation but it will never repay the debt since all it does is to increase the amount of debt outstanding from trillions of dollars to quadrillions.

The U.S. economy showed natural growth without deficit spending until 1960. At that point, heavier involvement by the U.S. in the Vietnam war created the initial deficits. As Eisenhower handed over to Kennedy in 1961, U.S. debt was only $286 billion. Then 20 years later during the first year of Reagan's presidency, U.S. debt reached the staggering sum of $1 trillion.

Reagan was hailed as a superb president primarily because he (like Thatcher in the U.K.) assumed power at the bottom of the economic and stock market cycles. So they were lucky to get in at the right time. But few people realise that Reagan achieved this by almost tripling debt from $0.9 trillion to $2,6T.

So in eight years Reagan incurred $1.7T of debt which is almost twice what all the presidents before him had incurred since 1789. And from then on every single president continued on the neck braking deficit course. Most people believed that Clinton managed the U.S. economy particularly well and created surpluses for the first time in 35 years.

But what the Clinton administration succeeded particularly well with was to cook the books rather than to create surpluses. Because in every single year of the Clinton administration, federal debt increased in spite of the fact that budget surpluses were shown. And by the time Clinton left in 2001, he had managed to add another $1.6T debt to make the total $5.7T.

Next record breaker was Bush Jr. who increased debt by $4.3T from $5.7T to $10T. But Obama has been the most productive of all presidents so far. Remember that it took the U.S. 219 years to go from zero debt to $10T. Then "Apr├Ęs nous le Deluge" (after us the deluge) Obama took over and before he has finished, U.S. debt will be around $20T.

That is the most astonishing increase in national debt in history excluding hyperinflationary economies. And remember that this figure does not include the Fed's money printing or unfunded liabilities nor personal or corporate debt which all have grown exponentially. With all of that we can add at least $250 trillion! This debt will never be repaid.

Debt has gone from $900 billion in 1981 to $19.6 trillion currently. By the time Obama hands over to Clinton/Trump he will have doubled U.S. debt from $10T to $20T during his reign and he has also presided over a cumulative budget deficit of $7 trillion.

Thus in the last 36 years, U.S. debt will have increased 22 times. It took 220 years to reach $10 trillion debt and Obama has achieved to double this in only 8 years. Having already received the Nobel peace prize, he should perhaps also be awarded the Nobel Prize in Economics as the most productive president in world history.

Meanwhile, since 1981, tax receipts have gone from $900 billion to $3.5 trillion, a 5.8 times increase.

Since 1960 the U.S. has not produced a real budget surplus in any single year. With debt up 22X since 1981 and tax revenue up only 5.8X, it is clear that the U.S. debt can never be repaid with the only realistic solution being default and bankruptcy.

Neither presidential candidate will solve the U.S. debt catastrophe.

It is just unbelievable that the world's biggest economy with the world's reserve currency is being run into the abyss by a successive number of presidents with each one exacerbating the problem exponentially.

What is even more astonishing is that in the current presidential election campaign, neither of the candidates devotes any serious campaign time to the most pressing of all problems which is "the economy stupid"!

The reason for this is simple. They don't dare to seriously discuss a problem that they know they can't solve. To run for president at a time when it is almost guaranteed that the U.S. economy and the dollar will collapse in the next 4 years is certainly a daunting prospect.

Even under normal circumstances and without major recessions, the U.S. deficit is forecast to grow substantially in coming years. The promises of Clinton/Trump will also contribute to escalating deficits. Add to that a serious recession, increasing interest rates and a derivative debacle and we will see deficits not only in the dollar tens but in the hundreds of trillions. Thus Clinton/Trump are likely to preside over a U.S. default.

A country that for 55 years cannot manage its finances properly is on the road to perdition. It is only a matter of time before the U.S. economy implodes. And as the country implodes, so will the U.S. dollar. A currency that is just supported by worthless debt and by a weakening military power, does not qualify for the role as reserve currency.

And that is why the hegemony of the U.S. and the dollar is now coming to an end. The country will clearly not give up this role without putting up a massive fight. This could sadly involve starting major military conflicts even of nuclear proportions. It is also guaranteed to involve money printing of a magnitude never seen before in history.

The bottom line is, Clinton/Trump and Yellen will all continue Obama's/Bernanke's record producing money printing.

It is not only the U.S. which will experience escalating deficits, massive money printing and a collapsing currency. Virtually every major economy including Japan, China, E.U. and Emerging Markets will go through the same thing. The big difference is that the U.S. has the biggest debt and deficits as well as bigger bubbles in stocks, bonds, property, car loans, student loans etc. than any other country.

Dark clouds are now moving in fast across the world and this coming autumn could be very troublesome both for the world economy as well as geopolitically and socially. The combined risks are now higher than at any time in world history. When risks are high, it is advisable to stay away from bubble markets. But sadly, the investment world loves owning things that are priced high, totally ignoring the massive loss potential.

The best insurance against financial or economic risk are real assets such as gold and silver as long as they are held safely outside the financial system. Precious metals will reflect the unending destruction of paper money.

You should have enough gold and silver to fall back on if there is a crisis in the financial system which prevents access to other investments or makes it impossible to raise cash from other assets.

What is important to remember is that gold and silver is money and instant liquidity. Throughout history, in every country where there has been a serious financial crisis, gold and silver have always functioned as money or barter.

Before the coming crisis is over, gold is likely to reach at least $10,000 in today's money and silver $500. In hyperinflationary terms, we could see multiples of these targets. Compared to holding money in the bank or cash, the gain in the gold price becomes very real and will be actual life insurance.

And at today's basement-bargain price of $1,272 per ounce, there is no better insurance to own.


Egon von Greyerz
for The Daily Reckoning

Ed. note: "A charmingly mordant take on the stock news of the day, accentuated by philosophical maunderings…" That's how one leading financial magazine described the free daily email edition of The Daily Reckoning. You'll find cutting-edge analysis from the complex worlds of finance, politics and culture. Presented in an entertaining style few can match. Click here now to sign up for FREE.

The post The Six Presidents Causing U.S. Bankruptcy appeared first on Daily Reckoning.

Gold Price Closed at $1309 Down $4.30 or -0.33%

Posted: 04 Oct 2016 02:10 PM PDT

3-Oct-16PriceChange% Change
Gold Price, $/oz1,309.00-4.30-0.33%
Silver Price, $/oz18.80-0.34-1.80%
Gold/Silver Ratio69.6461.0271.50%
Silver/Gold Ratio0.0144-0.0002-1.47%
Platinum Price1,003.70-24.90-2.42%
Palladium Price710.75-9.75-1.35%
S&P 5002,161.20-7.07-0.33%
Dow in GOLD $s288.270.090.03%
Dow in GOLD oz13.940.000.03%
Dow in SILVER oz971.2114.621.53%
US Dollar Index95.590.200.21%
IMPORTANT NOTE: The following are wholesale, not retail, prices. To figure retail selling price, multiply the "ask" price by 1.035. To figure our retail buying price, multiple the "bid" price by 0.97. Lower commissions apply to larger orders, higher commissions to very small orders.
SPOT GOLD:1,312.70   
American Eagle1.001,348.141,356.681,356.68
1/2 AE0.50668.97692.451,384.90
1/4 AE0.25337.76352.791,411.15
1/10 AE0.10137.73143.741,437.41
Aust. 100 corona0.981,275.131,284.131,310.07
British sovereign0.24311.33324.331,377.77
French 20 franc0.19242.63246.631,321.00
Maple Leaf1.001,322.701,336.701,336.70
1/2 Maple Leaf0.50754.80689.171,378.34
1/4 Maple Leaf0.25334.74351.151,404.59
1/10 Maple Leaf0.10139.15143.081,430.84
Mexican 50 peso1.211,573.101,584.101,313.84
.9999 bar1.001,317.291,324.701,324.70
SPOT SILVER:18.83   
VG+ Morgan $B4 19050.7725.0027.0035.29
VG+ Peace dollar0.7720.0022.0028.76
90% silver coin bags0.7213,534.9513,820.9519.33
US 40% silver 1/2s0.305,363.105,513.1018.69
100 oz .999 bar100.001,863.001,898.0018.98
10 oz .999 bar10.00189.80194.8019.48
1 oz .999 round1.0018.6319.1319.13
Am Eagle, 200 oz Min1.0020.3321.8321.83
SPOT PLATINUM:1,003.70   
Plat. Platypus1.001,018.701,048.701,048.70

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BOMBSHELL: Was Wikileaks-Assange DRONE story Floated to STOP HILLARY October Surprise?

Posted: 04 Oct 2016 02:00 PM PDT

BOMBSHELL: Was Wikileaks-Assange DRONE story Floated to STOP HILLARY October Surprise? He should stop playing games and just release it all. Hillary will want him dead regardless. The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists , visionaries...

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Gold Daily and Silver Weekly Charts - All Hail The Recovery®

Posted: 04 Oct 2016 01:42 PM PDT

Julian Assange Trolled The World - Jonestown Is Not Happy

Posted: 04 Oct 2016 12:15 PM PDT

 Alex Jones calls out Julian Assange who trolled the world by failing to release any documents at a press conference heavily hyped by the organization. 10-4-16 The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists , visionaries , free...

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Alex Jones Calls Out Julian Assange for Trolling The World

Posted: 04 Oct 2016 12:00 PM PDT

Alex Jones calls out Julian Assange who trolled the world by failing to release any documents at a press conference heavily hyped by the organization.  The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists , visionaries , free investigative...

[[ This is a content summary only. Visit or for full links, other content, and more! ]]

1,000 tonnes in paper gold dumped today to help bullion banks cover, Maguire tells KWN

Posted: 04 Oct 2016 11:55 AM PDT

2:56p ET Tuesday, October 4, 2016

Dear Friend of GATA and Gold:

London metals trader Andrew Maguire tells King World News that today's smashing of gold involved about 1,000 tonnes' worth of paper gold.

"This is a desperate effort by Western officials to cover massive offside pre-Brexit over-the-counter short positions put on by their agent bullion banks near the $1,275 level," Maguire says, adding that the smash was timed for a trading holiday in China.

An excerpt from the interview is posted at KWN here:

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


Gold Standard Continues to Expand North Dark Star High-Grade Deposit

Company Announcement
Wednesday, September 14, 2016

VANCOUVER, British Columbia, Canada -- Gold Standard Ventures Corp. (TSXV: GSV; NYSE MKT:GSV) today announced assay results from two holes, DS16-21 and DS16-04, at the recently discovered North Dark Star oxide gold deposit on its fully-owned and controlled Railroad-Pinion Project in Nevada's Carlin Trend. Results from DS16-21 have increased the width of the deposit and, more importantly, have confirmed that higher-grade oxide mineralization projects up-dip to more shallow depths to the east of DS16-08.

The primary objective of this year's drill program at North Dark Star was to expand the high-grade zone discovered in core hole DS15-13 (15.4 meters of 1.85 gold grams per tonne and 97 meters of 1.61 gold grams per tonne) at the end of last year's drill program. ...

...For the remainder of the announcement:

Join GATA here:

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Wednesday-Saturday, October 26-29, 2016
Hilton New Orleans Riverside
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Help GATA by purchasing DVDs of GATA's London conference in August 2011 or GATA's Dawson City conference in August 2006:

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Trump vs Clinton - The Window of Opportunity

Posted: 04 Oct 2016 10:55 AM PDT

 Elections 2016... There has never been a better time for a rude awakening. 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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In The News Today

Posted: 04 Oct 2016 10:24 AM PDT

Jim Sinclair's Commentary Tenacity is a Swiss trait. A Swiss clerk sells the bank information of depositors to the German government and everyone runs into a mountain vault. Secret Alpine Gold Vaults Are the New Swiss Bank AccountsSeptember 30, 2016 Deep in the Swiss Alps, next to an old airstrip suitable for landing Gulfstream and... Read more »

The post In The News Today appeared first on Jim Sinclair's Mineset.

Key Breakdowns after Silver’s Final Reversal

Posted: 04 Oct 2016 08:37 AM PDT

The end of the previous week was rich in signals as gold, silver and mining stocks all reversed along with the USD Index. Gold closed the week below the rising support line and the implications should not be ignored even by those who usually focus on fundamentals alone. Why? Because in the short- and medium term, the important technical developments will shape the price – not the fundamentals. Why should one care? In early 2008 silver was priced above $20 and in late 2008 it was priced below $10, even though the fundamental outlook didn’t change. Similar price swings can make a lot of money for those who pay close attention to what’s going on – but knowing about positive fundamentals is not enough.

Assessing the Short-Term Outlook for Gold and Silver and the Miners

Posted: 04 Oct 2016 08:21 AM PDT

Precious metals expert Michael Ballanger assesses the gold-silver ratio and its ramifications for the market. I want to go on the record and state categorically that, in my opinion, technical analysis is of limited value when trying to predict the short-term movements of precious metals. However, there are millions of traders and investors out there who believe that it does work despite interventions, manipulations, and the ability of the bullion banks to fabricate a surrogate for actual physical gold by way of paper futures. In light of that, the short-term technical set-ups for gold and silver and the miners are all different in that after Friday's month-end bombardment, which originated in the London options market, that formidable uptrend line that began in December 2015 has finally been vanquished.

NIRP is the Fuel that Will Rocket Gold Price to $5,000 or Higher

Posted: 04 Oct 2016 08:09 AM PDT

For decades, the primary argument by Warren Buffett and other financial elites for not owning gold was that “gold doesn’t pay you anything.” Once the ECB took interest rates to NIRP in 2014, this argument became null and void. In a world in which bonds are charging you to hold them, gold with its ZERO yield has become attractive as an investment.

Gold: The End Game And Headwinds

Posted: 04 Oct 2016 08:01 AM PDT

Graceland Update

The End of US Dollar Dominance?

Posted: 04 Oct 2016 05:35 AM PDT

The end of U.S. dollar dominance may be unfolding in front of our eyes. No, we don't think China's ascent is the key threat; instead, key to understanding the U.S. dollar may be to understand the money market fund you might hold. Let me explain what's unfolding in front of our eyes, and what it might mean for the U.S. dollar and global markets.

Could a S&P500 Stock Market Flash Crash be Round the Corner?

Posted: 04 Oct 2016 05:29 AM PDT

There has been general speculation among the trading community recently about the possibiity of a flash crash of the types in 1988. In our morning meeting, we looked at some triggers which can potentially cause a major correction. We will look at if there is any real posibility. As many of you know, we do not like to just talk some nonsense about gold and Silver being precious metals and S&P500 as worthless papers and hence S&P 500 should be trading at under 10 and gold to be at 10,000. That kind of talk we leave to the uninformed punters of the kind we find at various bearish sites. MESH framework is a statistical tool which analyses various trading instruments for trading opportunities. Here we will look at the posibility of a major risk aversion this month.

Western Gold Investing Eases from 3-Year Peak

Posted: 04 Oct 2016 03:09 AM PDT

Bullion Vault

Gold Falls on Rate-Hike Fears

Posted: 04 Oct 2016 01:00 AM PDT

Gold fell below $1,300 today for the first time since the Brexit vote in June, as the dollar index rose to a two-month high.

FTSE BrExit Stock Market Panic Crash Resolves towards New All Time Highs

Posted: 04 Oct 2016 12:21 AM PDT

Remember how BrExit was supposed to trigger a stock market crash, collapse, bear market, with the mainstream press's panic reporting Brexit morning (June 24th) following the FTSE's early morning 5% mark down in the wake of the UK voting to LEAVE the EU.

Breaking News And Best Of The Web

Posted: 03 Oct 2016 05:37 PM PDT

Stocks fall on renewed Deutsche Bank fears. Commerzbank to cut 9,600 jobs, suspend dividend. Wells Fargo draws abuse for consumer fraud. Gold and silver down a bit. US GDP revised slightly higher, consumer spending softens. OPEC agrees to output cut, oil price jumps. China’s debt crisis has gone from inevitable to imminent. Tax evasion becomes […]

The post Breaking News And Best Of The Web appeared first on

The End of Dollar Dominance?

Posted: 03 Oct 2016 05:00 PM PDT

The end of US dollar dominance may be unfolding in front of our eyes. No, we don't think China's ascent is the key threat; instead, key to understanding the US dollar may be to understand the money market fund you might hold.

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