Wednesday, November 23, 2016

Gold World News Flash

Gold World News Flash

Obstacles To Trump's "Growth" Plans

Posted: 23 Nov 2016 12:30 AM PST

Authored by Alastair Crooke, via Raul Ilargi Meijer's Automatic Earth blog,

We are plainly at a pivotal moment. President-Elect Trump wants to make dramatic changes in his nation’s course. His battle cry of wanting to make “America Great Again” evokes – and almost certainly is intended to evoke – the epic American economic expansions of the Nineteenth and Twentieth centuries.

Trump wants to reverse the off-shoring of American jobs; he wants to revive America’s manufacturing base; he wants to recast the terms of international trade; he wants growth; and he wants jobs in the U.S. – and he wants to turn America’s foreign policy around 180 degrees.

The run-down PIX Theatre sign reads “Vote Trump” on Main Street in Sleepy Eye, Minnesota. July 15, 2016. (Photo by Tony Webster Flickr)

It is an agenda that is, as it were, quite laudable. Many Americans want just this, and the transition in which we are presently in – dictated by the global elusiveness and search for growth (whatever is meant now by this term “growth”), clearly requires a different economic approach from that followed in recent decades.

As Raúl Ilargi Meijer has perceptively posited, greater self-reliance “is the future of the world, ‘post-growth’, and post-globalization. Every country, and every society, needs to focus on self-reliance, not as some idealistic luxury choice, but as a necessity. And that is not as bad or terrible as people would have you believe, and it’s not the end of the world … It is not an idealistic transition towards self-sufficiency, it’s simply and inevitably what’s left, once unfettered growth hits the skids. …

“Our entire world views and ‘philosophies’ are based on ever more and ever bigger and then some, and our entire economies are built upon it. That has already made us ignore the decline of our real markets for many years now. We focus on data about stock markets and the like, and ignore the demise of our respective heartlands, and flyover countries …


Donald Trump looks very much like the ideal fit for this transition … What matters [here] is that he promises to bring back jobs to America, and that’s what the country needs … Not so they can then export their products, but to consume them at home, and sell them in the domestic market …There’s nothing wrong or negative with an American buying products made in America instead of in China.


“There’s nothing economically – let alone morally – wrong with people producing what they and their families and close neighbours themselves want, and need, without hauling it halfway around the world for a meagre profit. At least not for the man in the street. It’s not a threat to our ‘open societies’, as many claim. That openness does not depend on having things shipped to your stores over 1000s of miles, that you could have made yourselves, at a potentially huge benefit to your local economy. An ‘open society’ is a state of mind, be it collective or personal. It’s not something that’s for sale.”

A Great Wish

That’s Trump’s ostensible great wish, (it seems). It is not an unworthy one, but things have changed: America is no longer what it was in the Nineteenth or Twentieth centuries, neither in terms of untapped natural resources, nor societally. And nor is the rest of the world the same either.

Mr. Trump rather unfortunately may find that his chief task will not be the management of this Great Re-orientation, but more prosaically, fending off the headwinds which he will face as he hauls on the tiller of the economy.

In short, there is a real prospect that his ambitious economic “remake” may well be prematurely punctured by financial crisis.

These headwinds will not be of his making, and for the main part, they lie beyond human agency per se. They are structural, and they are multiple. They represent the accumulation of an earlier monetary doctrine which will fetter the President-elect into a small corner from which any chosen exit will carry adverse implications.

Ditto for anyone else trying to steer any ship of state in this contemporary global economy. Paradoxically – in an era moving toward greater self-sufficiency – what success Trump may have, however, will likely depend not on self-reliance so much as he would like.

For his foreign policy about turn, he will depend on finding common interest with Russian President Vladimir Putin (that should not be too hard) – and for the economic “about turn” – on Trump’s ability not to confront China, but to come to some modus vivendi with President Xi (less easy).

“Things are not what they were.” Complexity “theory” tells us that trying to repeat what worked earlier – in very different conditions – will likely not work if repeated later. In the Clinton era, for example, 85 percent of the U.S. population growth derived from the working-age population. The headwind that Trump will face is that, over the next eight years, 80 percent of the population growth will comprise 65+ year olds. And 65+ year olds are not a good engine of economic growth. This is not an uniquely American problem; it is a global trend too.


“The peak growth” (according to Econimica blog), “in the annual combined working age population (15-64 year/olds) among all the 35 wealthy OECD nations, China, Brazil, and Russia has collapsed since its 1981 peak. The annual growth in the working age population among these nations has fallen from +29 million a year to just +1 million in 2016 … but from here on, the working age population will be declining every year … These nations make up almost three quarters of all global demand for oil and exports in general. But their combined working age populations will shrink every year, from here on (surely for decades and perhaps far longer). Global demand for nearly everything is set to suffer.

(FFR stands for Federal Funds Rate: i.e. the US key interest rate) Source:

And then there is China: It too is passing through a difficult “transition” from the old economy to an “innovative” one. It too, has an aging population and a debt problem (with a debt-to-gross domestic ratio reaching 247 percent). Trump argues that China deliberately holds down the value of its currency to gain unfair trade advantage, and he further suggests that he intends to confront the Chinese government on this key issue.

Again, Trump does have a point (many nations are managing their exchange rates precisely in order to try to “steal” a little bit extra growth from the diminished global pot). But as noted at Zerohedge, citing the analysis of One River Asset Management executive Eric Peters:

“What’s good for the US in this case [the rising dollar and interest rates in anticipation of ‘Trumponomics’], is not good for emerging markets (EMs). Emerging markets benefit from a weaker dollar, and you’re not going to get that. Emerging markets benefit from global capital flows moving in their direction and that’s not happening either. Back in February, emerging markets were in sharp decline, driven by (1) a strong dollar, (2) rising US interest rates, and (3) slowing Chinese growth. Then China spurred a massive credit stimulus, the Fed became wildly dovish, and the dollar declined sharply.


“Interest rates collapsed throughout the year. As the growing pool of dollar, euro and yen liquidity searched for a decent return, it headed to emerging markets. Trump has reignited the dollar rally, and his fiscal stimulus will force interest rates higher. This reversed everything. [the dollars are heading home]


“And to be sure, the Beijing boys don’t want to see material weakness ahead of next autumn’s Party Congress. But we’re currently near peak impulse from China’s Q1 stimulus.”

In short, Peters is saying that, with the appreciating dollar and rising interest rate environment, growth from emerging markets as a whole will falter, since emerging markets have effectively leveraged their economies to Chinese growth. It used to be the case that they were closely tied to U.S. growth, but it is now China which dominates the EMs’ trade flows [i.e. without China growth, the EMs languish]. The question is, can America reboot its growth whilst China and the EMs languish? It is another structural shift, whereas heretofore, it was vice versa: without U.S. growth, the EMs and China languished. Now it is the converse.

Hollowed-Out Economies

There are other structural changes of course which will make it harder for the industrially hollowed-out economies of the West to recuperate jobs off-shored earlier. Firstly, there has been a systemic shift of innovation and technology eastwards (often to a more skilled and better-educated workforce). This represents not only an economic event, but a redistribution of power too. In any case, technology in this new era is being more job destructive than creative.

In one sense, Trump’s economic plan to “get America working again” through massive debt-financed, infrastructure projects, harks back to the Reagan era, which was also a period in which the dollar was strong. But yet again, “things today are not what they were then.” Inflation then was at 13 percent, Interest rates were around 20 percent, and crucially, the U.S. debt to GDP ratio was a mere 35 percent (compared to today’s estimate of 71.8 percent or 104.5 percent with external debt included).

Then, as Jim Rickards has suggested, the strong dollar was deflationary (deliberately so), and interest rates had nowhere to go, but down. It was the beginning of the three decades’ bond boom, which finally seems to have come to an end, coincident with Trump’s election. Today, inflation has nowhere to go but up – as have interest rates – and the bond market, nowhere to go, but (perilously) down.

Growth and Jobs?

Can Trump then achieve growth and jobs through infrastructure expenditure? Well, “growth” is an ambiguous, shape-shifting term. The first chart shows both sides of the equation … the annual GDP growth and the annual federal debt incurred, spent, and (thus counted as part of the growth) to achieve the purported growth.

The second chart shows the annual GDP minus the annual growth in federal debt to achieve that “GDP growth.” In other words, unlike in the earlier Reagan times, more recently, the debt is producing no growth – but … well … just more debt, mostly.

In fact, what the second chart is reflecting is the dilution – through money “printing” – of purchasing power: away from one entity (the American consumer), through the intermediation of the financial sector, to other entities (mostly financial entities, and to corporations buying back their own shares). This is debt deflation: the American consumer ends having less and less purchasing power (in the sense of residual discretionary income).

The point here is that “growth” is becoming rarer everywhere. Russia and China, like everyone else, are in search for new sources for growth.

As Rickards has said, debt is the “devil” that can undo Trump’s whole schema: a “$1 trillion infrastructure refurbishment plan, along with his proposal to rebuild the military, will — at least in the short-term — significantly increase annual deficits. In fact, deficits are already soaring; the fiscal 2016 budget hole jumped to $587 billion, up from $438 in the prior year, for a huge 34% increase…in addition to this, Trump’s protectionist trade policies would implement either a 35% tariff on certain imports or would require these goods to be produced inside the United States, at much higher prices. For example, the increase in labor costs from goods made in China would be 190% when compared to the federally mandated minimum wage earner in the United States. Hence, inflation is on the way.”

In sum, self-sufficiency implies higher domestic costs and price rises for consumers.

Debt will rise. And there is seemingly already a buyers’ strike against U.S. government debt underway: well over a third of a $1 trillion worth of Treasuries were disposed of, and sold in the year to Aug. 31 by foreign Central Banks. And who is buying it? (Below, the chart shows what this purchasing looks like, as a percentage of total debt issued by the Treasury). Well, foreign central banks have disappeared. (The Chinese have not bought a U.S. Treasury bond since 2011.)

(Above: who purchased the marketable debt as a percentage, by period)


It is the American public who are buying. Will they be willing to take on Trump’s $1 trillion infrastructure spree? Or, will it be “printed” in yet another dilution of the American consumer’s purchasing power? The question of whether the infrastructure splurge does give growth hangs very much in the balance to such answers. (Equity shares in construction firms will do okay, of course).

The bottom line: (Michael Pento, Pento Report): “If interest rates continue to rise it won’t just be bond prices that will collapse. It will be every asset that has been priced off that so called ‘risk free rate of return’ offered by sovereign debt. The painful lesson will then be learned that having a virtual zero interest rate policy for the past 90 months wasn’t at all risk free. All of the asset prices negative interest rates have so massively distorted including; corporate debt, municipal bonds, REITs, CLOs, equities, commodities, luxury cars, art, all fixed income assets and their proxies, and everything in between, will fall concurrently along with the global economy.

“For the record, a normalization of bond yields would be very healthy for the economy in the long-run, as it is necessary to reconcile the massive economic imbalances now in existence. However, President Trump will want no part of the depression that would run concurrently with collapsing real estate, equity and bond prices.”

A Pending Financial Crisis

Trump, to be fair, has said consistently throughout the election campaign that whoever won the Presidential campaign to take office in January would face a financial crisis. Perhaps he will not face the “violent unwind” of the QE and bond bubble as some experts have predicted, but many more – according to Bank of America’s survey of 177 fund managers over the last six days, and controlling just under half a trillion of assets – expect a “stagflationary bond crash.”

This has major political implications. Trump is setting out to do no less than transform the economy and foreign policy of the U.S. He is doing this against a backdrop of many of the followers of the liberal élite, so angered at the election outcome, that they reject completely his electoral legitimacy (and, with the élites themselves staying mum at this rejection of the U.S. democratic process). Movements are being organized to wreck his Presidency (see here for example). If Trump does indeed experience a severe financial “unwind” at a time of such domestic anger and agitation, matters could turn quite ugly.

Gold to Rally More, Stocks Should Drop

Posted: 22 Nov 2016 10:21 PM PST

GDX looks to rally hard in a 'c' of "C" wave, likely into Early the 25th. We could see GDX around 24.50. It looks like a bear rally. The jobs report on December 2 could knock the precious metals sector down like it did from November 9-14. The SPX is running on fumes and should drop at least to the 2162 area by early Friday I would think. Higher highs into next November 30-December 1 look likely and up to around 2208/09. My target for next week of 2203 was hit today.

Silver and Gold - We Can’t Understand It for Them

Posted: 22 Nov 2016 10:17 PM PST

For years I have calmly, patiently, and for the most part rationally, listened to friends, family, patients, and colleagues grapple with the notion of precious metals. The majority understand the basic reasons why some portion of portfolio allocation is necessary or prudent, but very few have (or will) taken action. Often, people are shocked that I would be interested in the matter to begin with. I think subconsciously people understand to be a “Doctor” is to be a teacher, but on the surface most people find it odd and uncomfortable to accept my interest and quest in something that rarely occurs to them.

LIVE STREAM: InfoWars Coverage - Donald Trump's Presidential Transition Video! [22/11/2016]

Posted: 22 Nov 2016 09:00 PM PST

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Devalue yuan before Trump takes over, Chinese government adviser says

Posted: 22 Nov 2016 08:54 PM PST

China Should Let Yuan Fall Against U.S. Dollar before Trump Takes Office, Government Adviser Says

By Sidney Leng
South China Morning Post, Hong Kong
Wednesday, November 23, 2016

An influential Chinese government adviser says Beijing should stop intervening to control the value of the yuan and instead allow a fall in the currency's exchange rate before Donald Trump takes office as U.S. president at the end of January.

Yu Yongding, a senior fellow at the Chinese Academy of Social Sciences, wrote in a co-authored article published in the Shanghai Securities News that the Chinese currency was likely to depreciate against the dollar in the coming months and Beijing should permit the yuan to fall as much as the markets dictate while maintaining controls on the flow of capital in and out of the country.

Yu, who was the only academic on the central bank's monetary policy committee when China removed the yuan's peg to the value of the dollar in 2005, said in the article: "Over the next few months, the possible increase of returns on dollar assets ... and capital outflows will bring in bigger depreciation pressure on yuan.

"From now until the president-elect Donald Trump officially takes office is a good period to abandon market intervention and let the yuan fully release its depreciation pressure."

Yu and fellow author Xiao Lisheng said the central bank's current strategy of trying to manage a gradual and controlled fall in the value of the yuan was backfiring and wasting China's hard-earned foreign exchange reserves to prop up the currency. These have shrunk by about US$800 billion from a peak in June 2014. ...

... For the remainder of the report:


K92 Mining Begins Gold Production at Kainantu Mine

Company Announcement
Wednesday, October 5, 2016

K92 Mining Inc. is pleased to announce that gold production has commenced from the Irumafimpa gold deposit.

Ian Stalker, K92 Chief Executive Officer, says: "This milestone is highly significant for our company, and for this region of Papua New Guinea. A great deal of thanks goes to the entire team on site in PNG in achieving production ahead of schedule and on budget. The rehabilitation of the Irumafimpa gold mine, process plant, and associated infrastructure commenced in late March and is now complete. As an enhancement of the processing facility, we are also pleased to note that the installation of a new drum scrubber is also nearing completion and commissioning of this will be completed by the end of the month. ..."

...For the remainder of the announcement:

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Edward Snowden talking about New President Donald Trump

Posted: 22 Nov 2016 08:00 PM PST

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Will Trump Avert or Trigger Economic Collapse -- JOHN RUBINO

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Privatize to Get Rid of Passports and Resolve Immigration

Posted: 22 Nov 2016 05:51 PM PST

Via The Daily Bell
Privatize to Get Rid of Passports and Resolve Immigration

To silence dissidents, Gulf states are revoking their citizenship  Many are left stateless as a result. – The Economist

The Economist "newspaper" is worried that nations are beginning to use passports as a way to punish people that leaders don't like.

This article focuses mainly on the Middle East, especially Bahrain, which the article calls an "energetic stripper."

More here:

Bahrain's … Sunni royals have dangled the threat of statelessness over its Shia majority to suppress an uprising launched in 2011, during the Arab spring.

In 2014 it stripped 21 people of their nationality. A year later the number was up tenfold. "Gulf rulers have turned people from citizens into subservient subjects," says Abdulhadi Khalaf, a former Bahraini parliamentarian whose citizenship was revoked in 2012 and now lives safely in Sweden.

"Our passports are not a birthright. They are part of the ruler's prerogative."  Neighbouring states are following suit. Kuwait's ruling Al-Sabah family have deprived 120 of their people of their nationality in the past two years, says Nawaf al-Hendal, who runs Kuwait Watch, a local monitor.

Qatar is another big stripper. It suspended citizenship of an entire clan — the Ghafrans— some 5,000 Ghafrans since 2004. But it's not just travel that is affected when a passport is revoked, but also in many cases jobs, house ownership, even the ability to own a phone or maintain a bank account.

If you are abroad, you cannot return, nor can the birth of a child be recorded, nor even a marriage. The laws allowing passport revocation are broader now, according to The Economist, and include the "terrorism," which can be defined loosely.

Loyalty is beginning to be used as a reason for passport removal, and the West is not exempt. Britain will remove passports based on the contravention of the "public good." And many EU nations cite terrorism for some passport confiscations

In the US, passports may be suspended by the IRS if overseas citizens owe more than $50,000 and the IRS has filed a notice of lien. However, the largest issue regarding passports remains unexamined by this article. And that issue has to do with the necessity for passports in the first place.

It can be argued of course, that passports are an absolute necessity for nation-states, but passports are basically an invention of the 20th century. The Guardian tells us, "Passports were not generally required for international travel until the first world war." Before then, passports were issued in a haphazard manner.  Here, from the Guardian:

Following an agreement among the League of Nations to standardise passports, the famous "old blue" was issued in 1920. Apart from a few adjustments to its duration and security features, the old blue remained a steady symbol of the touring Briton until it gradually began to be replaced by the burgundy-coloured European version in 1988.

INTERPOL is another form of global control that is less than 100 years old. Post-World War II, the United Nations has played a more active role in resuscitating and formalizing INTERPOL, see here.

Thus, international control of people's movements and actions has drastically increased in the 20th and 21st century. Passports are now starting to represent regions rather than countries. A pan-African passport was announced earlier this year at the African Union (AU) summit in the Rwandan capital Kigali. From the report:

With the launch of the new pan-African document, the continent moved up a notch towards the free cross-border movement of goods and people—in direct opposite to Brexit, the decision by British voters to exit the European Union.

Of course, one could argue that expanding a passport's operational function is not the same as reducing the power of a passport. In fact, even as passports expanded in power and scope in the 20th century,  there were many high-level discussions about getting rid of them.

From an article posted at Business Insider:

In 1947, the first problem considered at an expert meeting preparing for the UN World Conference on Passports and Frontier Formalities, was "the possibility of a return to the regime which existed before 1914 involving as a general rule the abolition of any requirement that travelers should carry passports".

But delegates ultimately decided that a return to a passport-free world could only happen alongside a return to the global conditions that prevailed before the start of the first world war.

By 1947, that was a distant dream. The experts advised instead a series of bilateral and multilateral agreements to attain this goal.

World leaders were still talking about banning passports as late as 1963, when the UN Conference on International Travel and Tourism recognised "the desirability, from both an economic and social point, of progressively freer international travel". Once again, it was estimated that "it is not feasible to recommend the abolition of passports on a world-wide basis."

Now, neither the public nor governments consider passports as a serious obstacle to freedom of movement, though any would-be traveller from Yemen, Afghanistan or Somalia would no doubt argue differently.

The world survived without passports for thousands – tens of thousands – of years. Likewise, the necessity of an expanding, global police force has not historically been a matter of discussion, much less implementation. Yet today the passport system is globally ubiquitous and growing. INTERPOL is merging some operations with the UN and becoming evermore aggressive and empowered.

The Economist article promotes the idea that passports ought to be seen as travel documents, not weapons of punishment. This is logical as far as it goes. But it never occurs to The Economist editors to argue that passports ought not to exist to begin with.

The Economist like most of the mainstream media is always apt to criticize the powers that government has but never to suggest that the real solution is to do away with those powers.

Even a passing familiarity with free-market economics would yield up options other than merely re-calibrating government power.

Private property is the key to a better and more rational world. If people – rather than their governments – owned a substantial portion of the world's real estate, immigration might soon cease to be a problem. People themselves would decide who would come and go. The poisonous immigration battles now taking place would be at least mitigated.

Likewise, government abuse of passports would be considerably reduced if it were generally accepted that people had a right to invite people onto their own property without government permission.

The argument then comes up that "terrorism" necessitates passports and government control over immigration. But even a cursory examination of the history of al Qaeda and ISIS will show that the West and especially the US fostered these terrorist groups to begin with.

Here, from

The so-called "War on Terror" should be seen for what it really is: a pretext for maintaining a dangerously oversized U.S. military. The two most powerful groups in the U.S. foreign policy establishment are the Israel lobby, which directs U.S. Middle East policy, and the Military-Industrial-Complex, which profits from the former group's actions.

Since George W. Bush declared the "War on Terror" in October 2001, it has cost the American taxpayer approximately 6.6 trillion dollars and thousands of fallen sons and daughters; but, the wars have also raked in billions of dollars for Washington's military elite.

Those controlling government are ever jealous of their prerogatives and the wealth they have access to. They will create an endless amount of crises to justify and expand their control. Government itself, based on monopoly power and resultant force, is purveyor of the problem, always.

Conclusion: Reshaping public solutions does no good. Jettisoning them to greatest degree possible is the only viable solution.  

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Putin on Trump promises: What is bad about bringing manufacturing jobs back to America?

Posted: 22 Nov 2016 05:30 PM PST

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Is the U.S Entering Martial Law?

Posted: 22 Nov 2016 04:00 PM PST

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The Dark Side of “Trumpflation”

Posted: 22 Nov 2016 02:56 PM PST

This post The Dark Side of "Trumpflation" appeared first on Daily Reckoning.

Does Trump mean a return of stagflation?

A ghastly portmanteau of stagnation and inflation, the word conjures the darkest days of the disco era — stalled growth… high unemployment… soaring prices… bell-bottoms.

And some think it's coming back for another ride in the saddle. Business Insider:

Since the election of Donald Trump, economists and analysts have once again begun to bring up the idea of stagflation hitting the U.S. economy. The combination of government spending and trade policies, coupled with an uncertain growth picture, have brought the disastrous specter of the late 1970s back into the economic discussion.

Ben Laidler, HSBC chief global strategist, with more:

A more "populist" Trump could see a dramatic disruption to trade which would weigh heavily on the global growth outlook, while a much tighter immigration policy could ultimately push the U.S. toward stagflation.

Trade barriers drive up the cost of imports. Immigration restrictions increase the cost of labor. Both drive up consumer prices. Some are calling the whole thing "Trumpflation."

But it's the government spending part that commands our attention today…

Fiscal stimulus promises to turn a cup of water into a gallon of wine. This through the conjuring power of the "money multiplier." Every buck the government throws at a road or bridge does double-duty by generating another spent on widgets, gewgaws and all manner of services. That's the theory.

But the money multiplier itself came in for hard sledding under the stagflation of the '70s.

The '70s saw the higher prices. So much so that Paul Volcker had to raise interest rates all the way to 20% in 1981.

But they didn't see the growth that the "virtue" of rising prices promised. And the '70s saw unemployment galore. Hence, stagflation.

Only when Volcker lassoed inflation did the Reagan boom commence in the early '80s. And it was the end of the chapter for the money multiplier. Or so many thought…

Now the money multiplier, long dead and buried, is climbing out of the grave. The zombie's parading as a hero, no less, now that eight years of monetary policy have proved a bust. Fiscal policy is the new (old) solution to get the economy jumping again.

But the zombie masked as hero could be Trump's undoing…

In an economy unburdened by crushing debt, the money multiplier could make a case for itself. One dollar of fiscal stimulus might turn the cup of water into that gallon of wine when the vat is empty. But as the debt mounts, each new drop of water yields less and less wine. Ultimately comes the point where a drop of water not only gives no wine at all… it actually turns the whole thing to vinegar…

Evidence shows that when the debt-to-GDP ratio exceeds 70%, the money multiplier goes into reverse. And real GDP declines. Economist Lacy Hunt:

Based on academic research, the best evidence suggests the [government expenditure] multiplier is -0.01, which means that an additional dollar of deficit spending will reduce private GDP by $1.01, resulting in a 1 cent decline in real GDP.

It's true, the wine may give GDP a temporary buzz. But then cometh the hangover:

The deficit spending provides a transitory boost to economic activity, but the initial effect is more than reversed in time. Within no more than three years, the economy is worse off on a net basis, with the lagged effects outweighing the initial positive benefit.

So Trump’s infrastructure and tax cuts could be heady wine in the short run. But if this Hunt fellow is right, it wears off within three years.

That means the headache starts when Trump's seeking re-election.

Remember, evidence shows the money multiplier went kaput when the debt-to-GDP ratio exceeded 70%. Today… the U.S. debt-to-GDP ratio is 104%. So the country's been getting negative bang for the buck.

And the Congressional Budget Office (CBO) projections already indicate debt-to-GDP could push 150% by 2025. That's without an ounce of infrastructure. Medicare, Social Security and Obamacare are the culprits. And it'll likely get worse. Lacy:

The multiplier is likely to become more negative over time since mandatory components of the government spending will control an ever-increasing share of budget outlays… Federal borrowing to sustain these programs does not generate an income stream for the economy as a whole to pay for these programs. As history has evidenced, the continual taking on of this kind of debt will eventually cause bankruptcy.

If the money multiplier turned negative when the debt-to-GDP hit 70%… how about when it's 150%?

We wish Trump all the best. But the math might have him in handcuffs from day one. "Trumpflation" could well become stagflation.

And unfortunately, stagflation could just be the beginning of something far worse…


Brian Maher
Managing editor, The Daily Reckoning

The post The Dark Side of "Trumpflation" appeared first on Daily Reckoning.

Comparing Trump to Reagan

Posted: 22 Nov 2016 02:46 PM PST

This post Comparing Trump to Reagan appeared first on Daily Reckoning.

The election of Donald Trump can be compared in some ways to the election of Ronald Reagan in 1980. There are similarities, but some important differences, which you'll see in a moment.

First, the main similarity: Ronald Reagan was considered a buffoon, a dope, an actor unfit for the presidency. Many feared he'd also push the nuclear button and start World War III. So many of the things you've heard about Trump are exactly what they said about Reagan at the time.

But Reagan came in with a team of advisors and did a lot of things right. He had a lot of help from Paul Volcker, who headed the Fed at the time. That's something important to bear in mind. It wasn't just Reagan. It was Reagan and the Fed working together to turn the U.S. economy around. Reagan entered office when the economy was sunk in one of the worst recessions since World War II.

Reagan had his recession in 1981 going into 1982. I always thought it was genius of Ronald Reagan to his recession over early. Most presidents do not make it through their terms without a recession. If they succeed in delaying it initially, they usually end up having it late in their terms at the worst possible time. Once Reagan's early recession was over, the economy grew for seven straight years.

For over three years, from 1983 to 1986, growth in the United States was 16%. That's real growth, not nominal growth. There wasn't any inflation to dilute that number. In contrast, average annual growth in the United States has been barely 2% since 2009. That's almost eight years. Yet for three years in the early stage of the Reagan administration, growth averaged over 5%.

2% versus 5% might not sound dramatic. But over time it is a dramatic difference of orders of magnitude. An economy growing at 5%, or even 4%, if compounded, will be twice as rich in 20 years as the economy growing at 2%. It's a major difference.

Now, let's step back and talk a little bit about something you're not going to hear anywhere else. They speak to some important differences between the economy of Ronald Reagan and the economy Donald Trump will inherit.

When Ronald Reagan was sworn in, interest rates were 20%. They were as high as they could possibly be. They had nowhere to go but down. They weren't going to go to 30%. The country would have gone belly up and declared bankruptcy.

Now, as we prepare for 2017, Trump will be entering the White House under very different circumstances. Interest rates are close to zero. They have nowhere to go but up.

Reagan had a major tailwind in the form of potentially lower interest rates. Trump is going to have a major headwind in terms of potentially higher interest rates. The inflation picture is also quite different.

When Reagan entered office, inflation was running at 13%. By 1984, Volcker had reduced it to around 4%. That was a massive disinflation

Stocks and bonds both went up. Stocks were going up because of real growth. Bonds were going up because interest rates were coming down and inflation was coming down. Now, Trump could have the opposite situation. Trump could have a collapsing bond market and stocks could run out of steam.

The other major difference between then and now, and this is one that I haven't heard anyone mention, is that when Reagan was sworn in, the U.S. debt-to-GDP ratio was 35%, close to the lowest it had been since the end of World War II. At the end of World War II, the U.S. debt-to-GDP ratio was 100%. By the '70s, it had come down to around 30%. It had gone up slightly to 34% when Reagan was sworn in.

Reagan therefore had enormous fiscal space. He had enormous headroom to increase the debt-to-GDP ratio without threatening the financial solvency of the United States, which he took advantage of. When Reagan left office, the debt-to-GDP ratio was 50%. So he added 15 percentage points to the debt-to-GDP ratio. If you take 15, divide it by 35, you can see that he increased the debt-to-GDP ratio by 40%.

Now, what did Reagan spend the money on? Winning the Cold War. Reagan basically outspent the Russians because they couldn't match us. By the end of the decade, the Cold War was over. Reagan also instituted massive tax cuts. That was the other contributor to deficits. Paul Krugman and others to this day criticize Reagan for running up the debt.

Now, here's the problem:

The debt-to-GDP ratio today is 100%, back to where we were at the end of World War II. When Obama entered office, the national debt was about 10 trillion. Today, it's about 20 trillion, and growing. Obama piled 10 trillion of new debt on top of the old, so the debt-to-GDP ratio is back up to 100%.

What is Trump going to do? He wants to be a big spender. He wants tax cuts, more spending on defense, spending on the wall, infrastructure spending, airports, roads, bridges, tunnels, railroads, et cetera, and less regulation. He wants to be Ronald Reagan. But unfortunately for Trump, Obama has tied his hands.

Trump will not have the fiscal space Reagan had. The U.S. is getting uncomfortably close to where Italy, Spain, and Greece, and Japan and some of these other potentially bankrupt countries are. The point being that Trump faces enormous constraints that Ronald Reagan did not have.

Trump won't have falling interest rates like Reagan had. He's going to face increasing interest rates instead. Inflation won't be falling dramatically. He's facing the possibility of increasing inflation, which means higher food prices and higher prices at the pump. He doesn't have a low debt-to-GDP ratio like the 34% Reagan inherited. He's actually inheriting a high debt-to-GDP ratio of 100%.

Trump is going to try to run the Reagan playbook in a non-Reagan environment. That plan could immediately hit a wall. It could result in something like stagflation, where we get the inflation from spending and deficits, but you don't get the growth. That's because after eight years and $10 trillion, we're facing the reality of diminishing marginal returns. That's when each new dollar of stimulus fails to produce as much growth as the dollar before. Basically, the first dollar you spend in an expansion is a lot more powerful than the ten-trillionth dollar you spend.

The low-hanging fruit is gone. Now, it's like a giraffe trying to climb a tree. By the way, I think tax cuts are a good thing. I'm not saying that Trump's policies are bad. I think a lot of them are positive, but I don't believe they're going to work out the way his advisors expect. Someone may have to sit him down and say, "Mr. President, you may want to do all this, but honestly, we're out of room. We're out of headroom. We don't have the ability to expand the debt."

There is a good chance that cutting taxes right now will help the economy, but not enough to produce the growth required to make up the difference. That means larger deficits. Add all that new spending on top of it and the debt-to-GDP ratio is going to increase.

Where are we going to get the borrowing capacity unless the Fed accommodates it?

If the Fed accommodates it, it'll produce inflation. If the Fed doesn't accommodate it, we're going to hit the wall and enter recession. That's two possible outcomes, recession or inflation. Neither one is good. We can even get the worst of both worlds, and that's the stagflation I mentioned. We'll be writing and speaking a lot more about this.

The Reagan/Trump analogies are interesting. But there are major differences that people are not focusing on and a lot of reason to be concerned.

Right now, I would say that if things get really bad and we have a financial crisis, you're going to want gold. If the economy grows, but we get inflation, you're going to want gold.

All signs point to gold as a safe haven asset in this environment.


Jim Rickards
for The Daily Reckoning

The post Comparing Trump to Reagan appeared first on Daily Reckoning.

Texe Marrs -- Defending Against a Death Cult

Posted: 22 Nov 2016 02:30 PM PST

Jeff Rense & Texe Marrs - Defending Against a Death Cult Clip from November 21, 2016 - guest Texe Marrs on the Jeff Rense Program. The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists , visionaries , free investigative journalists , researchers...

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Donald Trump Gives Speech On First Changes In America - Outnumbered (FULL SHOW 11/21/2016)

Posted: 22 Nov 2016 02:00 PM PST

President-Elect Donald Trump has given a speech to tell the American people about his plans for the first 100 days as President Of The United States. The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists , visionaries , free investigative...

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Gold Seeker Closing Report: Gold and Silver End Mixed While Stocks Climb Higher

Posted: 22 Nov 2016 01:50 PM PST

Gold gained $8.46 to $1220.86 in early Asian trade before it fell all of the way back to $1206.44 in late morning New York trade and then bounced back higher into midday, but it still ended with a loss of 0.03%. Silver rose to as high as $16.886 and ended with a gain of 0.42%.

Silver and Gold - We Can’t Understand It for Them

Posted: 22 Nov 2016 01:24 PM PST

For years I have calmly, patiently, and for the most part rationally, listened to friends, family, patients, and colleagues grapple with the notion of precious metals. The majority understand the basic reasons why some portion of portfolio allocation is necessary or prudent, but very few have (or will) taken action. Often, people are shocked that I would be interested in the matter to begin with. I think subconsciously people understand to be a "Doctor" is to be a teacher, but on the surface most people find it odd and uncomfortable to accept my interest and quest in something that rarely occurs to them.

Gold Daily and Silver Weekly Charts - Comex Option Expiration - Tableau Sans Vie

Posted: 22 Nov 2016 01:08 PM PST

An Elephant In The Room?

Posted: 22 Nov 2016 12:11 PM PST

Here we are again, just six days away from a major COMEX gold (and silver) delivery month with a huge outsized amount of contracts outstanding versus deliverable inventory. For a background, COMEX holds 2,083,000 (nearly 65 tons) of registered gold. This amount is much higher than it was last December when it stood at a... Read more »

The post An Elephant In The Room? appeared first on Jim Sinclair's Mineset.

Why is Trump against the TPP deal?

Posted: 22 Nov 2016 11:30 AM PST

Inside Story - Why is US president-elect Donald Trump against the TPP deal? The US President-elect has promised to withdraw from the world's largest free-trade agreement. The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists , visionaries , free...

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5 Signs Julian Assange is Dead or Missing

Posted: 22 Nov 2016 10:30 AM PST

Julian Assange has not been seen alive in public or on video since October 4, 2016. These 5 strange pieces of evidence suggest that he may be dead or missing and that WikiLeaks may be under attack by the US government or an unknown hostile actor The Financial Armageddon Economic Collapse...

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Posted: 22 Nov 2016 10:00 AM PST

EU superstate is dead on arrival. Their rotten corps is being consumed by larva like infestation. 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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The Greatest Threat to America -- CyberWarfare

Posted: 22 Nov 2016 09:30 AM PST

Root9B Technologies CEO Joe Grano on what is needed to improve cyber security in the U.S. and Donald Trump's economic plan. The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists , visionaries , free investigative journalists , researchers ,...

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Trump’s Financial Revolution!

Posted: 22 Nov 2016 09:23 AM PST

A financial revolution is now taking place and I want to tell you the story. It has rather large implications for interest rates, the stock market, gold and real estate. The only reasons for the DOW JONES sharp gains, post-election, is due to the fact its’ index leans toward financial and industrial stocks, (as seen in the chart below), more than the SPX and Nasdaq Indexes. Those two sectors have outstripped most of the market since Election Day.

The Dow Jones Continues To Trump UP!

Posted: 22 Nov 2016 09:16 AM PST

Eric Balchunas, ETF Analyst for Bloomberg Intelligence, stated that "Financial ETFs are on fire, but the center of the heat is really banks, which will benefit from rising rates more than other areas of the financial sector,". Is the strengthening of the dollar merely "temporary”? Is this recovery an illusion, which will precede an inevitable crash? I have maintained all along that there has been no real recovery and that the FED will not raise interest rates soon, contrary to common widespread beliefs.

Donald Trump The update on the white house transition And The Policy Plan For The Next 100 day

Posted: 22 Nov 2016 09:00 AM PST

The President-elect shares an update on the Presidential Transition, an outline of some of his policy plans for the first 100 days, and his day one executive actions. The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists , visionaries , free...

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Alex Jones : The N.W.O. Is Planning To HURT DONALD TRUMP!

Posted: 22 Nov 2016 08:00 AM PST

 Alex Jones tells us that the new world order is planning to do something very bad to Donald trump! The New World Order wants Trump dead at all costs because he is a serious threat to their operations and existence. The Financial Armageddon Economic Collapse Blog tracks trends and...

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Post-election Mathematics

Posted: 22 Nov 2016 07:55 AM PST

Any solution regarding the mathematical inevitability of the above will create massive trauma. Consider the outrage concerning: Reduce federal employees by 5% every year for a decade. Eliminate the Federal Reserve. Cut military retirements. Eliminate half the budget for the Department of Defense. Reduce Social Security benefits by 50%. Dismantle the Medicare system. Return to a gold standard.

Gold, Commodities, Forex and Stock Market Forecasts

Posted: 22 Nov 2016 07:34 AM PST

We continue to be bearish on Gold as we have been for months, our only recent change is that we are expecting a significant low earlier in 2017 than previously forecast. We have consistently maintained that this bearish phase is just a short term consolidation before we begin a new and significant rise that could well lead to new all time highs.

The Spreading Bondfire And The Rising Price Of Gold

Posted: 22 Nov 2016 07:29 AM PST

Today’s rising interest rates and trillion-dollar losses in global bond markets are prelude to what is to come, i.e. rising inflation with higher interest rates ending in the bursting of the global government bond bubble and the long awaited breakout of gold. Last year, on December 15, 2015, the Fed announced the first tentative rate increase in nearly ten years, from 0.0% to 0.25%. The Fed had last raised rates in June 2006 which eventually burst the US real estate bubble in 2007 resulting in the collapse of global markets in 2008.

Precious Metals: Key Levels For Buyers

Posted: 22 Nov 2016 07:22 AM PST

Eager gold stock enthusiasts can be buyers here in the $20 zone. Note the action of my 14,7,7 Stochastics oscillator, at the bottom of the chart. It's very positive right now. Also, Chinese jewellery companies are poised to begin their buying for the upcoming New Year celebratory season, and that tends to precede a great January rally for GDX. As Christmas approaches, tis the GDX season to be jolly!

Gold’s Upside and Downside Targets

Posted: 22 Nov 2016 07:17 AM PST

In yesterday's alert we wrote that staying on the sidelines appeared to be a good idea for the next several days as the short-term outlook became more bullish, even though the medium-term outlook became more bearish (due to the USD's breakout). Actually, at the moment when our yesterday's alert was sent, gold and silver's prices were below the entry prices, so the position was closed at a profit.

7 Indicators Oil Might Continue to Drop

Posted: 22 Nov 2016 06:03 AM PST

This post 7 Indicators Oil Might Continue to Drop appeared first on Daily Reckoning.

The latest reports are that oil is hitting a three-week high ahead of an OPEC (Organization of the Petroleum Exporting Countries) decision on output due out this month.  While the news on rising oil might be only temporary, here are 7 reasons that oil very well could drop further.  

7 Indicators Oil Drop

1. OPEC.

As the Daily Reckoning reported back in September, OPEC's head of state meeting is set to happen days from now – and its credibility is overblown.  Following the September 28th meeting, many speculated that OPEC would halt its global oil production.  Don't hold your breath.  

The chance of Iran, Saudi Arabia and Iraq all agreeing on the reduction of money into their economy at this point in time is highly unlikely.  Reducing production is bad for business.  It is also bad for waning government stability.


This is the third consecutive year of record breaking heat.  The US has its first major snowstorm at the very end of November, and even that might not last long.  While the winter season continues to hold out, expect lowering heating demand from winter fuel expenditures.  Last year at the national level, the number of high demand on heating days was 18% lower than the previous winter season and is expected to be even lower this year.


The dollar is on the rise. Despite a day in which the dollar could be down, the US currency has continued to gain strength following the surprise election of Donald Trump.  As of November 16 the dollar hit a 14 year high.  The vast majority of oil continues to be traded in US currency, the strengthening dollar makes domestic purchasing power for oil cheaper.


The low-emission auto industry is booming. In the third quarter alone,  Tesla has sold twice as many cars as it was in 2015.  Elon Musk has even noted that regardless of a Trump policy, the Tesla business will remain secure.  While Tesla owns the PR market, General Motors (GM) has an all new all-electric auto that is very competitively priced due out later this year.

Outside of the green vehicle market, millennials and demographics across the board are seeking high efficiency vehicles.  This in combination of people driving less has made the demand on gas decrease across the auto sector.


President-elect Trump has taken up the Palin motto of "drill baby drill."  As a candidate, Trump even went as far to propose during a debate and even a presidential forum to take the oil from Iraq.  These types of presidential campaign statements might be purely words, but they do highlight a president-elect that is very conscious to the mobility and drive for oil.  That type of policy is sure to open up oil drilling domestically and flood the market with a greater supply of "black gold."

6. OIL RIGS.  

In the third quarter of 2016 the US oil rig count hit the most it has produced since 2009.  That trend, while it is only one part of the story, will likely continue to grow under the incoming administration.  Now that the stigma and worry from the Deepwater Horizon oil spill by BP is only in a distant memory, expect to see greater presence of new oil rigs domestically.   


The USGS has estimated that nearly 20 billion barrels of oil has been located in west Texas.  That is a groundbreaking amount and the largest in US history.  To put it in perspective, Bloomberg reports that it is an estimated $900 billion in current market value.  That amount of domestic based natural resource containment is only to bring stability and confidence in the longevity of the US oil market and investors.  

Understanding these indicators gives you an asymmetric approach to investing.  While some storylines on oil could turn out differently, there is still prime opportunity.  As Jim Rickards has noted on uncertain ventures, "I use "asymmetric" to describe an opportunity where the outcome may be uncertain but the risk/reward ratio is entirely in your favor. In other words, it's heads you win, tails you don't lose."


Craig Wilson, @craig_wilson7
for the Daily Reckoning

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The post 7 Indicators Oil Might Continue to Drop appeared first on Daily Reckoning.

Avery Goodman: Understanding elections, gold, and the U.S. dollar via market manipulation

Posted: 22 Nov 2016 05:39 AM PST

8:41a ET Tuesday, November 22, 2016

Dear Friend of GATA and Gold:

Securities lawyer and market analyst Avery Goodman writes today that an attack on the gold price by the international gold cartel signaled the likely election of Donald Trump as president, and he predicts that as president Trump will cut off the cartel's access to the U.S. gold reserve, the expectation of which has prompted the cartel's current frenzy to cover its short positions in gold and long positions in the U.S. dollar. Goodman's commentary is headlined "Understanding Elections, Gold, and the U.S. Dollar via Market Manipulation" and it's posted at his internet site here:

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


Canadian Government Issues Key Water License
for Seabridge Gold's KSM Project in British Columbia

Company Announcement
Monday, November 21, 2016

TORONTO -- Seabridge Gold Inc. (TSX: SEA) (NYSE:SA) announced today it has received a license from the Government of Canada required for the construction, operation, and maintenance of the water storage facility and associated ancillary water works at its 100 percent-owned KSM Project in northwestern British Columbia.

The license, as authorized within the International Rivers Improvement Act, regulates all structures and activities situated on transboundary waters shared with the United States that have the potential to affect water quality and quantity. The Water storage facility and its ancillary water works (water diversion ditches and tunnels) are the primary water management control systems for the KSM Project. These facilities separate water that has not contacted mined material from so-called contact water originating from disturbed areas of the mine site and then contain the contact water prior to treatment and eventual release to the receiving environment.

These facilities are situated on Mitchell and Sulphurets creeks, tributaries of the transboundary Unuk River system that flows into Alaska. The license was granted for a term of 25 years under the International Rivers Improvements Regulations as administered by Environment and Climate Change Canada. ...

... For the remainder of the announcement:

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Cheap Money to Continue Flowing & Helicopter Money to Start after 2017 Market Crash

Posted: 22 Nov 2016 04:21 AM PST

It is my privilege now to welcome in Michael Pento, president and founder of Pento Portfolio Strategies and author of the book The Coming Bond Market Collapse: How to Survive the Demise of the U.S. Debt Market. Michael is a money manager who ascribes to the Austrian School of Economics and has been a regular guest on CNBC, Bloomberg, Fox Business News, and also the Money Metals Podcast. Michael, it's always great to have you on. Thanks for joining us today and welcome back.

Breaking News And Best Of The Web

Posted: 22 Nov 2016 01:37 AM PST

US dollar soaring, now at highest level of the year. Interest rates rising, bond prices falling. Mortgage rates up. Gold and silver correcting, setting the stage for the next bull market. Political class still searching for an explanation (see “Best of the Web”). Trump’s cabinet takes shape, with mostly old and a few new faces. […]

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

BCGold in a Sweet Spot in Peru

Posted: 22 Nov 2016 12:00 AM PST

Bob Moriarty of 321 Gold highlights BCGold, a company that he believes its promising land package in Peru makes it a good buy in this market.

Visit the for more information and for a free newsletter

Stock and Bond Markets Outlook For 2017

Posted: 21 Nov 2016 06:37 PM PST

We have discussed at length different forecasts for 2017. All our calls, so far, seem to be spot-on. Think of our bullish call for financial stocks in 2017 and bearish gold price forecast 2017. In this article we explain our broad markets outlook for 2017. Many investors look for leading indicators. Some look at the volatility index (VIX), others at the U.S. dollar or inflation expectations (TIPS). Some believe that reading the news will be helpful to understand where markets are going. The truth of the matter is that none of all that is helpful whatsoever. Most sources are only noise, and that is the reason why only 10% of investors are successful.

Gold Price Forecast: Nasty Naughty November Gold Price Trend

Posted: 21 Nov 2016 06:24 PM PST

As all are well aware the price of gold initiated a new bull market since December 2015 (rising from $1,050 to its $1,376 peak in early July this year. Indeed it was a spectacular bull price run where gold soared more than +30% in only six months. Indeed spectacular! Subsequently, the bull trend petered out in early July. Since then the price of gold has been steadily declining. Moreover, there are several reasons for this on-going price consolidation…and why it has yet to put in a bottom: 3-Month T-Bill Yield Soaring US$ Index Surges US$ vs 3-Month T-Bill Weekly $UST1Y vs USD Chart Point&Figure Projections (Gold, USD and Silver) Traditional November Gold Price Decline

Gold Prices Struggle Post-Trump; India 'in Jeopardy'

Posted: 21 Nov 2016 04:00 PM PST

GOLD PRICES touched a 3-session high of $1221 per ounce early in Asian trade Tuesday, recovering three-quarters of last week's 1.6% drop before easing back as world stock markets extended their gains and bond prices slipped again, nudging interest rates higher...

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