Tag Archives: gold

First Ever Triple Bubble in Stocks, Real Estate & Bonds – With Nick Barisheff

We are living in an age of records in the financial world. The stock market is in its longest bull market in history and near all-time highs.  The world has more debt than ever before while interest rates are near record lows, and some are negative in many countries for the first time ever.  Nick Barisheff, CEO of Bullion Management Group (BMG), is seeing a dark ending for the era of financial records. Barisheff explains,

“I have been in the business for 40 years, and this is the first time we have had a simultaneous triple bubble, a bubble in real estate, stocks and bonds all at the same time.  In 1999, it was a stock bubble. In 2007, it was a real estate bubble. This time, we’ve got a triple simultaneous bubble.  So, when we have the correction, it’s going to be massive. Value calculations on equities say it’s worse than 1999, and in some cases worse than 1929. The big problem is this triple bubble is sitting on a mountain of debt like never before.”

What is going to be the reaction to this record bubble in everything crashing?  Barisheff says, “I think you are going to be getting riots in the streets.  It’s already happening in California. CalPERS is the pension fund administrator for a lot of the pension funds in California. So, already retired teachers, firefighters and policemen that are sitting in retirement getting their pension checks all got letters saying sorry, your pension checks from now on are going to be reduced by 60%.  How do you get by then?”

What happens if the meltdown picks up speed and casualties?  Barisheff says,

“I think the only option will be for the government is to print more money and postpone the problem yet a little bit longer, but that leads to massive inflation and eventually hyperinflation.  Every fiat currency that has ever existed has always ended in hyperinflation, every single one.  Since 1800, there have been 56 hyper inflations. Hyperinflation is defined as 50% inflation per month.  That’s where we are going and what other choice is there?”

So, what do you do?  Barisheff says,

“In the U.S. dollar since 2000, gold is up an average of 9.4% per year. In some countries, it’s up 14% and so on.  If you take the overall average of all the countries, the average increase is 10% a year.  Every time Warren Buffett is on CNBC, he seems to go out of his way to disparage gold, but if you look at a chart of Berkshire Hathaway and gold, gold has outperformed Berkshire Hathaway. . .  Everybody worships Warren Buffett as the best investor in the world, and gold has outperformed his fund in U.S. dollars.  I would not disparage gold if I were him. I’d keep quiet about it.”

There is a first for Barisheff, too, in this financial environment.  He says for the first time ever, he’s “100% invested in gold” as a percentage of his portfolio.  He says the bottom “is in for gold,” and “the bottom is in for silver, too.”

Barisheff contends that with the record bubbles and the record debt, both gold and silver will be setting new all-time high records as well in the not-so-distant future.

Join Greg Hunter of USAWatchdog.com as he goes One-on-One with Nick Barisheff, CEO of BMG and the author of the popular book “$10,000 Gold.”

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Is The Federal Reserve Losing Control Of The Gold Price?

After years of being kept in the doldrums by orchestrated short selling described on this website by Roberts and Kranzler, gold has lately moved up sharply, reaching over $1,500 this week.  The gold price has continued to rise despite the continuing practice of dumping large volumes of naked contracts in the futures market.  The gold price is driven down but quickly recovers and moves on up.  I haven’t an explanation at this time for the new force that is more powerful than the short-selling that has been used to control the price of gold.

Various central banks have been converting their dollar reserves into gold, which reduces the demand for dollars and increases the demand for gold.  Existing stocks of gold available to fill orders are being drawn down, and new mining output is not keeping pace with the rise in demand.  Perhaps this is the explanation for the rise in the price of gold.

During the many years of Quantitative Easing the exchange value of the dollar was protected by the Japanese, British, and EU central banks also printing money to insure that their currencies did not rise in value relative to the dollar. The Federal Reserve needs to protect the dollar’s exchange value so that it continues in its role as the world’s reserve currency in which international transactions are conducted.  If the dollar loses this role, the US will lose the ability to pay its bills by printing dollars.  A dollar declining in value relative to other countries would cause flight from the dollar to the rising currencies.  Catastrophe quickly occurs from increasing the supply of a currency that central banks are unwilling to hold.

One problem remained. The dollar was depreciating relative to gold.  Rigging the currency market was necessary but not sufficient to stabilize the dollar’s value. The gold market also had to be rigged. To stop the dollar’s depreciation, naked short selling has been used to artificially increase the supply of paper gold in order to suppress the price.  Unlike equities, gold shorts don’t have to be covered. This turns the price-setting gold futures market into a paper market where contracts are settled primarily in cash and not by taking delivery of gold.  Therefore, participants can increase the supply of the paper gold traded in the futures market by printing new contracts. When large numbers of contracts are suddenly dumped in the market, the sudden increase in paper gold supply drives down the price. This has worked until now.

If flight from the dollar is beginning, it will make it difficult for the Federal Reserve to accommodate the growing US budget deficit and continue its policy of lowering interest rates. With central banks moving their reserves from dollars (US Treasury bonds and bills) to gold, the demand for US government debt is not keeping up with supply.  The supply will be increasing due to the $1.5 trillion US budget deficit.  The Federal Reserve will have to take up the gap between the amount of new debt that has to be issued and the amount that can be sold by purchasing the difference.  In other words, the Fed will print more money with which to purchase the unsold portion of the new debt.  

The creation of more dollars when the dollar is experiencing pressure puts more downward pressure on the dollar.  To protect the dollar, that is, to make it again attractive to investors and central banks, the Federal Reserve would have to raise interest rates substantially.  If the US economy is in recession or moving toward recession, the cost of rising interest rates would be high in terms of unemployment.  

With a rising price of gold, who would want to hold debt denominated in a rapidly depreciating currency when interest rates are low, zero, or negative?

The Federal Reserve might have no awareness of the pending crisis that it has set up for itself.  On the other hand, the Federal Reserve is responsive to the elite who want to rid themselves of Trump.  Collapsing the economy on Trump’s head is one way to prevent his reelection.

Source: by Paul Craig Roberts

Does Gold’s Breakout Mean Silver Is On The Launchpad?

Gold and silver prices continue to push higher. They’re starting to get some attention from the mainstream, too. A new uptrend in gold is clearly underway, but silver’s performance has so far trailed gold’s. Let’s take a look at the price behavior over the past six-plus years of both metals to see if we can gain any insights about silver.

Is Trump Positioning America For A Return To The Gold Standard?

(Alex Deluce) There may be readers who weren’t even born when the U.S. still had a gold-backed dollar. Since the gold standard was abolished in 1971, the value of the dollar has decreased annually by 3.96 percent. You would need over $600 today to purchase the same goods you purchased for $100 in 1973. Still, a dollar is a dollar, right? No, it is not. It is just a piece of paper.

Is there a chance the U.S. could return to the gold standard and provide real value to the U.S. currency? Judy Shelton and Christopher Waller are President Trump’s pick for Federal Reserve governors. As it happens, Ms. Shelton is a believer in the gold standard and a critic of current Federal Reserve policies. She believes that the Fed has become unnecessarily involved in trade policies instead of adhering to its function of regulating the monetary system. Returning to the gold standard is not a popular idea these days when economists support the limitless printing for currency, high debt, and inflation.

Ms. Shelton would have been considered mainstream 35 years ago. Today, she is thought of as unorthodox. In 2018, she wrote in an article published by the conservative thinktank, Cato Institute,

If the appeal of cryptocurrencies is their capacity to provide a common currency, and to maintain a uniform value for every issued unit, we need only consult historical experience to ascertain that these same qualities were achieved through the classical international gold standard.”  

She also authored a book, Fixing the Dollar Now. In it, she advocates for linking the dollar to a benchmark of value, preferably gold. More than four decades ago, the currency of all major countries, such a Britain, Japan, France, Russia, and others were linked to gold. In 1933, the dollar was linked to $35 worth of gold. In 2019, the value of the dollar is less than one-thirtieth of that.

The gold standard helped the U.S. prosper for 180 years. The signers of the U.S. Constitution included this requirement in Article 10.

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

Almost two hundred years later, such a concept is deemed unorthodox. Ideologies change, and not always for the better. 

The reason the Founding Fathers included a monetary policy in the Constitution is that they wanted money to be as far away as possible from any human intervention. This was achieved by linking the dollar to gold. Gold is a stable commodity, and thus ensures a stable U.S. currency.

Countries today link their currency to some other, stronger currency, such as the dollar or the euro. This means that these countries have no control over their own currency and are at the mercy of an arbitrary link. But as the dollar and euro weaken, so do the currencies that have linked themselves to it. This serves as a disruption of all global economies.

“Stable money” provides us with logical economic guidelines. Market forces become the determining factor of what is produced and where capital is spent. For example, if the price of oil becomes too high, the consumer will reduce oil consumption while companies will either increase their production of oil or seek other sources. When market forces rule, everyone benefits. 

Market forces have largely been replaced by government interference and manipulation. The cost of a loaf of bread is what the government says it will be. (See Venezuela for an extreme example.) To manipulate prices, the government, or the Fed, needs to manipulate the value of the dollar. The loaf of bread purchased a year ago for $2.00 now costs $2.50. Same bread, manipulated price. When market forces rule, the price of a loaf of bread would be determined by consumer choice. Under central banking rules, the price would be manipulated by some artificial whim.

One of the easiest ways to manipulate money is through easy credit. Print unlimited currency with no intrinsic value and you create a mountain of debt. This will inevitably lead to inflation and higher prices. If the dollar were once again linked to gold, only a certain amount of money, backed by gold, could be printed. Debt, inflation and higher prices would almost immediately go into a tailspin. Money cannot be manipulated under the gold standard. Perhaps that is why so many economists fear to return to such a standard.

Judy Shelton will be duly criticized for her opinions. Stable money is a new concept for a new generation of bankers and economists. But gold has been around for thousands of years and will undoubtedly outlast these new thinkers.

Source: by Alex Deluce | ZeroHedge

America’s Adversaries Are Buying Gold Hand Over Fist


Having tested $1300 numerous times over the past few years, gold has broken dramatically higher in the last month, hitting 6-year highs as President Trump rhetoric around the world raises tensions, increasing the odds of open WWIII conflict.

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The surge in the precious metal has accompanied a collapse in bond yields around the world and a record level of negative-yielding debt…

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And while Gold volatility is soaring…

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Demand remains abundant, as Goldman details in its latest note, raising its outlook for gold, countries with “geopolitical tensions with the US” are buying everything:

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Central bank demand is gaining momentum and we now expect 2019 purchases to reach 750 tonnes vs 650 tonnes last year. Visible gold purchases YTD are running at 211 tonnes until April vs 117 tonnes over the same period last year (see Exhibit 11).

Importantly, China just raised its gold purchasing pace from 10 tonnes per month to 15 tonnes for April and May as it aims to diversify its reserve holdings. 

With the Fed and ECB now both likely easing monetary policy, more CBs may decide to add gold to their portfolios as they did between 2008 and 2012 (see Exhibit 12).

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Also, just recently, trade tensions between India and the US have begun to escalate as India retaliated with tariffs on US goods in response to US steel tariffs. Rising tensions with the US often create upside potential to a country’s gold purchases

Additionally, in case you thought the move was exhausted, Goldman notes that there is about to a pick up in demand as Russia purchases tend to be strongest in Q3…

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And finally, Goldman notes that good economic news and bad economic news could both be positive for the precious metal at this point in the cycle.

If DM growth fails to pick up in the second half, gold has substantial upside potential

If DM growth continues to underperform, there is room for a much more substantial build in ETF positions. Last time we were in a similar environment was in 2016. DM growth back then was as weak as it is now and both the Fed and the ECB turned more dovish.

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But back then the push into ETFs was significantly higher than it is currently… we think that current low growth makes owning gold appealing from a diversification perspective.

And Goldman notes that an improvement in global economic growth is not necessarily bearish for gold.

Our economists expect the bulk of the acceleration in GDP growth to come from ex-US and EM countries in particular. This should support gold through the “wealth” channel. Importantly, a reduced US growth outperformance points to a weakening of the dollar, which should boost the dollar purchasing power of the world ex-US (see Exhibit 7). In addition to this, gold is starting to build momentum in the local currencies of its two biggest consumers, India and China.

And the momentum gold prices built in the first half of 2019 can lead to an increase in EM (emerging markets) retail gold demand in the second half.

Goldman concludes, we believe that gold continues to offer significant diversification value with substantial upside if DM (developed markets) growth continues to underperform… or, as we noted above, global tensions continue to rise.

As we noted previously, combined Russia and China Treasury holdings are at their lowest since June 2010 as China and Russia’s gold holdings have soared…

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De-dollarization?

Source: ZeroHedge

Gold Likely To Soon Be Lifted By Rising De-Dollarization Surge

Summary:
  • What the gold buying strategies of major countries have in common is a desire to escape from dollar hegemony and the imposition of dollar-based sanctions.
  • The practical implication for gold investors is a firm floor under gold prices since these players can be relied upon to buy any dips. Downside is limited.
  • The technical charts are starting to sing the same tune with lyrics such as “Reverse Head & Shoulders”, “Cup & Handle” and “Bullish Ascending Triangle”.
  • All of this leaves us currently at critical overhead resistance levels, which if broken will likely take gold denominated in US dollar towards previous highs.

The reaction to the “Weaponization” of the US dollar via US sanctions has accelerated the ongoing global de-dollarization efforts. We outlined the rapidly unfolding developments earlier this year in our 151 page Annual Thesis paper entitled, De-Dollarization. Documented de-dollarization efforts are now underway in China, Russia, Venezuela, Iran, India, Turkey, Syria, Qatar, Pakistan, Lebanon, Libya, Egypt, Philippines and more.

Situational Analysis

The real power of the dollar is its relationship with sanctions programs. Legislation such as the International Emergency Economic Powers Act, The Trading With the Enemy Act and The Patriot Act have allowed Washington to weaponize payment flows. The proposed Defending Elections From Threats by Establishing Redlines Act and Defending American Security From Kremlin Aggression Act would extend that armory.

When combined with access it gained to data from Swift, the Society for Worldwide Interbank Financial Telecommunication’s global messaging system, the U.S. exerts unprecedented control over global economic activity. Sanctions target persons, entities, organizations, a regime or an entire country. Secondary curbs restrict foreign corporations, financial institutions and individuals from doing business with sanctioned entities. Any dollar payment flowing through a U.S. bank or the American payments system provides the necessary nexus for the U.S. to prosecute the offender or act against its American assets. This gives the nation extraterritorial reach over non-Americans trading with or financing a sanctioned party. The mere threat of prosecution can destabilize finances, trade and currency markets, effectively disrupting the activities of non-Americans.

The countries cited above are aggressively reacting to this. Gold is non-digital and does not move through electronic payments systems, so it is impossible for the U.S. to freeze on interdict.

Central banks are stocking up on gold. According to the World Gold Council, net buying by central banks reached 145.5 tons in the first quarter of 2019. That’s a 68% increase over last year. And it’s the most gold central banks have bought in the first quarter since 2013.

High Probability Market Ramifications

Soon both the buying of gold by major players such as Russia, China, India, Iran and Turkey, along with an emerging gold backed cryptocurrency for international settlements, will take gold towards testing prior 2011 highs.

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Major investors such as Paul Tudor Jones recently went on record as saying:

“The best trade is going to be gold. If I have to pick my favorite for the next 12-24 months it probably would be gold. I think gold goes beyond $1,400… it goes to $1,700 rather quickly. It has everything going for it in a world where rates are conceivably going to zero in the United States.”

“Remember we’ve had 75 years of expanding globalization and trade, and we built the machine around the believe that’s the way the world’s going to be. Now all of a sudden it’s stopped, and we are reversing that. When you break something like that, the consequences won’t be seen at first, it might be seen one year, two years, three years later. That would make one think that it’s possible that we go into a recession. That would make one think that rates in the US go back toward the zero bound and in the course of that situation, gold is going to scream.

Of course, we have heard this sort of talk ever since gold hit its prior high in 2011.

Technical Support

However, this time the technical charts are starting to sing the same tune with lyrics such as “Reverse Head & Shoulders”, “Cup & Handle” and “Bullish Ascending Triangle”.

All of this leaves us currently at critical overhead resistance levels, which if broken will likely take gold denominated in US dollar towards previous highs.

(larger Image)

What the gold buying strategies of Russia, China, India, Iran, Turkey et al. have in common is a desire to escape from dollar hegemony and the imposition of dollar-based sanctions by the U.S. The practical implication for gold investors is a firm floor under gold prices since these players can be relied upon to buy any dips.

Downside Is Limited – Upside Is Good

According to James Rickards:

The primary factor that has been keeping a lid on gold prices is the strong dollar. The dollar itself has been propped up by the Fed’s policy of raising interest rates and reducing money supply, so-called “quantitative tightening” or QT. These tight money policies have amplified disinflationary trends and pushed the Fed further away from its 2% inflation goal.

However, the Fed reversed course on rate hikes last December and has announced it will end QT next September. These actions will make gold more attractive to dollar investors and lead to a dollar devaluation when measured in gold.

The price of gold in euros, yen and yuan could go even higher since the ECB, Bank of Japan and People’s Bank of China will still be trying to devalue against the dollar as part of the ongoing currency wars. The only way all major currencies can devalue at the same time is against gold, since they cannot simultaneously devalue against each other.

A situation in which there is a solid floor on the dollar price of gold and a need to devalue the dollar means only one thing – higher dollar prices for gold. A breakout to the upside is the next move for gold.


Source: by Gordon Long | Seeking Alpha

Under “Basel III” Rules Gold Becomes Money Again

In 2018, central banks added nearly 23 million ounces of gold, up 74% from 2017. This is the highest annual purchase rate increase since 1971, and the second-highest rate in history. Russia was the biggest buyer. And not surprisingly, the lion’s share of gold is flowing into central banks of countries that are in the sights of America’s killing machine—the Military Industrial Complex that Eisenhower warned us about in 1958.

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The Bank for International Settlements (BIS), located in Basal, Switzerland, is often referred to as the central bankers’ bank. Related to this issue of central bank hoarding of gold is the fact that on March 29 the BIS will permit central banks to count the physical gold it holds (marked to market) as a reserve asset just the same as it allows cash and sovereign debt instruments to be counted.

There has been a long-term view that China and other nations dishoarding dollars in favor of gold have been quite happy about western banks trashing the gold price through the synthetic paper markets. But one has to wonder if that might not change, once physical gold is marked to market for the sake of enlarging bank balance sheets.

This also raises the question with regard to how much gold the U.S. actually holds as opposed to what it claims to hold. James Sinclair has always argued that the only way the world can overcome the debt that is strangling the global economy is to remonetize gold on the balance sheets of central banks at a price in many thousands of dollars higher. This would mean a major change in the global monetary system away from the dollar, as China has been pushing for the last decade or so.

If banks own and possess gold bullion, they can use that asset as equity and thus this will enable them to print more money. It may be no coincidence that as March 29th has been approaching banks around the world have been buying huge amounts of physical gold and taking delivery. For the first time in 50 years, central banks bought over 640 tons of gold bars last year, almost twice as much as in 2017 and the highest level raised since 1971, when President Nixon closed the gold window and forced the world onto a floating rate currency system.

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But as Chris Powell of GATA noted, that in itself is not news. The move toward making gold equal to cash and bonds was anticipated several years ago. However, what is news is the realization by a major Italian Newspaper, II Sole/24 Ore, that “synthetic gold,” or “paper gold,” has been used to suppress the price of gold, thus enabling countries and their central banks to continue to buy gold and build up their reserves at lower and lower prices as massive amounts of artificially-created “synthetic gold” triggers layer upon layer of artificially lower priced gold as unaware private investors panic out of their positions.

The paper concludes that,

“In recent years, but especially in 2018, a jump in the price of gold would have been the normal order of things. On the contrary, gold closed last year with a 7-percent downturn and a negative financial return. How do you explain this? While the central banks raided “real” gold bars behind the scenes, they pushed and coordinated the offer of hundreds of tons of “synthetic gold” on the London and New York exchanges, where 90 percent of the trading of metals takes place. The excess supply of gold derivatives obviously served to knock down the price of gold, forcing investors to liquidate positions to limit large losses accumulated on futures. Thus, the more gold futures prices fell, the more investors sold “synthetic gold,” triggering bearish spirals exploited by central banks to buy physical gold at ever-lower prices”.

The only way governments can manage the levels of debt that threaten the financial survival of the Western world is to inflate (debase) their currencies. The ability to count gold as a reserve from which banks can create monetary inflation is not only to allow gold to become a reserve on the balance sheet of banks but to have a much, much higher, gold price to build up equity in line with the massive debt in the system.

Source: ZeroHedge