The Precious Metals Week in Review – February 16, 2018

The Precious Metals Week in Review - February 16, 2018.
The Precious Metals Week in Review – February 16, 2018.

1. Stock market volatility continued this week as a round of economic data was released in the U.S. which included figures for inflation and retail sales. The Olympic games in South Korea continued to split the attention of the media.

2. The seasonally adjusted number of Americans filing initial claims for state unemployment jumped by 7,000 claims to a new level of 230,000 for the week ending February 10. The previous week’s level was revised higher by 2,000 claims. The four-week moving average of claims increased by 3,500 to a new level of 228,500 from the previous week’s revised average. The previous week’s 4-week moving average of claims was revised higher by 500. Claims taking procedures in both the Virgin Islands and Puerto Rico have still not returned to 2017 pre-hurricane norms. Unemployment data should be expected to remain volatile through the end of February, and will likely be subject to further revisions.

3. The Dow Jones Industrial Average shook off last week’s jitters and pushed its way back over the 25,000 mark once more as the average headed for its best weekly performance in nearly a decade. When the carnage that began two weeks ago finally came to its conclusion, major stock averages had fallen over 10 percent. Analysts are still confused over what triggered the correction, which coincided with a U.S. Labor Department report that finally showed an increase in hourly earnings. Many blamed the correction on fears that inflation could be growing at a faster pace than the Federal Reserve anticipated, but stronger-than-expected inflation data that was released in the U.S. this week failed to trigger a similar negative reaction and stocks continued to recover some of their previous gains. Regardless of the cause, most analysts now agree that the massive volatility experienced over the last several weeks is likely here to continue for the near term.

4. Economic data out of the U.S. added to fears that inflation may be accelerating faster than the Federal Reserve may have anticipated this week. The Consumer Price Index rose more than expected, according to a report released on Wednesday, and a report on Producer prices that came out on Thursday also showed price gains across the board, partly on increasing gasoline and health care costs. The data, coinciding with a weaker U.S. dollar and an apparently tightening labor market, could act to rattle equity markets again, particularly if the Federal Reserve appears to be considering the option of raising rates at a faster pace than originally anticipated.

5. Lunar New Year, also known as Chinese New Year, kicked off on Friday and is expected to bring a week of spending sprees across the globe as travelers from mainland China head out for vacation. 6.5 million travelers are expected to head overseas, spending billions over the week-long festival. Many Asian markets will be closed during the holiday period and frequently the drop in trading volume across Asia means other global markets tend to show a bit more volatility.

6. North Korea’s leader, Kim Jong Un, has apparently invited South Korean president Moon Jae-in to Pyongyang “at an early date” for a summit. If the meeting actually does take place, it would be the first such meeting in more than a decade. The invitation was apparently extended during discussions and a lunch that Moon had with Kim Jong Un’s younger sister, Kim Yo Jong while she was in South Korea for the Olympics. Moon Jae-in came to power following the downfall of the previous South Korean administration on talk of possibly taking a softer stance on North Korea than his predecessors.

7. Reports surfaced this week that Moscow and Beijing may be developing “anti-satellite weapons as a means to reduce U.S. and allied military effectiveness.” In a joint report, with input from the CIA, the FBI and the National Security Agency, it was noted that “Of particular concern, Russia and China continue to launch ‘experimental’ satellites that conduct sophisticated on-orbit activities, at least some of which are intended to advance counterspace capabilities.” The report also noted that “if a future conflict were to occur involving Russia or China, either country would justify attacks against U.S. and allied satellites as necessary to offset any perceived U.S. military advantage derived from military, civil, or commercial space systems.”

8. The U.S. Commerce Department announced on Friday that it was recommending that the Trump administration place steep tariffs and/or quotas on steel and aluminum imports from China, Hong Kong, Russia, Venezuela and Vietnam. The recommended tariff on steel is for 24 percent on imports globally, or at least 53 percent on steel from a list of nearly a dozen different countries. The recommended tariffs on aluminum would be 7.7 percent on all aluminum imports, or 23.5 percent on the specific countries listed above. President Trump has 90 days to review the findings and recommendations in the Commerce Department’s report and would then decide whether following any of the recommendations would be in the U.S.’ best interests.

9. German Chancellor Angela Merkel appeared to show support for the ongoing Brexit negotiations between the U.K. and the European Union at a press conference following talks on Friday. Ms. Merkel said “In the end there needs to be a fair balance of divergence, from the single market for example, and on the other hand a partnership that is not too close. This can be achieved and the (EU) 27 will ensure that the relationship (with the UK) is as close as possible but that there is a difference to membership (in the EU). She posed for pictures while shaking hands with U.K. Prime Minister Theresa May and said that she was not frustrated with the way the negotiations were going and that the EU should stick to the original timetable for the exit process.

10. U.S. Crude broke its two-week losing streak, rising back over the $60-a-barrel mark once more. Surging U.S. production continues to put pressure on prices despite further supportive comments from OPEC that the output cuts were expected to continue through the end of 2018.

11. The euro rose fairly steadily against the U.S. dollar this week, only experiencing brief dips late on Wednesday after the U.S. inflation data was released, and again on Friday just before market close. Neither dip was enough to take the euro into negative territory for the week and it will close out the week higher against the U.S. dollar. The Japanese yen moved sideways against the U.S. dollar at the start of trading for the week but soon began moving higher and trended higher through the rest of the week. The yen will also close the week out higher against the U.S. dollar.

Trading should be expected to be somewhat light next week as most Asian markets will close for the Lunar New Year holiday period. U.S. markets will also be shortened next week as they will be closed on Monday for President’s Day.

Market volatility in equities might be expected to continue, especially as further details from Special Counsel Robert Mueller’s indictments of 13 Russian individuals and three Russian entities are released next week. The 37-page indictment was released on Friday just prior to the closing bell and with markets closed on Monday, analysts will have plenty of time to delve deeply into the document to assess the impact that the indictments may have on markets. One key takeaway from the indictment was the statement that “Some defendants, posing as U.S. persons and without revealing their Russian association, communicated with unwitting individuals associated with the Trump Campaign and with other political activists to seek to coordinate political activities.” Deputy Attorney General Rod Rosenstein spoke to the press on Friday and repeatedly said that his comments were specific to the federal grand jury indictment that the special counsel’s office had just announced when he said that the indictment showed no allegations of American involvement or any specific impact to the election.

President Trump took to Twitter following the release of the report to reiterate that it showed no evidence of collusion with anyone from the Trump campaign and that it showed instead that his campaign “did nothing wrong” during the 2016 election.  Market reaction was brief in equities following the release of the indictments, initially selling off somewhat but quickly recovering after it became apparent that there would be no allegations of ties of collusion between the Trump campaign and the Russian individuals and entities named in the document.

In Europe, negotiations continued between the U.K. and the E.U. over the implementation of “Brexit”. Germany appears to believe that negotiations are going smoothly, if Angela Merkel’s apparent attitude can be believed. Chancellor Merkel was very outspoken at a press conference she held with U.K. Prime Minister Theresa May on Friday after talks in Germany, posing for photos with the Prime Minister and calling for a “fair balance of divergence” and a “partnership that is not too close” but still “close as possible”. Merkel went on to state that she was not frustrated with the ongoing negotiations and that she thought the EU should stick to the original Brexit timetable.

Lastly, late on Friday the Commerce Department released recommendations that the Trump administration should impose heavy tariffs and/or quotas on steel and aluminum imports into the U.S. President Trump will have 90 days to review the 262-page report and decide on a course of action.

Inflation data will likely continue to be the primary focus for equity markets in the coming weeks, particularly if inflation shows signs of accelerating on a global basis. The most recent U.S. data has sparked speculation that the Federal Reserve may step up the pace of its interest rate hikes if inflation truly begins moving faster than they expected. There also appear to be signs that the Fed may have been partly responsible for the v-shaped recovery in stocks this week.

The central bank appears to have added $11 billion to its “System Open Market Account” for the week ending February 14, meaning it effectively purchased $11 billion in mortgage securities directly from banks. This procedure was creatively named “Quantitative Easing” during the height of the financial crisis, and the Fed is supposed to have stopped such actions and instead is supposed to be engaged in winding its balance sheet down.

Remember that precious metals should always be viewed as a long-term investment and that the key to profitability through the ownership of physical precious metals is to actually acquire and own the physical products and to hold them for the long term. Always remember that you should never overextend your ability to maintain ownership of your precious metals over the long term.

Trading Department
Precious Metals International, Ltd.

Friday to Friday Close (New York Closing Prices)

Feb 9th2018 Feb 16th2018 Net Change
Gold $1315.50 $1354.00 38.50 + 2.93%
Silver $16.22 $16.78 0.56 + 3.45%
Platinum $960.00 $1013.50 53.50 + 5.57%
Palladium $968.50 $1044.00 75.50 + 7.80%
Dow Jones 24190.90 25219.38 1028.48 + 4.25%

Previous year Comparisons

Feb 17th2017 Feb 16th2018 Net Change
Gold $1238.60 $1354.00 115.40 + 9.32%
Silver $18.06 $16.78 (1.28) – 7.09%
Platinum $1005.00 $1013.50  8.50 + 0.85%
Palladium $781.00 $1044.00 263.00 + 33.67%
Dow Jones 20624.05 25219.38 4595.33 + 22.28%

Here are your Short Term Support and Resistance Levels for the upcoming week.

Gold Silver
Support 1320/1280/1260 16.60/16.42/16.30
Resistance 1360/1380/1400 16.80/17.10/17.40
Platinum Palladium
Support 1000/985/960 1025/990/945
Resistance 1025/1040/1060 1070/1090/1110
This is not a solicitation to purchase or sell.
© 2018, Precious Metals International, Ltd.

The All-Important Doorman

By Jeff Thomas,
Feature Writer for Doug Casey’s International Man and Strategic Wealth Preservation

Picture this: A tribal leader from a distant country visits the US. He’s brought to a large apartment building in New York City. When he gets out of the car, he looks up at the great building and is quite impressed. A uniformed doorman exits the foyer and comes out on the sidewalk. The tribesman sees the gold braiding and brass buttons of his coat and immediately decides that this is a very important person. Again he looks up at the building and says to the doorman, “This is a very great home you have. You must be very important indeed.”

The All-Important Doorman. An article by: Jeff Thomas.
The All-Important Doorman, an article by Jeff Thomas. Photo by: Shintaro Works.

Of course, if we were present, we might chuckle at the tribesman’s naiveté. The owners of such a great building would never greet people at the entrance. They leave such trivial tasks to hired servants, whilst they run the real business without ever needing any direct contact with visitors as they enter the building. And, in addition, doormen come and go – they are, after all, disposable. The owners – those who control what happens in the building, retain their positions over the long term… and may remain anonymous, if they so choose.

We find this simple concept easy enough to understand, and yet we chronically have difficulty in understanding that, in most countries, the president, or prime minister, is not by any means the man who makes the big decisions in the running of the country.

We assume that, because we were allowed to vote for our leader, he must actually be our leader. But, as Mark Twain has at times been credited as saying, “If voting made any difference, they wouldn’t let us do it.”

Similarly, the man whose family took over the financing of Europe, Meyer Rothschild, said, “Permit me to issue and control the money of a nation and I care not who makes its laws.” His family has been calling the shots for centuries, but like the owners of the apartment building, they keep a low profile.

Remarkably, most people will nod their heads at the above quotes, yet somehow still imagine their elected leader to be in charge.

Most anyone will accept that the voting system in their country has been corrupted in one way or another and it’s even more likely that they’ll acknowledge that the central banks control the flow of money. Yet, they persist in believing that, even if elections are financed by the big banks, the military industrial complex, Big Pharma, etc., somehow, those who are elected remain loyal to the voters, not to those who paid for their election.

And, they imagine these elected members to be running the show.

Further, whilst they often acknowledge that the political party that they oppose is bought and paid for, they prefer to think that the one they favour is not.

At this point, both the EU and the US are run by the Deep State. In Europe it’s a bit more obvious, as the EU is a visible, unelected body that holds sway over all of the most significant developments in Europe.

In the US, it’s a bit less obvious, but it’s generally understood that the CIA, FBI and other similar organisations run independently of the president. (He has the power to fire a Director, but does not have the power to eliminate these organisations or change their agenda.)

The US is run as a corporatist body – joint rule by big business and the state. The elected members are, like the doorman, temporary. They are, of course, highly visible, which they’re intended to be, as they’re meant to distract the public eye away from those who are truly in charge.

And, like the doorman, they’re disposable. They can be unelected at four–year intervals and the agenda continues as planned. They are, in fact, largely irrelevant to the direction that the country takes.

The president, in particular, falls into this category. There have been quite a few presidents, such as the present one, who rose to that post with little or no previous experience in elected office. Their election is a result of popularity. If they do a better job of creating campaign-promises than their opponents, they emerge as the winners, even if they have no political ties, associations with other legislators, or previous experience in the job.

And yet, we somehow assume that those who really pull the strings would spend hundreds of millions of dollars on elections, then tolerate a newly-elected outsider to wash away their investment by actually taking charge.

To be sure, there have been presidents who have bucked the Deep State, but they tend to change their tune rather quickly and get back into line. Those who have refused have sometimes found themselves on the business end of a bullet, although, more recently, the preferred tactic has been to invent accusations of corruption and indecency, then to produce questionable witnesses to discredit the leader. (A leader who has been forced out in disgrace is just as gone as one that’s been assassinated.)

But, almost invariably, the “leader” sees that it’s in his interest to cave in to the Deep State, as, perennially, they hold the real power. Campaign promises are tossed into the dustbin and it’s back to the previous, ongoing agenda. This we’ve witnessed time after time.

Does this mean that the president is only a mouthpiece for the Deep State? Well, no, it’s actually advantageous for him to express his own opinion, ruffle the public’s feathers and push his pet projects. It adds to the distraction that he’s in charge. However, the larger issues – particularly the flow of tax dollars into the pockets of corporations, continues exactly as planned, regardless of who’s in office. Bankers continue to receive absurdly large bailouts when they’ve grossly mismanaged their banks. The military industrial complex continues to enjoy perpetual warfare, so that they can supply armaments to the government for unnecessary conflicts. Big Pharma enjoys legislation that forces people to be vaccinated against their will and accept outrageously high prices for medications that are generally inexpensive to produce.

But, yes, as long as a president remains the spokesman to explain why such policies are not only tolerable, but essential, he may be allowed to occupy the oval office until the voters tire of him.

But, if this is true, why do people so quickly and so readily accept the “leader” to actually be unilaterally responsible for every facet of every governmental policy and action?

Well actually, nothing could be easier. It’s human nature to want to put a face to our praise and/or criticism. We can’t muster the same focus if we’re advised that we’re being ruled by a faceless group. We tend to respond more readily and more intensely to a single individual – a face we can conjure up immediately. “People desire certainty,” Doug Casey once observed to me, when discussing a related subject, and that’s exactly so. If we’re uncertain during troubled times, we’ll instantly jump at the opportunity to put a single face to the problem, to blame one individual for whatever is troubling us.

This is evidenced by the presentation of photos of Lee Harvey Oswald and Osama bin Laden, mere hours after major events, as the certain culprits. They were immediately accepted, without any question, by a people desperately seeking certainty.

Therefore, as soon as one leader is out and another takes his place, we’re able to immediately transfer our devotion or hatred to the replacement.

The concept of providing a single face to the public is one that was understood by George Orwell, who created the character of “Big Brother,” who would be on the video screens incessantly, as the face of the government.

But, in stating all of the above, it may seem that I’ve portrayed the doorman as insignificant and this is not the case. He does play quite an important role.

He’s absolutely essential, as he, more than any other legislator, creates a suitable distraction from those who really run the show. He’s in front of the microphone, does interviews, is filmed on almost a daily basis, and is constantly credited by the media as being either the saviour or the devil, depending upon which media outlet is providing the portrayal.

And the shakier an economy, and the greater the problems of a country, the more essential it is that the “leader” be visible. After all, when things go badly awry, someone has to serve as the fall guy.

When this occurs, he is, of course, disposable. He leaves in disgrace or is voted out and a new puppet is voted in whose loyalty is again to the Deep State, not to the voters. And, most importantly, the real agenda continues, as planned, regardless of whatever new campaign promises got him elected.

Campaign promises are dumped wholesale; the demeanour of the new leader may change dramatically, and the new leader’s very principles may suddenly evaporate after election day. However, the ongoing agenda does not. Regardless of who’s elected, or what party he professes to represent, we witness a continuation of the previous directions taken by those who truly hold the power.

What’s important to recognize is that, no matter how large the apartment building may be, no matter how impressive the presentation of the doorman may be, he is just that. He is only the front man, and he is disposable.

The Deep State runs the show. Their presence is permanent and their agenda is both ongoing and impervious to the whims of the voting public.

Jeff Thomas
International Man and Strategic Wealth Preservation
jeff.thomas1066@gmail.com

 

 

This article was originally posted in the Strategic Wealth Preservation Blog and copied here with permission of the author.

The Precious Metals Week in Review – February 9, 2018

The Precious Metals Week in Review - February 9, 2018.
The Precious Metals Week in Review – February 9, 2018.

1. Stress fractures in the equity and virtual currency markets continued to spread this week as both markets plunged while the Federal Reserve ushered in its new Chairperson, Jerome Powell. The market plunge obscured, for the most part, the fact that the latest Continuing Resolution was set to expire on Friday, pushing the U.S. government to the brink of yet another shutdown.

2. The seasonally adjusted number of Americans filing initial claims for state unemployment fell by 9,000 claims to a new level of 221,000 for the week ending February 3. The previous week’s level was unrevised. The four-week moving average of claims dropped by 10,000 to a new level of 224,500 from the previous week’s unrevised average. Claims taking procedures in both the Virgin Islands and Puerto Rico have still not returned to 2017 pre-hurricane norms. Unemployment data should be expected to remain volatile through the end of February.

3. The Dow Jones Industrial Average had an extremely volatile week, falling, surging, and falling again throughout the week moving by over 20,000 points, this week alone, when counting all of the ups and downs. The DJIA plunged rapidly near the market close on Thursday, falling over 1000 points in mere minutes to close under the 24,000 mark. Friday trading remained volatile, with the DJIA swinging between gains and losses for the day as it headed for its worst weekly performance in nine years. The DJIA has now lost nearly half of its 2017 gains and has officially entered correction territory.

4. Bitcoin continued its plunge this week as well, falling below $6,000 at one point earlier in the week. Trading in the cryptocurrency remained volatile however, and the battered virtual currency had pushed its way back over $8,000 by Thursday. Bitcoin remains nowhere near its mid-December peak of $19,500 that marked the height of the crypto-craze and those unwise enough to have used home loans or credit cards to fund their investment at those heights are likely highly regretting such a decision.

5. North Korea took the opportunity of this week’s opening of the Winter Olympics in South Korea to hold a military parade, clearly aimed at upstaging the Olympics and to showcase its growing arsenal of ballistic missiles – both short and long-range varieties. Images of the parade were carefully scrutinized by analysts for indications of the North’s true launch capabilities. It appears, if analysts are correct, that while the North may be accelerating its production of its long range Intercontinental Ballistic Missiles, it may not be keeping up with production on the mobile vehicles that could be used to stealthily launch those projectiles with minimal outside detection or warning. Just four mobile launch vehicles were on display for Thursday’s parade, and other vehicles used to carry projectiles appeared to be Chinese-made logging trucks hastily converted to haul heavier loads.

6. Billionaire investor George Soros is reported to be supporting a pro-European Union campaign called The Best for Britain, which appears to have the goal of stopping the U.K.’s exit from the E.U., according to both The Guardian and The Telegraph. The report in The Telegraph, noted that it plans to launch “a nationwide advertising campaign” this month which the group hopes will lead to a second referendum which could counteract the original and keep Britain in the E.U. Negotiations for the U.K.’s exit continue to be contentious, but have been largely eclipsed in the news over the last two weeks by the plunging equity markets around the world and the opening of the Olympic games.

7. Equity markets in Europe and Asia followed suit with the U.S. markets this week, all selling off and closing in negative territory for the week. Asian shares were already pressured to the downside due to profit taking, which typically takes place ahead of the Lunar New Year holiday, and the selloff in Europe and the U.S. only added further to that downward pressure. Global equity markets have now lost more than $5 trillion dollars in market cap since their January peaks.

8. The People’s Bank of China announced on Friday that it had released temporary liquidity worth nearly 2 trillion yuan ($316.28 billion) to satisfy demand for cash ahead of the Lunar New Year holidays. The central bank had previously announced in December that it would relax the required reserves for some commercial banks to help cope with the usual heavy demand for cash during the festivities which begin later next week and last, at minimum, through the following week for most citizens.

9. Crude oil dipped below $60 this week for the first time in 2018, falling 8.5% as record-high crude output in the U.S. triggered fears that the global supply glut that has decimated prices over the last few years could continue into the foreseeable future. It was the largest weekly loss for oil in 10 months and coincided with a plunge in equity markets apparently set off by fears that inflation could be accelerating faster than intended. Iran also announced this week that it plans to increase its oil production by at least 700,000 barrels a day within the next four years, which also added to price weakness.

10. The euro dropped steadily against the U.S. dollar for most of the week, finding a bottom late Wednesday and then moving sideways from there. The euro remained weaker into Friday and will close out the week lower against the U.S. dollar. The Japanese yen moved higher against the U.S. dollar early in the week, then drifted basically sideways through late Thursday before moving slightly higher again. The yen will close the week out slightly higher against the U.S. dollar.

Global equity markets continued to sell off this week, apparently sparked by fears that inflation could be accelerating faster than the world’s central banks intended.

Last Friday’s Non-Farm Payrolls report showed a boost to hourly earnings that has analysts fearing that inflation is moving faster in the U.S. than the Federal Reserve might have anticipated. The data, coming just as a new chairperson takes the helm of the central bank, has fostered uncertainty as to whether the Fed might begin raising rates at a faster pace than anticipated, perhaps four times in 2018 instead of three. The Bank of England also acknowledged this week that inflation in the U.K. is expected to remain above its 2% target through at least 2021.

Cryptocurrencies also suffered this week, in tandem with equities, with Bitcoin dropping below the $6,000 mark at one point before rebounding back above $8,000. Mainstream media continues blaming “algorithmic trading” for the compounding selloff and analysts seemingly have yet to lose their bullish enthusiasm for what has long been described as an overextended and overvalued stock market that is now long due for a correction.

Stocks have officially entered correction territory with the latest selling, with the DJIA giving back nearly half of its 2017 gains, so the question now is “how long will the selling continue?”

In Asia, the upcoming and lengthy Lunar New Year holidays beginning next week will mean that the Asian equity markets will be closed just as the rest of the global equity markets could be teetering on the brink of a more massive selloff. As equity investors face margin calls due to the market plunge, their usual mentality is that they “sell what they can, not what they want” and very often that means that precious metals see a temporary price dip as they are sold off to cover margin calls in other asset classes.

In times past, this has presented a buying opportunity for wiser investors to acquire precious metals at a discount prior to a surge in demand for physical metals as former equity investors try to find safer havens for their cash during the plunge.

Those savvy investors who have continued to acquire physical precious metals for their portfolios in an attempt to keep them diversified and balance them against overexposure to any single asset class may now soon see the benefits of sticking to their plan. These same investors likely also formulated a plan for exiting the equity markets in a controlled manner, in the event of just such a rapid sell-off as we are witnessing now, without endangering their precious metals holdings.

If inflation is truly rising faster than the world’s central banks anticipate then investor interest in precious metals, particularly gold, could see a sudden and massive surge, triggering a shortage in supply which mining company analysts have been warning might occur for years as more and more mining operations were shut down to cut costs as company profit margins fell under long-suppressed prices.

Remember that precious metals should always be viewed as a long-term investment and that the key to profitability through the ownership of physical precious metals is to actually acquire and own the physical products and to hold them for the long term. Always remember that you should never overextend your ability to maintain ownership of your precious metals over the long term.

Trading Department
Precious Metals International, Ltd.

Friday to Friday Close (New York Closing Prices)

Feb 2nd2018 Feb 9th2018 Net Change
Gold $1335.00 $1315.50 (19.50) – 1.46%
Silver $16.76 $16.22 (0.54) – 3.22%
Platinum $996.50 $960.00 (36.50) – 3.66%
Palladium $1047.50 $968.50 (79.00) – 7.54%
Dow Jones 25520.96 24190.90 1330.06 – 5.21%

Previous year Comparisons

Feb. 10th2017 Feb 9th2018 Net Change
Gold $1235.30 $1315.50 80.20 + 6.49%
Silver $17.97 $16.22 (1.75) – 9.74%
Platinum $1013.00 $960.00  (53.00) – 5.23%
Palladium $785.50 $968.50 183.00 + 23.30%
Dow Jones 20272.70 24190.90 3918.20 + 19.33%

Here are your Short Term Support and Resistance Levels for the upcoming week.

Gold Silver
Support 1280/1260/1240 16.20/15.90/15.70
Resistance 1320/1360/1380 16.30/16.42/16.60
Platinum Palladium
Support 960/940/910 945/915/890
Resistance 985/1000/1025 990/1025/1070
This is not a solicitation to purchase or sell.
© 2018, Precious Metals International, Ltd.

The Potential Big Surprise for 2018, and What It Means for Gold

By Jeff Clark,
Senior Precious Metals Analyst, GoldSilver.com
The Potential Big Surprise for 2018, and What It Means for Gold
The Potential Big Surprise for 2018, and What It Means for Gold.
An article by Jeff Clark.

There’s a sneaky development underway, one that’s been off the radar of most investors. It contributed to the recent stock market plunge, and if it really takes hold it has major ramifications for the three G’s: groceries, gas, and gold.

What is this development? Here are a few hints…

  • US Treasury yields are now at their highest level in four years, with the two-year note hitting a 10-year high
  • The five-year German bund (their government bond) traded in positive territory for the first time since 2015
  • The little-known ECEC (Employer Costs for Employee Compensation) jumped to 4.4% last year, more than triple the 1.3% reading in 2016
  • And perhaps the most obvious clue of what may be on the horizon: the gap between what TIPS (Treasury Inflation-Protected Securities) pay and the 10-year note is now at its widest range since September 2014. That means inflation has been rising much faster than what the 10-year bond pays.
    That’s right: Inflation is sneaking up.

It’s not just me noticing. “Traders Bet on Faster Inflation in the World’s Biggest Economy” declared The Street last week. The article points out that due to the rise in commodity prices (especially oil), a surge in manufacturing activity, and rising GDP in the US and around the world, investors are bracing for higher inflation than what they expected just one month earlier.

On top of that, the tax cuts, wage increases, and recently imposed trade tariffs are also all inflationary.

As we pointed out in our Gold Forecast 2018, many analysts now expect higher inflation this year:

  • Barron’s: “We expect to see inflation go up in 2018 across developed markets relative to where it is today, with the United States leading the way.”
  • Kiplinger: “Inflation will rise this year.”
  • PIMCO: “Global inflation is likely to rise in 2018.”
  • World Bank: “There could be faster than expected inflation…”
  • And The Wall Street Journal reported in mid-January that “Investors Prepare for Inflation.”

To whatever extent they’re right, it means the cost of gas and groceries will go up.

Does it mean the gold price will rise?

I’ll Give You 3 Guesses How Gold Performs during Rising Inflation, and the First 2 Don’t Count

The World Gold Council came out with an interesting study that examined gold’s performance during periods of low inflation (3% or less) vs. high inflation (over 3%). The results confirmed what many of us instinctively knew.

The Potential Big Surprise for 2018, and What It Means for Gold

The data over the past 47 years is clear: Gold rises more when inflation is higher than when it is lower.

So if inflation heats up this year, history says the gold price will move higher. Throw in the possibility of a sudden increase in inflation, one that catches people off guard, and we could see a sharp rise in the gold price. And given the fact that inflation trends are not measured in months, but in years, you have the makings for a long-term move up in gold.

If inflation becomes a new reality, it could easily kick-start the next major bull market in gold.

Either way, investing in the current environment is less about a specific path and more about crisis.

More important than predicting the future is to prepare for it. Today that means holding a meaningful amount of physical gold and silver.

Jeff Clark
Senior Precious Metals Analyst

 

 

This article was originally posted in the Strategic Wealth Preservation Blog and copied here with permission of the author.

The Precious Metals Week in Review – February 2, 2018

The Precious Metals Week in Review - February 2, 2018.
The Precious Metals Week in Review – February 2, 2018.

1. Markets showed further signs of stress this week as volatility increased. Uncertainty over whether the rallies in Bitcoin and equities could continue sent those markets plunging this week.

2. The seasonally adjusted number of Americans filing initial claims for state unemployment fell by 1,000 claims to a new level of 230,000 for the week ending January 20. The previous week’s level was revised lower by 2,000 claims to 231,000. The four-week moving average of claims dropped by 5,000 to a new level of 234,500 from the previous week’s revised average. The previous week’s 4-week moving average was revised lower by 500 claims. Claims taking procedures in both the Virgin Islands and Puerto Rico have still not returned to 2017 pre-hurricane norms. Unemployment data should be expected to remain volatile through the first several months of the year as severe winter weather and the lingering effects of seasonal employment terminations continue to work their way through the system.

3. The U.S. economy added 200,000 jobs in January according to the Non-Farm Payrolls report that was released on Friday. The report was better than economists’ expectations for the addition of 180,000 jobs. Wages rose 2.9 percent, on an annualized basis, and the positive numbers sent the benchmark 10-year yield surging higher. The boost in wages sparked fears that the Federal Reserve could possibly raise rates four times in 2018 instead of the three that economists forecast.

4. The Dow Jones Industrial average took a sharp plunge this week and was on track for its worst weekly performance in two years. On Friday the DJIA plunged over 600 points at one point on Friday as interest rates surged higher in spite of the better-then-expected Non-Farm Payrolls report. Investors, recalling the old adage “bull markets don’t die of old age, they are killed by inflation, seem to be fearing that the Fed could mishandle it’s interest rate hikes, shooting past its 2 percent inflation target.

5. Bitcoin accelerated its tumble this week, wiping out over 100 million US dollars’ worth of its market cap overnight as investor fears accelerated that a global regulatory crackdown on the use of virtual currencies was on the way. Rumors that one of the exchanges that Bitcoin trades on may have manipulated the price also sent jitters through the virtual currency world as investors began to question whether the currency really trades freely and without manipulation.

6. The Bank of Japan stepped in this week and offered “unlimited” buying in Japanese Government Bonds (JGB) to achieve the yield target they were looking for. The BOJ also increased the amount of its planned buying of five and ten-year JGBs, upping the purchase target to 450 billion yen from 410 billion.

7. Crude oil maintained its grip on the mid-$60 a barrel range this week, but weakened slightly as the U.S. dollar strengthened following the stronger than expected Non-Farm Payrolls report. OPEC maintained its posture that it, and the other countries party to its agreement to cap production, would continue to limit output well into 2018, which acted to limit the downward move of prices.

8. The euro plunged against the U.S. dollar at the start of trading this week but then began marching higher through the rest of the week. On Friday the euro took a sharp dip lower, back near even for the week, before bouncing higher. The euro appears set to close the week higher against the U.S. dollar. The Japanese yen spent the week moving downward against the U.S. dollar at a fairly steady pace. The yen will close out the week lower against the U.S. dollar.

The cracks in the massive rally that has been surging in equities and virtual currencies continued to spread this week. The Dow Jones Industrial Average plunged sharply lower on Friday, falling by over 600 points as investors began to fear that the Federal Reserve may lose control over the pace of inflation. A better-than-expected Non-Farm Payrolls report actually appears to be what triggered the drop, sending interest rates sharply higher, apparently on a boost in hourly wages. Virtual currencies also plunged this week as fears over a global crackdown on the ability to trade them continued to grow. Rumors also surfaced that one of the exchanges that trades Bitcoin may have manipulated the price during its massive rally that began last year. These facts, combined with the continued release of information about the security flaws that led to last week’s heist of over $500 million from a Japanese virtual currency exchange appear to be finally making investors lose faith in the technology behind the creation and trading of all virtual currencies. The Bank of Japan essentially embarked on unlimited quantitative easing (QE) this week as the rest of the world’s central banks appear to be considering how to taper off their own QE programs. In the U.S., speculation is growing that the Federal Reserve might embark on four interest rate hikes this year, instead of the expected three, as inflation begins to move higher at an apparently accelerating rate. Investors now appear to be considering the possibility that inflation could get away from the Federal Reserve, shooting well past its two percent target at an uncontrolled pace. In Europe, the negotiations between the United Kingdom and the European Union continue to run into roadblocks. Fears are growing in the UK that the final result of the negotiations could be a “bad deal” for the UK. Parliament has managed to wrangle final approval of the exit deal away from Prime Minister Theresa May, so even at the conclusion of the negotiations, the outcome will remain questionable until parliament holds its final vote on the matter. China appears to be taking the opportunity of the UK’s exit from the EU to try to broker deals between Beijing and London, which would allow Beijing access into one of the world’s foremost financial centers. As the virtual currency and equities bubbles reach their bursting points and begin to correct, savvy investors continue to seek out alternative asset classes to keep their portfolios diversified. Buying opportunities, in the form of temporary price dips, allow these investors to purchase additional physical precious metals to aid in hedging their portfolios against inflation. Remember that precious metals should always be viewed as a long-term investment and that the key to profitability through the ownership of physical precious metals is to actually acquire and own the physical products and to hold them for the long term. Always remember that you should never overextend your ability to maintain ownership of your precious metals over the long term.

Remember that precious metals should always be viewed as a long-term investment and that the key to profitability through the ownership of physical precious metals is to actually acquire and own the physical products and to hold them for the long term. Always remember that you should never overextend your ability to maintain ownership of your precious metals over the long term.

Trading Department
Precious Metals International, Ltd.

Friday to Friday Close (New York Closing Prices)

Jan 26th2018 Feb 2nd2018 Net Change
Gold $1353.00 $1335.00 (18.00) – 1.33%
Silver $17.48 $16.76 (0.72) – 4.12%
Platinum $1016.50 $996.50 (20.00) – 1.97%
Palladium $1092.50 $1047.50 (45.00) – 4.12%
Dow Jones 26616.71 25520.96 1095.75 – 4.12%

Previous year Comparisons

Feb 3rd2017 Feb 2nd2018 Net Change
Gold $1219.50 $1335.00 115.50 + 9.47%
Silver $17.51 $16.76 (0.75) – 4.28%
Platinum $1004.00 $996.50 (7.50) – 0.75%
Palladium $751.00 $1047.50 296.50 + 39.48%
Dow Jones 20071.46 25520.96 5449.50 + 27.15%

Here are your Short Term Support and Resistance Levels for the upcoming week.

Gold Silver
Support 1320/1280/1260 16.60/16.42/16.25
Resistance 1360/1380/1400 16.80/17.00/17.30
Platinum Palladium
Support 985/960/940 1040/1020/1000
Resistance 1000/1025/1050 1060/1080/1100
This is not a solicitation to purchase or sell.
© 2018, Precious Metals International, Ltd.

The Ebb and Flow of the Tides of Nations

By Jeff Thomas,
Feature Writer for Doug Casey’s International Man and Strategic Wealth Preservation

In advising those who are considering international diversification, the most common misconception I hear is that, “There’s not really anything you can do. The globalists are taking over the world and that means that there’s nowhere to go to escape them.”

Not so.

Clearly, much of what was at one time known as the “free world” is in a dramatic decline and this is most certainly due, in large part, to globalists. Consequently, those who live in one of the declining countries assume that the world mirrors what exists in the country in which they live.

The Ebb and Flow of the Tides of Nations.
The Ebb and Flow of the Tides of Nations.  An article by Jeff Thomas

Many of these people tend to be fatalists and assume that they have no options. However, throughout history, there have always been countries (and empires) that were in the declining stages of their “shelf-life.” But, likewise, there have also always been those countries that were on the rise at the same time.

It’s as perennial as the ebb and flow of the tides. As the tide of prosperity and freedom flows away from one nation’s shore, it flows toward another’s. The objective is to pick those countries that are on the rise, to increase the likelihood of a good future.

An important factor to keep in mind is that, whilst collectivism is ever-popular with globalists, it kills the free market and man’s sense of enterprise. Therefore, it eventually diminishes the creation of real wealth and prosperity, upon which collectivism feeds. As Maggie Thatcher said, “The problem with socialism is that, eventually, you run out of other people’s money.” For this reason, collectivists eventually (and invariably) kill off the milk cow that feeds them. When this happens, they can no longer fund their programmes and the system collapses. This means that they cannot continue to provide entitlements, nor can they afford to enforce their draconian laws. (Think about that.)

It’s also important to keep in mind that wealth is not destroyed; it just changes hands. If it flows out of one country, that means it’s flowing to another. There’s always a balance.

In advising people who are citizens and/or residents of nations that are presently in decline, the following are the concerns that I hear most frequently. (It’s important to note that all of the solutions below are legal. You should always remain within the law. )

If I choose to leave my country, where could I go?

Choose countries that have a history of being welcoming to people in your situation.

  • A history of staying out of conflict – not taking sides in wars.
  • Minimal economic dependence on declining countries – minimal exports and imports, minimal grants and treaties that bind the country to a declining country.
  • People that are welcoming of foreigners, rather than resenting them
  • People who share the same core values that you do
  • A country that can supply you with your basic needs (job, schooling, medical facilities, diet, etc.) They need not be the same as you have now, as long as they are sufficient. (No one truly needs a Starbucks on the corner, but they do need an adequate supply of food.)

Then, pick the country that you feel would be the happiest place for you and your family, based upon their needs and personal likes and dislikes.

What do I do about my citizenship?

If you can accomplish it, it’s very advisable to take on another citizenship or two. Several countries (Austria, Cyprus, Malta, St. Kitts/Nevis, St. Lucia, Dominica, Antigua/Barbuda, Grenada) offer investment citizenship. It’s costly – ranging from $100,000 (Dominica) to over $1,000,000, but some of them offer a full return of your investment after a period of time.

Alternatively, citizenship by residence is possible in many countries, some of them for relatively brief periods (Argentina – 2 years, Paraguay and Uruguay – 3 years, etc.) Bear in mind that you need not necessarily live in the country that provided the passport after you gain it. Your citizenship is primarily a protection against remaining a possession of your home country.

How do I protect my savings from confiscation?

For many people in the world, this is as simple as creating a bank account in a jurisdiction that’s less likely to be impacted by the decline than your own. However, this is becoming increasingly difficult for those who hold an American passport. Many banks around the world will no longer accept American clients. Therefore, the best way to get money out is to buy precious metals in a safer jurisdiction and store them there.

How do you identify a “safe” jurisdiction?

You’ve probably already have heard of several of them – Singapore, Switzerland, the Cayman Islands, Hong Kong, etc. Do some research on each and look for the following:

  • No direct taxation. No taxes or duties that apply to the purchase, ownership, storage or sales of precious metals; no capital gains, no inheritance tax, etc.
  • World-class local financial system to provide auxiliary services
  • Stable government with a consistent history for economic stability that caters to international investors
  • Minimal wealth legislation and regulation, to assure a minimum of red tape in purchases, sales and shipment of metals.

Is there any safe way to store wealth outside of financial institutions other than precious metals?

Yes. The safest is in overseas real estate. First choose a “safe” country as described above. Ideally, you’d want one that had little or no property tax. Buy in a country where you wouldn’t mind living, if it should come to that, and one that’s likely to grow economically, rather than decline, in a crisis. That assures that property prices will rise.

Real estate may even be safer than precious metals as a store of wealth. Metals, however, have the advantage of being far more liquid and more divisible.

Isn’t my home country likely to try to confiscate my savings, my precious metals and my real estate in another country, just as they would at home?

No. First, for one country to take possession of land in another country amounts to an act of war. Second, in order to confiscate cash or metals, the institution that holds your wealth is subject to local laws. They can’t be forced by another country to break their own laws. In most cases, any attempt at seizure would need to go through the local courts. This is costly and time-consuming. You’d be less-targeted than those who remained at home and were thoroughly exposed.

It should be noted that there are no guaranteed safehavens in the world. However, by creating a situation in which you’re one of the most difficult individuals to target, means that, since they tend to target the low-hanging fruit first, you’d be near the end of the list. It’s possible to make it awkward and costly to go after you.

The political leaders of a country that’s on the verge of economic collapse will always make a last-ditch effort to grab as much as they can as they go down. You can make it as difficult as possible to be victimized. If successful, you may come out the other side intact, or possibly in an even better position than before.

The key to all the above is to choose one or more jurisdictions where the tide is coming in, not going out.

Jeff Thomas
International Man and Strategic Wealth Preservation
jeff.thomas1066@gmail.com

 

 

This article was originally posted in the Strategic Wealth Preservation Blog and copied here with permission of the author.

The Precious Metals Week in Review – January 26, 2018

The Precious Metals Week in Review - January 26, 2018.
The Precious Metals Week in Review – January 26, 2018.

1. Unsurprisingly, the U.S. Senate followed through on its threat to trigger a government shutdown by withholding enough votes last Friday to prevent the passage of yet another continuing resolution to fund the government through more and more debt. Volatility increased this week as the cryptocurrency bubble showed signs of further rupturing and the equities bubble also showed signs of nearing its own rupture.

2. The seasonally adjusted number of Americans filing initial claims for state unemployment surged by 17,000 claims to a new level of 233,000 for the week ending January 20. The previous week’s level was revised lower by 4,000 claims to 216,000. The four-week moving average of claims dropped by 3,500 to a new level of 240,000 from the previous week’s revised average. The previous week’s 4-week moving average was revised lower by 1,000 claims. Claims taking procedures in both the Virgin Islands and Puerto Rico have still not returned to 2017 pre-hurricane norms. Unemployment data should be expected to remain volatile through the first several months of the year as severe winter weather and the lingering effects of seasonal employment terminations continue to work their way through the system.

3. The U.S. Congress, specifically the Senate, allowed the Continuing Resolution that had kept the U.S. government operating through Friday, January 19 at midnight to expire. The shutdown was short-lived, just three days, and the standoff will likely be largely blamed on Republicans, when elections in November of this year. It appears to have actually been Senate Democrats that were responsible for the delay. Senate leaders reached a compromise on a deal to reopen the government on Monday after a tense three-day standoff, but the new resolution only funds the government through February 8.

4. The U.S. dollar took a sharp tumble this week as U.S. Treasury Secretary Steven Mnuchin appeared to openly support a weaker U.S. dollar through comments that he made at the World Economic Forum in Davos, Switzerland. Mnuchin and President Trump both tried to “walk back” the comments, saying that in the long-term, a stronger U.S. dollar is in the country’s best interests, but the statements did little to help the dollar get out of its slump.

5. Bitcoin continued its tumble this week, dropping below $10,000 and booking a loss of 25% on the year by Tuesday. There did not appear to be a specific news item that drove this week’s mounting losses, but new details did emerge from South Korea over its changing plans to limit trading in cryptocurrencies. The South Korean Financial Services Commission announced Tuesday that it was proposing to ban anonymous trading accounts by January 30, saying “Those who do not have their real-name accounts at the same bank with the exchanges will not be allowed to make new deposits into the exchanges’ accounts. They will be only allowed to make withdrawals.” The primary attraction of cryptocurrencies has long been the anonymity associated with them. It is becoming ever clearer that the world’s regulatory bodies are taking aim on that very anonymity and quickly maneuvering to bring digital currencies and the technology that drives them under their purview.

6. The US announced a decision this week to implement steep tariffs on washing machines and solar panels from South Korea, angering its ally to the point that Seoul said it would complain to the World Trade Organization (WTO) over the “excessive” and “regrettable” move. South Korean tech giant Samsung, who manufactures washing machines that are sold in the U.S. and elsewhere around the world, said “Everyone will pay more with fewer choices” with regards to the tariffs on residential washing machines. U.S. Trade Representative Robert Lighthizer said on Monday “The President’s action makes clear again that the Trump Administration will always defend American workers, farmers, ranchers, and businesses in this regard.” The tax on imported solar panels alone will be up to 30%. China also spoke out against the move, saying that the U.S. was “deteriorating the global trade environment”.

7. In yet another security breach demonstrating the “Wild West” state of cryptocurrencies, Japanese cryptocurrency exchange Coincheck announced on Friday that 523 million of the exchange’s coins were sent to another account by hackers at around  3 a.m. local time. At the time the theft was detected, the stolen digital currency was worth over $500 million U.S.

8. Crude oil maintained its grip on the mid-$60 a barrel range as a weakening U.S. dollar helped boost demand for fuel. Refinery maintenance season is due to begin soon and the corresponding slowdown in orders for crude oil as suppliers anticipate the production delays could trigger moderate weakness in prices in the coming months. The ongoing increase in U.S. crude production could also act to offset any benefits to oil prices that the OPEC supply cap agreements have had.

9. The euro enjoyed a near steady increase against the U.S. dollar all week, dipping briefly on Thursday as President Trump and Secretary Mnuchin were trying to do damage control over their apparent support of a weaker U.S. dollar. The corresponding dip in the euro was relatively small and it will still close the week out higher against the U.S. dollar. The Japanese yen also marched higher against the U.S. dollar this week, dipping late Thursday evening, again as Trump and Mnuchin were trying to contain the damage from their apparent support of a weaker U.S. dollar, but the dip was short-lived and the yen will also close the week out higher against the U.S. dollar.

President Trump and U.S. Treasury Secretary Steven Mnuchin made waves in Davos, Switzerland this week at the World Economic Forum discussing “America First” policies and publicly noting that a weakening dollar would be beneficial to the United States. Several Central Bank officials from Europe noted that such public statements are “not helpful” as they create increased market volatility among the world’s currencies. Both Trump and Mnuchin did their best to do damage control from the Secretary’s implication that the US was in favor of watching its dollar weaken further, but their weak “taken out of context” excuse did not do much to prop up the plunging dollar.

Continued weakness in the dollar could be a lasting problem for Europe, as they would see their exports plunge if U.S. consumers continue to see the price of imported goods increase. Pierre Moscovici, the European commissioner for economic and financial affairs, told CNBC in Davos “For the time being we see nothing which is absolutely out of control, but we need to be of course vigilant, watching it, and because we need to strike the right balance especially between the dollar and the euro.”

In Europe, the impact of the United Kingdom’s (UK) decision to leave the European Union (EU) is finally beginning to hit home to the rest of the citizens of the EU. The UK has been one of the main contributors to the pooled European budget and that comes to an end when they exit the bloc next year. The remaining EU members are finally coming to the realization that their own contributions to the European budget will have to increase in order to compensate for the loss of the UK and they are clearly not happy about the idea.

European Commission Vice President Jyrki Katainen told CNBC on the sidelines of the Davos World Economic Form that the loss of the UK’s budget contributions are “certainly a problem and we have to address it. If I should bet something, we need to adjust the budget to a certain extent but also we need fresh money from member states. We also have to look at how money is spent, how we could get more out of less.” Katainen said that the EU is looking at different methods of financing European projects, rather than asking member states to up their financial contributions – which means they are considering piling on more global debt. Many in the U.K. still fear that the “exit bill” for breaking up with the EU may turn out to be more punitive in nature, and rumors that the EU will be left with a shortfall that must be made up for do nothing to reassure those fears.  The finance minister of Luxembourg said, at Davos this week, “There are many people out there who are trying to punish the United Kingdom without saying it – if you ask them they will deny it. Let’s try to be more positive, let’s try to de-dramatize the whole negotiation.”

Cryptocurrencies continued to show signs that their “wild west” days may soon be over. Bitcoin was down by 25% at one point this week, and a Japanese cryptocurrency exchange report the theft of nearly half a billion US dollars’ worth of digital currency on Friday. South Korea continued discussing the possible bans that it might put in place on virtual currencies, including the complete loss of the very anonymity that seems to make them so popular.

Equities seemed to gleefully shake off every piece of troubling news again this week, with the Dow Jones Industrial Average continuing to set new records as it moved closer to the 27,000 mark just weeks after pushing through the 25,000 mark.

As Bitcoin toppled this week, reports surfaced that investors in the virtual currency were rushing for the exits and attempting to turn to Gold as a safe haven place to store the profits they were attempting to flee with. The trouble appears to be that while so many exchanges seem to make it easy to purchase cryptocurrencies, they do not, for the most part, appear to make it easy to sell those “coins” back when investors look to book their profits.

Savvy investors recognized long ago that there was a mania surrounding anything with the words “bit”, “block” or “chain” in it and moved to book their profits well in advance of the sudden plunge. These same investors also wisely continued purchasing alternative assets to make certain that they were keeping their investment portfolios diversified against overexposure to asset classes whose bubbles had clearly risen to the bursting point. One such alternative asset frequently used as a means of diversification is physical precious metals. Investors seeking to diversify their portfolios with precious metals have continued to follow their plan of purchasing additional physical product whenever temporary price dips present them with the buying opportunities to do so.

Remember that precious metals should always be viewed as a long-term investment and that the key to profitability through the ownership of physical precious metals is to actually acquire and own the physical products and to hold them for the long term. Always remember that you should never overextend your ability to maintain ownership of your precious metals over the long term.

Trading Department
Precious Metals International, Ltd.

Friday to Friday Close (New York Closing Prices)

Jan 19th2018 Jan 26th2018 Net Change
Gold $1333.50 $1353.00 19.50 + 1.46%
Silver $17.04 $17.48 0.44 + 2.58%
Platinum $1016.50 $1016.50 0.00 + 0.00%
Palladium $1106.50 $1092.50 (14.00) – 1.27%
Dow Jones 26071.72 26616.71 544.99 + 2.09%

Previous year Comparisons

Jan. 27th2017 Jan 26th2018 Net Change
Gold $1190.00 $1353.00 163.00 + 13.70%
Silver $17.16 $17.48 0.32 + 1.86%
Platinum $  984.00 $1016.50  32.50 + 3.30%
Palladium $  744.00 $1092.50 348.50 + 46.84%
Dow Jones 20093.78 26616.71 6522.93 + 32.46%

Here are your Short Term Support and Resistance Levels for the upcoming week.

Gold Silver
Support 1320/1280/1260 17.30/17.00/16.80
Resistance 1360/1380/1400 17.55/17.80/18.00
Platinum Palladium
Support 1000/985/960 1080/1060/1040
Resistance 1025/1050/1075 1130/1150/1170
This is not a solicitation to purchase or sell.
© 2018, Precious Metals International, Ltd.

Capitalism Has Failed

By Jeff Thomas,
Feature Writer for Doug Casey’s International Man and Strategic Wealth Preservation

Today, more than at any time previously, westerners are justifying a move toward collectivist thinking with the phrase, “Capitalism has failed.”

In response to this, conservative thinkers offer a knee-jerk reaction that collectivism has also had a dismal record of performance. Neither group tends to gain any ground with the other group, but over time, the west is moving inexorably in the collectivist direction.

Capitalism Has Failed.
Capitalism Has Failed. Article by Jeff Thomas.

As I see it, liberals are putting forward what appears on the surface to be a legitimate criticism and conservatives are countering it with the apology that, yes, capitalism is failing, but collectivism is worse.

Unfortunately, what we’re seeing here is not classical logic, as Aristotle would have endorsed, but emotionalism that ignores the principles of logic.

If we’re to follow the rules of logical discussion, we begin with the statement that capitalism has failed and, instead of treating it as a given, we examine whether the statement is correct. Only if it proves correct, can we build further suppositions upon it.

Whenever I’m confronted with this now oft-stated comment, my first question to the person offering it is, “Have you ever lived in a capitalist country?” That is, “Have you ever lived in a country in which, during your lifetime, a free-market system dominated?”

Most people seem initially confused by this question, as they’re residents of either a European country or a North American country and operate under the assumption that the system in which they live is a capitalist one.

So, let’s examine that assumption.

A capitalist, or “free market” system is one in which the prices of goods and services are determined by the open market and consumers, in which the laws and forces of supply and demand are free from any intervention by a government, price-setting monopoly, or other authority.

Today, none of the major (larger) countries in what was once referred to as the “free world” bear any resemblance to this definition. Each of these countries is rife with laws, regulations and a plethora of regulatory bodies whose very purpose is to restrict the freedom of voluntary commerce. Every year, more laws are passed to restrict free enterprise even more.

Equally as bad is the fact that, in these same countries, large corporations have become so powerful that, by contributing equally to the campaigns of each major political party, they’re able to demand rewards following the elections, that not only guarantee them funds from the public coffers, but protect them against any possible prosecution as a result of this form of bribery.

There’s a word for this form of governance, and it’s fascism.

Many people today, if asked to describe fascism, would refer to Mussolini, black boots and tyranny. They would state with confidence that they, themselves, do not live under fascism. But, in fact, fascism, is by definition, a state in which joint rule by business and state exists. (Mussolini himself stated that fascism would better be called corporatism, for this reason.)

In recognizing the traditional definition of fascism, there can be no doubt that fascism is the driving force behind the economies of North America and Europe.

In addition, the concept of any government taking by force from some individuals, the fruits of their labour, and bestowing it upon others, is by no means free-market. It is a socialist concept. And, in any country where roughly half of the population are the recipients of such largesse, that country has unquestionably, settled deeply into a socialist condition.

However, this is by no means a new idea. As Socrates asked Adeimantus,

“Do not their leaders deprive the rich of their estates and distribute them among the people; at the same time taking care to preserve the larger part for themselves?”

So, which is it? Are we saying here that these countries are socialist or fascist?

Well, in truth, socialism, fascism and, indeed communism, are all forms of collectivism. They all come under the same umbrella.

So, what we’re witnessing is liberals, rightfully criticizing the evils of fascism, but failing to understand it for what it is – a form of collectivism. Conservatives, on the other hand, do their best to continue to operate under their countries’ socialist laws, regulations and regulatory bodies, whist continuing to imagine that a remnant of capitalism remains.

And so we return to the question, “Have you ever lived in a country in which, during your lifetime, a free-market system dominated?

Such countries do exist. It should be pointed out, however, that even they tend to move slowly toward collectivist over time. (After all, it’s in collectivism that they gain their power.) However, some countries are “newer,” just as the US was in the early nineteenth century and, like the US, the governments have not yet had enough time to sufficiently degrade the economies that have been entrusted to them.

In addition, some citizenries are feistier than others and/or are less easy to convince that, by allowing themselves to be dominated by their governments, they’ll actually be better off.

Whatever the reasons, there are most certainly countries that are far more free-market than the countries discussed above.

But, what does this tell us of the future? What can be done to turn these great powers back to a more free-market system? Well the bad news is that that’s unlikely in the extreme. To be sure, we, from time to time, have inspired orators, such as Nigel Farage or Ron Paul, who remind us what we “should” do to put these countries back on track, so that they serve the people of the country, rather than its leaders. But, historically, such orators have never succeeded in reversing the trend one iota.

History tells us that political leaders, in their pursuit of collectivism, never reverse the trend. They instead, ride it all the way to the bottom, then bail out, if they can.

However, it is ever true that, in some locations in the world, there have always been free market societies. Over time, they deteriorate under the hands of their leaders and, as they do, others spring up.

The choice of the reader is to look upon the world as his oyster – to assess whether he is more or less content with the country he’s in and confident that it will continue to be a good place in which to live, work, invest and prosper, or, if not, to consider diversifying, or even moving entirely, to a more rewarding, more capitalist jurisdiction.

Jeff Thomas
International Man and Strategic Wealth Preservation
jeff.thomas1066@gmail.com

 

 

This article was originally posted in the Strategic Wealth Preservation Blog and copied here with permission of the author.

The Precious Metals Week in Review – January 19, 2018

The Precious Metals Week in Review - January 19, 2018.
The Precious Metals Week in Review – January 19, 2018.

1. This week was a shortened trading week in the United States due to the Martin Luther King holiday. The bubble in equities continued to accelerate this week, but the cracks in cryptocurrencies appeared in earnest this week as Bitcoin saw its value plunge on further rumors of crackdowns on the trading of virtual currencies across the globe. The U.S. Congress, true to what has seemingly become the norm over the last decade or so, remained dysfunctional and gridlocked until the expiration of the continuing resolution that kept the government functioning through the end of this week.

2. The seasonally adjusted number of Americans filing initial claims for state unemployment plummeted by 41,000 claims, coming in at 220,000 for the week ending January 11. The previous week’s level was unrevised. The four-week moving average of claims dropped by 6,250 to a new level of 244,500 from the previous week’s unrevised average. Claims taking procedures in both the Virgin Islands and Puerto Rico have still not returned to 2017 pre-hurricane norms despite months of infrastructure repair work. Unemployment data should be expected to remain volatile through the first several months of the year as severe winter weather and the lingering effects of seasonal employment terminations work their way through the system.

3. The continuing resolution to keep the U.S. government operating while an actual budget continues to be under negotiation runs out at midnight on Friday, January 19. The U.S. Congress struggled to overcome the dysfunction and gridlock, that has plagued it for the better part of a decade now, to come to an agreement on extending the resolution. The House of Representatives passed its version of a new continuing resolution late on Thursday, but the Senate appears set to block any further governmental spending using such resolutions. In other words, the Senate appears ready to trigger another U.S. government shutdown, the third since 2011.

4. The bubble in equities continued to skyrocket this week, as the Dow Jones Industrial Average eclipsed the 26,000 mark, just barely a week after passing 25,000. Investors have apparently approached “mania” stage and cash is pouring into the bloated equities market at record levels as these investors seem to experience a full blown “fear of missing out” on further gains. According to recent investor intelligence surveys, so-called “bulls” outnumber the “bears” by a margin of 66.7 percent to 12.7 percent, the largest such spread since 1986.

5. China’s economy grew by 6.9% in 2017, according to official figures released on Wednesday. The growth topped both economists’ estimates and official guidance. Beijing is apparently keeping its growth target at “around 6.5 percent” for 2018 according to a Reuters report which cited anonymous policy sources. China’s economy remains heavily exposed, as does much of the world’s economies, to massive debt levels that have continued to skyrocket as the world struggles to recover from the financial crisis that began with 2008’s U.S. housing market collapse.

6. Rumors abounded this week that both China and South Korea intend to heavily clamp down, if not an implementation of an outright ban, on the exchanges that allow for the trading of virtual currencies, commonly called crypto currencies. Bitcoin, one such virtual currency, saw its price plummet on the crackdown news, briefly dipping back below $10,000 as investors ran for the exits to find less volatile assets. One of those assets appears to have been physical precious metals like Gold and Silver, as online sources for purchasing those products reported a surge in buying that coincided with Bitcoin’s collapse this week.

7. North Korea abruptly cancelled a planned visit by a delegation of seven members to South Korea without explanation. The delegation was due to visit South Korea on Saturday to check potential performance venues for a North Korean art troupe that will be at the Winter Olympics next month. It was not immediately clear whether this cancellation would have any effect on the North’s newly agreed upon participation in next month’s Winter Olympic games.

8. On Tuesday, a 20-nation meeting took place in Vancouver, Canada to discuss North Korea’s continued pursuit of nuclearization. The group agreed to consider imposing additional unilateral sanctions on Pyongyang that would go farther than current sanctions imposed by the United Nation Security Council. In a statement released after the meeting, the group said that they “agree to consider and take steps to impose unilateral sanctions and further diplomatic actions that go beyond those required by U.N. Security Council resolutions” but no specific details on additional sanctions were released from the meeting, which lasted just a single day.

9. Hawaii residents were panicked this weekend when their televisions, radios and cell phones all received communications that a ballistic missile was inbound, followed by the words “THIS IS NOT A DRILL”. It took Hawaii more than a half hour to reassure residents that the alert was a false alarm that had been triggered in error by an official testing the emergency broadcast system. Japanese TV had a similar problem on Tuesday when it issued a false alarm about a North Korean missile launch, but the error was corrected in a matter of minutes. The two events show just how on edge the world is over the stability of the Korean Peninsula and the growing fear over North Korea’s increasing nuclear capabilities.

10. Crude oil maintained its grip on the mid-$60-a-barrel range this week despite projections that U.S. crude output could break through 10 million barrels per day in the near future. In its monthly report, the International Energy Agency (IEA) said that while global oil supplies have tightened, “Explosive growth in the U.S. and substantial gains in Canada and Brazil will far outweigh potentially steep declines in Venezuela and Mexico.” The IEA projects that U.S. crude output could soon overtake that of Russia and Saudi Arabia.

11. The euro’s chart this week looked like a medical EKG. The euro surged higher at the start of trading, plunged back near even on Tuesday before immediately surging to a new high, then plunged back to a low for the week by late Wednesday, before surging higher again into Friday trading. The euro saw another reversal on Friday as the debate over the U.S. government shutdown continued, but it still appears set to close the week higher against the U.S. dollar. The Japanese yen showed a similar pattern to the euro, dropping to its low for the week on Thursday before surging higher through Friday trading. The yen did not see the same sort of reversal as the euro on Friday and will close the week out higher against the U.S. dollar.

The Dow Jones Industrial Average (DJIA) topped 26,000 in this shortened trading week as the equities bubble continued to accelerate its expansion. Bitcoin and other cryptocurrencies were roiled this week by continued rumors of crackdowns on the exchanges where they are traded, particularly in Asia. Bitcoin futures dropped by 20% as the crackdown fears escalated and reports surfaced that the U.S. Commodity Futures Trading Commission (CFTC) had filed fraud charges against three virtual currency operators, charging them with “fraud, misappropriation of funds, and misrepresentation, causing significant financial harm to investors.” As the cryptocurrency bubble showed signs of stress and increased volatility, analysts continued to celebrate the “unstoppable” bull market in stocks.

One asset management firm however, is going against the herd mentality and said this week that “Stocks are in complete bitcoin territory. Valuations on stocks sometimes feel like bitcoin because in a way it is totally disconnected from fundamentals. It’s purely based on sentiment and flows from central banks and the private passive investment community.”

Francesco Filia, Chief Executive at Fasanara Capital continued, saying “There is not one enterprise valuation that would say that this market is properly priced.” Other well-known analysts have made similar statements, saying that today’s stock market is “the most overvalued on record” as they compared today’s soaring equities markets to those of 1929, 2000 and 2007 – all years with significant and drastic corrections.

U.S. Stock markets have become so disconnected from fundamentals that even the fact that Congress showed very little signs of overcoming its dysfunctional nature to pass an additional Continuing Resolution to stave off another government shutdown next week could not keep markets down on Friday. The DJIA popped back over 26,000 late in the day even though the Senate was rumored to be willing to push its negotiations all the way up until the current Resolution expired at midnight on Friday.

In Europe, the United Kingdom’s second largest construction firm collapsed and went into compulsory liquidation on Monday as banks refused to lend it any additional money. The construction firm, named Carillion, employs roughly 43,000 individuals around the globe, half of those employees are located in the U.K. The firm’s collapse is likely to have extensive ripple effects since it acts as a lead or major partner on hundreds of projects including railways, military contracts and maintenance for hospitals, prisons and schools. Further effects will surely be felt by Carillion’s pension holders, who will likely see an immediate drop in their retirement income. Carillion primarily focuses on government-based contracts, but London’s housing market also appears to be cooling, which could impact similarly overextended residential builders there, which could spread contagion to other areas of the U.K. Uncertainty over post-Brexit housing needs, and higher taxes for home purchases have directly and negatively impacted home prices in London as potential buyers wait to see how they will be affected by the upcoming changes.

On Wednesday, the International Monetary Fund criticized Germany for maintaining its trade surplus instead of embarking on public spending projects which would ostensibly act to give a boost to other euro zone economies. Christine Lagarde, managing director of the IMF, wrote “We at the IMF see a particularly strong case to use headroom in the budget to invest more in public infrastructure, such as roads, railways, and digital infrastructure.” Lagarde continued, saying “We have also advised the [German] government to spend more on reforms that help women go back to work, such as opening more childcare centers and kindergartens. Our view is that higher growth in the long-term will improve prosperity, helping to offset the costs of an aging society.” Germany remains without a functional government as talks have continued to drag out between rival political parties to form a coalition government to be led by Chancellor Merkel, so any embarkation on spending projects is likely far in the future if they happen at all.

Savvy investors continue to seek opportunities to keep their portfolios diversified and avoid the “herd mentality” that seems to be taking hold of average investors. These wise investors view temporary price dips in precious metals as buying opportunities to acquire additional hard assets for their investment portfolios that they hope will diversify risk away from exposure to the overvalued equities and cryptocurrency markets.

Remember that precious metals should always be viewed as a long-term investment and that the key to profitability through the ownership of physical precious metals is to actually acquire and own the physical products and to hold them for the long term. Always remember that you should never overextend your ability to maintain ownership of your precious metals over the long term.

Trading Department
Precious Metals International, Ltd.

Friday to Friday Close (New York Closing Prices)

Jan 12th2018 Jan 19th2018 Net Change
Gold $1336.00 $1333.50 (2.50) – 0.19%
Silver $17.14 $17.04 (0.10) – 0.58%
Platinum $997.00 $1016.50 19.50 + 1.96%
Palladium $1120.00 $1106.50 (13.50) – 1.21%
Dow Jones 25803.19 26071.72 268.53 + 1.04%

Previous year Comparisons

Jan. 20th2017 Jan 19th2018 Net Change
Gold $1205.80 $1333.50 127.70 + 10.59%
Silver $17.03 $17.04 0.01 + 0.06%
Platinum $975.50 $1016.50  41.00 + 4.20%
Palladium $792.00 $1106.50 314.50 + 39.71%
Dow Jones 19827.25 26071.72 6244.47 + 31.49%

Here are your Short Term Support and Resistance Levels for the upcoming week.

Gold Silver
Support 1310/1280/1260 17.00/16.80/16.60
Resistance 1350/1380/1400 17.30/17.55/17.80
Platinum Palladium
Support 1000/985/960 1100/1070/1050
Resistance 1025/1050/1075 1130/1150/1170
This is not a solicitation to purchase or sell.
© 2018, Precious Metals International, Ltd.

The Origin of the Separation of Church and State

By Jeff Thomas,
Feature Writer for Doug Casey’s International Man and Strategic Wealth Preservation

Americans can be justifiably proud of their founding fathers’ insistence on a separation of Church and State. And, yet, surprisingly, very few Americans seem to understand what their founding fathers meant by this concept.

Conservative politicians take pride is saying that the US is, primarily, a Christian nation and that their Christian forefathers fought King George in order to have the freedom to practice Christianity as they saw fit.

The Origin of the Separation of Church and State
The Origin of the Separation of Church and State.
An article by Jeff Thomas.

Liberal politicians tend to take an opposing view – that separation of Church and State means that the concept of God has no place in government. In fact, some go so far as to say that landmarks such as a plaque stating that George Washington attended a specific church, should be removed, as it compromises the separation of Church and State.

Unfortunately, both these groups have got it wrong.

So, let’s take a step back and have a look at what caused Thomas Jefferson to repeatedly insist that the separation be implemented in the US Constitution.

Mister Jefferson attended the College of William and Mary, where he received the customary university education, but went on to study law privately under George Wythe in Williamsburg, Virginia. Mister Wythe was not only his teacher, but his mentor, a man in his latter years who not only imparted knowledge to the young Jefferson, but wisdom. He frequented the Raleigh Tavern with his pupil, but additionally brought him to banquets at the mansion of Governor Fauquier, in an effort to expand his outlook.

I believe that it’s safe to say that, when Mister Jefferson completed his education at age thirty-four, he had both the energy and imagination of youth and the wisdom of the elders at his command. The former gave him his drive and the latter provided him with the farsightedness that guided the writing of the American Constitution and the future direction of the new nation.

George Wythe lived conveniently next door to the Governor. (His home is still there today, as is his small study where he taught the future president.) On the other side of his home was Bruton Parish Church. In the 18th Century, one could not be elected to office unless he was a member of the Church of England. As Attorney General, Mister Wythe tolerated this, but taught his pupil that, as a free man, he should not be required to be an Anglican.

To add insult to injury, Mister Jefferson was not a Christian, but a Deist, as were several others of the founding fathers. He did believe in his own form of a God and even referred to him in the first sentence of the Declaration of Independence, but did not ascribe to him the power of miracles and omnipotence, as described in the Bible.

In addition, he regarded Jesus as an admirable human being, but did not regard him as anything more. (In later years, he would create his own Bible, by removing much of what he considered to be latter-day additions to the King James Bible, leaving little more than the words of Jesus.)

In spite of his beliefs, Mister Jefferson was required to be a (paid-up) member of the Anglican Church in order to sit in the House of Burgesses and he chafed at this requirement.

However, he was a deep believer in the concept of God as a being with both consciousness and conscience, who, he believed took no direct part in the affairs of man, but did create all men as equals and therefore entitled them to “certain unalienable Rights”.

But he saw the Church differently. He regarded it as a political organization, controlled by the King, intended to dictate morals and acceptable behaviour.

Mister Jefferson was entirely comfortable with the concept of a moral God as a principle upon which to base a government. However, he distrusted the inclusion of the Church.

Comedian George Carlin once said, “I’m completely in favor of the separation of Church and State. My idea is that these two institutions screw us up enough on their own, so both of them together is certain death.” Had Mister Jefferson been in the audience, I believe he would have nodded his approval.

Today, politicians tend to treat God and Church as being one and the same. In the perception of America’s founding fathers, they were entirely different entities. One was a creator, the other was a controller and, at times, a usurper.

Not coincidentally, it was the latter description that they ascribed to governments. The Constitution was written not only to outline what their new government should be, but in what ways it should be limited to keep it from being a controller and a usurper.

In past history, much good has been done in the name of the Church, but, indeed, whenever it has become a political power centre, it has abused this position. This is evidenced by the Crusades, the Medici’s, the Spanish Inquisition and more.

Today, we see this same problem manifesting itself, particularly with the destruction of Europe by religious zealots.

Individual spirituality lies at the very core of what makes a person moral. However, a strong personal moral fibre, and an adherence to a religious organization which dictates blind obeisance to itself are, in fact, polar opposites.

The former offers a moral compass to the individual; the latter, especially when connected to a government, trounces mankind’s natural morality and increases the potential for oppression by that government.

As in so many other things, America’s founding fathers had the right idea with the separation of Church and State. The phrase still exists today, but its original intent has been largely lost.

Should its true meaning be revived, we can be fairly certain that it won’t be done by the political class.

Jeff Thomas
International Man and Strategic Wealth Preservation
jeff.thomas1066@gmail.com

 

 

This article was originally posted in the Strategic Wealth Preservation Blog and copied here with permission of the author.