Consistency: The Success of the Cayman Islands

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

Not surprisingly, as I’m called upon frequently to counsel investors seeking advice on their international diversification, one of the most oft-asked questions is why my principle country of residence, the Cayman Islands, is so uniquely advantageous.

Consistency: The Success of the Cayman Islands
Consistency: The Success of the Cayman Islands. An article by Jeff Thomas

Whilst I discuss this subject regularly, often in detail, it was only recently that I was asked to boil the answer down into a single word. I’m afraid that I was a bit stumped and it wasn’t until the next day that I was able to answer, “consistency.”

Whereupon, I was asked to elaborate. The same fellow who sought a very brief answer then wanted a fuller answer.

Fortunately, a fuller answer is easier to voice.

Over the centuries, the Cayman Islands have been exceedingly consistent. The people themselves are remarkably reliable in their natural bent to be wary of change. Perhaps even more significantly, the UK – our mother country – has also been remarkably consistent in our dealings.

The Consistency of the UK

The Cayman Islands were first discovered in 1503 and were immediately ignored as being without natural harbours or natural resources (and therefore, valueless). In addition, they’re flat coral rocks in the Caribbean Sea, with soil so meagre that large plantations could not be established. Therefore slavery, along with the divisiveness it brings, would not result in prosperity.

In this regard, Cayman was unique in the Caribbean, where most islands have mountains and fertile valleys – perfect for plantations. Since Cayman could not succeed as a slave nation, to this day, the country is predominantly of mixed race, with virtually no racial consciousness. Even the words, “black” and “white” are used primarily by new residents from other cultures.

As Cayman was, for centuries, an essentially worthless possession to the British Crown, we were largely ignored. Our greatest historical event was the “Wreck of the Ten Sails” in 1794, when Caymanians rowed out to ten of his majesty’s ships, that were wrecked off our shores in a hurricane, and rescued much of their crew.

The King thanked Cayman by decreeing that the Cayman Islands would ever be free from both conscription and taxation.

At the time, this was not a major gift, as so little commerce existed in Cayman that we weren’t worth taxing. It did, however, lay the groundwork for Cayman as a financial haven. Today, the government of the UK would certainly like very much to find some means to tax Cayman, but a royal decree is a royal decree, and the UK government has been steadfast in honouring this commitment.

However, the flip side of this relationship is that the Crown has always had an unusual record for protecting its dependencies. In fact, on those few occasions when a new Prime Minister has been elected in the UK and had begun discussions on possible taxation for Cayman, he was instructed to have an audience with the monarch, who might have advised him as to England’s historical responsibility.

In each such case, the discussion of the imposition of taxation on England’s “children” – the colonies – came to an abrupt end.

To be sure, the UK government does endeavour to create ways to regulate its dependencies, but, even in this effort, they must tread softly.

Consequently, Cayman is, to this day, of minimal value to the UK government and, not surprisingly, we occasionally receive visits from members of the House of Commons who suggest that, of course, we must wish to one day gain our independence and, is there anything they can do to make that easier for us?

But, since we’ve seen the demise of other British Overseas Territories that have degraded into banana republics after going independent, we invariably respond with a resounding, “No!” We wish to remain a dependency.

That assures us that, for a large nation to aggress against us would amount to an act of war against Britain.

The Consistency of Cayman

Caymanians are highly conscious that we possess an unusual situation in the world. We’re a small island nation, which allows us to have a small government. That, in turn, allows us to be able to operate on a relatively small annual budget. It also means that, if we can attract overseas investment, we’ll have an unusually high revenue per capita.

In 1967, we passed laws that allowed for a mutually beneficial relationship to be created with investors worldwide and, as a result, we’ve grown from being a relatively worthless coral rock to the fifth largest financial centre in the world in the last half-century.

But, of course, it’s not enough for the citizenry to have a common recognised goal. In fact, in most countries, if the economy goes south, it’s not the people who create the problem, it’s the result of political machinations.

Politicians in any country have a tendency, first and foremost, to pursue their own power and economic advancement and, in doing so, they have a remarkable propensity for throwing out the baby with the bathwater.

Yet, never in Cayman’s 500-year history have we ever had direct taxation of any kind and even our political class understand that this would not be to their benefit.

Again, this is because we’re small, yet, a very high percentage of our government’s revenue is derived from the financial industry, in the way of company fees.

Consequently, even our least intellectually-gifted political leaders fully understand that, if we were to establish local taxation or tax investment by foreigners, the investor wealth that presently resides in Cayman could be transferred to a more attractive jurisdiction in a keystroke.

Therefore, if our political leaders don’t remain diligent in assuring that the needs of overseas investors are met, they stand to lose their own jobs and incomes.

As a result of all the above, we have a country that values its consistency highly. We tend not to elect candidates who tout radical change. We tend to periodically refine our laws rather than toss out the old ones wholesale. We tend to recognise that our continued success is based upon our recognition that, if we serve the investor well, we’ll be rewarded.

It’s exactly this reputation for consistency that’s resulted in our continued growth over time.

More importantly, though, it’s the reason why, as much of the world approaches a period of financial crisis, Cayman will not be tempted to rock the boat.

Even as other countries are making an ill-advised shift toward socialism, Cayman seeks to refine its existing model of success, not experiment with dramatic change.

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.

“Now Is the Time of Monsters”

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

In ancient Rome, interregnum was the term given to the period between stable governments when anything untoward might occur, and sometimes did – civil unrest, warfare between warlords, power vacuums and, finally, succession wars –.

Now Is The Time Of Monsters
Now Is The Time Of Monsters. An article by Jeff Thomas.

But, eventually, the dust would settle and the victors, whoever they might be, would at some point, restabilise the empire, often with a new map, showing the latest lines of geographic possession.

In 1929, the Italian Antonio Gramsci was in a fascist prison, writing about what he considered to be a new interregnum – a Europe that was tearing itself apart. He anticipated civil unrest, war between nations and repeated changes in the lines of geographic possession.

At that time, he was attributed as saying, “The old world is dying and the new world struggles to be born. Now is the time of monsters.”

And, of course, looking back from our vantage point in the twenty-first century, we have no difficulty in confirming that he was correct in his prognosis. The world war that followed, brought forward the worst traits in mankind. The sociopaths of the world came centre-stage. By the time the dust had settled, tens of millions were dead.

What we do have difficulty with is recognizing that the same pattern is again with us. National leaders and their advisors spoiling for war, building up weaponry, creating senseless proxy wars in other nations’ backyards and playing a dangerous game of “chicken” with other major powers.

This will not end well, of course. It never does. Once the shoving-match has begun, it only escalates. And, at some point, whether it’s the false-flag assassination of an Archduke, as in World War I, or the false flag invasion of Germany by Poland, as in World War II, we can always count on some excuse being created to justify diving headlong into war.

It’s also true that, when empires get into economic trouble that’s too far gone for any solution to be viable, a trick that’s always employed to by political leaders to keep the citizens from removing them from their seats of power, is to start a war. A people will, if they believe their homeland is in peril, accept the “temporary” removal of their freedoms.

Even in the United States, the famed “Land of the Free,” political leaders have routinely imprisoned dissidents in times of warfare. People tend to get behind their leaders in times of war, no matter how undeserved that loyalty might be.

And so, now is the time of monsters, as Mr. Gramsci rightly stated. A time of uncertainty, when countries are in turmoil and would-be leaders are jostling for power with existing leaders. An interregnum.

Troubled times tend to bring out all the crazies – all the sociopathic – types that would find it hard to succeed in stable, prosperous times.

In such times, the average person becomes worried that things are not going to turn out well. That’s perfectly understandable, but, unfortunately, most people lack both the imagination and the courage to cope with how the times are impacting their lives. They instead rely on others to provide a torch that might provide escape from the darkness.

Not surprising then, that every snake-oil salesman in town sees an opportunity to offer big promises – promises that he has neither the ability nor the inclination to fulfill.

At such times, the people of a country tend to become polarized, placing their faith in one political party or another, hoping that their party will “make the bad stuff go away.”

In the US, we see, on the liberal side, promises for “free health care for all,” a guaranteed basic income, housing for those who cannot afford it, and an endless stream of promises that, if the government were to implement them all, they will not be able to pay for them, even with 100% taxation from those who presently pay tax.

On the conservative side, we see promises such as “Make America Great Again,” with tax rebates that do not rejuvenate the economy, breaks for firms that have expatriated, but do not fool them into returning, claims to cut budgets, only to increase them, and promises to eliminate debt, only to expand it.

We see presidential elections in which one of the two leading candidates is a textbook narcissist, whilst the other displays all the traits of sociopathy.

And we see a waitress elected to Congress by a substantial margin, raised to the status of heroine, merely for promising all things to all people, whilst offering no plan as to how that might come about. Record numbers of candidates pour into the political arena, seeking a last grab at power, prior to systemic failure.

But, to be fair, the US is by no means alone in delivering incapable people with nonsensical solutions to the higher offices.

In the UK, each leading party states emphatically that a hard Brexit would be a disaster, yet neither party can come up with a working alternative. What they can do, as in America, is point fingers and shout invectives at each other.

In France, riots have become a weekend staple, whilst the disconnected president essentially says, “Let them eat cake,” serving only to create further fury on the street.

To be sure, the problem begins at the top. But it doesn’t end there. It sifts down to the proletariat, who, unable to come up with constructive solutions, create their own monsters, trashing the shops and burning the cars of people who had no hand in creating the problem.

But, surely, this is just a one-off phase in which the best and brightest are temporarily pushed offstage, but will soon return, yes?

Well, unfortunately, no. Historically, a period such as this one is followed by one of increased madness. Historically, the next step is societal breakdown. Riots, secessions and revolutions become commonplace, accompanied by economic collapse.

Out of these events come the worst of all the monsters. It’s in the wake of such developments that the people of any country then turn away from those that made the empty promises and toward those who promise revenge against an ill-defined group who are characterized as having caused the problems.

That’s when the Robespierres, the Lenins, the Hitlers – the greatest monsters – are swept into power. They invariably deliver the same message – that they’ll seek out the aristocracy, the gentry, the patricians, and strip them of their positions and possessions.

Invariably the way that this shakes out is not that the average man rises up, taking his “fair share” of the spoils. Instead, the leaders take the spoils and the proletariat are reduced to an equality of poverty.

Our friend Mr. Gramsci found himself imprisoned by Benito Mussolini and died from illnesses incurred in prison. Unfortunately, his approach was to complain, but remain, as his country deteriorated around him. This proved, for him, to be the worst of choices.

And, so it is today.

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 – March 8, 2018

1. Economic data out of the U.S., China and Europe were primary factors for market volatility this week. The Non-Farm Payrolls report for February will be closely watched when it is released on Friday for further indication that the U.S. economy might be slowing.

The Precious Metals Week in Review - March 8, 2019.
The Precious Metals Week in Review – March 8, 2019.

2. The seasonally adjusted number of Americans filing initial claims for state unemployment dipped by 3,000 claims to a new level of 223,000 for the week ending March 2. The previous week’s level was revised higher by 1,000 claims. The four-week moving average of claims dropped by 3,000 claims to a new level of 226,250. The previous week’s moving average was revised higher by 250 claims.

3. Friday’s Non-Farm Payrolls report in the U.S. showed that the pace of job growth in the U.S. appears to be slowing significantly. The U.S. economy added just 20,000 jobs to its payrolls in February, far below the monthly average that has come to be expected. Economists were quick to point out that there may be errors in the data due to the government shutdown’s impact on workers during the survey period. Payrolls have been coming in well above 100,000 for months and the extraordinarily weak figure for February has economists questioning their projections that while the economy might be slowing slightly, a recession is not immediately imminent.

4. The number of expected retail store closure announcements in the U.S. climbed to 4,810 according to a new report released this week by Coresight Research. Dollar Tree and Abercrombie & Fitch both announced multiple store closures this week and when lumped in with other retail closures that were announced earlier in the year by troubled brick and mortar stores, the number of stores closing their doors for good is now more than double that of new store openings.

5. China’s government confirmed that it will support Huawei’s lawsuit against the U.S. government. The tech giant, who has suffered under threats of a ban on its telecommunications equipment as well as the arrest of one of its top officers on allegations of sanctions violations, filed suit against the U.S. government on Thursday. The firm claims that a ban on the sale of its telecommunications equipment, much of which would enable so-called “5G” for cell phones in the U.S., is unconstitutional. China’s top diplomat in the region, Wang Yi, said “China has and will continue to take all necessary measures to resolutely protect the legitimate and lawful interests of Chinese businesses and citizens. At the same time, we support the company and individual in question in seeking legal redress to protect their own interests and refusing to be victimized like silent lambs.”

6. Venezuela suffered a massive power outage this week that left most of the country in the dark just as most commuters were leaving work to head home in the evening on Thursday. The blackout halted subway service and caused massive traffic backups as stop lights went dark. Embattled self-proclaimed leader Nicolas Maduro seized on the event to further blame the U.S. for his country’s troubles, calling the blackout an “electrical war” yet offering no evidence as to how or why the U.S. might be responsible for the issue. Communications Minister Jorge Rodriguez oddly appeared to blame Florida Republican Senator Marco Rubio for the blackout, saying right-wing extremists were “causing mayhem” in the country on Rubio’s orders. Marco Rubio responded, in a tweet that mocked Mr. Rodriguez’ claim, saying 99     

7. China’s trade data came in much worse than expected for February, with exports falling more than 20%. The overall trade surplus for the month was also much weaker than expected, coming in at $4.12 billion as opposed to the expected $26.38 billion. China and the U.S. continue their negotiations to tackle the trade dispute that has been one of the factors affecting imports and exports for both countries as they engaged in tit-for-tat tariffs on each other’s goods last year. Sources told CNBC that the negotiations continue to move forward and that the talks could end with an agreement within the month.

8. The European Central Bank surprised markets this week when it slashed economic growth forecasts and said it would keep interest rates at record laws all the way through December of 2019. At a press conference following the ECB’s decision to keep interest rates unchanged again, ECB President Mario Draghi seemed to cast doubt on whether the decision to continue its low-interest stimulus program would work at all, saying “We are aware that our decisions certainly increase the resilience of the euro zone economy, but actually can they address these factors that are weighing on the euro zone economy in the resto of the world? They cannot.” Draghi further clarified that statement, telling reporters that growing protectionism and geopolitical risks were the factors that he was referring to which the ECB’s stimulus could not combat.

9. The weak jobs report out of the U.S. and weak economic data out of Europe and China all acted to send oil prices sliding lower this week. Combined with climbing production outputs in the U.S., the downward pressure on the price of oil looks like it could continue for the foreseeable future. Brent Crude closed the week down nearly 1 percent around $65 a barrel and West Texas Intermediate fell 1.2 percent, bouncing to just over $56 a barrel after hitting a three-week low of $54.52 earlier.

10. The euro drifted lower against the U.S. dollar for much of the week, in a fairly steady line. On Thursday, following the European Central Bank’s announcement that it was slashing growth forecasts for 2019 to just 1.1 percent, the euro nosedived against the U.S. dollar. The euro hit its lows for the week late on Thursday and staged a modest recovery but will still finish the week out lower against the U.S. dollar. The Japanese yen bumped slightly higher against the U.S. dollar at the start of trading, dipped back to even, then embarked on a fairly steady climb higher for the rest of the week. The climb accelerated to the upside in early trading on Friday and the yen appears set to close the week out higher against the U.S. dollar.

Weakening economic data across the globe has many economists and analysts reconsidering their projections on exactly when another recession will strike.

In Europe, as the U.K. continues to struggle to come up with an agreement on their exit terms from the European Union, the European Central Bank has reduced its growth projections for 2019 and projected that it will keep its ultra-low interest rate policy in place through the rest of the year in an attempt to combat a slowing economy across the EU.

In the United States, February’s jobs data came in far underneath expectations. The U.S. economy added just 20,000 jobs in February, far underneath what has become an expectation for the addition of well over 100,000 jobs per month. China also added a slew of weaker-than-expected economic data to Europe’s and the U.S.’ poor numbers.

The trade dispute between China and the U.S. has been economically harming both countries as it has lingered on and if negotiations fall apart between the two again, which could trigger another increase in U.S. tariffs on Chinese goods, then that weakness will likely further spread into Europe and the rest of the world.

Prime Minister Theresa May is facing a series of votes next week that she must win in order to allow the U.K. to exit the EU under some form of agreement on their future relationship with each other. On Tuesday, parliament will make its second vote on May’s Brexit deal, the first vote having ended disastrously in January. If that vote fails to gain a simple majority then the governing body will vote on whether they want the UK to leave the EU with no deal in place, the so-called “no deal Brexit”. If THAT vote fails to gain a majority then parliament must finally vote on whether to allow Prime Minister May to extend Article 50, which would delay the UK’s exit beyond the approaching March 29 deadline.

Nothing much has changed in the Brexit agreement since it was first voted down. The item of major concern to parliament is the so-called “Irish Backstop”, which would leave Northern Ireland with closer ties to the EU than the rest of the U.K. in order to prevent a hard border between it and the Republic of Ireland. European leaders in Brussels have steadfastly refused to reconsider or adjust the Irish Backstop proposal, offering the U.K. nothing but seemingly vague reassurances that the backstop is seen only as the option of last resort should the exit process take longer than expected.

Venezuela continues to unravel as the current regime continues to deny aid and much-needed supplies from reaching its citizens. The latest issue to strike the country was a massive power outage that struck on Thursday evening, leaving much of the country in the dark and infrastructure practically unusable in the darkness as subways shut down and stop lights ceased to function.

Finally, in the wake of President Trump’s failed summit in Vietnam with North Korean leader Kim Jong Un, South Korean intelligence agencies reported this week that North Korea appears to have begun rebuilding facilities at a long-range rocket launch site between February 16 and March 2. The facilities in question have long been believed to be involved in the attempted production of rockets capable of targeting and reaching the U.S.

As geopolitical and macroeconomic conditions continue to decline, savvy investors continue to take steps to ensure that their portfolios are well-diversified against a sudden drop in the equity markets. Many of these investors have continued adding physical precious metals to their portfolios on price dips, viewing the temporary drops as just another buying opportunity to acquire more product at a discount.

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)

Mar. 1st2019 Mar. 8th2019 Net Change
Gold $1298.15 $1299.00 0.85 + 0.07%
Silver $15.23 $15.34 0.11 + 0.72%
Platinum $861.50 $816.95 (44.55) – 5.17%
Palladium $1551.10 $1501.50 (49.60) – 3.20%
Dow Jones 26026.32 25450.24 (576.08) – 2.21%

Previous year Comparisons

Mar 9th2018 Mar. 8th2019 Net Change
Gold $1323.50 $1299.00 (24.50) – 1.85%
Silver $16.63 $15.34 (1.29) – 7.76%
Platinum $964.50 $816.95  (147.55) – 15.30%
Palladium $994.00 $1501.50 507.50 + 51.06%
Dow Jones 25335.74 25450.24 114.50 + 0.45%

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

Gold Silver
Support 1280/1260/1240 15.20/15.00/14.80
Resistance 1300/1320/1360 15.50/15.57/16.00
Platinum Palladium
Support 810/790/768 1100/1070/1050
Resistance 840/880/900 1540/1580/1600
This is not a solicitation to purchase or sell.
© 2019, 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.

Here’s What Historically Happens to Stocks When Bull Markets End

By Jeff Clark,
Senior Precious Metals Analyst, GoldSilver.com

You undoubtedly know that 2017 was a record-setting year for the broad stock markets. And while gold was up last year despite numerous headwinds, most mainstream investors aren’t paying much attention to gold since they keep seeing so much green in their stock portfolios.

Here's What Historically Happens to Stocks When Bull Markets End
Here’s What Historically Happens to Stocks When Bull Markets End.
An article by Jeff Clark.

Even I was taken back by some of the data from the bull market in stock:

  • The Dow hit a record high 71 times last year. On average, a new high was hit more frequently than once a week.
  • For the first time ever in its almost 90-year history, the S&P 500 rose every month in 2017. And historically there have only been four years with gains in 11 months of the year.
  • The S&P’s largest pullback in 2017 was 2.8%, the smallest since 1995.
  • To start 2018, the S&P 500 has risen in each of the five trading sessions, hitting a new record high every day. The last time the index opened the year with at least five straight record highs was 1964.
  • And as Mike pointed out in his 2018 predictions, the CAPE (Cyclically Adjusted Price-Earnings) ratio has now matched its 1999 level, the second highest reading in over 100 years of data. The CAPE now has a higher reading only in 1929.

This all begs the question: is the bull market about to come to an end? This is exactly the kind of frothy behavior a market sees near its apex, so it’s definitely a prudent question to ask. If last year ends up being the top of this bull market, what does history say could happen to stocks this year?

We dug up the data for all bull markets in the S&P since the year 1900, and then examined what happened in the very first year after each of those bull markets ended. In other words, what did the first year of the bear market look like after the last full year of the bull market? This could be useful data, if 2017 ends up being the peak of the bull market.

Here’s what history shows.

First Year Performance of Bear Market After Bull Market Ends

Here's What Historically Happens to Stocks When Bull Markets End

While the declines for the first year of the bear market varied greatly, you can see that on average, the S&P lost 16% the year immediately following the last year of the bull market. Also notice that in only four cases was the decline measured in single digits—all others were double digit losses.

Mike Maloney believes this is the year overvalued stocks begin their descent. If he’s right, the decline could be higher than the historical average, since this is the second longest bull market in history.

And what is gold likely to do in that environment? We’ve shown before that gold has acted as a buffer—and gained ground—in most of the biggest stock market crashes.

The bottom line for us is that we think a major shift is coming, not just in overpriced stock and bond and real estate markets, but in the currencies that have been abused by many central bankers the world over. Once the process gets underway, the mainstream will turn back to mankind’s oldest form of money in mass, and our patience and forethought will pay off.

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 – January 12, 2018

The Precious Metals Week in Review - January 5, 2018
The Precious Metals Week in Review – January 12, 2018

1. The first full week of trading in 2018 saw the cracks start to appear in at least one of the bubbles that expanded to epic proportions in 2017 – Bitcoin. The cryptocurrency was hit hard by several regulatory announcements around the world, and a report that South Korea might be considering an outright ban on the trading of cryptocurrencies. Next week will once again be a shortened trading week due to the Martin Luther King holiday in the United States.

2. The seasonally adjusted number of Americans filing initial claims for state unemployment rose by 11,000 claims, coming in at 261,000 for the week ending January 6. The previous week’s level was unrevised. The four-week moving average of claims increased by 9,000 to a new level of 250,750 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.

3. A report surfaced on Wednesday at Bloomberg News that China may be considering slowing, or even halting, its US Treasury purchases. The report said, citing “people familiar with the matter”, that Chinese officials think U.S. debt is becoming less attractive compared with other assets and that trade tensions between China and the U.S. could provide a valid reason to slow or halt the purchases. Treasury prices fell, along with the U.S. dollar, on the news as gold began to climb. China’s foreign exchange regulator said Thursday that the Bloomberg report may have “quote[ed] the wrong source of information, or may be fake news.” China is the largest foreign holder of U.S. government debt, holding $1.19 trillion in Treasuries as of October 2017.

4. The U.S. House Foreign Affairs Committee passed two bills on Tuesday that are apparently aimed at strengthening the U.S.’ relationship with Taiwan. One bill, the Taiwan Travel Act, would allow for high level visits between Washington and Taipei “at all levels of government”, which could allow for official visits to the White House by Taiwanese leaders. No Taiwanese leader has formally visited the White House since 1979 when the U.S. established diplomatic ties with China. China maintains that Taiwan is nothing more than a rogue province and refuses to recognize its independence. An op-ed that appeared on Wednesday in The Global Times said, “The mainland will surely act to make sure Taiwan and the U.S. pay the price for their high-level exchanges.” The piece continued, saying “Beijing’s diplomatic retaliations toward Washington will come from all sides. This will multiply exponentially the costs, for the U.S., of handling global affairs and make the country profoundly realize that the Taiwan question is the Chinese mainland’s bottom line that it cannot afford to touch.”

5. North Korea’s only known underground nuclear test site is showing signs of activity again. Satellite images appear to show excavations and “significant tunneling” in a region of the facility that was not used in previous nuclear tests last year. In October, reports surfaced that the site had become unstable and experienced several tunnel collapses that are rumored to have killed hundreds of North Korean workers. If the image analysis is correct, the North may be excavating new test tunnels at the west end of the site with the obvious goal of carrying out continued tests of their nuclear capabilities.

6. North Korean and South Korean negotiators met at the Demilitarized Zone (DMZ) on Tuesday in the first high-level talks between them since late in 2015. The negotiations apparently resulted in Pyongyang agreeing to send a delegation of athletes to the Winter Olympic Games in PyeongChang, South Korea in February. As earlier reported, the two sides also agreed to reactivate a military hotline for the purposes of holding future talks. There was no apparent discussion on the denuclearization of North Korea.

7. Coalition party leaders in Germany have apparently reached a “breakthrough” in their talks to form a new government, months after Angela Merkel won reelection as Chancellor but failed to capture an overall majority. Merkel and leaders from her party engaged in talks with rival Social Democratic Party leaders and the negotiations apparently resulted in real progress towards finally forming a functional German government. It remains to be seen if these new discussions will remain civil and finally lead to a fully functioning government for one of the EU’s strongest members.

8. Crude oil posted its fourth consecutive weekly gain this week, closing above $64 after Russia’s oil minister, Alexander Novak, said that global crude supplies were “not completely balanced yet” and that ministers from leading OPEC and non-OPEC oil producers would be discussing the status of the production caps at an upcoming committee meeting.

9. The euro took a brief bump higher against the U.S. dollar at the start of trading this week, but soon began an orderly drift lower that lasted through Wednesday afternoon. Early Wednesday afternoon, the euro took a brief vertical leap to the upside, but soon returned near the lows for the week. Early Thursday afternoon, the euro took another vertical leap higher and it continued to extend its gains through Friday trading. The euro will close the week higher against the U.S. dollar. The Japanese yen briefly dipped lower against the U.S. dollar at the start of the week, but by Monday morning it began a march to the upside. Despite a brief dip on Thursday and another on Friday, the yen still appears set to close the week higher against the U.S. dollar.

The Dow Jones Industrial Average closed in on 26,000 this week, just a week after breaking through the 25,000 mark, as the ongoing bubble showed signs of further acceleration towards the breaking point. David Rosenberg, chief economist and strategist at Gluskin Sheff, urged caution as stocks continued to set records. Mr. Gluskin, in a daily note to clients, said “The bull market continues unabated and is taking on a speculative tone in the process.” Mr. Rosenberg continued, speculating on whether the Fed would “remain a serial bubble blower” under the leadership of Jerome Powell and multiple new Fed appointees all slated to take over in 2018. Blackstone Private Wealth Solutions’ vice chairman Byron Wien apparently agrees that stocks are in strong bubble territory. Mr. Wien said on CNBC this week that “Sentiment is bordering on the euphoric state. When investors think they can’t get into trouble, they usually do. We’re vulnerable to a correction.” Mr. Wien continued, saying “The market needs to have some kind of correction. There are some excesses in it, so I fully expect it to happen.” Mr. Wien apparently expects that a correction of between 10 and 15 percent is unavoidable.

Volatility in cryptocurrencies was also more pronounced this week as regulators around the world showed signs of taking a larger supervisory role and even possibly limiting the ability to trade cryptocurrencies altogether. Bitcoin alone lost 7% in a single day as the rumors persisted.

North Korea made the surprise move of opening negotiations with South Korea at the Demilitarized Zone this week and came away with an agreement allowing them to send a delegation of athletes to the Winter Olympic games next month in South Korea. The two Koreas also agreed to reestablish a military hotline that had been shut down since 2015 as relations between the two continued to sour.

In Europe, a new study commissioned by the Mayor of London modeled 5 different scenarios for the United Kingdom’s upcoming exit from the European Union. The worst-case scenario showed a departure in March of 2019 having reached no deal with the EU on any trade or transition agreements. That scenario, the study shows, could result in the loss of 46.8 billion pounds in investment by 2030 and the loss of 482,000 jobs. Mayor of London Sadiq Khan said that Britain could be heading for its own “lost decade” of lower growth and lower employment in a post-Brexit era, saying “Ministers are fast running out of time to turn the negotiations around.” Under no scenario in the study did the U.K. economy escape without harm, but the actual severity of economic damage will remain an unknown factor until negotiations are closer to their final outcome. The calculations used in the study appear to also be in line with a similar assessment commissioned by the International Monetary Fund and the National Institute of Economic and Social Research before the U.K. even held its referendum on leaving the Union.

According to a new poll, roughly half of British voters now believe that Prime Minister Theresa May is not capable of successfully negotiating the “right” Brexit deal. Reports also surfaced early in the week that Ms. May was looking to appoint a new cabinet minister for a “no deal” Brexit.

In the U.S., core consumer prices apparently posted their largest gains in 11 months as rental accommodation and health care costs surged. The surge reinforced analyst opinions that inflation could be set to take hold this year, justifying further rate hikes by the Federal Reserve.

As bubbles continue to inflate in both equities and cryptocurrencies, wise investors have continued to make efforts to keep their portfolios diversified to avoid extreme overexposure to any single particular asset class. Savvy investors have continued to accumulate physical precious metals as a means to keep their portfolios diversified, and also to hedge against the potential that inflation could start to skyrocket.

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 5th2018 Jan 12th2018 Net Change
Gold $1321.50 $1336.00 14.50 + 1.10%
Silver $17.28 $17.14 (0.14) – 0.81%
Platinum $973.00 $997.00 24.00 + 2.47 %
Palladium $1091.50 $1120.00 28.50 + 2.61%
Dow Jones 25295.87 25803.19 507.32 + 2.01%

Previous year Comparisons

Jan. 13th2017 Jan 12th2018 Net Change
Gold $1197.10 $1336.00 138.90 + 11.60%
Silver $16.77 $17.14 0.37 + 2.21x%
Platinum $985.50 $997.00  11.50 + 1.17%
Palladium $753.00 $1120.00 367.00 + 48.74%
Dow Jones 19885.73 25803.19 5917.46 + 29.76%

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 985/960/935 1100/1070/1050
Resistance 1000/1025/1050 1130/1150/1170
This is not a solicitation to purchase or sell.
© 2018, Precious Metals International, Ltd.

These 3 Facts Show Gold Is Set to Surge in 2018

By Jeff Clark,
Senior Precious Metals Analyst, GoldSilver.com

Crypto and stock prices grabbed most of the investment headlines in 2017. But by the end of 2018, a different asset class is bound to spark investor’s attention.

There are multiple reasons for that, starting with the fact that no trend or bull market lasts forever. But it’s about more than just the prolonged run in equities and runaway prices in cryptos.

These 3 Facts Show Gold Is Set to Surge in 2018.  An article by Jeff Clark
These 3 Facts Show Gold Is Set to Surge in 2018.
An article by Jeff Clark

There are three specific developments I’ve been tracking that all point to 2018 being the year for a decisive breakout in gold…

1. Gold Should’ve Fallen in 2017—Instead It Built a Base

Let’s play a guessing game… I’ll give you an economic and market scenario, and you tell me if gold would rise or fall in that environment. Here’s the scenario:

• Soaring stocks markets, with all major US markets making numerous new highs throughout the year.

• Raging bitcoin and crypto prices, captivating investors worldwide and dominating headlines, with numerous stories of investors getting rich.

• Rising real estate values, with some areas reporting frothy prices.

• Rising US interest rates, with promises of more from the Fed.

• Higher GDP in the US and many other economies around the world.

• Falling unemployment in the US.

• Higher wages, with the passage of a tax bill that spurred many companies to offer bonuses and wage increases.

• And last, falling gold bullion sales, so soft they reached a 10-year low.

So what do you think… would gold rise or fall in that set of circumstances?

Surely you’d guess the price would be weak, if not fall substantially. It’s the exact opposite environment for gold to do well. Indeed, there are plenty of examples from history where gold performed poorly in circumstances similar to these.

But with all that going on last year, the gold price ROSE! It climbed 12.1% in 2017, despite the many obvious headwinds.

These 3 Facts Show Gold Is Set to Surge in 2018

Why was gold up in the midst of all the positive economic indicators and giddy investment markets?

As you can see in the chart, one reason is because the US dollar fell last year, which is usually inversely correlated to gold. This fact has a message for us: if you’re bearish on the world’s reserve currency like we are, then you can expect gold to do well as the dollar’s value continues to disintegrate.

But it’s more than just dollar weakness. Clearly, investors around the world continued to see the need to buy gold, despite many improving economic indicators and the everybody’s-getting-rich investment markets. Whether it’s overpriced stock and crypto markets, ongoing currency dilution, surging debt levels, geopolitical conflicts, USD weakness, or one of many other concerns, investors didn’t shun gold but instead were buying. They see elevated risks in markets, economies, and currencies and are flocking to gold in response.

This behavior is not one of confidence in markets or central bankers, but a sign of just the opposite. It says that investors are preparing for a reversal in the good fortunes outlined above—and for a decisive bull market in gold. Given the multiple financial risks that surround us, it won’t take much to tip sentiment back to gold. By the end of this year we think that’s exactly what happens.

2. The Everything Bubble Is Coming to an End

Mike Maloney shows in his excellent new video that stocks, bonds, and real estate—the primary investment assets of most North Americans—are all in bubbles. And he believes those bubbles are likely to pop this year.

As just a couple examples from Mike’s video, he shows that…

• The VIX (Volatility Index, a general measure of fear in the marketplace) has registered a reading below 10 a total of 54 days in the last 20 years—and 46 of those abnormally low readings have occurred just since last May! The reversal to the upside could be stunning—and push investors into gold.

• The CAPE (Cyclically Adjusted Price-Earnings) ratio has now matched its 1999 level, the second highest reading in over 100 years of data. And you remember what happened in the years following that bloated stock market level. The CAPE has now registered a higher reading only in 1929. Yikes.

Remember, no trend lasts forever. Since gold is inversely correlated to most major asset classes, it is more likely to rise when stock markets crash.

Mike states that next January will be a “very happy new year for precious metals investors.” If you haven’t seen what he expects to take place over the coming year, this video is well worth your time.

3. The Technical Picture Shows Gold Coiling for a Big Breakout

There’s an interesting development in the technical charts for gold, one that says a big move is on the way.

I turned to expert Dominick Graziano for an update on gold’s technical picture. He is a trader extraordinaire, and over the past several decades has amassed a seven-figure brokerage account from his technical trading. He is well worth paying attention to.

Since gold has been trading largely range-bound for several years now, I asked him what this may imply. Here’s his chart of gold’s monthly price, and note his comments.

These 3 Facts Show Gold Is Set to Surge in 2018.

The gold price continues to squeeze tighter and tighter on a monthly basis, a technical sign that implies a breakout is coming. The ADX (Average Directional Index) measures the strength or weakness of a trend, and you can see that gold isn’t trending but instead is building energy.

The longer this consolidation goes on, and the greater the buildup in energy, the bigger the breakout will be. In fact, Dominick told me that “long-term consolidations are the most powerful when they finally break out.”

The technical picture doesn’t tell us when this breakout will occur, but as he says a new all-time high could be in the cards if it breaks to the upside. You’ll notice other technical indicators give bullish indications, too.

The point here is that we’re inching closer and closer to a major move in the gold market. And you’ll want to be positioned beforehand to take full advantage. That’s what we’re doing—continuing to buy physical metal now in preparation of a major shift in the markets.

When Will Gold Begin Its Surge?

I’m frequently asked how much longer we’ll have to watch stocks and cryptos soar before our time comes.

I can’t pinpoint the day, but I can tell you when:

Gold will respond when uncertainty and fear creep back into the economy or markets.

Or any other surprise that catches investors off guard. The next event that causes financial instability will likely be the spark that pushes gold out of its current range and kick-starts the next surge.

Our job as investors and protectors of family wealth is to prepare for that shift. And the best way to do that is to worry a little less about the price and a little more about how many ounces we own and if they will be sufficient for the next crisis.

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 – January 5, 2018

The Precious Metals Week in Review - January 5, 2018
The Precious Metals Week in Review – January 5, 2018

1. This week was a shortened trading week due to the timing of the New Year. 2018 began with a massive winter storm in the U.S. that looks to continue its path of devastation throughout the weekend. The massive amounts of ice and snow that shut down roads and airports across the North Eastern United States will likely cause employment and retail data to be highly unreliable for at least several weeks. Markets anxiously awaited the release of Friday’s Non-Farm Payrolls report this week for indications on what direction the Federal Reserve might take with further rate hikes.

2. The seasonally adjusted number of Americans filing initial claims for state unemployment rose by 3,000 claims, coming in at 250,000 for the week ending December 30. The previous week’s level was revised higher by 2,000 claims. We can expect the unemployment data to remain volatile as we move further into the New Year, particularly in the North-East region of the U.S. as massive snowfalls and foul weather will likely cause a surge in claims. The four-week moving average of claims increased by 3,500 to a new level of 241,750 from the previous week’s revised average. Claims taking procedures in both the Virgin Islands and Puerto Rico have still not returned to pre-hurricane norms despite months of infrastructure repair work.

3. Friday’s Non-Farm Payrolls report (NFP) missed expectations, with the U.S. economy adding just 148,000 jobs in December, as compared to economists’ expectations for an addition of 190,000 jobs. Stocks initially dropped on the news, but were soon surging to new record highs as the bubble expansion continued in spite of the weaker-than-expected data. December and January are typically difficult months to accurately read the employment picture, due to the timing of the holiday season so it is highly likely that the data for both of these months will be heavily revised.

4. North Korea reportedly accepted an offer by South Korea to hold wide-ranging talks on January 9th. The talks are purported to be focused on the Winter Olympics, which are to be held in South Korea, and “other issues of mutual interest”.  North Korea also apparently reopened its cross-border communications channel with South Korea for the first time in roughly two years. The news comes despite a renewed “war of words” between Donald Trump and Kim Jong Un that broke out at the start of the New Year. President Trump, in yet another provoking tweet, said “North Korean Leader Kim Jong Un just stated that the ‘Nuclear Button is on his desk at all times.’ Will someone from his depleted and food starved regime please inform him that I too have a Nuclear Button, but it is a much bigger & more powerful one than his, and my Button works!”

5. President Trump also took to twitter at New Year to chastise Islamabad for harboring terrorists. Pakistan’s central bank announced just 24 hours later that it would be replacing the U.S. dollar with the Chinese yuan for bilateral trade and investment with Beijing. Chinese Foreign Ministry spokesman Geng Shuang said, the same day, that Pakistan had “made great efforts and sacrifices for combating terrorism”, and urged the rest of the international community to “fully recognize” that fact. Pakistan summoned the U.S. ambassador in protest to the President’s tweet and asked him to fully explain the President’s actions.

6. In Iran, protestors attacked police stations and held anti-government demonstrations throughout the weekend. More than 450 were arrested and at least one member of the security forces was reported killed on Monday, bringing the total death toll to 14 in the boldest protest against Iran’s clerical leadership since similar unrest in 2009. The Revolutionary Court warned on Tuesday that any of those arrested in the protest movement would likely face extremely harsh punishment.

7. Crude oil retreated off of its highest levels since 2015, but remained above the $60-a-barrel mark. Strengthening U.S. shale oil production, coupled with a drop-off in typical demand during the holiday season acted to force prices lower in spite of continued production cuts by OPEC and non-OPEC oil-producing nations.

8. The euro surged higher against the U.S. dollar at the start of trading for 2018 but then began drifting lower until early Thursday morning. The euro surged to its highs for the week by late Thursday, but began drifting lower again as it entered into Friday’s trading session. The euro still appears set to close the week slightly to the upside against the U.S. dollar. The Japanese yen popped higher against the U.S. dollar to start off the year, but then began a steady drift to the downside for the rest of the week. The yen will close out the first week of the new year lower against the U.S. dollar.

The Dow Jones Industrial Average broke above 25,000 on Thursday and one analyst told CNBC “We’re really terrified” when asked about the record breaking move higher. Paul Gambles, managing partner at MBMG Group, said that the collective global growth the world witnessed in 2017 was the equivalent of a “blow-off top.” Mr. Gambles said that a similar pattern was witnessed during the prelude to previous financial crises and that the current risk to investors has become “exponential.”

Adding to the concern over what appears to be rapidly expanding bubbles in equities and crypto-currencies, are global debt levels, which hit a record level of $233 trillion in the third quarter of 2017 according to the Institute of International Finance (IIF). The IIF also warned that “heavy emerging market redemptions” would occur in 2018, including over $1.5 trillion of bonds and syndicated loans. China, Russia, Korea and Brazil also have heavy dollar-debt repayment schedules in 2018.

Amid growing unrest in the Middle East and OPEC’s continued avowal to maintain the production cut that it implemented with other oil-producing nations last year, oil recorded its strongest opening for a New Year since 2014. Iran erupted into protest at the start of the year over growing economic hardship and a lack of civil liberties. The nuclear agreement signed between Iran and several world powers in 2015 was supposed to create a boost for Iran’s economy, which had stagnated under international sanctions as it continued its pursuit of nuclear weaponry. That economic boost failed to materialize, and Iran’s relatively young population appears to have had enough. Protests took place in 80 cities and towns with demonstrators chanting anti-government slogans, against Supreme Leader Ayatollah Ali Khamenei, and against Iran’s involvement in foreign conflicts. It remains unclear exactly what sparked the protests, but at least 22 people were killed and more than 1,000 arrested, including many students.

Tehran was quick to lay the blame at the feet of the United States with one cleric having been quoted by Reuters as saying, “ordinary Iranians were deceived by these American-backed rioters”, calling for some leniency on those that were arrested for non-violent protestation. Those protestors who engaged in more violent activity, especially those that seized police stations and caused harm, will likely face harsh penalties, up to and including death, under Iran’s strict interpretation of its laws.

In Europe, news was relatively quiet, but the political crises that have been spreading across the continent will likely continue throughout 2018. The United Kingdom is still completing its negotiations to exit the European Union, and it still appears that London could lose its historical status as the “financial hub” of Europe after the exit.

Spain continues to face its own political crisis in Catalonia after the elections there effectively resulted in the separatist movement regaining power in the regional government.

Germany remains politically gridlocked, struggling to form a viable coalition government under Chancellor Angela Merkel’s lead.

As geopolitical uncertainty continues to surge across the globe, savvy investors have maintained their focus and continued to seek out ways to keep their investment portfolios diversified against overexposure to any single asset class as more and more assets appear to be skyrocketing further into bubble territory. One such methods these investors use for that diversification is to acquire physical precious metals whenever temporary price dips afford them with a buying opportunity to do so at a discount.

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)

Dec 29th2017 Jan 5th2018 Net Change
Gold $1304.00 $1321.50 17.50 + 1.34%
Silver $16.98 $17.28 0.30 + 1.77%
Platinum $931.00 $973.00 42.00 + 4.51%
Palladium $1066.00 $1091.50 25.50 + 2.39%
Dow Jones 24719.22 25295.87 541.81 + 2.19%

Previous year Comparisons

Jan. 6th2017 Jan 5th2018 Net Change
Gold $1173.70 $1321.50 147.80 + 12.59%
Silver $16.51 $17.28 0.77 + 4.66%
Platinum $970.00 $973.00  3.00 + 0.31%
Palladium $756.00 $1091.50 335.50 + 44.38%
Dow Jones 19963.80 25295.87 5332.07 + 26.71%

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 960/935/900 1050/1030/1000
Resistance 985/1000/1025 1095/1100/1120
This is not a solicitation to purchase or sell.
© 2018, Precious Metals International, Ltd.