More to Come…

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

Years ago, when visiting the US, I’d often watch late night television. Just prior to each interval, in order to ensure that viewers would sit through the adverts, the show would run a panel that said, “More to Come.”

More To Come. An article by Jeff Thomas.
More To Come.
An article by Jeff Thomas.

This, of course, was effective, as the viewer would be anticipating that the best part of the programme would come in a later segment and would be more likely to continue watching.

Today, were looking at the reverse of that situation. The programme we’re watching is The Decline and Fall of the American Empire and those who recognize the decline are viewing with ever-increasing trepidation, the developments that are unfolding there. Even those of us who are not American and don’t live there are glued to our screens, as we’re aware that were viewing the early stages of a collapse that promises to be the greatest social, political and economic event that we’re likely to see in our lifetimes.

Following World War Two, the US was in a boom beyond anything the world had ever seen. The Americans came to the war late, after having built up their manufacturing capacity for war dramatically, at the expense of the Allied powers in Europe. And they did this, essentially for free. It was paid for with the gold from the vaults of the European allies. After the war, Europe was trashed and it would take decades for them to get on their feet again. Meanwhile, the US had been going flat out in production, had first-rate modern factories and, most important, held the majority of the world’s gold.

The 1944 Bretton Woods Agreement ensured that the US dollar would become the world’s default currency and, later, become the petrodollar, ensuring American hegemony over much of the rest of the world.

There can be no doubt that, in the first decades after the war, the US had an amazing run and was, arguably, one of the best places to live in the world.

But, unfortunately, as so often happens, American political and industry leaders became full of themselves and couldn’t resist going out on limb to gain even more for themselves. In so doing, they turned the US from the world’s foremost creditor nation into the world’s foremost debtor nation. Worse, when they reached this unprecedented point, they opted to just keep going.

Worse still, it would appear that today’s leaders are aware that the mother of all bubbles that they’ve created, is going to pop sometime in the near future, as they’re preparing themselves for the mother of all pushbacks from the populace when the crashes come.

The FBI, CIA, NSA, and a host of other authorities have either been created or expanded, allowing the creation of the world’s foremost police state. And, beginning in 2001with the Patriot Act, have created a host of laws to assign authority to any of those bodies to exert ever-increasing control over the population. Capital controls, migration controls, higher taxes, confiscation of deposits in banks and quite a bit more have been passed in legislation, including the ability to declare the US in its entirely to be a “battle zone,” through which habeas corpus and the court system can be suspended nationally.

Yipes. (Or, blimey, depending on where you’re from.)

At this point, any American who’s paying attention could be forgiven if he’s genuinely frightened at where his government is going with all this.

And so, we come back to the title of this essay – “More to Come.”

A regular flow of proposed laws is now coming down the pipeline that would have been considered the stuff of a bad movie a few decades ago, but is now only too real and threatening to the freedoms of the average citizen.

Instead of “more to come” meaning that the best is still on the way, the opposite would appear to be the case.

But, how can this be, we ask ourselves. Surely those in power – the politicians, the industrialists, the central bankers, etc., must see this coming and, if that’s so, surely they’ll do something to stop it.

Well, historically, that’s never been the case. Those in the greatest positions of power have never suddenly reversed an empire when it was about to self-destruct. What they tend to do instead is to guard against becoming casualties of the disaster they’ve created.

So, is that what’s happening this time around? In a word, yes.

The Bernie Madoffs of the world go to jail. However, those who commit the same fraudulent acts from within the system never go to jail. For example, if the heads of a bank commit massive fraud, the bank pays an enormous fine. The fine is then paid by the stockholders. And should the fine be large enough to crash the bank, the bankers can appeal to the government to bail them out, as they’re “too big to fail.” Thus, the taxpayers pick up the bill.

At this point, what we’re witnessing is an era in which laws are regularly being passed to ensure that the creators of the bubble will get a “Get Out of Jail Free” card and others will sustain the losses.

This is the very essence of what happens in an endgame run. Just as a hitman who places a bomb in a building makes his exit before the bomb can go off, the creators of bubbles safeguard themselves before the economic bomb can go off. They have no intention of being around to live with the resultant devastation that they’ve put into play.

Pete Townshend wrote prophetically, “Won’t Get Fooled Again,” in 1971, in which he hopes that the latest gang of leaders will be better than the last. In the final line of the song, he grimly announces, “Meet the new boss – same as the old boss.”

And, in fact, this is the usual outcome. Perhaps the reason why empires collapse much in the same way, time and again, and their citizens consistently fail to see it coming, is that empires general last a long time before collapsing. The Venetian Republic lasted 200 years. The Spanish Empire lasted just over 120 years. Holland lasted 130 years, Russia – 200, the UK, just under 120. And it’s been much the same for the others. In every case, they last longer than a single lifetime, so it’s rare that any individual sees more than one empire collapse in his own lifetime and doesn’t understand that empires don’t end with a whimper. They end with a crescendo, not unlike the Who’s “Won’t Get Fooled Again.”

We will be witness to the collapse of the world’s foremost empire. This is not mere conjecture. The US has all the symptoms that historically precede a collapse and we’re now coming close to the final stages.

And, if history plays out yet again, as it has repeatedly, we can expect that, in the lead-up to the collapse, the controls by governments will become increasingly draconian. As we consider, “more to come,” we should be braced for the likelihood that the worst controls are yet to be revealed.

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 – December 29, 2017

The Precious Metals Week in Review - December 29, 2017
The Precious Metals Week in Review – December 29, 2017

1. This week we close out 2017, a year full of seemingly endless uncertainty and geopolitical strife. We have witnessed what appears to be the formation of the most epic bubble of all time in virtual currencies, a stock market that has now come to ignore every piece of bad news thrown its way, the start of fractures across the European Union and in the Middle East that show signs of growing into outright chasms of disagreement before the end of 2018. Next week will be a shortened trading week due to the New Year holiday so will likely be relatively quiet, but we can probably expect more chaos in 2018.

2. The seasonally adjusted number of Americans filing initial claims for state unemployment was flat, coming in at 245,000 for the week ending December 23. The previous week’s level remained unrevised, but the numbers for the end of December are usually skewed due to the timing of the Christmas and New Year holidays and the winding down of temporary employment positions at retailers. The four-week moving average of claims increased by 1,750 to a new level of 237,750 from the previous week’s unrevised average. Claims taking procedures in both the Virgin Islands and Puerto Rico have still not returned to pre-hurricane norms.

3. In 2017, the U.S. dollar had its worst performance in 14 years in spite of multiple interest rate hikes by the Federal Reserve and promises of massive fiscal stimulus in the form of tax cuts and proposed infrastructure projects. Some strategists see further pain for the U.S. dollar as it competes with other currencies across the globe and inflation remains muted in the U.S. The continual uncertainty caused by the Trump administration could also weaken the dollar, as there are risks that planned NAFTA talks could fail and tensions between China, Russia and the U.S. could overflow into trade issues.

4. As the U.S. readies to celebrate the New Year over the weekend, security at larger cities and venues is being strengthened to levels never before seen in the wake of multiple attacks that were carried out on large crowds across the globe this year. New York has said that it will field the largest security detail ever in Times Square for the New Year’s Eve celebration. The officials in New York hope the larger force will work to prevent any attempts at a “lone wolf” style attack to spread terror and discord in the U.S.

5. North Korea has reportedly constructed an advanced reconnaissance satellite equipped with cameras and telecommunication devices, according to South Korean newspaper JoongAng Ilbo, citing an unnamed South Korean government source. Previous satellites launched by the North apparently lacked the ability to transmit any data back to Earth. Many analysts believe that North Korea is using its satellite launches as cover for further development of its long range ballistic missile program which it continues to pursue in defiance of crippling sanctions by the United Nations.

6. North Korea’s foreign ministry said this week that the new sanctions imposed by the United Nations Security Council on Friday were tantamount to a complete economic blockade of the country and are an act of war. The reclusive nation threatened to punish those countries that supported the measure, which was passed unanimously. The new sanctions, imposed as a result of the North’s latest ballistic missile test, are designed to limit its access to refined petroleum products and crude oil, cutting its fuel supplies by drastic amounts.

7. An explosion rocked a supermarket in Russia on Wednesday this week, injuring 13 people in St. Petersburg. Russian President Vladimir Putin said Thursday that the blast was the result of an act of terrorism. The explosive was a homemade bomb packed with pieces of metal and hidden in a locker where shoppers can leave their belongings. Putin, speaking at a ceremony awarding Russian personnel who served in Syria, said he had told the director of his security force “to act within the framework of the law when detaining these bandits of course, but if there is a threat to the life and well-being of our employees…to act decisively, not take any prisoners, and liquidate the bandits on the spot.”

8. In Spain, regional elections were held in Catalonia and the outcome of the vote has only served to complicate the Spanish political crisis even further. Separatist parties in Catalonia gained 70 seats in the 135-seat regional assembly, with exiled former First Minister Carles Puigdemont’s party being the largest group to gain seats. Puigdemont remains in exile in Brussels and will be almost certainly arrested immediately if he sets foot back in Spain so his party will likely have to recommend another candidate to lead Catalonia. The fact that so many separatists remain in parliament could mean that another election will be forced by Spain’s central government before the end of 2018.

9. Oil prices closed above $60 a barrel for the first time in 2 and a half years on Friday, ending the year up 12.5 percent. American output and stockpiles both suffered drops this week and ongoing production cuts by OPEC and Russia, along with rising Chinese demand for oil all acted to support prices as signs pointed to further reduction in the global supply glut that has plagued the industry for most of 2017.

10. The euro spent most of the week trending higher against the U.S. dollar and will close out the final week of the year to the upside. The Japanese yen bounced along fairly sideways against the U.S. dollar for most of the week. On Thursday, the yen took a near vertical leap higher in the morning, drifted sideways into Friday trading and then surged higher again. The yen will close the final week of the year out higher against the U.S. dollar.

This week closes out the last trading session of 2017 and brings to an end what has proved to be a highly tumultuous year. Next week will be a shortened trading week as we begin 2018 and activity is likely to be muted in the immediate post-holiday trading sessions.

In 2018, we can likely expect further geopolitical tensions in Asia, the Middle East, and even across the U.S. and Europe. The U.S. Congress remains dysfunctional, between the Senate and House of Representatives, and even though it successfully passed the much-debated tax reform legislation at the end of this year, the true impact of the new legislation will not likely be known for many months until the text of the new law can be studied thoroughly. Congress also managed to pass a couple of stop-gap measures in December to keep the U.S. government operational for a few more weeks at a time but failed to complete a full budget that details how the government will fund itself into 2018.

The latest emergency measure, called a “Continuing Resolution” expires on January 19 and was passed just hours before the previous measure expired at midnight on December 21. Congress and President Trump both left Washington, D.C. for the holidays so the amount of time they will have to draft and pass a full budget outlining the funding of the U.S. government will be extremely short when they return.

In Spain elections in Catalonia, forced upon the region by the Spanish central government in Madrid to replace the rebellious previous government, finally took place last week and it appears that the separatists have essentially regained control of the regional government in the wealthy autonomous region. This means that Spain’s constitutional crisis is far from over, and the result may actually pave the way for the return of Carles Puigdemont, the former leader who was forcibly removed by the central government in Madrid when he followed through on holding a referendum for Catalonia to secede from the rest of Spain earlier this year. Puigdemont has been living in exile in Brussels since the Spanish central government announced it would place him and the majority of his cabinet members under arrest.

Brexit negotiations continue in the United Kingdom and there appears to be a growing conflict between Parliament and Prime Minister Theresa May on who will have the final say on the completed Brexit agreement. Parliament continues to show signs that it might undercut Prime Minister May’s efforts to lead the U.K. out of the European Union by 2019.

North Korea should also be expected to continue to be a growing danger to the world as it refuses to give up its quest for nuclear capable intercontinental ballistic missiles (ICBMs). The continual sanctions that the United Nations have put in place on the North to try to bring them to the negotiation table to discuss abandoning such a dangerous path appear only to have angered them further and strengthened their resolve to arm themselves, whatever the cost may be to their citizenry.

Questions have even been raised recently on whether Chinese and Russian shipping companies may be covertly ignoring the very sanctions that the UN has put in place to rein in the hermit nation, possibly delivering oil and other goods to North Korea via ship-to-ship transfer at sea in direct violation of the sanctions.

As the New Year begins, it will be important to watch world news outlets for events that could act to increase market volatility. If the bubbles in Bitcoin and equities suddenly burst early in the new year due to a dramatic increase in geopolitical tensions or macroeconomic pressure, there could be a massive surge in interest for physical precious metals as investors once again turn to the historical “safe haven” asset that tends to protect their wealth in times of turmoil. Savvy investors have used temporary price dips in precious metals to acquire more physical product as part of their plan to keep their portfolios diversified against such events.

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 22nd2017 Dec 29th2017 Net Change
Gold $1275.00 $1304.00 29.00 + 2.27%
Silver $16.37 $16.98 0.61 + 3.73%
Platinum $919.00 $931.00 12.00 + 1.31%
Palladium $1030.00 $1066.00 36.00 + 3.50%
Dow Jones 24754.06 24719.22 (34.84) – 0.14%

Month End to Month End Close

Nov 30th2017 Dec 29th2017 Net Change
Gold $1273.95 $1304.00 30.05 + 2.36%
Silver $16.44 $16.98 0.54 + 3.28%
Platinum $941.00 $931.00  (10.00) – 1.06%
Palladium $1013.55 $1066.00 52.45 + 5.17%
Dow Jones 24272.35 24719.22 446.87 + 1.84%

Previous year Comparisons

Dec. 30th2016 Dec 29th2017 Net Change
Gold $1151.40 $1304.00 152.60 + 13.25%
Silver $15.97 $16.98 1.01 + 6.32%
Platinum $904.50 $931.00  26.50 + 2.93%
Palladium $685.00 $1066.00 381.00 + 55.62%
Dow Jones 19762.60 24719.22 4956.62 + 25.08%

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

Gold Silver
Support 1280/1260/1240 16.80/16.60/16.30
Resistance 1310/1350/1380 17.00/17.25/17.50
Platinum Palladium
Support 900/885/845 1050/1030/1000
Resistance 935/960/985 1070/1090/1100
This is not a solicitation to purchase or sell.
© 2017-2018, Precious Metals International, Ltd.

The Precious Metals Week in Review – December 22, 2017

The Precious Metals Week in Review - December 22, 2017
The Precious Metals Week in Review – December 22, 2017

1. This week the news was mostly focused on the much-publicized tax reform bill that the U.S. Congress has been working to put before President Trump. The Senate and the House of Representatives managed to cobble together a compromise bill at the last minute and have it on Mr. Trump’s desk prior to Christmas, as he had hoped. The bill was signed into law by President Trump on Friday.

2. The seasonally adjusted number of Americans filing initial claims for state unemployment surged massively, by 20,000 claims to a new level of 245,000 for the week ending December 16. The previous week’s level remained unrevised. The four-week moving average of claims increased by 1,250 to a new level of 236,000 from the previous week’s unrevised average. Claims submissions in the Virgin Islands continue to be disrupted by the damage from this year’s deadly hurricane season and Puerto Rico’s processing has also not returned to normal. We can expect extreme volatility in the weekly unemployment numbers for the next several months as temporary seasonal employment opportunities come to an end and additional workers reenter the employment pool in search of more permanent work.

3. The U.S. state of California remained ablaze this week as the fire known as “The Thomas Fire” continued to burn its way across Southern California in what has now become the worst wildfire ever to be recorded in the state’s history. By Friday, the Thomas fire was believed to be about 65 percent contained and state officials lifted many of the evacuation orders that have been in place since the blazes broke out in early December. The blazes have destroyed several agricultural areas in Southern California, including avocado farms, grazing lands, and beekeeping businesses, in addition to devastating losses among private homes and businesses.

4. On Tuesday, Saudi Arabia announced that it had intercepted a Houthi missile that was fired towards Riyadh. A spokesman for the Houthi movement confirmed that a ballistic missile had targeted the royal court at al-Yamama palace where a meeting was under way just hours before a news conference that was to be attended by senior Saudi ministers. There were no reports of casualties and the Saudi air defense systems appear to have successfully been deployed to intercept the projectile.

5. The Trump administration approved a plan to provide weaponry to Ukraine this week, including Javelin anti-tank missiles to help it fight Russian-backed separatists that have been trying to carve out more territory away from Ukraine and annex it in to Russia since 2014. The new weaponry deal is likely to add to the growing tensions between the U.S. and Russia. The U.S. State Department said on Friday that “U.S. assistance [to Ukraine] is entirely defensive in nature, and as we have always said, Ukraine is a sovereign country and has a right to defend itself.”

6. The owner of a cryptocurrency exchange called Youbit in South Korea filed for bankruptcy this week, following a hack that it claimed cost it 17 percent of its cryptocurrency assets. The exchange said that its customers would only receive 75% of their holdings for the moment, until the company completes its bankruptcy proceedings. This is the second such hack for Youbit. The first hack occurred in April and South Korea’s Internet and Security agency blamed that attack on cyber spies working for North Korea. Youbit’s collapse adds another name to the growing list of cryptocurrency exchanges that have suffered hacks, security breaches, and employee fraud as the bubble surrounding virtual currencies has continued to expand.

7. Venezuela apparently failed to honor a settlement payment with Canada-based mining company Crystallex International this month and on Thursday the company urged a federal judge to allow it to seize control of Citgo Petroleum, a U.S. oil refiner that is owned by Venezuela’s PDVSA, a Venezuelan state-owned oil company.

8. South Korean guards fired up to 20 warning shots at North Korean troops this week as they searched for a soldier who had defected to the South on Thursday. South Korea’s Joint Chiefs of Staff said that at around 8 am local time on Wednesday, a low-ranking soldier crossed the border without incident in heavy fog that limited visibility to just over 100 yards. Surveillance equipment picked up the defector and he was detained by the South for questioning.

9. Oil prices continued to hover near $60-a-barrel this week as global demand continued to appear as if it may begin soaking up some of the multi-year supply glut.

10. The euro moved higher against the U.S. dollar in a fairly steady trend for most of the week. The euro seemed to find its high for the week late on Wednesday as the U.S. Congress completed its finalization of the tax reform bill. Despite a slight drop on Friday after the tax bill was signed by President Trump, the euro will close the week out higher against the U.S. dollar. The Japanese yen spent most of the week declining against the U.S. dollar, finding a floor on Thursday and then essentially drifting sideways into Friday’s close. The yen will close the week out slightly lower against the U.S. dollar.

As we enter the final weeks of 2017, the bubbles that have been proliferating throughout equities and virtual currencies, particularly during the second half of the year, continue to show signs of stress. Cryptocurrencies in particular have reached record levels of mania that have continued to draw comparisons to the “tech bubble” in the 1990s and the U.S. housing market bubble in the early-to-mid 2000s as unsophisticated investors just kept piling into those markets just before each of them burst.

An officer for one crypto-currency startup that was interviewed on CNBC this week, when asked to justify the valuation of his company, essentially said “I can’t, this valuation and the market cap makes no sense at all. My company should have never been valued at these levels.” Virtual currency exchanges continue to be hit by reports of security holes, hacks and accusations of fraud.

Geopolitical issues also continue to bear watching as North Korea continues its pursuit of nuclear armaments, there is continued turmoil in the Middle East, and the potential for the U.S. to become embroiled in the battle between Ukraine and its Russian separatists by providing new, higher tech, armaments to Ukraine becomes a very real possibility.

Political turmoil is also still rampant across Europe as various elections around the continent have resulted in weaker governments, or no viable government at all. Germany’s leadership continues to founder as its political parties cannot resolve their infighting to form a coalition government.

In the U.K., Prime Minister Theresa May’s efforts to steer the country through its lengthy exit process from the European Union seems to be continually hampered by a recalcitrant parliament. In the U.S., analysts across the board kept saying the tax reform bill was “priced in” to the markets, yet when the bill was finally signed into law by President Trump, the equity markets apparently saw one of the largest capital outflows in recent history.

As uncertainty rules the day and bubbles show signs of slowing their expansion and nearing the bursting point, savvy investors have once again begun turning to physical precious metals as a means to diversify and protect their portfolios against overexposure to one or more riskier assets.

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 15th2017 Dec 22nd2017 Net Change
Gold $1255.41 $1275.00 19.59 + 1.56%
Silver $16.05 $16.37 0.32 + 1.99%
Platinum $891.50 $919.00 27.50 + 3.08%
Palladium $1024.00 $1030.00 6.00 + 0.59%
Dow Jones 24651.74 24754.06 102.32 + 0.42%

Previous year Comparisons

Dec. 23rd2016 Dec 22nd2017 Net Change
Gold $1133.00 $1275.00 142.00 + 12.53%
Silver $15.73 $16.37 0.64 + 4.07%
Platinum $896.00 $919.00  23.00 + 2.57%
Palladium $662.00 $1030.00 368.00 + 55.59%
Dow Jones 19933.81 24754.06 4820.25 + 24.18%

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

Gold Silver
Support 1260/1240/1225 16.30/16.15/15.90
Resistance 1280/1310/1350 16.60/16.80/17.00
Platinum Palladium
Support 900/885/845 1000/975/950
Resistance 935/960/985 1030/1050/1070
This is not a solicitation to purchase or sell.
© 2017, Precious Metals International, Ltd.

Kite in a Tree

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

When I was a boy, cartoonist Charles Schulz introduced a new comic strip called, “Peanuts.” Its central premise was children having the same problems as adults, and was an instant hit.

There were several recurring themes and, each autumn, the cartoonist would have his main character, Charlie Brown, attempt to fly a kite. At first all would go well, and Charlie Brown would build up his hopes, only to have them dashed when a tree would snag his kite and eat it.

Kite In A Tree
Kite In A Tree. – An article by Jeff Thomas.

This theme was endlessly enjoyable, as it reflected a syndrome familiar to all adults. The cartoonist was careful to assure that he could do new variations on the theme every Autumn, due to the fact that Charlie Brown never succeeded. In the end, the tree always ate his kite.

And so it often goes in the adult world. Albert Einstein famously said, “The definition of insanity is doing the same thing over and over and expecting different results.”

And, yet, in every era, we can see this strange behaviour play itself out, time and again.

People go to casinos, imagining that, somehow, the casino will lose and they will win. They buy lottery tickets with odds of hundreds of thousands to one, against them.

And, amazingly, they invest in the stock market, not just badly, but in the very same pattern that has historically proven to virtually guarantee loss. More amazingly, this is not the behaviour of the occasional loser; it’s the approach adopted by the great majority of investors and is one that they staunchly defend as “wise and informed investment,” right until the crash that cleans them out.

So what, then is this pattern? Well, generally, a potential investor contacts broker and asks him if there’s anything he can recommend. The broker virtually always says yes, that whilst some stocks do not earn his endorsement, there are others that he feels are almost certain to go up.

Should the investor then buy, he can count on the broker to keep in touch with him whenever one of his recommendations has risen in value. (He’s less likely to get in touch if his recommendations go down.)

As each bull market unfolds, the broker advises his clients that, if they don’t continue to buy, they’ll be “missing out” and the opportunity for enrichment will pass them by.

Each investor who’s roped in by this spiel reinforces the broker’s prediction, expanding the bull market and attracting more and more investors to get into the game.

Then, something very interesting happens.

In a major bull market, when investors have reached their limit, they’re advised that they can buy on margin and increase their position. This is acknowledged as being risky in normal times, but these are not normal times. This is the mother of all bull markets and “the sky’s the limit.” The investors dive in.

When they become so strapped that they cannot buy on margin any further, many investors, believing that they’re on the cusp of getting rich, borrow money privately to buy on margin and, in so doing, become dramatically leveraged, but they do so, because the broker promises that the bull market is going, “to the moon.”

But, like all bubbles, this one, too, eventually pops. Naturally, Wall Street doesn’t want an uncontrolled collapse of the market (after all, they wish to get themselves out before a crash), so, their ideal scenario is to create a controlled crash. Once the writing is on the wall, they themselves sell out, just prior to a trigger that will collapse the market.

In 1929, this was achieved by a sudden raise of interest rates. Since investors were up to their eyes in debt, any rise in interest rates meant that they’d default on their loans. The brokers would then unilaterally sell off their clients’ portfolios (as they’re entitled to do in a margin call). They, of course, hope to salvage the maximum amount possible for themselves, so they do their best to liquidate everything overnight.

The customary reaction by investors is to be stunned that a crash has occurred that they didn’t see coming and that they woke up one morning to find that they’d sustained a massive loss.

In the early 2000’s, a small number of people (myself included), predicted a stock market crash. I estimated its occurrence to be in 2007, so, in order to be out well-ahead of time, I was out in 2006. (As it transpired, I was out earlier than need be, for which I had no regret.)

Prior to the crash, I warned friends and associates, who invariably said, “All indicators say that the market’s still going up. If it starts to slide downward, then I may sell.”

I repeatedly reminded them that a major bull market never ends with a whimper. It invariably ends with a major upside spike, before it suddenly plummets downward.

And this is not a coincidence. It’s based upon the behavior stated above.

What I find truly amazing is that most investors never learn. Even after they’ve been cleaned out once, they simply find another “better” broker and start all over. Incredibly, the average investor will work hard at his regular job and do all he can to get better at it, then, whatever savings he can create that year, he hands over to someone else to manage. He makes little or no effort to educate himself in the patterns of bull and bear markets, so that he can avoid another failure.

He repeatedly takes his kite out to fly it amongst the trees.

Many investors make the same mistake over and over, throughout their careers, working hard for their pay, then literally throwing away their savings.

Today, we’re approaching the end of a major bull market. This one is especially interesting, in that, since 2008, we’ve been in a depression that virtually no one acknowledges. Those on Wall Street state with confidence that, despite increased unemployment, manufacturing leaving the country in droves, diminishing GDP, extensive business closures, etc., “This can’t be a depression if the market is up.”

Unfortunately, what we’re really witnessing is the world’s longest sucker-rally.

In the 1930’s, a popular, if bitter-tasting joke was that, “When every shoeshine boy is offering stock tips, it’s time to get out of the market.” That advice arrived too late.

We’re presently at that point again, except that the profession of shoeshine boy has disappeared.

Incredibly, even heads of banks and Wall Street firms are now warning that the end is near. Perhaps the most unlikely expert of all to join this group is Lord Jacob Rothschild, who has now said, in a semi-annual report,

“We do not believe this is an appropriate time to add to risk. Share prices have in many cases risen to unprecedented levels at a time when economic growth is by no means assured.”

Clearly, he was careful not to employ phrasing that would be overly alarming, but he did make the quote to explain why he has dumped massive amounts of US assets. (i.e., He’s getting out before the crash.)

Meanwhile, the average investor, who contributes the oxygen to create all bubbles, is once again flying his kite, convinced that the tree will not once again eat his kite.

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 – December 15, 2017

The Precious Metals Week in Review - December 15, 2017
The Precious Metals Week in Review – December 15, 2017

1. This week was extremely news-heavy as the tax reform bill that has been working its way through Congress grew closer to completion, the California wildfires continued to rage and the Federal Reserve followed through on another December interest rate hike.

2. The seasonally adjusted number of Americans filing initial claims for state unemployment plunged by 11,000 claims to a new level of 225,000 for the week ending December 9 from the previous week’s unrevised level. The four-week moving average of claims decreased by 6,750 to a new level of 234,750 from the previous week’s unrevised average. Claims submissions in the Virgin Islands continue to be disrupted by the damage from this year’s deadly hurricane season and Puerto Rico’s processing has also not returned to normal. As is usual for this time of year, the employment data is likely to be volatile over the next several months due to extensive temporary hiring that usually takes place to support the holiday buying season.

3. The Federal Reserve followed through with another quarter point interest rate hike at the conclusion of its final Federal Open Market Committee meeting to set monetary policy in 2017. The move was widely expected after last week’s better-than-expected Non-Farm Payrolls report. For the most part, the decision was “priced in” to markets and most of them remained unmoved, or even climbed slightly higher, after the decision was announced. The Federal Reserve noted that the inflation rate remains stubbornly below its 2% target and JPMorgan chief global strategist David Kelly told CNBC after the decision was announced on Wednesday that he is “increasingly worried” that the Fed is “missing the big danger here.” Mr. Kelly said “We haven’t had an inflation problem in 25 years, but we’ve had a tech bubble, we’ve had a commodity bubble, we’ve had a housing bubble. All of those were fueled by too-easy money and all of them resulted in big market corrections or recessions – and one of them the biggest recession we’ve seen since the Great Depression.” Mr. Kelly continued, saying “Inflation’s not the enemy. The gauge they’ve got to watch here [is] asset prices.”

4. The U.S. state of California remained ablaze this week as the Santa Ana winds and extremely low humidity made controlling the multiple raging fires a massive challenge. The largest of the blazes, the Thomas fire, became the fourth largest wildfire on record in California since 1932. It has destroyed more than 249,000 acres and razed more than 700 homes. The ongoing fires remain a threat to nearly 18,000 other homes and structures throughout communities in Southern California. Air quality across the state has plunged as smoke and ash drifts along the air currents across Southern California, forcing commuters and pedestrians to wear masks so that they can breathe when venturing outdoors.

5. In the U.S., Congress neared completion of the compromise version of the two tax reform bills that passed the Senate and the House of Representatives earlier this month. The two chambers are expected to have a final, combined version of the bill completed by Friday afternoon. Their desire is to vote on the final bill early next week and send it to President Trump for his signature by Christmas. Both the contents of the final reform bill and the impact it could have on the U.S. economy have been hotly debated and even after a final version is unveiled, there remains no guarantee that the Republicans will rally behind the bill and garner enough votes to actually pass it next week.

6. A report released by the Asia Maritime Transparency Initiative, part of U.S.-based think-tank the Center for Strategic and International Studies, showed that China has completed permanent construction projects on and around the Spratly and Paracel islands which account for 72 acres of what appears to be primarily a military infrastructure. The report said “International attention has shifted away from the slow-moving crisis in the South China Sea over the course of 2017, but the situation on the water has not remained static. Beijing remains committed to advancing the next phase of its build-up – construction of the infrastructure necessary for fully-functioning air and naval bases on the larger outposts.” The report notes the recent completion of a high frequency radar array at the north end of Fiery Cross Reef in the Spratlys and new Storage tunnels in Subi and Mischief Reefs, also near the Spratlys, which are expected to expand China’s radar and signals intelligence capabilities significantly.

7. With all of the discussion over the final version of the tax reform bill, the media seems to largely be ignoring that the temporary “Continuing Resolution” that was passed to keep the government funded through the end of this year is set to expire on December 22. Very little has been mentioned in the media on whether Congress has been working in tandem with its tax-reform efforts on a new longer-term resolution to keep the government operating past Christmas. Even if Congress does manage to pass another “Continuing Resolution”, it will simply add more debt to the already staggering pile accumulated under the Obama administration as it continually raised the so-called debt ceiling to keep the government operational.

8. As Bitcoin began trading in the futures markets at the start of the week, the price continued to stay elevated at exorbitant levels as speculators continued to rush into the cryptocurrency arena, which remains mysterious and opaque to the extreme. In what is a sure sign that the “crypto-craze” has reached mania levels, bond king Jeffrey Gundlach noted in an interview with CNBC that one of his bond traders had heard a story of an individual that had purchased a “crypto kitty” for $100,000 and was looking to turn around and “flip” it to try to double his money. The aforementioned “crypto kitty” is literally a unique, digitally generated picture of a cat that has been created using blockchain technology. The Securities and Exchange Commission in the U.S. warned this week that investors should be wary of putting their money into cryptocurrencies and noted that trading and public offerings, known as Initial Coin Offerings (ICO), may be in direct violation of federal securities law. The SEC stepped in to stop a planned ICO by a restaurant review app for failing to register it as a security. Andrew Bailey, chief executive of the U.K.’s Financial Conduct Authority (FCA) told the BBC’s “Newsnight” program that buying Bitcoin was akin to gambling, with the same level of risk. Mr. Bailey said “If you want to invest in Bitcoin, be prepared to lose all your money.”

9. Tensions between China and Australia ratcheted up again as China summoned Ambassador Jan Adams to a meeting at the Chinese Ministry for Foreign Affairs to lodge a formal complaint over statements made last week. The complaint was triggered by allegations made last week that China has sought to interfere in Australia’s domestic politics. China is Australia’s largest trading partner and comments by Prime Minister Malcolm Turnbull last week which appeared to single China out for meddling in internal politics were classified as “full of prejudice against China” and were “baseless and poisoned the atmosphere of China-Australia relations.” Turnbull denies that he was disparaging China and said that the uproar over any comments he might have made were just an attempt by the opposition Labour party to “win favour with a large voter block ahead of a make-or-break by-election on Saturday.”

10. Oil prices continued to hover near $60-a-barrel this week, stabilized by a pipeline outage in the North Sea that affected supply to Britain, and the ongoing production caps led by a partnership of OPEC and non-OPEC oil producing nations. A decline in global crude stocks also added upward pressure to prices as signs that the global oil glut might finally be drawing down appeared.

11. The euro moved higher against the U.S. dollar as the week opened but began moving lower in choppy stages late on Monday night. Mid-day on Tuesday, the euro saw a near vertical plunge lower, but it quickly found its floor for the week and began struggling back higher. On Wednesday, after the Federal Reserve announced its interest rate hike, the euro surged back into positive territory, where it traded in a narrow range through late Thursday. In late Thursday trading, the euro plunged lower again, falling back near even for the week as Friday’s trading began. In Friday trading, the euro drifted higher and looks set to close the week out slightly higher against the U.S. dollar. The Japanese yen began the week trading in a narrow range against the U.S. dollar drifting essentially sideways through Tuesday afternoon. Starting late afternoon on Tuesday, the yen began a steady move towards the upside, assisted by Wednesday’s announcement that the Federal Reserve would be raising interest rates. There was a brief, but steep decline in the yen in Friday morning trading, but the yen will still close the week out higher against the U.S. dollar.

The final version of the tax reform bill is not expected to be revealed by the U.S. Congress until after all markets have closed on Friday. Stocks are still waffling back and forth over what might actually make its way into the final copy of the bill. Many analysts have been saying that the seemingly constant record highs that stocks have been reaching in recent months is mostly due to the possibility that the tax-reform might actually be passed. The bill is expected to reduce corporate taxes and allow companies to repatriate some of the capital that they might have parked overseas back into the U.S. without harsh penalties.

The Republicans appear to have just enough votes to pass the final version of the bill, so if there are any last-minute holdouts or some members decide to change their votes, stocks could take a turn for the worse.

Janet Yellen gave her last press conference as chair of the Federal Reserve this week as the central bank voted to raise interest rates by another quarter point at the conclusion of the FOMC meeting. Chair Yellen noted that inflation is still stubbornly below the Fed’s 2% target threshold and basically admitted that the Fed really does not understand why. As we close out 2017, market analysts expect the Fed to continue its pattern of interest rate hikes into 2018 despite the apparent danger of sliding back into recession.

In Europe, Italy was in the news for two reasons this week. The first headline was that a general election which is expected to occur in March will most likely end in a hung parliament, bringing Italy’s leadership in line with much of the rest of Europe as Germany’s political crisis continues, the UK’s government is fractured, and Spain continues to struggle through its own leadership crisis. Lorenzo Codogno, a professor at the London School of Economics told CNBC Thursday, regarding the possibility of a hung parliament in Italy, “I think the real threat for investors is a prolonged period of instability. Italy cannot afford to have no government and maybe new elections, that could trigger some volatility and pressure in the market.” The second headline for Italy was less political in nature, but no less important: a large explosion at a main gas hub on Slovakia’s border with Austria has triggered an 87 percent rise in natural gas prices due to fear of a shortage. Carlo Calenda, Italy’s industry minister, warned of a “serious” energy supply problem and said that Italy would need to declare a state of emergency.

In London, Prime Minister Theresa May was soundly defeated in parliament on Wednesday when lawmakers forced through changes to her government’s Brexit plan that many ministers say could delay or even damage Britain’s exit from the EU. The key takeaway from the modifications that were made is that parliament will now have a vote on any proposed “Brexit” deal before it is finalized and written into law. Prime Minister May’s fear is that parliament could add a crucial delay into the negotiation process that could have an effect of weakening Britain’s negotiating powers.

Finally, geopolitical risk seemed to have been pushed to the back burner this week in favor of Bitcoin and tax reform coverage, but obviously remains worth monitoring. President Trump and Russian President Vladimir Putin apparently held a phone conversation this week to discuss options on how to solve the looming problem that is North Korea’s continued pursuit of a nuclear arsenal. Protests around the world over President Trump’s recognition of Jerusalem as the capital of Israel also continued this week with Malaysia apparently vocalizing its readiness to send troops into Jerusalem, calling Trump’s announcement a “slap in the face” for the entire Muslim world.

As the mania in cryptocurrencies reaches full euphoria stage, and stock markets appear ready to follow suit, wise investors continue to take steps to diversify their portfolios to make sure that they avoid overexposure to any single asset class. The temporary dip in precious metals prices in the run-up to the Federal Reserve’s final FOMC meeting for 2017 appeared to offer these savvy investors the buying opportunity that they were looking for to add additional physical precious metals to their portfolios at a discount.

Physical precious metals prices have remained suppressed as equities and cryptocurrencies have taken off and the very companies that mine the metals out of the ground still maintain that they are not making money at current price levels. Many cautious analysts have begun recommending seeking out investments that are “cheap” and “beaten down” instead of following the herd into the market mania, and these same analysts note that gold and silver qualify as “cheap” at current price levels.

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 8th2017 Dec 15th2017 Net Change
Gold $1247.34 $1255.41 8.07 + 0.65%
Silver $15.80 $16.05 0.25 + 1.58%
Platinum $886.00 $891.50 5.50 + 0.62%
Palladium $1009.50 $1024.00 14.50 + 1.44%
Dow Jones 24329.16 24651.74 322.58 + 1.33%

Previous year Comparisons

Dec. 16th2016 Dec 15th2017 Net Change
Gold $1136.70 $1255.41 118.71 + 10.44%
Silver $16.19 $16.05 (0.14) – 0.86%
Platinum $930.00 $891.50  (38.50) – 4.14%
Palladium $698.50 $1024.00 325.50 + 46.60%
Dow Jones 19843.41 24651.74 4808.33 + 24.23%

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

Gold Silver
Support 1240/1225/1205 15.90/15.60/15.20
Resistance 1260/1280/1310 16.15/16.30/16.60
Platinum Palladium
Support 885/845/800 1000/975/950
Resistance 900/935/960 1030/1050/1070
This is not a solicitation to purchase or sell.
© 2017, Precious Metals International, Ltd.

Merry Christmas to You – Bullion Premiums at Multi-Year Lows

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

There’s nothing like a bargain during the holidays. And here’s an unexpected one even I was surprised to see…

It’s not easy to dig up industry-wide data on coin and bar premiums. To do it manually is incredibly time-consuming and then would be out of date as soon as you published it, since premiums always fluctuate.

But we’ve snagged both wholesale and retail data from a couple sources. And there’s a very clear message from these statistics: gold bullion is on the SALE rack…

Wholesale Prices: Plunging

CPM Group tracks premiums paid by dealers from the US Mint, and here’s what they reported at the Silver & Gold Summit. Check out how premiums have recently plunged.

Bullion Premiums

Wholesale prices on gold Eagles are lower by a third or more than what they were five years ago. In fact, there have been very few times since the Eagle was first produced in 1986 when you could buy them at this steep of a discount.

Retail Premiums: Near 10-Year Lows

The website Quandl has tracked retail premiums of some of the more popular bullion products (the data is not exhaustive though should be fairly representative across the industry). Here’s the ratio of gold Eagles to spot prices over the past 10 years.

Bullion Premiums

You can see that beginning the summer of 2016, the ratio of Eagle premiums to the spot price dropped to a new low—and has stayed there. Compare the current level to the end of 2008 and early 2009.

But it’s more than just low premiums that allow you to save money right now…

Double Discount Days

Not only are premiums at multi-year lows, so are spot prices.

Bullion Premiums

You can buy gold and silver at the same price as seven years ago!

It’s one of the best scenarios you could hope for: low spot prices and below average premiums. All on an asset that has historically served as a safe haven when other assets have been under stress, as well as one poised to soar in the next crisis.

And if you haven’t noticed, PMI’s premiums are much lower than what you see in that retail chart above. And you can now order the latest coins the industry has to offer—the 2018 gold Eagle, Maple Leaf, Philharmonic, and Britannia.

I encourage you to take advantage of the current gold environment. Low prices, low premiums, with an asset that will protect you in the inevitable crisis like no other.

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.

Political Pizza

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

Over the years, I’ve often been asked to explain the political party system in a simple, easy-to-grasp way. Several years ago, I came up with the following explanation and, for some people, it’s helped to remove the complexity and smoke and mirrors created by the political world. Let’s see if you agree.

Picture this: You live in a relatively small town. It’s a good place to live, with most townspeople being mutually supportive and often quite helpful. There are just a few local restaurants, each owned and operated by your fellow townsmen. You go out to eat often, to support your community.

Political Pizza
Political Pizza.
An article by: Jeff Thomas.

Then, one day, in an old, brick commercial building in the centre of town, with two vacant storefronts, you see signs announcing the opening of a new pizza shop in one of the vacant spaces. It will be called, “Blue Pizza.”

When it opens, the manager advises customers that the owner is a staunch blue party supporter and, each month, the owner plans to dedicate much of the profits from the shop to blue candidates. You vote blue in each election, so, you make a point of frequenting the shop and feel good that your meals are benefitting the blue party.

Soon, many of the other blue supporters in town flock to the shop, regularly buying pizza. Red supporters, however, are a bit disgruntled and rarely go in for a pizza.

Then, one day, signs appear in the other vacant storefront, announcing the opening of “Red Pizza.” It’s immediately popular with red party voters, as the manager advises customers that the owner intends to donate a major portion of the profits to red party candidates.

Although the owners never seem to be present, the two managers are quite vocal regarding the political support by their respective shops. Soon, business increases dramatically for both pizza shops. Half the town frequents Blue Pizza; the other half frequents Red Pizza. Townspeople go as often as possible, wanting to lend as much support as they can.

Over time, the pre-existing local restaurants are having a hard time making ends meet, as they’re seeing far fewer customers. One by one, they fold. Townspeople regret the closures, but, with each closure, they increase their commitment to their chosen pizza shop.

Each group of patrons insists that its shop’s pizza is better pizza and rumours begin to circulate that the other shop serves pizza with substandard ingredients that are unhealthy. The other pizza is not only less desirable, but a danger to the community.

As each election time approaches, townspeople go all out, ordering pizza as often as they can, in order to help their chosen candidates to get elected. Altercations often break out between younger customers, on the street in front of the shops.

The townspeople become divided like never before. A resident, who once got on fairly well with his neighbour, now looks at him with resentment and even anger, when he sees him enter the opposing shop. The townspeople become highly polarized and begin to see each other as the enemy. Although actual violence is minimal, the former sense of community, in which neighbours looked after one another, deteriorates.

People in the workplace find that they’re taking up sides far more than they once did and, in the same place of work, blue and red groupings often define whether co-workers can work together effectively.

One day, someone from out of town is visiting for a few days. He’s intrigued by the considerable business being done by the two pizza shops and the polarization that’s developed in the once-harmonious town.

Out of curiosity, he goes to each shop and orders a slice of pizza. He’s surprised to find that they look and taste exactly the same.

He then visits the real estate office that handles the building and asks the realtor if any other space has been rented in the building recently. The realtor mentions that the office space above the two shops was rented at about the same time as the shops themselves.

That night, at closing time for the two pizza shops, the visitor sits on a bench across the street from the shops, staring at the building. A local notices him and asks, “What are you looking at?”

The visitor says, “I’m waiting to see what happens. Have a seat.”

The local sits down and they both stare at the front of the brick building. Eventually, they see the manager of Blue Pizza shut off the lights, lock up the front door and enter the door that leads to the upstairs office. Moments later, the manager of Red Pizza does the same.

The two people on the bench stare into the lighted office above the pizza shops, where a man, presumably the owner, sits at a desk. As the managers arrive upstairs, they place their proceeds from the day into one pile. The three men count out the money, and the owner makes a record of the total take for the day. They then sit back, have a beer and joke together. The owner places the proceeds into his valise and the three men exit the building, driving away in separate directions.

And that’s essentially the system of democracy.

In bygone eras, kings ruled vast areas of countryside. They fed off the people and were understandably resented and even hated by them.

Then, along came democracy. It was often created from the bottom-up, by a people who were fed up at having their lives ruled by usurpers who allowed them few choices and limited opportunity.

But, in virtually every country, the system was co-opted by those who sought power. Not surprisingly, they sought power for their own gain, not the benefit of the people. (Twas ever thus.)

Ironically, the democratic system has been far more effective for the rulers than the monarchic system. By creating the illusion that the people have a choice, the rulers and their flunkies can extract far more from the people, without inciting revolt, than was previously possible in the monarchic system.

Political leaders are therefore far more loyal to the system than they are to those who voted for them.

A thousand years ago, in the “dark” ages, a worker paid his tithe to the feudal lord. The standard tithe was “one day’s labour in ten,” or ten percent of his earnings. Today, although the average serf has modern distractions, such as smart phones and flat screen TV’s, he pays a far higher percentage of the fruits of his labour in an endless plethora of federal, state and local taxes and government departmental fees.

For both Blue Pizza and Red Pizza, revenue has never been better and the cost of a slice is certain to rise further.

Hopefully the lesson to be learned is to avoid being distracted by the colour of the pizza shop, but to focus instead on the fellow in the office above.

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.

End of Year Reminder: Sell ETF Losses; Buy Physical Metals – No Wash Sale Rule

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

We know our readers invest in precious metals in various ways. One way is through ETFs. If you are one of these investors, pay taxes to the U.S., and are holding onto any positions with a loss since the time you bought, here’s a heads-up: if you act by December 31, you can capture that loss on your taxes without losing your exposure to metals.

Buy Physical Metals
End of Year Reminder: Sell ETF Losses; Buy Physical Metals – No Wash Sale Rule
An article by Jeff Clark

The “wash sale” rule was designed to discourage people from selling securities at a loss simply to claim a tax benefit. Section 1091 of the U.S. Tax Code defines a “wash sale” as a transaction in which an investor sells a security at a loss, but then repurchases the same or a “substantially similar” security within 30 days (before or after the sale date).

However, in its current form, the wash sale rule only applies to “securities,” and physical precious metals are not included in the definition of “securities.” This means the rule does not apply to bullion ETF holders who sell those securities for a loss and buy physical metals within 30 days before or after their sale of the bullion ETF. While both the bullion ETF and physical metals give you exposure to the price of metals and the volatility insurance that comes with it, the investments are sufficiently different in nature that they do not trigger the wash sale rule.

So, if you have losses on any bullion-backed ETF—gold, silver, platinum or palladium—you can claim that loss on this year’s taxes if you sell it for a loss any time before December 31. But, you can immediately buy physical metals with the proceeds. (This obviously assumes the sale is not in a tax advantaged retirement account.)

There are obvious advantages to this strategy: you can not only claim the loss on your income tax return, but you are permitted to buy physical metals with the proceeds right away. Further…

1) Precious metals prices are low. Gold and silver are one-third and two-thirds below their 2011 highs, respectively.

Buy Physical Metals

It’s bargain hunting season. You can buy gold and silver at the same prices as seven years ago.

2) You can own PHYSICAL metal. Owning a tangible form of wealth not only comes with greater security than a paper form of gold, but it also carries many distinct advantages ETFs and most other investments don’t. I challenge you to glance at the list in that last link and not see how gold and silver bullion can be advantageous to you.

There aren’t many tax strategies left that can work to your advantage as an investor. But this one offers the opportunity to claim a loss and swap buy a superior product that Mike and everyone else at GoldSilver is convinced will soon be the next great financial bubble.

And you can pre-order the brand new 2018 gold Eagles and silver Eagles right now.

 

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 – December 8, 2017

The Precious Metals Week in Review - December 8, 2017
The Precious Metals Week in Review – December 8, 2017

1. The bubbles in equities and cryptocurrencies, especially Bitcoin, floated dramatically higher this week. The comparisons between the current market behavior and the tech bubble in the 1990’s, just before it dramatically burst, grew much more pronounced this week. All eyes were on the monthly Non-Farm Payrolls report for indications on the Federal Reserve’s next move on interest rates.

2. The seasonally adjusted number of Americans filing initial claims for state unemployment dropped by 2,000 claims to a new level of 236,000 for the week ending December 2 from the previous week’s unrevised level. The four-week moving average of claims decreased by 750 to a new level of 241,500 from the previous week’s average. Claims submissions in the Virgin Islands continue to be severely impacted, Puerto Rico’s processing has apparently still not returned to normal, but continues to improve.

3. Friday’s Non-Farm Payrolls report (NFP) for November blew through economists’ expectations with the U.S. economy adding 228,000 jobs and the unemployment rate holding steady at 4.1 percent. Wage growth was muted once again, with average hourly earnings up only 2.5 percent on an annualized basis. A more thorough measure of joblessness that includes those workers that are discouraged and those holding part-time positions for economic reasons drifted higher to 8 percent, and the count of those not participating in the labor force moved higher by another 35,000 to 95.4 million. The report served to reinforce the view that the Federal Reserve will go ahead with another December interest rate hike when it meets next week.

4. The U.S. state of California caught fire again this week as the Santa Ana winds acted to accelerate 6 wildfires that continue to blaze their way across Southern California, mostly out of control. The fires in Northern California alone caused over $9 billion in insured losses earlier this year, according to the California Department of Insurance. The damage caused by the current infernos that are still raging across the south cannot even begin to be assessed until firefighters manage to bring them anywhere close to containment. The current blazes have destroyed at least 500 structures, threaten 23,000 homes and have forced the evacuation of 190,000 people as of late Thursday.

5. Tensions flared between Australia and China this week as Australian Prime Minister Malcolm Turnbull cited “disturbing reports about Chinese influence” when he announced proposals to limit foreign influence in domestic politics. Turnbull said “Foreign powers are making unprecedented and increasingly sophisticated attempts to influence the political process.” The Chinese embassy released its own statement saying “China has no intention to interfere in Australia’s internal affairs or exert influence on its political process through political donations” and went on to suggest that Australia reevaluate its relationship with China in “an objective, fair and rational manner” and to avoid making “irresponsible remarks to the detriment of political mutual trust” between China and Australia.

6. North Korea’s foreign ministry said this week that large scale military drills currently being carried out by the U.S. and South Korea, along with “confrontational warmongering” remarks by U.S. officials have pushed the Korean Peninsula to the brink of war. A foreign ministry spokesman said in a statement carried by North Korea’s official news agency, KCNA, that “The remaining question now is: when will the war break out? We do not wish for a war but we shall not hide from it.” U.S. Republican Senator Lindsey Graham reportedly urged the Pentagon to begin moving U.S. military dependents, such as spouses and children, out of South Korea, citing the growing potential for conflict.

7. The U.S. Congress narrowly avoided another ill-timed government shutdown this week by passing a short-term spending bill that allows the U.S. government to remain operational through December 22. With so much attention focused on the tax reform bills making their way through the Senate and the House of Representatives, the fact that the current “continuing resolution” to fund the government was set to expire this week seemed to go largely unreported. The new two-week stopgap measure allows congressional leaders time to work on a longer-term spending bill called a “Continuing Resolution” that has been the debt-fueled tool of choice for keeping the U.S. government operational since the Obama administration first used it.

8. The bubble in Bitcoin blew up to ridiculous levels this week as the cryptocurrency passed the $19,000 mark. At one point, Bitcoin was gaining roughly $1,000 in value every hour. The cryptocurrency is set to begin Futures trading on Sunday and it appeared that investors were surging into the cryptocurrency in a gamble to make a “quick buck” before that event. On Friday, Bitcoin was back below $16,000 as media personalities and larger brokerage firms were sounding the alarms. Interactive Brokers’ (IB) founder Thomas Peterffy said on Thursday as he was discussing the upcoming futures trading of Bitcoin with CNBC’s “Fast Money” that “smaller brokerage firms will go bankrupt” and that such an event could “destabilize the clearing houses.” IB will allow traders limited access to the Bitcoin futures market, requiring a 50 percent margin and absolutely no ability to hold short positions. Peterffy commented on the sudden surge of investors rushing into the digital currency, saying “I’m extremely curious, this is an amazing thing. How silly people are, it is just amazing” and noted that he does not own any Bitcoin himself. The Futures Industry Association sent a letter to the Commodity Futures Trading Commission on Wednesday warning of the risks that clearing firms will be taking on once futures trading begins in the volatile digital currency arena. On Friday, CNBC’s Jim Cramer said “short selling is just going to annihilate people when you can start trading it. Once this thing starts trading the futures, they are just going to kibosh it. You’re going to see a lot of shenanigans.”

9. In Europe, Brexit talks finally reached a breakthrough moment between the United Kingdom and the European Union. Negotiators claimed on Friday that they had reached a crucial breakthrough, particularly on citizen’s rights, the Irish border and the “divorce bill” for the U.K., after 6 months of intense negotiations. This does not conclude the negotiation process, but it does allow the negotiators involved to move on to discussions of trade agreements and a “transition period” for unforeseen events that might crop up after the UK officially departs the EU. European Commission President Jean-Claude Juncker told reporters in Brussels on Friday morning that “we have now made the breakthrough we needed” and UK Prime Minister Theresa May added “we worked extremely hard this week” and noted that there had been “give and take” from both sides.

10. Germany’s political situation remains uncertain and unstable as talks between Chancellor Angela Merkel’s Christian Democratic party and the Greens collapsed this week. The focus on trying to form a coalition government now hinges on the Social Democratic Party, but they have long insisted that they wish to remain in opposition to Ms. Merkel’s party so the uncertainty could continue as Ms. Merkel ponders leading a minority government in Germany as it enters the New Year.

11. Oil prices continued to hover near $60-a-barrel this week on an apparent increase in Chinese imports of crude. Prices are still constrained by over-supply as U.S. oil production has reached its highest output levels since the 1970s. One factor adding support for prices is an apparent threat of a union strike in Nigeria, Africa’s largest oil exporter, later this month.

12. The euro began the trading week with a short, but vertical, drop to the downside against the U.S. dollar. The euro spent the rest of the week trending steadily lower until Friday, when it saw a slight uptick after the release of the Non-Farm Payrolls (NFP) report in the U.S. and the “breakthrough” in Brexit negotiations was announced. The move on Friday was not nearly enough to send the euro back into positive territory for the week and it will close out lower against the U.S. dollar. The Japanese yen also started the week with a near vertical drop against the U.S. dollar, but it quickly halted its decline and began moving back near even. By Wednesday the yen had reached its highs for the week and then began a steady downward move that lasted through Friday. There was a slight bump higher after the release of the NFP in the U.S. but the climb was short-lived and the yen soon reversed course and moved to its lows for the week. The yen will close out the week lower against the U.S. dollar.

Geopolitical issues and the escalating bubbles in equities and cryptocurrencies remain the primary concerns to monitor for market impacts.

President Trump’s announcement on Wednesday that the United States would recognize Jerusalem as Israel’s capital and move the American embassy there from Tel Aviv sparked protests across the world, particularly in the Middle East. The move also prompted the State Department to issue a “worldwide caution”, saying “U.S. government facilities worldwide remain in a heightened state of alert. These facilities may temporarily close or periodically suspend public services to assess their security posture. In those instances, U.S. embassies and consulates will make every effort to provide emergency services to U.S. citizens.” The warning also urged American citizens abroad to be aware of local developments and remain in contact with U.S. embassies or consulates.

North Korea also continues to stoke tensions in the Asian region with its continued pursuit of nuclear capable ballistic missiles. White House national security adviser H.R. McMaster noted that the possibility of war with North Korea was “increasing every day” after the North’s latest missile test last week. Ongoing large-scale joint military exercises between the U.S. and South Korea have heightened tensions even further. A spokesman for the North’s foreign ministry said “Recently, as the U.S. is conducting the largest-ever joint aerial drill on the Korean Peninsula targeting the Democratic People’s Republic of Korea, its high-level politicians are showing alarming signs by making bellicose remarks one after another. These confrontational war-mongering remarks cannot be interpreted in any other way but as a warning to us to be prepared for a war on the Korean Peninsula.”

In Europe, Germany remains at a political impasse, with Angela Merkel’s Christian Democratic party unable to form a governing coalition with any of Germany’s other political parties. Germany’s political stalemate, combined with U.K. Prime Minister Theresa May’s own weakened state after her ill-fated decision to hold snap elections to try to secure a larger majority in parliament ahead of Brexit negotiations means that two of Europe’s traditional leadership powerhouses are full of distractions and ineffective in their leadership roles. There seems to be a contagion effect from so much political discord across Europe, as evidenced by the recent leadership crises in Spain and even in Ireland, where the minority government nearly collapsed after accusations surfaced that the Deputy Prime Minister might be implicated in the mishandling of a police whistleblower case.

Despite the growing geopolitical instability, equity markets and cryptocurrencies have marched ever higher, turning a blind eye to what appears to be an accelerating environment of risk. When Bitcoin begins trading in the Futures market on Sunday night, the already extreme volatility that it experienced this week could grow even more pronounced. Analysts and media personalities alike have been sounding the warning bells all week as Bitcoin has surpassed valuation levels that have been described as “a joke”, “a fraud”, “ridiculous” and “unsustainable”. Many media personalities drew comparisons between Bitcoin and the famed Dutch Tulip Mania in the 1600s or the Beanie Baby craze that took hold during the 1990s.

Savvy investors have continued to diversify their portfolios away from overexposure to any single asset class, particularly equities and cryptocurrencies which have reached record bubble heights. These investors have sought out other tangible, physical hard assets that might offer some shelter for their portfolios when the equity and cryptocurrency bubbles finally collapse. One such asset that savvy investors continue to accumulate to aid in diversifying their portfolios is physical precious metals. As the Bitcoin craze surged this week, an accompanying dip in precious metals prices appeared to be offering a buying opportunity for investors to accumulate more product for their portfolios 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 1st2017 Dec 8th2017 Net Change
Gold $1279.40 $1247.34 (32.06) – 2.51%
Silver $16.36 $15.80 (0.56) – 3.42%
Platinum $939.10 $886.00 (53.10) – 5.65%
Palladium $1029.00 $1009.50 (19.50) – 1.90%
Dow Jones 24251.49 24329.16 77.67 + 0.32%

Previous year Comparisons

Dec. 9th2016 Dec 8th2017 Net Change
Gold $1160.60 $1247.34 86.74 + 7.47%
Silver $16.94 $15.80 (1.14) – 6.73%
Platinum $919.50 $886.00  (33.50) – 3.64%
Palladium $  739.50 $  1009.50 270.00 + 36.51%
Dow Jones 19756.85 24329.16 4572.31 + 23.14%

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

Gold Silver
Support 1240/1225/1205 15.60/15.20/14.90
Resistance 1255/1270/1310 16.00/16.15/16.30
Platinum Palladium
Support 885/845/800 1000/975/950
Resistance 900/935/960 1020/1040/1060
This is not a solicitation to purchase or sell.
© 2017, Precious Metals International, Ltd.

Tilt! Game Over

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

Anyone who’s ever played a pinball machine can attest to the fact that the player easily becomes wrapped up in it, to the point of the exclusion of all else happening around him. He hits the flippers rapidly, glancing up from time to time at his increasing score. It becomes irresistible to jiggle the table frequently, in an effort to get the ball to go where the player wants it to go.

Tilt! Game Over
Tilt! Game Over.
An article by: Jeff Thomas.

And, of course, every player is familiar with the disappointment that comes when he’s overplayed his body English and the machine stops suddenly, lighting up a sign that says, “Tilt! Game Over”.

Much of the world is now embroiled in an economic game similar to pinball. The stakes are becoming ever greater, the flipper buttons are being pressed ever faster and those who are desperately attempting to keep the collapsing system going are shoving the table ever more recklessly.

At this point in the world economy, the number of possible triggers that could take the system down is growing ever more rapidly. And, for those who are paying attention, the list of dominoes that we’ll see fall is becoming ever more starkly apparent. Let’s have a look at just some of the more basic dominoes:

  • Creditor countries dumping US Treasuries back into the US market (This has already begun and will continue until the dollar crashes).
  • Cessation of the US dollar as the petrodollar (This is about to begin, but will take several years to play out fully).
  • Economic sanctions by the US against Russia and China ( that are unlikely to have the support of the US’s allies).
  • Implementation of tariffs, resulting in a tariff war.
  • A rise in interest rates (as was consciously created in 1929 by the Fed in order to trigger a timed crash).
  • Bursting of the bond market bubble.
  • A major stock market crash.
  • Dramatic increase in mortgage defaults.
  • A spike in commodity prices, coinciding with a drop in asset values (inflation and deflation at the same time – the worst possible combination).
  • Collapse of the paper gold market.
  • A switch to the new IMF cryptocurrency and a major effort to end the use of cash (This will succeed to some extent, but will create a worldwide monetary black market).
  • US defaults on its debt (This, too will occur over several years).
  • Collapse of the dollar.

Many of these events will be black swans. As can be expected, some of the events will be sudden, whilst others will take time to play out. In addition, although they’re likely to occur roughly in order, several will be in play at any given time.

Although each of these events can be anticipated, they won’t come with warning notices. Their actual occurrence will be unheralded. (As an example, when a stock market crash occurs, investors will wake up to discover that it’s occurred whilst they were sleeping.)

And, just as in pinball, the end of the game will come quite suddenly. The player will know that it’s “Game Over” when he goes to his ATM and finds that the screen is dark. The machine has been made inoperative overnight. Annoyed, he’ll go to the next-nearest ATM, but will find that that one too is shut down. He’ll go to others and at some point, will realise that they’re all shut down.

Without spending cash in his wallet, he’ll then go to the local gas station or supermarket and attempt to pay with his credit cards, but will find that they’ve all been made inactive. In trying to sort out the problem with the owner, he’ll be told that all credit cards for all his customers have been denied that day.

The realization will suddenly hit that money has ceased to flow. For how long? The television news programmes will state that it will be temporary, but they don’t define “temporary”.

Those few individuals who understood that an economic crisis was brewing, will take inventory of how much cash they have remaining in their wallets and how much they’ve stashed at home, and realise that this total now represents their total purchasing power.

Overnight, wealth is no longer measured in saleable assets, since, if virtually no one has spending money, they have no means of payment. Therefore, the fellow who thought that, if he found himself in a pinch, he could always sell the Harley in the driveway, or perhaps the family boat, for some quick cash, can no longer locate a buyer who can pay him – at any price.

Of course, many people will do all they can to contact their bankers, demanding that they be allowed to remove their money on deposit and extract the contents of their safe deposit boxes, but they’ll receive a recording, saying, “We’re sorry for the inconvenience, but the bank will be temporarily closed until further notice.”

At this point, “wealth” will change its definition to include only the cash in hand, plus whatever might be bartered.

Recently, I received an email from an associate in Canada, who asked, “When will I know when I really have to make a move?” My answer was, “You won’t. But there will be an actual day when you’ll know that you’ve waited too long and it’s now too late. That day will be the day that you visit the ATM and find it closed.”

That’s it. “Game over.”

So, are we all doomed? Well, no, not at all. Those who are pro-active can remove themselves from the system now, before the system reaches the “Tilt!”

If the reader lives in one of the jurisdictions that’s likely to be the most impacted (EU, US, Canada, etc.) he would be wise to liquidate his possessions there and move the proceeds to a jurisdiction that’s less likely to be impacted and which has a long reputation for economic stability. He should place his wealth (no matter how great or little) in precious metals and real estate overseas – again in a safer jurisdiction.

He should retain some money (in cash and precious metals) at home, or nearby – enough to cover a few months expenses.

If he can afford to, he should then create a bolthole in a jurisdiction that he can go to quickly, should the crisis overtake him.

However, even those who recognize that their home country may soon become an economic prison camp are likely to dither, failing to prepare adequately. Sadly, they’re likely to find themselves in the position of the fellow in the photo above, discovering that “Game Over” has arrived before he could ready himself.

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.