Archive for April, 2015
IMF decision may trigger a collapse of the dollar (Devastating for Seniors) Click Here
From Chris Kimble at Kimble Charting Solutions:
CLICK ON CHART TO ENLARGE
When it comes to “upside leadership,” few can compete with the biotech sector!
IBB hit resistance line (1) on 3/20 and created a “reversal pattern at (2).
Since then IBB has traded sideways, and may have created a “double top” at the (2) reversal level.
Now IBB is testing Fibonacci 423% extension level as support this morning at (3).
It might be worth paying close attention to leadership, because what IBB does at (3) could influence the market in both directions!
The truth about “cryptocurrencies”
While the mainstream media is fixated on new digital currencies… and many people have lost massive amounts of money on Bitcoin… some of America’s wealthiest families are quietly using a very different type of alternative “cryptocurrency.” Find out here…
|EXCLUSIVE INTERVIEW: You won’t believe what Ron Paul just told us
You’ve probably seen interviews with Dr. Paul in the past… or maybe you’ve watched his testimony in front of Congress. But we guarantee you’ve never seen him quite like this…
From Jeff Thomas at Doug Casey’s International Man:
Recently, France decided to crack down on people who make cash payments and withdrawals, and who hold small bank accounts.
The reason given was, not surprisingly, to “fight terrorism,” the handy catchall justification for any new restriction governments wish to impose on their citizens. French Finance Minister Michel Sapin stated at the time, “[T]errorism feeds on fraud, money laundering, and petty trafficking.”
And so, in future, people in France will not be allowed to make cash payments exceeding €1,000 (down from €3,000). Additionally, cash deposits and withdrawals totaling more than €10,000 per month will be reported to Tracfin—an anti-fraud and money laundering agency.
Currency exchange will also be further restricted. Anyone changing over €1,000 to another currency (down from €8,000) will be required to show an identity card.
Do you need to make a deposit on a car? That might be suspect. Did you just deposit a dividend you received? It might be a payment from a terrorist organisation. Planning a holiday and need some cash? You might need to be investigated for terrorism.
And France is not alone. In the U.S., federal law requires banks to file a “suspicious activity report” (SAR) on their customers whenever a customer requests a suspicious transaction. (In 2013, 1.6 million SAR’s were submitted.)
As to what may be deemed “suspicious,” it may be any transaction of $5,000 or more, but it may also mean a series of transactions that, together, exceed $5,000.
The reader may be saying to himself, “But that’s just normal, everyday banking business—that means anybody, any time, could be reported.” If so, he would be correct. Essentially, any banking activity the reader conducts could be regarded as suspect.
In Italy, in 2011, Prime Minister Mario Monti began working to end the right of landlords, tradesmen, and small businesses to perform large transactions in cash, which critics say help them evade taxation. In December of that year, his government reduced the maximum allowed cash payment from €2,500 euros to €1,000.
Spain has outlawed cash transactions over €2,500. The justification? “To crack down on the black market and tax evaders.”
In Sweden, the country where the first banknote was created in 1661, the use of cash is being steadily eliminated. Increasingly, expenses are paid and purchases made by cellphone text message, and many banks have stopped handling cash altogether.
Denmark’s central bank, Nationalbanken, has another justification for ending its use of banknotes—producing paper money and coinage is not cost effective.
Israel also seeks to end the use of cash. Prime Minister Benjamin Netanyahu’s chief of staff has announced a three-phase plan to “all but do away with cash transactions in Israel.”
Individuals and businesses would initially continue to be allowed to make small cash transactions, but eventually, all transactions would be converted to electronic forms of payment. The justification being used in Israel is that “cash is bad,” because it encourages an underground economy and enables tax evasion.
Across the Atlantic, banks and governments are on a similar campaign. A 2012 law in Mexico bans large cash transactions, with a maximum penalty of five years in prison.
In August 2014, Uruguay passed the Financial Inclusion Law, which limits cash transactions to US$5,000. In future, all transactions over that amount will be required to be performed electronically. The crying need for such a law? The stated reason was to improve the country’s credit ratings.
The Elimination of Paper Currency
In recent years, in commenting on the inevitability of currency collapse in those countries that are indebted beyond the possibility of repayment, I’ve made the prediction that governments and banks would jointly resort to the elimination of paper currency and replace it with an electronic one.
Some readers have understandably regarded the prediction as “alarmist.” After all, the idea is so farfetched—paper currency may be conceptually flawed, but it’s been around for a long time.
But banks and governments seek total control of money, and this can only be achieved if they possess a monopoly on the flow of money.
If a worldwide system can be implemented in which currency transactions can only take place electronically through banking institutions, the banks will then have total power over the ability of a people to function economically.
But why would any government allow the banks such dictatorial monetary control? The answer is that governments would then realise a long-held, but heretofore impossible dream: to have access to a record of every monetary transaction that takes place for every single individual.
Governments have been both more proactive and bolder than I had anticipated and are simply imposing the restrictions worldwide under the justifications previously stated. As yet, there hasn’t been any backlash, and it may be that people worldwide may simply swallow the pill, not understanding what it means to their economic liberty.
If the public are not treating the new system as serious business, governments most assuredly are. Bankers on both sides of the Atlantic have forcibly become unpaid government spies. If they don’t comply, they can be fined and/or lose their banking charter. Directors can be imprisoned.
The U.S. Justice Department already wants to take this overreach even further. Banks are now being asked to call the authorities whenever something “suspicious” occurs, presumably so that immediate action may be taken.
What we are witnessing is the creation of totalitarian control of your finances. The implication that you may have some sort of terrorist involvement is a smokescreen.
As the above information attests, if for any reason you object to any of these measures, you have already been forewarned—you may be suspected of money laundering, tax evasion, or even terrorism. If you use cash for any reason—to pay your rent, to buy a used car, or (soon) to pay for your lunch—you may trigger an investigation. (The onus of proof that you are not guilty good will be on you.)
The take-away from this discussion? Totalitarian control of currency is an inevitability, and it will take place sooner rather than later. The only question is whether the reader can retain some control of his wealth. Fortunately, wealth may still be held in land and precious metals, but these are only safe if they’re held outside a country that seeks totalitarian rule over its people.
The ability to retain wealth still exists and, as always, internationalisation remains a key element to its continuation.
Editor’s Note: The ultimate way to diversify your savings internationally is to transfer it out of the immediate reach of your home government. And we’ve put together an in-depth video presentation to help you do just that. It’s called, “Internationalizing Your Assets.”
Our all-star panel of experts, including Doug Casey, provide low-cost options for international diversification that anyone can implement – including how to safely set up foreign storage for your gold and silver bullion and how to move your savings abroad without triggering invasive reporting requirements. This is a must watch video for any investor and it’s completely free. Click here to watch Internationalizing Your Assets right now.
From Bill Bonner, Chairman, Bonner & Partners:
So far, we’ve proposed two reasons why the 21st century has been such a dud…
First… the developed nations are cursed with too many geezers.We have nothing against old people (especially as we hope to be one ourselves all too soon). But old people do not build a new economy; young people do. And today, there are not enough young people to power the kind of economic growth we’ve gotten used to.
Second… rules, regulations, subsidies, laws and orders now protect established financial interests against upstart competitors.
Businesses get older along with the population, as government creeps over more and more of the economy.
The feds use monopoly force to prevent competition and reward today’s voters and capital owners. The baby born in 2015 finds himself subject to debts, obligations and restrictions that were meant to benefit his grandparents.
Today, we give you another reason for the flop that is the 21st century. As you will see, they are all related…
We begin with this report from Fox Business:
Mortgage finance giant Fannie Mae just debuted its new “HomePath Ready Buyer Program,” which lets first-time homebuyers get up to a 3% rebate of a home’s purchase price if they buy a Fannie Mae property, so long as they complete an online homebuyer education course which costs $75.
The new HomePath Ready Buyer Program, as described by Fannie Mae, could create $4,500 in savings on a $150,000 home for first-time buyers (defined as borrowers who have not owned a home in the prior three years).
In addition to the 3% rebate, Fannie Mae will refund the cost of the homebuyer education course.
This new program comes after Melvin Watt, director of the Federal Housing Finance Agency, announced last December that Fannie Mae and Freddie Mac would soon start buying mortgage securities backed by 30-year loans with just 3% down payments, which banks largely halted delivering two years ago, instead demanding 20% down.
That’s right: We’re back to 3% down payments, rebated. And we’re back to the feds (Fannie Mae is a government entity) encouraging people to load themselves down with mortgage debt.
“Stimulus,” is what they call it. “A debt trap” is what it really is.
Housing is essentially a form of consumption – of lifestyle enhancement – instead of capital enhancement. And consumption debt has become so weighty that it drags the entire world economy down.
Even the International Monetary Fund says so. Here’s Ambrose Evans-Pritchard in British newspaper The Telegraph:
The International Monetary Fund has sounded the alarm on the exorbitant levels of debt across the world, this time literally.
The IMF’s World Economic Outlook describes a prostrate planet caught in a low-growth trap as the population ages across the Northern Hemisphere, and productivity splutters. Nor is this malaise confined to the West. The fertility rate has collapsed across the Far East. China’s workforce is shrinking by three million a year.
The report warned of a “persistent reduction” in the global growth rate since the Great Recession of 2008-2009, with no sign yet of a return to normal. “Lower potential growth will make it more difficult to reduce high public and private debt ratios,” it said.
Christine Lagarde, the Fund’s managing director, calls it the “New Mediocre.”
The world has been drawn deeper into a Faustian Pact.
Total public and private debt levels have reached a record 275% of GDP in rich countries, and 175% in emerging markets. Both are up 30 points since the Lehman crisis.
Nobody knows for sure whether this is benign, or how it will end. The haunting fear for the lords of global finance at IMF headquarters this year is that it may never be repaid. Caveat Creditor.
The Root Cause of the Global Slump
Not at all: Mediocrity would be a big improvement. What we’ve got here is awfulness.
Debt doesn’t only slow GDP growth. It pushes it into reverse. That is what we’ve seen so far in the 21st century. The typical American has less money to spend today than he had in 1999. The century has set him back.
Here is Lacy Hunt and Van Hoisington of Hoisington Investment Management:
Over the more than two thousand years of economic history, a clear record emerges regarding the relationship between the level of indebtedness of a nation and its resultant pace of economic activity.
The once flourishing and powerful Mesopotamian, Roman and Bourbon dynasties, as well as the British Empire, ultimately lost their great economic vigor due to the inability to prosper under crushing debt levels.
In his famous paper “Of Public Finance” (1752) David Hume, the man some consider to have been the intellectual leader of the Enlightenment, wrote about the debt problems of Mesopotamia and Rome. The contemporary scholar Niall Ferguson of Harvard University also described the over-indebted conditions in all four countries mentioned above.
Since 1940, real per capita GDP in the US grew by 2.5% a year. That’s mediocre. But since the 21st century began, real per capita growth has averaged only 1% a year. That’s downright awful.
Hunt and Hoisington explain why:
The reason for the remarkably slow expansion over the past decade and a half has to do with the accumulation of too much debt.
Numerous studies indicate that when total indebtedness in the economy reaches certain critical levels there is a deleterious impact on real per capita growth.
Those important over-indebtedness levels (roughly 275% of GDP) were crossed in the late 1990s, which is the root cause for the underperformance of the economy in this latest expansion.
Non-farm business productivity is rising at the slowest rate in 50 years. And the velocity of money – the speed at which each unit of currency changes hands and a key component of inflation – has fallen to the lowest level in half a century.Why?
Because of the declining marginal utility of debt. When there is little debt, you can add cash and credit to a system and get a boost.
The money circulates. The economy revs up. But the more you add, the greater the burden of debt becomes… and the less of a boost you get from it.
Finally, you’ve ballooned the Fed’s balance sheet to $4.5 trillion and you’re getting a measly 1% per capita GDP growth in return.
And then… as in the first quarter of this year… the growth falls to near zero.
All the “stimulus” since 2000 was a scam.
It stimulated nothing but more debt – which slows the rate of real growth.
Crux note: Bill says a crash is coming… Don’t let it catch you off guard. There are some surprisingly simple steps you can take right now to protect your savings… and even set yourself up to profit as other investors panic. Prepare yourself here.
Federal Reserve policy makers said the economy weakened, partly for reasons that will fade, after a sharp slowdown reinforced expectations officials will keep interest rates near zero at their next meeting in June or longer.
“Economic growth slowed during the winter months, in part reflecting transitory factors,” the Federal Open Market Committee said in a statement Wednesday in Washington. “The pace of job gains moderated,” it said, and “underutilization of labor resources was little changed.”
Fed officials have said they expect to raise rates this year for the first time since 2006 as the economy nears full employment, and that their decision will be guided by the latest data. A report earlier Wednesday showed growth almost ground to a halt in the first quarter, held back by severe winter weather and slumping business spending and exports.
“Although growth in output and unemployment slowed during the first quarter, the committee continues to expect that, with appropriate policy accommodation, economic activity will expand at a moderate pace,” the Fed said.
Stocks and U.S. Treasuries pared earlier losses after the announcement. The Standard & Poor’s 500 index was down 0.5 percent at 2,104.62 as of 2:10 p.m. in New York after earlier falling as much as 0.8 percent. Ten-year Treasury notes yielded 2.04 percent, up 4 basis points from Tuesday.
The Fed repeated it will raise rates when it sees further labor-market improvement and is “reasonably confident” inflation will move back to its 2 percent goal over time. The decision was unanimous.
“Inflation is anticipated to remain near its recent low level in the near term, but the committee expects inflation to rise gradually toward 2 percent over the medium term,” the FOMC said.
Officials held the benchmark overnight fed funds rate in a zero to 0.25 percent range, where it has been since December 2008. They had said last month that they would be unlikely to raise rates at their April meeting.
A run of disappointing economic data has cast doubt on how quickly the Fed can meet its goals for full employment and stable prices.
The economy grew at a 0.2 percent annual rate last quarter after advancing 2.2 percent in the prior three months, Commerce Department data showed. Economists surveyed by Bloomberg forecast a 1 percent gain.
While the impact of unusually harsh winter weather is likely to fade, other drags, including a drop in capital spending and exports, may last longer.
“The economy has dug a deeper hole and will take longer for growth to bounce back above trend,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. “A June meeting is on the table, but it’s a long shot now.”
Employers added 126,000 workers to payrolls in March, the weakest month since December 2013. Reports on manufacturing and retail sales have also trailed behind economists’ expectations.
Even before the release of the first quarter GDP report, economists had pushed back their forecasts for liftoff.
In a Bloomberg survey conducted last week, 73 percent of respondents predicted the central bank will wait until September. In a March poll, a majority predicted the first rate increase in June or July.
Expectations for continued low rates have helped fuel gains in stocks while keeping Treasury yields down. The Standard & Poor’s 500 Index is near record highs, and the yield on the benchmark 10-year Treasury note was 2 percent late Tuesday in New York, below the one-year average of 2.28 percent
While unemployment has fallen to 5.5 percent from a post-recession peak of 10 percent, Fed officials have reduced their estimate of the long-run jobless rate to 5 percent to 5.2 percent, suggesting they have room to keep borrowing costs low to put more Americans back to work.
What’s more, inflation has lingered below the Fed’s goal for 34 straight months. The Fed’s preferred gauge of prices rose just 0.3 percent in February from a year earlier.
Lower oil prices have helped keep a lid on inflation while also sapping energy-related investment, and a stronger dollar has curbed exports and made imports cheaper.
Pfizer Inc., the biggest U.S. drugmaker by sales, cut its 2015 earnings forecast because of the impact of the dollar on overseas sales.
From Brian Hunt and Ben Morris, DailyWealth Trader:
If you’re on the sidelines, don’t wait any longer…
One of the strongest uptrends in the world is gaining ground… And it’s making some investors lots of money. If you’re following DailyWealth, you should be one of them.
We’re talking about the uptrend in European stocks…
Before January 22 of this year, most European stocks were either trending lower or moving sideways. But those trends were broken on January 22…
That’s the date the head of the European Central Bank (ECB) – Mario Draghi – announced a massive, €1 trillion bond-buying program. The ECB will buy €60 billion in bonds every month until September 2016… and maybe longer. The move is meant to support the European economy, which is struggling with high unemployment and slow growth.
This is the big idea behind what Steve Sjuggerud calls the “Draghi Asset Bubble.”
To show you what we mean, let’s take a look at the charts of a few funds that track stocks in European countries…
Germany is the largest economy in the European Union (EU). Here’s the chart of the Germany iShares fund. You can see the downtrend was broken right around the time of Draghi’s announcement.
The same goes for British stocks. The United Kingdom is the EU’s second-largest economy.
Here’s the chart of French stocks. France is the EU’s third-largest economy.
And Italy… the European Union’s fourth-largest economy.
You get the idea. Mario Draghi’s announcement – which was followed by massive amounts of money flowing into European economies – has boosted share prices. If the ECB’s actions have similar effects on European stocks as the Federal Reserve’s had on U.S. stocks, we’re in for more gains to come.
And it’s not just the charts that look good. European stocks pay big dividend yields… The Dow Jones Euro STOXX 50 Index – the “Dow Jones Industrial Average of Europe” – yields 3.2% today. The index is made up of 50 blue-chip stocks across 12 European countries. They include multinationals like British consumer-goods firm Unilever, French health and beauty product company L’Oréal, and Belgian beer-maker Anheuser-Busch InBev.
The 30 stocks in the U.S. Dow Jones Industrial Average – for comparison – have an average dividend yield of 2.3%.
Plus, lots of bonds and bank accounts in Europe pay near-zero interest rates. Others have negative rates… meaning you have to pay to store your money. The comparatively high yields in stocks will attract fund managers and individual investors searching for income. And this supports share prices…
One of our favorite ways to take advantage of this idea is with the SPDR Euro Stoxx 50 Fund (FEZ), which tracks the Euro Stoxx 50 Index we mentioned above. As you can see in the chart below, FEZ also broke its downtrend… and on Monday, the fund hit a six-month high.
European stocks have bigger yields than U.S. stocks… And they have the support of the European Central Bank… at least through late next year. If you’re not making money on this big trend, start today.
Investing In Gold Over The Long-Run: Which ETF Is Best?
Gold is an excellent addition to any portfolio as a hedge against inflation and recessions. However, investors are often confused about the best way to invest in gold over the long-run. We discuss the pros and cons of the various ETF options, as well …
- January 2016 (20)
- December 2015 (58)
- November 2015 (128)
- October 2015 (159)
- September 2015 (173)
- August 2015 (139)
- July 2015 (221)
- June 2015 (244)
- May 2015 (231)
- April 2015 (245)
- March 2015 (214)
- February 2015 (182)
- January 2015 (179)
- December 2014 (175)
- November 2014 (209)
- October 2014 (242)
- September 2014 (187)
- August 2014 (241)
- July 2014 (228)
- June 2014 (209)
- May 2014 (254)
- April 2014 (293)
- March 2014 (253)
- February 2014 (230)
- January 2014 (228)
- December 2013 (216)
- November 2013 (250)
- October 2013 (295)
- September 2013 (247)
- August 2013 (273)
- July 2013 (272)
- June 2013 (277)
- May 2013 (289)
- April 2013 (299)
- March 2013 (289)
- February 2013 (283)
- January 2013 (286)
- December 2012 (174)
- November 2012 (161)
- October 2012 (280)
- September 2012 (268)
- August 2012 (270)
- July 2012 (165)
- June 2012 (229)
- May 2012 (318)
- April 2012 (246)
- March 2012 (287)
- February 2012 (357)
- January 2012 (327)
- December 2011 (303)
- November 2011 (330)
- October 2011 (134)