Archive for September, 2015

Buy gold… while you still can

From Chris Martenson at PeakProsperity:

One of our long-running themes here is that the truly historic and massive flows of gold from West to East is (someday) going to stop, for the simple reason that there will be no more physical bullion left to move.

It’s just a basic supply versus demand issue. At current rates of flow, sooner or later the West will entirely run out of physical gold to sell to China and India. Although long before that hard limit, we suspect that the remaining holders of gold in the West will cease their willingness to part with their gold.

So the date at which “the West runs out of gold to sell” is somewhere between now and whenever the last willing Western seller parts with their last ounce. As each day passes, we get closer and closer to that fateful moment.

This report centers on preponderance of fascinating data revealing the extent of the West’s massive dis-hoarding of physical gold, for the first time, begins to allow us to start estimating the range of end-dates for the flow to the East.

Here’s the punchline: there’s an enormous and growing disconnect between the cash and physical markets for gold. This is exactly what we would expect to precede a major market-shaking event based on a physical gold shortage.

Stopping the Flows

There are only two outcomes that will stop the process of Western gold flowing East, one illegitimate and the other legitimate.

  1. It becomes illegal to sell gold. This is the favored approach of central planners who prefer to force change by dictate rather than via free markets and free will. Unfortunately, this strain of political intervention is dominant in the West, particularly in the U.S. and E.U.
  2. The price of gold dramatically rises. A large increase in the price of gold will (paradoxically) cause greater demand for gold in the West and (sensibly) less demand in the East. This is what should legitimately happen given current supply and demand dynamics. But it may not.

There’s always a third option, we suppose: economically carpet-bombing China and India’s financial systems to scare/force some gold back out. Consider such an approach along the ‘economic hitman’ lines of thinking.

This would be done, for example, by having outside interests sell the Rupee furiously, driving down its value and forcing the Indian monetary authorities to defend it by using up foreign reserves to buy the Rupee. Then wait for India to run out of foreign reserves and then casually ‘suggest’ that its government use gold sales to continue defending its currency. India’s leaders would have to find ways to somehow ‘coax’ gold from its citizens. I think we can all imagine the sorts of draconian rules and penalties that desperate governments would deploy in such a situation.

As a side note, I believe this is the same process that was used to ‘coax’ a lot of gold out of the GLD trust since 2012. After enough bear raids on the price of gold, which began somewhat suspiciously almost exactly on the date that QE3 was announced, Western gold ‘investors’ lost interest in the yellow metal, sold their GLD shares in droves, and hundreds of tons of gold were liberated from that stockpile.

What is truly odd from a chart perspective: this hammering down of gold started just after it had broken to the upside out of a textbook perfect triangle, when it looked seemingly ready to head off to higher values:

But in the days immediately following the QE3 announcement, gold shed $100, then barely recovered, and just wandered lower until it was violently slammed from $1550 to $1350 over one night (of course) in April 2013.

Now this was highly fortuitous for the ever-lucky Federal Reserve. After launching the largest money printing campaign in U.S. history, the Fed did not need gold heading any higher, possibly providing a signal that would cast doubt on the wisdom or possible effectiveness of its easy-money policies. Policies, mind you, that the years since have proven to do little more than enrich the banker class and the 0.1%, as well as lard the system with extraordinary levels of new indebtedness and liquidity.

The Fed Indeed Cares About Gold

Gold, when unfettered, has a habit of sending signals that the Fed really doesn’t like. Therefore the Fed is at the top of everyone’s suspect list when it comes to wondering who might be behind the suspicious gold slams. Whether the Fed does it directly is rather doubtful; but they have a lot of useful proxies out there in their cartel network.

To reveal the extent to which gold sits front and center in the Fed’s mind, and how they think of it, here’s an excerpt from a 1993 FOMC meeting’s full transcript. Note that the full meeting notes from Fed meetings are only released years after the fact. The most recent ones available are only from 2009. Listen to what this FOMC voting member had to say about gold:

At the last meeting I was very concerned about what commodity prices were doing. And as you know, they got lucky again and told us that the rate of inflation was higher than we thought it was.

Now, I know there’s nothing to it but they did get lucky. I’ve had plenty of econometric studies tell me how lucky commodity prices can get. I told you at the time that the reason I had not been upset before the March FOMC meeting was that the price of gold was well behaved.

But I said that the price of gold was moving. The price of gold at that time had moved up from 328 to 344, and I don’t know what I was so excited about! I guess it was that I thought the price of gold was going on up. Now, if the price of gold goes up, long bond rates will not be involved.

People can talk about gold’s price being due to what the Chinese are buying; that’s the silliest nonsense that ever wasThe price of gold is largely determined by what people who do not have trust in fiat money system want to use for an escape out of any currency, and they want to gain security through owning gold.

A monetary policy step at this time is a win/win. I don’t know what is going to happen for sure. I hope Mike is correct that the rate of inflation will move back down to 2.6 percent for the remaining 8 months of this calendar year. If we make a move and Mike is correct, we could take credit for having accomplished this and the price of gold will soon be down to the 328 level and we can lower the fed funds rate at that point in time and declare victory.

(Source – Fed)

There it is, in black and white from an FOMC member’s own mouth spelling out the primary reason why I hold gold: I lack faith in our fiat money system. He nailed it. Or rather, I have very great faith that the people managing the money system will print too much and ultimately destroy it. Same thing, said differently.

And of course the people at the Fed are acutely aware of gold’s role as a barometer of people’s faith in ‘fiat money.’ Of course they track it very carefully, discuss it, and worry about it when it is sending ‘the wrong signals.’ I would, too, if in their shoes.

The Federal Reserve Note (a.k.a. the U.S. dollar) is literally nothing more than an idea. It has no intrinsic value. America’s money supply is just digital ones and zeros careening about the planet, accompanied by a much smaller amount of actual paper currency. The last thing an idea needs is to be exposed as fraudulent. Trust is everything for a currency — when that dies, the currency dies.

The other thing you can note from these FOMC minutes is that gold pops up 19 times in the conversation. The Fed members are actively and deliberately discussing its price, role in setting interest rates, and the psychological impact of a rising or falling gold price.

Later in that same meeting Mr. Greenspan says:

My inclination for today — and I’m frankly most curious to get other people’s views–would be to go to a tilt toward tightness and to watch the psychology as best we can. By the latter I mean to watch what is happening to the bond market, the exchange markets, and the price of gold…

I have one other issue I’d like to throw on the table. I hesitate to do it, but let me tell you some of the issues that are involved here. If we are dealing with psychology, then the thermometers one uses to measure it have an effect. I was raising the question on the side with Governor Mullins of what would happen if the Treasury sold a little gold in this market.

There’s an interesting question here because if the gold price broke in that context, the thermometer would not be just a measuring tool. It would basically affect the underlying psychology. Now, we don’t have the legal right to sell gold but I’m just frankly curious about what people’s views are on situations of this nature because something unusual is involved in policy here. We’re not just going through the standard policy where the money supply is expanding, the economy is expanding, and the Fed tightens. This is a wholly different thing.

The recap of all this is that the Fed watches the price of gold carefully, frets over whether the price of gold is ‘sending the right signals’ to market participants, and pays attention to gold’s impact on market psychology (with an eye to controlling it).

In short, the Fed keeps a close eye on the “golden thermometer.”

Back to the supply story for gold. Not long after gold began its downward price movement in 2012, the GLD trust began coughing up a lot of gold, eventually shedding more than 500 tonnes; a truly massive amount.


(Source)

In my mind, the absolute slamming of gold in 2013 was done by a few select entities and represents one of the clearest cases of price manipulation on the recent record. While we can debate the reasons ‘why’ gold was manipulated lower or ‘who’ did it, to me, there’s no question about how it was done. Or that it was done.

Massive amounts of paper gold were dumped into a thin overnight market with the specific intent of driving down the price of gold.

It’s an open and shut case of price manipulation. Textbook perfect.

Even if these bear raids were performed by self-interested parties that made money while doing it, you can be sure the Fed was smiling thankfully in the background and that the SEC wasn’t going to spend one minute looking into whether any securities laws were broken (especially those related to price manipulation). Gold’s falling “thermometer” was exactly what the central planners wanted the world to see.

Down and Out

The paper markets for gold are centered in the U.S., while the physical market for gold is centered in London (but increasingly Shanghai). It’s safe to say that the paper markets set the spot price, while the physical movement of gold originates in London.

What’s increasingly obvious is the growing disconnect between the paper and physical markets. This is exactly what we’d expect to see if the paper markets were pushing in one direction (down) while physical gold was heading in a different direction (out).

The tension between these ‘down and out’ movements is building and, according to a senior manager of one of the largest gold refineries in the world located in Switzerland, the current price of gold “has no correlation to the physical market.”

He notes a lot of on-going tightness in the physical market. Unsurprisingly, gold is moving from West to East with vaults in London supplying much of the physical metal that’s being refined into fresh kilo bars and sent off to China and India.

But given the astonishing amount of physical demand, why has the price of gold been heading steadily lower over the past several years?

The aforementioned Swiss refiner is equally perplexed:

If I am honest, the only thing I could share now with you would be that I’m perplexed about the discrepancy between the prices and the situation of the physical market. This is something I still do not understand and is a riddle for me every day. For all people who are interested in precious metals, the physical side of this business should be given more emphasis.

(Source – Transcript)

There’s no mystery as to demand going up in China and India as the price went down. Interested buyers will buy more at a lower price.

But it’s a big mystery as to why Western “investors” seem more interested in selling gold than buying it right now.

Evidence of Physical Tightness

Besides the first-hand experience of the Swiss refiner, there have been numerous stories in the main stream press also pointing to tightness in the London physical gold market as well as relentless demand from China and India being the driver of that condition:

Gold demand from China and India picks up

Sep 2, 2015

London’s gold market is showing tentative signs of increased demand for bullion from consumers in emerging markets, after the price of the precious metal fell to its lowest level in five years in July.

The cost of borrowing physical gold in London has risen sharply in recent weeks. That has been driven by dealers needing gold to deliver to refineries in Switzerland before it is melted down and sent to places such as India, according to market participants

“[The rise] does indicate there is physical tightness in the market for gold for immediate delivery,” said Jon Butler, analyst at Mitsubishi.

The move comes as Indian gold demand picked up in July, with shipments of gold from Switzerland to India more than trebling. Most of that gold is likely to originally come from London before it is melted down into kilobars by Swiss refineries, according to analysts.

In the first half of this year, total recorded exports of gold from the UK were 50 per cent higher than the first half of 2014, on a monthly average basis, according to Rhona O’Connell, head of metals for GFMS at Thomson Reuters. More than 90 per cent was headed for a combination of China, Hong Kong and Switzerland.

London remains the world’s biggest centre for trading and storing gold.

(Source)

Shipments and exports are up very strongly and nearly all of that gold is headed to just two countries; China and India.

India Precious Metals Import Explosive – August Gold 126t, Silver 1,400t

Sept 10, 2015

In the month of August 2015, India imported 126 tonnes of gold and 1,400 tonnes of silver, according to data from Infodrive India. Gold import into India is rising after a steep fall due to government import restrictions implemented in 2013.

Year-to-date India has imported 654 tonnes of gold, which is 66 % up year on year. 6,782 tonnes in silver bars have crossed the Indian border so far this year, up 96 % y/y.

Gold import is set to reach an annualized 980 tonnes, which would be up 26 % relative to 2014 and would be the second highest figure on (my) record – my record goes back to 2008.

Silver import is on track to reach an annualized 10,172 tonnes, up 44 % y/y! This would be a staggering 37 % of world mining.

(Source)

With China and India’s combined appetite for gold being higher than total world mining output, it only stands to reason that somebody has to be parting with their physical gold and those entities appear to be substantially located in the U.S. and U.K.

When There’s No More To Sell, There’s No More To Buy

All the above evidence of a tightening physical market for gold is just the tip of the iceberg.

In Part 2: Why Gold Is Headed Higher & May Be Unavailable At Any Price we look at the frightening inventory declines in bullion storage that the LBMA and the COMEX have experienced over the past year.

We then lay out how this deliberate suppression of gold prices by the central planners is destined to end: with MUCH higher prices for gold, and much less availability. In fact, there is high likelihood we will experience a point at which it may be nearly impossible for the average investor to acquire physical gold, as there will be no sellers willing to part with it.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access)

Crux note: Our colleague Matt Badiali has found reason to believe gold prices are being manipulated as well… by none other than China. Given the recent turmoil, you might find that surprising. But what if China could halt its stock market decline… boost its economy… and destabilize the U.S… with one simple announcement?

Matt says it’s not only possible, but that it could happen in the next 12 months. And if it does, the price of gold could jump 50% or more overnight… and gold stocks could soar. NOW is the time to protect your assets and set yourself up for hundreds-of-percent gains in the resource market. Matt put together a presentation explaining all the details. Click here to see for yourself.


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Tuesday, September 29th, 2015 Invest, News, Wealth Comments Off on Buy gold… while you still can

Is it all over?

From Dr. Steve Sjuggerud, Editor, True Wealth:

Is it all over?

Is it time to sell everything?

After a record-tying six straight years of higher stock prices, is 2015 the year that stocks finally peak?

Stocks lost 11% of their value in August – in just more than a week!

Was that massive fall the beginning of the end?

To give us some clues about today, let’s take a brief look back at the last major bust…

The biggest bust in U.S. stock prices that I’ve ever experienced started in March 2000. In June 2000 – after the Nasdaq Composite Index had lost a third of its value – I wrote this to my 40,000 newsletter subscribers:

Investors are intensely bullish right now. I was surprised to find that most of the attendees at the recent [investor conference] were “true believers.” They believe that the stock market is the way to make money over the long run – even though the Nasdaq has lost a third of its value…

[In short,] there’s not enough pessimism in the market for this to be the bottom.

Keep in mind, I wrote that in June 2000 – three months after the market peak. Can you believe that investors were still “intensely bullish” – even after losing a third of their wealth in two months?

It’s shocking today to go back and read that… I wouldn’t have believed it if I hadn’t written it myself!

Back then, I wrote that more losses were likely… because investors hadn’t given up enough on stocks yet.

That turned out to be exactly right… It took a while for the stock market to knock out all those “true believers.” The Nasdaq Composite Index ultimately lost 78% of its value from its 2000 peak to its 2002 trough.

So… does today resemble June 2000? Are individual investors wildly optimistic about stocks – even after the massive fall in stock prices in August?

To me, the answer is clear… NO.

I don’t know how you feel – but I doubt you’d describe yourself as “wildly optimistic” on the stock market today.

In the mini crash in August, investor confidence fell to never-before-seen lows (according to SentimenTrader.com). This is more like what a BOTTOM in stock prices feels like, as opposed to a top.

Two things happened in last month’s crash:

  1. Stock market volatility soared and daily price fluctuations hit crazy extremes. But volatility has calmed down somewhat.
  2. Investor confidence crashed to a never-before-seen degree. It’s now recovering.

These are the two most important things to know right now. And they have historically been incredible BUY signals, not sell signals, for stocks.

June 2000 was a much different time than today. Back then, stocks were crashing… but investors were still wildly optimistic.

This isn’t the case today. Low investor confidence and fear have been the headlines during the recent correction. This is not how stock markets top

So, is this the end? Is it time to sell everything?

Based on my two decades of market experience, the simple answer is: NO!

Good investing,

Steve


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Tuesday, September 29th, 2015 Invest, News, Wealth Comments Off on Is it all over?

Ron Paul: Here’s why we’re on the brink of another major recession

From Ron Paul at The Ron Paul Institute for Peace and Prosperity:

This month marks the seventh anniversary of the bursting of the housing bubble and the subsequent economic meltdown. The mood in Congress following the meltdown resembled the panicked atmosphere that followed the September 11th attacks. As was the case after September 11th, Congress rushed to pass hastily written legislation that, instead of dealing with the real causes of the crisis, simply gave the government more power.

Just as few understood the role our interventionist foreign policy played in the September 11th attacks, few in Congress understood that the 2008 meltdown was caused by the Federal Reserve and Congress, not by unregulated capitalism. Not surprising to anyone familiar with economic history, the story of the 2008 meltdown starts with the bursting of the Fed-created tech bubble.

Following the collapse of the tech bubble, the Fed began aggressively pumping money into the economy. This money flooded into the housing market, creating the housing bubble. The Bush administration and the Republican Congress also added fuel to the housing bubble. These so-called “free-market” conservatives expanded federal housing programs in hopes of creating an “ownership society.”

If Congress understood the Austrian theory of the business cycle, it would have allowed the recession that followed the housing bubble’s inevitable collapse to run its course. Recessions are the economy’s way of eliminating the distortions caused by the Federal Reserve. Attempts by Congress and the Fed to end a recession via inflation and government spending will only lead to future – and more severe – economic downturns.

SEE ALSO: Dr. Ron Paul Describes Exactly What America’s Next Crisis Will Look Like

The corporate bailouts, government spending, and money creation via quantitative easing that Congress and the Fed have engaged in since the fall of 2008, have failed to produce even the illusion of prosperity. The daily experience of most Americans shows that the government’s doctored statistics drastically understate both unemployment and inflation.

This is not to say that no Americans have benefited from Federal Reserve policies. Even Donald Trump has called quantitative easing “a great deal for guys like me.” Much of the growth of government over the past seven years, from the bailouts to the increases in military and domestic spending to Obamacare, has also benefited politically connected crony capitalists.

The Federal Reserve’s continued delay of an interest rate increase suggests that, contrary to its public statements, the Fed understands that the economy has not recovered from the meltdown and is on the brink of another major recession. Fear that the Fed is not being fully forthcoming with its view of the economy is one reason the stock market declined following the Fed’s recent decision to once again postpone increasing interest rates.

Learning the full truth about how the Fed evaluates the economy and its plans to respond to another downturn are two reasons why it is important to pass the Audit the Fed bill.

A vote on Audit the Fed would probably be the only good thing to occur in Congress this year. A Congress that cannot defund Planned Parenthood is unlikely to make any serious cuts in spending. Instead of waiting for politicians to do the right thing, those who know the truth must spread the ideas of liberty as far and wide as possible. Only when the teachings of the Austrian school are embraced by a critical mass of Americans will Congress cut warfare spending, cut welfare spending, and audit, and then end, the Fed.

Tuesday, September 29th, 2015 Invest, News, Wealth Comments Off on Ron Paul: Here’s why we’re on the brink of another major recession

Gold stocks are rallying… Here’s what you need to know

From Justin Brill, Editor, Stansberry Digest:

One sector defied the selloff and moved higher yesterday. Regular readers won’t be surprised…

Gold and silver each rallied more than 2%. And gold stocks did even better…

The widely followed Gold BUGS Index (HUI) rallied nearly 7%. So did the popular Market Vectors Gold Miners Fund (GDX). And many smaller gold stocks did even better.

The signs of a significant bottom in gold stocks have been falling into place for months. And as we discussed on Monday, we’re seeing some positive “price action” that could confirm it’s finally here.

Seeing gold move higher again yesterday – while the rest of the market fell – is one more sign that the recent “test” of the lows was successful, and that a new rally could be starting…

But that’s not the only reason for optimism. Brian Hunt and his co-editor Ben Morris explained the situation in their Tuesday issue of DailyWealth Trader

Today, we’ll show you another positive sign for gold stocks… And we’ll show you how you could make at least 30% in the coming rally.

The positive sign comes in the form of the “bullish percent index” (or “BPI”). The BPI tracks the percentage of stocks in a sector that are trading in a bullish pattern. It ranges from zero to 100.

The BPI flashes a buy signal when it reaches 30 or lower (oversold territory) and then turns higher. And it flashes a sell signal when it reaches 80 or higher (overbought territory) and then turns lower.

In the chart below, you’ll see GDX (the black line) and the BPI for gold stocks (the blue line) going back two years. In late 2013, the gold-stock BPI fell to 10. When it turned higher, GDX rallied 36% in less than three months. Then in late 2014, the gold-stock BPI fell to 0… the lowest possible reading. When it turned higher this time, GDX rallied 34% in just one month.

Today, we have a similar setup. The gold-stock BPI fell back down to 0 over the summer… And it just turned higher.

There are a number of ways to profit from a rally in gold stocks…

One of the easiest is simply to buy shares of GDX or another popular exchange-traded fund (ETF) that holds gold stocks.

If you’re willing to take more risk, you could consider buying small positions in junior gold stocks – or “stock options that never expire,” as we like to say around the office.

Of course, longtime readers know that one of our favorite ways to profit from gold – and other resource markets – is to own royalty stocks. As Porter reminded readers in the June 12 Digest

There’s another kind of business that’s almost as capital-efficient as insurance… These firms are the absolute best way to invest in almost any industry or trend. I’m talking about royalty companies.

These firms raise capital and then invest in operating businesses. But rather than buy stock or lend on credit, these companies buy a small percentage of the company’s future revenue. Royalty rates vary, but they’re typically between 5% and 10% of all future revenue. That adds up.

Royalty companies are one of the safest and most reliable ways to profit from gold. While most gold stocks plummeted over the past few years, high-quality gold-royalty companies have not only survived the downturn… they’ve done well. Porter used top gold-royalty company Franco-Nevada as an example…

The most famous (and one of the best) is Franco-Nevada (FNV). Most investors know that owning gold over the last five years hasn’t been a great bet. (It’s down around 3%.)

But even if you bought gold at just about the worst possible time in the last 20 years, if you bought gold via exposure to Franco-Nevada’s royalty streams – its stock – you’ve done well. You’re up nearly 60%…

If you’re interested in profiting from a rally in gold with relatively low risk, consider gold-royalty companies like Franco-Nevada (FNV) or Royal Gold (RGLD) instead. But remember, even these stocks are not without risk. Using proper position sizing and trailing stops is particularly important in the resource sector, even with high-quality companies like these.

Investors who are starting to build positions in these great royalty stocks today are likely to do very well over the next few years. But if there’s one “downside” to these companies, it’s that they’re already very large. They’re unlikely to return the huge gains investors in smaller gold stocks could see.

But our colleague Dan Ferris, editor of Extreme Value, has discovered a smaller, little-known royalty company that could combine the safety of stocks like Franco-Nevada and Royal Gold with the explosive upside of smaller stocks.

In fact, Dan believes investors buying today could see gains of 500% or more over the next few years. Even better, he believes investors could do well even if gold and other resources go nowhere. He has put together a presentation explaining it all. To watch Dan’s presentation and learn more about subscribing to Extreme Valueclick here. (Or if you prefer to read a transcript, click here.)

Regards,

Justin Brill


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Tuesday, September 29th, 2015 Invest, News, Wealth Comments Off on Gold stocks are rallying… Here’s what you need to know

A journalist asked Janet Yellen if rates would be zero forever… Her response may shock you

From Nick Giambruno, Editor, International Man:

After the president of the United States, the most powerful person on the planet is the chairman of the Federal Reserve.

Ask almost anyone on the street for the name of the U.S. president, and you’ll get a quick answer.

But if you ask the same person what the Federal Reserve is, you’ll likely get a blank stare.

They don’t know – partly due to the institution’s deliberately obscure name – that the Fed is really the third iteration of the country’s central bank. Or that the Fed manipulates the nation’s economic destiny by controlling the money supply.

And that’s just how the Fed likes it. They’d prefer Boobus americanus not understand the king-like power they wield.

By simply choosing to utter the right words, the chairman of the Fed can create or extinguish trillions of dollars of wealth both in and outside of the U.S. He holds the economic fate of billions of people in his hands.

So it’s no shocker that investors carefully parse everything he says. They have to, if they want to be successful. Some even go as far as to analyze the almighty chairman’s body language. Of course, the mainstream financial media revere the Fed.

You may recall the unhealthy spectacle that occurred in 1996. That’s when Alan Greenspan, the Fed chairman at the time, spoke the now famous phrase “irrational exuberance” in what should have otherwise been a dull and forgettable speech.

Investors heard Greenspan’s phrase to mean that the Fed would soon raise interest rates to slow the global economy.

It’s worth mentioning that Greenspan didn’t actually say the Fed would raise rates. Nor did he intend to signal that.

Nonetheless, the reaction was swift and panicky. U.S. markets were closed at the time, but stocks in Japan and Hong Kong dropped 3%. The German stock market fell 4%. When trading started in the U.S. market the next day, the market opened down 2%.

Billions of dollars of wealth vanished in a period of 16 hours.

That’s the absurd power over the global economy that the Federal Reserve gives to one human being.

The words of the chairman can make or break the fortunes of anyone with a brokerage account.

The Fed’s Alice in Wonderland Economy

I almost fell out of my chair when I heard it…

A journalist recently asked Janet Yellen, the current chair of the Federal Reserve, if the central bank would keep interest rates at 0% forever.

Her response: I can’t completely rule it out.

I was stunned…

The deferential financial media hurried to ignore the significance of that statement. Instead, it acted the way big city police might act after making a messy arrest on a busy sidewalk. “Move along folks, nothing to see here!”

Clearly, there was something to see. Something very important.

Yellen’s words came amidst one of the most anticipated economic pronouncements in a generation… whether the Fed would finally raise interest rates for the first time in nine years. Short-term rates have been at zero since the 2008 financial crisis.

Interest rates are simply the price of borrowing money. Setting them at an artificial level is nothing other than price fixing. Not surprisingly, it has led to enormous amounts of malinvestment and other distortions in the economy.

Malinvestment is the result of faulty decision-making. Any investor or business can make a mistake, but central bank manipulation of interest rates subsidizes bad, wasteful decisions.

Cheap borrowing costs trick companies. It causes them to plow money into plants, equipment, and other assets that appear profitable because borrowing costs are low. Only later, when the profits don’t show up, do they discover that the capital was wasted.

Seven years of quantitative easing (QE) and Fed-engineered zero interest rates have drawn the U.S. and much of the world into an unsustainable “Alice in Wonderland” bubble economy riddled with malinvestment.

The pundits had expected that, at this recent meeting, the Fed would move to raise rates just a little and give the global economy a tiny taste of sobriety.

Not even that nudge materialized.

Instead, the Fed sat on its hands. It kept interest rates at zero.

And Janet Yellen couldn’t even rule out that rates would stay at zero forever.

If she can’t even do that, how is she going to start a sustained series of rate hikes, as many of those same pundits now expect her to do a few months down the road?

The truth is, seven years of 0% yields and successive rounds of money printing has so distorted the U.S. economy that it can’t handle even the tiniest increase in interest rates. It would be the pin that pricks the biggest stock and bond market bubble in all of human history. The Fed cannot let that happen.

What Happens Next

It’s clear that the Fed can’t raise interest rates in any meaningful way. It would trigger a financial meltdown that would quickly force them to reverse course.

The Fed might be able to get away with a token increase, but that’s all.

In other words, the Fed has trapped itself.

Former Fed chairman Ben Bernanke admitted as much recently when he said he didn’t expect rates to normalize in his lifetime.

And then, we have the current chair Janet Yellen saying that rates might stay at zero forever!

Yellen’s belief that she has the power to suppress interest rates until the end of time is a frightening sign.

As powerful as the Fed is, it isn’t stronger than the markets. A crisis in the markets could force rates higher even if the Fed doesn’t want them to go there. And the longer the Fed tries to sustain abnormalities like QE and 0% interest rates, the more likely it is that the whole business will end with the markets crushing the Fed.

And that’s not even considering a collapse of the petrodollar system or China pushing the establishment of a New Silk Road in Eurasia…two catalysts that would likely force interest rates higher.

So I’ll go ahead and disagree with Yellen and rule out the possibility that rates might stay at zero forever. They won’t, because they can’t.

At the next sign of a market swoon or of a weakening economy, or with the next episode of deflationary jitters, the Fed will again ramp up the easy money. It could be another round of QE. Or the Fed could push interest rates into negative territory. If that fails, the Fed could go for the nuclear option and drop freshly printed money out of helicopters as Bernanke once infamously suggested – or, more likely, into everyone’s bank account. They’ll do whatever it takes, no matter what the eventual damage to the dollar’s value.

Whatever the details, one thing should be clear. This politburo of unaccountable central planners is the greatest risk to your financial wellbeing today.

What You Can Do About It

It’s a terrifying thought that the actions of a few people at the Fed so endanger your financial security.

But the facts are worse than that. There’s more to worry about than just the financial effects. The social and political implications of the Fed’s actions are even more dangerous.

An economic depression and currency inflation (perhaps hyperinflation) are very much in the cards. These things rarely lead to anything but bigger government, less freedom, and shrinking prosperity. Sometimes they lead to much worse.

Fortunately, your destiny doesn’t need to be hostage to what’s coming.

We’ve published a groundbreaking step-by-step manual that sets out the three essential measures all Americans should take right now to protect themselves and their families.

These measures are easy and straightforward to implement. You just need to understand what they are and how they keep you safe. New York Times best-selling author Doug Casey and his team describe how you can do it all from home. And there’s still time to get it done without any extraordinary cost or effort.

Normally, this get-it-done manual retails for $99. But I believe it’s so important for you to act now to protect yourself and your family that I’ve arranged for anyone who is a resident of the U.S. to get a free copy. Click here to secure your free copy.

Tuesday, September 29th, 2015 Invest, News, Wealth Comments Off on A journalist asked Janet Yellen if rates would be zero forever… Her response may shock you

Mining Stocks News: First Majestic and Silvercrest (TSX: SVL) (NYSE MKT: SVLC) Announce Shareholder Approval of Plan of Arrangement

Vancouver, BC – September 28, 2015 (Investorideas.com Mining Stocks Newswire) First Majestic Silver Corp. (FR.TO)(AG)(FMV.F)(AG) (“First Majestic”) and SilverCrest Mines Inc. (TSX:SVL) ( NYSE MKT: SVLC) (“SilverCrest”) are pleased to announce that shareholders of both companies have voted in favour of the necessary resolutions in respect of the previously announced arrangement (the “Arrangement”) among First Majestic, SilverCrest and SilverCrest Metals Inc. (“New SilverCrest”).

Tuesday, September 29th, 2015 News Comments Off on Mining Stocks News: First Majestic and Silvercrest (TSX: SVL) (NYSE MKT: SVLC) Announce Shareholder Approval of Plan of Arrangement

Bullion Erases Sept’ Gain as Base Metal Miners Crash, ‘Strong Signals’ of … – BullionVault

Bullion Erases Sept' Gain as Base Metal Miners Crash, 'Strong Signals' of
BullionVault
Three days after Bloomberg said 5 banks – none of whom own vaulting facilities in London – are pushing with the mining-backed World Gold Council for a move to exchange-traded contracts in the world's wholesale bullion market, Swiss competition …

Tuesday, September 29th, 2015 Invest, News, Wealth Comments Off on Bullion Erases Sept’ Gain as Base Metal Miners Crash, ‘Strong Signals’ of … – BullionVault

Gold stocks are rallying… Here’s what you need to know

From Justin Brill, Editor, Stansberry Digest:

One sector defied the selloff and moved higher yesterday. Regular readers won’t be surprised…

Gold and silver each rallied more than 2%. And gold stocks did even better…

The widely followed Gold BUGS Index (HUI) rallied nearly 7%. So did the popular Market Vectors Gold Miners Fund (GDX). And many smaller gold stocks did even better.

The signs of a significant bottom in gold stocks have been falling into place for months. And as we discussed on Monday, we’re seeing some positive “price action” that could confirm it’s finally here.

Seeing gold move higher again yesterday – while the rest of the market fell – is one more sign that the recent “test” of the lows was successful, and that a new rally could be starting…

But that’s not the only reason for optimism. Brian Hunt and his co-editor Ben Morris explained the situation in their Tuesday issue of DailyWealth Trader

Today, we’ll show you another positive sign for gold stocks… And we’ll show you how you could make at least 30% in the coming rally.

The positive sign comes in the form of the “bullish percent index” (or “BPI”). The BPI tracks the percentage of stocks in a sector that are trading in a bullish pattern. It ranges from zero to 100.

The BPI flashes a buy signal when it reaches 30 or lower (oversold territory) and then turns higher. And it flashes a sell signal when it reaches 80 or higher (overbought territory) and then turns lower.

In the chart below, you’ll see GDX (the black line) and the BPI for gold stocks (the blue line) going back two years. In late 2013, the gold-stock BPI fell to 10. When it turned higher, GDX rallied 36% in less than three months. Then in late 2014, the gold-stock BPI fell to 0… the lowest possible reading. When it turned higher this time, GDX rallied 34% in just one month.

Today, we have a similar setup. The gold-stock BPI fell back down to 0 over the summer… And it just turned higher.

There are a number of ways to profit from a rally in gold stocks…

One of the easiest is simply to buy shares of GDX or another popular exchange-traded fund (ETF) that holds gold stocks.

If you’re willing to take more risk, you could consider buying small positions in junior gold stocks – or “stock options that never expire,” as we like to say around the office.

Of course, longtime readers know that one of our favorite ways to profit from gold – and other resource markets – is to own royalty stocks. As Porter reminded readers in the June 12 Digest

There’s another kind of business that’s almost as capital-efficient as insurance… These firms are the absolute best way to invest in almost any industry or trend. I’m talking about royalty companies.

These firms raise capital and then invest in operating businesses. But rather than buy stock or lend on credit, these companies buy a small percentage of the company’s future revenue. Royalty rates vary, but they’re typically between 5% and 10% of all future revenue. That adds up.

Royalty companies are one of the safest and most reliable ways to profit from gold. While most gold stocks plummeted over the past few years, high-quality gold-royalty companies have not only survived the downturn… they’ve done well. Porter used top gold-royalty company Franco-Nevada as an example…

The most famous (and one of the best) is Franco-Nevada (FNV). Most investors know that owning gold over the last five years hasn’t been a great bet. (It’s down around 3%.)

But even if you bought gold at just about the worst possible time in the last 20 years, if you bought gold via exposure to Franco-Nevada’s royalty streams – its stock – you’ve done well. You’re up nearly 60%…

If you’re interested in profiting from a rally in gold with relatively low risk, consider gold-royalty companies like Franco-Nevada (FNV) or Royal Gold (RGLD) instead. But remember, even these stocks are not without risk. Using proper position sizing and trailing stops is particularly important in the resource sector, even with high-quality companies like these.

Investors who are starting to build positions in these great royalty stocks today are likely to do very well over the next few years. But if there’s one “downside” to these companies, it’s that they’re already very large. They’re unlikely to return the huge gains investors in smaller gold stocks could see.

But our colleague Dan Ferris, editor of Extreme Value, has discovered a smaller, little-known royalty company that could combine the safety of stocks like Franco-Nevada and Royal Gold with the explosive upside of smaller stocks.

In fact, Dan believes investors buying today could see gains of 500% or more over the next few years. Even better, he believes investors could do well even if gold and other resources go nowhere. He has put together a presentation explaining it all. To watch Dan’s presentation and learn more about subscribing to Extreme Valueclick here. (Or if you prefer to read a transcript, click here.)

Regards,

Justin Brill


Recommended Links

Value analyst: This is my No. 1 Idea ever

Analysts rarely go on record with one idea that they’d rank above everything else. But one of our editors says he has a hands-down favorite stock – the best opportunity he’s ever found in the markets. A pricing anomaly in the markets has created a rare second opportunity for him to share this idea with new readers. Click here

Sunday, September 27th, 2015 Invest, News, Wealth Comments Off on Gold stocks are rallying… Here’s what you need to know

The Fed’s ‘Alice in Wonderland’ economy — What happens next?

From Nick Giambruno, Editor, International Man:

After the president of the United States, the most powerful person on the planet is the chairman of the Federal Reserve.

Ask almost anyone on the street for the name of the U.S. president, and you’ll get a quick answer.

But if you ask the same person what the Federal Reserve is, you’ll likely get a blank stare.

They don’t know – partly due to the institution’s deliberately obscure name – that the Fed is really the third iteration of the country’s central bank. Or that the Fed manipulates the nation’s economic destiny by controlling the money supply.

And that’s just how the Fed likes it. They’d prefer Boobus americanus not understand the king-like power they wield.

By simply choosing to utter the right words, the chairman of the Fed can create or extinguish trillions of dollars of wealth both in and outside of the U.S. He holds the economic fate of billions of people in his hands.

So it’s no shocker that investors carefully parse everything he says. They have to, if they want to be successful. Some even go as far as to analyze the almighty chairman’s body language. Of course, the mainstream financial media revere the Fed.

You may recall the unhealthy spectacle that occurred in 1996. That’s when Alan Greenspan, the Fed chairman at the time, spoke the now famous phrase “irrational exuberance” in what should have otherwise been a dull and forgettable speech.

Investors heard Greenspan’s phrase to mean that the Fed would soon raise interest rates to slow the global economy.

It’s worth mentioning that Greenspan didn’t actually say the Fed would raise rates. Nor did he intend to signal that.

Nonetheless, the reaction was swift and panicky. U.S. markets were closed at the time, but stocks in Japan and Hong Kong dropped 3%. The German stock market fell 4%. When trading started in the U.S. market the next day, the market opened down 2%.

Billions of dollars of wealth vanished in a period of 16 hours.

That’s the absurd power over the global economy that the Federal Reserve gives to one human being.

The words of the chairman can make or break the fortunes of anyone with a brokerage account.

The Fed’s Alice in Wonderland Economy

I almost fell out of my chair when I heard it…

A journalist recently asked Janet Yellen, the current chair of the Federal Reserve, if the central bank would keep interest rates at 0% forever.

Her response: I can’t completely rule it out.

I was stunned…

The deferential financial media hurried to ignore the significance of that statement. Instead, it acted the way big city police might act after making a messy arrest on a busy sidewalk. “Move along folks, nothing to see here!”

Clearly, there was something to see. Something very important.

Yellen’s words came amidst one of the most anticipated economic pronouncements in a generation… whether the Fed would finally raise interest rates for the first time in nine years. Short-term rates have been at zero since the 2008 financial crisis.

Interest rates are simply the price of borrowing money. Setting them at an artificial level is nothing other than price fixing. Not surprisingly, it has led to enormous amounts of malinvestment and other distortions in the economy.

Malinvestment is the result of faulty decision-making. Any investor or business can make a mistake, but central bank manipulation of interest rates subsidizes bad, wasteful decisions.

Cheap borrowing costs trick companies. It causes them to plow money into plants, equipment, and other assets that appear profitable because borrowing costs are low. Only later, when the profits don’t show up, do they discover that the capital was wasted.

Seven years of quantitative easing (QE) and Fed-engineered zero interest rates have drawn the U.S. and much of the world into an unsustainable “Alice in Wonderland” bubble economy riddled with malinvestment.

The pundits had expected that, at this recent meeting, the Fed would move to raise rates just a little and give the global economy a tiny taste of sobriety.

Not even that nudge materialized.

Instead, the Fed sat on its hands. It kept interest rates at zero.

And Janet Yellen couldn’t even rule out that rates would stay at zero forever.

If she can’t even do that, how is she going to start a sustained series of rate hikes, as many of those same pundits now expect her to do a few months down the road?

The truth is, seven years of 0% yields and successive rounds of money printing has so distorted the U.S. economy that it can’t handle even the tiniest increase in interest rates. It would be the pin that pricks the biggest stock and bond market bubble in all of human history. The Fed cannot let that happen.

What Happens Next

It’s clear that the Fed can’t raise interest rates in any meaningful way. It would trigger a financial meltdown that would quickly force them to reverse course.

The Fed might be able to get away with a token increase, but that’s all.

In other words, the Fed has trapped itself.

Former Fed chairman Ben Bernanke admitted as much recently when he said he didn’t expect rates to normalize in his lifetime.

And then, we have the current chair Janet Yellen saying that rates might stay at zero forever!

Yellen’s belief that she has the power to suppress interest rates until the end of time is a frightening sign.

As powerful as the Fed is, it isn’t stronger than the markets. A crisis in the markets could force rates higher even if the Fed doesn’t want them to go there. And the longer the Fed tries to sustain abnormalities like QE and 0% interest rates, the more likely it is that the whole business will end with the markets crushing the Fed.

And that’s not even considering a collapse of the petrodollar system or China pushing the establishment of a New Silk Road in Eurasia…two catalysts that would likely force interest rates higher.

So I’ll go ahead and disagree with Yellen and rule out the possibility that rates might stay at zero forever. They won’t, because they can’t.

At the next sign of a market swoon or of a weakening economy, or with the next episode of deflationary jitters, the Fed will again ramp up the easy money. It could be another round of QE. Or the Fed could push interest rates into negative territory. If that fails, the Fed could go for the nuclear option and drop freshly printed money out of helicopters as Bernanke once infamously suggested – or, more likely, into everyone’s bank account. They’ll do whatever it takes, no matter what the eventual damage to the dollar’s value.

Whatever the details, one thing should be clear. This politburo of unaccountable central planners is the greatest risk to your financial wellbeing today.

What You Can Do About It

It’s a terrifying thought that the actions of a few people at the Fed so endanger your financial security.

But the facts are worse than that. There’s more to worry about than just the financial effects. The social and political implications of the Fed’s actions are even more dangerous.

An economic depression and currency inflation (perhaps hyperinflation) are very much in the cards. These things rarely lead to anything but bigger government, less freedom, and shrinking prosperity. Sometimes they lead to much worse.

Fortunately, your destiny doesn’t need to be hostage to what’s coming.

We’ve published a groundbreaking step-by-step manual that sets out the three essential measures all Americans should take right now to protect themselves and their families.

These measures are easy and straightforward to implement. You just need to understand what they are and how they keep you safe. New York Times best-selling author Doug Casey and his team describe how you can do it all from home. And there’s still time to get it done without any extraordinary cost or effort.

Normally, this get-it-done manual retails for $99. But I believe it’s so important for you to act now to protect yourself and your family that I’ve arranged for anyone who is a resident of the U.S. to get a free copy. Click here to secure your free copy.

Sunday, September 27th, 2015 Invest, News, Wealth Comments Off on The Fed’s ‘Alice in Wonderland’ economy — What happens next?

Here are the best ways to profit from the gold rally

From Justin Brill, Editor, Stansberry Digest:

One sector defied the selloff and moved higher yesterday. Regular readers won’t be surprised…

Gold and silver each rallied more than 2%. And gold stocks did even better…

The widely followed Gold BUGS Index (HUI) rallied nearly 7%. So did the popular Market Vectors Gold Miners Fund (GDX). And many smaller gold stocks did even better.

The signs of a significant bottom in gold stocks have been falling into place for months. And as we discussed on Monday, we’re seeing some positive “price action” that could confirm it’s finally here.

Seeing gold move higher again yesterday – while the rest of the market fell – is one more sign that the recent “test” of the lows was successful, and that a new rally could be starting…

But that’s not the only reason for optimism. Brian Hunt and his co-editor Ben Morris explained the situation in their Tuesday issue of DailyWealth Trader

Today, we’ll show you another positive sign for gold stocks… And we’ll show you how you could make at least 30% in the coming rally.

The positive sign comes in the form of the “bullish percent index” (or “BPI”). The BPI tracks the percentage of stocks in a sector that are trading in a bullish pattern. It ranges from zero to 100.

The BPI flashes a buy signal when it reaches 30 or lower (oversold territory) and then turns higher. And it flashes a sell signal when it reaches 80 or higher (overbought territory) and then turns lower.

In the chart below, you’ll see GDX (the black line) and the BPI for gold stocks (the blue line) going back two years. In late 2013, the gold-stock BPI fell to 10. When it turned higher, GDX rallied 36% in less than three months. Then in late 2014, the gold-stock BPI fell to 0… the lowest possible reading. When it turned higher this time, GDX rallied 34% in just one month.

Today, we have a similar setup. The gold-stock BPI fell back down to 0 over the summer… And it just turned higher.

There are a number of ways to profit from a rally in gold stocks…

One of the easiest is simply to buy shares of GDX or another popular exchange-traded fund (ETF) that holds gold stocks.

If you’re willing to take more risk, you could consider buying small positions in junior gold stocks – or “stock options that never expire,” as we like to say around the office.

Of course, longtime readers know that one of our favorite ways to profit from gold – and other resource markets – is to own royalty stocks. As Porter reminded readers in the June 12 Digest

There’s another kind of business that’s almost as capital-efficient as insurance… These firms are the absolute best way to invest in almost any industry or trend. I’m talking about royalty companies.

These firms raise capital and then invest in operating businesses. But rather than buy stock or lend on credit, these companies buy a small percentage of the company’s future revenue. Royalty rates vary, but they’re typically between 5% and 10% of all future revenue. That adds up.

Royalty companies are one of the safest and most reliable ways to profit from gold. While most gold stocks plummeted over the past few years, high-quality gold-royalty companies have not only survived the downturn… they’ve done well. Porter used top gold-royalty company Franco-Nevada as an example…

The most famous (and one of the best) is Franco-Nevada (FNV). Most investors know that owning gold over the last five years hasn’t been a great bet. (It’s down around 3%.)

But even if you bought gold at just about the worst possible time in the last 20 years, if you bought gold via exposure to Franco-Nevada’s royalty streams – its stock – you’ve done well. You’re up nearly 60%…

If you’re interested in profiting from a rally in gold with relatively low risk, consider gold-royalty companies like Franco-Nevada (FNV) or Royal Gold (RGLD) instead. But remember, even these stocks are not without risk. Using proper position sizing and trailing stops is particularly important in the resource sector, even with high-quality companies like these.

Investors who are starting to build positions in these great royalty stocks today are likely to do very well over the next few years. But if there’s one “downside” to these companies, it’s that they’re already very large. They’re unlikely to return the huge gains investors in smaller gold stocks could see.

But our colleague Dan Ferris, editor of Extreme Value, has discovered a smaller, little-known royalty company that could combine the safety of stocks like Franco-Nevada and Royal Gold with the explosive upside of smaller stocks.

In fact, Dan believes investors buying today could see gains of 500% or more over the next few years. Even better, he believes investors could do well even if gold and other resources go nowhere. He has put together a presentation explaining it all. To watch Dan’s presentation and learn more about subscribing to Extreme Valueclick here. (Or if you prefer to read a transcript, click here.)

Regards,

Justin Brill


Recommended Links

Value analyst: This is my No. 1 Idea ever

Analysts rarely go on record with one idea that they’d rank above everything else. But one of our editors says he has a hands-down favorite stock – the best opportunity he’s ever found in the markets. A pricing anomaly in the markets has created a rare second opportunity for him to share this idea with new readers. Click here

Saturday, September 26th, 2015 Invest, News, Wealth Comments Off on Here are the best ways to profit from the gold rally

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