The Repo Market Continues to Fester, Fed Considers Overhaul

All that we have heard about for the past couple of weeks is the ongoing conflict between the United States and Iran, the dire outcomes that, that situation may lead to and for good reason, it is a true threat to the stability of our global economy in the short to medium term and many good, innocent people have already sadly lost their lives.

However, another sinister situation has continued to unfold, largely behind the scenes, as it has taken a backseat to the immediate threat at our doorstep, the ongoing crisis in the repo markets.

If you thought that this complete and utter mess was magically fixed by the Federal Reserves dumping bucket loads of money over the top of it, then you were horribly mistaken, in fact the repo market crisis has continued to fester.

The only thing keeping the contagion from spreading throughout the entirety of the markets, is the fact that the Federal Reserve continues to play the role of the larger financial institutions, readily lending money to those who are in need in the overnight markets.

Just recently on January 9th, the Federal Reserve injected $83.1 billion in "temporary" liquidity, which came in two parts, an overnight repurchase agreement of $48.8 billion and a 14 day repo intervention of $34.3 billion.

Then, proving just how much of a mess the repo markets are in, the Federal Reserve was forced to return to the rescue once again, adding another $60.7 billion in overnight liquidity to the markets on January 13th, just four days later.

(Chart source, federalreserve.gov)

Carrying on with the trend, the Federal Reserve has continued on the path of the completely undoing all of the hard work that they did, as they attempted to unwind their balance sheet, following the historic expansion of assets following the 2008 crisis.

As of the last official reporting via the Federal Reserve, their total assets stood at $4.15 trillion, up from $3.76 trillion in September of last year, when the expansion of assets once again kicked into hyper-drive.

However, we know that due to the previously mentioned recent injections, that the total assets on the Federal Reserve books are even higher and will be reflected thus so in the next scheduled update.

The situation has become so dire, that the Federal Reserve is actually beginning to question whether or not that they can solve the current problem they face, with the current system structured as it is.

This is leading some within the Federal Reserve to speculate whether or not an entirely new way of doing business within the repo market is needed, one that will cut out the banks as the middleman and allow the FICC (Fixed Income Clearing Corp.) direct access to market participants.

This would add much needed assurance and stability to the repo markets, leading to less disruptions and freezes as well, however, it would essentially be akin to signalling a green light to those wishing to take on riskier assets, leveraging up and putting the entirety of the system at a greater risk in the long term.

Additionally, this would allow large financial institutions and hedge funds direct access to the Federal Reserve indefinitely, putting tax payers on the hook for future bailouts, a reality that is unlikely to sit well with the general public.

Dallas Fed President Robert Kaplan recently expressed concerns with this plan, as well as the recent actions by the Federal Reserve in the repo markets, indicating that they are likely giving investors the go ahead to take on risky assets, due to the following three reasons;

1. Interest rates are lower as a result of the central bank’s three rate cuts in 2019.
2. Investors have the “perception” that the bar is higher for future rates hikes.
3. The third issue is that the Fed has grown its balance sheet to quell turmoil in the short-term money market.

Hilariously however, Fed President Robert Kaplan shied away from directly calling the Fed's recent actions Quantitative Easing, sticking to the Fed's talking point that these actions "are not QE", which has confounded anyone who has taken more than two seconds to look into the matter, proving that this statement is nothing more than a jawboning talking point.

Whether or not the Fed will move forward with these changes to the repo markets, or simply continue to muddle along the path they have chosen for the foreseeable future, dumping copious amounts of money on the problem, is yet to be seen, as I believe the Fed is truly stumped as what to do next to rectify this fiasco.

However, either result means that more easy money is going to be injected into the system, the Fed's balance sheets are going to continue to grow and the fundamentals for owning precious metals are only going to increase, not decrease.

Keep stacking.

- As first seen on the Sprott Money Blog

Robert Kiyosaki: Your Pension is Being Robbed, Gold is the Only Salvation

A ballooning retiree population over the coming years is likely to force the government to print more money in order to support pensioners, and this will create a good environment for gold, said Robert Kiyosaki, author of Who Stole My Pension? 

How You Can Stop the Looting. “In the next ten years, two billion old guys like me will retire. Two billion, all over the world. This is a global crisis,” Kiyosaki told Kitco News. “I’m buying gold and silver, I love silver, because it’s cheap.” 

He added that the government will have to print more money to cover a massive shortfall of money for retirees.

- Source, Kitco News

Here Is Why Gold Could Rise Above $7000 An Ounce

US real interest rates are falling again.

The real yield is the difference between the US government bond yield and the expected future inflation rate. It tells you how much you could make, after inflation, by investing in government bonds. The current rate is 0.1%. That doesn’t sound like much – but is much better than what you’d get in Europe.

This means that gold has a tail wind. And in my opinion, real rates will keep on falling in what could become a major theme for the decade.

I am not saying that the Federal Reserve will slash rates to zero like the Europeans. But rates will stay lower for longer, and inflation will rise. We can be relatively sure that the Fed will keep rates low, because they want to keep the party going.

We saw that a year ago, as the ten-year bond yield went above 3%. The result? The stockmarket nosedived by 20%. They don’t want to see that repeated.

The missing piece is inflation. Many believe that it won’t rise, because high levels of debt or demographic trends will keep it under control. But there’s an external risk – namely the price of oil.

Energy is the most important input cost in our lives. For example, food production requires diesel. If the oil price rises, food prices must follow suit. That squeezes the consumer, harms the economy and reduces purchasing power. And even if the green revolution surprises us all, it will take years before it becomes a dominant force.

In the meantime, Asia keeps on growing. According to the OECD, not only is China forecast to fly past the almighty US by 2030, but India too. The US could be humiliated into third place.

President Donald Trump doesn’t like that idea and hence a new cold war with China is underway. Europe might be even more embarrassed, as it may not have a single country in the top five. Indonesia, a nation of 300 million people by 2030, might squeeze past Germany. With Japan’s place relatively secure, an Asian decade seems increasingly likely.

On that point, while energy consumption has remained flat in the OECD countries, the fast-growing non-OECD countries have seen their consumption nearly double this century. It grows by 3.3% per year and shows no signs of slowing down.

The US shale boom came to the rescue post-2006, bringing another six million barrels per day (mbpd) to market. That has kept a lid on the oil price since 2014, but if the non-OECD countries carry on at this pace, a future oil shock becomes more probable than possible. Consider that the OECD countries are growing too, and you can see how this Malthusian story might play out.

And let’s not forget the growing US budget deficit (annual government overspending). Nor are deficits unique to the US, indeed they are coming back into fashion. Japan has a stimulus package; the UK has one; Europe wants one. China will join the party too, and the world wants infrastructure like it’s the industrial revolution all over again. Demand for commodities will soar. The new gold bull market is simply telling you what lies ahead.

Laying the foundations for the epic gold bull market of the 2020s

As we approach 2020, it’s worth considering where gold might be by 2030. The ‘00s saw a 280% increase, and the ‘10s, a 35% increase. For the 2020s, I am forecasting a 415% return with a price target of $7,166. I’ll explain why.

The Atlas Pulse fair value model (see chart above) treats gold as a 20-year, zero coupon, inflation-linked bond. Thus falling real rates are bullish and rising real rates are bearish, with historic inflation acting as the long-term tailwind.

Note that the fair value has made a six-year high; recovering the lost ground since the taper tantrum. Also note that gold has returned to a premium above fair value. With those points in mind, my bullish scenario has three components:


1. Falling real yields will boost the fair value to $3,386

2. The premium (to fair value) will grow to 50% from the current 7%

3. Actual inflation for the decade is 48%

The US long-dated real yield fell from 4.3% to 1.4% over the 2000s. That boosted the fair value of gold by 80%. The 2010s saw further easing of real yields to 0.1%, which boosted gold by a further 15%. These don’t seem like big numbers – and they aren’t. That’s because real yields are made up of the bond yield and expected inflation, but these two components are not equal in their contribution.

This important point is that the gold rally of the 21st century has had nothing to do with inflation – it’s been all about the falling bond yield. By my calculations, falling nominal yields have boosted gold by around 270%. On the other hand, weak inflation has actually held gold back, albeit slightly.

I hope this becomes clear on the table below showing future fair value scenarios. The US 20-year bond yield is currently at 2.08% and 20-year inflation expectations are at 1.77%. That puts the fair value at $1,377, which is slightly below the current price, and highlighted in grey.

If the real yield was to fall to -2%, different possible scenarios are highlighted in green. Notice how a 0% bond yield with 2% inflation brings us to $2,296. In contrast, a 2% bond yield with 4% inflation gives $3,386. That’s a big difference for the same real yield scenario of -2%. My 2030 scenario sees a -2% real yield driven by managed rates at 2% and inflation rising to 4%. That results in a $3,386 price target.

Can US real rates move to -2%? They can. UK real rates are currently -2.2%, Swedish are -1.7%, and -1.3% in Germany. All you’d need is a couple of rate cuts to anchor the long bond, while inflation quietly rises towards 4%. With infrastructure spending about to splurge, it’s looking quite likely.

But it doesn’t end there as gold bull markets also attract a premium.

A rising gold premium

We should remind ourselves that the last bull market saw the gold price premium rise between 2005 and 2011. It started at a 55% discount and ended at a 51% premium by 2011. The monthly chart hides that (shown below), but it happened.

Gold also went to a significant premium back in 1980, at the height of the bull market. It must have been at least 50%, but we’ll never know because inflation expectations weren’t known at the time, as TIPS hadn’t been invented. Still, there was unquestionably a premium, because the animal spirits were off the record, as the history books remind us.

The gold premium tends to be a trending affair. It would be wrong to suggest that just because an asset has a fair value, it must trade there. That’s not how markets work. More likely, the asset will mean-revert around fair value over the course of market cycles.

What caught my attention was the new high for fair value on the previous chart, and what looks like a rising trend on this chart. More importantly, bull markets and premiums go hand in hand. Therefore, if my bull market forecast is correct, the premium will be right too.

The current gold premium is 7%. A move to a 50% premium means there is another 43% to be had before we get there. That means the gold price will touch $3,386 x 43% = $4,842.

But it doesn’t end there either. Next, we must add actual inflation. That is the inflation that actually happens, as opposed to what is expected...

- Source, Money Week

The Three Reasons Gold Will Remain Above $1600 in 2020

The first week of 2020 left market participants bedazzled as gold jumped past $1,600 within a few days over concerns that the conflict between the U.S. and Iran would escalate. The metal has retraced below the level as tensions appeared to simmer, yet it remains perched around last year’s high of $1,553, last seen in 2013.

Multiple strategists believe that gold’s incredible spike was far from a one-off, and that the factors are in place for the metal to return to $1,600 and stay above it for the rest of the year. While tensions in the Middle East look to have calmed down for now, not everyone is optimistic about the geopolitical outlook, and a bout of tensions that threatens to affect inflation or growth could lead to a prolonged period of price gains.

Yet even in the absence of such flare-ups, gold has plenty of drivers to suggest that the momentum from last year will pour over into 2020 and keep pushing the metal up. Negative real rates remain a global issue, and a possible weakening of the dollar could be another source of the metal’s strength, especially as gold has managed to post double-digit gains alongside a rising greenback. The fall in the dollar could start with disappointing U.S. economic data for the first quarter, which UBS commodity strategists Joni Teves and James Malcolm see as a likely scenario.

Colin Hamilton, managing director of commodities research at BMO Capital Markets, thinks that heightened physical demand from China could be another important price driver, as the past few months have shown noticeable improvements in the nation’s economy. Hamilton added a rebalancing of investor portfolios in favor of gold and consistent central bank buying as more reasons that point to another stellar year for the metal.

Gold could be starting a run that will bring the metal to $3,000 by 2025

In an interview with Yahoo Finance, Heritage Capital’s Paul Schatz spoke about what he sees as the start of a new era of price gains in the gold market that has the potential to double the metal’s price by 2025.

Schatz dismissed the idea that gold’s gains rely on major geopolitical flare-ups. While the U.S.-Iran conflict helped bring the metal above $1,600, gold is still up 4% less than two weeks into the New Year even after the tensions have seemingly calmed down. The yellow metal remains one of the world’s top performers due to a multitude of factors, and tensions with the Middle East have only been a small piece of the puzzle that allowed gold to close 2019 with a gain of nearly 20%.

Schatz took note of sentiment rapidly shifting in gold’s favor, as evidenced by the latest report by the latest Commodity Futures Trading Commission (CFTC), which showed that large speculators are betting big on the metal’s further gains.

Although gold often stands out as a hedge, Schatz said that investors shouldn’t get too attached to the view that gold is only being bought in a bid for safety, adding that the metal has seen plenty of demand despite the stock market’s solid performance. With this in mind, Schatz thinks we are seeing the beginning of a significant shift in the gold market that will push gold towards $3,000 by 2025.

Jim Cramer: The flock to gold highlights investor concerns over the stock market’s health

Days before gold breached the $1,600 level due to geopolitical tensions, CNBC’s Jim Cramer shared some insights on how the metal has been moving, both in response to the conflict and irrespective of it. As Cramer noted, the conflict with Iran has certainly helped gold breach a significant milestone, but demand for the metal is far from reliant on it.

Gold moved past $1,600 as Iran retaliated with a flurry of missile strikes, yet Cramer noted that massive gold buying started taking place even before the U.S. airstrike which killed top Iranian general Qasem Soleimani.

To Cramer, this signals that fear-driven demand is beginning to play a prominent role, especially when one considers that investors have been scrounging up Treasuries despite their abysmal showings. Speaking about gold’s technicals ahead of the strikes, Cramer said that investor appetite suggests that the metal looks ready to move to $1,700 or $1,800. Cramer added that gold’s move to this level could spell trouble for the thus-far well-performing stock market.

- Source, Birch Gold Group via Silver Bear Cafe

Will Iran and United States Friction Push Gold Prices to New Ultimate Highs?

Tensions between the U.S. and Iran seem to have simmered down a bit, but a flare up could happen again and gold could be poised to push higher, said Peter Hug, global trading director of Kitco Metals. 

“Right now, gold looks a little suspect, I wouldn’t be aggressively chasing it. I’m looking for the market to consolidate here. If it consolidates here, then the next push to $1,600 could be a real push,” Hug told Kitco News.

- Source, Kitco News

Ongoing Conflict With Iran Causes Gold Prices to Swing Wildly

Gold, silver, oil and the general markets as a whole have been experiencing one heck of a wild ride over the past week, as the conflict between the United States and Iran boiled over, turning from a war of words, to an actual shooting war.

As reported on last week, this conflict kicked into high gear after the United States preemptively attacked and killed one of Iran’s top generals, Qassem Soleimani, enraging the people of Iran and their government.

According to the United States, their intelligence indicated that this was necessary to protect their assets and citizens across the globe, as they believed that Qassem Soleimani was helping orchestrate attacks on its people. 

Regardless of whether or not it was justified, or whether or not it was right or wrong is up for debate, with your opinion likely residing on one far end of the spectrum or the other.

We are not here to debate that opinion, but rather look at how these unfolding actions are currently and likely to affect the markets moving forward.

Unfortunately, tensions continued to boil over since last week, with the Iranian military striking out and retaliating against the American military, conducting multiple missile strikes against U.S. bases located in Iraq.

To make matters worse, a horrible tragedy unfolded in the midst of all of this madness, when a Ukrainian plan leaving from Tehran crashed only minutes into its flight, resulting in the deaths of all 176 people on board.

This plan crash occurred only hours after Iran's missile strikes occurred on the U.S. bases located in Iraq, sparking wild speculation that it was the Iranian government that shot down this aircraft. However, this is yet unknown, as a formal investigation has yet to occur.

The United States government is stating that they strongly believe it was Iran that shot down the civilian aircraft, while Iran itself is denying this statement, indicating that they did not do so.

Obviously if Iran did accidentally do this, it would not bold well for them, while if they did, it would rally significant support for the United States governments efforts, while at the same time drawing condemnation from countless governments around the world.

Regardless of what actually occurred, 176 people have lost their lives, which is a tragic loss no matter which way the dice fall in the end.

All of this chaos has wracked the global markets as a whole, as reported in my opening statement, sending gold, oil and stock markets on a wild roller-coaster of a ride over the past week.

(Chart source, goldprice.org)

(Chart source, oilprice.com)

(Chart source, google finance)

Both oil and gold sharply spiked higher, with gold rallying above $1600 USD per ounce and WTI Crude hitting nearly $66 USD per barrel, before falling back and retracing.

This move higher in gold prices was a near seven year high, marking a significant break through for the price of gold bullion.

Meanwhile, the S&P 500 and other indexes at first traded lower, as money moved into safe haven assets, only to recover during today's trading session.

The reasoning for why the markets are rebounding, while both gold, silver and oil are retracing is the fact that both the United States and Iran have given indications that they are willing to walk back from the edge of full blown war today, with the United States government stating that "Iran is standing down".

However, many market participants and political pundits believe that this is only a temporary reprieve and that Iran is likely to move forward with retaliation against the United States via their many proxy cells, located around the world.

Meanwhile, the United States plans on increasing and applying additional economic sanctions against Iran, hoping to cripple their economy and force change via this method.

Expect continued volatility moving forward. Expect higher oil prices, expect higher gold prices. 2020 is shaping up to be a rocky year indeed.

Keep stacking and stay safe.

- As first seen on the Sprott Money Blog

What’s Next For Precious Metals Investors In 2020? Gold, Silver, Platinum and Palladium

This week we look back at the gold, silver, platinum, & palladium markets during 2019 and discuss what's next for gold and silver investing in 2020. 

We'll show the price movements of gold, silver, platinum, palladium, the ratios, DOW, S&P, and more. Thanks for listening.

- Source, Golden Rule Radio

Paul Craig Roberts: Murder Of Soleimani Is A Criminal Act That Could Start World War 3

Vladimir Putin is the most impressive leader on the world stage. He survived and arose from a Russia corrupted by Washington and Israel during the Yeltsin years and reestablished Russia as a world power. He dealt successfully with American/Israeli aggression against South Ossetia and against Ukraine, incorporating at Crimea’s request the Russian province back into Mother Russia. He has tolerated endless insults and provocations from Washington and its empire without responding in kind. He is conciliatory and a peacemaker from a position of strength.

He knows that the American empire based as it is on arrogance and lies is failing economically, socially, politically, and militarily. He understands that war serves no Russian interest.

Washington’s murder of Qasem Soleimani, a great Iranian leader, indeed, one of the rare leaders in world history, has dimmed Trump’s leadership and placed the limelight on Putin. The stage is set for Putin and Russia to assume the leadership of the world.

Washington’s murder of Soleimani is a criminal act that could start World War 3 just as the Serbian murder of the Austrian Archduke set World War 1 in motion. Only Putin and Russia with China’s help can stop this war that Washington has set in motion.

Putin understood that the Washington/Israeli intended destabilization of Syria was aimed at Russia. Without warning Russia intervened, defeated the Washington financed and armed proxy forces, and restored stability to Syria.

Defeated, Washington and Israel have decided to bypass Syria and take the attack on Russia directly to Iran. The destabilization of Iran serves both Washington and Israel. For Israel Iran’s demise stops support for Hezbollah, the Lebanese militia that has twice defeated Israel’s army and prevented Israel’s occupation of southern Lebanon. For Washington Iran’s demise allows CIA-supported jihadists to bring instability into the Russian Federation.


Unless Putin submits to American and Israeli will, he has no choice but to block any Washington/Israeli attack on Iran.

The easiest and cleanest way for Putin to do this is to announce that Iran is under Russia’s protection. This protection should be formalized in a mutual defense treaty between Russia, China, and Iran, with perhaps India and Turkey as members. This is hard for Putin to do, because incompetent historians have convinced Putin that alliances are the cause of war. But an alliance such as this would prevent war. Not even the insane criminal Netanyahu and the crazed American neoconservatives would, even when completely drunk or deluded, declare war on Iran, Russia, China, and if included in the alliance India and Turkey. It would mean the death of America, Israel and any European country sufficiently stupid to participate.

If Putin is unable to free himself from the influence of incompetent historians, who in effect are serving Washington, not Russian, interests, he has other options. He can calm down Iran by giving Iran the best Russian air defense systems with Russian crews to train the Iranians and whose presence serve as a warning to Washington and Israel that an attack on Russian forces is an attack on Russia.

This done, Putin can then, not offer, but insist on mediating. This is Putin’s role as there is no other with the power, influence and objectivity to mediate.

Putin’s job is not so much to rescue Iran as to get Trump out of a losing war that would destroy Trump. Putin could set his own price. For example, Putin’s price can be the revival of the INF/START treaty, the anti-ballistic missile treaty, the removal of NATO from Russian borders. In effect, Putin is positioned to demand whatever he wants.

Iranian missiles can sink any American vessels anywhere near Iran. Chinese missiles can sink any American fleets anywhere near China. Russian missiles can sink American fleets anywhere in the world. The ability of Washington to project power in the Middle East now that everyone, Shia and Sunni and Washington’s former proxies such as ISIS, hates Americans with a passion is zero. The State Department has had to order Americans out of the Middle East. How does Washingon count as a force in the Middle East when no American is safe there?

Of course Washington is stupid in its arrogance, and Putin, China, and Iran must take this into consideration. A stupid government is capable of bringing ruin not only on itself but on others.

So there are risks for Putin. But there are also risks for Putin failing to take charge. If Washington and Israel attack Iran, which Israel will try to provoke by some false flag event as sinking an American warship and blaming Iran, Russia will be at war anyway. Better for the initiative to be in Putin’s hands. And better for the world and life on Earth for Russia to be in charge.

- Source, Paul Craig Roberts

Preppers: High Security Shelters and Becoming The "Grey Man"

What is a simple, readily available life-saving tool you should have by every bedside in your home, and in the trunk of your car? What are the key elements you need to include when constructing a safe-room to defeat even a torched burn-down of your house? 

What essential feature should you look for in a solar system that the salesperson won't tell you will dramatically extend the life of your storage batteries? 

What specific habits should you maintain NOW, WHILE you are creating a private life and a retreat location, to avoid drawing attention to yourself BEFORE you disappear and "BECOME THE GREY MAN?" 

Joel Skousen, editor of the World Affairs Brief, and highly sought-after consultant on strategic relocation, site selection, and defensive architecture, returns the Reluctant Preppers to reveal the answers to these and more questions. 

Skousen gives us a free sampling of the kinds of security advice that his millionaire clients pay him dearly to provide. Join in for an informative and awareness-expanding discussion with a true master of the arts of protection!

- Source, Reluctant Preppers

Crude Oil Spikes Higher as Conflict Between the United States & Iran Boil Over

Some are calling it bold, some are calling it reckless, others are just holding their breath in anticipation of what comes next in the aftermath of the drone air strike initiated by the United States administration, that resulted in the death of one of Irans top Generals, Qassem Soleimani.

This move caught not only the Iranian government by surprise, but the global markets as well, resulting in a massive spike in the price of oil overnight and into the Friday trading session.

(Chart sources, oilprice)

At one point both WTI Crude and Brent Crude were trading up over 4%, as a risk premium was slapped on the price of oil, due to the potential ramifications in the Middle East over this pre-emptive strike against Qassem Soleimani, a man considered by many to be the second most powerful man in Iran.

The Pentagon issued their reasoning for carrying out the air strike that took place on Thursday, Reuters reports;

"At the direction of the President, the U.S. military has taken decisive defensive action to protect U.S. personnel abroad by killing Qassem Soleimani," the Pentagon said in a statement.

"This strike was aimed at deterring future Iranian attack plans," it said, adding that the United States would continue to take necessary action to protect Americans and interests around the world.

The Pentagon further went on to state that they had intelligence that indicated that Iran Quds Force Chief Qassem Soleimani was responsible for numerous attacks against US personal and assets over the past few months, including having an active role in the recent U.S. embassy attacks that have taken place in Baghdad over the past week.

In true Trump fashion, the President took to Twitter, gloating about this recent "victory" by the U.S. Military, posting first just an image of an American flag, then later a statement by the U.S. Department of State Bureau of Consular Affairs, urging all Americans to depart Iraq immediately due to heightened risks;

pic.twitter.com/VXeKiVzpTf

— Donald J. Trump (@realDonaldTrump) January 3, 2020

#Iraq: Due to heightened tensions in Iraq and the region, we ujanrge U.S. citizens to depart Iraq immediately. Due to Iranian-backed militia attacks at the U.S. Embassy compound, all consular operations are suspended. U.S. citizens should not approach the Embassy. pic.twitter.com/rdRce3Qr4a

— Travel - State Dept (@TravelGov) January 3, 2020

These combined actions enraged Iran's supreme leader, the Ayatollah Khamenei, who took to the airwaves, vowing that there would be "severe retaliation" against the "criminals" who carried out this attack.

This severe ratcheting higher in global risk levels, resulted in a quick and sharp increase in the price of oil, of which I believe still has much higher yet to go if tensions are not eased in quick order, which is sadly unlikely.

Responding in kind were both gold and silver bullion, who also sharply traded higher in prices, hoping to offset some of the risk unfolding.

(Chart sources, goldprice)

However, after their initial spikes higher, both gold and silver bullion gave up some of their previous gains, trading lower at the time of writing.

If the price of oil continues to trade higher and higher, then you can expect that these short term gains for both gold and silver bullion are going to translate into much higher prices in the long term, as precious metals historically move higher as the price of oil does.

Unfortunately, the risk of runaway prices in the Crude markets is all too real, as I have previously written about, Iran resides in a key geographical location on the Strait of Hormuz, of which they have the ability to severely impact this key global shipping lane.

This is very important due to the fact that roughly 20% of the world's oil supply travels through the Straight of Hormuz, of which Iran has the ability to shut down, at least in the short to medium term.

Much of this oil travels to countries in Asia, including China, Japan, India and South Korea. All of whom do not wish to see conflict erupt in this region due to the impact that it would have on their economies.

This prompted China to issue a statement, "urging calm and restraint" by all of those involved.

Still, these countries would be far from the only ones affected, as a rippling effect would wash over the world as a whole, resulting in higher prices for manufacturers and thus consumers all across the globe. Potentially sparking a global recession.

Expect a bumpy ride moving forward, higher oil prices and increased conflict in the Middle East once again. I believe that this is far from over, lets hope I'm wrong.

- Source, As first seen on the Sprott Money Blog

I'm buying silver for my kids, it's the metal of 2020

There is a case for silver if either the economy performs well or poorly in 2020, said Peter Hug, global trading director of Kitco Metals. 

“I still believe silver, relative to gold, is going to outperform next year and I am bullish silver,” Hug told Kitco News.

- Source, Kitco News

Making Money in Mining Stocks in 2020

Jay introduces the guests and sponsors for the day’s program and explains that this week and next he will be interviewing presenters from Metals Investor forum.

- Source, Jay Taylor Media

Debt Reset Coming in 2020...

Wayne Jett is an accomplished lawyer who has argued cases in front of the U.S. Supreme Court. Jett is also an expert on the Federal Reserve. Jett thinks the globalist-cabal may force a debt reset sooner than later. 

Jett says, “I prefer to put it off to 2021 if possible, but those that are desperate, according to the events that are likely going to happen in bringing them to justice, they may be desperate enough to try to force a currency reset on us or a financial crisis that will cause it to be done in the year 2020 as opposed to 2021.” 

Jett closes and says, “I think we have a turning point in the last few days of this year and then in 2020. I think you are not going to see the President of the United States playing rope-a-dope any longer. I think you are going to see him go from defense to offense.”

- Source, USA Watchdog

History Repeats: Debt Once Again Poses a Major Risk as We Head Into 2020

As we head into a new year, it is a time for reflection, it is a time for thinking about the past and the future and how best to prepare yourself financially for 2020 and the years beyond.

I believe that we are living in a very important time in history, when cultural changes are occurring at an unprecedented rate, which makes predicting what is coming next nearly impossible to do, however, to not even attempt to decipher the barrage of news we receive on a daily basis would be negligent as well.

It is often during these periods of time that people will do radical things to either get the change they wish to see unfold, or to keep the status quo. I believe that 2020 has the potential to be one of these years.

There are already countless examples of this unfolding in the world around us, geopolitically we live in a period of time in which things could turn south at the drop of a hat and all that is needed to ignite the flames is the smallest spark.

Regardless, as we move into the uncertainty that the 2020's are undoubtedly going to hold, it is during these times that you need to take stock and prepare your portfolio accordingly, however best you believe that to be.

This is not to say that any catastrophic event will unfold throughout the course of next year, the following year, or anytime within the foreseeable future. I, nor does anyone else have a crystal ball that can predict this.

However, there are great risks currently affecting the broader markets and thus our societies as a whole. Some of these are purely financially based, others are due to politics, most are intermingled.

One such example of risk is the current mess unfolding in the Repo Markets, which the Fed as of the past few months has had to throw billions of dollars at, desperately hoping to plug the numerous holes that continue to spring leaks.

This is something that I have written extensively about as of recently, as I believe it poses a dire threat to our current financial system if it cannot be brought back under control.

Hopefully, the Fed will be able to stop the contagion from spreading throughout the banking sector, preventing similar problems from occurring to what we witnessed following the 2008 crisis when banks became fearful of lending to each other and thus causing the system to grind to a halt.

Still, the Repo Markets are far from the only area in which debt poses a major risk to the health of our economies as a whole.

As recently reported by the World Bank, who just released a new book titled "Global Waves of Debt: Causes and Consequences", the world as a global economy is now currently going through a massive period of debt accumulation, the likes of which has only been seen a few times throughout mankinds history.

The World Bank reports;

"The global economy has experienced four waves of debt accumulation over the past fifty years. The first three debt waves ended with financial crises in many emerging and developing economies. 

The latest, since 2010, has already witnessed the largest, fastest and most broad-based increase in debt in these economies. Their total debt has risen by 54 percentage points of GDP to a historic peak of almost 170 percent of GDP in 2018."

As the World Bank states, this massive rise in debt levels has largely been kept in check by historically low interest rates, but for how long can rates remain this low?

Once rates begin to rise in a meaningful way, the whole charade begins to crumble and the house of debt comes crashing down, causing a monstrous financial disaster in the process.

Despite the reality that we now live in and the financial risk that surround us, gold and silver bullion continue to trade around the $1500 and $18 per ounce mark, which I believe the future is going to deem to be laughably cheap once looked back upon.

Eventually the broader markets are also going to come to this realization and precious metals are once again going to be brought back into the limelight, being bought at a feverish pace, causing prices to catapult higher.

Whether or not 2020 is the year that the debt bomb finally counts down to zero and explodes is yet unknown, but one thing is certain is that the fundamentals for owning precious metals has never looked better, of that I have no doubt.

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