This is One of the Biggest Market Risks That Nobody’s Talking About...

A recession is a natural part of the business cycle, and policy makers should not be artificially propping up the economy, said Jeff Tomasulo, founder and CEO of Vespula Capital. 

“My view on it, and this has been my view for the last nine years, is that I don’t want a market manipulator in there. 

I don’t want the Fed to get as involved as they are, I want a recession to happen. I want the market cycles to come back the way market cycles should come back which is free markets. 

Let the market figure it out itself,” Tomasulo told Kitco News.

- Source, Kitco News

Retail Inferno: 12,000 US Stores Are Forecast To Close In 2019

The retail inferno is escalating in 2019.

According to Coresight Research,  in the US, year-to-date announced closures have already exceeded the total we recorded for the full year 2018. Coresight Research estimates announced US store closures could reach 12,000 by the end of 2019.

So far this year, US retailers have announced 7,062 store closures and 3,017 store openings. This compares to 5,864 closures and 3,258 openings for the full year 2018.

Here is Coresight’s complete list of store closures so far for this year:

Payless ShoeSource: 2,589 (includes 248 Canada locations and 114 smaller-format stores in Shopko Hometown locations).

Gymboree/Crazy 8: 749

Dressbarn: 649. Here are the locations that closed in June and closing in July.

Charlotte Russe: 494; but the company’s new owner is opening new stores.

Shopko: 371

Charming Charlie: 261

LifeWay Christian Resources: 170

Topshop: All 11 U.S. stores

Henri Bendel: 23

E.L.F. Beauty: 22

Here are more announced closures that could roll into 2020:

Family Dollar: As many as 390 stores

Fred’s: 442; the company said it would close another 129 stores with going-out-of-business sales beginning Friday.

Chico’s: 74, but 250 over the next three years.

GNC: 233

Gap: Roughly 230 in next two years

Walgreens: 195

Foot Locker: 165, total includes closings outside of the U.S.

Signet Jewelers: The parent company of Kay, Zales and Jared said it would close another 150 stores.

Pier 1 Imports: 57, but up to 145 could close.

Ascena Retail: 120

Destination Maternity: 117

Sears: 72

Victoria’s Secret: 53

Vera Bradley: 50

Office Depot: 50

Kmart: 48

CVS: 46

Party City: 45

Sears Hometown and Outlet Stores: 45

The Children’s Place: Up to 45

Z Gallerie: 44

DKNY: 41

Stage Stores: 40 to 60

Bed Bath & Beyond: 40

Abercrombie & Fitch: 40

Francesca’s: At least 30 stores

Build-A-Bear: Up to 30 over two years

Williams-Sonoma: 30

J.C. Penney: 27

Bath & Body Works: 24

Southeastern Grocers: 22

Saks Off 5th: 20

Lowe’s: 20

J. Crew: 20

Macy’s: 8

Nordstrom: 7

Target: 6

J.Crew: 5

Kohl’s: 4

Whole Foods: 1

Calvin Klein: 1

Pottery Barn: 1

Now, that is a lot of retail store closings! Hopefully, The Fed doesn’t adopt the practice of buying failing retail stores to prop-up REITs and CMBS.

- Source, Confounded Interest

CONTRARIAN ALERT: Only 1% Of People Think This Bullish Gold Catalyst Will Trigger

It looks like another bullish gold catalyst is falling into place from a contrarian perspective because only 1% of people think this will happen.

Only 1% Believe This Bullish Gold Catalyst Will Trigger

July 17 (King World News) – Peter Boockvar: “It was 3 months ago when Business Week had a headline magazine cover titled “Is Inflation Dead?” Today, I heard that in the BoA monthly fund manager survey, all of 1% of those surveyed are predicting an increase in inflation over the coming 12 months. It was 80% one year ago. So yes, 99% of those surveyed see flat to lower inflation from here in the next year…

This Could Lead To A Rise In Prices

I’ve argued for years that with services inflation being so sticky mostly driven by housing, medical care and tuition, all we needed was a rise in goods prices to see a more notable rise in inflation. Goods deflation is prevalent and has been for hundreds of years as long as technology progresses and business becomes more efficient and thus is a good thing. Rises in goods prices tend to be more cyclical experiences rather than secular. The question before the house is now whether the tariffs and large disruptions in supply chains are the cyclical sparks that could lead to a rise in goods prices which combined with services would lead to a rise in inflation over the next 12 months.

BULLISH GOLD CATALYST

We saw the .4% m/o/m gain in goods prices in last week’s CPI for June and while there were methodology issues surrounding apparel, home furnishings impacted by tariffs saw price gains of note. 

We’ll of course see whether this was a blip or not and somehow the tariffs will be eaten by companies (not from what I’m hearing from both private and public companies however) but if one tries to look at an extreme view point on something and tries to determine the odds of the possibility of an opposite outcome, this could be an area.

Considering where global bond yields are and with the Fed about to cut rates because of their worry about too low inflation, let’s hope that inflation doesn’t rise from here and the 99% are right.” King World News note: If we begin to see a significant increase in inflation, this will be yet another bullish gold catalyst. 

We have already seen iron-ore prices skyrocket more than 91% in the past year, and nickel has also been on the move, surging a violent 4.26% in yesterday’s trading. KWN will keep an eye on commodity prices and update as necessary.

- Source, King World News

Building Permits Plunge the Most in Three Years, Even as Rates Fall

After weak home sales data and re-weakening in mortgage applications (but a modest recovery in homebuilder sentiment), expectations were for a slowdown in starts and permits but the June prints were shockingly bad.

Housing Starts dropped 0.9% MoM (worse than the 0.7% expected) but Building Permits plunged 6.1% MoM - the worst drop since March 2016.

This occurred despite a collapse in mortgage rates during the reporting period.

This is the 6th month in a row of YoY declines in Building Permits...

Under the surface, multi-family starts tumbled 9.4% MoM as single-family jumped 3.5% from 818K to 847K

And multi-family permits collapsed 20.7%, from 454K to 360K, the lowest since Feb 2017.

Two of four regions posted an increase in housing starts last month, led by a 31.3% rise in the Northeast and a 27.1% advance in the Midwest. New construction declined 9.2% in the South and 4.9% in the West.

Get back to work Mr. Powell!!

- Source, Zero Hedge

Stock Market Experts Predict a 70% Correction

July 2019 will mark exactly 10 years since the end of the Global Financial Crisis in 2009. It will also mark the longest period of economic expansion on record, surpassing the 1991 to 2001 internet boom.

The question – Is the current boom sustainable?

The 90s economic boom was fuelled by the internet. This economic recovery has been fuelled by historically low-interest rates and cheap credit – a situation many investors and economists say cannot last.

Warning Signs: The End of the Economic Boom

2018 has been the most volatile year in the stock market since the recession, and volatility can make stock market crises more likely.

Source: CNBC

Yet, volatility is just one reason the world’s biggest hedge fund managers and leading economists are predicting a 2019 crash. Another reason is rising interest rates.

The Interest Rates and Financial Crises Relationship

As the US economy firing on all cylinders, the Federal Reserve has increased interest rates eight times since 2015. However, as the US nears full employment, there is an increased danger of rising inflation and consumer prices.

Increasing interest rates is a strategy to curb the rise of inflation – increasing the cost of credit and making saving more attractive strikes a balance between people spending and saving.

However, there are also dangers to this approach. Lower consumer spending has a negative impact on the revenue of consumer-facing businesses. Declining revenue then tightens spending across both the consumer and business landscapes. At the same time, higher interest rates make it harder for financially weak companies to meet their debt obligations.

In a vicious cycle that can lead to economic shrinkage, falling stock prices, and stock market crashes, it’s not surprising that interest rate hikes have preceded over 10 economic recessions in the past 40 years.

Source: Forbes

Expert Predictions: A 70% Stock Market Crash

Increased volatility and rising interest rates are leading investors and economists to warn of an impending stock market crash.

According to hedge fund manager Paul Tudor Jones, “We have the strongest economy in 40 years, at full employment. The mood is euphoric. But it is unsustainable and comes with costs such as bubbles in stocks and credit.”

Scott Minerd, Chairman of Investments and Global Chief Investment Officer of Guggenheim Partners has forecast a 40% retracement, while economist Ted Bauman believes the market could fall by 70%.

Finally, the CIA’s Financial Threat and Asymmetric Warfare Advisor Jim Rickards has claimed that a 70% drop is the best case scenario...

- Source, FX Empire

Inside The Battle For the Next Global Monetary System: Facebook Libra vs Central Banks

Could these be the opening shots in the battle for the next global monetary system? 

Join Mike Maloney as he explores the serious implications that arise from Facebook's foray into the world of finance, and whether or not their Libra project is the ultimate Trojan Horse.

- Source, Gold Silver

IMF: The Days Of Being Paid Interest May Be Over Forever

Deutsche Bank fires 18,000 people to try to stay afloat... Gold & Safe Havens now on the move - somebody knows something. IMF Paper looks at closing the money system & charging you for cash.

- Source, Golden Rule Radio

Financial Insanity: Good Job Numbers Equals Bad, Weakening Economy Equals Good

The DOW Jones hit its all time high on July 11th and is still trending strongly near the 27,000 point mark, indicating that the economy is booming and all is right in the world, nothing is wrong, nor does anything look like it could go wrong in the short, or medium term.

This spike in price comes on the heels of last weeks amazing jobs numbers, which blew away market expectations, who were expecting 160,000 positions to be added throughout the month of June, however, this was vastly outperformed as the economy added 224,000 positions instead.

But wait? You say that the markets actually threw a tantrum and were upset over these numbers last Friday, sending the markets lower on Monday? Surely, this makes no sense and defies all common sense!

Of course it doesn't make sense, as sanity was long ago abandoned in this new age of Quantitative Easing to infinity and perpetually low interest rates. Who needs basic economics anymore? That's a barbarous relic of the past!

You see, strengthening job numbers means that the FED may pull back the punch bowl and not lower interest rates, putting a damper on the raging low rates, easy money party. What was once good is now bad and what was once bad is now good. This is the economic madness we currently live in.

Fortunately for Wall St, they had little to fear and were simply overreacting as we would quickly discover.

The rally resumed as the printer in chief, Federal Reserve Chairman Jerome Powell testified before the House Committee on Financial Services on the monetary policy and the state of the United States economy, making some incredibly dovish comments in his opening remarks.

A strong indication was given that he would be quite comfortable with cutting rates at this month FED meeting, which is scheduled to take place on the 30th-31st.

This was all the green light that the markets needed to resume the party and end their temper tantrums, as odds for the chances of FED rate cut at the end of this month once again shot back to their previous 100% odd level, as according to the CME Group FedWatch tool.

This also caused gold bullion to resume its trend higher, once again moving above the critical $1400 price level, with a number of closes above this price point. 

Once again gold bullion appears to the only rational, sane asset in the house, performing as it should and adjusting for an increased chance of interest rate cuts and dipping lower when the positive jobs report was released.

Meanwhile, smart Central Banks around the globe continue to not play into this nonsense and are continuing to purchase precious metals, with one of the key players being China, who once again added to their gold reverses throughout the month of June, adding 10.3 tons.

Poland has also continued their accumulation in the face of this insanity, stating that they have more than doubled their gold reserves over this year and last, making them the largest holder of the yellow metal in central Europe and thus a possible financial powerhouse within the region in the future.

In conclusion, the future for gold and thus precious metals in general remains bright, as predicted, I believe it will continue to rally throughout the remainder of this year and next. 

This asset class will be an anchor in the coming storm, as sanity and reality are forcibly injected back into the markets, as they always have been and as they always eventually will be.

Until then, keep stacking.


- As first seen on the Sprott Money Blog

Bill Holter and Jim Sinclair: Gold $87000 per Ounce at Least

Legendary investor Jim Sinclair and his business partner Bill Holter say Gold is going much higher. It’s a mathematical certainty. Sinclair says, “You need to look at gold, not a speculation, but as a savings account. If the dollar gets sliced in half, you basically double the value (of your gold) if not more. I think much more.

In the second reset, that will take gold to a price where it will balance the ability to pay global debt. That’s the major move coming forward. Right now, we are definitely going back to the $1,850 and $1,925 area per ounce for gold.

The second reset, you can pick any price you want for gold. Pick a high price.” With the national debt officially at $22 trillion, and the additional “missing” $21 trillion discovered by Economics Professor Mark Skidmore at Michigan State University in 2017, you have a huge amount of debt and dollars floating around.

This fact makes Sinclair’s prediction of $50,000 per ounce gold a few years ago look conservative. Bill Holter has done the math and says it simply must go much higher.

Holter explains, “If you take the 8,300 tons the U.S. supposedly has, and I did this math last year when the official national debt was approaching $21 trillion, gold would need to be $87,000 per ounce to cover just the on books debt.

I am not talking about the “missing” money, not future guarantees, pensions, Social Security and things like that. So, the number is $87,000 per ounce for gold or multiples of that.

- Source, USA Watchdog

This Completely Reasonable Change In Investor Behavior Would Send Gold To The Moon

Mark Mobius took over for the legendary John Templeton at Franklin Templeton’s Emerging Markets Fund back in the 1980s, and filled those big shoes well for three decades. Now running his own shop, he recently made what seems like a completely reasonable suggestion about gold — one that if adopted by the broader investment community would send the metal’s price to the moon:

Gold Bull Mobius Says Every Portfolio Needs at Least 10%

(Bloomberg) — Veteran investor Mark Mobius says that gold’s set to push higher, potentially topping $1,500 an ounce, as interest rates head lower, central banks extend purchases, and uncertainty surrounding geopolitics and cryptocurrencies fans demand.“I love gold,” Mobius, who set up Mobius Capital Partners LLP last year after three decades at Franklin Templeton Investments, said in an interview in Singapore, adding bullion should always form part of a portfolio, with a holding of at least 10%. “As these interest rates come down, where do you go?”

Gold has rallied in 2019, rising to the highest level in six years, as investors contemplate slowing economic growth, prospects for easier monetary policy in the U.S. and Europe and festering trade frictions.

The upswing has been given added momentum as central banks, including authorities in Russia and China, step up purchases. A revival in cryptocurrencies may lead to spillover demand from investors for the older haven, according to Mobius. “Interest rates are going so low, particularly now in Europe,” he said.

“What’s the sense of holding euro when you get a negative rate? You might as well put it into gold, because gold is a much better currency.”

Two points about Mobius’ suggestion that most portfolios should be 10% allocated to gold:

First, the idea of replacing dollar cash with a historically better-performing store of wealth seems like a no-brainer in a world of soaring fiat currency debt and plunging interest rates.

Second and vastly more interesting, the current allocation to gold in the financial world is about 1% of total investable capital, so moving from here to 10% would produce spectacular price gains for gold. If it’s even possible, which it might not be: Most current demand for physical metal is from the Chinese and Russian central banks, which presumably won’t be selling their reserves to investors anytime soon.

As for gold mining stocks, here’s a chart from Marin Katusa showing their weighting within the S&P 500. Note that it’s both minuscule and historically low. A reversion to just the average would send the miners up dramatically.

- Source, John Rubino

Gregory Mannarino: Get Out Of The Central Banks System, Global Currency Devaluations Coming!

Greg Mannarino, founder of TradersChoice.net, says the only thing you can count on in this economy is more debt being created. Mannarino says, “World central banks’ power exists in one thing, and that is their ability to issue debt. The more debt they issue, the stronger they become. So, they are loving this.”

Mannarino says the end game is simple, and that is “a gigantic wealth transfer effect. The global central banks are going to create a massive, massive problem, and then they are going to offer a solution. It’s the same scenario over and over again.”

Mannarino says central banks are signaling “this is the time to buy gold and silver because they are telling you they are going to create debt and devalue global currencies.” Mannarino says, “Get out of their system and become your own central bank by getting hard assets like physical gold and silver.”

- Source, USA Watchdog

Pompeo & Bolton Are Good For Gold & Bad For Peace...Gold Soars

It took a little over a decade, but the fantasy that The Fed has had things under control since the 2008 collapse has turned into the reality. 

It was all a lie. QE failed and is no longer just a “temporary” measure. Add in the prospect of yet another war and the motivation to own real money like gold is accelerating!

- Source, Ron Paul

Walk the World: Credit Growth As Weak As....

We look at the latest lending statistics from both RBA and APRA. Not much evidence of a rebound so far!

- Source, Walk the World

Gold Bullion Closes Above $1400 After an Impressive Month of Trading Action

After talking about the wild week that bitcoin just had, which was one for the history books, catapulting higher, then rapidly crashing to the ground, it seems rather boring to talk about the action seen in gold bullion as of lately.

However, boring in this case is only relative to the action seen in bitcoin, as in any other period of time the positive gains that the precious metals markets have seen as of lately, would only be classified as exhilarating.

For those of us who have had to go through the long, hard slog that it has been to be invested in the hard money space over the last few years, the recent action seen from the king of metals has been a breath of fresh year, resulting in numerous calls from precious metals experts that the time has finally come for gold to break out of its chains and begin its long overdue march higher.

Closing out last month at $1409.70 per oz, gold bullion put on an impressive display over the last 30 days of trading action, holding strong, even after the recent jawboning from the FED put a short term damper on the possibility of decreasing interest rates.

The FED fund rates remain at 2.5%, which is where it has remained since the last hike in 2018 that sent the markets into a short term tailspin and throwing a tantrum.

However, the markets are not buying these recent hawkish moves from the FED and are still predicting a rate decrease by the end of this year, perhaps even multiple if the economy begins to deteriorate.

Gold bullion also seems to be following this train of thought as well, as indicated by the lack of concern by this announcement from the FED, trading strongly throughout last week, with only a minor dip lower from its $1440.40 high, which was accredited to short term profit taking over anything else.

However, one person that was not pleased at all about the FED's decision was President Trump, who took to Twitter to vent his concerns about the FED's hands off approach to market concerns;

“Despite a Federal Reserve that doesn’t know what it is doing - raised rates far to fast (very low inflation, other parts of world slowing, lowering & easing) & did large scale tightening, $50 Billion/month, we are on course to have one of the best Months of June in U.S. history.”

He then went further;

“Think of what it could have been if the Fed had gotten it right. Thousands of points higher on the Dow, and GDP in the 4’s or even 5’s. Now they stick, like a stubborn child, when we need rates cuts, & easing, to make up for what other countries are doing against us. Blew it!”

This marks a renewal in the open feud that we witnessed last year between the President and the Federal Reserve, the latter of whom after much pressure changed their stance on ratchteding rates higher.

The President is correct in the fact that the FED rarely gets anything right, as the historic 2008 crash proved, however, cutting rates simply to raise the price of stocks to make the sitting government look better is never a good idea.

I believe that, as predicted at the start of the year we are going to only see gold bullion move higher throughout the remainder of 2019. The fundamentals underpinning these price gains are simply too strong and show no sign of abating anytime soon.

The smart money knows this as well, as seen from the recent massive move by billionaire investor George Soros, who has moved heavily into precious metals as of lately, taking a $264 million stake in the worlds largest gold miner.

Also, the geopolitical situation continues to erode across the globe, as tensions with Iran and the United States remain at heightened levels and as trade wars continue to flare all around the world as President Trump continues to take a hard line stance with his "America First" approach.

The accumulation of precious metals as a long term strategic asset class by Central banks, most notably Russia and China is also continuing on month after month, with China adding another 200,000 ounces of gold just before it surged higher in price.

Now is the time for institutional and individual investors to wake up and smell the roses, pushing precious metals to new heights.

The trend is your friend until the end and the trend towards higher gold prices looks bright indeed. 

Keep stacking my friends.

- Source, as first seen on the Sprott Money Blog

Bitcoin: One Heck of a Wild Ride

Bitcoin over the course of last weekend caught everyone by surprise, firing on all cylinders and quickly rocketing through its key psychological $10,000 USD barrier level.

As market participants woke up on Monday morning, the FOMO (fear of missing out) could be felt in the air, it was everywhere as stories of the last historic bitcoin mania began to be retold and the profits that could of been had if only they had acted sooner.

Forget the fact that there are still people attempting to recover from that very predictable, but none the less devastating crash, this time was going to be different!

Throughout the week, the hype compounded in a stunning way, as the algorithms joined in on the action and propelled bitcoin to above the $13,000 USD mark.

(Chart via CoinDesk)

This was the first time that bitcoin had reached these heights since January 2018, and many market experts simply couldn't explain what was going on? Why was this happening? What had changed?

As many of you know, I am a strong supporter of bitcoin, despite my short term negativity over these recent erratic price movements, as nothing should move this high, this fast, without some strong short term dramatic change that dictates a resetting in price.

Of course, this move higher was soon set to change, as reality came crashing down and as traders began to take out some quick profits, sending the price of bitcoin crashing down below $11,000 USD in just ONE trading session!

(Chart via CoinDesk)

At the time of writing, bitcoin stands at $10,831 USD, which is a 19.22% loss within less than a day. A complete bloodbath and a loss that is going to leave many traders who hopped on the hype wagon deep in the red.

Once again bitcoin and cryptocurrencies in general are reminding everyone just how volatile and unpredictable that they can be and that they should be approached with extreme caution, as they are still a relatively young asset class, unlike gold and silver, which have over 10,000 years of history backing them up as a safe store of value.

Bitcoin does however have strong long term fundamentals as a competing "fiat-lite" currency, which in my opinion makes it vastly superior to the current corrupt dollar based fiat system we find ourselves in at the moment.

These fundamentals are only growing stronger with each passing day, as bitcoin continues its long march across the globe, becoming more and more common place in the world of commerce.

As recently pointed out by Cointelegraph, there are now over 5,000 bitcoin ATM's around the world, in about 90 different countries, with 150 of these being installed in the month of June alone. This equates to 6 new bitcoin ATM's per day.

Bitcoin is also going to have its block mining reward halved once again, in just 11 short months from now in May 2020. This, as it did last time, should ultimately result in bitcoin settling in at a higher price level.

Additionally, the bitcoin network is more secure than it has ever been before, with the total computing power, aka the bitcoin hash rate, hitting a recent all time high of 65,000,000 TH/s.

(Chart via blockchain.com)

Hash rate increases as mining interest in bitcoin increases and makes the overall bitcoin network immensely more secure. At this level, the bitcoin network is essentially impenetrable.

This level of security is one of the many reasons why bitcoin is going to remain the big dog in the cryptocurrency house and make it the first go to choice for those looking to get into the sector.

As you can see, overall, I continue to have faith in bitcoin. I believe that it will continue to play a valuable role in the monetary markets moving forward and in the long term, I believe that the price is going to continue to move steadily higher, despite its many set backs.

However, these recent price actions are not healthy and are detrimental to the overall state of the bitcoin markets.  They are a reminder that absolutely nothing goes straight up forever and that the rules of basic economics still apply.

Bitcoin to the moon? Clearly not today. However, who knows what the future will bring.

- Source, As first seen on the Sprott Money Blog