Trump Fed Pick’s Push for Gold Troubles Lawmakers

Decades after the U.S. abandoned its policy of tying the dollar’s value to gold, President Donald Trump’s latest pick for the Federal Reserve, Judy Shelton, wants to bring it back into style.

Shelton’s longtime promotion of a return to a gold standard is so out of the mainstream that it’s likely to be an obstacle on her road to Senate confirmation. Yet it’s only one of several ideas she has espoused that would redefine — and diminish — the Fed’s role in the economy. And that matters because, while Shelton would be only one of seven Fed governors if confirmed, she could be in line to chair the central bank if Trump wins reelection.

A gold standard would make deficit spending much more expensive. It would limit the central bank’s ability to take the kind of extraordinary measures that it did during the financial crisis to stop the economy from going into freefall. And it would link the Fed’s interest rate decisions to gold market fluctuations rather than to its current goals of fighting inflation and maximizing employment.

“The gold standard would probably shatter a lot of people’s dreams around the world right now,” said Sen. Richard Shelby (R-Ala.), a key member of the Banking Committee, which will vet her nomination. “There was a reason to get off of it.”

“I’ve gotta see where she’s at on a lot of other stuff, but this is not necessarily something that I would give her high marks for,” added Sen. Jon Tester, a centrist Democrat who also sits on the Banking Committee and has voted with the GOP majority on some important legislation.

For her part, Shelton says she’s glad the topic is being discussed. “I am actually quite grateful that these ideas, that have been my focus for some 25 years, are being elevated to the level of public debate without people’s eyes glazing over,” she wrote in one of multiple emails to POLITICO.

While even Shelton agrees that the U.S. is nowhere near being on track to returning to a gold standard, which was fully abandoned by President Richard Nixon in 1971, the idea has maintained popularity in certain conservative and libertarian circles as a way to increase the dollar’s stability.

That's particularly true among those with a strong distrust of the Fed — a camp that includes Shelton.

While both the 2012 and 2016 Republican Party platforms called for a new commission to consider fixing the dollar’s value to a precious metal, most economists argue that returning to gold would prevent the central bank from acting in the best interest of the economy. They also say it would attempt to aggressively head off a problem that hasn’t existed for decades: runaway inflation.

In 2012, the University of Chicago’s Booth School of Business asked 40 prominent economists whether a return to the gold standard would be better for the average American. All of them said no.

Support for tying the dollar to gold's value makes a Fed candidate “manifestly unqualified, in the same way I wouldn’t have a surgeon general who supported leeches and bloodletting,” said Jason Furman, a Harvard professor and former chief economist to President Barack Obama. “It handcuffs the Fed and locks them into focusing on an objective that has no underlying reality, which is the price of the dollar relative to gold.”

Republicans have not publicly voiced concerns about Shelton herself, whose selection comes in the wake of senators’ objections to Trump’s last two picks, Stephen Moore and Herman Cain — both forced to withdraw. But neither are GOP senators embracing the idea that has been central to her policy advocacy for more than two decades.

Sen. Pat Toomey (R-Pa.), an influential Banking Committee member, said he wouldn’t support a return to the gold standard, although he said pegging rates to “some commodity basket index would not be an unreasonable way to anchor monetary policy.”

“I haven’t had a chance to drill down and study what she has written and what she has said, and I’ve never met her,” he added, a sentiment echoed by Sen. Mike Rounds (R-S.D.).

Some senators are ignoring the question entirely. “I don’t think it’s relevant,” Sen. Tim Scott (R-S.C.) said when asked about her views on gold, adding that there was no need to focus on “controversial statements” when “she has decades of work that we can actually look at.”

But talking about Shelton’s decades of work means talking about gold, and her candidacy for the central bank gives her a bigger platform than ever to make her case.

The dollar is now valued by trading on the open market, rather than having a fixed value in terms of gold, and its price often appreciates in connection with positive developments in the U.S. economy. Trump has in recent months bemoaned the strength of the dollar relative to other currencies, because it makes U.S. exports more expensive, and called on the Fed to devalue it. Shelton, in contrast, has long advocated for a strong, stable dollar.

She says returning to an authentic gold standard — in which dollars are redeemable for a certain amount of gold — “would not be feasible” now, because there are too many dollars in circulation relative to the U.S. government’s store of gold. Such a standard hasn’t fully existed in the U.S. since the Great Depression...

- Source, Politico

Peak Prosperity: Overdosing on Crazy Pills

Financial bubbles happen. History is full of them. It’s just that they’re just not supposed to happen more than once a generation.

How can so many people have completely forgotten the painful lessons of not one, but two, recent bubbles?

The bursting of the DotCom bubble in 2000 was traumatic. “Eyeballs” were favored for a time over “earnings.” But then investors woke up to the fact that all of their rationalizations for the sky-high valuations of profitless companies were actually ridiculous.

Okay, fine. Lesson learned. Earnings are actually important.

But here we go, again, less than 20 years after the DotCom bubble (and only 10 years post-subprime bubble — both far less than a full generation later to allow the keepers of the memories a chance to die off) with exactly the same dynamic at play:

In the pre-financialization era that ended a few decades ago, a more normal mix would have been roughly 15% of IPOs with negative earnings. Today it’s nearly 80%.

Just as it was in 2000.

By way of example, let’s look at Uber and Lyft. Both companies aren’t just unprofitable, but wildly so. The more these companies make in revenue, the greater the accompanying losses:

This is the very essence of a broken business model. It’s no different – literally, exactly the same – as a circa-1999 DotCom losing gobs of money on a pie-in-the-sky business scheme that sounded great but didn’t actually work.

No matter to Lyft’s stock price, though, as the market (or ““market”” as I refer to it because it’s so deformed it needs double quote marks to signify that condition) now values this cash-burning furnace at $18.9 billion:

Lyft’s stock price just keeps going higher, no matter the losses. One can only imagine how much higher it will explode if Lyft manages to somehow turn in slightly-less-than-negative-as-last-time earnings next quarter.

What matters during an asset price bubble is not the rational, but the rationalizations. Uber and Lyft are “transforming transportation” and “reducing urban congestion” even though taxis already existed and there’s zero evidence of the latter...

- Source, Peak Prosperity

Kevin Shipp: Americans Are Not Ready for the Coming Financial Calamity

Former CIA Officer and whistleblower Kevin Shipp says a very big risk is the global economic system suffering a financial calamity. 

This includes the U.S. Shipp contends, “Russia and China are stocking up on gold as they agree to stop using the U.S. dollar and go to the yuan and ruble, which means they will stop recognizing the U.S. dollar. 

The dollar will lose its value because of that. We have a huge debt, and by 2025, our deficit will be $30 trillion. 

It is impossible to pay that off. The global deficit is $245 trillion. This thing has got to burst, and it’s going to burst.

Donald Trump has come out against the Deep State and Shadow Government in ways I could only dream of. 

I am a Trump supporter, but what he has got on his hands is a coming catastrophe. 

You cannot stop the collapse caused by the deficit. Trump will take some significant action. 

This is a national security issue, and he can step in and make some changes. 

This is a huge catastrophe, and Americans are not aware of what is coming and are not ready for a financial calamity.”

- Source, USA Watchdog

Did Ben Bernanke Tell Us Back in 2016 What Central Banks Would Do In The Future?

Because the 2016 US Presidential Election was heating up, and the media coverage of Donald Trump was non-stop, many people missed Ben Bernanke writing a blog article on the Brookings Institute about negative interest rates in March 2016 and then his visit to Japan later that year where he recommended that the Bank of Japan (BOJ) convert its bond holdings into zero-coupon perpetual bonds.

- Source, Wall St for Main St

Crossing the Rubicon: Tensions With Iran Threaten Global Trade

This is not good for anyone. Tensions are rapidly escalating and we are now incredibly close to crossing the Rubicon in regards to the spiralling out of control situation in the Straight of Hormuz.

This dangerous game of chicken is no game at all, but is one that could upend the apple cart in regards to international trade and commerce, especially when it comes to the price of oil.

Iran is not backing down from the West, and the West is not backing down from Iran. The question is, who is going to blink first? If anyone does at all.

Earlier this month, the United Kingdom assisted its American allies, getting in on the conflict with Iran, seizing the oil tanker Grace 1 which was carrying approximately 2 million barrels of oil, off the coast of Gibraltar.

This oil was suspected to be going to Syria and was thus stopped by the Royal Navy at the request of the United States military.

This action infuriated Iran and they vowed to get revenge for these actions, of which they would in very short order.

Retaliation came last Friday, when the Iranian Revolutionary Guard boarded and seized two oil tankers, one that was registered in the United Kingdom and the other Liberia (however, UK operated).

The UK oil tanker, Stena Impero was taken into port, along with its 23 man crew, which later images would show them understandably frightened and terrified.

Fortunately, the government of Iran guarantees that the crew is safe and sound in their custody, which I have no doubt is the truth, as the ramifications of doing harm to the civilian crew would be drastic indeed.

The excuse being given by the Iranian Revolutionary Guard for seizing the UK owned oil tanker was first that it had infringed maritime regulations, then later that it had collided with an Iranian fishing vessel.

Meanwhile, the owners of the oil tanker state that this vessel was seized in international waters illegally after being surrounded by a number of small boats and helicopters, while breaking no international regulations.

Jeremy Hunt, the UK foreign secretary, stated the following;

“We are absolutely clear that, if this situation is not resolved quickly, there will be serious consequences.”

What is most likely in this scenario is that Iran was simply following through on their threats and were taking an "eye for an eye", or rather in this scenario, an "oil tanker for an oil tanker".

This has been escalating for days and has grown more severe the longer the detained crews remain in custody, with people demanding that a resolution be reached.

Iran, however, is showing no signs of backing down and have continued to escalate their rhetoric, uttering a threat against the entire global economy when they stated they would "secure the Straight of Hormuz" if not allowed to access it for trade, a similar threat that they have made in the past.

Taking it one step further, Hossein Dehghan, the Islamic Republic's top military adviser rejected any possibility of new negotiations with the United States and said that Iran and its regional allies would target and attack all US bases in the area, if war action were taken.

As I have previously mentioned, when first covering the start of this conflict, this rapidly escalating crisis threatens all of global trade, as approximately 17.2 million barrels of oil per day flows through the Straight of Hormuz.

Oil is the lifeblood of commerce and is often called "black gold" for a good reason. It affects the price of everything. 

War in the Straight of Hormuz would cause the price of oil to explode in price. If oil goes up in price, then so too does transportation, production and the cost of just about everything else. This one commodity is so interconnected with global commerce it is scary.

This situation, if it crosses over the Rubicon could spark one of the greatest economic crises of our lifetimes.

In this scenario, precious metals will explode higher in price, as they move in tangent with a higher price of oil and an increase in global geopolitical risk.

The United States, the United Kingdom, the World will not allow the Straight of Hormuz to be shut down and unfortunately, Iran cannot afford to be locked out of this vital shipping lane either.

Conflict looks assured, but there is still time for cooler heads to prevail. Let's hope the latter is the outcome we get, for the sake of global trade, for the sake of everyone.

- Source, As first seen on the Sprott Money Blog

Central Banks Should Forget About 2% Inflation

Despite years of monetary stimulus, inflation in the United States, Japan, and the eurozone continues to undershoot central banks’ 2% target. Rather than doubling down on their oft-missed goal, however, perhaps the Fed and other central banks should quietly stop pursuing it aggressively.

CAMBRIDGE – The United States Federal Reserve has some reasons to cut interest rates at its July 31 meeting, or subsequently if the US economy weakens. (There is also a case for holding rates steady, if growth remains as strong as it has been over the past year.) But one argument for easing is less persuasive: a perceived imperative to get US inflation up to or above 2%.

The Fed set the 2% inflation target in January 2012 under former Chair Ben Bernanke, after some other central banks had already done so. Japan followed suit a year later, shortly after Prime Minister Shinzo Abe returned to power on the promise that monetary policy would raise inflation (Japan had previously suffered from falling prices).

The logic was impeccable. With unemployment still high and growth still low in the aftermath of the 2008 global financial crisis, further stimulus was needed. But central banks had already lowered nominal interest rates to zero and could not cut them much further. Monetary policymakers therefore tried to stimulate economic activity by raising expected inflation.

An increase in the expected inflation rate would lower the real interest rate (the nominal interest rate minus expected inflation). And by making it cheaper to borrow in real terms, central banks hoped to persuade households and firms to purchase more cars, buildings, and equipment.

Monetary authorities took several steps to boost inflationary expectations among the public. They emphasized their 2%-or-higher inflation objective; were sincere in doing so; and kept their foot on the monetary accelerator (via quantitative easing) so long as inflation remained below target. In the process, central banks increased their monetary base many times over. It is hard to see what more they could have done.

Did it work? On one hand, inflation is still below 2% in the US, Japan, and the eurozone. Month after month, year after year, the authorities have had to explain that achieving the target would take a bit longer.

Meanwhile, however, the US and Japanese economies had returned to approximate full employment by 2016. America’s jobless rate has now fallen to 3.7%, its lowest level since 1969, while unemployment in Japan is 2.4%, down from over 5% in 2010. So it is past time to declare victory on that front. The main purpose of the plan was achieved, even if the intended mechanism largely failed.

Most economists and central bankers, however, fear that their credibility is at stake, and remain fixated on the need to reach the 2% inflation target. In fact, a few economists even want to raise the target from 2% to 4%. One proposal popular among monetary economists is so-called price-level targeting, whereby the Fed would pledge to achieve future inflation that is one percentage point above the 2% goal for every year that it has already fallen short of that target.

But why should these more ambitious inflation goals be credible or achievable when policymakers have failed to reach even the 2% target? Instead, economists should ask why the standard measures of inflationary expectations, such as professional forecasts, have not risen much in recent years.

Perhaps the public’s expected inflation – a central element of economists’ models for a half-century – does not really exist. Or, to be more precise, it may not be well defined when prices are relatively stable. After all, most people pay little attention to the inflation rate when price growth is as low as it has been in recent years.

In a recent paper, Olivier Coibion, Yuriy Gorodnichenko, Saten Kumar, and Mathieu Pedemonte argue that households and firms generally do not have well-informed expectations of future inflation, and often do not know what the inflation rate has been in the recent past. Large policy-change announcements in the US, the United Kingdom, and the eurozone, the authors argue, seem to have only limited effects on the inflation expectations of households and firms. (In a separate paper, two of the authors argue that reading news coverage of the Fed’s Federal Open Market Committee meetings has little effect on American households’ inflation expectations.)

They point out that US households’ expected inflation rate has averaged around 3.5% since the early 2000s – well above the actual rate or professional forecasts. In addition, when they asked hundreds of top executives for their US consumer inflation forecasts over the next 12 months, some 55% said they did not know. Among those who offered an inflation forecast, the average, 3.7%, was again too high.

Moreover, studies in Germany, other eurozone countries, and New Zealandindicate that the public’s inflation expectations are similarly off-target elsewhere. At the same time, the authors say, some standard surveys of the public’s inflation expectations can produce misleadingly reasonable forecasts by “priming” respondents beforehand with a set of choices.

Former Fed Chair Alan Greenspan once defined price stability as “that state in which expected changes in the general price level do not effectively alter business and household decisions” – in other words, inflation is low enough that people don’t think about it in their daily lives. In today’s environment, therefore, policymakers should not be too concerned if the average person does not have well-informed inflation expectations.

Why, then, should central bankers keep banging their heads against the wall of a desired inflation rate? To be sure, monetary authorities should be transparent about their expectations for long-run inflation, as well as for real GDP growth and unemployment. Rather than doubling down on their oft-missed 2% target, however, perhaps the Fed and other central banks should quietly stop pursuing it aggressively.

- Source, Project Syndicate

The End of the "Road" Financial Presentation

Featured faculty for this webinar include Ted Siedle, national pension expert and recipient of the two largest-ever whistleblower settlements from the SEC and CFTC, Chris Martenson PhD, economic analyst and co-founder of PeakProsperity.com, and Brien Lundin, publisher of GoldNewsletter.com and producer of the world’s longest-running investment conference.

- Source, Peak Prosperity

$50 Million Gold Coin Makes Splash at NYSE

Perth Mint made history on Tuesday by bringing the world’s largest gold coin to the NYSE. 

The coin, weighing in at 1 tonne, holds the Guinness World Record for the world’s largest, is valued close to $45 - $50 million at market prices, with spot gold last trading at $1,411.10 an ounce. 

The coin’s unveiling at the NYSE marks the Perth Mint’s launching of its gold-backed ETF, the Perth Mint Physical Gold ETF (NYSEArca: AAAU). 

AAAU is the world’s first government-backed gold ETF, with the majority of the fund’s gold vaulted at the Perth Mint.

- Source, Kitco News

What is Driving the Recent Silver and Gold Movement?

What drives an individual to take responsibility for their financial future through the ownership of silver and gold?

- Source, Silver Fortune

Martin Armstrong: Dow 35,000 By 2021?

The most hated stock market rally still has room left to become truly despised, according to Martin Armstrong. Armstrong is an economic forecaster, former hedge fund manager, monetary and foreign exchange currency expert and a deep student of history.

He has advised central banks, powerful political leaders, and has testified before Congressional committees on economic cycles and monetary and currency issues. 

At present, he’s extremely concerned about the gross distortions central bank policies have had on the global economy. Excess liquidity has caused asset prices to become recklessly inflated while enabling otherwise-doomed companies to persist by feeding off of the cheap and plentiful capital. 

But while Armstrong predicts this “one giant mess” “is not going to end nicely”, he warns that things may get a lot more deformed, especially in the US, before the break point is reached. 

With so much of the rest of the world beginning to succumb to the arriving global recession, capital is fleeing towards the relative safety and positive returns offered by America’s financial markets. 

As a result, Armstrong sees the US stock market continuing to power higher from here, with the Dow Jones Industrial Average potentially tagging 35,000 by 2021.

- Source, Peak Prosperity

Silver is Headed for the Moon, Watch Out Says Bubba

Silver prices are in for a bid if key levels are broken, this according to Todd Horwitz, chief strategist of Bubba Trading. 

“Silver has caught a bid and it looks like it wants to go higher. If this breakout can continue, we can clear $16 or $16.20 [an ounce], then I think we’re on our way to $17 and then if we can get through there, then I think you’re on your way to $20,” Horwitz told Kitco News.

- Source, Kitco News

China Dumps Treasuries, Buys Gold For Seventh Straight Month

The trade war with China continues on, with seemingly no end in sight.

Tensions remain high, with neither party willing to back down from the fight and unfortunately for many parties involved, it appears that the thought of a quick resolution has long ago been cast aside.

President Trump cannot and will not back down from this fight. 

In his eyes and those who support him, his hard headed attitude has won him a number of concessions in recent trade war bouts, even if it has come at a cost to certain companies and individuals, and he is not going to change his "winning" formula.

US farmers have taken the brunt of the damage domestically, having to be bailed out by the United States government repeatedly.

Iowa farmers, who have taken tremendous losses, just recently received approximately $1 billion in relief funds, that is intended to help them mitigate some of the damage these ongoing disputes have caused.

The pain and suffering are likely to continue on for years to come, and thus, you can expect the bailouts for US farmers hit the hardest to continue on as well, until they can appropriately adjust their business models to the new economic reality they find themselves in.

However, who has been hit the most is undoubtedly China, as businesses have been migrating their factories and thus production to the country for countless years, ballooning and swelling their economy, resulting in staggering economic growth.

Yet, this is starting to change, as businesses who have off-shored their production are also starting to feel the pinch of President Trumps roughly $250 billion worth of tariffs and are starting to make the required changes to circumvent these new taxes.

This is resulting in some companies redesigning their products to get around tariff laws, mislabeling items, or even outright moving production out of the country entirely.

Global News reports;

"Consider Xcel Brands, a New York-based company that owns such brands as Halston, Isaac Mizrahi and C. Wonder. Two years ago, it made all its clothing in China. 

Now it’s on the move — diversifying production to Vietnam, Cambodia, Bangladesh and Canada and considering Mexico and Central America as well. By next year, it expects to have left China completely."

These trade wars are undoubtedly one of the major reasons why China's GDP has continued to tick lower, albeit still at at enviously high growth rate of 6.2%.

Upon learning of this slowdown, President Trump took to twitter to claim victory, however preemptive it may be;

“China’s 2nd Quarter growth is the slowest it has been in more than 27 years. The United States Tariffs are having a major effect on companies wanting to leave China for non-tariffed countries. Thousands of companies are leaving. 

This is why China wants to make a deal with the U.S., and wishes it had not broken the original deal in the first place. In the meantime, we are receiving Billions of Dollars in Tariffs from China, with possibly much more to come. These Tariffs are paid for by China devaluing & pumping, not by the U.S. taxpayer!”

Still, if you think that China is going to take this lying down and that there are not going to be consequences then you would be horribly mistaken.

China continues to play the long game, knowing that they ultimately are going to be the most hurt throughout these trade wars, as they have built an entire economy on supplying goods to both the United States and Europe, the latter of which is also slowing down their demand for Chinese goods.

This puts China between a rock and a hard place and the best weapon they have is debt.

China has accumulated a monstrous amount of US Treasuries over the years, assisting greatly in the rapid accumulation of US national debt, which now stands at a staggering $22 trillion and growing.

Choosing to punch back, China has been dumping some of the US Treasuries that they have accumulated throughout the years, accelerating their deleveraging with each passing month.

In April alone, China shed $7.5 billion in Treasuries, according to the US Treasury Department, bringing their total holdings down to $1.1 trillion.

However, this is just what we know, as China is notorious for not disclosing all of their financial information, shrouding much of what they do in mystery and funnelling funds through alternative routes.

While at the same time China has been very open about where they prefer to park some of these newly liquidated funds, gold bullion.

Increasing their holdings for seven straight months, China added another hefty purchase to their gold reserves in June, 10.3 tons. 

This results in an increase of 74 tons over the same period of time, proving that this is not a "one off" and that they are dead serious on their long term strategy of dollar deleveraging and gold accumulation.

Regardless of whether or not the trade wars continue on for the foreseeable future, I believe that there is no going back from this strategy and that China, along with other countries such as Russia are going to continue to shed US dollars and buy gold.

This is going to create a floor in the physical price of gold, eventually overwhelming the fiat paper gold markets that are horrendously over-leveraged and thus destined to implode as physical demand becomes too much for it to bear.

I believe that this underpinning in the gold bullion markets is just one of the many reasons why we have seen such strength recently and is why I believe that over the next few years we are going to continue to see higher and higher prices, retesting and inevitably breaking through the old highs.

- As first seen on the Sprott Money Blog

Bitcoin Officially Declared a Currency: What's Next for GOLD?

Gold market insider and proprietary analyst Rob Kirby returns to Reluctant Preppers to answer YOUR questions about what's next for Gold, Silver, Cryptos, the Fed, free elections, and the financial collapse!

- Source, Reluctant Preppers

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