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  • Gold Smugglers Aren’t Meeting The Demand…

    So in the end the US government debt debate gets resolved for another few months. Except nothing has really been resolved, mostly just delayed. Place an entry in your calendar for the similar cycle to repeat about January next year. 

    The other thing you should pencil in is the Port Phillip Publishing2014 conference, World War D: Cash, War and Survival in the Digital Age. Put your email around the hotlist  if you’re interested. You’lmost all be eligible for an early bird provide but with no obligation. There’utes going to be a cracking line up of speakers. We’re not at liberty to say who just yet.  

    Speaking associated with money, it was interesting to listen to currency expert Jim Rickards now.  Rickards, a gold bull, has long said the path of the US dollar is unsustainable. Therefor it will not be continual. Nothing about the recent ‘resolution’ of the debt situation changes that from all… 

    Two Countries Still Feeling the Press

    As Rickards noted this week, the US debt, deficit and debt to Gross domestic product ratio are still going up. The discussion was never about cutting Government spending, it was about the rate associated with increase. It was never a real government shutdown, either, only a temporary stop in the US ability to proceed deeper into debt. 

    One downside from the US political gridlock would be that the future of the US dollar looks a bit dimmer in the eyes of the world.  You’d think then that the long term for gold would look brighter. But you wouldn’t know it by looking at the price. Publisher Den Denning made his method north late this week to the 2013 Gold Symposium in Sydney.

    He might’ve faced a more sceptical crowd compared to previous years. Gold has a date with its first down year in 13 years since the beginning of the bull run that saw it go from US$250 to in excess of US$1900. It’s currently trading around $US1300 but showing little sign of existence.

    Over at the Daily Reckoning last week, your editor pointed out the physical gold marketplace is under some pressure. That’s because the largest market for gold is within India, and the government is trying to restrict gold sales to reduce the actual country’s trade deficit.

    The Wall Street Journal reported that imports of the metal fell 90% in August as well as ‘the import curbs had implications beyond India’s borders as well as helped muzzle a large part of the global gold trade.’ Based on the article, refiners and traders in Switzerland and Dubai are feeling the downturn. In September the value associated with Indian gold imports dropped 82%.

    Of program, these figures are based on official data. What nobody can really know is how much gold is smuggled within. The WSJ also noted that demand is beginning to fire up as India moves into its festival season, usually a time for gold buying. But premiums are high and precious metal supply is short. That suggests the actual smugglers aren’t meeting the need!

    That’s the physical marketplace. But there’s some odd trades going on in the document market as well.

    Robin Bromby in the Australian reported this week that last Friday a huge 2 million ounce sell order strike the exchange at the open up. It was ‘an order so big this triggered an automatic 10-second trading interruption (and a $US30 an ounce fall in the metal’s cost)…There was a huge order unloaded on October 1, too, and only then do we had that episode within April when, within 2 hours, 13.4 million ounces had been unloaded through Comex. Someone is determined in order to knock the stuffing out of gold.‘

    Whether any attempt to jerk the price around is just big bucks boys trying to work an advantage or something larger, we don’capital t know. Mr Brumby suggests the Chinese won’t mind, because they’ll be able to buy up more.

    Bullion Versus Miners

    Bullion buyers have the option to sit out the downside. That’s not a luxurious afforded to mining companies. They need money coming in. Greg Canavan, editor of Sound Money Sound Investments, has been operating the ruler over the gold miners. With gold at these types of prices, many gold miners will not only end up being not making money, they may not really have positive cash flow. Greg highlighted these studies from UK company Hinde Capital now: 
     
     ‘From an investor’s perspective it is a treacherous minefield… While the big caps that comprise the GDX index are not likely to go out of business for the short term and may offer some trading opportunities for a bounce here, the very nature of this desperate company remains. Huge capital is needed a long time before there is even the sniff of future cash flow. All companies can go to zero but mining companies get there considerably faster than most.‘

    Hinde’s research shows 109 global mining companies have endured falls of 90% or more from the height, with another 58 not far behind, down 80-90%. That’s shows you how savage this bear market continues to be. Their take is that gold bullion is an attractive proposition at the current price, but forget the miners for now. That sounds like something Jim Rickards might agree with. Stay tuned.

    Callum Newman+
    Editor, Money Weekend

    From the main harbour Phillip Publishing Library

    Special Report: UNAVOIDABLE: Australia’s First Recession in 22 Years  

  • Another $32 Billion Lost — Is This How it Begins?

    Another $32 Billion Lost — Is This How it Begins?

    Australia High Resolution Economy Concept

    Same story different week.

    Fears regarding China’s economy slowing caused the Dow to shed 470 points last night.

    Weak manufacturing data out of The far east spooked the Aussie market yesterday. Last week’s recuperation has all but been vaporised. The ASX lost 2.1%, or $32 million, in one day.

    Adding to the marketplace’s woes was our worse than expected current accounts deficit (our net borrowings from the rest of the world) — a blowout of $19 billion.

    The RBA has kept prices on hold. But I believe that, as the global economic situation continues to deteriorate, further rate cuts will be on the table.

    The IMF issued an update warning…worldwide growth will be weaker than they forecast two months ago. Truthfully, why do we pay these folks? They are perpetual over-estimators.

    Hark back to January. The year started out with such guarantee.

    Share markets continued where these people left off in 2014…moving onto new highs.

    Global growth forecasts were optimistic.

    But issues haven’t quite worked out towards the rose-coloured plan the policymakers might have liked.

    The scoreboard so far is:

    • Commodities catalog down 10%
    • Growing fears about the degree of the slowdown in China’s economy
    • Eurozone Gross domestic product growth fell in 2nd quarter 2015
    • Less likely the Given will raise interest rates this particular month
    • Australia Bureau of Statistics introduced in June that Australia’s long-term unemployed hit a 16-year higher.
    • The RBA has reduced cash through 2.5% to 2%
    • And Australia’s mining field continues to struggle.

    ‘Alpha’s collapse shows more coal mines must close for others to survive‘

    Australian Financial Review, 31 July 2015

    While this is not the outcome the central bankers and politicians would have foreseen in January 2015, none of this may come as a surprise to you.

    My outlook for 2015 was included in the Twenty-seven January 2015 edition of The Every day Reckoning, and has been reiterated many times in Money Morning and The Daily Reckoning since.

    Understanding the big picture is crucial to investment success. In the trading game, avoiding risks is, on balance, more important than capitalising on opportunities.

    Significant losses can set you back years and even years.

    Appreciating what lies ahead is critical to long term wealth creation AND retention.

    The End of Australia, my recently published book, is actually my big picture view on exactly how all these forces at play in the global economy lead to a fiscal collapse. And on what you can do to safeguard your family’s wealth, and profit from the recovery on the other side of this crisis. You can still purchase your free copy on the internet; click here to find out how.

    The finest debt powder keg in history

    The Great Depression was preceded by a debt crisis.

    The long bust in Japan was beat by a debt crisis.

    The globe is sitting atop the greatest level of accumulated debt in the history — in both dollar conditions and percentage of GDP. This cannot end well. Yet, as a society we are not getting any meaningful discussion concerning the single greatest threat to our living standards.

    There is plenty associated with talk on marriage equal rights, becoming a republic or whether a retired judge intends to talk at a function.

    While these topics may be near and expensive to individuals, none of it really matters if the world is turned upside down financially.

    When the actual GFC hit, all talk about climate change (the great moral, economic and social challenge) was completely sidelined. Why? Because when it comes to what really matters to homes, money and employment are top of the list.

    The fact the global debt issue is not entrance and centre in the nationwide forum is a reflection on the level of community complacency and politics deception we have in culture.

    This, to me, is a further contrarian sign that an economic disaster on a par with The Great Depression awaits us.

    For a bit of perspective on the recent market mayhem, which no one in the mainstream seems to have seen coming, beneath is an extract from my personal January article on the perspective for 2015.

    Commodities in 2015

    Firstly let me say that one of the risks in forecasting is the old ‘extrapolate the past into the future’ trick.

    Commodities is a very broad container of goodies — agricultural, nutrient, timber, energy, livestock and precious metals.

    Predicting the direction of each one of these is beyond my personal capabilities. However on the crucial commodities — iron ore, copper, natural gas and oil — my expectancy is the past price motion is likely to continue this year.

    We possess world of increased supply meeting one of decreased demand. Ultimately price equilibrium will be restored but only after supply decreases or demand increases or perhaps a combination of both. The more probable scenario is for supply to lower as marginal players close-up shop.

    In the fight for survival producers are inclined to lower prices to generate cash flow. My expectation is perfect for lower commodity prices this year. This outcome only increases the deflationary scenario we are facing.

    China’s outlook

    The slowing growth rate in China is a function of globalisation and domestic imbalances — a result of massive debt financed infrastructure spending.

    Like the rest of the world, China believed at some point during the past six years the traditional western consumer would revert in order to type and the growth engine would once again purr into action. China backed this belief with a full throttle method of infrastructure investment.

    In 2000, China’s credit score market debt was US$1 trillion. Today it is US$25 trillion.

    China has generated it, but no-one (at least to not the numbers they need to service the debt) has come.

    To achieve this objective China needs to create its own internal demand.

    Eventually this’ll happen, but not in 2015.

    In the meanwhile the continued retreat of the traditional western consumer and the challenge of stabilising an economy which has leveraged up 25x in Fifteen years will further slow China’s financial progress. In due course China is placed to register growth numbers beginning with a 3.

    […]

    Thoughts on Australia

    A slumping China means more discomfort for our mining sector.

    More minor miners will close operations in 2015. Banks are already increasing their own bad debt provisions to the mining sector.

    Higher unemployment calls from the resources slowdown together with the softening in global development.

    A hostile and financially reckless Senate means the Federal Government operates larger budget deficits compared to originally projected.

    The Official money rate is destined to fall below 2%, perhaps into the low 1% range.

    Judging by the public backlash to government authorities that have had the temerity to tackle debt issues, it appears our political masters happen to be put on notice by an electorate that has very little urge for food for unfunded promises to be scaly back.

    Australia dodged the worst of the GFC for two reasons. China’s full throttle response to infrastructure spending would be a huge boon to our source sector. And Federal Government financial debt was non-existent.

    Australia will not be so fortunate when the next crisis arrives at our shores.

    China’s decision to help ease up on infrastructure spending and transition to a more consumption dependent economy means the source sector will not play the role of the ‘white knight’.

    In the space of seven years the us government has gone from being $20 billion in the black to $390 billion in debt.

    As a percentage of GDP this is relatively modest through international standards, but it is of the sufficient level the Government has to be more considered in its stimulation responses…unless of course it goes down the path of the US, Europe, UK and Japan.

    Summary

    At some point over indebtedness may lead to massive debt write-offs (defaults). Resulting in serious financial pain for investors holding the invoices — bond holders and financial institution shareholders.

    Governments will renege on their sociable contract regarding entitlements for life. The social upheaval from those ill-equipped (as distinct from those who are as well sick, old or disabled) to generate income independently will create a troubling and unsettled social mood. A depressed social mood will be reflected within the prices investors are prepared to pay for assets — shares and home.

    Finally, overcapacity will be resolved initially by producers filing for bankruptcy or simply closing the doors on their reduction making enterprises. In due course the rest of the producers will benefit from the steady consumption uptake from China and in due course, Indian.

    In summary over indebtedness, over promise and over capacity has put us all over a barrel. This can be a bad situation that has to be labored through. It cannot be avoided or solved with printed document and suppressed interest rates.

    Many in the mainstream press would have you think that the chaos on marketplaces for the last few weeks was something which no one saw coming. Fundamental essentials same figures that will sell you other market myths, like ‘stocks always go up in the long run’. That may even be true, however it won’t do you much great if it takes longer than your lifetime for them to recover from the crash.

    Financial advisors and hedge fund managers with a vested curiosity about having your money in the market may claim not to have seen this particular crisis coming. But the leads to are there for anyone who cares to look. To read more about why the market is ripe for a drop, and what you can do to protect your own wealth, order your free copy of The End associated with Australia here.

    Regards,

    Vern Gowdie,

    Editor, The Gowdie Letter

  • Gold: The Banks are Selling but I’m Buying

    US stocks were up 2% this morning. Observe, we told you not to panic. We hope you took our advice and used the past few days of pullback to buy stocks.

    But we’re not looking at stocks today. Instead we’re looking at something we’ve neglected for far too long.

    Winston Churchill once stated of Russia that ‘it is really a riddle wrapped in a mystery inside an enigma.‘

    In other words, the boozing old philanderer didn’capital t know what to make of Spain. That probably explains why the mass murdering Josef Stalin had the better of Churchill during the Second World War.

    But if Russia is a riddle wrapped in a mystery inside an enigma, then gold is all of those activities, with the added complexity to be locked in a box.

    Certainly US Federal Reserve chairman Dr Ben S Bernanke doesn’t understand gold. He or she admitted as much to the US Our elected representatives in July. So if among the world’s most important moneymen doesn’t get gold, what chance will anyone else have?

    Fortunately, it’s not that difficult. Dr Bernanke just isn’capital t trying…or doesn’t want to try to comprehend it…

    As Bloomberg reported this week:

    ‘Bernanke, who holds economics degrees from Harvard University and the Massachusetts Institute associated with Technology and led the Federal Reserve through the biggest financial disaster since the Great Depression, told the Senate Banking Committee in July that “no one really understands gold prices and that i don’t pretend to really understand them either.”‘

    You’re not foolish if you hold degrees through Harvard and MIT. That’s for smart people. Therefore why doesn’t Dr Bernanke understand gold and the gold price?

    There’s a easy answer for that. It’s not too he doesn’t understand it, it’utes that he can’t admit to understanding it. To admit to understanding the gold price would mean admitting that printing money devalues the money already in circulation and causes the price of assets such as precious metal to rise.

    There’s no way in the planet Dr Bernanke would ever admit to that.

    Big Banks Lining Up to Sell Gold

    But right now Dr Bernanke isn’t the only one to provide gold the cold make. With all the volatility in stock prices and interest rates, and political instability in the US and European countries, investors just can’t tell what’s bullish and bearish for just about any asset class.

    Is the US government shut down good or bad for stocks? Could it be good or bad for gold? Will a positive resolution be good or harmful to either asset? And likewise without resolution?

    Really, it’s anyone’s speculate. In fact, it’s probably reasonable to say that investors will only decide the answer to those questions when the resolution (or non-resolution) arrives.

    The market’s reaction could come down to whether most traders obtained out of bed on the wrong side or even whether they had a good journey into the office.

    And we’re not really kidding either. It’s the reason why on two different times you can see the same excuse given to explain why the market went up eventually and down the other.

    But whatever the truth, it seems the big investment banking institutions aren’t about to risk too much of their money on gold. Because Bloomberg reported yesterday:

    ‘Gold will extend losses into 2014 amid expectations the government Reserve will pare stimulus because the U.S. recovers, according to Morgan Stanley, adding to bearish calls from Goldman Sachs Group Inc. and Credit Suisse Group AG.

    ‘“We recommend staying away from gold only at that point in the cycle,” Melbourne-based analyst Joel Crane said in a video clip report received today. Bullion will average $1,313 an ounce within 2014, down from the $1,420 forecast for this year, Morgan Stanley said in its quarterly metals report on Oct. Seven.‘

    Don’t underestimate the power of JP Morgan, Goldman Sachs and Credit score Suisse. These guys have a lot of influence on asset prices. They can place a whole lot of money to work rapidly to affect the price of stocks, interest rates and gold.

    But that doesn’t mean they usually get it right.

    So Much for the Harvard Education

    The big banks have talked down precious metal for most of the past 10 years, even though even they jumped on board because the commodities boom flourished through to the end of 2007.

    Now it’s the opposite. It’s hard to find anyone prepared to bet on a rising gold cost. That’s not surprising. As we wrote to you yesterday, a big part associated with investing is psychology.

    Seeing as the gold price offers trended downwards since peaking in 2011, and is down 20% in Aussie dollar terms in the past year, it’s only natural that many investors have had sufficient. That’s the same with any kind of asset. If you hold a regular that’s done nothing but sink lower and lower, eventually you’ll give up on it.

    That’s one reason why gold may go lower, even though logically with the torrent of cash unleashed through central banks, gold is going higher. But that’s the actual psychology of the moment.

    Even so (as well as call us mad if you like), no matter what to the gold price, there is zero chance we will sell actually one single ounce of our gold holding. In fact there’s a greater chance that we’ll top-up our holding.

    After all, gold is the ultimate long term expense. Unlike a stock portfolio, we know gold will still be around within 40 or 50 years – 100% assured.

    But we can’t put the same guarantee on stocks, even the bluest of blue-chip stocks. There’s no guarantee they’ll still be about in their current form 50 years from now. And that’s coming from someone who’s as favorable as you can get when it comes to stocks.

    Gold is for the long term. We’ll always purchased it. It’s an absolute certainty the US Federal Reserve will keep rates low for the foreseeable future and print more money.

    It’s only a matter of time before investors wake up and rediscover that the reason for buying gold – the reason Dr Bernanke won’t admit to understanding – is to protect your wealth from the constant and chronic devaluation of paper money.

    It’s so simple we just can’capital t believe a Harvard man like Dr Bernanke doesn’t have it.

    Cheers,
    Kris+

  • How to Boost Your Income Without Taking Big Risks

    How to Boost Your Income Without Taking Big Risks

    Magnifying glass over stocks 695x460

    With record low interest rates, everyone’s looking for the best income boost.

    Term deposits are at a record low. We know.

    Recently, we received the latest term deposit rates from AMP. A six-month term deposit pays 2.9%.

    Not so long ago, the same term deposit paid more than 5%.

    Lower prices make it hard to earn an income. So folks have to take more risks.

    But if you take more risks, you need to manage the risk.

    We’ll explain a simple way to manage risk and improve your income today…

    We’ve often written about what we call ‘punting money’ as well as ‘safe money’.

    We advise folks to split their investments into 2 groups — ‘safe money’ such as gold, cash and dividend shares. And ‘punting money’ such as growth stocks, small-caps, microcaps, futures contracts, and speculative options contracts.

    As an apart, note that we put a focus ‘speculative’ options contracts. Not all choice trading involves speculation.

    We’lmost all reveal more detail on that when Matt Hibbard introduces you to a new way to make extra income from stocks you may not even own.

    Sound interesting?

    We’ll reveal more details quickly. But if you want to be among the first to get into this new service, that can be done by taking out a Platinum Alliance membership here.

    And keep in mind, this is the last ever time that we’ll make Platinum eagle Alliance membership available. The doors close for good next week — no exceptions. Details right here.

    But getting back to managing risk, even within the ‘safe money’ and ‘punting money’ segments, you can still manage your danger according to each investment kind.

    If you use stop orders, you’lmost all probably use them in a different way depending on whether you’re investing in a big blue-chip stock or a tiny microcap.

    And in the event that you’re managing risk with a dividend portfolio, you may use position sizes to help you achieve an overall level of yield for your profile.

    For instance, let’s say you had a $4,000 portfolio, and also you want to earn a decent income from stocks. You could take that $4,000 and put it all in to one stock or a quantity of stocks that each paid a 5% dividend yield:



    In this scenario, you’d earn $200.

    Alternatively, you could take your $4,Thousand and spread it across four stocks, each paying a different yield. Your profile could look like this:



    In this case, you have a higher yield and income. You’re earning $370, or even 9.25% on the same amount of cash.

    However, this could also mean that you’ve elevated your risk. Typically, (but not always), a higher yielding stock can mean a greater amount of risk.

    So, what can you do? Simple, you can alter the numbers. You can do that till you’re happy with the amount of funds invested in each stock and the average income yield. Your own portfolio could look something like this:



    In this case, we’re following an average income yield of around 7%. But rather than putting all the money in the stock that pays a 7% dividend yield, we’ve put most of the portfolio into a inventory yielding 5%, and then smaller amounts in stocks with higher yields.

    You see? There’s no single way to do things when it comes to danger management, or even trying to make money stream. You have to play around with suggestions and your capital, until you’re comfortable.

    Although, even then, you shouldn’capital t remain static. You should always pay close attention to what’s going on in the markets, and most of all, not be scared to adjust your thinking if your view of the market has changed.

    Cheers,

    Kris

    PS: Income specialist Matt Hibbard knows all about managing danger for income investors. Visit here to find out Matt’s latest ideas on assisting investors boost their income

  • What the Three Market Bears Mean for Resources

    What the Three Market Bears Mean for Resources

    Fountain pen and glasses on stock chart.

    When I started working with Port Phillip Posting in December 2013, the Publisher, Kris Sayce, was the biggest marketplace bull I had ever fulfilled.

    Yet, as you read in his post here, he’s now turned shockingly bearish! And for good reason.

    Kris’ view now aligns with our co-workers Jim Rickards of Strategic Intelligenceand Vern GowdieofGowdie Family Wealth. They are all anticipating a major near-term stock market accident; possibly worse than that of the worldwide Financial Crisis.

    Will they be right?

    Only time will tell.

    I’ll explain…

    The US interest rate rise is coming

    Kris recently wrote in Tactical Wealth, ‘the more We look at the evidence and review what I’ve written, the greater convinced I am that a major stock market collapse is only days away‘.

    When someone who’s been right for seven years straight modifications tack, it’s worrisome. Kris’ view is that the stock market will crash because of two reasons — interest rates and earnings.

    So let’s speak interest rates…

    I’ve long said to anticipate a US interest rate hike this year.

    US Federal Reserve Chairperson, Janet Yellen’s continues to confirm our forecast with her comments this week. In her own phrases,

    ‘Most judged that the conditions with regard to policy firming had not yet been achieved, but they noted that conditions were approaching that point. Participants observed the labor market had improved notably since early this year, but many saw scope for some further improvement‘

    Indeed, it’s now not ‘if’ however ‘when’ the US Fed will raise rates. That said, the US Given plans to raise rates sooner rather than later.

    On the topic of timing, it’s always been my view that the high quality hike will come in September or October. This target lines up with Yellen’s comments last month:

    ‘We should also be careful not to tighten too latebecause, if we do that, arguably we could overshoot each of our goals and be faced with this situation where we would after that need to tighten monetary coverage in a very sharp way that could be disruptive.

    ‘If there is a negative surprise to the economy with rates of interest pinned at zero, we don’t have great scope to respond through loosening policy further, while with a positive shock obviously we can tighten monetary policy.‘

    What I find interesting is the Fed’s intention to have some ammunition upward its sleeve, to fight the following financial crisis.

    This is a shocking cause to raise rates.

    But I guess the worst forecasting institution around the globe — a tough call when you toss in the International Monetary Fund — has to at least seem useful.

    As Kris recently wrote to Tactical Wealth readers,

    ‘The Fed appears to believe that increasing interest rates is a no-lose situation for them. If the Fed raises rates of interest and the markets keep booming, they can say they were to raise rates.

    ‘But if the Fed raises interest rates and markets dive, it gives them an excuse in order to intervene in the market…perhaps through launching a new money-printing program.

    ‘An increase in the September meeting seems probably. That’s because it’s just two to three days before the next US revenue season‘.

    Kris Sayce says ‘watch out for the October stock market crash’

    And this brings me personally to my Publisher’s second stage — earnings. No doubt, and in collection with Kris’ October stock market accident warning, he expects them to be terrible.

    In fact, looking back at when we were approaching the Global Financial Crisis, earnings began to slow down immensely. Yet, while earnings slowed down, mergers and acquisitions activity was booming — a sure sign that the crash was coming…

    In today’s regard, this quote from Dealogic describes it all:

    ‘Global Healthcare M&A volume stands at a YTD record a lot of $422.8bn in 2015, up 42% from 2014 YTD and has almost exceeded the full year record high volume of $429.3bn set in 2014.’ A big increase in M&The activity is a danger sign. You usually see a peak within activity as the economy and markets near a peak‘.

    So with earnings slowing down and acquisitions at an all-time high, is a accident coming?

    Worse than subprime

    According to finance experienced Vern Gowdie, it’s inevitable. And when it comes, the crash’will be far even worse than either 9/11 or the GFC. Banks going broke. Governments reneging on bond obligations. Massive pension funds scrambling to protect what’s left of their portfolios.‘

    This aligns with Rick Rickards: ‘when the next crisis hits, the actual predictable and illogical response will be for panicked investors in order to storm the doors of america Treasury and demand to buy as much of that worthless paper because they can‘.

    The argument for owning All of us Treasuries is that, like it or not, the US is the still the reserve currency of the world. It’s also got the largest economy. And the greatest and most liquid financial markets. So, when panic comes, individuals turn to the US financial markets with regard to safety.

    No doubt this is precisely why Rickards believes that the bond bubble can continue to run for, possibly, years to come…

    So, if the three has don’t see the crash arising from the bond market, where will the crash come from?

    Eye wide open

    Jim Rickards elaborates here:

    ‘The next financial collapse, already on the radar screen, will not originate from hedge funds or house mortgages. It will come from junk bonds, especially energy-related and emerging-market company debt.

    ‘The Financial Times recently estimated that the total amount of energy-related corporate debt issued from 2009-2014 for exploration and development is over US$5 trillion. Meanwhile, the Bank for International Settlements recently estimated that the total amount of emerging-market dollar-denominated company debt is over US$9 trillion‘.

    So Jim Rickards is looking for a dual financial crash next year! Part one will be in All of us dollar-denominated emerging market corporate credit sector. And part two will arise in the energy corporate credit space.

    And for this reason Tim Dohrmann and Jim wrote in Strategic Intelligence this week:

    ‘If Yellen will raise US interest rates, secure your seat belt and look away below. Markets will have absolutely no bottom and we’ll be set for a 1998-style crash beginning in rising markets.

    ‘For that reason, the most important date of the year will be the Sept 17 Fed meeting.

    If the Fed raises rates, you’re going to visit a huge amount of capital hurry into the US dollar. This might trigger the emerging marketplace crisis in the years forward. Lower oil prices could easily trigger a junk bond collapse.

    And there you have it: the right ingredients for the next financial accident.

    But if you ask me…

    The next global financial crisis will stem from government bonds.

    The majority tend to be far too bullish on bonds — at a time when economic development has come to a halt and the financial system is severely overleveraged. Historically, these conditions typically spell the end of bond bubbles. However most people dismiss that there could ever be a crisis in bonds which could wipe out wealth worldwide.

    Governments defaulting on their bonds is the turmoil you should be worried about…

    And when the US fed raises rates, it will spell the end to this 30-year bond bull market.

    The hedge?

    Commodities.

    To find out more, go here.

    Regards,

    Jason Stevenson,

    Resources Analyst, Resource Speculator

    From the Port Phillip Posting Library

    Special Report: Nitro Stocks Completely unknown to many Aussie investors, there is a unique type of ASX investment that can produce more cash in a week than many people earn in a year! They’re known as ‘Nitro stocks’ and they can cram 20 or 30 years of market profits into just a few several weeks. Sam Volkering says, ‘It’s like taking a slow-moving bluechip and pumping it filled with steroids!‘ Sam’s spotted three stocks on the verge of hitting their ‘Nitro-phase’. And if you want in, you’d better rush!

  • The Financial Warning You Were Never Supposed to Hear

    The Financial Warning You Were Never Supposed to Hear

    Boss checking on his employee

    You may be surprised to learn exactly what Im about to tell you.

    But the globes most connected financial insiders lately signalled that the markets are on the brink of disaster.

    Many of these global elites are already making plans to prepare for the worst. Fortunately, its not too late for you to consider concrete steps to protect your personal wealth ahead of time.

    Theres an old stating in the stock market that when costs are about to collapse nobody rings a bell. In other words, its up to you to be alert to important turning points in markets.

    No analyst or advisor is going to tell you exactly when the bull market is over. Actually, they probably dont know themselves; the experts will be taken as much by surprise as everyday investors.

    Yet sometimes, the global power elites do ring a bell.

    But they ring this for the wealthiest and most powerful individuals only. Everyday traders like you are not meant to hear this. One of these insider warnings had been sounded recently

    On 29 June 2014, the financial institution for International Settlements (BIS) released its annual report, that said markets had become euphoric. That report went on to say that Time and again seemingly strong balance sheets have turned out to mask unsuspected vulnerabilities.

    The BIS, based in Switzerland, is a private meetinghouse for the most powerful central bankers in the world. It exists under a distinctive legal structure that is not responsible to any government.

    During the Second World War, the BIS, under the direction of an United states CEO, fenced Nazi gold to help the Germans fight the Allies. The BIS is also the key institution for central bank gold manipulation today.

    No institution in the world keeps more central bank secrets than the BIS. Once they warn about market pockets, you should take heed. However they werent the only ones

    Three months later, on 20 September 2014, the G-20 finance?ministers met in Australia. The G-20 is a group of 20 economies such as rich countries such as the US and emerging markets for example Brazil, China and India.

    Since the crisis of 2008, the G-20 has been the most important forum for directing global economic policy.

    The final statement of their September meeting stated, We are mindful of the potential for a build up of excessive risk within financial markets, particularly in an environment associated with low interest rates and low resource price volatility.

    A few days after the G-20 conference, a private think tank located in Switzerland called the International Center for Monetary and Financial Studies, ICMB, with strong links to major banks as well as government regulators, issued it’s so-called Geneva Report on the world economy, which it has done since 1999.

    The latest Geneva Report said, Contrary to widely held beliefs, six many years on from the beginning of the financial crisis the global economy is not however on a deleveraging path. Indeed, the ratio of global total debt over GDP offers kept increasing and breaking brand new highs.

    The report then procedes to warn about the poisonous impact of this debt today.

    On 11 Oct, shortly after the Geneva Report release, the International Monetary Fund (IMF) issued its own warnings.

    The mind of the IMFs most powerful policy panel said capital markets are vulnerable to financial Ebolas that are bound to happen

    The IMFs final pr release said, Downside risks arise from elevated risk-taking amidst low volatility in financial markets and heightened geopolitical tensions.

    Finally, while attending the same IMF meeting in Washington, the vice chairman of the Federal Reserve, Stan Fischer, cautioned that world growth may be weaker than expected, which could delay the Feds next transfer toward raising interest rates.

    Put everything information together, the message doesn’t seem possible to ignore.

    The worlds most powerful financial institutions as well as think tanks, the BIS, G-20, ICMB, IMF and the Fed are all warning about extreme leverage, asset bubbles, sluggish growth and systemic danger.

    They are doing this publicly, as well as seemingly in a coordinated fashion, since all of these warnings were issued within 100 days from late June to early October 2014.

    As if upon cue, the Dow Johnson index peaked on Nineteen September and then began the 700-point nose dive that ongoing through 10 October at the start of the IMF meeting.

    The market briefly bounced back, but the volatility and nervousness has continued via today.

    Are the global financial elites attempting to tell you something?

    Actually, no.

    All from the reports and press releases noted above are written in highly technical language and were read only by a fairly small number of expert analysts.

    Some of these reports may have been picked up and mentioned briefly in the push, but they didnt make the front pages.

    For you, such pronouncements are just much more financial noise in a flood of information that washes more than you every day on TV, stereo, the Web, in newspapers as well as in other publications.

    The power elite were not signalling you they were signalling one another.

    Have you noticed that government authorities, billionaires and major CEOs rarely seem to suffer when the economic climate collapses, as it does from time to time?

    Its not a coincidence that its daily investors and middle-class savers that see their 401(k) company accounts and stock portfolios take a beating during collapses.

    This is because the elites have inside info. They see the catastrophe arriving and warn each other to get out of the way in advance.

    Not every millionaire is a full-time financial expert. A few made their money in telecommunications, social media, Hollywood or other endeavours.

    But they do share tips as well as inside information at personal conclaves in Davos, Sun Valley, Aspen, Jackson Hole and other hangouts of the rich and famous.

    They see trouble coming as well as scramble out of the broad stock exchange and into hard assets, art, cash, land along with other safe havens.

    When the collapse arrives, they emerge from their financial bunkers to snap upward valuable companies that small investors have been panicked into selling at bargain-basement prices.

    As soon as top notch institutions like the BIS and IMF start sounding the alarm, the actual smart money knows where you can hide.

    These elite warnings function another purpose in addition to giving fellow elites a heads-up.

    They insulate political figures and officials from fault after the crash.

    When the fall comes, you can be sure the BIS, G-20, IMF and the rest will point to the statements I just told you about as well as say, in effect, See, we told you it was coming. Dont blame us if you didnt take action.

    The warning continues to be sounded. The time for defensive action is now.

    Regards,

    Jim Rickards

    Strategist, Strategic Intelligence

    From the Port Phillip Publishing Library

    Special Report: If you want to get ahead in this world, it pays to have powerful buddies in high places. With this particular new advisory, youll make one. The portfolio manager at the West Shore Group, and advisor on international economics as well as financial threats to the US Department of Defense. Jim Rickards is no ordinary financial newsletter writer.?And Strategic Intelligence is no ordinary newsletter (more)

  • Gold Investors to Hit the Tipping Point in the USA

    Gold Investors to Hit the Tipping Point in the USA

    Gold took quite a beating within September, bucking its seasonal typical monthly return of Two.3%. The political battle between President Barack Obama and Congress, China’utes Golden Week, and India’s gold import restrictions likely weighed on the metal.

    September’s correction only adds to the negative emotion toward the precious metal. The assumption from many market pundits is that gold is no longer appealing as an investment. With increasing rates and continuing low rising cost of living, US investors believe they have a solid case for selling their holdings.

    However, this could be a premature assessment, causing these bears in order to potentially lose out on a profitable position.

    Allow me to use a piece of ice to explain.

    One of the strongest drivers from the ‘fear trade’ is real rates of interest. Whenever a country has negative-to-low real prices of return, which means the inflationary rate (CPI) is greater than the current interest rate, gold tends to increase in that country’s currency. And our model tells us that the showing point for gold is whenever real interest rates go above the actual 2% mark.

    Consider the ice dice, which shows how brand new equilibriums can have significant effects. At 0 degrees Celsius, H2O is really a solid chunk, but when the temperature increases, the mass gradually begins to turn into a liquid. Over 1 degree, ice modifications form from solid to fluid, but it’s still made of hydrogen and oxygen.

    Because money is like water, when many other economic characteristics, such as population growth, urbanisation prices and changes in government policies, reach their tipping stage, the velocity of money tends to be altered.

    As global investors, we watch for changes in these trends to understand how to invest in commodities and markets, find new possibilities and adjust for danger.

    How Close to Gold’s Tipping Point Are US Investors?

    In other phrases, what is the real interest rate today? As you can see below, US Treasury investors still lose money, as the 5-year bill produces 1.41 percent and inflation sits at 1.5 percent. This is nowhere near the 2% mark.



    Click to enlarge

    I would be worried about gold in the event that real interest rates solidly crossed the 2% threshold for an extended amount of time, because it would have a dramatic effect on gold. as an asset class. In a high rate of interest environment, gold and silver lose their own attraction as a store of value.

    In purchase for that tipping point to happen, rates would need to continue increasing above inflation, and rising cost of living would need to remain low. These are the forecasts made by many gold sellers today; however I wouldn’capital t get too trigger pleased just yet, as recent data problems these assumptions.

    Take the monthly [US] joblessness figure, which is one of the primary indicators the Federal Reserve studies when evaluating the economy. But with respect to the definition of an unemployed person, the actual numbers reveal different results.

    The recognized U3 unemployment rate, the exact figure Ben Bernanke uses, tracks the total unemployed as a percent of the civilian labour force.

    The broadest gauge determined by the Bureau of Labor Statistics (BLS) is the U6 unemployment rate. For this number, the BLS adds in all those people who are slightly attached to the labour force, in addition people working part-time who want to work full-time.

    What does ‘marginally attached to the work force’ mean? These people are neither working nor looking for work but show they want a job, are available to work and also have worked during some period in the last 12 months. These slightly attached people also include discouraged workers who are not looking for work because of some job-market related reason.

    Then there’utes a measure of the labour market the BLS tracked prior to 94′. This is the seasonally-adjusted alternate unemployment rate that statistician John Williams continued to calculate. It’s basically the U6 plus long-term frustrated workers.

    While the figures closely followed one another from 1994 through 2009, there’s recently been a shift. U3 and U6 have been popular downward over the past few years, while Williams’ ShadowStats unemployment rate shows the noticeably upward trajectory. Probably the official unemployment figure overstates the healthiness of the economy?


    Click to enlarge

    Based on the jobs marketplace, a limited housing recovery and regulations that have been slowing down the flow of money, the Federal Book may have no choice however to raise rates very gradually to keep stimulating the economy.

    Figures Don’t Lie, But Liars Figure

    Then there’s the suggestion of inflation manipulation. Even though the US has been reporting a reduced inflation number, things feel more expensive to many Americans. Disposable income has been growing less than inflation in recent years; perhaps that’s why many people feel ‘squeezed’.

    Also consider Williams’ graph below. It shows month-to-month inflation data going back for more than a century. The blue and gray shaded areas represent BLS’ historical Consumer Price Index (CPI).

    You can clearly begin to see the wild swings of rising cost of living and deflation, especially during the First World War, the Great Depression, and the Second World War, as well as the stagflation of the 1970s and early 1980s.

    However, shortly after disco, bell bottoms, and episodes of All within the Family faded from memory, the united states adjusted CPI not once however twice, first in the early 1980s and again in the mid-1990s. If you use the pre-1982 calculation, you end up with a much different inflation picture. This really is the area shaded in red-colored.


    Click to enlarge

    Way back in 1889, statistician Carroll D. Wright, within addressing the Convention associated with Commissioners of Bureaus of Figures of Labor, talked about the unbiased and fearless presentation of its data, using the above play on phrases. He said:

    ‘The old saying is that ‘figures will not lie,’ but a new saying is ‘liars will figure.’ It is our duty, because practical statisticians, to prevent the liar through figuring; in other words, to prevent him through perverting the truth, in the interest associated with some theory he desires to establish.‘

    Wright’s speech seems particularly relevant today.

    For patient, long-term traders looking for a great portfolio diversifier, an average weighting in gold and precious metal stocks may be just the solution. And, today, when looking over the gold mining industry, you’lmost all find plenty of companies that have compensated attractive dividends, many higher than the [US] 5-year government yield.

    Frank Holmes
    Contributing Publisher, Money Morning

    Publisher’s Note: Figures Don’t Lie, But Liars Figure initially appeared in The Daily Reckoning USA

  • Sell Your Property and Buy Resource Stocks

    Sell Your Property and Buy Resource Stocks

    Newcrest Mining

    A financial crash is coming to a house near you.

    While we’re not there however, the property market is fast approaching bubble territory.

    On this topic, I’m sure that some of my colleagues (Phil Anderson, Terence Duffy as well as Callum Newman) over at Cycles, Trends and Forecasts may disagree with me! The team of property bulls do make some solid arguments, pointing towards an additional 15-year rally in property costs. If you ask them, we’re nowhere near the top in real estate.

    Admittedly, they could be right. This is why I don’t ignore what they have to say. And neither should you. I suggest checking out what they’re saying here.

    That said, having done my research around the property sector, I’m not about to run out and buy an investment property.

    Here’s why…

    Australia’s property market right now worth $6 trillion!

    A good place to start is questioning whether home has already peaked. In some Aussie states, it appears so.

    Looking from Perth, in a clear sign that the mining boom is over, the actual June REIWA figures show that the actual medium house price rests around $530,000. Prices possess crashed by $20,000 on average in the last six months.

    While you don’t want to maintain Perth property, it’s another story over in Sydney and Victoria. The average house price has reached the $1 million tag in both states. And, according to the Australian, the good times may be over:

    ‘Amid booming prices in Sydney and Melbourne, regulators possess in the past year grown increasingly concerned that lending standards are slipping, as banks battle to lend and purchasers take advantage of record low interest rates.

    ‘In December, the Australian Prudential Regulation Expert stepped in and told banks to limit financing growth to property investors in order to 10 per cent a year…

    ‘Despite the banks continuous shrill of super-safe housing, APRA have thoroughly dismissed this given the major banks all failed the APRA November 2014 mortgage stress tests. And in May APRA highlighted severe deficiencies in bank housing lending credit underwriting standards.’

    Indeed, the brakes take presctiption with bank lending. Which is a cause for concern.

    The whole property market is built on the premise that the lending as well as leverage will continue forever.

    Unfortunately, it is unrealistic to expect debt to develop forever.

    Eventually, the system requires a main restructuring to grow again. This is not rocket science. The editors from Port Phillip Publishing have argued for years that the increasing global debt load is totally unsustainable.

    With limited economic growth as well as deflationary conditions, it’s likely that the debt period will blow up soon. So when the overleveraged system goes down the actual drain, this won’t be good news for property prices.

    The Book Bank of Australia’s Governor, Glenn Stevens, is also concerned. He said?that he was ‘concerned about Sydney‘ house prices,?which he described as ‘crazy‘ in June.?This week he or she backed up his view through saying that ‘dwelling prices continue to increase strongly in Sydney‘. And that the actual RBA is working to?’assess and contain risks that may arise in the housing market‘.

    Given the extraordinary financial debt levels, authorities are even beginning to look at regulating negative gearing. Doctor Luci?Ellis, the?RBA’s?head of monetary stability,?told a Senate economics committee inquiry in to home ownership on Tuesday,

    ‘The combination of negative gearing and concessional taxation of capital gains creates an incentive which makes people more comfortable about taking on leverage… It’s worthy of a holistic review.’

    At the end of the day, it’s really easy…

    Increasing regulation and slowing lending growth are ominous signs for the housing sector. And when these measures go ahead, the knife will be put to the property bubble.

    And if you didn’t know, 60% of Aussie wealth is tied to the property sector. This compares to the global average of 45%. Then when, and not if, property prices crash, household wealth will require a huge hit.

    The property maximum is approaching

    We’re also facing the biggest financial crash of our life span — the sovereign debt crisis. This is the real trigger for the fall in property prices. Don’t just take my word for this…

    Doug Casey, from Casey Research, has been saying this for years now. Martin Lance armstrong, Chairman of Princeton Economics International, started warning concerning the coming ‘Big Bang’ back in 1985! And our founder, Bill Bonner, continues to be warning about financial systems flaws and faults since, well, before I was born!

    The sad fact is that no one concentrates.

    Unfortunately they will hear it when the bond bubble pops…and the majority of overleveraged products collapse. And this includes property prices.

    Don’t be the last one standing

    Already, the smart money is getting out…

    Billionaire James Packer just sold his mansion for $70 million, breaking the all-time report. This kind of activity typically occurs at the top of the market.

    And my close friend’s dad, a multi-millionaire in the Victoria property development space, is about to sell all his qualities. When the smart money is getting out like this, you don’t want to be the last one standing.

    You need to look after yourself.

    The best way to do this is by shifting your money into quality resource stocks. Compared to property, they’re dirt cheap. And when resources rebound, as I’m sure they will, you stand to make a tidy revenue. But you have to play your own cards right, buying into the right sectors…at the right time.

    If you would like more information on how to best play these types of markets, you can start here.

    Regards,

    Jason Stevenson,

    Resources Analyst, Resource Speculator

    From the Port Phillip Publishing Library

    Special Report: Nitro Stocks Completely unknown to most Aussie traders, there is a special type of ASX investment that can generate more cash in a week than most people earn each year! They’re called ‘Nitro stocks’ and they can cram 20 or 3 decades of market profits in to just a few months. Sam Volkering states, ‘It’s like taking a slow-moving bluechip and pumping it full of steroids!‘ Sam’s noticed three stocks on the verge of hitting their ‘Nitro-phase’. And if you want in, you’d better hurry!

  • Who Wins in the Currency War: Emerging Markets versus the Big Four?

    Who Wins in the Currency War: Emerging Markets versus the Big Four?

    Stock Graph Zoom In statistic

    In July 2014 Brazil was web host to the biggest sports event in the world, the FIFA World Cup.

    A big event like this costs money. And lots of it.

    All in Brazil expected around US$15 billion to host the event. On stadiums alone these people spent around US$3.9 billion. For 12 stadiums thats about US$316 million on average each. Could Brazil afford to pay for this particular? Of course not. The taxpayer had to foot the bill.

    But not even the actual taxpayer could afford it.

    In 2014 South america collected about US$288 billion in tax revenues. A deficiency of US$28 billion. That shortfall is if you allocate all the money to the event. Dont forget those tax receipts are money for running the country as well. Things like health, education and infrastructure. Its actually likely the taxpayer will foot the bill for decades to come.

    This tournament was supposed to reinvigorate Brazils economy. The government was hoping it would spur growth and attract investment. Put Brazil properly on the world stage.

    It didnt.

    It feels like this might have been Brazils last roll of the dice. A way to arise the economy from its emerging economy peers. But they didnt realise is that theyll always be an emerging economy. At least, when you compare them to the actual might of the US or China

    But Brazil bet the house. And even chose to host the other biggest event in the world, the 2016 Olympics.

    Tommy Andersson in his 2008 paper, Impact of Mega-Events on the Economy estimates on average the economic benefit of an Olympic games is below US$10 billion. Estimates are the Olympics will cost around US$16 billion.

    To complicate matters, since 2011 the Brazilian real is over 59% weaker against the US dollar.

    Thats great if youre heading to the games from the US on holiday. Its not so great when youre trying to host the two biggest events in the world consecutive. Its thrown the Brazilian economy into a tailspin.

    So why is the real therefore weak? What did South america do, aside from maybe be considered a little overambitious? How come now the actual is up there with the worst performing currencies in the world? Well as Jim Rickards, Strategist for Strategic Intelligence explains within todays essay its all down to the Forex Wars playing out amongst the worlds Big Four C All of us, China, Japan and European countries.

    Of course its not just Brazil. Because youll see Jim highlights the plight of Korea also. In fact these wars effect all emerging economies. You see when the Big Four engage in their Currency Wars, they play to win, and everyone else loses. Especially the rising economies like Brazil and Korea.

    Regards,

    Sam

    Who Wins the Forex War: Emerging Markets Vs the Big Four?

    By Jim Rickards, Strategist, Strategic Intelligence

    For better or worse, emerging marketplaces have become roadkill in the currency conflicts.

    Perhaps collateral damage is a better term for it, since collateral damage is used to describe innocent victims of battling among hostile adversaries.

    All wars produce collateral damage, and the currency wars are no exclusion.

    The major adversaries in the forex wars are the US, China, Europe and Japan.

    Each of those four economic powers is actually confronted with the same dilemma. There is too much debt in the world, and never enough growth.

    If growth were strong, the debt would be workable and countries wouldnt care a lot if one player tried to adjust its currency. But development is not strong; its weak. And getting weaker all over the world.

    And sovereign debt just keeps growing.

    Its easy to make fun of nations like Japan that have debt-to-GDP percentages over 200%, but the US and China are not that much behind and are catching up quick.

    The whole world is beginning to look such as Greece.

    The key to solving the sovereign debt problem is nominal growth, which consists of real growth in addition inflation.

    If nominal growth is booming faster than your deficit, then the debt-to-GDP ratio goes down as well as your sovereign debt is viewed as sustainable.

    The reverse is happening.

    Deficits persist in the main economies, but nominal development is weak. In fact, minimal growth in some countries, including the US and Japan occasionally, is actually negative, in part because rising cost of living has turned to deflation.

    Real growth is essential, but when it comes to paying the money you owe, nominal growth is what counts, because debt is paid in nominal dollars. In a world of deflation, nominal growth is actually?lower?than real growth. The world of sovereign debt management has been turned upside down.

    The main economic powers are battling deflation by devaluing their currencies.

    A devaluation raises the price of imports such as energy, commodities and manufactured goods.

    These greater import prices feed with the supply chain and put upward cost pressure on finished items and competing products.

    The issue is that not everyone can devalue at the same time; countries have to take turns.

    China were built with a weak yuan policy in 2009. By 2011, the US had engineered a weak dollar. Beginning in late 2012, Japan orchestrated the fragile yen with Abenomics.

    By mid-2014, it was time for that weak euro, which was achieved by the ECB using negative rates of interest and quantitative easing. The major financial systems keep passing the forex wars canteen, hoping that everyone could possibly get just enough relief to keep the game going.

    Still, robust global growth is nowhere in sight.

    Where performs this leave emerging markets?

    Unfortunately on their behalf, emerging markets are simply not big enough or important enough to factor into the calculations of the major economic powers.

    Its not too the big central banks dont treatment; its just that there are limits as to the they can do. The US, The far east, Japan and Europe, the actual Big Four, account for almost two-thirds of global Gross domestic product. All of the other developed economies and also the emerging markets combined account for the remaining third. As far as the Big Four are concerned, the rest of the globe are just along for the ride.

    When the Big Four fight the currency wars, sometimes these people win and sometimes they lose.

    But the emerging markets always shed. The emerging markets have been painted into a corner and can’t escape the room.

    Heres why.

    When a good emerging-market currency weakens, capital leaves the nation and heads for strong-currency areas such as the US. This capital flight causes declines in asset markets such as stocks and real estate.

    A weak forex in an emerging-market economy also causes it to be harder to pay off dollar-denominated corporate debt. This can lead to debt defaults and much more capital flight.

    In a worst of all, you can have a full-blown emerging-market meltdown of the kind that happened in 1997C98.

    But when an emerging-market currency strengthens, its exporters suffer, and its tourism sector can be hurt also. This really is happening in Korea today.

    The relatively strong won has the Korean economy on the brink of recession because they are losing export competition to Japan, Taiwan and other competitors.

    So a weak currency causes funds flight and asset accidents, and a strong currency causes recession and hurts exports.

    Emerging financial markets are between a rock and a hard place, and they will stay there so long as the Big Four are battling the currency wars.

    One solution to this dilemma is a resumption of strong economic growth in the Big Four. In a world of strong growth and stable exchange rates, emerging markets can prosper with exports of commodities as well as manufactured goods as well as tourism as well as services.

    But strong growth isn’t in sight.

    Another solution is capital controls. But capital controls are discouraged by the IMF and are considered a sign of desperation.

    Neither strong growth nor capital controls are on the horizon right now, therefore emerging markets will remain within this heads you win, tails I lose posture relative to the Big Four.

    Emerging market financial systems dont have the right type of weaponry to defend themselves in currency wars.

    The emerging markets are in position to lose both ways.

    Regards,

    Jim Rickards,

    Strategist, Strategic Intelligence

    Ed Note: the over article first appeared as a Strategic Intelligence weekly update

  • What Good are Politicians Anyway?

    What Good are Politicians Anyway?

    Businessman holding money - Australian dollars

    Here in the UK the latest political debate is front page news. It’s nothing to do with any economy. There’s no mention of ISIS, immigration, Greece, the EU, employment or elections.

    No, the front page news here in the UK is all about disgraced Lord Steve Buttifant Sewell.

    Lord Sewell sits in the House of Lords. If you do not know what the House of Lords does, here is a crash course.

    The House of Lords may be the second chamber of United kingdom Parliament. It helps to make and shape legislation (laws) here in the UK. They keep the government under control by scrutinising bills that have undergone the House of Commons.

    To become a Lord you’re appointed. You don’t go through the public vote like for the House of Commons. That means any schoolboy mate, person of prosperity or chum can get the gig. Sounds dodgy in the get go really…

    Anyway, good old The almighty Sewell is one of those appointed Lords that has an influence on the laws and regulations of the UK. A powerful placement. But he just got the actual sack. Why?

    Well there’s nothing like a good alleged night in a taxpayer subsidised apartment with two hookers along with a heap of cocaine to get one in trouble. Oh and also the fact there are photos and videos to supplement the tabloid story probably helps the ‘disgraced’ component.

    Of course the UK isn’t isolated when it comes to political scandal. Back in Australia, Bronwyn Bishop, the speaker of the House associated with Representatives, is in her own small pot of boiling drinking water.

    Dodgy politicians is a global epidemic

    Getting through Melbourne to Geelong can be a horrendous journey. So rather than take the route most normal people do, via car, Bishop went in style. Chartering a $5,227 helicopter, Bishop just sailed over the plebs listed below.

    The thing is, the trip was to a party fundraiser event. Not any kind of official responsibility. Then she claimed the flight as an expense. Which means the taxpayer, you and me, footie the bill.

    Ah the life of a politician hey? Helicopter flights, cocaine and hookers.

    But there’s plenty worse available, believe it or not.

    What about over in Malaysia at the moment. The Malaysian Premier, Najib Razak, is currently coping with allegations that around US$700 zillion from a state investment account ended up in his personal company accounts.

    And then there’s the US. Oh, the united states…Donald Trump is running to guide the Republican Party in the US. Which means, one day he could become leader.

    Seriously.

    This is a guy who just a couple weeks ago in a speech said,

    ‘[Mexico] are sending somebody that has lots of problems, and they are getting those problems to us. They are bringing drugs, and getting crime, and their rapists.’

    It’s almost silly that these people have such significant influence on the world.

    I mean really, what good are these folks? They sit in positions of power with uncounted influence over how countries operate. They have power to influence legislation, which is supposed to help guide all of us, the average citizen, on how to reside.

    With people like these in charge, it’s no wonder the world is in such a messed up situation.

    But what can you do about this? Can you stop high level political figures from manipulating the system? Are you able to stop them from rorting taxpayer money? Can you stop all of them from being complete idiots?

    No, you can’t.

    And that’s the most important point to all these scandals you read about every day. When you see Bronwyn Bishop hovering within the city in a chopper don’t get mad. Understand there’s nothing you can do.

    So shut it out. Don’t get mad, get even.

    Create your own energy, create your own wealth

    The best way you are able to feel better about Bronwyn Bishop’s helicopter fetish is to observe her down at the nearby Helipad. I reckon half the main reason people are annoyed at this is they don’t fly by chopper themselves.

    I reckon if you travelled to work or to your holiday house in a chopper you wouldn’t give two hoots.

    If you heard about the Malaysian Premier looting $700 million from a debt-laden fund while looking at the millions with no debt in your own portfolio, you’d say, ‘Good luck for you Mr. Razak. You’ll need it. I do not.’

    Here’s the thing. You aren’t going to travel by chopper working ‘for the man’ your whole life. Maybe you could easily get there after oh, I don’t know, state 1,000 years.

    The easiest way you can end up travelling by chopper is through investing. The great thing is the opportunities to invest in firms that could return triple determine gains are all over the location. You’ve just got to know where to look…or who to listen to.

    Take for example my colleague Jason McIntosh, who runs the most amazing trading service I’ve come across, Quant Trader. Jason has an very left-field way of zeroing in upon future stock superstars at that golden time when virtually no one knows about them.

    He calls these stocks ‘The Outsiders’. When you hold the secret of what Jason calls ‘outsider trading’ and how simple it is if you have a calibrated computer algorithm crunching the data and performing the scouting for you, you’ll never look at trading in the same way again.

    But trading might not be your thing. And that is fine it’s not for everyone. That doesn’t mean the opportunities stop there.

    Another one of my colleagues, Ken Wandong, head up New Frontier Investor. Ken is from China. He knows the actual lay of the land, they know the people, and he knows the markets. You might have never invested in that region before. And today you’re quite likely petrified of it. That is, if you listen to the news you hear on the mainstream news stations.

    But Ken is far savvier than the typical noise you get within the mainstream. As I said, he’s on the floor. And he believes the international map of corporate power is being rewritten.

    In 20 years’ time it will look almost unrecognisable. And it could provide similar investments returns within the next 10-25 years, to those that were made from the rise of America within the 20th century. Gains like 11,095%, 20,621% and 50,760%. These were made from the last megatrend. Ken’s New Frontier Investor is focussed on the next megatrend.

    And with the uncertainty in China, now might actually be one of the best times to look at investing in this market.

    My point is you may never have an influence in the hallowed halls of Canberra, Washington or Westminster. You’ve got to look out for yourself. You can just properly set yourself up by trading. It’s that simple.

    So you can do nothing about it, or you can take your personal action and get even, as well as hopefully rich.

    Regards,

    Sam

  • The Price of Interest Rate Manipulation

    The Price of Interest Rate Manipulation

    stocks down

    Its pretty obvious theres no such thing as being able to see the near future. Or is there? From what I can gather there is no Grays Sports activities Almanac like in Back to the Future Part II, with the outcomes of events later on.

    But some extraordinary people have an uncanny ability to predict what will happen in the future. Currency Wars author as well as Strategic Intelligence Strategist Jim Rickards is one such individual.

    And what Jims uncanny ability seems to be is predicting whats going to happen in world economies. Sometimes I believe Jim might even have a secret copy of Grays Economic Almanac and hes simply not letting on

    While the world was with the US to hike rates in September Jim suggested they wouldnt. And below youll observe exactly why he made that call and was right.

    Furthermore youll also see Jims long term strategic view of the actual Feds actions, and the five options he thinks theyre going to have. And then whatever the Fed does end up doing will be a tradeoff between their credibility or catastrophe.

    Regards,

    Sam

    The Cost of Interest Rate Manipulation

    By Shae Russell, Editor, Strategic Intelligence

    The Fed won’t raise interest rates. Thats something Ive said for a long time.

    This statement is acquainted to subscribers of Strategic Intelligence. It sounds exactly like something, their own strategist, Jim Rickards would say.

    In reality, its exactly what he said to the Mastening numbers on the Monday night before the actual Liberal party changed leaders.

    As most Aussies were tweeting libspill memes, Jim was chatting to The Business concerning the implications of the looming Federal Reverse Bank meeting now.

    I highly recommend you watch the interview.

    Now, this interview took place before the September Federal Open Marketplaces Committee. When you watch the job interview, its clear that Jim was confident thered be no rate increase from the Fed which month.

    However, he did discuss something called the October Surprise.

    Now the Fed meets eight times annually. But they only hold the press conference four times annually. As a general rule, the Fed has a tendency to raise rates at the same time a press conference is planned.

    After this last meeting, the actual Fed wont have another push conference until December this year.

    Yet, as Jim explains in the interview, last year the Fed had a teleconference practice run during the Northern hemisphere spring.

    The marketplaces and most in the mainstream for that matter wouldnt expect it because theres absolutely no scheduled press conference. Therefore, the October surprise.

    At the time, Jim felt the Given may risk saving face and dump an Oct Surprise on the US market.

    In saying that, he believes any kind of rate rise this year is unlikely. 2016 is still a possibility, however, as Jim explained to subscribers associated with Strategic Intelligence on Wednesday, the Given have until March 2016 in the event that its dependent on economic data.

    While Jims suggesting to look out for the unexpected, he or she reckons the Fed missed the actual boat to raise rates.

    They could have done so gradually over This year and 2011. If the main bankers had used this opportunity to raise rates, thered be room in the US economy to tighten monetary policy today.

    The fact is, they didnt.

    Today the US is faced with frail economic numbers. Jim states the, Employment rate has come lower, but labour force participation is lousy. The labour force declined last month as well as real wages are going nowhere. In fact, monthly job creation is going nowhere. If you look in the data behind the pleased talk, the [economic] data is very fragile in the US.

    As a result, Jim believes the Fed has five choices.

    1. Fire up those printing presses and start printing money once again.
    2. Establish negative interest rates. Although Jim thinks this move is highly unlikely.
    3. Helicopter money. This is where the united states runs bigger budget deficits and the Fed buys the bonds. Money printing having a purpose, Jim calls this.
    4. The Fed changes its forward guidance. Since spring the government Reserve has put the market upon notice that a rate rise could happen at any moment. Jims says the Fed could change the speak with being data dependent rather than this difficult talk we get now.
    5. And the ultimate tool currency wars. That is, cheapen the dollar at all costs. The problem as Jim explains within the interview is that this move may put pressure on countries like Australia and China that are trying to weaken their own currencies.

    In saying that, the Given might have these choices, however Jim doesnt see the Fed with them at this point.

    However, the biggest take away from the ABC interview is what occurs if the Fed doesnt raise rates after all the tough talk.

    Jim views it coming down to either causing a meltdown in the US and rising markets by raising rates, or accepting that they shed their credibility.

    The Fed need to choose between their credibility or a catastrophe. People are saying if they dont raise rates, when theyve been talking it up for so long, theyll lose their credibility. However the data is weak so if they do raise rates theyll cause a catastrophe.

    Pushed on the point further, Jim tells the ABC: They will need to leave their credibility in shreds to avoid a catastrophe.?This is the price of manipulation.

    Regards,

    Shae Russell

    Editor, Strategic Intelligence

    Ed Note: the over article first appeared like a Strategic Intelligence weekly update (16 September 2015)

  • What Every Resource Investor Needs to Know about the Middle East

    What Every Resource Investor Needs to Know about the Middle East

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    I’ve long argued that a main war will break out by mid-2017.

    I just don’t know where it’ll start…

    Ukraine, the South Chinese Sea, and the Middle Eastern all have the potential to be the spark that sets this in motion. Wherever it begins, when this really kicks off, it’s likely to escalate quickly into the first major conflict of the 21st century.

    I do not say this to scare you. And it’s not a subject that I enjoy talking about. But someone has to warn you about the real risks that we’re facing. The loss of life in a major conflict will be devastating. However there is nothing you or I’m able to do to stop that.

    What you can do is prepare yourself and get your investments, so that if this war escalates when i believe it will, at least your wealth won’t be erased. Right now I don’t want to sound distasteful, speaking about the loss of life and the loss of money in one breath. But again, if this war breaks out you won’t be able to prevent the bloodshed. But you can protect your portfolio.

    For now, let’s turn to the Middle Eastern.

    The Middle Eastern conflict is continuing to grow around Syria for some time now. And when you’ve ever wondered why a poor country like Syria matters, a minimum of to the US and Saudi Arabia, I’ll explain.

    The Middle East power play

    And at the end of your day, the whole mess boils down to politics, power and money. I don’t anticipate this to shock a person.

    But to kick things off, let’s start with religion at the very surface level. In doing so, please understand that I consider no view on religion. My purpose here is to provide an objective take on the region from an investor’s perspective.

    With that said, it’s helpful to understand who the main players are. The governments of Iran, Iraq, Syria and Lebanon are controlled through Shi’ite Muslims. While the governments of Saudi Arabia, Qatar, United Arab Emirates and Jordan are ruled by Sunni Muslims.

    When it comes to managing energy, these groups broadly have a tendency to back their own circle. That’s important when you analyse the world’s largest natural gas and condensate field — South Pars and North Dome. It is shared by both Iran (Shi’ite ruled) and Qatar (Sunni ruled).

    Both the Shi’ites and also the Sunnis want to build their own gasoline pipeline networks. You can see this on the map below…


    Source: passionforliberty.com

    Click to enlarge

    The Shi’ites want to use the route Iran-Iraq-Syria-Lebanon-Europe (Islamic pipeline); the Sunnis the Qatar-Saudi Arabia-Iraq-Syria-Turkey-Europe route (Qatar-Turkey pipeline).

    But what’s the capture?

    Well, both groups need to develop a pipe through Syria. And for this reason, Syria represents huge strategic value. If either the Sunni or Shi’ite groups are going to get their gas piped in order to Europe, they’ll have to go through Syria.

    This is how it gets interesting…

    The home of cards

    Syria has been ruled through the Assad family for decades. There have been stress between Syria’s and Saudi’s elites for many years. And there’s huge tension between Saudi Arabic and Iran. The Saudis — the area’s largest oil producer — feel threatened by Iran’s rising dominance in the region, and they have long sought to replace its government.

    For Saudi Arabia to exchange Iran’s government with its own judgment party, effectively gaining control over OPEC, it first needs to overthrow the Assad family in Syria. Then it can hopefully build the pipeline with the help of other Sunni groups.

    The Shi’ites want Assad to remain in power, to allow them to build THEIR pipeline together with his blessing.

    The Middle East conflict essentially boils down to a harmful game of poker.

    To make things worse, a lot of powerful outside parties possess chips on the table.?The US has its chips on the Sunnis’ side (Saudi Arabia). And the Russians and Chinese language (although China remains undeclared) are all in on the Shi’ites’ side (Syria).

    Now, you might wonder why the US really wants to get involved at all.

    Thanks to fracking technologies, it’s the world’s largest essential oil producer. It doesn’t need Middle Eastern oil anymore. Adding to this, it’s in the process of building LNG terminals to export its shale gasoline.

    So what interest does the All of us have in the region?

    Aside from All of us companies operating in Irak, they’re hoping to help the Sunni cause.

    Why?

    If the Sunni natural gas pipeline gets to Europe, Russia’s geopolitical influence in Europe will be neutralised.

    Geopolitical games 101

    It’s clear the US wants to isolate Russia — it’s the only country (bar China) that really stands up to all of them. The US doesn’t like, and is not used to, being told how to proceed. So to put Russia in its place, it’s using sanctions along with other geopolitical tools. For example, attempting to cut off its lifeblood — oil and gas money.

    Russia is by far the biggest supplier of natural gas to Western Europe — where many of America’s closest partners (Germany, France, Italy) sit.

    It’s a massive bargaining chip. Russia could simply switch off the gas, and cause immense economic and political harm to America’s allies. It’s currently switched off Ukraine’s gas a number of occasions.

    If Putin does this, it will squeeze Europe’s economy. Capital will flee Western markets and head towards the US, pushing the dollar even higher. Europe’s economy is a train wreck and its bond markets are ready to crash. US as well as European sanctions are poorly conceived — to say the least — and will jepardize hard.

    If this escalates additional, we could see this geopolitical card played out by 2017. But it will have to obtain a lot worse for this to happen.

    In the meantime, the US goal to isolate Russia continues. Obama realises that if Europe can get their gas from the Middle East instead of Russia, Vladimir Putin can no longer threaten to ‘turn off the gas’. Russia’s gas-monopoly trump greeting card ceases to exist.

    That’s part of the reason that Russia is noisily safeguarding its interests in the region.

    But this is not all…

    Russia has just secured a major contract with the Syrian government. This now holds long term exploration and development rights to a large part of Syria’s offshore waters. If Russia can find coal and oil in the region AND have influence over a pipeline to Europe, it’s control over all the gas that flows into Europe.

    Everyone has a lot on the table in this game of geopolitical chess. And the region is extremely hostile. At the moment, the US is pushing Spain to the edge. If it adopts Syria, it will draw Russia as well as Iran into conflict. This is arriving, whether you like it or not.

    I hope I’m wrong concerning the scale of the coming conflicts. But if I’m not, you have to ask yourself, is your portfolio prepared for a global scale war?

    Resource Speculator readers have been getting strategic advice for several weeks about the hurdles that we’re facing. They will be prepared for the tough times ahead. Indeed, during times associated with war, the demand for most commodities swells.

    You just need to know where, when, and how to commit to maximise your returns. You can see more details here.

    Regards,

    Jason Stevenson,

    Resources Analyst, Resource Speculator

    From the main harbour Phillip Publishing Library

    Special Report: Nitro Stocks Completely unfamiliar to most Aussie investors, there’s a special type of ASX investment that can generate more cash in a week than most people earn in a year! They are called ‘Nitro stocks’ and they can stuff 20 or 30 years of market profits into just a couple months. Sam Volkering says, ‘It’s such as taking a slow-moving bluechip and pumping this full of steroids!‘ Sam’s spotted three stocks on the verge of hitting their ‘Nitro-phase’. And if you want in, you’d better hurry!