Welcome To Usa Finance Page

Blog

Even Masters Have Masters

‘Will I ever make it to a higher level?’

It’s something many people ask on their own at some point. I know I definitely have.

This thought can creep in when a goal seems almost beyond reach. We think about where we are — then where we want to be — and wonder how we’ll ever get there.

Now this can apply to anything. It could be trading, business, sport, or education.

The fact is, most successful people start at the bottom. They then work their method to the top, one level at a time.

I often get emails from individuals starting out in the markets. A couple of things usually stand out — basic knowledge and a modest capital foundation.

Many of these people worry about the scale of the task. They wonder if they’ll ever be meaningfully successful. It’s a bit like standing at the base of Everest and searching up.

I know how this feels — I’ve been there. Every trader has…from the part-time speculator to the New York hedge fund superstar. At the rear of every successful trader there’utes a modest beginning.

It’utes funny how random events may take you down an unexpected route. A few years ago I was listening to ABC Radio. I tuned in by chance during a trip to the businesses.

It turns out there was a talk display in progress. The special visitor was former Test cricketer Justin Langer. This was a fascinating interview. It had a lasting impact on the way I think.

Justin was talking about his cricketing career. It had been a tale of contrasts.

The first half of his career regularly saw him in and out of the team. He was continually falling short of anticipations. His career was frequently on a knife’s edge.

But the other half was radically different. Justin’utes star was soaring. He went on to become one of the most effective opening batsmen of all time.

How did he do it?

This is the part I enjoy most. I love listing to people’s stories…I always learn new things. And this was no exception.

The centrepiece associated with Justin’s story is a simple book. It was a gift from the teammate while on tour. Bieber credits this as a crucial event in his career. Their whole way of thinking changed.

The book became a constant companion. Bieber said he would keep it on his bedside table. Every night he would read one of its short chapters…just a few pages.

I guess you’re wondering the book’utes name. Well, it’s uncommon. You probably won’t read about it anywhere else this weekend.

The name is Zen in the Martial Arts by Joe Hyams. It was written back in 1979.

So what do martial arts relate to cricket…or trading, for that matter?

Well, Zen within the Martial Arts isn’t about drills as well as technique. The focus is more existence and philosophy…creating a positive from a negative.

I always give consideration when a high achiever gives away a ‘secret’. You never know where it’s going to lead.

So I went online after the interview to look for the book. Sure enough, it was there. Amazon had it in stock for a bargain basement $12.95. The biggest expense was shipping!

Zen within the Martial Arts is an outstanding book. Its 135 pages contain a few real gems. Some of the section titles are‘Conquer Haste’, ‘Active Inactivity’, and ‘Lengthen Your Line’. It was mind-opening.

I purchased Zen in the Martial Arts in 2009. It’s still clear in my mind six many years later. I often find myself teaching my kids a training from the book.

Let me tell you about one of the chapters. It describes an excellent way to look at progression. This can really help put your ability into perspective. I think about this all the time for all sorts of products.

The chapter’s name is ‘The Masters Have Masters’. It describes the entire process of getting good at something.

The author, Joe Hyams, describes his own learning experience in the martial arts. He talks about ability as a never-ending staircase with countless landings, or plateaus. The landings signify times when he would stop improving.

Hyam talks of the frustration of being stuck on a landing. He says it was discouraging when his improvement would stall. And he found he wasn’t alone…the experience had been common to many.

I’m one of these people. There have been many plateaus in my career…periods after i was only marking time. And yes, I found those times frustrating.

But life is often how we frame it. The right perspective can make all the difference.

Hyams recalls his mentor’s way of coping with the plateaus. When discouraged, he would go to watch the actual beginners train. This would remind him how far he had already come.

He would then watch the black belts. This would then inspire him by seeing how much better he could be.

Eventually he was a dark belt himself. But which wasn’t the top. His master was higher, and his master’s master was higher nevertheless. The potential to improve was endless.

I often think of the infinitely rising stairs. A landing is no longer frustrating. It’utes now an opportunity to take stock…a chance to see an ever-increasing number of landings below.

Always reflect on your achievements along the way. They’re a great reminder of methods far you’ve already arrive.

Until next week,

Jason McIntosh
Editor, Quant Trader

PS: Quant Trader is a fully algorithmic trading system. Its aim is to determine ASX stocks with the potential for large gains. The system’s underlying strategy is to run winners and cut losses. While easy to say, many traders find this particular difficult to do. Quant Trader can give you the discipline and confidence to turn a little profit into a BIG 1. To learn more, click here.

January 30, 2016
‘Really? There’s No Gold in Fort Knox?’

Prices for gold and silver tend to be down on the year – gold off 20% as well as silver down 28%. One sage banker explains – in the Wall Street Journal, no less – that the economy is enhancing. Thus people are less inclined to ‘keep their money idle‘ by buying gold, he says. Better to ‘put your money to good use,‘ he says, by channeling it into other investments. Really?

Evidently, this banker-guy missed the category in which the instructor taught which ‘gold is money’. Because there’utes nothing ‘idle’ about holding precious metal. Ask the rest of the world, especially the East. They’re buying gold.

Indeed, my tally of national central banks that have been buying gold, recently, includes Russia, Turkey, India, Brazil, Canada, Mexico, Saudi Arabia and Vietnam. What do they know?

Of course, China is also building a gold stash, but not bragging about it. They’lso are building nuclear weapons, too, and not bragging about it. To paraphrase which oft-noted Las Vegas line, what happens in China stays in China.

Back at Harvard, I learned that gold is money. On the other hand, I learned that in the Geology Division, from the mining geology guy, Prof. Ulrich Petersen, and never in the Economics Department.

Still, each and every now and then – back in the 1970s – one could overhear a Harvard economics professor state something like ‘a dollar is as good as gold’. Yes, it was a reminiscence of the days of the Bretton Woods Agreement, which established the dollar as a currency ‘backed’ by precious metal.

Old monetary habits die hard. Hey, maybe old monetary routines were the right thing to do, within their day. They deserve to die hard.

At any rate, I’ve never thought that US forex was real ‘money’. Those green pieces of zombie paper are merely the medium of exchange, and ‘legal tender for all debts, public and private‘. Where did I get that offbeat, countercultural idea? Well, start with the text that’s printed on every Fed note, that’s where. This says exactly that.

There’s a difference between currency and money. Contemporary America has been able to get aside with blurring the currency-money distinction for a few generations. But with federal investing out of control, each day brings us nearer to our own, contemporary version of economic apocalypse.

Really, that needs a zombie apocalypse, when you’ve had a federal government that spends astronomical amounts of ‘money’ that, apparently, comes from nowhere? Well, okay, it originates from the Federal Reserve. But when you conclude the essence of things, Fed-money is equivalent to a ‘Big Bang money machine’ – from nothing, arrives something.

The Gold in Fort Knox?

This reminds me of a story – a true story, no less. I was within the Pentagon, some years ago, in the era of the Bush II-administration. It was E-Ring stuff. I was in the very spacious office of a very senior guy in the US Air Force. We were discussing energy issues, particularly Air Pressure programs to spur an american ‘synthetic fuel’ industry.

Our discussion touched issues of government funding of private commercial development, and questions about who owns the intellectual property (IP). New energy-development technology has national security implications. Should the IP go into the public domain? Or do we keep parts of it classified?

One of the military staffers at the table spoke up, as well as said, with a downbeat voice, ‘I don’capital t know if we can keep this type of tech classified. We’re terrible from keeping these things under wraps for long.‘

As everyone around the desk nodded in agreement, I decided to check their hearing. I stated, ‘That’s true. Really, the only two national secrets we’ve ever been able to keep are about individuals space aliens, and the captured soaring saucer in Area 51, and that there’s no gold in Fort Knox.‘

The room went peaceful. You could hear a pin drop. The senior Atmosphere Force guy leaned over the desk, and looked right at me. He said, ‘Really? There’s absolutely no gold in Fort Knox?‘

That’s all for now. Thanks for reading.

Byron King
Contributing Editor, Money Morning

January 30, 2016
Should You Buy Oil Search Limited At This Share Price?

What happened to the OSH share price?

Oil Search Limited [ASX:OSH] has been a rock-star performer over the last 13 years. That seemingly unbreakable fortune broke this past year with the collapse of oil price. It didn’t matter how strong the fundamentals were at Oil Search, its stock price went into a change V-shape, heading south.

With the fall of oil, the celebration was over for long-hold investors. However, the party continued for long/short investors. Those are investors who are able to benefit from both the upside and the downside of an asset, so they enjoyed the downside just as much.

Oil is depressed

On the fundamental side, there is nothing new. Global demand has been repeatedly downgraded by the IMF and the International Energy Agency. Around the supply side, shale, OPEC and now Iran will continue to add to the stockpile. It seems absolutely hopeless for oil.

But investors must ask themselves: what can oil sink? Must i buy the dip?

I am the emerging market analyst from Port Philip Publishing. I operate a service called New Frontier Investor. I help my clients to invest in higher growth opportunities in emerging markets.

Despite the turmoil in China, many of our Chinese opportunities are still way above their entry points. Most of our ex-China investments are profitable. How do we achieve that? We bought low and held onto value.

As of late, I have been promoting depressed assets such as commodities and depressed emerging market stocks. I brought oil onto my list over the past dip a few months ago. Right now, I’m telling investors to buy much more. I brought Brazil to the list a few months ago. It is yet to turn around, and it is right now even more attractive than before.

I guess you can call that contrarian trading. The point is, I believe oil is not high enough for its long term fundamentals, so it will rebound.

What should you do with OSH shares now?

If you are a long/short participant, your 52 weeks rolling return should be near or higher the 10% mark. It has been taking advantage of a series of long positions in the market. For long-hold investors, you ought to have a longer term perspective. Picking healthy companies at the dip is the most profitable strategy you can have.

Ken Wangdong+
Emerging Market Analyst, New Frontier Investor

January 30, 2016
When Will the US Dollar Die?

Ever since the markets collapsed within 2008, folks have predicted the collapse of the US dollar.

Some thought it might collapse that very 12 months.

In hindsight, the thought of that may seem ridiculous. However at the time, it was a real concern.

There were also those who believed the US dollar would fall, but that it would have a long timeyears, perhaps decades.

But there was another school of thought. They believed that while the US dollar might collapse, it wouldnt be the very first paper currency to collapse.

They believed that before the US dollar collapsed, all other paper currencies might collapse first.

Its an interesting idea. Every time there is a monetary panic, the knee-jerk reaction is perfect for investors to migrate to the All of us dollar and US ties.

So in the event of a total financial fall, maybe that will happen. Individuals will ditch Aussie dollars, lbs, euros and yen, as well as instead theyll hoard US dollars.

Only then, after the destruction of all additional paper currencies, will people realise that the US dollar doesn’t have value either. Then, precious metal (and silver) will go back to their rightful place as units of money.

But what most people dont realise, is that the value of paper cash has already collapsed. The US buck has lost 98.3% of its value since 1920.

How do I realize that? You just need to look at the value of the US dollar relative to the precious metal price. Most people look at the gold price and see that it has gone up in value.

To see the wear and tear of the US dollar, you need to invert the chart. The chart below shows how many oz . of gold you could get with regard to US$1 in 1920, versus how many ounces of gold you can get for US$1 today:

Click to enlarge

Source: Bloomberg

In 1920, you could get 0.05 ounces of gold for US$1.

Today, US$1 will only get you 0.00085 ounces of gold.

Thats the destruction of the purchasing power of document money by more than 98%.

So right now we ask you, is it truly so crazy to think that certain day the US dollar will finally die?

More on the end of the US dollar from Jim Rickards today

Cheers,

Kris

January 30, 2016
What a US Rate Rise Means for Your Investments Today

I’ve long said to expect a US interest rate hike this year. US Federal Reserve Chairperson, Janet Yellen continues to confirm my forecast with her comments. In her own words (but with my emphasis),

‘My own choice would be to be able proceed to tighten up in a prudent and gradual manner.

‘We should also be careful not to tighten too late because, if we do that, arguably we’re able to overshoot both of our goals and become faced with this situation where we would then need to tighten financial policy in a very sharp method in which could be disruptive.

‘If there is a unfavorable shock to the economy along with interest rates pinned at zero, we don’t have great scope to respond by loosening policy further, whereas with a positive shock obviously we can tighten monetary policy.‘

Indeed, US interest rates are going one way, and that’s up.

Why?

Because the Given has no other choice.

This isn’t regarding inflation.

And it isn’t about joblessness.

This is purely about the Fed using a job during the next economic crisis. Adjusting rates is the only policy tool that the Fed has available — the days of money printing are over.

This should be no surprise…

Why money printing is over forever

The Japanese government has been printing money for 20 years. And where’s that got them?

Absolutely no place.

The US money printing program didn’t achieve anything either. In fact, it merely postponed and amplified the next financial crisis. Which I may add, is in bonds and NOT stocks.

And the European Main Bank’s (ECB) money printing program?

Again, don’t expect anything miraculous presently there.

So, at the end of the day, money printing is only good for the bond holders. And it ensures that governments can issue even more bonds (we.e. borrow more money). Of course, this means that they can promise and spend more…

Now, while government spending sounds good in theory, it actually doesn’t do much for long term economic growth.

In reality, if you’re wondering, the majority of Foreign government spending goes in the direction of interest repayments on financial debt (19.8%), social security (Thirty-five.1%) and healthcare (16.1%). And even though most of this sounds good (as well as necessary), it doesn’t create sustainable long term jobs. At least not outside of government anyway!

And presently there you have it…

Money printing, which benefits government and the bond cases, does absolutely nothing for the actual economy. The experiment has sucked the economy dry. And central bank credibility has been hit hard for this.

This is why I say that the days of money printing are over.

And, because I’ve long said, you should expect US interest rates to rise higher. The first rate hike should come in either September or October. And I’m backing a second rise in December.

When interest rates start to increase, so will the US dollar. Which means that Aussie dollar will weaken. Yet this is still some time away.

In fact, before it happens, we’re likely to see a bounce in the euro. Which should affect your stock market investments.

If the euro rallies, what about the stock market?

Starting with Greece, here is why…

After all the controversy, the nation still remains in the Eurozone. This should observe confidence return into the Eurozone, at least temporarily.

Eurozone politicians will be in heated conversations into October 17 — the actual date when Athens’ bridging finance runs out — deciding on whether to maintain Greece in the Eurozone. In my view, otherwise at the mid-September Finance Ministers meeting, this will be the date when A holiday in greece will start packing it totes.

But, at the moment, the Eurozone remains. So that as Boris Schlossberg?of BK Asset Management?places it:

‘Almost everyone on Walls Street hates the euro right now and everybody is convinced that it’s going to parity [against the US dollar]. And it very well may. But not before I think it hurts quite a lot of complacent shorts.‘

Indeed, when the entire market hates something, typically you will see a rally. And this is exactly what I’m banking on…

And to shine it off, the US equities confirming season hasn’t kicked off to the greatest start. The technology sector overall has not impressed traders. For example, thanks to lower than expected Chinese iPhone sales, Apple Corporation. [NASDAW:AAPL] fell by nearly 8%. Additionally, it provided weaker profit assistance and a US dollar warning.

So, the data coming out of the US is not hot, to say the least. And a fragile earnings season may see investors punt on a later rate rise. This should strengthen the dinar. Furthermore, with Greece residing in the Eurozone, Europe has stabilised for the time being.

As such, expect a short phrase bounce in the euro. And, following the money trail, this should see capital shift in to bond market. Indeed, we’re already looking at a nice trend emerging in the bond market. Italian 10-year ties have had their best run because the summer of 2008

And with poor financial reporting results, this will see stocks trade reduced the meantime. Indeed, the correction which I called prior to the May high is not however over.

Take a look at this month-to-month chart of the Dow Johnson Industrial Index. It teaches you what we’re looking at for the short term.

Source: Freestockchart.com; Resource Speculator

The monthly chart will show you the big picture on the line. This year, we’ve seen the market smooth. And therefore, at the moment, it could move either way.

Yet, my analysis shows that it will move downwards. To confirm the ongoing correction, we need to visit a monthly close below 17,136 points. This is the January low. If this happens, it’s likely that we’ll after that be looking at the 16,Three hundred point region — the main target for the correction. This is proven by the lower black line.

Nevertheless, it’s still possible that I could be wrong. And the market could move higher if it removes the May high of Eighteen,351 points. If this happens, we’re taking a look at a two to three month move towards the 19,300 stage level. This is shown through the upper black line.

If you want more information on how to play these markets, check out Resource Speculator. I’ve been guiding readers through these choppy market conditions all year. See right here.

Regards,

Jason Stevenson,

Analyst, Resource Speculator

From the Port Phillip Publishing Library

Special Statement: The Golden Age of Infrastructure China just unveiled a $100 million multinational investment bank for a single mission: Rebuilding the 2000-year old Silk Road buying and selling route. Why? Because the Center Kingdom is determined to redraw the global economic map…and establish a new world order of trade. So it’s kick-starting what could be the biggest infrastructure boom in history…and handing you a once-in-a-lifetime value investing opportunity in two companies that could double in price once this particular new ‘Golden Age of Infrastructure’ dawns…

January 30, 2016
The Dollar Will Die with a Whimper, Not a Bang

The same force that made the US dollar the worlds reserve forex is working to dethrone it.

22 This summer 1944 marked the official conclusion of the Bretton Woods Conference in Nh. There, 730 delegates from Forty four nations met at the Attach Washington Hotel in the final days of the Second World War to devise a new international monetary system.

The associates there were acutely aware that the actual failures of the international monetary system after the First Globe War had contributed to the outbreak of the Second World War. They were determined to create a more stable system that would avoid beggar-thy-neighbour forex wars, trade wars along with other dysfunctions that could lead to capturing wars.

It was at Bretton Woods the dollar was officially designated the worlds leading reserve currency a position that it still holds today. Under the Bretton Woods system, all major currencies had been pegged to the dollar in a fixed exchange rate. The actual dollar itself was pegged to gold at the rate of US$35.00 per ounce. Indirectly, the other currencies had a fixed gold value due to their peg to the dollar.

Other currencies could devalue against the dollar, and for that reason against gold, if they obtained permission from the International Financial Fund (IMF). However, the dollar could not devalue, at least theoretically. It was the keystone of the entire system intended to be permanently moored to gold.

From 1950C1970 the Bretton Forest system worked fairly well. Trading partners of the US that earned dollars could cash those dollars in to the All of us Treasury and be paid in gold at the fixed rate.

Trading partners of america who earned dollars could cash those dollars in to the US Treasury and be paid in gold at the fixed rate.

In 1950, the US had about 20,Thousand tons of gold. By 1970, that amount had been reduced to about 9,000 tons. The 11,000-ton decline went to All of us trading partners, primarily Indonesia, France and Italy, who earned dollars and cashed them in for gold.

The UK pound sterling had previously held the dominant reserve forex role starting in 1816, following the end of the Napoleonic Wars and the official adoption of the gold standard through the UK Many observers presume the 1944 Bretton Woods conference was the moment the US dollar replaced sterling as the worlds leading reserve currency. In fact, that replacement of sterling through the dollar as the worlds leading reserve currency was a process that required 30 years, from 1914 to 1944.

The real turning point was the period JulyCNovember 1914, whenever a financial panic caused by the start of the First World War led to the closures of the London and New York stock markets and a mad scramble around the world to obtain gold to meet obligations. At first, the US was really short of gold. The New You are able to Stock Exchange was closed so that Europeans could not sell All of us stocks and convert the actual dollar sales proceeds in to gold.

But within a few months, massive US exports of cotton along with other agricultural produce to the United kingdom produced huge trade surpluses. Precious metal began to flow the other method, from Europe back to the US Wall Street banks began to underwrite massive war loans for the UK and France. By the end of the First World War, the US had become a major creditor nation and a major gold power. The dollars percentage of total global reserves began to soar.

Scholar Barry Eichengreen has documented how the dollar as well as sterling seesawed over the 20 years following the Very first World War, with 1 taking the lead from the additional as the leading reserve forex and in turn giving back charge. In fact, the period from 1919C1939 was really one in which the world experienced two major reserve currencies dollars and sterling operating side by side.

Finally, in 1939, England suspended gold shipments in order to fight the Second World War and the role of sterling like a reliable store of value was greatly diminished apart from the UKs unique trading zone of Australia, Canada and other Commonwealth countries. The 1944 Bretton Woods conference was merely recognition of a process of dollar reserve dominance that had started in 1914.

The significance of the procedure by which the dollar replaced sterling over a 30-year period has large implications for you today. Slippage in the dollars role as the leading global reserve currency isn’t necessarily something that would happen overnight, but is more likely to be a slow, steady process.

Signs of this are already visible. In 2000, dollar assets were about 70% of global reserves. Today, the equivalent figure is about 62%. If this trend continues, one could easily begin to see the dollar fall below 50% in the not-too-distant future.

It is equally obvious that the major creditor nation is emerging to challenge the united states today just as the US emerged to challenge the UK in 1914. That power is The far east. The US had massive precious metal inflows from 1914C1944. China has huge gold inflows today.

Officially, China reviews that it has 1,658 metric tonnes of gold in the reserves. However, China has acquired thousands of metric lots since without reporting these types of acquisitions to the IMF or World Gold Council.

Based on available data on imports and the creation of Chinese mines, it is possible to estimate that actual Chinese government and private gold holdings exceed Eight,500 metric tonnes, as shown in the chart below.

Click to enlarge

Assuming half of this is government owned, with the other half in private hands, then the real Chinese government gold placement exceeds 4,250 metric tonnes, an increase of over 300%. Of course, these figures are only estimations, because China operates through secret channels and does not officially report its gold assets except at rare times.

Chinas gold acquisition is not the consequence of a formal gold standard, but is going on by stealth acquisitions on the market. Theyre using intelligence and military assets, covert operations and market manipulation. But the result is the same. Gold is moving to China today, just like gold flowed to the All of us before Bretton Woods.

China is not on your own in its efforts to achieve creditor status and to acquire precious metal. Russia has doubled its gold reserves in the past five years and has little external financial debt. Iran has also imported massive levels of gold, mostly through Turkey and Dubai, although no one knows the exact amount, because Iranian precious metal imports are a state secret.

Other countries, including BRICS members Brazil, India and South Africa, have became a member of Russia and China to construct institutions that could replace the stability of payments lending of the International Monetary Fund (IMF) and the development lending of the World Bank. All of these countries are clear about their desire to break free of US dollar dominance.

Sterling faced a single competitor in 1914, the US dollar. These days, the dollar faces a host of rivals China, Russia, India, Brazil, South Africa, Iran and many others. Additionally, there is the world super-money, the special drawing right (SDR), which I anticipate will also be used to diminish the role of the dollar. The US is actually playing into the hands of those rivals by running industry deficits, budget deficits and a huge external debt.

What would be the implications for your portfolio? Once more, history is highly instructive.

During the glory years of sterling as a global reserve currency, the trade value of sterling was remarkably steady. In 2006, the UK House of Commons produced a 255-year price index for sterling that covered the period 1750C2005.

Click to enlarge

The index were built with a value of 5.1 in 1751. There have been fluctuations due to the Napoleonic Wars and the First World War, but even as late as 1934, the actual index was at only Fifteen.8, meaning that prices had only tripled in 185 years.

But once the sterling lost its lead reserve currency role to the buck, inflation exploded. The catalog hit 757.3 by 2005.

In other words, during the 255 years of the index, prices increased through 200% in the first 185 years while the sterling was the lead reserve forex, but went up?5,000%?in the Seventy years that followed.

Price stability appears to be the norm for money with reserve currency status, but once which status is lost, inflation is actually dominant.

The decline of the dollar as a reserve currency started in 2000 with the advent of the actual euro and accelerated in 2010 with the beginning of a new currency war. That decline is now being amplified by Chinas emergence as a major creditor and gold power. Not to mention the actions of a new anti-dollar alliance composed of the BRICS, Iran and others. If history is a guide, inflation within US dollar prices can come next.

In his 1925 poem?The Hollowed out Men, T. S. Eliot writes: This may be the way the world ends/ Not with the bang but a whimper. Individuals waiting for a sudden, spontaneous collapse of the dollar may be missing out on the dollars less dramatic, however equally important slow, steady decrease.

The dollar collapse has already started. The time to acquire inflation insurance is now.

Regards,

Jim Rickards,

Strategist, Strategic Intelligence

Ed note: The above essay first appeared in the US Daily Reckoning 28 May 2015. It has been up-to-date to include Chinas current gold supplies.

January 30, 2016
The Overlooked X Factor in the Gold Price

Goldman Sachs created a stir recently if this forecasted that gold would fall to $1,000 an ounce after 2014, as the firm expected the Federal Reserve to reduce its bond purchasing program. Goldman also suggested which gold miners might want to hedge their output, locking in 2013 costs.

HSBC analysts have also been bearish on gold, even though the firm admits that lower gold prices tend to draw out tremendous need from emerging markets, particularly China. Because of that demand, HSBC believes gold will end 2014 at about $1,435 an ounce, says MarketWatch.

Keep in mind that ‘Goldman Sachs will things that are good for Goldman, not you,‘ says Byron King through Agora Financial. Things can alter quickly in the gold marketplace, as investors saw whenever, only days after Goldman’utes assertion, the Federal Reserve shocked everyone by announcing it would continue purchasing $85 billion worth of bonds. Gold investors cheered because the precious metal shot up the most in 15 months.

Unlike many commodities, there are many shades to gold, such as the Love Trade’s buying gold for loved ones and also the Fear Trade’s purchasing gold as a store of value. An extra ‘shade’ investors need to be aware of is when the Fed interprets the recuperation of the US economy.

I had a few reasons to believe Ben Bernanke was going to pull the rug out from under the market’s feet. Before word came out, I told Canada’s Business News Network that the ending of quantitative easing was not going to be abrupt because it’s not a black and white problem.

Consider the lack of significant job growth in the US, as many of the jobs that have been created in recent history had been part-time positions. Investor’s Business Every day (IBD) links this lackluster employment situation to President Barack Obama’s Affordable Care Act.

According to the publication’utes scorecard, ‘more than 300 employers have cut work hours or jobs, or otherwise shifted away from full-time staff, to limit liability under ObamaCare.‘ Whilst providing affordable health care to Americans sounds honourable, the loss of full-time jobs seems to be an unintended consequence from the burdensome regulations placed upon a business.

Take a glance at IBD’s chart, which exhibits the accommodations industry’s typical weekly hours that nonsupervisors put in since 2000. During each economic downturn, in 2001 and again in 2008 to 2009, the hours dropped.

But since ObamaCare was authorized into law, which mandated that employers would need to provide health care coverage for staff that work more than 30 hrs a week, the average plummeted. As of July, the lodging industry workweek hit 28.8 hours, ‘at a record low,‘ in accordance to IBD.

Click to enlarge

It’s not only about job growth. Housing is also not rebounding as strongly as some people think. I told Reuters that many people don’t realise that the real estate marketplace boom has been narrowly targeted.

According to USA Today, almost half of the houses purchased in July were bought with cold hard cash. Within places like Florida, ‘nearly two-thirds of home sales were completed with no mortgage loan,‘ says USA Today.

In Nevada, about 65 percent of buyers paid with cash, followed by Maine, where nearly 60 percent of house sales were cash. Perhaps regulation in the banking industry has made the process of getting a mortgage as well burdensome for families?

Housing is one of the biggest multipliers for jobs, exactly where $1 spent in housing results in about $16 in related economic activity. When rates of interest are low, more people make an application for mortgages. They build houses, employ moving services and buy new furniture, which in turn employs more people within multiple industries.

But after interest prices rose quickly, the housing market came to a halt. People who once qualified for a mortgage to build a new home no longer qualify at the higher rates, which means a potential inventory of new real estate may quickly build.

At the same time, big banks are announcing layoffs in mortgage loan lending. Wells Fargo announced it was likely to lay off 1,800 workers as refinancing activity continues in order to slow. The company had currently told 2,300 workers to stop coming to work as rising interest rates curtail demand for brand new mortgages and refinancing.

So instead of the Fed quickly declining its bond purchases and raising rates, this process will likely be very gradual. I believe the federal government will have to keep interest rates low to stimulate the economic climate.

And that’s positive for equity marketplaces as well as for gold. If interest rates remain low, real rates might remain in negative territory.

In my personal presentation on opportunities in resources and emerging markets, We told the crowd at the Greater toronto area Resource Investment Conference which 2% has been the tipping point with regard to gold. Historically, gold and silver carried out well in a low or negative real interest rate environment.

Click to enlarge

Regardless of where analysts think the actual gold price will be a 12 months from now, we believe gold and gold stocks can be an superb portfolio diversifier. We’d rather maintain quality gold companies that are experiencing a growth in resource base, development in production and growth in cash flow instead of trying to time the market.

Frank Holmes
CEO and Chief Investment Official, U.S. Global Investors

[U.Utes. Global Investors, Inc. is definitely an investment management firm focusing in gold, natural sources, emerging markets and worldwide infrastructure opportunities around the world. The company, headquartered in Dallas, Texas, manages 13 no-load mutual funds in the U.S. Worldwide Investors fund family, in addition to funds for international customers.]

Publisher’s Note: The Gold Market’utes Overlooked X Factor originally appeared in The Daily Reckoning USA

January 30, 2016
Why an 18-fold Increase in Aluminium Cars will Create Huge Opportunity

I’m currently in the US on a research mission. A mission to discover some of the best cyber defence possibilities that exist in the world right now.

More on that in the coming days.

But when I’m away on a work missions it leads to a bit of period bashing away on the keyboard in a hotel room. And invariably in the background is good old US TV.

There’s not a lot to choose from really. Unless I want to watch endless re-runs of NCIS or the constant squabbling on The View, I’ve really only obtained about two choices.

One of these is ESPN. That’s great for downtime. And interestingly right now in the US, there’s some heated racial controversy in the NFL. Evidently one NFL coach is ‘uncomfortable’ amongst some of the black players.

I find it unbelievable that in both Australia and the US that certain of the biggest news stories is all about race.

It go to show that you are able to ‘progress’ as much as you like with equal rights, but shaking the shackles associated with history is hard to do. It is quite sad.

But racial controversy and ESPN aside, my additional viewing options is BloombergTV. So that as of today the biggest story on Bloomberg is cars.

You see a good indicator of an economy’s strength is new car sales. To put this very simply, if new car sales are on the increase, then things are looking pretty good.

It says people have jobs, cash is flowing and consumer confidence is on the rise.

And when all the car companies are reporting increases in new car sales, then you have to consider serious notice.

That’s not to say there’s not problems in the world

There’s much debate right now about where the global markets and economies tend to be heading. You’ve got Greece in turmoil over in Europe. Upon Monday the Greek marketplaces had the worst sell-off ever. In a matter of minutes after the starting bell the market tumbled 23%.

Five of the biggest banks lost 30% in the day. It would happen to be more except the daily limit is 30%…

With Greece in turmoil, we turn to Asian countries. And China is still in the midst of turmoil. The market is still tumbling, factory activity shrank more than initially expected, and growth is still looking weak.

Even new vehicle sales in China are falling. Volkswagen reported their first sales decline within a decade earlier this year. And Ford predict a drop in their Chinese language new car sales this year. China, it seems, isn’t always likely to grow.

This of course leads all of us to the US. If there’s weak point in China and European countries it could well spread to the US. If it does also it starts to drag on the US, it gives the Fed carte blanche to print more cash and keep prices on hold.

As Kris has said within Money Morning before, it could be a win-win for the Given. If the economy stutters a bit, they will print more cash and be announced the saviours of the economy. In the event that things look up for the better, then they’ll jack rates and say the economy is fit and fighting…thanks to them of course.

But looking at brand new car sales here in the united states, perhaps the economy here is already fit and fighting. Even when China and Europe’s problems creep across the Pacific and Atlantic, maybe, just maybe, the united states will push on via without the need to print cash.

How just one car can boost an entire economy

You see one of the best indicators for a strong economy is the correlation between new car sales and unemployment. If you’ve got a job, you can buy a car. If you don’t have a job, you can’t.

Source: Wall Street Daily

And because the unemployment rate lowers in the US, new car sales are climbing. IN fact the US just reported three straight several weeks with the new car sales rate above 17 zillion.

The last time this happened had been 15 years ago.

All major car makers are reporting stronger new sales numbers. General Motors [NYSE:GM] expires 6.4%. FIAT Chrysler Automobiles [NYSE:FCAU] up 6.2%. And even Toyota Motor Corp (ADR) [NYSE:TM], although not because strong, is still up Zero.6%.

But when it comes to selling cars the actual Ford Motor Company [NYSE:FORD] is one of the best. For the month of This summer alone they sold 222,731 new cars in the US. That’s a sales increase of 5%. It’s best because July 2006.

Much of this success is thanks to one model. The F-150.

Source: Ford Media

When sales of the F-150 are up, Ford is up. And when this 112 year old staple of American capitalism is up, so is the united states.

It’s hard to think, but the power of sales in the newest model of the F-150 can actually raise the entire confidence of a nation.

Sales of the F-150 have recently been a little shaky. This is down to financial jitters and production problems within Ford. But now manufacturing is back on track. And it seems as though the US might be as well.

Ford just released the F-150 sales numbers for July. And they caught everyone by surprise. The new F-150 saw a gain of 13% within retail sales. That is massive. In July they shifted 66,300 new F-150s. That’s the best July results in 9 years.

The increase in sales is a surprise. But the fact it’s the F-150 leading the charge isn’t. America loves big trucks. The bigger the better. Cadillac Escalades, Lincoln Navigator, Ford F-150, Ford Explorer, GM Sierra and more.

In the past these have all been big, cumbersome, heavy trucks and Sports utility vehicles. However there’s a change underfoot. It’s from big, bulky and high to big, bulky and lightweight. And the F-150 is leading the actual charge.

The latest F-150 is an incredible step forward in car making. Its body is made from aluminum. That makes it one the least heavy F-150s ever made. Importantly, the use of aluminium doesn’t sacrifice structural power.

The use of aluminium is part of a global trend in the car industry in order to ‘lightweight’ cars. The end game of lightweighting is to improve fuel efficiency.

The easy equation is that the lighter an automobile (or truck) needs less fuel. And with tough new emissions standards, these big trucks have to get more efficient.

However, it’s not only Ford pushing forward with lightweight technology. The Vw Group, FIAT Chrysler, and GM are lightweighting cars and improving efficiency.

That’s important to investors. Because it creates tremendous opportunities in wise investments. And in particular there are small-cap Foreign stocks that will benefit from a world with millions of lightweight vehicles built from aluminium.

With an 18-fold increase how can you ignore this opportunity?

Think about this. The US alone is on the right track to shift over Seventeen million new cars within 2015. Even with falling new car sales, China will still account for around 23 zillion new cars. And according to Statista, globally there will be around Seventy three.87 million new car sales this year.

Now looking at the F-150 for any second, each truck uses around 855 pounds (388kg) of aluminum in its construction. Right now aluminium costs about US$0.715 per pound. So each F-150 uses US$611 worth of aluminium.

In 2015 they are looking at the F-150 exceeding 700,000 units. That’s 271,600 tonnes of aluminum just for the F-150 alone. And Ford will spend around US$477 zillion on aluminium just to meet demand of the F-150.

Outside of The far east, global aluminium production within 2014 was 24 million tonnes. Including China that figure pushes up to around 50 million tonnes.

Ford’s demand for the F-150 alone is 0.54% of global aluminium production. That might not sound like a lot. But remember this is one single model of truck in an entire industry moving towards lightweighting technology.

The Wall Street Journal reports that,

‘By 2025, 18% of all vehicles in the U.S. are expected to have all-aluminium bodies, compared with less than 1% now, according to Ducker Worldwide LLC, a consulting and market-research firm.’

That’s a rise in demand some 18 occasions higher than it is today. In other words, one of the biggest market opportunities within the next five years are aluminium companies.

With 73 million new cars hitting the road each year, you can’t ignore this opportunity. It is a ready-made market that’s at the initial phase of new innovation. That is what expense dreams are made of.

Regards,

Sam

January 30, 2016
Why Buying BHP is Like Swimming Upstream

The ongoing crash in commodity prices wasn’t enough to force the Reserve Bank into an ’emergency’ rate cut yesterday. But the prospect of another rate cut in Australia is much nearer than most people think.

Earlier this week, manufacturing data out of China hit a two year reduced. Monday night, a studying of US manufacturing came in less strong than expected. This wasn’t great news for the commodities sector. Copper and gold lost about 0.5%. Brent crude fell a massive 5% to just above its January 2015 low point.

The item rout is now a bloodbath. As the Financial Times reviews:

‘The commodity rout is now officially as bad as during the financial crisis. The actual Thomson Reuters Core Commodity Index, the actual broadest and longest running basket of tradeable oil, whole grains, and metals, just fell to a level last seen in February 2009.

‘The drop in the index comes as Brent crude oil offers dropped back below $50 the barrel for the first time since The month of january and as copper and aluminum prices fall to a six-year reduced.

‘The TR CRB index hit 199.7688 around lunch break in New York, down from 203.1 on Friday. It’s low in early 2009 in the peak of the financial crisis was 199.6386.‘

By the end of the day’s trading, the index closed below this year’s low. The commodities boom is well and genuinely over folks. Keep in mind although that this is a US dollar denominated index. The situation is not quite as bad when you look at things through the lens of a weaker Aussie dollar, as you can see in the graph below:

In Aussie dollar conditions, commodities hit a low point back in 2012. Falling fossil fuel and iron ore prices (not reflected in the above chart) led the RBA to aggressively slash interest rates throughout 2012.

Commodity prices rebounded strongly into 2014 thanks in part to a depreciating Foreign dollar. Then came the oil price rout, which sent the index back down to test to June 2012 lows.

So far the lows are holding, but the chart certainly doesn’t look healthy. If you were to include the economically important fossil fuel and iron ore prices in to the above chart, then Australia would indeed be looking at the actual worst commodity price levels seen in many years.

Despite this, the RBA did not pull out a surprise cut the other day. I wrote in the past’s Daily Reckoning that I didn’t think he would, but one is coming at some point.

Bank boss Glenn Stevens may want to wait another month or two to see whether attempts to cool the housing percolate have had any effect. Rates of interest on investor loans have increased across the board, but so far it is had little effect.

By just about all accounts, capital is still pouring into Aussie property. A 25 basis point improve for investors is hardly enough to reduce interest in the sector. A weaker Aussie dollar is playing it’s part too. For foreign investors, a weaker Foreign dollar increases their buying power.

The Financial Review reported yesterday the Cromwell Property Trust [ASX:CMW] has had a deal from a Korean asset administration fund for its Cromwell Box Slope Trust. The trust is the owner of an Australian Tax Business building currently under construction in Box Hill in Melbourne.

And just last week, the Chinese sovereign wealth fund China Investment Corporation (CIC) bought Investa Property Group’s nine workplace towers for a massive $2.Forty five billion, placing the assets on a very low (bubble such as) yield of 5%.

As the Financial Review documented at the time:

‘The more than 30 per cent slide by the?Australian buck and the record low interest price environment?helped drive up the cost but also made it?more compelling for?offshore investors transacting in US dollars.’

In short, funds continues to flow into Sydney, buying up prime assets. How are lower rates of interest going to help? They won’t. Just about all they will do is encourage more speculation in residential property and more consumption on the back again of speculative gains.

To financial this borrowing and consumption binge, we need foreign capital, and we’re getting it by selling off our best property.

Pretty smart, huh?

The more property we sell, the more future income generated by those assets flows offshore. This will show up in the years ahead using a continually growing current accounts deficit.

The only potential gold lining is that you could make a disagreement that Chinese buyers aren’t particularly astute. Over the past couple of years, Chinese investors haven’t covered themselves in glory.

There would be a lot of buying of commodities near the top of the cycle in 2011, there is the Chinese property bubble, a gold buying spree as prices run up in 2011, and much more recently capital chasing speculative returns in the Chinese stock exchange.

In short, Chinese capital loves momentum, which is why you’re right now seeing big investments within Aussie property. Could the recent record investment from CIC symbolize another market peak?

Not in the event that rates and the dollar keep falling. Australia’s broken economic model still has some life inside it yet.

Getting back to commodities, are you looking to buy, with prices striking multi-year lows?

While the typical contrarian response will be a ‘yes’, I would say no. Why try and pick the bottom? Why not wait for signs that the downtrend has finally run its course prior to loading up?

Let’s use BHP for example. This is how I go about picking stocks picks (or avoiding them) in my Sound Money. Seem Investments newsletter.

The chart below shows the two-year performance of BHP. We recommended BHP as a ‘short sell’ in September last year. That means you make cash on the trade when the cost falls.

I knew BHP would are afflicted by falling iron ore prices and at the time the oil price had started to fall dramatically too. More importantly though, the stock price had just made a new low as well as was entering a downward trend.

The combination of negative basic principles and a charting outlook that confirmed the negative view was enough for me to tell subscribers to sell.

Now, as you can see through the downward sloping green arrow, the downtrend is well established. While BHP may be attempting to bottom right now, the path of least resistance is unequivocally down.

The odds favour this particular downtrend continuing, and I wouldn’t be shocked to see BHP break through support at $25 and make new lows in the weeks or months ahead.

I’ve discovered from painful experience that purchasing in the face of a downtrend is like swimming against a current. It’s tough work and there is a low probability of achievement.

You’re far better off waiting for the actual downtrend to exhaust itself and for a new turnaround to emerge before getting involved.

So if you’re tempted to buy commodities at this point, go jump in a river and try swimming upstream. Then, lay lying on your back and let the current get you. How much easier is that?

If you have in mind investing using this approach of blending fundamental and specialized analysis, click here. As you will see, it works.

Regards,

Greg Canavan,
Editor, Sound Money. Seem Investments

From the Port Phillip Publishing Library

Special Report: The Golden Age of Infrastructure China simply unveiled a $100 billion multinational investment bank for a single mission: Rebuilding the 2000-year old Silk Road trading route. Why? Because the Middle Empire is determined to redraw the global financial map…and establish a ” new world ” order of trade. So it’s kick-starting what could be the biggest infrastructure boom in history…and handing a once-in-a-lifetime value investing opportunity in two companies that could double in price once this brand new ‘Golden Age of Infrastructure’ dawns…

January 30, 2016
Are You Ready for the Third World War?

The United States the worlds dominant superpower is lying on its deathbed.

For a long time, the US was a good friend around the world. After the Second World War it opened up its arms to freedom. Former US President, Ronald Regan famously said to the world, tear down this particular wall from West Berlin.

Years later on, Germany was reunited. Communism failed and capitalism exploded.

US geopolitical, economic, financial, and military power was completely unchallenged. And it would remain that way for years.

Unfortunately, the times possess changed.

The US economy is actually weakening. Its debt amounts are high. And its interest rates are hovering around historical lows.

Soon, within this decade, the united states will no longer hold the reserve forex status. And this means that substantial changes are on the horizon

The very first change will be geopolitical

Its really unfortunate that All of us politicians dont listen to their beginning fathers. George Washington stated in 1796 at his farewell speech:

The great rule associated with conduct for us in regard to foreign nations is in extending the commercial relations, to have together as little political connection as possible. So far as we have already formed engagements, let them be fulfilled with perfect good belief. Here let us stop.

Of program, the political religion associated with?US President Barack Obama and most from the?political class? is that its Americas?moral duty?to be involved in other nations business.

Today, the US remains the worlds leading military power. But its prominence is rapidly being chipped away. Its my way or the highway mindset has frustrated many nations. Especially countries in the Middle East

Historically, US involvement in the Middle East is finished in disaster. The past year has proven no different

In the last 12 months, US forces have conducted over 7,000 airstrikes in Iraq and Syria. The official mission has been to wipe out Islamic State (Is actually).

Awkwardly, this hasnt happened.

Instead, US airstrikes possess caused more harm than good. With bombs and missiles flying everywhere, the Syrian refugee crisis was born a situation thats gone from bad to worse.

Unfortunately, theres been no official response to this humanitarian crisis. Other than to keep bombing Syria, that is

And no doubt, this course of action will lead to more mayhem.

Especially now that Russian warplanes are involved in Syria.

Russia started bombing Islamic State on 30 Sept. And while US officials possess accused Moscow of acting wrongly, it only took the Russians 24 hours to do what they couldnt. A minimum of according to Russian Major Common Igor Konashenkov, as reported by RT:

Our aviation group in the last day has destroyed 2 militant command centers, 29 field camps, 23 fortified facilities and several troop positions with military hardware.

Theres only one goal within Syria

The US wants to topple Syrian Leader Bashar Hafez al-Assad. This plan wont change. The US really wants to install its own puppet politician in Syria. Other Western leaders have rose on board with this policy.

And surprise the mainstream media is actually backing the official political story. A story that accuses Assad of attacking his own citizens with chemical weapons.

Thats despite the fact that theres no proof that this ever happened. The actual evidence points towards the terrorist attack. This is why Russia, a key ally of Assad, along with China have opposed military intervention inside Syria.

With this barrier in place, Barrack Obama has had absolutely no choice but to impose his no boots on the ground policy. Of course, this policy goes against the wishes of the US government and Obama himself. In time, theres without doubt in my mind that it will change.

In the meantime, theres been no shortage associated with tough talk by Traditional western leaders. And to stir the pot, US officials have been forced to come up with other ideas. Such as spending nearly US$500 million training Syrian rebels to fight IS.

Unfortunately, this didnt turn out as planned.

General Lloyd Austin, who leads the US military’s Central Command, recently informed the US Senate Armed Services Committee:?The [number of Syrian rebels] that are in the fight, were talking four or five.

What an absolute stuff upward. For the price of half a billion US dollars, there are four or five Syrian rebels fighting Islamic State.

Following the large quantity of attention on this poor policy, and Russias effective military procedure, the US recently suspended this program.

Instead, it will airdrop ammunition in the middle of the desert. And it just fallen 50 tonnes of ammo out of the sky. (Which you wish gets in the hands of the right individuals.)

According to the Whitehouse, it was a successful mission. Anti-Islamic State coalition spokesman Colonel Steve Warren informed the ABC:

[The airdrop reached] Syrian Arab groups whose leaders appropriately were vetted by the United States and also have been fighting to remove ISIL.

Dont flash an eye

While Im not sure what will occur next, one fact is guaranteed this story is not more than.

In fact, its likely that the worst is yet to come.

Times are changing. The old structure in the world a system dominated by the US government, US banks, and the US buck is coming to an end.

The US Kingdom and economy are decreasing. If history is dependable, their leaders will do whatever it takes in which to stay power.

And typically, when an economy turns down politicians 03 their people off to war. I dont want a world battle to happen any more than you do, were talking about politicians that are detached from the modern day world.

Ill be talking about this story in additional depth next week in Resource Speculator. There are fortunes to be made for people who comprehend these trends and are able to get out in front of them. Ill suggest one or two Aussie stocks which you can use to do exactly that. When this battle takes a turn for the even worse, these companies should profit hugely.

If you want to know more, you can start right here.

Jason Stevenson,

Resources Analyst, Resource Speculator

From the Port Phillip Publishing Library

Special Statement: If you want to get ahead in this world, it pays to have powerful friends in high places. With this brand new advisory, youll make one. A profile manager at the West Shore Group, and adviser upon international economics and financial threats to the US Dod. Jim Rickards is no ordinary monetary newsletter writer.?And Strategic Intelligence is no ordinary newsletter (more)

January 30, 2016
QE, QE and more QE (Let’s Talk Gold…)

Today we’ll discuss the prospects with regard to gold and silver.

But first, let’s talk about Richard Nixon.

That is, after he lost the election for governor of California in 1962, he remarked to the assembled information reporters, ‘You won’t have Nixon to stop around anymore.‘ Of course, everyone knows what happened with Mr. Nixon in later years.

(Heck, speaking of gold, Nixon took the US from the gold standard in 1971. And it was on Nixon’s view that oil prices quadrupled within 1973. But I digress….)

Nixon’s so-called ‘final press conference’ came to mind when i saw news that former Treasury secretary and presidential economic adviser Larry Summers…umm…’withdrew’ his name from consideration to be the next chairman of the Federal Reserve.

He won’t succeed the current Fed ramrod, Ben Shalom Bernanke. Yes, indeed. Larry Summers withdrew his name. I just read it on the internet, so it should be true.

Did Summers walk? Or was he ‘helped’ in making their decision? Or just plain pressed? Whatever happened, I’ll wager Summers thought long and hard about whether or not to plunge into that Given briar patch with his monetary bud whacker. His designated role would have been that of the central financial institution ‘fall guy’.

That is, the duty Summer season won’t seek is similar to the mission of Paul Volcker during the late 1970s and early 1980s. Volcker was the Fed head in an era of flaming inflation and economic stagnation. Volcker gritted his teeth and raised interest rates to nosebleed levels, which smashed inflation down – and tore the guts from an already weak economy.

In an alternative universe, today Summers would have had the uncomfortable duty of scaling back on Bernanke’s still-raging $85 billion per month plan of quantitative easing (QE). Hey, somebody needs to fall on that monetary hand grenade sooner or later. But I guess it’ll be later. And the perp won’t be Larry Summers.

Keep the QE Flowing

Evidently, big shots inside the Obama administration and the Senate noticed that our grand US economy is less robust than they would like. Plus, we have looming budget battles and political dogfights over taxes and spending.

Add in the approaching surprise of Obamacare – a job-killing, economy-wrecking tsunami already flooding over the land, from what I can see (long story). So the issue for the Federal Reserve becomes whether to accelerator QE just now or let the Fed’s money spigot run.

Politically, it’s dangerous to scale back on QE. Or to paraphrase that old line about cancer, there are more people living off it than dying from it.

So evidently, policy honchos within the Obama administration told Bernanke to help keep the Fed’s signature easy-money programs in position for a while longer. How much longer? Well… through this fall, at least. Then we move into 2014, when the All of us will hold elections for the entire House as well as one-third of the Senate. So politically, this can be a no-brainer, and QE should last a while longer.

Volcker’s Ghost

Getting back to Ray Summers, I suspect he knows what happened to Paul Volcker back in the 1980s, once the guy battled America’s inflation problem in a post-Vietnam, oil-shocked economy.

In terms of monetary policy, Volcker did what he or she needed to do. Volcker raised curiosity rates. He raised them high!

I lived through this. It was good to be a saving idea or lender, but I additionally recall that Volcker’s high interest rates sure stung if you were the customer. Ugh. I once signed up for any 16% rate on a used car mortgage – a beat-up Dodge Omni, no less! I still cringe at the thought.

In the larger picture, Volcker was much hated in many quarters. In the Area at the time, the steel and auto industries had been contracting due to rising global competition. (It’s where the term ‘Rust Belt’ originated.)

Volcker’s high interest rates made things worse, leading to more plant and generator closings and attendant layoffs. People rioted in the streets against Volcker and burnt him in effigy. As things unfolded, Volcker required personal protection due to death risks.

I’ll add this for viewpoint, though. Back then, the world was in the depths of the Cold War. The West faced a very real as well as dangerous nuclear threat from the former Soviet Union, which set the overall political tone. Absent that, I doubt that either President Jimmy Carter or even President Ronald Reagan would have gutted it out with Volcker’s high interest rates, even to halt rising cost of living and save the dollar.

In other words, no matter how bad issues were with Volcker’s high interest rates, the politicians could rationalise it all as well as think it was better than losing out in the Cold War to the evil commies, if not getting nuked. Nowadays, we lack that comforting selection of alternatives.

Thus, Larry Summers ought to inhale sighs of relief at missing out on receiving rivers of unadulterated hate from entire populations over the now wired-in world, which lacks the previous military motivations of the Chilly War era. Really, today those flash mobs of ‘Take up This or That’ can monitor you down in a heartbeat.

So Summers will avoid the fate of personal vilification and destruction that’s or else primed and aimed at whoever takes the dirty job associated with draining a trillion dollars per year of fake Fed liquidity out of the global economy.

Indeed, global marketplaces were setting up to sell away at merely the hint associated with Summers at the helm of the Great Ship Fed. And then? Forget about Summers. Bernanke announced more QE. And the markets firmed up – as did gold prices.

Also, as per the coming in contact with custom of Kabuki theater that’s modern Washington, DC, President Obama graciously accepted the Summers drawback. Heck, Mr. President actually offered kind words for Mr. Summers’ many years of national service. Right now we can only wonder about what might have been with Summers running the actual Fed. What might he have accomplished? Scaling back QE? We’lmost all never know.

Recalling the Happy Golden Bygone Days

Then again… let’s not overly romanticise Ray Summers. It’s not as in the event that he’s a ‘doomed son of heroes’ out of the tale associated with Ossian, riding toward the steel.

When I think of Larry Summers, I look back to his tenure as president of Harvard, where he left a mixed legacy. For example, he initiated a long-overdue attack on grade inflation – sort of a ‘QE of grades’, if you will. Bravo!

Summers additionally encouraged several academically challenged Harvard faculty members to seek other possibilities. I won’t mention names, but the matter is not precisely a state secret. Again, bravissimo to Summers!

But then Summers oversaw the loss of $2 billion of Harvard endowment funds due to bad interest rate swaps, a subject on which he’s said to be an expert – or at least the neatest guy in the room.

On that last matter, consider that Harvard’s undergraduate tuition is about $50,000 per year, per student. Therefore Summers losing $2 billion is the same as burning a year’s originate from 40,000 students.

But there are only about 6,000 undergraduate students on campus in almost any given year. Thus, one could say that Summers broke Harvard’s enrolment bank – zeroed the account – for almost seven entire years of procedures. Ouch.

Of course, Harvard continues to perform, as one might expect of an enduring institution that dates back in order to 1636. And the US will likely endure as well – QE or no – considering the resilient national history since 1776.

No matter who runs the Given, though – and it won’t be Larry Summers – I think we’lso are in for a rough ride for a while. At least for now, we won’t possess Summers to kick around.

What’s the takeaway right here? QE, QE and more QE. The Fed is actually propping up Wall Street, to speak, while the ‘real’ economy languishes. It’utes investable for stock pickers. And buy physical gold. Buy physical silver. Hold oil. The buck will live through another duration of troubles. That’s where this really is heading.

That’s all for now. Thanks for reading.

Byron King
Contributing Editor, Money Early morning

Ed Note: Larry Summers Won’capital t Burn in Effigy originally made an appearance in The Daily Reckoning USA

January 30, 2016
One Mining Sector You Should Be Looking At

It’s day two at the Sprott-Stansberry Natural Resource Symposium in Vancouver, Canada.

And if you thought day one sounded good, day two was a cracker!

Doug Casey, particularly, was in fine fashion.

If you have not heard of him, he’s the actual Founder and Chairman associated with Casey Research — a globally accepted investment institution. Casey is libertarian and an anarcho-capitalist. And he’s well known with regard to never not having an opinion.

And he or she lived up to his reputation. While I was hanging onto every one of his words, I was thinking: when is he going to possess something positive to say!

‘Mining is a 19th century business’

Doug started off with a line that sent shivers throughout the space: ‘Mining’s worse today than it’s ever been before. And it has absolutely no future.‘

Not very comforting if you’re a resource investor!

But then again, will he be right?

I mean, mining has been around since before the days of the Roman Empire. Back in those days, the Romans dug up gold, producing an average of one gram for each tonne they mined. Now, you’re mining it for one 10th of a gram. So Doug’s right when he says that ‘most of the high-grade, low-surface build up are gone.’

And yes, gone forever.

Just look back 100 years…

The days of the actual gold rush seem like the fairy tale. No longer can you drop by the local creek and pan gold. You can’t even head to Bendigo or Kalgoorlie, start digging and load up the truck.

Now, complex technology is a must in the exploration business.

This means that studying geology, geophysics and geochemistry is mandatory. And even then, after spending millions of shareholder dollars, there’s not assure in finding a massive, high grade mineral deposit. After all, it’s just analysis at the end of the day.

So what great is there in mining?

To be honest, Doug couldn’t say much.

To start with, before you make any money from the my own, millions of dollars are spent on ecological studies — studies which often consider years to complete.

This isn’t just about all.

While the environmental battle is on, the local communities start seeking a slice of the pie. And, of course, of your time and money.

Then, once you’ve analysed the rock formation, you’ve got to drill it. And if you’re lucky — I mean, truly lucky — you’ll intercept some thing rich and thick. But then there’s millions more to become spent in proving up the deposit.

And if you finally do get around to mining the thing, government shows up again for their slice of the pie. Indeed, seeing the actual mine as an ‘entitlement fund’, government demands its fair share in royalties (if it doesn’t make money) and taxes (if it does make money).

So, indeed, mining is not a sexy business.

But if you like boring…Doug Casey says there is one opportunity

Gold!

Doug, like myself, believes that we’re in a massive bond bubble. For over 12 months, I’ve been warning you about the coming sovereign debt crisis in 2016/17. If you’re wondering, this is the event which should see gold go through the roofing.

And if you question what will take the bubble…

Think interest rates.

US interest rates have been falling for 3 decades. This has fuelled the debt period to Armageddon levels. And it’s nearly ready to pop. Indeed, the very first interest rate hike should come within September/ October. And a second rate rise is likely in December.

These occasions will trigger the end of the actual 30-year bond bull market. So while the stock market won’t crash this time, we’re not looking at quite a situation.

In Doug’s words, ‘The next financial crisis will squeeze the standard of just living, sending the world into a Excellent Depression worse than the 1930s. This is the reason why gold stocks, which are trading at crappy prices, may explode in the years ahead, thanks to fear and greed.’

No argument here. In fact, this is the precise financial crisis that I’ve been preparing Resource Speculator readers for since last year.

I’m helping my readers make use of the resources bear market. The low it goes, the more opportunities exist.

And I believe that we’re yet to see the final phase of the resources bear market. This means commodities have significantly further to crash, including gold, which has been long said will fall to US$931 per ounce.

That will offer you a great buying opportunity to pick up the best gold stocks available on the market.

If you believe that the sovereign debt crisis is coming, and you want to know how you can survive and prosper immensely, resources are the place you’ll want to look in 2016/17.

Click here for more details.

Regards,

Jason Stevenson,

Resources Analyst, Resource Speculator

January 30, 2016