David's Commentary (In Blue)
The markets are in lock down. Watching gold and silver is like watching grass grow. Try writing a newsletter, twice a week, in a market like this. Finding something new to write about is like one of my favorite Loggins and Mesinna songs, “Same Old Wine In A Brand New Bottle". So let me lighten up a bit today and cover some new territory.
I sell gold and silver. I admit it. I believe in it. I am proud of it. And no, I am not from another planet – but based on the reaction I get when I tell people what I do, you would think that I am. All right, I’ll fess up. I am different; but not from another planet.
Someone once said, “He sees around corners.” Sounds about right to me.
My mother was 23 years old when I was born. She traveled around the country playing piano in an all-girl band. Think about it – how unusual was that? Maybe not so much today, but this was 1941. “Free Spirit” runs deep in my gene pool. I am the result of a one-night-stand. In those days, having a child out of wedlock was not an option, so my mother did what most young girls would do in her circumstance, she decided to have an abortion. It didn’t work. I am here against all odds. I am an accident. I am a poster child of why the Right-To-Life argument has merit. My daughter is all-in on the Women’s Rights side of the abortion argument. She wants her daughters to be able to make the choice whether or not to have an abortion. When I say to her, "in the world that you want, I wouldn’t have been born and you wouldn’t be here discussing this with me.” Do you think that my logic makes any difference to her? Of course not. Logic never wins out over emotion.
I had a fascination about my mother for as long as I can remember. I wanted to know all about her and fill in the blanks in my genetic background. When I was 32 I asked my mother (the parent who brought me up) if she would help me find my genetic mother. She said yes, and she contacted the Children’s Home Society in St. Paul MN, who placed me with my parents. A few months later I received a phone call. Marietta Spencer was on the other end of the line and after introducing herself told me that she had tracked down my birth mother. She told me that when she called Edith, that was my mother’s name, Edith told her, “I was expecting the call. I knew you would be calling today.” (If you think that this is amazing, I have a better story for you next week.) Marietta said to me, “Why don’t you come here tomorrow morning and I’ll show you your file. I said, “Tomorrow? I’m heading over to see you right now.” One hour later, I was looking at a picture of my mother for the very first time. She asked me if it would be o.k. if Edith called me. Sure, I said. A day later the phone rang, and when I picked it up a voice said, “David, this is your mother.” Two weeks later we all drove off to Detroit to meet my mother. We had a nice relationship for the next 20 years until she passed away.
My father, the other parent who brought me up, was an insurance salesman for John Hancock. Every summer they had a picnic for all of the agents at Excelsior Amusement Park. This is the famous place where the Rolling Stones played on June 12, 1964 and where their all-time number one hit, You Can’t Always Get What You Want” was conceived. Mick Jagger sat next to the local hippy, “Mr. Jimmy” who told him you can’t always get what you want but you can get what you need. I remember there was a race for the kids and I was way out in front, when I stopped to pick a flower. And instead of winning, I finished last, but do you think I cared? I always did it my way.
My parents sent me once a week to see a Dr. Hanson, who was a psychologist at St. Barnabus Hospital. This went on for at least a year. It was a long time ago and I don’t remember much about it. To this day, I have absolutely no idea why they sent me to meet with him. My parents never talked to me about it. Dr. Hansen never talked about it. All I recall is that we made model airplanes and talked. Evidently, I was a handful for my parents - They had no idea what to do with me.
This much I do remember – I always felt that I didn’t belong, that I was different. And I was. I am. I mean even now, look what I do for a living. I sell a product, with conviction, that most people think is unnecessary. My perceived reality is rejected by a majority of Americans. People who know me think I am pessimistic and negative. Some believe that I promote fear and greed. Me - Negative? Fear is a reason to buy gold but if the reasons to be afraid are real, then shouldn’t you face them head on? Playing ostrich is a bad idea. Remember, I’m the kid who stopped in the middle of a race to pick a flower. I was part of the Flower Power generation and was what today you would call a long-haired hippy. In 1970 I had a white Mercedes 250SL convertible with flower decals on the trunk. All we knew in those days was drugs, sex and rock and roll - and lots of sports. I actively played baseball, basketball and football until my late 40s.
Living through the late 60s and the 70s was quite an interesting experience. Life was a blast and I lived it to the fullest. And yet there was a side of me that was almost corporate. I was a buyer for Target from 1969-1972. I was the only one in the office with long hair and wasn’t one of their typical hires, or exactly a good “fit.” But I knew Steven Pistner, the Target CEO and he got me the job. I was never a “good fit,” at any job I ever had until the fall of 1983 when I went to work for Investment Rarities. I fit in there very well. It was the first time in my working life where I could succeed by using my brain instead of my back. All the other jobs were predicated on hard work, not thinking outside the box. For the first time in my life I was exposed to these new concepts and they made perfect sense to me. It became my mission to tell everyone about precious metals and the Federal Reserve and the economy. Here was a story that was so compelling that I could not conceive why anyone would doubt it. And yet, most people did. I don’t believe that anyone knows the actual numbers, but after spending over 30 years in my industry I would estimate that only a few percent of Americans own any gold or silver or understand why it is necessary to. By the time that the shit hits the fan and Americans finally understand what we have been talking about, it will be too late for them. This is a “better early than late” industry. You own gold and silver before you need it, not after, because we sell insurance, not investments. Just try and buy your insurance AFTER you have a car accident, or your house is flooded, or the dollar collapses, or hyperinflation pays us a visit.
James Grant puts it a different way. He says, he prefers gold as “an investment in monetary disorder.”.... I can live with that definition.
O.K. let’s get serious now. JPMorgan is fessing up. They could just as easily have quoted GATA's Chris Powell who says, “There are no markets anymore, just interventions. Why else do you think that I have been wrong for so long? Don’t bother me with the facts, just believe what
(your money manager, your financial advisor, Wall Street, your broker, the major media, the government and even Warren Buffett) tell you – you don’t need gold, just stocks, which never go down. I beg to disagree. In my short tenure in this industry I witnessed a stock market crash in 1987, 2000 and 2008, so if you think you are safe in the stock market, think again. And when it corrects AGAIN, since markets DO CYCLE, you will see what Grant means when he mentions “monetary disorder.”
What have we learned in the last 10 years? We’ve learned that markets are cyclical. They have their peaks and their troughs. Most of our clients are contrarians. They understand that you have to buy low.
We have been bullish on silver for several years because the gold/silver ratio tells us that silver, relative to gold, is cheap. But it is not a good predictive tool because the ratio can tighten if gold falls and silver remains the same. That’s right, silver doesn’t have to rise for the ratio to fall; it only has to outperform gold. The most bullish case is for gold to rise, and for silver to rise faster. And we are bullish on gold. That is not contradictory, because where gold goes, silver will follow. Silver is more volatile, so if gold is going up, silver will go up more. One cannot be certain, but I do think that 2019 is the year that we finally break out of the trading range that we’ve been in. In gold’s case, between $1,200 to $1,375. What we do know is that the silver/gold ratio has to normalize so if you are bullish on gold, silver has to rise faster.
Gold is a necessary form of insurance versus the US dollar. If you believe that gold trades contrary to the dollar, that is reason enough to be bullish on gold. With $22 trillion in on balance sheet liabilities and $120 trillion in off balance sheet liabilities (Social Security, Medicare, etc.). This can only go one of two ways. You can default, or you can deflate it away.
"The reality is that maybe the word ‘cycle’ is no longer even relevant, given that we have so much unconventional central-bank involvement."
Now I’m not saying that this will happen, but if it does…. This is the glue that holds our economy and currency together.
Nothing lasts forever...
Gold buying by Russia and China is all it takes to move gold off of its narrow trading range. Once gold tops $1,375 the bull market will be back.
The last time China resumed its gold purchases, was just three months before China's August 2015 yuan devaluation, which also unleashed a period of dramatic yuan volatility and Chinese economic weakness.
If (when) the Fed reinstates QE, gold is off to the races. How many black swans do you need before one of them actually lands on your front lawn?
"I personally think the Fed should drop rates, I think they really slowed us down, there's no inflation, in terms of quantitative tightening, it should really be quantitative easing..."
Here are a few worthwhile articles courtesy of our colleague, Ed Steer
President Trump said Thursday he intends to nominate former GOP presidential candidate Herman Cain to the Federal Reserve's board of governors, signaling his desire to remake the nation's central bank after complaining about it for months.
The selection of Mr. Cain, following the president's decision to nominate his former campaign adviser Stephen Moore, marks an effort to install two Fed critics and loyal Trump supporters on the central bank's powerful seven-seat board.
While the nominations would be subject to Senate confirmation, they would underscore Mr. Trump's growing unhappiness with Fed policy under Jerome Powell, whom the president tapped to lead the central bank.
Messrs. Cain and Moore have previously advocated, for example, a return to the gold standard. The gold standard periodically compels a central bank that is losing gold reserves to raise interest rates, even if that causes consumer-price deflation and recession. But both men are strong supporters of the president and have indicated they now favor positions in sync with his call for easier policy.
The remaining portion of this
Wall Street Journal
story that's posted in the clear is contained in a
dispatch that Chris Powell filed from Hong Kong on their Friday morning. Another link to it is
[I]t looks like the next recession is coming fast. And based on the early data I have, it looks like the Doom Index will hit 8 in our official reading this quarter.
That doesn't necessarily mean that a stock market crash is imminent. In back-tests, the Doom Index sounded the crash alert several quarters early in 2007.
But it could very well be that this bull market already peaked last September, and the Doom Index is warning of a larger crash to come.
That's what happened in our back-tests around the dot-com bust. Stocks were trading around their peak in August 2000 and they had already fallen 6% when the Doom Index hit an 8 in the third-quarter reading. But then, the S&P 500 went on to plummet 45% from there - wiping many investors out in the process.
That being the case, it may make sense to give readers an advanced warning before the next official Doom Index reading comes out in a few weeks... The tattered Crash Flag shall fly again.
commentary from Bill appeared on the
Internet site early on Thursday morning EDT -- and another link to it is
This month, the Federal Reserve joined its global peers by turning decisively dovish. Jerome Powell and friends haven't just stopped tightening. Soon they will begin actively easing by reinvesting the Fed's maturing mortgage bonds into Treasury securities. It's not exactly "Quantitative Easing I, II, and III," but it will have some of the same effects.
Why are they doing this? One theory, which I admit possibly plausible, was that Powell simply caved to Wall Street pressure. The rate hikes and QT were hitting asset prices and liquidity, much to the detriment of bankers and others to whom the Fed pays keen attention. But that doesn't truly square with his 2018 speeches and actions. The Fed's March 20 announcement suggests more is happening.
I think two other factors are driving the Fed's thinking. One is increasing recognition of the same slowing global growth that made other central banks turn dovish in recent months. The other is the Fed's realization that its previous course risked inverting the yield curve, which was violently turning against its fourth-quarter expectations and possibly toward recession (see chart below, courtesy of WSJ's "Daily Shot"). That would not have looked good in the history books, hence the backtracking.
On the second point... too late. The yield curve inverted, and recession forecasts became suddenly de rigueur among the same financial punditry that was wildly bullish just weeks ago.
My own position has been consistent: Recession is approaching but not just yet. Yet like the Fed, I am data-dependent, and the latest data are not encouraging. Today, we'll examine this and consider what may have changed.
commentary from John put in an appearance on the
website at 4:25 p.m. on Tuesday afternoon EDT -- and it's
worth your while
...if you have the time, that is. I thank Brad Robertson for sending it our way -- and another link to it is
Remember, yesterday and today, we let the shades speak.
We make no predictions. Nor do we connect any dots.
Instead, we merely stand back and marvel at the gall... the conceit... the shameful, egotistical, self-dealing of it. We're talking about the vanity of the living.
And rather than pass judgement ourselves, we call upon the dead... and the unborn... to do the talking. Yesterday, we heard from the ghosts of the past. Today, the phantoms of the future tell their tale:
"Thanks. I'll get right down to it. Thanks a lot... you jerks."
"You're supposed to leave your children and grandchildren a richer, safer world. You are doing neither."
This commentary from Bill was posted on the
Internet site sometime ealry on Tuesday morning EDT -- and another link to it is
I say gold is financial insurance. Jim Rickards says gold is money and nothing else. He also says that it is manipulated. Yes indeed, gold is manipulated. So is everything else too.
(GATA)Jim Rickards: Gold is so manipulated we don't have to speculate about it
Submitted by cpowell on 03:26PM ET Tuesday, April 9, 2019. Section: Daily Dispatches
11:25a ET Tuesday, April 9, 2019
Dear Friend of GATA and Gold:
Fund manager, author, and geopolitical strategist Jim Rickards, whose recent book, "The New Case for Gold," provides the best summary of gold price manipulation by governments and central banks --
-- returns to the subject in commentary just posted at The Daily Reckoning.
In an essay that takes for a headline J.P. Morgan's famous dictum -- "Gold is money, and nothing else" -- Rickards writes in part:
"So much of the gold market is 'paper gold.' This paper gold market is so manipulated we no longer have to speculate about it. It’s very well documented.
"A central bank, for example, can lease gold to one of the London Bullion Market Association banks, which include large players like Goldman Sachs, Citibank, JPMorgan Chase, and HSBC.
"Gold leasing is often conducted through an unaccountable intermediary called the Bank for International Settlements. Historically the BIS has been used as a major channel for manipulating the gold market and for conducting sales of gold between central banks and commercial banks. The BIS is the ideal venue for central banks to manipulate the global financial markets, including gold, with complete nontransparency.
"But it all rests on a tiny base of physical gold. I describe the market as an inverted pyramid with a little bit of gold at the bottom and a big inverted pyramid of paper gold resting on top. There's just not that much gold available. But in the paper gold market, there's no limit on size, so anything goes.
"Leasing of paper gold by bullion banks allows them to sell the same gold as much as 10 times over to 10 different buyers. It's like a game of musical chairs, only with more participants and fewer chairs.
"Someday, probably sooner than later, somebody is going to show up and say, 'I want my gold, please,' and the custodian won't be able to give it to them. What if a major institution wants its gold but can't get it?
"That would be a shock wave. It would set off panic buying in gold, driving prices through the roof.
"Meanwhile, the physical fundamentals are stronger than ever for gold. ..."
Rickards' commentary is posted at The Daily Reckoning here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Greg Hunter gets interesting people on his USAWatchdog.com program. He asks the right questions too. In the following interview, he talks about gold with John Rubino. Rubino says
“What’s cheap? Gold and silver. What is down and what is cheap relative to the fundamentals... Gold is moving back into the center of the global financial system. It is possible that a garden variety one-year recession would blow up the financial markets..."
This is a worthwhile interview.
Rubino: "Gold Is Moving Back Into The Center Of The Global Financial System"
Unemployment is near 3% and President Trump is calling for rate cuts and quantitative easing.
Is the economy doing well or getting ready to tank?
Financial writer John Rubino says, “We went from being at all-time highs to down 20% in sort of a flash crash in two months towards the end of last year.
That told the Fed and the other central banks that they can never tighten again
"This is it for this cycle and for the entire remaining time of today’s financial system for higher interest rates.
They abruptly announced to never mind about those four rate hikes that were going to happen in 2019. We (the Fed) are not going to do anything.
If we do anything, it will be in the opposite direction and cut interest rates and a new round of QE, etcetera and etcetera. The stock market went right back up to record levels..
The end part of this story is how good all this is for gold...
The next thing from the Fed will be a rate cut, and it will increase and not decrease its balance sheet... We are going to go preemptively to monetary easing, and that’s really new. This is very, very new. You normally don’t do this.
You wait until you see a bear market and a slowdown in the economy that gets people laid off before you start aggressively easing.
Apparently, we are going to do that stuff before that stuff starts happening. Who knows what the impact of that will be? If it works the way they want, more people will get hired, wages will pick up and we’ll have inflation in the 4% or 5% range before you know it.”
So, with near record low yields on bonds and near record high prices for stocks, Rubino has just one question. Rubino says,
“What’s cheap? Gold and silver. What is down and what is cheap relative to the fundamentals.
"It’s not just the price of gold and silver, it’s how much gold and silver exists relative to how much paper wealth is in the world. The amount of gold and silver that we are bringing out of the ground is growing at 1% or 2% per year. The amount of paper wealth in the world is growing exponentially...
Gold is moving back into the center of the global financial system.”
Another big factor to consider is debt. Rubino says,
“Every big country is running deficits that are dramatically bigger than they were five years ago..."
"In the U.S., we are back to $1 trillion a year deficits, which is Obama Administration post Great Recession kind of numbers, and we are doing it 10 years into an expansion...
So, in the next recession, we will be taking on huge amounts of new debt at an accelerating rate. We are not fixing any of the mistakes...which mean the problems that are going to flow from today’s mistakes are going to be that much bigger because we are compounding yesterday’s mistakes.
. . . This is new and scary and fascinating. From a safe distance, this is going to be very interesting to watch. Unfortunately, for most people, they will not be a safe distance. They will be right in the middle of the tornado.
In closing, Rubino says, “It is possible that
a garden variety one-year recession would blow up the financial markets..."
"That’s the stuff that they are hearing (in the White House) that is terrifying. . . . There are probably older and wiser people whispering in Trump’s ear who are saying the next equities bear market might be the end of the financial world for us...
They are so worried, they are willing to experiment with monetary policy again in order to prevent the crash that could make them this generation’s Herbert Hoover.”
Join Greg Hunter of USAWatchdog.com as he goes One-on-One with John Rubino, founder of