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The Fed can’t stop printing money.  

Now it has discovered that the trillions of dollars it already “printed” can’t be neutralized or rolled back.  

The genie can’t be put back in the bottle.

The Fed tried that.  It tried to undo some of the trillions of dollars of funny money it created in Quantitative Easing.  That’s because even Fed officials know that if those trillions of dollars aren’t somehow unwound before they work their way into the general economy, they will eventually create a real Third World-style inflation here in the US.

Worse than that, the Fed not only can’t undo what it did in its QE money printing spree, it now is scrambling to print more money to replace what it tried to roll back last year.

The Fed is in a real bind.  A mess of its own creation.  And since we are all helpless victims of its policies, we are in a mess, too.

Here’s the story.  It can be seen in the chart below. 

The Federal Reserve reacted to the mortgage meltdown in 2008 by creating almost $4 trillion.  It was all just made up digital money.  It did this so that it could buy toxic mortgage and other bonds from the crony banks.  To help them out.  And, boy oh boy, did it ever help the crony banks out! 

The spree lasted from 2008 to 2014.  

This chart shows the assets on the Fed books after QE ended.  It had assets bumping along close to $4.5 trillion dollars.

Recognizing the inflationary potential of that liquidity when, under certain circumstances, it starts finding its way into the commercial banks and into the consumer economy and sets off a nightmare inflation, the Fed decided to undo what it had done.

It didn’t go well.  We’ll tell you what happened then and why it matters to you and the gold market in our next post, Inflate or Die, Part II.

Before the trillions of dollars of made-up digital “money” it created in 2008-2014 does its real damage, driving consumer prices to the moon, the Fed started to reduce its assets with a program called Quantitative Tightening.   They didn’t discuss it much, and the mainstream press didn’t say much about the risk overhanding the economy from QE either, but even the Fed knew that had created a huge problem with trillions of dollars of money it made up out of thin air in its Quantitative Easing program.  You can see on the chart below that Fed assets began to move lower in 2018 as the Fed targeted reducing its holdings by $50 billion a month

But by last fall, the stock market threw a fit.  Since it had been climbing for years on the backs of free money for Wall Street, as the Fed tightened and reduced its assets, the market began to collapse.   The S&P500 had traded as high as 2941 points in late September; by Christmas Eve it was 2350, a staggering 20 percent loss in only three months!  

Wall Street was on strike!  More free money, it told the Fed, or we’ll bring the whole stock market house of cards down.

The Fed got the message.  By Labor Day, as you can see on the chart, the Fed’s balance sheet began to grow once again.  Fast!

Not only did the Fed reverse gears, but it also stomped on the money printing accelerator!

Notice that the blue line, Fed assets, is now climbing faster than it came down.  The upward trajectory is steeper than the rate at which it declined in the first nine months of the year.  This illustrates the fact that with the new QE the Fed is printing at least $60 billion a month, which is more than the original QE that began in 2008.

Fed chief Jerome Powell says the new QE (which he refuses to call QE) is an interim measure.  But is it?

The Fed knows it has to print money or the stock market will go into free-fall.  The Fed has become the guarantor of stock market profits.   The Fed has become Wall Street’s “Hey, boy!”  It is inflate, or die!  

Eventually, a critical mass of investors will figure that out.  Discovering that the market is only held aloft by the Fed, they will head for the door all at once.  And there is nothing the Fed can do at that point.

Well, there is one thing.  The Fed can begin printing money and buying stock itself.  That is a real endgame scenario.  Seriously, if that happens, it’s the end of American free enterprise.  Get out of the way!

One more thing.  And this is the reason for telling the whole story.  When the Fed prints new money, it reduces the value of every other existing dollar.   That’s inflation.  It’s a stealth tax, voted for by no one.  It appears to make everything cost more, but in reality, the dollar buys less and less.

That’s one of the reasons people buy gold.  

And in fact, you may remember when the market figured out last summer that the Fed was going to start a new round of inflation, the new gold and silver bull market was born.  Gold and silver prices took off!  

Here’s a chart that shows what happened.

The Inflate or Die Fed is in a fix.  The only beneficiaries of its dilemma are people with gold.  By its own logic, the Fed must continue to print more dollars.  That will drive gold higher.  Much higher.  If it stops printing money, the stock market will plummet.  And stock investors will rush into gold.  

Either way, your best choice is to own gold.

Sometimes even otherwise bright people have a big gap in their common sense.  Absent-minded professors are the stuff of legend, while “pointy-headed intellectuals” have been accused of not being able to park a bicycle straight.

Robert Shiller is a pretty bright guy.  He’s a Yale economics professor (we don’t automatically discount him for that; we prefer to judge him on the merits of what he professes), a Nobel Laureate, and the author of the book Irrational Exuberance.

That book, published right at the top of the dot.com market bubble, made a cogent case the stock markets were over-valued.  A 2005 edition of Irrational Exuberance made the case that the real estate bubble would soon burst.  

We think Shiller is pretty capable, at least more so than the Keynesians and Modern Monetary Theorists found in most college economics departments and on the pages of the New York Times.  So we’re not accusing anybody of anything or calling any names here… just helpfully pointing out where something obvious might have been overlooked.

Shiller is back on bubble patrol, sounding out new warnings.  “I see bubbles everywhere,” he says.  The stock market is a bubble, he says.  The bond market is a bubble.  Shiller even thinks the housing market is in a bubble again.

Using a long-term valuation measure (the CAPE ratio) for stock prices, Shiller says we’re in a market bubble that “you know is going to decline.’  The bond market is just as threatening, he says.  “It seems to be related to people not paying enough attention thinking through the simple logic … this can’t keep going and it’s going to end badly.”

We share his views about both the stock and bond markets.  We have written about the bubbles in both many times.   And without a doubt, when the bond market crashes, it will mean interest rates have risen, which will have a negative impact on real estate.

So what is our problem with Shiller?  It is simple this:  Shiller doesn’t know where to go to escape the carnage of these inevitably bursting bubbles.  

“There’s no place to go,” he says. “You just have to ride it out.”

No.  

You don’t.

This is the second time in recent weeks that we have encountered this meme (see Nowhere to Hide, Part I here).  We aren’t sure yet, but are beginning to grow suspicious that this may be a new focus group-tested talking point or meme contrived by Wall Street: “Sure, the stock market is grossly overvalued, but you have to stay invested in it since there is nowhere to hide.”  We’ll be interested to see if the phrase starts showing up often in the financial press

We’ve had two stock market crashes already in this very young century.  This time, though, the stock and bond bubbles are bigger than ever.  That means the bust will be bigger than ever. 

In any case, Shiller is too despairing when he says that you have to invest in the stock market, “even though you expect the price to decline.”

That is simply bad advice.  It took decades for the market to recover from the 1929 crash.  It took the Nasdaq market 15 years to recover from the dot com crash.

Michael Shedlock of Mish’s Global Economic Forecast also takes a caustic view of Shiller’s advice, that you have to ride it out, that there is no place to hide.

Number one on Mish’s list of places to go is gold.  He says, “I do not care about books or past predictions.  I care about logic of the moment.”

“It is absurd to say there is no place to go,” says Mish.  “Choose wisely where to hide.”

We agree.  Let the professionals at RME Gold tell you about gold and the logic of the moment before the bubbles burst.

What Have We Learned from Investment Bank Failures like Lehman Brothers and Bear Stearns?

If you wanted to watch the world economy collapse into a nightmare depression of currency failures and bankruptcy, you would start by looking for the failure of a major financial institution.

And when that happens, you would be glad to own gold.

Few people today know of the 1931 failure of Credit Anstalt, the Viennese banking giant founded by the famous Rothschild family of international financiers.  The conventional wisdom was that Credit Anstalt was impregnable.  When the bank teetered and fell, shockwaves were felt across Europe and around the world.  The ensuing panic made the Great Depression a worldwide calamity.   

Not everyone was blind to the unsound practices that brought Credit Anstalt to its knees.  Seeing that it was actually bankrupt, the great free market economist Ludwig von Mises refused several executive positions with the bank.  It is said that when Mises would walk down the street by the bank’s huge building edifice, he would tap it with his umbrella, saying, “You’ll be coming down soon!’ 

The failures of Bear Stearns and Lehman Brothers, the fourth largest investment bank in the United States, ushered in the Panic of 2008 and the bursting of the mortgage bubble.  

In each of these examples, central bankers and government authorities quietly scrambled to provide liquidity and bailouts to the so-called “too big to fail” banks.

Now the Federal Reserve has begun moving a monetary heaven and earth of liquidity into the banking system to deal with issues that are shrouded in mystery.

We don’t claim any special insight or inside knowledge about what may be underway, but we have a good alarm system that tells us all these Fed machinations mean something is up in the financial world.  Back in July we asked if Germany’s Deutsche Bank could be ‘the key log in the log jam.”  

“That’s the log that, once moved, sets the whole destructive torrent of all the other logs loose to destroy everything downstream in their path,” we wrote.

At that time Deutsche Bank announced it was cutting 18,000 jobs; its share price cratered.  A week later we reported that its clients were pulling a billion dollars a day out from Deutsche Bank.

We’re not the only ones wondering if all this hyperactive Fed money printing is an attempt to “paper over” problems cascading down from Deutsche Bank.  MarketWatch reported in the summer that the bank had created a book of $53 trillion in derivatives instruments, although the bank claimed its own exposure was only $22 billion; we take that with a grain of salt having heard understatements of their own exposure from the banks last time around .  Last month Deutsche Bank invited bids to auction off some of its interest rate derivative contracts.   

Deutsche Bank may not be the next Credit Anstalt, or Bear Stearns or Lehman.  It’s just as likely, perhaps even more so, that the US government’s voracious borrowing appetite is running into supply troubles.  Perhaps Deutsche Bank’s troubles are simply pulling the curtain back on something larger.  We say larger because the Fed’s latest liquidity measures and Quantitative Easing are huge.  It appears that a backdoor bailout is underway somewhere.

In any case, something is amiss.  Something big.

Buy gold.

And stay tuned.

The Federal Reserve has quietly launched a massive new round of money printing.  

We hope you will take time with this very important piece.  It should be shared widely.  It describes a new phase of Fed monetary management, a turning point that people will look back on as a crucial moment in the US economy, and one that will drive gold to new heights.

The Fed has quietly launched a new round of Quantitative Easing (QE), the most outrageous monetary experiment in American history.  QE began in 2008 with the Fed’s frenzied purchase of US treasury bonds and toxic mortgage and other troubled bonds.  (It was mostly another example of crony capitalism; the Fed bought worthless mortgage paper from the banks, taking it off their books, and putting it on the books of the American people.)

The spree lasted until 2014, by which time the Fed had acquired about $4 trillion in assets.

Where did the Fed get $4 trillion to buy all those bonds?   It just made it all up.  We call it money printing, but that is an old-fashioned term.  It’s mostly just made-up digital money.  Bookkeeping entries.  

There were three rounds of QE, known as QEI, QEII, and QEIII.  The madness more or less came to an end in 2014.  But all that made-up money is still out there.  It represents a sort of Sword of Damocles hanging over the US economy.

Recognizing the danger that all that made-up money would find its way from the Fed’s balance sheet into the hands of the commercial banks, setting off a nightmare rise in consumer prices, the Fed tried to mop up some of this crazed money with a program called Quantitative Tightening.  That necessarily involved higher interest rates, but when the stock market had a tantrum, the Fed apologized and stopped at once.

So, most of that QE funny money is still out there, an unresolved problem that can drive consumer prices (and gold) to the moon when it leaks out into the banking system and the general economy.

That’s all history, and it is bad enough.  But now the Fed has begun a new round of money printing.  They don’t like to call it Quantitative Easing, but it is.

Fed Boosts Amount of Liquidity Offered to Financial System

Besides bailing out crony institutions, flooding the overnight markets with Fed money, these “liquidity operations” in all their variety are aimed at driving down interest rates and keeping the stock market artificially high.  To that end, Fed Chairman Powell recently announced a new program to buy $60 billion of Treasury bills each month through the end of the second quarter of 2020.

Powell objected to calling it what it is, but we’re more direct.  Welcome to QE IV!

A couple of paragraphs ago I said that made-up Fed money seriously threatens the consumer economy with higher prices when it leaks out of the Fed’s hands and into the general economy.  That’s when the money supply starts growing.  And gold starts to take off.  

And that is just what is now happening.  

The peerless Doug Noland, who blogs at Credit Market Bulletin, observed recently that US money supply is at last beginning to explode.

Noland writes, “Let’s focus on the extraordinary $575 billion M2 expansion over the past 22 weeks (that receives zero attention). This was the second strongest (22-week) monetary expansion in U.S. history, trailing only 2011’s “QE2” period (Fed expanded holdings by $600 billion) where M2 expanded as much as $616 billion over 22 weeks. M2 growth peaked at $530 billion (over 22 weeks) in February 2009 during the Federal Reserve’s inaugural QE operation.”

Factoring in other money fund liquidity growth, Noland discovers that we are experiencing “a blistering 11.9% annualized growth rate” in the money supply.  This is monetary inflation such as we haven’t seen for a very long time.

And it is very bullish for gold.

We admit that all this is a little wonkish for some of our readers, so we have prepared a chart using Fed data that illustrates what we are talking about.

It shows money supply growth (M2 – a measure of cash and cash-like liquidity such as checking deposits, savings accounts, and money market funds) taking off earlier this year.  And just as you would expect, gold responded, surging powerfully throughout the summer.  Please note that while gold has been consolidating its gains around $1,500 an ounce, the money supply (the blue line) continues to climb.

Here’s the way the Wall Street Journal headlined a story about the Fed’s new policies on Friday, 10/25:

This money supply growth and the new QE is a policy error that must result in serious consequences for the general economy, as well as much higher gold prices.

The Fed can create more dollars with a computer keystroke, but it can’t print more gold.

That’s why gold goes up.  

It’s vital that you find out more.  Call or stop by and visit with an RME Gold professional.  Because this is a pivotal moment in monetary policy, feel free to share this post with family, friends, and colleagues.  

They may appreciate learning that the Fed’s money printing has gone wild.  They must not wait before protecting themselves and their families with the safety of gold, because the Fed is finally letting the much-feared inflation genie out of the bottle.

Once or twice a year we check in to see what Jim Rogers says about things.  Rogers thinks the worst bear stock market of our lifetimes is headed out way.

We sample Jim’s opinion for several reasons, not the least of which is that he has a stellar track record.  During the brutal bear market of the 1970s, the Quantum Fund, which Rogers co-founded, beat the S&P by an incredible 4,150 percent, making it one of the best performing hedge funds ever.

Since there is no substitute for up-close and personal real-life experience, Jim Rogers has twice driven around the world, once by motorcycle, crossing primitive frontiers and backwater boundaries in search of investment opportunities.

So, what does Jim say about the US stock market?  The “worst bear market in my lifetime is coming,” he says.  “It has been over 10 years since we had a serious bear market in the United States.  I would suspect by the end of this year or next year, it will start,” Rogers says.  “These things always start small, where people are not looking and then they work to the major markets, and then you see them on the major news.”

Although he says he’s the “worst market timer in the world,” Jim keeps his eyes on the fundamentals.  He puts his money where his mouth in and says that he doesn’t own any US stocks now.  

Despite headlines to the contrary, all touting the stock market as the place for investors to be, that’s a pretty wise position.  Especially from the perspective of  those of us that understand gold.  

Measured by gold, the Dow has lost half its value since the turn of the century.  That’s according to newsletter writer Bill Bonner, who notes the US hasn’t gotten off to a very good start in the new millennium:

“Our guess is that America peaked out at the end of the last century. Since then, with Dubya’s $5 trillion war against Iraq… Obamacare… quantitative easing and a negative real fed funds rate for 10 years… transgenderism, the Kardashians, Lee Greenwood, trillion-dollar deficits, $22 trillion in federal debt, fake money, fake interest rates, and fake wars – it has been all downhill.”

“The Dow – the flower of American capitalism – has lost more than half its value (measured by gold).”

Speak to your RME professional today about a sensible plan to protect your wealth from the next crisis.  Simply call our office, (602) 955-6500, and you will be connected to one of our knowledgeable gold and silver authorities.

A Black Swan is an unexpected event.

The term was popularized in a 2007 book by author and market trader Nassim Nicholas Taleb called “The Black Swan:  The Impact of the Highly Improbable.”

Before the discovery of Australia, he writes, it was universally believed that all swans are white.  But all it takes is the sighting of one black swan to invalidate what was commonly believed. Taleb uses the term now to represent events of low predictability and outsize impact.  He says that just about everything going on in our world can be explained by Black Swan events.  

What was widely understood about the world in 1914 didn’t help to explain the wars and carnage that followed the Black Swan assassination of an archduke.  The demise of the Soviet Union.  The rise of Islamic fundamentalism.  These are Black Swan event.

9/11 was a Black Swan event.

So, what will the next Black Swan events be?  It’s hard to say because they are unexpected.

It seems more than likely that some kind of economic/monetary calamity will be next, despite the fact – or maybe even because – the authorities insist everything is just fine.  But sudden, unexpected, high impact economic/monetary calamities occur often throughout history, thanks to the same economic practices and folly that our authorities persist in today.    

Almost every economic/monetary Black Swan event is a persuasive reason to own gold (and silver} coins and bars.

Making a list of the possible trigger events for such a calamity is an inexhaustible exercise.  We write often about the financial possibilities since they loom larger and more certain with each passing day:  the ending of the dollar reserve system; unpayable sovereign and other debt; cascading government and private bankruptcies; bank failure; foreign dumping of US treasuries; runaway inflation and crippling stagflation.

But we need to allow for even less predictable Black Swans that can trigger these economic/monetary calamities.  Those include everything from the sudden outbreak of war, widespread crop failures, and the spread of disease like the flu epidemic of a century ago, to uncontrollable civil turmoil, power grid failures, earthquakes, volcanic eruptions, and even less likely events like an asteroid impact.

Unexpected?  Unlikely?  Precisely the qualities of the Black Swan events that order and reorder just about everything in our lives.

The gathering in Armenia this week of 200 technology and security officials from 70 countries at the World Congress of Information Technology includes special attention to Black Swan events.  Organizers ask attendees, “Are we doing the kind of hard-nosed vulnerability assessments that are necessary of our increasingly complex and fragile infrastructure systems?”

Are you doing the kind of hard-nosed vulnerability assessments of your exposure to an increasingly fragile economic and monetary system?  Owning physical gold and silver is the single most important thing you can do to protect yourself from low predictable events that carry outsize impacts.

Speak with you RME Gold and Silver professional today.

Will Rogers offered this advice for making money.  “Take all your savings,” he said, “and buy some good stock and hold it till it goes up, then sell it. If it don’t go up, don’t buy it.”

Rogers was a humorist and could get away with giving that kind of advice.  We, on the other hand, take your money and wealth (and our own!) more seriously.  And we have never seen better advice than this:  

“Buy low, and sell high.”

Not many people do that of course.  Too often they do the exact opposite.  They buy high and sell low.

If you would like to buy low and sell high, we can’t think of better advice than to sell stocks now.  And buy silver.

That’s because silver is low.  And stock are really, really high.  

The all-time high of Dow Jones Industrial Average was 27,359 points.  That was last July.

As you can see, the Dow keeps bumping up against resistance in the neighborhood of 27,000, and can’t break through.  That stands to reason, since there is ample evidence that a slowdown is on the horizon.  September was the worst month for US manufacturing since the Great Recession; global growth has slowed; political turmoil worsens by the day, and the trade war is spreading.

Please make sure you see the report we featured recently here that corporate insiders are selling their company stock at a furious rate, on pace for a record not seen since the dot com bubble.  It reads in part, “Executives across the United States are shedding stock in their own companies at the fastest pace in two decades, amid concerns that the long bull market in equities is reaching its final stages.”

Think about this a moment:  Instead of paying dividends to their shareholder, they are using company earnings to buy back their stock and thus run the share price up, so they can exercise options and sell their own stock at higher prices.  What it should tell you is that corporate managers engaged in such practices have very short time horizons for their companies.   And they have their own best interests at heart.  Not yours.

So, if the stock market is high, you know what to sell.

But what is low?  What should you be buying?  Something that is not subject to corporate mismanagement and can’t be printed into worthlessness.

What is low right now that has proven itself as both a monetary and an industrial commodity?   Is there anything that stands up to government debt and bankruptcy? Prized for wealth preservation and financial privacy?

The answer is silver.  It meets all those important qualifications. And silver is just over a third its price of 40 years ago.   Think about that a moment.  How many other investments are less than a third the price they were almost 40 years ago?

Forgive us for repeating the point we made not so long ago.  “Today, everywhere you look, things are higher.  In 1980 the median price of a US home was only $47,200. Today it is $226,800. 

“Oil stopped out a $40 a barrel back in 1980.  Today it is $53.  

“At the beginning of 1980 the Dow Jones Industrial Average was 824.  Today it is around its all-time high of 26,500.  

“Everything is higher today.  Everything except silver.”

Call or visit an RME professional today.  

By the way, Will Rogers also said, “Remember, write to your Congressman. Even if he can’t read, write to him.”

The Federal Reserve Open Market Committee ended its September meeting with a decision to lower interest rates again.  The policy cuts the Fed funds rate by 25 basis points to a new target range of 1.75  to 2 percent.  The announcement on Wednesday afternoon (9/18) was accompanied by a broad hint that rates may be cut again before the end of the year.

As we watched the Chairman Powell’s announcement – which amounted to not much more than reading and repeating well-worn talking points — our thoughts turned to Ron Paul’s recent comments about negative interest rates.  

We’ll get to that in a moment, but first, we recently wrote (here) about Ron Paul’s prediction that gold would double by the end of 2020.  

We don’t mention it because we think it is a particularly bullish prediction.  Quite the contrary.  We could highlight many economic observers and technical analysts whose price target for gold are higher.  

Some are much higher.  

We thought you should see Dr. Paul’s prediction because it is unusual for the former congressman and Presidential candidate to voice such a specific prediction to begin with.

The suggestion that gold could reach $3,000 by the end of next year is not overstated in the least.  It is a cautiously moderate forecast.  As we would expect from Dr. Paul.

Indeed, Dr. Paul himself acknowledges that when the monetary crisis strikes, his call may prove to substantially understate the case.

We agree.  In fact, alert market watchers are already feeling the hot breath of the approaching monetary crisis breathing down their neck.  After all, we are now in an era of Quantitative Easing, trillion-dollar deficits, and hundreds of trillions of dollars in unfunded US government liabilities.  

Not to mention an era of negative interest rates.

Negative rates are such a profound anomaly that they remind us of every catastrophic economic scheme that has ever gone before.  Things like the South Sea Bubble and John Law’s Mississippi Bubble, both schemes of the 18^th century.  Only this is the biggest bubble of all time.

Dr. Paul thinks that the US government and Federal Reserve will have us following much of the rest of the world into the negative interest rate abyss.  

“We will join the rest of them and go to total negative rates in hopes that that will be the solution,” Paul said on CNBC last week.  “We’ve never had as many currencies in negative interest rates. $17 trillion worth of bonds [are] in negative interest rates. It’s never existed before. And, that’s a bubble.”

“So, we’re in the biggest bond bubble in history, and it’s going to burst.” 

When confronted with the choice between real money – gold – and paying the government a fee to let it use your money, like Dr. Paul we believe that in a crisis rational people will opt for gold.  After all, as Dr. Paul asks, “How do you sell a bond that pays a negative rate? Who’s going to jump up and down?”

The long-term consequences of negative interest rates are incredibly destructive and immeasurable bullish for gold and silver.  

Stay tuned.

“Russia’s Huge Gold Stash is Now Worth More than $100 Billion”

Source: Bloomberg

Russia decided some years ago that it wanted more gold and fewer US dollars.  It was a smart move, as Bloomberg reported this week:

“The country quadrupled gold reserves in the past decade as it diversified away from U.S. assets, a move that has paid off recently as haven demand sent prices to a six-year high. In the past year, the value of the nation’s gold jumped 42 percent to $109.5 billion…”  

 Today Russia owns 2,219 tons of gold.  At the same time, Russia began adding gold to its central bank holdings, it began dumping US dollars.  In other words, it was selling dollars to buy gold.  Russia concluded correctly that the future of gold was brighter than the future of the dollar.  

Ten years ago, Russia held $180 billion in US Treasury securities.  Now the Treasury Department reports Russia’s dollar holdings as so low they are down in the asterisks, below the holdings of countries like Iraq and Columbia, and less than one percent of what both China and Japan own.  

But the de-dollarization move is not limited to Russia.  It is a global phenomenon.  Countries like Kazakhstan and Poland are moving out of dollars and into gold.  Turkey, Mexico, and India are buying gold as well. 

China’s central bank has been buying gold aggressively all year long, adding 100 tons since December, while its dollar holding has fallen some $70 billion over the last year.

Gold’s strength has been a windfall for gold owners.  Both China and Russia saw the dollar value of their gold reserves jump by $7.5 billion between July and August.

The US still has the largest gold reserves, but, of course, its gold holding has not been audited since the Eisenhower administration.  Actually, because that audit was never completed, it is probably more accurate to say that US gold reserves have never been audited.

In May, Congressman Alex Mooney (R-WV) introduced a bill in the House calling for a “full assay, inventory, and audit of all gold reserves, including any gold in ‘deep storage,’ of the United States at the place or places where such reserves are kept.”

A real audit is more than just an inventory.  It is not enough to count bars.  The title to our gold must be verified.  In that respect Mooney’s bill is thorough.  Because we know the propensity of governments to try to operate in secrecy – note how vigorously the Federal Reserve has resisted an audit – Mooney’s bill seeks to discover if the title to any US gold has been impaired or encumbered.  It mandates  “a full accounting of any and all sales, purchases, disbursements, or receipts… a full accounting of any and all encumbrances, including those due to lease, swap, or similar transactions presently in existence or entered into [in the past 15 years, and] an analysis of the sufficiency of the measures taken to ensure the physical security of such reserves.”

Assuming the gold is all present, accounted for, and with clear title, the $400 billion in US gold reserves is a very small base of liquidity upon which to rest a $23 trillion dollar national debt.

One of the most important reasons to own gold and silver is to avoid major risks common to stocks, bonds, banks, and other financial assets and transactions:  the risk of insolvency and default.

All these financial markets and institutions carry a risk of insolvency and default.  Those are risks that grow more threatening with each passing day.  

But gold and silver are monetary commodities in their own right.  They are not claims to something else somewhere else down the road.  The value of an ounce of gold or silver is utterly indifferent to the issuer’s total debt, or the wisdom of its political leaders.   An ounce of gold is an ounce of gold no matter whose image or national motto is engraved on it.  

Its value is not contingent on someone else’s integrity.

That’s why it is such a high compliment to say that someone’s word “is as good as gold.”  It is claiming that there is no risk of their failure to abide by their word; there is no risk of default.

When investment advisors, money managers, and stockbrokers reluctantly agree that owning gold makes sense (a conclusion they often try to avoid), they try desperately to steer their clients into gold stocks or gold exchange-traded funds (ETFs).  They do so because it means that they still have control of their clients’ funds; their money stays in an account at the financial institution.

But with this advice, they deprive their clients of one of gold’s chief virtues.  All these “paper gold” investments still have a risk of default.

The Only Real Gold is Gold

What about Gold stocks?
Governments nationalize mines, expose them to wars, appropriate their profits with taxation.  At the same time mining companies can be guilty of fraud, mismanagement, and subject to disasters. 

…or Gold ETF’s (Exchange-Traded Funds)?
Bank holidays, risk of institutional mismanagement, insolvency, title challenges, and counter-party risk, hypothecation and re-hypothecation, outright fraud, government failure, and nationalization are among the risks that may impact paper claims to gold.

It’s Time to Put the Security of Your Wealth in Your Own Hands

In times like these, times of currency wars, unpayable debt, interest rate anomalies, sky-high government and business debt, central bank volatility and confusion, cultural stress and political polarization, state corruption, abuse of power and betrayal of trust, institutional failure, and widespread social and moral recklessness, protecting yourself and your wealth demands avoiding unnecessary risk.

You have probably heard it said that gold and silver are unique in the financial world because they are not someone else’s liability, they are not dependent on someone else’s promise or performance.

Make sure that you take advantage of these virtues.  Use gold and silver to protect yourself from default and insolvency risk.  Especially in times like these when those risks are heightened.

But you can only accomplish this risk avoidance with real, physical gold and silver that you take into your actual possession.  

We are here to help.

AMERICA’S WEALTH HINGES ON ITS ABILITY TO BORROW BIG – OR ELSE

The US government’s addiction to debt is truly something to behold.  Even in what we are told are boom times, the Federal government still has to borrow a trillion dollars each year to makes ends meet.  

But what happens if and when the credit markets shut down?  

That’s the question Bloomberg asked.  Here’s part of the answer:

“U.S. per capita income of $66,900 would be slashed to a negative $4,857 using this measure. That’s a total loss of almost $72,000 for every man, woman, and child.”

See the whole story HERE.

THE END OF THE DOLLAR AS WE KNOW IT

The dollar’s share of central bank reserves is falling.  In 2000 the greenback represented 70 percent of foreign central bank holdings.  Today that has fallen to 60 percent.  And it continues to fall as central bank’s gold holdings rise. 

Now even our “best friends” are admitting that the dollar game is up.  At Jackson Hole, Wyoming, where many of the world’s central bankers gather each August, Mark Carney, the governor of the Bank of England, called for the dollar’s international role to be supplanted by “synthetic hegemonic currency . . . provided . . . perhaps through a network of central bank digital currencies.”

By that, of course, he means another monetary flim-flam.

Would you like one more?  Okay, here goes:

PREPARING FOR A FINANCIAL APOCALYPSE: INSIDERS ARE SELLING $600 MILLION OF STOCK PER DAY IN AUGUST

Your stockbroker may be trying desperately to keep you from withdrawing money from the market, but a lot of corporate insiders are getting out while the getting is good.  

“August is on track to be the fifth month of the year in which insider selling tops $10 billion. The only other times that has happened was 2006 and 2007, the period before the last bear market in stocks.”

Throughout the summer our hair was practically on fire so determined were we to let our friends and clients know about the breathtaking opportunity before them in the silver market.  

We put it as clearly as possible in June when we wrote To Make Money… Buy Silver!

As we repeatedly observed, the price of silver was historically low compared to the price of gold.  As it so often does in a bull market, we expected silver to surge and outperform even gold itself!

And it did!  In blockbuster fashion!

How did we know that?  By tracking a simple metric called the Gold/Silver Ratio.

The ratio is simply the gold price divided by the silver price.  It tells you how many ounces of silver you can buy with one ounce of gold.

As your RME precious metals professional will explain, employing a simple strategy of trading from gold to silver and then back as the ratio changes is a time-tested and powerful strategy for increasing the total number of ounces of gold and silver you own without making any additional investments! 

As you can see from the chart, the Gold/Silver Ratio has been high, above 80 to one all year… and kept trending higher!

Then the ratio spiked in July to almost unprecedented 95 to one.  In our radio messages and here on our blog we wrote again in July (here) about the profitable opportunity it presented to trade gold for silver and take advantage of the superior outperformance we expected from silver.  

As forecast, silver’s price performance has been explosive.  It is now knocking on the door of $20 an ounce.

Let’s look in more detail.  Silver had a low last fall of $13.86.  It’s 2019 low, recorded in May, was $14.27.  Since then it has traded as high as $19.69.  That’s a gain of more than 40 percent in a year, and up almost 38 percent from its May low.

What Should You Do Now?

The Gold/Silver Ratio remains above 80 to one and still suggests that silver’s gains should continue to outpace gold.  Experienced gold and silver investors and professionals want their portfolios to emphasize the precious metal poised to move up the most.  At this ratio, they will trade and adjust their portfolios to emphasize silver.  Do as they do.  Take advantage of this strategy and increase your precious metals holdings without making any additional purchases. 

See our post from last March How to Acquire More Gold with Ratio Trading,  It illustrates the power of this simple trading strategy using a ratio like today’s of 80 to one to trade gold for silver, and then targeting a ratio of 50 to one to trade back into gold.  

Your RME Gold professional will explain this powerful strategy for profit in detail, answer your questions, and then alert you as the strategic ratio changes develop in the future.

We get it!

Of course, banks don’t like gold.  Burger King doesn’t like McDonald’s.  Ford doesn’t like Mercedes.  

Similarly, banks see gold as a competitor.  

We get that.  They have seen their clients walk in to pull out money and head straight to the gold desk.

That’s why it’s amusing to watch Bank of America fall all over itself trying to explain why gold is rising, even though it doesn’t really want its customers to own gold.   A recent piece by BofA analysts makes the obvious admission that central bank monetary policies, with all their interest rate machinations, currency manipulation, and money printing scams – “quantitative failure” says BofA– “make gold an attractive asset.”

So we have been saying.

The bank warns of a stock market sell-off, thanks to ultra-easy monetary policies that have floated equities to unsustainable levels, prevented needed corrections and even kept “zombie companies” alive.

But the key observation, at least in our view, is that the inevitable stock market sell-off will prompt central banks to increase liquidity operations (money printing) even further.  So “a sell-off,” says BofA, “may prompt central banks to ease more aggressively, making gold an even more attractive asset to hold.”

So we have been saying.

We don’t have too much sympathy for the banks, especially those that remain afloat today thanks to taxpayer bailouts.  BofA got more than $150 billion in bailouts and guarantees from unwilling American taxpayers.

And then there is Wells Fargo…

Wells Fargo is another major bank that has stood silently by and profited while the Federal Reserve engineered one bubble after another.  And then when the bubble popped, it, too, got a bailout from the taxpayers.  Theirs amounted to $25 billion.

Wells Fargo, no doubt kicking and screaming, has now conceded that “we do believe that gold has a place in a well-diversified portfolio”

“The reason is that gold can become a good alternative to bonds when their yields are negative…Investors now pay to invest in German government debt. On the other hand, gold is not tied to a particular government … this eliminates the risk that a government may act irresponsibly …”

So we have been saying.  And in the face of reality, with gold racing to catch up with years of foolhardy monetary policy, the banks can hardly say otherwise.

8/15/2019

The US has had paper dollars for a long time, but through most of our history, even the paper dollars were tied to gold.  Until this date, August 15, back in 1971.  It was then, 48 years ago today, that President Nixon severed the last remaining link of the U.S. dollar to gold.  

Today, almost half a century later, we are experiencing the long-term consequences of that decision.   Those consequences include a trade and currency war, a race among nations to destroy the purchasing power of their currencies, unrestrained money printing, inadequate personal savings, interest rate manipulations, weak economic growth, a stalled out middle-class, growing deficits, and skyrocketing debt.

Under the post-World War II monetary regime, the rest of the world had been persuaded to hold dollars as reserves and conduct international commerce in dollars.   But U.S. politicians of both parties had a grand time for years spending money and buying votes on left and right to delight their special constituencies.   There was the Great Society and the Vietnam War, too.  Because they had the Federal Reserve to print money for them, it had been a wild spree.  

But like any ne’er do well, the U.S. was writing bad checks.  The state was issuing more dollars than it could possibly redeem for gold at the promised exchange rate of $35 per ounce.

The rest of the world saw the U.S. money printing under the dollar/gold exchange standard and noted the falling purchasing power of the dollars they held.

They began to race for the exits. They wanted to cash their paper dollars in for gold while they could.

Like a run on the bank, the demand to exchange dollars for gold was beyond containment.  

Nixon decided to find a bogeyman to blame for the government’s wastrel ways.  He chose “international money speculators.”

The crisis of the U.S. writing hot checks was their fault, he said.

In making his case against them, Nixon uttered more monetary babble.  “The strength of a nation’s currency is based on the strength of that nation’s economy,” he said.  But that was simply untrue: America’s economy has been growing while the value of the dollar was sinking.  

And so, on that hot August night in 1971, Nixon closed the gold window and abandoned any pretense of dollar redeemability in gold.  

That was 48 years ago today.  

Now we find ourselves on the doorstep of a long-brewing currency crisis.  With the dollar redeemable in nothing, what would act as a restraint on the issuance of more and more dollars, an endless torrent of money printing?

If the rest of the world noticed that they were having difficulty cashing in their dollars for gold decades ago, consider how they must feel today knowing that there is nothing to cash them in for.

We are speeding toward the long inevitable crisis of resolution.  At every hand, the central banks and governments of foreign nations, are taking steps to insulate themselves from the developing dollar crisis.  

Many of the central banks are using dollars to add to their gold reserves.  They may not mind fleecing their citizens with their own debased currencies, but they didn’t want to be victimized by ours 48 years ago.  And they still don’t want to be victimized by it today.  

And neither should you.

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• Fiscal Year 2019 is winding down and it’s one for the books.  For the ten months of the year through July 30, the deficit is already higher than for the entire 12 months of the prior year.  So far revenue has increased 3 percent over last year, while spending is up 8 percent.  Not smart.

• Inflation turned higher in July.  Both the Core Consumer Price Index – that’s the one that doesn’t count food and energy – and the broader CPI were up 0.3 percent for the month.  Annualize that!  The higher number, well above the Fed’s 2 percent annual inflation target, makes it hard to justify further interest rate cuts. 

• Publisher Bill Bonner writes that gold has outperformed stocks for the entire 21^st Century.  “And not by just a little – but a lot. The Dow rose 145%. Gold rose 420%.  Compare this to the 20th century. It was just the opposite.”

• The world is now awash in some $15 trillion in debt instruments (bonds) with negative yields.  It’s quite an anomaly and one that screams danger.  Jim Sinclair associate Bill Holter asks a question that should answer itself:  “If you are offered a bond with negative rates from an issuer who is less than stellar…and your other option is gold or silver, which do you choose?”

• Speaking of debt, US mortgage debt has now surpassed the level of 2008 when the mortgage meltdown hit.  In the third quarter of 2008 when it all went kablooey, mortgage debt totaled $9.294 trillion.  It jumped $162 billion in the last quarter, reaching $9.406.

• And still speaking of debt, US bankruptcy filings, both personal and business, rose 5 percent in the month of July.  Both student loan debt and auto loan debt just made new highs of $1.605 trillion and $1.174 trillion respectively.

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There are few phrases as unwelcome as “told you so.”  It should be left in schoolyards where it belongs.  For that reason, we won’t say it.

But we’re going to come uncomfortably close when we say instead …

“We hope you took our advice!”

Recently we trotted out time-tested market wisdom to “buy the rumor, sell the news.”  As we approached the long-awaited Federal Reserve Open Market Committee meeting at the end of July, we made the case here and here that “that even if the Fed cuts rates, stocks will take a beating.”  

So, we said that selling the news would trigger the next big decline.  

And so it happened.  The Dow Industrial began the last week of July at 27,300.  Then the Fed announced its new policy rate and the Dow fell four straight days.  It finished Monday, August 5 at 25,700.  

The S&P500 began the week of the Fed announcement at 3020.  Then the Fed spoke, resulting in six straight days (so far!) of lower prices.  The index finished the following Monday at 2844.  That’s a loss of six percent from its all-time high set just last month!

The biggest drop in each of those markets – and the worst day in the stock market so far this year – came on Monday when China stopped supporting its currency, the yuan, letting it fall to the lowest level in 10 years.  

President Trump responded, designating China a “currency manipulator.”  

Which, of course, it is.  As is the United States.  And in fact, the Fed’s interest rate cut day ago was nothing other than an act of currency manipulation itself.  We said as much, citing the Mises Institute, here, and went on to explain, “The President wants a lower dollar, just like the rest of the world wants to lower their Yen, Yuan, and Euros.  That’s what governments do in trade wars.”

And that is precisely the problem.  Why should anyone put their faith in paper currencies that are mere insubstantial assertions of value and therefore so easily manipulated?

In fact, everything the Fed does is currency manipulation including interest rate manipulation, liquidity operations, paying banks interest on excess reserves, and both quantitative easing and quantitative tightening.  The government’s fiscal behavior – borrowing and spending – can be described as currency manipulation as well.  

We have warned many times (see here) that gold is the big winner in currency wars.  It is because currency wars are conducted everywhere by legal counterfeiters of unbacked digital and paper money.  No wonder gold has entered a new bull market.  No wonder gold has now hit all-time highs in many of the world’s currencies: the British pound, the Japanese yen, the Canadian and the Australian dollars, the Indian rupee, and the South African rand.   

How long before it hits an all-time high in the US dollar?

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• Washington’s Paper Money Counterfeiting Scheme!
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Nobody was very happy with the Federal Reserve’s announcement on Wednesday that it would cut its targeted Fed funds interest rate and the interest it pays on “excess reserves” by a quarter-point.

Wall Street wanted more, a half-point, or at least a promise by the Fed that more rate cuts were on their way.  It didn’t get that promise either.

So at one point, the DJIA was down 400 points, before settling 333 points lower.  President Trump tweeted “As usual, Powell let us down.”

The writer of a Mises Institute article this week said, “With the economy growing at 2.1 percent, unemployment at 3.6 percent, creating 170,000 jobs per month, and estimated underlying core inflation of 2 percent, no objective data justifies cutting rates that are already artificially low.”

Then what is the real reason for a rate cut of whatever size?  It’s not like someone has to break out the paddles for an economic coronary event,  a rate cut defibrillator for a stricken economy.  

Then why cut rates?

The Mises articles suggest it’s because we’re heading into a currency war.

The President’s pressure on the Fed to lower rates has been relentless.  But don’t let anybody tell you that Trump is the first to politicize the Fed.  One Fed chairman famously said years ago that the Fed has to do what the president wants, or it will lose its independence.

Think about that for a minute!

What is the fallout for gold?  What is the collateral damage from another interest rate cut of whatever size?  It is a currency destruction.

The President wants a lower dollar, just like the rest of the world wants to lower their Yen, Yuan, and Euros.  That’s what governments do in trade wars.

One other thing to note is that with its rate cut, the Fed also announced the early ending of its Quantitative Tightening activity.  So monetary easing is the policy of the day.  But this time it doubled down.  Lower rates and a halt to cleaning up its bloated balance sheet.  Constant easing drives bubbles and keeps zombie companies alive just a while longer.  Both spell trouble down the road.

Loose money persists.  Artificially contrived lower interest rates mean higher gold prices.  And the world’s central banks know it.  They are buying gold when the dollar trades up and when it trades down.  They continue to buy gold when the Fed cuts rates, just as they did when the Fed was set on raising rates.  

Here’s the latest from Bloomberg:

“Central banks continued to load up on gold in the first half, helping push total bullion demand to a three-year high, according to the World Gold Council.

“Nations added 374.1 tons in the first six months as Russia and China kept building reserves and Poland made a massive purchase. The trend is expected to continue, with a recent survey of central banks showing 54 percent of respondents expect global holdings to climb in the next 12 months.”

Nothing makes as much sense as buying gold when the money printers of the world are trying to lower the value of their currencies with interest rate cuts.  And it makes more sense than ever when they become aggressive and competitive with their rate cuts, seeking to outdo one another in devaluing their currency.  That’s what they do in trade wars.

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“I think we’re headed for a bout of stagflation like we’ve never before seen.”  

That’s the view of well-known market analyst Michael Pento.

Pento, the author of The Coming Bond Market Collapse, has proven himself to be a knowledgeable critic of bad fiscal and monetary policy, one who understands gold.

In a recent interview, Pento said that the stagflation ahead will be like nothing we have ever experienced “in the history of this nation.”

It’s not just the Fed that is panicking, he says.  “Every other nation on earth now is panicking, too.”  Central bankers are afraid that if they can’t engineer ongoing inflation, bank assets – the housing market, stocks, low grade, and junk bonds – will all tumble and turn into a massive crash.

According to Pento, the leverage in the system is so great that if things even started to correct a little bit, it could turn very quickly into a massive banking crash.

We’re glad Pento has identified stagflation as a very likely outcome of the monetary policies of the Fed and other central bankers.  As the name suggests, stagflation combines elements of stagnation and inflation.  Stagflation could be described as the worst of both worlds, weak on non-existent economic growth, accompanied by rising prices.  

Weak growth makes it increasingly impossible for debtors – individuals and corporate – to service their massive debts.  That’s because sales slow down, margins are squeezed, businesses are forced to cut prices, pay raises don’t materialize, and jobs disappear.

At the same time inflation means the purchasing power of the currency falls, interest rates rise in compensation, and, saving money becomes pointless.  And it blows up the bond market.  

There is a haven of safety and profit in an era of stagflation:  Gold.

Some of our clients will remember the “stagflation decade,” the 1970s.  Others will have heard about it.  The stock market basically collapsed, and unemployment rose as did interest rates.  Inflation skyrocketed.

Economic conditions were severe, and just when people most needed the money they had saved to keep afloat, it’s purchasing power failed them.

No wonder people began to pull out of troubled banks and failing currencies and moved into precious metals.  A great bull market in gold and silver followed.

It is a pattern of movement that we are seeing today:  confused central bankers flailing all about, banks dependent on Fed cronyism for their survival, foreign nations moving out of dollars and into gold.  The remarkable strength of gold and silver is only an early warning of things to come.

Pento makes a strong case that stagflation is headed our way.  Don’t delay.  Speak with your RME Gold professional today about protecting yourself and your family with gold.  If you don’t have an advisor, simply call RME Gold and you will be connected with one of our Gold Authorities.

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On June 21, we wrote a blog post called “To Make Money Buy Silver.”  

It turned out to be pretty good advice.  Silver is up more than $1.00 an ounce since then.

Nice.  But experienced gold and silver investors and professionals watch something else:  the gold-silver ratio.

That’s because, in bull markets like this, silver often outperforms gold.    It’s something we’ve seen over and over again.  Experienced gold and silver investors and professionals want their portfolios to emphasize the precious metal poised to move up the most.

Since silver is now outperforming gold, there is a window of opportunity for you to increase your precious metals holdings with an easy strategy, one I have used myself for many years.

It’s called the Gold-Silver Ratio strategy.  The ratio is simply the price of gold divided by the price of silver.  In other words, how many ounces of silver it takes to buy one ounce of gold.

In a precious metals bull market like this, both gold and silver move higher.  But since we want to be in the one that moves the most, at these high ratios we recommend trading gold for silver.

Later, when the ratio is lower you can trade your silver back into gold with a net increase in the number of ounces of gold you own.

As you can see from the following chart, the Gold-Silver Ratio has been moving higher for some time.  Suddenly a couple of weeks ago it spiked briefly at 95 to one, turned around, and began to move sharply lower as we expected. 

Although it is moving lower, as I write this the ratio is still around 86 to one, still highly advantageous for you to take advantage of this strategy and increase your precious metals holdings without making any additional purchases. 

I urge to speak with one of our professionals.  Even if you didn’t buy your gold from us, they are happy to explain this powerful strategy in more detail and answer your questions.  We especially like this simple strategy for growing your gold and silver holdings because you are always invested in precious metals, moving into the precious metal that is relatively undervalued and therefore the one that promises the greatest relative price appreciation.

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Most of the biggest banks and financial institutions find very little fault with the monetary status quo.  After all, they are the beneficiaries of it.  Bailouts preferred borrowing at the Fed’s discount window, protection from market competition, and interest on excess reserves are just a few the privileges they enjoy under the Federal Reserve’s monetary regime.

There are policy differences at the margin among some of them from time to time.  Some will prefer one policy option to another one very much like it, one interest rate adjustment more than another, or one quantitative easing or tightening schedule more than an alternative.  But such differences and debates occur within a narrow range of allowable opinions.

But every now and then a development looms so largely, a consequence of monetary malfeasance so certain, that even loyal banking cronies have to say something.

Such is the case with the spreading de-dollarization of the global economy.  

Although we have been warning our clients and friends about the certain ending of the US dollar’s role as the world’s reserve currency, one banking giant has noticed this 800-pound gorilla in our monetary future.

From JPMorgan Chase, the largest US bank:

“We believe the dollar could lose its status as the world’s dominant currency (which could see it depreciate over the medium term) due to structural reasons as well as cyclical impediments.”

The bank even says that diversifying from the dollar with a higher weighting in precious metals “makes sense.”

Indeed, it does.

JPMorgan Chase asks if the dollar’s declining role is already under way? Its answer makes us wonder if they have been reading our blog.  It writes:  

“As a share of overall central bank reserves, the USD’s role has been declining ever since the Great Recession….  

“Central banks across the globe are also adding to gold reserves at their strongest pace on record. 2018 saw the strongest demand for gold from central banks since 1971 and a rolling four-quarter sum of gold purchases is the strongest on record. To us, this makes sense: gold is a stable source of value with thousands of years of trust among humans supporting it.”

The world is beginning to de-dollarize.  If you’d like to know why read our blog posts over the past year. 

Or look instead at the debt ceiling suspension deal working its way through Washington right now with its $320 billion in new spending.  To put it another way, spending in the current fiscal year is already up – before the new debt deal — more than 10 percent over last year, while revenue is up just 3.3 percent.

The deficit this fiscal year looks like it will come in a $1.1 trillion

Time to de-dollarize your investments.

Your RME Gold professional can help you embark on a sensible plan to diversify out of the debt-loaded, debt-backed, decaying dollar.

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Is a short squeeze developing in the silver market?  A short squeeze is an exciting market event in which rising prices give rise to still more rising prices, which in turn give rise to more… Well, you get the idea:  sharply higher prices!

“Shorts” are speculators who have sold silver for future delivery in the hopes that as that date approaches, they will be able to meet their obligation by buying at lower prices.  They hope to profit by the difference in those prices.

But if silver prices are actually higher as the date nears, they have to buy at those higher prices to meet their obligations.  And that additional buying (called “short covering”) drives rising prices higher still, which stampedes other shorts to cover their positions with more buying.  

And so it goes.

Here is some of the evidence that a silver short squeeze may be in development.  As I write this, silver is up more than 13 percent since the end of May.  It has even begun now to outpace gold.  

As a consequence of this silver strength, the gold/silver ratio that we have written about many times (most recently here) has begun to trend lower.  The ratio peaked just two weeks ago at 95 to 1 and as I write is now just below 88 to 1.

Update (7/24/19): as we’ve been saying all along, the ratio keeps gradually shrinking, and the investment opportunities are shrinking along with it. Today the ratio is down to 86:1.

Two takeaways for our clients and friends:  If a silver squeeze is underway, you can expect a dramatic (and sometimes very dramatic) increase in silver prices.  Your RME Gold professional will monitor all the latest developments and is prepared to advise you how to emphasize silver in your portfolio to take advantage of the move.  

The turn-down in the gold/silver ratio also provides you with an important reminder about the potential gains available by trading gold for silver.  Be sure to discuss this important and time-tested strategy.  There is still time.

A FOLLOW-UP ABOUT DEUTSCHE BANK  

Last week we wrote about troubles at Deutsche Bank, the German banking giant.  We wondered it was the “key log” in the banking log-jam like Bear Stearns and Lehman Brothers were a decade ago.  Their collapses led to a torrent of other collapses, a chain of destruction that became known as the Great Recession and Mortgage Meltdown.

Today we note that others are wondering the same thing.  Zero Hedge reports that Deutsche Bank clients are pulling a billion dollars a day from the bank.  “The similarities to Lehman Brothers are growing by the day,” it writes. 

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• Washington’s Paper Money Counterfeiting Scheme!
• Gold Has a Long Way to Go!
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An old market adage advises to “buy the rumor, sell the news.”

In application, it suggests that you can buy stock XYZ when the market assumes that something important – a takeover, an acquisition, a major breakthrough – is imminent, but then to sell quickly when the actual news hits.

There is a justifiable cynicism to the advice.  After all, it sometimes happens that market rumors are fabricated out of little or nothing, simply to run a stock price up.  The rumormongers are poised to sell at the top when the news proves to be entirely fictitious or less than impressive.

That’s the description of a “pump and dump” scheme.

When the news is real, insiders have still positioned themselves well in advance.  Lest they be accused of illegally trading on material non-public information, some patiently wait to profit when the rumored announcement is finally made.  

“Buy the rumor, sell the news” is probably pretty good advice in the face of the widely expected Federal Reserve interest rate cut.  In this case, we are not suggesting you go out and buy stocks before the upcoming Fed announcement.  Certainly not.  But realistically, if you are holding stocks you are already participating in the bubble; you have already effectively “bought the rumor.”

If the market universally expects that the Fed will cut interest rates, what happens when it either does so – or fails to do so – at the July meeting?

First, if it fails to cut rates, the disappointment will be widespread.  Expect a hard fall in stock prices.  Hard.   The S&P 500 fell 25 percent in three months last fall over interest rate disappointments.

Meanwhile, the market has been buying the rumor, the expectation of a Fed rate cut, since the first of June, climbing non-stop ever since.  The market believes a rate cut is a given.  

That’s the “pump” part of the “pump and dump” scheme.

But if the Fed does cut rates, some observers suggest the Wall Street will “sell the news.”  That’s the “dump” part of the “pump and dump” scheme.  

Wall Street “selling the news” will trigger the next big decline.  That’s the view of Jesse from Cafe Americain and others close observers.

It is a view we share.  Although there is no shortage of other candidates to trigger the stock market sell-off, typical rumor/news market behavior is as good a trigger candidate as any.  This is especially true in the face of what fund manager John Hussman calls some of the most extreme market valuations in history.  Says Hussman, “Presently, we observe market conditions that have been associated almost exclusively, and in most cases precisely, with the most extreme bull market peaks across history.”

Be ready.  The highly anticipated Fed meeting is only two weeks away!

Got gold?

Recent Articles

• Here’s Why Central Banks Are Buying Gold
• Why is Gold Going Through the Roof?
• Washington’s Paper Money Counterfeiting Scheme!
• Gold Has a Long Way to Go!
• U.S. Debt Finally Got Away From Us

There are a lot of reasons that real money – gold – outperforms irredeemable money created out of thin air.

But for today, here are three news stories that spell higher gold prices in the immediate future.

Reason Number One:  The US government, hopelessly in debt, is recklessly piling up more debt by the hour.

Total federal debt, $22,022,825,000,000, is more than 100 percent of total US productivity.  But that is not enough to stop Washington’s deficit spending.

The Treasury estimates that the national debt ceiling will have to be raised sometime around October.  Nancy Pelosi thinks it may have to be raised in August to avoid a federal default.

Reason Number Two:  The world’s central banks continue to ditch the dollar.  

This is a story we’ve highlighted many times, here, here, and here.  

The implications of this global “de-dollarization” are so far-reaching that we can hardly believe it receives such little attention.  

We’ll have more to say about this soon, but just to share one story that captures the megatrend, Poland’s central bank announced last week that it has added 100 tons of gold to its reserves since the beginning of the year.  That is four times what it added to its reserves last year.  

Those willing to read between the lines will see that suspicions about the reliability of the international dollar-reserve monetary system are running so high that countries are not just adding to their gold holdings.  They are bringing their gold home from accounts at foreign institutions.  For example, at the same time Poland is adding aggressively to its gold reserves, it is repatriating gold that has been held in its accounts at the Bank of England.

Reason Number Three: Countries around the world are creating institutions to allow them to circumvent dollar-denominated financial institutions.

US control of the international payments system enables it to enforce sanctions against foreign countries, and then to sanction countries that evade existing sanctions.  The proliferation of these US sanctions has spurred the development of non-dollar, non-US settlement alternatives of foreign transactions.

Since the Iraq war, a host of new bi-lateral and multi-lateral trade agreements have sprung up among nations.  But most significant is the recent announcement by British, French, and German officials that a new system that will enable them to bypass the US SWIFT payments system is now operational.  The new system, INSTEX, will initially allow countries to circumvent the US and continue to trade and settle accounts with Iran.

The long-term consequence is to sharply lessen the world’s reliance on the dollar.  The dollar reserve standard that has prevailed since the end of World War II has added marginally to the purchasing power of the US dollar.  A dwindling reliance of the dollar will have the opposite effect of diminishing the dollar’s purchasing power.

It is our hope that these three news stories will help our clients and friends read the signs of the times and take steps to protect themselves from potentially cataclysmic changes in the dollar and its value. 

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It’s hard to know what will prove to be the key log in the log jam.

That’s the log that, once moved, sets the whole destructive torrent of all the other logs loose to destroy everything downstream in their path.

It could be Germany’s Deutsche Bank.

In the Panic of 2008, Bear Stearns went first.  The Fed threw $29 billion into the mess to get JPMorgan to take over the Bad News Bear.

A lot of good that did.  Soon other logs were rolling: IndyMac, Lehman Brothers, Merrill Lynch, Fannie Mae, Freddie Mac.

It was the biggest bust since the Great Depression.

Deutsche Bank is the world’s 15^th largest bank.  It is slashing operations everywhere and cutting 18,000 jobs.  

While Deutsche Bank is flailing about, the Bank of International Settlements in Switzerland, sort of a central bank for the world’s central banks, is warning that the corporate debt market is growing unstable.  From a story in the Guardian:

“The Basel-based watchdog said a surge in the sale of collateralized loan obligations (CLOs), which are collections of low-grade corporate debts packaged for sale to investors, was reminiscent of the steep rise in their forerunner – collateralized debt obligations – which ‘amplified the sub-prime crisis’.”

It is eerily like the last time.  Gold was about $600 an ounce at the beginning of 2007.  Then banks started failing and the mortgage crisis set gold running to $1900 in 2011.

Deutsche Bank’s problems are just one sign that “the financial system is in trouble,” says Jim Rogers.  

Deutsche Bank could be the key log in the log jam.  But there are others major European banks that are going to have to confront similar restructuring.

It’s best to just get out of the way of a crumbling financial system.   It’s best to move into gold now.  

Not later.

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Financial analysts around the world are racing to revise their gold price targets higher… Way higher. 

Many are recommending allocating more of their portfolios to precious metals.

Maybe they are starting to take notice of some troubling fiscal and monetary developments. 

June’s gold breakout, taking it to over $1,442 was like a wake-up call for many of them.  The technical picture is incredibly strong.  Even after pulling back to $1,400 an ounce, gold finished last week $74 over its 50-day moving average and $119 over its 200-day moving average.

Maybe somebody noticed that “the everything bubble” engineered by the Federal Reserve and its fellow central banks includes not just a stock market bubble, but a massive bond bubble as well.  The bond bubble has resulted in $13.4 trillion in global negative yielding debt!

Negative yielding debt means that when you buy a bond, for say $1,000, at maturity it is redeemed for less than $1,000 dollars.

How long will individuals and even institutions buy bonds with negative yields?  I don’t want any and you probably don’t either.  It is a market anomaly so great that it fairly screams for informed people to get out of the way before it breaks.  To get out of the way of not only bonds but stocks as well.

Maybe they finally noticed all the politicians running around the country promising free goodies to everybody. 

Maybe they are starting to pay attention to US spending and debt.  

If financial analysts and portfolio managers around the world are starting to notice these things, at last, the target price for gold can barely be computed.

Right now, as John Rubino notes, the financial world’s total invested capital in gold is a mere one percent.  What happens when that share rises as it inevitable will?  Long-time Templeton Financial fund manager Mark Mobius says portfolios should contain closer to 10 percent gold.  

That, says Rubino, would send gold to the moon!

If you have noticed any of these troubling fiscal and monetary developments yourself, call or stop by our offices to discuss ways of protecting yourself and your family with prudent precious metals investments.

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What a tragedy Zimbabwe has been.  And a monetary laughingstock for the ages.  

Now Zimbabwe wants to do it all over again.

Like so many of the African countries that fell under the control of native Marxists-Leninists and other indistinguishable leftist totalitarians in the post-colonial period –  Nyerere, Mobuto, Kaunda, Lumumba – it was Zimbabwe’s bad fortune to be home to a madman named Robert Mugabe.  

Zimbabwe, of course, is the former Rhodesia.  As Rhodesia, it was a food exporting nation.  But not long after it became Zimbabwe in 1980, and under the rule of Mugabe, it soon couldn’t produce enough food to feed its own population.

Such stories of economic train wrecks are all too familiar in sub-Saharan Africa.  But what made Zimbabwe the butt of the economic jokes was its hyper-inflationary monetary policies.

Gideon Gono, the head of Zimbabwe’s central bank (sort of the Ben Bernanke of Africa) was eventually printing Zimbabwe dollars at a frenzied pace.  Annual inflation was reported to have hit 11,200,000 percent in 2008!

Somewhere around the office, I have a 100 trillion Zimbabwe dollar bill.  Worthless, except as an artifact of one of the worst inflations in recent history.  Afterall, at the end of the money-printing experiment, it took 35 quadrillion Zimbabwe dollars to buy one US dollar.

It was literally not worth the paper it was printed on.

Eventually, Zimbabweans dumped their dollar and began using the US dollar instead.  That helped for a while, but now they are back to their old ways.  Zimbabwe has banned the use of foreign currencies, including the US dollar, and issued a new Zimbabwe dollar.  Predictably, it put the force of law behind it, designating it the new legal tender.

Prices are surging, People are taking to the streets.  It is a human tragedy, one enacted again and again.  One must feel sorry for the people of the land victimized by their government’s policies.  But don’t laugh out loud, because failure is the certain fate of unbacked, irredeemable paper money everywhere.  That includes the US dollar.  

We can only wonder how many times the lesson needs to be relearned.

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Thought One:  We added a short postscript to our 4/22/19 post “Temperature Rising in the Persian Gulf” that read:

“NOTE:  So far this year, any pullback of gold below $1,300 has been a favorable opportunity to add to your holdings.”  

It’s always risky to make a call like that because we don’t want anyone to fail to acquire gold because they waited for a price pullback.  But there are often trading patterns that appear – after a lifetime in the business – predictable.  

For example, after a sharp rise, the only way for “long” futures markets traders to realize their profits is to sell.  When a market falls, those with “short” positions take their profits by buying.   Accordingly, we are never surprised to see a pull-back, no matter how brief, after a good run, or a bounce up after a market moves lower.

Still, modesty demands that we chalk up to good luck that our clients had several opportunities to buy gold below $1,300 as we suggested before the bull market sprang to life in June.

We have just experienced a powerful wave up, in a very short period.  From $1,267 on April 29, gold roared up to more than $1,440 in June.  On July 1 it closed at $1389.     

We would like to suggest now that any pullback to $1,400 or below is a good gold buying opportunity.  But be warned:  it may not last.  There is a very real and broad-based rotation into gold taking place at the level of governments and major institutions globally.  

Something big is happening.  Take advantage of the price break while you can.  

Thought Two:  Now that we have entered the second half of 2019, it looks increasingly apparent that the rest of the year will be very painful for stock investors.  We are now in the longest economic expansion in history, tepid though it has been.  

David Stockman makes the point that during the past twelve years the stock market’s growth has outpaced the growth of the main street economy by six times.  

That is unsustainable. 

Stockman asks how the big shots at the Fed could miss this and countless other data points that confirm the basic disconnect between the state of the underlying economy and the market.

The answer is simple:  They always miss it.  

One portfolio manager interviewed by Yahoo Finance said investors stand to get “clobbered.” 

We agree and will have more to say about it in the weeks ahead.

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Hint: They didn’t have staggering debt and bottomless printable currency in mind.

As we celebrate America this week, our independence and the birth of our Republic remember that the founders specifically wrote into the Constitution itself a gold and silver based monetary system for the new nation.

First of all, they gave Congress the power to coin money. From Article I, Section 8, “Congress shall have Power…to coin Money.”  

Not print.  Coin.

It’s hard to believe that proponents of today’s irredeemable, unbacked printing-press money schemes can get away with conflating printed money with coined money.

The founders certainly knew the difference between the two.  They had experienced the collapse of the irredeemable paper currencies of the colonies and that of the Continental Congress.  The Continental paper dollar was such a failure that it gave rise to a popular expression, “not worth a Continental.”  It was an all-purpose description of complete worthlessness.

In Section 10 they addressed the monetary system again without ambiguity:  “No state…shall make any Thing but gold and silver Coin a Tender in Payment of Debts.”

Why did the founders incorporate these provisions into the Constitution?  First of all, they have learned men, well-read in the historical precedents of paper money failures, base-money inflations, and spendthrift governments.

Secondly, just as they intended to set up a government that would protect our rights, they wanted the new government to protect our wealth as well.  

But our politicians had other ideas. They stripped away the protection gold and silver provide to a monetary system, first in the Civil War era with the “greenback dollar,” and then again later with the Federal Reserve system and the final break with a gold-backed monetary system in 1971.

Although we endured a brazen act of unconstitutionality from 1933 to 1974 when the government made it illegal for Americans to own monetary gold, today you can own gold. 

So today, our politicians have failed to do what the founders wished, and instead of a sound monetary system that protects your wealth, you have to protect your own wealth.

And that’s exactly why we are here at Republic Monetary Exchange.  

Have a happy Fourth of July.  Spend some time thinking about the blessings of liberty this week.  And when you or someone you know needs help protecting their wealth, call or stop by and find out why the founders trusted gold and silver.

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Something about the way the world works seems to have been forgotten in America.  

Here it is:

This is a world in which people’s wants are virtually limitless.  Resources, on the other hand, the means of fulfilling those wants, are strictly limited.

Economics is about meeting unlimited wants with limited means.  It is about trade-offs.  It is why accounting is important.

But today people in Washington have an aversion to confronting the real world with its limited resources.

They missed out on that 400-year-old nursery rhyme which said that if wishes were horses, beggars would ride.

These thoughts occurred to us after the Democratic presidential debates.  The news site The Daily Caller noticed it, too:  “Moderators Ask Zero Questions About National Debt In First Two Democratic Debates Combined.”

“Moderators for the first two Democratic debates asked a combined zero questions about the rapidly expanding national debt.

“NBC and MSNBC hosts Savannah Guthrie, Lester Holt, Chuck Todd, Rachel Maddow, and José Diaz-Balart failed to ask any of the 20 candidates on the stage Wednesday and Thursday night about the national debt.

“The moderators covered a range of topics — other than the national debt.”

You would think that with $22 trillion in unpayable national debt (and unknown trillions more in promises the government has made to pay people for things in the future), candidates and news moderators would be deeply concerned about the ways and means of our national solvency and survival.  But not so!

No wonder politics in America has become a contest of offering the people something for nothing:  free housing, free medical care, free education, guaranteed annual income.

You knew, of course, that I would bring the discussion back to gold.  This indifference to the realities of hard-world accounting and clear-eyed fiscal responsibility got underway with the ending of the gold standard, something that happened in two major steps.  The first was with FDR’s unconstitutional confiscation of the people’s gold.  The second step was Nixon’s repudiation of America’s promise to redeem its dollars in gold.

A gold-based monetary system provides discipline on governments.  No wonder politicians hate it!   They can’t simply issue a decree or pass a law that increases the amount of gold in the treasury.  

In a gold system, they are forced to live in the real world.

That’s why gold had to go.  It is why the Federal Reserve was created to replace it.  

If you understand how grim it is that Washington can’t be bothered to deal with little things like national solvency and unpayable debt, you will understand why you need to take steps to insulate yourself from the governing classes’ failing monetary system.

That’s what we’re here for.  RME’s experts can help you get started on a plan to protect yourself and your family with gold and silver.

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Get Ready for the Global Currency War!

Bloomberg writes this about gold: “Futures post the highest close in six years; funds pile in.”

With gold hitting six-year highs, major institutional financial analysts around the world have been busy revising upwards their precious metals price targets.

Here’s a sampling of comments and observations about the precious metals bull market:

 “Gold bulls are back in control,” said one analyst in a Bloomberg article. 

Michael Oliver, a technical analyst, said in an interview, “By the end of the year we should see $1,700 in gold. That’s not the end, it’s just where it will be at year-end. We’re in a major situation.

John Rubino headlines a piece about silver this way: “If History Still Matters, Silver Is Poised For A Huge Move.”

Agora Financial wrote this week, “This could be your last chance to hold physical metal before the masses come rushing in.”

Jim Sinclair, a veteran precious metals analyst, called the timing of the June breakout in precious metals with amazing precision.  He called for the breakout within a couple of days.  Now, says Sinclair, we’ll see a complete monetary re-set by 2024, or heading into 2025, with a gold price so high, I won’t even repeat it here.  Not because I disagree with Sinclair, but because at that point, the dollar price of gold will be much less important than how many ounces of gold one owns. 

Most of the commentary about the gold and silver breakout refers to trigger events like the Fed’s recent meeting and the Iran situation.  The importance of both of those cannot be overstated.  We have emphasized both as our regular readers will know.

But there are gathering storm clouds that are being overlooked by most commentators: economic darkness approaches in the form of a developing currency war. 

We have observed that the world – including the US – is headed pell-mell into this off-shoot of the trade war.   A currency war is a form of financial madness in which the winners are said to be those that most thoroughly destroy their currencies’ purchasing power.  

We have been warning about the escalation of a global currency war for a long time, but have increased our warnings and sense of alarm recently (see here and here), warning that gold is always the big winner of currency wars.

In Trump Calls for Currency War with China, we were explicit that the new monetary calamity was hard upon us:  “A currency war is about to break out.” 

“These policies are unreservedly bullish for gold.  All paper currencies are discredited as they each fight their way to be the cheapest.  Since they can’t all be the cheapest, successive rounds of devaluation can become quite frantic as they all fight their way to the bottom.

“When countries devalue their currencies, they are ultimately devaluing them against gold, the true supra-sovereign global currency 

“That means the price of gold goes up!

“The best way to protect yourself from a currency war is to own gold.”

We want to call your attention to the fact that the breakout in gold and silver comes just ahead of the G20 meeting of nations in Japan.  Only one other analyst that we have seen also notes the direct linkage between the price movement in the metals and the G20 meeting.  It is his view that the Japan summit will result in a sharp devaluation of the US dollar, somewhere on the order of 20-25 percent.

If that is the case, the price movement we have seen in the last month is only the beginning of what is to come.

Only a very small beginning.

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With gold closing over $1,400 an ounce and silver easily breaking through $15.00 an ounce, the world is discovering that there are a lot of important reasons to own gold and silver.

Reasons like government debt and money printing.  Wealth preservation.   Financial privacy.

Or just to make money!

Today’s message is for those of you looking for good old-fashioned profits!

Right now, silver is less than a third the price it hit in 1980!  

Think about that a moment.  How many other investments are less than a third the price they were almost 40 years ago?

Today, everywhere you look, things are higher.  In 1980 the median price of a US home was only $47,200. Today it is $226,800. 

Oil topped out a $40 a barrel back in 1980.  Today it is $54.  

At the beginning of 1980, the Dow Jones Industrial Average was 824.  Today it is around its all-time high of 27,000.  “It’s too late to be bullish” on stocks says a London analyst.

Everything is higher today.  Everything except silver.

Is that because no one needs silver?  

On the contrary.  Because of silver’s dual role – as an industrial metal and prized for its monetary properties – demand rises over time.  Silver demand for coins and bullion bars shows powerful growth.  Some 60 percent of annual silver supplies are consumed by industrial applications.  But new silver mining cannot keep up with overall demand for silver.  The shortfall has largely been made up over the decades by scrap silver recovery and by net sales from government stockpiles.  But scrap recovery is way down and sales from once huge government stockpiles have now ground to a complete halt as those stockpiles have been depleted.

Today at only $15 an ounce, silver is less than a third the price it topped out at in 1980, $50 an ounce.  And that wasn’t just a one-time thing.  Silver moved back up to that range – to over $49 an ounce – again in 2011.

Let me state the case I have made here differently.  What is more likely to triple in value, the stock market that is already at all-time highs, or silver, priced today at less than one third its 1980 and 2011 highs?

Because somebody wise once suggested that the key to making money is to buy low and sell high, there are a lot of things we might consider to be attractive investments at their prices of 40 years ago.  It would make great sense to buy real estate and stocks at the prices that prevailed back in those days.  

You can’t.

But you can buy silver today for less than a third its prior highs.  And that is a shining profit opportunity!

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Gold raced to six-year highs on Thursday (6/20), closing at $1,397.10.  That’s a powerful one day move of $48 on news of Iran taking out a US military drone and the expectation of forthcoming US countermeasures.

The headline that best captured to action was from Bloomberg News:  Gold Achieves Liftoff as Prices Rocket Toward $1,400!

Gold has now marched up more than $130 an ounce in just the last month!

Silver easily broke above $15 an ounce this week, to close Thursday at $15.49.  That’s up from a low last month of $14.27.  That’s an 8.5 percent move in just over three weeks.

With these moves, we are watching many of our monetary predictions and warnings about global confrontations being fulfilled.

Two months ago, in one of our frequent posts about the Persian Gulf, we wrote that “the risk of an incident, even an accident, is rising.”  

Now, the incendiary geopolitics propelling gold higher is taking place in an environment in which the markets expect more Federal Reserve interest rate manipulation and credit creation, as well.   

Although the Fed did not announce an interest rate cut on Wednesday following its Open Market Committee meeting, close Fed watchers concluded that lower rates were in the offing. Bretton Woods Research said it was “95 percent certain the Fed will begin reducing rates sometime during the next 91 days.”

The widespread certainty of lower rates ahead not only pushed gold up, but it also pushed the dollar and treasury market yields lower.

As we reported recently, former Congressman and long-time gold expert Ron Paul is explicit in identifying this as a gold bull market.  Similar bullish calls are coming in from every direction.  Even Citigroup analysts say $1,500 seems to be a reasonable target for gold.  Hedge fund manager Paul Tudor Jones, who we wrote about last week, sees $1,700 gold coming “rather quickly.”

Elsewhere, China’s aggressive gold buying continued in May for the sixth straight month.  The chart below from Zero Hedge illustrates this de-dollarization and the move to gold by China and Russia.

We cannot be more clear:  These powerful moves in gold and silver are not accidents.  The world is growing more dangerous by the moment, and central bank authorities, not just at the Federal Reserve, but in Europe and around the world, know no other course but massive credit creation and money printing.  

It is a path of dollar destruction.  It is a road of no return. 

We advise our friends and clients to add aggressively to their precious metal holdings now.   

For those who have not yet taken steps to protect themselves and their families, we urge you to read the timely advice we posted last week:  Don’t Wait Until It’s Too Late to Own Gold!  Then contact RME Gold to learn more.  Simply call our office and you will be connected to one of our knowledgeable gold and silver professionals.

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Gold’s close at $1350 on Tuesday, 6/18 was the highest close in over a year.  Last week gold reached an intraday high of $1362.

With that, gold is more than $50 an ounce over its 50-day moving average; it is more than $80 an ounce over its 200-day m0ving average.

So, what exactly is going on with gold?

Just exactly what we have been writing about for months.  In fact, the forces driving gold are so plentiful that we hardly know where to begin.

But let us touch on a couple of things.

Things are moving fast in the Persian Gulf.  According to the Jerusalem Post, diplomatic sources at the UN describe the US as readying a massive aerial bombardment campaign against Iranian targets.  

Secretary of State Mike Pompeo visited Centcom Headquarters in Florida, while both John Bolton and Henry Kissinger have been sighted at the Pentagon.  All this as the Trump administration announced plans to send 1,000 more troops to the Mideast.

Meanwhile, China has sounded a grave warning about the US opening a “Pandora’s box” in the region and called on the US to halt its “extreme pressure” campaign against Iran.

At the same time, Russia, describing what it called a “conscious attempt to  provoke a war with Iran,” has called on the US to halt its “unthinking and reckless pumping up of tensions in an explosive region.”

We don’t know exactly what will happen next.  Things can heat up and cool down, only to ignite again when least expected.

Still, there are other fronts that threaten military confrontations, like the South China Sea.  We always try to bear in mind that when the world is focused on one trouble spot, real conflagrations often break out somewhere off the news media’s radar screen.  The US has just enough military presence scattered across the globe that any incident anywhere can act as a tripwire to assure US involvement.

At the same time, US debt continues to explode.  But foreigners, many of whom are skeptical of US attribution of responsibility to Iran for tanker attacks in the Persian Gulf region, are also dragging their feet when it comes to continuing funding US debt.

China, the largest foreign creditor of the US, sold $17 billion of US debt in March and April, a total of $69 billion over the twelve months that ended in April.

Other countries are picking up part of the shortfall, but they won’t be able to continue to do so in the face of the advancing global trade war and the coming currency war.  (It should be lost on no one that both Trump and Democratic opponents like Elizabeth Warren want to drive the purchasing power of the dollar down.  That means Americans will get less, not more for their money.)  Nor can foreign creditors be counted to keep up with the rivers of US red ink.  During the same 12-month period ending in April, US debt soared by almost a trillion dollars.  

That’s probably enough to chew on for now.  We will leave for another day revisiting other dynamics that will propel gold to unimaginable new heights.

Your RME Gold professional can help you take sound steps to protect yourself and profit from a world spinning apart.   But don’t delay!  Call or stop by today.

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(And a note about the Persian Gulf incidents)

From Bloomberg:

Paul Tudor Jones, the Tudor Investment Corporation founder, believes that gold is the best trade and is going to “scream” over the next year to two years.

Jones is a leading hedge fund manager of long-standing.  His philanthropic activities are many.  He first became prominent when he predicted the calamitous Black Monday stock market crash in October 1987.

In an interview on Bloomberg TV this week, Jones said:

“The best trade is going to be gold. If I have to pick my favorite for the next 12-24 months, it probably would be gold. I think gold goes beyond $1,400… it goes to $1,700 rather quickly. It has everything going for it in a world where rates are conceivably going to zero in the United States. 

“Remember we’ve had 75 years of expanding globalization and trade, and we built the machine around the belief that’s the way the world’s going to be. Now, all of a sudden, it’s stopped, and we are reversing that.

“When you break something like that, the consequences won’t be seen at first, it might be seen one year, two years, three years later. That would make one think that it’s possible that we go into a recession. That would make one think that rates in the US go back toward the zero bound and in the course of that situation, gold is going to scream.”  

SPECIAL NOTE:

It is early to draw any firm conclusion about the latest incidents in the Persian Gulf attacks on two commercial vessels.  We have lived through too many things like the Tonkin Gulf incident, forged yellowcake documents, and missing WMDs to jump to conclusions.  There are too many parties with interests in the region and hopes to gain from an escalation of hostilities to attribute responsibility without definitive evidence.  As we have learned, the possibility of a false flag attack is always high.

While Iran has the most to lose, it is worth bearing in mind Iranian President Hassan Rouhani promised last year to his nation that, “If one day they (the US) want to prevent the export of Iran’s oil, then no oil will be exported from the Persian Gulf.”

We note only that no matter who is to blame, and for whatever purposes, such incidents in the Persian Gulf threaten wider warfare and they are unreservedly bullish for gold and silver.

For important background, please review our April 22 post, Temperature Is Rising in the Persian Gulf, and the warning we posted on December 4 last year, Watch This One Carefully.

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“I think we’re in the middle of a bull market in gold.”

That’s the observation of Dr. Ron Paul.  

The former congressman and presidential candidate was commenting on the dramatic surge in gold prices.  Even with a correction this week, gold is up more than $60 an ounce since its late May low just weeks ago.  

In fact, gold is up more than $300 since its low of $1046 in 2015.

“The dollar’s value goes down.  It never keeps up.  There are more dollars around.  The purchasing power goes down.  Real wages go down.”

“The purchasing power of gold is moving up again and people will discover it.”

The gold market has certainly taken note of the push for lower interest rates and more quantitative easing.  Looking ahead to next years election, President Trump’s thumping for loose money has been relentless, despite his insistence during the last presidential campaign that we are in the middle of a “big, fat, ugly bubble” in the stock market.

Now Trump wants the bubble to get bigger, fatter, and uglier.  Recently he remarked on CNBC that if the Fed had listened to him on interest rates, the stock market would be up another 10,000 points.

David Stockman reacted the bubble talk, warning market participants that “when the trap door opens, you won’t even know what hit you.”

Dr. Paul correctly observes that the market is probably 10,000 points too high right now because of what the Fed has already don.

Still, the Fed can certainly make the bubble bigger if it prints enough money, says Paul.  But as it inflates the bubble, the people should be frightened by its enormous size.  What happens to the cost structure the people will be forced to face?  To medical costs?  To education costs?

What’s the solution?  Gold.  “We need to seriously consider the use of gold as part of the monetary system.”  But to really work, a gold standard has to be a gold coin standard, says Dr. Paul.   

“My main concern, my interest in this is not only because people should protect themselves; I think it’s a freedom issue.

“This strategy of central banking over the last 50-60 years around the world has all been geared to pay for big government.

“Big government always undermines personal liberties and encourages wars.

“The issue is liberty, and liberty cannot be preserved without sound money.”

Well said, Dr. Paul.

And welcome to the gold bull market!

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Why do people buy gold?

People certainly buy gold for a lot of (good) different reasons.

Some people buy gold for long-term capital preservation.   If your grandparents or great grandparents had left you a pile of $20 gold coins, you’d be a lot better off than if they had left you a wad of $20 bills.

That’s because the Federal Reserve has destroyed 96 percent of the dollar’s purchasing power.

Other people buy gold as insurance against reckless government policies and money printing.  

We think that’s be very good idea.  People by fire insurance for their homes, too.  But the risk of their home burning down is slight compared to the certainty that the government will spend itself into bankruptcy.  

Some people buy gold for privacy.  They would like to keep their financial affairs better protected.  Since the banks have become snoops for the government, reporting what you do, and since big corporations try to follow you in everything you do and anything you buy, just the peace of mind of having a little privacy is a very good reason to own gold.  

You may remember how a lot of things were shut down after 9/11.  Have you even wondered what would happen if the increasingly stressed national electricity grid went down, or if solar flares screwed up satellite functions and digital communications?

What would you do if ATM machines stopped spitting out cash?

I can tell you this.  In any of those circumstances you would be very happy to own gold and silver, the world’s most liquid commodities.

But there is one more very good reason that people buy gold.  And that is for good, old fashioned profits.  

They just want to make money.

You may have noticed that when the price of gold (and silver) are suppressed for a long time by the government (it was illegal for Americans to own monetary gold as recently as 1974!); or that when the price is suppressed by wild money printing and interest rate manipulation, it can only be suppressed for so long.

All of these are good reasons to own gold.

The longer they suppress the gold price, the bigger the move when it breaks out! We’ve already seen the spike begin this past week. Gold has now topped $1,300 and is quickly approaching the $1,350 mark. Why wait until $1,400 to protect your portfolio when you still can now with gold spot under $1,350?

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I have coined a term for it:  the socialist juggernaut.  

Socialism is when the government enables other people to live at your expense.  

A juggernaut is a large, merciless, and unstoppable destructive force.

And that is what is loose in America.  A socialist juggernaut.

You work.  You save.  And then politicians looking for votes start offering everybody free stuff.  Free college.  Free medicine.  Borrow money for free.  Free guaranteed annual income.  Free housing.

Somebody has to pay.  The money has to come from somewhere.  Before long they’re peering into your wallet.  Eyeing your bank account.  Focusing on your investments.

But as Margaret Thatcher said, the problem with socialism is that pretty soon you run out of other people’s money.

All of this comes to mind because of an investment newsletter that showed up in our inbox the other day.  It asked what happens when the socialists come after your wealth.

We have plenty of precedents from all around the world, so the answer is pretty clear.

When the socialist come for your money, they get it.  

Sometimes they get it by destroying the currency.  The print more and more of it to pay for the giveaways, until the money you have saved looses its purchasing power.  It is a stealth confiscation of your wealth.

Sometimes they get it through taxation.  Or by the expropriation of your private property.  

And there are other clever ways the socialists get your money.  They may hope to borrow more.  But if people decide they don’t trust the state enough to loan it any more money, they may insist that every bank and financial institution and even your personal retirement account must invest a certain percentage of its assets in their untrustworthy bonds.  Bonds that are certificates of guaranteed confiscation.

Oh, they’re clever!  When the socialists come for your money, they invent financial devices and monetary shenanigans to get it faster than you can keep up.  

Ask the people in Venezuela.  They get it by manipulating prices, by rationing, by increasingly burdensome financial regulations.  

The evidence that a socialist juggernaut is loose on the land can be seen in the way America’s middle class is being wiped out, and in the mounting debt of the American people, borrowing and struggling to keep up.  It can be seen in the compounding debt of the nation-state.  It can be seen in the rise of political fantasies like Modern Monetary Theory and political figures who never learned that wealth comes from production, not from redistribution.

What do you do when the socialist come for your wealth?  

You get your wealth out of the game since it is not a level playing field.  You get it out of the institutions they control.

You refuse to be victimized.

Somebody wise once called gold “capital on strike.”  When you realize your wealth is in their crosshairs, you have to go on strike.

The world has been through these episodes over and over:  Venezuela, North Korea, Cuba, East Germany and much of Eastern Europe, the Soviet Union, and Mao’s China are but a few of many, many examples.   

Gold remains the best means of getting out of the way and preserving your wealth when the socialist beast roams the land.  

ONE FINAL NOTE:

If you have missed gold’s powerful breakout because you have been mesmerized by the stock market, we will share with you an observation from Bill Bonner, another newsletter writer:

“In the downturn of 2000, the Greenspan Fed cut the federal funds rate by 500 basis points. Still, in terms of gold, the Dow fell 82%. In 2008/2009, the Bernanke Fed again cut rates by 500 basis points. Once again, stocks nevertheless lost 68%.

“And now, the expansion seems to be approaching its end (it has to end sometime!)… and the Fed only has 240 basis points to cut.

“Besides, the Fed cannot really make companies more valuable. It can’t increase their sales; it can’t really increase their profits. It can’t improve their products or strengthen their marketing. It can’t create more time. Or more real money. Or make people smarter or more inventive.

“All it can do is mislead you and misallocate resources with fake money and fake price signals.”

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April, says the famous poem The Waste Land, is the cruelest month.  But May was pretty tough on the top-heavy stock market, as we had warned.  (See here, here, and here.) The Month of May was cruel to investors.

Both the Dow Industrials and the S&P 5oo lost six percent in May.  The Nasdaq fell about eight percent.

What happens when a market falls?  What does it take to restore your position?  This is a very important consideration and one of the reasons we have been advising you to seek safety in gold.  

Let me give you an example.  Suppose a stock index you have invested in is at 10,000 points.    If the market falls 20 percent, your index is now worth 8,000.  That is straight forward, right?  

So, you need the market to bounce back up 20 percent to be made whole again, right?  

No.  Wrong.

At the new price of 8,000, if the index climbs a full 20 percent, it is now worth only 9,600 points

The market fell 20 percent.  But then in climbed 20 percent back up.  Yet you are still down four percent. 

And that is crueler than any month.

In fact, you need the market to climb 25 percent just to break even!

That is why we warn so repeatedly that in this environment of an obviously top-heavy and wobbly stock market, it is better to sit out the game.  

Don’t forget for an instant that last fall the S&P 500 dropped 25 percent in just 64 trading days!  And when a market falls 25 percent like that, it has to climb back up 33 percent just to get you back to break-even!  

That’s a pretty steep climb!

The safest place to sit out the risky stock market game in an era of trade and currency wars, unpayable government debt, and reckless money-printing, is gold.

Contact RME Gold to learn more.  Simply call our office and you will be connected to one of our knowledgeable gold and silver professionals.

Today we have a rare and potentially extremely profitable opportunity for our friends and clients.  

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Today we have a rare and potentially extremely profitable opportunity for our friends and clients.  

The Gold-Silver has recently reached levels that have not been seen in more than 25 years!

The ratio is simply the gold price divided by the silver price.  It tells you how many ounces of silver you can buy with one ounce of gold.

The ratio is so high right now that you can get more ounces of silver for each ounce of gold than at any time since 1993!  

It is like a second chance to take advantage of this opportunity.

Then, when the Gold-Silver ratio moves lower, you will be able to trade your silver back into gold with a net increase in the amount of gold you own!

More gold in your portfolio!  Without making any additional investment!

Recently the ratio has been in the high 80s range, creating a spectacular opportunity for you to increase your precious metal holdings.  It is a simple strategy that the professionals us to increase their wealth.

There is nothing magical about it.  Indeed, like so many of the best wealth building techniques it is really the essence of simplicity.

Let me give you an example of this powerful strategy.

Suppose you have 25 ounces of gold.  On a day when the Gold-Silver ratio is high, say 86 to one, you trade your gold for 2,150 ounces of silver. 

Then down the road, when the ratio reaches 50 to one, you trade your silver back into gold.  At that ratio, your 2,150 ounces of silver would be equal to 43 ounces of gold.

With this simple strategy, you would have increased your gold holdings from 25 ounces to 43 ounces, an increase of 18 ounces of gold.  

That is a 72 percent increase in the amount of gold you own!  With no additional investment.

This example, using the spot prices of gold and silver, is for purposes of illustration only because of transaction costs and since different coins and bars have their own premiums relative to the spot prices.  But I have chosen to be very conservative in illustrating this strategy.  

I used the example of trading with the ration at 86 to 1.  But the actual ratio as I write this is almost 90 to 1, even more favorable for making the trade.  And when you trade back into gold, the ratio could very well be even lower than the 50 to 1 example I used to illustrate the strategy, meaning more gold in your portfolio.  Your RME Professional will be able to give you specific recommendations depending on market conditions at that time.  

Many of our clients and I, myself, have used this powerful strategy for years to substantially increase our precious metals holdings.

The key takeaway is that with the Gold-Silver ratio at almost 90 to 1, the price of silver is historically low relative to the gold price.

Check out this infographic we’ve created at RME to illustrate ratio trading.

In a rising market, silver in poised to appreciate even faster than the price of gold.  With this strategy, you are never out of precious metals, but you always emphasize the one in your holdings with the greatest promise of profit.

And that is a good place to be!

If you own gold, even if you didn’t buy your gold from us, let us show you how the professionals use this ratio to maximize their profits.    Call or stop by.  

After all, why should you let the professionals have all the profits?

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Switzerland has a long, long history of taking issues of money, wealth, banking and financial propriety very seriously.  

These are some of the reason that Switzerland has long been a prosperous island of stability surrounded by centuries of chaos and ruinous inflation, currency failure, and bankruptcy in neighboring countries like Germany, France, and Italy.

It is no surprise that Switzerland ranks near the top in measures of economic stability, growth, privacy, and prosperity.  In terms of size or natural resources, it would not rank near the top at all.  But it rates number one in Europe and number four worldwide in the Heritage 2019 Index of World Freedom.  Its per capital GDP ranks among the highest in the world.

For a very long time the Swiss Franc was one of the world’s premier currencies.  It even had a statutory gold-backing.

Although Switzerland in recent decades has succumbed to some of the paper money mania that has proven so destructive elsewhere, still the preference for sound money runs deep in the national ethos of the Swiss people.

A new survey reveals the persistence of Swiss attachment to gold.  In fact, the headline on a report by the University of St. Gallen reads, “Swiss people like to invest in gold.”  48 percent of Swiss surveyed mention gold among their favorite investments.  That’s second only to real estate, and well ahead of stocks and funds, and even traditional saving accounts. Platinum ranks surprisingly high among the Swiss, at ninth, and even ahead of silver which ranks 13^th.

Switzerland has the second highest per capital gold demand in the world, right after Hong Kong, also noted for its prosperity.  Unfortunately, the US doesn’t even rank in the top 10.

Almost forty percent of the Swiss surveyed mentioned “security” as among their reasons for preferring gold.

Gold remains the world’s super sovereign currency.  As such, it’s linkage to wealth, prosperity, and economic security is not a coincidence.

Speak with one of RME Gold’s professionals to find out how to anchor your wealth, prosperity and security in gold.

The way the Swiss do.

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We would like you, and all our friends and clients, to take a good look at the accompanying chart.  It will help you read the signs of the times.

It is an eye-opening portrayal of this stage in the everything bubble!  As you can see from the movement up by the S&P500 since last Christmas, the stock market has been powered by the Fed’s reversal of its announced interest rate increases at the end of last year.  

In fact, as we have pointed out many times, this entire stock market bubble is the offspring of the Fed’s interest rate suppression.

The chart shows the yield on the 10-year US Treasury moving down, down, down, down.

Wednesday’s market action (5/29) was strong confirmation of the longer-term picture illustrated here.  The 10-year yield fell to 2.26 percent.  That’s the lowest yield since September 2017.  At the same time stocks fell to 12- week lows, with the Dow Industrials gapping down to close beneath its 200-day moving average.

Lower yields mean that money is moving massively into the bond market.  Why would Wall Street stampede into the bond market at these historic low yields?  The answer comes in two parts:

 They are getting out of the way of a stock market calamity.  

 And they expect that the Fed will respond to a stock market calamity by attempting to drive rates even lower – an effort to goose the economy as a recession looms. 

We expect the same thing.  

The Federal Reserve is a one trick pony.  It has one thing that it does:  It creates money and credit out of nothing.  That is the Fed’s response to every crisis, a banking liquidity crisis, a housing bubble that popped, or a collapsing stock market.

One other important note:

There is an anomaly in the interest rate market called a yield curve inversion.  In this case the yield on the 10-year Treasury is lower than the yield on the three-month Treasury.  

That is abnormal.  It is an important signal that something is amiss.

As we have pointed out, normally longer-term interest rates are higher than short-term rates.  After all, whatever you might charge to loan someone money for three months, you would certainly want a higher rate to loan money for ten years.   You have given up the use of your money for a longer time during which market rates may change markedly, while a longer-term increases the risks that can befall the borrower and the return of your money.  

In normal markets, long-term rates are higher than short-term rates.   An interest rate inversion like the one we are experiencing, when long-term debt instruments develop lower yields than short-term ones, is a classic indication of a weakening economy and of recessions.  

It is an indication that investors are beginning to panic!

As a post on Zero Hedge put it, “The last two times the yield curve inverted like this were March 2000… right when the Tech Bubble burst… and late 2006… right as the housing bubble burst… and about 12 months before the Great Financial Crisis…”

This is a key juncture to buy gold.  The deficit picture will worsen in a recession and Fed money printing will become much more aggressive.  At the same time, many of the people fleeing the stock market, those who can read the signs of the times, will look to the safest of safe havens.

They will look to gold.

We hope you will take this warning seriously and do the same.

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There are two takeaways from today’s’ commentary.  Let me share them with your right up front:

• Takeaway #1: 
  President Trump wants to have a currency war with China, and ultimately with the rest of the world.
  
• Takeaway #2: 
  The big winner in currency wars is gold.

In addition to continual calls from the administration for all the elements of a currency war, specifically for the Federal Reserve to lower rates further, for more Quantitative Easing (money printing), and for tariff regimes, the President recently tweeted, 

“China will be pumping money into their system and probably reducing interest rates, as always, in order to make up for the business they are, and will be, losing. If the Federal Reserve ever did a ‘match,’ it would be game over, we win! In any event, China wants a deal!”

In response to the taunt, a Chinese government newspaper, the Global Times, reports that China is preparing for a currency war, with steps being taken that will position it to strike back.

In our May 15 post, Trump Calls for Currency War with China!, we explained elements of currency wars:

A currency war occurs when nations deliberately depreciate the value of their currencies in order to stimulate their economies.  When trading partners impose tariffs on a country’s incoming goods, the exporting nation will often depreciate or devalue its currency so that its goods become cheaper to foreign buyers.  In this way it hopes to offset the additional cost imposed on its goods by the tariffs or taxes imposed on them.

It is a deranged strategy.  Countries devalue their currencies by manipulating interest rates lower and printing money – or to use the euphemisms of the day, by “quantitative easing.”

While it can make its manufactured goods cheaper for foreign buyers with such machinations, it makes everything its own citizens buy from foreign producers more expensive.  So, if a country like China drives the yuan down, the Chinese pay more for raw materials, gasoline, food, and anything else that comes from abroad.

When China devalues its currency, it makes the Chinese people poorer.

When America devalues its currency, it makes the American people poorer.  

A country the devalues its currency is saying that it wants its people to get less for their money.

Who wins currency wars?  People who own gold are the big winners.

In his book Currency Wars, author Jim Rickards identifies three major currency wars in the last 100 years.  

The first, from 1920 – 1936 saw the complete collapse of some currencies, while President Roosevelt declared a bank holiday and steeply depreciated the dollar.

Gold holders were the big winners as gold skyrocketed from the gold standard price of $20.67 an ounce to $35 an ounce.

Gold appreciated 69 percent.  

The second currency war, Rickards dates from 1967 – 1987.  There can be some disagreement about the dates, but there is no disagreement about the dollar’s loss of purchasing power during the period.  As the currency war opened, gold was still officially priced at $35 dollars an ounce, but in the free market none was available at that price.  It was the period that saw the silver in US coinage replaced with cheap base metals, although the government went to a great deal of trouble to make the new coinage appear to still be made of silver.  Most of the action took place during the stagflation decade of the 1970s, and by the beginning of the 1980s gold has raced to $850 an ounce.

Rickards identifies the third currency war as having begun in 2010.  It continues today. Given the risk of the collapse of the global monetary system, Rickards suggests that Currency War III may be the last currency war.  

Currency War III includes the so-called Great Recession, Quantitative Easing, and an explosion of unpayable government debt.  Even with events of that magnitude, it is fair to say that until now, Currency War III has been a low-grade affair.  Even so, it saw gold roar up to $1,900 per ounce in 2011.  

But now the currency war is getting going in earnest as threats and counter-threats of rising intensity fly back and forth across the oceans. 

If Rickards is right that this could be the last currency war, then there is little point in attempting to forecast just how high the price of gold will go in terms of a dollar that itself will be dethroned as the world’s reserve currency.

In the final analysis, wealth will be measured not in terms of such irredeemable paper currencies, but in terms of how many ounces of gold one owns.

In currency wars, the winners are people who own gold.

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De-Risking!

We’ve all heard of bloggers and writers – mostly conservatives, but not all – that have been de-platformed by social media.  These are people that have said something that the social media giants like Facebook and Twitter have found unacceptable, and who have therefore been banned and lost their access to their audiences.

But have you heard of people being de-platformed by their bank?  

Actually, in the banking world, it is called “de-risking.”  And apparently, a growing number of people has had their accounts closed.  Some are finding their funds frozen along the way.

A common pretext for de-risking is a bank’s finding that it isn’t making enough money off a customer’s account.  But the proliferation of governmental policies and regulations and the war on cash are also responsible for banks closing customer accounts.

Mark Nestmann, whose business involves helping people establish foreign domiciles, writes, “In the US, tens of thousands of gun sellers, coin dealers, fireworks suppliers, dating services, US citizens living abroad, Muslim students, money services businesses, diplomats, and even porn stars like Teagan Presley have had their accounts closed due to the de-risking phenomenon.”

According to Nestmann, 

“It’s not really surprising that US banks are de-risking as fast as they can. They must follow strict ‘know your customer’ rules and also report an ever-larger list of supposed ‘suspicious transactions’ to a secretive Treasury bureau called the “Financial Crimes Enforcement Network,” (FinCEN).

“If a bank perceives a customer as ‘high risk,’ it’s safer to close their account than to possibly face stiff fines and even criminal prosecution. And Congress keeps passing new laws requiring ever-greater levels of surveillance over our financial transactions. Is it really a surprise that a growing number of banks refuse to provide banking services to a growing number of categories of customers?”

One financial consultancy that studied the phenomena found it ironic that regulations purportedly spawned to protect financial institutions are having the opposite effect.  They are driving people and business away from financial institutions.

Meanwhile, so-called “anti-money laundering” provisions are casting an ever-widening net.  Banks have required foreign embassies, over the protest of the State Department, to close their accounts, while people involved in marijuana commerce in venues where it is perfectly legal to have had banks close their accounts.

All in all, it is another development in the fatigue and confusion of the financial and monetary system.  The government, demonstrably incapable of managing its own financial and monetary affairs, compensates with a flurry of intrusions into the private affairs of the people.

We prefer to look at the term “de-risking” from the perspective of our clients and the American people. That is why we recommend holding at least a substantial portion of your wealth in gold.  It is the most efficient way to insulate yourself from the financial risk of a hopelessly indebted government and the monetary risk of a confused, money-printing central bank.

Speak with an RME Gold associate today to find out how to de-risk yourself.  Simply call our office, (602) 955-6500, and you will be connected to one of our knowledgeable gold and silver professionals.

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There is an old expression in the stock market that they never ring a bell at the top.  It’s true.  

They shouldn’t need to ring a bell.  This expansion is already long-in-the-tooth, almost ten years old.  In a few weeks it will be the longest on record.  Ever.  And one of the weakest, too.

In place of the bell, look at the burgeoning trade war.  Or look at some of the ridiculous IPOs.  Uber and Lyft are the biggest money-losing companies to ever go public.  Doesn’t anybody remember the Nasdaq bubble and Pets.com, eToys.com, Drugstore.com, or    DrKoop.com?

Just as they never ring a bell at the top of the market, former congressman Ron Paul says that the Federal Reserve never announces that it created a bubble.  

It has created so many that you might think they would know exactly how and precisely when they do it so that they could announce it.  

It’s just that they really don’t want you to know it’s a bubble.  Besides, you’ll find out soon enough – once it pops and the damage is done!

In the meantime, they can’t announce a bubble like the dotcom bubble, the housing bubble, or today’s stock market bubble because, as Dr. Paul says, they want to avoid a panic.  

“The bubble is there,” he says.  “No one wants to admit it.  I think people should prepare for it.  And quite frankly, my opinion is, this bubble is really big!”

Of course, he’s not the only one who notices that this bubble is much bigger than the others the Fed has created.  And that’s really saying something, since most have them have been stupendous.  “When the Nasdaq bubble burst, it lost 80 percent of its value,” Paul reminds us.  

“It will be the worst in my lifetime,” says Jim Rogers of the coming bear market.

But they don’t ring a bell at the top.  

And the Fed never announces that it created another bubble.

That’s okay.  You’ll find out soon enough.

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Avoid the casino economy! The stock market looks more like a casino every day.  And you know that casino odds are never in your favor.

Casino?  Consider David Stockman’s observation that “between the September 21 intra-day high of 2,941 and the 2,351 close on Christmas Eve, the S&P 500 index dropped by a stomach-churning 25% in just 64 trading days.”  

That drastic move wasn’t because the underlying conditions, sales, markets, or revenue picture of American business had changed dramatically in those three months. 

It was because the Fed intended to raise interest rates.  Betting on the future value of stocks based on what a handful of unelected and mostly unknown Fed officials may do next is like betting on a roll of the dice.  

It is not investing.  It’s a crap shoot.

Then the Fed changed its position on interest rates and the market moved back up.  The Dow Industrial began trading above its 50-day moving average.  

But suddenly, with the next roll of the dice and some announcements from Washington, a trade war began gaining traction.  Now the market has fallen for two weeks and is trading below its 50-day moving average again.

With every little change in the breeze, with every change in the Washington winds, the market reverses itself.

That is not a reputable trading environment.  It is a casino.

The more volatile the stock market, the more dangerous to you.  And the more important it is to own gold.

Casino markets come and go. But gold has been the preferred money of the world for thousands of years, the supra-sovereign currency that outlasts all paper money schemes, and the best haven for safety as governments gorge themselves to death on debt.  

Leave the casino.  Cash in your casino chips.  Protect yourself and your family from the casino economy.  With gold and silver.

Speak with an RME associate today.  Simply call our office, (602) 955-6500, and you will be connected to one of our knowledgeable gold and silver professionals.

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Today some key insights and financial news, little noticed and mostly overlooked stories that affect our economy, paper money, and gold; bite-size news that we think our friends and clients should know.  

China Cuts US Debt Holdings

“China reduced its holdings of U.S. debt in March by about $20.5 billion, bringing its overall ownership down to $1.12 trillion.

“The holdings are at their lowest level in two years and come amid escalating trade tensions.

“There’s worry that China might use its status as the world’s No. 1 U.S. debtholder as leverage in trade negotiations.”

• CNBC, 5/16/19

Social Security just ran a $9 trillion deficit, and nobody noticed!

“Social Security’s annual Trustees Report came out recently, and it showed Social Security ran a gigantic $9 trillion deficit between last year and this year. The system’s long-term unfunded liability is now $43 trillion, up from $34 trillion last year.   

“Funny, nobody noticed.”

• Boston University Professor Laurence Kotlikoff, The Hill, 5/14/19

Fed Issues More Warnings on Danger of High-Risk Company Debt

“The Federal Reserve escalated its warnings about the perils of risky borrowing by businesses Monday, saying firms with the worst credit profiles are the ones taking on more and more debt…. 

“The U.S. central bank’s latest financial stability report said leveraged-lending issuance grew 20 percent last year, and that protections included in loan documents to shield lenders from defaults are eroding.”

• Bloomberg, 5/6/19

Dutch Central Bank Admits ‘The Rich Get Richer When We Print Money“

“Loose monetary conditions strongly increase the top one percent’s income and vice versa. In fact, following an expansionary monetary policy shock, the share of national income held by the richest 1 percent increases by approximately 1 to 6 percentage points.”

“… the increase in top 1 percent’s share is arguably the result of higher asset prices. The baseline results hold under a battery of robustness checks…. Furthermore, the regime-switching version of our model indicates that our conclusions are robust, regardless of the state of the economy.”

• ZeroHedge, 5/5/19

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The Decline of the American Middle Class

We don’t often find ourselves citing the CEOs of America’s biggest banks.  Between the bankster bailouts and the way the Fed has stovepiped wealth to the canyons of Wall Street, it’s clear that their influence peddling and cronyism has helped them at the expense of the people.  Their every pronouncement should be viewed skeptically.

But the problem of the overlooked and declining American middle class is too big to be ignored, even by them.  So today I will cite a comment from J.P. Morgan Chase CEO Jamie Dimon (whose bank had a $25 billion bailout windfall) about those who are being left behind:

“Forty percent of Americans make less than $15 an hour. Forty percent of Americans can’t afford a $400 bill, whether it’s medical or fixing their car. Fifteen percent of Americans make minimum wages, 70,000 die from opioids” annually.

“If you travel around to most neighborhoods where companies live, they’re doing fine.” 

“So we’ve kind of bifurcated the economy.”

Bifurcated.  Well, that’s one word for it.

In the 1960s, America’s growing middle class was the envy of the world.  Its prosperity and reach haven’t been equaled since.  No one should be surprised that with the end of the gold exchange standard (itself a corruption of a real gold standard) in 1971, the expansion of the middle-class ground to a halt.

The Income Gap

The wealth and income gap have been widening ever since.  But the situation has gotten critical today with the frenzied wealth redistribution of today’s monetary cronyism.  Quantitative Easing saw trillions of dollars made up out of thin air and pumped right into the financial sector.

In the interest of candor, we may call this Federal Reserve activity of creating money counterfeiting.  It may be legalized by the state, but it is monetary counterfeiting none the less.  Murray Rothbard pulled back the curtain on the practice long ago:

“It would be difficult to see the point of counterfeiting if each person is to receive the new money proportionally. In real life, then, the very point of counterfeiting is to constitute a process, a process of transmitting new money from one pocket to another, and not the result of a magical and proportionate expansion of money in everyone’s pocket simultaneously.”

Little wonder that the state and its cronies resist the discipline that an honest gold standard imposes on them.  The alchemists of old couldn’t create gold out of lead, and today’s Washington wizards can’t create gold out of thin air.

The growing divide between the rich and poor that results from Washington’s monetary sleight of hand are, incidentally, a surefire recipe for social breakdown and violence.  Even Dimon acknowledges the danger, saying, “We made a mistake by ignoring some of these things. If we don’t [act], society is going to get worse, because these problems aren’t aging well.”

We’ll go one step further and assure our readers that the problems will not get fixed.  Living through a monetary collapse is not a pleasant thing, but get ready for it.  If you know that it is coming you can protect yourself and your family with gold and silver.

Don’t be left behind.