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Monday, April 27, 2020

3 Reasons Why Soaring Gold Prices Could Crash in 2020 - According to Crypto Coin News

Crypto Coin News has given its opinion why gold investors are about to get slaughtered - so everybody ought to pile into Crypto Currencies.

Reason 1

1. A Coronavirus Vaccine

According to CCN this could happen faster than anyone thinks, even by mid 2021 so all that "economic turmoil" should clear right up making gold crash.

Comment: It is hard to imagine anyone could suggest that a year of deep deflationary depression will clear right up.  But it it's good to be optimistic.

Reason 2

2. An Economic Recovery

That reason 2 is the same as reason 1 doesn't seem to occur to the folks at CCN.

Reason 3

Deflation And A Soaring Dollar

That reason 3 annihilates reason 1 and 2 is clear.  But let's consider reason 3,  Yes, the deflationary force of mass unemployment is crushing.  But historically gold does very well during periods of deflation because deflation is massively destabilizing for an economy - especially an economy drowning in debt.  It crushes interest rates, animal spirits and GDP - making all sorts of financial gambles (investments) extraordinarily risky; debt becomes crushing - which each passing day the debt becomes larger and larger.  Meanwhile the dollar doesn't soar but it does rise commensurately with the debt because the debt must be paid in dollars. 

And just as it has for the last year gold will continue  rise with the dollar for the same reason: people are seeking safety. 

Unless there are massive defaults which have to be bailed out and that's when you get massive printing and hyperinflation.  In which case gold becomes the only viable currency.

So listen to the insanely poor reasoning of the Crypto shills and buy gold.

Friday, April 24, 2020


Stacks Of Bright New Shiny Gold Coins Placed On Weighing Scales ...

As I've noted many times, there are all sorts of metrics used to value gold.  All are imperfect.  You can make statistics say what you want.  Every forecaster has a "fair gold price" target.  Pierre Lasonde calls for $20,000 gold over 20 years.  Bank of America calls for $3000 dollars gold over 18 months.  Chuck Butler (whom i enjoy reading in the Daily Pfennig) figures that if every nation buys into a common gold backed currency gold would be price at about $10,000 an ounce.  Most every banking house  has $1800 minimum by the end of the year.

Here's how I figure it.  Right now gold is hovering around $1700.

That's two months into a crisis wherein most Politicians and Wall Street TV regulars are assuming a "return to some normalcy" by the fall.  This prognosis also assumes a fair amount of pent up demand which will power some kind of rebound and return to positive growth in the global economy.

Also, baked into this prognosis is the idea that the trillions and trillions of printed money injected into the global economy by central banks in a zero rate economy will not have any more negative repercussions than they did after the 2008 crisis (where the Fed had the luxury of 6 percent interest rates).

I have to believe most people buy into that.  And if that's true, the $1700 price tag on gold seems pretty reasonable,

However, if any part of those assumptions are wrong gold goes much higher.  For example, if as most scientists agree, there will be no vaccine for about 18 months, then any attempt to "return to normalcy" in an environment where there is little to no testing is a pipe dream.  What if we have rolling outbreaks that keep interrupting "normalcy?"  This is sure to frighten people

Then gold goes higher.

Also, what if mass unemployment and  business failures destroy any idea of "Pent up demand?"
What if people decide it best to SAVE MONEY rather than live pay check to pay check?  In this case positive growth disappears as 70% of the economy is consumer spending, in an economy where trend was already below 2 percent.

Then gold goes much higher.

Now, what if injecting trillions and trillions of printed dollars into a debt soaked economy running on zero interest rates does have some negative financial repercussion?  What is we see a wave of credit defaults that roil the banking system and require a new round of bailouts?  The banks claim to have rock solid balance sheets.  But the three larges US Banks have combined 3 trillion dollars of off balance sheet trading liabilities/  What if we have a series of new financial crises?

Well then gold goes much much higher.

So how do you value gold?  It depends how you handicap the likelihood of the future conditions outlined above.

Wednesday, April 22, 2020


President Donald Trump Tweetstorm – The Saturday Edition – Deadline

Trump tweeted Wednesday that he has instructed the US Navy to "shoot down and destroy any and all Iranian gunboats" that harass US ships.
"I have instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea," Trump wrote.
Later on Wednesday senior Pentagon officials said the tweet was a lawful order.
Gold, already back to $1700 on the day promptly rose another $15 dollars.
Maybe Trump has his own vault, the way he seems determined to launch gold into the stratosphere.


Tuesday, April 21, 2020

B of A calls for 3000 dollar gold in the next 18 months

  • Gold will rally 80% over the next 18 months as central bank stimulus and economic turmoil drives record interest, Bank of America forecast in a Monday note.
  • Monetary authorities are spending trillions of dollars to keep economies above water. The widespread spending will place incredible pressure on currencies, the bank's analysts said, in turn pushing investors to gold and its scarcity.
  • There's still plenty of room for investors to pile into the metal, the bank added. Positioning "has been surprisingly weak" even after gold's late March rally, and a massive influx of capital will send prices soaring through the year.

That's all according to Bank of America.

Meanwhile paper gold is trading just south of 1700.

Real Gold at apmex or Kitco, or JM, or everywhere is just south of 1900.

Even though positioning has been "Surprisingly weak."

Of course, most people are distracted.  Most people are confused.  Most people are hopeful this will all just go away soon.  After all the Government is telling them it will, every single day on television.  Predicting light at the end of the tunnel.  Predicting V shaped recoveries.  Predicting amazing pent up Demand.

When it doesn't happen most people will start to understand the Government has been lying to them.  

And then most people will start to think about how to protect themselves.

For many that will include getting a little gold.




  • Global debt surged to a record $250 trillion in the first half of 2019, led by the US and China

US debt surpasses $23

 trillion for first time


Monday, April 20, 2020


Coronavirus could be Donald Trump's Katrina moment | Trump | Al ...

Analysts use all sorts of metrics to estimate the "true Value" of Gold.  S +  P versus Gold, Silver to Gold, Dollar vs Gold,  Global Debt vs Gold, etc etc etc.

But gold's true value lies in inverse proportion to Global Stability both economic and political (which are two sides to the same gold coin.)

The less stable the political/economic environment the more important it is to have at least some of your wealth in the most stable currency the world has ever known.  A currency that can not be printed and has no counter-party risk.

Since the end of World War 2 the United States of America has been the most stable political-economic environment on earth.  During those 70 years you can pretty much chart gold against US relative stability.

Right now, the United States of America is one of the least stable political-economic environments in the developed world, because our President is unstable.  You might love him for that or hate him for that, but it is an undeniable fact that while most developed nations are dealing with the current crisis through universal testing and guaranteed income, the United States is currently incapable of testing for the virus and incapable is distributing the trillions of aid to the small businesses that make up 50 percent of the economy.  Those two things are becoming so destabilizing that another month or two of this chaos and our economy will not recover - which is a tremendous danger to the global economy.

There is little reason for hope right now, because our president instead of solving these two problems, is busy watching TV 24/7 (except when he's on TV) and retweeting destabilizing conspiracy theories blaming China, Bill Gates, his own Virus Response team led by Dr. Faucci, and God knows who else for the problems we face rather than simply directing a universal Testing response and the fair and swift distribution of funds to failing small businesses.

But rather than solve the problems our leader is reaping chaos through conspiracy theories.  The conspiracy theories are becoming widely adopted by a scared, angry grotesquely under-educated and well-armed population.  The longer the crisis lasts, the more likely this mob will turn violent.

Why our Government has been the most inept in the developed world is not really the subject of this comment.  The subject is Gold.  The spot price for gold is hovering around $1700.  You can not buy it for that price anywhere. If you can get it it will cost you between $1800 and $2000/  Some of that is due to shuttered production.  Much of it is due to the fact that people who are looking at this appalling situation with open eyes are seeing a global destabilization emanating outward from 1400 Pennsylvania Ave that if not stemmed will lead to the greatest explosion in the price of Gold the world has yet seen.'

Even, best case, when we get the virus under control with an eventual vaccine, how do we placate the 40 percent of the broke and angy population who now thinks the virus was just a hoax perpetuated by their blood-enemies, their fellow citizens, in this brave new world of  Negative Rates, Negative Priced Futures Contracts, and multi trillion dollar yearly deficits?

By printing and distributing ever greater quantities of US dollars. 

Count on it,

Friday, April 10, 2020

COVID: the Virus is temporary, The Response - MMT - is PERMANENT


19 %  of the population, or nearly one out of every five U.S. households has a Negative Net Worth,.

53% of U.S. households have no emergency savings

63% Of Americans Don't Have Enough Savings To Cover A $500 emergency

33.6M civilian workers lack paid sick leave

27.9M non-elderly lack health insurance

21.3M lack adequate broadband

550,000 homeless are living on streets

Debt held by the public totaled 78 percent of the economy at the end of 2019 
                                         Massive Unemployment: How many and for how long – UNKNOWN

Decimated businesses not likely to rebound any time soon: Restaurant, Live entertainment, Travel, Retail and HOUSING.

How bad will the hit be for these and related businesses?  Nobody has any idea.  But a safe bet is that all those people who have been living paycheck to paycheck and with debt, will decide it is smart to start to save for the next crisis.

For now count on : A Half-Speed Economy: investment, consumption, trade, growth •


Congress allocated $2.2 trillion via the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
The new law gives the Treasury Department $454 billion to invest in a “special purpose vehicle” jointly with the Federal Reserve. The Fed will then allocate (or perhaps misallocate) that money in loans to private businesses.
But in fact, it’s way more than $454 billion. Here’s how two economists described the arrangement in a Wall Street Journal article:.
The expectation is that the central bank will leverage this money 10 to 1, enabling it to lend up to $4.54 trillion to companies.
That sum is more than all U.S. commercial and industrial loans outstanding at the end of 2019 ($2.35 trillion) plus all the new corporate bonds issued during 2019 ($1.41 trillion).
Thus, if this capital is all deployed by the Fed, and at rates that will surely crowd out private capital, all capital allocation in the U.S. in 2020 will be done by the Federal Reserve System, not by the capital market. This is the largest step toward a centrally planned economy the U.S. has ever taken.
AND understand this – for good and for bad – the Fed’s balance sheet is headed to north of $7 trillion. That will not mean “actively intervening in the market.” 
That will MAKE the CENTRAL BANK the MARKET. 
And the Federal Deficits, already out of control under Trump will balloon into the multi-Trillions.
And this is just phase I.

Thursday, April 9, 2020


The Fed can unleash untold trillions into the economy.  They can buy all the bad debt in the entire world.  They can send checks to every citizen.  They can buy stocks to support the stock market.

Here's the problem we face.

All markets are ultimately DEMAND DRIVEN.

No amount of supply can stimulate Demand when people are scared to spend.

That's the problem.

And it's not the virus that's making them afraid.  It's that fact that everybody is starting to realize how fragile our economic system is.  All the wealth is concentrated in the hands of one tenth of one percent of the population.  Everybody else is essentially one crisis away from perdition.

That crisis has come.  And we can all see how tenuous our lives are in this screwed up system - which it neither capitalist nor socialist.  It is a weird hybrid of socialism for the very very rich.

Here's the main idea of this system: The central bank keeps real rates negative creating a flow of funds out of the hands of savers and into the hands of speculators who can never lose because when they do the Central Bank bails them out and lower rates even more.  Until all rates go negative all savers go broke and only the richest speculators continue to reap all the benefits.

What a system.  Ultimately this system is dependent on the good faith of all who are getting screwed by it.  When that good faith is used up, the game ends.  And I'm afraid that's just about where we are.

Who out there can really say they have faith that those running the system can -or even want to - figure out a way to make the system fair in order to re-engender good faith in the populace at large.

That would involve pushing rates back up to 10 or 15 percent so that savers can get a fair return.  But that's impossible with hundreds of trillions of dollars of debt.  The debt service would cause the country to go broke in a second./

So then what?

Sending working families a $1200 check while shoveling 5 trillion dollars to corporations, hedge funds, private equity groups etc just won't get the job done.  The Fed buying all the bad debt of the largest corporations while giving home owners a one month grace period on their mortgage just won't get the job done.

And everybody is starting to realize that.

It's hard to know what this will all look like in a couple of years.  But one thing is for damn sure: the more your wealth is outside the system in the form of hard assets with intrinsic value - things that have NO COUNTER-PARTY RISK - and things that can't be inflated away by the central government - the better off you'll be.

Wednesday, April 8, 2020

Massive dislocations continue in the gold - and silver market.

45 year chart of the spread between spot gold and futures near term contract:

Meanwhile, the spread between near term futures and physical bullion at top dealers like Apmex etc, is another 100 to 150 dollars.

Long time gold watchers will understand how unusual this is.  Much of the dislocation is being ascribed to closed mines and mints on account of the virus.  But mines represent bullion in the ground.  And mints provide new coins.  But in normal times there is always enough gold to satisfy investor demand.  There is just as obviously a Demand Dislocation.  People want bullion and People can't get bullion unless they pay prices very close to the peak of what bullion sold for back when spot gold topped out at $2000.  And people are okay with paying that.  So new coins are needed.

Is it just the Virus?

No.  It's the global response to virus: Zero to Negative Rates forever, and Untold Trillions in stimulus that is being printed without any source of funding.   In fact the funding sources: Taxes have disappeared as business activity is obviously contracting while Government Spending has gone into hyperdrive.

Right now, the massive debt load is holding down - or driving down - rates.  But QE INFINITY is a fact of life, not a theory.  And every sentient being on earth right now is aware - even if they have no understanding of basic economics - that the value of their money is being eroded.  And eventually Rates will rise again (Who in their right mind would lend anyone money at the current rates?) creating the second wave of this crisis. 

And then Gold will be unaffordable and Silver will have its day.  Just to be clear: high quality bullion silver is already trading at near double the spot price.

Tuesday, April 7, 2020

Demand for PHYSICAL GOLD so drastically outstripping the demand for Paper Gold (futures and gold tracking stocks) massive dislocations are occurring:

COMEX Can't Find Any 400 Oz Bars For Its New Gold Futures Contract

Submitted by Ronan Manly,
With continuing problems besieging the tag team COMEX – LBMA paper gold markets where the front month gold futures contract (now June) continues to trade above the London spot price of price, the contango that emerged a week ago between the New York – London ‘gold price discovery’ duopoly shows no sign of abating.
NYLON (New York and London)
While the pricing suggests that the core ailment relates to bullion bank liquidity problems faced by market makers in the London ‘gold’ market, this didn’t stop the London Bullion Market Association (LBMA) rushing out a statement last Tuesday, March 24, in an attempt to shift focus to CME’s COMEX, saying that:“The London gold market continues to be open for business. There has, however, been some impact on liquidity arising from price volatility in Comex 100oz futures contracts. LBMA has offered its support to CME Group to facilitate physical delivery in New York and is working closely with COMEX and other key stakeholders to ensure the efficient running of the global gold market."
Notwithstanding that on Tuesday 23 March, the London market had seen gold bid-ask spot spreads blowing out to US$ 100 and LBMA market makers breaching their responsibility to actively provide two-way price quotations, the LBMA forged ahead with pinning the blame on COMEX, and bizarrely offered to support COMEX to ‘facilitate physical delivery in New York’.

Saturday, April 4, 2020

That's it for Capitalsim

The last heroic act of Capitalism occurred in 1979 when Paul Volker raised rates to 17 percent, crushing inflation and giving the working middle class family a chance to flourish just by putting their hard earned cash in the bank. 

Since 1979 Capitalism has been taking the path of cutting corners, screwing the middle class and beggaring thy neighbor by competitively devaluing currencies by cutting rates at every bump in the road, while debasing accounting standards, ratings standards and GDP metrics all the  while keeping the real return of money ever below the real rate of inflation. 

Now the game is over. Capitalism is dead and gone.

Global Rates are Zero and Below.

The Fed's balance sheet is headed towards 10 Trillion dollars.

The Federal Deficit is headed towards 30 Trillion dollars.

The Government is printing money and just sending it to citizens, and buying all of its own debt, and most of the rest of the debt that;s out there.

Modern Monetary Theory (of Magic Money Tree) is the theory wherein the Government can just print whatever money it needs to spend on whatever it wants, to infinity.  Deficits are irrelevant.  Debt is something that never need to be repaid. Idiots can run the government, because solving a problem just means pushing a button and running the printing presses to mint more money.

I don't know what system of economy this is, but it's not capitalism by any stretch of the imagination - nor is it socialism which still requires labor to create wealth. 

This is new. 

The result of cutting rates from 17 percent in 1980 to 6 percent in 2000 was that the Dow went from 1000 to 10,000: Prosperity  by borrowing growth from the future  That's the definition of Negative Real Rates Policy.

From 2000 to 2025 - the last 25 years the Dow has doubled as we cut rates from 6 percent to ZERO.  And most of that growth was driven by Corporate Stock Buybacks.

Still not bad, i guess, though real inflation has careened out of control so that if you bought real assets like Gold or Real Estate or Old Master Paintings or classic cars or comic books etc during the same period you would have made 5 to 20 times as much as you would have in stocks.  Gold for example went from 250 dollars to 1600 during that period.

So what next?  Nobody has any idea because in Economic Theory, Negative Rates don't exist.  There is no system in theory or historical practice that covers the same ground as Modern Monetary Theory of MAGIC MONEY printed and distributed at the Whim of whatever Moron has his hand on the Magic Button.

Whatever occurs my guess is that REAL ASSETS continue to do way better than Paper Assets.  Just my opinion.