Insider

Utah Is Setting an Important Example

cmartenson — Thu, 16 May 2013 15:01:05 +0000

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Since I started delivering this message, I've held a vision of the day when it instead elicits knowing nods because its truths have become self-evident. My proudest day will be when there's no more need to communicate the core ideas in the Crash Course because they'll already be common knowledge.

I cannot wait for the day when, literally, I'll have talked myself out of a job.

Well, we're one very important step closer to that day.

Off the Cuff: The Age of Delusion

Adam Taggart — Thu, 09 May 2013 05:55:04 +0000

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In this week's Off the Cuff podcast, Chris and Mish discuss:

Fuzzy Fed Math
- Housing-cost methodology understates true inflation
China's Gold Hunger
- Vacuuming up 50% of total world production
Market Madness
- Any news – good, bad, or worse – drives stock prices higher

Why This Recovery Is Coming to an End

Gregor Macdonald — Mon, 06 May 2013 15:34:01 +0000

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Executive Summary

Fertility rates are experiencing a "natural decrease" at record levels across the U.S.
Poverty rates are rising across the country, despite the "recovering" economy
What exactly is "powering" U.S. economic growth? Perhaps much less than realized.
Why we are likely in the calm before the storm when corporate profits peak right before an economic downturn
The 3 most likely scenarios for the stock market from here

If you have not yet read Part I: Marking the 4-Year Reflationary Rally: How Much Better Off Are We Really?, available free to all readers, please click here to read it first.

One of the challenges the U.S. stock market will increasingly face in the years ahead is continued growth in the Dependency Ratio. The U.S. Census Bureau alerted us to this trend back in 2010. For keen observers of demographics, this couldn’t have been a surprise). The rate at which the Dependency Ratio is growing, and is set to grow further, is accelerating:

The U.S. Census Bureau reported today that the dependency ratio, or the number of people 65 and older to every 100 people of traditional working ages, is projected to climb rapidly from 22 in 2010 to 35 in 2030. This time period coincides with the time when baby boomers are moving into the 65 and older age category...The expected steep rise in the dependency ratio over the next two decades reflects the projected proportion of people 65 and older climbing from 13 percent to 19 percent of the total population over the period, with the percentage in the 20 to 64 age range falling from 60 percent to 55 percent...“This rapid growth of the older population may present challenges in the next two decades,” said Victoria Velkoff, assistant chief for estimates and projections for the Census Bureau's Population Division. “It's also noteworthy that those 85 and older — who often require additional caregiving and support — would increase from about 14 percent of the older population today to 21 percent in 2050.”

This is precisely one of the key, ongoing headwinds that faced Japan's stock market for 20 years. When Japan's economy moved steadily into its low-growth phase, unable to generate sufficient jobs, fertility rates and household formation declined rapidly. As I explained in The Arrival of Japan's Sunset, these will not be cured by the current devaluation of the yen, despite naïve cheerleading. And neither will they be solved here in the U.S.

But in contrast to Japan, the United States is only just embarking on its slow growth phase. Its demographically challenged culture and economy will reinforce each other as we move ahead in time. And, it's not just the retiring class of workers that will massively increase the Dependency Ratio in the U.S. in years ahead...

Frustrated & Bored, Yet Happy

cmartenson — Fri, 03 May 2013 00:10:44 +0000

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I am happy, bored, and frustrated all at the same time.

My frustration is one I share with everyone who believes that fundamentals (a.k.a. 'reality') matter. This frustration is fueled by the endlessly-propped financial markets in which good news and bad news are both good and worse news seems to be even better. No matter what the latest headline might say, it seems to ignite a new round of buying of stocks, bonds, and anything else that the central banks deem worthy of dressing up.

A Technical Analysis of Where the Gold Price is Likely to Go Next

charleshughsmith — Tue, 30 Apr 2013 13:51:57 +0000

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Executive Summary

Sentiment measurement is proving to be an unreliable indicator
Classic technical analysis is inconclusive but hints there is still weakness that needs to be flushed from the system
The current era is feeling like 2007/2008 – gold could rebound strongly this year if enough weak economic data makes it out into the public
The factors to look for that will indicate a price reversal is imminent

If you have not yet read Part I: Charting Gold, available free to all readers, please click here to read it first.

Off the Cuff: Free Fallin'

Adam Taggart — Thu, 25 Apr 2013 05:33:27 +0000

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In this week's Off the Cuff podcast, Chris and Mish discuss:

Gold: Falling Prices
- Sparking in unprecedented global buying spree
Silver: Falling Inventory
- Physical demand is overwhelming the system
Europe: Falling Everything
- Bad news everywhere you look

AP Twitter Hack Reveals Just How Broken Our Markets Really Are

cmartenson — Tue, 23 Apr 2013 19:16:09 +0000

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Two themes that we've been consistently stressing over the past several years were beautifully illustrated today, courtesy of a hacked AP Twitter feed.

They are:

Our markets are broken (courtesy of High Frequency Trading, or HFT, computers), and
When things finally shift, they will do so at a speed that will shock us.

But first, the hacked AP Twitter feed...

Fixing the Mess We've Made

JHK — Tue, 23 Apr 2013 02:18:50 +0000

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Executive Summary

The prevailing trends of the next several decades: contraction, down-scaling & re-localization
How these trends will manifest in commerce, politics, employment & infrastructure
Those who adapt now will be positioned to thrive
Act now - ask forgiveness, not permission

If you have not yet read Part I: We've Dug a Pretty Damn Big Hole for Ourselves, available free to all readers, please click here to read it first.

We may never again restore trust in giant institutions ranging from the U.S. government to Harvard University to The New York Times. They have probably squandered their credibility and their legitimacy.

Anyway, the trends now moving human affairs are taking us away from both gigantism and the growth imperative that these things represent. The trends of the present moment in history are contraction, down-scaling, and re-localization.

Managing contraction is the only safe reality-based political response to the situation, and there is no constituency for it – though contraction is emphatically underway whether we like it or not, and it would be advantageous if we could manage our way through it rather than let it become a disorderly rout in which people starve and the rule of law disintegrates altogether.

As for re-localization and downscaling, there is a highly visible, easily identifiable constituency...

For Those Looking to Purchase Bullion Now

Adam Taggart — Fri, 19 Apr 2013 18:13:01 +0000

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We've been closely following the tightness in supply in the physical bullion market this week. Premiums began spiking, and now it's becoming harder and harder to find metal in stock to purchase regardless of price.

Why There May Be a Lot Less Gold Than We Realize

cmartenson — Wed, 17 Apr 2013 21:26:30 +0000

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Executive Summary

The U.S. may have a lot less gold than widely believed
Replacing these missing reserves would be extremely costly and disruptive
Understanding this, the recent market manipulation begins to make sense (in a tradable way)
Why physical ownership is of paramount importance now as supply is increasingly tenuous

If you have not yet read Part I: Unintended Consequences Are Increasing World Demand for Gold, available free to all readers, please click here to read it first.

Exactly How Much Gold Do We Have?

There's growing concern that a lot of official gold has been leased out into the market and that sooner or later, as happened back in the late 1990s, one or more parties, perhaps bullion banks or a metals exchange, would run into difficulty trying to meet a physical gold delivery commitment.

For a short video on the mechanics of gold leasing, click here.

If a lot of gold has been leased out, someday it will have to be rebought, and difficulties may emerge if the gold cannot be rebought in sufficient quantities without creating mayhem within the financial system by causing a very large hike in the price of gold.

Important: The amounts of gold leased by central banks is a very closely guarded secret, and we do not have direct information on them, which means we have to try and back-calculate these amounts by other means.

A recent and thought-provoking study regarding gold leasing was done by Sprott Asset Management in March. After accounting for all known flows of gold into and out of the U.S. over the past 22 years, the Sprott team arrived at a figure of nearly 4,500 tonnes of gold that cannot be accounted for.

Here's the summary flow chart...