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Now That's A Nice Bottom

Keeping an eye on gold, silver, oil, and copper prices
Monday, December 1, 2014, 10:07 PM

~ Gold and silver race up off the lows

The failure of the Swiss referendum to repatriate gold was somehow used as the catalyst to hammer gold, silver, oil, and copper...each of them a signature bell-weather for economic activity.

I was ready to write this piece titled "Deflation Wins!"  but that would have been the on-line equivalent of "Dewey Wins!"  because just as Dewey actually lost to Truman, each of the four substances listed bounced back hard after their initial pummeling. » Read more



Off the Cuff: Gold Wars

Europeans increasingly want their gold back
Thursday, November 27, 2014, 10:47 AM

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

  • The Swiss gold referendum and the extraordinary lengths to which the Swiss National Bank is going to prevent its passage.
  • The World Gold Council's bizarre under-reporting of Chinese gold demand
  • Fuzzy numbers:  GDP is both distorted and not representative of actual economic progress
  • Russia moving toward putting the ruble under a gold standard?
  • Provoking Russia.  The aims of the west are not clear, probably because there's no real strategy in place.

There are very big movements happening in the world of physical gold, with the dutch somehow getting their 120+ tonnes of gold back from the US Federal Reserve over just three months while Germany continues to insist 5 tonnes over an entire year was reasonable.  A major political figure in France has written a letter to the French central bank demanding that all French gold be repatriated while Russia's central bank continues to accumulate gold in preference for dollars.

Yet the price for physical gold remains stuck in a tight band between $1190 and $1200.  

But what if Russia is moving towards a gold standard?  This would make sense for them on a lot of levels and would be a true game changer for a world that currently revolves around the petrodollar.  Alasdair and Chris discuss the hows and the whys. » Read more


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Off the Cuff: The Shift From Paper Assets To Real Ones Is On

At least, among the top 1%
Thursday, November 20, 2014, 10:29 PM

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

  • Mass-delusional Markets
    • Investors are mistaking the destruction of our fiat system as prosperity
  • The Shift From Paper To Real Assets Is On
    • At least, among the top 1%
  • Generational War
    • Coming to a stagnating economy near you
  • It All Comes Back To Energy
    • And there's still no magic bullet in sight

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Keep Your Eyes On The Prize

It’s always and ever about energy
Wednesday, November 19, 2014, 11:53 PM

At the essential center of the framework of the Crash Course is the almost insultingly simple idea that endless growth on a finite planet is an impossibility.

It is so simple it could be worked out by a clever 4 year-old and yet it must not be so simple because the main narrative of every economy in every corner of the globe rests on the idea of endless, infinite growth. » Read more


Farmland LP

Special Farmland Update

Archived webinar available soon
Monday, November 17, 2014, 10:34 PM

Chris recently hosted a webinar for investing in sustainable farmland. An archived footage of the webinar is provided here. » Read more



Off the Cuff: 2015 Will See A Return To Global Recession

The unsustainable sugar-high of the past 5 years is ending
Thursday, November 13, 2014, 10:14 PM

In this week's Off the Cuff podcast, Chris and Charles Hugh Smith discuss:

  • Bankers Behaving Badly
    • Fraud should be expected when there's no punishment for it
  • Rudderless Leadership
    • It's no wonder voters are 'throwing the bums out'
  • The Japan Time-Bomb
    • Guaranteed to blow up the global economy. But when?
  • 2015: The Year Of Return To Global Recession
    • Charles and Chris make the call


Why The Strengthening Dollar Is A Sign Of The Next Global Crisis

It causes the weaker parts of the system to fail faster
Wednesday, November 12, 2014, 11:21 AM

Executive Summary

  • Understanding the two different ways money flows into the US dollar
  • How currency crises elsewhere can send the dollar skyrocketing
  • Why yen, yuan and euro printing are not the same as dollar printing
  • How these accelerating money flows are creating the next global crisis

If you have not yet read The Consequences of a Strengthening US Dollar available free to all readers, please click here to read it first.

In Part 1, we surveyed the key dynamic that is playing out across the globe: the problems revealed by the Global Financial Meltdown of 2008-2009 were not addressed; they were in effect shifted into the foreign exchange (FX) market. Now the risk bubble is in the FX market.

The complexity of the feedbacks into the FX market is nothing short of mind-boggling, and rather than attempt a comprehensive survey, I’m highlighting the dynamics that hold the greatest risks of triggering instability, not just in finance but in geopolitics, trade and commodities.

Two Kinds of Dollar Flows

Let’s start by differentiating between the two kinds of money flows into the dollar:

  1. Money converted from periphery currencies into dollars to pay back loans denominated in dollars
  2. Money flowing out of periphery economies and into dollar-denominated assets such as stocks, bonds, real estate and dollar-denominated bank accounts.

Broadly speaking, both of these capital flows are “risk-off,” but they have different effects.

In the first case, money borrowed on the cheap in dollars and invested in high-yield periphery bonds earned a tidy profit as the dollar weakened. The trader picked up a double profit: the arbitrage on the interest rates (borrow at .25% and earn 4+%) and the FX profit from the rise of the periphery currency and the decline of the dollar.

This currency-arbitrage profit reverses when the dollar starts rising, and it quickly wipes out the entire interest-rate profit as it leaps higher.

The carry trade is “risk-on” because money is being borrowed to speculate in interest-rate arbitrage. Deleveraging this trade is “risk-off” because the only way to stem the potential losses as the dollar strengthens is to... » Read more


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Europe's Next Energy Crisis Is Now Assured

China takes more & more of the gas that once went to Europe
Tuesday, November 11, 2014, 12:25 AM

Today, Russia inked a second blockbuster deal with China that will starve Europe for natural gas in just a few short years. It's now increasingly clear that 2018 will mark the beginning of the end for any hopes Europe had of returning to robust economic growth.

It was by far the biggest news of the day. While it did make headlines, you might have missed it because not much was made of the affair beyond the announcement.  The story came and went as if Russia has oodles of natural gas (NG) to send to China.

It doesn't. And the supplies it has now contracted to send to China will be pulled from supplies that currently go to Europe. » Read more



John Hussman Podcast - Part 2

Market bubbles, gold & oil
Saturday, November 8, 2014, 5:03 PM

The second part of our interview with John Hussman is available here for Peak Prosperity's enrolled members.

If you've not yet listened to Part 1, click here to do so.

In Part 2 of the interview, John provides more specificity around his valuation methodology, and how he sees things playing out from here in the financial markets. 

To access Part 2 of this podcast, simply click the yellow button to enroll. » Read more


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Off the Cuff: The Importance Of Global Capital Flows

More responsible for prices than any other current factor
Thursday, November 6, 2014, 10:56 PM

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

  • Japan's Halloween Massacre
    • The most glaring sign yet that the central banks are desperate
  • Capital Flows Are King Right Now
    • The reason we have record-high markets despite crummy fundamentals
  • Musical Chairs
    • Every (market) player has fun until the music stops
  • Throwing The Bums Out
    • As our lifestyles contract, we vote out the incumbents