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Off The Cuff: The Betrayal Of Capital

Leads to mal-investment that eventually topples onto itself
Monday, October 5, 2015, 8:37 PM

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

  • Growing Weakness At The Periphery
    • A reminder that collapse happens from the outside in
  • The Betrayal Of Capital
    • We are watching the predictable result of too much mal-investment
  • Natural Limits Will Be The Ones That Matter
    • The ones that can't be addressed by printing up more money
  • TINA: There Is No Alternative
    • Those in charge of the system have run out of Plan Bs

Recorded last week, here's the latest Off The Cuff discussion recorded between Chris and Charles Hugh Smith.

Both note the deflationary forces that are fast-eroding the stability of periphery countries around the globe. As long repeated here at Peak Prosperity, we're of the opinion that collapse happens from "the outside in". Once the smaller dominoes start falling, watch the pace at which the next-largest drop, as it can tell you how quickly the core ("safest") counties will start being affected.

A theme delved into in this discussion is the...

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio and other premium content today. » Read more


Michael Wick/Shutterstock

From Deflation To Hyperinflation

Expect a market crash followed by helicopter money
Thursday, October 1, 2015, 12:36 AM

Executive Summary

  • China is rolling over
  • Contagion will eventually take down the core economies, including the US
  • We are witnessing a full-blown collapse of the commodity complex
  • Deflation will win the day over the next year, but then get ready for helicopter money hyperinflation

If you have not yet read Part 1: Deflation Warning: The Next Wave available free to all readers, please click here to read it first.

The Chinese GDP Lie

Right off the top, China is not growing anywhere near the 7% it claims.  That’s just a politically useful lie that the Chinese tell to the world as much as they tell to themselves.

Fortunately, hardly anyone is falling for that particular fib any longer.  Let’s start with the completely obvious manufacturing slump that has hit China:

Chinese Factory Gauge Slumps to Lowest Level Since March 2009

Sept 22, 2015

A private Chinese manufacturing gauge fell to the lowest in 6 1/2 years, underscoring challenges facing the economy as its old growth engines splutter.

A global sell off in riskier assets gained pace after the preliminary Purchasing Managers’ Index from Caixin Media and Markit Economics dropped to 47.0 in September. That missed the median estimate of 47.5 in a Bloomberg survey and fell from the final reading of 47.3 in the previous month. Readings have remained below 50 since March, indicating contraction.

Premier Li Keqiang’s growth target of about 7 percent for this year is being challenged by a slowdown in manufacturing and exports even as services and consumption show resilience.


The way a PMI reading works is anything over 50 indicates expansions and anything under 50 indicates contraction.  Anybody care to explain to me how China can be sporting sub-50 readings every month since March -- that’s five full months -- and still be claiming to be aiming for a 7% annual growth target?  You know, because China is... » Read more


Sgame |

Why Gold Is Headed Higher & May Become Unavailable At Any Price

Time is now short
Friday, September 25, 2015, 3:55 PM

Executive Summary

  • The amount of gold in London's vaults dropped by 1/3 in the past year(!)
  • Activity at the COMEX is flashing warning signs
  • When to worry about physical defaults
  • Simple math will win out: the West is fast running out of its bullion

If you have not yet read Part 1: Buy Gold While You Still Can! available free to all readers, please click here to read it first.

An interesting piece of detective work was done by Ronan Manly at where he noted that the LBMA reported pronounced drops in the amount of gold stored in London vaults, which includes both gold held at the Bank of England as well as non-official vaults within the LBMA system.

To summarize his report, here’s the amount of gold reportedly held in London:

  • April 2014 – 9,000 tonnes
  • Early 2015 – 7,500 tonnes
  • June 2015 – 6,250 tonnes

That means that 2,750 tonnes left London over the past 1+ year.

Does such a large number even make sense?

Well, sure, if we consider that just four countries cumulatively imported (or increased reserves) by ~4,500 tonnes since the beginning of 2014.

Confirming this is the handy chart below of gold flows as compared to... » Read more


Esteban De Armas/Shutterstock

Off The Cuff: Look Out Below!

We're on the cusp of major asset deflation
Thursday, September 24, 2015, 5:15 PM

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

  • The Periphery Is Collapsing Fast
    • Emerging market currencies are falling hard vs the US dollar
  • China Is Running Off The Rails
    • We're witnessing a bust in progress
  • Europe's Black Swan Has Landed
    • A migrant crisis no one saw coming this quickly
  • The US Is Sliding Back Into Recession
    • The data is bad and getting worse

Skypixel |

The War On Cash Intensifies

Negative interest rates. A ban on cash. Pick your poison.
Monday, September 21, 2015, 9:45 PM

The central planners are setting the stage for the next round of officially sanctioned theft and this time they mean to assure that you have no way(s) of escaping.

They’re coming for your cash. This is a risk that Charles Hughes Smith explored for us back in June in a very well-received analysis.

Once a fringe idea, this concept is now being openly discussed and debated at the highest levels publicly. Which means it is being hotly discussed behind closed doors, and likely has been for a long time. » Read more


Everett Collection/Shutterstock

Off The Cuff: The Future Of The Fed

QE to the people? Negative interest rates? Just maybe...
Friday, September 18, 2015, 9:18 PM

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

  • The Future Of The Fed
    • Further easing seems assured for 2016
  • The Worlds Central Banks Are Cornered
    • They have no good options if crisis hits
  • The Debt Time-Bomb
    • No matter what the Fed engineers, our debt will kill the economy in the end
  • Politics As The Newest Black Swan
    • The populace is becoming unrestful


When Nothing Means A Lot

Why the Fed’s failure to act is a bad sign
Friday, September 18, 2015, 12:12 AM

Today, Thursday September 17, 2015, the most anticipated decision in all of financial history was made.

Or not made, as it turned out. » Read more


Ralf Siemieniec/Shutterstock

Off The Cuff: Follow The Money!

Currencies are underappreciated market indicators
Thursday, September 10, 2015, 5:47 PM

In this week's Off The Cuff podcast, Chris and Axel Merk discuss:

  • Follow The Money!
    • Why watching currencies yields predictive insights
  • China's Yuan Devaluation
    • What will the implications be?
  • Buckle Up!
    • Volatility in currencies & stocks is just getting started
  • Why It's Time To Go Short
    • No matter whether the Fed raises rates or not this year


Off The Cuff: Beware The Misbehavior Of Markets

They aren't as predictable as we think
Monday, September 7, 2015, 11:31 AM

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

  • Manipulated Markets
    • How the Fed uses stocks as a signaling device
  • House Of Cards
    • Why the system is more vulnerable than ever
  • The Machines Are In Control
    • Which works well until it doesn't
  • Beware The Misbehavior Of Markets
    • They are not as predictable as we think

Share America

The Criticality Of Monitoring Margin Debt Closely From Here

An very accurate canary in the coal mine
Friday, September 4, 2015, 9:00 PM

Executive Summary

  • Declining margin debt will signal an impending major market decline 
  • This signal will be even more telling for non-US countries
  • Evidence indicates we are passing the peak margin debt cycle right now
  • There is time to act, but time is running out

If you have not yet read Part 1: The Margin Debt Time-Bomb available free to all readers, please click here to read it first.

In the meantime, monitoring trends in levels of margin debt is one of a necessary number of risk management tools.  Meaningfully declining monthly levels of margin debt ahead will be an important red flag.  The key is knowing it will come and being able to act unemotionally and rationally when it occurs.  For now, in the clarity of hindsight, we have the very short term divergence in place between price (SPX) and margin debt levels as of month end July.  Now it’s a matter of continuing to monitor margin debt levels ahead as one of a number of important risk management tools. 

I think it is important to note that in the two prior market cycles, margin debt declined noticeably after the year over year change in S&P 500 sales (revenues) fell into negative territory, as we are now seeing in 2015.  As you can see from the chart below, the year over year change in S&P 500 sales from 2014 to 2015 has crossed into... » Read more