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Preparing For The 'Big One'

The damage of the next true market crash will be staggering
Friday, October 12, 2018, 6:54 PM

Executive Summary

  • Long-suppressed market forces are suddenly coming unleashed
  • Why the status quo of the past decade is ending fast
  • What's most likely to come next
  • How much damage would a true "market crash" wreak?

If you have not yet read Has “It” Finally Arrived?, available free to all readers, please click here to read it first.

What A “Market Crash” Really Means

The risk that comes from the bursting of a credit cycle is financial market disruption that causes prices to dislocate.  In 2008 that meant the utter inability to move certain credit and derivative products within the banking ecosystem which led to the downfall of Bear Stearns and Lehman Brothers. 

In turn those failures helped to nearly precipitate the systemic collapse of the banking system.  It got so bad that even high level bank CEOs were taking cash out of ATMs because they simply didn’t know if their won banks would be open in the morning.

Lots of changes were made to try and prevent such a thing from happening again, but many of these are counterproductive. 

In talking about Trump’s criticism of Powell, Chris Whalen of The Institutional Risk Analyst wrote several scathing critiques of the ways the Fed has indeed destroyed the markets, but it was his third point that really caught my attention:

Third is the real issuing bothering President Trump, even if he cannot find the precise words, namely liquidity.  We have the illusion of liquidity in the financial markets today.

Sell Side firms are prohibited by Dodd-Frank and the Volcker Rule from deploying capital in the cash equity and debt markets.  All bank portfolios are now passive.  No trading, no market making.  There is nobody to catch the falling knife.

The only credit being extended today in the short-term markets is with collateral.  There is no longer any unsecured lending between banks and, especially, non-banks.

As we noted in The Institutional Risk Analyst earlier this week, there are scores of nonbank lenders in mortgages, autos and consumer unsecured lending that are ready to go belly up.  Half of the non-bank mortgage lenders in the US are in default on their bank credit lines.  As in 2007, the model builders at the Fed in Washington have no idea nor do they care to hear outside opinions.

(Source)

There’s nobody to catch a falling knife.  Everybody has abdicated to the idea of an untested ecosystem of computer algorithms being first, last and only line of defense.  It’s kind of binary; it either works or it doesn’t.

It’s also untested. 

So the risk here, which is impossible to quantify, is that someday things go a bit haywire, something (or a whole lot of somethings) go out of parameter and the computers go dark.

What happens then?

First, we'll see.........(Enroll to continue reading the full report) » Read more

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Off The Cuff: Expect More Interest Rate Hikes

Hikes that the market has not yet priced in
Thursday, September 13, 2018, 12:20 PM

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

  • Contagion Risk
    • Where will the Emerging Markets melt-down end?
  • Inflation On The Rise
    • Now cresting above 2%
  • More Fed Rate Hikes Coming
    • Not yet priced into the market
  • Gold/Silver Ratio
    • What is today's extreme level telling us?

Recorded last week, Axel -- who has close access to Federal Reserve insiders -- explains why he predicts the Fed will hike rates higher than the market currently expects.

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio as well as all of PeakProsperity.com's other premium content. » Read more

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Off The Cuff: Why The Market Has To Crash

Too much bad debt
Monday, September 3, 2018, 2:25 PM

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

  • Tax-Cut Sugar-High
    • Corporate earning shoot the moon, but wages are little changed
  • Emerging Markets Deja-Vu
    • Crisis always follows borrowing too much debt from foreign creditors
  • Our Captive Political System
    • The democratic dream has long been suffocated by those who control DC
  • A Gold Suprise?
    • Historical precendent strong suggests gold will rebound sharply soon

As the markets hang at record highs (yet again), Chris and Mish revisit the data -- are these levels justified by the data?

A fresh look makes it very hard to defend them. And while there are lots of reasons to support that conclusion, the core one is the same as it was prior to the 2008 crash: Too Much Bad Debt.

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio as well as all of PeakProsperity.com's other premium content. » Read more

Podcast

STEEP

Brien Lundin: Why The Gold Market Looks Poised For Reversal

Extreme conditions are aligning in a way we've seen before
Tuesday, August 28, 2018, 4:40 PM

This week, we welcome back to the podcast Brien Lundin, publisher of Gold Newsletter and producer of the New Orleans Investment Conference (Nov 1-4, 2018). FYI: both Chris and I will be speaking there again this year.

Brien predicts that the brutal period for precious metals may soon be over. In fact, he now seeing a bullish alignment of factors he's seen before, which precursored a sharp move upwards in the prices of gold and silver. » Read more

Podcast

Ted Butler: New Hope For Higher Silver Prices

How silver's oppressor may end up being its savior
Monday, July 23, 2018, 10:37 AM

Precious metals analyst Ted Butler returns to the podcast this week to discuss the long-suffering silver price.

Will the beatings continue? Or is there finally reason to believe that, after seven painful years of languishing, silver may finally see a brighter future?

Butler predicts a turning point is nigh. And ironically, he thinks silver's savior will be the same cultprit responsible for keeping the price suppressed for all these years: » Read more

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It's Time To Care Again About Gold & Silver

Fundamentals and TA are signaling extreme undervaluation
Friday, June 29, 2018, 7:09 PM

It's been a while since I've covered the precious metals in an article. They've been range-bound for much of the past year, with few notable sector developments to report.

But I feel compelled to write about them today for two reasons:

  1. The probability of an upwards re-pricing of the precious metals is rising, and
  2. Both gold & silver are quite over-sold right now, technically-speaking.
Podcast

Ronald Stoeferle: Gold Is Dirt Cheap Right Now

And a new bull market for the metal is beginning
Tuesday, June 12, 2018, 11:38 AM

Fresh from releasing his exhaustive 230-page annual report titled In Gold We Trust, Ronald Stoerferle joins us to summarize his forecast for the yellow metal.

Stoerferle, an author of several books on Austrian economics and head of strategy and portofolio management at Incrementum AG, concludes that gold is extremely cheap right now in dollar terms. And he sees a new bull market beginning for the precious metal -- one likely to quickly build momentum as the next (and long overdue) financial market correction arrives. » Read more

Insider

Off The Cuff: The Last Rescue?

Soon, markets will have to fend for themselves
Saturday, June 9, 2018, 1:09 AM

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

  • The Visible Hand Of The Market Manipulators
    • Volatility is (once again) being intentionally throttled
  • Why Italy Matters
    • It has the size and will to destabilize the EU
  • Weakness In The EU Goes Beyond Italy
    • The banks, especially Deutche Bank, are in trouble
  • Can Anyone 'Win' A Trade War?
    • It's debatable. What's not is that everyone gets bloodied.

Chris and Mish address the latest "rescue" of the markets since Italy briefly threatened to destabilize Europe. So, the intervention of the past 8 years is still in play, but for how much longer? With the central banks starting in earnest to shrink their balance sheets (or at least taper their purchasing), these market "saves" will be less possible going forward. Mish, in particular, expects gold to reflect that heightened risk in the coming future.

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio as well as all of PeakProsperity.com's other premium content.
Blog

The End Of Our Empire Approaches

History is clear on where we're headed
Friday, April 27, 2018, 8:01 PM

Do you have the nagging sense that our empire is in decline?

If so, don't be embarrassed by it. Historically speaking, we’re in very good company.  Far larger and longer-lived empires than ours have come and gone over the millennia. » Read more

Insider

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Off The Cuff: Silver Set To Soar?

An epic short squeeze looks to be in the making
Friday, April 20, 2018, 1:24 AM

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

  • Crazy Like A Fox?
    • Evaluating Trump's colorful record so far
  • Silver Set To Soar?
    • An epic short squeeze looks in the making
  • Commodity Complex Break-Out?
    • Rising oil prices are leading the way
  • Beware The Bitcoin?
    • Reasons to proeed with caution before re-entering the crypto space

PeakProsperity.com's gold & silver analyst joins Off The Cuff this week to discuss his tingling spider-sense, which is predicting a price breakout in silver.

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.