Deficits, Rates & Gold To Reach Vertiginous Heights

By Common Stock Warrants

October 10, 2018
by Egon von Greyerz

The end of an empire is a dramatic but also drawn out event with very few willing to face the facts. As the end is getting closer, denial is at its peak. We can probably figure out how it will end but not quite when. Looking at the facts, the beginning of the end is here. The signs are clear. Here we have a country that for the last 27 years has doubled debt every eight years and the trend continues uninhibited. This is a country that for decades has been living above its means by borrowing unlimited amounts. Well, it is not a Banana Republic, nor Argentina or Venezuela but the biggest economy in the world – the soon not so great USA.

The US economy is just like Humpty Dumpty, big, fat and unlikely to recover from the coming fall for a very long time.

US DEBT HAS INCREASED 58 YEARS IN A ROW

The road to perdition normally takes many turns. But not in the case of the US. This has been a straight road to what will be the most spectacular fall in economic history. Since 1960 US debt has increased every single year without fail. There are some who are under the illusion that the debt went down in the 1990s due to surpluses in the Clinton years. But these were fake surpluses and the debt continued to rise also during that period.

In 1960 the debt was $286 billion and it reached $1 trillion when Reagan become president in 1981. This much admired president managed to almost treble US debt during his reign. No wonder he was popular, especially since he also managed to send the Dow up 2.5 times after a decade of sideways markets. He was a hero and that was certainly deserved. But being a hero involves a great deal of luck in timing. Both Reagan and Thatcher were instruments of their time. After a long period of high inflation, high rates and low economic growth, these two individuals were the right leaders to steer their countries towards better times.

BORROW AND SPEND – BORROW AND SPEND

But sadly that also involved spending money that you don’t have. This was Keynesian economics at its best. Borrow and spend and then borrow some more and spend that too. This is when the era of the rich getting richer started in earnest with wealth concentration benefitting an ever decreasing part of the population. At the same time, ordinary workers have experienced a massive 55% decline in real wages since 1974.

US DEBT HAS DOUBLED EVERY 8 YEARS SINCE 1981

Since Reagan became president in 1981, US debt has on average doubled every 8 years. So, when Trump was elected in late 2016, the most obvious forecast was to extrapolate the historical trend. Thus I made the forecast below in December 2016:

The image above is disturbing not only due to the galloping debt level but also because tax revenues are growing at a snail’s pace. Debt is up 23 times from $0.9 trillion in 1981 to $21.5 trillion today in 2018 and tax revenues up only 6 times (Illustration above shows debt forecast to 2021). How does anyone believe that the stagnant or falling tax revenues will ever be sufficient to reduce the debt. History is telling us differently. The US economy is heading towards bankruptcy in no uncertain terms. The Fed’s only remedy will be to print unlimited amounts of money until the dollar has become totally worthless.

US DEBT $40 TRILLION BY 2025

Trump inherited a debt of $20 trillion and whether he or someone else will be there 8 years later, it seems quite a sure bet that debt will at least double to $40 trillion by 2025.

Whether or not the debt will reach $28 trillion at the half way stage in 2021, as I have forecasted in the graph above, we will soon know. That would mean an average deficit of $230 billion per month in the next 28 months. Since the August US deficit was $214 billion, the $28 trillion doesn’t seem too unrealistic. What we know is that debt is already at $21.5 trillion or $1.5 trillion above the level when Trump took over 19 months ago. And remember this is with a booming economy.

But the finances of USA Inc are not that great. In August for example, half of the budget Outlays were financed by debt – a very disturbing trend if it continues.

HIGHER RATES, HIGHER DEFICITS – RECIPE FOR DISASTER

The biggest factors that will send the debt soaring will be higher interest rates and higher deficits. Interest expense on the US debt in Fiscal 2017-18 was $365 billion. As I discussed in last week’s article, interest rates have turned up and are likely to rise to the 1981 high of 16% at least.

As deficits grow and bond prices collapse, the Fed will totally lose control of the long end of the debt market. The biggest creditors, China and Japan will most certainly assist in this process. Falling bond prices and a falling dollar will make them rush to the exit as quickly as possible when there is still some value left.

Let’s say that in the next few years debt reaches $28 trillion and interest rates 10% whilst tax revenue declines by 15%. At that point, all tax revenue will be absorbed by the interest expense.

I realise that these are assumptions that might not sound realistic today. But in my view they are probably too optimistic. The 2007-9 crisis was never solved but only deferred to a later date. …read more

From:: Common Stock Warrants

Holidays Are Over – Time For Action and Some Great Articles

By dudley

We trust that our Canadian friends had a wonderful Thanksgiving yesterday and now it is time for all investors to focus on these markets and to be in position for some exciting times.

While gold and silver continue to struggle it appears that the lows are in place and I believe it is time to look for interesting opportunities in the resource sector.

For me, there is only one way to play this ‘game’ by investing in quality junior mining companies and/or long-term stock warrants trading on those companies.

If you are not familiar with stock warrants, you can receive The Stock Warrant Handbook for FREE by visiting, http://CommonStockWarrants.com along with more freebies.

As well, many investors are finding great opportunities with warrants on the U.S. stocks in other sectors, bio-techs, pharmaceuticals, banking, blank check companies, etc.

Remember that only 25% or so of my personal portfolio is in stock warrants, the balance are common shares in the junior mining companies and I am on the hunt for new additions to my portfolio.

There are many interesting opportunities in stocks as well as the stock warrants available today, so if you are not a current subscriber, LET’S GET YOU STARTED NOW.

The next several years, 2018 – 2020 will see some exciting times in the PM sector and I am looking to make a fortune. Do you want to follow me? Let’s have some fun and make money together.

Recent Articles On Our Websites:

From the shores of Lake Chapala, Jalisco, Mexico

Dudley Pierce Baker
Founder-Editor
http://CommonStockWarrants.com
http://JuniorMiningNews.com

…read more

From:: Common Stock Warrants

Signals for the Coming Crash in Stocks and Rally in Gold

Signals for the Coming Crash in Stocks and Rally in Gold- David Brady,CFA(19/09/2018) By David Brady, CFA Sept 19,2018 The U.S. imposed new tariffs on China this week that were close to the worst possible scenario, despite mainstream media comments to the contrary. The fact that China responded with nothing more than 5-10% tariffs on $60bln of U.S. imports soothed the markets, and stocks rallied. The mistake being made, however, is that China is unlikely done retaliating just yet, and there is likely more to come. What is clear is that neither side is willing to back down in this trade war, so it is probably going to get worse. This is why I still see a risk of higher USD/CNY (despite recent comments from the Chinese Premier to the contrary) and lower Gold prices ahead. The bigger question is: when does it all end? When does Gold finally bottom … Continue reading

The Final Gold Bull Market Confirmation Is Very Close

By Common Stock Warrants

Gold Price Forecast 2019/2018: The Final Gold Bull Market Confirmation Is Very Close

By Hubert Moolman

We are getting very close to what I believe is the final confirmation of the coming multi-year gold bull market. Although it is very clear that gold is going higher from around these levels, a move pass the $1 375 area would be that final confirmation, based on the update of this previously shown comparison:

gold similarity between 2018 and 1983

I have marked two fractals (patterns) 1 to 5, to show how they might be similar. I have also marked the point where interest rates peaked (in 1981), and where they probably bottomed (in 2016).

If the comparison with the 1980s pattern is justified, and the current pattern continues in a similar fashion, then gold will continue in a long bear market. However, there are just too many fundamental obstacles to such a scenario (interest rates being one of them), since gold appears to be ready for the next phase of the bull market which started around 2000.

A breakout at the top red line (the high at point 5 – $1 375) would almost certainly signal or confirm the bull market. This would be divergence from the 1980s pattern, and likely cause prices to rise really fast once the breakout is confirmed (when dealing with fractals, the biggest price movements occur when two fractals diverge – a breakout at the top red line is a divergence).

This, in my opinion, is the most likely outcome.

A breakdown at the bottom red line, could mean that prices will continue to follow the 1980s pattern, and go lower than $1000. Which would mean we will have to wait many years (even a decade) for the next gold bull market (very unlikely).

The movement between the two red lines will probably not persist much longer – we are likely to see a resolution by the end of September 2018.

For more on this and this kind of fractal analysis, you are welcome to subscribe to my premium service.

I have also recently completed a Silver Fractal Analysis Report as well as a Gold Fractal Analysis Report. You can also subscribe to this blog (enter email at the top right of this page) to get my regular free gold and silver updates.

…read more

From:: Common Stock Warrants

Gold Rallies Back Above $1200 and Some Great Articles

By Common Stock Warrants

A Great Time to Add Leverage To Your Portfolio

A big special thanks to our new and long time subscribers.

Are we starting to see the light at the end of this long downward spiral?

Perhaps.

On Friday gold closed at $1205 and silver at $14.77 both up strongly on the day.

Even more disastrous than the decline in gold and silver has been the decline in resource shares.

I continue to like and share with subscribers this long term monthly chart of the HUI – Golds Bugs Index.

The chart basically speaks for its self as we approach the apex of this long term consolidation. I continue to look for the upside breakout in the coming months.

The question I always ask is, what are you doing now to prepare for the breakout?

For me, there is only one way to play this ‘game’ by investing in quality junior mining companies and/or long-term stock warrants trading on those companies.

If you are not familiar with stock warrants, you can receive The Stock Warrant Handbook for FREE by visiting, http://CommonStockWarrants.com along with more freebies.

As well, many investors are finding great opportunities with warrants on the U.S. stocks in other sectors, bio-techs, pharmaceuticals, banking, blank check companies, etc.


Remember that only 25% or so of my personal portfolio is in stock warrants, the balance are common shares in the junior mining companies and I am on the hunt for new additions to my portfolio.

There are many interesting opportunities in stocks as well as the stock warrants available today, so if you are not a current subscriber, LET’S GET YOU STARTED NOW.

The next several years, 2018 – 2020 will see some exciting times in the PM sector and I am looking to make a fortune. Do you want to follow me? Let’s have some fun and make money together.

Recent Articles On Our Websites:

From the shores of Lake Chapala, Jalisco, Mexico

Dudley Pierce Baker
Founder-Editor
http://CommonStockWarrants.com
http://JuniorMiningNews.com

…read more

From:: Common Stock Warrants

Buying Opportunity as Gold and Silver Shorts Reach Record Levels

By Common Stock Warrants

Sprott Gold Report: Buying Opportunity as Gold and Silver Shorts Reach Record Levels

August 23, 2018

By Shree Kargutkar, Portfolio Manager, Sprott Asset Management LP

The Turkish lira has seen its value drop an astonishing 40% since the beginning of the year. The Argentine peso, the Brazilian real and the Russian ruble are the other victims of the emerging markets thrashing that continues to unfold.

As investors have fled the emerging markets and sought the safety of the U.S. dollar and U.S. equities, they have continued to increase their short positions in commodities. Most surprisingly, and counterintuitively, bets against precious metals (gold, silver andplatinum) have reached record levels.

YUAN-GOLD LINK?

The People’s Bank of China (PBOC) has kept a close eye on the emerging markets currency carnage. After seeing its yuan decline by more than 8% since April 2018, the PBOC reacted by imposing a stiff 20% reserve requirement on forward currency contracts. With the PBOC making it more difficult to short the yuan, and with the inverse correlation between gold and the yuan sitting at a five-year high, we wonder if traders are using gold as a proxy for shorting the yuan? Other astute investment managers have suggested this dynamic as well.

Figure 1: Correlation Between Chinese Yuan and Gold at Five-Year High (2013-2018). Source: Bloomberg. XAU, the ISO 4217 standard code for one troy ounce of gold, versus Chinese Yuan (CNY), as of August 20, 2018.

YTD GOLD SHORTS UP 275%, SILVER SHORTS UP 84%

Net speculative positioning in gold has declined significantly, currently at a 15-year low. Net positioning in silver has recovered slightly from a 10-year low set in April 2018. With investor’s sentiment at depressed levels, the short positioning in both silver and gold is catching our eye.

Short positions in gold are up 275% year to date. Investors are now short just over 215k contracts of gold or nearly 21.5 million ounces of gold. Short positions in gold have overwhelmed longs, whereby the net positioning in gold is now -3,688 contracts. The last time we saw a number this low and this negative was in 2001 when gold traded below $300/oz.

Figure 2: Speculative Gold Futures Shorts on CFTC Have Reached All-Time Highs(2008-2018). Source: Bloomberg. CFTC CEI Gold Non-Commercial Short Contracts/Futures Only as of August 20, 2018.

We have seen gold and silver do well following previous spikes in short interest. With over US$25 billion of gold being shorted, any meaningful short covering should produce a significant price appreciation in gold.

Figure 3: The Current Opportunity: Inverse Relationship between Spot Gold and Gold Futures Shorts (2013-2018). Source: Bloomberg. XAU, the ISO 4217 standard code for one troy ounce of gold, versus the CFTC CEI Gold Non-Commercial Short Contracts/Futures Only as of August 20, 2018

SILVER FUTURE SHORTS: A DANGEROUS GAME?

Interestingly, silver shorts are also at record highs at the time of this writing, up nearly 84% year to date. The latest data indicates that investors are short over 96,000 contracts of silver, representing almost 480 million ounces. This number is astounding to us for many reasons. With 852 million ounces of silver mined in 2017, 480 million ounces represent over 56% of 2017 annual silver production. Out of 852 million ounces, 209 million ounces ended up in silver jewelry and 657 million ounces were used in industrial fabrication including silverware. These two uses of silver alone represent 866 million ounces, according to The Silver Institute: World Silver Survey 2018 and are larger than the annual mined supply. The gap in supply and demand is met by silver scrap.

Suffice it to say that silver supply is tight. There are no mines scheduled to come on in the next year or two which would increase annual silver output by anything close to 450 million ounces. Unless an asteroid carrying half a billion ounces of silver lands on earth, we believe the shorts are playing a dangerous game with little to gain.

Silver Futures Shorts at All-Time Highs (2008-2018). Source: Bloomberg. CFTC CEI Silver Non-Commercial Short Contracts/Futures Only as of August 20, 2018.

AN EXTRAORDINARY OPPORTUNITY FOR CONTRARIANS

The bonfire of currencies has succeeded in distracting investors away from more important topics that underpin our bullish thesis on gold, namely, the escalating global trade war, rising geopolitical tensions and spiraling debt and budget deficits in the United States. Bearish sentiment towards precious metals has reached a climactic phase. If past is prologue, the current shorting frenzy in gold and silver futures will likely be followed by an intense short-covering rally.

Read my colleague Trey Reik’s recent post, Summer Test, for an even more in-depth look at gold’s recent performance.

…read more

From:: Common Stock Warrants

It’s Time For Serious Investors To Get On Board

By dudley

A big special thanks to our new and long time subscribers.

I continue to believe that gold, silver and resource shares are in a bottoming process.

Those bottoms might, just might have been reached last week, but no one knows for sure.

There are so many interesting opportunities with gold, silver, uranium companies and much more. And let’s not forget the long-term stock warrants trading on those companies.

For me, there is only one way to play this ‘game’ by investing in quality junior mining companies and/or long-term stock warrants trading on those companies.

If you are not familiar with stock warrants, you can receive The Stock Warrant Handbook for FREE by visiting, http://CommonStockWarrants.com along with more freebies.

As well, many investors are finding great opportunities with warrants on the U.S. stocks in other sectors, bio-techs, pharmaceuticals, banking, blank check companies, etc.

Remember that only 25% or so of my personal portfolio is in stock warrants, the balance are common shares in the junior mining companies and I am on the hunt for new additions to my portfolio.

There are many interesting opportunities in stocks as well as the stock warrants available today, so if you are not a current subscriber, LET’S GET YOU STARTED NOW.

The next several years, 2018 – 2020 will see some exciting times in the PM sector and I am looking to make a fortune. Do you want to follow me? Let’s have some fun and make money together.

Recent Articles On Our Websites:

From the shores of Lake Chapala, Jalisco, Mexico

Dudley Pierce Baker
Founder-Editor
http://CommonStockWarrants.com
http://JuniorMiningNews.com

…read more

From:: Common Stock Warrants

Hyper-inflationary Gold at $175 Billion Dollars

By Common Stock Warrants

HYPERINFLATIONARY GOLD AT $175 BILLION DOLLARS

August 2, 2018

by Egon von Greyerz

The Sword of Damocles is hanging over the world economy, held only by a single hair of a horse’s tail. With such visible danger, the problem could have been fixed easily by either using a gold chain or even removing the sword altogether.

But the elite, and central bankers have had other plans. Instead of replacing the hair with a solid metal chain, the sword is today hanging by a very fragile thread that can break at any time.

The global financial system was on the verge of collapse a decade ago. Central banks around the world, led by the Fed injected around $25 trillion in loans and guarantees. Banks like Citigroup, Morgan Stanley, Merrill Lynch and Bank of America got trillions. (see table below).

Today, more than ten years since the Great Financial Crisis started, the debt problem has become uncontrollable. Global debt has doubled since 2006 and together with derivatives and unfunded liabilities risk has grown exponentially. So $100s of trillions increase in debt and liabilities has not bought the world enduring stability but instead weakened the foundations on which the world economy rests to an extent that the next rescue attempt will totally fail.

NEW WORLD ORDER GOVERNMENT

It is therefore inevitable that the Sword of Damocles will soon drop and cause irreparable damage to the world. We can speculate if central bankers are totally unaware of the risks or if they have a hidden agenda. There are theories that the elite will orchestrate a collapse of the dollar and of the financial system which will cause global panic. The purpose would be to hand over political and economic power to a centralised authority with the BIS (Bank of International Settlement) and the IMF playing a central role. Social unrest and migration is all part of the plan. The ultimate goal would be a NWO (New World Order) government and currency. Microchipping everyone and eliminating private property would be also be part of the plan.

Whether this is all conspiracy theory or if a clandestine plan of this nature actually exists, time will tell. For most people it all seems very farfetched and unlikely. What seems more certain is that when the current economic super bubble bursts there will be dramatic changes in the world economy and in the political system. If governments and central banks lose control over both the financial system and the political system then the vacuum created could be extremely dangerous. If law and order cannot be maintained, then the whole fabric of society will disintegrate. That would also involve the breakup of national borders as well as mass migration on a much bigger scale than we have seen so far.

A DIFFERENT WORLD

Whatever the exact course of events, the world will experience major changes starting in the next few years. By mid-century our children and grandchildren will live in a very different world to the one that the West has experienced since WWII. Humanity has always adapted throughout history and most certainly will this time too. But there is likely to be a lot of suffering and hardship for a major part of the global population. The explosion in the world population from 1 billion to 7.5 billion since 1850 is likely to reverse. This will lead to a reduction of maybe 2-3 billion people due to war, civil unrest disease, famine and lack of nutrition.

All forecasts are by definition wrong so only future historians will get the facts right. What is going to happen in the shorter term is easier to forecast with greater accuracy. When the Sword of Damocles falls within the next 1-3 years, the damage inflicted to the financial system will be of such magnitude that central banks desperately will print $100s of trillions or quadrillions to save the system. But this time the printed money will have no effect. Instead it will destroy the value of money and create the biggest global hyperinflationary period in history.

GOLD REVEALS GLOBAL CURRENCY COLLAPSE

Major trends normally start in the periphery before they move into the centre. There is no better measure of hyperinflation than gold. Because gold reveals the mismanagement of the economy and the debasement of the currency that has been rampant in most countries in the last 100 years. If we just take the dollar, it has declined 97% against gold since 1970 and 80% since 1999.

HYPERINFLATION IN VENEZUELA

But that decline is nothing compared to the countries that are already encountering hyperinflation.

By the end of this year, inflation in Venezuela is expected to reach 1 million percent!!

At that rate, Venezuela is now in the Weimar stratosphere. In January this year the IMF estimated that Venezuelan inflation would be 2,400% in 2018. Only the IMF can make such an incredible mistake in forecasting 2,400% when the actual will be 1 MILLION percent. What this also shows is that when hyperinflation takes hold it increases stratospherically. A cup of coffee cost 2,300 Bolivar a year ago and is now 2 million Bolivar. From August they will take five zeros off the currency. We will see how long it will be before hyperinflation adds them back again.

As Margret Thatcher said, “the problem with socialism is that you eventually run out of other people’s money. And that is where Venezuela is. An oil rich and previously prosperous economy turns to socialism and has now totally run out of money”.

And the effect on the economy is totally disastrous. GDP is down over 40% in the last 3 years. Just in 2018, GDP is expected to be down 18%.

<img src="https://goldswitzerland.com/wp-content/uploads/2018/08/venezuela_gdp-600×318.jpg" sizes="(max-width: 600px) 100vw, 600px" srcset="https://goldswitzerland.com/wp-content/uploads/2018/08/venezuela_gdp-600×318.jpg 600w, https://goldswitzerland.com/wp-content/uploads/2018/08/venezuela_gdp-150×79.jpg 150w, https://goldswitzerland.com/wp-content/uploads/2018/08/venezuela_gdp-768×406.jpg 768w, https://goldswitzerland.com/wp-content/uploads/2018/08/venezuela_gdp-720×380.jpg 720w, …read more

From:: Common Stock Warrants

Resource Investors – Will The Wait Be Worth The Pain? and Some Great Articles

By Common Stock Warrants

Resource Investors – Will The Wait Be Worth The Pain? and Some Great Articles

“I continue to look for gains of 500%, 1,000% and possibly more within the next 2 years.”

I’ve got some great articles for you today (see below) which should get you excited about the opportunities that lie in front of us.

Perhaps you have given up on gold and silver?

In my opinion, that would be a big mistake as I continue to see big gains on the horizon. I’m not talking about 5% or 10%. I am talking about opportunities that should bring us 1,000s of percent and more. I invest to hit home runs not a few percentage points. True, not all of these speculative investments will reward you and some will be losers which is why you need a basket of these opportunities.

The question I always ask is, what are you doing now to prepare for the breakout?

Yes, I know the markets are depressed and perhaps you have a right to be depressed, but things change folks and markets can change on a dime from bear to bull.

For me, there is only one way to play this resource sector and it is by investing in quality junior mining companies and/or long-term stock warrants trading on those companies.

If you are not familiar with stock warrants, you can receive The Stock Warrant Handbook for FREE by visiting, http://CommonStockWarrants.com along with more freebies.

As well, many investors are finding great opportunities with warrants on the U.S. stocks in other sectors, bio-techs, pharmaceuticals, banking, blank check companies, etc.


Remember that only 25% or so of my personal portfolio is in stock warrants, the balance are common shares in the junior mining companies and I am on the hunt for new additions to my portfolio.

There are many interesting opportunities in stocks as well as the stock warrants available today, so if you are not a current subscriber, LET’S GET YOU STARTED NOW.

The next several years, 2018 – 2020 will see some exciting times in the PM sector and I am looking to make a fortune. Do you want to follow me? Let’s have some fun and make money together.

Recent Articles On Our Websites:

From the shores of Lake Chapala, Jalisco, Mexico

Dudley Pierce Baker
Founder-Editor
http://CommonStockWarrants.com
http://JuniorMiningNews.com

…read more

From:: Common Stock Warrants