Submitted by William Bonner, Chairman – Bonner & Partners
Like Asking Yourself for a Date
NORMANDY, France – “The Decline and Fall of America’s Working Class” is a subject that draws much interest.
Semi-skilled labor isn’t what it used to be. From our own simple calculation, last week, it appeared that in order to afford a typical new house and new car, a working stiff today would have to put in about twice as much time on the job as he would have 40 years ago.
“How come?” is the question most people ask. But we’ll come back with a different question in just a moment. First, a look at the markets: Investors decided to leave their worries on the doorstep on Monday. They crossed to the sunny side of the street, with the Dow up 237 points.
Who needs men? It’s a sheconomy now! Incidentally, the “home of the brave” has also turned into a nation of wimps, in which young men need to call the police for help and require “psychological counseling” upon discovering a mouse living in their apartment. But that is probably just a coincidence.
Image credit: iconspro
On Monday, traders woke up and said to themselves: what could be a better reason for buying stocks than a bloody terror attack? That Keynesian genius Professor Roubini already told us it will be good for the euro zone economy! War, death and destruction are the fathers of all things after all! – click to enlarge. Continue reading
Following up from yesterday’s nod toward monetary policy irrationality, the “relevant” markets today continue to profess their concurrence with it all categorized in that manner. I’m not just critiquing the readings of economists at the Fed and their conditional responses, I’m stating unequivocally that the entire affair, and all in it, has been reduced to pure farce. That starts squarely with the idea that the Federal Reserve, the nation’s deputized monetary agent, has any idea, let alone control, about money and money markets; dollar or “dollar.”
Trading today only furthers that thought as everyone, or at least the “right” people, now perceives December 17 as the final “liftoff” and “exit.” How I ended yesterday seems quite appropriate to open commentary today:
And so it is in that context that all this makes perfect sense; the Federal Reserve will target a money rate that nobody uses in order to project a story in which nobody believes so that economists can call this stunted, decrepit recovery a full one.
That is no interpretation on any account. Start with oil and copper, among other commodities. If the federal funds rate’s only job is to project economic confidence, copper trading below $2.08 again today and WTI trading below $40 again today grabs nothing but failure in that regard. Small wonder, too, given that the fundamentals of each are simply atrocious, having been so for now more than a year. This cannot be “transitory” factors, as true markets, where prices actually clear actual material (or don’t, as in US crude), are wrestling with exactly the same negativity right now as when the same FOMC story was told the first time.
Those who place their faith in a sustainable economic recovery emanating through government fiat will soon be shocked. Colossal central bank counterfeiting and gargantuan government deficit spending has caused the major averages to climb back towards unchanged on the year. Zero interest rate and negative interest rate policies, along with unprecedented interest rate manipulations, have levitated global stock markets. But still, sustainable and robust GDP growth has been remarkably absent for the past 8 years.
Equity prices have now become massively disconnected from underlying economic activity, and the recession in corporate revenue and earnings growth is exacerbating this overvalued condition. Throw in the fact that earnings have been manipulated higher by Wall Street’s recent prowess in the art of financial engineering, and you get an extremely combustible cocktail.
I have been on record saying this will end in chaos and here is how I think it will unfold:
Global central banks have universally adopted inflation targets, yet claim those goals have yet to be met. This is because of the inaccurate way governments measure consumer price inflation. Nevertheless, most of the new money created has been pushed directly into real estate, equities and bonds by financial institutions; thus primarily inflating the asset prices of the rich and increasing the wealth gap. And since these economic leaders equate growth with inflation, the inability to achieve inflation targets is viewed also as the primary reason why growth has remained so elusive. Continue reading
Submitted by Mark O’Byrne – GoldCore
Thomson Reuters has released their interim Silver Market Review including provisional supply and demand forecasts for 2015.
Highlights from that report include:
– Total silver supply is forecast to fall to 1,014.4 Moz* in 2015, down 3%
– Silver bullion coin sales at record high, up 95% year-on-year
– Coin demand should account for 12% of physical demand this year
– Silver market is expected to be in an annual physical deficit of 42.7 Moz* in 2015
– Silver prices this year are 18.3% lower than in the same period in 2014
*Millions of Oz
A one thousand oz silver bar
According to a recent review by silver analyst Steve St. Angelo, “The world has experienced consecutive silver deficits for the past 12 years”. Recently published data shows “three of the top five silver producing countries are showing large declines in production compared to the same period last year”. He also highlights the most important statement in the Interim Silver Market Review: “While such deficits do not necessarily influence prices in the near term, multiple years of annual deficits can begin to apply upward pressure to prices in subsequent periods”.
Other observations from the review include a predicted increased demand from industrial silver consumers – the photovoltaics industry, Solar and ethylene oxide producers – however, the total industrial demand for silver is forecast to fall by 4% to 570.7 Moz, and to account for 54% of physical demand in 2015. Total physical demand is also forecast to contract by 2.5% in 2015, to 1,057.1 Moz, primarily driven by a drop in demand from the electronics sector, a downward trend which begin in 2011.
The global ‘supply squeeze’ in silver coins, has forced some mints to ration sales and sending US-based buyers to seek coins from overseas. The Perth Mint have stated demand for silver coins is unprecedented (see “Silver coin demand is absolutely through the roof” – Perth Mint”).
Read the full Thomson Reuters Releases Interim Silver Market Review
Silverseek.com ‘World Silver Deficits –12 Years Running’
“Biggest Silver Supply Losers For 2015″
The minutes from the last Fed meeting were released on Wednesday afternoon. The minutes, along with a squadron of jabbering Fed heads lying about the economy doing great, pretty much locked in the most talked about .25% interest rate increase in world history. Evidently the Wall Street titans of greed have convinced the muppets higher interest rates are great for stocks, as the market soared by 250 points. As institutional money exits the market on these rigged up days, the dumb money retail investor buys into the market with dreams of riches just like they did with Pets.com in 2000, McMansions in 2005, and Bear Stearns in 2007.
The Fed has lost any credibility they ever thought they deserved by delaying this meaningless insignificant interest rate increase for the last three years, so they will make this token increase in December come hell or high water. They want to give themselves some leeway for easing again when this debt saturated global economy implodes in the near future. The Fed is trapped by their own cowardice and capture by the Wall Street cabal. If they raise rates the USD will strengthen even more than it has already. The USD is already at 11 year highs. It has appreciated by 25% in the last year versus the basket of world currencies. The babbling boobs on the entertainment news channels authoritatively expound with a straight face about the rise in the dollar being due to our strong economic performance. It’s beyond laughable, as the economy has been sucking wind since the day the Fed turned off the QE spigot in October 2014.
Chart of the Day Continue reading