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Yellen’s Dovish Comments Lift Gold: GSB Weekly Review for July 13

News and Nonsense

Illinois, New Jersey, Connecticut, California, Chicago, Pension Crisis, and Impossible Debt:

Illinois raised taxes 30+ percent on individuals and corporations.  Intelligent and real solutions were not considered.  Politics and payback were paramount.  Rig for stormy weather if you live in bankrupt states or depend upon their pension plans.

“Those are huge tax increases…. In short, it won’t fix anything.”

Illinois is behind on accounts payable by $15 billion.  This should have been a clue to politicians.

 “Today, Illinois pension system owes $250 billion more than it has.”

 “… the inevitable U.S. public pension crisis has become imminent.”

 North Korea:

Must the U.S. crush North Korea, or should we concern ourselves with our own massive and possibly unsolvable problems?

From Charles KrauthammerThe Rubicon Is Crossed In North Korea

“… the choice is binary:  acquiescence or war.  War is almost unthinkable, given the proximity of the Demilitarized Zone to the 10 million people of Seoul.  A mere conventional war would be devastating.  And could rapidly go nuclear.  Acquiescence is not unthinkable.” 

EARLY WARNINGS:

Zero Hedge:  “Sornette’s Supercomputer is Betting On A Market Crash

Didier Sornette is a brilliant French mathematician.  The mathematics are complex, the conclusion is simple:

 “… FCO’s supercomputer is setting up for some sort of market crash or correction in the months ahead.”

A non-linear event in August of 2017?

 

CENTRAL BANKING:

From Zero Hedge:  “Ron Paul Jabs Janet Yellen:  She’s a False Prophet of Prosperity

“Yellen’s statement should send shivers down our spines, as there are few more reliable signals of an impending recession, or worse, than when so-called experts proclaim that we are in an era of unending prosperity.”

According to James Rickards, who should know, the Fed uses bad econometric models, which is why their forecasts are so often wrong.  Stormy weather ahead!

Yellen Testimony on July 12:

Short summary:  Yada Yada Dovish

More Details:  Read here.

From Graham Summers on Yellen Testimony:  “The US Dollar is TOAST 

From the always insightful Charles Hugh Smith:  The inevitability of DeGrowth

“Creating currency out of thin air isn’t free in our system:  all new currency is loaned into existence and accrues interest.”

 “Simply put, debt-dependent consumption in a world in which wages stagnate for the bottom 90% and energy costs increase as demand outstrips supply is a system with only one possible end-point:  collapse.”

What could go WRONG?

Zero Hedge:  “Deutsche:  Once the Carnage From Higher Rates Hits, Then We Move to Helicopter Money

Suppress bond yields, create more debt, “print” currencies, boost stocks, support fiat currencies, and pretend the problems are caused by anything but central bank policies…  The beat goes on.

GOLD, SILVER, AND THEIR STOCKS:

James Richards:  “A Tale of Two Gold Markets” – “Flash Crash”

“In the early morning hours of Monday, June 26, gold fell about 1%, from $1,254 per ounce to $1,242 per ounce, in a matter of seconds.

 “…1.8 million ounces of [paper] gold were sold at once… about 2% of the entire gold mining production of the world for a full year.  No one sells that amount of physical gold.”

 “Physical gold is scarce, difficult to source and already spoken for when you can find it.  Meanwhile, demand for physical gold remains robust.”

 “… there really is no true market for gold, just a rigged game consisting of physical gold and paper gold trading side by side as if they were one and the same.  They’re not.”

  “World’s 2nd Largest Silver Mine Shut Down

 Silver demand is strong, and supply was already weak. Low prices and closing mines further tightens supply.

Read:  Is Silver Fairly Priced At $16?

Monthly silver prices – log scale – are near the bottom of their uptrend since 9-11.  Unless you think that central bankers and politicians are competent managers, debt can exponentially increase forever, there is no problem with debt growing much faster than both revenue and the economy, and the Easter Bunny will make it all better … silver is too low and will rally substantially. 

Consider these graphs and news stories for:

AG – First Majestic Silver

ABX – Barrick Gold

NEM – Newmont Mining

 

 

Gold and silver stocks and ETFs show lows in late 2015, higher prices in mid-2016, and higher lows in 2017.  They have followed, with leverage, the highs and lows of silver and gold prices.  Barrick and Newmont are two of the largest global mining companies.  Most or all gold and silver mining stocks have been hurt by the low paper gold and silver prices.  Gold production has peaked, the surviving mining companies have cut costs. Their stocks will jump in price when silver and gold prices inevitably rise.

From Stewart Dougherty:  “The Gold Industry Is In A Massive State of Dysfunction, Delusion and Denial

 “The Financial Deep State is, of course, delighted by its success in making a laughing stock of gold, particularly as compared with virtually every other asset class in the world, including baseball cards and vintage Herme’s handbags, all of which have soared in price.  The destruction of gold sentiment has always been its main objective.”

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Do your own due diligence, but gold and silver bullion and stocks look like long-term buys at these prices, unless you believe in the excellence of central bank management, popular delusions, debt increasing forever etc.

CONCLUSIONS:

Another week, another Dow high, more flash crashes in gold and silver, central banks are “printing” billions of dollars per day, global debt exceeds $200 trillion and will never be repaid without massive currency devaluations, and gold and silver are “dirt” cheap.  Gold and silver mining stock prices have been crushed again and will rally – perhaps soon.

Global stock markets look ripe for a correction or crash.  Ask yourself the “Dirty Harry” question, “Do I feel lucky?”

If you think “lucky” is an unreliable plan, consider gold and silver bullion, gold and silver stocks, and a subscription to Gold Stock Bull.

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Article written for Gold Stock Bull by Gary Christenson of The Deviant Investor

By | 2017-07-13T12:56:32+00:00 July 13th, 2017|Gold & Silver Commentary|

About the Author:

Gary Christenson is the owner and writer for the popular and contrarian investment site Deviant Investor and the author of several books, including “Fort Knox Down!” and “Gold Value and Gold Prices 1971 – 2021.” He is a retired accountant and business manager with 30 years of experience studying markets, investing, and trading. He writes about investing, gold, silver, the economy, and central banking. Many years ago he did graduate work in physics (all but dissertation), so he strongly believes in analysis, objective facts, and rational decisions based on hard data.