The Israel Deception

Is the return of Israel in the 20th century truly a work of God, or is it a result of a cosmic chess move to deceive the elect by the adversary?

Wednesday, October 31, 2018

Shotgun Economics update for October 31 2018 - Financial Markets and Economic Wrapup


Researchers believe that cryptocurrency mining could affect global warming even more than coal burning

If people felt that the global warming propaganda couldn't get any worse, researchers from the University of Hawaii have taken it to the next level as a new study published on Oct. 29 concluded that Bitcoin mining could inevitably raise global temperatures by 2 Degrees making it a far worse threat than even that of coal burning.


Thanks to the massive amount of electricity needed to mine cryptocurrency, adopting bitcoin on a society-wide basis could raise global temperatures by two degrees Celsius in just 15 years, according to a new study. 
Researchers at the University of Hawaii calculated the electrical efficiency of the computers used in bitcoin mining as well as the emissions generated by producing electricity in those quantities and estimated that cryptocurrency-mining in 2017 emitted 69 million metric tons of CO2 – as much as 15 coal-fired power plants. 
Further calculations indicate that if bitcoin and other cryptos are adopted globally at the slowest rate at which new technologies are generally assimilated, carbon emissions from the mining could warm the planet two degrees in 22 years. If adopted at an average rate, such a rise would only take 16 years. Given the burgeoning popularity of cryptos, driven in part by declining faith in government-backed currencies, some predict the technology will catch on even faster. - Russia Today
Cryptocurrency mining has already enacted serious consequences to local power grids, as seen in Plattsburgh, NY where the town council banned crypto mining due to the fact that residents were suddenly having to pay higher energy costs due to the necessity of having to import extra electricity.

While the mining of cryptocurrencies does tax energy ecosystems quite a bit, it is extremely unlikely that in any way, shape, or form they are a catalyst for the global warming hype being propagated by scientists around the world.  But like the way corporations try to blame the weather whenever they have bad earnings to report, so too is the psuedo-science community grasping at any straw possible to push the propaganda that man is primary cause for making the world burn.

October saw gold outperform Bitcoin for the first time in several months

As market volatility raged through both the equity and bond markets in the month of October, an interesting dichotomy took place between two alternative assets.  And that is that for the first time in several months, gold outperformed Bitcoin.


While stocks fell, gold prices gained. Prices for the yellow metal started the month at $1,189 a troy ounce and were recently trading at $1,220, according to data from Bloomberg
Meanwhile, Bitcoin, which has been much heralded as a new alternative asset, lost value. The price of one Bitcoin started the month fetching $6,573 and was recently trading for $6,271. That's a drop of more than 4% so far in October. 
In this case, it should be clear that during the volatile month of October gold was a far superior safe-haven asset than was Bitcoin. - Forbes
Both Bitcoin and gold have for the most part traded in tight ranges minus a strong move by the precious metal back on 11th which took its price to up around $1240 per ounce.  And with markets expected to be even more volatile going forward after both the Fed and ECB announced less 'accommodative' policies during their last meetings, investors will be seeking to park their cash in safer havens than that of Treasuries or dollars.

Monday, October 29, 2018

Russia to join China in conducting non-dollar trade in Africa

The Eastern economic blocs continue to expand their gambit of de-dollarization as on Oct. 29, Russia joined China in preparing for bi-lateral trade on the African continent.

Seeking to accelerate the use of each nation's own currencies in international trade, the Chairman of the Russia-Zimbabwe Business Council announced that Russian corporations are now pushing for non-dollar alternatives in order to protect themselves from continuing sanctions being imposed upon them and their trade partners by Washington.


Russian corporations are ready to find an alternative to the greenback in mutual settlements with countries of the African continent, according to the chairman of the Russia-Zimbabwe Business Council, Dmitry Mazepin. 
“I think, it is possible to use other currencies in Africa,” Mazepin, who is also a co-owner of Russia’s largest fertilizer manufacturers, Uralchem and Russian fertilizer group Uralkali, told journalists. 
“We know that VTB is planning to extend its activity in the region. So, we could switch to settlements in the currencies that are more convenient to the lender.” 
Earlier this month, the Russian authorities announced plans to take all necessary steps towards de-dollarization of the country’s economy. The key point of the ambitious plan is to make it more profitable for key Russian exporters to use rubles instead of dollars. 
The measure is reportedly aimed at protecting the country’s economy against imminent US sanctions that threaten to ban investing in Russia’s sovereign bonds, as well as to cut the country off from dollar transactions. - Russia Today
Russia has joined China in realizing that the African continent will be a vital region for growth here in the 21st century, and where several African nations such as Nigeria and Zimbabwe have already opened their banking systems to not only accepting the Yuan as as viable trade payment, but also in accumulating the Chinese currency as one of their primary reserves.

While the U.S. engages in a policy of sanctions, tariffs, and economic warfare, the BRICS nations are instead focusing on expanding the internationalization of their own currencies through trade, lending, and infrastructure growth.  And with more than 40% of the world's population now being willing to accept the Yuan and Ruble in their own economies, the East has almost reached enough critical mass to isolate the reserve currency from one half of the world, and in making the dollar nearly irrelevant.

Dollar dumping continues as Japan signs its second non-dollar bi-lateral currency agreement within a week

A week ago, Japan became the newest economy to join the ongoing global de-dollarization movement when they signed a bi-lateral currency agreement with China.  Now just a few days later, they are doing the same with the world's fifth largest economy.

India and Japan on Monday concluded a $ 75 billion bilateral currency swap agreement to provide greater stability in foreign exchange and capital markets in the country. This swap arrangement is 50% higher in value than the last swap agreement signed between the two countries in 2015.  
This is the second big currency swap agreement between Asia’s two biggest economies after Beijing and Tokyo signed $30 billion currency swap arrangement last Friday, aimed at enhancing financial stability and spurring business activities in both countries. 
"This bilateral swap reflects the depth of our deeper economic relationship," India's Minister of Finance Arun Jaitley said after the sealing of the agreement during Indian Prime Minister Narendra Modi's visit to Tokyo for the Indo-Japan annual summit. 
India, Japan, and China signed the currency agreement against the backdrop of trade tariff war initiated by the US President Donald Trump early this year. The three countries also trimmed their ownership of US treasury bonds since the beginning of trade war. The Reserve Bank of India (RBI) has sold US treasury bonds worth $16.3 billion since April, with the country's stock plummeting to $140 billion in late August. - Sputnik News
Even before President Trump began his new tariff policy, coalitions such as the BRICS nations have been planning de-dollarization for at least five years now.  And with the global economy looking like it is headed towards another recession or perhaps even a potential collapse, few want to be relying upon the unipolar reserve currency in light of what happened to the Middle East during the Arab Spring eight years ago, or in anticipation of what may occur once sanctions become fully reenacted against Iran in November.

Friday, October 26, 2018

Long time U.S.ally Japan joins global de-dollarization movement by signing new direct bi-lateral trade agreement with China

Following World War II then West Germany (now unified of course), and Japan became virtual 'vassal states' to the U.S. under the terms of the surrender agreements they signed to end the conflict.  And over the past 70+ years these two nations have for the most part remained solidly in the sphere of American influence.

However with the U.S. now engaging in economic warfare against more than 10% of global economies by turning the dollar and reserve currency into a weapon, both of these long standing allies are now suddenly defying U.S. hegemony by proposing alternative policies that don't include use of the dollar.

And on Oct. 26, Japan took this move one step further by signing an agreement with rival China in a trade pact that would entail direct use of each other's own currencies.


Beijing and Tokyo sealed a multi-billion dollar currency swap arrangement on Friday, aimed at enhancing financial stability and spurring business activity in both countries.
According to the Bank of Japan (BOJ), the arrangement which will last until October 25, 2021, will allow the exchange of local currencies between the two central banks for up to 200 billion yuan or 3.4 trillion yen ($30 billion). 
The agreement was sealed during Japanese Prime Minister Shinzo Abe’s visit to Beijing for the first formal Sino-Japanese summit in seven years. The meeting comes as Asia’s two biggest economies look to strengthen relations against a backdrop of trade friction with the United States. 
The two main holders of the US Treasury securities, China and Japan have trimmed their ownership of notes and bonds in August. 
“With the strengthening of economic and financial linkages between Japan and China, Japanese financial institutions have been expanding their renminbi-based businesses,” said the BOJ. – Russia Today
Despite the fact that China is right now undergoing an economic slowdown that includes liquidity issues within their banks and equity markets, use of the Yuan in international trade settlement continues to increase as more and more countries around the world seek to find alternatives to the dollar and its unipolar reserve currency system.

And it's gone! Stocks lose all their gains in first two hours of trading following exuberant dip buying yesterday

On Oct. 26, equity markets have given up all their gains from the day before as the Dow, Nasdaq, and S&P 500 cratered during the first two hours of trading on Friday.


Thanks in large part to Tesla's Q3 announcement that they had finally achieved a profit here in 2018, and low volume dip buying on the Dow, stocks recovered a modicum of gains on Thursday.  However as has been the trend over the past week, every single positive day in the markets has been immediately followed by an even worse selloff that has brought both the Nasdaq and the S&P into correction territory.

Dow:


S&P 500:


Nasdaq:

Wednesday, October 24, 2018

Hey Bumbling Bernie Sanders, Sweden in not Socialist and succeeds because they even privatize welfare

Just like with the so-called Democratic Socialist candidate Alexandria Ocasio-Cortez, Senator Bernie Sanders is an absolute idiot and buffoon when it comes to him trying to impress Socialism on the American people.  And while he has fled his earlier statements of how great Venezuela and Cuba are because of their Socialist governments and economic systems, he is still clinging to the belief that Northern European states like Sweden are the perfect models for his Socialist dream.

The only problem however is... Sweden is not Socialist.


In a new expose done by the well respected investigative reporter John Stossel, Sweden's 'famous' welfare system is actually run on the backs of private enterprise and wait for it...

Taxing the poor, not the rich.



Sorry Bernie, but your ignorance when it comes to economics is only overshadowed by tup and coming fools like Ocasio-Cortez who can't even define the word Socialism.

Gold price holding strong over last 10 days as it closes over 100 day moving average for first time in six months

Following gold's highest jump in price on Oct. 10 since the Brexit vote a few years ago , it has surprisingly not only held those gains over the past 10 days, but just yesterday it closed above its 100 day moving average for the first time in six months.


For the first time since April 26, gold has closed above its 100-day moving average. Although gold closed well off of the intraday high, it did manage to close above the 100-day moving average for the first time in six months. Gold prices surged to a high of $1,243 before backing off, and as of 4:20 PM Eastern standard time, gold futures are currently fixed at $1,233.20, which is a net gain of $8.60 (+0.70%) on the day. - Kitco
Looking at the gold chart we also see that the price appears to be creating a new floor at around the $1228 mark, which bodes very well for the precious metal as market turmoil and geopolitical chaos forces investors to seek safe havens for their cash going into the rest of the year.

Mexico mulling over making marijuana legal as dominoes beginning to fall following Canada's legalization last week

Last week, Canada officially became the first nation to legalize marijuana across an entire country.  And while The Netherlands has decriminalized the personal use of pot for years, it still remains illegal under the law.

Now just a week later, this legalization by America's neighbors to the North appears to be sparking a domino effect as on Oct. 24, officials in Mexico are mulling the idea of legalizing cannabis in their country.


Mexico’s incoming foreign minister, Marcelo Ebrard, said the country could “absolutely” follow Canada in legalizing marijuana as a way to reduce violence generated by a war on drugs that “doesn’t work.” 
This week he met with Canadian Foreign Minister Chrystia Freeland and said that Ottawa’s experience “is a very interesting option in the short term for Mexico.” 
According to Ebrard – who will become foreign minister when Mexico’s president-elect, Andres Manuel Lopez Obrador, takes office on December 1 – “there are two options: the Canadian model or the Uruguay model.” 
Ebrard explained that “It doesn’t make sense to have a law forbidding the possession or production of cannabis and we have 9,000 people in jail for that, we have a huge amount of violence in the country.” 
“You spend a huge amount of money [on policing], you cause suffering for a lot of people and it doesn’t make sense,” he added. 
“[Prohibition] doesn’t work, you have the cannabis anyway,” the incoming FM said. – Russia Today
The Prohibition Era in the U.S. during the 1920's proved that not only does making a relatively safe vice illegal not work, but in the end it makes things much worse for both society and law enforcement as it drives the substance into the criminal realm.  And 100 years later, Washington is still failing to recognize this truth as the 40+ year War on Drugs has resulted in millions of incarcerated Americans, and an opioid crisis that is out of their control.

Science has proven that cannabis has an extraordinary amount of lower cost benefits in the realms of medicine and pain relief, and the public overall has reached a point where a majority of individuals are now in favor of its legalization.  And since one of the government's hidden altruism's is 'If you can't beat it, then co-opt it so you can tax it', perhaps Mexico is coming to the same realizations that Canada has in turning the tables where the legalization of cannabis can make you money, rather than cost you it.

Tuesday, October 23, 2018

Shotgun Economics update for October 23 2018 - Financial Markets and Economic Wrapup


America's conundrum in needing to give Saudi Arabia the benefit of the doubt isn't about Saudi's money, but the fate of the U.S. dollar

There is an interesting thing about criminal investigations that are considered 'too perfect', where even the investigators start to question whether the event was staged, or that their prime suspect was potentially framed by the real culprits.

We mention this conundrum because this is exactly what is taking place right now in regards to the killing of Saudi journalist Jamal Khashoggi, and the 'evidence' surrounding it which curiously was handed to the media on a silver platter almost minutes after it took place.

But this article is not about the investigation, conspiracy, or who was behind Khashoggi's death.  Instead it is about the responses being made by the Trump administration and why the President is patiently giving the Saudi government as much benefit of the doubt as possible before reacting.


It has been more than a generation since the United States monetary system discarded the long-standing Gold Standard and embarked on a fiat currency system by which they tied the dollar and reserve currency to oil.  And to facilitate this 'Petrodollar' system, they needed the partnership of the leading authority over OPEC, which of course was the Saudi royal family.

This bargain between thieves has lasted now for 44 years, and has been the primary foundation behind America's empirical power, and the vast wealth accumulation by the House of Saud.  And because of this, not even Saudi citizen involvement in 9/11 could break that bond because it would mean the financial collapse of the United States.

President Trump knows this, and realizes that to stand with the rest of the globalist world in vilifying, castigating, and even sanctioning Saudi Arabia without absolute proof would mean that he is accepting the fact that the world economy could be plunged into chaos by his hand because the probable reaction by the Saudi government would be to instantly disband the Petrodollar, and to cause oil prices to spike up to levels that would crush a majority of nations.

In the end there is too much at stake for the United States to simply respond with reactionary outrage in order to appease opposition forces that already hate President Trump, his policies, and what he is trying to do by dismantling the globalist built system.  And like any good leader, there will be time enough to dole out the proper punishment when the evidence finally avails itself, especially since this event was done not to the United States itself, but most probably by rogue Saudi officials on one of their own citizens.

Monday, October 22, 2018

U.S. seeking to bully SWIFT into becoming an economic weapon which could lead to a showdown between Trump and the EU

The way that President Trump has alienated so many nations over Iran, one has to truly wonder if his real intention is to force everyone into abandoning the dollar entirely.  Because that is what appears to be where Washington is heading as the Treasury Department is right now in the process of trying to bully the authorities over SWIFT to turn the global messaging system into an economic weapon.

To achieve the US goal of further isolating Iran from the global financial community, Mnuchin said that the U.S. Treasury was already in negotiations with the Belgian-based financial messaging service SWIFT which intermediates the bulk of the world’s cross-border dollar-denominated transactions, on disconnecting Iran from the network. Washington has been pressuring SWIFT to cut Iran from the system as it did in 2012 before the nuclear deal. 
Validating European concerns that the US can and will weaponize the dollar at will and use the reserve currency as a global bargaining chip, Mnuchin's threats confirmed that although the United States does not hold a majority on SWIFT’s board of directors, the Trump administration could impose penalties on SWIFT unless it disconnects from Iran, pressuring it to comply with US demands. 
"I can assure you our objective is to make sure that sanctioned transactions do not occur whether it’s through SWIFT or any other mechanism,” he said, “Our focus is to make sure that the sanctions are enforced." - Zerohedge
Interestingly, if this is truly Trump's gambit to force de-dollarization on the rest of the world then it appears to be working.  Because not only have two of the biggest economies in the world (Russia and China) already created their own alternative to SWIFT which would allow nations like Iran to transact in cross-border payments outside the dollar, but Europe is also rushing headlong towards the creation of their own system which would subsequently make the SWIFT system close to obsolete.

Nations all around the world shoring up their currencies and central bank reserves by dumping dollars and accumulating gold

It is unfair to say that India is new to the game of gold accumulation, but what is different this time is that a large amount of buying is coming from the country's own central bank.

In a sudden sea-change from the recent past where the Reserve Bank of India (RBI) was trying to dissuade the use of gold in their economy in exchange for fiat currency, a new report is out showing that the central bank is now actually dumping its dollar reserves (Treasuries) in order to help shore up the Rupee while also accumulating gold as a replacement reserve asset.


The Reserve Bank of India (RBI) is cutting down on its holding of US Treasuries, joining a number of countries which have been dumping US debt to bolster domestic economies. 
The country’s share of US sovereign debt saw a gradual decline from $157 billion in March to $140 billion as of the end of August, according to the latest US Treasury report. RBI needed US dollars to sell in the market to stop the steep slide of its currency, the rupee. The bank has sold foreign currencies worth $18.6 billion in the spot market since April to rein the value of the rupee. 
Foreign portfolio investors (FPI) have pulled out more than $10 billion of their investments in the Indian markets since April. That has resulted in rupee losing more than 10 percent in value against the dollar. 
“If FPI flows do not revive amid an US-China trade war, the RBI may need to sell another $10-15 billion by March,” said Bank of America Merrill Lynch. According to its report, there could be more pressure on India's central bank to sell US bond holdings in order to meet the dollar demand. 
Experts say the RBI may be using part of the sales proceeds of the US bonds to buy gold. Statistics showed that the bank’s gold reserves grew to 18.64 million troy ounces in August from 18.01 million troy ounces in March 2018. – Russia Today
However India is not the only country to be rushing to accumulate gold in the global de-dollarization movement.  And with the U.S. right now in negotiations with SWIFT to turn the reserve currency into a full on economic weapon, we can expect to see even more nations besides the emerging market ones to follow this trend of dollar divestiture.
Countries around the world are turning to gold as uncertainty about the global economy rises. Trade wars and the aggressive policies of the United States are making emerging economies withdraw from dollar assets, analysts told RT. 
“The aggressive US policy in recent years has forced some countries to look for an alternative to the dollar and replenish their gold reserves. Worries about the future growth of global economy are an additional incentive for purchases. Many question Donald Trump’s protectionism.”  
There are signs that the global financial system dominated by the US dollar could collapse, says financial institute FinIst analyst Denis Lisitsyn. These signs include the uncontrolled emission of money from different countries, an increase in US interest rates, trade wars, the rapid rise in energy prices, geopolitical tensions in Syria, Iraq, the war in Yemen, he says. 
“Many countries are buying gold in advance. They understand that paper money is constantly eaten up by inflation, equities will sharply fall in price in case of a crisis, and foreign deposits can be arrested, confiscated or frozen,” he said. 
Hungary, Poland, Russia, China, India, Turkey, Saudi Arabia are all hoarding gold, notes Vladimir Rozhankovsky, LIFA, expert at the International Financial Center. - RT

'Alien invasion' from Honduras moving faster than humanly possible to be at the border on election day

In what started as a couple of thousand of Hondurans suddenly getting the idea they could trek thousands of miles northward to freely cross over into the United States has morphed into a full fledged 'Alien invasion' that appears to be a ploy to influence the mid-term elections on Nov. 6.

In an interesting observation from economist Jim Rickards this morning, it would take the average healthy person approximately two months to walk from Honduras to the U.S. border.  However when you calculate the actual pace in which they are moving, it appears now that most of the pictures being shown by the press are little more than propaganda and that the migrants are stealthily traveling by some forms of motorized vehicles to ensure they reach the border in the next 15 days.

It's about 1,500 miles from Guatemala to Texas. At 30 miles per day (a healthy clip) it would take almost two months to walk. So, if these people show up before the election, they didn't walk, they drove. These crowd photos are fake news. – Jim Rickards
In addition, a video emerged over the weekend showing migrants receiving payments from what appears to be members of an NGO to fund their trip and incentivize their breaking of international laws.


President Trump through intelligence sources has already discovered that this Caravan has been infiltrated with many non-Hondurans, including potential terrorists, criminal elements, and even so-called 'refugees from Syria'.  And if accurate, it would mean the same organizations who paid for the migrant invasion into Europe is helping to fund this political scheme to influence the upcoming elections.

When you add in the suspicious killing of Jamal Khashoggi last week, coupled with the increased violence being perpetrated by the Democratic left against conservatives over the past several months, then one has to question every single anomalous event occurring in the leadup to Nov. 6 as being suspect rather than simply a random act.

Friday, October 19, 2018

Shotgun Economics update for October 19 2018 - Financial Markets and Economic Wrapup


Thursday, October 18, 2018

All of a sudden gold has not only disconnected from the Chinese Yuan, but it is also moving with and not against the dollar

For most real gold investors, understanding that the market runs via manipulation in the paper markets is a long held reality.  However 2018 has seen some interesting anomalies take shape which include the price of gold moving in lockstep with the Chinese currency.

Chart courtesy of Kitco

Yet with the sudden and recent moves upward by gold over the past week, which saw it break out of a long three month range and climb back above its 50 day moving average, an alternate dichotomy has also taken place as the gold price appears to not only have disconnected with the Chinese Yuan, but it is also moving with, rather than against, the U.S. dollar.
Yesterday, when looking at a chart of gold priced in yuan, a level which the PBOC appeared to be far more concerned about than the yuan-dollar exchange rate, we asked if the Chinese central bank had "lost control", because after managing to "peg" its currency at roughly 8,300 Yuan per oz of gold in Q3, something snapped this week when the PBOC appeared to lose its ability to managed the peg. 
Whether due to desperate liquidity needs elsewhere or defending stocks as they begin to freefall, the Yuan suddenly plunged back to 8,500 per oz of gold. 
Just 24 hours later, the topic of the Yuan gold peg "breach" prompted Nomura's Bilal Hafeez to observe that "Something is going on in CNY." 
As the Nomura strategist writes in an email to clients, even though the dollar has not moved much against the euro or yen today, "the Chinese yuan is falling to new lows against the dollar. Not only that, but the tight gold-CNY relationship I flagged last week appears to breaking down with CNY much weaker than it should be." - Zerohedge
Yuan - Gold peg breakout:


Dollar chart:


Gold chart:


While this divergence between gold and both currencies may simply be an anomaly, it does signal a serious warning for China who are now back to fighting a currency war directly against the dollar, rather than through the ability to use the gold markets as a buffer as was part and parcel for most of 2018.

Wednesday, October 17, 2018

Shotgun Economics update for October 17 2018 - Financial Markets and Economic Wrapup


Canada turns over a new leaf as nation set to become better known for cannabis than for maple syrup

Perhaps Canada should declare a proclamation changing the Maple Leaf on their flag to that of a Cannabis Leaf as on Oct. 17 the nation became the first to officially legalize marijuana across its domain.

Canada on Wednesday became the first major world economy to legalize recreational marijuana, beginning a national experiment that will alter the country’s social, cultural and economic fabric, and present the nation with its biggest public policy challenge in decades. – NY Times
Canada is the first country to accept the economic and medicinal potential that cannabis provides, and is at the forefront of not only recognizing its potential as both an import and export industry, but also as a segment of the economy that could spawn massive growth in areas such a cuisine, medicine, and recreation.

Additionally, Canada is also permitting its mail system to process shipments directly to consumers which adds the potential for online commerce expansion in this burgeoning industry.
Legal cannabis is set to usher in a wave of high-value, age-restricted parcels in the mail system, and delivery companies say they’re ready. 
The test of the system will come as Ontario relies entirely on the postal system for deliveries when pot is legalized on Wednesday while other provinces expect to see a fair portion of sales from online. 
All provinces will require strict age verification of deliveries, but a combination of existing practices and new systems will help Purolator with the challenge, said Ramsey Mansour, vice-president of corporate strategy and marketing at the company. – Global News
Legalization of both hemp and cannabis could very soon blossom into a trillion industry, and be a much safer alternative to the monopolies held by Big Pharma and Big Agriculture.  And just like in how alcohol prohibition failed because you can't legislate morality, it may be only a matter of time before nations like the U.S., Mexico, and even the EU find the political will to legalize cannabis in their own domains. 

August saw both China and Japan dump Treasuries which adds another catalyst to rising bond rates

One of the primary things that has kept inflation from raging across the U.S. economy over the past decade as the Fed conducted a historic amount of monetary expansion has been America's reliance upon foreign entities being willing to purchase dollars and dollar based assets.  But unfortunately for the U.S., the days of mindless acceptance of the dollar by nations has crossed the Rubicon.

Besides Russia dumping the majority of their dollar reserves since the beginning of the year, a growing number of countries have simply chosen to stop their accumulation of dollars which has forced the Fed to often have to buy its own bond issuance to protect the market.  And now we are finding out that the two biggest holders of Treasuries are becoming net sellers as both China and Japan sold off dollars in August for the first time in several months.

China and Japan – the two main holders of the US Treasury securities – have trimmed their ownership of notes and bonds in August, according to the latest figures from the US Treasury Department, released on Tuesday. 
China’s holdings of US sovereign debt dropped to $1.165 trillion in August, from $1.171 trillion in July, marking the third consecutive month of declines as the world’s second-largest economy bolsters its national currency amid trade tensions with the US. China remains the biggest foreign holder of US Treasuries, followed by long-time US ally Japan. 
Tokyo cut its holdings of US securities to $1.029 trillion in August, the lowest since October 2011. In July, Japan’s holdings were at $1.035 trillion. According to the latest figures from the country’s Ministry of Finance, Japanese investors opted to buy British debt in August, selling US and German bonds. Japan reportedly liquidated a net $5.6 billion worth of debt. 
Liquidating US Treasuries, one of the world's most actively-traded financial assets, has recently become a trend among major holders. Russia dumped 84 percent of its holdings this year, with its remaining holdings as of June totaling just $14.9 billion. With relations between Moscow and Washington at their lowest point in decades, the Central Bank of Russia explained the decision was based on financial, economic and geopolitical risks. – Russia Today
As an ever growing number of nations begin to reject the dollar as a medium of exchange for trade, holding dollars in reserve is rapidly becoming unnecessary.  And this de-dollarization policy is certainly creating a huge problem now in the bond markets, and a major reason for the dangerous spike in yields which could prove disastrous for the U.S. and its ability to cover and expand their debt requirements.

Tuesday, October 16, 2018

How ironic is it that Russia has become the world's most stable economy after dumping their dollar reserves and swapping them out with gold

If we were to ask you what you thought of a country that has little debt, record low unemployment, 3.1% expected economic growth, and an economy that produces the two most important commodities in the world, which nation would you guess fits this description?

Additionally, what if we mentioned that this country has also been under intense economic sanctions for the past five years?

If you guessed Russia then you are absolutely correct.  And perhaps what is most ironic is that they are achieving this at a time when most of the world's other economies are teetering on the cusp of recession, enduring a growing debt crisis, or dealing with tightening liquidity.

Russia is financially stable despite sanctions, President Vladimir Putin said at a meeting with Central Bank officials on Tuesday. Higher reserves and falling dependence on oil are the key factors, according to the president. 
“The financial market remains stable. That is thanks to the joint actions of the government and the Central Bank. Our foreign exchange reserves have increased by 5.7 percent since the beginning of this year and are already at $459 billion,” Putin said. 
Russian foreign reserves consist of foreign exchange, special drawing rights (SDR) holdings, the reserve position in the IMF, and monetary gold. They reached their highest level before the global crisis of 2008 at $598 billion. 
The economy shows growth, too, Putin noted. “In general, the picture in the Russian economy is generally positive. Industrial growth for eight months amounted to 3.1 percent, including manufacturing production that grew by 3.8 percent,” the president said. 
Putin also noted the consistently low inflation and unemployment. “In August, unemployment fell to 4.6 percent, which is a record low, and inflation in September was 3.4 percent.” – Russia Today
Russia, even more than China, has led the way in global de-dollarization and cutting off as many strings in which the United States could use to put more economic pressure on the Eurasian power.  And by diversifying their primary industries now with agricultural exports, they have also been able to protect themselves from the gambit used by Washington back in the late 1980's to bring about the fall of the Soviet Union.

27 years after that fall, it is perhaps apropos that Russia is the one leading the way in helping to bring down the U.S. by attempting to cut off its power not through oil, but in their control over the global reserve currency.  And a big part of this has been in their decision to dump their dollar reserves in exchange for gold, and set themselves up to be a huge winner during the next global currency reset.

Hungary is the next country to join the global push of nations filling their coffers with gold reserves

Hungary has now joined Poland here in October in their announcing a major monetary policy shift within their central bank reserves.

On Oct. 16, Hungary reported that they have boosted their gold reserves 10-fold, and are labeling the accumulation of the precious metal as one of 'economic and national strategic importance' in the wake of emerging market turmoil as well as a slowdown in the global economy.

Hungary’s central bank has announced the country has boosted its gold reserves tenfold to 31.5 tons. The regulator says it wants to improve the security of the nation’s wealth and to reduce risks. 
According to the bank’s governor, Gyorgy Matolcsy, the decision was of “economic and national strategic importance” and has been made after Prime Minister Viktor Orban requested a year ago that the bank assess its gold strategy. 
Matolcsy has also recalled Hungary’s heritage as one of the world’s largest gold producers in the Middle Ages. 
Gold now accounts for 4.4 percent of Hungary’s national bank’s reserves, according to the bank’s vice-president Marton Nagy. - Russia Today
Hungary's President Viktor Orban is considered to be cut from the same cloth as President Trump as he also rose to power in the midst of the ongoing global populist movement.  And like his fellow world leader, is a big proponent of the gold standard.
Donald Trump: “We used to have a very, very solid country because it was based on a gold standard,” he told WMUR television in New Hampshire in March last year. But he said it would be tough to bring it back because “we don’t have the gold. Other places have the gold.” 
Trump’s comment to GQ: "Bringing back the gold standard would be very hard to do, but boy, would it be wonderful. We’d have a standard on which to base our money." - Forbes

Monday, October 15, 2018

Gold breaks through strong resistance as last week's move took it above its 50 day moving average for first time since April 20

With the gold price having been controlled over the past several months by numerous speculators in the futures market who have built a record amount of short contracts, last week's move of over $35 was extremely significant for the sentiment of the precious metal.  And that is because for the first time since April 20, the gold price broke through and has sustained a support above its 50 day moving average.

On a technical level, yesterday’s strong price advance took current pricing above $1,200, a key psychological level of either resistance or support, and more importantly above the 50- day moving average. The last occurrence of gold closing above its 50-day moving average was on April 20. 
Lastly, yesterday’s strong gains took gold prices above the .618% retracement which is currently at $1,217.60. This retracement is from an extremely long data set beginning at the end of 2016 when gold was trading at $1,124 per ounce, up to this year’s record highs at $1,369 per ounce. 
Most importantly yesterday’s dynamic upside move resulted in gold trading out of its defined and narrow trading range for the first time since August. If gold can effectively continue to trade above $1,218 per ounce, it could move to higher ground.  - Kitco
Adding to last week's strong move is today's price rise of over $11 which has seen gold touch on the $1230 handle for the first time since early in the year.  And with increasing volatility in the equity markets, coupled with growing economic turmoil around the world like as we saw over the weekend in Saudi Arabia, it appears that gold may be regaining its place as the one true safe haven asset, which bodes very well for the price going forward at least through the end of the year.

Russia proposes that SCO members no longer use the dollar in bi-lateral trade which would affect 40% of the global economy

As de-dollarization continues to accelerate across the globe, Russia on Oct. 15 suggested to member nations of the Shanghai Cooperation Organization (SCO) that they as a whole divest their need to use the recognized reserve currency and instead start conducting trade with each other in their own currencies.

Speaking at the SCO Council Meeting being held in Tajikistan this week, Russian Prime Minister Dmitri Medvedev sought to inject the Eurasian power's view that the world no longer needs to rely upon a uni-polar reserve currency in conducting bi-lateral trade with one another, and that continued reliance on the dollar means that nation's would continue to be bound to the whims of the U.S. any time they desired to inflict economic warfare on their economies through sanctions or tariffs.

Transitioning to mutual settlements in national currencies could open prospects for countries of the Shanghai Cooperation Organization (SCO), according to Russian Prime Minister Dmitry Medvedev. 
Talking at the SCO council meeting in Tajikistan, the PM said there’s need in such a step and the Russian government supports the idea. He, however, noted that “it is necessary to act carefully.” 
According to Medvedev, “The external conditions we are working are still difficult and can hardly be called comfortable. The system of strategic stability faces serious challenges.” 
He stressed that “some states use unfair competition, introducing protectionist measures, illegal unilateral sanctions” in order “to maintain their dominant positions.”Medvedev explained that such attacks are mainly directed against Russia and China as key members of the SCO, as well as their partner Iran. – Russia Today
At this time in history, the U.S. has imposed economic sanctions on over 10% of global economies and has been seeking to restrict the sovereign power of European nations in choosing to trade with Iran ever since President Trump took office.  Additionally, sanctions imposed upon Russia by Washington going back to 2013 have taken their toll on most of the EU as countries have been forced to abdicate hundreds of billion of euros in lost trade over the Ukraine question and Russia's re-consolidation of the Crimea.

Up until this decade, nearly all global sanctions imposed on nations were addressed by the United Nations in a joint partnership, rather than unilaterally by a single nation.  And it is this change that began with the Obama administration and has since carried over to President Trump as well, that has accelerated the world both dumping the dollar, and seeking to end its hegemony as the primary reserve currency.

Saturday, October 13, 2018

G20 tries to fight back against Trump and Populism in a new report by saying globalism is the key to individual prosperity

If you thought that President Trump's war on globalism was going to be easy, you were certainly very mistaken.  Because if within human nature a strung out thug on the street would be willing to kill for less than $5, what do you think the Establishment would be willing to do when trillions of dollars are on the line?

Needless to say, the current climate of populism and nationalism is scaring the Establishment to the core, as nations like Italy threaten to tear down the European Union, and individuals like Donald Trump work towards tearing down their plans for a one world government.  And thus we have seen a growing amount of rhetoric emerge from individuals like Jean-Claude Junker and Christine Lagarde, and now institutions like the G20 as they attempt to save the current globalist system, and a tearing down of their 'Deep State' plans.

Wide-ranging reforms are needed to reset the global financial system and make it work amid turbulent times, an international panel of top economists and leaders said yesterday. 
The Group of 20 (G-20) Eminent Persons Group on Global Financial Governance, in a report issued at the International Monetary Fund-World Bank annual meetings, underlined that the open and competitive world order of the past 70 years has lifted many out of poverty and fostered peace. But the system of international governance and cooperation that underpins it is fraying, and there is a real risk of drift into a fragmented world, in which all nations would end up losing, it said. 
"There is no going back to the old multilateralism. There is no single conductor. There are already many more orchestras in play," it added. "The world needs a new harmony." 
There must arise a new, cooperative international order that will help nations achieve stronger, more inclusive and more sustainable growth, the panel said.Straits Times
Globalists love to tout how they, not pure unadulterated capitalism, have brought more people out of poverty than any other mechanism in history.  But in reality they have done just the opposite, as seen from the results in Southern Europe following the 2008 Financial Crisis, and the effects of NAFTA to the United States as nearly all their manufacturing was shipped off to third world countries.

Globalism is about economic and political enslavement, not in providing freedom and betterment to the people.  So it should not be surprising that the Establishment is doing all they can to try to stop the global populist movement in its tracks, before they potentially find themselves left out in the cold as their New World Order reverts back into an Older World Order.

Challenging global economic conditions, including a combination of low growth, a limited number of jobs, and rising inequality, are fueling the rise of nationalism and populism that are a threat to global cooperation, IMF Managing Director Christine Lagarde said in a speech at CGD.

U.S. and global stock market turmoil should continue as last week showed that the Fed is now focused on inflation fears over market intervention

Last week saw the Dow fall over 1300 points on Wednesday and Thursday before a small recovery rally on Friday brought a modicum of relief to equity traders.  However perhaps the most important thing that came out of the Dow, S&P 500, Nasdaq, and even global markets cratering in the latter half of the week, is that Chairman Jay Powell's recent comments of a Fed no longer being accommodative appears to have indeed come to pass.

In the Federal Reserve's last FOMC in September, Chairman Powell initiated a sea-change in the central bank's monetary policy where they would no longer be 'accommodative' to the markets since the Fed needed to focus more on bond yields, recession fears, and most importantly, rising inflation.

Federal Reserve policymakers have been able to stave off sharply higher inflation even with low unemployment by managing expectations, central bank Chairman Jerome Powell said Tuesday. 
Should those attitudes change, Powell said in a speech, the Fed won't hesitate to respond.
"From the standpoint of contingency planning, our course is clear: Resolutely conduct policy consistent with the [Federal Open Market Committee's] symmetric 2 percent inflation objective, and stand ready to act with authority if expectations drift materially up or down," he told the National Association for Business Economics in Boston. - CNBC
Chairman Powell's last three predecessors were all low interest rate, cheap money administrators who helped fuel a multitude of financial bubbles that even led one in 2008 to bring the world to the cusp of a complete financial meltdown.  And despite the 'fake prosperity' these policies have helped create since 2001, and where the majority of this wealth transferred up to the 1% at the expense of the entire middle class, the one thing that the central bank have continuously lied about is how much real inflation their expansionary monetary policies have created in the economy.


As you can see from this inflation chart, the only real time inflation feel was during the deflationary aftermath of the 2008 financial crisis where liquidity completely dried up, and asset prices fell approximately 50% across the board.  And it was only after the central bank began to intervene on a continuous basis through a combination of near zero interest rates and four rounds of Quantitative Easing (money printing) that prices began to recover, but they recovered primarily through inflation rather than from growth in real value.

Ie... do you think that a company (Amazon) that earns 13 times less in revenue than Apple does is correctly valued at 9 times the tech company's stock price?

What we saw last week in the equity markets is the Fed finally capitulating to an overheated stock market and an overvalued asset bubble.  And with bond yields having risen to their 'danger zones' over the past two weeks, one of the tools that the Fed has left is to shock the markets is by proving it will no longer intervene in equity volatility and instead force sellers to move their cash into bonds which will provide the natural market means to drive down rising yields.

Stock selloff:


Bond Yields drop as cash goes into sector:

Thursday, October 11, 2018

Shotgun Economics update for October 11 2018 - Financial Markets and Economic Wrapup


Gold finally breaks out of three month range amid market turmoil and inflation fears

October 11 has seen the gold price soar more than $26 so far this morning as market turmoil which began yesterday in the U.S. continued through the Asian, European markets.

In addition to equity prices taking between a 3 and 5% bloodbath across most exchanges, inflation numbers out today signal that the markets may be disturbed with the Fed's signaled policies of many more rate hikes and equity accommodation.


Ironically as well, today's move in gold means that the asset class is the only one that is positive since the Fed raised interest rates during their last FOMC meeting back in September.

Wednesday, October 10, 2018

When billions aren't enough... MLB seeking .25 integrity fee from states in order for them to institute sports betting

Major League Baseball has suddenly morphed into the mob by attempting to negotiate (extort) a .25 royalty from the states in order for them to institute sports betting legislation.

Calling the royalty an 'integrity fee', representatives of the game of professional baseball are seeking what they refer to on the street as 'protection money' which ironically is currently not demanded of Las Vegas casinos who happen to run their own sports books.

Major League Baseball and the casino industry are entrenched in their views on a league proposal to get a cut from wagers placed on the sport following the repeal of a federal ban on sports betting earlier this year. 
Representatives from both industries vigorously defended what they believe is their right over the money wagered Wednesday during a panel at the casino industry's top trade show in Las Vegas. MLB and other pro leagues have asked for a percentage of the wagers, and casinos have strongly opposed any direct payments. 
Kenny Gersh, MLB's executive vice president of gaming, told the crowd of casino executives that a proposed 0.25 percent fee -- which some have dubbed an "integrity fee" -- is essentially a royalty that casino companies should pay if they are going to make money off of the sport. He defended it as a case of "fairness" and partnership with casino operators. 
Professional sports leagues have failed so far to convince any state to build the fees into their laws. Nevada, which has offered sports betting for years, does not pay an integrity fee. - ESPN
It is kind of humorous for MLB to be demand fees from states seeking to allow sports betting when over the decades this organization has already browbeat and coerced numerous cities to pay hundreds of millions of dollars for sports stadiums in which they received little or no compensation.

In 2017 Major League Baseball set a new record for gross revenues of over $10 billion while at the same time cities across the country were falling deeper in debt for outstanding bonds (some tied to stadium projects for the NFL and MLB), and shortfalls in pension funds.  And ironically when you look at sports betting now in America, an estimated $150 billion is gambled each year illegally of which zero dollars are given to any sports association or outfit.

Just as a growing number of fans are ditching the NFL for their support of Colin Kaepernick over that of the military and American flag, so too are people getting fed up with any sport that feels they can charge outrageous prices while also seeking to squeeze even more from the communities that service a team.  And all that will happen if MLB chooses to push this issue is that sports betting will remain in the shadows, and the only ones hurt will be the states and cities who could desperately use the added tax revenue.

Is the cryptocurrency sector ready to implode? New study of market data is suggesting this is a possibility

According to a study done by Juniper Research back in early September, failures by the cryptocurrency market to achieve footholds in China and India coupled with trading volumes cut by more than half over the past six months are suggesting that the entire industry is ripe for an implosion.

A recent study by Juniper Research titled, The Future of Cryptocurrency: Bitcoin & Altcoin Trends & Challenges 2018-2023, warns that the current technical setup of the entire cryptocurrency market indicates the possibility of a total market implosion. 
According to the study, daily Bitcoin (BTC) $6568.50 +0.03% transaction volume fell from 360,000 in late 2017 to just 230,000 daily transactions as of September 2018. At the same time, the value of these daily transactions also fell from $3.7 billion to less than $670 million and the pace of cryptocurrency transactions within the entire market contracted from $1.4 trillion in Q1 of 2017 to less than $1.7 trillion for the entire year. 
Researchers went even further by suggesting that “based on activity during the first half of Q3, Juniper estimates a further 47 percent quarter-on-quarter drop in transaction values.” The report also noted that the cryptocurrency market failed to rally amongst tense geopolitical events such as the U.S. – China trade war and Brexit-related issues. - Bitcoinist
Ever since a myriad of cryptocurrencies reached all-time highs back in December of last year and January of this year, cryptocurrencies as a whole have shed upwards of 80% of their monumental gains achieved between 2013 and 2017, with approximately 80% of them now trading/selling for less than a penny.

On the flip side however, Bitcoin has been able to stabilize over the past two months into a trading range of between $6200 and $6600 on average.  But a sudden decline in trading volume over the past two weeks is threatening to completely destroy investor sentiment in the asset class.


While Juniper's study does validate what many in the crypto sphere have realized over the past several months, it does not necessarily mean that the current trading volumes and declining investor sentiment are leading to a complete implosion of the markets.  In fact 2018 has seen most of the sentiment shift over to what are known as Stable Coins (asset backed cryptocurrencies) rather than in unbacked tokens like Bitcoin, Ethereum, and Litecoin, and this trend could eventually lead to an even greater market share should sovereign governments deem to move their currencies into a blockchain based digital platform.

Main focus on this year's In Gold We Trust annual report is that global de-dollarization is real

For 12 years running Incrementum has published an annual In Gold We Trust report which spells out not only economic and financial trends taking place across the globe, but also why individuals need to have gold in their portfolios to sustain their wealth during these periods of change.  And in their newly published report on Oct. 9, Incrementum put a large focus on global de-dollarization and how it will affect the dollar and dollar based activities.

Some of the key takeaways of our new chartbook are: 
A turn of the tide in monetary policy: 10 year liquidty party is ending due to QT and rising interest rates. 
A turn of the tide in the global monetary architecture: De-Dollarization is real. Trade and currency wars might be the consequence 
A turn of tide in technological process: cryptocurrencies and gold are friends, not foes
Gold's status quo: Heavily skewed risk/reward-profile after capitulation selling. CoT report offers best setup in 17 years. USD 1,180 is a crucial support level. - Incrementum
Following the dissemination of this report, Forbes weighed in with their analysis of the publication and echoed the sentiment that despite the depressed price of gold, it is once again needed by investors in their portfolio as turmoil begins to grow in both currencies and markets.
1. The End of Easy Money 
To offset the effects of the global financial crisis a decade ago, central banks increased liquidity by slashing interest rates and buying trillions of dollars’ worth of government securities. Now, however, it looks as though banks are ready to start tightening, and no one is really quite sure what the consequences will be. 
2. Banks on a Gold-Buying Spree 
While I’m on this subject, central banks have been net purchasers of gold since 2010, with China, Russia, Turkey and India responsible for much of the activity. Just this week, I shared with you the news that Poland added as much as nine metric tons to its reserves this past summer. If gold is such a “barbarous relic,” why are they doing this? As Incrementum writes, “The increase in gold reserves should be seen as strong evidence of growing distrust in the dominance of the U.S. dollar and the global monetary system associated with it.”  
3. Too Much Debt 
Everywhere you look, debt is rising to historic highs, whether it’s emerging market debt, student loan debt or U.S. government debt. Meanwhile, higher rates are making it more expensive to service all this debt. 
4. An Exceptional Store of Value 
In U.S. dollar-denominated terms, the price of gold is down right now. But in Turkey, Venezuela,Argentina and other countries whose currencies have weakened substantially in recent months, the precious metal is soaring. This alone should be reason enough to have part of your wealth stored in gold. 
5. A Sterling Time to Buy Gold? 
Finally, a word about timing. According to Incrementum, some of the best gold buying opportunities have been when the gold/silver ratio crossed above 80—that is, when it took 80 or more ounces of silver to buy one ounce of gold. - Forbes
Just as both weather and solar activity revolves in cycles, so too does gold function in a similar pattern.  And while stock and bond markets exploded over the past seven years due to unprecedented participation by the central banks through their policies of low interest rates and vast money printing, we are now entering in a 'maunder minimum' cycle of Quantitative Tightening, and this means that like in 2010-11, gold is set for its time to prosper and at a price value rarely seen in relation to dollar confidence.

Hunt for Red October: Stocks breaking critical levels on all indices just a week after peaking with new all-time highs

October 3rd was an interesting day in the markets as both the S&P 500 and the Dow achieved new all-time highs after many thought the markets had peaked back in January.  However in just a week's time not only have equities declined on all indices, but they are appearing to have reached critical support levels which could lead to much greater volatility on the downside.

S&P 500:

The S&P 500 closed out its session at an all-time high of 2937 on Oct. 3.  But since that day the index has fallen nearly 3% to its current level on Oct. 10 of 2852.


Dow:

The Dow closed out its session at an all-time high of 26,828 on Oct. 3.  But since that day the index has fallen 2.5% to its current level on Oct. 10 of 26,160.


Nasdaq:

The Nasdaq trajectory is a bit different than its sister indices as it peaked out at an all-time high on Aug. 31.  However this also means that the index's declines have been much steeper than either the Dow or S&P 500 as it has now fallen nearly 500 points since its high of 8109 and is currently down 6% in the past 40 days.


And while a 2.5, 3, or even 6% drop in value for each index is not even considered a market correction much less evidence of a bear market, when you couple in the very recent spike in the Volatility Index (VIX), then the start of October is signalling something big may be on the horizon a decade after the Financial Crash.

VIX:

The Dow just tumbled back into the red for October but it is Trannies, Small Caps, and Nasdaq that are bloodbathing this month as risk-parity deleveraging slams US equity markets below critical technical levels... - Zerohedge