Saturday, 23 September 2017

Bitcoin, Sour Grapes and Jamie Dimon

If I had a bitcoin for every time some pundit declared bitcoin is a bubble, I’d be a billionaire. There are three problems with opining that bitcoin and cryptocurrencies are bubblicious:

Everything is in a bubble now: stocks, bonds, housing, heck, even bat guano is bubblicious. Exactly what insight is being added by yet another guru repeating the BTC is a bubble meme?
What’s the value proposition in declaring BTC is in a bubble? Spotting bubbles is like shooting fish in a barrel; the value proposition is in identifying the price/time tipping point at which bubbles pop.

Declaring bitcoin is a bubble is starting to sound like sour grapes. Sour grapes defined: those who missed the 10-bagger (never mind the 100-bagger) feel better by dismissing the whole thing as a fad and a bubble, but as BTC continues marching higher, it looks like they missed the boat but are too proud to admit they didn’t grasp the significance of cryptocurrencies and BTC in particular.

Take J.P. Morgan CEO and President, Jamie Dimon.

He came out recently and called Bitcoin a fraud.

Well, here’s a quick question for you, Mr. Dimon: which words/phrases are associated with you and your employer, J.P. Morgan?

Looting, pillage, rapacious, exploitive, only saved from collapse by massive intervention by the Federal Reserve, the source of rising wealth inequality, crony capitalism, privatized profits-socialized losses, low interest rates = gift from savers to banks, bloviating overpaid C.E.O., propaganda favoring the financial elite, tool of the top .01%, destroyer of democracy, financial fraud goes unpunished, free money for financiers, debt-serfdom, produces nothing of value to society or the bottom 99.5%.

Jamie, if you answered “all of them,” you’re correct.

The only reason you have a soapbox from which you can bloviate is the Federal Reserve saved you and your looting machine (bank) from well-deserved oblivion in 2008-09. That, and the unprecedented, coordinated campaign by global central banks to buy trillions of dollars of bonds and stocks.

J.P Morgan would have done very well in the past eight years if they’d replaced you with a crash-test dummy. In fact, the shareholders would have done much, much better if the crash-test dummy had a Post-It note on its chest reading “buy bitcoin.”

Compare the return for an investor who “bought the dip” in J.P. Morgan stock (JPM) at $57 in early February 2016 and the investor who bought bitcoin (BTC) at $376 at the same time.

The buyer of JPM has certainly done well, earning a return of around 77% over the 19 months (JPM has risen from $57 to $91, a gain of $44, not counting dividends). But the buyer of bitcoin has earned about a 10-fold increase, gaining $3,200 per bitcoin at the current price around $3,560. (A few weeks ago, an owner of BTC could have skimmed an additional $1,000 per coin.)

The buyer of 1,000 shares of JPM for $57,000 gained $44,000 plus dividends, yielding a total of around $93,000, while the buyer of $57,000 worth of bitcoin at $376 (roughly 150 BTC) gained $478,000 and has a total of $534,000.

The buyer of JPM could sell his shares, pay the capital gains tax and buy a modest mid-sized car with the gains. The buyer of bitcoin could sell his bitcoins, pay the capital gains tax and buy a very nice house or flat in all but the most overvalued markets with his gain, and buy a brand-new vehicle with whatever cash is left.

Some initial coin offerings have made gains that make this mere 10-bagger look like small change.

And a lot of institutional fund managers are angry that they’ve missed out.

This might look like a speculative side-game, but for institutional money managers, it’s getting serious. As we all know, it’s becoming increasingly difficult to manage money such that the returns on the managed money exceed the return of an S&P 500 index fund.

If a passive index fund does better over five years than an actively managed fund, then what the heck are we paying the fund managers big bucks for?

- Source, The Daily Reckoning, Read More Here

Thursday, 21 September 2017

The Mexican Congress Debates the Monetization of the Libertad Silver Ounce


On September 13th I participated in the Forum for "The Promotion of Savings by Mexicans" organized by the group "Legislators in Favor of Savings by the People" who are members of the Chamber of Deputies (i.e. "Congressmen") in the Mexican Federal Congress; the group is led by Congressman Francisco Javier Pinto. The fact that this meeting took place at the seat of one the Legislative Houses of the Mexican Republic is extraordinary news, because there are few things so important for the development of the national economy and the economy of Mexican families, as savings.

According to the poll taken by the "National Poll Regarding Financial Participation in 2015", 32% of the population saves informally, that is to say, by "stuffing money under the mattress" and other invented measures, and only 15% saves in a formal manner, for example, by depositing money in a bank account, or by purchasing Government Treasury Certificates ("CETES") or by voluntary contributions to their official retirement account ("AFORES").

These options are preferable than just saving pesos, though they are not winners, nor do they allow Mexicans to retain the purchasing power of their savings: they are only alternatives that provide less loss of purchasing power.

It is just for this reason that it is imperative to go further. At the Forum we insisted on the proposal to give a stable value to the Mexican silver coin. I'll explain in few words.

The central feature of the proposal is that the Central Bank of Mexico (Banxico) shall determine a value in pesos for the "Libertad" silver ounce; and that this value shall be slightly higher (by a percentage that would be defined in the corresponding Law) than the price of silver in the international market, in order to provide Banxico with an assured profit in minting and placing these coins in monetary circulation.

Today, for example, at the present rate of exchange and the present price of silver, the Mexican silver ounce is worth $320 pesos. Now suppose the Proposal requires an overprice of 10%. In that case, Banxico's monetary quote for the "Libertad" silver ounce would be for $352 pesos.

If the price of silver should plunge tomorrow to $250 pesos to the ounce, for example, the Mexican central bank would keep the monetary value of the "Libertad" ounce stable. In that way, the saver would not loose and the silver coin would remain "in circulation". (Actually, the public will scarcely use the silver "Libertad" ounce as money, due to Gresham's Law; practically all ounces will be held as savings for the long term or for emergencies, and the public will choose to keep on spending fiat money for daily needs, because it is money of no quality at all).

As a matter of fact, all the coins we carry around in our pockets are also worth less as plain metal, than their stamped nominal monetary value, and when their metal is worth more than the stamped value on the coins, they go out of circulation and are replaced by cheaper coins. (Why do you think we no longer see coins for 5, 10 or 20 centavos (cents) any more, and you hardly ever see the yellow 50 centavo coins?).

On the other hand, if the price of silver should shoot upward, Banxico would have to issue new, higher quotes for the "Libertad" silver ounce (according to the formula to be established by Law). In this way, again, the coin will remain "in circulation", and since it has no nominal price stamped on it, it will avoid ending up - like all the old silver coins that had stamped values - at the refineries.

Most of those old silver coins, once their content was worth more than the peso stamped value on their faces, ended up in the refineries. The holders of the coins sold their coins at a profit, for their silver content.

This won't happen with the "Libertad" silver ounce, whose value will be adjusted upward, and benefit the saver, who will thus retain his purchasing power no matter what may happen with inflation. Thanks to owning silver "Libertad" ounces, the public's savings will float on the ocean of currency through the years.

The great peace of mind for the investor, great or small, will encourage savings and financial responsibility better than any other policy of public stimulus.This is not the first time that this proposal comes before the Mexican Congress, but we pray that this time it becomes a reality. We hope so. It's for Mexico, the world's Número Uno producer of silver!

- Source, Plata

Monday, 18 September 2017

Chris Martenson: Central Banks Are Terrified


Resource analyst and futurist Chris Martenson points out, “The Dow is hitting all-time highs. So, it can’t be that bad, right? The Dow is used as a signaling device, and it says have faith in your leadership and everything is fine. Under the covers, obviously, things are not fine. 

The people I talk to are nervous and worried. One reason is because it’s fall, and that is sometimes when we see these corrections, but the other reason is everything we track is getting more and more fragile. These markets are held together by confidence...

I can’t tell you the number of people that used to be investors that say they just don’t trust these markets. They are rigged and they understand that. They don’t want any part of that.” 

In closing, Martenson contends, “By many metrics, this market has never been more expensive,What goes up has to come down. I am convinced the central banks are so petrified to let a 1% or a 2% correction happen...

What does it mean when the central banks are so petrified that they can even allow a correction to get started? That’s what people should be focused on.”


Sunday, 17 September 2017

Blowing the Roof Off the Debt, Fiat Money Out of Control


Peter Schiff discusses the recent debate surrounding the debt ceiling and how it will be raised once again. The can has been kicked down the road, over and over again and at this point is barely movable because of how large it is getting.

How long can the US continue, before it loses control and its debt spirals out of control? Peter Schiff explains this recent news.


- Video Source

Friday, 15 September 2017

Keiser Report: Modi's Demonetization


Max and Stacy discuss India’s disastrous ‘demonetization’ programme which has resulted in the opposite of what Modi’s government claimed was their intention. In the second half, Max continues his interview with Michael Pento of PentoPort.com on gold returning to a bull market amidst the emerging market meltdowns.


Gold Would Be Higher But Buyers Are Jumping Ship to Bitcoin


As gold loses steam after rallying to 12-month highs, one market expert says he is seeing bitcoin take a chunk out of the yellow metal. "I think it's a big part of the problem in terms of stalling gold's rally. 

In my eyes gold is always a currency play not a safe-haven play, now that you have other currencies getting real traction they are taking part of the buyers away from gold," said Todd 'Bubba' Horwitz, founder of bubbaatrading.com In mid-July, Bitcoin was trading around $1,985 per coin before continuing its rise higher. 

As hostilities increased between North Korea and the U.S., it broke the $3,000 mark before slicing through the $4,000 level with ease. But fret not gold trackers, Horwitz added that another yellow metal rally is coming.

- Source, The Street

Wednesday, 13 September 2017

John Rubino Federal Reserve to Blame for Boom and Bust Cycles


John Rubino believes that the Federal Reserve and interest rate manipulation is to blame for the boom and bust cycles and says how important the balance sheet is.

- Source, Jay Taylor Media

Monday, 11 September 2017

With Debt Ceiling Looming, Gold Is The Hedge You Want


The gold market is looking ‘buoyant,’ this according to Tocqueville portfolio manager Doug Groh, who called the recent rally in gold back in March of this year. ‘We got through the summer downturn, and it has now become a constructive gold market,’ Groh said.

Groh, who manages Tocqueville’s $1.25-billion gold fund, said it was important for gold to break through the $1,300 - $1,303 level, which it managed to do earlier this week. Groh said that the conversation now becomes focused around the debt ceiling, “[I]nvestors will look at their equity portfolio and want to make sure they are finishing off the year in good form – [they are saying], I'm going to take some money off the table and hedge my position, gold is a perfect diversifier for that.” 

He also commented on the rise of cryptocurrencies, which he called ‘faddish.’ ‘The thing about cryptocurrencies is that there is risk to the system you participate in, whereas gold around the world is recognized as a monetary instrument.’

- Source, Kitco News

Monday, 4 September 2017

The Bear Market For Gold is Officially Over, Next Stop $1,370


Gold prices ended Thursday with good gains and were poised to finish with a bullish 10-month high close. One technical analyst is so convinced by the metal's chart action that he is calling for the official end of the bear market. "I thought the move up to $1,331 was healthy, and the pullback was actually healthier. 

I'm not concerned about the dollar anymore, gold is becoming a new currency for a lot of people," said Todd 'Bubba' Horwitz, the founder of BubbaTrading.com. "I am calling the bear market for gold officially over - $1,370 will be our next major stop," he said. Many traders saw early price weakness as a value-buying opportunity and jumped on board the long side. A weaker U.S. dollar index also worked in favor of the precious metals market bulls. December Comex gold was last up 0.77% at $1,324.20 an ounce.

- Source, Kitco News

Saturday, 2 September 2017

Martin Armstrong: The Next Great Depression Is Going To Be A Collapse Of Bonds And Governments


The infamous Martin Armstrong discusses the unavoidable collapse that the world faces and how it is going to begin. How will governments around the world handle the next collapse?

- Video Source

Thursday, 31 August 2017

Never Ending Trump Surge in The Markets


Max and Stacy discuss Democrats not looking forward to Hillary’s ‘blame everyone but herself’ book tour. In the second half Max interviews Wolf Richter of WolfStreet.com about the never ending Trump surge in the markets.
- Source, Max Keiser

Tuesday, 29 August 2017

Hugo Salinas Price: 'There Is No Cure for this Disease...'

In 1934, through the Gold Reserve Act, President Roosevelt devalued the dollar from $20.67 dollars per ounce, to $35 dollars per ounce.

The devaluation was excessive, meaning that at $35 dollars per ounce, the world considered that it would rather own American dollars - as undervalued - rather than gold; for this reason, and because of fears regarding another World War, the world shipped enormous quantities of gold to the US, in exchange for US dollars.

The consequence was that the stash of American gold, at the end of WW II, was about 22,000 tons of gold.

The huge error which the American administration committed at the Bretton Woods, N.H., international monetary conference in 1944, where the monetary order of the post-war world was determined, was to force upon the world a defective monetary system: gold was to be the foundation of the post-war world economy, supported by the US dollar, which was to be considered - like it or not - as good as gold.

This huge mistake has brought the US and the world to an enormous economic distortion: all production in all countries of the world, today, and all economic relations, both internally within nations and with regard to their international relations, are disconnected from reality.

After the war, the US continued the policy to which it was and is addicted: credit expansion. Consequently, the undervaluation of the dollar in 1934, turned into an overvaluation of the dollar, and US gold began to be purchased by the rest of the world at what was regarded as an increasingly attractive price of $35 dollars per ounce. Accordingly, the US stock of gold began to contract as gold left the country.

In 1955, when I was 23 years old, and returning from a trip to Europe with my bride on the Italian passenger liner, the "Andrea Doria", I recall after-dinner conversations with elderly gentlemen in the lounge, and the subject of the conversations was the persistent loss of gold on the part of the US.

In the post-war period, as a result of the Bretton Woods Agreements of 1944, the rest of the world accumulated dollar reserves - "as good as gold" - and this helped mask the consequences of the constant US credit expansion. However, there was a fly in the ointment: the perceptive Jacques Rueff, Economics Minister of General Charles de Gaulle, President of France, alerted de Gaulle to the fact that the US was both expanding internal US credit, and external credit by sending US dollars to France in payment for French imports to the US: French acceptance of dollars as payment, was actually credit extended to the US, and according to Rueff, this was unwise.

General de Gaulle thereupon insisted on returning the dollars held by the Bank of France to the US, and demanding in return, the gold to which it had a right. In May of 1968, Paris was shaken by very severe Leftist rioting and President de Gaulle was very nearly deposed. Obviously, the US had not been pleased with General de Gaulle's attitude.

Nevertheless, the outflow of gold from Fort Knox to the rest of the world continued unabated. The cheap dollar purchased a lot of gold, at $35 dollars an ounce.

As we all know, Fort Knox continued to bleed gold until August 15, 1971 when the gold stock having reached some 8,000 tons, President Nixon "temporarily" closed the gold window. The "as good as gold" part of the Bretton Woods Agreements of 1944 had ended. The irredeemable US dollar - a figment of the imagination - was now the basis of the world's economy.

World trade did not stop in its tracks. The world continued to revolve around its own axis in 24 hours a day, and the nations of the world went on using the irredeemable dollar as the foundation of their national economies and their banking systems.

Gold reserves ceased to have any importance for finance ministers around the world. Gold became the "barbarous relic" of J. M. Keynes. Having dollars now became the paramount objective of finance ministers and Central Bank chiefs.

The question for the rest of the world was no longer "We cannot allow excessive credit expansion, because we have to protect our gold reserves." After August 15, 1971, the new question was: "We must export more than we import, in order to have growing reserves of US dollars; because if we have more dollars, we can also expand credit - like the US - and grow our economies." If the rest of the world wanted more dollars in order to "grow their economies", there was, in the last resort, only one country that provided the necessary dollars: the US.

Consequently, the rest of the world went to work to sell whatever it could, to the US, and receive dollars in payment. National prosperity for the rest of the world required a flourishing export market in the US. Those who had nothing to sell to the US were out of luck. Those selling lots of stuff to the US, enjoyed prosperity.

What was the key to selling to the US, for the all-important dollars received in return?

The key, for all countries, was to undersell the local US producers of whatever the rest of the world had for sale. There was no other way to obtain dollars.

It is fitting to remember, how pleased Americans were, back in the 70's, to see their smoky, polluting industries close down, to be replaced with green malls and pleasant cafés, with areas for exercising, sunning and shopping. The time was hailed as the "The greening of America".

What happened to America was a Greek tragedy writ large. By its own hand, the US has destroyed itself. Its huge advantage - the right to issue the world's fundamental money, the dollar - turned into the sword which disemboweled its own guts.

There will be no "make America great again". President Trump will fail utterly, in re-industrializing the US: that cannot possibly happen unless the dollar ceases being the world's reserve currency. Huge fissures in the social make-up of the US are surfacing. The rest of the world looks on in shock, as it contemplates what is going on in the US.

The US is afflicted with a "terminal disease". To introduce a bit of levity into this dismal essay, herewith:

HENRY KING, who chewed bits of string, and was early cut off, in dreadful agonies, by Hilaire Belloc:

THE Chief Defect of Henry King
Was chewing little bits of String.
At last he swallowed some which tied
Itself in ugly Knots inside.
Physicians of the Utmost Fame
Were called at once; but when they came
They answered, as they took their Fees,
'There is no Cure for this Disease.
Henry will very soon be dead.'
His parents stood about his Bed
Lamenting his Untimely Death,
When Henry, with his Latest Breath,
Cried 'Oh, my Friends, be warned by me,
That Breakfast, Dinner, Lunch, and Tea
Are all the Human Frame requires...'
With that, the Wretched Child expires.

A return to gold on the part of the US is unthinkable. It is much too late. Such a move would produce unimaginable social chaos in the US and put an end to the all-powerful "Military-Industrial-Congressional Complex". Total chaos lies ahead, unavoidably, and will present itself as disease intensifies; no politician can be willing to advance its arrival with a monetary reform.


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