Gold is still expensive, but rising economic risks and market turmoil mean investors should buy it for insurance, Deutsche Bank said Friday.
The recovery since the global and European financial crises had put the price of gold under some pressure. The yellow metal, which some analysts view as a safe haven or as a protection against rising inflation, typically underperforms during periods when the economy is growing or inflation is low. However, in a note issued Friday, the German Bank said economic signs are pointing in gold’s favor.
“There are rising stresses in the global financial system; in particular the rising risk of a U.S. corporate default cycle and the risk of a sharp one-off renminbi devaluation due to the sharp increase in China’s capital outflows,” Deutsche Bank added.”Buying some gold as ‘insurance’ is warranted.”
However, even though gold has fallen from levels over $1,900 an ounce in 2011 to around $1,200 an ounce currently, Deutsche Bank said it still looks expensive, ranking as the most expensive commodity relative to its 15-year trading history.
“A bit like insurance, which is often a grudge purchase for many, some investors may balk at the current levels,” it said. “We would, however, argue that given the plethora of negative deposit rates globally, the holding cost of gold is now negligible in many jurisdictions, and therefore gold deserves to be trading at elevated levels versus many other assets.” (Read more from “Deutsche Bank: It’s Time to Buy Gold” HERE)
After a series of stunning declines through the month of January and the first half of February, global financial markets seem to have found a patch of relative stability at least for the moment. But that does not mean that the crisis is over. On the contrary, all of the hard economic numbers that are coming in from around the world tell us that the global economy is coming apart at the seams. This is especially true when you look at global trade numbers. The amount of stuff that is being bought, sold and shipped around the planet is falling precipitously. So don’t be fooled if stocks go up one day or down the next. The truth is that we are in the early chapters of a brand new economic meltdown, and I believe that all of the signs indicate that it will continue to get worse in the months ahead. The following are 21 new numbers that show that the global economy is absolutely imploding…
#1 Chinese exports fell by 11.2 percent year over year in January.
#2 Chinese imports were even worse in January. On a year over year basis, they declined a whopping 18.8 percent.
#3 It may be hard to believe, but Chinese imports have now plunged for 15 months in a row.
#4 In India, exports were down 13.6 percent on a year over year basis in January.
#5 In Japan, exports declined 8 percent in December on a year over year basis, while imports plummeted 18 percent.
#6 For the sixth time in six years, Japanese GDP growth has gone negative.
#7 In the United States, exports were down 7 percent on a year over year basis in December.
#8 U.S. factory orders have fallen for 14 months in a row.
#9 The Restaurant Performance Index in the United States has dropped to the lowest level that we have seen since 2008.
#10 This month the Baltic Dry Index fell below 300 for the first time ever.
#11 It is now cheaper to rent a 1,100 foot merchant vessel than it is to rent a Ferrari.
#12 Orders for Class 8 trucks in the United States dropped by 48 percent on a year over year basis in January.
#13 Due to a lack of demand for trucks, Daimler just laid off 1,250 U.S. workers.
#14 Even though Saudi Arabia and Russia have agreed to freeze oil production at current levels, the price of U.S. oil has still fallen below 30 dollars a barrel.
#15 It is being reported that 35 percent of all oil and gas companies around the world are at risk of falling into bankruptcy.
#16 According to CNN, 67 oil and gas companies in the United States filed for bankruptcy during 2015.
#17 The number of job cuts in the United States skyrocketed 218 percent during the month of January according to Challenger, Gray & Christmas.
#18 All over America, retail stores are shutting down at a stunning pace. The following list of store closures comes from one of my previous articles…
-Wal-Mart is closing 269 stores, including 154 inside the United States.
-K-Mart is closing down more than two dozen stores over the next several months.
-J.C. Penney will be permanently shutting down 47 more stores after closing a total of 40 stores in 2015.
-Macy’s has decided that it needs to shutter 36 stores and lay off approximately 2,500 employees.
-The Gap is in the process of closing 175 stores in North America.
-Aeropostale is in the process of closing 84 stores all across America.
-Finish Line has announced that 150 stores will be shutting down over the next few years.
-Sears has shut down about 600 stores over the past year or so, but sales at the stores that remain open continue to fall precipitously.
#19 The price of gold is enjoying its best quarterly performance in 30 years.
#20 Global stocks have fallen into bear market territory, which means that about one-fifth of all global stock market wealth has already been wiped out.
#21 Unfortunately for global central banks, they have pretty much run out of ammunition. Since March 2008, central banks have cut interest rates 637 times and they have purchased a staggering 12.3 trillion dollars worth of assets. There is not much more that they can do, and now the next great crisis is upon us.
Without any outside influences, the global economy and the global financial system will continue to rapidly fall apart.
But if we do have a major “black swan event” take place, that could cause the bottom to fall out at any moment.
In particular, I am deeply concerned about the possibility that World War III could be sparked in the Middle East. In an article that I published earlier today entitled “Turkey Is Asking The United States To Take Part In A Ground Invasion Of Syria“, I included a quote from Turkish Foreign Minister Mevlut Cavusoglu that reveals just how eager Turkey and Saudi Arabia are for war to begin…
“Some countries like us, Saudi Arabia and some other Western European countries have said that a ground operation is necessary,” Turkish Foreign Minister Mevlut Cavusoglu told Reuters in an interview.
However, this kind of action could not be left to regional powers alone. “To expect this only from Saudi Arabia, Turkey and Qatar is neither right nor realistic. If such an operation is to take place, it has to be carried out jointly, like the (coalition) air strikes,” he said.
The Turks and the Saudis very much want the United States to take a leading role in any ground invasion of Syria, but the Obama administration is not likely to do that.
So we shall see if the Turks and the Saudis are willing to go ahead without us. Let us hope that they do not decide to invade Syria, because that could start the biggest war in the Middle East that any of us have ever seen.
Unfortunately, Turkey is already attacking.
Turkey has been shelling Kurdish and Syrian military positions in northern Syria for four days in a row even though the Obama administration has been urging them to stop.
The first month and a half of 2016 has already been quite chaotic, and the stage is set for global events to greatly accelerate during the months ahead.
Sadly, the mainstream media in the United States is largely ignoring the preparations for a ground invasion of Syria, and they keep telling us that the global economy is going to be just fine, so most ordinary Americans are going to be absolutely blindsided by what is about to happen. (For more from the author of “21 New Numbers That Show That the Global Economy Is Absolutely Imploding” please click HERE)
https://joemiller.us/wp-content/uploads/Earth-At-Night-Public-Domain-460x306.jpg306460Joe Millerhttps://joemiller.us/wp-content/uploads/logotext.pngJoe Miller2016-02-16 22:42:412016-04-11 10:52:3521 New Numbers That Show That the Global Economy Is Absolutely Imploding
By Mehreen Khan. The world’s tentative experiment with negative interest rates got off to an unremarkable start.
Sweden’s Riksbank – the world’s oldest central bank – became the first major monetary authority to cross the rubicon and take its main policy rate into the red exactly a year ago to the month.
The Riksbank’s move followed the likes of Switzerland and Denmark, who had turned negative in a bid to stimulate flagging inflation and halt the punishing appreciation of their currencies.
But the introduction of sub-zero rates caused no immediate panic that central bankers were “losing control”.
Neither did they seem to produce deleterious economic effects in their host countries, as savers continued to keep their money deposited in banks rather than fleeing for the safety of cash. Commercial lenders, meanwhile, adjusted their business models to help maintain profitability. (Read more from “Negative Central Bank Interest Rates Now Herald New Danger for the World” HERE)
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Central Bankers ‘Don’t Have a Clue’ – Jim Rogers
By Alanna Petroff. Famed investor Jim Rogers is warning that financial Armageddon is just around the corner, and it’s being fueled by moronic central bankers.
“We’re all going to pay a horrible price for the incompetence of these central bankers,” he said Monday in a TV interview with CNNMoney’s Nina dos Santos. “We got a bunch of academics and bureaucrats who don’t have a clue what they’re doing.”
The Singapore-based American investor said central bankers are doing everything they can to prop up financial markets, but it’s all for naught. He predicts their unconventional monetary strategies will lead to a stock market rally in the near future, but deep trouble later this year and into 2017.
“This is going to be a disaster in the end,” he said. “You should be very worried and you should be prepared.” (Read more from “Central Bankers ‘Don’t Have a Clue’ – Jim Rogers” HERE)
https://joemiller.us/wp-content/uploads/dollar-726882_960_720.jpg678960Joe Millerhttps://joemiller.us/wp-content/uploads/logotext.pngJoe Miller2016-02-15 23:53:432016-04-11 10:52:38Negative Central Bank Interest Rates Now Herald New Danger for the World
Peter Schiff has been credited as being one of the few financial analysts to predict the collapse of the housing and financial markets in 2008 and the subsequent financial recession. He is also the author of several popular books on our financial state as well as a stockbroker and the founder of schiffgold.com and Euro Pacific Capital.
This week, on Joe Miller’s radio show, Peter Schiff had a strong warning for all Americans, especially investors. He is predicting an imminent recession that will last longer and be more painful than the Great Depression of the 1930’s. Due to past policies and current issues, he contends there is no way the US can avoid this catastrophe.
He blames the Federal Reserve as the primary cause of this imminent recession. He points to the Fed’s seven years of zero percent interest rates and three rounds of quantitative easing. Now that the Federal Reserve is trying to ease up on the monetary stimulus, the terrible financial state the U.S. is really in will be revealed.
Schiff also maintains that we are in a far worse position because we currently hold much more debt than we did seven years ago. He analogizes U.S. financial strategy in accruing debt with countries like China and Russia to a huge Ponzi scheme. Our foreign creditors are on to the fact that it may be impossible for us to make good on that debt and have no desire to be part of a free-money-to-the-US scheme.
Schiff contends another major problem is that the US dollar is currently overvalued. Many countries are taking advantage of this high valuation by making moves to get rid of their United States dollars. As the world’s reserve currency, this overvaluation also creates instability internationally.
The only reason the U.S. hasn’t collided with economic disaster yet is, in Schiff’s opinion, the currency speculators. However, no matter what the speculators do, the dollar will eventually fall, as much as 30%. In a worst case scenario, the end result could be hyperinflation, wiping out most of the value of the dollar.
Schiff also reminded listeners that the dollar itself does not hold any intrinsic value. Its value is entirely contingent upon people’s confidence in it. Once people lose confidence in the dollar, its value will evaporate and will be worthless to purchase anything with, so political leaders do what they can to reinforce faith in it. A case in point is Obama’s State of the Union address where he falsely claimed that the economy had recovered. According to Schiff, these false reports that the economy has recovered are being used to prop up confidence in the dollar.
There are numerous indicators that the US economy is in serious trouble. At the beginning of this year several companies (Walmart, Macy’s, and Finish Line) all reported numerous store closures and massive layoffs. Walmart alone is expected to layoff 10,000 people. Other companies that do not have physical stores such as Yahoo and Johnson and Johnson have also announced layoffs that will affect thousands of more people. Finally, the percentage of adults in the labor force is at the lowest level in 40 years while wage gains for most workers has been a nonexistent. These are all indicators that the U.S. economy is in troubled waters.
What is Peter Schiff’s advice for U.S. investors? To protect against the imminent collapse, they should immediately divest themselves from the U.S. stock market and sink their money in international markets, gold and silver stocks, and other commodities.
Only time will tell whether Schiff has accurately predicted yet another financial catastrophe for the United States. One thing is sure: if he’s right about an imminent Second Great Depression, this nation – and probably the world at large – will experience an era of unprecedented political instability.
https://joemiller.us/wp-content/uploads/logotext.png00Joe Millerhttps://joemiller.us/wp-content/uploads/logotext.pngJoe Miller2016-01-21 23:08:442016-04-11 10:53:33Exclusive: Peter Schiff Claims Something Worse Than The Great Depression Is Imminent And There’s No Way Out
The outlook for the global economy next year is darkening, with a U.S. recession and China becoming the first major emerging market to slash interest rates to zero both potential scenarios, according to Citi.
As the U.S. economy enters its seventh year of expansion following the 2008-09 crisis, the probability of recession will reach 65 percent, Citi’s rates strategists wrote in their 2016 outlook published late on Tuesday. A rapid flattening of the bond yield curve towards inversion would be an key warning sign.
“The cumulative probability of U.S. recession reaches 65 percent next year,” Citi’s rates strategists wrote in their 2016 outlook published late on Tuesday. “Curve inversion will likely come more quickly than the consensus thinks.” (Read more from “Watch for U.S. Recession, Zero Interest Rates in China next Year” HERE)
https://joemiller.us/wp-content/uploads/logotext.png00Joe Millerhttps://joemiller.us/wp-content/uploads/logotext.pngJoe Miller2015-12-03 03:41:212016-04-11 10:55:32Watch for U.S. Recession, Zero Interest Rates in China next Year
Before the Monday, Aug. 24, thousand-point down day, I warned readers of my investment letter to be ready for the market to correct, quite possibly via an “elevator drop” and to get ready to buy stocks on our list of attractive companies. Prior to the “mini flash crash” as I’ve heard it called, I warned here on MarketWatch that “things were getting bearish,” and “stocks were not properly priced.“ Smart investors spent the spring and summer raising cash and preparing a list of stocks and ETFs to buy when opportunities arose.
Retail investors are getting it half right, moving money out of stocks for the past year. Most have done so out of fear of the “next collapse,” as they did in early 2009 before finally reinvesting around 2012. This time, they are close to their portfolio highs from the middle 2000s and believe they should get out of the stock market before the next crash. That makes some sense, better to pre-panic than post-panic.
Investor fear, primarily among baby boomers, is probably well founded in the short-term. The world is facing serious economic headwinds driven by demographics and debts which I have covered in several columns, investor letters and recently in my monthly investor webinar. The combination of investor skepticism, a slow economy and a Federal Reserve that keeps talking tough makes it very probable that we are going to get another thousand-point down day very soon. In fact, I am pretty sure we will get two or three within the same few weeks.
How horrible will it get for the stock market? How far will emotional sellers and traders drive the markets down? Will it be the beginning of another financial collapse? Here’s what I think.
I believe fear and emotional selling will drive the stock market down into official bear-market territory, however, I have a hard time making a case for anything more than a run-of-the-mill bear market. It also seems to me that there is not enough stupid retail money left in the stock market to take it below the strong support level around 1550 on the S&P 500 for more than a week or two. For traders or those seeking a hedge, rolling put option positions on the SPDR S&P 500 SPY, +0.23% makes a lot of sense to me given those contracts are cheap and have potential large upside. (Read more from “The Next 1000-Point Down Day Is Coming” HERE)
https://joemiller.us/wp-content/uploads/logotext.png00Joe Millerhttps://joemiller.us/wp-content/uploads/logotext.pngJoe Miller2015-11-11 00:28:502016-04-11 10:56:19The Next 1000-Point Down Day Is Coming
The risk of a global financial crash has increased because a slowdown in China and decline in world trade are undermining the stability of highly indebted emerging economies, according to the International Monetary Fund (IMF).
The Washington-based lender of last resort said the scale of borrowing by emerging market countries, whose debts are vulnerable to rising interest rates in the US, mean policymakers need to act quickly to shore up the financial system.
José Viñals, the IMF’s financial counselor, said the threat of instability and recession hanging over economies including China, Brazil, Turkey and Malaysia was one of a “triad of risks” that could knock 3% off global GDP. The second, he said, was the legacy of debt and disharmony in Europe, while the third is centered on battered global markets that are more likely to transmit shocks rather than cushion the blow.
At the very least, central banks would need to remain vigilant and be prepared to increase their stimulus programs should difficulties in emerging market countries spill over into the financial system.
Addressing the prospect of an interest rate rise in the US, Viñals said there was little reason to tighten monetary policy before Christmas while inflationary pressures and wage rises remain low. “The risks of a premature tightening are greater than those of waiting two or three more months,” he said. (Read more from “Risk of Global Financial Crash Has Increased” HERE)
https://joemiller.us/wp-content/uploads/logotext.png00Joe Millerhttps://joemiller.us/wp-content/uploads/logotext.pngJoe Miller2015-11-10 00:20:582016-04-11 10:56:20Risk of Global Financial Crash Has Increased
Did you know that 11 trillion dollars in global stock market wealth was wiped out during the third quarter of 2015? When I was emailed this figure by a friend, I was stunned for a moment. I knew that things were bad, but were they really this bad? When I first received this information, I had just finished a taping for a television show in which I had boldly declared that 5 trillion dollars of stock market wealth had been wiped out around the world. Unfortunately, the final number has turned out to be much larger than that. Over the past three months, the stock markets of all major global economies have been crashing simultaneously, and 11 trillion dollars of “paper wealth” has now completely vanished. The following comes from Fortune…
Global equity markets suffered a bruising third quarter, shedding $11 trillion worth of global shares over three months, according to Bloomberg.
It was the market’s worst quarter since 2011. The prolonged slump was due to low prices for commodities such as oil, instability in China’s markets, and the anticipation that the U.S. Federal Reserve will soon raise interest rates.
In light of this number, how in the world is it possible that there is still anyone out there that is claiming that “nothing happened” over the past few months?
In China, they sure aren’t claiming that “nothing happened”. Chinese stocks are down about 40 percent from the peak of the market.
In Germany, they sure aren’t claiming that “nothing happened”. As of a few days ago a quarter of all German stock market wealth had been wiped out since the peak earlier this year.
Yes, things have been a bit milder in the United States. So far, stocks are only down about 10 percent or so, but we did see some truly remarkable things happen over the past three months. We witnessed the 8th largest single day stock market crash on a point basis in U.S. history, we witnessed the 10th largest single day stock market crash in U.S. history, and we witnessed the single greatest intraday stock market crash in all of U.S. history. On August 24th the Dow plunged 1,089 points before bouncing back.
But every time the markets have an up day there are all these people running around declaring that “the crash is over”. Well, that is not how financial markets work. They “stair-step” on the way up and they do the same thing on the way down.
And without a doubt, U.S. stocks still have a long, long way to go down.
In recent years, stocks have soared to unbelievably unrealistic levels. One of the most popular methods of measuring the true value of stocks is something called the cyclically-adjusted price to earnings ratio. It was developed by economist Robert Shiller of Yale University, and it attempts to accurately show how much we are paying for stocks in relation to how much those corporations are actually earning. When this number is very high, stocks are overvalued, and when this number is very low stocks are undervalued.
Earlier this year, CAPE hit a peak of about 27, and by the beginning of August it was still sitting up around 26. The only times CAPE has been higher has been just before other stock market bubbles have been burst…
It would take a total drop of about 40 percent from the peak of the market just to get back to average. So far the Dow has fallen about 10 percent or so, so it is going to take another 30 percent crash just to get to a point where stock prices are considered “normal” once again.
Another very common measurement of stock values shows the exact same thing. The ratio of corporate equities to GDP is also known as “the Buffett Indicator” because Warren Buffett loves it so much. When stock prices get very high in relation to the size of the overall economy that is a sign that stocks are overvalued, and when stock prices get very low in relation to the size of the overall economy that is a sign that stocks are undervalued.
The chart below was recently posted by dshort.com and it shows that stock prices would have to fall more than 40 percent just to get back to the historical average (the mean).
Right now, lots of Americans are rushing to get back into the stock market because “September is over” and they figure that stocks are a good value now since they have gone down a good bit.
But as you can clearly see from the charts that I have just shared, U.S. stocks are still a terrible value.
Even if we don’t experience a “black swan event” like a major natural disaster, a large scale terror attack or the collapse of a globally important financial institution in the months ahead, it is inevitable that stocks will go down a lot more at some point. Stocks simply cannot defy gravity forever. These bubbles have always ended in crashes in the past, and the same thing is going to happen again this time.
People that are trying to tell you that “things are different this time” simply refuse to learn from history.
I am writing this piece while waiting for a plane at Denver International Airport. I missed my connection because my first flight was delayed by about an hour. So I am just sitting here watching people walk past. Most of them are just living their lives without any idea of the disaster that is about to hit this country.
Over the past few days I have been reflecting on the fact that our nation has willingly chosen this path. We willingly chose to go into so much debt. We willingly chose to send millions of good paying jobs overseas. We willingly chose to pump up these financial bubbles. We willingly chose to reject the values of our forefathers. We willingly chose men like Barack Obama, Harry Reid and John Boehner to represent us in Washington.
The things that are coming are the logical consequences for decisions that we have collectively made as a nation.
There are still many out there that do not believe that we will have to face any consequences for what we have done.
Unfortunately for all of us, they are not going to have to wait very long at all to see how incredibly wrong they were. (For more from the author of “Yes, This Is a Financial Crisis – 11 TRILLION Dollars in Stock Market Wealth Was Wiped out in the 3rd Quarter” please click HERE)
https://joemiller.us/wp-content/uploads/logotext.png00Joe Millerhttps://joemiller.us/wp-content/uploads/logotext.pngJoe Miller2015-10-04 19:48:092016-04-11 10:57:44Yes, This Is a Financial Crisis – 11 TRILLION Dollars in Stock Market Wealth Was Wiped out in the 3rd Quarter
Citing global economic weakness and financial market turmoil, the Federal Reserve agreed Thursday to keep its benchmark interest rate near zero despite the rapidly improving U.S. labor market.
But Fed policymakers’ forecast indicates they still expect to bump up the federal funds rate this year for the first time in nearly a decade, with meetings scheduled for October and December. Their projections, however, show they expect to raise it even more gradually over the long-term than they previously signaled . . .
The decision capped the most dramatic run-up to a Fed meeting in recent memory, with economists split on whether the central bank would raise its key rate, which has been near zero since the 2008 financial crisis and affects borrowing costs for consumers and businesses across the economy.
“An argument can be made for a rise in interest rates at this time,” Fed Chair Janet Yellen said at a news conference.But she added, “We want to take more time to evaluate the likely impact on the United States” from the overseas slowdown and market gyrations . . .
In a statement after a two-day meeting, the Fed said, “Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near-term.” (Read more from “No Hike: Fed Keeps Benchmark Rate Near Zero” HERE)
Debt ratios have reached extreme levels across all major regions of the global economy, leaving the financial system acutely vulnerable to monetary tightening by the US Federal Reserve, the world’s top financial watchdog has warned.
The Bank for International Settlements said the wild market ructions of recent weeks and capital outflows from China are warning signs that the massive build-up in credit is coming back to haunt, compounded by worries that policymakers may be struggling to control events.
“We are not seeing isolated tremors, but the release of pressure that has gradually accumulated over the years along major fault lines,” said Claudio Borio, the bank’s chief economist.
The Swiss-based BIS said total debt ratios are now significantly higher than they were at the peak of the last credit cycle in 2007, just before the onset of global financial crisis.
Combined public and private debt has jumped by 36 percentage points since then to 265pc of GDP in the the developed economies. (Read more from “BIS Fears Emerging Market Maelstrom as Fed Tightens” HERE)
