As we turn over another month on the 2016 calendar, we also move a step closer to some type of inevitable financial accident. When? I have no idea. But what I do know is that I would much rather buy my insurance at a lower price before the accident, than to wait until the accident and have to pay higher premiums… but that’s just me.
Some people I talk to refuse to take precautions because they have not seen an accident yet, so they feel they are saving money by not purchasing their insurance. The problem with that theory is that when an accident does occur, its usually too late to do anything. Look. We all have insurance on our car and our home – it’s mandatory. Most of us go above the requirements and purchase life insurance, health insurance, dental insurance, heck, some of us even have insurance on our pets. Why not have insurance on your portfolio? We know we hate paying those premiums each month, but should we ever have an accident, we are sure damn glad we have that insurance.
Now, what happens to your premiums if you have to use that insurance? They usually go up right? Same thing here with gold and silver – If we had another 2008 style event and stocks started to crash, what do you think would happen to the price of gold and silver? It would go up and it would be used as a flight to safety and quality. My point is that I don’t want my readers to be left out if something were to happen and in my professional opinion, something is getting ready to happen. When? Again, it doesn’t matter the when, it only matters that you have insurance before the accident – then you just sleep better at night knowing your family is protected.
The Stock Market’s Being Set Up For A Hard Fall – The market’s melt-up since the Feb. 11 interim low has been positively surreal. It has gone up 19% since that February low of 1,829 on the S&P 500.
But there’s nothing sustainable about it. This latest rebound was the work of eyes-wide-shut day traders and robo-machines surfing on a thinner and thinner cushion of momentum. What comes next, in fact, is exactly what happens when you stop pedaling your bicycle. Momentum gets exhausted, gravity takes over and the illusion of stability is painfully shattered.
Take a look at a chart from the last cycle, culminating in the crash of 2008. The Greenspan housing, credit and stock market bubbles were inflating. At the same time, volatility was steadily drained out of the market by increasingly more bullish and complacent traders.
Gold Bullion Averages Biggest Seasonal Gains in September Over Past 20 Years – Gold bullion has had its biggest gains in September over the past 20 years. Seasonally gold is entering the sweet spot with the Autumn being gold’s best season and with September being gold’s best month in the last 20 years. The spring and summer months frequently see seasonal weakness, since gold became a traded market in 1971. Gold bullion often sees periods of weakness in the summer doldrum months of May, June and July.
August tends to be a better month for gold but not this year with gold down nearly 2% in dollar terms, 3% in euro terms and 1.8% in sterling terms.
Gold’s traditional period of strength is from August through to January and February with weakness and a correction frequently seen in October. Thus, August is generally a good time to buy after the seasonal spring and summer dip.
Gold Just Broke a 5 Year Downtrend – It’s not just the charts that have me bullish. I’m seeing two bullish forces lining up behind gold.
The first is negative interest rates.
According to Bank of America Merrill Lynch, there is $13trillion of negative-yielding global government debt… At the beginning of 2014, there was none.
Let me explain why this is very bullish for gold.
When institutions consider buying gold, they pause. That’s because gold pays no dividend. Investors have to rely solely on capital appreciation to see any profits. Throughout history, cash and cash equivalents (such as bonds) have always paid interest while you hold them. So institutions have preferred to hold cash and bonds over gold.
That is no longer true.
Due to low and negative interest rates, it’s now cheaper to hold gold than it is to hold cash or bonds. This is the first time in 5,000 years that it’s been cheaper to hold gold than cash and cash equivalents. This is going to cause hundreds of billions of institutional dollars to flow out of cash and bonds and into gold… and that is very bullish.
Why It’s Time to Go “Maximum Overweight” in Gold – It’s not hard to fathom that soon enough, this will affect more and more people in more countries at different income levels. As I’ve said, the consequences of negative-interest-rate policies – financial repression – are soon to be widely felt.
That’s why some of the world’s ultimate “in the know” investors are making a beeline for gold right now.
And when you see what’s coming down on our heads, you’ll see why it’s a good idea to follow them before prices get much higher…
Our world and the way we think about money is all about to change… Here’s why:
Chairman of China’s Gold Association Confirms SDR Just One Step In The Future Backing Of Yuan With Gold – Last year, China joined the IMF (International Monetary Fund) Special Drawing Rights (SDR), signifying the renminbi’s march towards internationalization.
Song Xin pointed out that the renminbi is closely related to gold. Gold is priced in US dollars throughout the world and in renminbi in China. There is a special relation between the renminbi and gold. We have continuously increased gold reserves since China strove to join the SDR basket of currencies. By the end of February this year, our gold reserves have increased to 1788.45 tonnes.
In other words, China has continuously increased its official gold reserves and publicized the amount to the world, keeping a close relation with renminbi internationalization and joining the SDR.
Also read: The Stunning Roadmap To The Coming Global SDR Currency– “Wake up, America. We have a problem that’s threatening our economy and perhaps even our continued existence as a free society, and no one is paying attention.
The problem: we have too much money and too little wealth. Today our money-to-wealth ratio is probably lower than for any other developed country in history. But there’s no indication that policymakers here understand the key distinction between money and wealth or even see the dire implications…
The Chinese do. They realize the vastly disproportionate amount of money compared to wealth in the West has made the world’s dollar-denominated monetary system a cancer. The Chinese are scared to death it could spread to contaminate them, and they’re determined to change the system.
Over the next few weeks, I will be reviving something that I brought to you some time ago – Keep your eyes open and your powder dry…