Caitlin Johnstone: 12 Tips For Making Sense Of The World

Authored by Caitlin Johnstone via Medium.com,

In an environment that is saturated with mass media propaganda, it can be hard to figure out which way’s up, let alone get an accurate read on what’s going on in the world. Here are a few tips I’ve learned which have given me a lot of clarity in seeing through the haze of spin and confusion.

Taken separately they don’t tell you a lot, but taken together they paint a very useful picture of the world and why it is the way it is.

1. It’s always ultimately about acquiring power.

In the quest to understand why governments move in such irrational ways, why expensive, senseless wars are fought while homeless people die of exposure on the streets, why millionaires and billionaires get richer and richer while everyone else struggles to pay rent, why we destroy the ecosystem we depend on for our survival, why one elected official tends to advance more or less the same harmful policies and agendas as his or her predecessor, people often come up with explanations which don’t really hold water.

The most common of these is probably the notion that all of these problems are due to the malignant influence of one of two mainstream political parties, and if the other party could just get in control of the situation all the problems would go away. Other explanations include the belief that humans are just intrinsically awful, blaming minorities like Jews or immigrants, blaming racism and white supremacy, or going all the way down wild and twisted rabbit holes into theories about reptilian secret societies and baby-eating pedophile cabals. But really all of mankind’s irrational behavior can be explained by the basic human impulse to amass power and influence over one’s fellow humans, combined with the fact that sociopaths tend to rise to positions of power.

Our evolutionary ancestors were pack animals, and the ability to rise in social standing in one’s pack determined crucial matters like whether one got first or last dibs on food or got to reproduce. This impulse to rise in our pack is hardwired deeply into our evolutionary heritage, but when left unchecked due to a lack of empathy, and when expanded into the globe-spanning 7.6 billion human pack we now find ourselves in due to ease of transportation and communication, it can lead to individuals who will keep amassing more and more power until they wield immense influence over entire clusters of nations.

2. Money rewards sociopathy.

The willingness to do anything to get ahead, to claw your way to the top, to betray whomever you need to, to throw anyone under the bus, to step on anyone to pass them in the rat race, will be rewarded in our current system. Being willing to underpay employees, cheat the legal system, and influence legislators will be rewarded exponentially more. People with a sense of empathy are often unwilling to do such things, whereas sociopaths and psychopaths are.

About four percent of the population are sociopaths, and about one percent are psychopaths, with some five to fifteen percent falling somewhere along the borderline. The less empathy you have, the further you are willing to go, and the further up the ladder you can climb.

3. Wealth kills empathy.

If that weren’t bad enough, studies have shown that controlling large amounts of wealth actually destroys one’s sense of compassion for one’s fellow man. When you are able to use wealth to obtain everything from security to loyalty to personal relationships, you no longer have to be tuned in to the brain’s empathy center the rest of humanity depends on to get an accurate reading on what’s going on with the people we’re surrounded by. Most people need to be constantly feeling around their families, coworkers, employers, friends and acquaintances in order to ensure their own safety, social standing and security, whereas a wealthy person can simply purchase those things. Being born into wealth or having it for a long time can prevent that sense of empathy from being as strong as it is in the rest of the population.

4. Money is power.

2014 Princeton study showed that ordinary Americans have essentially zero influence over their nation’s policy and behavior regardless of how they vote, while wealthy Americans have a great deal of influence. This is because the ability to use corporate lobbying and campaign donations effectively amounts to the legalized bribery of elected officials, which means that money translates directly into political power. This creates a ruling class which is naturally incentivized to use their influence to increase their own wealth while decreasing everyone else’s, because since power is relative, the less money everyone else has the more power the ruling class has.

This is why billionaires keep hoarding more and more wealth while using legalized bribery to stifle economic justice legislation. It isn’t because they want to be able to buy thousands of luxury cars or dozens of private jets; they can only use one at a time the same as everyone else. They hoard wealth to keep the rest of the population from having it. Because money equals power, spreading wealth around would be tantamount to making everyone king, and because power is relative, making everyone king would mean that no one is king.

Rulers, historically, do not give up power easily, and this elite wealthy class is no exception. Hence all their aggressive attempts to suppress any movement against the status quo from the unwashed masses.

5. This same ruling class controls the media.

It’s common knowledge that most media is controlled by plutocrats, whether it’s the old money plutocrats who control the legacy media or the new money Silicon Valley plutocrats who control much of the new media. Media control is an essential component of rule; this has always been the case, since the days when kings would order dissident books burned and bishops would torture dissident orators to death. This is why the first thing a new plutocrat does as soon as rising to a certain level of wealth is start buying up media influence, like Jeff Bezos did when he bought the Washington Post in 2013. Bezos bought WaPo not because he is a stupid businessman who thought newspapers were about to make a lucrative resurgence, but because he is a brilliant businessman who knows that the status quo he is building his empire upon requires a propaganda firm that the public will trust and believe.

6. People are always manipulating each other.

Cultivating an acute awareness of when you are being manipulated, and considering whether someone might have a motive to do so, is an essential component to making sense of the world.

It is very rare to encounter someone who won’t try to manipulate you in any way. Generally people you’ll encounter in your life will try to influence the way you perceive them and your relationship to them, they’ll try to pull you in in some ways and push you out in others, try to hook you up to their personal agendas and goals and shape you in a way that fits with their shape. There’s nothing inherently malevolent in such behavior, it’s just what people do and what they always have done. Again, humans are social creatures, and we do what we can to increase our standing within our social circles.

The big problem is when skillful manipulators find their way into positions of large-scale influence like government or media. Unfortunately, these are the types who tend to get elevated into such positions, because they can manipulate their way in, and generally they do so for reasons of personal ambition rather than altruism. These skillful manipulators form an essential echelon of the ruling class’ loyal servants, and are the minds behind the pro-establishment narratives you’ll suddenly see circulated from think tanks to media platforms to the establishment lackeys on Capitol Hill.

7. Society is made of narrative.

Most of human experience is filtered through our mental stories about it, from our sense of self, to our ideas about who we are, to our beliefs about how we’re supposed to behave in society, to what money is and how it works, to where power exists and who we’re supposed to obey. All of these things are purely conceptual constructs which only exist in the realm of thought; a “dollar” exists to the extent that we’ve all agreed to pretend it’s a real thing and that it has a certain amount of purchasing power. At any time we could collectively decide to change the rules about how power functions or what money is and how it operates, and then instantly the rule of the elite class would be over without anyone firing a shot. It really would be that simple.

That’s how powerful a force narrative is, which is why the ruling plutocrats fight so hard to keep us from seizing control of it. This is why whistleblowers and outlets like WikiLeaks are aggressively and constantly smeared and demonized in the corporate media; if they can create suspicion of truth-tellers then they can keep them from being trusted, and thus keep them from being believed. This tool has been used to minimize the impact of everything from on the ground reports of what’s happening in Syria to leak drops from Edward Snowden; if you can create enough suspicion of someone it doesn’t matter if they’re speaking 100 percent truth; nobody will believe them, and thus the dominant narrative will remain the same.

Maintaining an awareness that there is always an unending battle to control the narrative and manipulate it to advance plutocratic interests is an essential part of understanding the world.

8. The lines between nations are imaginary.

Those lines drawn on the map between countries are pure narrative as well; they’re only as real as the collective public agrees to pretend they are. The ruling elites know this and exploit this. They don’t think in terms of nations and governments, they think in terms of individuals and groups of individuals.

Key strategic region in the Middle East? No need to take over the whole country, just flood it with extremist groups who are loyal to your agendas and control its oil fields. Primo naval real estate in the southern hemisphere? No need to annex it and plant your country’s flag there, just secure enough influence over the important moving parts using corporate contracts, trade agreements, military/intelligence treaties and secret deals and you can use it however you want.

This is why I am dismissive of arguments that “Israel controls America” or “America controls Europe”. There is no “Israel” or “America”; they’re made-up ideas which rulers once upon a time treated as real, but in the modern days of nationless plutocracy they no longer do. There are individuals, there are corporations, there are government agencies, there are factions and groups, and these are what the ruling elites deal with. Governmental structures are only tools which are used by the ruling elites for the purpose of manipulation, control, and military violence, and they only do so insofar as it is useful. The idea of real nations and governments is a cutesy fairy tale sold to the masses so they won’t see the manipulations.

9. Powerful forces are naturally incentivized to collaborate with each other toward mutual interests.

You can be a low-grade millionaire and still live like a relatively normal civilian, but once you start obtaining giant amounts of wealth control you need to start collaborating with existing power structures or they’ll snuff you out to prevent you from rocking their boat, because again, money equals power. This is why Jeff Bezos contracts with the CIA and sits on a Pentagon advisory board, and it’s why Facebook and Google collaborate extensively with government agencies; they never would have been allowed to grow to their size if they had not. Plutocratic dynasties which have been in place since long before Amazon, Facebook and Google figured this out many generations ago, and have agreed to push forward in a direction of mutual interest that doesn’t upset the status quo that their wealth is built upon.

This is extremely true of the west, where an effective empire has been created by a complex transnational alliance of mostly western plutocrats, but it is true outside of that empire as well; there are power alliances to be found everywhere that there is power.

10. There is an immense amount of wealth that can be grabbed in the chaos of war and conflict.

In the same way that existing power structures are naturally incentivized to quash any emerging power which would upset their status quo, alliances of power structures push to crush non-aligned power structures the world over. Whenever you see the tight western alliances and their media propaganda arms attacking the interests of Russia, China, Syria, Iran, Venezuela etc., you are seeing an alliance of power structures working to disrupt the interests of another alliance of power structures in order to absorb their assets.

The chaotic, Wild West environments that these conflicts create allow for an amount of underhanded looting and pillaging that you could never get away with in your own country, in the exact same way the colonialists and conquistadors of old could never have gotten away with brazenly grabbing gold, land and slaves from their fellow Europeans in Madrid or Rome but were given no legal trouble in the new world. The colonialists and conquistadors pushed into the Americas, Africa and Asia on the pretense of spreading Christianity and civilization; modern day conquerers push into non-aligned power structures on the pretense of spreading freedom and democracy in precisely the same way.

This chaos doesn’t require direct military conflict to be profitable; the uncritical enmity against Russia that the western plutocratic alliance has manufactured with its media control has allowed them to be blamed for everything from incriminating WikiLeaks documents to a corporate raid by Ukrainian oligarchs without any questions asked. Anyone who has ever had to deal personally with a sociopath knows how much they love to exploit the gray areas that chaotic situations give them, and geopolitical conflicts create those situations in spades.

11. The neocons are always wrong.

This one’s really easy. If you ever want to be on the right side of history for a foreign policy debate, look at what Bush-era PNAC neocons like John Bolton and Bill Kristol are saying about it, and take the opposite position. Neocon thought leaders have been loudly and catastrophically wrong about everything since the turn of the century, from Afghanistan to Iraq to Libya to Syria, and they’re not about to start being right now.

12. The push towards truth always starts with yourself.

You can’t out-manipulate seasoned manipulators. The main error most people make when trying to deal with a sociopath is to try and manipulate them back. Don’t even try. They have years of experience on you because they literally have done nothing else. While you were laughing and crying and worrying and connecting and relating to people, they were working out how to play humans like Garry Kasparov worked out how to play chess. And when you have literal teams of sociopaths collaborating together to amass power, you my dear child, do not have a chance. Don’t play their game. You will lose.

The only way to win this is to set your compass resolutely to “true.” Always be honest with yourself. Find all the different ways that you are manipulating others and see them and acknowledge them. Find your tribal allegiances and your desire to be right, and tip your hat to their existence. The more self-aware we are, the less levers we have to be manipulated by. If you are blindly partisan or loyal to a particular faction, that makes you gullible to propaganda because your wishful thinking and your desire to be right come into play. Get honest with yourself about who you are and what you want, and you will start to become an un-playable piece on the board.

If we can’t beat these bastards with truth, we don’t deserve to win.

* * *

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De Niro Expands Nobu Empire With Sushi-Condo-Hotel Scheme, Expects Revenues To Top $1 Billion

Sushi restaurant and luxury hotel chain, Nobu Hospitality LLC, expects to top $1 billion in revenue within five years as it expands into the real estate market. Partners Robert De Niro, Meir Teper and chef Nobu Matsuhisa unveiled 550 condos and 36 luxury-hotel suites above a Toronto Nobu restaurant. 

Nobu, founded in 1994 with one sushi restaurant in New York, has swelled to over 40 locations, including Las Vegas and London, according to Nobu Hospitality CEO Trevor Horwell. 

“It’s quite a rapid growth,” Horwell said, breaking ground at the Toronto project on Mercer Street, in the city’s entertainment district, Monday. “Normally in our restaurants we can have over 100,000 customers a year. All we’ve got to do is convert 10 to 15 percent of those customers to fill our hotels. So that’s why we went into hotels.” –Bloomberg

The project was announced last year and sold out in three months, while Nobu plans to complete the $231 million two-tower Toronto project in two-and-a-half years. 

Hotel rooms will cost up to $600 per night, and condo units – most of which have been pre-sold to local residents, will average $650,000, according to Josh Zagdanski, VP for high rise at Toronto-based Madison Group.

I’ve done movies here, a festival here and it’s a logical place for us to open,” said De Niro, who also attended the groundbreaking, complete with gold shovels and Japanese drummers. –Bloomberg

Nobu has also committed to two more mixed-use developments in Los Cabos, Mexico and Sao Paulo, Brazil – and is looking to expand into Taipei, Hong Kong, Jakarta for at least 10 such projects over the next decade, while adding five hotels and restaurants per year. 

New York is also on their radar, however an earlier mixed-use project fell through due to zoning issues, according to Horwell. “We want to do New York without a doubt, but it has to be special,” he said. “If we did a mixed-use, it’d have to be the best, because there’s some great developments there.”

De Niro says he’s hoping to see a Nobu resort in the coming years, and has his eye on Bermuda. “There’s quite a few things in the works,” he said.

One thing we’re sure of – Donald Trump won’t be allowed into any of them. 

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“Do You like It, Senator, When The Deep State Works Against You?”

Authored by Jeremiah Johnson (Nom de plume of  retired Green Beret of the US Army Special Forces ) via SHTFplan.com,

There’s an old expression: “What’s good for the goose is good for the gander.” In this case, another old expression is even better: “Turnabout is fair play.” We are all still reeling from the Obama years of “transparency,” and “change you can believe in,” that both equated to Doublethink and Doublespeak. Under Obama, everything was hidden from the American people: Benghazi, Fast and Furious, Ukraine/McCain/Nuland, and the Arab Spring. Nancy Pelosi (on the several thousand-paged Obamacare legislation): “We’ll just have to read it after its finished to know what’s in it.”

Democrats or Republicans, they are merely far-left Marxists or center-Marxists; nevertheless, they picked up a taste of their own medicine last week. An article was released on 6/7/18, entitled “Conspiracy Theory Proven Fact as Cops Remove Senator from Wal-Mart Converted Into Detention Center.”

The incident this article describes is very, very important: please read on.

U.S. Senator, Jeff Merkley (D-OR), attempted to enter a “shuttered/closed” Wal-Mart on 6/1/18, for the purpose of ascertaining whether the children of illegal aliens were being held there. The Wal-Mart is located in Brownsville, Texas. Here’s an excerpt of that article:

All the windows and doors to the facility – which is a shuttered Walmart – have been blacked out with window tinting.  [Senator] Merkley arrived and was immediately asked to leave by a female government worker. One of the country’s most powerful lawmakers then demanded to speak with a supervisor. Instead of complying with his wishes in the name of transparency, the shadowy government workers called Brownsville police on the U.S. Senator. After 10 minutes of waiting and being confronted by local police, he was denied entry and forced to leave.

Later, in a Facebook live video, Merkley remarked: “When an organization has something to hide, not allowing members of Congress to see it, in a democracy, is completely unacceptable…What’s going on is an effort to prevent the press from being able to report to the American people what is happening.  And that’s simply unacceptable.”

Subsequent to all this, it was learned that Southwest Key Programs runs the detention facility. They released this statement three days after Merkley’s statement, on 6/6/18 that ties in to the big picture. Take note of the government agency behind it all, their name emboldened, and their cover story bottom-line, also emboldened for you:

“We regret having to turn away Senator Merkley at our Casa Padre shelter.  The U.S. Office of Refugee Resettlement (ORR) prohibits any facility from allowing visits that have not been approved by them, even if it is a U.S. Senator. With ORR approval, Southwest Key shelters have welcomed elected and other public officials at our facilities in the past, and will continue to do so, because we are proud of the caring environment we provide these children. We have reached out to the Senator and connected with his staff because we would like to see this happen.”

Can’t you just imagine Neil Diamond’s “Coming to America” playing in the back of your mind? Or the old Coca-Cola ad in the early ‘70’s with everyone holding hands and singing, “I’d like to teach the world to sing, in perfect harmony…” Can’t you hear it now?

The “welcoming shelter,” that welcomed Senator Merkley by calling the Brownsville Police on him and denying his entrance. The “caring environment” just couldn’t bear, perhaps, to disturb the children?

Senator Merkley has visited another facility at the McAllen Border station where he pointed out that he saw hundreds of children kept in chain-link fenced-off areas (basically, cages). The White House released a statement that claimed the Senator was “spreading blatant lies.” Of course the actions had to be politicized by both sides.

But let’s go a little bit further, and bring the punch line of the comedy (or tragedy) in focus. Another statement came out, as well. Here it is:

At 2 pm on a Friday, the Senator asked to visit a secure DHS facility over the weekend where children are present and we worked with him [the Senator] to provide him access. This presented obvious and serious privacy concerns – not to mention disrupting operations. He was able to visit the facility on Sunday.

So, we learn that Southwest Key Programs runs the facility for the DHS. That falls in line perfectly, as DHS has subcontracted out the management of the place to them. Such actions place a layer of insulation between them and the facility. By “corporatizing” the facility instead of having it run by DHS outright, it removes it from direct government oversight by placing it in the hands of a private corporation. Simultaneously, the DHS still controls it by maintaining federal bureaucratic oversight.

Isn’t it amazing? If a U.S. citizen were to carry out such a “slicky” maneuver, they would be charged with forming a shell corporation for the purposes of concealing another venture and perhaps thrown into a cell…indefinitely…never being charged with anything because that isn’t necessary anymore. Charges are unnecessary, because with indefinite detention being authorized by Congress, what is necessary?

The only thing that’s necessary is that you be placed under investigation; investigation is the key word, now.

Interestingly enough, Senator Merkley was never permitted to visit, nor did he visit that facility on Sunday, 6/3/18, or any other time. Guess who made that statement?

DHS Press Secretary Tyler Houlton, the same man who just a few months ago informed us that the new DHS policy would be to gather up the names of journalists, reporters, writers, bloggers, radio show hosts, and anyone in the Independent News Media that mentioned or wrote about the DHS. He referred to Independent Media reporters as “tinfoil hat-wearing conspiracy theorists.”

In truth, there’s a lot more to this entire scenario than meets the eye. Let’s summarize it.

1. The ORR as mentioned previously was formed long before President Trump took office. This shows a continuation of Deep State policies that run without being interrupted by a change in administrations.

2. There is no transparency in government, even when such transparency is demanded by a government official (in this case, a United States Senator) who has been elected to represent the people.

3. The three-party system of checks and balances is nothing but a desiccated husk, the shell of a cicada clinging to the bark of a tree.

4. The irony: politicians do not like it when they are subjected to censorship and denied access to the truth…exactly the same way they have denied American citizens from the truth with endless legislation and bureaucracy, closed-door sessions and meetings, and other tactics employed by the rulers on the ruled.

5. This is just one little facility. Just one. Think it ends there? Think again: this is just the tip of the iceberg.

6. If the administration knows about such things as these “happy welcoming centers,” then it is either powerless to stop them, or it supports them.

7. Senator Merkley said that it is “unacceptable” for a “democracy” to prevent a member of congress from investigating something…or to keep “the press” from reporting it to the people.

This last item, #7, is the crux of the problem: too many middlemen between the event and the American people, to include elected officials and bureaucrats, and the press. Where is the news? Where has the news been? Why, all mainstream media (MSM) is Associated Press approved, and every paper marches in lock step…it is canned, controlled, and censored content. It is deliberately crafted to mold the public consciousness into the “social conscience” of groupthink…tearing down all normative and traditional beliefs and supplanting them with malleable groupthink.

It is all form and no substance. The MSM is a 70 year-old prostitute with a made-up, plastic face: a mannequin without a soul, living in a $10 million dollar mansion and claiming to be an average citizen, reporting on “grass roots” issues. Those issues are mere tabloids: bread and circuses provided to the masses to obfuscate and divert focus away from the theft, the ever-increasing surveillance, and the never-ending wars of expansion and global dominance. These tabloid issues exploit the deterioration of society. Even all our crumbling infrastructure is nothing more than a true picture of how we have become a potholed, banana-republic with run-down highways and broken bridges and highwaymen with badges robbing us for ad valorem at will, or worse.

The politicians are even more heinous than the press, especially since they control the press, equating “freedom to fawn” with license to write. Politicians lie in the campaign and then enter office to do exactly the opposite of what they promised. They cannot be held accountable. It is a business: the business of politics. It is a cycle, where the red clown faces off against the blue clown, and the winning clown sprouts fangs of Stephen King’s “It” as soon as the swearing in is completed. Government is no longer in the hands of the people: the people are necessary for labor and to keep the machine running, but we are ruled, not governed.

Last week a U.S. Senator received the same spoonful of Castor oil that Congress has been giving to the American people for decades. More than that occurred, however, as another example emerged of lack of balanced accountability and the control of the Shadow government. Working through and aided by bureaucracies…obscure ones created under executive order but without Congressional oversight or expiration date…this Shadow government is one step away from seizing power and smothering out the last sparks of freedom in this country forever.

It is dangerous to write this article. It is dangerous to write these words, and this comes straight out of the mouths of bureaucrats and government officials. Others will also smear the words: anonymous or masked expletive-laden vitriol spouted by the trolls. They are lackeys, either paid for or indirectly supporting the stance of that Shadow government. The open government and the Shadow government have vested interests in one another, for now. Make no mistake: they mutually support one another.

There is a written document much greater than mine, however, that has been smeared and denounced over time.  The document’s greatest detractors, ironically, are not the ones who openly denounce and revile it. The true detractors are the complacent ones…the ones who do not exercise the very God-given rights affirmed and championed by this written document: the Constitution of the United States of America.

It is in this vein that I claim those rights given to me before birth, and affirmed within the First Amendment of the Constitution of the United States: the right to freedom of speech and freedom of the press. Someone may need these words: someone who is struggling whether or not to take a stand within their heart and maybe in their family, workplace, or community. Maybe it will make a difference for at least one, and one is more than none. The First Amendment needs to be exercised if we’re ever to have a government by “We the People” ever again.

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US Senate Accelerates Hypersonic Defenses Citing “Fierce Competition” By China And Russia

The U.S. lawmakers have introduced bipartisan legislation that aims to improve missile defense capabilities of the United States. The U.S. Senators Brian Schatz (D-Hawaii) and Dan Sullivan (R-Alaska) introduced S. 2980 – Integrated Missile Defense Act of 2018 on May 24, which was read twice and referred to the Committee on Armed Services. The bill directs new efforts to further accelerate hypersonic missile defenses and space-based sensors, as the cold war for emerging technologies, including hy­per­son­ics be well underway against China and Russia.

“Last year, Congress – working closely with the Trump administration – undertook much-needed efforts to dramatically bolster and advance our country’s missile defense,” said Senator Sullivan.

“This year, continuing to work in a bipartisan fashion, our bill finally authorizes the full development and deployment of a space-based sensor layer. This important measure further helps to ready our missile defenses and make them increasingly interoperable and effective against an ever-evolving missile threat.

Additionally, this bill seeks to better align our missile defenses with the 2018 National Defense Strategy including more quickly fielding advanced capabilities to address future threats, better integrating our missile defense systems, and seeking to collaborate more with allies and partners on missile defense technologies, Senator Sullivan added.

“When it comes to North Korea, we can hope for the best while still planning for the worst,” Senator Schatz said.

“I strongly support diplomacy, but in the meantime, this bill beefs up our missile defense system and protects Hawaii, Alaska, and the U.S. mainland from rogue missile threats. It also speeds up our efforts to protect U.S. forces and allies in the region by improving our ability to detect, track, discriminate, and intercept increasingly sophisticated future missile threats,” Schatz added.

S. 2980 is co-sponsored by Senators Ted Cruz (R-TX), Gary Peters (D-MI) and Tom Cotton (R-AR). Here is the overview of the bill:

  • Develops and Deploys Space-based Sensors: Mandates the development deployment of space-based sensors as soon as practicable.

  • Readies Our Defenses: Mandates an analysis of accelerating the development and deployment of the Redesigned Kill Vehicle (RKV) to Missile Field 4 at Fort Greely.

  • Promotes a More Integrated Missile Defense: Directs a study on an integrated air-and-missile defense architecture to protect against evolving threats outlined in the 2018 National Defense Strategy.

  • Accelerates Our Defenses Against Hypersonic Threats: Directs the acceleration of our hypersonic missile defenses and links them to the deployment of space-based sensors.

  • Focuses of Allies: Expresses that the U.S. should work with allies and trusted partners to share missile defense capabilities.

  • More Rigorous Testing: Seeks to discourage a risk adverse culture of missile defense testing and promotes a more rigorous testing regime to deliver capabilities at the “speed of relevance.”

Senators Schatz and Sullivan stated that the Secretary of Defense “shall submit to the congressional defense committees a report” detailing how the department plans on accelerating its hypersonic missile defense program, within the next three months.

The Senators also quoted a variety of high-ranking military officials, who warn about China and Russia acquiring emerging technologies, including hy­per­son­ic missiles that could fundamentally change the landscape of war against the West.

  • General Joe Dunford, Chairman of the Joint Chiefs of Staff, stated, “The United States military is in a fierce competition to harness the benefits of emerging technologies, including hy­per­son­ics … as these developments will fundamentally change the character of war.”.

  • General John Hyten, Commander of United States Strategic Command (USSTRATCOM) stated, “China is swiftly developing and testing a hy­per­son­ic-glide vehicle capability, a technology used to defeat ballistic missile defenses.”

  • General Hyten also stated, “President Putin announced Russia’s development of … a maneuverable hypersonic glide vehicle,” which “only reinforce Russia’s commitment to develop weapons designed to intimidate and coerce the U.S. and its allies.”.

  • Admiral Harry Harris, Commander of USPACOM stated, “China and Russia continue to develop and operationally field advanced counter-intervention technologies which include fielding and testing of highly maneuverable re-entry vehicle/warhead (i.e., hypersonic weapons) capabilities that challenge U.S. strategic, operational, and tactical freedom of movement and maneuver. China and Russia also present other notable challenges in the form of cruise missiles and small-unmanned aircraft systems (s–UAS) which fly different trajectories, making them hard to detect, acquire, track, and intercept.”

It seems as China and Russia are surpassing the United States in acquiring these emerging technologies that the Pentagon has not just tried to develop for years, but squandered trillions of dollars in failed Middle East wars. The consequence? Well, China and or Russia could soon have the ability to strike the heartland of the United States with a hypersonic missile — rendering all missile shields useless.

That is precisely why U.S. Senators are rushing to accelerate the hypersonic missile program because they understand China and Russia now have an edge. The slow death of American exceptionalism continues.

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Ronald Stoeferle: Gold Is Dirt Cheap Right Now

Authored by Adam Taggart via PeakProsperity,com,

…and a new bull market for the metal is beginning.

Fresh from releasing his exhaustive 230-page annual report titled In Gold We Trust, Ronald Stoerferle joins us to summarize his forecast for the yellow metal.

Stoerferle, an author of several books on Austrian economics and head of strategy and portofolio management at Incrementum AG, concludes that gold is extremely cheap right now in dollar terms. And he sees a new bull market beginning for the precious metal — one likely to quickly build momentum as the next (and long overdue) financial market correction arrives.

We’re at the beginning of a new stage of a bull market.

We’ve seen a massive correction with a big drawdown, but we’re now seeing the Commitment of Traders report suggesting that there’s been a washout. We’re seeing that sentiment is really negative. We’re seeing that nobody really cares about gold and mining stocks, and especially about silver. Silver is probably the biggest contrarian investment, though silver mining stocks are probably even more contrarian at the moment.

We all know that the herd behavior in the sector is getting more extreme. I think it has got to do with career risk in the financial industry, so nobody really wants to make a contrarian call. But once we go above this $1,360-$1,380 resistance, which is also the neckline of a large inverse head & shoulder formation, I think gold will hit $1,500, $1,600 pretty quickly.

The most important thing is: in comparison to all the monetary printing that we’ve seen in the last couple of years, gold got significantly cheaper. Gold, in monetary terms, is dirt cheap at the moment. We’re basically at the same levels like in 1971 when it comes to the gold backing of the US dollar. So gold is a bargain at this level.

Of course, we need some sort of catalyst. I think one of the main catalysts will probably be recession fears coming up and the greater volatility in equity markets that’s going to go hand in hand. And we’ll see it sooner or later.

We should not forget that stocks have been trading at or close to the all-time highs, that real estate has been doing really well, that bond markets have been doing well, that cryptocurrencies have been kind of stealing the show, that people regained trust in the financial system, in banks, and even in politicians. Inflation is not a big concern at the moment. We’re seeing rising rates and so on. Let’s face it: those things are not an extremely positive environment for gold. But still, it’s been doing pretty well.

If those headwinds become tailwinds, meaning that there will be some volatility kicking in in equity markets, that the bond markets start cracking, that people start losing trust in the system again — early indications of which it looks like we may be seeing here in 2018 — that’s going to be the point in time when gold will pick up momentum big time.

And the other big thing is that the whole world is increasingly trying to diversify out of the US dollar. We’re coming to a multipolar currency system sooner or later. That’s a long process. This year we’ve seen the introduction of the oil futures in Shanghai — that’s a really big development — volumes are enormous in Shanghai. Nobody would have expected that. And that’s just another nail in the coffin of the US dollar.

And, of course, all those countries that are trying to avoid the US dollar in their trade, they are big holders of gold. So I think within the course of the next crisis, I think there’s might chance of a revaluation of gold.

Click the play button below to listen to Chris’ interview with Ronald Stoeferle (49m:22s).

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Trump Credits Presidential Trash-Talking In Diplomatic Accord: “Without The Rhetoric We Wouldn’t Be Here”

Less than a year ago, President Trump dropped his first MOAB in the war of words with 35-year-old North Korean leader Kim Jong Un – warning him “best not make any more threats to the United States,” or North Korea “will be met with fire and fury like the world has never seen.”

Two days later, Kim threatened a “simultaneous strike” which would rain down “historic enveloping fire at Guam” within weeks. 

Weeks later, Trump told the U.N. that America would “totally destroy” North Korea and it’s leader, “Rocket Man” Kim Jong Un – a nickname he would continue to use over the ensuing weeks and months. 

Hitting back a few days after Trump’s speech, Kim threatened to “tame the mentally deranged U.S. dotard with fire” :

“I am now thinking hard about what response he could have expected when he allowed such eccentric words to trip off his tongue. Whatever Trump might have expected, he will face results beyond his expectation. I will surely and definitely tame the mentally deranged U. S. dotard with fire.”

*drops mic* 

Now, President Trump credits his tough-talk with Kim as a major factor in yesterday’s successful summit – telling Fox News “without the rhetoric we wouldn’t have been here.” 

So I think the rhetoric, I hated to do it, sometimes I felt foolish doing it, but we had no choice,” he said.

In other words, Trump’s war of words with Kim was all part of the Art of the Deal.  

So instead of this: 

We now have this:

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We Know How This Ends! – China Copies U.S. Housing Bubble Policies

Via Investing In Chinese Stocks blog,

In the late 1990s, the U.S. government under Clinton began pushing home affordability with an upgrade to the 1977 Community Reinvestment Act. The law was originally “designed to encourage commercial banks and savings associations to help meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods.” In 1994, compliance with CRA laws became a prerequisite for mergers and interstate expansion.

This became explicit in 1999 as part of the Glass-Steagal repeal effort: “any bank holding institution wishing to be re-designated as a financial holding institution by the Board of Governors of the Federal Reserve System would also have to follow Community Reinvestment Act compliance guidelines before any merger or expansion could take effect.”

President Bush expanded on CRA goals with the Ownership Society, the cornerstone of which was home ownership. In 2005: Countrywide Ups Minority Lending Goal to $1 Trillion

Countrywide Home Loans Inc. has extended its minority and low-income lending goal by $400 billion to $1 trillion over the next five years. The company says its “We House America” initiative has been overwhelmingly successful since its 1992 launch and initial goal of $1.25 billion in loans, prompting the lender in 2001 to set a new bar of $600 billion in loans by 2010. However, Mary Duron, senior vice president of fair lending and the “We House America” lending program, says Countrywide had reached the $300 billion mark by the end of last year and decided to strive for even more minority and low-income lending. Angelo Mozilo, chairman and CEO of Countrywide Financial, says the program has helped put 2.4 million families in homes, and the number is expected to nearly triple over the next five years.

Countrywide went down the tubes and almost took down Bank of America after it acquired Countrywide in early 2008.

Besides a government-encouraged expansion of subprime lending and very willing participation by banks and financial institutions, Wall Street was looking for mortgages to bundle into MBS and CMOs. As demand for these products surged, Wall Street replaced homebuyers as a source of demand for new loans. Crooked mortgage brokers force fed low-quality loans to borrowers including to people with no way of paying the mortgage (dubbed NINJAs loans because the borrower had no income, no job). The result was a perfect storm that blew up spectacularly in 2008.

History is rhyming in China.

The government is forcing large banks to lend trillions of yuan for rental housing, at below market rates, to borrowers who can’t afford it, and banks are trying to pass of the risk by bundling these loans into asset-backed securities.

Reuters: China pushes state banks into home rental market at their own risk

As property prices rocket across China, Beijing has appealed to the country’s banks and insurers to help accelerate the development of rental markets as a way of making homes more affordable – and rein in speculative sale markets.

The big state banks have responded by pledging more than 3 trillion yuan ($467 billion) in rental housing financing, including for real estate developers, leasing firms and tenants, according to Reuters calculations. The total value of the rental market was 1.3 trillion yuan last year.

China Construction Bank Corp (CCB)(0939.HK) (601939.SS), the second-largest lender, is the most visible example of this trend, giving loans to renters at ultra-low interest rates with long repayment periods.

These loans are popular in pricey Shenzhen. 

Liu Feng, a 28-year-old product manager, was one of the first to take out a rental loan from CCB for his 90 square meter (970 square feet) three-room apartment in Shenzhen.

He said his monthly payments under the plan – including interest – came to about 6,000 yuan, less than if he paid for it himself, meaning the bank was effectively subsidizing his rent.

“The property developer leased the apartment to CCB, and CCB leased it to me,” said Liu.

In the U.S., the subprime borrower could not afford the home. The bank “subsidized” their mortgage (rent) rent because adjustable rate mortgages offered very low teaser rates for the first few years. As those rates reset in 2006, 2007 and 2008 the homeowners defaulted on their homes. Wall Street made billions selling mortgage debt that was effectively long-term loans made to short-term renters, and banks ended up owning the property.

In China, there won’t be a similar “reset” situation that blows up the market. That said, the uneconomic arrangement is no different. Lending at below market rates is a recipe for disaster because it distorts the market and accrues losses that eventually have to be made up.

Also last year Industrial and Commercial Bank of China Ltd (1398.HK)(601398.SS) launched a similar product in Guangzhou and Bank of China Ltd (601988.SS)(3988.HK) issued its first loan to renters in Xiamen. Both of the southern cities have been chosen by the central government to test real estate sector reforms.

\So far, only large state banks are offering the loans. Multiple sources at mid-sized and small lenders said they were daunted by default risks, high costs and low returns.

Losses are likely, the sources said, as the loans have to be priced below market rates due to the pressure on banks to show support for developing the rental market.

Even large listed banks are not participating because they don’t have the PBoC put:

A retail loan officer at one of China’s 12 joint-stock banks said his bank had decided not to offer the product.

“After CCB launched the products we looked into it closely, but only to find that was not something we could afford – interest rates were just too low to cover the cost of funding,” the officer said, declining to be named. “Only deep-pocketed large state banks can bear the cost.”

More shades of subprime:

The products have low bars for loan applicants, so risk control is really the key,” said Yang Xianling, chief economist at Ke Research Institute. “A credit-based mechanism needs to be introduced to carefully prevent speculators.

The final piece of the puzzle:

To mitigate risks, banks are considering packaging rental-related loans into asset-backed securities and real estate investment trusts and transferring risk to other investors, the sources said.

And the fuse that could set off the time bomb: the Foshan model.

“We have examined more than 100 projects of all kinds, but their returns are super low,” said Cai Yu, general manager at Foshan Jianxin. “Frankly we could have earned more if the money were deposited at a bank.”

Foshan Jianxin has been ordered by local authorities to issue loans at below market price to cultivate the rental housing market and lure tenants, Cai said.

What happens as losses pile up? Eventually, these companies will start selling properties to recoup capital.

Therefore, even with the capital infusion from CCB’s subsidiary and others, the company may still have to sell houses in a few years to cover losses, Cai said.

Despite that, CCB said this “Foshan model” has been copied in 18 other cities in Guangdong province, and it could be extended to other smaller cities nationwide.

  • Housing affordability push by government? Check.

  • Banks pressured to make riskier loans? Check.

  • Banks offering below market rates? Check.

  • Short-term borrowers (renters) taking out long-term loans? Check.

  • Loans packaged into ABS? Check.

  • Potential time bomb? Check.

Being China, there won’t be a replay of 2008 because the process of taking losses is very different. There will be losses though, lots of them, and eventually it will end up on the government’s balance sheet or more likely, the PBoC. This is unsustainable credit creation that will have to be monetized down the road, driving the future exchange value of the renminbi even lower.

And while this is all going on, developers that lack government backing are starting to chase expensive overseas financing.

Reuters: Chinese property developers bet on higher returns with mezzanine loans

Chinese property companies are increasingly tapping expensive mezzanine loans as they seek out higher returns, a trend that could undermine government efforts to cool the country’s booming real estate sector and rein in debt.

Many developers are turning to offshore mezzanine loans as government measures to tighten credit and clamp down on shadow banking in China are increasingly felt, according to lenders.

Others are taking out the loans for M&A activities or to raise working capital that would allow them to prolong construction periods in hopes that the government will lift price caps on new projects, the lenders say.

…InfraRed is now talking to two smaller cap developers listed in Hong Kong for loans for a residential project in Guangzhou and an eastern city of Yangzhou at interest rates of 15 percent to 18 percent. He declined to name the borrowers as the deals are not closed yet.

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ZTE Crashes Almost 40% After HK Trading Resumes, Limit-Down In China

Almost two months since ZTE was halted on news that the US government had dealt the firm a “death sentence” banning the tech giant from buying US parts (due to breaking Iran sanctions – and spying allegations), the telecoms company has resumed trading in Hong Kong – down 37.5% at the open

The White House announced the initial ban on ZTE buying parts from US firms in April, after the company was found to have violated a settlement originally imposed over ZTE’s sales to Iran in defiance of US sanctions. As part of the original settlement, ZTE had agreed to fire certain senior managers and withhold bonuses from others. But the company didn’t follow through with either promise.

ZTE

Then last Thursday shortly after Commerce Secretary Wilbur Ross announced the administration had worked out a deal to save ZTE which meant the company would pay a penalty of $1.3 billion (plus place another $400 million in escrow to be seized should the company again fail to hold up its end of the bargain). The company would also be forced to accept – and pay for – a team of compliance officers that will be led by a “special independent compliance coordinator” who will report jointly to ZTE’s CEO, its board and the Commerce Department. The company will be forced to pay for the monitors for ten years. The company will also be required replace its entire board of directors and senior leadership team. In exchange, ZTE will resume buying products from US firms.

And today the share start trading again…

Furthermore, in Shenzhen, ZTE is limit-down 10% (China’s post-crisis rules) – halted for the rest of the day.

h/t @YuanTalks

However, as we detailed earlier, we wouldn’t be holding our breath as a group of senators have successfully attached an amendment that would effectively kill the Trump administration’s deal with Chinese telecoms firm ZTE to a “must-pass” defense authorization bill, according to Axiosthe latest sign that the movement to kill the deal is gaining momentum, even among Republicans who rarely oppose the president… and would reimpose the White House’s original ban on ZTE buying components from US firms (what some have described as a “death sentence” for the company).

 

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June FOMC Preview: All Eyes On The “Dots” As Economy Overshoots

On Wednesday at 2pm ET, the FOMC will publish its rate decision and economic projections with Chair Powell’s press conference scheduled for 230pm ET. There will be no surprises: both consensus and the market expect (with 100% certainty) a 25bps hike to 1.75%-2.00%; where the market still has questions is about the shape of the “dots” to see if the FOMC pencils in a fourth 2018 hike: all that needs to happen is for one net dot to rise. Analysts will also watch whether the IOER will rise by only 20bps instead of 25 bps, as the last FOMC minutes discussed, any discussions on the neutral rate and whether, as per the WSJ rumor, Powell will make every meeting “live” in a hawkish switch where a press conference will follow every FOMC meeting.

Here’s what else to look forward to in tomorrow’s Fed fiesta, courtesy of RanSquawk

TRAJECTORY: The Fed has pencilled in three hikes in 2018, three in 2019, and two in 2020; the question is whether it sees a fourth hike this year. Money markets price an 88% chance of three hikes this year, and around 44% chance of four 2018 hikes. Fed’s Bostic (voter), Kaplan (non-voter) and Harker (non-voter) have all endorsed three rate rises in 2018, while Williams (voter) and Mester (voter) are in the ‘three/four’ hikes camp, depending on data. Goldman Sachs and BofA see the FOMC projecting a fourth rate rise this year, citing hawkish comments from FOMC officials in recent weeks, and Goldman also expects the 2019 median dot to rise by a quarter point, consistent with three hikes in that year (and one more in 2020). “This 4-3-1 baseline for 2018-20 compares to the March projected pace of 3-3-2, and in our view would be a natural response to mounting evidence of a larger employment overshoot.

NEUTRAL RATE: In the press conference, Fed chair Powell may be quizzed about the neutral rate, a subject that has featured heavily in recent Fedspeak; specifically, what level does the FOMC see the neutral rate, and how far is it prepared to overshoot it in this hiking cycle is the key area of debate. The May meeting minutes stated that “a few” officials “observed that the neutral level of the federal funds rate might currently be lower than their estimates of its longer-run level.” That estimate naturally varies among Fed officials: Bostic (voter) sees it between 2.25%-2.75%, Kaplan (non-voter) sees it between 2.50%-2.75%, Harker (non-voter) sees it between 2.75%-3.00%.

IOER: Analysts will be keeping an eye on whether the Fed raises the Interest on Excess Reserves by only 20bps not the full 25bps, as hinted at in the FOMC’s recent meeting minutes, given the Fed Funds Rate target have been creeping towards the rate of Interest on Excess Reserves (IOER), which is set towards the top-end of the target range: “The Fed has never thought the IOER rate and the top of the target range have to be coterminous, and a prospective tweak should be seen as technical,” writes UBS, “this change should be seen in the context of a longer-running debate inside the Fed about the daily operating framework for monetary policy,” and adds that “the minutes did note that the adjustment could take place at a meeting with or without a target rate change. Nevertheless, the June meeting seems like an opportune time for the Board to make this adjustment.” The rate is currently at 1.75%.

FOMC MARCH SEP VS. MARKET EXPECTATIONS

What Goldman expects the projections will look like:

And finally, this is how the economy has changed over the past 3 months:

 

PRESS CONFERENCES: There is a chance that the FOMC will decide to hold a press conference after every policy meeting, as opposed to quarterly press-conferences that take place in March/June/September/December, when forecasts are updated. Analysts say this would allow the Fed a degree of flexibility to adjust rates at non-SEP meetings (as has been the case in this hiking cycle), which would have the consequence of making every meeting ‘live’. Analysts at Oxford Economics believe this would be a good step, but note however that “Chair Powell says he is concerned that a press conference after each meeting would incite market participants to assume more rate hikes than currently expected. Communicating such a change clearly to the markets would be paramount.”

DOTS HEADING HIGHER: In order to reflect the upbeat growth picture and the labor market overshoot, Goldman expects hawkish changes to the dot plot. Recent public remarks by several Fed officials continued to evolve in a hawkish direction during the spring—including by previously dovish members such as Governor Brainard and influential centrists such as San Francisco Fed President John Williams. In fact, several committee members have explicitly addressed the possibility of a faster pace of hikes this year. With the exception of Williams’ June 1 remarks, all of the below quotations preceded the release of the high-flying May employment report (which brought the jobless rate to a 48-year low and may incite additional hawkish changes).

This hawkishness will manifest itself in a gradual increase in the median dot for 2018, which according to Goldman will show a total of four interest rate hikes, up from the three projected at the March meeting. What is notable is that only one member would have to boost his or her 2018 projection above the March median for next week’s SEP to show a four-hike baseline this year, an increase which is certainly likely tomorrow. Goldman also expects the 2019 median dot to rise by a quarter point, consistent with three hikes in that year and one additional hike in 2020. This 4-3-1 baseline for 2018-19-20 compares to the March projected pace of 3-3-2.

In the event that the 2018 median does not increase, Goldman still sees scope for the 2019 medians to show 7 hikes cumulatively over those two years (vs. 6 hikes in the March SEP). Said otherwise, fewer projected hikes in 2018 would increase the scope for additional ones the following year.

* * *

STATEMENT: A number of officials, notably Williams (voter) and Brainard (voter), have argued that forward guidance may need to be changed as the neutral rate approaches, and as such, the FOMC will likely review its language around ‘accommodative policy’. The line in the statement in focus will be that rates will remain “for some time, below the levels that are expected to prevail in the longer run.”

Goldman Sachs expects the statement to retain an upbeat tone, with a constructive view on household spending, an acknowledgement of lower unemployment, and a hawkish rewording of the forward guidance. “On the negative side, with Italian sovereign spreads returning to levels last seen in the European debt crisis, we think the statement will probably include a subtle reference to heightened uncertainty abroad, echoing recent comments from Governor Brainard.” (see projected redline below).

In terms of the other key sentences, Goldman is looking for the following:

  • In response to upward pressure on the effective fed funds rate, n we expect a policy directive in the statement’s implementation note that will adjust the interest on excess reserves rate (IOER). Such a change (for example, “to a level 5 basis points below the top of the target range”) was strongly suggested by the May minutes.
  • We do not expect a direct reference to recently enacted tariffs nor to the prospect of additional trade restrictions. We do, however, expect these issues to come up during the press conference.
  • We think Fed governor nominees Richard Clarida and Michelle Bowman will not attend next week’s meeting. Given that the Senate Financial Services Committee vote is currently scheduled for Tuesday the 12th, the odds of scheduling and holding a floor vote to confirm them in time for the meeting are very low.
  • We do not expect any dissents, matching the unanimity of the March tightening action. The December dissenters (Minneapolis Fed President Neel Kashkari and Chicago Fed President Charles Evans) are non-voters this year, and we expect that even the more dovish voters on the Committee will be persuaded to support a second hike in 2018

Finally, here is Goldman’s proposal for the June FOMC statement redlined vs the May statement.

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When Will Gold’s “Summer Doldrums” End? History Says Pretty Soon

Authored by John Rubino via DollarCollapse.com,

This has been a uniquely boring stretch for gold and silver – especially considering all the things going on in the world that ought to light a fire under precious metals. In just the past few weeks, the US started a global trade war, Italy elected a populist governmentemerging markets descended into yet another crisis, and inflation has risen from the dead – all of which would be expected to spook normal financial markets and send capital pouring into safe havens. But not this time, which leaves precious metals under the control of seasonal factors that have over the years generated the “sell in May and go away” rule-of-thumb.

So when do the summer doldrums end? Based on recent history, December is a pretty good bet. The arrows on the following chart mark the beginning of each year since 2014. Note how gold’s price frequently starts moving up either then or a few weeks before, in early December. This seasonal strength is due to Asian buying in anticipation of weddings and harvests, and though you’d think traders would anticipate – and therefore cancel – the cycle’s impact, it still seems to operate.

Prior to 2014 the pattern was slightly different. Here’s a chart from Casey Research showing gold’s average performance for each month between 1975 and 2013. September was by far the best month to buy, with January the second best, implying a eight-month window beginning in July in which buying was rewarded with at least short-term gains.

If the second pattern re-emerges, then we really don’t have long to wait at all. Maybe one more month and at most three, and gold bugs can start having fun again.

As always, though, deciding when to buy precious metals is just the first in a series of challenges. Choosing the right dealer is paramount (see here for a list of reputable ones), followed by whether to take delivery and store the metal at home or seek secure vault storage for gold and silver.

And then there’s the bullion vs mining stock question. The former is money which will hold its value over long periods of time (thus preserving your purchasing power) while the latter are investments that can rise by multiples of their original cost or disappear without a trace. Jay Taylor’s newsletter is a good source for intelligence on the explorers, the riskiest and potentially most profitable segment of the mining market.

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