Author: admin

Authored by James Rickards via The Daily Reckoning,

Gold spiked after last Friday’s drone strike that took out a top Iranian military official and is trading at seven-year highs.

Yes, the news was dramatic and made a major impact. But geopolitics is just one factor driving gold. Even without the latest geopolitical tensions, gold is poised for a historic run.

The first two major gold bull markets were 1971–80 and 1999–2011. Today, gold is in the early stages of its third bull market in 50 years.

If we simply average the performance of the past two bull markets and extend the new bull market on that basis, we would expect to see prices peak at $14,000 per ounce by 2026.

What’s driving the new gold bull market?

From both long-term and short-term perspectives, there are three principal drivers:

1. geopolitics,

2. supply and demand and,

3. Fed interest rate policy

(the dollar price of gold is just the inverse of dollar strength. A strong dollar = a lower dollar price of gold, and a weak dollar = a higher dollar price of gold. Fed rate policy determines if the dollar is strong or weak).

The first two factors have been driving the price of gold higher since 2015 and will continue to do so. Geopolitical hot spots like Iran, Korea, Crimea, Venezuela, China and Syria remain unresolved. Some are getting worse.

Each flare-up drives a flight to safety that boosts gold along with Treasury notes, as the latest incident shows.

The supply/demand situation remains favorable with Russia and China buying over 50 tons per month to build up their reserves while global mining output has been flat for at least five years.

The third factor, Fed policy, is the hardest to forecast and the most powerful on a day-to-day basis.

But there’s little chance that the Fed will be raising rates anytime soon. It’s much more likely to cut rates as the U.S. economy faces strong headwinds, especially from rising debt levels. Debt is growing faster than the economy.

Debt is now at the highest levels since World War II. We’re nearly in the same position on a relative basis as we were in 1945.

Because of the natural deflationary state of the world and the high debt-to-GDP ratio, growth has been snuffed out.

And based on Congressional Budget Office (CBO) projections — which I think are conservative — the debt-to-GDP ratio is going to keep going up.

There is no way out except inflation.

Add it all up and the environment is highly favorable for gold. But if you want evidence that owning gold is probably the best way to guard your wealth, just look at the “smart money.”

I’m sure you’ve seen plenty of billionaire hedge fund managers on business TV or streaming live from Davos. They like to discuss their investments in Apple, Amazon, Treasury notes and other stocks and bonds.

They love to “talk their book” in the hope that other investors will piggyback on their trades, run up the price and produce more profits for them.

What they almost never discuss in public is gold. After all, why have gold when stocks and bonds are so wonderful?

Well, I worked on Wall Street and in the hedge fund industry for decades. I also lived among the players in New York and Greenwich, Connecticut, at the same time. I’ve met the top hedge fund gurus in private settings. And here’s the thing:

I’ve never met one of them who does not have a large hoard of physical gold stored safely in a nonbank vault. Not one.

Of course, they won’t say so on TV because they don’t want to spook retail investors into dumping stocks and bonds. But watch what they do, not what they say.

If gold bullion is the go-to asset for billionaires, why don’t small investors have at least a 10% allocation to gold and silver bullion just in case?

Some do, but most don’t. They’ll find out the hard way what individuals have learned over centuries and millennia. Gold preserves wealth; paper assets do not.

A global monetary reset is coming, with gold at its center. It can either be an orderly process – or a chaotic one…

Over the past days while little real debate over the Iran crisis has happened in Washington or Congress (instead it’s merely the default drones and “bombs away” as usual), the American public has been busy online and in living rooms debating the merits or lack thereof of escalation and potential war with Iran. 

However, like with many other instances of US foreign policy adventurism, this is typically a “debate” lacking in necessary recent historical context or appreciation for how the domino effect of disasters now facing American security were often brought on by prior US action in the first place. As a case in point, it’s not recognized often enough in public discourse that it was the United States under the neocon Bush administration which handed Iraq over to “Iranian influence” and the Shia clerics in the first place.

It must be remembered that Saddam Hussein was a secular Sunni dictator presiding over a Shia majority population, and he was enemy #1 of Iran. Team USA’s short-sighted and criminal 2003 invasion and overthrow of Saddam based on WMD lies had the immediate benefit to Tehran of handing the Ayatollah the greatest gift that Iran waged a nearly decade-long war to accomplish, but couldn’t (the 1980-1988 Iran-Iraq War).

And the neocons within the bowels of the national security state have ever since been attempting to salvage their failed legacy in Iraq by the futile effort of trying to contain Iran and roll back Shia dominance in Baghdad, as Seymour Hersh detailed in his famous 2006 New Yorker piece The Redirection, which accurately predicted the ‘long war’ against the Hezbollah-Damascus-Baghdad-Tehran axis which would unfold, and did indeed unfold, especially in Syria of the past eight years. 

To “situate” the past week’s dramatic events, it’s also crucial to understand, as The Libertarian Institute’s Scott Horton has pointed out, that “The U.S.A. has been bombing Iraq for 29 years. And it looks like it’s not over yet.”

Below is an essential timeline compiled by Horton of that nearly three decade long history where Iraq has been consistently subject to American bombs and intervention — yet ironically (and some might say predictably) the situation is still getting worse, more unstable, and more dangerous.

* * *

The U.S.A. has been bombing Iraq for 29 years. And it looks like it’s not over yet:

Iraq War I: January—February 1991 (aka The Gulf War, Operation Desert Storm, liberation of Kuwait)

Iraq War I 1/2: February 1991—March 2003 (The rest of Bush I, Bill Clinton years, economic blockade and no-fly zone bombings)

Iraq War II: March 2003—December 2011 (aka Operation Iraqi Freedom, W. Bush’s invasion and war for the Shi’ite side)

Iraq War III: August 2014—December 2017 (aka Operation Inherent Resolve, the war against the Islamic State, which America had helped to build up in Syria but then launched this war to destroy, on behalf of the Shi’ite government in Baghdad, after ISIS had seized the predominately Sunni west of the country in the early summer of 2014 and declared the Islamic State “Caliphate”)

Iraq War III 1/2: December 2017—January 2020 (The “mopping-up” war against the remnants of ISIS which has had the U.S. still allied with the very same Shi’ite militias they fought Iraq War II and III for, but are now attacking)

Iraq War IV: Now—?

NEW from me: We asked folks to identify Iran on an unlabeled map.

28% of them got it right. Here’s where they guessed. https://t.co/XhP5OU9s2n pic.twitter.com/IQ8HYFDKxE

— Joanna Piacenza (@jpiacenza) January 8, 2020

As Scott Horton suggests, the roots of the current crisis lie all the way back in the mid-20th century: 

In 1953, the American CIA overthrew the elected prime minister of Iran in favor of the Shah Reza Pahlavi who ruled a dictatorship there for 26 years until in 1979 a popular revolution overthrew his government and installed the Shi’ite Ayatollah Ruhollah Khomeini in power.

So in 1980, President Jimmy Carter’s government gave Iraq’s Saddam Hussein the green light to invade Iran, a war which the U.S. continued to support throughout the Ronald Reagan years, though they also sold weapons to the Iranian side at times.

But then in 1990, Iraq invaded Kuwait in a dispute over debts from the recent war with Iran, with some encouragement by the U.S. government, leading to America’s Iraq War I, aka the first Gulf War or Operation Desert Storm at the beginning of 1991.

And that was merely the very beginning. 

Read the rest of the story and the excellent brief history of how we got here over at The Libertarian Institute. 

Authored by Daisy Luther via The Organic Prepper blog,

If you thought the law that would effectively ban semi-automatic weapons in Virginia was draconian, just wait. The General Assembly isn’t done trampling the Second Amendment yet. They have lots more potential felonies in store for gun owners.

Let’s take a look at HB567 and HB318.

HB567 wants to ensure gun ranges are government-owned.

In a blow not only to gun owners but also to small business owners, HB567 would outlaw many indoor gun ranges that are not owned by the state government. What’s more, the private ranges allowed would have to cater to law enforcement as their primary clientele. And they’re not done yet – the gun ranges would serve as data-collection points.

Here’s the text of the summary. (Emphasis mine)

As used in this section, “indoor shooting range” means any fully enclosed or indoor area or facility designed for the use of rifles, shotguns, pistols, silhouettes, skeet, trap, or black powder or any other similar sport shooting.

B. It is unlawful to operate an indoor shooting range in any building not owned or leased by the Commonwealth or the federal government unless (i) fewer than 50 employees work in the building or (ii) (a) at least 90 percent of the users of the indoor shooting range are law-enforcement officers, as defined in § 9.1-101, or federal law-enforcement officers, (b) the indoor shooting range maintains a log of each user’s name, phone number, address, and the law-enforcement agency where such user is employed, and (c) the indoor shooting range verifies each user’s identity and address by requiring all users to present a government-issued photo-identification card. (source)

So very small indoor gun ranges might be able to continue to operate (for now) but the large, high-quality ranges that also serve as instruction facilities or have attached gun stores could have too many employees to continue to operate if the new bill becomes a law.

It’s interesting that the state government claims to want to make the state safer, but at the same time, they want to close facilities where gun-owners hone their skills, accuracy, education, and safe usage of firearms.

The penalties for breaking this law would be civil, with a fine of up to $100,000 on the first infraction and an additional $5000 per day if the defiance continues.

HB318 would create ammunition-free zones.

Making about as much sense as the law that caused the original hullaballoo – the one that would ban weapons that “could” possess extended magazines, even if the owner has no such magazines – HB318 would send anyone in the possession of ammunition to prison for a currently-undetermined amount of time.

I suppose they’re concerned that someone might have ammo in a gun-free zone and throw it really hard, causing a mass casualty incident? This would-be law encompasses more than ammunition. It also includes the possession of stun weapons and knives with metal blades.

Here’s the text of the bill, again, emphasis mine.

A. If any person knowingly possesses any (i) stun weapon as defined in this section; (ii) knife, except a pocket knife having a folding metal blade of less than three inches; or (iii) weapon, including a weapon of like kind, designated in subsection A of § 18.2-308, other than a firearm; or (iv) ammunition for a firearm, as defined in § 18.2-308.2, upon (a) the property of any public, private, or religious elementary, middle, or high school, including buildings and grounds; (b) that portion of any property open to the public and then exclusively used for school-sponsored functions or extracurricular activities while such functions or activities are taking place; or (c) any school bus owned or operated by any such school, he is guilty of a Class 1 misdemeanor.

B. If any person knowingly possesses any firearm designed or intended to expel a projectile by action of an explosion of a combustible material while such person is upon (i) any public, private or religious elementary, middle or high school, including buildings and grounds; (ii) that portion of any property open to the public and then exclusively used for school-sponsored functions or extracurricular activities while such functions or activities are taking place; or (iii) any school bus owned or operated by any such school, he is guilty of a Class 6 felony. (source)

There are a few exemptions that would allow law enforcement officers, former law enforcement officers, and concealed carry permit holders or those who use knives with metal blades in their trades, to have their unloaded weapons locked securely in their trunk while they are in traffic circles and parking lots. However, a regular person who happens to have an extra cartridge floating around the bottom of her purse (who doesn’t?) could potentially become a felon if tried by some over-zealous, anti-2A prosecutor.

Those exceptions would exist initially but at the rate new laws are being proposed, I wouldn’t count on the exceptions on a long-term basis.

Coincidentally, Governor Northam has increased his detention budget.

You probably recall a member of the state congress’s threats about dispatching the National Guard to confiscate weapons and the Virginia Attorney General’s opinion that sanctuary municipalities have no legal weight.

But that’s not all. Governor Northam is going to be specifically funding gun control efforts with an additional quarter of a million dollars in the newly proposed state budget.

Included in the appropriation for this Item is $250,000 the first year from the general fund for the estimated net increase in the operating cost of adult correctional facilities resulting from the enactment of sentencing legislation as listed below. This amount shall be paid into the Corrections Special Reserve Fund, established pursuant to § 30-19.1:4, Code of Virginia.

1. Allow the removal of firearms from persons who pose substantial risk to themselves or others — $50,000

2. Prohibit the sale, possession, and transport of assault firearms, trigger activators, and silencers — $50,000

3. Increase the penalty for allowing a child to access unsecured firearms — $50,000

4. Prohibit possession of firearms for persons subject to final orders of protection — $50,000

5. Require background checks for all firearms sales — $50,000. (source)

So for those who say, “Nobody is trying to take your guns” the evidence in these proposals clearly disputes this opinion.

91% of the state is staunchly defiant.

Virginians have been defiant in the face of these attacks on the Second Amendment, with Tazewell County going as far as creating an official militia and the sheriff of Culpeper County vowing to deputize thousands of citizens to protect their rights.

Practically the entire state has vowed to protect the rights of gun owners and the movement is still growing, as shown by the map below.

A recent job listing for disarmament officers at the United Nations New York office has many concerned that confiscation efforts could go beyond calling up a National Guard that may be less than enthusiastic about taking away the rights of their friends, family members, and neighbors.

The votes on these gun control bills and budget appropriations will be held in the first couple of months of 2020.

“This is going to be an exciting couple of months,” Gov. Ralph Northam (D) said Monday. (source)

It certainly is, Governor Northam.

Authored by Jonathan Turley,

I have previously written about my criticism to Antifa and its anti-free speech agenda, including academics legitimizing efforts to violently curtail free speech on our campuses. It is tragically ironic therefore that the University of British Columbia has cancelled an event by a critic of Antifa, a decision that carries out precisely the goals of this vehemently anti-free speech organization.

Portland journalist Andy Ngo was scheduled to speak on campus when the school, reportedly without notice, canceled the event due to an unspecified “concern about the safety and security of our campus community.”

The reference to security is an all-too-familiar excuse of universities to shutdown speakers, particularly conservative speakers, while insisting that the move is not content-based discrimination. Berkeley and other schools like DePaul University have used the mob to justify cancelling speakers. That institutionalizes the “Heckler’s Veto” so that a mob need only threaten violence and the school then cancels the speech…which is what the mob was demanding.

Even an event with former Attorney General Jeff Sessions was disrupted by the protesters. The cancellation of the Sessions event was another disgrace for Northwestern which has yielded to such tactics by students. It was a triumph for those who want to deny free speech to those with whom they disagree. Censoring speech has become a badge of honor for some. It has not stopped at simply stopping speeches and classes.

We have been discussing the rising intolerance and violence on college campuses, particularly against conservative speakers. (here and here and here and here). Berkeley has been the focus of much concern over mob rule on our campuses as violent protesters have succeeded in silencing speakers, even including a few speakers like an ACLU official.  Both students and some faculty have maintained the position that they have a right to silence those with whom they disagree and even student newspapers have declared opposing speech to be outside of the protections of free speech.  At another University of California campus, professors actually rallied around a professor who physically assaulted pro-life advocates and tore down their display.  In the meantime, academics and deans have said that there is no free speech protection for offensive or “disingenuous” speech.  CUNY Law Dean Mary Lu Bilek showed how far this trend has gone. When conservative law professor Josh Blackman was stopped from speaking about “the importance of free speech,”  Bilek insisted that disrupting the speech on free speech was free speech. 

Ngo was invited to speak at a January 29th event on “Understanding ANTIFA violence.” Ngo was assaulted  while covering a protest in Portland.

I remain highly skeptical of these claims of security concerns that seem to consistently be applied to critics of Antifa or conservative speakers. Universities cannot fulfill our core mission if we are going to yield to such mob threats and harassment. This is doing the work of the mob — a triumph of the heckler’s veto.

As thousands of American service members prepare for the worst in the Middle East following an American drone strike that killed Iran’s second-most powerful man, just 23% of registered voters can identify the Islamic republic on an unlabeled map of the globe, according to a Morning Consult/Politico survey.

When shown an unlabeled map of just the Middle East, the number rose to a still-abysmal 28%. Eight percent of those thought Iran was Iraq on the second map – just like Joe Biden.

Of those surveyed, men were around twice as likely as women to identify Iran on both maps – roughly in line with a 2017 Morning Consult experiment involving North Korea. Wealthier and more educated voters were also more likely to get it right.

Political affiliation and age were not significant factors.

News of Soleimani’s death — which 49 percent of voters reported hearing “a lot” about —  brought new attention to U.S. policy in the Middle East, with high-profile Democrats questioning whether there was a strategy behind the attack at Baghdad International Airport ordered by President Donald Trump. 

Voters were more likely to support (47 percent) the airstrike that killed Soleimani than oppose it (40 percent). Attitudes on Trump’s call fell neatly along partisan lines: 70 percent of Democrats disapproved of the strike while 85 percent of Republicans approved of it, including 61 percent of Republicans who strongly approved. –Morning Consult

Meanwhile, despite a majority of respondents backing the strike, 69% said they thought the Soleimani assassination made war with Iran more likely, and half said they think it made America less safe.

The survey, conducted Jan. 4-5 before Iran shelled two Iraq air bases housing US troops, was asked of 1,995 registered voters and has a margin of error of two percentage points.

Authored by Mike Shedlock via MishTalk,

Over the past year, 4 housing indicators have moved in ways consistent with patterns seen in 3 previous recessions.

Housing is Signaling a Recession

Despite optimistic talk from Fed regional presidents, a St. Louis Fed study concludes Housing Indicators Remain Consistent With a Broader Slowdown in 2020.

Key Takeaways

• Over the past year, four housing indicators have moved in ways consistent with patterns seen before three previous recessions.

• These indicators are mortgage rates, existing home sales, real house prices and the momentum of residential investment.

• More recent housing data still point to a slowdown, albeit a less severe one.

1: 30-Year Fixed Mortgage Rates

NOTES: The figure shows the average quarterly 30-year fixed mortgage rate minus the average of the previous three years (12 quarters). Each line shows three years of data before and after a recession; time zero is the quarter in which a recession began. The first quarter of the recession is indicated in the line label (key): the fourth quarter of 1990, second quarter of 2001 and first quarter of 2008.

Consistent with earlier cycles, the average 30-year fixed mortgage rate has declined significantly even though a recession has not begun. Figure 1 updates the path of this long-term mortgage rate through the third quarter of 2019.2 The last observation of about one-half of one percentage point below the most recent three-year moving average is identical to the level one quarter before the onset of the 2001 recession and is just below the level one quarter before the 1990-91 recession. Hence, this indicator remains consistent with—though still does not guarantee—an imminent recession.

2: Existing Home Sales

NOTES: The figure shows the percent difference between the current rate of existing single-family home sales (four-quarter average) and the average annualized sales rate during the previous three years (12 quarters).

The pace of existing home sales relative to their recent trend rate continued to slow during 2019. (See Figure 2.) Despite a modest upturn in the third quarter of 2019, this indicator remains firmly in the range observed prior to the 1990-91 and 2001 recessions. In contrast to the Great Recession, the decline in home sales since dipping below zero has been much more moderate.

3: Real House Prices

NOTES: The figure shows the four-quarter percent change in the CoreLogic Home Price Index, deflated by the Personal Consumption Expenditures (PCE) Chain-Weighted Price Index, minus the annualized percent change during the previous three years (12 quarters).

Qualitatively, the recent behavior of inflation-adjusted home-price growth relative to its recent trend rate (shown in Figure 3) is very similar to the patterns of the two previous indicators—that is, it mirrors the run-up to the relatively mild 1990-91 and 2001 recessions and is unlike the pattern just before the Great Recession.

4: Contribution of Residential Investment to GDP Growth

NOTES: The figure shows the four-quarter average contribution to real GDP growth minus the annualized contribution during the previous three years (12 quarters).

If any of the highlighted housing indicators hints at a departure from the typical recessionary pattern it is the contribution of residential investment to GDP growth. (See Figure 4.) Despite some improvement over the course of 2019, residential investment continued to be a drag on economic growth through the third quarter, albeit a slightly smaller one than before. Of all four indicators, this one most closely resembles the patterns seen before the two relatively mild recessions of 1990-91 and 2001 versus the more severe Great Recession.

Conclusion: Housing Indicators Still Signal Recession, Albeit a Less Severe One

The value of leading indicators – from housing variables to the slope of the yield curve – is that they offer an opportunity to prepare for a possible economic slowdown or outright downturn. A recent example is the Federal Reserve’s dramatic turn from a program of monetary tightening in 2018 to an easing of policy in 2019.

One hazard of leading indicators is that they can lead to misinterpretation and complacency. If the economic slowdown signaled by weakening housing indicators and some portions of the U.S. Treasury yield curve inverting in 2019 does not begin immediately, some observers may think the precautions undertaken in response to the signals, such as the Fed’s recent easing of monetary policy, can void the signals themselves and pre-empt a recession.

This would run counter to the historical patterns documented in this article: The Fed eased monetary policy and mortgage rates plunged in advance of each of the three previous recessions, yet the economy still went into a downturn. Thus, the value of leading indicators may lie more in their role as early warning signals that help us better prepare for, rather than outright prevent, a recession.

This time could be different, however, if the Fed’s timely interest rate cuts and other factors in fact help to prevent a recession in late 2019 or 2020. If that happens, we should re-examine the indicators that have been successful in signaling recessions in the past. In the meantime, we should not dismiss their salience.

Why Are Interest Rates Down?

This is certainly an interesting study and runs in sharp contrast to recent Fed statements that the economy is sound.

It also in contrast to those who suggest lower interest rate will revive housing.

Rather, rates are down precisely because the economy is weakening.

Service Sector Expansion

Earlier today I reported ISM Service Index Up, 11 Sectors Expanding, 6 Contracting.

But Guess What: Real Estate and Rental & Leasing are two of the sectors in contraction.

New Home Sales Badly Miss Expectations

On December 23, I reported New Home Sales Badly Miss Expectations

New home sales rose 1.3% in November but only because of huge downward revisions.

And here’s another Guess What: The St Louis Fed Study came out a week before that massive downward revision in new home sales.

Manufacturing

Also on December 23, I reported Economists Wrong on Durable Goods By an Amazing 3.9 Percentage Points.

Nine States in or Near Contraction

And please note that a Philadelphia Fed study projects Nine States Projected to Contract in 2020

Mideast tensions cannot possibly help.

So why would it stop at nine?

Other than that, everything is just dandy except of course leverage, hedge fund record long bets on S&P 500 futures, valuations through the roof, a huge slowdown in Germany, capital controls in China, and a big signal from gold that something is very wrong.

A recent study suggests that Victoria’s Secret’s SJW critics, who last year helped kill the lingerie purveyors’ annual fashion show (much to the consternation of red-blooded straight men (and maybe some gay women), might be on to something.

Offering some insight into L Brands’ recent troubles (we’re not talking about Epstein) – something that we’ve explored in-depth in the past – one recent study purportedly quantified the trend of VS angels’ shrinking waists over the years. It found that the company’s models’ midsections have shrunk by about an inch since the company launched the show, from an average of 24.7 inches in 1995, to about 23.6 in 2018, the last year that it was held. 

As one doctor who spoke to the New York Post explained, shaving an inch off one’s waist is extremely hard to do, especially when you’re already model thin. To achieve something like that, models reportedly undergo grueling prep routines that include workouts that would befit an Olympian, and crash diets that sometimes amount to just bone broth and water.

“To slim an inch off one’s waist – that’s very hard to do,” Dr. Neelam Vashi, the lead author of the research paper, told WBUR.

The company’s merchandise has been criticized for not reflecting the true physical proportions of most American women. And as analysts have pointed out time and time again, VS’s sizing has often deliberately excluded millions of American women, often to the detriment of sales growth.

Because how can a company sell more bras if the underwear they’re making are getting smaller, while the people who are supposed to be wearing it are getting bigger.

To underscore this point, the New York Post approached some shoppers at the VS flagship store near Herald Square on Sunday to ask about their experience.

Several shoppers coming out of the Victoria’s Secret near Herald Square on Sunday said their trip to the store was a bust – because everything was too small.

“I only got one bra because most of the stuff doesn’t fit women like us,” said 37-year-old Amy De La Cruz of herself and her daughters.

Another shopper said she only sometimes stops by VS for “perfume and lipgloss” because none of the clothes fit her.

A 47-year-old woman who would only give her first name, Andrea, said: “I mostly go for lipgloss and fragrances because I know they don’t have anything that fits me there.”

Many interpreted VS’s decision to cancel the fashion show as a harbinger of a more “woke” VS. Sales have apparently gotten to such a crisis point, that some of salespeople at VS retail locations have embraced the hard sell: encouraging customers to go lose some weight, then come back.

And 27-year-old Manhattanite Amy Issa called the study’s results “disappointing” and “devastating.”

“Even the people that work here they push you to lose weight they would say things like, ‘oh you can’t fit in this maybe next month if you lose a few pounds it’ll fit you,'” Issa said.

The clothing brand has already taken its first tentative steps toward embracing the body-positive movement by hiring its first size 14 model. We expect its next collection will move even further toward selling women “reality” instead of “fantasy.”