The Bolsheviks even want to tax your toaster oven…

In a concept paper called “Treat Wealth Like Wages”, the ranking member of the US Senate Finance Committee laid out a plan late last week to radically overhaul the tax code in a way never before seen.

Just as you’d expect from the title, his central idea is to tax wealth; if you own just about anything, this Senator wants you to start paying an annual tithe to the federal government.

It’s sort of like how property tax works: you don’t actually -own- your own property. You’re just renting it from the government.

They charge you a tax each year– some percentage of the property’s value–  to use the land. And if you don’t pay your property taxes, they’ll come and take it from you.

Now they want to create a similar federal tax that applies to almost every major asset you own.

This includes CASH in your bank account. Financial assets like stocks and bonds. Private business and partnership interests. Your entire real estate portfolio. Collectible assets like art and fine wine.

Never mind that you’ve bought these assets with money that’s already been taxed. Now they want to tax it again, every year. And when you die they want to tax it again.

They even included Individual Retirement Accounts.

Hell, for that matter they even proposed taxing “household goods” beyond a certain threshold. So you could even pay tax on your toaster oven.

What I found really interesting about this proposal, though, is that the guy who authored it is NOT one of the 10,000 people running for President right now.

In fact, this US Senator (Ron Wyden from Oregon) isn’t even up for re-election until 2022, at which point he’ll likely retire.

We’d expect to hear about wealth taxes from all the Bolshevik presidential candidates who are seeking attention and headlines. Or from some firebrand Twitter Queen who hates rich people.

But Ron Wyden is neither of those. He’s a seasoned, 70-year old US Senator who created a detailed 33-page plan on why AND how to implement a wealth tax.

This shows that the idea is really catching fire.

The wealth tax, of course, joins a slew of other taxes and hikes that have been proposed by the motley gang of Bolsheviks.

Several candidates plan to drastically raise the Death Tax while slashing exemptions. Others want to raise the top income tax rate to 70%. Another wants to tax UNREALIZED (i.e. paper) gains on investments.

They always say, of course, that they only want to tax the wealthy. They might even mean it.

But take a look at the income tax itself as a great historical example.

When the income tax was first implemented in 1913, it was intended to affect only the wealthiest households in America. Plus, the base rate was just 1%, and the top rate was 7%.

It was only a few years later that the middle class got ensnared into paying taxes. And by 1922, there were FIFTY SIX different tax brackets, all the way up to 73%, with nearly everyone in America owing a ‘fair share’.

Point is, whatever they create to tax the rich almost always ends up affecting the middle class.

And this latest proposal shows that the idea of a wealth tax has a LOT of momentum.

It’s no longer some lofty sound byte. There are detailed plans and real support behind it… which means you might want to strongly consider your own options for a Plan B.

For some people, that might even mean picking up and moving. It’s not such a radical concept… people do it all the time, especially state-to-state.

Just a few days ago, Billionaire Carl Icahn he announced he was moving to Florida to save on New-York’s ever-increasing taxes.

He also said that his whole office is moving with him… and that anyone who doesn’t move won’t have a job anymore.

And a long list of billionaires has already taken advantage of Florida to take advantage of this including Paul Tudor Jones, David Tepper, Eddie Lampert, etc.

But for those who are willing to leave the mainland, there are even better places.

Sir John Templeton, one of the first-ever billionaire investors, moved to the Bahamas late in his career. And from his tax savings alone, he was able to increase his charitable donations by an ADDITIONAL $100 million per year.

Puerto Rico is one place that offers exceptional tax advantages; investment income and capital gains are taxed at 0%… and corporate tax is just 4%… all in a tropical paradise that’s a 2 hour flight from the US mainland.

US citizens don’t even need a passport to move here. Because Puerto Rico is a US territory, moving to PR is no different than moving from New York to Florida.

I’ve said it over and over again, but it’s worth repeating– these incentives won’t last forever.

That’s why I insist the time to start strongly considering them and taking action is NOW.

If you’re interested in learning more, you can read our in-depth report on Puerto Rico’s tax incentives.

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The most profitable business in the world

More than 5,000 years ago on a hilltop located in modern-day Georgia (the country, not the state), a group of people from the prehistoric Kura-Araxes civilization gathered their primitive tools and began to dig.

It took years. But they eventually burrowed 20 meters deep into the earth and constructed a network of elaborate tunnels.

Thousands of years later, archaeologists and geologists figured out why: the Kura-Araxes were digging for gold.

And that site, known as Sakdrisi-Kachagiani, is the oldest gold mine in the world. It predates Ancient Egypt and even Mesopotamia.

And it shows that, even in prehistoric times, our early ancestors valued gold.

Nearly every great civilization from every corner of the planet since then has continued to mine for gold– from Greece and Rome to China’s Zhou dynasty in the first millennium BC, to the Inca and Aztec.

Mining was so important in ancient times, in fact, that wars frequently broke out over control of the best-producing mines.

In many respects, a gold mine is the ultimate asset. Even to this day we still use the term ‘gold mine’ to refer to a fantastic investment.

And obviously gold mines themselves can be phenomenal investments.

We’ve been talking about gold a lot lately and discussing different ways to own it. I’ve encouraged you to avoid buying into a gold ETF, and instead to buy the most prominent physical coins (like Canadian Maple Leaf gold coins).

But one very interesting (and completely different) way to invest in gold is to buy shares of mining companies.

Mining companies generate profit based on the difference between their mining costs and mining revenue.

So as the price of gold increases, mining company profits tend to increase as well, pushing their stock prices higher.

Among miners, the largest are known as the ‘majors’ or ‘senior producers’, including companies like Goldcorp, Kinross Gold, Barrick Gold, Newcrest Mining, Gold Fields, etc.

Majors are typically multi-billion dollar companies that have been around for decades, similar to how Exxon-Mobil and Royal Dutch Shell dominate the oil business.

Majors also frequently pay dividends to their shareholders, which means you could profit from an increase in the gold price while also generating regular cashflow.

And while this might sound great, there’s a slightly different business model in the mining industry that I think is even more compelling.

Business is difficult, and mining is no exception. Large mining companies have thousands of employees and often operate in difficult jurisdictions. Things go wrong all the time– strikes, major accidents, political instability, etc. And these can all affect the company’s performance.

But there’s another category of businesses in the mining industry called royalty or streaming companies.

Gold streaming/royalty companies are quasi-banks; they provide capital up-front to mining companies to help build and develop mines.

And in exchange they usually receive a royalty on every ounce of gold (or silver, etc.) that’s produced from that mine, whether in the form of a cash payment, or a portion of the production itself.

Now, read this next statement very carefully:

Gold streaming is the most profitable business model in the world.

That’s because, while the major mining companies have to hire tens of thousands of people to operate their mines, the streaming/royalty companies can operate with minimal overhead.

Barrick Gold, one of the largest gold miners in the world, generated $1.765 billion in Operating Cash Flow in 2018 according to its annual report.

(Operating Cash Flow is a great benchmark to measure the real-world profitability of a company’s core operating business, without factoring in accounting gimmicks or capital investments.)

Given that Barrick Gold has more than 20,000 employees, that works out to be around $82,000 in Operating Cash Flow per employee.

Franco Nevada is the world’s largest gold royalty and streaming company. And according to its annual report, Franco Nevada had $474 million in Operating Cash Flow in 2018.

Except that Franco Nevada only has 34 employees! That means Franco Nevada generated over $13 million in cash flow per employee last year.

 Franco Nevada’s business model is more profitable than:

– Apple ($629,000 Operating Cash Flow per employee)

– Google ($463,000 Operating Cash Flow per employee)

– Netflix (NEGATIVE $377,000 Operating Cash Flow per employee)

– Exxon-Mobil ($507,000 Operating Cash Flow per employee)

– JP Morgan ($56,000 Operating Cash Flow per employee)

Now, I’m not recommending that you buy shares of Franco Nevada (or any other company) right now; Franco Nevada shares sell at nearly 50x operating cash flow– and that’s pretty expensive in my opinion.

But it’s definitely an industry worth watching and potentially accumulating when valuations become more attractive.

Now, there’s one more segment of the industry that you should know about: ‘junior’ mining companies.

Unlike the major producers which operate large mines, juniors are usually tiny companies that explore for new gold deposits.

These are very high risk ventures. It’s entirely possible that a junior mining company looking for gold burns through all of its investors’ capital but comes up with nothing.

Then again, from time to time, a ‘junior’ / exploration company with a great property and solid management will discover a substantial deposit.

And its stock price can shoot up 10x, 50x, even 100x.

Within mining, this is the place where fortunes can be made (and lost).

They’re high risk and very speculative. But given how phenomenal the potential returns are, qualified investors who can bear the risk might consider allocating a small portion of their capital to speculate in juniors.

The right investment could literally be a gold mine.

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Eating human flesh is the latest idea to stop climate change

Get ready for your Friday absurdity! Here are this week’s stories:

Professor advocates for cannibalism to fight climate change

If you’re concerned about the human impact on Earth’s climate, you could plant a tree, install solar panels, ride a bike, or eat your dead relatives.

Don’t let that sack of meat decompose. Put it to good use, save a cow, and sequester that carbon into your own body.

At a summit in Sweden about the future of food, a professor gave two presentations about how eating human flesh could combat the negative effects of climate change.

He claims resistance to cannibalism is “conservative” or even “selfish.”

And of course, the human meat industry will have to start slow, first getting people used to the idea of eating pets and insects. But eventually humans can be “tricked into making the right decisions,” the professor suggested.

We thought it was a bit strange when we heard about human body composting services emerging in Washington state, as an alternative to burying or cremated the dead.

But even we didn’t think soylent green would become a serious proposal so soon.

Click here for the full story.

Experiment to cool earth with chemicals in the atmosphere

Backed by the likes of Bill Gates and other powerful elite, scientists are set to try their first experiment in “geoengineering” to cool the globe.

This experiment will be small scale, spewing chemicals into the atmosphere in order to mimic a volcanic eruption. Eruptions are known to cool the globe, because the particles in the air reflect the sun’s rays away from the earth.

If they deem the experiment a success, it could be replicated around the globe.

Of course, volcanoes can also cause famine, drought, and eliminate blue skies.

But those are risks this enlightened group of elites is willing to take… without anyone else’s consent.

Click here for the full story.

Oregon unions want to limit self check-out lanes at grocery stores

Have you ever used the self-checkout at the grocery store to beat the long lines?

If Oregon unions get their way, those lines will be just as long.

A group of labor unions is collecting signatures in Oregon for a 2020 statewide ballot initiative.

They want to put the Grocery Store Service and Community Protection Act to popular vote, which would prohibit grocery stores from having more than two self-checkout lanes.

The unions say these self service lanes are cutting jobs and are hard for elderly and handicapped to operate.

The self-checkout is also causing social isolation, they say– because we all know how important those social interactions like, “paper or plastic?” are.

Click here for the full story.

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The price of gold just hit a record high

A few hours ago, the European Central Bank announced a bonanza stimulus package: interest rate cuts, money printing, quantitative easing, the whole nine yards.

Europe’s economic growth has ground to a halt. The German economy actually shrank last quarter, according to official statistics.

So the European Central Bank is throwing everything including the kitchen sink at this problem. Their stimulus package is like a monetary defibrillator trying to shock Europe’s economies back to growth.

It’s pretty amazing when you think about it: interest rates in Europe are already NEGATIVE. They’ve been cutting rates for years, and it hasn’t worked.

Back in July 2008, the European Central Bank’s main interest rate was 3.25%.

By the end of 2008, it was clear the global economy was slowing down, and the central bank had slashed interest rates to just 1%.

But they kept going.

By 2013, the ECB had reduced its primary interest rate all the way to zero.

And in 2014, they took the unprecedented step of cutting rates even further– to NEGATIVE 0.10%.

European rates have been negative now for FIVE YEARS. Yet Europe’s economies are still in the dog house.

These results completely defy prevailing economic wisdom.

According to the ridiculous playbook that nearly all central bankers use, cutting interest rates is supposed to stimulate economic growth.

If interest rates are lower, it makes it easier and cheaper for people to borrow money. If it’s cheaper to borrow money, people buy more stuff… which creates more economic growth.

But that’s not happening.

They’ve been cutting rates, even below zero, to the point that you can actually get PAID to BORROW money in Europe. Yet those economies are still stagnating.

So the central bank’s solution? If what you’re doing isn’t working, do more of the same!

It’s astonishing how these economists cling their ridiculous theories…

Unsurprisingly, the European prices of both gold and silver shot up this morning.

Gold is now selling in Europe for nearly 1,400 euros as I write this letter— an ALL-TIME high.

That’s because precious metals are a refuge from keeping your savings held hostage by unelected central bankers who can slash interest rates to negative levels and conjure unlimited quantities of paper currency out of thin air.

It’s not just Europe either.

Across the water in the United States, the central bank has already indicated that they’re going to start cutting rates as well… plus they’re facing pressure from the Tweeter-in-Chief to make interest rates negative, just like in Europe.

That’s a big reason why precious metals prices have been climbing so rapidly; in the past two months alone, the silver price is up 22%.

I’ve been talking about this for months, encouraging you to buy gold and silver. But this isn’t over. There’s a lot more monetary insanity to come from the United States and Europe… so gold and silver prices likely still have a lot of room to rise.

(Silver could actually triple in price, and it still wouldn’t beat its previous record high.)

One big driver of gold demand is actually coming from foreign central banks and governments. They can see what’s happening to the US dollar and euro, and they’re keen to diversify their reserve assets away from negative interest rates.

Russia has been on a gold-buying spree lately, gobbling up more than 18 metric tons of gold in the month of June alone, and nearly 100 metric tons since the beginning of 2019.

China has also added 100 metric tons of gold to its foreign reserves since the beginning of 2019.

Even the central bank of Poland has acquired 100 metric tons of gold this year, nearly doubling its gold holdings from last year.

This is a powerful trend that could continue sending prices higher. So it’s still a reasonable time to buy physical gold and silver.

Over the past few weeks I’ve written to you about why you should consider buying coins (rather than bars), and definitely avoid precious metal ETFs.

Next week we’ll discuss how you could make potentially explosive gains from an increase in gold and silver prices through mining companies.

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The Bolsheviks hate Opportunity Zones. But they’re working.

Lately I’ve been looking at a number of office buildings in San Juan– I own two businesses that are based here in Puerto Rico, and it’s about time the team moved to a larger space.

I was really impressed with what I saw– there are a number of compelling new commercial real estate projects in Puerto Rico right now… and almost all of them are due to the Opportunity Zone legislation.

We’ve talked about this a few times before: Opportunity Zones are areas that have been deemed ‘economically underdeveloped’. And qualifying investments that take place within those Opportunity Zones are eligible for incredible tax breaks.

There are Opportunity Zones in every single state in the United States, including territories like Guam, US Virgin Islands, and Puerto Rico.

In fact, nearly the entire island of Puerto Rico is an Opportunity Zone. It’s incredible.

Doing business inside a designated Opportunity Zone means that qualifying investors are eligible for tax-free capital gains. Forever.

It works like this–

Let’s say you’re a US taxpayer and have just sold your business. Or perhaps cryptocurrency, stocks, or your real estate portfolio. And, after you sell, you’re sitting on substantial capital gains.

First, congratulations.

Second, you’re going to owe Uncle Sam a LOT of money– 20% capital gains tax, plus the 3.8% Obamacare surtax, plus possibly state and local tax as well.

BUT… if you roll your capital gains into a special fund that invests in Opportunity Zones, you can defer the tax on those gains for up to 7 years.

And any additional gains you make on your Opportunity Zone investments will be tax-free forever, as long as you hold the investment for at least 10 years.

The one sticking point is that, in order to be eligible for this extraordinary tax benefit, you have to invest capital gains in an Opportunity Zone, i.e. money that you’ve recently earned by selling other investments.

But– even if you don’t have a lot of capital gains right now, you can still benefit from Opportunity Zones. Because, for anyone who is looking for funding to start a business or real estate project, Opportunity Zones are an absolute gold mine!

That’s because there’s hundreds of billions of dollars… potentially even more than a $1 trillion… of capital gains in the United States right now that’s looking for interesting Opportunity Zone projects to invest in.

And right now there’s simply not enough great Opportunity Zone investments for all that capital.

This means that Opportunity Zone entrepreneurs and developers have access to a ton of capital that NEEDS to be invested. And the other HUGE benefit is that, since the Opportunity Zone tax benefits require a 10-year holding period, you’ll have investors with a very long-term view.

This is an absolute dream for anyone looking to raise money.

And don’t think that you have to start your business or development in some remote area.

As an example, there are even parts of that are qualified Opportunity Zones– part of the East Village and Lower East Side. Or across the East River in Brooklyn.

So you could literally raise money for real estate projects in New York City and provide your investors with long-term, tax-free gains.

Or, you could start a tech company in certain neighborhoods of Austin, Texas, or even parts of Silicon Valley, which are designated Opportunity Zones. And if those companies become successful and end up being acquired in the future, the gains would be eligible for the Opportunity Zone tax benefits.

There are Opportunity Zones everywhere, from American Samoa to Zanesville, OH. And there are likely plenty of ways for created, talented individuals to create value in all of them.

(Take a look at the Opportunity Zone map here.)

But it’s not just the financial incentives that make Opportunity Zones so compelling.

I’m seeing it first hand here in Puerto Rico. The neighborhoods where these Opportunity Zone investments are taking place are clearly on the rise. You can taste it. The streets are cleaner, the neighborhood is nicer. New businesses are moving in, so there’s a new bustle and energy where before there was gloom.

All the economic activity is creating jobs, plus tax revenue for the local government.

Everyone wins.

Of course, that doesn’t stop the Bolsheviks from dumping all over this tax incentive. They can’t stand win/win deals. They hate the fact that investors (who are already wealthy) receive tax breaks from their Opportunity Zone investments.

About two weeks ago, the New York Times (AKA the Daily Worker) did a hit job on Opportunity Zones  with an article entitled, “How a Trump Tax Break to Help Poor Communities Became a Windfall for the Rich”.

It’s just a Bolshevik propaganda piece howling about rich people receiving tax breaks, and making absurd assertions that these Opportunity Zone investments aren’t helping poor communities.

I was literally standing in some of those poor communities last week, witnessing incredible transformation in progress.

But none of that matters to Bolsheviks. All they care about is making sure that wealthy people don’t benefit.

They can’t stomach a win/win deal. And they’d rather see no one benefit, than a rich person receive a single penny in tax breaks.

It’s pure insanity.

But here’s the good news: these people aren’t in power. At least, not yet. Which means, whether you’re an investor, entrepreneur, or developer, this Opportunity Zone trend still has ENORMOUS potential, and it’s absolutely worth considering.

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Here’s every reason to avoid buying a gold ETF

Buckle up, this one’s going to be entertaining… because I should have called this note “Why you should always read the fine print.”

This morning I read through the prospectus and annual reports of the most popular Gold ETFs in the world.

First, some background:

ETF stands for ‘exchange-traded fund’. It’s sort of like a mutual fund that’s listed on the stock exchange, meaning investors can buy/sell shares of an ETF just like they would buy/sell shares of Apple, Ford, or (God help us) Netflix.

But unlike Apple, which is an operating business with employees, products, revenue, etc., an ETF is NOT an operating business. It’s a fund that merely pools capital to own assets.

The benefit for investors is that ETFs can be an easy and convenient way to invest in certain assets which would otherwise be difficult to buy.

If someone wants to buy Egyptian stocks, for example– they could open a brokerage account in Cairo… or buy an Egypt ETF that’s listed on the New York Stock Exchange.

The ETF is a LOT easier for most investors.

But there are also ETFs for gold and silver. And I find this mystifying.

We’re not talking about Egyptian stocks. Gold and silver are easy to buy. You could have Canadian Maple Leaf gold coins delivered to your home with a few mouse clicks.

So gold ETFs provide no added convenience.

Yet there’s an enormous amount of downside.

First off– it’s important to know that if you buy an ETF, you’re paying for a ton of unnecessary expenses.

The ETF has to pay custodian fees, marketing fees, listing fees to the New York Stock Exchange, audit fees, management fees, etc.

I’m chairman of the Board of Directors for a company that’s listed on a stock exchange, and trust me– the listing fees are REALLY expensive.

If you own physical gold in your own safe, you wouldn’t have to suffer the cost of paying lawyers, auditors, and investment bankers.

But GLD does. Which means that as a GLD investor, YOU are fundamentally paying those costs.

And remember that ETFs aren’t operating businesses. Apple makes money selling overpriced hardware. But GLD has no products, and hence doesn’t generate any revenue.

So how do they pay for this mountain of expenses?

By selling gold.

Your gold.

GLD trustees periodically sell off the gold (that’s supposedly owned by the investors) in order to pay expenses.

Right in its own prospectus, GLD tells us:

The amount of gold [held by GLD] will continue to be reduced during the life of the Trust due to the sales of gold necessary to pay the Trust’s expenses”

And like I said, those expenses are NOT cheap. I’ll come back to that.

This is important because GLD (and several other ETFs) are structured as ‘flow-through’ trusts.

So when they sell gold to pay expenses, this can create hidden tax headaches for GLD investors. The IRS could treat those gold sales as if you personally had sold gold, triggering capital gains consequences.

GLD’s 2018 annual report states this clearly on page 21:

“When the Trust sells gold . . . to pay expenses, a U.S. Shareholder generally will recognize gain or loss. . .”

But aside from the excessive costs and possible tax consequences, ETFs are simply not designed for your benefit. They’re designed for Wall Street’s benefit.

GLD, for example, has a terribly complex structure involving a ‘sponsor’, ‘marketing agent’, ‘trustee’, ‘custodian’, and various ‘Authorized Participants’.

These middlemen standing between you and your gold are all big Wall Street banks who suck value from your investment.

Here’s something really incredible: with GLD, the physical gold is supposed to be held with the ‘Custodian’, which is HSBC Global.

But according to GLD’s legal documents, the Custodian has the right to use Sub-Custodians. Yet they’re not required to have any written agreement with the sub-custodians.

Those sub-custodians can then shift your gold even further to sub-sub-custodians, which also does not require a written agreement.

This is directly from GLD’s report:

“The Custodian’s selected subcustodians may appoint further subcustodians.”

“These further subcustodians are not expected to have written custody agreements with the Custodian’s subcustodians that selected them.”

This is where it gets really ridiculous:

“[T]he Custodian does not undertake to monitor the performance by subcustodians of their custody functions or their selection of additional subcustodians and is not responsible for the actions or inactions of subcustodians.

In other words, the gold could end up with some sub-sub-sub-custodian. No written agreement is required.

And, even though the primary custodian (HSBC) is receiving handsome fees, they have no obligation to monitor the sub-custodians, nor can HSBC be held responsible if someone screws up.

Moreover, the report states:

“The Custodian and the Trustee do not require any direct or indirect sub-custodians to be insured or bonded with respect to their custodial activities…

“Therefore, Shareholders cannot be assured that the Custodian maintains adequate insurance or any insurance with respect to the gold held by the Custodian on behalf of the [ETF].”

So, not only is there zero requirement to even have a written agreement before storing your gold with some sub-custodian, there’s also no requirement to insure the gold that they’re storing.

SOUNDS LIKE ANOTHER WIN FOR THE LITTLE GUY!

Seriously, you have to be insane to buy GLD.

Sure, it’s convenient to click a button and buy GLD with your brokerage account.

But it’s also convenient to buy physical gold coins on Amazon. Jeff Bezos can deliver them to your house via drone strike later this afternoon.

Yes, GLD is liquid. You can sell shares anytime during market hours. But physical gold is also liquid. You can sell it anywhere in the world.

So gold ETFs have no real advantage.

But the disadvantages are numerous. You’re paying a ton of unnecessary expenses, dealing with potential tax consequences, and enriching big Wall Street banks who have no obligation to do anything on your behalf.

No thanks.

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It’s now “incendiary” to say there are two genders

Happy Friday everyone. Let’s bring on the weekly absurdity!

School cop handcuffs and screams at autistic 8-year-old

An eight year old autistic boy in Southlake, Texas became agitated in his guidance counselor’s office.

At one point the child became fidgety and took out a jump rope (that had been provided to him by the school). Amazingly enough, the counselor felt threatened by this and asked the school cop to come into the office.

So the cop handcuffed the child, screamed in his face, and mocked his frustration. The cop also claimed that the child had a weapon, which he described as “homemade nunchucks”. This ‘weapon’ turned out to be the jump rope that the child was twirling.

When the parents came to retrieve their child, the officer continued to harass the parents, sarcastically telling them, “great parenting.”

Click here for the full story.

82 days in jail for possession of honey

A Jamaican man legally residing in the USA returned from his yearly visit to his home island.

With him he brought two bottles of honey. Unfortunately the airport drug dog thought the man’s bag smelled suspicious. And an initial test said the honey was actually meth.

Another drug test revealed that the honey bottles were shockingly filled with honey.

But they still didn’t want to release him, even on bail. They wanted to send the honey off for more advanced testing.

EIGHTY TWO DAYS LATER the results came back. Honey. US Customs finally released the man from jail… but by then he had already lost his job after being absent for nearly three months.

Click here for the full story.

MSNBC calls it “incendiary” to say there are two genders

MSNBC is an allegedly non-biased news outlet. All they do is report the facts, right?

Last week, an anchor reported that a candidate for Governor “is out with a new TV ad this week, making incendiary comments about gender.”

Here’s what he said: “As a Doctor, I can assure you, there are only two genders.”

To MSNBC, it is a newsworthy reportable fact that this statement is “incendiary.”

Not up for debate, not worthy of scientific thought, just incendiary… to state a basic fact that everyone agreed on until a couple years ago.

Click here for the full story.

Boy suspended from school after going target shooting with his mom

This story starts out almost too wholesome to believe.

On a crisp afternoon in the forests of northern Colorado, a mother and her son Nate bond over some target practice. They shoot cans with rifles and handguns.

I bet mom even ruffled Nate’s shaggy hair as she gazed proudly at what a fine young man he was growing into. It’s straight out of the Andy Griffith Show.

And imagine a teen that isn’t too embarrassed to post a video on social media of him spending the afternoon hanging out with mom.

But because that video included guns, someone called the police to report that Nate was a threat to the school.

The police investigated, rolled their eyes, and said there was nothing illegal about target shooting and posting the video online.

But then the family got a phone call from the school, telling them Nate couldn’t return to school until after a “threat assessment hearing.”

Click here for the full story.

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Here’s a really unique way to own gold

Last week we dove into a series about different ways to own gold. And I explained in that first article why it’s a great idea to own physical bullion– gold you can hold in your hand.

With physical gold, there’s no middleman standing between you and your wealth. And when properly stored, it’s very difficult for some frivolous creditor or out-of-control government agency to steal it.

When it comes to physical gold, I explained that I prefer gold coins over gold bars.

Gold bars are completely non-uniform. A typical 400-ounce gold bar (like the ones you see in the movies, or that you imagine are stacked up in Fort Knox) could weigh as little as 350 ounces, or as much as 430 ounces. They’re all different.

On the other hand, 1-ounce Canadian Gold Maple Leaf coins are generally all the same. They’re uniform… minted and crafted to the exact same standard.

The uniformity of gold coins like the Canadian Maple Leaf makes them much easier to buy/sell.

If you want to buy or sell a gold bar, it has to be weighed and assayed with special equipment first. But if you want to buy or sell a Maple leaf, it’s simple– because the coins are pretty much all the same.

Now, there’s one special sub-category of gold and silver coins that are worth mentioning: collectible coins.

Collectible coins, just like Canadian Maple Leaf coins, have value because of their gold or silver content.

But collectibles also have additional value for their rarity.

Whereas the Royal Mint of Canada produces new Maple Leaf coins every single year, no one can go back in time to mint more Venetian gold ducats from the 14th century. There’s only a fixed number of those coins in existence.

Because of that, collectible coins sell for a significant premium to the value of their gold or silver content.

This concept of ‘premium’ is an important one: ALL coins, whether a rare coin or a bullion coin like a Canadian Maple Leaf, generally sell for an additional amount above the gold price.

That’s because, unlike a gold bar which is simply poured into a cast (and rather unevenly at that), a coin has a lot of craftsmanship that goes into the minting process. It’s more expensive to produce, therefore it costs a bit more.

That premium can be between $20 and $150 per coin.

As I write this article to you right now, the price of gold is $1,545 per troy ounce. But a 1-ounce Canadian Gold Maple Leaf is selling for $1,565– a $20 premium to the ‘spot’ price of gold.

But that $20 premium isn’t a sunk cost; if you ever sell your coin, your coin will be worth whatever the spot price of gold is in the future, plus the premium. So you’ll recoup the $20 down the road.

(In fact, in times of high demand for gold coins, premiums can increase significantly, so you could actually make even more money if you ever sell.)

With rare coins, however, premiums are MUCH higher. Remember, you’re not only paying for the gold/silver content in the coin, you’re also paying for its rarity.

That premium with rare coins could be hundreds, thousands, tens of thousands, or more.

Here’s an example– right now there’s a Venetian gold ducat from the early 1400s for sale on eBay for $1,000.

A gold ducat from that era contained 3.545 grams of almost pure gold. And based on the current gold price, there’s approximately $175 worth of gold in that coin… meaning that the coin’s rarity is worth $825. That’s the premium.

(If $825 sounds high, there are some rare coins which command premiums in excess of hundreds of thousands of dollars.)

One important point to remember about collectibles is that, unlike bullion coins, rare coins are not all equal.

There’s typically no price difference between a 2013 Canadian maple leaf and a 2018 Canadian maple leaf.

But there can be a significant price difference between a ‘Buffalo Nickel’ from 1913 and a Buffalo Nickel 1918. Prices vary based on the rarity from that particular year and model.

There can even be significant price differences between two of the same rare coins from the same year, depending on their condition.

Just like a ‘mint condition’ baseball card is worth more than the same card that’s heavily worn, coins in better condition fetch higher prices.

There are coin grading systems, like PCGS, which rate coins on a standardized scale; so an “MS-66” rating means the coin has fewer scuffs and blemishes (and is hence worth more) than a “MS-64” rating.

It’s clear that investing in rare coins takes a lot more education and research than buying a standard bullion coin like a Canadian Maple Leaf. So I’d definitely recommend that you NOT go out and start buying ancient Roman solidus coins or medieval Dutch guilders unless you really know what you’re doing.

But if you want to get your feet wet, there are some rare coins that offer solid value compared to the typical premiums they sell for. The $20 Saint-Gaudens “double eagle” is a great example.

In the past $20 Saint-Gaudens double eagle has sold at a premium of hundreds of dollars above the spot price of gold.

Today, however, the premium is quite low– I’ve seen these coins selling for premiums of less than $50 above the price of gold.

That’s almost as cheap as a Canadian gold Maple Leaf coin, but with the added benefit of owning a coin that’s rare. Again, no one can go back in time to the early 20th century and make more of these coins.

So it’s possible that, in a few years, we could not only see a MUCH higher gold price, but MUCH higher premiums for the Double Eagle. So you could make money both ways.

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Think about this if you own Hong Kong dollars

On January 20, 1841, after delivering a series of military defeats to Imperial China in the First Opium War, British forces landed in Hong Kong and took control of the island.

Hong Kong was hugely important for the British economy because it ensured access to the Chinese market. And they went to war multiple times to keep control of the island.

In 1898 the two empires signed a lasting peace treaty whereby Britain agreed to turn the island over to China in 1997. And Hong Kong prospered for decades under British rule.

But by early 1980s, Hong Kong started experiencing more turbulent times.

International businesses, bankers, and traders were becoming concerned about the Chinese handover that would take place 15 years later.

And when China’s Deng Xiaoping expressed his desire to hit the gas pedal on Hong Kong’s return to China, investors panicked.

Between September 1982 and September 1983, the Hong Kong dollar lost 25% of its value against the US dollar.

Within a week, by early October, it had lost another 15% of its value. And it continued losing ground by the day.

The currency was in free-fall. So in mid-October 1983, the Hong Kong government stabilized the currency by fixing the exchange rate to the US dollar.

It has remained that way for the past 36 years.

This ‘pegged’ exchange rate provided a lot of benefit to Hong Kong back then, helping cement its status as an international financial center.

And I’ve been writing about this for years: the pegged exchange rate means that the Hong Kong dollar has all the benefits of the US dollar, without any of the baggage.

The US dollar has international recognition and stability. Hong Kong’s currency is pegged to the US dollar, so it shares those benefits too.

But while the United States is drowning in debt with $50+ trillion in unfunded pension liabilities, Hong Kong has massive financial reserves, positive cash flow, and a healthy current account surplus.

For the past months we’ve watched Hong Kong’s most dramatic political turmoil in decades.

Millions of people have protested, and it’s becoming a full-blown revolution.

Just this morning the Chinese government asserted its right to declare a state of emergency– pretext for sending armed troops into Hong Kong to quell rebellion.

Does this mean Hong Kong’s pegged exchange rate is finished?

Throughout financial history there are a examples of central banks that tried, and failed, to maintain a pegged exchange rate.

The most notorious example is the UK in the 1990s, which had pegged the British pound to the German Deutsche Mark at minimum level of 2.773.

The market did not believe that Britain could maintain the peg. And they were right.

In 1992, a group of speculators (including George Soros) bet so heavily against the British pound that the central bank spent all of its cash reserves defending the exchange rate.

With an insolvent central bank, the British government finally capitulated and devalued the pound.

In the case of Hong Kong today, though, that scenario is highly unlikely.

Hong Kong’s Monetary Authority (HKMA) has an absurd amount of firepower to maintain the exchange rate indefinitely.

HKMA is, by far, one of the most well-capitalized central banks in the world.  For every Hong Kong dollar in circulation, the HKMA has TWO dollars of foreign currency in reserve.

In other words, the HKMA could fend off speculators and defend the pegged exchange rate to the very last Hong Kong dollar… and STILL have hundreds of billions of dollars left over.

And HKMA will still have those cash reserves even in a nightmare scenario where Chinese tanks and millions of people are in the streets.

This is a political issue. A MAJOR political issue. But it’s not a financial one.

It’s also important to remember that Hong Kong’s pegged exchange rate has survived plenty of apocalyptic events before.

There was the Asian Financial Crisis in 1997, the dot-com crash in 2000, the Global Financial Crisis in 2008, plus plenty of other non-financial crises like swine flu, bird flu, and, of course, the handover to the Chinese.

The peg has always survived.

But here’s a VERY critical point: just because the HKMA is ABLE to maintain the peg, and just because they have done so for decades, doesn’t mean they will continue to do so.

At the end of the day, Hong Kong’s pegged exchange rate needs to make sense for Hong Kong. And for China.

It’s becoming more clear that this is no longer the case.

Back in the 1980s, the US was Hong Kong’s primary trading partner. Having a dollar peg was incredibly convenient.

It was also a convenience for mainland China, because the peg gave Chinese businesses (through their Hong Kong subsidiaries) easy access to foreign markets and US dollars.

Today those things are no longer necessary.

Hong Kong is now a first-world economy that no longer requires US economic support.

Hong Kong’s primary trading partner today is China, not the US. And China has so much economic power that its businesses don’t need US dollar convertibility through Hong Kong.

The biggest issue is that maintaining the peg requires Hong Kong to mirror US interest rate policy, essentially sacrificing part of its economic sovereignty.

That’s something that definitely doesn’t make sense, for Hong Kong, OR for China– especially with a trade war looming.

It’s worth noting that HKMA’s CEO, Norman Chan, a long-time defender of the currency peg, is retiring this month.

And it remains to be seen whether his successor will share the same enthusiasm to spend hundreds of billions of dollars maintaining a peg that might not make sense anymore.

Bottom line– Hong Kong will unlikely be ‘bullied’ by speculators into dropping its currency peg.

But it’s entirely possible they may choose to willingly do so… simply because the US dollar peg doesn’t make as much sense as it did in 1983.

So if you’re holding Hong Kong dollars, please do bear this possibility in mind.

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Feminist thought leader claims milking cows is the same as rape

Welcome to our Friday roll up, where we highlight the most interesting, absurd, and concerning stories we are following this week.

Local tax collector ruins children’s entrepreneurship event

Every summer, a Utah non-profit agency called the Libertas Institute holds an entrepreneurship event for children.

It’s a wonderful idea– children as young as 5 gather together in a marketplace to buy and sell products and services that they’ve created to one another.

And parents are strongly encouraged to step back and let their kids be in charge– advertise, negotiate, count money, and make the sale. So it really is children doing business with other children. Obviously no one is getting rich from this; the larger point is to start cultivating the desire within the next generation to build and grow their own companies.

The Libertas Institute held one such event at Spanish Fork, Utah a few weeks ago on August 7. And for the first time since they’ve been holding these, the local tax collectors showed up, demanding that the kids pay city sales tax on the day’s transactions.

Moreover, the tax collectors insisted that even kids who didn’t make a single sale that day should still file tax forms with the state government.

Click here for the full story.

San Francisco continues reinventing the English language

The City of San Francisco is back at it. A few weeks ago we told you they were ‘gender neutralizing’ the English language, changing words like “manhole” into “maintenance hole”.

They’re terrified that someone might be offended by words like “manhole”, so they’ve cleansed the dictionary and demanded that all city workers and agencies begin using the new gender-neutral language.

Now they’re extending their sensitivities to even more groups.

The word “felon” will henceforth be replaced with “justice involved person”. Because we’d hate for felons to be offended.

And a convict going back to prison will now be a “returning resident.”

I can’t even imagine how that will sound in a courtroom: “That justice involved person is going to be a returning resident!”

Click here for the full story.

Cop tries to shoot innocent teenager, misses, and hits another innocent bystander

On the morning of February 10, 2015, a cop saw a group of teenagers a few blocks from their school. One of them was holding a toy gun– the kind with a giant, bright orange tip on it..

So without any warning, or any request to drop the weapon, he shot at the kid with the toy gun.

But the bullet missed the intended target, and instead hit another one of the teenagers.

Despite this appalling blunder, the cop handcuffed and detained the students for five hours– probably in a desperate attempt to try to find something to pin on them to take the focus off the fact that he just shot an innocent, unarmed kid.

The student that was accidentally shot has tried to sue the police officer.

But a federal appeals court has just thrown out the case, ruling that the police officer ha ‘qualified immunity’.

In other words, the cop cannot be sued for something he did in the performance of his official duties… even when his official duties involved shooting at a bunch of teenagers with no warning.

Click here for the full story.

Got Milk? You’re a rapist.

Humans have been herding and breeding livestock for their milk for about 10,000 years.

That likely played a huge role in developing an advanced human society.

But we are now such an advanced species that proponents of feminist theory now claim artificial insemination of cows is rape, and milking them is sexual abuse.

In a paper called “Readying the Rape Rack: Feminism and the Exploitation of Non-Human Reproductive Systems,” one such enlightened thinker argues that feminists need to incorporate non-humans females into their movement.

And the paper demands that women should challenge the “outdated stereotype about women being caretakers and most importantly child-bearers [which] remains consistent in the dairy industry.”

Sounds like comparing dairy farming to rape might be insensitive to actual rape victims… But what do I know, I’m just a patriarchal oppressor.

Click here for the full story.

Cop and Paramedic assault a 76-year old man trying to help

A self-described frail 76-year-old man, Freddie Judd, heard his friend’s store was burning down.

So Judd drove to the scene and saw firefighters struggling to open the main door to the store.

Judd went up to an officer to try to give her the keys to the front door.

According to court documents, the officer then threw Judd to the ground and handcuffed him, at which point a nearby paramedic came over to help beat him.

Judd did not resist, but he was still beaten, and sustained a broken elbow.

Click here for the full story.

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