The Banquet Of Consequences IS ABOUT TO BE SERVED !

For your reading pleasure – although not pleasant!


I must make this quick today so I’ll just say that this email’s “subject title” was taken from the excellent Charles Smith article: Is the World Getting Crazier, But We No Longer Notice? which is found immediately following the comics.  Hope you enjoy all the fine articles.  Take care.






Is the World Getting Crazier, But We No Longer Notice?

April 29, 2016

The banquet of consequences is about to be served.

If we step back and look at what’s happened since the Global Financial Crisis of 2008-09, it’s easy to see that the global leadership has chosen to do more of what’s failed spectacularly.

Since the Global Financial Meltdown, central bankers and planners have pursued policies designed to boost global stock markets to create a wealth effect in which people will be psychologically inclined to borrow and spend more because their stock market/IRA portfolios are rising. This supposedly encourages them to spend this “paper wealth.”

But the policy runs aground on two realities: 1) only the top 5% of the households own enough stocks to make a difference to their wealth (and their perception of wealth, i.e. the wealth effect), and 2) the wealth effect only occurs in “good times” when people feel the economy is healthy and their prospects are improving.

When people sense the economy is unhealthy and their prospects have dimmed, they save more regardless of how much the stock market rises.










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Signs of financial craziness abound:

— 25% of all stock market gains occur after Federal Reserve meetings: in other words, central banks “own the market.”

— The Swiss central bank admitted to spending $470 billion on currency market manipulation since 2010.

— Other central banks have intervened in the stock and bond markets to the tune of trillions of dollars/yen/euro/yuan.

— The central bank of China has spent over $100 billion in a few months propping up the yuan.

— China has made it easier to borrow money again, sparking yet another housing bubble in First Tier cities like Shanghai and Beijing–as if another housing bubble will fix what’s broken in China’s economy.

— U.S. corporations have borrowed billions of dollars at 1% to buy back their own shares–a dynamic that may account for 50% of the current rise in the stock market.

— ObamaCare has added costs to the healthcare system rather than reducing costs; though healthcare spending adds to GDP, it is a form of consumption, not production.

— Cheap credit enabled energy companies to boost production to the point that oil is now in over-supply–and the need for revenues to fund the debts taken on to expand production force producers to keep pumping.

— Sweden has dropped its interest rate to negative territory, a policy that has sparked an insane housing bubble.

And this is considered sane and healthy?

In other words, central banks and planners have generated enormous bubbles in debt, housing and stocks to maintain the illusion that doing more of what failed spectacularly will actually fix what’s broken. This is crazy, because these policies are what’s broken. All these massive interventions and manipulations are driving the system off the cliff.

Longtime correspondent J.B. recently shared some personal observations about the craziness of the current American economy:

“I have to say I think things are even crazier now than is 2002-06.

Look back to then and attempt to gauge how your thinking has changed.

I guess back then I never realized how corrupt the government and Federal Reserve were/are. I actually did think we had a government which cared about the people. How naïve of me. I just thought they were stupid.

There have been no jobs created which pay anything except for programmers working on start-ups with billion dollar valuations which make no money. Interest rates have been driven so low that people have stepped out into High Yield and will lose most of their money. The stock market really trades on no fundamentals except what the latest Fed head comes out and says that day. The only investment that your gut feeling says should go up (gold) has been in the crapper for several years (do you think the Fed is suppressing it?)

I have to tell you there seems to be a lot of new restaurants popping up in L.A.; most do not seem to last and many of the old ones seem to disappear. We had friends in from France (she is French but a US citizen and lived in LA for quite a while). The one comment they had was they could not believe how expensive food is.

Every government unit in the United States (federal, state, county, etc.) is having to borrow and borrow. Basically they are all bankrupt.”

J.B. mentions food and restaurants, but we all know costs are out of control in big-ticket items: rent, tuition, healthcare.

I recently posted a link that public university tuition has soared 135% to 145% in the decade from 2004 to 2014–a period in which “official” inflation rose 25%.

We recently helped a neighbor get home from the hospital after emergency surgery for acute appendicitis. He told us a visiting-scholar friend from Europe who recently went to the emergency room was billed $12,000 for the visit, which did not include any surgery or procedures.

Americans with gold-plated healthcare coverage don’t see what the system bills or what is actually paid, so completely outrageous bills are commonplace.

(Note that caregivers aren’t necessarily benefiting from these soaring costs to consumers, insurers, etc.–many physician correspondents have explained that their income has declined significantly in the past few years, extending a decades-long trend. In regions with a shortage of nurses, pay has risen markedly, but in other regions, nurses’ compensation has not risen along with higher healthcare costs.)

High-end restaurants are indeed opening not just in L.A. and San Francisco, but in smaller cities and even towns–as if the populace with sufficient cash or credit to spend $100 on dinner for two is unlimited.

With rising rents, regulatory compliance, workers comp and wages, businesses are jacking up the price of their product/service just to cover the increases in their own expenses.

Corporations are cutting corners by reducing the contents of packages and reducing the quality of their ingredients/products.

Here is the craziness: nothing has actually been fixed in the past 7 years. Rather, everything that was broken in 2008 has been ramped up to an even higher levels of craziness.

The crazy solution to bursting housing bubbles is even bigger housing bubbles (see Sweden, China and the U.S.).

The failure of central planning (super-low interest rates, easy credit, etc.) has led to extreme extensions of the very policies that made the global financial meltdown inevitable.

Yet strangely, we accept this craziness as the New Normal. People with demanding jobs in Corporate America are working harder and longer for less pay (eroded by inflation) to the point of physical, emotional and psychological exhaustion. But the mortgage and bills must be paid, so they continue sacrificing their health for the sake of supporting an unsupportable lifestyle.

We now have a TINA economy–there is no alternative. People feel trapped, unable to choose another way of living and another livelihood, because all the alternatives mean sacrificing discretionary income–often by 2/3. The person earning $90,000 in Corporate America or the government can only earn $30,000 if they bailed out and took a less insane job.

Eventually, things start breaking.  The overworked person’s health breaks.   The corporate bond market breaks, as debt that can’t be paid is not paid. Small businesses break, close their doors and the owners retire or move on to some sort of work that is less stressful. The Venture Capital bubble of throwing millions of dollars at Unicorn startups with no revenues breaks.

Blind, destructive craziness has costs.  The supposed benefits of doing more of what failed spectacularly are short-term, and they’re finally starting to run out.

The banquet of consequences is about to be served.  Excellent interview of Michael Pento by Greg Hunter.  The story of this DEBACLE just keeps getting worse.  It’s all pretty clear why so many LIES had to be told to sell this farce.

The Chances Of A COMEX Default……IS GUARANTEED in my opinion!

Posted April 25th, 2016 at 4:55 PM (CST) by Bill Holter & filed under Bill Holter.

I would not normally write something like this but it seems I had to. Last week, Bob Moriarty of 321 Gold wrote a story with the exact same title and came to the conclusion “…is zero”. He began his article by saying “So anyone telling you Comex is about to default either doesn’t have a clue as to how commodity markets work or they are deliberately lying to you.”

He then goes on to say “But the chance of a ‘Gold Derivatives Time Bomb,’ is also zero. There is no such thing. And there is no such thing as a ‘Commercial Signal Failure’ or a 400 ounce gold bar made of tungsten.” Is he serious? When well over 100 pieces of paper “call” on the one underlying real ounce …there is no chance of failure? Is he trying to say the commercials can NEVER ever be wrong and forced to cover because they cannot deliver “promised” but non existent gold? Is he trying to say 400 ounce tungsten bars have not already turned up? I do want to point out, this is the same man who said a derivatives blowup can never happen. I think those at Bear Stearns and Lehman Brothers would beg to differ with him! We already know for a fact, we were only hours away from a total financial meltdown in 2008 were it not for the Fed magically creating $16 trillion. It is clear to me, since the amount of global derivatives far exceed the underlying assets they represent, true “settlement” or “performance” is a foregone impossibility as the “pie” only gets bigger. The only question now is “how big is TOO big”?

Let’s look at the numbers and use a little common sense to see “who doesn’t have a clue or is deliberately lying to you”! Currently in the COMEX gold and silver vaults we see there are roughly 17 tons of gold and 32 million ounces of silver “registered” (available for delivery). This amounts to about $680 million worth of gold and $540 million of silver. A whopping total of $1.2 billion or less than 1/2 day’s interest on the U.S. federal debt. In today’s world of “trillions and quadrillions”, this amounts to pocket change!

I put these registered inventories forth so we can have something to use as a base for comparison. Looking at silver, there are now 1 billion ounces represented by 200,000 COMEX contracts of various months. For May alone (which goes first notice day in five days) there are 280 million ounces represented by these paper contracts. By comparison, the world (excluding Chinese and Russian production) produces 700 million per year. So, we have a market with a claimed 32 million ounces that “prices” (for now) a market which produces 700 million ounces per year. This 32 million ounce inventory is the “guarantee” being used or promised to “deliver” on contracts (280 million ounces worth for May and 1 billion ounces in total) whose owners can decide they want delivery. If you look at other “commodity” markets, there are none as egregious as silver. Currently open interest represents 140+% of global production. In other words, the paper market is far larger than the real physical market. Not so in other commodities where the paper markets are typically 10-15% the size of global production.

Going one step further with this 32 million ounce inventory, we saw a 10 minute span on Thursday morning where 37.5 million ounces of silver were dumped all at once. The effect of course was nearly a $1 drop in price. This was done as silver looked to be breaking out pricewise to the upside, the massive dump was used to contain price. We saw this again on Friday when over 100 million ounces were dumped in just one hour. In perspective, Thursday’s dump equated to 19 days of total global production…sold in 10 minutes. Taking Thursday and Friday’s “70 minutes” together saw the equivalent of

2 1/2 months of global silver production sold. Again, who actually has this amount of silver and who in their right mind would ever sell it in this fashion to get the absolute worst price possible? …unless they WANTED the worst price possible? Taking a brief look at how inept the registered gold inventory is, Shanghai has been importing 30-40 tons per WEEK for several years now. How many “days” worth of Shanghai imports will COMEX’ 17 tons cover?

The above speaks to the woefully small registered inventories claimed by COMEX. From a mathematical standpoint, both silver and gold stocks could be wiped out in just one trade. Bob Moriarty says this does not matter and no default can ever happen because COMEX can settle in paper. I agree with his statement “COMEX can settle in paper” because it appears they have been doing this for years rather than delivering real metal to all of those standing. I do no have smoking gun proof of this but just ask yourself the question, WHO would fully fund their account in order to take delivery, wait until the very last days of the delivery period and then just “go away”? This happens time and time again, I believe it can only be explained by “cash premiums” being offered and paid. If you have another plausible explanation, I would love to hear it but by “plausible” I mean to say it must include real logic a true economic man would follow.

Now, is “cash settlement” because there is no gold or silver available to deliver … considered a default? According to Bob Moriarty the answer is “no”. I would simply ask you this, if COMEX can only settle in cash, then what is it exactly that you are trading? Of what value is a contract which cannot perform and deliver the product you are “supposedly” trading? It is for this reason I have said for many years we will end up seeing a two tiered market where there is one price for the paper derivatives of gold and silver …and another (higher) price for the real thing. In fact, we are already seeing the early stages of this with backwardation particularly in London.

To finish, until recently we were told that ALL markets were rigged EXCEPT for gold and silver. We were just nutjob conspiracy theorists to think gold and silver markets were rigged. But now we find out we weren’t nuts after Deutsche Bank admitted guilt and paid a fine for rigging the London fixes. The fine by the way was not small potatoes, it was $5 BILLION …(or roughly five times the dollar value of what COMEX claims to be able to deliver)!

I assure you Deutsche Bank did not hand over $5 billion out of the goodness of their hearts, nor did they take lightly “pleading guilty” as they will now be sued by the mining industry to the moon and back. Even more curious was their decision to turn state’s evidence? I certainly do not have the particulars but I can observe and connect the dots. The metals markets are acting very differently and the commercials (if COT numbers are to be believed) are extremely short while registered inventories are extremely low. Financial stresses in Western credit markets are again showing quite similar to 2008. Central banks have already fired interest rate/money supply bazookas …while sovereign treasuries far and wide have destroyed their balance sheets.

Would it be crazy to believe fear capital will flood into the ONLY MONIES ON THE PLANET that have neither counterparty risk nor are anyone else’s liability? Actually, from a mathematical standpoint, all of this global debt can ONLY be paid back if currencies are debased …which guarantees a flood into gold and silver. Would it be considered a “default” if the U.S. had to print so many dollars that it took 1 million of them to purchase a cup of coffee? In the situation where COMEX inventories get cleaned out, isn’t this the same thing as a bank in the old days “running out of gold”? That was considered default then but Moriarty wants you to believe it is “business as usual” today? Sorry, I don’t think so!

This has been a “public” article , should you desire to read all of my work, please follow this link to our subscription page

Standing watch,

Bill Holter
Holter-Sinclair collaboration
Comments welcome

Strange!! our Quant specialist, Marko Kolanovic is suddenly worried about the end game and believe it or not discusses how gold will be useful in this environment:

(courtesy zero hedge)

Why Is JPM’s “Quant Guru” Suddenly Worried About The “Endgame”

When JPM quant Marko Kolanovic released his latest report today, we were expecting him to read his latest insight on the positioning of quant funds, on the relative imbalance of risk parity, or perhaps whether market gamma was suggesting that the market is poised for an inflection point, either lower or higher. Instead, we were surprised to read an extended analysis looking at how trapped the “out of options” central banks are, what the next steps are for the global economy, how the market is now as overvalued as it was before the 2000 crash, how rising rates “would make the current S&P 500 level look like a bubble”, and the exhaustion of all available policy options, which he dubbed the “endgame.” To wit:

If investors lose confidence that the debt can ever be repaid, they will reduce their holdings, increasing the cost to governments or inviting more central bank buying.This can eventually result in the devaluation of all currencies against real assets such as gold, high inflation or even outright defaults (as was the case in Greece). If such a trend develops in one of the large economies, it could have far-reaching consequences.

We were most surprised by Kolanovic’s strong case to buy gold, although considering it comes just one week after a Pimco economist dared to propose that central banks should monetize gold next in an attempt to massively boost inflation expectations (while send the price of gold to $5,000), perhaps we are not that surprised.

* * * .

We are confident readers will find it just as an engaging read.

From JPM’s Marko Kolanovic

Central banks, Inflation, and Debt Endgame

With the Fed and BoJ meetings behind us, markets are increasingly accepting that central banks are nearly out of options. Central banks can hardly raise interest rates, and there is a growing realization that negative interest rates simply make no sense (see analysis below). Unconventional approaches of buying corporate bonds (ECB) and stocks (Japan) so far have not produced significant results, and run the risk of tainting these assets for private investors. The next attempt to boost the economy or prevent a potential market crisis will likely need to be accomplished by fiscal measures. Fiscal measures may be employed even if there is no crisis (e.g., post US election), and over the next months investors will look closely at potential measures and their impact on equity markets, commodities (potential positive impact on certain sectors – e.g., from infrastructure spending), and the value of debt and currencies (likely negative impact).

Before we discuss the implications and risks that could result from such developments, we present an analysis that suggests that central banks face the risk of entrenched low inflation (rather than the risk of high inflation) and likely will not be able to raise rates meaningfully. Figure 1 shows the cumulative PCE (relative to the Fed’s 2% target) that shows significant and persistent undershooting over the past 8 years. Since 2000, the cumulative undershoot is 6% on the core PCE measure. Over the past 4 years, core PCE undershot by more than 1.5 % (and headline by 3.5%, the difference being largely due to the 2014 decline in energy). This undershooting is fairly significant: over the past 2 years headline PCE undershot by 3% (2 standard deviations) and Core by 1% (1 standard deviation). What should be more worrying is that PCE readings historically show strong persistence (serial correlations). This means that a low core PCE reading today implies that PCE is more likely to stay low in the future as well (e.g., core PCE reading today has 80% correlation with the reading of 12 months ago). Our quantitative model of core PCE indicates the most likely level is still below the Fed’s 2% target and continuing to undershoot over the next 3 years.

In that context, the Fed should welcome any overshooting of the target as that is the only way it can end up closer to the stated 2% target over any meaningful time period (e.g., 2, 5, or 10 years). For instance, overshooting the target over the next 2-3 years by ~0.5% each year (or over the next 1-2 years by ~1%) would put the inflation averages within the margin of the stated 2% target. The problem is that it simply may not happen, and inflation breakeven rates in the US, Europe and Japan point to the same direction.

Over the past 20 years, PCE overshoots (undershoots) tended to coincide with S&P 500 rallies (declines). However, over the past 8 years, PCE kept trending lower, while the market rallied strongly. While the Fed’s QE programs did not prevent inflation to persistently undershoot the 2% target, a potential byproduct was inflated S&P 500 valuations. Indeed, many clients ask us how much of the S&P 500 rally can be attributed to near zero rates and can be at risk should rates continue to rise? Assuming the S&P 500 returning to median P/E levels for comparable rate and inflation environments in the past, it would suggest a 5%-15% de-rating of the equity multiple should rates continue to rise at a moderate pace and assuming no increase of recession probability. If rates increase the probability of recession, it would likely result in a larger market pullback, as both earnings and multiples would suffer.

Should the problem of low inflation go away (e.g., if there is an oil price shock, or upside growth surprise) and there is need to raise rates more significantly, the Fed will face another problem. That is how to hike but not push the equity market significantly lower. The reason is that with current levels of leverage, rates behave like a ratchet (easy to turn lower, but hard to turn higher without breaking the gears). Over the years of ZIRP, asset prices and business models adjusted to low rates. For example, home buyers make decisions based on monthly mortgage payment levels, and S&P 500 companies (ex-financials) have the highest leverage since 2007 (when leverage was at record levels), with some of the debt used to buy back shares.

Indeed, the current S&P 500 P/EBITDA ratio is at the same level as shortly before the market crash of 2000. The distinction between current market valuations being reasonable vs. bubble-like is due to low interest rates (as well as lower effective tax rates).Significant increase of rates (e.g., to levels implied by 2018 Fed dots) would make the current S&P 500 level look like a bubble.

As we argued above, it is hard to see short-term rates moving meaningfully higher any time soon. We also think that rates cannot go much lower either as negative rates fundamentally don’t make sense (issues such as physical storage of cash can make negative yields viable only over short periods of time). So the attempt to boost growth or fight a potential crisis will likely need to be accomplished by fiscal measures.

However, fiscal measures also bring an increased level of government debt and increased market and credit risk of owning government bonds. These risks are in addition to current low yields and a less favorable correlation of bonds to risky assets. The unfavorable risk-reward of government bonds near the point of zero yields will likely prevent asset managers from increasing holdings of government bonds. If there are no private buyers, governments can still place their bonds with central banks. This trend is of course already in place – for instance, the Fed’s holdings of US Treasuries increased from ~18% in 2008 to ~34% today.

Increased government spending, financed by central banks could indeed create inflation, but will further elevate the problem of debt viability. If investors lose confidence that the debt can ever be repaid, they will reduce their holdings, increasing the cost to governments or inviting more central bank buying. This can eventually result in the devaluation of all currencies against real assets such as gold, high inflation or even outright defaults (as was the case in Greece). If such a trend develops in one of the large economies, it could have far-reaching consequences.

Once fiscal measures replace monetary measures, we think investors will increasingly focus on the dynamics of government debt and currency valuations, particularly in Japan and the US.

How can an investor hedge against the risk of these potential developments? One can reduce allocation to bonds and increase allocation to real assets and equity sectors related to real assets. Investors can also move away from bonds that are not backed by reserve assets such as currency reserves or gold. The ability of a government to pay back debt and at the same time as maintaining the value of the currency should be measured by hard assets for which transfer to bondholders is politically viable. For example, during the Greek crisis, the option of selling islands owned by the government was off limits. On the other hand, governments can easily part with assets with no national or cultural attachments such as FX reserves or gold, as was recently the case with Ukraine and Venezuela.



With Tech Tanking, Can Anything Save The System?

Submitted by John Rubino via,

First it was the banks reporting horrendous numbers — largely, we were told, because of their exposure to recently-cratered energy companies. Now it’s Big Tech, which is a much harder thing to explain. The FAANGs (Facebook, Apple, Amazon, Netflix and Google) own their niches and not so long ago were expected to generate strong growth pretty much forever. That’s why every large-cap mutual fund and most hedge funds (not to mention a few central banks) owned so much of them.

This year’s first quarter was emphatically not what their fans had in mind. Apple, for instance, reported not just a slowdown but a double-digit year-over-year sales decline:

Rotten Apple: Stock plunges 8% on earnings, revenue miss

(CNBC) – Apple reported quarterly earnings and revenue that missed analysts’ estimates on Tuesday, and its guidance for the current quarter also fell shy of expectations.

The tech giant said it saw fiscal second-quarter earnings of $1.90 per diluted share on $50.56 billion in revenue. Wall Street expected Apple to report earnings of about $2 a share on $51.97 billion in revenue, according to a consensus estimate from Thomson Reuters.

That revenue figure was a roughly 13 percent decline against $58.01 billion in the comparable year-ago period — representing the first year-over-year quarterly sales drop since 2003.

Shares in the company fell more than 8 percent in after-hours trading, erasing more than $46 billion in market cap. That after-hours loss is greater than the market cap of 391 of the S&P 500 companies.

Looking ahead to the fiscal third quarter, Apple said it expects revenue between $41 billion and $43 billion — Wall Street had expected $47.42 billion on average, according to StreetAccount.

One area of weakness for Apple in its second-quarter was the Greater China segment — comprising mainland China, Taiwan and Hong Kong. Revenue for that region fell 26 percent year-over-year to $12.49 billion. Previously, that area had posted consistent growth for China.

Twitter managed to grow in the first quarter, but its next-quarter revenue projection came in 10% below Wall Street’s consensus:

Twitter sinks 12% on revenue miss, guidance

(CNBC) – Twitter on Tuesday posted mixed quarterly results and gave sales guidance that disappointed Wall Street, even as its user base grew more than expected.

The social media company reported adjusted first-quarter earnings of 15 cents per share on $594.5 million in revenue. Earnings rose from 7 cents per share in the previous year, while sales climbed 36 percent from $435.9 million in the prior-year period.

Analysts expected Twitter to report earnings of 10 cents per share on $608 million in revenue, according to a consensus estimate from Thomson Reuters.

Shares dropped about 12 percent in after-hours trading Tuesday.

Twitter said it expects second-quarter revenue of $590 million to $610 million, well below analysts’ estimates of $678 million, according to Thomson Reuters. In the company’s conference call, executives downplayed the low estimate, saying it did not reflect sagging interest from advertisers.

The repercussions from tech’s tank are myriad, in part because so many sophisticated investors own so much of this paper. As Zero Hedge just noted:

Wall Street In Pain: 163 Hedge Funds Are Long AAPL Stock

First it was the blow up of hedge fund darling Valeant that crushed countless funds who were long the name.

Then, one month ago after the collapse of the Allergan-Pfizer deal, we showed (one of the reasons) why the hedge fund world continued to underperform the broader market: Allergan was one of the most widely held hedge fund stocks.

And now, following the biggest Apple debacle in years, here is the reason why the hedge fund community is about to see even more redemption requests and underperform the market even more: according to the latest GS hedge fund tracker, at least 163 hedge fund are long the name which has just lost over $40 billion in market cap in the after hours. The good news: it used to be over 200 as recently as a year ago.

Tears won’t be confined to Wall Street however: let’s not forget that none other than the Swiss National Bank is also long some 10.4 million shares of AAPL.

It also won’t be a surprise to find out that the Japanese central bank — a massive buyer of equities which recently began diversifying into other countries’ shares — and the US Plunge Protection Team are on the hook for a few tens of billions here. But stock market squiggles and hedge fund redemptions are a side-show. The big questions are:

1) Can an economy grow when its banks, energy companies and tech giants are all losing ground?

2) Can a hyper-leveraged global financial system survive if its main economies can’t grow?

The answer to both questions is almost certainly “no.” So either something extraordinary (and extraordinarily unlikely) happens to ignite sustainable growth, or the dissolution of the fiat currency/fractional reserve banking/central planning model will begin. Expect developed world governments to do almost literally anything to stop that from happening.


The following is very important.  The stock market has been riding high with corporate buy backs of stock.  Last yr close to 400 billion dollars worth of stock has been bought back with debt.  This yr. less than half.

Those buying stocks BEWARE!!


The sad case for America’s Millennials:  (age 18 through 34)

(courtesy Wall Street Journal/zero hedge)

America’s Millennial Dream: Making 20% Less & Drowning In Debt

Millennials have now overtaken baby boomers as America’s largest living generation according to Pew Research. Millennials as defined by Pew as ages 18-34 now number 75.4 million, slightly edging out Baby Boomers (ages 51-69) numbering 74.9 million.

Millennials also have a few other things going for them, however not in a good way.

As the WSJ reports, Millennials in New York City are earning about 20% less than the previous generation of workers, and they are absolutely drowning in $14 billion in debt.

The average working 23-year old in New York City earned $23,543 compared to $27,731 in 2000 (adj. for inflation). Moving up the age scale a bit, the average 29-year old made $50,331 in 2014 versus $56,026 in 2000.

Another point worth mentioning in the article is that nationwide, the percentage of millennials living independently (read: not in their parents house) has fallen from 51% in 2007, to just 45% in 2014.

In summary, people from 18-34 are going to college, getting into debt, entering into the workforce at minimum wage, and living with their parents. The very definition of the American dream isn’t it? Imagine if Obama hadn’t saved the world’s economy, as he so humbly said he did.

Of course all of this speaks to what we discuss repeatedly on Zero Hedge. The economy is weak, the only jobs being created are primarily waiter and bartender jobs, and the fed is fueling a enormous student loan credit bubble. Now, courtesy of years of mismanaged policies and incompetence, millennials have to face the consequences directly.




Mike Savage


Driving into the office this morning I was listening to Bloomberg. Why I don’t know. I have to turn the radio off almost every time because of the rubbish being touted as facts.


This morning the question asked with baited breath was, for a supposed “expert” was if Abenomics was working in Japan.


The person asked the question strongly implied that the Abenomics practiced in Japan was working because when it started inflation was at 0% and now it is at 1%. SAY AGAIN?


The Japanese citizen’s incomes are falling so how does the central bank plan to help? Make prices higher. My take: NOT WORKING


The idea behind negative interest rates and buying bonds, stocks and etfs in amounts that are truly stunning is to lower the value of the yen to spur exports and prop up the ailing Japanese stock markets.


Keep in mind that I have consistently warned that you need to keep doing more and more to get the same results. It is why there is no record of money “printing” that has ever been successful in the world’s history.


Many people were expecting that the Japanese Central Bank would do “more” today (4-28). When that didn’t materialize the Yen soared 3% against the US dollar and the Nikkei index dropped 3.6%. My take: Not Working!


Every developed central bank is on a similar path- even though Japan has had a head start. Anyone with a brain should be able to recognize that doing more of what hasn’t worked for years is NOT the answer.


It appears that we are at a tipping point in history. The actions that are taken, likely in the next few months, could impact our lives for not only years but maybe decades.


Anyone who has not diversified themselves already should consider doing so.

By diversification I am not talking about different types of stocks and different types of bonds- they are both being artificially propped up and are in danger of a major re-pricing lower in my opinion.


Real Estate is no place to be hiding now either. Sam Zell, who has made billions by buying real estate low and selling it high- calling the last two highs- has been a major seller in 2015-2016. To me, this is a sign that major caution is warranted.

In my opinion, anyone who has no exposure to precious metals is either blissfully ignorant of what is going on around them or just intentionally misled by the mainstream media.


If I went out on the street and asked 100 people what asset class has performed best since the year 2000 I’ll bet not 1 out of 100 would pick gold. Many would pick stocks because that is what is touted on the financial game shows.

Since the year 2000 here is how stocks have fared against the yellow metal- the barbarous relic that central banks and large banks can’t get enough of but tell you not to buy any – or even short it- likely so they can get more for a cheaper price!


Asset 2000 2007 2016 Total Return Avg. Annl. Return

DOW * 11,500 14,000 17,942 +56% +3.73%

S&P 500 * 1,500 1,566 2,058 +37.2% +2.48%

Nasdaq * 5,000 2,500 4,862 – 2.76% Loss

Gold ** 250 1,400 1,255 +402% +26.8%

· Stock ** Historical Gold Price


Hmm… even with the last four years of getting beat down (and now verified that the price has been manipulated- see last week’s article about Deutsche Bank’s settlement for rigging the price of gold and silver) gold has, by far been the asset class to own in this century.


As I have said many times I believe that stocks, bonds and real estate are artificially high and when the “stimulus” is either stopped or fails to produce desired outcomes as is happening in Japan- look out below!


Real Estate will not be spared either as rates rise, occupancy rates fall and prices likely tumble to where real estate may be the buy of a lifetime- at far LOWER prices of course.


At the same time, it appears you are not too late to get in on what appears to be a generational bull market in precious metals.


Is CNBC, Bloomberg or any of the networks letting you know that gold is up 16% since the beginning of the year? Is anyone screaming that silver is up 12% and, in my opinion, is likely the most undervalued asset on the planet? Nope! Keep buying those stocks and bonds that are at nosebleed levels any which way you value them according to my research.


Generally, the gold mining stocks have made far larger gains in the first quarter of 2016. We also have to realize that NO markets go straight up and that these type of investments can be volatile in both directions.


For the first time in 5 years I am telling people not to get too excited just yet and don’t expect every quarter to look like this. Any asset that moves that far that fast should expect some sort of a correction. If I am correct about that generational bull market every pullback should be an opportunity to buy.


Time is certainly running short- do not delay! Be Prepared!


Mike Savage, ChFC Financial Advisor

2642 Route 940 Pocono Summit, Pa 18346

(570) 730-4880

Raymond James Financial Services, Inc. Member FINRA/SIPC



Revolutions can take many forms. There are social revolutions, political revolutions… and even financial revolutions.


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May 3, 2016

Santiago, Chile


Just after sunrise on April 19, 1775, a large contingent of British military troops arrived to the town of Lexington, Massachusetts.

They were under orders to search for and confiscate all weapons and munitions from the colonials– something the British army had done countless times before.

In many ways it was a routine operation. And yet, that morning, roughly 80 local militiamen stood blocking their path.

Paul Revere had ridden through Lexington only hours before to warn residents of the approaching threat.

There was a lot of yelling and tension between the two sides, and amid all the confusion, someone fired his musket. Then another. Then another.

(Historians are still unclear which side shot first, though much of the evidence points to Han Solo.)

And though few people realized it at the time, those turned out to be the opening shots of the American Revolution.

This is how revolutions often start– people who have reached their breaking points engage in a small acts of defiance that quickly escalate out of control.

We’ve seen this pattern over and over again.

The Arab Spring uprising in 2011 started with a Tunisian fruit cart merchant who lit himself on fire. Revolution ensued.

The 2014 revolution in Ukraine started when police violently clashed with peaceful anti-government demonstrators.

Revolutions, of course, can take many forms. There are social revolutions, political revolutions… and even financial revolutions.

That’s what we’re seeing today: financial revolution.

Now that interest rates are negative in many parts of the world, the financial system has become an incredibly destructive force.

Negative rates adversely impact the livelihoods of just about everyone, from the average guy on the street all the way to the banks themselves.

A few key players have reached their breaking points and are starting to engage in acts of defiance.

I told you recently how the Bavarian Banking Association in Germany advised its member banks to hold physical cash instead of reserve deposits with the European Central Bank (ECB) at negative interest.

Some major insurance funds are also jumping on board, choosing to hold physical cash instead of bank deposits earning negative interest.

In its effort to avoid negative interest rates, the Canton of Zug in Switzerland asked its citizens to delay paying their taxes.

Now even the political and media establishments in Germany are rebelling against the ECB, saying that negative interest rates chip away at the savings of pensioners.

In response, the ECB opted for the ‘blame the victim’ approach, pointing the finger at all of us little people because we’ve been saving too much money.

So according to the unelected bureaucrats who printed all the money to begin with, people have been saving too much.

Consequently, everyone must be punished with negative interest rates. And you’re your fault.

That’s like a rapist saying, “she deserved it.” It was an appalling response, and astonishingly stupid.

You’re supposed to save money. That’s what the Universal Law of Prosperity is based on: produce more than you consume. Save more than you spend.

Penalizing savers is the exact opposite of what bureaucrats should be doing.

But people are starting to figure this out. The resentment is growing, even within the financial system itself.

Remember that modern ‘money’ is backed by nothing but unelected bureaucrats and their insipid economic theories.

The only way this system works is when there’s unquestionable confidence in the people running it, almost to the point of blind obedience and wilful ignorance.

When that confidence wanes, the financial system can spiral out of control very quickly.

We may be reaching that point soon and could look back on this period as the opening shots of the Financial Revolution.

If you recognize that the financial system is destructive and want to make a change, your most powerful option is to stop using it.

Or at least reduce your dependence on it.

Part of being a Sovereign Man is having a strong sense of freedom and independence… and that includes financial independence.

Last week we talked about the importance of holding physical cash.

You won’t be worse off for taking some savings out of the banking system.

And you’ll be protected against problems like negative interest, bank bail-ins, or withdrawal controls.

(All of these, by the way, already exist or have happened recently.)

But cash is not a panacea. Because if there really is a major reset in the financial system, your paper money might lose significant purchasing power.

That’s why it makes sense to hold gold and silver in addition to cash.

If there are greater problems in the monetary system, your precious metals will turn out to be an extraordinary insurance policy.

(Silver is a better bargain right now based on historical ratios, but it’s hard to imagine you can go wrong with either one.)


Until tomorrow,

Simon Black






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