Gold Undervalued Due To Massive Stock Dilution & Debt

The market price of gold would be considerably higher if it wasn’t for the massive stock dilution and debt in the gold mining industry. Basically, the gold mining industry issued billions of new shares and debt to help replace production and to compensate for rising costs. Thus, investors of gold mining stocks got raped so the market could enjoy an artificially lower gold price.
Nothing like Free Market Capitalism at work.
Top 5 Gold Producers: Production vs Shares
If we look at the data from the top five gold producers since 2000, we can see a very interesting trend. In 2000, these top gold producers (Barrick, Newmont, AngloGold, GoldFields & GoldCorp) had 1.39 billion shares outstanding, while their total production was 23.6 million ounces (Moz).

This post was published at SRSrocco Report on December 30, 2015.

Americans Petition Obama To Declare Erdogan’s Turkey State Sponsor Of Terror

On our way to documenting Turkey’s arrest of two generals and a colonel who dared to stop a weapons-laden MIT truck in route to Syria, we said that ‘if there’s a silver lining to last Tuesday’s downing of a Russian Su-24 warplane by two Turkish F-16s it’s that the world is now starting to scrutinize President Recep Tayyip Erdogan.’
Indeed, in the wake of the plane ‘incident’, Russia embarked on an epic PR campaign to expose the Erdogan government’s complicity in Islamic State’s illegal crude trade and to generally wake the world up to the fact that if ever there were a state sponsor of terror, it’s Turkey.
While it’s probably too much to ask for the general public to delve deeply into the history of Wahhabism in Saudi Arabia on the way to drawing a connection between Riyadh and the ideology espoused by the various Sunni extremist groups operating in the Mid-East and generally recognized as ‘terrorists’ by the Western media, watching clips of Russian warplanes vaporizing oil tanker trucks requires little in the way of intellectual investment. That’s perhaps why The Kremlin’s PR blitz has done such an admirable job of alerting the world to Turkey’s role in sponsoring terror.

This post was published at Zero Hedge on 12/30/2015.

Venezuela’s Four Exchange Rates

Venezuela is currently going through its worst crisis in history, replete with an endless list of interesting problems. Foremost amongst these are severe shortages in even the most basic of necessities. Economists have used these shortages as textbook examples to illustrate the pernicious effects of price controls. Few people, however, are aware that many of the country’s problems are caused by a complex monetary arrangement that makes use of four different exchange rates simultaneously. The result is that Venezuela can either be extremely cheap, or unbearably expensive, depending on the rate used.
Monetary chaos began in 2003 when the late president Hugo Chavez imposed currency controls to stem capital flight after an oil strike. At the time, one US dollar could fetch 1.6 Venezuelan bolivars. Today, barely ten years later, that same dollar can buy 172 bolivars, a devaluation of over 99%! Of course, that is in the official (i.e., government regulated) market. On the black market the exchange rate is currently nearly 900 bolivars to the US dollar. That is, if you can find anyone selling dollars, or more importantly, looking to buy the badly tarnished Venezuelan currency.
This devaluation is in and of itself a large problem, both for consumers who must deal with high degrees of price inflation and for businesses that must undergo long-term capital planning decisions with a constantly moving monetary unit. However, it is the volatility of the exchange rate caused by the government’s continuous changes to currency restrictions and official rates that is proving the most cumbersome problem.

This post was published at Mises Canada on DECEMBER 30, 2015.

The Minimum Wage Hike Hangover Arrives: Dining Out To Cost 10% More Starting January 1

One year ago, when the brainwashed economist Ph. D intelligentsia was stampeding over each other to come up with the most hyperbolic terms to dub the recovery that would be unleashed on the economy as a result of plunging oil, and gas, prices – with “unambiguously good” being our personal favorite – we would write post after post explaining just how wrong this is, and how in a hyperfinancialized economy, a 2-year record collapse in oil prices is about as “unambiguously bad” as it gets, and not just only for the hundreds of thousands of highly paid energy sector workers who had been the only source of in the early years after the financial crisis.
Back then US GDP had risen 2.9% over the prior year; it has since tumbled to 2.1% and is sliding, while the rest of the world, especially the oil-producing nations, is gripped in a severe recession which has already spread to the US manufacturing sector and will soon drag down US services into a recession as well, aborting the Fed’s rate hike cycle.
And then there was the idiocy with raising minimum wages which was supposed boost overall compensation: in another instance showcasing the real intellectual capacity of career and academic economists and those clueless enough to listen to them, we warned repeatedly that even the smallest of mandatory wage hikes would ripple through the economy and unleash extensive price increases across the board, not to mention countless job cuts as small and medium business, already struggling with keeping profits from plunging, had to find ways to eliminate overhead or raise prices.

This post was published at Zero Hedge on 12/30/2015.

This Is The Best Investment Of 2015… Just Don’t Adjust For Hyperinflation

It’s that time of year again. When hindsight is 20/20 and coulda/woulda/shoulda gives way to reality. With the US equity market barely able to keep its head above green water, a look around the world shows investors could have done a lot better (or not).
In fact, as Handelsblatt shows, the best investment in the world in 2015 would have been – drum roll please – Venezuelan stocks!

This post was published at Zero Hedge on 12/30/2015.

Pending Home Sales Decline 0.9%, Well Below Lowest Estimate; About that “Know Before You Owe” Theory

Today the NAR released the Pending Home Sales Index, a measure of expected sales on existing homes. The Econoday Consensus Estimate was for a 0.5% rise in a range of 0.0 to 2.4%.
No economist got the sign correct. The index unexpectedly declined 0.9% month-over-month, well below even the lowest economist’s estimate.
Pending home sales in November declined for the third time in four months as buyers continue to battle both rising home prices and limited homes available for sale. The pending home sales index was down 0.9 percent but up 2.7 percent from a year ago. Modest gains in the Midwest and South were offset by larger declines in the Northeast and West.
November’s dip continued the modestly slowing trend seen ever since pending sales peaked to an over nine year high back in May. NAR said that home prices rose too sharply in several markets, there were mixed signs of an economy losing momentum and waning supply levels all contributed to headwinds in recent months despite low mortgage rates and solid job gains.
The Northeast decreased 3.0 percent but is still 4.3 percent above a year ago. In the Midwest the index rose 1.0 percent and and is now 4.1 percent above November 2014. Pending home sales in the South increased 1.3 percent and are 0.5 percent higher than last November. The index in the West declined 5.5 percent but remains 4.5 percent above a year ago.

This post was published at Global Economic Analysis on December 30, 2015.

The Formlessness of Progressivism

Progressives are often good people with good intentions. However, modern Progressivism has evolved into something so shapeless and amorphous as to amount to little more than a belief in ‘things that sound nice.’ Mainstream Progressives have done an abysmal job of outlining precisely, in their view, the proper role of government and what (if any) limiting principle(s) apply to the state as a whole.
Everything Is Now a Taxpayer-Funded ‘Right’
Problems with today’s leftism begin with the ideology’s conception of ‘rights.’ In the common laissez-faire view, rights are universal because they do not impose a duty on others to act positively on our behalf. Simply put, the proper view of human rights is that they prohibit us from initiating coercion against others.
Moreover, not only are the rights universal, but they are inherent to being human. To argue that the state confers these rights suggests that the state, through whatever ‘legitimate’ institutions it may possess, can also take them away. This is an unacceptable possibility in a society of free people.
Modern Progressivism, however, has so warped the entire nature of rights as to turn almost any desired good or service into a right.
In this view, private employers refusing to subsidize birth control purchases by employees are violating a woman’s ‘right’ to birth control. Business owners with religious convictions about homosexuality are denying ‘rights’ by refusing to bake cakes for homosexual couples. Offering someone a job that pays wages belowsome arbitrary federal or state mandated minimum is now an act in violation of a ‘labor right.’
A service once voluntarily offered to the public is now a duty enforced by the violent arm of the state.

This post was published at Ludwig von Mises Institute on DECEMBER 30, 2015.

Yes, I Would (Did, Actually)

This is how you lose you.
How you lose your basic human right to control who and what you are. Your very flesh. Oh sure, the argument is that “you’re done with it”, and therefore absent some positive act anyone should be able to take whatever they want.
It may sound like a strange question. After all, you probably don’t even know who I am. But that is the stark question that many would be left to contemplate if America makes a much-needed change to its rules on donating organs — to people like me.
I was two days from graduating college when I was officially told last year that I needed a heart transplant, having been diagnosed with dilated cardiomyopathy when I was a child. I was still only 21, but everything that I had worked toward so far was about having a long and successful life.
And then it continues. Of course you wouldn’t “deny” this woman your heart, if you didn’t need it any more, right?
This, of course, means that by default it should be taken?

This post was published at Market-Ticker on 2015-12-30.

The New Cartel Running The Oil Sector

As oil prices wallow near multi-year lows, it’s becoming increasingly clear that the new cartel controlling oil prices is not OPEC but world credit markets. From Saudi Arabia’s record $100 billion deficit to shale oil’s continuing reliance on cheap credit funding, it’s clear that no major oil producer or company in the world right now is economically self-sufficient based on oil revenues alone. This situation has left the flow of oil and the decision on when to stop pumping the increasingly tarnished black gold in the hands of banks rather than oil men.

This post was published at Zero Hedge on 12/30/2015.

Buffett’s Utility Monopoly In Nevada Socks Musk’s Solar Firm

In a clash of the titans, Warren Buffett just defeated Elon Musk.
The fight was over solar net-metering in Nevada, a state that has the fifth largest installed solar capacity in the country. Nevada is home to Tesla’s ‘Gigafactory,’ which will produce batteries for electric vehicles. In addition to CEO of Tesla, Elon Musk is also the chairman of SolarCity, and net-metering – the policy that allows homeowners with solar panels to be paid for the power they produce – is central to solar economics.
But while Musk has quite a bit of sway in the Silver State, he came up short against Warren Buffett. NV Energy, a major Nevada utility and subsidiary of Buffett’s Berkshire Hathaway, strongly opposed the net-metering provision.
Earlier this year the Nevada state legislature ordered the Public Utility Commission (PUC) to formulate a new net-metering payment by the end of 2015 after the state maxed out the allotted 235 megawatt net-metering program. Vivint Solar, another solar developer, pulled out of Nevada last summer after the net-metering program became fully subscribed, which forced solar installations to grind to a halt. The impasse meant that a lot was riding on the PUC’s decision.

This post was published at Wolf Street on December 30, 2015.

The Good, the Bad, and the Ugly

In his brilliant classic, A Disquisition on Government, John C. Calhoun warned that a written constitution would never be sufficient to restrain the governmental leviathan. The net tax consumers (those who received more in government benefits than they paid in taxes), especially government employees, would relentlessly argue away the effectiveness of constitutional restrictions on government, he predicted. The net tax payers would inevitably be overwhelmed and defeated. There was never a truer political prediction.
In his new book, 9 Presidents Who Screwed Up America – And Four Who Tried to Save Her, Brion McClanahan presents a masterful and superbly-scholarly discussion of how nine presidents, beginning with George Washington himself, effectively destroyed constitutional government. On the brighter side, he also explains how four presidents – Jefferson, Tyler, Cleveland, and Coolidge – did their best to preserve the Jeffersonian vision of limited constitutional government.
In a sense, the book demonstrates the futility of ‘limited constitutional government’ for precisely the reasons given by Calhoun. For example, even George Washington acted in ways that were destructive of constitutional government. McClanahan describes how slick political manipulators like Alexander Hamilton were able to talk Washington into things that were either of dubious constitutionality or plainly unconstitutional. Washington wanted America to stay out of foreign wars, so he issued a ‘Proclamation of Neutrality.’ That sounds fine, but there was no constitutional authority for the president to intervene in foreign policy in that way. Nor did Washington have the constitutional authority to call up the state militia (only Congress does) to invade Pennsylvania during the Whiskey rebellion – another one of Hamilton’s heavy-handed, tyrannical adventures.

This post was published at Lew Rockwell on December 30, 2015.

“Coiled Spring” Stock Market Likely To Disappoint In 2016

2015’s stock market range (from high to low) is among the narrowest since World War II. This ‘compression’ has led the horde of asset-gatherers and commission-takers to suggest that stocks are a “coiled spring” ready to burst higher from this newly-formed permanent plateau. However, as S&P Capital IQ’s Sam Stoval notes, that is the exact opposite of what to expect based on history. In fact a narrow range year is typically followed by a low return year, not a high return year.
Anyone expecting a jump in the Standard & Poor’s 500 Index after its relatively narrow range this year may be disappointed, according to Sam Stovall, S&P Capital IQ’s chief U. S. equity strategist. As Bloomberg reports,

This post was published at Zero Hedge on 12/30/2015.

PUERTO RICO TO DEFAULT ON A PORTION OF $1 BILLION DEBT

DECEMBER 30, 2015
Over the past year, Puerto Rico’s financial problems have received national attention. Not only is the territory mired in high unemployment, but their government is also buried under a mountain of debt. Officials have desperately tried to keep the situation under control, and have pleaded with Congress to let them restructure their debt, but to no avail.
Now Puerto Rico is going to ring in the New Year by defaulting on a portion of $1 billion in bonds that are due next Monday. Officials with the Commonwealth have admitted that cannot pay 2 of 13 different payments that are owed to bondholders by January 4th. This includes $35.9 million for the Puerto Rico Infrastructure Financing Authority and another $1.4 million for the Puerto Rico Public Finance Corporation.

This post was published at The Daily Sheeple on JOSHUA KRAUSE /.

The Next Time Your Financial Advisor Tells You To Buy Stocks, Show Them This Chart

Earlier today, we noted that while the market was surging last week, the smart money was selling. This comes at the same time as ICI reported major redemptions from both stock ($3.9 billion) and bond ($4.5 billion) mutual funds, even as corporate buybacks were decelerating, leading to the question of just who was buying stocks during the Santa rally of the past two weeks.
But something even more surprising emerged when looking at the detailed breakdown of how the “smart money” has been flowing. As Bank of America clarifies, when explaining where its $0.7 billion in weekly outflows came from, “net sales were chiefly due to institutional clients last week” and adds that institutionals “have sold stocks for eight consecutive weeks”!
And then something even more surprising emerges when looking at the YTD breakdown of flows: while hedge funds and private clients (retail) have largely offset each other over the past year, the former selling $2.8BN and the latter buying $2.2BN in 2015, something odd has taken place at the institutional level: starting in early January, the largest financial institutions – mutual funds and various other asset managers – have unleashed an unprecedented selling spree for 11 consecutive months, which has brought their total outflow to $26.8 billion.
Which leads to another question: if institutions are actively dumping stocks, perhaps mom and pop investors should show the following chart to their financial advisors, who directly or indirectly work for these institutions, and ask them: why should they be buying, when the counterparty they are buying from is, most likely, this very same financial advisor?

This post was published at Zero Hedge on 12/30/2015.

Speak No Evil Financial Media Says No Housing ‘Inflation’, Only ‘Growth and Gains’

Recent media reports indicate that house prices are rising so I was curious to see how often the news reports on the Case Shiller house price index mentioned ‘inflation.’ I also wanted to see just how bad housing inflation is. But lo and behold, in reading the news reports I learned that there is no inflation in housing.
A CNBC.com post on the Case Shiller used the word ‘gains’ 4 times and ‘higher’ 6 times, but did not mention ‘inflation.’
Business Insider used ‘higher’ 2 times, and ‘gains’ once. ‘Inflation?’ Zero.
The Wall Street Journal’s piece started with ‘price growth,’ using the ‘growth’ euphemism 10 times, including in the headline. ‘Increase’ showed up 6 times. A total of 16 descriptions of the price change mentioned either growth or increase. ‘Inflate’ or ‘inflation’ how many times? Zero.
Now, Rupert Murdoch owns both the Wall Street Journal and Realtor.com. We shouldn’t expect anything negative from the hired public relations and marketing arm of the NAR.

This post was published at Wall Street Examiner by Lee Adler ‘ December 30, 2015.

Downright Ugly 7 Year Auction Concludes Treasury Sales For 2015

First thing this morning, when previewing the key event of the day, namely today’s auction of $29 billion in 7 Year Treasurys, we said that “with the issue not anywhere close to trading “special” in repo, the risk for a big tail – like in yesterday’s 5Y auction – is high.”
Specifically, we were looking at the 0.45% repo rate on the 7 Year yesterday and today, which was the highest across the entire curve, suggesting absolutely no short covering would take place into today’s auction.

This post was published at Zero Hedge on 12/30/2015.