Greg Weldon: Debt-Driven Consumer Economy Breaking Down

Mike Gleason: It is my privilege now to welcome in Greg Weldon, CEO and President of Weldon Financial. Greg has over three decades of market research and trading experience, specializing in metals and commodity markets and even authored a book in 2006 titled Gold Trading Bootcamp, where he accurately predicted the implosion of the U. S. credit market and urged people to buy gold when it was only $550 an ounce.
He is a highly sought-after presenter at financial conferences throughout the country, and is a regular guest on financial shows throughout the world, and it’s good to have him back here on the Money Metals Podcast.
Greg, thanks for joining us today. And it’s nice to talk to you again. How are you?
Greg Weldon: I’m great, thanks. My pleasure, Micheal.
Mike Gleason: Well, when we had you on back in mid-August you were optimistic about gold at the time. We had a pretty good move higher, shortly thereafter that ended up with gold hitting a one year high. But it stalled out around $1,350 in early September and we’re currently back below $1,300 as we’re talking here on Wednesday afternoon. Gold hit resistance at about the same level in the summer of last year, so give us your update as to your current outlook. What drivers, if any, do you see that can push gold through that $1,350 resistance level in the months ahead, Greg?
Greg Weldon: Yeah, well, exactly as you said. You had the move that we were anticipating when we last spoke and it kind of had already started from the 1205-ish level. All of this fitting into the kind of bigger picture, technical structure that still leads to a bullish resolution. But as you accurately mentioned, you got up to what have been close to, not quite even towards last summer’s highs around $1,375, $1,377. In this case, around $1,360 and ran out of steam.
The dollar kind of changed some of the picture and the thought process linked to the Fed changed some of the picture. So, you embarked on a downside correction. $1,260 was the low, you have a nice little correction from that level. That was the level that equated to 200-day exponential moving average. It’s a level that was just below the 38% Fibonnaci retracement of the move up from $1,205. Actually, the move up from $1,123 back at the end of 2016. So you had real, critical support there. So, to me, everything’s kind of mapped out the way you might expect it to, structurally, in this market.

This post was published at GoldSeek on 23 October 2017.

Do Shifting Democrat Talking Points Confirm That “Trump Is Unlikely To Be Implicated” In Russia Probe?

Over the past several weeks, the Russia-related talking points of Democrats and their mainstream media echo chambers have shifted from constantly insisting that Trump colluded with Russia during the 2016 election to focus on a seemingly irrelevant amount of advertising dollars that may have been spent on various social media platforms by people that “may have been connected” to the Kremlin…which, to our understanding, is defined as anyone with their browser language set to Russian.
Alas, as the Washington Examiner points out today, this shift in talking points could finally indicate that Democrats are admitting that there is no ‘there’ there when it comes to the ‘Trump collusion’ narrative.

This post was published at Zero Hedge on Oct 23, 2017.

Yawning Debt Trap Proves the Great Recession is Still On

While David Stockman stated early this year with resolute certainty that the debt ceiling debate would blow congress up and send the nation reeling over the financial precipice, I avoided jumping on the debt-ceiling bandwagon. While I was convinced major rifts in the economy would start to show up in the summer, I was not convinced they would have anything to do with the debt ceiling debate. If there is anything you can be certain of this in endless recovery-mode economy, it is that the US will just keep pushing its bags of bonds up a hill until it can finally push no more. So, I figured another punt down the road was more likely.
The Debt Ceiling Debate that Didn’t Happen The reason I didn’t think that debate would blow apart is that Republicans have more than once experienced the political reality that comes from taking the nation to the brink of default or of shutting down government. Each time that kind of thing has happened, it has hurt Republicans far more than it has hurt Democrats. I doubted establishment Repubs (the majority) had the stomach to take us through another credit downgrade, though I’ve noted such an event was possible.
Unsurprisingly to me, then, Congress did the only thing it seems to be capable of any more and just kicked that can a little further down the road with hardly a kerfuffle about it. Hurricane Harvey made things a lot easier for congress to kick the can again by providing a good excuse to dodge that unwanted debate on the basis of massive human suffering that truly did need tending to. Much-talked-about government shutdown put off for a better time
The debate was entirely avoided even as the national debt broke over the $20 trillion mark this summer, keeping US debt at more than 100% of GDP, which is the stratosphere we’ve been in since 2011.
A group of progressive economists affiliated with the University of Massachusetts predicted in 2013 that a debt burden [that reaches 90% of GDP for five years] would result in an annual growth rate of just 2.2 percent, which means economic stagnation. (Reason.com)
We’re already well past that five-year marker. Not surprisiing, then, that the Congressional Budgeting Office expects economic growth to stay at 1.8% through 2027.

This post was published at GoldSeek on 24 October 2017.

First, ETFs; Now JPMorgan Incorporates A.I. Into FICC Business

Only yesterday, we commented on the launch of the world’s first A. I.-driven ETF ‘EquBot LLC, in partnership with ETF Managers Group (ETFMG) launched the world’s first ETF powered by artificial intelligence, the AI Powered Equity ETF (NYSE Arca: AIEQ). According to Business Wire, the new ETF uses ‘cognitive and big data processing abilities of IBM Watson to analyze U. S.-listed investment opportunities’.
A mere 24 hours later and JPM has joined the party as Bloomberg reports,
At the world’s biggest debt dealer, traders can have trouble making sense of all the action as it happens. So JPMorgan Chase & Co. is bringing in artificial intelligence to give them a picture of the whole trading floor — and even predict where markets are going. MSX, a data analytics and machine-learning program, is being deployed in the bank’s fixed-income sales and trading operations, New York-based JPMorgan said Monday in a statement. It will compile data from all desks and orders to give salespeople and traders a clearer picture in real time and help them anticipate market moves. Developed by London-based start-up Mosaic Smart Data, the program is already used in JPMorgan’s rates trading.

This post was published at Zero Hedge on Oct 23, 2017.

Asian Metals Market Update: October-24-2017

Moves in the currency markets are dictating gold and silver. Technically gold and silver are in a neutral to bullish zone. There is not much news at the moment. Prices moves in gold, silver and currency markets reflect investor short sightedness. Fears that geopolitical risk can rise anytime is preventing investors not to take a medium term stance.
Investors will start taking positions for the New Year and the first quarter of next year. Global economic growth is expected to get a smooth ride till the first quarter of next year. A destabilizing factor will be changes in geopolitical risk. East Asian calm is the one before the Typhoon. Next year central banks will face the dilemma between growth, inflation and interest rate cycles. Bitcoin will be regulated in 2018. I believe that those who are crying over the fate of bitcoin, are themselves heavily invested in bitcoin. In short as compared to this year, it will be a nightmare to trade and invest.
COMEX GOLD DECEMBER 2017 – current price $1283.30
Bullish over $1281.60 with $1289.90 and $1301.10 as price target.
Bearish below $1273.20 with $1265.10 and $1256.90 as price target.
Gold gets another chance to rise to $1307.60 if it manages to trade over $1268.80. Initial resistance is at $1284.80. There will be another wave of rise over $1284.80.

This post was published at GoldSeek on 24 October 2017.

Falling Interest

Last week, we discussed the marginal productivity of debt. This is how much each newly-borrowed dollar adds to GDP. And ever since the interest rate began its falling trend in 1981, marginal productivity of debt has tightly correlated with interest. The lower the interest rate, the less productive additional borrowing has in fact become.
Let’s look at a recent event: the Ikea acquisition of TaskRabbit. You might wonder, why does a home goods company need to own a freelance labor company? Superficially, it seems to makes sense. Ikea products notoriously come in flat packs, but consumers don’t want to fuss with all the little parts. They just want finished furniture. Ikea has been using TaskRabbit to hire people to assemble it in their homes.
Isn’t this like that caricature of the billionaire who buys, say, the Planters Peanut company because he likes to eat salted nuts? Ikea could be a customer of TaskRabbit, hiring its temporary workers as needed, without owning the company. In fact, it had been doing that for years.
The acquisition price was not disclosed, however, we can guess that it was high. TaskRabbit was a Silicon Valley darling with a bright future. Its value proposition is right for this economy. It had raised $50 million, presumably at rich valuation multiples.
How much would Ikea be willing to pay? We don’t know how many dollars TaskRabbit was earning, so we will have to pass on total price. However, we can ask how much Ikea would be willing to pay for each dollar of earnings. There are two metrics to help answer this question.
One, Ikea can compare to the price that its own investors are willing to pay for a dollar of Ikea earnings. If it can buy a dollar of earnings via TaskRabbit for less than the market pays for a dollar of Ikea earnings, then it’s a good deal. Ikea is not publicly traded (but we suspect management has an accurate internal estimate of enterprise value).

This post was published at GoldSeek on 23 October 2017.

It Is Seven Times More Difficult To Get A Flight Attendant Job At Delta Than Enter Harvard

One of our preferred “off beat” economic indicators is how many workers apply at any one given moment in time for jobs that are hardly considered career-track. An example of this is the number of applicants for minimum wage line cook jobs at McDonalds, or flight attendant positions at Delta Airlines; conveniently, this is a series which we have tracked on and off for the past 7 years.
As regular readers may recall, back in October 2010, the Atlanta-based carrier received 100,000 applications for 1,000 jobs, an “acceptance ratio” of 1.0%. Things appeared to improve modestly in 2012 when Bloomberg reported that Delta had received 22,000 applicants for 300 flight attendant jobs: this pushed the acceptance ratio slightly higher to 1.3%, as by this point the job market had improved somewhat, and there were far better job career options available.
Fast forward to today when things have turned decidedly more grim for the US job market once again, at least based on this one particular indicator. According to CNN, Delta is once again on the hunt for new flight attendants, and has roughly 1,000 open positions for 2018, although this year the competition is virtually unprecedented: so far, Delta has received more than 125,000 applications for this hiring round, which all else equal would result in an acceptance ratio of 0.8%. Note, we said “virtually unprecedented” because this year ratio of applicants to open positions is identical to last year, when 150,000 people applied for 1,200 flight attendant jobs, resulting in an identical, 0.8% acceptance ratio.
So what makes it such a tough gig to land?
“You need to not only be a customer service professional, but also a safety expert,” said Ashton Morrow, a Delta spokeswoman.
Political correctness aside, you have to be young, relatively good looking, preferably a female (sorry, sexism does exist)… oh and willing to accept next to minimum wage.

This post was published at Zero Hedge on Oct 23, 2017.

OCT 23/GOLD AND SILVER REBOUND ON EITHER TRUMP’S CLOSE TO PICKING A FED NOMINEE OR MOST LIKELY REACTING TO IMMINENT THREAT COMING FROM NORTH KOREA/TROUBLE IN SPAIN AS ARTICLE 155 IS INVOKED AND T…

GOLD: $1279.65 UP $0.30
Silver: $17.05 UP 2 cents
Closing access prices:
Gold $1282.20
silver: $17.08
SHANGHAI GOLD FIX: FIRST FIX 10 15 PM EST (2:15 SHANGHAI LOCAL TIME)
SECOND FIX: 2:15 AM EST (6:15 SHANGHAI LOCAL TIME)
SHANGHAI FIRST GOLD FIX: $1290.33 DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: $1275.55
PREMIUM FIRST FIX: $14.78(premiums getting larger)
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
SECOND SHANGHAI GOLD FIX: $1290.33
NY GOLD PRICE AT THE EXACT SAME TIME: $1276.55
Premium of Shanghai 2nd fix/NY:$13.78 PREMIUMS GETTING LARGER)
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
LONDON FIRST GOLD FIX: 5:30 am est $1275.25
NY PRICING AT THE EXACT SAME TIME: $1275.85
LONDON SECOND GOLD FIX 10 AM: $1274.90
NY PRICING AT THE EXACT SAME TIME. 1274.75
For comex gold:
OCTOBER/
NOTICES FILINGS TODAY FOR OCT CONTRACT MONTH: 4 NOTICE(S) FOR 400 OZ.
TOTAL NOTICES SO FAR: 2443 FOR 244,300 OZ (7.599TONNES)
For silver:
OCTOBER
5 NOTICES FILED TODAY FOR
25,000 OZ/
Total number of notices filed so far this month: 784 for 3,920,000 oz
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Bitcoin: $5659 bid /$5678 offer DOWN $278.00 (MORNING)
BITCOIN CLOSING;$5904 BID:5924. OFFER DOWN $29.00

This post was published at Harvey Organ Blog on October 23, 2017.

Smuggled Gold Pouring into India as Consumers Dodge Taxes

An increase in the import duty hasn’t dampened Indians’ appetite for gold. It’s just pushed the market underground.
Gold is such an important part of the Indian economy, people will do whatever they have to in order to get their hands on the yellow metal – including skirt the law. According to a recent report by the Hindu, occurrences of gold smuggling have risen rapidly in the wake of higher import taxes.
Ever since the import duty on gold was raised to 10%, the country has reportedly witnessed a rapid rise in the quantum of gold brought into the country illegally. Currently, government levies total 13%, including IGST of 3%.’
Government efforts to crack down on smuggling have proven largely ineffective. Officials estimate customs agents and police have intercepted less than 10% of the gold entering the country illegally. Police do a better job of catching smugglers traveling by air from West Asia and south-east Asia, but officials say gold brought in through the international waters of Sri Lanka and the porous borders of Myanmar, Thailand, Nepal, Bangladesh, and Pakistan is seldom tracked.

This post was published at Schiffgold on OCTOBER 23, 2017.

The 4 Possible Channels For A Chinese Financial Crisis

That China is a widely accepted global outlier in the context of credit, debt and leverage, look no further than the latest Financial Stability Report from the IMF, which in no uncertain terms lays out where China can be “found” relative to its G-20 peers in the following chart:

Yet according to the IMF, China’s bleak picture is based on a relatively rosy estimate of the country’s non-financial debt to GDP at approximately “only” 242%.
The reality, however, is that China’s true leverage picture is far worse, and while there are far more aggressive and pessimistic estimates in the public domain, we have chosen the latest number calculated by Victor Shih from the Mercator Institute for China Studies, who in a just released report calculates that total non-financial credit in China stood around 254 trillion RMB as of May 2017, equivalent to 328% of 2016 nominal GDP, or nearly 100% higher than the official IMF estimate. This is also 34% increase as a share of GDP compared with the end of 2015.

This post was published at Zero Hedge on Oct 23, 2017.

SWOT Analysis: How Will Gold Move Into 2018?

Strengths
The best performing precious metal for the week was palladium, off 1.44 percent for the week. Citigroup favors palladium in the short term, in response to pollution control, but says substitution risks prevent the bank from taking a more bullish view long term as the price of palladium is now higher than the price of platinum. After the Indian government eased rules on gold purchases, the country’s demand for gold jewelry and branded coins appears to be better than the last quarter, according to P. R. Somasundaram, MD for India at the World Gold Council. The ensuing wedding season is the key for quarterly demand performance, Bloomberg reports, and with a good monsoon season, stable gold prices should encourage consumers. In the month of September, Swiss gold exports doubled month-over-month to 148.4 metric tons, reports Bloomberg. In August, exports were only 72 tons, according to the Swiss Federal Customs Administration. Specifically, Swiss exports to China rose 21 percent and to Hong Kong rose 92 percent. Weaknesses
The worst performing precious metal for the week was platinum, off 2.41 percent as palladium seems to be the more crowded trade. September makes 11 months straight of China officially reporting a zero increase in the level of its gold reserves, writes Lawrie Williams. The only time in recent years that the Asian nation has published any month-by-month gold reserve accumulations was in the 16 months ahead of the yuan being accepted as an integral part of the International Monetary Fund’s (IMF) Special Drawing Rights basket of currencies, Williams continues. ‘We don’t think it coincidence that such month-by-month reporting effectively ceased once the yuan became part of the SDR, thus paving its way for acceptance as a reserve currency,’ the article reads.

This post was published at GoldSeek on 23 October 2017.

Manhattan Office Bubble Fizzles without Big Chinese Buyers

Sales volume in Q3 plunges 67% from a year ago.
Manhattan, the biggest most expensive trophy market in the US for commercial real estate, used to be particularly appealing to exuberant foreign investors, such as Chinese conglomerates. But in the third quarter, sales volume of large office properties (minimum $5 million and 50,000 sq. ft.) plunged 67% year-over-year to $991 million, the lowest in five years. It was down 90% from the peak in Q1 2015.
‘Q3 2017 might signal a return to normalcy for the highly sought-after Manhattan market,’ the report by Yardi Systems’ Commercial Cafcommented.
This chart shows the dollar sales volume of large office properties. The $991 million in Q3 is rounded up to $1 billion:

This post was published at Wolf Street on Oct 23, 2017.

Air Force Denies That US Nuclear Bombers Are Being Put Back On 24-Hour Alert

There were many unanswered questions following last night’s story from Defense One, according to which the US Air Force would put nuclear bombers on high, 24-hour alert for the first time since the end of the cold war in 1991. There may be even more questions on Monday, when the Air Force denied the report and said it was not preparing to put its B-52 nuclear bombers on 24-hour alert, adding that a “misunderstanding” might have led to a report claiming those preparations are underway.

This post was published at Zero Hedge on Oct 23, 2017.