Student debt becoming a larger albatross for economic growth: $1.2 trillion in student debt is outstanding and many college graduates working in jobs that don’t require their degree.

There was a time when going to college made sense in every feasible way. It made sense professionally, economically, and many college graduates have a wonderful time in the process of completing their degrees. Most would argue that learning is vital in growing and moving forward. Yet students need to ask whether their return on investment is really worth it? Many people go to college in a compulsory fashion. This is simply the next step after high school. This was an easy decision to make during a time when the costs of going to college were affordable. Today, many schools charge $40,000 and $50,000 per year for a basic undergraduate degree. That is problematic. A large number of recent graduates are now working in positions that don’t require their specific field of study. In other words, they are employed in a field different from their undergraduate degree but still carry forward with mounds of debt. The total student debt market is now well over $1.2 trillion. It might be worth it to take a course in Student Debt 101.
Growing student debt
There are no signs or smells that the student debt bubble is likely to slow down in formation. To the contrary total student debt has been on a mission upwards in the last decade or so. When you saddle a nation of young people with mountains of debt don’t be surprised when first time home buying reverses or discretionary spending slows down. That seems to be another problem for another day in debt world.
Student loan debt used to be a smaller part of non-housing related debt. Today it is now the largest consumer debt being held outside of mortgages. Take a look at the growth:

This post was published at MyBudget360 on September 1, 2014.

Gold Market Update

Gold and silver are at a critical juncture – either they break down to new lows soon or a major new uptrend is about to start. Which is it? – while we cannot be 100% sure either way, we can certainly attempt to figure which way they are likely to break.
Many have been tempted to conclude, because of the dismal response to date by the Precious Metals to the growing geopolitical tensions in various regions of the world, that this is an indication of intrinsic weakness, and that they are therefore destined to break down soon, but there is another way of looking at it.
The vast majority of investors have no idea just how dangerous the worsening situation with Russia really is. The West is looking for trouble with Russia – and like most people who go looking for trouble, they are going to find it – this is a situation that could quickly lead to a World War. They have made it obvious that they are not interested in compromise – they want to overcome and subdue Russia, and the consequences are likely to be grave – especially for Europe which is on the front line. We have gone into this in detail on the site and will not look at it further here, but it deserves to be mentioned at the outset, because this could drive a meteoric rise in Precious Metal prices – and it could start with a big move that seems to come out of nowhere.
With this in mind let’s now move on to look at the latest gold charts.
We will start by looking at gold’s long-term chart, as we need an overall perspective from the start. On gold’s 15-year chart we can see that despite the rough time it has had over the past 3 years, it still hasn’t broken down from its long-term uptrend – and if this uptrend is valid, then it is clear that a huge upleg could be in prospect from here. If it were to run to the top of its major uptrend channel again, it would result in a massive increase in the price to the $4000 – $5000 area. Of course, the pattern that has formed over the past year could be a continuation pattern to be followed by a breakdown and another steep drop, but this doesn’t look like it is on the cards as it would require a significant easing of geopolitical tensions, considered highly unlikely, and a deflationary implosion, which the money printers will ‘move heaven and earth’ to avoid. Volume indicators on gold’s long-term chart look positive relative to price, with Accum-Distrib line in particular looking strong. This chart makes plain that we are at a critical juncture here.

This post was published at Clive Maund on September 1st, 2014.

British Pound Volatility Surges Most Since 2008 As Scottish Referendum “Yes” Vote Looms

As we explained previously, the market appeared woefully under-priced for the potential risk of a Scottish “yes” vote. However, this weekend saw the margin between ‘yes’ and ‘no’ voters narrowed dramatically (53% “No” vs 47% “Yes” – a 6-point spread now versus a 14 point spread just 2 weeks ago). UK Gilt yields are higher, GBP is falling (its lowest since March) and implied volatility has spiked by the most since 2008 as hedgers pile in, now suddenly fearful.
GBP vol spikes on narrowing “Yes” vote…

* * *
As we concluded previously,
Some Possible Implications Of a ‘Yes’ Vote
Nevertheless, even if a ‘yes’ vote looks unlikely at present, it is not impossible. In our view, a ‘yes’ vote would have several key implications:
Bad for UK growth. Uncertainties over the economic prospects, policies and currency arrangements of an independent Scotland probably would hit growth in both Scotland and the rest of the UK (rUK), raising the incentive for firms to ‘wait and see’ or to expand elsewhere. Exports to Scotland account for roughly 4% of GDP for the rUK and Scotland would immediately be the rUK’s second biggest trading partner, slightly behind the US and slightly above Germany. Moreover, many banks and businesses have sizeable cross-border exposures between Scotland and rUK, and some firms may seek to limit such exposure as a hedge against the possible breakup of sterlingisation (if that is the policy adopted).

This post was published at Zero Hedge on 09/02/2014.

The Precious Metals Complex : Contradiction And Potential

In this Weekend Report I’d like to look at some of the Precious metals stock indexes as there was a fairly strong reversal off of the previous lows made over the last two months. It was one of those inflection points where the PM stock indexes could have gone either way. It just so happened that they all had a decent bounce off the lows with the last two days being up. We’ll examine some of the PM stock indexes in a minute but I would first like to show you the BPGDM as it’s still on a buy signal that was generated three weeks ago.
The reading of 46.67 is the highest point the BPGDM has reached in about year so there is some underlying strength. The BPGDM is above the 5 dma and the 5 dma is above the 8 dma so the buy signal is in place. Also the price action is still finding support at the neckline of the potential one plus year inverse H&S bottom.

This post was published at Gold-Eagle on September 2, 2014.

The Manufacturing World Suddenly Goes Into Reverse: Global August PMI Summary

While yesterday everyone was focusing on the ongoing escalation in Ukraine, or BBQing, the real story was the sudden and quite dramatic collapse, or as we called it, “bloodbath” in global manufacturing as tracked by various PMI indices.
Here, via Bank of America, is the bottom line: as the below table shows, out of the 26 countries that have reported so far, 9 reported improvements in their manufacturing sectors in August, while 15 recorded a weakening, and 2 remained unchanged. A reading above 50 reflects expansion, while below 50 indicates contraction. In this regard, there were 5 countries in negative territory and 21 in positive. In particular, Brazil, Greece, Korea and Turkey moved from contraction to expansion, while Australia and Italy did the reverse. The biggest concern: virtually every core and pierphral Eurozone country of note (from France and Germany to Spain and Italy) saw substantial contraciton. Which, as is well-known in the New Normal, is the stuff new all time S&P500 highs are made of.

This post was published at Zero Hedge on 09/02/2014.

Bloomberg Reports on Ruin in Hong Kong But Leaves Out the Larger Picture

To Save the Rich, China Ruins Hong Kong … When they meet on Sunday, legislators from China’s rubber-stamp National People’s Congress are expected to disregard even the most moderate proposals to open up Hong Kong’s political system. In all likelihood the decision will provoke street protests, drive moderates into the more radical pro-democracy camp and call into question the former British colony’s standing as a global financial center and bastion of free enterprise. And for what? The good of Hong Kong, of course. – Bloomberg
Dominant Social Theme: Capitalism creates prosperity, but the Chinese don’t understand.
Free-Market Analysis: What’s going on in China and Hong Kong is ironic because it seems to mimic much that has held the West back in modern times. In fact, much that China suffers from at its current level of development corresponds to a similar evolution in the West.
Bloomberg resolutely avoids making the comparison – though in our view, this article would have provided a perfect opportunity. Instead, Bloomberg tries to treat Chinese authoritarianism as an Asian problem.
Here’s more:
Wang Zhenmin, a Chinese law professor who sat on the committee overseeing Hong Kong’s constitution, laid out the case most blatantly on Thursday, when he told journalists that the interests of the city’s powerful tycoons had to be safeguarded from unchecked democracy.
“If we just ignore their interest, Hong Kong capitalism will stop,” he said. “Democracy is a political matter and it is also an economic matter.”

This post was published at The Daily Bell on September 02, 2014.

Silver Market Update

Bearing in mind what is written in the introductory paragraphs of the Gold Market update, which is equally applicable to silver, we will start by observing that silver appears to be on the point of turning up.
On its long-term 15-year chart we can see that silver is at an excellent point to begin a massive upleg, as it is currently in a zone of strong support after its 3-year long reaction and just above its major long-term uptrend line. If the next major upleg takes it to the top of the giant uptrend shown, we are looking at it rising to about $100 an ounce. Could it instead crash the support level and plunge? – anything is possible but as with gold this would only be expected to occur against the background of a dramatic easing of geopolitical tensions and a deflationary implosion, both of which look unlikely at this point.

This post was published at Clive Maund on September 1st, 2014.

“One Of The Defining Investment Moments Of The Next Few Years”

Some very spot on observations (which contain the amusing line: “inflation has been a modern day (last 100 years) phenomenon tied to the evolution of central banks (the Fed started in 1913) and the gradual demise of precious metal currency systems“) of what will be the biggest trouble with the credit bubble, from Deutsche Bank’s Jim Reid:
One of the more interesting stories of yesterday was a 1bn 50 year private placement bond issued by the Spanish Government with a 4% coupon. It’s a measure of how far things have come in a couple of years that such a deal could be launched. It was also a day when 2 year French yields traded below zero for the first time ever. We still live in remarkable financial times. Back to the Spanish deal, although current low levels of inflation make this deal look optically attractive on a real yield basis we thought we’d look at the rolling average 50 year level of inflation in Spain to highlight what real returns might potentially be over the lifetime of the bond. I hope I survive to see it mature but I hope I won’t be writing about it then. Anyway the average annual inflation over the last 50 years in Spain is 7.0% and as the graph in today’s pdf shows the last time the 50-year rolling average was below 4% was in 1956. Clearly prior to this the average rate of inflation was constantly below this level as inflation has been a modern day (last 100 years) phenomenon tied to the evolution of central banks (the Fed started in 1913) and the gradual demise of precious metal currency systems. So it’s a measure of how buoyant fixed income markets are that investors are prepared to ignore that last half century’s inflation record and the current fiat currency world when pricing long-term bonds. This is not a Spain-specific issue but on a slow news day the story stood out. The same would be true for most countries issuing similar long-dated debt today. Indeed yields elsewhere would likely be even lower.

This post was published at Zero Hedge on 09/02/2014.

3 Important Gold Charts – Transparent Holdings Fall As Bullion Goes East To Russia and China

3 Important Gold Charts – Transparent Holdings Fall As Bullion Goes East To Russia and China
Chart 1: Changes in Holdings (millions of oz) vs Gold Price
Nick Laird of www. ShareLynx.com has compiled some great new charts on the transparency of public gold holdings over time. The charts were emailed to us Monday night. Sharelynx.com is one of the internet’s most comprehensive sources for market related charts and is well worth the subscription. The charts are very illuminating and provide great insight into how gold has shifted between non public sources and public sources over the last 10-12 years. Below we reproduce some of Nick’s charts and some GoldCore commentary on the trends that we find most interesting.
In his charts, Nick has defined transparent gold holdings as ‘Total Published Repositories, Mutual Funds and ETFs’, and the gold holdings in millions of ounces are derived from these sources. The data therefore covers known private holdings of gold but excludes both the holdings of central banks, the official sector, and holdings in private ownership including for example GoldCore Secure Storage holdings.
The first chart shows a long term view of transparent gold holdings since 1970. As the gold bull market began in the late 1990s, the amount of gold held in transparent holdings rose sharply and displays a very high correlation with the rising gold price.

This post was published at Gold Core on 2 September 2014.

Central banks get discounts for trading EVERYTHING through CME Group and Comex

Zero Hedge reports that Eric Scott Hunsader, founder of market data research firm Nanex in Winnetka, Illinois, which exposed the algorithm trading responsible for the flash crash in gold futures on January 6 this year has discovered documentation at the U.S. Commodity Futures Trading Commission showing that CME Group, operator of various futures markets, including the New York Commodity Exchange (Comex), has been providing to central banks outside the United States, since at least July 1, 2013, a program of discounts for trading equity market, bond market, and commodity market futures, including gold and silver futures.
The documentation consists of a letter, dated January 29 this year, from CME Group's managing director and chief regulatory counsel, Christopher Bowen, notifying the CFTC of changes to the discount trading program for central banks. In his letter, Bowen insists, "The program's incentive structure does not impact the exchanges' ability to perform their trade practice and market surveillance obligations under the CEA [Commodity Exchange Act]. The exchanges' market regulation staff will monitor trading in the program's products to prevent manipulative trading and market abuse."

This post was published at GATA

Some deferred gold-buying finally comes around in India

Manish Kedia, bullion retailer, said that with India's central bank allowing more entities to import gold, premiums have fallen and supplies have eased, much to the relief of buyers.
"Last year, Diwali was preceded by very high demand in the first half and imports hit a record in April and May. Jewellers also took a stand that they would not sell gold coins as anti gold sentiment was at its peak across the country,'' he added.
This year, he said the sentiment had changed and people who had deferred purchases were coming back to the market, albeit slowly.
With the Indian government reducing the import tariff value on gold and silver on Saturday, supplies would also be eased. Tariff value was reduced to $420 per 10 grams for gold and $645 per kilogram for silver. For the first fortnight of this month, the tariff value on imported gold was $426 per 10 grams, while that for silver was $650 per kilogram.

This post was published at Mineweb

Gold hungry Indians boost imports in UAE

Among the most popular imports into the UAE in the first three months of the year, were gold and diamonds. The country’s consumers bought about 20,000 kilograms of the material, valued at around Dhirham 37.9 billion. Most of the buyers were Indian staying in the UAE, or those visiting the country.
The UAE’s non oil trade reached Dh 256 billion in the first quarter of 2014, reflecting the continuous momentum of the country’s non oil foreign trade, driven by stronger performance in all the economic sectors, preliminary data of the Federal Customs Authority (FCA) showed.
A World Gold Council report has also alluded to this. Total gold demand in the United Arab Emirates (UAE) reached 25.4 tonnes in the first quarter of 2014. The 16% increase from Q1 in 2013, was largely driven by Indian tourists choosing to buy gold in the UAE, rather than their homeland in an attempt to bypass the Indian gold import tax.

This post was published at Mineweb

Eurozone manufacturing slows further in August

Manufacturing in the eurozone slumped in August to a 13-month low, a closely watched survey showed on Monday, in a further sign that recovery is faltering and that tensions with Russia are taking their toll.
Markit's purchasing managers' index (PMI) measure of output in the eurozone's manufacturing sectors fell to a figure of 50.7 in August, according to the final estimate.
That was still above the 50-point boom-or-bust mark and it compared with the previous flash reading of 50.8.

This post was published at France24

Market Turning Points

Current position of the market
SPX: Long-term trend – In 1932 and 1974, the 40-yr cycle was responsible for protracted market weakness. The current phase is due this year but where is the weakness? Has man (Federal Reserve) finally achieved dominance over universal rhythms or has it simply delayed the inevitable?
Intermediate trend – The correction is over and what is most likely the final phase of the uptrend (before a more serious correction) is underway.
Analysis of the short-term trend is done on a daily basis with the help of hourly charts. It is an important adjunct to the analysis of daily and weekly charts which discusses the course of longer market trends.
APPROACHING AN IMPORTANT HIGH?
Market Overview
According to the Trader’s Almanac, September is the weakest month of the year. What better time for the stock market to have a long overdue correction of intermediate scope. I indicated under ‘Long-term trend’ above, that the heretofore predictable 40-year cycle rhythm had sorely disappointed the bears, this time. Will the month of September do likewise? Perhaps not! There are some sound reasons why bearish expectations will be at least partially redeemed in the near future. Let’s examine some of them:
The weekly MACD approaches the beginning of the month in a state of double negative divergence. This reflects price deceleration on an intermediate scale. Of course, this is not a final verdict! The MACD is still in an uptrend and, if it continues to move up, could nullify the divergence. However, the daily MACD also exhibits negative divergence and, judging by its histogram which has started to decline over the past four days, it may also be losing its upside momentum.

This post was published at Gold-Eagle on September 2, 2014.

US Futures Levitate To New All Time High As USDJPY Surges Above 105; Gold Slammed

Just when we thought centrally-planned markets could no longer surprise us, here comes last night’s superspike in the USDJPY which has moved nearly 100 pips higher in the past few trading days and moments ago crossed 105.000. The reason for the surprise is that while there was no economic news that would justify such a move: certainly not an improving Japanese economy, nor, for that matter, a new and improved collapse, what the move was attributed to was news that Yasuhisa Shiozaki, who has been advocating for the GPIF to reduce allocation to domestic bonds, may be appointed the Health Minister when Abe announces his new cabinet tomorrow: a reshuffle driven by the fact that the failure of Abenomics is starting to anger Japan’s voters. In other words, the GPIF continues to be the “forward guidance” gift that keeps on giving, even if the vast majority of its capital reallocation into equities has already long since taken place. As a result of the USDJPY surge, driven by a rumor of a minister appointment, the Nikkei is up 1.2%, which in turned has pushed both Europe and Asia to overnight highs and US equity futures to fresh record highs, with the S&P500 cash now just 40 points away, or about 4-8 trading sessions away from Goldman’s revised 2014 year end closing target.
Oh, for whatever reason but probably just because “banks are providing liquidity”, both gold and silver were summarily pounded to multi-month lows seconds ago.
In other Asian markets, the Hang Seng, Shanghai Composite, and the KOSPI are 0%, 1.4% and -0.8%, respectively. European stocks advance amid speculation that slower growth will prompt policy makers to accelerate stimulus. German and Italian shares outperform. The yen came close to a five-year low against the dollar, while the pound falls after a survey showed support for Scottish independence increasing. Treasuries drop ahead of reports this week that economists predict will show U. S. manufacturing and employment expanded in August. Oil and gold fall.

This post was published at Zero Hedge on 09/02/2014.

The Underbelly of Corporate America: Insider Selling, Stock Buy-Backs, Dodgy Profits

The hollowing out of corporate strengths to enable short-term profiteering by the handful at the top leads to systemic fragility.
Anonymous comments on message boards must be taken with a grain of salt, but this comment succinctly captures the underbelly of Corporate America: massive insider selling, borrowing billions to buy back their own stocks to push valuations to the moon so shares granted as compensation can be sold for a fortune, and dodgy accounting strategies that boost headline profits and hide the gutting of investments in long-term growth. Here’s the comment: “I’m occupying a vantage point that allows me to see what is going on inside the top Fortune 50 companies. I have never seen such rot before. Of the 50, at least 30 have debt at 120% of cash. Most have cut capex, R&D and maintenance by 80%. Most have been borrowing money to do stock buy-backs, while simultaneously selling off business units and doing layoffs.
Of the 50, at least 20 have 100% insider selling. For some, you would have to go back decades to find a point where all of the acting board of directors are selling. In essence, they are paying the mortgage with their credit cards. Without bookkeeping games, there are no solid earnings. There will be no earnings growth. ‘Executive compensation based on stock performance’ is killing corporate America.

This post was published at Charles Hugh Smith on MONDAY, SEPTEMBER 01, 2014.

WILL THIS BE THE LAST LABOR DAY WORKERS CAN AFFORD TO ESCAPE THE US?

Ah, “Labor Day.” A government created day on which those people who work (read: producers) are supposedly celebrated by the people who don’t (government and welfare recipients). Pat yourselves on the back, entrepreneurs – the parasites love you. As I’ve written here in The Dollar Vigilante (TDV) Blog, approximately 65 million US citizens work. The rest receive welfare in various forms.

So, as you see, for about 252 million Americans, life is pretty good. The government taxes those who create vast sums of wealth, half of which is then stolen (“for the greater good”) and re-allocated to people who can’t work or won’t. A small percentage of this is allocated towards some useful things, sure, but most is squandered by the growing bureau-rat class.
So, it’s safe to say that about 252 million individuals are not interested in leaving the US. Expatriation!? They probably don’t even know what that means. They’d be absolutely insane to want to do so…. They have it pretty good. They’re born, they immediately get separated from their family and educated (read: brainwashed) in government year-round camps, torn from precious REM sleep and fed lackluster school lunches only to fail by world standards. And then, after lots of brainwashing (some of which costs hundreds of thousands of dollars), there is a job awaiting them in an exploding public sector – a militarized public sector at that.

This post was published at Dollar Vigilante on September 1st, 2014.

France Needs a “Thatcher Moment” But First a Depression

It is amusing reading day in and day out the Keynesian cure for what ails Europe, especially France.
Consider France. Public spending amounts to 57% of French GDP, yet Keynesians want still more. The sad irony is that 100% would not be enough. In fact, it would make matters worse.
France suffers from too much government spending and too much government interference everywhere one looks.
The Problem
On Sunday, in Eurozone Currency Dispute Intensifies: France Wants More ECB Action to Correct Overvalued Euro, Germany Doesn’t I summed up the problem.
Inflation Won’t Cure France
Contrary to popular belief, inflation will not spur consumer spending. Nor will inflation create any jobs or cause wage inflation.
Nonetheless, France demands the ECB wizards fix something that cannot be fixed by monetary policy.

This post was published at Global Economic Analysis on Tuesday, September 02, 2014.

Austrians, Fractional Reserves, and the Money Multiplier

John Tamny recently wrote a piece at Forbestitled, ‘The Closing of the Austrian School’s Economic Mind’ in which he critiqued certain claims made in Frank Hollenbeck’s Mises Dailyarticle, ‘Confusing Capitalism with Fractional Reserve Banking.’
Tamny goes far beyond taking Hollenbeck to task, asserting that many modern Austrian economists have certain views of monetary policy that are at odds with much of the rest of the contribution of the Austrian School. Tamny’s biggest point of disagreement with Austrians is over the low regard with which many Austrians hold the practice of fractional reserve banking. In so doing, he makes several arguments which cannot stand up to critical scrutiny.
The crux of the Austrian position is that the practice of fractional reserve banking gives ownership claims to the same funds to more than one person. The person depositing the funds clearly has a property claim to those funds. Yet when a loan is made from those funds, the borrower now has a claim to the same funds. Two or more people owning the same funds is what makes bank runs possible. The existence of deposit insurance since the 1930s has minimized the number of these runs, in which multiple owners sought to claim their funds at the same time. The deposit insurance that prevents bank runs really amounts to a pre-emptive bailout of the banks. As this is a special privilege, rather than a natural development of the market, it follows that restrictions on fractional reserve banking would be a libertarian validation of the market rather than the statist interference that Tamny claims it to be.

This post was published at Ludwig von Mises Institute on Tuesday, September 02, 2014.

A Warning to Those Grown Bored with Gold

I’m starting to warm once again to gold. Like many of you, I never gave up on it, I had just grown too bored to care. With the bear market in bullion about to enter its fourth year, who could be blamed for losing interest? Gold has looked so punk for so long that every time it rallies sharply, I get that nagging feeling, as you probably do, that we’re about to get sandbagged for the umpteenth time. So why the change of heart? All credit to Richard ‘Doc’ Postma, a friend and regular guest panelist with me on interviews with the (Al ) Korelin Economic Report. Doc, a physician by training, is also an astute investor and market timer. A patient sort as well, he is that rare bird who can watch and wait for months or even years while exceptional opportunities slowly take shape. I hasten to add that on more than one occasion, he has been a crucial step ahead of me in calling some important price swings in gold. Naturally, that got my attention.

He now thinks gold and silver are about to take off – as soon as late September or early October. The very idea of it caused me to look with fresh eyes at my charts for corroborating signs. The inescapable conclusion is that Doc is onto something. The evidence is there for anyone who cares to look. For one, bullion continues to hit marginal new lows, but without breaking down. Rallies have been fleeting, followed by slumps that continue to wear down even gold’s most loyal followers. Most telling of all, mining shares have shown increasing reluctance to give ground on days when demand for physical is weak.

This post was published at Rick Ackerman BY RICK ACKERMAN ON SEPTEMBER 2, 2014.