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Economy Gold and Silver

Gold Has Good Support Price at $1,500 Amid Dollar Surge

At 1400 EST today the Federal Reserve Bank decided to lower interest rates by a quarter point (25 basis points). As a result the Dow Jones Industrial Average dropped 196 points and the S&P 500 sank to 25 points by 1148 that morning.

By 1445—the 10-year treasury bond dropped to 1.77% and the two-year treasury yield was at 1.78%. The Dollar Index rose 0.38% to 98.64. Gold and silver declined to $1,502.10 and $17.68 respectively. Nevertheless, as a longstanding hedge against inflation these metals have been deemed as “money” since human civilization began 5,000 years ago.

It’s no surprise during weak and volatile economies gold and silver shines, even amid a strong dollar that is artificially propped up. These are signs that the United States economy is falling, and “real money” is rising. Keynesian economics and modern monetary theory (MMT) have wreaked havoc on our once rich and prosperous economy that blossomed during the republic’s early years in the 1700s.

The U.S. has long been a creditor nation, meaning it has loaned money to others. Now, it’s a debtor nation, owing $1.11 trillion to China as of May 2019, with a fiat currency that lost 98 percent of its value since the Federal Reserve was created in 1913. President Nixon took us off the gold standard “temporarily” (or so was the claim) in 1972. The 40 percent backing allocation of gold and silver before this point restrained U.S. monetary policy from overspending.

Further, amid today’s news of weary investor confidence, gold and silver prices stayed above their early August highs. We are still looking at higher highs and lower highs when setting a line between the base of their chart fluctuations since the bull market began in June of 2019.

Gold price remains slightly more stable than silver, although fluctuations have historically caused silver to outperform gold. There widely assumed that silver will have more leverage–in both directions–as it follows the price of gold during this bull market.

It’s also important to note that structural bull markets in precious metals such as this usually last about 5 years. I feel strongly that gold and silver will outperform the U.S. stock market in the coming years. The economy is a mess. Record consumer debt soars at all time highs, while low-wage “server jobs” fill much of the employment numbers. Meanwhile, pundits on CNBC and the Trump administration claim the economy is still strong amid dwindling numbers of economy growth.

Though recent earnings reports from some U.S. retailers (e.g. Walmart) were favorable, they were likely due to credit card borrowing. The reality is, most Americans are broke. They use credit cards to buy necessities, and many do not see what’s coming. Consumerism is a major problem in this nation. Americans’ lack of saving combined with the federal government’s increase in spend will surely reap consequences. We are due for a huge, painful correction, but this is how natural laws work.

Moreover, as usual, President Trump reacted with yet another degrading tweet toward Chairman Powell upon his Fed announcement at 1400, criticizing his dovishness of not lowering interest rates even more. Notwithstanding, Trump’s recent attacks contradict his former condemnation of low interest rates by the Fed during the Obama years, which he avidly denounced.

Donald Trump: Jay Powell and the Federal Reserve Fail Again. No “guts,” no sense, no vision! A terrible communicator!

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Economy

Trump’s Friday Tweets Move Markets Down

In the wake of Fed Chair Jerome Powell’s speech Friday morning at Jackson Hole, WY, President Trump launched a firestorm of aggravated statements on Twitter. This included blaming Chair Powell for not aiming to lower interest rates far enough.

Donald Trump: “As usual, the Fed did NOTHING! It is incredible that they can “speak” without knowing or asking what I am doing, which will be announced shortly. We have a very strong dollar and a very weak Fed. I will work “brilliantly” with both, and the U.S. will do great…”

Then he followed it by saying, “….My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?”

Further, President Trump reiterated the abuse China has caused to the United States through its trade measures. Rightly so, but the way he reacted and dealt with it is reproachable and outright dangerous to our economy.

Donald Trump: “Our Country has lost, stupidly, Trillions of Dollars with China over many years. They have stolen our Intellectual Property at a rate of Hundreds of Billions of Dollars a year, & they want to continue. I won’t let that happen! We don’t need China and, frankly, would be far….”

However, the frosting took to the cake when he said this—causing the Dow to drop 460 points, or 1.8%. The S&P 500 and NASDAQ Composite fell 1.9% and 2.2%, respectively.

Donald Trump: “….better off without them. The vast amounts of money made and stolen by China from the United States, year after year, for decades, will and must STOP. Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing..”

Donald Trump: “….your companies HOME and making your products in the USA. I will be responding to China’s Tariffs this afternoon. This is a GREAT opportunity for the United States. Also, I am ordering all carriers, including Fed Ex, Amazon, UPS and the Post Office, to SEARCH FOR & REFUSE,….”

Seriously? Even CNBC reporters reconfirmed during this hour that the president is not a king and has no constitutional authority to dictate how private U.S. companies will do business. I am not surprised at the least from the president’s rhetoric. He says stupid things whenever his temperament amounts from something negative.

UPDATE [08/24/19]: Trump Comments on Statement to “Order” U.S. Companies

The following day on Saturday, Trump reiterated his statement on Twitter after being questioned by the media. He claimed the Emergency Economic Powers Act of 1977 give him authority to do so.

Donald Trump: “For all of the Fake News Reporters that don’t have a clue as to what the law is relative to Presidential powers, China, etc., try looking at the Emergency Economic Powers Act of 1977. Case closed!”

I rejected his argument by replying that such an act, whether upheld in court, is unconstitutional.

CHRIS NAWOJCZYK: Guess what: YOU’RE NOT MY KING. We already revolted against one in 1775. Conservative values include free market capitalism via laissez faire economics, not dictatorial powers. Whatever manipulation of EEPA you claim, whether upheld or not, is #UNCONSTITUTIONAL.

Silver and Gold Soared as the Stock Market Fell, as Always

Furthermore, silver and gold stocks and ETFs shot up in the wake of the Fed Chair and president’s statements. However by 0900 there as a slight selloff.

The VIX CBOE Volatility Index actually hit a low of 16.04 before 1100, only to soar up to a high of 12.93 by 1200 noon. If President Trump just acted more “presidential” by showing more bearing and leadership in his public sentiments, the markets may not have reacted as they did. Right now in August, which is often a volatile month, the drastic rise and fall of U.S. securities is largely the result of fear and emotion rather than fact and reason.

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Powell says there’s no ‘rulebook’ for trade war, pledges to ‘act as appropriate’ to sustain economy

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Economy

The U.S. Economy is a Mess Despite Trump and CNBC Hype

We had a drastic week all around the financial world. Gold hit record highs not seen in years, to include gold ETFs like IAU (iShares Gold Trust), GLD (SPDR Gold Shares), and many others. Virtually all gold and silver exchange traded funds followed the same bullish pattern, while the U.S. dollar rose against the Chinese Yuan.

Gold shot up 1.5% on Monday in dollar terms, hitting a 6 year high. The metal increased to $1,469 before some sellers took profit, thus stalling the rally.

Moreover, it was in the value of other currencies where gold hit all time record highs. These include the British Pound, the Japanese Yen, the Indian Rubi, the Canadian dollar, the Australian dollar, and the South African Rant.

The yellow metal rose 3.5% in Yuan and 1.2% in Euros. All this came about because the Trump administration plans to levy a 10% tariff on imports from China starting September 1st, 2019. This will tariff the remaining 300 billion dollars worth of goods and products coming in to the United States.

Though president Trump accused China of being a currency manipulator, the International Monetary Fund (IMF) came out with a report today debunking that “Twitter” conspiracy by the president.

Peter Schiff, CEO of Europacific Capital, went on FOX Business recently to speak the truth of what’s really happening: investors are trending toward moving out of the U.S. dollar and into gold. SchiffGold’s Gold Wrap podcast, a weekly roundup each Friday hosted by Mike Maharrey, outlines the startling truths of what is really happening.

Maharrey sees Trump’s actions of implementing tariffs on China as a “calculated move,” of which I concur. The president wants the Federal Reserve to keep interest rates artificially low to help stimulate this struggling economy. He wants the Fed to keep cutting rates at a continuous cycle from now until his second election, despite his constant self-praise of how good the economy is under his presidency.

Can you image why? It’s simply because Trump knows that if the economy tanks under his watch the Democrats will blame him for this sickened economy, which he actually inherited. The left will ridicule capitalism (once again) and call upon all-mighty socialism as the answer to American’s woes and worries; democratic-socialists will claim to take care of people—but in exchange for letting government have more control over their lives.

The true state of the U.S. economy

The United States economy is a disaster waiting to happen. Amid all the hype by Trump, his supporters, Federal Reserve leaders, and CNBC talking heads that jobs are at record highs and production is increasing—it’s a phony economic growth that is fueled by DEBT. Consumers are using credit cards at record highs, and the federal government is using its credit card to pay for its massive programs. The central bank creates money out of thin air, which it then uses to buy U.S. Treasury bonds, in exchange for interest paid back to them by the federal government.

These facts are products of a fundamental economic problem this is being ignored by almost everyone in Washington D.C. and the mainstream media. This game of keeping interest rates artificially low is a necessity in order to keep the borrowing going as long as possible, otherwise both Trump and Fed Chair Jerome Powell will get blamed.

During the dot-com bubble of 2000 when U.S. companies crashed the following year, Federal Reserve interest rates were upwards of 6 percent—a big difference compared to today’s rates hovering around 2 percent. This chart tracks the central bank’s interest rates from 1987 to 2009.

Federal Reserve interest rates of U.S. economy from 1987 - 2009.

The Left’s desire to end free market economy as we know it

This insidious proposition is the actual intention of radical leftists. Seizing more authoritarian control over the means of production by making citizens less free is the narcissistic charge they receive. In fact, they relish the idea of having authority over the destiny of people’s lives. It sounds drastic to say, but the truth is they operate under the guise of “taking care of people” who can’t take care of themselves.

Perhaps these politicians actually believe their own claims. Maybe they feel morally justified. Nevertheless, their motives are rooted in a psychological need for greater control and self- aggrandizement. Such are the traits of narcissistic personality disorder (NPD).

Many of today’s Democrats—as well as Republicans to some degree—have tendencies to strip people of their personal sovereignty. Government regulation and taxes on business and personal income, are all measures that wee

The United States was founded on hard work and self-reliance

The United States was built on a “can-do” spirit of entrepreneurship, hard work, determination, and adherence to values and ideologies of personal liberty. This libertarian doctrine is not only rooted in the founding of our nation but is traced back to the European Enlightenment, ancient Greece, and even the Bible. However, many of the 2020 presidential frontrunners such as Bernie Sanders, Elizabeth Warren—and actually every one of them—do not want the free market to have full control. Most government leaders’s subtle tendency is to have the reigns of power, thereby diminishing the soul of those trying to get ahead and gain autonomy through self-reliance.

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A Tale of Two Bubbles: How the Fed Crashed the Tech and the Housing Markets

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Economy

Gold Soars as Dow Drops 800 Points in Worst Fall of 2019

Gold Price Live Chart

Today the Dow Industrial Average (DOW) Dropped to a low of 2,822.12 points from a record year high of 3,027.98 in June, 2019. This occurred as a result of the currency decline of China which took place in defense of Trump’s trade tariffs.

Dow plunges almost 900 points as trade war escalation with China pummels stock market

Investors dumped U.S. stocks in late afternoon trading Monday, interpreting a sharp decline in China’s currency as an escalation in the trade war between that country and Washington.

China allowed the yuan to drop to seven per U.S. dollar, an 11-year low and a politically sensitive level. A weaker Chinese currency can help boost that country’s exports by making them cheaper while hurting foreign competition.

Jim Cramer Weighs in on Today’s Panic