The Fed Has Set America Up For Disaster

On the heels of continued volatility in key global markets, the Godfather of newsletter writers, Richard Russell, discussed gold at length and also warned that the Federal Reserve has set America up for “disaster.” This is a fantastic piece where Russell notes the gold market may be ready to roar as physical gold is continuing to be drained from the COMEX.

Richard Russell: “Everybody knows that the US has an almost unsolvable problem with debt. Let’s call it a predicament, since there is no way of solving the debt problem in an acceptable way (I mean in a politically acceptable way). Of course we could declare sovereign bankruptcy — or we could turn to hyperinflation and literally inflate our way out of the debt-trap. But neither would be acceptable or politically possible.

  • Dow Jones 30,000 Trigger Leaked by 27-Year-Old Stock Research Firm CLICK HERE
  • The Inevitable: Dow Jones 30,000 CLICK HERE

But before the predicted disaster, you can be certain that the coming trouble will be sensed and registered in the price of something. It will show in the price of stocks or gold or bonds or the dollar. In other words, it will show somewhere in price.

What about the bond market — isn’t the bond market now saying, “trouble ahead?” In my opinion, not yet. True, bonds have taken a beating in recent months, but I don’t call the decline in bonds, so far, a red-flag prediction of disaster … And the stock market continues to rise, probably based on the current ocean of liquidity.

How about gold? Ah, gold may be about to raise the red alarm-flag. But not quite yet. As a personal opinion, I believe gold has now put in a major bottom. Wait — what about price? Ah, there you’ve got me. Even if a bottom has been put in, we have not yet seen the “meat.” The price of gold has not yet started to boom. It’s one thing to say that you believe “the bottom is in,” but it’s another thing to see the item surge off its low.

Source: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/7/15_Richard_Russell_-_The_Fed_Has_Set_America_Up_For_Disaster.html

Sell Equities And Buy Physical Gold Now While Prices Are Low

Faber said it’s a good idea to take money out of the stock market.

“I don’t think there is a lot of upside potential, but I think there is considerable downside,” he said.

Marc Faber, managing director of Marc Faber Limited and the author of the widely read monthly investment newsletter “Gloom, Boom & Doom” report, said weakness in China’s economy could spell big trouble global markets.

  • Dow Jones 30,000 Trigger Leaked by 27-Year-Old Stock Research Firm CLICK HERE
  • The Inevitable: Dow Jones 30,000 CLICK HERE

Faber said that if the Chinese economy grows at 3 or 4 percent—or even not at all, which he sees as a possibility—it will have a huge, negative affect on industrial commodities and the incomes of countries that produce them. In turn, he said, if countries such as Russia, Brazil or nations in Africa, Central Asia or the Middle East have less income, they’ll buy less from China, Western Europe and America, leading to very little earnings growth or an earnings contraction for those more prosperous economies.

China preferably would show trend line growth of 10 percent, as it has done for the past 20 years, Faber said.

Faber said it’s a good idea to take money out of the stock market.

“I don’t think there is a lot of upside potential, but I think there is considerable downside,” he said.

However, he said that markets are now seeing emerging markets and their currencies go lower, and “It could be that all the money in the world flows in to U.S. stocks and avoids emerging markets.”

Gold can eventually be a source of profit, according to Faber. He said it’s possible the price of gold can go somewhat lower, even though he thinks it’s now at a reasonable level. “I keep on buying gold and I have faith that gold prices will eventually be higher,” Faber said.

Faber said that, in general, corporate earnings will disappoint.

“They may not collapse, but I don’t think they will be as a good as expected,” Faber said. He said cyclical stocks, such as semiconductors and materials companies, will have tough time matching earnings expectations.

U.S. aluminum giant Alcoa kicks off the unofficial start to quarterly earnings season after the closing bell on Monday.

Source: http://finance.yahoo.com/blogs/big-data-download/mark-faber-china-puts-global-markets-risk-164954983.html

Financial Meltdown, Back-To-Back “Stick Saves” & Gold

On the heels of more turbulence in key global markets, today 40-year veteran, Robert Fitzwilson, put together another extraordinary piece. Fitzwilson, who is founder of The Portola Group, discussed financial meltdown, back-to-back “stick saves,” and what this all means for battered traders and investors in the gold market. Below is Fitzwilson’s outstanding and exclusive piece for KWN.

Fitzwilson: “There is a term in ice hockey called a stick save. Instead of using the curved end of the hockey stick, the player uses the handle end to move the puck. It has been described as having no points for style, and often fails, but sometimes saves the day for the player and his or her team.

  • Dow Jones 30,000 Trigger Leaked by 27-Year-Old Stock Research Firm CLICK HERE
  • The Inevitable: Dow Jones 30,000 CLICK HERE

Below is a chart of the Dow Jones Industrial Average from 1970 to the present. You can clearly see two stick saves early last decade and the second during the 2008 meltdown.

The first stick save was engineered largely by the policy of driving rates to zero. While it saved the stock market and thrust the real estate markets to new heights, it sowed the seeds for the horrendous crash in 2008….

“A larger stick save was required in the 2008 debacle, requiring the completion of the zero interest rate objective as well as the creation of massive amounts of money on a global and historic scale.

It is no wonder that many people are terrified of equities when one looks at this chart. The volatility has been incredible. You can barely see the Crash of 1987 on the chart, although that was a stomach churning decline on the order of 23%.

The chart below is for gold during the same period.

While the Dow Jones has increased by roughly 14 times since 1980, the price of gold has merely doubled from the peak. Despite that disparity, most people look favorably at the chart for stocks, and are adamant that gold is overvalued.

For stocks, valuation metrics are used such as price-to-earnings ratios. For gold, there is no attempt to relate the price to the forces that drives the metal’s price. What drives gold is the excessive, massive creation of fiat currency. Since 1980, the amount of debt-based money has exploded. If that simple valuation metric of comparing the price of gold to the amount of money is applied, gold is drastically undervalued.

Source: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/7/3_Financial_Meltdown,_Back-To-Back_Stick_Saves_%26_Gold.html