The U.S. stock market is breaking down. October is here, the home month of past crashes. Here is a chart of the NASDAQ rolling over.-Lou
The U.S. stock market is breaking down. October is here, the home month of past crashes. Here is a chart of the NASDAQ rolling over.-Lou
Huge Silver buying but the paper price is creamed in September.-Lou
U.S. Mint Sells Over 750,000 Ounces Of Silver In One Day
The market reacted to the big drop in the paper price of silver by a huge increase in Silver Eagle purchases. September was turning out to be a much stronger month compared to July and August even before the last update of the month.
On Monday, the U.S. Mint reported 3,375,000 sales for the month. Then this evening, I checked to see if they had updated their figures.. which they did in A BIG WAY.
In one day, the U.S. Mint sold 766,000 Silver Eagles, more than all the Gold Eagles sold to date. Actually, is was more than double the 379,000 oz of Gold Eagles sold this year.
If we look at the chart below, sales of Silver Eagles in September, were double that of July and August:
Silver Eagle sales were quite strong in the beginning of the year and started to slow down in June. However, the manipulated lower price of silver motivated investors to ramp up the purchases making September one of the three strongest months of the year.
Only January and March were stronger than the 4,140,000 Silver Eagle sales in September. The total for the first three-quarters of the year is 32,251,000.
World physical gold supply moving from the West to the East. My money is on the Chinese being right, not the COMEX.-Lou
Why China thinks gold is the buy of the century
(. . . In one easy lesson*)
by Michael J. Kosares
Let’s start with some big, but digestible numbers:
$3,950,000,000,000 = China’s total foreign exchange reserves
$1,250,000,000,000 = Value of the world’s 31,866 metric tonnes gold reserve at $1220/troy ounce
$1,280,000,000,000. = China’s holdings of U.S. Treasuries in its foreign exchange reserves
$ 319,000,000,000. = Value of U.S. 8133 metric tonnes gold reserve at $1220/troy ounce
Now let’s delve into what those numbers might mean to the average gold owner:
On the occasion of the launch of the Shanghai International Gold Exchange on September 19, 2014, Zhou Xiaochuan, the governor of the Peoples’ Bank of China (PBOC), reflected on his country’s view of gold. “[The] gold market,” he said, “is an important and integral part of China’s financial market. We are now the largest gold producer, as well as the biggest gold importer and consumer in the world. . . The People’s Bank of China will continue to support the sustainable growth and sound development of China’s gold market.”
“Can you imagine,” asks Koos Jansen, the Holland-based expert on China’s gold market, “Mario Draghi or Janet Yellen attending the opening ceremony of a gold exchange in Frankfurt or New York, let alone speaking about the importance of gold?”
When it comes to the gold market, China is the dragon in the room. With its nearly $4 trillion in foreign exchange reserves and potential purchasing power, that presence is formidable.
How formidable? Consider this:
- China could purchase the total United States gold reserve (8133 metric tonnes) with 8% of its foreign exchange reserves.
- It could purchase the total global gold reserve (31,866 metric tonnes) with 32% of its foreign exchange reserves.
- It could purchase all the gold stored by Exchange Traded Funds (+/- 1750 metric tonnes) with less than 2% of its foreign exchange reserves.
- At $4900 per troy ounce, the value of U.S. gold reserves would match China’s U.S. Treasury holdings of roughly $1.28 trillion.
- At $4700 per troy ounce, the value of the world’s gold reserves would match China’s total foreign exchange reserves of roughly $4 trillion.
- To put it another way, China could pay double the current price for the world’s total gold reserve and still have nearly $1.5 trillion in foreign exchange reserves.
- China sits atop the list of the world’s foreign exchange holdings. The United States ranks thirteenth at $133 billion. For the United States to ascend to the top of the rankings, it would need to revalue its $319 billion gold reserve to almost $4 trillion – or raise the value to just under $15,300 per troy ounce.
These numbers are daunting. And for those unfamiliar with the massive scope of the monetary mess confronting the world’s central banks, they might appear unbelievable. At the core, though, the yawning chasm between official sector gold and China’s foreign exchange reserves suggests a serious undervaluation of gold at current prices. This imbalance is not likely to be addressed through mine production anytime soon, nor is it likely to be addressed by some realignment of international gold reserves, as some have suggested. Instead, the most likely outcome will be a significant adjustment in gold’s market price. It could come gradually or in fits and starts, or even all at once. Somehow though, sometime down the road, the market will address the imbalance. It always does. In fact, as some have suggested, China–through its staunch advocacy of gold–might already be in the process of forcing the issue.
It happens: Seniors with student debt – and smaller Social Security checks
CHICAGO – It’s a rude awakening for a growing number of seniors: They file for Social Security, then discover that the federal government plans to take part of their benefit to pay off delinquent student loans, tax bills, child support or alimony.
This month the U.S. Government Accountability Office (GAO) released findings on the problem of rising student debt burdens among retirees – and how the government goes after delinquent borrowers by going after wages, tax refunds and Social Security checks.
Under federal law, benefits can be attached and seized to pay child support and alimony obligations, collection of overdue federal taxes and court-ordered restitution to victims of crimes. Benefits also can be attached for any federal non-tax debt, including student loans.
It seems the student loan crisis isn’t just for young people. The GAO found that 706,000 of households headed by those aged 65 or older have outstanding student debts. That’s just 3 percent of all households, but the debt they hold has ballooned from $2.8 billion in 2005 to about $18.2 billion last year. Some 27 percent of those loans are in default.
If you’re among the 191,000 households that GAO estimates have defaulted, your Social Security benefits can be attached and seized.
“When that happens, the federal government pays off the creditor, and now it’s a debt to the federal government,” says Avram L. Sacks, an attorney who specializes in Social Security law. “So they can go after you for the loans – and now that students are reaching retirement age, long-forgotten debts are coming back to haunt them.”
The amounts that can be seized are limited, and the maximum amounts vary. In the case of any federal non-tax debt, including student loan debt, the government can take up to 15 percent of your monthly Social Security check. That’s a painful bite for low-income seniors living primarily on their benefits.
The law prohibits any attachment due to a federal non-tax debt that reduces a monthly benefit below $750. (Federal tax debt is not subject to this limitation.) Retirement and disability checks can be attached, but Supplemental Security Income – a program of benefits for low-income people administered by the Social Security Administration – is exempt.
In alimony or child support situations, garnishment is limited to the lesser of whatever maximums are set by states or the federal limit. The federal limits vary from 50 percent to 65 percent depending on how much the debt is in arrears and on whether the debtor is supporting a spouse or child. In victim restitution cases, the limit is 25 percent of the benefit.
Sorry for the lack of Posts last week as I was on a cruise with bad internet. This is the mega-issue that will take down the banking system.-Lou
Derivatives Market a $1.2 Quadrillion Time Bomb
Financial jargon is often arcane and perplexing to the average person. While even casual observers have surely heard of derivatives, most are unlikely to know what exactly they are.
Derivatives, or swaps, are basically bets between companies and banks that are designed, in essence, to be insurance policies.
The problem with derivatives is that since they often involve highly leveraged bets, they can be very dangerous. A small change in market conditions can mean huge losses.
Such losses can occur because derivatives use extraordinary leverage, or borrowing. Derivatives allow investors to earn large returns from small movements in the underlying asset’s price. However, investors can also lose large amounts if the price of the underlying asset moves against them significantly.
In fact, derivatives were used to conceal credit risk from third parties while protecting derivative counterparties, which contributed to the financial crisis in 2008.
That threat still lingers today. If interest rates were to rise unexpectedly, for example, it could result in a financial bloodbath on Wall Street.
Derivatives are used to make the really big money on Wall St. They can be many things, but are basically contracts or bets that derive their value from the performance of something else — an interest rate, a bond or stock, a loan, a currency, a commodity, virtually anything.
For traders, derivatives are a perfect product. They can also be highly lucrative to financial institutions. Over the last five years, banks earned an estimated $20 billion selling derivatives just to school districts, hospitals, and scores of state and local governments across the country.
Yet, as Warren Buffett famously stated, derivatives are “financial weapons of mass destruction.”
The global derivatives market is highly complex, totally unregulated and freakishly large. According to one of the world’s leading derivatives experts, Paul Wilmott, who holds a doctorate in applied mathematics from Oxford University, the so-called notional value of the worldwide derivatives market is $1.2 quadrillion.
A quadrillion is an incomprehensibly massive figure: 1,000 times a trillion. The market’s notional value is 20 times the size of the global economy.
The annual gross domestic product of the entire planet is between $50 trillion and $60 trillion.
Even if Congress decided to regulate the stunningly massive derivatives market, regulators wouldn’t be able to assess the risks of derivatives because they don’t understand them. Congress doesn’t understand them either.
Wow, this is amazing but it makes sense. Instant Repo!-Lou
Watch Video Here
Miss a Payment? Good Luck Moving That Car
The thermometer showed a 103.5-degree fever, and her 10-year-old’s asthma was flaring up. Mary Bolender, who lives in Las Vegas, needed to get her daughter to an emergency room, but her 2005 Chrysler van would not start.
The cause was not a mechanical problem — it was her lender.
Ms. Bolender was three days behind on her monthly car payment. Her lender, C.A.G. Acceptance of Mesa, Ariz., remotely activated a device in her car’s dashboard that prevented her car from starting. Before she could get back on the road, she had to pay more than $389, money she did not have that morning in March.
“I felt absolutely helpless,” said Ms. Bolender, a single mother who stopped working to care for her daughter. It was not the only time this happened: Her car was shut down that March, once in April and again in June.
This new technology is bringing auto loans — and Wall Street’s version of Big Brother — into the lives of people with credit scores battered by the financial downturn.
Auto loans to borrowers considered subprime, those with credit scores at or below 640, have spiked in the last five years. The jump has been driven in large part by the demand among investors for securities backed by the loans, which offer high returns at a time of low interest rates. Roughly 25 percent of all new auto loans made last year were subprime, and the volume of subprime auto loans reached more than $145 billion in the first three months of this year.
But before they can drive off the lot, many subprime borrowers like Ms. Bolender must have their car outfitted with a so-called starter interrupt device, which allows lenders to remotely disable the ignition. Using the GPS technology on the devices, the lenders can also track the cars’ location and movements.
The devices, which have been installed in about two million vehicles, are helping feed the subprime boom by enabling more high-risk borrowers to get loans. But there is a big catch. By simply clicking a mouse or tapping a smartphone, lenders retain the ultimate control. Borrowers must stay current with their payments, or lose access to their vehicle.
This week’s radio show is now available.-Lou Listen Here
Central Banks and the wealthy are buying gold with both fists but gold goes down on the fraudulent COMEX (CRIMEX).-Lou
Super-Rich Rush To Buy “Italian Job” Style Gold Bars
Economic uncertainties trigger rush for 12.5kg gold bars, worth about £300,000 each
The super-rich are looking to protect their wealth through buying record numbers of “Italian job” style gold bars, according to bullion experts.
The number of 12.5kg gold bars being bought by wealthy customers has increased 243pc so far this year, when compared to the same period last year, said Rob Halliday-Stein founder of BullionByPost.
“These gold bars are usually stored in the vaults of central banks and are the same ones you see in the film ‘The Italian Job’,” added David Cousins, bullion executive from London based ATS Bullion.
The bars which are made from pure gold and are worth more than £300,000 each at today’s prices of $1,223 (£760) an ounce.
The sales of 1kg gold bars, worth about £25,000 each, has doubled during the three months ended August, when compared to the same period last year, according to ATS Bullion sales figures.
Sales of the more popular gold coins such as the quarter ounce sovereign and one ounce Krugerrand have also doubled this year, according to figures from BullionByPost.
Mr Halliday-Stein said that while most customers arrange for secure storage of the larger bars in secret vaults operated by Brinks, some customers have taken physical delivery of the 12.5kg bars. The small coins can also be sent in the post.
This week’s column for Physician’s Money digest.-Lou
Feelings of Material Entitlement Lead To Financial Failure
When I was growing up, my parents, my 5 siblings and I lived in a small house. Although our quarters were close, we made it work. Our family had one car, which we kept until it died. Every night we all sat down for dinner together. On the rare occasions we ate out, it was to celebrate a special event. When I was a kid, we took only one vacation — we all got in the car and drove to Niagara Falls.
Money was always tight, so our family lived frugally and watched what we spent. My parents only bought what we needed. We didn’t have credit cards, so we had to live within our means. When we wanted to buy something for ourselves, we frequently had to save for it, which took a while, or we bought it “on time.”
Today, people live totally differently; they have a different attitude. They’re driven by feelings of material entitlement. They believe that they deserve to live extravagant lifestyles — the type of lives they see in the movies, magazines, advertisements and on television, which most of them can’t afford. To get what they think they deserve, they spend all they have, erode their savings and plunge into debt. They live in a culture of credit.
Americans today are also impatient and unwilling to wait. Since they won’t hold off until they can afford what they want, they put it on plastic, on their credit cards. By feasting today, they risk starving tomorrow.
Because they have feelings of entitlement, people use credit to purchase what they can’t afford. And the use of credit is the main reason why people fail financially.
The typical symptoms of feelings of material entitlement include:
Try this exercise; it can help change your attitude:
Eliminate waste in your life. If that means downsizing your home, cars and lifestyle, think seriously about doing so.