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Japan
by
Chris Martenson
Executive Summary
- The current gold slam has *nothing* to do with the fundamentals for precious metals, which are very favorable right now
- How bad would deflation be?
- Evidence that deflation is arriving
- Why our current monetary system has become so compromised by the banks
- How to best protect your wealth from both deflation and the banks
If you have not yet read Part I: This Gold Slam is a Massive Wealth Transfer from Our Pockets to the Banks, available free to all readers, please click here to read it first.
About Those Wealth Transfers
The biggest news of the recent past is the flow of gold from West to East.
(Source)
With China importing 835 tonnes of gold in 2012 – that we know about (and they may well be doing more under the table for official purposes) – and also standing as the number one producer of gold, with ~360 tonnes of domestic production, none of which is exported, China is consuming at least 44% of total yearly world gold production.
Connect that with India importing between 200 and 300 tons per quarter (2011 imports were 967 tonnes, and 2012 was 864 tonnes), and this represents another 33% of total world mine output. Add in Russia buying more official gold, and you suddenly find that a commanding proportion of the newly mined gold in the world is headed East, where it used to stay largely in the West.
To be clear, I view gold as money and therefore wealth itself. Everything else that can be manufactured out of thin air is merely a claim on wealth. In these terms, the West is slowly but steadily bleeding control of wealth to the East, something I thought our leaders were both aware of and focused on.
Knowing the lower prices will only exacerbate this West-to-East flow, I therefore thought that the bullion banks and central banks would not have dared push that dynamic any further. But apparently – no, obviously – I was wrong, which pains me on several levels.
Add to this the various things going on in the world today, and I honestly thought we were in the most gold-favorable landscape of my life.
Consider:
- Negative real interest rates (powerfully gold- and commodity-friendly throughout history)
- North Korea threatening nuclear and conventional war
- Open confiscation of wealth in Europe from bank accounts
- Japan doubling their monetary base in a brazenly desperate bid to stoke inflation by attacking Japanese trust in their own currency
- Extremely unfavorable bond yields up and down the yield ladder
- Continued European stress and discord with the possibility of a Eurozone disintegration
Taken together, this level of system, sovereign, and institutional uncertainty is about as gold-friendly a situation one could concoct…
Protecting Your Wealth from Deflation
PREVIEW by Chris MartensonExecutive Summary
- The current gold slam has *nothing* to do with the fundamentals for precious metals, which are very favorable right now
- How bad would deflation be?
- Evidence that deflation is arriving
- Why our current monetary system has become so compromised by the banks
- How to best protect your wealth from both deflation and the banks
If you have not yet read Part I: This Gold Slam is a Massive Wealth Transfer from Our Pockets to the Banks, available free to all readers, please click here to read it first.
About Those Wealth Transfers
The biggest news of the recent past is the flow of gold from West to East.
(Source)
With China importing 835 tonnes of gold in 2012 – that we know about (and they may well be doing more under the table for official purposes) – and also standing as the number one producer of gold, with ~360 tonnes of domestic production, none of which is exported, China is consuming at least 44% of total yearly world gold production.
Connect that with India importing between 200 and 300 tons per quarter (2011 imports were 967 tonnes, and 2012 was 864 tonnes), and this represents another 33% of total world mine output. Add in Russia buying more official gold, and you suddenly find that a commanding proportion of the newly mined gold in the world is headed East, where it used to stay largely in the West.
To be clear, I view gold as money and therefore wealth itself. Everything else that can be manufactured out of thin air is merely a claim on wealth. In these terms, the West is slowly but steadily bleeding control of wealth to the East, something I thought our leaders were both aware of and focused on.
Knowing the lower prices will only exacerbate this West-to-East flow, I therefore thought that the bullion banks and central banks would not have dared push that dynamic any further. But apparently – no, obviously – I was wrong, which pains me on several levels.
Add to this the various things going on in the world today, and I honestly thought we were in the most gold-favorable landscape of my life.
Consider:
- Negative real interest rates (powerfully gold- and commodity-friendly throughout history)
- North Korea threatening nuclear and conventional war
- Open confiscation of wealth in Europe from bank accounts
- Japan doubling their monetary base in a brazenly desperate bid to stoke inflation by attacking Japanese trust in their own currency
- Extremely unfavorable bond yields up and down the yield ladder
- Continued European stress and discord with the possibility of a Eurozone disintegration
Taken together, this level of system, sovereign, and institutional uncertainty is about as gold-friendly a situation one could concoct…
by
Chris Martenson
In this week's Off the Cuff podcast, Chris and Adam discuss:
- Rough Seas Ahead
- Chris issues a rare warning for a 40%+ correction in the stock market
- Happy Sequester!
- What will its impact be?
- The Japan Mess
- Looking more & more like it will be the first major country/currency to fail
- The "Affordable" Care Act
- A misnomer if there ever was one
- The Barnburner at Rowe
- This year's seminar is shaping up to be one for the ages
Off the Cuff: Red Sky at Morning
PREVIEW by Chris MartensonIn this week's Off the Cuff podcast, Chris and Adam discuss:
- Rough Seas Ahead
- Chris issues a rare warning for a 40%+ correction in the stock market
- Happy Sequester!
- What will its impact be?
- The Japan Mess
- Looking more & more like it will be the first major country/currency to fail
- The "Affordable" Care Act
- A misnomer if there ever was one
- The Barnburner at Rowe
- This year's seminar is shaping up to be one for the ages
by
Chris Martenson
Executive Summary
- The central-planning Status Quo will fight to the bitter end in order to keep stock and housing prices elevated
- HFT algorithms dramatically increase the odds of immediate "air pockets" in stock prices
- Persistently high gasoline prices are choking economic growth
- A parade of economic headwinds (weakening GDP growth, higher taxes, the impact of Obamacare, sequester cuts, chronic unemployment) are blowing increasingly stronger
- Powerful TBTF ("too-big-to-fail') interests are likely supporting the Fed's current efforts to boost asset prices
- Both near-term and long-term history tell us that the more asset prices are artificially increased, the farther they eventually fall, as intervention hits its point of diminishing returns
- Why you don't want to be long in this market when that happens
If you have not yet read Part I: Warning: Stocks Likely to Crater from Here, available free to all readers, please click here to read it first.
Hey, Where's My Cheap Gasoline?
Expensive energy is a serious drag on economic growth. It always has been and always will be, for obvious reasons.
The average person can be forgiven for being confused by the recent spike in gasoline prices. Since early 2012, there has been a concerted effort to tell the tale that the U.S. is producing more oil than it has in a long time and is on track to rival Saudi Arabia.
Literally hundreds of articles have breathlessly repeated the same information over and over again, like all good marketing programs should. But here in 2013, gasoline is on track to set price records and possibly make this year the most expensive one in history for gas prices:
How can this be? What is going on? How do we reconcile all the reports of record-breaking advances in U.S. oil production with these concurrent record-high gasoline prices?
The answer starts with the fact that the U.S. still imports 40% of its daily oil supply and is nowhere near energy independence when it comes to petroleum. This means that the U.S. remains wedded to the world price of oil, which remains quite elevated in price – with Brent crude remaining stubbornly elevated between $110 and $120 a barrel over the majority of the past year…
How the Market Failure Will Happen
PREVIEW by Chris MartensonExecutive Summary
- The central-planning Status Quo will fight to the bitter end in order to keep stock and housing prices elevated
- HFT algorithms dramatically increase the odds of immediate "air pockets" in stock prices
- Persistently high gasoline prices are choking economic growth
- A parade of economic headwinds (weakening GDP growth, higher taxes, the impact of Obamacare, sequester cuts, chronic unemployment) are blowing increasingly stronger
- Powerful TBTF ("too-big-to-fail') interests are likely supporting the Fed's current efforts to boost asset prices
- Both near-term and long-term history tell us that the more asset prices are artificially increased, the farther they eventually fall, as intervention hits its point of diminishing returns
- Why you don't want to be long in this market when that happens
If you have not yet read Part I: Warning: Stocks Likely to Crater from Here, available free to all readers, please click here to read it first.
Hey, Where's My Cheap Gasoline?
Expensive energy is a serious drag on economic growth. It always has been and always will be, for obvious reasons.
The average person can be forgiven for being confused by the recent spike in gasoline prices. Since early 2012, there has been a concerted effort to tell the tale that the U.S. is producing more oil than it has in a long time and is on track to rival Saudi Arabia.
Literally hundreds of articles have breathlessly repeated the same information over and over again, like all good marketing programs should. But here in 2013, gasoline is on track to set price records and possibly make this year the most expensive one in history for gas prices:
How can this be? What is going on? How do we reconcile all the reports of record-breaking advances in U.S. oil production with these concurrent record-high gasoline prices?
The answer starts with the fact that the U.S. still imports 40% of its daily oil supply and is nowhere near energy independence when it comes to petroleum. This means that the U.S. remains wedded to the world price of oil, which remains quite elevated in price – with Brent crude remaining stubbornly elevated between $110 and $120 a barrel over the majority of the past year…
by
Gregor Macdonald
Executive Summary
- Japan is intentionally devaluing its currency through money printing. The recent boost in the Nikkei is simply the result of this flood of new money.
- Japan industry is now experiencing cost increases on two fronts: inflation of the money supply, and rising prices on the global market for commodities.
- Rising bond rates are all but guaranteed.
- Gold vs. the yen is surging and will pick up momentum from here
- The ten predictable events that will happen next, as the unavoidable Japan disaster unfolds
If you have not yet read Part I: The Arrival of Japan's Sunset available free to all readers, please click here to read it first.
In Part II we explain why Japan has unequivocally entered the terminal phase of its 20-year reflationary experiment.
Further “abundance” harvesting from this point forward will be difficult if not impossible.
Is the devaluation of the yen really the successful technology that will fool nature? We think not. The outcome will have spectacular implications for many global assets, ranging from real estate, to stock markets, to oil and gold.
Observers of Japan from this point forward should be sober about the threshold the country has now crossed. Japan has effectively said to the world: Go ahead, make my day. Sell our currency, give us inflation, and get out of our bonds.
Japan has indeed taken to heart the Krugman dictum, and committed to irresponsibility.
The 10 Next Predictable Steps to Japan’s Unfolding Disaster
PREVIEW by Gregor MacdonaldExecutive Summary
- Japan is intentionally devaluing its currency through money printing. The recent boost in the Nikkei is simply the result of this flood of new money.
- Japan industry is now experiencing cost increases on two fronts: inflation of the money supply, and rising prices on the global market for commodities.
- Rising bond rates are all but guaranteed.
- Gold vs. the yen is surging and will pick up momentum from here
- The ten predictable events that will happen next, as the unavoidable Japan disaster unfolds
If you have not yet read Part I: The Arrival of Japan's Sunset available free to all readers, please click here to read it first.
In Part II we explain why Japan has unequivocally entered the terminal phase of its 20-year reflationary experiment.
Further “abundance” harvesting from this point forward will be difficult if not impossible.
Is the devaluation of the yen really the successful technology that will fool nature? We think not. The outcome will have spectacular implications for many global assets, ranging from real estate, to stock markets, to oil and gold.
Observers of Japan from this point forward should be sober about the threshold the country has now crossed. Japan has effectively said to the world: Go ahead, make my day. Sell our currency, give us inflation, and get out of our bonds.
Japan has indeed taken to heart the Krugman dictum, and committed to irresponsibility.
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