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Image | Our “As You Wish” Markets Have Reached the Cliffs of Insanity
Our “As You Wish” Markets Have Reached the Cliffs of Insanity
by Chris Martenson

In the classic fantasy rom-com The Princess Bride, the beautiful maid Buttercup orders the farm boy Westley to perform numerous tasks to test his servitude. No matter the magnitude of the request, Westley simply answers "As you wish" and makes it so. Buttercup eventually comes to view Wesley with similar devotion, and true love is born.

Similarly, investors have fallen back in love with the capital markets, whose continual response their increasingly irrational hopes has been "As you wish."

Our “As You Wish” Markets Have Reached the Cliffs of Insanity
 by Chris Martenson

In the classic fantasy rom-com The Princess Bride, the beautiful maid Buttercup orders the farm boy Westley to perform numerous tasks to test his servitude. No matter the magnitude of the request, Westley simply answers "As you wish" and makes it so. Buttercup eventually comes to view Wesley with similar devotion, and true love is born.

Similarly, investors have fallen back in love with the capital markets, whose continual response their increasingly irrational hopes has been "As you wish."

Image | Off the Cuff: The Fed is Speaking out of Every Corner of Its Mouth
Off the Cuff: The Fed is Speaking out of Every Corner of Its Mouth
 PREVIEW
by Chris Martenson

In this week's Off the Cuff podcast, Chris and Charles Hugh Smith discuss:

  • Decoding FedSpeak
    • Deciphering the latest Fed minutes
  • Pricey Petroleum
    • Crude oil cracks $105/barrel
  • Fed Losing Control?
    • Outlook for stocks/bonds/real estate looking shaky
Off the Cuff: The Fed is Speaking out of Every Corner of Its Mouth
 PREVIEW by Chris Martenson

In this week's Off the Cuff podcast, Chris and Charles Hugh Smith discuss:

  • Decoding FedSpeak
    • Deciphering the latest Fed minutes
  • Pricey Petroleum
    • Crude oil cracks $105/barrel
  • Fed Losing Control?
    • Outlook for stocks/bonds/real estate looking shaky
Image | The Dead Weight of Sluggish Global Growth
The Dead Weight of Sluggish Global Growth
by Gregor Macdonald

Global Slowdown

The U.S. economy weakened appreciably in the first quarter of 2013. But what if this weakness persists into the second quarter just completed, and worsens still in the second half of this year? Q1 GDP, as reported on June 26th, was revised lower to just 1.8%. And various indications suggest that Q2 could come in slightly lower still, at 1.6%. Might the U.S. economy be guiding to a long-term GDP of 1.5%? That’s the rate identified by such observers as Jeremy Grantham – the rate at which we combine aging demographics, lower fertility rates, high resource costs, and the burdensome legacy of debt. Well, after a four-year reflationary rally in just about everything, and now with an interest-rate shock, the second half of 2013 appears to have more downside rather than upside risk. Have global stock markets started to discount this possibility?

The Dead Weight of Sluggish Global Growth
 by Gregor Macdonald

Global Slowdown

The U.S. economy weakened appreciably in the first quarter of 2013. But what if this weakness persists into the second quarter just completed, and worsens still in the second half of this year? Q1 GDP, as reported on June 26th, was revised lower to just 1.8%. And various indications suggest that Q2 could come in slightly lower still, at 1.6%. Might the U.S. economy be guiding to a long-term GDP of 1.5%? That’s the rate identified by such observers as Jeremy Grantham – the rate at which we combine aging demographics, lower fertility rates, high resource costs, and the burdensome legacy of debt. Well, after a four-year reflationary rally in just about everything, and now with an interest-rate shock, the second half of 2013 appears to have more downside rather than upside risk. Have global stock markets started to discount this possibility?

Image | Off the Cuff: What Comes Next
Off the Cuff: What Comes Next
 PREVIEW
by Chris Martenson

In this week's Off the Cuff podcast, Adam and Charles discuss:

  • Market Turning Point?
    • Weakness seen post-"taper" rumors
  • Impact of Higher Interest Rates
    • Kryptonite for most asset classes
  • Gold & Silver's Terrible, No-Good, Very Bad Year
    • Will it get any better?

 
Off the Cuff: What Comes Next
 PREVIEW by Chris Martenson

In this week's Off the Cuff podcast, Adam and Charles discuss:

  • Market Turning Point?
    • Weakness seen post-"taper" rumors
  • Impact of Higher Interest Rates
    • Kryptonite for most asset classes
  • Gold & Silver's Terrible, No-Good, Very Bad Year
    • Will it get any better?

 
Image | Europe’s Precarious Banks Will Determine the Future
Europe’s Precarious Banks Will Determine the Future
by Alasdair Macleod

Crying Wolf?

It is easy to get the impression that the naysayers are wrong about Europe. After all of the predictions of Armageddon, ten-year government bond yields for Spain and Italy fell to the 4% level, France (which is retreating into old-fashioned socialism) was able to borrow at about 2%, and one of the best-performing bond investments has been until recently – wait for it – Greek government bonds! Admittedly, bond yields have risen from those lows, but so have they everywhere. It is clear, when one stands back from all the usual euro-rhetoric, that, as a threat to the global financial system, it is a case of "panic over."
Europe’s Precarious Banks Will Determine the Future
 by Alasdair Macleod

Crying Wolf?

It is easy to get the impression that the naysayers are wrong about Europe. After all of the predictions of Armageddon, ten-year government bond yields for Spain and Italy fell to the 4% level, France (which is retreating into old-fashioned socialism) was able to borrow at about 2%, and one of the best-performing bond investments has been until recently – wait for it – Greek government bonds! Admittedly, bond yields have risen from those lows, but so have they everywhere. It is clear, when one stands back from all the usual euro-rhetoric, that, as a threat to the global financial system, it is a case of "panic over."
Image | Everything Is Being Sold
Everything Is Being Sold
by Chris Martenson

Global financial markets are now in a very perilous state, and there is a much higher than normal chance of a crash. Bernanke's recent statement revealed just how large a role speculation had played in the prices of nearly everything, and now there is a mad dash for cash taking place all over the world.
Everything Is Being Sold
 by Chris Martenson

Global financial markets are now in a very perilous state, and there is a much higher than normal chance of a crash. Bernanke's recent statement revealed just how large a role speculation had played in the prices of nearly everything, and now there is a mad dash for cash taking place all over the world.
Image | The New Game-Changers for Gold & Silver
The New Game-Changers for Gold & Silver
 PREVIEW
by Adam Taggart

Executive Summary

  • Large players (and likely price manipulators) now have incentive for precious metals prices to rise
  • Investor demand for bullion remains at record highs
  • Competition for bullion from the East continues to heat up
  • Central banks buy more bullion as Comex inventories deplete
  • The key signs to know when it will be time to sell your gold & silver

If you have not yet read Part I: Is Gold at a Turning Point? available free to all readers, please click here to read it first.

Manipulation

Much has been written across the Web (including here at PeakProsperity.com) about whether or not the precious metals markets are manipulated in price by big players (major multi-national banks such as JP Morgan). Without delving into the many arguments on both the pro and con sides, Chris and I are of the opinion that sufficient data exists to convince a reasonable observer that price manipulation in the PM markets is indeed real, or, at the very least, highly probable. (For those remaining doubters out there, have a look at the evidence here, here, and here, and let us know if you have a rational, non-manipulative explanation.)

One of the most glaring signs of likely manipulation has been the massive short positions that a small number of large banks (JP Morgan being the most prominent among them) have held for many years, particularly in the silver market [measure positions as % of world silver production]. And not only were these unlimited positions allowed, but this cabal of banks was allowed to naked-sell PMs short (i.e., sell metal without actually owning it first). On the other side of the coin, the long side, position limits were enforced, and there was no similar ability to buy more metal than one could pay for. This imbalance of rules certainly provides the mechanism by which PM prices could be artificially jockeyed more easily to the downside. In this context, a decline from the high $40s to the low $20s looks more understandable.

Well, a very important part of this story has just shifted. The CFTC (Commodities Futures Trading Commission) publishes a monthly report illustrating the positions taken in Comex Futures Contracts

After nearly ten years of being net short in Comex gold futures, U.S. banks have been recently decreasing those short positions, and – for the first time since 2004 (with the exception of a single month in 2008) – they have flipped to become net long gold in May (see bottom chart below)…

The New Game-Changers for Gold & Silver
 PREVIEW by Adam Taggart

Executive Summary

  • Large players (and likely price manipulators) now have incentive for precious metals prices to rise
  • Investor demand for bullion remains at record highs
  • Competition for bullion from the East continues to heat up
  • Central banks buy more bullion as Comex inventories deplete
  • The key signs to know when it will be time to sell your gold & silver

If you have not yet read Part I: Is Gold at a Turning Point? available free to all readers, please click here to read it first.

Manipulation

Much has been written across the Web (including here at PeakProsperity.com) about whether or not the precious metals markets are manipulated in price by big players (major multi-national banks such as JP Morgan). Without delving into the many arguments on both the pro and con sides, Chris and I are of the opinion that sufficient data exists to convince a reasonable observer that price manipulation in the PM markets is indeed real, or, at the very least, highly probable. (For those remaining doubters out there, have a look at the evidence here, here, and here, and let us know if you have a rational, non-manipulative explanation.)

One of the most glaring signs of likely manipulation has been the massive short positions that a small number of large banks (JP Morgan being the most prominent among them) have held for many years, particularly in the silver market [measure positions as % of world silver production]. And not only were these unlimited positions allowed, but this cabal of banks was allowed to naked-sell PMs short (i.e., sell metal without actually owning it first). On the other side of the coin, the long side, position limits were enforced, and there was no similar ability to buy more metal than one could pay for. This imbalance of rules certainly provides the mechanism by which PM prices could be artificially jockeyed more easily to the downside. In this context, a decline from the high $40s to the low $20s looks more understandable.

Well, a very important part of this story has just shifted. The CFTC (Commodities Futures Trading Commission) publishes a monthly report illustrating the positions taken in Comex Futures Contracts

After nearly ten years of being net short in Comex gold futures, U.S. banks have been recently decreasing those short positions, and – for the first time since 2004 (with the exception of a single month in 2008) – they have flipped to become net long gold in May (see bottom chart below)…

Image | Is Gold at a Turning Point?
Is Gold at a Turning Point?
by Adam Taggart

There's no way to sugarcoat the dismal performance of the precious metals in recent months. But a revisitation of the reasons for owning them reveals no cracks in the underlying thesis for doing so.

In fact, there are a number of new compelling developments arguing that the long heartbreak for gold and silver holders will soon be over.
Is Gold at a Turning Point?
 by Adam Taggart

There's no way to sugarcoat the dismal performance of the precious metals in recent months. But a revisitation of the reasons for owning them reveals no cracks in the underlying thesis for doing so.

In fact, there are a number of new compelling developments arguing that the long heartbreak for gold and silver holders will soon be over.
Image | Ron Paul: Rejecting Authoritarian Government Is Our Greatest Priority
Ron Paul: Rejecting Authoritarian Government Is Our Greatest Priority
by Chris Martenson

Dr Ron Paul has long been a leading voice for limited constitutional government, low taxes, free markets, sound money, civil liberty, and non-interventionist foreign policies.

His last term in the U.S. House of Representatives ended earlier this year, so we caught up with the former Congressman to get his latest perspective on how successfully our national leadership is dealing with America’s economic challenges.
Ron Paul: Rejecting Authoritarian Government Is Our Greatest Priority
 by Chris Martenson

Dr Ron Paul has long been a leading voice for limited constitutional government, low taxes, free markets, sound money, civil liberty, and non-interventionist foreign policies.

His last term in the U.S. House of Representatives ended earlier this year, so we caught up with the former Congressman to get his latest perspective on how successfully our national leadership is dealing with America’s economic challenges.
Image | The Forces That Will Reverse Housing’s Recent Gains
The Forces That Will Reverse Housing’s Recent Gains
 PREVIEW
by charleshughsmith

Executive Summary

  • Intervention in the housing market by central planners is experiencing diminishing returns
  • The four major trend reversals most likely to depress housing prices in the coming future
  • The power deflationary force of reversion to (or perhaps below?) the mean
  • Why demographics do not support rising prices

If you have not yet read Part I: The Unsafe Foundation of Our Housing 'Recovery', available free to all readers, please click here to read it first.

In Part I, we sketched out the larger context of the housing market: the dramatic rise of mortgage debt, the stagnation of income for 90% of households and the unprecedented scope of Central Planning intervention in the housing and mortgage markets.

In Part II, examine what will likely cause this nascent rise in housing prices to reverse, and to resume the decline Central Planning halted in 2009.

Intervention Has Only One Way to Go: Diminishing Returns

As noted in Part I, every Central Planning support of the mortgage and housing markets has already been pushed to the maximum, so there is nowhere left to go. Interest rates are already negative, over 90% of the mortgage market is backed by Federal agencies, the Fed has already pledged to buy trillions of dollars in mortgages, etc.

Four years of this massive intervention has stripped the mortgage and housing markets of the ability to price risk, capital, and assets. This has created a culture of supreme complacency, as participants have come to believe interest rates will stay near-zero for the foreseeable future and Central Planning intervention is permanent.

But nothing is permanent in life. And the current extremes of intervention and complacency have set the stage for some important reversals:

The Forces That Will Reverse Housing’s Recent Gains
 PREVIEW by charleshughsmith

Executive Summary

  • Intervention in the housing market by central planners is experiencing diminishing returns
  • The four major trend reversals most likely to depress housing prices in the coming future
  • The power deflationary force of reversion to (or perhaps below?) the mean
  • Why demographics do not support rising prices

If you have not yet read Part I: The Unsafe Foundation of Our Housing 'Recovery', available free to all readers, please click here to read it first.

In Part I, we sketched out the larger context of the housing market: the dramatic rise of mortgage debt, the stagnation of income for 90% of households and the unprecedented scope of Central Planning intervention in the housing and mortgage markets.

In Part II, examine what will likely cause this nascent rise in housing prices to reverse, and to resume the decline Central Planning halted in 2009.

Intervention Has Only One Way to Go: Diminishing Returns

As noted in Part I, every Central Planning support of the mortgage and housing markets has already been pushed to the maximum, so there is nowhere left to go. Interest rates are already negative, over 90% of the mortgage market is backed by Federal agencies, the Fed has already pledged to buy trillions of dollars in mortgages, etc.

Four years of this massive intervention has stripped the mortgage and housing markets of the ability to price risk, capital, and assets. This has created a culture of supreme complacency, as participants have come to believe interest rates will stay near-zero for the foreseeable future and Central Planning intervention is permanent.

But nothing is permanent in life. And the current extremes of intervention and complacency have set the stage for some important reversals:

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