1. Professor Who Wrote the Book on Abolishing Cash Says… He Likes Gold!

    Professor Ken Rogoff of Harvard is a chess grandmaster, world-class economist and author or co-author of several bestselling books on economics. He is also an advocate of negative interest rates, which is a form of wealth confiscation from savings accounts.

    Rogoff understands that savers who face a negative interest rate on bank deposits can easily avoid the confiscation by taking their money out of the bank and holding it in the form of cash in a vault or other safe place. To prevent this avoidance, Rogoff also supports the end of cash.

    His last book, The Curse of Cash (2016), he proposes the elimination of cash. This would force everyone to hold their savings in the form of digital bank accounts, which would make it easy for the government to spy on every transaction and impose negative interest rates.

    You would think that the enemy of cash would also be the enemy of gold. Not true! As shown in this article, even the sworn enemy of cash has a soft spot for gold.

    Rogoff writes, “As a hedge, gold has enormous value. You never know what’s going to happen and when something really bad happens, gold is probably going to be worth a lot to you.”

    Read the entire article to see what the Harvard professor has to say about cash, cryptocurrencies and gold. It may surprise you.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  2. How Do You Get USA High-Speed Rail When You Can’t Connect California?

    I’m sure you’ve heard of the “Green New Deal” put forward by House member Alexandria Ocasio-Cortez (D-NY) and Senator Ed Markey (D-MA). The back-up talking points for the Green New Deal included an end to the oil and gas industry, an end to air travel, an end to internal combustion engines in cars and an end to meat.

    It would basically destroy the U.S. economy, erase tens of millions of jobs and cause tens of trillions of dollars of Fed money printing to monetize the resulting deficits. Air travel would be replaced by high-speed trains from coast-to-coast.

    There’s only one problem with the trains. According to this article, California just shut down its own in-state effort to build high-speed rail from San Diego to Sacramento.

    The project was launched with a $5 billion bond, but it’s currently ten years behind schedule and the current estimated cost is $77 billion. The money spent so far was mostly wasted on consultants and advisors, although a small section from Merced to Bakersfield may get built.

    It’s the biggest taxpayer-funded government boondoggle in state history. If California can’t build a railroad in a single state, it’s hard to see how the Green New Deal will build several from coast-to-coast. The Green New Deal looks more like a liberal Green Dream and a taxpayer nightmare.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  3. First Venezuela, Now Italy. Who Really Owns All of That “Official” Gold?

    In the past few weeks, we’ve sent you articles about the custody and ownership of Venezuela’s gold.

    First, Venezuela requested the return of 14 tons of gold held in custody at the Bank of England. The bank refused to return the gold and said it would be held on account for a future legitimate government of Venezuela.

    Next, Venezuela tried to ship about 20 tons of gold on a plane sent from Russia, and another plane headed for Dubai. The U.S. put out the word that anyone in the world handling the Venezuelan gold would face U.S. economic sanctions and possible exclusion from the U.S. dollar payments system. That was enough to keep the gold where it was.

    It seems that Venezuela had lost control of its own gold by remote control from the U.S. and UK. As described in this article, Italy is the next in line to learn a lesson about sovereign gold ownership.

    Italy’s government (ruled by a coalition of nationalist parties including the right-wing Lega and left-wing Five-star) is in severe financial distress but wants to spend more on social programs. Italy has the third largest gold reserves in the world, after the U.S. and Germany.

    The government planned to sell or lease the gold and use the proceeds for spending programs. But, it turns out that about half the gold is stored in New York, London or Switzerland in vaults controlled by the Fed, the Bank of England or the BIS. Ownership of the gold is not in the hands of the government, but in the hands of the Bank of Italy, the central bank.

    Now the government is in a fight with its own central bank about who owns the gold. Even if the government wins the argument, it’s not clear the Fed or Bank of England will return it anytime soon. When it comes to gold, governments around the world are learning that you can’t mess with the central banks.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

     

  4. The Fed Runs Up Another White Flag. Balance Sheet Reduction Is Done.

    Since the end of QE and the “taper” in October 2014, the Fed has been trying to “normalize” their balance sheet and interest rates. The balance sheet needed to be reduced from $4.5 trillion to about $2.5 trillion through “quantitative tightening” or QT, which is tantamount to burning money. Interest rates needed to be raised to around 4% in stages of 0.25%.

    The purpose of QT and rate hikes was so that the Fed would have the capacity to lower rates and increase the balance sheet (“QE4”) again to fight a new recession. The rate hikes started in December 2015 (the “liftoff”) and the balance sheet reductions started in October 2017.

    Both started slowly but have gained momentum. Rates are now up to 2.5% and the balance sheet is just below $4 trillion. The Fed’s problem was that actual rate hikes were about 1% per year and the balance sheet reduction at $600 billion per year had the effect of another 1% of rate hikes.

    Would the Fed be able to achieve it’s goals of 4% rates and a $2.5 trillion balance sheet without causing the recession they were preparing to fight? It turns out the answer is no.

    In late December, Fed chair Powell announced the Fed would be “patient” on rate hikes. That means no more rate hikes until further notice. Now, according to this article the Fed has also thrown in the towel on balance sheet normalization.

    When QT began, Janet Yellen said it would “run on background” and would not be an instrument of policy. Ooops. Now the Fed is ending it, so it clearly is an instrument of policy.

    The Fed may have avoided a recession for now, but they have left themselves far short of what they’ll need to fight the next recession when it comes. That could lead to another lost decade. The U.S. looks more like Japan with each passing day.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  5. Now the Robots Have Joined Forces to Take Your Money. It’s Collusion!

    Most investors know that over 90% of the New York Stock Exchange and other exchange trading is done by robots, not people. These are not just electronic order matching systems for individual trades; those have been around since the 1990s. These are actual robots that make the trading decisions and decide when to enter trades with no human intervention at all.

    These robots work off of large databases and use artificial intelligence to decide when to act. The AI is fed by news scanners that look for key words in particular sequences to interpret the news. This key word scanning and automated order entry work at microsecond speeds; much faster than any human could possible read the news and decide what to do.

    This is why markets seem to overshoot in both directions. All of the robots read the same news at the same time and react the same way. The result is a rush and crush to buy or sell without any humans who are smart enough to sell into strength or buy into weakness to mitigate the damage.

    As if that’s not bad enough, this article reveals that automation has just become a lot more dangerous. Not only do the robots read and act on their own, they’ve begun communicating with each other.

    This article refers specifically to retail pricing but the same issue applies to stock trading. The robots are colluding and acting like a gang to push markets around. This amplifies their power and their “deep learning” algorithms reinforce this behavior so you get more of it with the passage of time.

    This will all end in a one-way flash crash where there is mass selling, no buying and no way out of the abyss.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

     

     

  6. The Crumbling Chinese Market

    A Chinese financial and economic crisis has been in the forecasts of many analysts for years, including my own. So far, it has not happened. Does this mean China has solved the problem of how to avoid a crisis? Or is the crisis just a matter of time, set to happen sooner than later?

    My view is that a crisis in China is inevitable based on China’s growth model, the international financial climate and excessive debt. Some of the world’s most prominent economists agree. A countdown to crisis has begun.

    Click here to read the rest of this article.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  7. China Snared in “Middle-income Trap”

    A large number of China analysts are concluding that growth in China is slower than the official government reports. In fact, growth is even worse than the pessimists imagine.

    The statistics on Chinese GDP growth for the fourth quarter of 2018 and the full-year have been widely reported. Quarterly growth was 6.4% (annualized), the lowest ever reported. Full-year growth for 2018 was 6.6%, the lowest since 1990.

    For the rest of this article, click here.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  8. Multiple Risks Are Converging at Once

    Since the end of QE and the “taper” in October 2014, the Fed has been trying to “normalize” their balance sheet and interest rates. The balance sheet needed to be reduced from $4.5 trillion to about $2.5 trillion through “quantitative tightening” or QT, which is tantamount to burning money.

    To read the rest of this article, click here.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

     

  9. Financial Warfare Is the New Battlefield for Rival Great Powers

     

    Wars are raging all over the world, yet relatively few are traditional shooting wars. Most are financial wars involving banks, payment systems, capital markets and gold. The latest example of a financial war is described in this article.

    The U.S. is in a complicated financial war with Venezuela. The U.S. has placed an embargo on Venezuelan oil exports and has threatened to seize any money received by Venezuela for their oil. The only exception is for oil shipped directly to U.S. refineries where the sales proceeds would be placed in escrow accounts for the benefit of the people of Venezuela once a replacement president to Nicolas Maduro is installed.

    Maduro is fighting this by turning to the Russians. Venezuela has informed buyers of its oil to deposit proceeds to an account at Gazprombank AO, an entity controlled by Russia’s largest energy company and indirectly by Russia itself. That account is presumably beyond the direct jurisdiction of the U.S. authorities. But this war could easily escalate to the point where the U.S. imposes secondary sanctions on parties that do business with Gazprom.

    It’s not clear how much this financial war will escalate and how it will end. What is clear is that financial warfare may be more destructive to a target economy than bombs and is definitely here to stay.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

     

  10. Think Your Gold Is Safe in a Central Bank Vault? Guess Again

    What’s the safest way to store physical gold bullion? Most investors would say that the safest place is in a bank vault. Most would agree that the one place safer than a bank vault would be a central bank vault. What could be safer?

    As this article shows, both answers are incorrect. Banks are controlled by the government. Central banks are the government thinly disguised as banks. Both are subject to government declarations, including account freezes and confiscation.

    Venezuela stored 14 tons of gold in the Bank of England, one of the two largest official depositaries in the world (the other is the Federal Reserve Bank of New York; both the BOE and the N.Y. Fed have more gold than Fort Knox).

    Venezuela requested that the gold be returned. No doubt, they intended to pledge it to Russia or China in exchange for cash. But the Bank of England reneged on its custody agreement, froze the gold in place and said they would hold it in trust until the appointment of a new president of Venezuela in place of Nicolas Maduro.

    This is clear-cut evidence that when you put your gold in a bank vault, it’s not your gold anymore. It belongs to the bank and they’ll only give it to you if they feel like it. The lesson is to store your gold in a secure nonbank vault operated by Brink’s, Loomis or another high-quality provider. If you store gold in a bank, you may never see it again.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.