financial markets Archives

The Zenconomics Report June Issue

submitted by jwithrow.
Click here to get the Journal of a Wayward Philosopher by Email

Journal of a Wayward Philosopher
Zenconomics Report June Dispatch

June 28, 2016
Hot Springs, VA

The S&P closed out Monday at $2,000. Gold closed at $1,330 per ounce. Crude Oil closed at $46.71 per barrel, and the 10-year Treasury rate closed at 1.46%. Bitcoin is trading around $650 per BTC today.

Dear Journal,

There will be no official entry today. Instead, I would like to invite you to subscribe to the Zenconomics Report in time to receive our first official issue. We will be sending out the monthly dispatch on June 30 to members of the Zenconomics Report mailing list.

The Zenconomics Report will cut through all of the noise, clap-trap, hoop-la, misinformation, and propaganda circling the financial markets. The financial media typically analyzes the markets from a binary perspective of “good versus bad”, often with an underlying agenda to push. This does seekers of financial information a major disservice, and it sets them up to crash and burn when the next Black Swan makes its appearance.

The digital age has made information nearly free for everyone with an internet connection, but this created an unforeseen problem. With the flood gates of information open, how do you know what information is good and what information is not so good? Continue reading “The Zenconomics Report June Issue”

Bitcoin and the Crypto Revolution

submitted by jwithrow.
Click here to get the Journal of a Wayward Philosopher by Email

Journal of a Wayward Philosopher
Bitcoin and the Crypto Revolution

June 22, 2016
Hot Springs, VA

“Bitcoin is the beginning of something great: a currency without a government, something necessary and imperative. ” – Nassim Taleb, Author of Antifragile: Things That Gain from Disorder

The S&P closed out Monday at $2,088. Gold closed at $1,271 per ounce. Crude Oil closed at $48.95 per barrel, and the 10-year Treasury rate closed at 1.70%. Bitcoin is trading around $670 per BTC today.

Dear Journal,

Bitcoin flirted with $800 last week before dropping all the way down to $630. Today it is hovering around $670. Such volatility is usually feared by the general public, and it is often cited as one of Bitcoin’s weaknesses. To me, this volatility is a beautiful example of price discovery in one of the freest markets on Earth. Continue reading “Bitcoin and the Crypto Revolution”

Risk Update: Belief That Gold Will Fall When the Dollar Climbs

by Jeff Clark – Hard Assets Alliance :

Gold and the US dollar typically exhibit an inverse relationship—when one climbs, the other tends to fall. But that relationship disappeared over three months ago.

Why the new romance between gold and the dollar? Primarily because what has been supportive for the dollar has also been good for gold.

This trend should continue. I’m not the only one to think so:

• “The resilience of gold in the face of a surging dollar and collapsing oil price supports our view that the precious metal will recover further this year and next.” (Capital Economics head of research Julian Jessop)

Do you believe there is greater or lesser risk in the financial markets? Will there be more or less fear in the world in 2015?

If you suspect that ever-optimistic government figures are masking far uglier truths… if you understand that the US economy depends on the global economy for far more than exports… if you believe the truly historic amount of money printing in the US and around the world must eventually result in inflation… or if for any reason you doubt that 2015 will be rosy, then the best investment strategy is one that includes a meaningful amount of gold bullion.

Remember: The issue is not inflation vs. deflation, the USD vs. euro, or even supply vs. demand. It’s fear and chaos vs. confidence and stability. Whichever of these you see as the stronger trend in the years ahead should drive your action plan.

In our view, the response we’ve seen thus far in gold has been a small foretaste of the major move we can expect when the wheels come off the global financial system, whatever form that may take.

My friends, buffer your investments and way of life against a growing level of financial risk. I urge you to continue adding low-cost bullion to your Hard Assets Alliance account.

Article originally posted in the February issue of Smart Metals Investor at HardAssetsAlliance.com.

Another Reason to Diversify into Precious Metals

by the Hard Assets Alliance Team:

Once upon a time, interest rates conveyed critical information about securities: the higher the rate, the riskier the investment.

Today, bond yields communicate little about underlying security risk and are arguably misleading. Consider the 1.57% yield on 10-year Spanish bonds. That level of return is hardly commensurate for a country suffering 23.9% unemployment.

The culprit for deceptive interest rates is a familiar one. Across the globe, central banks have suppressed rates to fend off crises or boost sagging economies—and zero percent is not the lowest band for this type of manipulation.

As an investor interested in precious metals, you’ve likely watched the growing number of countries shifting from zero interest rate policies (ZIRP) to negative interest rate policies (NIRP). Government bond yields in Germany, Switzerland, Japan, France, Holland, Denmark, and a handful of other countries have recently turned negative.

Negative real interest rates are nothing new, but we are talking about governments actually charging for the privilege of parking money with them. Yet another good reason to diversify into precious metals.

This shift from zero interest rate policies to negative interest rate policies epitomizes how detached financial markets have become from reality. More alarming, these radical polices exacerbate existing market distortions. By punishing bondholders, central bankers are forcing investors up the risk ladder, whether it be into junk bonds or equities.

You are better off tucking cash under your mattress than paying some profligate government to hold your money. But of course, there’s a better way. The utter insanity of a NIRP illustrates the critical importance of diversifying away from fiat currencies… and into previous metals.

Article originally posted in the February issue of Smart Metals Investor at HardAssetsAlliance.com.

Investors Are Coming to Grips with Reality

by Justin Spittler – Hard Assets Alliance:

Today’s financial markets have acquired a knack for ingesting bad news without so much as a hiccup. Lately, that same resiliency—or more appropriately, complacency—has come under pressure.

After lying dormant for months, volatility has come storming back with a vengeance. Investors are finally coming to their senses—much to the delight of the precious metals community.

Patience Wearing Thin

The problems facing the global economy didn’t come out of nowhere. It just took a jolt of volatility to put them in the spotlight—and you can thank the soaring US dollar and the collapse of energy prices for putting investors on high alert.

Of course, there are perks to a strong dollar and cheap energy. A strong dollar makes imported goods more affordable for American consumers, while it’s estimated that weak oil prices will put roughly $500 into the wallet of the average American driver. While neither is positive for precious metals, the euphoria won’t last long.

An appreciating US dollar makes American exports less competitive. Depressed oil prices could cripple the domestic energy revolution, which has been the backbone of the US recovery. The breakout of the dollar also threatens to derail commodity-centric emerging markets, particularly nations that have relied on cheap credit for growth.

Monetary Tools Becoming Dull

The precarious state of the global economy doesn’t just have investors on edge. Policymakers in countries across the globe face a dilemma: risk an economic crash by stepping away from their maligned economies, or provide their debt-addicted with another dose of stimulus. It’s a lose-lose situation.

Yet it’s a no-brainer for central bankers, whose greatest fear is deflation.

The situation is no different in the United States even though the Federal Reserve ended its quantitative easing program in October. Remember, the Fed has said it will be “patient” in raising rates; and you can bet Yellen will fire up the printing press the second that the US economy shows symptoms of flatlining.

Unfortunately, the next round of stimulus won’t be as effective as previous installments, and investors seem to be waking up to that harsh reality.

Perceptions Change; the Case for Gold Stays the Same

As an analyst, I spend most of my days sifting through data, crunching numbers, and gathering different perspectives in an attempt to gain clues about the future. And yet, I’ll be the first to admit that economic forecasting is a silly process. Nonetheless, my feeling is that gold has hit a bottom.

That’s probably something you’re sick of hearing. Some in the precious metals community have been calling an end to the gold market rut for months… others for much longer.

Why do I think that this time is different? It has little to do with fundamentals. The case for owning gold has changed little recently, although we’re receiving more and more reminders. What’s changing is the perception of Western investors.

After witnessing unconventional monetary policies push financial markets to new heights, investors seem to be losing faith in this grand experiment. This uneasy feeling is starting to bring them back to gold—the most crisis-proof asset of all.

Luckily, there’s still an opportunity for investors to pick up gold while incurring little downside risk. There are few sellers at today’s prices, and those holding gold are what I like to call “strong hands.”

Even if gold hits a few speed bumps throughout the year, investors will sleep easier knowing that some of their wealth is held in the most time-tested of all assets.

Article originally posted in the January issue of Smart Metals Investor at HardAssetsAlliance.com.

Preventative Care

submitted by jwithrow.

Journal of a Wayward Philosopher
Preventative Care

November 12, 2014
Hot Springs, VA

The S&P opened at $2,028. Gold, starting to recover from its recent mugging, is up to $1,165. Oil is down to $77.25 and contemplating testing its support level. Bitcoin is up to $396 per BTC, and the 10-year Treasury rate opened at 2.34%.

Precious metals are still the asset class that most warrants your attention in the financial markets today. The U.S. mint sold 5.8 million ounces of silver in October which was a 40% increase from September sales. The Mint then started the month of November off by selling another 1.3 million ounces.

Then it ran out of silver to sell.

But guess what happened to the price of silver? It dropped from $19.50 per ounce on September 1 to $15.72 per ounce as the closing bell rang yesterday. Concurrently, the gold forward rate has just gone negative for the sixth time in fourteen years which suggests the market is pricing for a physical gold shortage. Despite this, the price of gold has been systematically beaten down in 2014 as well. What was that old saying about supply and demand?

Both gold and silver will probably flop around a bit for a while longer but ten years from now you will look quite wise if you allocate some of your capital to precious metals at the current prices.

Shifting gears to continue with our recent health care theme…

Last week we pondered a new model for health care based on cash payments for personalized service in order to opt out of the big-government/big-insurance/big-pharma cartel. We reckoned such a model would be similar to the free market model of a bygone era where family doctors had the freedom to offer personalized service to patients without having to worry about an avalanche of insurance paperwork needing to be complied with or a legion of attorneys hiding in the bushes outside looking for a malpractice lawsuit. We also reckoned there will be a small but growing number of health care professionals willing to offer personalized service for cash as the health insurance industry in the U.S. continues to spiral down into a sinkhole of bureaucracy.

What we didn’t ponder last week was how to afford a cash-based model and keep the insurance company in the waiting room unless an emergency occurs. The answer is simple: preventative care.

No, not the preventative care where you run to the specialist and sign up for the latest and greatest test or screening every time you think you might have sniffled in your sleep the night before. We mean the preventative care where you actually take responsibility for your own health and wellness.

The general guidelines are really pretty intuitive: get a good night’s sleep, stay active during the day even if you work behind a desk, walk as much as possible, eat real food and avoid the fake food that comes packaged in boxes and bags, drink plenty of water and not much soda, consider natural supplements and stay away from pharmaceutical drugs, reject stress and negativity, and maintain a positive state of mind.

Do these things consistently and you probably won’t ever get sick. And if you don’t get sick you won’t feel the need to go to the doctor – not even for checkups if you trust yourself implicitly. Then you could take the money you would have spent on doctor visits and prescription drugs and work on your asset allocation model.

Of course it is still advisable to maintain a wellness network. There are plenty of people and groups out there in cyberspace discussing natural health topics and answering each other’s questions at any given time of day. Though I gave it up years ago, I understand there are plenty of active Facebook groups in this space also.

Wife Rachel and I are big fans of routine chiropractic care as well. Instead of pushing a pill for every ill, chiropractors embrace a more holistic approach to wellness by focusing on musculoskeltal health to ensure optimal functionality of the nervous system. We found chiropractic care to be an especially important part of Rachel’s prenatal and postpartum wellness and it is an excellent tool to monitor the development of little Madison’s nervous system. You know how the pediatrician taps infants on the knee with the little hammer tool? Chiropractors do that too along with numerous other more advanced bio-mechanical and reactionary measurements.

Fortunately for the sake of this journal entry, many chiropractors operate on a cash-only basis. That is, they do not deal with insurance companies (they will accept credit cards). This eliminates the extra costs associated with insurance paperwork and compliance which means lower prices for clients. Some insurance policies may cover chiropractic care but it would be up to the client to file for reimbursement in that case. Ask the chiropractor whether or not his services are covered by insurance and he will probably say “I don’t know” and explain that your insurance policy is a private contract between you and the insurance company and has nothing to do with him (or her). How refreshing to know there is still a sliver of honesty and respectability left in the health care field!

With the proper mindset, preventative care is really quite easy so why do most people ignore it? One cannot know for certain but I suspect propagated fear has a lot to do with it. We’ll save that for a later entry…

More to come,

Joe Withrow
Wayward Philosopher

For more of Joe’s thoughts on the “Great Reset” and regaining individual sovereignty please read “The Individual is Rising” which is available at http://www.theindividualisrising.com/. The book is also available on Amazon in both paperback and Kindle editions.