The Machine

I love the way they have done this, some very interesting assumptions about what might happen

GOLD BULLION started London trade at a 12-week high against the US Dollar on Tuesday, rising 1.8% for the week so far as Asian stock markets slumped once more with commodity prices. As gold hit $1117 per ounce ahead of tomorrow's interest-rate decision from the US Fed, silver touched its highest level since early December at $14.45 per ounce, before also easing back as crude oil steadied and European stock markets crept higher. After New York closed 1.5% lower last night, China's equity market sank another 6% this morning, wth Tokyo and Hong Kong losing 2.3% each. World stock markets have now accelerated their drop to 18% from last May's new all-time high on the MSCI index. "Rallies" in gold bullion, in contrast, "have now eroded the 100-day moving average at $1105," says German financial group Commerzbank's weekly technical analysis, "and we would treat a close above here as the next upside trigger for a move to the...200-day ma at $1132. "This is our minimum objective. Longer term we expect to see a challenge to the $1192 October 2015 high, and the $1205 [per ounce] 2014-2016 resistance line." "We have been watching this $1110 level for confirmation of a bullish cycle," says Canada's Scotiabank in its daily technical analysis of the gold price, also "looking for an initial move to $1135." Priced in British Pounds, gold bullion today touched its best level since May, rising to £785 per ounce after Bank of England boss Mark Carney told UK lawmakers in regular testimony that – contrary to hints he gave last year – "the conditions required for an interest rate hike are not yet in place." Gold prices in China – the world's No.1 miner and importer of gold bullion – today tracked global 'spot' quotes 1.3% higher as Chinese equities sank, reaching their highest Yuan level since end-October on solid volume at the Shanghai Gold Exchange. Total gold bullion imports to China through Hong Kong rose 5.9% last year, new data said today, reaching 861.7 tonnes – equal to more than one ounce in every four of 2015's record-high global gold mining output, but remaining 25% below 2013's record as direct shipments to Shanghai continued to grow. Monday's 0.6% gain in Dollar gold prices meantime saw investor demand for shares in the giant SPDR Gold Trust (NYSEArca:GLD) unchanged at an 11-week high, needing 664 tonnes of bullion to back their value. But silver's largest ETF shrank again however, with shareholders now quitting 2.3% of the iShares Silver Trust (NYSEArca:SLV) since New Year. Forcing an outflow of 226 tonnes so far this month, that's taken the SLV's bullion holdings down to new 3-year lows of 9,662 tonnes.

Negative "all in" margins see global gold mining output turn lower from new record... GOLD MINING production dropped at the end of 2015, according to leading analysts, marking "the beginning of the decline" from a run of new all-time record highs. New output worldwide fell 4% in the last 3 months of 2015, precious-metals specialists Thomson Reuters GFMS said Tuesday – the "largest quarterly reduction since 2008," when the global financial crisis hit all minerals output. Moreover, gold mining profit margins turned negative on GFMS's measure of "all-in" costs, which includes investment to maintain future production, as well as writedowns on the value of existing assets thanks to the 40% plunge in gold prices since the peak of 2011. GFMS says it expects the 2015 full-year world average cost of producing gold to reach $1200 per ounce. That would stand some $40 per ounce above last year's annual average market price. The top 3 listed gold majors – Barrick (NYSE:ABX), Newmont (NYSE:NEM) and Goldcorp (NYSE:GG) – are due to report their fourth-quarter earnings in February. Bullion market prices rose today to reach 12-week highs near $1120 per ounce. Forecasting a gentle rise in gold prices for 2016, GFMS told Tuesday's conference call launching its Gold Survey 2015 Q4 Update & Outlook that gold miners as a group will return to "hedging" future production this year, reversing the slight de-hedging of existing forward sales likely to be confirmed for the last 3 months. With gold prices already reversing more than half of the 35% drop from 2011-2013 for Canadian miners – "Producer selling is evident" said one bullion bank's sales desk this week, noting that gold Forwards contracts sold for delivery of physical bullion in the future "are trading lower" on 1- and 2-year terms. "[That] usually hints of selling pressure from fundamental players," the note adds, saying that "most of the recent flow has been around emerging-market [gold producer] currencies" led by South African Rand and Russian Rubles. Even as emerging market equities lost another 1.3% Tuesday morning, gold mining companies listed on Johannesburg's Stock Exchange rose another 5%. South Africa's JSE Gold Miners index has now almost doubled in Rand terms fromlast summer's 14-year low. "Buying gold and the gold miners...is the best trade in the world...in 2016," reckons Lawrence McDonald, head of the macro strategies group at French investment and bullion bank Société Générale's US operation, speaking to CNBC. Capping a run of 7 years of new record highs for global gold mining output, end-2015's drop comes thanks to a "lack of investment since 2013," said GFMS mining analyst Will Tankard on Tuesday's call, with GFMS head of metals Rhona O'Connell predicting that global production will fall "by an order of several hundred tonnes per year" for the next half-decade. Notably, they added, gold mining supply from China – the world's No.1 producer nation since 2007 – will show a drop for the second-half of 2015 when final data are released, breaking a trend of growing output in place since the early 2000s. The impact on prices will depend on "who" announces these cuts, said O'Connell, explaining that large cuts from a gold mining major would improve investor sentiment on gold's supply/demand fundamentals in a way which piece-meal cuts from several smaller players would not.

I suppose anything would be better than the dollar or euro in the short term. but if the financial armageddon the alternative media has been predicting comes true whereby the dollar collapses, there will be no safety in any fiat currency. Start your own bank ..... buy gold and silver

And at some point, that will matter again to commodity prices... RICHARD MILLS, host of www.Aheadoftheherd.com and a junior mining investor, sees trouble ahead as the world consumes ever-more natural resources. Now, as the world prepares to house, feed and care for 9.7 billion people, he sees a tsunami of demand creeping up on healthcare worldwide, as well as continued growth in natural resources, as he says here in this interview with The Gold Report... The Gold Report: What does the United Nations projection of a population tsunami of 9.7 billion people living on earth by 2050 mean for commodities? Rick Mills: The statistics are mind-boggling and extremely scary. According to the UN, the world's population reached 7.3bn in the middle of 2015. That's 1bn more people sitting at the dinner table in the span of the last 12 years. Some 60% live in Asia (4.4bn people); 16% live in Africa (1.2bn people); 10% in Europe (just over 700 million); 9% in Latin America and the Caribbean (634m). The remaining 5% live in Northern America: Mexico, Canada and the US (358m). Compare those numbers to China, which has 1.4bn people, and India, which has 1.3bn. That's 19% and 18% of the world's population, respectively. Growth has slowed from 1.24% ten years ago to 1.18% this year, but it still means we are adding 83m people to the world's population annually. Half of the global population growth between now and 2050 is going to occur in Africa. Most of the people born between now and 2050 will be in developing countries. When we look at the global demand for resources, the Western world doesn't count. We here in the West are almost a rounding error in the world population. TGR: Can we innovate our way out of a commodity crisis? Rick Mills: Norman Borlaug, father of the Green Revolution, said if we did everything right, we'd be able to feed and water 10bn people. We are close to the edge. The world population is projected to reach 8.5 billion in 2030, and to increase further to 9.7 billion in 2050. The UN warned us when we reached 7bn people, "The world population has now reached a stage where the amount of resources needed to sustain it exceeds what is available." How are we going to feed, clothe and house 83m more people a year? Think of it as building a complete self-contained city for 1.5m people every week. It's not going to stop. In 2015, the earth's overshoot day – the day every year when we've exhausted all the natural resources that can be renewed each year on our planet – occurred six days earlier than it did in 2014. Humans have exhausted a year's supply of natural resources in less than eight months, according to an analysis of the demands the world's population are placing on the planet. This is when humanity goes into ecological debt. Right now, we are consuming the equivalent of 1.4 planets a year. By 2030, 8.5bn of us could be consuming the equivalent of two planets. The median age of the global population, that is, the age at which half the population is older and half is younger, is 29.6 years. Half of the world's population is under 30 years old. About one-quarter (26%) of the world's people are under 15 years of age. This is a lot of future consumption from people starting with much less than we have in the West. The ecologist Garrett Hardin introduced the idea of the "tragedy of the commons." Think about a pasture. As farmers keep putting more animals on the land, the cows get skinnier, but people continue to do it because it's advantageous right up to the point that the grazing limit is exceeded. Then all the cows die, and all of the families suffer. Fishermen behave similarly. Hardin says the private gain of the individual is thus at the shared cost of the whole group and ultimately catastrophic in nature. We are doing that on a global scale and it's going to have drastic consequences. TGR: If we're running out of resources, why are the prices of the commodities going down instead of up? Rick Mills: A lot of it has to do with cheap oil and gas. Saudi Arabia and Iraq are pumping oil and gas out like crazy to punish the frackers. Zero interest rates by the Federal Reserve cause investors to chase yield, mainly stocks and junk bonds. People are worried about whether China's economic growth can remain strong in the long run. Of particular importance to us is commodities are priced in the US Dollar. The US Dollar is pretty much off the charts, it's so strong, and it's causing a commodities pricing rout. TGR: The other thing about the supply and demand picture for commodities is the danger of a lack of supply in the coming decade because of a dearth of exploration that's going on now as companies try to conserve cash. When will we start to see that price pressure? Rick Mills: It's hard to say. If you had asked me a few years ago, I would have thought that we'd have seen it by now, but we seem to be careening from one economic crisis to another and attention is elsewhere. Brent is right in focusing on the supply side rather than demand. But there's more to it than just the dearth of exploration. We're actually shutting down mines and high grading the rest. The world's largest mines – the ones that supply most of our production – are running out of reserves. New mines are harder to find. They're more remote and infrastructure-challenged. They come with more complicated mineralogy, meaning more expensive metallurgy. Also, we have a bit of a glut of experienced people. But when things turn around, we're going to have a shortage of trained people, especially the midlevel managers and professional geoscientists. TGR: You have written that the coming scarcity of resources could be a security issue for countries that are not being proactive. You say that China is going out securing future supply. What are some examples of that? Rick Mills: China is trying to revive the old land and maritime Silk Roads. The new initiative is called One Belt, One Road (OBOR). This is a massive build-out of infrastructure, including tens of thousands of kilometers of roads, rail and ports. We're talking almost 100,000 kilometers (100,000km) of rail networks just in Eurasia. We're talking about close to 70% or more of the world's population, 30% of the world's economy, 25% of the world's good and services. China has invested $30bn in a $100bn Asian Infrastructure Investment Bank to lend money to the countries along the planned route. China also has $4 trillion in foreign reserve that it is going to lend to countries along the routes. It will build ports, railroads, highways, airports, schools and dig wells. All these countries have to do is sign an offtake agreement for natural resources. That is happening right now. All of that overcapacity that people think China screwed up on, all the megafactories, all the ghost cities, wasn't a mistake. This was planned. China wants to become the manufacturing center for 70% of the world. That's how it's going to do it, by the largest resource grab in history and the continuing urbanization (30m per annum) of its population. TGR: Once the rest of the world understands they need to secure their piece of the shrinking pie, what are the specific commodities and companies that could benefit from this? Rick Mills: Commodities have the benefit of being real things you can hold in your hands, whether it's nickel or precious metals or copper or ownership of uranium companies. These aren't paper promises like fiat currencies. These are things that have value and are going to become increasingly scarce and valuable going forward. TGR: What is the supply-demand picture for nickel? Rick Mills: I have long thought that nickel and copper have some of the better supply-demand fundamentals going forward. Asia is now by far the largest regional market for nickel representing 65% of total world demand. China alone now accounts for close to 44% of world nickel demand. Investors need to be looking down the road. TGR: Marin Katusa has talked about the security of supply concern, particularly when it comes to the fact that when we moved away from Russian uranium, we switched to more Kazakhstan uranium. Do you see that as a catalyst for uranium prices and domestic producers? Rick Mills: The US consumes 55 million pounds of uranium each year and imports over 90% of the uranium it uses. What could be more important to a country than security of energy supply in the form of nuclear fuel in the United States? TGR: A growing aging population also needs healthcare. You've written about a mining company that's turning itself into a life science company. How does that work? Are there crossover skills? What does that mean for the investor? Rick Mills: White light is the standard convention and it's what is commercially available in all endoscope devices manufactured today. White light has visualization limitations for all cancer types because white light cannot pass through tissue or blood and cannot illuminate tumors beneath the skin surface. White light is also not effective in visualizing the borders or margins of the tumor to determine where it starts and ends, especially after the initial removal of the main mass. TGR: What is the one piece of advice you have for investors bracing themselves for 2016? Rick Mills: We live on a small planet with finite resources. Much of the world's undeveloped resources lie within China's One Road One Belt initiative – what this author believes is a massive resource grab. Resources – real things – are going to become a dominate investment theme and should be on everyone's radar screens. It is an exciting time for the healthcare sector, patients, and, yes, investors, with many disruptive innovations on the near horizon. Picking the companies offering the most for the least with good management teams is the way to prosperity. TGR: Thanks for your time. It's always a pleasure.

State wealth control is tightening as the war on cash worsens... BACK in 2008, I began warning of increasing capital controls that we would see in the future, as a component in the decline of Western economies (Western in the broad sense, including Japan, Australia, etc.) writes Jeff Thomas for Doug Casey'sInternational Man newsletter. Along the way, it occurred to me that, at some point, governments might collectively attempt to eliminate paper currency in favour of an electronic currency – transferred from party to party solely through licensed banks. Sound farfetched? Well, maybe, but what if the US and EU agreed on an overall plan, then suggested it to other governments? On the face of it, this smacks of conspiracy theory, yet certainly, all governments would benefit from this control and would be likely to get on board. In fact, it might prove to be the only way out of their present economic problems. So, how would it play out? Here's roughly how I saw Phase I: Link the free movement of cash to terrorism (Create a consciousness that any movement of large sums suggests criminal activity.); Establish upper limits on the amount of money that can be moved without reporting to some government investigatory agency; Periodically lower those limits; Accustom people to making all purchases, however small or large, through a bank card; Create a consciousness that the mere possession of cash is suspect, since it's no longer "necessary". When I first wrote on the subject, there was considerable criticism as to the possibility that such a programme would ever be attempted, let alone succeed. And, granted, it was so Orwellian that it was understandably seen as a crackpot idea. But since that time, the programme has been developing extremely rapidly. In the last six months alone, it has become so visible that it has even garnered a name – "the War on Cash". References in the media have been made that terrorist groups fund their attacks with cash. Dozens of countries have placed limits on the maximum amount of money that can be moved without reporting. Some, notably France, have already begun lowering their limits. Banks in some countries, notably Sweden, are already treating all cash transactions as suspicious. The previously theoretical Phase I is now well under way. This issue has expanded more quickly than I'd anticipated. Clearly, the governments that are forcing it into being are running out of time. There can only be one reason why they'd rush a programme that normally would be given more time for people to accept, and that's that they see a crash coming before they can get Phase II of the programme underway. Although most anyone who's paying attention recognises that Phase I is in motion, Phase II (as I perceive it) is not yet on the radar, but I believe it will be soon. Phase II will be the second wave of measures and they will be more draconian than Phase I: Create a definitive false flag event that demonstrates how physical cash is the primary means of funding evil acts in the world; Declare a date on which paper currency will become illegal (Until that date, it can be deposited into a bank. After that date, it becomes criminal to possess it.); Once all cash has been deposited in banks, increase negative interest rates; Confiscation of deposits can then be implemented, as desired, by banks (Confiscation of deposits is already legal in Canada, the US, and the EU.); Confiscate contents of selected safe deposit boxes; End "voluntary" taxation. All taxation will, in future, be by direct debit; Declare money to be the property of the State that issued it. (The people are allowed to trade in it, but it is not truly theirs. The State therefore can freeze or confiscate the funds in any account, if any crime is "suspected".) In recent months, I've warned repeatedly that, since confiscations of deposits will take place, we must assume that banks will additionally raid safe deposit boxes, as stated in the above list. Some banks, beginning with JPMorgan Chase, have placed limits on what forms of wealth can be placed in safe deposit boxes. Since then, Greece has taken this one step further. In future, Greek citizens will be required to declare cash exceeding €15,000, jewellery and precious stones valued at over €30,000 and declare the location of the safe deposit box in which they're stored. The declaration is fraught with difficulties for the depositor, as he bears the obligation to accurately appraise each item. Should authorities disagree with the appraisal of, say, Grandma's diamond brooch, the depositor would be suspect and may face confiscation. Once Phase II is completed, state wealth control will exist. And, again, this prediction will seem at first glance to be Orwellian – a mere fiction. But then, less than a year ago, the War on Cash was regarded by only a few as being even within the realm of possibility, let alone right around the corner. And so it is with Phase II. Now that Phase I is in motion, it's accepted as an unsettling reality, but Phase II is the obvious sequel. If you have cash in a bank, you think of it as your own. This is not the case. It's wealth that you've loaned to the bank. In the future, the bank (with governmental approval) will have the power to decide if and when they will return all, or a part, of that cash to you. They will set the rules as to how that decision will be arrived at and those rules will be changed periodically. Since those rules will be arrived at by the banks (without need for your consent), the outcome will most certainly not be in your favour. Those who read this statement might react in one of three ways: "This can't be happening." "Okay, it's happening, but there's nothing I can do about it. It's global." "There must be something I can do to keep from being robbed." The first group will be the largest. They will freeze up, do little or nothing, and become victims. The second group may complain and even struggle a bit against these developments, but won't prepare sufficiently and, ultimately, will also become victims. The third group will seek alternatives, and here's where the light appears at the end of the tunnel. Yes, this effort will be international, but it won't be fully global. There will be those jurisdictions that, traditionally, have not been willing to fall into line with the world's foremost powers. They will not wish to go off the same cliff as the others and will take a different tack. They will be the recipients of those people who seek to escape the collapsing system. But, more than ever before, time is limited; the window is clearly closing. The solution is surprisingly simple, although it will take work and dedication. If you're a resident of any jurisdiction that's presently going down this road, move your money to a jurisdiction that has a consistent history for stable government, low (or no) direct taxation, and minimal interference or regulation over wealth. Convert your wealth into those forms of assets that are hardest for rapacious governments to confiscate (foreign-held precious metals and real estate). Create an exit plan for your own physical escape, should it become necessary. The War on Cash and negative interest rates are radical and insane measures. I believe they are a sign of desperation, and also pose huge threats to your financial security. Central planners are playing with fire and inviting a currency catastrophe.

they could start selling sandbags

On vacation in Europe, Bob noticed a marble column in a church in Rome with a golden telephone on it. As a young priest passed by, Bob asked who the telephone was for. The priest told him it was a direct line to Heaven, and if he’d like to call, it would be a thousand euros. Bob was amazed, but declined the offer. Throughout Europe Bob kept seeing the same golden telephone on a marble column. At each, he asked about it and the answer was always the same: a direct line to Heaven and he could call for a thousand euros. Bob finished his tour of Europe with a stop in Ireland . He decided to attend Mass at a local village church. When he walked in the door he noticed the golden telephone, but underneath it there was a sign stating: “DIRECT LINE TO HEAVEN — 25 CENTS” “Father,” he said, “I have been all over Europe and in all the cathedrals I visited, I’ve seen telephones exactly like this one but the price is always a thousand euros. Why is it that this one is only 25 cents?” The priest smiled and said,“Son, you’re in Ireland now. It’s a local call.”

well that's all the proof I need ....... what an idiot. Hillarious FOR PRISON !!

The bond that links your true family is not one of blood, but of respect and joy in each other's lives.

I remember going to the annual motorcycle show in dublin when I was a kid, they had pole dancers straight from the strip club obviously with a little more on but that was deemed a family friendly event lol, guess the evil guns are different lol. haters gonna hate

State wealth control is tightening as the war on cash worsens... BACK in 2008, I began warning of increasing capital controls that we would see in the future, as a component in the decline of Western economies (Western in the broad sense, including Japan, Australia, etc.) writes Jeff Thomas for Doug Casey'sInternational Man newsletter. Along the way, it occurred to me that, at some point, governments might collectively attempt to eliminate paper currency in favour of an electronic currency – transferred from party to party solely through licensed banks. Sound farfetched? Well, maybe, but what if the US and EU agreed on an overall plan, then suggested it to other governments? On the face of it, this smacks of conspiracy theory, yet certainly, all governments would benefit from this control and would be likely to get on board. In fact, it might prove to be the only way out of their present economic problems. So, how would it play out? Here's roughly how I saw Phase I: Link the free movement of cash to terrorism (Create a consciousness that any movement of large sums suggests criminal activity.); Establish upper limits on the amount of money that can be moved without reporting to some government investigatory agency; Periodically lower those limits; Accustom people to making all purchases, however small or large, through a bank card; Create a consciousness that the mere possession of cash is suspect, since it's no longer "necessary". When I first wrote on the subject, there was considerable criticism as to the possibility that such a programme would ever be attempted, let alone succeed. And, granted, it was so Orwellian that it was understandably seen as a crackpot idea. But since that time, the programme has been developing extremely rapidly. In the last six months alone, it has become so visible that it has even garnered a name – "the War on Cash". References in the media have been made that terrorist groups fund their attacks with cash. Dozens of countries have placed limits on the maximum amount of money that can be moved without reporting. Some, notably France, have already begun lowering their limits. Banks in some countries, notably Sweden, are already treating all cash transactions as suspicious. The previously theoretical Phase I is now well under way. This issue has expanded more quickly than I'd anticipated. Clearly, the governments that are forcing it into being are running out of time. There can only be one reason why they'd rush a programme that normally would be given more time for people to accept, and that's that they see a crash coming before they can get Phase II of the programme underway. Although most anyone who's paying attention recognises that Phase I is in motion, Phase II (as I perceive it) is not yet on the radar, but I believe it will be soon. Phase II will be the second wave of measures and they will be more draconian than Phase I: Create a definitive false flag event that demonstrates how physical cash is the primary means of funding evil acts in the world; Declare a date on which paper currency will become illegal (Until that date, it can be deposited into a bank. After that date, it becomes criminal to possess it.); Once all cash has been deposited in banks, increase negative interest rates; Confiscation of deposits can then be implemented, as desired, by banks (Confiscation of deposits is already legal in Canada, the US, and the EU.); Confiscate contents of selected safe deposit boxes; End "voluntary" taxation. All taxation will, in future, be by direct debit; Declare money to be the property of the State that issued it. (The people are allowed to trade in it, but it is not truly theirs. The State therefore can freeze or confiscate the funds in any account, if any crime is "suspected".) In recent months, I've warned repeatedly that, since confiscations of deposits will take place, we must assume that banks will additionally raid safe deposit boxes, as stated in the above list. Some banks, beginning with JPMorgan Chase, have placed limits on what forms of wealth can be placed in safe deposit boxes. Since then, Greece has taken this one step further. In future, Greek citizens will be required to declare cash exceeding €15,000, jewellery and precious stones valued at over €30,000 and declare the location of the safe deposit box in which they're stored. The declaration is fraught with difficulties for the depositor, as he bears the obligation to accurately appraise each item. Should authorities disagree with the appraisal of, say, Grandma's diamond brooch, the depositor would be suspect and may face confiscation. Once Phase II is completed, state wealth control will exist. And, again, this prediction will seem at first glance to be Orwellian – a mere fiction. But then, less than a year ago, the War on Cash was regarded by only a few as being even within the realm of possibility, let alone right around the corner. And so it is with Phase II. Now that Phase I is in motion, it's accepted as an unsettling reality, but Phase II is the obvious sequel. If you have cash in a bank, you think of it as your own. This is not the case. It's wealth that you've loaned to the bank. In the future, the bank (with governmental approval) will have the power to decide if and when they will return all, or a part, of that cash to you. They will set the rules as to how that decision will be arrived at and those rules will be changed periodically. Since those rules will be arrived at by the banks (without need for your consent), the outcome will most certainly not be in your favour. Those who read this statement might react in one of three ways: "This can't be happening." "Okay, it's happening, but there's nothing I can do about it. It's global." "There must be something I can do to keep from being robbed." The first group will be the largest. They will freeze up, do little or nothing, and become victims. The second group may complain and even struggle a bit against these developments, but won't prepare sufficiently and, ultimately, will also become victims. The third group will seek alternatives, and here's where the light appears at the end of the tunnel. Yes, this effort will be international, but it won't be fully global. There will be those jurisdictions that, traditionally, have not been willing to fall into line with the world's foremost powers. They will not wish to go off the same cliff as the others and will take a different tack. They will be the recipients of those people who seek to escape the collapsing system. But, more than ever before, time is limited; the window is clearly closing. The solution is surprisingly simple, although it will take work and dedication. If you're a resident of any jurisdiction that's presently going down this road, move your money to a jurisdiction that has a consistent history for stable government, low (or no) direct taxation, and minimal interference or regulation over wealth. Convert your wealth into those forms of assets that are hardest for rapacious governments to confiscate (foreign-held precious metals and real estate). Create an exit plan for your own physical escape, should it become necessary. The War on Cash and negative interest rates are radical and insane measures. I believe they are a sign of desperation, and also pose huge threats to your financial security. Central planners are playing with fire and inviting a currency catastrophe.

oh dear, after 6 years, 6 months and 26 days in office and countless failures your still flying the Obama flag ....... that was some strong Koolaid. here's some pictures to look at, I figure you're that kind of person.

GOLD BULLION held in a $4 range either side of $1100 per ounce in London on Thursday, trading 1% below yesterday's one-week highs as China's stock market slumped once again, but European share steadied ahead of the Eurozone central bank's latest comment on QE and sub-zero interest rates. Keeping its main refinancing rate at a record low of 0.05%, and holding the deposit rate for commercial banks at minus 0.30%, the ECB's president Draghi was due to give his post-decision press conference at lunchtime. London bullion clearing bank Barclays – one of only 3 of the remaining 5 clearers to operate its own vault – meantime said it is considering a sale of its precious metals division, with a memo to staff also announcing a further 1,200 jobs cuts, primarily in Asia, on top of the 7,000 completed last year. Currently with a global headcount of 135,000 according to internal HR documents, Barclays is a participating member through its London bullion division of regulated, daily benchmark the LBMA Gold Price, and is also a market maker – quoting prices to buy and to sell throughout the trading day – in wholesale spot, forwards and options. Today's news follows the exit from wholesale precious metals clearing, benchmarking and market-making of Germany's Deutsche Bank in 2013, and the exit of Japanese trading house Mitsui from London and Hong Kong precious metals trading at the end of 2015. Two weeks ago the Thomson Reuters news agency reported rumors – as yet unconfirmed – that Chinese-owned ICBC Standard Bank is buying Deutsche Bank's now dis-used bullion vault in north-west London. Last year, references to "gold" or "precious metals" trading appeared a total of 13 times in Barclays' 348-page 2014 annual report – only once outside footnotes on the lawsuits, fines and regulatory changes faced by the bank. Between Barclays and the other 4 remaining clearing members of London's wholesale bullion market, average daily volumes of gold transfers fell in late 2015 to a 10-year low by weight, and down more than 50% by value from the peak of 2011. Almost 2,250 tonnes of gold have meantime exited London's wholesale bullion vaults since the start of 2013, according to UK import and export data, cutting the net inflows of the last decade to just 1,550 tonnes – scarcely half of 1 year's current global gold mining output. Overnight in Asia on Thursday, "An early session dip below $1100 was short-lived," says a note from Swiss refining and finance group MKS's Australia team, "as Chinese interest kept the metal buoyant." With global prices trading at their highest level in 11 weeks as Shanghai closed, the Chinese premium above Dollar quotes for London settlement rose above $2 per ounce, just below the average incentive offered to importers over the last 18 months. At the retail level, "There's a bit of speculative demand," Reuters today quotes one Hong Kong dealer, "but not huge." Indeed, China's economic slowdown, the newswire quotes another Hong Kong dealer, means demand will likely stay weak ahead of next month's Chinese New Year – typically the strongest period for household demand in the world's heaviest gold importing nation.

Guess why, and how, this stockmarket crash began... IT'S SNOWING here this morning, writes Bill Bonner in his Diary of a Rogue Economist from his chateau near Poitiers, France. A soft, slow snow. Peaceful. Quiet. Like the last breath of a dying man. We came out to the country to pack and close up. We're leaving France this week, headed back to Baltimore. "What?" asked a friend in Paris. "You're leaving Paris for Baltimore? That doesn't seem like a good trade." "Well, Baltimore is not Paris," we replied. "But then there's nothing quite like Baltimore." Everything has its charms. Fortunately, we are happy in both cities. We are looking forward to getting back to the US...just in time to watch a market meltdown up close. Last Friday's 391-point drop in the Dow – a nearly 2.5% fall – ended the worst 10-day start to a year in US market history. The average stock in the S&P 1500 – which includes about 90% of all stocks in listed in the US – is now down more than 26% from its high. The standard definition of a bear market is a sustained fall of 20% or more from recent highs. "Woeful earnings," suggested MarketWatch as a cause. Another guess: "The stock market is freaking out over Trump and Sanders." Barron's was closer to the real source of the plunge: "Without Fed's Juice, Market Suffers Withdrawal Pains." In 1971, phony fiat money replaced the old gold-backed Dollar...and money that came "out of nothing" replaced real savings. At first, inflation rates rose. No one trusted the new fiat Dollar. But then, incoming Fed chairman Paul Volcker showed the world that the US could manage its currency in a responsible way. Consumer price inflation fell, along with interest rates. Debt increased. And gradually, every Middlesex village and farm has become dependent on more and more bank credit. The dot-com bubble blew up in 2000. The mortgage finance bubble blew up in 2007. Now, it looks as though another bubble is deflating... In 2008, the Fed cut rates all the way down to the "zero bound" to try to keep the jig going. But after seven years of its emergency zero-interest-rate policy (ZIRP), it became obvious that something had to be done to get back to "normal." Like a long binge on booze and drugs, things were starting to get a little weird. The juice had to go. But we doubt that the syringes and the Johnnie Walker have been put away for long. Despite announcing a great improvement in employment, for example, there have never been so many American men without jobs. Retail sales are falling. The transport industry – ships, trucks, rails – is in a funk. And the energy sector is in crisis...with as much as one-third of the sector's debt headed for default. What's the matter? The simple answer is that credit is not expanding fast enough. Lenders have become wary. Rolling over short-term financing is getting harder and harder to do. Yields on supposedly "risk free" Treasury bonds are going down (and prices are going up). Yields on junk bonds are going up (and prices are going down). "Any time credit fails to increase by at least 2% a year," said credit analyst Richard Duncan at Macro Watch, "the economy shrinks." And what's happening now? How fast is credit increasing? Uh-oh... It's not increasing at all. It's falling...for the first time since 2009. Not only is the juice no longer going into the system, it is actually going out. Which is just what you'd expect. The phony boom created and funded with the Fed's phony money is now turning into a real bust. China's foreign exchange reserves are falling. The ships sit idle in their ports. Orders for new trucks, new rail cars, new tankers...and yellow machines of all sorts...are hitting record lows. The whole kit-and-caboodle creaks and groans to a halt. And now, Bloomberg asks: "Is it over?" At least that question is easy to answer. No, it's not over. It has hardly even begun.

Well, low interest rates anyway. Because retiring now costs 8 times as much... RETIREMENT SAVINGS aren't what they were. Especially if you try to retire on them, writes Adrian Ash at BullionVault. That's the conclusion of this neat little note from credit and investment analysts S&P. It finds that, adjusted for inflation, you need four times as much saved for retirement as you would 40 years ago to get the same level of investment income from low-risk assets today. Blame this mess on the collapse in interest rates, of course. Plus the drop in household savings. Plus the slide in average personal income growth. Upshot? US retirees "can no longer afford to live on investment-grade fixed income returns," says the S&P note. Which may hardly be news. But it should be making headlines. Everywhere. Check the UK situation, for instance... Yes, if you want to retire on half of the average UK salary, then generating that level of income from "low risk" government bonds would need you to have 27 whole years of the current average wage saved up today. That, as you can see, has jumped from the last half-century's low of just 3.5 years' full income, an achievable level which retirees needed to have ready at several points in the 1970s and early 1980s. Because back then, the rate of interest offered by "low risk" government bonds touched above 16% per year. But it's since collapsed, down to the current miserly yield below 1.7% right now. Upshot? Besides a lot of poor pensioners – secretly hoping they peg out before their money does – these record-low returns to "safe" investments like government bonds and cash are also sprouting a crime wave. Because many savers are rightly looking for an alternative to bonds or cash, but few people have knowledge or experience of what to ask and what to avoid. So boiler-room crooks are pushing at an open door. Hence the flood of Bordeaux wine scams, fake carbon credits, non-existent share deals, landing banking fraud, gold coin bait-n-switch learnt from American conmen, and – of course – empty office safes not holding any precious metals, all now draining the UK's would-be retirees' tiny pension pots. "Given the current financial climate with low interest rates this type of fraud promising high returns is quite common." So said a Southwark police detective last September, commenting on the jailing of a gold investment con artist. Blame the Bank of England, in short. If you're investing in high-value objects or goods, using specialist storage outside your home should be the smart option. Because professional care is safer – reducing your insurance costs – and it will ensure the quality of your property, maintaining its maximum resale value. But how do you know the stuff really exists? How do you know it is of the quality promised? Get independent proof that's separate from your seller. That starts with getting storage at a third-party specialist, a business which is independent of your seller's company. You can then check the custodian's list of what they're caring for, rather than taking your seller's word for it. Also expect to get regular inspection reports from outside experts, double-checking the custodian's list and the quality of the material they're caring for. This is how BullionVault works. Firstly we employ independent custodians to care for our customers' bullion, entirely separate from our own operation. Secondly, we post the vault operators' own bar lists on the internet for our users to see. Against that, we post in public a full list of each client's holdings – all under anonymous nicknames to protect privacy – so you can check that the sum total matches with the independent bar lists down to the last gram every working day. Independent assayers then visit all the vaults each year, counting and inspecting each bar and reporting back to the independent chartered accountants who audit BullionVault's books and prepare our tax return. That report is then posted on the auditors' website, a site we couldn't hope to control. The Queen's Award for Enterprise recognised this innovation in the first of BullionVault's two awards, back in 2009. Now it is being applied to verify customer holdings of maturing Scotch through our new, sister venture, WhiskyInvestDirect. Whether or not you fancy investing in maturing Scotch whisky – appreciating in the barrel by 9% per year on average since 2005 – odds are you must look beyond the low-yielding shares and near-zero yielding bonds which financial advisors and pension funds would put you in. Plenty of crooks are only too happy to help. Do yourself a favour, and do your homework. But do also accept that "risk-free" retirement savings in government bonds and cash are a thing of the long-distant past.

No, the Gold Standard didn't privilege Scrooge over Bob Cratchit... The L.A. TIMES's Michael Hiltzik recently wrote a column slamming the GOP field in general and one of the two front-runners, Ted Cruz, in particular, writes Ralph Benko for the Cobden Centre, in this story first published at Forbes. In his article, The worst idea in the presidential debate: a return to the gold standard, Hiltzik thereby joins with a lot of usual suspects, like Paul Krugman and Larry Summers, in the ridicule-heaping ritual. Such conduct is unbecoming. His headline and conclusions are contradicted by a lot of reliable data. There actually is abundant evidence that Ted Cruz's proposal of the gold standard is the very best idea in the presidential debate so far and that Cruz is to be commended for it. There's far more evidence for the goodness of gold than for considering it a bad idea. It certainly is not ridiculous. Let's take a closer look. Mr.Hiltzik, after his prerequisite preliminary orgy of ridicule, writes: "The gold standard is one of the few economic nostrums on which progressives and conservatives agree. Neither side likes it. Here, for example, is James Pethokoukis of the conservative American Enterprise Institute: 'When GOP presidential candidates talk about the gold standard, I'm not sure if they're serious or just signaling a certain segment of votersobsessed about inflation and the dangers of 'fiat money.' I sure hope they're not serious and this is just campaign season silliness.'..." The proposition is flat, factually, wrong that "The gold standard is one of the few economic nostrums on which progressives and conservatives agree." Mr.Hiltzik cherry picked one – James Pethokoukis – of very, very, few conservatives who have been consistently hostile to the gold standard. A few others have written occasional criticism of the gold standard but none have crusaded against it comparably to Pethokoukis. Pethokoukis is a conservative outlier in manning the anti-gold barricades along with left-wing polemicists such as Paul Krugman. The right predominantly supports, or at least appreciates, the gold standard. In addition to Ted Cruz's direct advocacy presidential contenders Donald Trump, Rand Paul, Ben Carson and Mike Huckabee have made sympathetic statements. Jeb Bush has professed open-mindedness. Among conservative and libertarian public intellectuals proponents include such greatly respected figures as Reagan Gold Commissioner Lewis E.Lehrman (founder and chairman of The Lehrman Institute, with which I once had a professional association), publisher and former presidential contender Steve Forbes, and financier/philanthropist Sean Fieler (who chairs the American Principles Project, which I professionally advise). Journalists William Kristol, George Melloan, James Grant, Nathan Lewis, John Tamny and Peter Ferrara, among many, many, others have praised the gold standard. Dr.Norbert Michel of Heritage Foundation and Dr.George Selgin of the Cato Institute, both monetary policy thought leaders, have expressed astute sympathy toward, although not advocacy of, the gold standard. Mr.Hiltzik states that "economic historians concluded long ago, however, the idea that the gold standard provided stability is a myth." While this is a correct as to prevailing sentiment, such views by no means are unanimous. In addition to economic historian Prof.Brian Domitrovic, Prof.Richard Timberlake, particularly in his excellent 2013 Constitutional Money: A Review of the Supreme Court's Monetary Decisions, do not support Hiltzik's overgeneralized conclusion. Nor does monetary economist Prof.Lawrence White of George Mason University. Prof.Robert Mundell, in his magisterial 1999 Nobel Prize in Economics acceptance speech offers a far more appreciative and wide-ranging view of the history of the gold standard than that stated by Mr.Hiltzik. While Mundell can not be counted an outright gold standard proponent he clearly is a sympathizer. "Economic stability" (which ostensibly economic historians concluded "long ago" that the gold standard lacks) is relative. The current epoch of fiduciary monetary policy is much less stable than the precursor gold standard. Former Fed chair Paul Volcker, himself not an advocate of the gold standard, definitively nailed the instability of the current fiduciary Dollar standard in a speech at the Bretton Woods Committee in 2014: "In fact, international financial crises seem at least as frequent and more destructive in impeding economic stability and growth. The United States, in particular, had in the 1970s an unhappy decade of inflation ending in stagflation. The major Latin American debt crisis followed in the 1980s. There was a serious banking crisis late in that decade, followed by a new Mexican crisis, and then the really big and damaging Asian crisis. Less than a decade later, it was capped by the financial crisis of the 2007-2009 period and the great Recession. Not a pretty picture." As for former Fed chairman Ben Bernanke, his statement that "if you look at actual history the gold standard didn't work well" was in direct contradiction of a 2004 speech at Washington and Lee University he made as a Fed governor and in which he stated: "The gold standard appeared to be highly successful from about 1870 to the beginning of World War I in 1914. During the so-called 'classical gold standard period,' international trade and capital flows expanded markedly, and central banks experienced relatively few problems ensuring that their currencies retained their legal value." Going offshore, Dr.Jens Weidmann, president of the Bundesbank, called the gold standard "in a sense, a timeless classic" in a notable 2012 speech, Money creation and responsibility at the Institute for Bank-Historical Research. Former deputy governor of the Reserve Bank of India S.S.Tarapore has also written extensively and favorably on the gold standard. So too has written former finance minister of El Salvador Manuel Hinds (who Dollarized the Salvadoran economy to its great benefit). The Bank of England's 2011 Financial Stability Paper No. 13 assessed the Federal Reserve Note standard and its real outcomes – in every category reviewed, including job creation, economic growth, and inflation – has demonstrated itself, over 40 years, as inferior to the gold and gold-exchange standards. Further research since that time supports the assessment of this paper. Reaching into history, gold advocates and sympathizers from the deep past include Copernicus and Newton, George Washington, Alexander Hamilton, Thomas Jefferson, John Witherspoon, John Marshall and Tom Paine, among many other American founders; and, from the less distant past, such important thinkers as Carl Menger, Ludwig von Mises and Jacques Rueff, as well as revered political leaders such as Ronald Reagan and Jack Kemp. There is a very respectable body of opinion in support of the gold standard. The record of this is by no means obscure. Mr.Hiltzik's excluding respected proponents of the gold standard in reaching his conclusion does not do his readers justice. So why the hostility (and snark) directed at the gold standard? If I believed as does Mr.Hiltzik that... "...the 'stability' provided by linking currencies and exchange rates to a fixed value of gold benefited only one economic class – creditors, who desired the returns on their assets to be protected from inflation and to take primacy over every other interest group..." ...then I too – as a worker (AFL-CIO member) not an oligarch – would be as hostile to the gold standard as is Mr.Hiltzik. That said, characterizing the gold standard as a way to privilege Scrooge and prejudice Bob Cratchit is contradicted by the facts. Under the post-war Bretton Woods dilute form of the gold standard, for example, workers and median income families thrived, and dramatically so. Soon after Nixon "temporarily" closed the gold window, in 1971, median family income flat-lined...while the rich got much richer. The ending of the gold standard correlates directly with median family wage stagnation. Meanwhile Scrooge did much better than ever. Empirical evidence is persuasive that the gold standard, properly done (an important caveat – with the parity point set neutrally or even slightly favorably toward labor and debtors) is far more beneficial to working people than has been the fiduciary Dollar management of the Nixonian monetary regime under which we still labor today. It seems that Mr.Hiltzik, along with many others in the cultural elite sloppily surveyed by the Booth School in 2012 (including all of the 40 – not 51 – academic economists, few of whom were monetary economists), has fallen prey to the "Eichengreen Fallacy". The Eichengreen Fallacy is the attribution of the Great Depression to the gold standard. The gold standard had ceased operation over a decade before the Great Depression hit. It was not the causative factor. Prof.Eichengreen blundered by attributing the Great Depression to the gold standard. This, demonstrably, is untrue. That claim has led the discourse astray. The classical gold standard collapsed under the pressure of the first World War, long before the Great Depression. The classical gold standard was suspended when the Depression hit. An attempt was made to resuscitate the gold standard in Genoa, in 1922, putting in place what that great French classical liberal economist Jacques Rueff called "a grotesque caricature" of the gold standard: the gold-exchange standard. Genoa authorized a deformed pastiche of gold and paper currency as official central bank reserve assets. The Economist recently, and aptly, referred to the Interwar gold-exchange standardas "a mess." Mr.Hiltzik, following Eichengreen, collapses a critical distinction. Cruz is on strong ground – economically, historically, and politically – in his advocacy of the gold standard. The claim "The worst idea in the presidential debate: a return to the gold standard" is, simply, unsupported by the facts. While the gold standard is not, nor is it claimed to be, perfect – no system is perfect – it has an impressive track record. Readers deserve to have the evidence objectively reviewed rather than the topic ridiculed. The gold standard correlates with the American Dream of achieving decent middle class affluence through hard work far better than middle class affluence correlates with the Federal Reserve Note standard. Sen. Cruz's advocacy of the gold standard is impeccably respectable. The gold standard is the best idea in the 2016 presidential debate.

Survival tips now that all of emerging Asia looks like Northern Rock... IN A CRISIS, it helps to have good counsel, writes Tim Price on hisThePriceOfEverything blog. Investment strategist Mike Tyson is pretty good at summing up the problem: "Everyone has a plan 'til they get punched in the mouth." Or as the military strategist Helmuth von Moltke the Elder put it, somewhat more formally: "No battle plan ever survives contact with the enemy." The enemy has been quick to show himself this year, in the form of a bear market, at least for stocks. This bear has so far been quick, and indiscriminate: the US; Europe; China; stock markets have fallen sharply, internationally. Investors, being human, have scrabbled in search of an explanatory narrative. Some have blamed the Fed's baby steps towards normalising interest rates (if a rise from 0% to 0.25% can cause this much investor concern, get a load of history). Some blame the collapse in the oil price. Last week we watched David Cronenberg's 2012 thriller 'Cosmopolis', which has Robert Pattinson playing a 28-year-old hedge fund billionaire driving around town and losing his entire fortune in a single day due to the unexpected rise of the Yuan. Other than getting the direction of the Renminbi wrong, it could have been shot yesterday. (The film, like the financial markets of 2016, is largely unfathomable.) But as CLSA's Christopher Wood points out, perceptions of emerging markets, including China's, are becoming increasingly divorced from reality. The oil collapse, for one, is a huge red herring. Asia in aggregate "is a massive beneficiary of lower oil prices...[and] Asia now represents 72% of the MSCI Global Emerging Markets Index." So the narrative on oil is probably wrong, at least as regards most Asian economies, including Japan's. Fears that the Chinese authorities have lost control of their own markets, or have botched their own narrative regarding a measured devaluation of the renminbi against a trade-weighted basket of currencies, probably have more substance. CLSA suggest that the intent of the Chinese authorities may well be to devalue the renminbi against the US Dollar while maintaining stability against a currency basket (à la Singapore). But the lack of policy guidance from the Chinese – by comparison "with the overdose of communication from G7 central bankers" is clearly unhelpful. But it has certainly been a good month so far for bears. RBS told us to "Sell everything except high quality bonds". This is somewhat problematic if there aren't actually any high quality bonds to buy, hold or sell. But then nobody should expect nuance, foresight or intelligence from the bank whose management helped bring us Financial Crisis #1. And as The Spectator pointed out, the author of RBS' 'Sell everything' note has been predicting disaster for the past five years. Last Tuesday then brought us SocGen's Global Strategy Conference. Quantitative strategist Andrew Lapthorne's advice was more measured: do nothing, on the basis that almost half of your real return from equities comes from compounding dividend income. Clearly, if you don't hold equities, you don't get that income. Or any compounding. SocGen's guest speaker Russell Napier pointed out that growth in emerging market foreign exchange reserves from 2008 to 2014 amounted to the most rapid increase in emerging market money supply in history. As this process goes into reverse, EM growth will clearly suffer. And since many emerging market countries have over-borrowed in foreign currencies, the fighting in the global currency wars is set to get more intense this year. Many EM countries now look, in Napier's words, "like Northern Rock on speed" – with too much local currency and foreign currency denominated debt issued to foreigners – mainly to European banks. As Napier warns, 2016 has also ushered in BRRD in the Eurozone: new rules requiring bond and deposit holders to be bailed in when banks blow up. The EU (and many of its bank depositors) will come to regret not restructuring their banking system during the seven years post-Lehman when they had the opportunity. The search for an easy narrative to explain the bear market is probably a waste of time. The financial market is a complex adaptive system and investors are prone to irrational behaviour and mood swings. They are also prone to overpay. The great 'value' investor Benjamin Graham reminded us that "Operations for profit should be based not on optimism but on arithmetic." The optimists have had things their own way in an almost unbroken line since March 2009. January 2016 so far would suggest that the pragmatists are now in charge. So the pragmatic response to this month's volatility – if any is indeed required at all – is as follows: Diversify by asset type; Limit or eliminate exposure to EM debt. Raise cash rather than cling to a benchmark with no conviction (and no obvious value); Concentrate any debt exposure to bonds issued by creditors, not debtors; Limit equity exposure to high quality and inexpensive markets offering a 'margin of safety'. (Most of the US market does not qualify in this regard.) Russell Napier recommends Japanese equities, currency hedged, and so do we. And in a bear market, you don't want to own expensive growth, you want to own defensive value; Complement traditional investments with alternatives – we would advocate systematic trend-following funds (which can profit in bear markets just as they did in 2008), and gold – the one form of currency that comes with no counterparty risk because it is the one asset that is no-one's liability. Finally, limit your exposure to financial media, and especially to economists employed by commercial banks.

Two hillbillies walk into a restaurant. While having a bite to eat, they talk about their moonshine operation. Suddenly, a woman at a nearby table, who is eating a sandwich, begins to cough. After a minute or so, it becomes apparent that she is in real distress. One of the hillbillies looks at her and says, Kin ya swallar?' The woman shakes her head no. Then he asks, 'Kin ya breathe?' The woman begins to turn blue, and shakes her head no. The hillbilly walks over to the woman, lifts up her dress, yanks down her drawers, and quickly gives her right butt cheek a lick with his tongue. The woman is so shocked that she has a violent spasm, and the obstruction flies out of her mouth.As she begins to breathe again, the Hillbilly walks slowly back to his table. His partner says, 'Ya know, I'd heerd of that there 'Hind Lick Maneuver' but I never seed nobody done it.

Two hillbillies walk into a restaurant. While having a bite to eat, they talk about their moonshine operation. Suddenly, a woman at a nearby table, who is eating a sandwich, begins to cough. After a minute or so, it becomes apparent that she is in real distress. One of the hillbillies looks at her and says, Kin ya swallar?' The woman shakes her head no. Then he asks, 'Kin ya breathe?' The woman begins to turn blue, and shakes her head no. The hillbilly walks over to the woman, lifts up her dress, yanks down her drawers, and quickly gives her right butt cheek a lick with his tongue. The woman is so shocked that she has a violent spasm, and the obstruction flies out of her mouth.As she begins to breathe again, the Hillbilly walks slowly back to his table. His partner says, 'Ya know, I'd heerd of that there 'Hind Lick Maneuver' but I never seed nobody done it.

Because its stated plan would be a disaster with zero inflation... A CHEMIST by academic training, Charles Gibson spent a decade in the City of London as a mining analyst at Cazenove and a specialist mining salesman at T Hoare Canaccord. Having written for MoneyWeek and The Business magazines, as well as The Evening Standard. Gibson is now an analyst with London-based Edison Investment Research – and he is nervous, he tells The Gold Report in this interview. Because, Gibson says, the US Federal Reserve's statement that it would push the benchmark interest rate to 1.375% by the end of 2016 could send the US economy in the wrong direction for the sake of containing mostly nonexistent inflation... The Gold Report: On December 16, the US Federal Reserve, as expected, raised its benchmark interest rate by 25 basis points. Somewhat unexpectedly, gold rallied on the news. In its year-end report, the World Gold Council, along with a number of experts who have talked to The Gold Report in the last year, said its research shows that higher interest rates are not necessarily bad for gold. Do you concur? Charles Gibson: This rise in interest rates had been flagged for some time by the Federal Reserve; it was almost market orthodoxy that it was going to happen. The initial rally was a case of "sell on the rumor, buy on the facts," the reverse of the normal mentality. However, shortly after that, gold fell again. That, in part, was due to the fact that not only did the Fed put up the benchmark interest rate, it did so by the maximum amount, because there was some speculation that the rise might have been only 10 basis points. What continues to worry the market is Fed Chair Janet Yellen's statement that the Fed is looking at pushing the benchmark rate to 1.375% by the end of 2016, which suggests there are more interest rates rises to come over the next 12 months. That has renewed the nervousness in the market. TGR: Why is the market nervous? Charles Gibson: The issue of interest rates is not as simple as looking at interest rates in general. You need to look at real interest rates. You can have interest rates high and rising, but if inflation were higher and rising faster, then you would expect gold to go up. I was one of the ones who thought the Fed didn't need to raise rates. My analysis suggested that at the current mean level of inflation, one would expect interest rates to be higher. However, 0-25 basis points was within the normal range. Given the direction that inflation has been moving recently, there didn't seem to be any pressure from an upward move. So I took the Fed's move to be political rather than economic. The Fed wants to head off the risk of inflation; however, with falling commodity prices and other signs, there seems to be little evidence of inflation in the economy. The Fed is trying to suggest a return to normality, but given the magnitude of what has happened in the eight years since the financial crash, we're still a long way from normality. That's where the potential interest in the gold market remains for the foreseeable future. TGR: What rate of inflation would push gold higher? Charles Gibson: At 2% or above, we would still be in negative real interest rate territory. That makes hard assets an attractive proposition. The FTSE Index was above 7,000 earlier last year but is now around 6,000. That would suggest a deflationary trajectory. If interest rates go up and inflation continues to fall, the outlook is probably more choppy for gold because falling inflation and rising real interest rates has historically created headwinds for gold. TGR: As you watched Federal Reserve Chairman Janet Yellen deliver her speech at the Fed's press conference on Dec. 16, what were some of your thoughts as a gold investor? Charles Gibson: For a long time the Fed has had to surf a difficult wave, and it has admittedly surfed it quite well, yet it's being slightly disingenuous with the market. The Fed seems to determine the entire mood and direction of the market, whereas once upon a time it created the background. These days everyone seems to hang on every last comma of the Fed's pronouncements. That gives it enormous power and influence. It's also a dangerous position. By setting interest rate guidance at 1.375% by the end of 2016, the Fed could send the economy in the wrong direction for the sake of containing inflation. The economy's ability to sustain higher interest rates and higher real interest rates is very limited indeed. TGR: As gold prices approached six-year lows, so do silver prices. What's the thesis that pushes silver higher? Charles Gibson: Gold tends to perform better in an environment where the value of money is being questioned; silver tends to perform better in an environment where there is macroeconomic growth. For silver to outperform gold, we need to see evidence of growth among the major consuming nations like China. But at the moment, these metals are caught in an almost perfect storm where the Fed is raising interest rates, while China is dangerously close to a debt deflation spiral. So you have a major consuming nation consuming less at the same time that the Federal Reserve is making real hard assets less attractive as an investment proposition. TGR: Does that mean investors should lean more toward defensive equity names at this point? Charles Gibson: In the current environment, one of the biggest headwinds for any company is financing. Assets that would have been financed three or four years ago might not get financed today. If you're invested in a company that can get financed, then obviously you stand to benefit from the upside, but you have to accept that there is a reasonable risk that it might not. Therefore, the sensible approach would be to go with a conservative asset allocation policy. Among the metals and mining equities, I would be inclined to direct investors toward secure, producing assets with limited funding risk. TGR: Lithium carbonate prices outperformed gold and silver this year by a wide margin. Do you expect the trend to continue in 2016 and beyond? Charles Gibson: By and large we do. Lithium has a tailwind in the form of a revolutionary shift to electric vehicles in the automotive industry as the world attempts to move away from fossil fuels, lithium will go from being a specialized mined metal to something quite mainstream. That transition is transformative for the economic dynamics for lithium. TGR: Do you have a preference between brine and hard rock lithium deposits? Charles Gibson: We've been looking at this issue. There is a perception that brines are the superior asset due to their size, and that is not necessarily true. The conversion of resources to reserves is often quite low with brine deposits if they are to be extracted using evaporation ponds, and when you take that conversion into account, it makes the sizes of brines similar to hard rock deposits. What is key is product purity because end-users have very high standards and need to be sure that the lithium used maintains adequate battery life. TGR: Can you speak in broad terms about the advantages of owning stakes in a number of different lithium projects versus the typical discover-and-develop model employed by most junior mining companies? Charles Gibson: Many companies appear as single-asset companies but they often have a number of other less-developed assets. They place the emphasis on one asset because it makes it a simpler story for the market to understand. At the bottom of the last cycle, in 2000-2001 when virtually all mining assets were underperforming, the heavy mineral sands were the one exception where investors were making money. That situation looks similar to the current market environment for lithium. The market dynamic is in a secular uptrend. The opportunity for investors is to exploit mispriced assets. TGR: What about the rare earth elements component of that story? Is this mostly a lithium play or do the rare earths hold some value too? Charles Gibson: They certainly hold some value. Over the last 10 years, the investment proposition for rare earths has proven difficult. The lithium story is much cleaner and easier to tell. Is there value in the rare earths? Yes, but there may be a relatively long burn in terms of realizing that value. I think it's more likely to come out in the wake of the development of the lithium assets. TGR: Please give us a sentence that you expect will largely sum up the gold market in 2016. Charles Gibson: I think there is the possibility that some major, macroeconomic perceptions may change quite materially and quite rapidly. TGR: Thank you for your insights, Charles.

Life finds a way. So does the inevitable economic cycle... CHAOS THEORY studies the behaviour of dynamic systems that are highly sensitive to initial conditions, writes Tim Price on his blog, ThePriceOfEverything. In a chaotic system, tiny changes in initial conditions lead to wildly divergent outcomes further down the line. Under chaos, short term prediction may yield certain benefits, but long term prediction is impossible. Chaos theory has relevance to a variety of discipline, among them weather and climate. When snow settles on a snow mass, at a certain point, under certain conditions, that mass will shift from a stable equilibrium – safety – to an unstable equilibrium – the risk of an avalanche. But the precise snowflake that triggers the avalanche cannot be predicted. The same holds for dropping grains of sand onto a table. For some time, the sand pile will remain stable. At a certain point, it will shift to being unstable. One single grain of sand then has the capacity to shift the sand pile over. But we cannot predict in advance which grain that will be. The film 'Jurassic Park', adapted from Michael Crighton's novel, brought chaos theory into the popular realm. A wealthy scientist, John Hammond (Richard Attenborough), using DNA derived from fossilised mosquitoes, decides to recreate dinosaurs on a remote island. Once brought back to life, won't they breed? No, says Hammond. Because all the dinosaurs on the island are engineered to be female, by way of chromosome control. Dr Ian Malcolm, played by Jeff Goldblum, has been brought along to assess the project. His assessment is sceptical to the point of hostility: Life – nature – does indeed find a way. Malcolm survives into the inevitable sequel, and gets to be (justifiably) sceptical and hostile all over again. One of his companions is overwhelmed at the spectacle of the CGI dinosaurs. His response: "The kind of control you're attempting is not possible. If there's one thing the history of evolution has taught us, it's that life will not be contained. Life breaks free. It expands to new territories. It crashes through barriers. Painfully, maybe even...dangerously. "I'm simply saying that life...finds a way." 'Jurassic Park' is, of course, fiction. "Oh yeah. [Facetiously] Oooh! Aaah! That's how it always starts. Then later there's running and, um, screaming..." That central banks exist today, on the other hand, is fact. And it is fact that for several years they have been attempting to impose artificial constraints on market prices. For an object lesson in the efficacy of State interference in the market process, we give you the Shanghai and Shenzhen stock exchanges. Western market observers have no claim to moral or cultural superiority here. Western central banks have, for years, been pulling the same stunt in relation to interest rates and the price of money itself. In the ailing Eurozone, the Richard Attenborough role has been played by Mario Draghi, who made the following timeless pronouncement in July 2012: "Within our mandate, the ECB is ready to do whatever it takes to preserve the Euro. And believe me, it will be enough." We think the not-so-secret objective of QE all along was to trigger inflation (or avoid deflation). How's that project coming along? Eurozone annual inflation has been below 0.5% since July 2014. Almost 11% of the Eurozone workforce is jobless. There's a plausible argument that QE, ZIRP and NIRP are not inflationary, but deflationary: by allowing otherwise insolvent businesses to operate, they are creating a surplus of goods and services that, in an otherwise weak economic environment with inadequate demand, is causing prices to fall. Perhaps they should stop with these policies. But that is not the way of the bureaucrat. The beatings must continue until morale improves. Since the global financial crisis, the financial markets have been a battleground between the forces of deflation and inflation. Deflation represents the free market. A free market wants to reset the game, and clear all the redundant pieces from the table. Inflation represents the State, and its economic agents, the central banks, whose notional independence from the State may be unlikely to survive this ongoing crisis. The State 'merely' wants to perpetuate itself, and is somewhat indifferent to the costs incurred to its citizenry in the process. Financial analyst and market historian Russell Napier uses the analogy of the falcon and the falconer. The falcon is the markets; the falconer is the State. "The attempt to train the wild forces of supply and demand by the authorities has really ramped up since 2009. Just four trading days into 2016 [it is obvious] that they have failed to create a pet to do their bidding. The wild forces of supply and demand have sought to deliver deflation, at least since 2008, but the falconer has demanded the lift-off of inflation. "'Whatever it takes' may ultimately be constitutionally impossible and the ECB may not be prepared to print sufficient Euros to ensure that every government of the Eurozone makes all payment of principal and interest. If that reality dawns then yield spreads widen in the Eurozone and ultimately your interest and principal may not be paid in Euros. "For those investors who have to be in equities, North Asia is the only game in town. They, in the form of China, Japan, and probably also South Korea, will win the currency wars. Their success in winning this game triggers the scale of deflation that generates the global credit crunch that is virtually inevitable as deflation takes hold. "If you had not noticed, 2016 has begun with gold and the USD rising simultaneously. This is different and important. This is very positive for gold and very bad for the world. "Real rates have further to rise but a few more days of a strong USD and a strong gold price means gold has probably entered a bull market that should last for decades rather than years; its value boosted initially by its ability to avoid conscription, but underpinned by the authorities' mass mobilization of resources to ultimately generate inflation. "From 2009-2015 investors were well paid, at least in the developed world, to believe the most impossible of the six things before breakfast: that central bankers can subvert the desires, wishes, greed and fear of millions of people who set prices every day through their actions. "You now have two choices: keep believing the most impossible thing, or accept that the wild force that establishes market prices has not been tamed. It's not a pet, it's a falcon and 'The falcon cannot hear the falconer'." Judging just from the first week of market activity of 2016, life is finding a way. Nevsky Capital have decided to close their fund, citing the risks of investing in a world where opaque central bank activity, questionable data and the rise of algorithmic trading make the rational analysis of relative prices impossible. We elect to fight on, making pragmatic use of the least risky (i.e. powerfully inexpensive) high quality equities, predominantly in Asian markets (though we have no exposure to China); well risk-managed systematic trend-following funds that offer the potential to benefit in falling as well as rising markets; and gold. The skies are darkening with financial market chickens coming home to roost. What's in your investment armoury?

...and why gold investment could rise everywhere as a result... JAYANT BHANDARI has been an Asia-based institutional investor adviser for the last three years. Prior to that he worked for six years with US Global Investors in the United States, a boutique natural resource investment firm, and for one year with Casey Research. Now an independent investment adviser, Jayant Bhandari now sees gold demand rising across the world, as the emerging markets' chronic stagnation hits political turmoil, as he explains in this interview with The Gold Report... The Gold Report: So far in 2016, Saudi Arabia has severed diplomatic ties with Iran over a religious dispute, and several Saudi allies have followed suit. Meanwhile, China's major stock exchanges started the year with a selloff, prompting the Chinese government to inject $20 billion into the system to help stabilize it. Which situation is likely to have a greater impact on the gold price? Jayant Bhandari: It's not only a problem in the Middle East. The problem is in Africa. The problem is in South America. The problem is in Central and Southeast Asia. There is a huge amount of political turmoil in these areas. The reality is that most of the countries outside the West, with the exception of China and some smaller city-states, look very unstable. This will contribute to gold chasing by the populations in these countries because the economies are stagnant in all these countries except China and some city-states. TGR: If there is global instability, don't rough waters threaten to sink all boats, even gold? Jayant Bhandari: These are not sinking ships, these are ships that are stagnating. The economies in these countries are stagnating, and some of the countries are politically unstable. In all these cases, people buy gold. Historically, most of the gold purchasing has happened in the Middle East and the Indian subcontinent. These countries have negative-yielding economies, which means that investing in manufacturing or investing in infrastructure does not provide investors with a profit in these countries. Contrary to popular myth perpetuated by the World Bank and the International Monetary Fund, it is not the lack of capital that keeps poor countries poor, but their utter failure to productively deploy the capital. For the last 30 years, imported technology from the West allowed these economies to grow very quickly. But the people in these countries haven't changed their cultures, which continues to be tribal and irrational. I am from India and the country completely refuses to change its ways of thinking. It benefitted from the low-hanging fruit that came with technology from the West, but the low-hanging fruit is gone. TGR: What role do you expect India's stagnating economy to play in terms of gold demand in 2016 and beyond? Jayant Bhandari: Indians are already buying increased amounts of gold. The reason is that the Indian stock market is going nowhere. When you adjust for inflation, which is typically 8-10% every year, investments do not provide you with any return, often negative returns. That's when investors start buying gold and property. The West continues to believe India will be the next China. I guarantee you that India is not the next China. Worse, I'm increasingly scared about India, as it has taken the path of fanaticism, in religion and in nationalistic feelings, both based on arrogance and dogma rather than on principles. TGR: In different blog posts you've written that China's economic growth will continue for the foreseeable future. What are you seeing that most economists are not seeing when it comes to China? Jayant Bhandari: The Chinese economy is still growing at between 6-7%. Economists like to say that China is slowing. That's erroneous. China is not slowing; Chinese growth is slowing. These things are different. Chinese growth is falling, which has to happen for a country that has grown at such an enormous pace for 20-30 years. I see nothing wrong with that. At 6-7%, China's economy is growing faster than most economies. TGR: What do you make of China's recent stock market weakness? Jayant Bhandari: It's difficult to understand what is happening with the day-to-day stock trading in any country, but the reality is that China continues to grow. I am very optimistic about China. The Chinese have among the highest IQs in the world and have consistently proven it. I don't waver with the day-to-day changes in the stock market. It's an emerging economy. China has had similar kinds of crashes in the past, and it has re-emerged from those crashes. It pays to remember that the stock market does not necessarily tell you about the underlying economy – the US stock market has done extremely well since the beginning of 2009, but its economy hasn't. TGR: Are there other geopolitical events gold investors should be tracking? Jayant Bhandari: The biggest thing that gold investors should pay attention to is not inflation or deflation – it's negative-yielding economies. This is the reason why people in the Indian subcontinent and Middle East have bought gold in the past. Most economies in countries outside the West are starting to stagnate. Interestingly, the same is increasingly visible in the West. In Europe many sovereign bonds trade at negative yields, which means that there is an increased acceptance in Western countries toward becoming negative-yielding economies. Similarly, US publicly listed companies are sitting on trillions of Dollars of cash, earning negative real interest. That pretty much means that all economies are becoming stagnant. One of the biggest reasons is that democracies have placed people who don't understand economics in charge of economies. That is exactly when people buy a lot of gold and property because they have no better places to keep their money. Both land and gold offer you zero yields, and hence better than negative yields. This means that the stars are aligned for gold to go up. But what has to happen does not necessarily happen right away. TGR: Do you think the US Federal Reserve made the right move when it made the 25-basis point interest rate increase in December 2015 and set guidance at 1.6% rates by the end of 2016? Jayant Bhandari: The Fed did not increase interest rates enough. Savers get penalized when they get a 0% interest rate. This is morally discouraging for a society. Low interest rates create a boom-and-bust scenario, which means that a lot of malinvestments are taking place. But that does not mean that the Fed will further increase interest rates. I think the Fed will reduce interest rates again, for it is mostly run by people who have no real-life experience and hence they lack an understanding of complexity and unpredictability of life. They are mostly driven by political expediency. TGR: Can the US inflate its way out of this? Jayant Bhandari: There is not a chance. America has become a welfare state, which requires it to continue to print money. It might take a step back once in a while, but the movement eventually will be in the direction of increased money printing, increased inflation, increased regulation and increased oppression of entrepreneurs. The way our rulers think, they will do exactly more of what created the original problem. The average voter will go along, for he only worries about the seen, not the unseen, long-term consequences. TGR: Historically, January tends to be a strong market for junior gold equities. How did tax-loss selling position the sector for what's happening now? Are we going to see a rebound or more of the same? Jayant Bhandari: You will see an elastic rebound. This year should be a very good year for the good companies in the junior mining sector after we saw a bifurcation occur in 2015. Some 70 to 80% of companies that have no value have continued to fall and will continue to fall, but the good companies have found a foothold and have made gains over the last year. Those companies will continue to increase in value as they raise money and move in the right direction. So I'm very optimistic about selective companies within the junior mining sector. TGR: What are the key elements of a good junior mining company? Jayant Bhandari: The biggest thing is the management. The quality of management is always key because if the management is not good, that will destroy value. It's hard to believe, but a lot of junior mining CEOs are financially illiterate. A lot of them live a lifestyle using the company's treasury. TGR: As a long-time investor in the junior gold equity space, how are you approaching the market given the current economic backdrop? Jayant Bhandari: I'm very optimistic about gold as a commodity. There are many companies that offer good value. I want to make money with the least amount of risk. Some people say that with risks come rewards. I don't think that is necessarily true. I'm looking to maximize my rewards for the least amount of risk. Today, the way the market is, I seek opportunities with arbitrage upside because that's free upside. Arbitrage opportunities offer you one of the safest and high reward opportunities in this market. TGR: What is the one message you want to convey to investors at this moment in history? Jayant Bhandari: The world has become quite unstable and governments have too much control over our savings and net worth. They already take away about half of what we produce, in a plethora of taxes. Despite this they are forever in deficits. It is important for investors to internationalize their wealth. It is important for them to take a part of their wealth outside the formal system to protect it from what might happen in the future. One way to do that is to invest in physical gold. What happened in Cyprus will happen in other countries. It's only a matter of time. Your accounts will get frozen. Your money will be expropriated by your government. It pays to prepare yourself for this eventuality. TGR: Thank you for your insights, Jayant.

2016 starts with a bang for bullion prices. Ready...? WHO says gold lost its appeal as a safe haven asset? asks Frank Holmes at US Global Investors. After five straight positive trading sessions in the first week of 2016, the yellow metal climbed above $1100 per ounce – its highest level in nine weeks, on a weaker US Dollar.. The rally proves that gold still retains its status as a safe haven among investors, who were motivated by a rocky Chinese stock market, North Korea's announcement that it detonated a hydrogen bomb last Wednesday and rising tensions between Saudi Arabia and Iran. Here in the US, gold finished 2015 down 10.4%, its third straight negative year. Until the New Year, sentiment appeared poor, and many gold bulls were finding it hard to stay optimistic. But after the price jump last week, large exchange-traded gold funds saw massive inflows, confirming a shift in investors' attitude toward the precious metal. It's worth remembering that about 90% of physical demand comes from outside the US, mostly in emerging markets such as China and India. In many non-Dollar economies, buyers are actually seeing either a steady or even rising gold price. The metal is up in Russia, Peru, South Africa, Canada, Mexico, Brazil and many more. Note the differences in returns between gold priced in US Dollars and gold priced in the Brazilian Real, Turkish Lira, Canadian Dollar, Russian Ruble and Indonesian Rupiah. Gold demand in China was very robust last year. A record 2,596.4 tonnes of the yellow metal, or a whopping 80% of total global output for 2015, were withdrawn from the Shanghai Gold Exchange. As for the Chinese central bank, it reported adding 19 more tonnes in December, bringing the total to over 1,762 tonnes. Precious metals commentator Lawrie Williams points out, though, that China's total reserve figure is widely believed to be "hugely understated", meaning the central bank might very well have much more than we're being told. Despite all the talk of rising interest rates in connection to gold, they're not a dominant driver of prices. Sure, rising nominal rates have tended to make the metal less attractive, since it doesn't pay an income, but the larger driver by far are real interest rates. When real rates drop into negative territory, gold has historically done well. As a reminder, real rates, important for the Fear Trade, are what you get when you subtract the consumer price index (CPI), or inflation, from the 10-year Treasury yield. As of January 6, the 10-year yield was 2.18%, while the 12-month CPI for November – December data will be released later this month – came in at a barely-there 0.50%. Real rates, therefore, are running at a positive 1.68%, which is a headwind for gold. That's why we need inflation to pick up, because then gold would be more likely to rally. Regardless, the World Gold Council (WGC) writes in its 2016 outlook that gold's role as a diversifier remains "particularly relevant": "Research shows that, over the long run, holding 2% to 10% of an investor's portfolio in gold can improve portfolio performance." The reason for this is that gold has tended to have a low correlation to many other asset classes, making it a valuable diversifier. During economic contractions, for example, gold's correlation to stocks actually decreased, according to data between 1987 and 2015. For the last three years, gold has disappointed many because other investments, specifically equities, have seen such huge gains. But with global markets hitting turbulence, the yellow metal is looking more attractive as insurance against the currency wars. I always recommend 10% in gold: 5% in gold stocks or an actively-managed gold fund, 5% in bullion and/or jewelry. It's also important to rebalance every year. This should be the case in both good times and bad, whether gold is rising or falling. As highly influential investment expert Ray Dalio said last year: "If you don't own gold, you know neither history nor economics."