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Germans Warned To ‘Stockpile’ Cash In Case Of ‘War’

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Germans Warned To ‘Stockpile’ Cash In Case Of ‘War’

The German government is warning its people to ‘stockpile’ food, water and cash in case of ‘war’.

For the first time since the end of the Cold War, the German government is set to tell citizens to stockpile food, water, medicine, fuel and cash in case of war, an attack, catastrophe or “national emergency”, the Frankfurter Allgemeine Sonntagszeitungnewspaper reported on Sunday.

Merkel

Angela Merkel, Francois Hollande and Matteo Renzi on Aircraft Carrier Garibaldi yesterday. Photo: Guido Bergmann / DPA

Angela Merkel’s government is to “encourage the population” to have their own “personal supplies” including having some reserves of cash in their homes. People will also be urged to keep supplies of medicines, warm blankets, coal, wood, candles, torches, batteries and matches.

Regarding the advice to own cash outside the banking system, Deutsche Welle pointed out that:

“A wad of cash is another important part of any household’s emergency supplies. There may not be time to rush to a bank, and ATMs won’t work if the power is out.”

This is one of the primary reasons that one should own physical gold coins and bars outside the banking, financial and indeed the “technological system” and its dependence on electrical grids and supplies. Many of these systems are antiquated and vulnerable to attack such as from electromagnetic pulse (EMP) warfare that could quickly take out a large city or indeed a nation’s electricity infrastructure and supplies.

Frankfurter Allgemeine Sonntagszeitung reported that the

“Population should be able to protect themselves before government measures start to ensure an adequate supply of food, water, energy and cash.”

euro_drachma

“The population will be obliged to hold an individual supply of food for ten days,” the newspaper quoted the government’s “Concept for Civil Defence” – which has been prepared by the Interior Ministry – as saying. According to information leaked toFrankfurter Allgemeine Sontagszeitung they include advice to citizens to stockpile enough food for ten days and clean drinking water for five days.

“The population should be urged by appropriate means to keep two litres of drinking water per person per day,” the newspaper quoted a government paper as saying.

The 69-page report does not see an attack on Germany’s territory, which would require a conventional style of national defense, as likely. However, the precautionary measures demand that people “prepare appropriately for a development that could threaten our existence and cannot be categorically ruled out in the future,” the paper cited the report as saying.

The government is to increase stocks of smallpox vaccine and antibiotics in case of biological attack, and set up reserves of petrol and oil at 140 locations around Germany to ensure a supply for 90 days. Other provisions include setting up decontamination sites outside hospitals in case of nuclear, biological or chemical attack.

German newspapers like Deutsche Welle have complied handy checklists such as What emergency supplies do you need?

It is important to note that another global financial crisis and collapse of the global banking and financial system would also necessitate citizens being prepared. Deutsche Bank’s share price has all the hallmarks of that of Lehman Brothers prior to Lehman’s collapse.

Political and financial complacency reigns today as it tends to do regarding geopolitical risk. The complacency of the world between 1900 and 1914 is the best example of this. There is little analysis of the potential impact of terrorism and war on the lives of citizens or indeed on their personal finances.

Owning some gold coins and bars outside the banking and financial system will protect from these scenarios. As ever, it is prudent to hope for the best but be prepared for less benign scenarios.

Full Article: Germans Warned To ‘Stockpile’ Cash In Case Of ‘War’

Disclaimer© 2010 Junior Gold ReportJunior Gold Report’ Newsletter: Junior Gold Report’s Newsletter is published as a copyright publication of Junior Gold Report (JGR). No Guarantee as to Content: Although JGR attempts to research thoroughly and present information based on sources we believe to be reliable, there are no guarantees as to the accuracy or completeness of the information contained herein. Any statements expressed are subject to change without notice. JGR, its associates, authors, and affiliates are not responsible for errors or omissions. Consideration for Services: JGR, it’s editor, affiliates, associates, partners, family members, or contractors may have an interest or position in featured, written-up companies, as well as sponsored companies which compensate JGR. JGR has been paid by the company written up. Thus, multiple conflicts of interests exist. Therefore, information provided herewithin should not be construed as a financial analysis but rather as an advertisement. The author’s views and opinions regarding the companies featured in reports are his own views and are based on information that he has researched independently and has received, which the author assumes to be reliable. No Offer to Sell Securities: JGR is not a registered investment advisor. JGR is intended for informational, educational and research purposes only. It is not to be considered as investment advice. Subscribers are encouraged to conduct their own research and due diligence, and consult with their own independent financial and tax advisors with respect to any investment opportunity. No statement or expression of any opinions contained in this report constitutes an offer to buy or sell the shares of the companies mentioned herein. Links: JGR may contain links to related websites for stock quotes, charts, etc. JGR is not responsible for the content of or the privacy practices of these sites. Release of Liability: By reading JGR, you agree to hold Junior Gold Report its associates, sponsors, affiliates, and partners harmless and to completely release them from any and all liabilities due to any and all losses, damages, or injuries (financial or otherwise) that may be incurred.

Forward Looking Statements
Except for statements of historical fact, certain information contained herein constitutes forward-looking statements. Forward looking statements are usually identified by our use of certain terminology, including “will”, “believes”, “may”, “expects”, “should”, “seeks”, “anticipates”, “has potential to”, or “intends’ or by discussions of strategy, forward looking numbers or intentions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results or achievements to be materially different from any future results or achievements expressed or implied by such forward-looking statements. Forward-looking statements are statements that are not historical facts, and include but are not limited to, estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to the effectiveness of the Company’s business model; future operations, products and services; the impact of regulatory initiatives on the Company’s operations; the size of and opportunities related to the market for the Company’s products; general industry and macroeconomic growth rates; expectations related to possible joint and/or strategic ventures and statements regarding future performance. Junior Gold Report does not take responsibility for accuracy of forward looking statements and advises the reader to perform own due diligence on forward looking numbers or statements.

CMC METALS – FOOL ME ONCE, SHAME ON YOU. FOOL ME TWICE, SHAME ON ME

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CMC METALS – FOOL ME ONCE, SHAME ON YOU. FOOL ME TWICE, SHAME ON ME

Kal Kotecha PhD

Precious metals stocks, especially junior mining stocks, plummeted from 2011-2015. Last summer, we wrote that we felt gold had bottomed and we were starting to accumulate junior mining stocks. Some of the experts disagreed, “I don’t see a case to be bullish or to be positive on resource stocks”, said John Stephenson, CEO and founder of Stephenson & Co. on July 24, 2015
http://www.pressreader.com/canada/calgary-herald/20150724/282080570532889  
Fortunately we were right on that call but wrong on CMC Metals (TSX-V:CMB)
I lost a handsome sum investing in this tiny junior mining stock since 2010 – expecting that management would keep their word and execute on their game plan. A lot of other investors suffered the same fate as permitting, false promises and the bearish secular gold market were undesired affects contributing to the fall in CMC’s stock price.
The company’s flagship property is the Radcliff Mine located in Southeast California. Basically there are 100,000 ounces of high grade gold located at the Radcliff, based on the company’s January 2013 NI 43-101 technical report. Earlier estimates conducted by Echo Bay Exploration in 1993 suggested that there were 1,148,978 tons grading 0.24 oz/ton for a total of 280,350 in situ ounces of gold (non 43-101 compliant). Mineralized material from the Radcliff Mine would be shipped to the Bishop Mill owned by CMC Metals, located just two hours away. Infrastructure around the mill is excellent and includes 2-4 lane highways access. The Radcliff Mine is permitted and is a 50/50 joint venture between CMC and Pruett-Ballart (PBI), a Nevada based company specialized in mining engineering and the current operator of the Radcliffe Mine.
If properly executed, CMC Minerals could reap a lot of money from gold production – especially from the 3-4 years of expected high grade gold production.
Why then did the stock price plummet so much other than the reasons listed above which led to a 7:1 stock split? There is a lot of permitting and money required to get a mine into production. In CMC’s case it was a combination of: receiving permits from the Bureau of Land Management for the Operations of the Bishop’s Mill, dealing with the Lahontan Water board for the Class A Tailings Pond, working with the California Environmental Quality Act, Water licensing approval, permits for the Radcliff Mine etc.
Understandably, this all takes time. That was not the issue – rather that management did not do a feasible job communicating with shareholders while continuing to over promise and under deliver.
I have been assured that this time things are different. On that basis I agreed to take a small fee on a cheque swap basis to spread the word on the company’s progress. The major reason I agreed is because many investors are in the same position as myself holding a bunch of shares in a company we once truly believed in. If you believe in reincarnation – here is to hoping CMC can be reincarnated.
Some kudo’s should be given to management recently as they have taken serious steps in putting Radcliff into production. They managed to raise money, actually oversubscribed in the recent private placement to help put Radcliff into production. As well, insiders have been buying stock rather than dumping.
A new C.O.O. has been appointed, Ian Graham. Mr. Graham will oversee the operations at the Radcliff Mine and Bishop’s Mill. His bio is listed below. In a recent news release, COO Ian Graham commented: “The recently completed capital raise is permitting the Company to move forward on equipping, staffing and making bond arrangements for the Mill at Bishop, whilst simultaneously working with our partner Pruett-Ballarat Inc. to commence the mining of Mill feed: the Mill and mining JV teams are anxious to drive forward and deliver free cash flow in Q4, 2016.”
Fool me once, shame on you. Fool me twice, shame on me. The question remains, can management come through on making Radcliff  a real production story that rewards shareholders? At this point I am leaning towards a “yes”. Even though I see things are changing, this time it is: “I’m too smart to be fooled – you show me the goods”. I am holding my position and not accumulating until I see the mine personally (as promised by management numerous times) and that the company continues to make positive further progress.

Ian Graham’s bio:
Mr. Graham is an accomplished mining professional with over 20 years of experience in the development and exploration of mineral deposits, mostly gained with the major mining companies Rio Tinto and Anglo American. Formerly Chief Geologist with the Project Generation Group at Rio Tinto located in Vancouver, BC, Mr. Graham has been involved with evaluation and pre-development work on several projects in Canada and abroad including the Diavik Diamond Mine (Northwest Territories, Canada), Resolution Copper (Arizona, USA), Eagle Nickel (Michigan, USA), Lakeview Nickel (Minnesota, USA) and Bunder Diamonds (India). Prior to his work with Rio Tinto, Ian held exploration geologist roles with Anglo American. Ian graduated from the University of Natal (now Kwa-Zulu Natal) in Durban, South Africa with a B.Sc. in Geology and Applied Geology (1984) and B.Sc. (Hons) in Geology (1985).

Happy Investing!

Kal Kotecha PhD

To read the full article: The Gold Update by Mark Mead Baillie

Disclaimer© 2010 Junior Gold ReportJunior Gold Report’ Newsletter: Junior Gold Report’s Newsletter is published as a copyright publication of Junior Gold Report (JGR). No Guarantee as to Content: Although JGR attempts to research thoroughly and present information based on sources we believe to be reliable, there are no guarantees as to the accuracy or completeness of the information contained herein. Any statements expressed are subject to change without notice. JGR, its associates, authors, and affiliates are not responsible for errors or omissions. Consideration for Services: JGR, it’s editor, affiliates, associates, partners, family members, or contractors may have an interest or position in featured, written-up companies, as well as sponsored companies which compensate JGR. JGR has been paid by the company written up. Thus, multiple conflicts of interests exist. Therefore, information provided herewithin should not be construed as a financial analysis but rather as an advertisement. The author’s views and opinions regarding the companies featured in reports are his own views and are based on information that he has researched independently and has received, which the author assumes to be reliable. No Offer to Sell Securities: JGR is not a registered investment advisor. JGR is intended for informational, educational and research purposes only. It is not to be considered as investment advice. Subscribers are encouraged to conduct their own research and due diligence, and consult with their own independent financial and tax advisors with respect to any investment opportunity. No statement or expression of any opinions contained in this report constitutes an offer to buy or sell the shares of the companies mentioned herein. Links: JGR may contain links to related websites for stock quotes, charts, etc. JGR is not responsible for the content of or the privacy practices of these sites. Release of Liability: By reading JGR, you agree to hold Junior Gold Report its associates, sponsors, affiliates, and partners harmless and to completely release them from any and all liabilities due to any and all losses, damages, or injuries (financial or otherwise) that may be incurred.

Forward Looking Statements
Except for statements of historical fact, certain information contained herein constitutes forward-looking statements. Forward looking statements are usually identified by our use of certain terminology, including “will”, “believes”, “may”, “expects”, “should”, “seeks”, “anticipates”, “has potential to”, or “intends’ or by discussions of strategy, forward looking numbers or intentions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results or achievements to be materially different from any future results or achievements expressed or implied by such forward-looking statements. Forward-looking statements are statements that are not historical facts, and include but are not limited to, estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to the effectiveness of the Company’s business model; future operations, products and services; the impact of regulatory initiatives on the Company’s operations; the size of and opportunities related to the market for the Company’s products; general industry and macroeconomic growth rates; expectations related to possible joint and/or strategic ventures and statements regarding future performance. Junior Gold Report does not take responsibility for accuracy of forward looking statements and advises the reader to perform own due diligence on forward looking numbers or statements.

WILL THE BUBBLE POP REGARDLESS IF THE FED NEVER RAISES RATES?

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WILL THE BUBBLE POP REGARDLESS IF THE FED NEVER RAISES RATES?

The current overall SPX pattern is a broadening top, which is usually a very reliable pattern.  The market continues to look as though it wants to go even lower. The momentum shift, which I have been expecting, has been slow to start, however one should be prepared for this occurrence ahead of time.

Nevertheless, the large divergences which I have been viewing, in my proprietary oscillators, are most real, and, once the selling starts, the momentum should quickly move to the downside. 

The current market is being supported by a lack of sellers more so than aggressive buying.  With investors still thinking that there is no other place to store their money, they appear to be content with leaving their money with risk-on assets within a market that is pushing to all-time highs. 

This type of mentality usually leads to large losses rather than big gains.  There isn’t any real opportunity for growth in the SPX that I can see right now.

Dow Theory: Market Indexes Must Confirm Each Other

The Dow Theory was formulated from a series of Wall Street Journal editorials which were authored by Charles H. Dow from 1900 until the time of his death in 1902. These editorials reflected Dow’s beliefs regarding how the stock market behaved and how the market could be used to measure the health of the business environment.

Dow first used his theory to create the Dow Jones Industrial Index and the Dow Jones Rail Index (now Transportation Index), which were originally compiled by Dow for TheWall Street Journal. Dow created these indexes because he felt they were an accurate reflection of the business conditions within the economy, seeing as they covered two major economic segments: industrial and rail (transportation). While these indexes have changed, over the last 100 years, the theory still applies to current market indexes.

Market indexes must confirm one another. In other words, a major reversal from a bull or bear market cannot be signaled unless both indexes (generally the Dow Industrial and Transports Averages) are in agreement. Currently, THEY ARE DIVERGING,ISSUING A MAJOR NON-CONFIRMATION HIGH ON THE DOW JONES INDUSTRIAL AVERAGE. If one couples this with the volatility index (Fear Index), this is a warning sign and a recipe for disaster.

chart 1

The FEDs’ monetary policy over the last eight years has led to unproductive and reckless corporate behavior. The chart below shows U.S. non-financials’ year-on-year change in net debt versus operating cash flow as measured by earnings before interest, tax, depreciation, and amortization (EBITA).

Chart 2

The growth in operating cash flow peaked five years ago and has turned negative year-over-year. Net debt has continued to rise, which is not good for companies.

This has never before occurred in the post-World War II period. In the cycle preceding the Great Recession, the peaks had been pretty much coincidental. Even during that cycle, they only diverged for two years, and by the time EBITA turned negative, year-over-year, as it has today, growth in net debt had been declining for over two years. Again, the current 5-year divergence is unprecedented in financial history!

Today, most of that debt is used for financial engineering, as opposed to productive investments. In 2012, buybacks and M&A were $1.25 trillion, while all R&D and office equipment spending were $1.55 trillion. As valuations rose, since that time, R&D and office equipment grew by only $250 billion, but financial engineering grew by $750 billion, or three times this!

You can only live on your seed corn for so long. Despite there being no increase in their interest costs while growing their net borrowing by $1.7 trillion, the profit shares of the corporate sector peaked in 2012. The corporate sector, today, is stuck in a vicious cycle of earnings manipulation management, questionable allocation of capital, low productivity, declining margins and growing debt levels.

Conclusion:

In short, I continue to pound on the table to help keep you and fellow investors aware that something bad, financially, is going to take place – huge events like the tech bubble, the housing collapse a few years back, and now national financial instability. Experts saw all these events coming months and, in some cases, years in advance.

Big things typically don’t happen fast, but once the momentum changes direction you better be ready for some life changing events and a change in the financial market place.

Follow my analysis in real-time, swing trades, and even my long-term investment positions so you can survive from the financial storm: www.TheGoldAndOilGuy.com

Chris Vermeulen

Disclaimer© 2010 Junior Gold ReportJunior Gold Report’ Newsletter: Junior Gold Report’s Newsletter is published as a copyright publication of Junior Gold Report (JGR). No Guarantee as to Content: Although JGR attempts to research thoroughly and present information based on sources we believe to be reliable, there are no guarantees as to the accuracy or completeness of the information contained herein. Any statements expressed are subject to change without notice. JGR, its associates, authors, and affiliates are not responsible for errors or omissions. Consideration for Services: JGR, it’s editor, affiliates, associates, partners, family members, or contractors may have an interest or position in featured, written-up companies, as well as sponsored companies which compensate JGR. JGR has been paid by the company written up. Thus, multiple conflicts of interests exist. Therefore, information provided herewithin should not be construed as a financial analysis but rather as an advertisement. The author’s views and opinions regarding the companies featured in reports are his own views and are based on information that he has researched independently and has received, which the author assumes to be reliable. No Offer to Sell Securities: JGR is not a registered investment advisor. JGR is intended for informational, educational and research purposes only. It is not to be considered as investment advice. Subscribers are encouraged to conduct their own research and due diligence, and consult with their own independent financial and tax advisors with respect to any investment opportunity. No statement or expression of any opinions contained in this report constitutes an offer to buy or sell the shares of the companies mentioned herein. Links: JGR may contain links to related websites for stock quotes, charts, etc. JGR is not responsible for the content of or the privacy practices of these sites. Release of Liability: By reading JGR, you agree to hold Junior Gold Report its associates, sponsors, affiliates, and partners harmless and to completely release them from any and all liabilities due to any and all losses, damages, or injuries (financial or otherwise) that may be incurred.

Forward Looking Statements
Except for statements of historical fact, certain information contained herein constitutes forward-looking statements. Forward looking statements are usually identified by our use of certain terminology, including “will”, “believes”, “may”, “expects”, “should”, “seeks”, “anticipates”, “has potential to”, or “intends’ or by discussions of strategy, forward looking numbers or intentions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results or achievements to be materially different from any future results or achievements expressed or implied by such forward-looking statements. Forward-looking statements are statements that are not historical facts, and include but are not limited to, estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to the effectiveness of the Company’s business model; future operations, products and services; the impact of regulatory initiatives on the Company’s operations; the size of and opportunities related to the market for the Company’s products; general industry and macroeconomic growth rates; expectations related to possible joint and/or strategic ventures and statements regarding future performance. Junior Gold Report does not take responsibility for accuracy of forward looking statements and advises the reader to perform own due diligence on forward looking numbers or statements.

The Gold Update by Mark Mead Baillie

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The Gold Update by Mark Mead Baillie

Has anyone noticed that Gold through these “Dog Days of August” has been on a fairly tight leash, almost as if reined in by the S&P 500 such that both markets from one month ago-to-date have netted at best a mild 1% uprise, (the S&P’s lacking earnings otherwise)?

To read the full article: The Gold Update by Mark Mead Baillie

Disclaimer© 2010 Junior Gold ReportJunior Gold Report’ Newsletter: Junior Gold Report’s Newsletter is published as a copyright publication of Junior Gold Report (JGR). No Guarantee as to Content: Although JGR attempts to research thoroughly and present information based on sources we believe to be reliable, there are no guarantees as to the accuracy or completeness of the information contained herein. Any statements expressed are subject to change without notice. JGR, its associates, authors, and affiliates are not responsible for errors or omissions. Consideration for Services: JGR, it’s editor, affiliates, associates, partners, family members, or contractors may have an interest or position in featured, written-up companies, as well as sponsored companies which compensate JGR. JGR has been paid by the company written up. Thus, multiple conflicts of interests exist. Therefore, information provided herewithin should not be construed as a financial analysis but rather as an advertisement. The author’s views and opinions regarding the companies featured in reports are his own views and are based on information that he has researched independently and has received, which the author assumes to be reliable. No Offer to Sell Securities: JGR is not a registered investment advisor. JGR is intended for informational, educational and research purposes only. It is not to be considered as investment advice. Subscribers are encouraged to conduct their own research and due diligence, and consult with their own independent financial and tax advisors with respect to any investment opportunity. No statement or expression of any opinions contained in this report constitutes an offer to buy or sell the shares of the companies mentioned herein. Links: JGR may contain links to related websites for stock quotes, charts, etc. JGR is not responsible for the content of or the privacy practices of these sites. Release of Liability: By reading JGR, you agree to hold Junior Gold Report its associates, sponsors, affiliates, and partners harmless and to completely release them from any and all liabilities due to any and all losses, damages, or injuries (financial or otherwise) that may be incurred.

Forward Looking Statements
Except for statements of historical fact, certain information contained herein constitutes forward-looking statements. Forward looking statements are usually identified by our use of certain terminology, including “will”, “believes”, “may”, “expects”, “should”, “seeks”, “anticipates”, “has potential to”, or “intends’ or by discussions of strategy, forward looking numbers or intentions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results or achievements to be materially different from any future results or achievements expressed or implied by such forward-looking statements. Forward-looking statements are statements that are not historical facts, and include but are not limited to, estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to the effectiveness of the Company’s business model; future operations, products and services; the impact of regulatory initiatives on the Company’s operations; the size of and opportunities related to the market for the Company’s products; general industry and macroeconomic growth rates; expectations related to possible joint and/or strategic ventures and statements regarding future performance. Junior Gold Report does not take responsibility for accuracy of forward looking statements and advises the reader to perform own due diligence on forward looking numbers or statements.

How Will Brexit Impact the Gold Market? A Historical Perspective

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How Will Brexit Impact the Gold Market? A Historical Perspective

We know why Britons voted to leave the EU and what the UK’s options outside the EU are. Now, let’s analyze how Brexit could affect the gold market. We covered this topic in the latest edition of the Market Overview, as well as the daily updates of the Gold News Monitor, but today we will examine how the shiny metal performed during the past disintegrations of economic unions.

There are many examples of break-ups or exits from monetary unions (since 1945, more than sixty distinct countries or territories left a currency union), but these cases are not especially relevant for us, as Britain is not in the Eurozone. History also witnessed several break-ups of economic and political unions, like the collapse of the Austria-Hungary, Yugoslavia, the Soviet Union and Czechoslovakia. The Austro-Hungarian Empire ended in the very specific context of the First World War, when the gold market looked very differently, so we will confine ourselves to the last three cases.

As one can see in the chart below, gold was in the downward trend in the beginning of the 1990s, despite the turmoil in the Soviet Union, violent break-up of Yugoslavia and peaceful dissolution of the Czechoslovakia. There were big rallies in 1989 and 1990, but they were associated with the weakness of the U.S. dollar and American stocks (in 1990-1991, there was a recession in the U.S.). But these rises were temporary and gold quickly returned to the long-term downward trend. This behavior suggests that the price of gold does not react significantly to the political or economic break-ups. However, investors have to be cautious in drawing conclusions from this comparison. While Yugoslavia and Czechoslovakia were not globally significant unions, Brexit means an element of disintegration of the European Union, which would increase the risk of a full break-up of the biggest economic and political bloc in the world. The Soviet Empire was a major geopolitical player, but its dissolution actually diminished risk connected with the Cold War and increased the position of the Western world. Brexit, on the contrary, would increase uncertainty and diminish the role of West. This is why Brexit would be a real precedent even for the global economy and the gold market.

Chart 1: Gold prices during post-communist break-ups in the 1990s.

Now, let’s focus on the previous exits from the European Union, as the Brexit – contrary to some popular claims – would not be the first withdrawal from the European Union. Indeed, in 1962, Algeria gained its independence from France and left the European Economic Community, the EU’s predecessor. However, since the gold market was not free at the time, we cannot examine the impact of this breakup for the yellow metal.

The next withdrawal from the EU happened in the 1980s, when Greenland, a part of Denmark, left the EU. It was an interesting case, as Greenland held a referendum in 1982, but the exit was formalized only in 1985 by the Greenland Treaty. We shall add that the only controversial issue was fishing, and eventually the country did not fully exit from the EU, but adopted Overseas Country and Territory status, instead (it means that it remains subject to the EU treaties). If negotiations with Greenland (which is economically and politically less important that the UK) lasted three years, imagine how long Brexit might take (it could be great news for gold if the process increases anxiety and uncertainty, but it can be bearish for gold if the additional time makes investors think that there will be no Brexit after all or the final result will be close to Bremain anyway)!

As one can see in the chart below, the Greenland’s exit from the EU did not trigger a boost in the gold prices. Actually, the shiny metal entered into bear market in 1983. There was a rally in the summer of 1982, but it was caused by the recession in the U.S., the cuts in the Fed’s fund rate, and the fall in the U.S. interest rates.

Chart 2: Gold prices (yellow line, left axis) and the U.S. nominal interest rates (red line, right axis, in %, 10-year Treasury Constant Maturity rate) from January 1982 to February 1985.

The third withdrawal from the EU occurred in 2012, when Saint-Barthélemy, a small Caribbean island, left the EU and became one of the EU’s Overseas Countries and Territories. It would not come as a surprise that this small change did not shock the world and the gold market.

The review of the past withdrawals from the EU shows that the Brexit could be really unique. So far, only dependent territories exited from the EU, and since they were certainly not as economically and politically important as UK, they are not the best to guide how the UK departure might look. And the famous Article 50 of the Treaty on European Union, which set out the rules for exit, has not been tested yet. Hence, Brexit would be a whole new ball game, which should have much greater influence on the gold market.

Thank you.

Arkadiusz Sieron
Sunshine Profits‘ Gold News Monitor and Market Overview Editor

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

Disclaimer© 2010 Junior Gold ReportJunior Gold Report’ Newsletter: Junior Gold Report’s Newsletter is published as a copyright publication of Junior Gold Report (JGR). No Guarantee as to Content: Although JGR attempts to research thoroughly and present information based on sources we believe to be reliable, there are no guarantees as to the accuracy or completeness of the information contained herein. Any statements expressed are subject to change without notice. JGR, its associates, authors, and affiliates are not responsible for errors or omissions. Consideration for Services: JGR, it’s editor, affiliates, associates, partners, family members, or contractors may have an interest or position in featured, written-up companies, as well as sponsored companies which compensate JGR. JGR has been paid by the company written up. Thus, multiple conflicts of interests exist. Therefore, information provided herewithin should not be construed as a financial analysis but rather as an advertisement. The author’s views and opinions regarding the companies featured in reports are his own views and are based on information that he has researched independently and has received, which the author assumes to be reliable. No Offer to Sell Securities: JGR is not a registered investment advisor. JGR is intended for informational, educational and research purposes only. It is not to be considered as investment advice. Subscribers are encouraged to conduct their own research and due diligence, and consult with their own independent financial and tax advisors with respect to any investment opportunity. No statement or expression of any opinions contained in this report constitutes an offer to buy or sell the shares of the companies mentioned herein. Links: JGR may contain links to related websites for stock quotes, charts, etc. JGR is not responsible for the content of or the privacy practices of these sites. Release of Liability: By reading JGR, you agree to hold Junior Gold Report its associates, sponsors, affiliates, and partners harmless and to completely release them from any and all liabilities due to any and all losses, damages, or injuries (financial or otherwise) that may be incurred.

Forward Looking Statements
Except for statements of historical fact, certain information contained herein constitutes forward-looking statements. Forward looking statements are usually identified by our use of certain terminology, including “will”, “believes”, “may”, “expects”, “should”, “seeks”, “anticipates”, “has potential to”, or “intends’ or by discussions of strategy, forward looking numbers or intentions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results or achievements to be materially different from any future results or achievements expressed or implied by such forward-looking statements. Forward-looking statements are statements that are not historical facts, and include but are not limited to, estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to the effectiveness of the Company’s business model; future operations, products and services; the impact of regulatory initiatives on the Company’s operations; the size of and opportunities related to the market for the Company’s products; general industry and macroeconomic growth rates; expectations related to possible joint and/or strategic ventures and statements regarding future performance. Junior Gold Report does not take responsibility for accuracy of forward looking statements and advises the reader to perform own due diligence on forward looking numbers or statements.

Surprise! Surprise! Surprise! It’s the Greenspan Era Blueprint on Inflation

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Surprise! Surprise! Surprise! It’s the Greenspan Era Blueprint on Inflation

The post title is best when drawled in Gomer’s thick southern accent.

gomber and carter

I realize Gomer Pyle was way before the time of much of my reading audience, but for the last few weeks I’ve been hearing him in my head as not only NFTRH, but now the wider financial media get on the idea that things are not as bad as had been generally perceived going into the hype fest known as Brexit.  Most recently, a writer who always keeps an even keel, Chris Ciovacco, hassummarized the situation nicely (as posted at Biiwii).

But we need to be forward looking at all times.  From NFTRH 404 over a month ago…

“…economic data continue to be a mixed bag, but have started to improve lately,
as we expected would be the case. From Yardeni.com per the noted sources, here are a
couple of views of the ‘Economic Surprise’ index [omitted for this post] with the S&P 500’s price and P/E.  This is another view stating that those who have been predicting gloom in the face of recent market turbulence have been playing last year’s game. The thing about surprises is that they are only surprises for those depending only on backward looking data.”

That was a confirmation of our existing stance.  So what was the forward looking data?  Well, I have belabored that over and over again so if you visit nftrh.com regularly you don’t need me to go into detail.  We’ll just pop up the graphics again so that there is no confusion as to who was early to this party (I am the guy standing by the punch bowl with the ladle and the red plastic cups, serving but not partaking or reveling, due to my designated driver status).

In April we noted a rise in March Semi Equipment bookings.  In May we noted a big ramp for April.  In June we noted continued strength for May and a new (3 month) trend.

semi book to bill

We then cross referenced with a fellow indicator that worked well as a cyclical indicator in early 2013, the Palladium-Gold ratio, which had started to bounce.  First a bullish ‘W’ pattern was noted and then, the break above the moving averages.  If the moving averages cross upward (something about which I have my doubts) and SEMI remains strong, you do not want to be a bear until these conditions are undone.

pall-gold ratio

All of this happened while most market participants (evidently including the quant machines and techno charting whiz kids) were flat out bearish.  Over bearish sentiment said so and the eye test said so.  The media were in full frontal fear mode.  But there was a SEMI trend and there was a PALL-Gold ‘W’ arguing bullish.  Since those were my tools, I had to follow them.  I mean, you can’t just not use your tools if you disagree with what they say.

And now here is the Surprise Index, from the noted sources by way of Yardeni.com…

economic surprise index

Well surprise!  It appears the graph noted in Mr. Ciovacco’s article is a bit dated.  The index has turned down and indeed I am taking nothing (including SEMI and PALL-Gold) for granted.  That is because I expect this ‘breadth thrust’ market breakout to either be a prelude to a crash or at best, a suck-in to an eventual grinding bear market.  The timing is the thing.  We are operating on a 6 month horizon and are about 2 months in.  But this thing could be shorter or much longer than that.  It takes ongoing work, folks.  No substitute for it; certainly not ego or the fantasy that you can predict the markets.

Again in reference to Mr. Ciovacco’s article, I’d agree that the rally is about more than Central Banking inputs, but let’s be clear about the primary and original underpinning; it is a relentless refusal – despite the goofy media jawbones – to even attempt to normalize monetary policy by the Federal Reserve.  Hot money is literally being scared into the stock market as certain areas within the economy gain traction.

This is indeed a party and make no mistake that there is an element of mania and desperation to it.  That is probably the main reason to look for an eventual flame out and crash when it ends.  In the far reaching, scattered and ultimately unsatisfying NFTRH 408 (look, if I’m going to promo I’m also going to express when I think I’ve not produced my best work) we dug up some history for the American Association of Individual Investors (AAII).  Maybe this whole thing, this whole breadth thrust upward and potentially manic suck-in, was all about getting AAII members to finally give in.  Here’s an excerpt from #408…

<begin excerpt>

Individual Investors are not quite the consistent contrary indicator many think they are. They are grudgingly increasing their bullishness very slowly. From AAII…

aaii

“Bullish sentiment is above 30% for the fifth time in six weeks; similar such streaks have only occurred two other times over the past 12 months.” And…

“This week’s special question asked AAII members how, if at all, they have adjusted their investing strategy recently. More than half of all respondents (55%) said they are focusing on or have shifted more into stocks, particularly value and dividend-paying stocks. Slightly more than 27% of respondents say they have not changed their strategy. Nearly 12% said they are increasing their cash allocation. About 8% said they are taking a more conservative approach. Some respondents listed more than one than one asset class or investing style.”

Here is the AAII in the context of post-2009 history, from Stockcharts.com…

aaii

A longer view shows that AAII members really took personally the fact that they got more bullish as the blow off phase (1995 to 2000) of the 1980-2000 secular bull market progressed, and then failed to stop being bullish during much of the ensuing bear market, only to capitulate as the market made a higher low in 2003, which was the ‘buy’ signal on the new cyclical bull market. AAII was a massive contrary indicator on that cycle.

AAII remained a contrary indicator in fading the 2003-2007 bull market from start to finish. Sure, they were very well prepared for the crash of 2008 (due to non-participation in the bull) and even used contrarian sentiment to their advantage (getting long in 2009-2010) until the 2011 fake out correction (the ‘2011 comp’) that we talk so much about.

More recently, AAII did okay in riding the bull in 2013-2015, but have been increasingly bearish since Q4 2014 (ref. the Semiconductor sector’s implosion that never should have been, courtesy of Microchip Semi’s bogus guidance and a heaping helping of negative hype) due to the market’s topping pattern that was built out from late 2014 to early 2016. Now, the rubber meets the road. Is AAII the final component to close the loop? Will they finally forgive themselves for 1995-2007? Is AAII the last contrarian man standing?

aaii and spx

<end excerpt>

Is that really what this is all about?  Are we closing the loop on the 1995-2007 era, presided over by Alan Greenspan?  We are after all, operating to a general version of the ‘Greenspan Blueprint’ and its cyclical bull market from 2003-2007.  That was a time when gold bottomed first, and then silver and commodities bottomed… and stocks did too.

What do we have here today?  Gold bottomed and took the lead on commodities (including silver) but its leadership has now broken down vs. silver, palladium and possibly even crude oil.

gold vs. commodities

That is an inflationary signal in the making, folks.  And after all, our theme has been an economic bounce just as in 2003.  But it is also indicated to be an inflationary bounce.  Just as in 2003.  From that point on gold mostly flat lined vs. commodities and even under performed some key ones like crude oil and copper.

Clear the media noise and get this; gold leads out of deflation and into new inflationary cycles.

By this chart we are at the equivalent of 2003.  Now, how long will this cycle last?  Again, I have my doubts about it being anywhere near the ’03 to ’07 cycle in length.  But for now, it’s bullish and it is potentially inflationary, with holdout indicators being Treasury yield spreads and ‘inflation protected’ vs. nominal T bonds.

gold, copper, crude oil

But they say that the Treasury market is manipulated.  What ever could give them that idea (cough cough… Op/Twist… cough cough… “sanitize inflation”… nothing to see here, move along).

As of now, the balance of the indicators say inflation.  We even have a Fed president talking up inflation (the first jawbone in this post).  I wonder why.  Because maybe it is easier to deal with debt when you are inflating than when you are raising interest rates?  Surprise!

If the indicators come to say we are not on such a path, we will note it.  Meanwhile it looks like Full Frontal Greenspan… or even something potentially more intense.

By Gary Tanashian

 

 

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