Asset protection

Marc Faber: I Am My Own Central Banker

UnknownEveryone always says, I want to buy low and I want to sell high. So I think for me, of course I own a lot of gold, and I need to buy more to keep asset allocation between 25% in Real Estate, 25% in equities, 25% cash and bonds, and 25% gold. I need to buy more. So for me this is a very happy event. I don’t like to buy gold at $1,900 like in 2011. I like to buy it here or lower.

Gold Broker: Do you think it will break under $1,000 like some people say?

Marc Faber: Look. The forecasting record of people is horrible, in particular, the forecasting record of the Federal Reserve. So, I don’t know, maybe it will go below $1,000 but my sense is that it will not stay below $1,000. …. I would use the current weakness as a buying opportunity. … I’m telling everybody, you as an investor, and me as an investor, we cannot trust the government. … I am my own central banker. I keep my own physical gold. I do not trust anyone of these (unprintable word).

…the above posted on Marc’s website Dec 4th. The following on Dec 3rd & Dec 2nd. 

In Europe we have a flat inaudible Economy

Fed Monetary Policy Will Destroy World‬‬ 

 

Harry Dent’s Simple Strategy for Surviving Withdrawals from ‘Markets on Crack’

dollaronrock580An aging world is a deflationary one, according to “The Demographic Cliff” author Harry Dent. He predicts a major, painful crash in the next two years based on population statistics and historic patterns. He has some positive short-term predictions for gold, and investment suggestions for how to be one of the ones still standing after the dust settles. 

The Gold Report: Your book, “The Demographic Cliff: How to Survive and Prosper During the Great Deflation of 2014–2019,” predicted a great deflation based on demographic trends. Were you surprised by the strong stock market over the last year?

Harry Dent: Yes, I was. I’m always surprised. Bubbles go and go until they suck everybody in. It’s been this way all throughout history. This is a bubble. It looks like a bubble, quacks like a bubble and tracks every bubble in history. It’s going to burst, but we continue to have outside influences propping it up. The Federal Reserve announced tapering of quantitative easing, but then the Bank of Japan and the European Central Bank stepped up their bond buying, and the markets are eating it up. 

I actually think we’re probably not going to peak until early next year, perhaps around March, with the Dow Jones Industrial Average as high as 19,000. There are certain indicators we look for at a top. One we have already seen is small caps underperforming large caps without making new highs. That is one classic indicator. Another one is selling pressure increasing in a final rally, which shows you the smart money is leaving. That did not happen in this recent rally, as sharp as it was and as crazy as it looked. I call this the “markets on crack.” 

Bubbles act like grains of sands dropped on the floor. They form a mound that gets steeper and steeper until at some point one grain of sand causes an avalanche. Something is going to happen here that governments can’t respond to and control. Germany keeps weakening. China is showing signs of unraveling and cracking, but it hasn’t totally burst. . .yet. 

This market is not going to crash 10% or 20%. It’s going to crash worse than it did in 2008 and 2001 and 1930 and 1973. This is going to be the biggest crash ever.

TGR: What are the indicators that are warning you about this crash?

HD: We always look at demographics. The demographics for spending in Japan peaked in 1989 and pointed down in the 1990s. That was the indicator that Japan was going to have a tough decade. Germany is in an even worse predicament. It underperformed this year and will keep underperforming. That country has the steepest downtrend in demographic spending patterns of any country in the world, especially between 2014 and 2022. It is the second fastest aging country in the world. To make it worse, Germany is holding up Europe’s economy at the moment. What happens to bailout efforts of the already weak countries if Germany keeps declining? China’s housing bubble is cracking. Developers are discounting and the government is still encouraging overbuilding. 

We are also looking at demographics in the U.S. The average age of 46 for peak baby boomer spending occurred in 2007. That plateaus until the average age of 53 and causes demographic headwinds. We’re hitting that final plateau this year, 2014. That’s why the governments are stimulating at such unprecedented rates, just to get 2% growth on average. I am predicting that car sales are going to start to plummet next year, and the more affluent people who peak later are going to start spending less. Next year, 2015, will be a weaker year than the markets are expecting.

TGR: In the U.S. today, the official unemployment rate is close to 5.9%, but some, including John Williams at Shadow Stats, peg it closer to 23%. What’s happening in the U.S. economy, and is it part of what you call the Great American Reset?

HD: If you adjust for the decline in workforce participation, we’re still closer to 11%. John Williams is probably including underemployment and full-time-optimized people taking part-time jobs. The bottom line is that the job market is worse than the figures tell. Of course, the government is not going to tell anybody that because it wants to keep confidence up. It seems to be working. That is why I call this the “markets on crack.” The markets ignore bad news. They don’t look very deeply as long as the Fed keeps supporting the markets and holding interest rates at essentially zero short term. It is creating free money and convincing the markets that the economy can’t fail. 

There is recent proof that is not the case. Japan’s economy failed in the early 1990s when its demographics turned down sharply, even through the rest of the world boomed. I don’t think governments will be able to fight this next demographic decline. Debt is at unprecedented levels in almost all countries around the world. China has two to three times the debt that an emerging country, with its standard of living, normally has. We’re in the greatest debt bubble in history. You can’t keep growing when debt is growing and global growth is slowing. At some point, a grain of sand is going to break this thing. Something’s going to go wrong, and the markets are going to realize the future doesn’t look rosy and you can’t get something for nothing. We’re not going to get a sustainable recovery by creating money out of thin air. 

TGR: What does the Great American Reset feel like when you’re living through it?

HD: It is painful. That is why governments are fighting so hard to avoid a reset. Debt bubbles like the one we experienced in the early 1900s cause financial asset bubbles in stocks and real estate and commodities. Then, at some point, they burst and cause a reset. Stocks tend to go down 80% on average. That’s what they’ve been down in Japan. Real estate went down 60% in Japan. Imagine your house going down 60% and not bouncing back for 24 years. That is what is happening now in Japan. Unemployment goes to the highest levels we’ll see in a lifetime. It hit 25% in the Great Depression in the U.S. 

These resets are very painful, but they’re necessary. Unless financial assets come down, young people can’t invest for the future. Unless we burst this education and healthcare bubble, people aren’t going to be able to afford doctors or school in the future. Unless we reset entitlements so we retire later, there’s no way we can afford what’s been promised. Unless real estate goes back down to pre-bubble levels, and that is still 40% lower than where we are in this bounce, then young families aren’t going to be able to afford houses. 

We need this reset, but it is incredibly painful. Deflation is the reset. It is like a financial detox. Detox is painful. That is why it is important to get liquid, lock in your job and hunker down. Those who take this advice ahead of everybody else will do well. They will benefit from this reset. But most people will just go off the cliff and not know what the hell happened. 

TGR: When we talked in January, you pointed to Australia as the golden country because of its low debt-to-GDP ratio and possible population growth through immigration. What impact are lower resource prices having on a country where mining is responsible for almost 20% of the economy?

HD: Australia is a great place. It has low debt, low crime and a civil society. It has the strongest demographics because of high-quality immigration from Asia, and is one of the few countries with a bigger echo baby boom than the baby boom. But there are two challenges looming. The first is high trade with China, a country that is going to blow bigger than any country in modern history. That will affect Australia, which already has a real estate bubble that is as big as any Western country, except for England. The other negative is commodity prices. The Australian stock market is 20% off its highs, almost the same percent that commodities are off their highs right now. Commodities are Australia’s Achilles’ heel. Still, I consider it the best place to live in a crisis. It will come out of this stronger than most countries, but it also will feel the next downturn much more than the last one because of China and commodity prices.

TGR: Your predictions are largely based on demographics. I recently interviewed Frank Holmes from U.S. Global Investors, and he pointed out that in the emerging world, 100 million people are having sex right now, and in nine months that will mean one million screaming babies who will consume three million pounds of minerals, metals and fuels each in their lifetimes. Wouldn’t that be a positive demographic statistic for natural resources demand?

HD: You would sure think so, but the question is when. The positive demographics of many emerging countries won’t peak for 20 years or more. India will peak 50 years from now, and some countries in Africa could reach their highs 80 years from now. Having babies is good. But emerging countries are largely commodity exporters and their economies follow the developed countries. They don’t lead them. When we go down, they go down more. In the 2008 crash, despite all these positive demographic trends, the emerging markets crashed more than the U.S. market. The Emerging Markets Index went down 65%. I’m positive about emerging markets longer term, but we have to get over this worldwide downturn. 

We are projecting that commodity prices are going to go much lower in the next several years. Commodity prices peak like clockwork every 30 years, and then go down for 10 to 15 years or more. We’re in a downward cycle that doesn’t bottom out until around 2023. 

TGR: You predicted that while gold could return to $1,400 an ounce ($1,400/oz), it could also go as low as $700/oz. Is that still a possibility? And, if that were to happen, wouldn’t mines just close and there’d be no new gold entering the market?

HD: I think gold is extremely oversold right now. People are very bearish on it after the recent fall, but this isn’t the time to panic and sell. It is due for a bounce back up to $1,300/oz or even $1,400/oz. That would be the time to lighten up before it goes down again. I think gold is ultimately going to hit somewhere between $250/oz and $400/oz. I just think the next major stop is $700/oz. I think silver is going to hit $5–10/oz before it comes up again.

People bought gold because central banks were printing money like drunken sailors and they reasoned that would cause inflation. But when the global financial bubble bursts, that destroys money, creates deflation and is bad for commodity prices and gold.

TGR: What are your predictions for uranium and oil?

HD: We see commodity prices in general going down over the next several years. Oil is going to hit $10–20 a barrel. It’s not going to stay there. I think oil is also extremely oversold here and is probably due for a bounce. But I would not want to be long oil or uranium over the next several years.

TGR: How can investors survive or even prosper during all of this mayhem?

HD: The best thing is to get liquid. Sell real estate that is not critical to your business or that you don’t want to live in forever because real estate is going to go down again. If you’ve got a mortgage, it’s going to be really painful. Sell stocks and risk assets and commodities. Focus on cash, safe securities, some shorts if you want to take some risk or hedge some dividend stocks, and long the U.S. dollar versus the major currencies in the world. That’s the way to make money in volatile times. I just like having cash and sleeping. This way I can be totally objective, so when the next bubble bursts, which I think is very likely to happen in the next two years, I can step in with a clear mind and buy the emerging markets, like India and Southeast Asia and then Mexico, maybe even Turkey. 

A good bet based on demographics would also be the healthcare sectors—medical devices, biotech and things that benefit from the aging of the baby boomers. Once there’s a crash and the stock valuations go down, you’ll have the cash to buy whatever you want. 

TGR: Thanks for your time.

Harry S. Dent Jr. is founder of Dent Research, an economic research firm specializing in demographic trends, and editor of the Economy & Markets and Boom and Bust newsletters. His mission is “Helping People Understand Change.” Dent is also a bestselling author. In his book, “The Great Boom Ahead,” he stood virtually alone in accurately forecasting the unanticipated boom of the 1990s and the continued expansion into 2007. In his new book, “The Demographic Cliff,” he continues to educate audiences about his predictions for the next great depression, especially between 2014 and 2019, which he has been forecasting now for 20 years. Dent regularly lends his economic expertise to the media on television, in print, and on the radio, and is sought after as a panelist and speaker for international forums around the world. He earned his master’s degree in business administration from Harvard Business School, where he was a Baker Scholar. Subscribe to the free daily Economy & Markets newsletter at harrydent.com

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DISCLOSURE: 
1) JT Long conducted this interview for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, and provides services to Streetwise Reports as an employee. 
2) The following companies mentioned in the interview are sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services.
3) Harry Dent: I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I determined and had final say over which companies would be included in the interview based on my research, understanding of the sector and interview theme. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
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6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview until after it publishes.

 

A Bubble of Hope

Money-Week clip image001

If Everything Is Just Fine, Why Are So Many Really Smart People Forecasting Economic Disaster?

Could they be wrong?

It’s certainly possible.

But I wouldn’t bet against them.

                                ….read more HERE

Bloody Amazing: Flying Defibrillator “Ambulance Drone” ….

Screen Shot 2014-11-27 at 2.51.48 AM…slashes response time to 1 minute from 10 & Heart Attack survival from 8% to 80%!!!

A Dutch engineer has created a flying defibrillator for emergency situations. The drone, called the Ambulance Drone, would be stationed at various points in the city. In an emergency, people on the scene can call it in and it arrives a few seconds later. he built-in defibrillator unit can be used by anyone and it allows doctors to monitor the situation after the shocks are administered.

The drone includes a webcam and loudspeaker and allows remote doctors to walk people on the scene through the process of attaching the electrodes and preparing the defibrillator. The creator, Alec Momont of TU Delft’s Faculty of Industrial Design Engineering, said that 20% of people can operate a defibrillator without instruction and the number rises when they have prompts from trained personnel. 

‘Some 800,000 people suffer a cardiac arrest in the EU every year, and only 8% survive,’ Momont explains. ‘The main reason for this is the relatively long response time of the emergency services (approx. 10 minutes), while brain death and fatalities occur within 4 to 6 minutes. The ambulance drone can get a defibrillator to a patient inside a 12 km zone within one minute. This response speed increases the chance of survival following a cardiac arrest from 8% to 80%.’

 

The system is still in prototype stage but there is a good chance it could be launched in five years for about $20,000 each. Drones are still not allowed to fly autonomously so they can’t wing their way around downtown Delft with their helpful payload… yet. It will be interesting to see these robots flying around one day, dropping first aid when needed. 

 

Four Horsemen of the Apocalypse or the New Dawn

fourFrom John Mauldin:

“For a central banker, deflation is one of the Four Horsemen of the Apocalypse: Death, Famine, Disease, and Deflation. It is helpful to understand that, before a person is allowed to join the staff or board of a central bank, he or she is taken into a back room and given DNA replacement therapy, inserting a gene that is viscerally opposed to deflation.”

Death:        There will be many more deaths – think Middle East, Ukraine, Africa, and the next big war.

Famine:     A shortage of food, whether inspired by drought, politics or war has been normal throughout history.  Today there are food shortages in many countries and there are nearly 50,000,000 people in the U.S. on food stamps (SNAP) – the modern equivalent of “bread lines” and “soup kitchens.”

Disease:    Ebola, AIDS and drug resistant TB, staph infections and more.

Deflation:

…continue reading for advice on how to manage all of today’s dangers HERE

The Lie to End All Lies

On Thursday morning, whilst taping this week’s Audioblog, I discussed how overnight, the PMI Manufacturing reports in China, Japan and essentially all of Europe were not only miserable but well below expectations.  Heck, even the PMI report in the United States of Economic Lies came in at just 54.7, down from 56.2 last month and well below expectations of an increase to 56.5.  In fact, it was the lowest print in ten months, validating with this week’s slew of 4Q GDP estimate downgrades.  Which, by the way, were predicated on myriad factors from weak exports, to declining capital investment and even “Polar Vortex 2.0.”  In other words, a broad mosaic of data suggesting America is succumbing to its terminal debt addiction, amidst global economic weakness not inappropriately compared to the Depression.

Consequently, the 10-year Treasury yield was on the verge of breaching the Fed’s current “line in the sand” at 2.30% yet again, whilst stocks were in danger of actually declining; and, for the third time this week, gold was about to take out $1,200/oz. (after having been turned back by “Cartel Herald” algorithms the prior two days, at exactly 6:00 AM EST).

24-Hour-Spot-Gold-11-20

Consequently, the U.S. government decided to go as “all-in” on economic data manipulation as Japan has with its hyperinflation strategy.  To that end, recall when Forest Gump told the man at the bus stop that he owned the Bubba Gump Shrimp Company; to which, the man replied “Boy, I’ve heard some whoppers in my time, but that tops them all!”  To a man, I’d be more inclined to believe Forest could be a CEO than what the government proclaimed this morning; i.e., the “Philly Fed” business conditions index not only rose significantly from last month’s reading of 20.7 but exploded to 40.8.  In other words, a ten standard deviation “beat” of the consensus expectation of 18.0, whose theoretical odds occurring at just one in 1.5×10^23.  And not only did this “survey” print its strongest reading since 199 but strongest new orders component since 1988!

I doubt anyone in the investment world believes that’s even remotely true, particularly as it not only contradicted the PMI report published just 15 minutes earlier but essentially every real data point imaginable.  I mean in the past two weeks alone, it was reported that durable goods orders, factory orders, construction activity and industrial production declined in October, whilst retail sales rose a scant 0.3%.  Throw in the aforementioned, grisly international data and it’s difficult to believe any increase occurred – let alone, of the magnitude this travesty of a report depicted.

Of course, the “Dow Jones Propaganda Average” was treated to its 20th straight “dead ringer” algorithm – as it prepares to hyper-inflate, Venezuela-style.

2-Graphs-11-21

However, a funny thing happened in the world of “recovery”; as not only did Treasury yields decline, but closed just three basis points from the aforementioned “line in the sand” the Fed is so terrified of.  After all, it borders on comical that the Fed is pretending to consider rate hikes – even if not for a “considerable time” – when rates are plunging.  Let alone, when rate declines occur as their data cookers purport the “best economic conditions” since 1993; and oh yeah, the “stock market” is trading at record highs.

Better yet, despite relentless capping and attacking – no less, with the potentially Cartel-destroying Swiss referendum just ten days away; gold and silver not only recovered yesterday’s Cartel orchestrated losses, but closed at the day’s highs – setting up gold for a fourth attempt to take out $1,200 in four days.  Could we actually have three straight strong Friday’s – which frankly, NEVER happens?  Much less with the Swiss referendum next Sunday?

24hr-Charts-11-21

For some time now, we have discussed how the “propaganda leg” of the “evil tripod” of money printing, market manipulation and propaganda is permanently broken.  In other words, no matter what propaganda is reported, the world is starting to realize the true state of the U.S. economy.  For example, auto sales cannot be characterized as “strong” when they are either leases or subprime loan financed; let alone, amidst an environment of record “channel stuffing.”

Subprime-Auto-Loans

GM channel stuffing

Zero Hedge

Better yet, the “sentiment” of trade organizations like the National Association of Home Builders has as much credibility as a fox in a henhouse; particularly when it explodes to multi-year highs when both home sales and housing starts (in the latter case, principally rental units) remain at recessionary levels.

Housing-Charts-11-21

And thus, the issue of the boy who cried wolf.  At some point, people stop listening; and in this case, global fixed income and commodity markets decidedly aren’t buying America’s “recovery” propaganda.  Not to mention, the physical gold and silver markets, which are both experiencing record demand.  Given the reality that “Economic Mother Nature” is revealing, it won’t be long before the money printing and market manipulation “legs” break as well.  And when they do, if you haven’t already protected yourself with real money, you may never get the chance; certainly, not at prices anywhere near today’s historically suppressed levels.

www.milesfranklin.com