Timing & trends

The Skeptical Investor – April 2015

Produced by McIver Wealth Management Consulting Group

Ethan Dang, Portfolio Manager with McIver Wealth Management of Richardson GMP in Vancouver.

www.McIverWealth.com

In Three to Five Years Gold Will Be Priceless

Over the next few years as debt, currencies and countries start to fall apart individuals will be looking to place their money where it will hold its value and buying power during times of extreme uncertainty.

If you eliminate fiat currencies which are created out of this air and are nothing more than a credit we are left with precious metals and stones. As much as we have evolved over time, we could be valuing things like gold, silver, platinum, and precious stones more so than our currency.

Let’s face it, currencies are swinging in value 20-50% regularly and while most people do not realize it their buying power often is not as strong as it was. Would you rather hold a large portion of your capital in say the EURO which is falling like a rock in value costing you thousands of dollars a month, or would gold and silver which rises in value as your currency falls be a smarter decision?

Do not get me wrong, I am not trying to be a doom and gloom analyst. And I hope to be wrong, but with so many things pointing to an extreme global change it only makes sense to add some protection in the event something drastic does happen. 

With the average fiat reserve currency since 1400 lasting between 80-105 years. With the dollar becoming the reserve currency in 1920 the odds point to the dollar being dropped within 3-5 years.

currency-life

Gold Price Chart & Long Term Bullish Patterns

 

gold-halfway

Review Of the 1970-80’s Gold & Bubble

The chart below shows the price of gold, silver, the typical price bubble, and phased of the market which happens in all asset types at some point in their life cycle.

The red line shows the average market participants emotional state. Yellow line is the price of gold, and the grey line in silver.

1980bubble-495x400

Current Gold & Silver Bubble – Priceless 2015-we-r-here-495x400

Priceless Gold Conclusion:

What does all this mean? It means money is going to move out of dying currencies and into physical assets like gold, and silver.

There are three different forecasting models for gold I have created. Depending how things play out in the next couple years the low target is $5,000 oz, and highest is $12,000 oz.

Starting to accumulate physical gold and silver as a long term investment and as insurance for your portfolio is critical. Small denominations are best because when prices sky rocket it will be tough to sell/trade a $12,000 oz gold bar compared to a gram of gold that will be worth $450, or better yet an ounce of silver worth $150.

With that said my key focus is on trading for income and growth through the use of exchange traded funds. And if precious metals are about to start another bull market there will be big gains in gold stocks which I will be trading.

Chris Vermeulen

 

My new book explains how to protect your capital in detail.

Learn to trade, and get my trades live: www.TheGoldAndOilGuy.com

 

 

 

 

Extraordinary Open Letter from Ayatollah Khamenei’s Nephew to Obama: Stop Nuclear Deal

a-obamairan-386x217An open letter to President Obama was posted on an Iranian website (khodnevis.org) today from Dr. Mahmoud Moradkhani — the nephew of Iranian Supreme Leader Ayatollah Ali Khamenei.  This letter is explosive and tells Obama, in essence, that the ayatollah, his uncle, is lying in negotiations, practicing the Shia doctrine of taqiyya in which it is permissible for Muslims to lie to the infidel for the advancement of Islam.   He advises the president not to pursue his nuclear deal with Iran and to focus on the atrocious human rights record of that country.  But allow the doctor to speak for himself.

Dear Mr. President

I am presenting this open letter as one of the serious opponents of the Islamic republic of Iran on behalf of the like-minded opposition groups and myself. Because of my knowledge of this regime, especially of Ali Khamenei who is my uncle (my mother’s brother), I see it as my duty to inform you about this regime and the issue of nuclear negotiations with the Islamic regime of Iran.

Let me at first inform you that the regime that falsely calls itself a republic came to power in 1979 by deceiving Iranian people and the world through provoking Iranian people against the regime of Mohammad Reza Pahlavi and gaining the support of the world community.

The tragedy of Cinema Rex*, believing in Khomeini’s words and then establishing a backward regime that is violent, medieval and against all international laws are all results of Iranian people and the world community being deceived. We are witnessing that not only a rich and cultured country like Iran has become a victim of this regime but also the Middle East and the whole free world. The intervention of Ali Khamenei’s regime (following Khomeini’s footsteps who had no other intention other that domination of Iraq) in Lebanon, Palestine, Afghanistan, Iraq, and Syria is more than obvious. As if these were not enough, he has now added the Arabian Peninsula to that list.

In any case, this regime has done great damage to Iranians and to the international community.

We can find a historical example of this kind of deception prior to the Second World War. Hitler manipulated and deceived German people and European countries and the hesitation in addressing the problem with Hitler led to a great disaster.

Due to the changes in time, the domain of the disaster might become limited now but breach of human rights is the same, regardless of the number of people who become victimized in the process.

Ali Khamenei and his collaborators know very well that they will never become a nuclear power. They certainly do not have the national interest of Iranian in their mind; they just use the nuclear issue to bully the countries in the region and export their revolution and middle-aged culture to other countries. Obviously, you and European countries do not give the Islamic regime any concession unless you are certain that they comply with the agreement. The Islamic regime of Iran will certainly prolong the verification period the same way that they have delayed and prolonged the nuclear talks. It is in this period that the wounded regime will retaliate with its destructive policies.

The countless breaches of human rights violations, spreading of Islamic fundamentalism, intervention and creating crisis in the Middle East are all unacceptable and contrary to democratic and humane beliefs of yours and ours.

While we can, with some measure of decisiveness and courage, uproot the wicked tree of the Islamic regime of Iran, just settling for cutting its branches is nothing more than avoiding responsibility.

It is clear that the eradication of the Islamic regime of Iran is the responsibility and mission of Iranian people and specially the opposition abroad; however, by putting obstacles in front of Iranian people and the Iranian opposition abroad one prevents them from doing their task.

The Islamic regime of Iran, based on their deceptive nature have sent their mercenaries abroad and even managed to recruit and manipulate some American-Iranians. Individuals who out of self-interest are lobbying for the Islamic regime of Iran and hiding its true nature and giving a false picture of its intentions; in the same manner that while Khomeini was in France, the so-called Iranian intellectuals did not let people of Iran and the world, realize the true meaning “the Islamic republic”. Those so-called intellectuals polished the remarks of Khomeini and converted them to positive, popular, strong and victorious ones.

We see that unfortunately in your country and your state media (the Persian section of Voice of America) and especially in UK (the Persian section of BBC) the remarks of the opposition of Islamic regime of Iran are being censored and instead the indecent habit of analyzing and relaying statements of the Islamic regime of Iran have become a norm.

I have a deep understanding and insight of the habits, morals and true indentions of this regime and I find it necessary to let you and the world know that the true evil of the Islamic regime of Iran is far more damaging and dangerous to be resolved by just signing an agreement.

People who have always lied, deceived and believe in Taqiya**, people whose main goal is supremacy and domination over others can never be trusted.

Instead they should be confronted with the very basic principles that have led to their criminality and

 

    • To put an end on breaching of human rights violations; in other words, an end to Qisas***, random executions, discrimination, suppression of dissent, media repression, religious and ideological hegemony.
    • Devolving power to the people and the abolition of restrictive laws, such as mandatory supervision in elections.
    • Giving freedom to religious minorities and repealing laws limiting the choice of thought and religion.
    • Non-interfere policy toward governments of countries such as Afghanistan, Iraq, Lebanon, Syria and Yemen.
    • Cancelling the assassination orders of dissidents in the world that have resulted in the killing of journalists, writers and even cartoonists.

 

I believe that any agreement or concession that is not associated with these basic conditions in reality will only be assisting this regime in achieving its indecent goals.

The possible disaster following this kind of hesitation will be similar to the historical mistake made prior to the Second World War.

Ali Khamenei will not be satisfied with the little that he has today and surely, and in all secrecy, at the first possible moment will attempt to bully and dominate.

Removing the crippling sanctions without fundamental changes in this regime will not be in Iran’s interest and will only facilitates the Islamic regime of Iran in reaching its objectives.

United States of America and Europe should not jeopardize their long-term interests due to short-term ones.

There are powerful and pro-active forces in the Iranian opposition and if the censorship of the media that are supporting the Islamic regime of Iran were to be removed, the opposition can easily organize and assist the powerful civil disobedience of Iranian people.

Iranian people want peace and freedom; without this regime not only can they ensure the resurrection of a civilized country but also a peaceful region.

Yours respectfully

Dr.Mahmoud Moradkhani

 

 

The Calm Before The Enormous Storm

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2008 For Bonds

Inflation may not burst the Bond Bubble. But something will. Soon…
 
THERE was once a time, perhaps, when unprecedented things happened only occasionally, writes Tim Price on his ThePriceOfEverything blog.
 
In today’s financial markets, unprecedented things are commonplace.
 
The Queen in Lewis Carroll’s Through the Looking-Glass would sometimes believe as many as six impossible things before breakfast. She is probably working in the bond markets now, where believing anything less than twelve impossible things before breakfast is for wimps.
 
The average yield on all German government debt is now less than zero, for example. This doesn’t really make any sense, but then not much does any more in the interest rate markets. We saw last month that the Danish sex therapist (this detail being entirely gratuitous) Eva Christiansen had just been approved for a small business loan at a rate of minus 0.0172%. She is herself receiving interest on the loan she’s taken out.
 
At the same time Danish depositors are being charged 50 basis points simply for the convenience of keeping their money in the bank. Jamie Dimon, chairman and CEO of J.P.Morgan, points out that on October 15, 2014, the yield on US Treasury bonds moved, intra-day, by 40 basis points.
 
How did he describe that move ? “Unprecedented.”
But it matters, because Treasury bonds are meant to be the cornerstone of the capital market structure. If Treasury yields move up and down – in a single day – like a whore’s drawers, it does not exactly betray massive confidence in the rest of the financial system.
 
This pronounced volatility may or may not be a precursor to larger shocks to come. One reason to believe it might be is cited by Dimon when he talks about much reduced liquidity in the bond market:
“The market depth of 10-year Treasuries (defined as the average size of the best three bids and offers) today is $125 million, down from $500 million at its peak in 2007. The likely explanation for the lower depth in almost all bond markets is that inventories of market-makers’ positions are dramatically lower than in the past.
 
“For instance, the total inventory of Treasuries readily available to market-makers today is $1.7 trillion, down from $2.7 trillion at its peak in 2007. Meanwhile, the Treasury market is $12.5 trillion; it was $4.4 trillion in 2007. The trend in dealer positions of corporate bonds is similar. Dealer positions in corporate securities are down by about 75% from their 2007 peak, while the amount of corporate bonds outstanding has grown by 50% since then.
 
“Inventories are lower – not because of one new rule but because of the multiple new rules that affect market-making, including far higher capital and liquidity requirements and the pending implementation of the Volcker Rule. There are other potential rules, which also may be adding to this phenomenon. For example, post-trade transparency makes it harder to do sizeable trades since the whole world will know one’s position, in short order.”
Imagine a small room improbably crammed full of elephants. There is only one tiny door by way of an exit. Now let off a firework.
 
We heard a great line at an investment conference during the dark days of 2008, post-Lehman:

“If you’re a distressed seller of an illiquid asset in a market panic, it’s worse than being trapped in a crowded theatre that’s on fire. It’s like being trapped in a crowded theatre that’s on fire, and the only way you can get out is by persuading someone on the outside to swap places with you.”

For context, the sort of stuff whose values imploded spectacularly in 2008 included dodgy corporate credit and mortgage backed securities. Given the liquidity dynamics of the institutional marketplace highlighted by Jamie Dimon, the sort of stuff whose values can implode instantaneously today includes the likes of US Treasury securities themselves. So in the fixed income market, all bets are off.
 
At the recent Grant’s Conference in New York, fund manager Paul Singer identified an even bigger short than the original Big Short (repackaged sub-prime tat). This new, even bigger short?
 
Long-term claims on paper money. In other words, all bonds.
 
Is it remotely possible that at some point, perhaps quite soon, the bond market could see yields spike higher? As Paul Singer puts it,

“A surge of inflation which far exceeds the strength of the economies is not out of the question and could be catalyzed and accelerated by the oft-stated goal of central bankers to cause more of it.”

The bond market is acting schizophrenically. The cognitive dissonance is deafening. It has pushed down the yields of bonds on the tacit understanding that central banks (most recently, the European Central Bank) will be buying them by the bucket-load.
 
But the expressed purpose of so-called Quantitative Easing is to ignite inflation. If you believe that central banks can succeed in creating inflation, then you should be selling bonds, not buying them, especially when they’re yielding less than zero.
 
We’re not convinced that central bank money creation can easily trigger inflation when the forces of deflation seem to be currently so powerful. But it matters not. Anybody with half a brain cell will recognize the risk inherent in bond markets today. The relative and absolute attractiveness of value equities, by comparison, is now astonishing.
 
The only people who should be buying bonds today are billionaire altruist lunatics with a death wish.

 

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Yet Another Warning Over Canada’s Housing Market

images-1The Economist says that Canada’s housing market is overvalued by at least 25 per cent. More likely 35%

The magazine named Canada along with the U.K. and Australia as being “notable” for having an overvalued housing market. The metrics it uses include home-value-to-rent ratios and prices relative to after-tax income.

It’s not the first time that Canada has ranked highly in the Economist’s analysis of property markets, but it is the first time it’s been at the top.

House prices compared to rents are 89 per cent overvalued, which is a rise of 73 per cent from two years ago. Compared with income prices are 35 per cent too high. 

related:

9 reasons your real estate venture could fail

Vancouver condo ‘better investment than gold’

Investing in real estate will be easier, if you give to charity

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