Currency

Setting the Stage for the One World Currency

Posted by Martin Armstrong - Armstrong Economics

on Monday, 16 February 2015 15:04

one-world-currency

We can start to see how the one-world currency comes into play with BIG BANG. The more these governments try to manipulate the outcome of the free markets, the worse everything becomes. I met with members of the board in charge of the Swiss/Euro Peg just before the Berlin Conference. I explained that no peg has ever lasted and Bretton Woods stands as witness to that in recent memory no less the Pound/DMark Peg that made George Soros famous. Pegs only suppress the free market, they cannot prevent the eventual outcome.

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Instead of an orderly market, the Swiss got overloaded with buying Euros. Had they continued to keep buying, they would have simply bankrupted the entire country if they did not abandon the peg. But what happens is rather simple to comprehend. The volatility increases and its released all in one shot. We can see here that the collapse was still orderly. The market fell to test the Downtrend Line from 2011. It would have reached that target in a normal fashion. The peg simply postponed the inevitable increasing the price shock the longer it was extended. The more you postponed, the steeper the shock for the market will still test that Downtrend line no matter what or when.

The G20 Finance ministers are now pleading with the Fed not to raise rates since they have seen the impact of a rising Swiss franc on everyone who had Swiss loans outside the country demonstrates the crisis we have in currency developing. They have yet to understand why Greece and Southern Europe got screwed. Their debts were transferred to Euros which then DOUBLED. They had to pay back twice as much and that stripped mined their economies.

The G20 wants the Fed to surrender its domestic policy objective to serve external policy objectives. The Fed cannot and will not take that action. For when the stock market rises on an influx of foreign capital, they will see no other choice but raise rates. Everyone domestically will blame the Fed for low rates creating the bubble. They will set off a major debt crisis outside the USA by raising rates, but if they don’t they will be blamed for the Phase Transition into stocks from outside the country precisely as the bubble was created in Japan with the rising yen going into 1989.95.

interventionists

This is all part of the crisis we have in the total lack of understanding the global economy. This is what I am warning about that politicians cannot stand up and even promise change when the influences are external. ONLY those of us who have actually dealt internationally can see what is unfolding. The rest are confined by their traditional interventionist views that a local government can manipulate its economy irrespective of the world as Marx and the Keynes argued. Sorry – we are all connected.

We will be moving toward a one-world currency as everyone starts to comprehend that allowing one nation’s currency to serve as the world reserve currency, imposes obligations upon that nation that will be in conflict with its domestic policy objectives.

…also from Martin:

TIME – The Fourth Dimension

 

4 Reasons Why Every Investor Needs Dividend Stocks in Their Portfolio

Posted by Ryan Irvine - KeyStone Financial

on Monday, 16 February 2015 14:56

With interest rates near historic lows, investors have been desperately seeking yield. As a result, one of the hottest segments for investors over the last five years has been buying large companies that pay attractive dividends.

Many question whether or not this can continue. That fact is however, investing in high quality-cash producing dividend stocks is no “Johnny-come-lately” strategy. It is simple, tried & true, and has been used by some of the world’s most successful investors for over a century.

In fact, it is so simple that with the right advice, almost any investor can use it. It is likely why a financial industry that makes its’ money off creating, packaging and selling you exotic daily stock, options, commodities, and forex systems, often casts it aside. They don’t want average investors to discover the simple yet powerful wealth-builders dividend stocks can be.

Some of the world’s greatest investors including Warren Buffett will tell you to stop “trading” and start “investing.”

You need to stop playing the Wall Street game and start using the stock market, as it has been used in the past, as a distribution mechanism for the excess profits of corporations – dividends.

Here are 4 reasons why you should continue to look to high quality dividend paying stocks for superior long-term returns.

1.Dividend Stocks Have Outperformed Non-Dividend Stocks over the Long Term

A very common misconception with the investing public is that dividend stocks provide a lower, albeit safer, return on investment. This has helped dividend stocks earn an ill-conceived reputation for being boring. However, the facts present a completely different picture – dividend stocks actually outperform non-dividend stocks by a significant margin over the long term.

The chart below (from RBC Capital Markets Quantitative Research) clearly illustrates that over a 27 year time horizon, dividend stocks on the TSX Composite Index vastly outperformed their non-dividend paying counterparts. The average annual compound returns of dividend payers was 10.3% compared to 0% for companies that did not pay dividends. 

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2. Dividend Stocks Can Pay Investor’s for Being Patient – You Get Paid As You Wait

Patience is a virtue when it comes to investing, but dividends give investors a reason to be patient, even when the market is not performing. You can wait years for a good company to complete their growth plans, become accepted by the market, or to rise out of a downturn. If they are not issuing a dividend however, you may not be making a return. But if you are being paid a dividend, you are being paid to be patient. If the company struggles with any kind of market head winds, you are continuing to earn a real return on your investment.

3. Dividend Stocks Can Provide Investors with Growth as Well as Regular Cash Flow

Another common misconception about dividend stocks is that they are pure yield investments – meaning that while they provide a dividend, they also provide little or no potential for stock price appreciation. Once again, this notion is false. There are select opportunities in the market that not only pay a generous dividend, but also retain cash for re-investment into the operating business. This allows the company to grow their earnings and increase the distribution on a regular basis – these are referred to as dividend growth stocks. Not only are you receiving a higher dividend (and yield) after every increase, but you will also likely see the value of your stock price increase as well.

4. Dividends Can Help to Provide Price Support for a Stock during “Bear” Markets

A regular and safe dividend can also provide price support for a company’s stock. During a market downturn, a good company can be punished even if the financials remain intact. If the market is bearish, investors can lose short-term reasons to own non-dividend stocks. In such circumstances, the stock price will typically fall. Why own a stock in the short term if the market is against you? But a company with a stable or growing dividend presents a very compelling reason for ownership – even in a bear market – the more compelling the reason, the more stable the company’s stock price.

Again, dividends can be powerful wealth-builders and they offer the extra benefit of providing income even during market or stock pullbacks.

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Bull Trend Salvaged?

Posted by Lance Roberts - X-Factor Report

on Monday, 16 February 2015 14:52

Screen Shot 2015-02-16 at 6.21.10 AMAfter a couple of rough months in the markets where volatility rose quite dramatically, it now seems as if the bull trend will remain intact at least for a while longer.

It is interesting to note that despite the geopolitical risks (Russia, Iran), financial risks (Greece) and rapidly deteriorating economics and earnings, that the market has sustained only a 3%ish correction over the last couple of months.

This is, of course, due to the extreme level of complacency in the markets like the “irrational exuberance” witnessed in the late 90’s.  Now, like then, the level of overconfidence can last for quite some time and should not be underestimated.

What is important to understand, is “when” the eventual correction comes there will be no safe place to hide. In the coming financial reversion, the only save place will be in “cash.”

DO NOT misunderstand me. I am not suggesting that the world is about to end economically and that all you should own in gold, ammo and a can of “beanie-weenies.”

……Read more here

Long Bond Breakdown

Posted by Dan Norcini

on Monday, 16 February 2015 14:45

Well, here we go again. I do not know how many times over the past year or so I have noted what looked like a chart breakdown in the US long bond. By that I specifically mean a close BELOW the 50 day moving average. Generally, that will get technicians to sit up and take notice and begin to approach a market from the short side. Each time I have noted this however, the bonds have done a flip-a-roo and back up they have gone continuing the bull streak.

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This time, maybe, just maybe, we are seeing an end to the ultra low long term interest rate environment. As badly at this market has tripped me up over the last year and a half, when it comes to turning negative on it, I am somewhat reluctant to get too worked up about a close below the 50 day moving average once more. This time however, it While it cannot be seen on this daily chart view ( look at the weekly chart below), we were up near ALL TIME HIGHS in the bonds. That translates to ALL-TIME LOWS in long term interest rates.

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The question I ask is how much lower can long term rates go from these levels? I suppose they could indeed head lower but I shudder to think what economic conditions would be like were that to occur as it would signify a near collapse in US economic growth and a huge failure on the employment front.

Note on this intermediate term chart (weekly) the MACD has not yet given a Sell signal. It has hooked down however.

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Let’s switch the indicator to look at the ADX/DMI however because there is something quite notable that we need to discuss. The ADX, that line which when rising indicates the presence of a strong trending move, has finally hooked lower and turned down. It has done that before but this is what has my attention – it is doing so from ITS HIGHEST LEVEL ever since 2009! Look at the horizontal red line I have drawn across that indicator. You might recall that was when the very first QE program was initiated by the Federal Reserve and traders reacted by pushing bond prices sharply higher. However, it was not until the full impact of all those longer term bond purchases was being felt in the interest rate markets that the long bond went on to make its all time high in the summer of 2012. Look and see – even at that point, the ADX was not nearly as high as it currently is.

The same can be said of the Positive Directional Movement Indicator (+DMI BLUE LINE). It too is at its highest level since that same time frame in early 2009!

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In other words, we have experienced one of the most powerful uptrends in market history in the bonds – a trend that goes back over 30 YEARS and this trend, may just possibly be finally coming to an end. I do not want to read too much into one week’s price action in a trend of this duration, nor even one month’s price action, but given the level at which the bonds are trading, and given the comparable incredibly low corresponding interest rates, I personally believe that we have seen long term interest rates go as low as I will ever see again in my lifetime.

The only thing that I believe will disabuse me of this notion, is as I stated earlier, a complete economic collapse. Barring that, one has to wonder if 30 years of falling long term rates has now become one for the history books.

 

About Dan Norcini

Dan Norcini is a professional off-the-floor commodities trader bringing more than 25 years experience in the markets to provide a trader’s insight and commentary on the day’s price action. His editorial contributions and supporting technical analysis charts cover a broad range of tradable entities including the precious metals and foreign exchange markets as well as the broader commodity world including the grain and livestock markets. He is a frequent contributor to both Reuters and Dow Jones as a market analyst for the livestock sector and can be on occasion be found as a source in the Wall Street Journal’s commodities section. Trader Dan has also been a regular contributor in the past at Jim Sinclair’s JS Mineset and King News World as well as may other Precious Metals oriented websites.

Crash and Burn Phase for Governments …

Posted by Larry Edelson - Commodities, Stocks, Technical Analysis

on Saturday, 14 February 2015 14:38

LarryEdelsonLet me cut right to the chase: This year, the global financial markets … entire economies … and even political systems and philosophies — will spiral out of control.

We will hit the back wall of the financial hurricane that started in 2008. And we will also be hit by another ramping up of the related war cycles.

It won’t be pretty. It will affect everything you do. Everything you own. Every investment you make. Your lifestyle. Your children and grandchildren’s future.

No, I am not being an alarmist or screaming fire in a packed theater. I am merely telling it like it is, for if you understand the forces that are now converging upon the world, you will see the same things coming that I do.

Just take a look around:

 

Financial markets are swinging wildly. Everything from stocks and bonds, to commodities are now on a roller coaster. Whenever that happens, it means something big is coming.

Big moves that could destroy your wealth in a heartbeat. Or, big moves that you can capitalize on. The choice is yours.

Entire economies are quaking. Europe is the worst of them. But there are problems in China (though they won’t derail China’s growth). There are problems in Australia, Canada, Great Britain. In Brazil, Argentina, Mexico, Venezuela.

Screen Shot 2015-02-11 at 6.59.57 AMAnd then there’s Russia. An economy that most assuredly will crash and burn, but ironically, will give its leader, Vladimir Putin, all the more reason to point fingers, and his sheep, the Russian people, will back him all the way.

Even political systems are under stress. Third parties are rising in strength all over Europe. New Neo-Nazi groups. Separatist groups. Secession parties. Terrorist groups. Cultural clashes. And more.

All part and parcel of the rising war cycles that I’ve been warning you about, conditions that will not abate until at least the year 2020.

So why is all of this happening? Why will it get worse in the years ahead?

It’s actually very simple: You are witnessing the death of communism and Western-style socialism.

It is not the demise of capitalism, as so many think. It’s the opposite:

The death of big government. The death of the state taking care of you. The death of Keynesian economics.

The death of governments that are so indebted from fiscal mismanagement and making promises to you that they could never keep — that they are now waging financial repression against you …

While at the same time finding scapegoats in the form of other countries, other political systems and parties, to blame.

We are entering a crash and burn phase for government. Especially Western governments and their socialist and safety net experiments of the last several decades. Of their currency experiments, their trade wars, their inept policies, and more.

It will manifest itself mostly in the sovereign bond markets of Europe and the United States, where interest rates are so low that even our country’s founding fathers would be shocked.

And when it bursts later this year, it will usher in what my dear friend and mentor, Marty Armstrong, calls the “Sovereign Debt Big Bang.”

That’s when it will really start to come unglued. It’s when the sovereign bond markets of the United States, Europe, and Japan will begin to implode … and interest rates begin to rise … no matter what the central banks do.

It’s when the chickens will come home to roost, when the citizens of those countries … and investors everywhere … realize that the Emperors of those countries — their leaders and governments — really do have no clothes.

And then, nearly all markets will swing even more wildly than they are now.

I repeat: This is a year of danger. And unless you start preparing now, it will gut your wealth.

My best advice right now:

First, stay out of U.S., Japanese and European government debt. No matter what anyone tells you, sovereign debt markets are soon going to become the biggest disasters of all time.

Second, steer clear of the euro currency and the Japanese yen. Stay mostly in dollars. I know it seems illogical, but it isn’t. As Europe and Japan implode, and as the war cycles wreak havoc in almost every corner of the globe, more and more savvy money will flee to our shores and to the dollar — even as our bond markets tumble.

Third, build your own war chest, to go after the opportunities that are coming.

While this year will be the beginning of some of the biggest threats ever to your wealth …

It will also be the beginning of some of the biggest opportunities ever.

Stay safe and best wishes,

Larry

Larry Edelson, one of the world’s foremost experts on gold and precious metals, is the editor of Real Wealth Report, Power Portfolio and Gold and Silver Trader.

Larry has called the ups and downs in the gold market time and again. As a result, he is often called upon by the media for his investing views. Larry has been featured on Bloomberg, Reuters and CNBC as well as The New York Times and New York Sun.

 

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