U.S. China Trade War

DYI:  Will America win a trade war with China?  I voted for Trump but right out of the gate his unwillingness to take on the medical industrial complex – was on his campaign web site only to disappear when he was elected – has disappointed me greatly.  However when it comes to China we are Saints compared to their government sponsored theft of technology all over the globe.  Huawei Corporation is just one of many Chinese companies working side by side with their respective intelligence gathering agencies stealing technology for multiple decades.

Here’s the low down on U.S. trade war with China.  China’s national business model for modernization is all based on ripping everyone off what happens when nations such as us and others tire of being ripped off??  A trade war takes place and President Xi knows this would eventually happen.  He also knows that his country has blown a debt bubble that makes our Federal Reserve out to be pikers.  Combine their debt bubble and placing of tariffs China is in for one hell of an economic fall and President Xi knows that as well.

The original question is will we survive and win a trade war?  Contrary to many web sites and other bloggers that the next 1930’s is just around the corner the answer is hell no.  The percentage of our GDP from Chinese imports is only 15%.  If that went to zero there are other nations to import from or could be produced domestically.   Stopping the theft by at least not allowing them to prosper from our consumers is a big first step.  Not only will we win; we will survive as well.

The real question that should be asked will China survive as a nation?

The Chinese economic debt bubble smash will arrive faster with a trade war that China cannot win.  China is actually not a nation as most people envision but that of an empire held together by bribes and when needed brute force.  Their autonomous regions for decades desired to breakaway from China.  Tibet the most notable in the main stream press along with the north western regions being Muslim having nothing in common with eastern Chinese plus in the south Guangxi is far friendlier with China’s arch rival Vietnam.  If the smash is worse than our great depression it would come as no surprise to see their eastern seaboard from Shanghai to Hong Kong running back into the arms of the British.

DYI

Bubble

News

Even Before The Recession Has Officially Begun, Some Large U.S. Firms Are Laying Off Thousands Of Workers

May 20, 2019 by Michael Snyder

If the U.S. economy is “booming” and very bright days are ahead, then why are many large U.S. corporations laying off thousands of workers?  Layoffs are starting to come fast and furious now, and this is happening even though the coming recession has not even officially started yet.  Of course many are convinced that we are actually in a recession at this moment.  

In fact, according to John Williams of shadowstats.com if the government was actually using honest numbers they would show that we have been in a recession for quite some time.  

But the narrative that the mainstream media keeps feeding us is that the U.S. economy is “doing well” and that the outlook for the future is positive.  Well, if that is true then why are big companies laying off so many workers right now?Worldwide layoffsFord 7,000
Nestle 4,0003 M 2,000MGM Resorts 1,000Dress Barn closing all 650 storesWood-Mode Inc. 1,000

DYI:  So far DYI’s five recession indicators except for widening credit spreads are maintaining the all clear sign.  However they have weakened over the past few months enough to step up my vigilance for any other signs of a weakening economy.

When the next recession does arrive I don’t see a huge smash as many other web sites or bloggers are predicting.  Real estate does have some areas with rank speculation but nothing like the mass nation wide hysteria of the housing bubble.  So scratch off a nation wide real estate bubble we don’t have one.  Stocks are flying high and yet I observe zero chatter among the middle class talking about the latest hot stock.  The same goes for high yield and junk bonds.  So scratch off the three primary drivers of wealth that in my mind are not capable for a major economic crash.  Other areas such as oil prices are back up in price but not sky high – such as prior to the 2009 downturn.

To tie this all together when the next recession comes it will be mild in nature.  Of course if you are laid off it is never mild on an individual basis.  That is why one should maintain a very conservative financial status so when the economy throws you for a loop you’re back on track quickly.

   DYI

Bubble

News

Why We Need Gold

BY PETER GROSSKOPF | WEDNESDAY, MAY 15, 2019 

Time to Add Portfolio Protection?A reasonable question to ask is what happens if investors cool to Treasuries, or lose confidence in the purchasing power of their cash, or start to price in the multiple risks that appear to be lurking on the edges of "consensus" expectations? The crowded trade is to do nothing but that is yet another harbinger that the right thing to do is to begin to add some portfolio protection. As we see them, the existing liquid alternatives for insurance would, with U.S. Treasuries losing much of their appeal, be limited to (a) moving to cash; (b) purchasing portfolio protection options or moving to market-neutral funds; or, (c) buying gold or gold equities. 

Global Currencies Are A Sinking Ship, But Gold Will Save You - Sprott CEO

In a market note published Wednesday, Grosskopf laid out his opinion on why investors need gold as part of a balanced portfolio. Although investors have shunned the yellow metal, choosing instead to ride a 10-year historic bull market in equities, Grosskopf warned that the current market environment is not sustainable. 

Grosskopf described the current financial market environment as “a tightly coiled spring which is becoming more loaded every year.” The only way to protect yourself from the approaching crash, he said, is to put your money in gold. 

Grosskopf thinks that fiat could ultimately make way for gold’s return as a payment method. While it may not happen tomorrow, Grosskopf thinks investors don’t have time to waste when it comes to moving into gold, as MMT’s growing popularity means that we could soon see quantitative easing on an unprecedented scale.

Peter Schiff: The Russians Are Buying Gold To Prepare For The Impending Dollar Crisis

Peter said this wasn't a problem when people perceived value in the dollar, but he thinks that's going to change. 

"I think the next recession when the Fed goes back to zero and when we launch QE4, I think the dollar's role as a reserve currency is going to be questioned, and central banks need an alternative. And the only viable alternative to back up their own currency is real money, which is gold." 

The RT anchor asked if it was really possible for other countries to actually ditch the US dollar. Peter said it's not only possible, it's inevitable. 

"Ultimately, the US won't have any leverage at all… This [the dollar as the reserve currency] was an exorbitant privilege that the US has enjoyed for decades, but it has abused that privilege dramatically, even more so recently with the sanctions. So, I think that privilege is going to be lost and with it will go the artificially high standard of living that came along with it in the United States." 

 DYI

Dollar

Woes?

Sahil Mahtani: The dollar may be knocked off its pedestal

Will the U.S. dollar soon lose its status as the world's pre-eminent currency? The consensus is no—it's said that any move away from the dollar would take decades. This view is too complacent. 

The increasing use of economic sanctions under Presidents Obama and Trump is the immediate cause of dedollarization. In European finance, few have forgotten the $8.9 billion fine meted out to French bank BNP Paribas in 2014 for violating U.S. economic sanctions against Iran. It's not that surprising, or even that significant, when Russia shifts $100 billion of dollar-denominated reserves into Chinese yuan, euros and Japanese yen, as it did last year. But the change in posture among the trans-Atlantic democracies is noteworthy. At his final European State of the Union address, European Commission President Jean-Claude Juncker said: "It is absurd that European companies buy European planes in dollars instead of euros." 

Meanwhile, political polarization in the U.S. implies budget deficits as far as the eye can see, driven by tax cuts and higher entitlement spending. Congressional Budget Office forecasts show U.S. federal debt hitting 152% of gross domestic product by 2048, up from 78% today. The U.S. twin deficits -- fiscal and current account -- are a good leading indicator, with a two-year lag, of dollar weakness. They currently imply double-digit percentage declines in the dollar's value over the next few years. 

Significant currency shifts are rarely long and slow affairs. Britain's pound sterling was in a gentle postcolonial stupor until the early 1970s, when it still accounted for just under a third of global sovereign reserves. By the end of that turbulent decade, it was less than 1/20th. In the 1930s countries off the gold standard, such as the U.K. and Italy, saw currency declines of 20% to 40% in three to five years. Even the dollar lost nearly half its value against the deutsche mark from 1971-78. Foreign currency became so expensive that U.S. soldiers stationed in Germany at the end of the decade received care packages from sympathetic West Germans.

DYI:  This blogger was stationed in Germany with the U.S. Army during that exact period of time and went through the dollar devaluation against the Deutsche Mark and Swiss Franc.  However even though I was in my early twenties I had read Harry Browne’s book You Can Profit from a Monetary Crises and his Guide to Swiss banks.  So I opened a savings account with Bank Leu of Switzerland converting as many dollars as I could save [I was an E-4 living in the barracks] and lo and behold when the dollar bottomed out I converted back into dollars with a simple interest return (based on conversion) of 25% per year.  How did I know it had bottomed??  On my little base in Erlansee Germany the post bank [run by American Express] day after day there were long lines all converting to Deutsche Marks.  I knew right then and there this was madness of crowds – before I even read the book by Charles McKay – they were all wrong.  At an early age I had a contrarian bent it has served me well. 

Some will say that we've heard this all before. Persistent talk of a shift away from the dollar began in the 1970s, and recalls historian A.J.P. Taylor's assessment of the revolutions of 1848: "a turning point that did not turn." Habitual dollar use remains high—everywhere. Nevertheless, the emergence of a genuinely multipolar world means the coming market cycle is likely to be different. The U.S. dollar may finally be knocked off its pedestal.

DYI:  This is a definite possibility.  When a loss of confidence sets in just as what happened to the dollar during the 1970’s a multi-year crash is in store.  Here at home it would be seen as high inflation as most folks would not know of the crashing dollar.  And yes inflation during the 70’s was just a bad as you have heard only tamed by Chairman Volker of the Fed with his ultrahigh interest rate policy to break the back of inflation.  And by the way set up the bond buying opportunity [and utility stocks] of a lifetime.

So far I’m in the camp of a slow grinding affair of the American dollar despite all of its problems our currency is the best looking horse in the glue factory.  However, there is no doubt; countries such as Russia and China are working at feverish pace to move away from the dollar with their respective trading platforms for Rubles and Yuan plus gold.  Despite Russia’s large land mass their GDP measured in dollars [1.578 Trillion] is less than England [2.622 Trillion].  In the big picture Russia pulling away is not that much of an event.  China despite their trading platform with Russia and the surrounding countries will continue to use U.S. dollars in some form only due to their exports to America.      

 

DYI

My

Problem

With Harry

The Perfect Portfolio For Those Who Hate To Lose Money

Average Annual Returns from 1978 to 2017

Portfolio 3.)  100% Stocks 11.50%

Portfolio 2.)  60% Stocks 40% U.S. Gov’t Bonds 10.26%

Portfolio 1.)  Permanent Portfolio 8.69%

Permanent Portfolio

25% Stocks

25% Lt. Bonds

25% Gold

25% Cash [MMF]

The investor’s only responsibility is to buy or sell once a year, as needed, to maintain the target allocation. The Permanent Portfolio doesn’t crash when stocks fall because its asset classes often move in opposite directions. It’s also profitable because, when investors rebalance, they buy the underperforming asset class when everybody else is running the other way. When that asset class eventually recovers, a quarter of the Permanent Portfolio surges.

How I Invest: The Permanent Portfolio

 

The formula for retirement is much easier than you may think. Spend much less than you make and invest the difference. Once you have accumulated twenty-five times your annual living expenses you should be able to live off of 4% interest for the rest of your life. For example if you want to spend $40,000 per year for the rest of your life you should probably have $1,000,000 or more ($40,000 x 25).

 After making his money as an advisor he came to the realization that nobody can accurately and consistently predict the market. This is why he devised the Permanent Portfolio to keep his money safe. It consists of a 25% total stock market index, 25% a long-term bond index, 25% gold ETF or physical gold coins and 25% cash or short term treasuries.

DYI:  I have read every book that Harry Browne had published during his lifetime a definite pioneer in the use of uncorrelated assets.  Low volatility and a reasonable historical rate of return what was there not to like!?? 

My problem with Harry Browne’s Permanent Portfolio is just that it’s permanent.  Four assets always fixed at 25% despite when very easily measured valuations will tell you if stocks, Lt. Term bonds, or gold is over or under valued and to what degree.  My hair wanted to catch on fire in 1980 when stocks and even more so long term bonds were clearly deeply undervalued and gold being speculated to the moon and yet doggedly maintain 25% in each category.  Or more recently the year 2000 stocks were hopelessly overvalued and gold was on the give-away-table with the precious metals mining companies at huge discount from the price of gold!  Why on earth would I want 25% in stocks at numb minding high prices and gold with a mere 25%?

The Dividend Yield Investor is a spinoff of the Permanent Portfolio.  If all three assets, stocks, Lt. Term bonds, gold, [cash is DYI’s default asset] are at historical fair value then all four categories will be at 25%.  A very unlikely event due to their low correlated nature this pushes up or pulls down by completely different long term economic forces.  However that is a starting point for measurement as we know the long term average dividend yield for stocks, yields for bonds, and the average Dow/Gold ratio for gold.  Simply put; DYI’s averaging formulas determines the amount in each category [up to 50% except cash] based upon its relative position based on long term valuation.  DYI makes zero assessment for short term direction of any of the categories.

 Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 05/1/19

Active Allocation Bands (excluding cash) 0% to 50%

63% - Cash -Short Term Bond Index - VBIRX

36% -Gold- Global Capital Cycles Fund - VGPMX

 1% -Lt. Bonds- Long Term Bond Index - VBLTX

 0% -Stocks- Total Stock Market Index - VTSAX

[See Disclaimer]

 This blog site is not a registered financial advisor, broker or securities dealer and The Dividend Yield Investor is not responsible for what you do with your money.

This site strives for the highest standards of accuracy; however ERRORS AND OMISSIONS ARE ACCEPTED!

The Dividend Yield Investor is a blog site for entertainment and educational purposes ONLY.

The Dividend Yield Investor shall not be held liable for any loss and/or damages from the information herein.

Use this site at your own risk.

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. 

 DYI

Oil

Fever

Texas State Bill Would Make Protesting Pipelines a Felony on Par With Attempted Murder

A bill making its way through the Texas legislature would make protesting pipelines a third-degree felony, the same as attempted murder.  

H.B. 3557, which is under consideration in the state Senate after passing the state House earlier this month, ups penalties for interfering in energy infrastructure construction by making the protests a felony. Sentences would range from two to 10 years.

DYI:  As oil and gas becomes harder and harder to find unfortunately there will be additional misplaced and obvious unconstitutional legislation proposed in more States. 

Many of the protesters would just love to see oil and gas disappear and when the supply eventually becomes far more limited along with prices moving up; the ranks of protesters will drop as well.  All due to a reduced standard of living leaving very little time for protesting as most folks have no idea how energy dependent the world is!

DYI

What Goes Up

Can Go Down!

Economic class is one of the few remaining heresies in America: in the conventional narrative, it doesn't exist or is meaningless due to the tremendous social mobility of the American populace: the working class stiff is one wise decision way from middle class status, and the middle class worker is one wise investment away from becoming wealthy. 

What the conventional narrative purposefully ignores is the potential for downward mobility, in which one bad decision or investment triggers a drop in economic class and future financial prospects. 

The slippery slope from upper middle class to lower middle class is greased by the neoliberal boom-bust nature of the global economy:buy at the top and be forced to liquidate at the bottom and the entire household's wealth can be wiped out.

This dissolution of conventional ideological loyalties terrifies the ruling elites, for it threatens to dissolve their control of the masses.

DYI:  This is why it is so important to understand valuations.  Today the stock market and corporate bond market especially high yield and junk have gone to the moon.  Future returns from here will be anemic over the next 10 to 12 years.  During a much shorter time period of three to five years expect losses from this point forward.

Two huge factors are at play that has resulted in this decline of standard of living for many and the rest who standing still as the chart shows with REAL income since 1970.  The first is continuous and increasing amount of scams, frauds and economic madness that has perpetrated our society costing in the 100’s of billions.

If you have been following my blog I’ve reported this numerous times.  Such as the Medical Industrial complex that colludes in order to price fix – a CRIMINAL VIOLATION – and is moving from local to regional monopolies.  The reason for zero criminal charges is due to massive campaign donations and presto politicians all look the other way.  That is just one of many.  So many that I’ve reported them one at time as a post.

Be as that may be the second reason is net energy.  Since the 1970’s Alaska and North Sea there has not been one new “game changer” discovery of oil.  This ended with the world awash in oil/gas at the low price point in 1998 when infrastructure was in place to deliver those two game changers.  Since then reserves are dropping despite all of the horizontal drilling [fracking] that has taken place [only extends known reserves].  Plus the amount of energy that is needed from in ground to your gas tank has increased with much harder to reach reserves such as deep water or artic conditions.  Along with the infrastructure to deliver [energy dependent] to your truck or car [or anything else even your lawnmower].

What I see happening is a collision of frauds and energy.  If you think politics is wild now to use the old expression “You ain’t seen nothin yet!”  When will this happen no one knows and very difficult to put a timetable to it but when it does it will make the Great Depression look tame!

DYI

Will America avoid fiscal collapse?

Approximately two-thirds of federal spending grows on autopilot based on laws that exempt these programs from the annual budget process. Referred to by Washington insiders as mandatory spending or entitlement spending, the list of programs that fall in this category include Medicare, Medicaid, ObamaCare, Social Security, welfare and other income security programs like food stamps and federal housing assistance, as well as student loan programs, and the refundable part of the child tax credit. 

Despite the different nature of the programs, Medicare and Social Security are by far the most significant drivers of the impending fiscal collapse. 

As the federal budget becomes further unsustainable, change is inevitable. Lawmakers should approach these changes with deliberation and reform current policies gradually to enable the American people to adjust to them without doing unnecessary harm. Not reforming is not an option. 

In the absence of reforming entitlement programs to reflect longer life expectancies with higher eligibility ages, lower birth rates by reducing the cost of benefits for younger generations, and higher health care costs by introducing more choice and market forces in the health care sector, the American people will still pay the costs of the fiscal collapse, be it through higher taxes, greater inflation, and a smaller economy that may put the American dream out of reach for the next generation. We cannot escape from this fiscal reality. But we can face it with dignity and conviction.

DYI:  Here we go again with an attack on entitlement programs that all can be fixed without gutting the programs.

 

Let’s start off with the biggest of the biggest Medicare/Medicaid.  The Medical Industrial Complex for decades has and continues to collude in order to price fix among their competitors and now has moved from local monopolies to regional.  They are all in civil and criminal violation of the long standing laws passed by Congress to deal with the Gilded Age of robber barons.  Robinson-Patman, Clayton, and the Grand Daddy Sherman Anti-Trust Acts all have massive civil penalties AND criminal penalties up to 10 years in prison! 

If these laws were enforced medical costs would drop by 75% across the board.  Or to be more specific, depending on the severity of illness, prices would drop 60% to 90%.  For every day mundane illnesses insurance would not even be needed!  For catastrophic illnesses a family or individual would require an insurance policy easily attainable due to its low cost in the new competitive environment.

  

Even if these two programs were gutted the economy will continue to go into economic downward spiral as this one industry dwarfs the remaining economy at higher and higher levels.  This is effectively starving out other industries for consumption and investment.  Also the medical field domestically does not add to our GDP as it is a cost borne by sick people.  The only time that it does is when foreigners come here for treatment or when products are exported.  Other than those two exceptions these costs should be subtracted from GDP giving us a truer picture of economic performance.

The pharmaceutical industry through the use of bribes or should I say campaign dollars years ago pushed through legislation making it a felony for the re-importation of ethical drugs.  This massive anti-competitive legislation is simply OUTRAGEOUS!

 

A Federal offense is now imposed for a run of the mill business tactic.  The reason is simple prices of drugs are “jacked up” here in the States and depending upon the wealth of the nation they are marketing to will determine the price for sale.  If made legal by repealing this anti-competitive law prices for drugs would drop from 60% to 90% depending on whether remaining on patent or available as a generic.

Big pharma is now so out of control they are now committing massive academic fraud in their research reports as to the level of effectiveness for many of their drugs.  Plus they are using deceptive and manipulative statistical marketing tactics to bamboozle both doctors and patients alike all to benefit increased sales.  This is illustrated by the YouTube video of a British top notch Cardiologist when discussing stents and statin drugs.  Near the end of the video this doctor calls this industry a criminal enterprise.  His qualifications are impeccable and has been published both here in the States and England in all of the top medical journals.  A loose canon this doctor is not just telling the unfortunate truth and reality of today.

Social Security is an easy fix.  First Congress should change the law making this a pay as you go program from general revenues ending the regressive F.I.C.A. tax.  If these laws that I mentioned earlier were enforced for anti-competition against the medical industrial complex prices on balance will drop by 75% leaving a huge amount of dollars for Social Security.  Simply put case closed problem ended.

Zero effort from any Federal politician even remotely pushing this agenda.  The economy is being ground down as we speak for many reasons due to fraud.  The medical industrial complex is doing it all by themselves add on all of the other frauds I’ve reported on it is a miracle the economy isn’t worse.

   DYI

Bubble

News

The American baby bust

The total fertility rate, the number of babies a woman of childbearing age is expected to have over her lifetime, is currently at 1.72 — 2% lower than in 2017. It's also notably below the 2.1 fertility rate required for one generation to perfectly replace the next.

DYI:  Two major reasons for the decline in fertility.  

Mismanagement of the economy:  

Debt explosion by out of control banks that needs to be re-regulated bringing their leveraging back down to earth that has “jacked up” rental and home prices.  This not just thwarted household formation in of itself; but has the effect of starving the rest of the general economy for much needed spending or investment.  Add on the student loan debacle you have the recipe for a declining birth rate.

Increasing oil prices: 

The days of easy to find oil and gas has been gone since the late 1990’s.  This puts a perpetual drag on economic growth slowing all forms of human activity including women’s fertility rate. 

 

Oil Price as of 5/19/19

$62.71

As time rolls on as oil and gas supplies become tighter and tighter expenses not just driving a car or truck but all forms of  fossil fuel products will continue to increase in price placing additional pressure on the economy.  This will induce women to NOT have multiple children [or possibly none] as the cost continues to sky rocket for child rearing.

  DYI

Canadian

Bubble News

The Most Splendid Housing Bubbles in Canada Deflate Further

In Greater Vancouver, BC, Canada, house prices fell 0.4% in April from March, the ninth month in a row of month-to-month declines, according to the Teranet-National Bank House Price Index. The index is down 4.7% from the peak in July 2018, the sharpest nine-month decline since July 2009. And it’s down 2.8% from April last year. One of the most splendid housing bubbles in the world is now deflating before our very eyes, after prices had skyrocketed 316% from January 2002 to the peak in July 2018 – meaning prices had more than quadrupled in 16 years:

DYI:  If the world and especially the U.S. without a massive downturn then Canadian real estate will slowly melt with lower and lower prices over the years taking the gas out of their bubble. Canadians will endure two decade price erosion that will bring prices back into line with incomes.

DYI

Must see video for those who are taking Statins or are about to!

Stents & Statins - Do they work? A top cardiologist's view

DYI

America

Fraudster Nation?

The Military-Industrial Virus

How bloated defense budgets gut our armed forces

Late in 2018, Spinney’s longtime friend Pierre Sprey, a former Pentagon “whiz kid” revered for codesigning the highly successful ­A-10 and ­F-16 warplanes, and a trenchant critic of defense orthodoxy, suggested to Spinney that he add a novel tweak to his work by depicting budget changes from year to year in terms of percentages rather than dollar amounts. The analysis that Spinney produced at Sprey’s suggestion revealed something intriguing: although the U.S. defense budget clearly increased and decreased over the sixty years following the end of the Korean War, the decreases never dipped below where the budget would have been if it had simply grown at 5 percent per year from 1954 on (with one minor exception in the 1960s).

Only during Obama’s second term did it first dip below this level with any degree of significance. 

Even more interestingly, every single time the growth rate had bumped against that floor, there had been an immediate and forceful reaction in the form of high-­volume public outcry regarding a supposedly imminent military threat.

 Such bouts of threat inflation invariably induced a prompt remedial increase in budget growth, regardless of whether the proclaimed threat actually existed. As General Douglas ­MacArthur remarked, as far back as 1957: “Always there has been some terrible evil at home or some monstrous foreign power that was going to gobble us up if we did not blindly rally behind it by furnishing the exorbitant sums demanded. Yet, in retrospect, these disasters never seem to have happened, never seem to have been quite real.”

The Army and Marines present a hardly less depressing picture. For decades, the Army has been engaged in an expensive struggle to supply troops with reliable radios. 

One recent portable model, which the Institute for Defense Analyses found would cost $72,000 each, is called the Manpack. Not only is the Manpack twice as heavy as the model it replaces, with a shorter range, but it has displayed a tendency to overheat and severely burn the unfortunate infantrymen carrying it.

 The helmets worn by soldiers and Marines in Iraq and Afghanistan have also been shown to be faulty. As the authors of the recent book Shattered Minds have demonstrated, their design can actually amplify the effects of an explosion on one’s brain. Furthermore, many of the helmets have been found to be dangerously vulnerable to bullets and shrapnel, thanks to a corrupt contractor skimping on the necessary bulletproof material. As is common with those who speak up about official malpractice, the whistle-­blowers who exposed this particular fraud were viciously harassed by their superiors and driven out of their jobs.

DYI:  The above article by Harpers Magazine lists just a few of the multiple weapon systems that either out right doesn’t work or are of far less quality than what they replace.  From huge projects such as the flying pig super cost overruns F-35 or the Navy’s Littoral class mine sweepers called “little crappy ships” named by the sailors manning them.  On top of that the mine sweeping tech – you guessed it – doesn’t work.  Through out the military industrial complex from basic helmets worn by Marine or Army are made with substandard materials with design flaws that magnify injuries all the way to major projects that either incapable of working or take billions to get it right or is scraped.  The cost of our foreign wars actually pale in comparison with the built in cost overruns, incompetency, and outright FRAUD that is emblematic of the military industrial complex.

What we are really seeing is America the nation of Fraudsters.  Bankers who are routinely fined for crimes yet no one goes to prison, the medical industrial complex that colludes to price fix and has grown from local to regional monopolies, or the big pharma pushing out statins that has zero effect in preventing heart attacks with massive negative side effects.  Or student loans since they cannot be discharged in bankruptcy has the effect of “jacking up” the overall cost of higher education AND creating a generation of debt slaves.  The list is almost damn near endless without a massive societal change America will grind down over the decades to a has been nation riddled with liars, cheats, and thieves.

DYI

Bubble

News

"Get The Popcorn Ready" - Why The World's Most Bearish Hedge Fund Thinks The Biggest Crash Is Almost Here

Conventional investing wisdom would have you believe that anybody who has remained bearish on global markets since the financial crisis has not only lost a boatload of money, but has missed out on the opportunity to cash in on one of the most torrid bull markets in recent memory. 

However, as Horseman Global's Russell Clark has proven over and over again, this simply isn't true. A few years back, we anointed Horseman with the title "The world's most bearish hedge fund" for a very simple reason: Of all existing asset managers, Horseman may be the one with the biggest and longest net short position in history. Just look at the chart below, which shows not only that Clark's net exposure was (as of March) a staggering -88.14%, with a gross short position of 160%, but that he had been effectively net short since 2011!

DYI:  This money manager has been shorting different markets around the world along with certain commodities as well.  Despite that his long term returns are far ahead of the American averages.  No doubt the U.S. market is massively overvalued whether it will go into a crash situation or along the Japanese experience of a 20 year roller coaster bear market is anyone’s guess.  Be as that may be this dove tails right into the next article highlighting gold and especially silver as a valuation play in of themselves and related to the overvalued U.S. market.    

Precious Metals Are Setting Up For A Major Rally While The Broader Markets Are Primed For A Crash

While many precious metals investors are concerned about the current low prices, I believe gold and silver are setting up for a major rally while the market is primed for a crash.  

Why?  

Because the broader market technical indicators versus the precious metal have been pushed to opposite extremes.  

Thus, when one goes down, the other will rise.  And, we also must remember, gold and silver act as a FEAR TRADE when the conditions get ugly in the market. 

However, today, the Dow Jones is now 82% above its 200 MMA.[Monthly Moving average 16.66 years] So, we are severely overdue for a correction.  All stocks and indexes eventually come back to their 200 MMA.  It’s not only necessary, but it’s also healthy for the market.  We cannot have rising stock values forever. 

Today, the silver price is currently 11% BELOW its 200 MMA.  While this might be a negative technical indicator for traders, I only see that as temporary — more on this in an upcoming video.  According to my analysis, the current breakeven for the primary silver mining industry is about $15 an ounce.  Which means, we could see lower silver prices for the short term, but we must understand, silver is not overbought or overvalued by any stretch of the imagination, quite the contrary.  Also, the breakeven price to produce precious metals continues to provide a floor in the silver and gold prices. 

In 2008, the gold price was 144% above its 200 MMA versus only 25% higher today.  Moreover, when the gold price corrected lower in 2008, it fell to the industry’s breakeven cost of about $650 an ounce.  That was the reason it did not fall back to its 200 MMA.  Also, as we can see over the past five years, the gold price has been bouncing off the $1,150 level as that is now its PRODUCTION COST FLOOR LEVEL.  Yes, it’s true that gold fell below that in late 2015, but that was due to oil falling to $28 a barrel.  

In conclusion, the stock markets are seriously over-valued if we go by their 200 Month Moving Averages.  The NASDAQ and tech stocks are more overvalued than the Dow Jones Index, similar to what they were during the 1997-1999 Tech Boom.  

However, the gold and silver prices are at the opposite spectrum versus the overall markets as they are undervalued and closer to their 200 MMAs.  

Hell, the silver price is 11% below its 200 MMA. 

So, I believe the precious metals are setting up for one hell of a rally while the broader markets are primed for a crash.

DYI:  The gold/silver ratio with silver being enormously undervalued as compared to gold at a staggering 87 to 1 ratio!  With a sky high stock market DYI’s model portfolio is well positioned for any upcoming fireworks!  Hang onto your hats along with your cash plus precious metals the Great Wait may just be a bit shorter.

 Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 05/1/19

Active Allocation Bands (excluding cash) 0% to 50%

63% - Cash -Short Term Bond Index - VBIRX

36% -Gold- Global Capital Cycles Fund - VGPMX

 1% -Lt. Bonds- Long Term Bond Index - VBLTX

 0% -Stocks- Total Stock Market Index - VTSAX

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DYI