Peter Schiff: China, Russia buying gold because 

'they can read the writing on the wall'

Meanwhile, Russia has more than quadrupled its reserves over the past decade amid its promise to break its reliance on the U.S. dollar. Russia’s central bank has bought 106 tons so far this year, according to Bloomberg. 

Trade war uncertainty and worries about the health of the global economy have helped propel gold prices to their highest level in six years. The precious metal is up almost 18 percent this year and last month hit $1,550 an ounce for the first time since April 2013.

Russia’s gold stash now worth more than $100 billion

[DYI their gold stash is far greater than 100 billion!]

“Russia prefers to cushion its macroeconomic stability through politically neutral tools,” said Vladimir Miklashevsky, a strategist at Danske Bank A/S in Helsinki. “There is a massive substitution of U.S. dollar assets by gold — a strategy which has earned billions of dollars for the Bank of Russia just within several months.” 

Not all of Russia’s moves are paying off. Last year, the central bank shifted about $100 billion of U.S. holdings into euros, yuan and the yen, and since then the Chinese currency has dropped. Russia also missed out on the rally in U.S. Treasuries. 

Russia may keep buying gold to compensate for those other losses in its reserves, said Kirill Tremasov, a former Economics Ministry official and now director of analysis at Loko-Invest in Moscow. So far it’s working, with gold up 18% this year to $1,513 an ounce.

Russia Considers Possibility Of $25 Oil Next Year

Russia’s Central Bank has forecast in its macroeconomic forecast that oil could possibly hit that low due to falling demand for oil and oil products worldwide, as well as from disappointed global economic growth. 

One of the reasons why Russia is more impervious to low oil prices compared to its competition is that its currency weakens when oil prices fall. This provides some type of a cushion—at least to some extent—for its lower oil revenues. Russian oil companies can pay their expenses in this weaker ruble, but still rakes in US dollars for its oil exports. Further allowing it to withstand lower prices, are that Russia’s oil company’s taxes are designed to be less as oil prices fall. 

So much so is Russia’s ability to adapt to lower oil prices, that it actually struggles with higher oil prices, which dent demand for its oil. Russia’s budget for 2019 was based on $40 oil. Meanwhile, Saudi Arabia needs $80—some say even $85—per barrel.

Real US debt levels could be 2,000% of economy, a Wall Street report suggests

In its calculations, AB Bernstein pulls in debt from a variety of sources and compares it to GDP as follows:

• 100% of GDP using federal, state and local government debt combined.

• 150% for households and firms

• 450% for financial debt, which carries “conceptual issues and risks,” namely that debt held by financial firms often represents potential in a worst-case scenario involving various derivative instruments that can carry high notional levels that are unlikely ever to be realized.

• 27% in trusts for social insurance programs.

• 484%, which values all the promises from current social insurance programs.

633%, which tallies up an “infinite horizon” of obligations for social programs, rather than just the traditional 75 years used in computations.

Illinois' Record $47 Billion Loss Ignored By Mainstream Media. Why?

The loss of $47 billion for the state’s 2018 fiscal year, shown in audited financial statements released late last month, is an astonishing number. For some perspective, that’s about $7 billion more than the entire, current annual budget.

Families Go Deep in Debt to Stay Middle Class: Revolving Credit Jumps 11.2%

The American middle class is falling deeper into debt to maintain a middle-class lifestyle. 

Cars, college, houses and medical care have become steadily more costly, but incomes have been largely stagnant for two decades, despite a recent uptick. Filling the gap between earning and spending is an explosion of finance into nearly every corner of the consumer economy. 

Consumer debt, not counting mortgages, has climbed to $4 trillion—higher than it has ever been even after adjusting for inflation. Mortgage debt slid after the financial crisis a decade ago but is rebounding. 

Student debt totaled about $1.5 trillion last year, exceeding all other forms of consumer debt except mortgages. 

Auto debt is up nearly 40% adjusting for inflation in the last decade to $1.3 trillion. And the average loan for new cars is up an inflation-adjusted 11% in a decade, to $32,187, according to an analysis of data from credit-reporting firm Experian.

 DYI: 

The most likely outcome is that the U.S. economy will experience a mild recession and yet despite this slight and insignificant [unless you are laid off!] downturn we should expect the following:

• Negative interest rates out to 5 years in length for Treasury notes.
• Oil prices below $30 dollars per barrel
• Massive budget deficits
• Huge money printing by the Federal Reserve
• Defaults in the junk bond market
• Deflationary smash with inflation going backwards
• Gold and silver to go up in price as investors seek high quality investments
• Long term Treasuries fly to the heavens as rates drop significantly.

DYI