Bubble

News

Massive Stock Correction To Send Metals Surging & Elites Lose Control

With the broader markets continuing to be propped up by HOT AIR and Central Bank intervention, only a fraction of investors have prepared for the massive stock market correction with physical gold and silver.  Some precious metals investors fear that when the broader markets crash, so will the price of gold and silver… just like they did in 2008. 

I don’t see it that way.  When the markets crashed in 2008… everything went down together.  However, since 2013, the Dow Jones Index has continued higher while the precious metals prices were hammered to new lows in 2015.  Even though the gold and silver prices have recovered a bit from their lows, the Dow Jones is definitely overdue for a correction.

The Unavoidable Pension Crises

The Real Reason The Federal Government Have Been Keen to Blame Russia for Everything: Gold!

April 5, 2017

For the better part of the past year it has seemed as if the mainstream media, with talking points from the federal government, had been 100% obsessed with “Russia did it!!” “It” could be anything as the story has morphed so many times it’s hard to keep track. The “it” is not near as important as the cheer leading by the MSM to remind the public Russia is to blame! 

The Federal Reserve, through the world reserve currency status, has been able to push inflation out of the U.S. economy and onto other nations. 

China and Russia, along with the member nations of the SCO, EEU and BRICS are in the final stages of moving completely away from the Federal Reserve Note, which is quickly becoming useless on the global stage. 

While these nations continue acquiring ton upon ton of gold the U.S. continues to acquire billions upon billions in debt. 

Which scenario is more sustainable? As these nations continue to build out their trading systems, to circumvent the world reserve currency, how will the U.S. contend with this new reality? The U.S. government is currently acting like the drunken cousin described above. 

Why would BRICS nations, who are responsible for a significant portion of global GDP, continue to accept how the U.S. has treated them? The belligerence coming out of the White House and Pentagon, by way of NATO, has created a global divide. The U.S. is broke and can not pay back the owed debt. We can only bully other nations, steal their gold and bomb those that do not fall into line. 

Russia and China are large enough, wealthy enough and strong enough, militarily, to stand up to the U.S. 

They have been quietly going about their business – conducting business – while the U.S. has continually conducted war with anyone and everyone. The U.S. has now set it’s sights on these two power house nations. These nations are not Syria, Libya, Iraq or any of the other tiny nations these warmongers have bullied. This time it will be different and the golden rule still applies – he who has the gold makes the rules. China and Russia have the gold, the U.S. has debt.

Soaring Global Debt Sets Stage For “Unprecedented Private Deleveraging”

And there’s no end in sight. Japan just passed a record-high government budget, 35% of which will be borrowed. The US added $1.3 trillion to its federal debt in 2016 and is debating massive increases in defense and infrastructure spending. China’s corporate debt alone exceeds 170% of GDP. 

Which leads to three inescapable conclusions: 

1) Interest rates can never rise because rolling over this much debt at historically-normal rates would blow up the budgets of both the developed and developing worlds. 

2) The only solution – if you can call it that – is massive currency devaluation to make these debts manageable. 

3) Since the debt binge has apparently gone parabolic, the reckoning is fairly close at hand. 2018 might be one for the history books.

 April 5, 2017 11:00 am JST

China has its eyes on water in Russian lake

Plan could devastate ecosystem but earn Russia some cold, hard yuan

The Russian lake holds roughly 20% of the world's total unfrozen freshwater, which would be carried to northwestern China and Mongolia, helping agriculture as well as thirsty people and industries along the way. 

Russia has high expectations for Chinese cash; Alexander Tkachev, Russia's minister of agriculture, last year proposed a plan to deliver water from Siberia's Altai Republic to China's Xinjiang Uighur Autonomous Region.

 DYI 

Socialism

Equals

Authoritarian Rule

Not Populism!  

New York Times

How Does Populism Turn Authoritarian? Venezuela Is a Case in Point

DYI:  Despite a lengthy article not one mention of Maduro and his socialistic policies that are laying waste to Venezuela.  We can only assume the writers, editors, and management at the New York Times are socialists – only individuals with that deposition would allow an article of this absurdity to be printed.  All this in a vain attempt to smear President Trump; in the end this article will further the demise of a paper that was once distinguished and revered.  Shameful.

DYI

American

Petrol Dollar

Coming to a Close

Is Gold Money? China And Russia Think So, And The Whole World Shortly Will, TOO!

How manipulated have financial “markets” become?  Well, considering all that occurred in the past three months – from what will likely be reported as sub-1% U.S. GDP growth; an expanding, irreversible retail apocalypse; the death blow to “Trump-flation” delivered by “Freedom Caucus” Republicans; Donald Trump forcing the G-20 to remove language promoting free trade from its post-meeting communique; the institution of a $19.9 trillion debt ceiling – which roughly two months from now, will be reached; a plunging dollar and interest rates, despite a “surprise” Fed hike; rapidly deteriorating confidence in the OPEC “production cut” deal; all-out U.S. political war, including an expanding wire-tapping scandal that appears far worse than Watergate; and the commencement of the BrExit process – with the prospect of a “BrExit times 100” French election in the coming weeks; how ridiculous is it to see, that based on VIX trading, 1Q was the least volatile quarter in 11 years? 

Regarding “gold as money,” China and Russia confirmed this truism in spades this weekend, when they dropped a monetary bombshell by announcing their intention to pursue a trade settlement mechanism focused on gold – as described here.  To that end, Russia’s opening of a Beijing trade office last month was a major incremental step in the two superpowers’ ongoing initiative to “de-dollarize,” and lead an Eastern Trade Bloc outside the purview of the U.S., Europe, and other Western puppets like Japan.

 DYI

American

Fiat Money System

Federal Reserve Scam

Baltimore Mayor Vetoes Minimum-wage Bill After Doing “Research”

During her election campaign for mayor of Baltimore last fall, Democrat Catherine Pugh (shown), along with dozens of other Democratic politicians, supported the “Fight for 15” to raise the minimum wage to $15 an hour. Last week, she had the opportunity to fulfill that promise when the Baltimore city council passed a bill doing just that. But, after doing “some research,” Pugh changed her mind and her position, saying instead that “I am vetoing this bill.” 

Maybe she understands that any minimum wage violates the rights of individuals to buy and sell their skills in the marketplace. Isn’t the right to offer one’s labor to someone willing to buy it a natural right — a “right to life, liberty and the pursuit of happiness,” as Thomas Jefferson put it? 

However Baltimore Mayor Catherine Pugh arrived at the conclusion that minimum-wage laws hurt more than they help, it was the correct one. What is surprising is that she was open to the idea at all, and then was willing to veto the bill. 

As expected, members of the city council are outraged and are already plotting a strategy to override her veto. After all, they know more than she does about these things. 

DYI:  Democrat Mayor Catherine Pugh for whatever reason did a 180 degree change.  That is astounding.  Minimum wage laws are harmful economically and based upon morals each individual should have the freedom to sell their skills to an employer without interference from government.  If minimum wage laws were eliminated employment would increase significantly at the entry level.

The biggest problem is not the minimum wage it is the soundness of the Dollar or I should say lack of soundness.  The elites who cozy up close to the Central bank money spigot BEFORE the Dollars become inflated are able to purchase income producing assets borrowed at sub atomic low rates at less than the expected inflation rate.  At the other end of the spectrum those at the minimum wage level – and the middle class as well – has no such deal.  Do due chronic debasement of the Dollar – INFLATION – the middle class and especially the poor are always playing “catch up” to the ever increasing living costs.  In desperation promote increases in minimum wage, it is understandable but as stated before distorts employment and if pushed too high will result in less employment.

Before the last vestige of the gold standard eliminated by President Nixon in 1971 my father was able to raise four children plus his wife and himself all on a mailman’s salary.  He was NOT in management; simply a postal carrier delivering the downtown route in a small town of Willoughby, Ohio east of Cleveland.  He was able to purchase a house and rapidly pay it off, purchase a car, put good food on the table, clothes, health care, and a modest amount of money for savings plus a bit of fun.  Today??  A family of six?….Not a chance…even before the great recession.  Why?  The U.S. Dollar had far greater purchasing power due to the remaining convertibility to gold.  Simple as that!  The Federal Reserve (it’s private and has no reserves) was created to benefit the elites.

DYI

The Creature from Jekyll Island – written by G. Edward Griffin is an excellent explanation of our central bank WITHOUT economic jargon.  Along with top notch prose making for an enjoyable read.  It must be, as Griffin’s book is in its 5^th edition and 39^th printing.  That’s not a typo….39^th printing.  A great book for the liberty minded.   

Restoring

The

Second Amendment

Is on the Move!

Second Amendment 

Victories Continue to Pile Up

The restoration of Second Amendment-protected rights in the states is happening so quickly that it’s hard to keep up. On Friday, the Georgia legislature sent a bill to Governor Nathan Deal that would allow concealed handguns on public college campuses, with some exceptions built in to appease Deal, who vetoed a similar but stronger measure last year. Jerry Henry, executive director of GeorgiaCarry.org, a pro-gun rights group, was realistic: “It’s not the bill that we wanted but it’s the bill we got. It gives [us] a foot in the door.” If Deal signs the bill, Georgia would become the 11th state with this kind of campus-carry law.

DYI:  The article lists multiple States with one small victory after another – taken separately would only be minor in its scope – collectively there is no doubt the momentum at the State level is with pro 2^nd Amendment advocates.  These positive advances were moved forward during Obama’s reign of fake shootings promoting the gun grab road show – Sandy Hook as the epicenter (fake shooting AND fake news).  Trump’s victory hopefully will propel these small successes into a tidal wave.

DYI

Capital flight is a peaceful signal to government authorities to “get your house in order.”

Thomas Jefferson:

 “When the government fears the people, there is liberty.

When the people fear the government, there is tyranny.”

The anti-money laundering statutes are a clear attempt to get the people to fear the government.

Why the War on Money Laundering Should be Aborted

If you hesitate while trying to come up with a definition, you have begun to understand part of the problem. Money laundering is hard to define because it is not a crime like murder, robbery, or rape, where the evil act is clear. It is a crime of motive rather than activity. In fact, two different people can engage in the exact same set of activities, and one can be guilty of money laundering while the other is not. In fact, money laundering has only been illegal in the US since 1986, and it is not illegal in all countries.

The most dubious reason often given by the advocates of anti-money laundering laws and regulations is that of trying to stop tax evasion. First, such advocates seem to have problems differentiating between tax evasion and tax avoidance––which is not only legal but also a right. Second, such advocates seem to be unable to differentiate between evading reasonable taxes imposed by honest democratic governments and unreasonable taxes imposed by dishonest and corrupt governments.  

Recently, the Organization for Economic Cooperation and Development (OECD), the club of 29 rich nations, has denounced and is threatening 35 mainly smaller and poorer nations for engaging in “unfair tax competition.” No nation has the right to tell another sovereign entity what its tax rates and financial privacy policies ought to be. To do so is nothing more than financial imperialism. 

Those governments and politicians who are unhappy about “tax havens” might do well to look in the mirror and ask themselves why so many of their own citizens are moving assets and income elsewhere.  

Given that governmental units are almost always monopolies and also control the police and justice functions, an abused taxpayer often only has the options of revolution or moving his or her assets. 

Capital flight is a peaceful signal to government authorities to “get your house in order.” 

To cut off this alternative under the guise of fighting money laundering is likely to lead to far worse consequences. 

During the last two decades(now four) a sizable anti-money laundering industry has emerged with many billions of dollars to spend, and that those whose jobs depend on such an industry––law enforcement officials, equipment purveyors, and assorted bureaucrats, etc.––are not going to take kindly to my comments, even if they cannot refute my arguments. 

Delivered at the Conference on Financial Cryptography, Grand Cayman, February 20, 2001.

DYI:  Since the year 2001 has anything changed?  Yes it is now worse!  Our government is spending money at a feverish pace and yet no one from either party has made any REAL attempt to reign in spending.  Time will tell if Trump is a fiscal conservative.  With a 20 Trillion dollar debt plus the insane on going budgets the Federal government will be tax hungry – so much so – draconian means will be put into place.  In other words more of the same and new abusive tactics as stated in the 2001 article.  Trump may postpone and temporary reverse these tactics but as long as our citizens and corporations demand handouts funding will always be a problem.  This is the reason why so many corporations, businessmen, and basic citizens have moved their assets offshore in order to avoid abusive tax rates.

If the Federal government were to downsize significantly; offshored money – American or foreign – would come into the U.S. at a fantastical rate soaking up our unemployed faster than a speeding bullet.  We can all dream.

DYI

The

Failing & Fading

Main Stream Press 

The Sleazy Origins of Russia-gate

An irony of the escalating hysteria about the Trump camp’s contacts with Russians is that one presidential campaign in 2016 did exploit political dirt that supposedly came from the Kremlin and other Russian sources. Friends of that political campaign paid for this anonymous hearsay material, shared it with American journalists and urged them to publish it to gain an electoral advantage. But this campaign was not Donald Trump’s; it was Hillary Clinton’s. 

Indeed, you have the words of Rep. Adam Schiff, the ranking Democratic member of the House Intelligence Committee, in his opening statement at last week’s public hearing on so-called “Russia-gate.” Schiff’s seamless 15-minute narrative of the Trump campaign’s alleged collaboration with Russia followed the script prepared by former British intelligence officer Christopher Steele who was hired as an opposition researcher last June to dig up derogatory information on Donald Trump. 

So, yes, even Donald Trump deserves not to be railroaded by a mainstream media that wants desperately – along with other powerful forces in Official Washington – to see him run out of town on a rail and will use any pretext to do so, even if it means escalating the risks of a nuclear war with Russia. 

And, if mainstream media commentators truly want a thorough and independent investigation, they should be demanding that it start by summoning the people who first made the allegations.

 DYI

Energy

Wars

Heats Up!

Struggle for control of Libya's oil threatens to deepen conflicts

DYI:  Without energy an economy is dead in the water - until a substitute that produces as many Btu’s as oil and gas countries will continue to fight over this economic life blood.  This is the number one reason the U.S. is in the Middle East and attempting to make a move on Russia’s sphere of influence Central Asia.  It is an oil and gas natural resource grab that will only intensify in the years ahead.

 DYI

%

Allocation Formula

4-1-17
Updated Monthly

% Allocation = 100 – [100 x (Current PE10 – Avg. PE10 / 2)  /  (Avg.PE10 x 2 – Avg. PE10 / 2)]

Current PE10.....29.02

Avg. PE10.........16.74

% Stock Allocation 18% 

Logic behind this approach:

--As the stock market becomes more expensive, a conservative investor's stock allocation should go down. The rationale recognizes the reduced expected future returns for stocks, and the increasing risk. 

--The formula acknowledges the increased likelihood of the market falling from current levels based on historical valuation levels and regression to the median, rather than from volatility. Many agree this is the key to value investing.  

Please note there is controversy regarding the divisor (Avg. PE10).  The average since 1881 as reported by Multpl.com is 16.70.  However, Larry Swedroe and others believe that using a revised Shiller P/E mean of 19.6 , the number since 1960 ( a 53-year period), reflects more modern accounting procedures.

DYI adheres to the long view where over time the legacy (prior 1959) values will be absorbed into the average.  Also it can be said with just as much vigor the last 20 years corporate America has been noted for accounting irregularities.  So....If you use the higher or lower number, or average them, you'll be within the guide posts of value.      

  

DYI

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.

The Formula.

A value based allocation strategy

February 19, 2010 by John Kingham

Margin of Safety!

Central Concept of Investment for the purchase of Common Stocks.

"The danger to investors lies in concentrating their purchases in the upper levels of the market..."

Stocks compared to bonds:

Earnings Yield Coverage Ratio - [EYC Ratio]

EYC Ratio = [ (1/PE10) x 100] x 1.1] / Bond Rate

1.75 plus: Safe for large lump sums & DCA

1.30 plus: Safe for DCA

1.29 or less: Mid-Point - Hold stocks and purchase bonds.

1.00 or less: Sell stocks - rebalance portfolio - Re-think stock/bond allocation.

Current EYC Ratio: 0.96

As of 4-1-17
Updated Monthly

PE10 as report by Multpl.com

Bond Rate is the rate as reported by

Vanguard Long-Term Investment-Grade Fund Investor Shares (VWESX)

DCA is Dollar Cost Averaging.
Lump Sum any amount greater than yearly salary.

PE10  .........29.02
Bond Rate...3.93%

Over a ten-year period the typical excess of stock earnings power over bond interest may aggregate 4/3 of the price paid. This figure is sufficient to provide a very real margin of safety--which, under favorable conditions, will prevent or minimize a loss......If the purchases are made at the average level of the market over a span of years, the prices paid should carry with them assurance of an adequate margin of safety.  The danger to investors lies in concentrating their purchases in the upper levels of the market.....

Common Sense Investing:
The Papers of Benjamin Graham
Benjamin Graham