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Friday 05.12.2017

Have No Fear, Gold's Fundamentals Are Clear

Now is the time to take advantage of gold's dip and buy. The yellow metal has come off its recent highs of $1,295 and dipped down to the $1,220 level. Despite this 6% drop, it is still up 6% for the year. The fundamentals supporting the case for a continued bull market in gold have not changed. Like any bull market there will be peaks and valleys.

The fundamentals driving the dollar price of gold higher are intact. Real interest rates remain very low, with the current 10-year rate at roughly ½ a percent. Zero or negative real rates have historically been supportive of gold.

Gold's value as a safe haven store of wealth is critical in times of financial uncertainty. This uncertainty is reflected in the current real rates. Regardless of another Fed rate hike, we at Strategic Gold still view the current real rate environment as very supportive of higher gold prices.

Gold is the one financial asset that carries with it no counterparty risk. The value of your gold does not rely on any other party's ability to pay. This is key, as the financial system is burdened with massive, excessive debt loads that we have never before witnessed. Here in the U.S. we are currently laboring under huge amounts of both private and public debt -- $1 trillion in student loans, $1 trillion in revolving credit and $1 trillion in auto loans are the tip of the iceberg. And $20 trillion in U.S. government debt is also only part of the story. There are currently unfunded government liabilities well north of $100 trillion.

Wells Fargo plans to cut additional $2 billion in costs

Wells Fargo is planning an additional $2 billion in annual cost cuts as it recovers from a sales scandal last year.

Wells Fargo has already announced that it would cut $2 billion in annual expenses by the end of next year. Most of those savings will come from consolidated operations and the closure of 450 branches.

Chief Financial Officer John Shrewsberry says another $2 billion in cuts will be made in 2019.

Executives with the San Francisco bank met with investors Thursday to discuss plans going forward.

FHFA Director: Next year, taxpayers will foot any Fannie, Freddie losses

Thursday, Federal Housing Finance Agency Director Melvin Watt testified before the U.S. Senate Committee on Banking, Housing and Urban affairs as to the state of the government-sponsored enterprises' conservatorship.

In his prepared remarks, he emphasized that reform for Fannie Mae and Freddie Mac is needed, and soon.

“I have said repeatedly, and I want to reiterate, that these conservatorships are not sustainable and they need to end as soon as Congress can chart the way forward on housing finance reform,” Watt said. But he did point out that while reform is needed now, the conservatorship period has been good for the GSEs and for the housing market.

“However, it is important for all of us to recognize that the conservatorships have led to numerous reforms of the enterprises and their operations, practices, and protocols that have been extremely beneficial to the housing finance markets and have reduced exposure and risks to taxpayers,” Watt said.

Steve Forbes on growing the economy

Sears CEO: 'We don't need more customers'

Normally when retailers like Sears are fighting to stay alive, they sound desperate to lure shoppers. Sears Holdings (SHLD), which recently warned it may not survive due to mounting losses, is taking a different approach. The owner of the Sears and Kmart stores is choosing instead to focus on the shrinking number of customers it still has.

"We don't need more customers. We have all the customers we could possibly want," Sears CEO Eddie Lampert said on Wednesday at the company's annual shareholder meeting. A spokesman explained that Lampert made the comments referring to the company's ability to deliver great service and value to its Shop Your Way loyalty program.

Lampert's remarks will do little to silence the many critics who say the former Goldman Sachs executive has focused far too much on the company's vast real estate holdings instead of investing in the battered brands.

Sears, at one time the nation's largest retailer, has lost money every single year this decade, bleeding more than $10 billion over that span. The once-iconic brand has been forced to pull the plug on countless stores and its stock price has crashed by 68% since January 2013 when Lampert took over as CEO. "I give you my assurance -- I am not in denial," Lampert said in response to a question from a shareholder about the red ink.

More consumers considering long weekends over vacations

This summer, consumers are more likely to take a long weekend trip, perhaps a sign of growing consumer confidence and an improving economy. A survey by travel publisher Travelzoo shows nearly three quarters of consumers are planning an extended getaway -- longer than a two-day weekend but shorter than a vacation. Many of those said plans are likely to be made, and a destination chosen, at the last minute.

About half the consumers in the survey said they were likely to make more long weekend "mini vacations" than they did last year. And while a trip to the beach is one of the most popular long weekend destinations there's increased interest in a long weekend to Europe. Only 9% are planning a vacation to Europe this summer but half the consumers in the survey said they are considering taking advantage of low air fares for a long weekend getaway to someplace like Paris.

The threshold appears to be around $500. Consumers say if they get get round trip airfare under that amount, their bags would be packed. WOW Air and Norwegian Air have low cost flights well within that ball park. As we reported back in February, Norwegian Air plans to start service this summer between the East Coast and Ireland and Scotland for $65 one-way.

"Long weekend trips are in, and the good news is that there are more options now with lower fares to Europe and the increasing availability of last-minute deals," said Mike Stitt, Travelzoo's president of North America. "Even with the ongoing headlines about safety and security, Americans are still eager to get out of town this summer."

Banks Are Failing Again in America

Don’t look now, but banks are failing again in America. The past several years have been relatively placid for the banking industry. After the wholesale failure of the system during the financial crisis, banks gradually recovered their footing. Aided by essentially free money from the Federal Reserve, bailouts, and widespread federal and central bank guarantees, banks once again became rock-solid American institutions. As the expansion rolled on, companies and individuals did a much better job keeping up with their financial obligations. The result: record profits for banks and an extremely low rate of bank failure.

In 2016, banks covered by the Federal Deposit Insurance Corporation reported $171.3 billion in profits. Only five banks failed last year—“the smallest number of bank failures in a year since three FDIC-insured institutions failed in 2007,” the FDIC noted. What’s more, the banks that failed were truly marginal, counting just 18 branches and a mere $277 million in assets between them. In 2015, seven banks in the continental U.S. failed; they had combined assets of $826 million.

But something worrisome is happening in 2017. So far this year, five banks have already failed—as many as in all of 2016. More important, the banks that are failing are significantly larger. Last week, Guaranty Bank of Milwaukee ($1 billion in assets and 118 branches) bit the dust. The week before, it was First NBC Bank of New Orleans ($4.7 billion in assets and 29 branches).

What gives? We can’t blame this one on Donald Trump, for starters. Instead, it has everything to do with where we are in the economic cycle and the fact that credit businesses like banking are remarkably procyclical. That is to say: Financial success begets financial success throughout the system—which is what generally happened between 2011 and 2016. But there’s a flipside to this equation, which is easy to forget during the good times: Financial failure begets financial failure. For the first time in nearly a decade, this is what we are starting to see.

The Manipulation Of The Physical Gold & Silver Markets Must Be Stopped

Are Macy’s Digital Hopes Too Little Too Late?

Macy’s Inc. (NYSE: M) reported its fiscal first-quarter financial results before the markets opened on Thursday. The retailer said that it had $0.24 in earnings per share (EPS) and $5.34 billion in revenue, compared with consensus estimates from Thomson Reuters that called for $0.34 in EPS and revenue of $5.47 billion. The same period from last year had $0.40 in EPS and $5.77 billion in revenue.

Comparable sales on an owned basis were down 5.2% in the first quarter and down 4.6% on an owned plus licensed basis.

During the first quarter, the company opened new Macy’s stores in Murray, Utah, and Los Angeles, as well as 10 new freestanding Bluemercury beauty specialty stores and 11 new Macy’s Backstage stores.

In terms of guidance for the 2017 full year, the company expects to see comparable sales on an owned plus licensed basis to decline between 2.0% and 3.0%. At the same time, total sales are expected to be down between 3.2% and 4.3%. The consensus estimates for the 2017 full year are $3.45 in EPS and $24.8 billion in revenue.

America has a big ol’ pile of cash just waiting to be unlocked

I have a prediction. By this time next year, Congress will still be debating tax reform even as the US economy continues to suffer through the slowest recovery in modern history.

Come December, we will “celebrate” the 10th anniversary of the start of the last official recession in this country. That recession may have technically ended 19 months later, in June 2009, but it certainly has had lingering effects.

Say what you want about the Russians interfering in the last election or Hillary Clinton being a bad presidential candidate or Donald Trump stirring up some crazy fire in the American electorate — but the presidential election last year was basically lost by the Democrats because of the economy.

Incumbent parties don’t win when an economy is growing below 2 percent quarter after quarter. And while the Republicans and the Democrats are teasing each other about who won and who lost the last argument on Capitol Hill — and coming up with the same old poor ideas for economic stimulus and tax reform — those subpar quarters are piling up.

Nearly 40 percent of 18 to 34 year olds live with mom and dad in California

A record number of young people are living at home with mom and dad in California even in the midst of a very low unemployment rate and record in the stock market. Millennials in particular are carrying large levels of debt and many are still struggling to get out into a rental, let alone purchasing a home.

There is a housing apocalypse for young Americans and in California, many Millennials are simply waiting until their baby boomer parents kick the bucket so they can own a piece of the California Dream. But Taco Tuesday baby boomers are not going away and many are angry that their offspring are unable to buy a home like they did when housing wasn’t consumed by house horny buyers and prices were actually affordable.

The numbers are startling because when we brought attention to the issue a few years ago the number was at 2.3 million young adults living at home. Today it is now up to 3.6 million – if we combined these people it would be the third largest city in the U.S.

There was this “fake news” narrative that many young Americans would be the second wind that would keep the housing market going strong. That never materialized. What did happen is that you had investors, foreign money, and wealthier older households buying the slim inventory available in the market.

American Replaced by H-1B Making Run for Congress

At the end of May, it will be three years since former tech employee Craig Diangelo was laid off and forced to train his foreign replacement through the H-1B visa.

The 64-year-old is looking to change the very system which dismantled his and so many of his friends’ lives. Diangelo is running for the Fifth Congressional District in Connecticut, which is currently held by pro-H-1B Rep. Elizabeth Esty (D-CT). “She’s useless,” Diangelo said of Esty in an interview with Breitbart Texas.

Diangelo said in 2013, he was working at what is now Eversource Energy, when suddenly the company partnered with Infosys and Tata Consulting Service to replace at least 220 Americans’ jobs to primarily Indian nationals who were coming to the U.S. through the H-1B visa.

That’s when Diangelo, who was featured on an H-1B visa investigative on 60 Minutes last month, said he and his fellow American coworkers, many of whom who had been at the company for more than a decade, put up a silent protest. The Americans knew their days were numbered at Eversource Energy, formerly North East Utilities, so they began putting American flags at each of their cubicles, and when they were fired due to the H-1B visa replacement workers, they would pack up their things and take their flag down.

Could Breakthrough Cancer Treatments Raise Industrial Gold Demand?

Precious metals aren’t just used as investments and for jewelry—some of them have a wide range of industrial applications as well. Silver, for example, is used (and used up) in a multitude of products, from solar panels to glass coatings, LED chips, semiconductors, touch screens, water purification, and more.

Silver’s big brother gold, on the other hand, has far fewer industrial uses. However, that could change very soon. According to the latest numbers from market research firm Global Market Insights, the market size for gold nanoparticles is projected to reach $8 billion by 2022.

Most of the growth is expected to come from a growing trend to use gold in medical applications—for imaging, diagnosis, drug delivery, and photo-thermal therapy, as well as coating titanium-based dental implants. Here are a few examples of the most exciting new uses for gold nanoparticles.

According to laboratory research presented at the 2016 Cancer Conference of the UK-based National Cancer Research Institute (NCRI), the yellow metal might have a bright future in the medical sector. Research into the best ways to transport a drug directly into the heart of a cancer cell where the chromosomes reside has been going on for years, but it has recently reached the breakthrough stage. Scientists from the Cancer Research UK/MRC Oxford Institute for Radiation Oncology have figured out how to deploy gold nanoparticles as safe vehicles for a drug that shuts down a molecule called telomerase in the cancer cell—a process that keeps the malignant cell from rejuvenating and growing out of control.

The Fed Gets another Reason to Raise Rates and Unravel QE

The Producer Price Index, which measures inflation at the wholesale level for goods and services, and thus up the pipeline from the Consumer Price Index, jumped 2.5% in April from a year ago, the steepest increase since February 2012, blowing past consensus expectations of 2.2%.

On a monthly basis, seasonally adjusted, wholesale prices rose 0.5% from March. Nearly two-thirds of that increase was due to services, the biggest part of the US economy, where prices increased 0.4% from March. Among the standouts, services less trade, transportation, and warehousing, jumped 0.8% from March.

And it wasn’t “food and energy”: the PPI without food and energy (“core” PPI) jumped 0.7% from March, its 11th month in a row of increases. It’s up 2.1% year-over-year. Back in March, it was up only 1.7%. So picking up momentum.

The Producer Price Index reached a new all-time high in April of 112.7 points. In the chart below by Trading Economics, note the big dip in late 2014 and through 2015, caused by the collapse in energy prices. While energy prices have increased since then, they remain much lower than they’d been through mid-2014, with crude oil still down 55%.

Venezuela inflation so far this year at 93 percent

Venezuelan inflation in the first four months of this year was at 92.8 percent, according to the country's opposition-led congress. The country is undergoing a major economic and social crisis, fueling daily protests between security forces and protesters lobbing rocks, petrol bombs and feces that are being met with tear gas and rubber bullets.

Millions suffer from food and medicine shortages and the country's inflation figure is thought to be the world's highest, though no official data has been published for more than a year.

The bolivar currency is down more than 99 percent on the black market against the dollar since President Nicolas Maduro was elected to the presidency in 2013, meaning that $1,000 saved then would be worth less than $5 now.

Maduro blames the crisis on the opposition and U.S. government, and has raised the minimum wage twice this year. On May 1, it went up 60 percent to the equivalent of around a dollar a day on the black market exchange rate.

Hackers are targeting a broader scale of organizations

Tennessee makes community college free for all adults

Tennessee is about to become the first state in the nation to make community college free for all adults. Lawmakers approved legislation Wednesday that will expand the Tennessee Promise program that launched in 2014. It made tuition and fees free for recent high school graduates enrolled in a community college or technical school. Now, adults who don't already have an associate's or bachelor's degree can go for free, too, starting in the 2018 fall semester.

Governor Bill Haslam is expected to sign the bill into law. He proposed the legislation in his State of the State address earlier this year. It's a cornerstone of his initiative to increase the number of residents with a college education to 55% by 2025. Last year, less than 39% of residents had gone to college.

"If we want to have jobs ready for Tennesseans, we have to make sure that Tennesseans are ready for jobs, and there is no smarter investment than increasing access to high-quality education," Haslam said in a statement.

To be eligible, students must have been a state resident for at least a year before applying, maintain a 2.0 GPA, enroll in enough classes to be a part-time student, and complete the Free Application for Federal Student Aid. Expanding the free-tuition program will cost about $10 million once fully implemented. But it will be funded by the state's lottery account, just like the rest of Tennessee Promise.

Can Times Get Better In America Without A Major Crisis?

There is war going on now between government and the American people. It’s being fought on many fronts. Only a few Americans are aware of the depth and breadth of what is happening, and fewer still are seriously concerned.

You knowledgeable readers of Personal Liberty and consumers of non-fake news are outliers, making up only a small percentage of the American populace. The vast majority of Americans are unaware, and unaware that they are unaware. They are blown to and fro and easily excited over every fake meme and outrage making its way across social media and headlined on mainstream media outlets.

Did you know that the U.S. has almost as many in prison as China and Russia combined? The U.S. is a prosecuting attorney haven. What else would anyone expect with more lawyers in the U.S. than the rest of the world combined? The American system of Justice (just us) is the modern version of the old Star Chamber. A Star Chamber is a system of entrapment that provides no escape. The accused is made to testify against himself and then punished upon confession of guilt.

American jurisprudence is just like the Star Chamber. All rules of evidence in the U.S. start with “pretrial discovery” or the deposition of the defendant. The defendant is sworn to tell the truth which necessarily includes confession and testimony against himself. If he refuses to testify (confess) he is arrested and jailed. If, on the other hand he answers the questions, he will sooner or later incriminate himself.

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