Bitcoin Tops $100K on Expected Government Bailout - Ep 997

* The Dow finished the last trading day in February, with a 123-point decline, in fact the Dow Jones closed at the low of the day; the NASDAQ was down 32.5 points * Gold reversed the declined from Friday, it was up $16.5 today it's up another $2.50 as I record this, we're now back above $1240 * The reason gold declined on Friday was that the rate hike was apparently back on the table because of some stronger than expected Q4 GDP numbers and also the consumer income and spending numbers were hotter than expected * If you remember, I thought Q4 GDP would be revised down from .7%, in fact the consensus was for a downward revision to .4%; as it turned out, the government moved it up to +1% * The reason for the adjustment was that inventories were not draw down as much as was originally thought, so I suppose that will happen in 2016 Q1 * In fact, the Atlanta GDP has already walked down their estimate for Q1 a bit, since that number came out. * I don't think it really matters with the government says Q4 GDP was, because before the year is over they will revise that quarter negative because they will have to admit that the recession began last quarter * They always declare a recession after the fact by going back and revising down the data * We got the January trade deficit in merchandise that actually came out bigger than expected;  $62.2 billion vs $61 billion - that's a lot of red ink for merchandise trade in one month * What also spooked the gold market was the income and spending numbers - hotter than anticipated - personal income up .5 vs .4 expected, spending also up .5 vs .3 expected * The core CPE numbers, the inflation numbers were hotter also; instead of being unchanged, were up .1 * Year over year, we were up 1.7 on the core and 1.3 overall * The idea was that these numbers indicated that the rate hikes are back on the table * I don't think so; especially when you look at the horrible numbers that came out today * First is the Chicago PMI for February. Last month was 55.6, they were looking for 52.9; we got 47.6 * If you look at some of the sub-components, including employment, this was the weakest Chicago PMI since the great recession of 2009 * Our Sponsors: * Check out Avocado Green Mattress: https://avocadogreenmattress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com Privacy & Opt-Out: https://redcircle.com/privacy

1 Mars 201645min

* The rally in the U.S. stock market continues, the Dow closing up more than 212 right at the high of the day * It's not just the Dow Jones that is rising, and by the way, this is the highest the Dow Jones has closed since early January, so it's better than a one month high * Oil prices closed above $33/barrel for West Texas, again that's the highest level since early January * The dollar is weak across the board, in fact the Canadian dollar hit a 3-month high today against the U.S. dollar - this currency has really been beaten up until recently * Gold, higher again today, up about 4 or 5 bucks, it closed above $1232 * What is behind the rally? I think it is the deluge of bad economic news that keeps raining down on this market * I believe more and more people are beginning to realize that the Fed is not only not going to be raising interest rates in 2016, but they will cut them, and do another round of economic stimulus and that's is what is saving the market * The question is, with the Fed actually validate those expectations? * Even Jim Cramer of CNBC can see there's a recession * I just put up an article on my Facebook page yesterday, Cramer is saying the Fed is blind and can't see the recession * Maybe Cramer has been listening to my podcasts... * Do you remember the famous interview with Jim Cramer and Erin Burnett that went viral and he went on a rant about the Fed, "They know nothing!" * You've got Cramer calling out the Fed for not appreciating the weakness in the economy and calling on them to do something * I think they are going to do something, they're not just going to turn a deaf ear to the economy * But the Fed is still officially sticking to the party line * Today I wanted to talk about the CNBC interview with Jim Bullard * First, he told Matt Belvedere he was concerned that "inflation expectations" were too low * Of all the things you're going to worry about as a central banker, you're going to worry about the fact that people don't expect enough inflation? * Historically that would be a victory - that's what you want as a central banker * You want to stamp out the fear of inflation * What Bullard wants is more fear - he wants people to expect even higher inflation than they currently experience * Why would he want that? * Supposedly the lack of belief that inflation is going to be higher is somehow holding back the economy * Bullard believes inflation is going to be higher; why is he upset that the public doesn't believe it, too? Why? * How does the expectation of higher inflation help an economy? * The only thing that's good about inflation is if you're a debtor; if you borrowed money, inflation will help ease the pain of that debt * You would figure the last thing the Fed would want is for people to expect higher inflation, because what would happen to bond holders? * Bond holders would not want to hold bonds at low rates; they would demand higher interest on those bonds, which would crush the government because they don't have the money * It would also crush the Fed, because the Fed's balance sheet is loaded up with long-term government bonds that yi... Our Sponsors: * Check out Avocado Green Mattress: https://avocadogreenmattress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com Privacy & Opt-Out: https://redcircle.com/privacy

26 Feb 201635min

* We had some wild swing in the market today, particularly the stock market and the gold market * At one point this morning, the Dow Jones was down about 270 points * It finished the day up 53 points * There wasn't any real news that caused the market to go up; people were buying the dip * The oil market also turned around; it was down a buck and change and managed to close up .20-.30 * Gold was the mirror image; gold was up at one point to $27-$28, back above $1250 * Then when the stock market rallied back the gold market sold off * It managed to closed with a small $3 gain or so * Gold stocks closed the day mixed, most still positive on the day * The reason why the stock market falling is positive for gold is the effect that a falling stock market is going to have on the Fed, and its decisions on future interest rate hikes * Even if the stock market is not going down, the Fed will still reverse on rates because of the economy * The economy is back in recession, whether the Fed wants to acknowledge the fact or not * We had another Fed official, Richmond Fed President Jeffrey Lacker, actually came out saying he sees no signs that a recession is imminent * He sees no reason why the Fed should not go forward with the planned rate hikes for 2016 * Maybe rose-colored glasses are standard issue over at the Fed * There is ample evidence that there is a recession * However, if someone of Lacker's stature would come out and say, "Look, we're going into a recesssion, but rates are really low and the Fed has to raise them anyway, and this is going to be difficult." That would be honest. * But the Fed is saying they are going to raise rates because the economy is in great shape * To do otherwise is to admit that the Fed's monetary policy failed * The Fed is playing a very dangerous game * Not only do they risk making the economy worse, they risk their credibility * Here is some economic news that came out today, after Lacker's speech * At 9:45 am we got the February PMI Flash  Services Index * Last month, the number was 53.7 and this number was expected to repeat for February * The February number came out at 49.8! This shows that the recession is not contained to manufacturing * This reminds me of what they said about sub-prime: "Don't worry about it, the recession is contained to sub-prime." - That was nonsense and it is nonsense now * The problems in the economy are not contained to manufacturing, and today's numbers prove it * The service sector contracted in February * The last time this happened was in October of 2013. That was during the government shut-down, so a lot of government services were not available * That's an outlier - if you take that out, the last time we had a service sector PMI below 50 was during the great recession * So again, another indicator flashing recession * It's amazing to me that the Atlanta Fed still hasn't walked down their 2.6% forecast for Q1 GDP *  We've gotten so much bad news since the good news that prompted that forecast yet they've done nothing to downwardly revise their estimate * The FOMC might have said, "Hey, Atlanta, get with the program! We're talking up the economy - stop coming up with these negative forecasts." * On Friday, we're going to get the revised Q4 GDP numbers, which was originally reported as +.7 * I think it will be revised down, in fact the consensus is a revision down to .4 * So we're getting closer and closer to zero * The numbers we're getting for the first quarter could be worse, despite the Federal Reserve's rosy scenario * Also we got New Home Sales, which was a disaster; they were looking for 520,000 and we got 494,000 - that was a big, Our Sponsors: * Check out Avocado Green Mattress: https://avocadogreenmattress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com Privacy & Opt-Out: https://redcircle.com/privacy

25 Feb 201626min

* It looks like Jamie Dimon's bottom turned out to be the trap door I thought it was, with the Dow Jones today down almost 190 points * The market was let lower by the financials, JP Morgan itself down better than 4% * Remember it was Jami Dimon having the confidence to put a year's salary into company stock that sparked this rally, but it seems to be losing steam and rolling over * Because we're not going to get a lasting bottom until the Fed makes that bottom *  It's not going to be a Jamie Dimon bottom, it has to be a Janet Yellen bottom; and as much as I have no interest in seeing Janet Yellen's bottom, that's exactly what we're going to have to do to get a real low in this market * Every single decline that the market has experienced since 2009, the bottom has been set by the Fed * It's been the Fed forming that bottom by coming to the rescue with rate cuts, QE programs, Operation Twist, hinting about more QE, and so far, the Fed has done none of that * The Fed is still sticking to its narrative that rate hikes are coming * Yes, nobody believes they're coming anytime soon, but that is still the official forecast * Meanwhile, the markets can't even deal with rates as is * The gold market will be the mirror image of the stock market; gold was up about $16 today * It reversed a near $20 decline yesterday, but it consolidating its huge move above $1200 * So we are not getting the pullback that Dennis Gartman and Jim Cramer are hoping for to get on board * I think if people want to get on board this train, this is the stop. * If you like gold, just buy it and be happy that you're getting it for $1225 - yes, you could have bought it below $1100 in December, but $1225 is still cheap * The most interesting about yesterday's drop in gold - the gold stocks didn't really decline * Most of the gold stocks finished positive on the day * Gold stocks added to their gains today, and many are sitting on their highest close of the year, and several are at 52-week highs * Other than the gold stocks, the 52-week high list is pretty short * The 52-week low list looks like a rap sheet * Something happened on Friday that made some people believe that help from the Fed is not forthcoming * Which may be part of the reason why the markets are declining * The release of the CPI number caught a lot of people by surprise: January consumer prices, forecast to drop by .1% * The real number was the core rate, which excludes food and energy was up .3, month over month - the biggest jump since August 2011 * The increase in the core price year-over-year was 2.2%, the biggest increase since June of 2012 * Remember, the Fed says our target is 2%, well, we got 2.2! * We're there! We can raise rates! That's what's so scary * I wrote a commentary that is posted on this website, "The Fed’s Nightmare Scenario", and I got that title after reading an article in which an economist who, observing that the CPI was 2.2% announced that this is a"dream come true" for the Fed * He cited inflation as the primary barrier to the Fed's rate increase goals * The Fed's "mandate" of 2% inflation is finally met * First, the Fed doesn't have a mandate of 2% inflation. They made that up. * The Fed's real mandate is price stability, which doesn't require a definition, because everybody knows what the word "stable" means * The Federal Reserve decided to interpret that mandate to mean an increase of 2% * The late U.S. Supreme Court Justice Antonin Scalia was one of the few justices who believed in the "bizarre concept" of original intent Our Sponsors: * Check out Avocado Green Mattress: https://avocadogreenmattress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com Privacy & Opt-Out: https://redcircle.com/privacy

24 Feb 201627min

* What a difference two days make! Two days ago I recorded my podcast, "Goldman Sachs Sacks Gold", and that was because Goldman Sachs' comments about shorting gold were partially responsible for the severity of the drop in gold over the holiday weekend * Today, gold is fighting back, at one gold was up better than $30, although as I record this the price has pulled back a bit, still above $1230 - up about $22 on the day * Gold stocks, the GDX index I mentioned in my last podcast, was up 6% on the day, the biggest move up of the year * That index has recovered everything it lost on Tuesday * GDX would have been up a lot more, except that Newmont Mining came out with lower than expected earnings for the 4th quarter; so that stock was only up about 1% after dropping  7% in the first hour of trading * Several gold stocks made new 52-week highs today and several others are at the highest point of this calendar year * A very strong day for gold and gold stocks just a couple of days after Goldman Sachs recommended selling the metal short * People would have been much better off shorting Goldman Sachs * One of the other catalysts for the rise in the price of gold may well have been the comments made overnight by Jim Bullard, president of the Federal Reserve Bank of St. Louis * After I read his comments, I expected the price of gold to rally right away, but it didn't begin until later this morning * Bullard was one of the real Hawks on the Fed, he wanted to raise rates much earlier, citing concern about a stock market bubble * Talk about closing the barn door after the horses have left!  They have left the stables, the property, they're barely on the planet! * His comments last night about why the Fed should slow down the rate hikes are ironic, because his reason is the volatility in the stock market * Let me get this straight: He wants to raise rates because we don't want a stock market bubble; * They raise rates, the bubble is deflating and he wants to stop the rate cuts * You can't have it both ways. * Do you want to use monetary policy to prop up the stock market or not? * Bullard has not turned dove, do who's left? The FOMC minutes came out Wednesday and they showed that only a couple of governors did not show concern over the weakness in the stock market * What really should get the Fed governors nervous is the economy * Today we got the Leading Economic Indicators and last month they were down, in fast the original estimate for December was-.2 - instead, it was revised to -.3 * January is now -.2, so that is the second consecutive month of declining Leading Economic Indicators * That has not happened since August and September of 2011 * Here's the interesting part: QE2 ended in June of that year, so 2 months after the end of QE2, the economic indicators flashed recession * What did the Fed do? In September of 2011, the second month of the back-to-back declines in LEI, the Fed launched Operation Twist * That's what happening now, they just raised interest rates, we got back-to-back declines in LEI, what's the Fed going to do? They are going to come back and save the market * We got more bad economic news today; the Philly Fed, this is the 6th consecutive monthly decline * January was down 3.5%; February was down 2.8% * They were expecting -2.5%, so we got a bigger decline than expected * We got weak news on the housing market; housing starts dropping to a 3-month low, much lower than the 1.175M - instead we got 1.099M * Permits were also light; they were looking for 1.334M and we got 1.202M on starts * I think we are just getting started when it comes to the fallout in the housing market Our Sponsors: * Check out Avocado Green Mattress: https://avocadogreenmattress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com Privacy & Opt-Out: https://redcircle.com/privacy

19 Feb 201630min

* The big story of the day was the pullback in the price of gold * Gold was above $1260 last week; it pulled back a little bit on Friday, but the real damage happened overnight on Monday, while we were celebrating Presidents' Day * At one point gold was down almost $50; trading even below $1190 * When we opened up for trading in New York, gold was back above $1210.; it tried to rally, but really couldn't, in fact the only time gold rallied today is when the Dow sold off to +50 from +150 * The stock market and the gold market are the mirror image of each other right now * Ultimately, I do believe that stocks, gold stocks and gold will be going in the same direction because they will all respond positively to the Fed admitting that it will not raise interest rates, and in fact cut them and will launch QE4 * Now, gold is the safe haven from weak stocks, but the best environment is when the Fed steps up to save stocks, and that's when the gold trade is going to catch a bid * But when the market closed on the highs of the day, up over 200 points, that means gold closed on the low of the day * GLD, the ETF for gold, for today's decline, we were down $35.90 * In the spot market, we closed right about $1200 even * A good point: look at the gold stocks, GDX, that index was down 8.65% * In all the big gold up days, we never had a comparable up day for gold stocks * On gold's best day, the biggest day since 2008, gold stocks were just up about 5% * Yet on the down side, a -3% move in gold produces a -9% move in gold stocks * Why is all the movement on the down side? * One, there's still more fear than greed in the gold market * This is a good sign - a bull market climbing a wall of worry * This is just a resumption of a long-term secular market that began in 1999-2000 * Goldman Sachs rhetoric may in part be responsible for the sharp selloff * I mention on last week's podcast that Goldman was recommending a sell on gold, that it was going back down to $1000 * On Monday, while the market was having a holiday, Goldman Sachs was out with their PR again, not only telling people to sell gold, but to short gold * Why would Goldman Sachs be telling people to short gold? *  Why would they bother with a 20% short when there are so many stocks being killed right now that would be much better to short * Gold will never be worthless, what if it goes up? Why risk losing all that money? * The risk/reward isn't there * Goldman says they don't think there will be a recession and the Fed's going to keep raising rates * They admit there is a small chance of a recession this year: what's going to happen to gold if we go into recession? * What happens if you have shorted gold, hoping to capture just 20%? * The only thing that would make sense to me is that Goldman Sachs wants the price of gold to go down because they're probably already short - that's why Our Sponsors: * Check out Avocado Green Mattress: https://avocadogreenmattress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com Privacy & Opt-Out: https://redcircle.com/privacy

17 Feb 201624min

* Big day in gold today; gold broke over $1200 for the first time in almost over a year, in fact we hit a new 1-year high * I saw gold trading above 1260 at one point in the morning, that was up better than $60 on the ounce; It closed up 49.10, I believe at $124.90 * Remember, I was on CNBC "Futures Now" earlier in the week and gold was around $1180-$1190 and they were trying to press me on where I thought it would go, and I said, it's going to go higher, I'm bullish in the short term, the medium and the long term * But I'll tell you one thing: when gold brakes through $1200, it's going to move to $1300 very quickly and people are going to be surprised * It's just been one day and we're halfway there * Gold stocks still reflect a lot of skepticism on this rally; Gold stocks were up about 7% on the day * Gold stocks have a long way to go to catch up * I mentioned on the last podcast, Dennis Gartman, who got bullish on gold, told people not to buy, he said wait for a pull back * Well the people who are waiting f or a pull back are still waiting and they missed this entire $50 move * The stock market was the mirror image of the gold market today; at one point, with less than an hour to go, the Dow was down 400 points again, the NASDAQ was maybe down about 60 * Then all of a sudden there was a rumor floated that the United Arab Emirates was considering meeting with other OPEC nations about a production cut and all of a sudden the market rallied * The NASDAQ actually rallied positive; the Dow got to  about -170 and then they rolled over on the close, Dow down 254, NASDAQ down 16.76 - horrible close * Of course the weakest stocks on the day continue to be the financials getting decimated to new lows * Goldman Sachs down about 4.5%,  Morgan Stanley down 4.5%, Bank of America down 6.8% - many of these companies making new 52-week lows * But outside the financials, the debacle du jour, in the stock market is Boeing, which is a Dow component, was down 7% on the day, near a 3-year low; the lowest I saw inter-day was -12% * The news is that the SEC will investigate their accounting practices - that can't be good * Also they reported that they are going to be laying off workers in an effort to contain their costs * It's not just about bad oil loans, that's part of the story, that's just the tip of a huge iceberg * In fact, the market rallied because of the rumor of OPEC is making moves to support oil prices * We hear people saying that what the stock market needs is higher oil prices.  No we don't! * Higher oil prices will help oil stocks, but they're not going to help the overall market market because some guy writes an algorithm that runs a program that says, "Buy stocks when oil goes up" * Steve Liesman said on CNBC recently that he never would have believed the market would be so dependent on oil prices * A lot of people make that mistake, assuming that oil is driving the stock market but the same factors are dominating both:  fear of higher interest rates and weakness in the U.S. economy * But eventually, I think oil prices will go up, and the stock market will continue to go down * Many people are hopeful that Janet Yellen's second trip to Capitol Hill, this time talking to the Senate, might save the market; apparently that was not the case * Janet Yellen, this time, in the Q&A was closer to admitting that negative rates are coming * She actually said they would consider doing it if the economy needed it * All the discussion is going straight to negative rates and skipping over zero interest rates and QE * There was no discussion about reversing December's .25 rate hike * If Janet Yellen is thinking about negative rates, she has ready considered zero rates and QE Our Sponsors: * Check out Avocado Green Mattress: https://avocadogreenmattress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com Privacy & Opt-Out: https://redcircle.com/privacy

12 Feb 201627min

* Janet Yellen was up on the Hill today for the first of her two-day testimony before Congress * Remember I said the only way that Janet Yellen could stop the market from falling is to admit that the Fed will alter its 4-rate-hike trajectory for 2016, and she didn't do that * As a result, the stock market failed to sustain its early morning gains; the Dow was up better than 100 points - closed near the low of the day down 99.64 * The NASDAQ, which was up not quite 100 points earlier in the day closed on the low of the day, up only about 14 points on the day * It was the opposite for gold; gold was actually down this morning before Yellen spoke, down around 1180-ish on the lows; we closed up $8 on the high of the day - $1197 - knocking on the door of $1200 * The gold stocks were clobbered this morning and they closed positive; the gold index was up about 2-2-1/2% - it was down 4% earlier when gold was down but by the stock market opened gold wasn't down $8 anymore, it was down about $2 or $3, yet gold stocks were clobbered * Maybe it's still the overhang from Goldman Sachs coming out yesterday and predicting that gold would fall below $1000/oz in 2016 * That probably means that Goldman Sachs is short a bunch of gold and they want to cover, or they just need to buy and they're trying to convince the muppets who actually pay attention to what they say, to sell their gold to them * Janet Yellen continued with the narrative that everything is O.K. - the economy is fine, the recovery is on track, yes, she acknowledged some headwinds: growth was a little bit slower at the end of last year, but no big deal * There are some problems overseas that they're monitoring , there are some financial tightening: overseas markets are weak, domestic markets are weak, yes the Fed is paying attention to all that * But so far, from their perspective, everything is on track, the recovery is moving along, the labor market is strong, despite the fact that there is no improvement in labor force participation, there's no improvement in the part-time workers who want full-time work, there's no real wage growth other than the bump from the minimum wage hike * But despite all that, Janet Yellen still maintains that everything looks good, that we will overcome these headwinds - this is her most likely scenario * She did acknowledge that monetary policy is not fixed, that the trajectory is not set in stone, that the Fed will monitor incoming data, and if the data evolves in a manner they don't expect, then yes, they might not raise interest rates as much as they believe they're going to raise them * As far as the Fed is concerned, based on the data they have now, their most likely scenario is that everything is fine, which means the market is going to keep falling * It's almost ironic that Yellen would say, "The markets are weak, and if they stay weak then we might have to adjust our monetary policy" - that means the markets are going to stay weak! * The only way to stop the markets from falling is for the markets to know that rates aren't going up * I think it's more than just the absence of rate hikes: this market needs more QE * The Fed dialed back the dosage and the market requires it now, or it will start going down * I was watching a great interview with Jim Grant today on CNBC and he was saying all the things I am saying: he says we're already in a recession; he's confident that it began at the end of last year and he thinks the Fed is going to go back to zero and do more QE, and that they might go negative * Janet Yellen was asked about negative rates in her testimony, apparently the Fed had considered it back in 2010 and they rejected it and she was asked if negative interest rates are even legal * Yellen said to her knowledge there is nothing legally preventing the Fed from going ... Our Sponsors: * Check out Avocado Green Mattress: https://avocadogreenmattress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com Privacy & Opt-Out: https://redcircle.com/privacy

11 Feb 201634min