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

* Today's Podcast is entirely devoted to gold and gold stocks * Last night, in just a few minutes, gold dropped $50 * One or more major sell orders hit the market at the same time and gold went down below $1100 * It was down $20 by the time New York trading opened and by market close gold was down around $37 on the day * Silver was down only about .15 today * Why was all that gold dumped? The goal could not have been to get a good price - the goal was to knock the price down * The HUI was down 10% on the day * This bear market in gold stocks is now bigger than the one from 1996 to 2000 * Gold stocks are much cheaper today than they were at the end of the dot com bubble * If this a measure of trust in central bankers, the market is expressing greater confidence in Janet Yellen than it did in Alan Greenspan in 1999-2000, * We know how badly that turned out for stocks and how bullish it turned out for gold * The timing of this selloff comes on the heels of the media's spin on Janet Yellen's recent Congressional testimony * But the real news that ignited the sell-off was China's admission that they have gold reserves and in fact they intend to add to those reserves, surprising the market * If China was lying about how much gold they have had for the last six years, why does anyone believe they are telling the truth now? * I think they are still lying - being strategic * They want to get the price of gold down because they still want to buy a lot more gold * If China still needs more gold, eventually this will bring the price of gold up * Also a very negative WSJ article compared gold to the "pet rock" craze * This is the same nonsense that proliferated in the 1990's * The WSJ article describes gold investment as "a leap of faith" relative to dollar or stock investments * Gold should not be compared to stocks - it is currency, a commodity * Gold has intrinsic value, whereas the dollar is a fiat currency, backed by faith alone * Gold has had value for 5,000 years - you don't need ot have faith, you just own it * There will always be a use for gold * Why have faith in central bankers when everybody who has put their faith in central bankers in the past has been burned * An article on Zero Hedge compared the WSJ op-ed to a similar one from 1999 * The title was, "Who Needs Gold, When You Have Alan Greenspan?" * They called him "the maestro" * He gave us the dot com bubble, the real estate bubble and the financial crisis of 2008 * That's what happened to the people who put their faith in Alan Greenspan * Over the next 12 years after that article was written, gold appreciated 650% * Who needs gold when you have Alan Greenspan? Everybody * Today Alan Greenspan recommends gold * If we've got Janet Yellen, then we need gold * Greenspan wrote the playbook that Bernanke and Yellen are expanding and he knows it does not work * When you have Janet Yellen, you need all the gold you can get * Fortunately, it's a lot cheaper to buy gold and it is a lot cheaper to buy the companies that mine it * What could go wrong? Everything - what went wrong in 1999 and in 2008? * The same thing that went wrong then will go wrong now, because it is the same central bankers * And the same players on Wall Street either don't recognize the danger or are pretending it doesn't exist and abandoning everything we know about monetary policy * This is the biggest bubble yet - the entire economy is dependent on bubbles * Just when people trust the central bankers the most, that's the best time to buy gold * When this market turns it's going to be vicious * Once the market turns, 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

21 Juli 201522min

* Today Janet Yellen goes back up the Hill for the second of her 2-day Congressional testimony and the press has already made headlines about what she did not say * According to the headlines, Yellen's "hawkish" testimony reflected that she is putting the Fed on a path to hike rates later later this year * That is not what she said * From her prepared, written testimony, which was carefully crafted for all eyes, this is what she said: * "If the economy evolves as we expect, economic conditions likely will make it appropriate at some time this year to raise the Federal Funds rate target, thereby beginning to normalize the stance on monetary policy." * This sentence starts with a big condition: "If the economy evolves as we expect" * When has the economy ever evolved as the Fed expected? - Probably never * Even if the economy improves, those improvements may not live up to the Fed's unspecified expectations * "Economic conditions might make it appropriate to raise rates- * Not result in raising rates, of require us to raise rates - just because it is appropriate to raise rates doesn't mean the Fed will raise them * If the Fed was going to do what was appropriate, they would have raised rates a long time ago * Zero percent interest rates was never appropriate * Yellen herself has said she was likely to leave interest rates lower than would be appropriate because of "special circumstances" * Even if it is appropriate, there is no commitment to raise rates at any point this year * If Janet Yellen really said what the headlines infer, she would have said: * "Given the strength in the economy we will be raising interest rates later this year * She said nothing like that * The Fed went way out of its way to commit to nothing * Yet that's not the way the media is covering this * Why is that? Everyone wants to pretend that the economy is good and that the Fed is going to normalize interest rates * All of this make-believe causes the dollar to rally and gold to go down * By talking about raising interest rates, the Fed is pretending that the U.S. economy is strong enough to withstand higher interest rates without actually inflicting the pain of higher interest rates on all those addicted to the bubble economy * Yellen's responses to to questions during the Q&A were equally dovish * At one point in particular Yellen admitted that we've had zero percent interest rates for a long time and will proceed slowly in any attempt to raise rates * If we notice higher rates are causing pain, we will slow down * What is hawkish about that? * When Paul Volker raised rates to 20% of course he knew it would hurt the economy in the short term, but he knew it was needed * Yellen is worried that if the patient makes a bad face, she will discontinue the "medicine" * It is impossible to raise rates without hurting the economy, especially because a large part of our economy is now dependent on zero interest rates * Higher interest rates will expose a lot of unsound business decisions * It's not the economy that will be hurt, but the bubble - zero percent interest rates are the fuel for the bubble * Zero percent interest rates are more essential now than they were six years ago * Now we have much more debt to service * An interest rates hike would quickly wipe out any minimal gain from a stronger economy * The reality is the economy is already weakening * 70% of our GDP is consumption fueled by debt * Yellen said that zero percent interest rates may be a problem in the long run * It's the long run now * The deficit is already unsustainable * One of the most interesting rates went unanswered: 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

16 Juli 201531min

* As I have been saying all along, the Greek Prime Minister capitulated to German demands * In fact, he is agreeing to a plan that is more onerous on Greece than the one he encouraged his own people to vote down just over a week ago * Those who thought Greece held all the cards, that the Eurozone would risk a domino effect of other nations leaving the euro * I felt Germany held the stronger hand and would push Greece from the Eurozone rather than cave in to Greek demands * Greece is going to stay a part of the Eurozone, at least for now, because it is the only way they can get the bailout funds they need to sustain Greek socialism * Greek socialism will be mitigated to a degree, by the austerity demands to cut government spending * They don't need higher taxes * If Germany were to allow the Greek debt to be forgiven, the moral hazard for other struggling states would be enormous * The message Germany is sending is that it did not go well for Greece, it is not going to go well for any country who refuses to get their economic house in order * Germany demonstrated that membership in the Eurozone is not for life * This will force other countries to get their house in order * I don't agree with Greece's choice, although it might be better for Greece in the short than leaving the Eurozone * No Greek politician wants to accept responsibility for the austerity measures - it is easier to throw the blame over to Germany of Brussels * Push comes to shove no politician is going to be able to undo Eurozone austerity measures without having to face the music * Greece has run out of other people's money to fund socialism * Now their debt to GDP will be over 200% * They can't pay their debt now - how are they going to pay off a larger debt? * Part of the austerity measures, included a €50 billion privatization program, similar to the IMP's recommendation years ago * Greek government assets will be sold off for the benefit of foreign creditors * I think it would have been best for Europe to kick Greece out and loan them no more money * The euro is down today, but I think it is a dip to buy the euro * This move will show the markets that the euro is here to stay * Greece could have done one of two things: * Greece could have refused the aid package and defaulted on the debt * If they got kicked out of the euro, they could still use the euro as currency, they just would not have access to the ECB for bailout * If this happened, banks would fail; the government would have to downsize, pensions would have to be cut; * Without a tax income in euros, the government would have to operate on a balanced budget * Eventually, relieved of the debt they currently owe, they would be about to re-establish better credit * Greece could then enact real tax reform, become a tax haven in Europe and that would grow the Greek economy * The liberals will point to Greek economic challenges as proof that cuts in government spending do not work * It's not about asking the people who are already pulling the wagon to pull harder; it's about the people who are riding in the wagon to get out and start pulling themselves * Greece needs government level austerity * The Greek shipping industry is vibrant because it is not taxed * If shipping is now taxed, it will drive the industry away from Greece * In order to stimulate business with lower taxes, they would have to leave the Eurozone * Another choice is to establish a sound drachma backed by gold * Where would they get the gold? From privatization of assets * I would use the proceeds to back up my currency * Alternatively, they could back the currency with a Foreign Exchange Reserve 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

14 Juli 201521min

* This podcast comes from my hotel room in Las Vegas, as I am attending Freedom Fest * Janet Yellen received a standing ovation at the end of her talk, and I can't understand why... * Headlines from the talk report "Rates to go up by the end of the year" * Actual quote:"Based on my outlook, I expect that it will be appropriate at some point later to take the first step to raise the Federal Funds Rate, and thus begin normalizing monetary policy." * "I want to emphasize that the course of the economy and inflation remains highly uncertain, and unanticipated developments could delay or accelerate the first step." * In other words, the process will be delayed because whatever happens will be unanticipated or unannounced because the last thing Yellen wants to do is to admit that she can't raise rates. * We have gone 9 years without a rate hike * The market is not prepared for a rate hike given the enormity of the debt * The U.S. owes more money than all the other debtor nations combined * We can only pretend to be solvent and zero percent interest rates are a big part of that pretense * We will not be able to service our debt under normalization * Yellen states that the labor market is continuing to improve * No, it's not * Didn't she see Friday's jobs report, based on downward revisions to prior months? * Didn't she see the plunge in the labor force participation rate to a new low since 1977? * Didn't she see the all the part-time jobs that have replaced the lost full-time jobs? * Didn't she see yesterday's weekly jobless claims report that surged to 297,000? * Yellen previously stated that she would not raise interest rates until the labor market improves, and since then, the labor market has worsened * Wholesale inventories for May up by .8% * Year over year, sales are down 3.4%, the biggest decline since the 2008 financial crisis * Greece is forced to revisit austerity measures as Germany refuses to budge * Greece realizes they don't want to leave the Eurozone * The moral hazards are such that Europe can't budge * I dont'know how the Greek economy can grow, given the enormity of their debt in the hands of a socialist government * Europe needs to keep pressure on Greece in order to maintain standards for weaker economies * The Chinese stock market "collapse" is being overstated in the press * Even though the Chinese market is down 30% in a short period of time the Chinese market is still positive on the calendar year * The U.S. market is down * In April of this year, Chinese stocks took off because changes in Chinese government policy, making it possible for investors to own certain stocks for the first time * It should be no surprise that when a rush of investors tried to buy the new stocks, the price went up * At some point there is going to be profit-taking, sparking panic selling * This is normal market behavior * The market just retraced its steps, leaving gains achieved prior to April * The fundamentals that drove the market higher earlier this year are still solid, and they're in place * The dip in the market is a buying opportunity * The next round of gains will be more sustainable * The Chinese government exacerbated the volatility, making a classic mistake by chasing the market * U.S. economic pundits are commenting on the absurdity of the valuations on some of the Chinese stocks * They are living in a glass house - why are they throwing stones? * The same can be said about some U.S. stocks with ridiculous valuations * The Chinese monetary policy is creating issues, but beneath the bubble is a legitimate economy with production growth, savings and investment 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 Juli 201520min

* Over the weekend the Greeks voted no to the Eurozone bailout terms * The Greeks ars still hoping for a better deal, hoping to avoid austerity * The irony is that the consequences of their vote will bring on even more austerity, as a return to the drachma will result in a lower-valued currency * For example, pensioners will be paid not in fewer euros but drachmas that buy less * This will mean a huge collapse in the standard of living in Greece - far worse than the "austerity" called for under the Eurozone bailout terms * There is no way out without substantive reforms, particularly in smaller government * The markets are reacting adversely because they want to extend and pretend * The euro will be stronger without Greece, despite comments in the press to the contrary * Fears of "contagion" - other countries leaving - are unfounded * Greece is headed for hardship, but they will have to impose austerity from within they could rebound * Greece has a lot of potential, they have natural resources and a thriving shipping industries * The secret of the success of the shipping industry is that it is not taxed * The answer will be fewer taxes and less government spending * Short term, leaving the Eurozone will be negative for Greece * The Greek vote will be positive for the euro * There is still a flight to the dollar for safety over gold * The reason gold has not benefited from Greek instability is that the dollar is still viewed as a safe haven * More and more economic data reveals how weak the U.S. Eeconomy is * This week the Service Sector PMI for June contracted from 56.8 in May to 54.8 * More and more people are looking for a rate hike in December rather than September, but they are still buying the narrative that interest rate hikes are feasible * This belief supports the dollar over gold * Our economy is weaker than other countries whose interest rates are higher * When are the dollar buyers going to realize that they have jumped out of the frying pan into the fire? * The dollar is the grandaddy of the fiat currencies * In light of continued weak economic data and further deterioration in the job market, the Fed will have to come out with another round of QE * That will be a game changer * All the economic news around the world is fundamentally good for gold * At some point the speculative forces that are restraining gold will not hold up * All that stands behind the U.S. dollar is faith * At one point people had faith in Greece, they had faith in Puerto Rican government bonds and in sub-prime mortgages - and then they didn't * When we were on the gold standard, we had real value backing up our money * All that stands between us and economic collapse is the faith we have in a worthless piece of paper 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

8 Juli 201525min

* Happy 4th of July to everyone * Unfortunately, we have given up our independence to government tyranny * I will be back on the radio again - I'll be on the Alex Jones Show every first and third Friday of every month when the Non-Farm Payroll numbers come out * I will be doing tomorrow's show - the second hour of the show * The Non-Farm Payroll Report came out early this week because of the 4th of July holiday * The consensus forecast of 230,000 jobs was close to the actual number 223,000 * The unemployment rate of 5.5% last month was expected to come in at 5$% - actually came in at 5.3%, the lowest unemployment rate in 7 years * Great news, right? Not great news * The devil is in the details * The Labor Force Participation Rate - 62.9 last month - plunged down to 62.6% * This is the lowest rate since 1977 * 432,000 people dropped out of the labor force in June - twice the number of people who got jobs in June * Once again, these new jobs are low-paying service sector jobs * During the Obama "recovery" we have lost 1.4 million manufacturing jobs and gained 1.4 million wait staff and bartender jobs * According to the Household Survey 640,000 Americans left the labor force in June * Now we have a record 93.6 million Americans no longer in the labor force * The Household Survey reports 349,000 jobs were lost during the month * The only net gain - 161,000 part time jobs - represent a net loss * The Household Survey shows that we lost good jobs * When asked about the Labor Force Participation Rate number, Secretary of Labor Perez commented, "One month does not a trend make." * This trend has been going down every month of every year that President Obama has been in office * Janet Yellen announced that the Fed would not start raising rates without "further improvement in the labor market" * She specifically cited the Labor Force Participation Rate and proliferation of part-time jobs as troubling trends * We are now further from that goal * The demographic leaving the labor force are young people who cannot find jobs * Average Hourly Earnings, to increase .2, actually came in flat, at zero * Last month's .3 increase was revised down to .2, failing to beat the estimate * Weekly Jobless Claims expected to come in at 270,000, actually came in at 281,000 and I think this number is going to go higher * There have been fewer hires and fewer fires than expected because the estimates were based on the Birth/Death model, that is proving inaccurate * Factory Orders are down for 9 of the last 10 months - this month we were looking for -.3% and we got -1% * April was originally reported as -.4 but was revised down to -.7 * Year over year Factory Orders are down 6.3% (adjusted) * The only time we have seen numbers this weak is during a recession * The economy is in worse shape now that when QE3 was launched * Yet the markets did not react to these bad numbers * They still cling to the narrative that the Fed is going to raise rates because the U.S. economy is in good shape * Article on Motley Fool refers to me as someone who was "right for the wrong reason" * The misquoted me on my prediction on (mortgage)interest rates going up * After I made that statement, interest rates did go up for 2 years - they did not go down until after the bubble burst * The Fed raised interest rates from 1% to 5-1/2 percent * This quote was taken out of context - read my 2007 book, "Crash Proof" * There are dozens of articles about the real estate bubble 2004-2007 * The record shows that I was right for all the right reasons * I did think the dollar would go down after the housing bubble burst, 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

3 Juli 201522min

* One more time President Obama seeks to buy Democratic votes with a free lunch by appealing to workers * Promising more overtime pay, to go into effect in 2016 * Raises the threshold for overtime pay requirements * Workers who earn salaries of $50,000 or less must be paid overtime for hours worked over 40 hours per week * This prevents workers who put in extra hours on their own time to try to advance * This could cause employers to reduce salaries to factor in overtime * It will be harder for employers to change existing work agreements * This will adversely affect workers on flexible schedules, such as those who work at home in 2016 * Employers will have to seek more control over workers' schedules * New law will disproportionately hurt women, the very constituency Democrats claim to protect * Those who have variable workloads throughout the year will be adversely affected * This law eliminates choice and increases costs, but it's great politics * Followup on Puerto Rico: Minimum Wage * Puerto Rico is an example of the adverse effects of a minimum wage law that has devastated an economy * Puerto Rico's has more than 20% unemployment * Puerto Rico labor force participation rate is 42-43% * The minimum wage has priced out more than half of the labor force * There is no entry level work in Puerto Rico * If the minimum wage is so good, why does it not work in Puerto Rico? * Puerto Rico is a real-life case study on the adverse effects of minimum wage laws * Puerto Rico's only advantage is its tax law for incoming businesses which will increase demand for labor * Recent comments on my last podcast questioned my support for Puerto Rico * I never advised buying Puerto Rican debt - I knew it was a problem * It makes sense to move to Puerto Rico to take advantage of the new tax laws 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 Juli 201520min

* Global stock markets got beaten up overnight and the carnage continued here in the U.S. * Dow Jones down 350 points by closing bell - biggest point loss of the year * NASDAQ down 122 points * Possible Grexit sparked sell off in FOREX markets * Banks in Greece closing, sending masses to the ATM machines * Euro ended up closing near the highs of the day - nearly to $113 * The dollar was weak all day against the Yen and against the Swiss Franc * There was no safe haven move into the dollar - gold up * The dollar lost considerable ground against the euro * Another confirmation that the dollar's rally is over * My newsletter released today does a good job comparing the U.S. vs global markets * The U.S. did well against the international market from 1996 to 2000 * In 2008 the U.S markets went sideways and the markets I recommend skyrocketed * We have been in a period similar to '96 - 2000 and now we are about to see returns even greater than the 2008 gains in our markets * Regardless of the direction that Greece goes in this weekend's referendum, the dollar is going down against the euro * Puerto Rican governor finally admitted the obvious - repaying their debt is impossible * Puerto Rican debt is a fraction of the U.S. national debt * If it is mathematically impossible for Puerto Rico to pay their debt, why does anyone think the U.S. will be able to eventually pay off its debt? * The only way we can pretend to pay our debt is for the Fed to do it for us by creating inflation * This is yet another reason why the Fed is not going to raise rates in September * We continue to get recession-like economic data, despite the fact that the Fed is still optimistic * The Federal Reserve is looking for an excuse to not raise interest rates * Maybe the situation in Greece will provide that excuse * Maybe it will be the volatility in China * "External problems" are providing an excuse to not raise rates * It is important to point out that Puerto Rico would not be experiencing such insurmountable debt if it were not for U.S. policy. * Puerto Rican debt has seemed attractive with its high yield and triple-tax-exempt status * Zero interest rates from the Fed, on top of high yields, have caused the debt to seem safe, even though mathematically it cannot be paid * People may begin to wake up when they realize what's going on in Puerto Rico and that may become an even bigger problem than Greece 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

30 Juni 201526min