Could the combo of COVID shutdown and oil collapse cause the financial system to fail?
John Rubino joins me today to outline why he thinks we could be nearing the end of the current financial system as we know it. Now yes we have all heard this argument time and time again as debt continues to build and governments continue to spend. Will this time be different? John thinks it could, I take the other side of the argument.
If you’re involved in the crude markets, especially with USO or UCO, you better be listening to this from Macro Voices with Jim Bianco: https://www.macrovoices.com/
Gold@3000 is a 73% increase from todays $1723
Can there be as many stupid investors as macrovoices seem to think ?
I did post a photo-piece of 80 tankers floating off the coast of California, with nowhere to go, a few days ago.
A fool and his money are soon parted !
Of course, Trump might take 75 million barrels for the strategic oil reserve, but then that’s full too
I guess I lean more towards John’s stance on the above interview rather than with Cory’s somewhat skeptical comments. Cory, do you really believe that we’re all just going to go back to work and in 6 months things are going to be ‘normal’ even though there was nothing normal about markets before things blew up?
Hey SD, thanks for your comment. I agree with you that the economy is not going to snap back and any restart is going to be slow. My two arguments are 1) I don’t think the whole financial system is going to come crashing down. Central banks still have so much power and I don’t see another country, or groups of countries, as standing out from the pack. Everyone is being decimated right now.
2) The markets can stay somewhat disconnected from the underlying economy as long as central banks continue to print money and as long as the US is viewed still as one of the strongest markets in the world.
I hope thins clears up my comments.
Thanks again for sharing your thoughts!
Cory is spot on. Why? Where else is the money going to go?? Europe?? China?/ Russia??lol..Never bet on the end of the world. Why?? b/c there will be nobody to collect from even if you are dead right.
Precious Metals and Diamond Digest
April 27, 2020
MAG Silver stock skyrockets on Sprott investment
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Silvercorp to buy Guyana Goldfields in $75m deal
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Zijin axes expected gold output after losing PNG mine
It plans to speed up the upgrade and construction of its Longnan Zijin project in China and look into acquisitions to offset the loss of Porgera.
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CIBC raises gold price forecast; shares top stock picks
Bank is increasing its forecast to $1,725 per oz. in 2020 and $1,800 per oz. in 2021.
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Diamonds need some new best friends
Nearly seven decades after Marilyn Monroe’s immortal song, it’s time for a new myth.
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Six workers at Fortuna Silver Mines’ Peruvian operation test positive for covid-19
The six people have been isolated and are being monitored by medical personnel.
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Ivanhoe’s Kakula mine advances ahead of schedule
More than 13.5 kilometres of underground development is now completed, 4.2 kilometres ahead of plan.
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Gold heads for weekly gain despite investors cashing out
Gold is still on pace for an over 2% weekly gain.
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Tudor Gold pushes Treaty Creek project forward
With support from its JV partners, the company initiated metallurgical studies and signed a deal with RTEC.
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De Beers axes production forecast amid market collapse
As many other diamond miners, De Beers is trying to weather a shutdown of the global supply chain.
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Gold buyers are forking over lofty $135 premiums for US coins
Gold coin premiums tracked by Certified Coin Exchange are at the highest levels in six years.
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Gem Diamonds to restart Letšeng mine
Lesotho diamond mine will reopen on April 27, following a phased ramp-up plan and in compliance with protocols for preventing the spread of covid-19.
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Papua New Guinea snatches Barrick Gold’s Porgera mine
PNG’s government has refused to extend the company’s lease, citing environmental and social concerns.
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Falcon Gold to consolidate lands on Central Canada Belt
The Vancouver-based company signed a deal to acquire two large patented claim blocks in Ontario.
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Premier Gold shares hit 4-month high on strong Q1 output
The El Niño underground mine recorded its highest quarterly output since declaring commercial production last fall.
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Lockdown to cut Gold Fields’ South Deep output
Company expects to lose 32,000 ounces of production.
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Sibanye-Stillwater pulls 2020 outlook, to resume South African ops
The firm said it would resume gold and platinum operations in South Africa in the next two weeks.
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There must some empty salt mines that can be bought for the negative cost of oil, that can be filled.
Meanwhile we have Cuomo and Newsom, both morons in power, send corona virus patients after hospital stays into nursing homes.
Are thet deliberately trying to kill off the vulnerable people, who are in nursing homes because these old and infirm people can no longer care for themselves.
Do these political clowns, Cuomo and Newsom, no understand about asymptomatic transmission ?
Are they that stupid. ? Are they that uninformed ? Or are they considering nursing home patients as no longer significantly contributing to the tax system and are thus expendable
Nursing homes maybe staffed by caring employees, but they are not close to being hospitals capable of providing serious medical care ?
It is not that clear. Please help us out here. There has been some real discussions about trying to not be partisan, but more about sourcing the long term problem. We need you to be a part. We want Al’s tremendous input to be a part. Ever upward is by definition a thought process to elevate our thinking. It is about freedom in all ways.
David:
I read your post from this weekend and once again I will be the one to say really?
The Constitution that you grew up with is the same Constitution that is here today.
I pointed out to Mathew to no reply, that the Constitution you claim to defend is one that allows Presidents to pardon Drug dealers and the worst offenders of the justice system. Really?
Also I will add if the Constitution is so great how come the Political creatures of the day have been able to side step and trash it at will.
I have said many times a new way of thinking will be required going forward.
As long as I’m at it I’m going to say really to Ex/Shad for calling out Big Al. As I recall it was you that chastised me and eventually got me kicked off the blog back when I was a volunteer for 9/11 truth.
Remember, “What does it matter?”
Now the sh*t is hitting the fan again, everybody was akuna matada as long as their 401K were rising.
Those that didn’t see this coming deserve everything they get.
Oh and how can I forget Jim M inciting God again while he preached the boogeyman terrorist and the continual genocide on the Brown people of the Planet for how long.
Big Al is still my 10% . I may not always agree with him, but I can appreciate his position.
Presidential pardons have nothing to do with the criminal code. It is a separate provision placed into law that was most likely based on the idea that our President’s would have the highest character and ethical values. The framers or subsequent elected officials failed in that regard.
How are “they” able to trash it: Congress is the Law Makers. The Administrative Branch is the Regulators. The supreme Court is the referee or interpreter.
Let’s add a glitch: the establishment of Central Banking. Seems OK except they are owned by private interests. How could of that happened? Where was the challenge in the system. Answer: no where. Who audits it. No one. Enter the Exchange Stabilization Fund. What do they do? Who do they work for and who audits them. Answer : no one.
So here is the glitch: all of us as citizens go through life with Our Constitution, our Statutes and our local laws and procedures.
They work and we are happy.
Then back in 1973 we no longer back our paper fiat with gold. Boom! Politicians and the Fed System jump for joy. No more limitations on money printing. Did the Administration Branch scream and yell and motivate Congress to head off the pending disaster. Of course not. More political money. Did. Congress do anything. Of course not.
How long did it take to create massive debt. Bow long did it take fir the unaudited Fed to print money we don’t even know about.
How long did it take to deregulate and give The Fed, Banks, Corporations, Media, ESF to move tax payer money yet to be earned to black ops, foreign banks, foreign corporations, and other unaudited agencies. How long did it take the branches of government to annihilate election laws and other issues associated with cronyism.
How long did it take to develop lobbyist into the center of monetary buyers of politicians. How long did it take to spin and twist facts destroy reputations of honest citizens seeking office so special interests could take control.
I don’t know. Seems like a life time.
Your Question: what happened to the Constitution. The answer is nothing has happenec to the Constitution.
The issue is, why isn’t it being enforced.
Answer: No Regulation.
Guilty Parties: Elected and Appointed Officials.
Source of Problems: special money interests.
I apologize for typos and errors as it is near impossible to proof read without deleting all of this.
David:
Presidential Pardons, the Framers failed. BINGO
You are spot on about the big money interests. They have taken over via their Foundations.
Tax Exempt at that.
Free markets and Capitalism work, unfortunately we have neither.
JohnK – I have little time for your nonsense and will simply repost what I sent you on April 4th when you tried this same nonsense of blaming me for you getting kicked off the blog (for the 2nd time) because of your own bad behavior.
Last time you tried to blame your breaking of the house rules on going after my faith, and now this time (3 weeks later) you are trying to pin it on 9/11. We talked a million times about this and I never bought the official 9/11 narrative and provided my on personal experiences and connection, we just didn’t need it a dozen times a day dude. Give it a rest JohnK….
Again, you’re comments above show you are just back to insulting posters again…
You got kicked off the site for your own bad actions, so try taking some personal accountability for the terrible things you said, and quit blaming others like you are some kind of victim.
______________________________________
>On April 4, 2020 at 1:29 am,
Excelsior says:
“JohnK – It wasn’t your going after my faith that got you kicked off (for the 2nd time), but it was your smearing of other world faiths as if you had a lock on truth and everyone else were evil child rapists. Then it was your combative and insulting posts about all things conspiracy from then endless moon landing, flat earth, 9/11, JFK, etc… etc… posts dozens of times a day, lashing out at anyone that dared to disagree or was just fatigued from the daily stick you were beating us all over the head with.”
“When you got ugly, insulting, immature, and started name calling, then you broke the house rules, then you got booted (again). Pretty simple concept.”
________________________________
> On April 4, 2020 at 1:36 am,
Excelsior says:
“JohnK – Based on how you are acting on this thread and many other threads lately, I don’t see how you’ve changed much, and you are back to stirring up issues once again.”
“You’ve been going after DT and OOTB and can’t seem to help getting insulting towards other posters here, and it’s sad, because your economic posts or even some of the macro politics posts have added value, but the personal attacks on others and blog drams makes it hard to sift through all the garbage to get to those nuggets.”
“A leopard never changes it’s spots…”
_________________________________
> On April 4, 2020 at 4:34 am,
John Kruschke says:
“Your right Ex. Sorta.”
I had to respond to your nonsense concerning Big Al.
“What does it matter?”
When I hear someone say their going to start huffing a hairdryer as a Covid response, you bet I’m going to point out the many levels of stupidity involved.
You have no problem when Jerry calls us “Sheep” for wearing masks.
I am an admitted troll and I don’t mind that.
In my opinion Big Al will not be changing his spots any time soon as well.
Like I said, I always don’t understand his position on Politics, but I respect it.
Much like you Ex, I don’t always agree with you, but I respect your intelligence.
Most people wearing masks ARE sheep. If you’re youngish and healthy and never wore one for the flu, you’re a sheep.
https://www.youtube.com/watch?v=22Bn8jsGI54
Stroke concerns from covid-19
Now we begin to understand the need for large doses of Vitamin C.
https://www.youtube.com/watch?v=22Bn8jsGI54
Viyamin C is a vitally needed antioxidant for covid-19.
I hope everyone signed RFK Jr’s petition to the White House to investigate Bill Gate’s monstrous crimes against humanity.
For you Eddy:
I saw you reference the Heavan’s Gate Cult.
You know they found some more of the Cult.
You know where they found them?
They were under the sink looking for the Comet.
I am very surprised there have not been many more suicide cults (or whatever you want to call them) over the years. But now that the very rough times have arrived perhaps there will be more.
Heaven’s Gate was way out there…no doubt about it…but the one thing they got right was the realization that they were just visitors, not residents, of this planet. In a sense, we are all members of the away team.
Now you have me thinking.
My daughter receives her Masters Degree next month and her focus is on suicide in Alaskan Natives. She has also did comparative study with the Military suicide rates in Alaska.
I have talked to her about suicide rates increasing with the economic stresses associated with the Covid Virus.
I picked up on the Heavans gate post because I was in a out patient rehab for drugs and alcohol at the time when the Comet Hale Bob went by.
Some chose to die, some of us chose to put our faith in God and start living.
No KFC for this chicken.
Hale Bop
I don’t know if I or anyone else already posted the following article a month ago but it is worth reading, especially for fans of Brent Johnson’s Milkshake Theory and/or those who are overly biased in favor of the stock market over gold.
The author nails the problem that most paper bugs don’t understand:
“To think that one can handicap the long-term integrity of one index over another, as one can so easily achieve with the world’s most precious element, is a fool’s errand and, at best, it is an act of cognitive dissonance. Indices are spreadsheets with formulas that require constant rebalancing, making the challenge of mirroring an index over time to be a Sisyphean task. If you do not believe me, let me provide a few concrete examples:
• Of the 12 Original Dow Components on May 26, 1896, the last remaining component General Electric (GE) was rebalanced out in 2018. In other words, not one of the original constituents is even valuable enough to remain in the index while most of these companies have disappeared into the mists of time.
• By the end of 1929, there were 719 investment funds in existence in the United States. Today, only 6 remain in their contiguous legal structures. In other words, an actual human being could have bought and held only 6 investment funds from 1929 through March 11, 2020.
• These remaining mutual funds (MITTX, PIODX, VWELX, LOMMX, FFIDX, and DODBX) have mostly underperformed gold over their lifetime with some losing 90% or more to gold since 1971 (the date of gold’s demonetization).”
Matthew – That’s a really good editorial from Roy Sebag, so thanks for posting it.
This passage jumps out as well:
Roy Sebag – Goldmoney Insights (03/12/2020)
“The #dollar and #Gold cannot rise “together” when measured as Gold/USD. This statement, being a contradiction, is logically false. When Gold rises in dollars, the dollar is, by definition, losing purchasing power.”
“Either the dollar gains purchasing power against gold, or gold gains purchasing power against the dollar. The dollar is not defined as “a share of the S&P 500” or “equities” but, rather, it is defined as 1 unit of what it is in itself: a dollar.”
Exactly right. It is amazing how many people don’t grasp that fact.
Years ago, Bob Moriarty said how smart Roy is and he was clearly right.
👍
Matthew,
Just for your info some of what you said seems to be wrong. You list six investment funds (not necessarily stock funds) that you say one could have bought and held from 1929 through March 11, 2020. Well based on the facts the following two of those funds were not even around in 1929.
Dodge & Cox Balanced (DODBX) – Inception Date June 26, 1931
Fidelity (FFIDX) – Inception Date April 30, 1930
You also said that those six funds have mostly underperformed gold over their lifetime. Like which ones?
$10,000 in 1929 would have bought you about 485 ounces of gold. 485 ounces of gold today at $1725 an ounce is $837,625. According to Morningstar if you invested $10,000 in any of those funds at inception you would have many millions of dollars today. The Dodge and Cox fund does not have data going back to it’s inception.
Here is an article dated May 14, 2012 that I found that list those six funds and the growth of $10,000 invested in those funds at inception. Dodge and Cox fund data was not available. It clearly shows that at least five of those funds outperformed gold over their lifetime. Granted gold was at a disadvantage since the price was fixed for half of that time period.
Not wanting to get into another argument with you about this subject but please explain how can you say that those six funds mostly underperformed gold over their lifetime? Also I compared some of those funds total returns to that of gold since January 1972 and found they beat gold.
JMiller, the words you attribute to me are those of Roy Sebag and came straight from his article that I linked above.
It appears you’ve missed his point. He shows that it is foolish to think that comparing stock indexes to gold shows anything close to real world performance expectations.
He pointed out that:
• Of the 12 Original Dow Components on May 26, 1896, the last remaining component General Electric (GE) was rebalanced out in 2018. In other words, not one of the original constituents is even valuable enough to remain in the index while most of these companies have disappeared into the mists of time.
And:
• By the end of 1929, there were 719 investment funds in existence in the United States. Today, only 6 remain in their contiguous legal structures. In other words, an actual human being could have bought and held only 6 investment funds from 1929 through March 11, 2020.
And:
• These remaining mutual funds (MITTX, PIODX, VWELX, LOMMX, FFIDX, and DODBX) have mostly underperformed gold over their lifetime with some losing 90% or more to gold since 1971 (the date of gold’s demonetization).”
— — —
The above points were the author’s examples to support his claim that: “To think that one can handicap the long-term integrity of one index over another, as one can so easily achieve with the world’s most precious element, is a fool’s errand and, at best, it is an act of cognitive dissonance. Indices are spreadsheets with formulas that require constant rebalancing, making the challenge of mirroring an index over time to be a Sisyphean task.”
So Roy asserts that a tiny .8% of funds that existed 90 years ago still exist today and that most of those remaining .8% have underperformed gold with some losing 90% or more versus gold since 1971.
Conclusion: 99.2% of funds that existed 90 years ago have disappeared and more than half of the remaining .8% have underperformed gold. Therefore, individual investor performance in stocks varies wildly based on a myriad of variables so the expected return for the average investor cannot reasonably be deduced from the performance of funds and indexes which are always adding and subtracting components based on arbitrary factors — all skewed to make the paper products look as good as possible to the retail investor — when they’re not disappearing altogether.
Matthew,
I did not miss his point. I knew what he was trying to do. And I would say it is not really foolish to compare stock indexes to gold at least when it comes to the last 30 years since several index funds did exist in which one could use to invest in without buying each individual stock. And the fees for Index funds are much lower than managed mutual funds. Also let’s not forget that it was not until 1975 that Americans could once again really own gold bullion. Prior to that they were restricted to just 5 ounces, unless you had a special license. Of course you have to pay a premium over spot to buy gold unless you just happen to get lucky once in a while. Somehow that would have to be factored into the return of gold.
Btw, I bet Roy would respond if you asked him to clarify his information. You could email him at goldmoney…
https://www.goldmoney.com/corporate/bio/roy-sebag
Matthew,
After contacting Goldmoney about some of Roy Sebag’s errors in that article I received a reply from them that admitted to the mistakes. That two of those six funds did begin after 1929. And that someone could have invested in the S&P 500 index prior to 1991 by using the either a fund from Vanguard, Fidelity or T. Rowe Price. They thanked me for bringing it to their attention.
I also pointed out that those six funds have NOT mostly underperformed gold over their lifetime as Roy Sebag stated in that article and in fact all of them would have made many millions of dollars more than gold. They said that those funds would have outperformed gold nominally but that most of those funds lost purchasing power when compared to gold because stocks are priced in dollars and the dollar has lost a lot of purchasing power over those years where as gold is money and it maintains it’s purchasing power. Nonsense. What they did was take the nominal amount of those funds and adjusted it for inflation so that a fund that had an amount of 10 or 12 million dollars today only was worth only $800,000 or less in 1929 dollars. Of course gold which was not adjusted for inflation was still at something like $837,000. If adjusted for inflation, that $837,000 in gold would be worth only about $56,000 back in 1929 dollars.
Anyone can see that those six funds, which outperformed gold based on the data, would have made a lot more money in which you could have bought way more things than you could have with gold.
For example, if you had invested $10,000 in the Pioneer A (PIODX) fund at it’s inception in February of 1928 you would have had about $268 million where as if you put $10,000 into gold you would only have about $837,000. You sure could buy a whole lot more today with $268 million than with $837,000. So that fund did a much better job of beating inflation and keeping its purchasing power than gold.
That is why he can say that some of those funds lost 90% or more to gold since 1971 because he adjusted those funds for inflation and he did not do it for gold. Sorry but when comparing performance of an assets you can not compare one that has been adjusted for inflation to another that has not.
And out of those six funds that did the worst and supposedly underperformed gold were balanced funds and not stock funds.
I knew GoldMoney would reply to you but what still stands out is that you insist on focusing on the 6 examples rather than the 715 funds that disappeared altogether. His point has survived any errors regarding his examples: Real world returns for the average stock investor do not match those of the indexes over the long term. In fact, forget the dumb money, even 95 percent of fund managers failed to MATCH (not exceed) the return of the S&P 500 Index over a 10 year period according to research reported in 2017 by MarketWatch…
https://finance.zacks.com/desirable-stock-portfolio-rate-return-10281.html
Matthew,
I understand what you are saying and I agree with you. When one compares the S&P 500 index to gold or another asset only a small percent of investors would be able to at least match the total return of the S&P 500 because of fees or taxes owed on dividends or the fact that there was no way to replicate the index unless you bought each stock in the index (at least not until 1976 when Vanguard came out with the 500 index fund) or that most fund managers failed to match the return of the S&P 500 Index over a longer-term time frame.
My complaint with people who try to show how gold has outperformed stocks is when they cherry-pick dates. Or they exclude stock dividends. Or now when they adjust stock market returns for inflation and they do not do the same for gold as if inflation does not have an effect on the purchasing power of gold.
So if you agree that one should not cherry pick dates when comparing assets. That one should include any dividends when talking about the performance of stocks meaning the total return. And that they should not compare returns of investments in which one investment’s return is adjusted for inflation while the other one is not, then we seem to be in general agreement.
Matthew,
My apologize. I did not realize that you were just copying what the author said in that article. So he is the one that was wrong and not you that is unless you actually believe everything that guy said.
The author also must be not be very knowledgeable about mutual funds not to have known about the Vanguard S&P 500 Index fund that was launched in 1976 or the one launched by Fidelity in 1988 or the one launched by T. Rowe Price in 1990. An investor could have used any one of those for Brent Johnson’s 1991 starting date.
Again, you’re missing his point. It is the same as my point when you and I argued in the past. In the real world, everyone can’t expect even close to the returns of that you think they can. I am sorry that you don’t understand why.
Whether his examples contain errors or not, his point is dead-on:
“To think that one can handicap the long-term integrity of one index over another, as one can so easily achieve with the world’s most precious element, is a fool’s errand and, at best, it is an act of cognitive dissonance. Indices are spreadsheets with formulas that require constant rebalancing, making the challenge of mirroring an index over time to be a Sisyphean task.”
I am sorry too. And I do understand exactly what you are saying. To really accurately compare the return of stocks to gold is almost impossible as it is when trying to compare any investment or asset. Before index mutual funds came into being, investors could not really create a portfolio of all those stocks in the right weighting so that it accurate tracked the S&P 500 especially when including the cost to do so. And different index funds have different fees. And of course in a non-IRA account you will owe taxes on the dividends which would lower your return. And when it comes to gold, people do not pay the same price for an ounce of gold. Different dealers charge more for gold bullion coins and bars than another. Also sometimes there is tax to pay when purchasing gold that someone else may not have had to pay. So each person’s return is going to be different. So I guess all one can do is make general statements like gold outperformed stocks in the 1970s. Stocks outperformed gold in the 1980s and 1990s. Gold outperformed stocks since 2000.
Very true Jmiller. And sometimes the gold investors pays an annual storage fee. Obviously that Sebags guy is not fairly comparing stocks to gold and he really is not as dead on as matthew thinks.
paul,
My conclusion after seeing the nonsense that Roy Sebag did was that he is an idiot.
You mean an idiot just like matthew?
Well yeah since he believed Sebag’s nonsense..
Please listen to Steven Kwast about China.This is information YOU NEED TO KNOW:
https://youtu.be/KsPLmb6gAdw