economic realities vs forecasting in a...
TRANSCRIPT
Economic Realities vs Forecasting in A Bubble
By: Vincent Varghese aka “V The Guerrilla Economist”
Who Am I? • Former Commodities Trader in Strategic Metals @Ameropa Ag Zurich Switzerland,
Subsidiary Earth Metals SA. Protege Of One Of The Top Commodity Traders In The World And Former Head Of Glencore Trading Desk/ Current Head BTG Pactual.
• Consultant/ Junior Analyst Royal Bank of Scotland plc City Of London
• Contributed To A Major Think Tank (Classified via NDA) Specialized in understanding Strategic opportunities and threats. Uncanny ability to trends forecast utilizing advanced computational models that take into account Geo Strategic and Geo Economic trends.
• Founder Of RogueMoney.net, Rogue Media. Host Of Rogue Money Radio with 1.25 Million listeners.
• Strong Network Connections With Top Financial Contacts in Wall Street, The City Of London, BRICS, China, New Silk Road, ASEAN, SCO, Global South, As Well As Political Strategists and Intelligence Agency Insiders and Retired Spy Masters.
Verified List Of Accurate Forecasting
• Warned about Japan’s current economic crisis, Abenomics, Deflation, currency wars, trade wars, insane policies of the Bank Of Japan- January 2013
• Gave accurate forecasting of the current Eurozone crisis, Greece, Italy, Spain,France and Germany the dangerous Deutsche Bank derivative trigger that is one bad trade from imploding- June 2012
• Accurately predicted the bear and bull markets in precious metals multiple times since 2008.
• Accurately predicted the rise of the Islamic State in Syria (ISIS), the failure of the Arab Spring and the intensifying of the danger levels in the Middle East.
• Was the first on record to call oil prices below $40 a barrel by July 2015 back in September 2014 when the average price was $95.85/Barrel. Warned about the dangerous moves by Saudi Arabia and OPEC in an attempt to kill the US Shale oil industry.
• Warned about the dangers of High Frequency Trading, Derivatives, Bail Outs, Bail ins, Zero Interest Rate Policy, Capital Destruction, Dangers of Rehypothecation, wanton money printing (QE) and the looming dangers of soon to be Zero Interest Rate Policy and Hyperinflation.
• Predicted the BREXIT months before it happened.
America Post 2008: Recovery? Or Wrecked-Covered Up?
• 94,708,000 Permanently Out of the Work Force (BLS.Gov)
• 15,000,000 Unemployed/Receiving Benefits (BLS.Gov)
• Yet The Current Unemployment Rate is 4.9%?!!!!
• 46,674,364 people on Food Stamps (%15 of Population) This is more than the population of Columbia, Kenya, Ukraine and Argentina. (US Census Bureau)
• 60 Million Americans (1 in 5 Americans) have moved back in with their parents or grandparents. Due to crushing debt and joblessness. 20% of The population (The Pew Research Center)
• Wall Street Profits Though Are At An All Time High.
• Erosion of the disappearing middle class
• Collapse of median income.
• Pension Funds -$8 Trillion short. Examples of Ohio and Michigan. CalPers
• The coming ravages of Negative Interest Rates on Pensions and Insurance
Wall Street Profits? Or Illusions?
• Money Velocity Has Crashed to levels Never seen before in world history. Thus creating a market with next to NO VOLUME. Yet the Market is up 200% from it’s 2008 lows. Based on what?!
• Money Velocity is simply not moving. Never ever happened before.
• Margin Debt. Is Up 600% A Clear Indicator That Greed Is Rampant with Unbridled Desire To take on the the riskiest of investments. The previous time that Margin Debt was this high was in 2007. Irrational Exuberance anyone?
• How is the market going high when there is no volume and margin debt is up at record levels?
• Stock Buyback. Companies borrowing money at low interest rates to buy back their own stock. Record rate that stands at over a $1trillion and counting. Companies manipulating their stock prices higher while their profits and markets shares are falling.
• Schiller PE Ratio reaching Critical Mass. Sitting @ 27.1 and rising. Normal market PE Ratio is @16 meaning it would take a stock 16 years to pay back its market capital. Historically this only occurs when there is a massive correction in the market.
• How is that homeownership is at a 50 year low and collapsing while housing prices are up?! MBS, Investment Firms buying Realestate ie. BlackStone $7.5B buying 41,000 properties.
• HFT. (High Frequency Trading) Advanced form of market rigging. Or why the worst news causes the DOW to spike.
• Derivatives : Weapons of Mass Financial Destruction.
• All of it UNSUSTAINABLE
The Barbarous Relic• “In truth the gold standard is already a barbarous relic”. -John Maynard Keynes 1924 Book “Monetary Reform”.
• He was talking about the gold standard that Churchill proposed in 1924 and NOT GOLD.
• Keynes was a pragmatist since July 1914 at the start of the First World War, was the most persuasive voice of the classical gold standard that ran from 1870 to 1913
• Keynes argument: That gold was finite and credit elastic. Remaining on the gold standard would keep London as the center of global finance, UK’s credit will be enhanced and London can borrow the money it needs to win the war.
• And that is exactly what happened. Massive loans were floated from Wall Street banks to London and None for Germany and Austria. The loan was critical to the Britain’s ability hold out until the US entered the war in 1917
• 1925 Churchill attempted to get the UK on a new gold standard w/o correct pricing for the gold. Keynes argued that if the pricing was not correct and a HIGH price it should be, then there will be a deflationary depression. And that is exactly what happened. The UK entered the Great Depression years before the rest of the world.
• At the end of his life Keynes argued in 1944 @ Bretton Woods for global currency called the Bancor that is of all things backed by “The Barbarous Relic”.
• Keynes was an advocate for gold in early in his career, an ardent supporter of gold in mid-career, and an advocate for gold late in his career.
Not Enough Gold To Support Global Finance & Commerce• The answer is simple. There is always enough gold for a gold
standard. Just as Keynes argued as long as you specify a stable non-deflationary price.
• The problem is that this is contrary to countries running fiat currency schemes that historically have a 100% failure rate with all of them failing within 50 years from inception.
• When Critics say “there is not enough gold” what they are implying is that there isn't enough gold at current prices. This is not an objection to a gold standard, it’s objection to real value paper money relative to gold. That contention is taking place currently as fiat currencies globally are losing confidence while gold surges.
Gold Has No Yield!!!• True.
• It’s also one of the strongest arguments for gold.
• It’s not supposed to. Gold is money & money has no yield because it has no risk. Money can be a medium of exchange, a store of value and a unit of account but is NOT a risk asset
• Is the Dollar money? Yes. Does it have yield? No.
• Put it this way. A bank deposit is NOT money. It’s a bank’s unsecured liability. The Too Big To Fail banks would have imploded in 08 if not for massive intervention via, QE, Extended Deposit Insurance, Guaranteed money market funds, zero interest rates, foreign bank swap lines and other monetary circus shows.
• Cyprus, Greece, Austria and Italy are nations where bail-ins were instituted, people, businesses woke up to the painful education between money and deposit. Some EU citizens have seen their deposits converted to bank by force.
• Many “investors” think of stocks, bonds and real estate as “money” it is in fact risk assets. Like a “bank deposit”.
• Gold, Dollar, BitCoin, 3 forms of money. Metal, Paper, Digital. None have yield because they are money
• The cost of carrying, storing and liquidating Gold
Current State Of The World: The New Eastern Horizon
• De-Dollarize or Die
• The Trade Realities BRICS, New Silk Road, Eurasian Trade Union, SCO, Global South vs Trade Fantasy i.e. TPP
• Resurgence Of Gold in Global Trade
• China’s and the East’s Gold Move
• The G7 (Insolvent 7) Economies. Standing on the outside looking.
• NDB and AIIB
• The danger of arrogance or the over estimation of one’s might while underestimating the challenges of reality.
What Do You Know About Gold?Securing the Future with Physical Precious Metals
Joshua RotbartManaging Partner
“Gold is a treasure.He who possesses it does all he wishes in this world”
Christopher Columbus,1451-1506 AD
Remember
“Too Big to Fail”???
“...OAO Sovcomflot...has $25.8M frozen in Cyprus Popular Bank...these funds will not be recoverable...”
Wall Street Journal, 15.4.2013
Investment in physical gold bars and coins was the highest on
record.2013
Demand in physical gold see a sharp decline, but well within the post-2008 range.
2014
Modest increase of 1.16% in demand for bars and coins2015
» Total H1 gold demand to 2,335t – The 2nd highest first half on record
» Investment was the largest component of gold demand for two consecutive quarters (Q1 and Q2) – The first time this has ever happened.
2016
Our Data shows the same trend:
In H1 2016 we traded:
» 70% of the volume of total gold traded in 2015
» 160% of the volume of total silver traded in 2015
2016
What does Rothschild
know?
“...RIT increased its exposure to gold and precious metals by 8% during the period...”
Portfolio Adviser, 15th August 2016
Between the 4-11th of August the UK’s Royal
Mint saw a 50% increase in sales of gold bars and
coins, Investors are turning to gold as cash
and bonds offer diminishing returns.
So far this year, the price of gold has risen by 45% in sterling terms, and 25% in dollar terms.
Bar & Coin Investment, Central Banks & Total Demand
Central Banks are BUYING» Russia (+38.4t)» China (+25.9t)» Kazakhstan (+9.8t)
1
Top 10 Reported Official Gold Holdings
Tonnes % of Reserves
EAST and PRIVATE2Gold is Moving
“...Most people should have roughly 10% of their assets in gold, not only as a good, long-term investment, but also for its effectiveness in diversifying the other 90% of assets people hold...”
Ray DalioFounder of Bridgewater Associates
WhatYOUNEED to KNOW
1Know Your GOLD
Refinery Stamp (hallmark)
Purity
Serial Number
(unique)
Weight
Know Your
BAR
2Know Your VAULT
Shanghai
Bangkok
Singapore
Hong Kong
ZurichLondon
New YorkToronto
Where do you want to store your gold?
DallasLos Angeles
Risk Liability Coverage During Transit and Storage
"...I wouldn't be surprised if £200m is the amount stolen..."
Trust, BUT VERIFY
Keep your gold within the London Bullion Market Association “ecosystem”Chain of Integrity 3
4Allocated Holdings
