The End Really Is Near: A Play-By-Play Of The Coming Economic Collapse

Economic collapse and growth

By Max Cea | Published August 12, 2018

The End Really Is Near: A Play-By-Play Of The Coming Economic Collapse

Recoveries generally don’t die of old age. So what’s going to kill ours? Five economists call it like they see it

Since June, 2009, the pit of one of the biggest recessions in American history, the U.S. economy has been growing, slowly but steadily. That’s just over nine years of uninterrupted growth. If the good times roll for another year — and most economists expect they will — this expansionary period will go down as the longest ever in American history, surpassing the 120-month-long period during the ‘90s tech boom. But don’t be so quick to pop bubbly and send the confetti raining down. There’s precedence for unprecedented growth: It always ends. The economy, of course, moves in cycles.

And no matter how you slice it, it would seem there’s only so much more climbing before a fall. But what will set off a downturn? How bad will it be? And when will it actually happen? To answer these questions and more, Salon consulted with five economists, three of whom (Peter Schiff, Steve Keen and Dean Baker) predicted the 2008 financial crisis before it hit.

What Will Happen: A recession caused by the Fed over-reacting to a temporary uptick in the inflation rate.

How this will transpire: There are two ways we get recessions. The first and more common is that the Fed raises interest rates too much (ostensibly because of concerns about inflation) and throws the economy into recession. The other is a bubble burst. The latter happened in 2001 with the stock bubble bursting and the 2008-09 recession with the housing bubble.

I don’t see a bubble bursting recession on the horizon because I don’t see any bubbles large enough to sink the economy when they burst. (We have bubbles, like Bitcoin and Tesla stock, but nothing terrible will happen to the economy when they burst.).

This leaves the Fed. I think [Chairman of the Federal Reserve Jerome] Powell has been cautious with his rate hikes and will likely continue to be. Nonetheless, inflation data is erratic and it is virtually inevitable that we will see some periods of higher inflation in the not too distant future. This should in principle not be too severe.

Gold to Close Best Month Since 2016; Palladium Jumps to 3-month highs

Gold close to best month since 2016

In the month, gold is closing its best month since 2016 with over 8.0% gains and logging its second consecutive month of gains. On the quarter, XAU/USD recovered itself from early losses, and it is posting near 9.5% gains in the last three months.

Gold and other metals are trading positive on the last day of the week as investors are nervous ahead of the well-waited meeting between Trump and Xi. Some risk aversion is hurting the dollar, giving power to gold buyers.

Investors are also focused on the end of the month and the quarter. They are trading in month-end rebalancing trades as they want to book profits to be included in their books. On Thursday, some profit taking was identified and Friday is not the exception as today will be the latest trading day of the month.

So, be aware of divergences that could be signaling profit taking and end-month rebalancing.

Gold to close green its sixth consecutive week and perform the best month since 2016

Gold is trading positive on Friday, however, the unit is losing some ground in the latest hours as the market is not confident about a resolution in the trade war.

Currently, XAU/USD is trading at 1,413.65, 0.26% positive on Friday. Technical indicators suggest that a consolidation phase is undergoing for the yellow metal.

The bullion is green on the week, the month and the quarter that are closing today. XAU/USD is ready to close its sixth positive week in a row, this time with slightly over 1.0% weekly gains.

In the month, gold is closing its best month since 2016 with over 8.0% gains. It is logging its second consecutive month of gains. On the quarter, XAU/USD recovered itself from early losses, and it is posting near 9.5% gains in the last three months.

According to experts, gold has been fueled by risk aversion due to the trade war, economic growth concerns in the United States, and geopolitical tensions in the middle east. At the top of it, the Federal Reserve hinted a possible rate cut in its meeting of July, giving extra power to the XAU/USD.

Metal prices report for June 28

Silver is trading down for the fourth consecutive day as investors are closing positions ahead of the end of the month. However, the metal is posting its first monthly gain since January. Currently, silver is trading 0.10% negative at 15.25.

Palladium is down on Friday, but earlier in the day it jumped to trade at highs since March 26 at 1,565.50. XPD/USD is closing its fourth consecutive week of gains and its best month since November 2016 with a 16.25% gain in June.

Copper is ready to close its first positive month since February as the mineral managed to post three weeks of gains in a row that took the unit from 2.6125 to test the 2.7450 area. On Friday, XCU/USD remains inside the range between 2.700 and 2.730 it has been trading in the last days. Copper is 0.20% negative on Friday at 2.7120.

Platinum is posting small gains on Friday as the unit is trading 0.30% positive at 816.00. XPT/USD is closing its second week of benefits and a month of recoveries after the big declined performed in May.

Source: FX Empire

The Retirement Crisis Is Much Worse Than You Think

Retirement Crisis

Are you sitting down for this? According to a recent survey, one in five American adults have nothing saved for retirement or emergencies. A further 20 percent have squirreled away only 5 percent or less of their annual income to meet certain financial goals. Less than a third of all Americans have saved at least 11 percent or more.

One in five working Americans arent saving any money for retirement
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The survey, conducted by Bankrate in late February and early March, is just the latest indication that the U.S. faces a major retirement crisis. Every day, some 10,000 baby boomers turn 65, and they’re reaching retirement in worse financial shape than the previous generation for the first time since Harry Truman was president, according to a report by the Wall Street Journal.

The survey also raises the question of why some working-age adults haven’t been able to take full advantage of a booming U.S. economy and historic bull market to build wealth. Unemployment is near a 50-year low, and wage gains were at their highest level in a decade last month.

According to Bankrate, the number one reason (40 percent) why Americans aren’t saving is that they have too many other expenses. Sixteen percent said they “haven’t gotten around to it,” while the same percentage blamed the low quality of their job.

Indeed, not every employer provides access to a retirement plan such as a 401(k). A recent study by the National Institute on Retirement Security (NIRS) found that a little over half of working American adults have access to an employer-sponsored 401(k)-type plan. Only 40 percent actually participate.

As such, the median retirement account balance among all working-age Americans is—again, are you sitting down?—$0.00. That’s the median balance, remember, so half of all Americans have more than that. The other half, meanwhile, have even less than $0.00 to their name.

A Record $4 Trillion in Consumer Debt

That brings me to my next point. Interestingly, only 13 percent of those surveyed by Bankrate cited debt as the reason why they’re not saving as much as they should. I say “interesting” because total U.S. consumer debt, including revolving and non-revolving debt, now stands at more than $4 trillion, the most ever.

gold mining stocks still greatly undervalued relative to the market
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Debt affects us all, but it can seriously hinder workers’ ability to retire on time. The more you’re on the hook to pay lenders, the less you have to pay yourself.

Revolving debt, such as credit card debt, is now valued at more than $1 trillion, which exceeds the all-time high right before the financial crisis. And according to the Federal Reserve Bank of New York, people age 60 and older owe about a third of this total.

Non-revolving debt—auto loans, student loans, mortgages—is even worse. Student loan debt alone stands at an astronomical $1.5 trillion. It doesn’t help that, since the 1980s, the cost of college tuition has increased almost eight times faster than wages.

But if you think this burden belongs only to young people, you’re sorely mistaken. As many as 2.8 million Americans over the age of 60 are saddled with student debt, according to CNBC. Those over 50 owed more than $260 billion last year, up dramatically from $46 billion in 2006.

Confidence Lacking in Retirement Preparedness

All combined, it’s little wonder that a significant number of Americans feel some anxiety when it comes to their financial stability and retirement preparedness, despite a strong U.S. economy. A CFP Board survey conducted on Election Day 2018 found that less than a quarter of voting-age Americans were “completely confident” about their ability to navigate through economic ups and downs. Even less, 22 percent, felt the same about their ability to retire on time.

Large percentage of voting Americans lack financial confidence
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So what’s the solution?

Fund Your Financial Goals Affordably

I’ve heard from a number of people over the age of 50 who say they worry they haven’t adequately prepared for retirement, and yet are at a loss as to where to start. They want to build wealth fast but might have second thoughts about investing in the market.

I want to reassure those people that they need not put a significant amount in the market all at once, which for most people is impractical and risky. The truth is that they have options. One of the best, I think, is dollar cost averaging, which allows investors to fund their financial goals affordably.

In short, dollar cost averaging is an investing technique that lets investors add to an initial investment incrementally over time, usually once a month. That way, investors don’t break the bank, and as an added bonus, they don’t need to worry about market timing.

It’s a technique that has worked well for investors in the past. Take a look at the chart below. It shows a hypothetical initial investment of $1,000 in an S&P 500 Index in March 2009. Ten years later, after regular monthly contributions of only $100, the value of that initial investment grew at an annualized 12.96 percent to more than $26,385.

The power of dollar cost averaging
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This is just an illustration. The past 10 years have been an exceptionally profitable time to invest, and there’s no guarantee that the good times will last.

Also, $26,000 won’t sustain anyone through retirement, but remember, we were using only a hypothetical $1,000. All else being equal, an initial investment of $10,000 in March 2009 would today be worth more than $64,766, for an impressive annualized return of 14.81 percent.

Sound enticing? The good news is that U.S. Global Investors provides investors the opportunity to invest with dollar cost averaging! We call it the ABC Investment Plan, and I’m very proud to give investors this option. Investment minimums are just $1,000 initially and then $100 a month. With the ABC Investment Plan, you get to choose the day of the month your investment is transferred from your checking or savings account to your investment account.

That way, some of the worry is eliminated from your retirement preparations or other financial goals.

SOURCE: US Funds

Silver Stocks Look Poised to Move Higher

Silver price and stock poised to move higher

Since late December, silver and related precious metal commodities have proven to be some of the best investments for those looking for a hedge against geopolitical uncertainty and heightened market volatility. While prices have rallied tremendously over a short period of time, in this article, we’ll take a look at three silver-related charts that suggest the move is just getting started and try to determine how active traders will want to position themselves for a long-term uptrend.

 

iShares Silver Trust (SLV)

It wasn’t a particularly good year for silver and silver-related investments in 2018. The strong rally that started in September helped many recoup some major losses, and the momentum has continued to benefit investors so far in 2019. Taking a look at the chart of the iShares Silver Trust (SLV), a common barometer used for measuring the day-to-day movement of silver bullion, the price has been able to break above two key levels of resistance. The break above the 200-day moving average in late 2018 and subsequent retest of the newly formed support is a significant technical development and suggests that the bulls are now in control of the longer-term direction.

 

Active traders will be particularly keen on following the rising 50-day moving average, which looks poised to move above the 200-day moving average at some point this week. When it occurs, the bullish crossover will be referred to as a golden cross and is a technical signal that officially marks the start of a long-term uptrend. The proximity to the major support levels to current prices is providing followers of technical analysis a lucrative risk-to-reward ratio, and many will look to see if the crossover will be the catalyst required for a move back toward the January high and above.

 
Technical chart showing the share price performance of the iShares Silver Trust (SLV)
StockCharts.com

Wheaton Precious Metals Corp. (WPM)

One of the world’s leading mining companies when it comes to precious metals such as silver is Wheaton Precious Metals Corp. (WPM). Taking a look at the chart below, you can see that the breakout in December was strong enough to send the price of the stock above the resistance of its 200-day moving average. The price consolidated along its 200-day moving average for several weeks until it started its trek higher.

 

The break above short-term resistance was a clear sign to the bulls that prices were headed higher, and the momentum is likely enough to trigger a golden crossover between the two long-term moving averages, as shown by the blue circle. Followers of technical analysis will likely keep a close eye on this chart because a crossover will likely be used as confirmation of a move higher and will likely mark the start of a long-term uptrend.

 
Technical chart showing the share price performance of Wheaton Precious Metals Corp. (WPM)
StockCharts.com

First Majestic Silver Corp. (AG)

Another significant player within the silver market that active traders may be interested in following is First Majestic Silver Corp. (AG). While the pattern isn’t quite as developed as those mentioned above, the confined range shown on the chart is a clear indication that a major move in one direction or the other is imminent. The several failed breaks above the resistance of the 200-day moving average suggest that the bears are in control. However, if the other charts are any sort of indicator, a break above $6.17 could be the catalyst needed for a reversal in sentiment and likely a sharp move higher.

 
Technical chart showing the share price performance of First Majestic Silver Corp. (AG)
StockCharts.com

The Bottom Line

There are few segments of the financial markets in which traders are able to find shelter from the rising levels of volatility and uncertainty. With that said, the patterns that have recently started to show on charts of major silver assets suggest that the move higher in this niche could be in the early days and poised to continue over the coming weeks or months.

SOURCE: Investopedia