Thursday, May 29, 2014

The Colder War and the End of the Petrodollar

By Marin Katusa, Chief Energy Investment Strategist

The mainstream media are falling over themselves talking about Russia’s just-signed “Holy Grail” gas deal with China, which is expected to be worth more than $400 billion. But here’s what I think the real news is… and nobody’s talking about it—until now, that is. China’s President Xi Jinping has publicly stated that it’s time for a new model of security, not just for China, but for all of Asia. This new model of security, otherwise known as “the new UN,” will include Russia and Iran, but not the United States or the EU-28.

Don't miss this weeks webinar "The Insiders Guide to the Big Trade"

This monumental gas deal with China does so much more for Russia than the Western media are reporting. First off, it opens up Russian oil and gas supplies to all of Asia. It’s no coincidence that Russian President Putin announced the gas deal with China at a time when the tensions with the West over Ukraine were growing. Putin has U.S. President Obama exactly where he wants him, and it’s only going to get worse for Europe and America. But before I explain why that is, let’s put this deal in terms we can understand. The specific details have not been announced, but my sources tell me that the contract will bring in over U.S. $10 billion a year of revenue to start with.

The 30 year deal states that every year, the Russians will deliver 1.3 trillion cubic feet (TCF) of gas to China. The total capital expenditure to build the pipeline and all other infrastructure for the project will be more than $22 billion—this will be one of the largest projects in the world. You can bet the Russians won’t take payment in US dollars for their gas. This is the beginning of the end for the petrodollar.

The Chinese and Russians are working together against the Americans, and there are many countries that would be happy to join them in dethroning the U.S. dollar as the world’s reserve currency. This historic gas deal between Russia and China is very bad news for the petrodollar. Through this one deal, the Russians will provide about 25% of China’s current natural gas demand. In a word, this is huge. It’s also not a coincidence that Putin sealed the deal with China before the Australian, US, and Canadian liquefied natural gas (LNG) terminals are completed. If you read our recent Casey Energy Report issue on LNG, you know to be wary of the hype about LNG’s “bright future.” Take note: this deal is a serious negative for the global LNG projects.

I also stated in our April 2012 newsletter:

Putin has positioned Russia to play an increasingly dominant role in the global gas scene with two general strategies: first, by building new pipelines to avoid transiting troublesome countries and to develop Russia’s ability to sell gas to Asia, and second, by jumping into the liquefied natural gas (LNG) scene with new facilities in the Far East.

Pretty bang on for a comment that was made over two years ago in print, don’t you think?

So, what’s next? Lots. Putin will continue to outsmart Obama. (Note to all Americans: the Russians make fun of you—not just for your poor choice of presidents, but also for your failed foreign policy that has led to most of the world hating America. But I digress.) You will see Russia announce a major nuclear deal with Iran, where the Russians will build, finance, and supply the uranium for many nuclear reactors. The Russians will do the same for China, and then Syria. With China signing the natural gas deal with Russia and the president of China publicly stating that it’s time to create a new security model for the Asian nations that includes Russia and Iran, it’s clear China has chosen Russia over the U.S.

We are now in the early stages of the Colder War.

The European Union will be the first victim. The EU is completely dependent on Russia for its oil and natural gas imports—over one-third of the EU-28’s supply of oil and natural gas comes from Russia. I’ve been writing for years about this, and I’m watching it come true right now: the only way out for the EU countries is to use modern North American technology to revitalize their old proven oil and gas deposits.

I call it the European Energy Renaissance, and there’s a fortune to be made from it. Our Casey Energy Report portfolio has already been doing quite well from investing in the European Energy Renaissance, but this is only the beginning. If Europe is to survive the Colder War, it has no choice but to develop its own natural resources. There are naysayers who claim that Europe cannot and will not do that, for many reasons. I say rubbish.

Of course, to make money from this European dilemma, it’s imperative to only invest in the best management teams, operating in those countries with the political will to do what it takes to survive… but if you do, you could make a fortune. Doug Casey and I plan on doing so, and so should you.

For example, two weeks ago in this missive, I discussed “The Most Anticipated Oil Well of 2014,” where if you invested, in just two weeks you could be up over 40%. Not only did I write in great detail about the company, I even interviewed the CEO because of the serious potential this high-risk junior holds. I said in that Dispatch that the quality of the recorded interview wasn’t first class, but the quality of information was. The company just put together a very high-quality, professional video showing its potential, and I include it here for all to watch.

Since my write-up, the company has announced incredible news. It’s only months away now from knowing whether or not it has made a world-class discovery. Subscribers to the Casey Energy Report are already sitting on some good, short-term profits with this story, but it keeps getting better.

The more the tension is building in Ukraine (and it’s going to get worse), the more money we’re going to make from the Colder War. There’s nothing you can do about the current geopolitical situation, but you can position yourself and your family to benefit financially from the European Energy Renaissance.

Now You Can Take the Lead… We Make It Simple

We expect great things from this company and other companies that are exposed to the European Energy Renaissance. You can read our ongoing guidance on this and our other top energy stocks every month in the Casey Energy Report. In the current issue, for example, you’ll find an in-depth report on the coal sector, uranium, and updates on all of our portfolio companies that are poised to benefit most from the European Energy Renaissance.

There’s no risk in trying it: If you don’t like the Casey Energy Report or don’t make any money within your first three months, just cancel within that time for a full, prompt refund. Even if you miss the cutoff, you can cancel anytime for a prorated refund on the unused part of your subscription.

You don’t have to travel 300+ days a year to discover the best energy investments in the world—we do it for you. Click Here to Get Started.

The article The Colder War and the End of the Petrodollar was originally published at Casey Research



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Wednesday, May 28, 2014

You Can’t Shoot Fish in a Barrel Without Ammunition

By Dan Steinhart, Managing Editor, The Casey Report


"FOMO"


I heard this acronym on a podcast last week. Having no clue what it meant, I consulted Google. Turns out it stands for “Fear of Missing Out.” Kids use it to describe their anxiety about missing a social event that all of their friends are attending. It struck me that investors experience FOMO too. And it usually leads to bad decisions.

From Prudent to FOMO

 

In the comfort of your home office, investing rationally is pretty easy. You think a bull market might be emerging, so you invest in the S&P 500.

But you’re not stupid. No one really knows where the stock market is headed, so you keep a healthy allocation of cash on the side to deploy the next time stocks trade at bargain prices. A prudent, rational plan.
But leave the house and things start to change. You notice that others seem to be making more money than you. First it’s the “smart money” raking in the dough—those who had the foresight and fortitude to buy during the last panic, when everyone else was retreating. You’re OK with that. Investing is their full-time job.

You can’t expect to compete with them.

But as the bull market charges higher, the caliber of people making more money than you sinks lower. The mailman starts giving you stock tips. And your gardener’s brand new Mustang, parked in your driveway just behind your sensible, 2011 Toyota Corolla, starts to irritate you.

Your brother-in-law is the last straw. He thinks he’s so smart, but he’s really just lucky to somehow always be in the right place at the right time. I mean, just last month you had to pick him up from a NASCAR tailgate after security kicked him out for lewd behavior—and now he’s taking the family to Europe with his stock market winnings?

If that guy can make $30,000 in the market in six months, you should be a millionaire. Now you feel like a sucker for holding so much cash. Why earn a pitiful 0.5% interest when you could be making… hang on, how much did the S&P 500 gain last year? 29.6%? Some quick extrapolation shows that if you invest all of your cash right now, you can retire by 2023. Factor in a couple family trips to Europe, and we’ll call it 2024 to be safe.

Cash Is Trash… Until It’s King

 

Such is the (slightly exaggerated) psychology of a bull market. FOMO is a powerful motivator and causes smart investors to do stupid things, like go all-in at the worst possible moment. Which is no small concern, since it undermines one of the most powerful investment strategies: keeping liquid cash in reserve to invest during market panics.

Take the roaring ‘20s as a long ago but pertinent example. The surging stock market of that era caused a whole lot of FOMO. Seeing their friends get rich, people who had never invested before piled into stocks.
Of course, we know how that ended. But there’s a fascinating angle that you may not have given much thought. I hadn’t until yesterday, when I finished reading The Great Depression: A Diary [click here to purchase on Amazon.com]. It’s a firsthand, anecdotal account written by attorney Benjamin Roth.

Roth emphasized that during the Great Depression, everyone knew financial assets were great bargains. The problem was hardly anyone had cash to take advantage of them.

Here are a few quotes from the book:

August 1931: I see now how very important it is for the professional man to build up a surplus in normal times. A surplus capital of $2,500 wisely invested during the depression might have meant financial security for the rest of his life. Without it he is at the mercy of the economic winds.
December 1931: It is generally believed that good stocks and bonds can now be bought at very attractive prices. The difficulty is that nobody has the cash to buy.
September 1932: I believe it can be truly said that the man who has money during this depression to invest in the highest grade investment stocks and can hold on for 2 or 3 years will be the rich man of 1935.
June 1933: I am afraid the opportunity to buy a fortune in stocks at about 10¢ on the dollar is past and so far I have been unable to take advantage of it.
July 1933: Again and again during this depression it is driven home to me that opportunity is a stern goddess who passes up those who are unprepared with liquid capital.
May 1937: The greatest chance in a lifetime to build a fortune has gone and will probably not come again soon. Very few people had any surplus to invest—it was a matter of earning enough to buy the necessaries of life.

In short, by succumbing to FOMO and investing all your cash, you might be giving up the opportunity to make a literal fortune. You can’t shoot fish in a barrel without ammunition.

Of course, the parallels from the Great Depression to present day crises aren’t exact. The U.S. was on the gold standard back then, meaning the Fed couldn’t conjure money out of thin air to reflate stock prices. Such a nationwide shortage of cash is unthinkable today, as Yellen & Friends would create however many dollars necessary to prevent stocks from plummeting 90%, as they did during the Great Depression.

That’s exactly what happened during the 2008 financial crisis, as you can see below. The Fed injected liquidity, and stocks rebounded rapidly. Compared to the Great Depression, the stock market crash of 2008 was short and sweet:


What does that mean for modern investors?

When the next crisis comes—and it will—there will be bargains. But because of the Fed’s quick trigger, investors will have to act decisively to get a piece of them.

What’s more, now that the US government has demonstrated beyond the shadow of a doubt that it will prop up the economy, bargains should dissipate even quicker next time around. After all, the hardest part of buying stocks in a crisis is overcoming fear. But that fear isn’t much of a detriment when Uncle Sam is standing by with his hand on the lever of the money-printing machine, ready to rescue the market.

Crises can creep up on you faster than you think. You may never know what hit you--unless you knew what to look for ahead of time. Watch Meltdown America, the eye opening 30-minute documentary on how to recognize (and survive) an economic crisis—with top experts including Sovereign Society Director Jeff Opdyke, investing legend Doug Casey, and Canadian National Security Council member Dr. Andre Gerolymatos.

Be prepared… it can (and will) happen here. Click here to watch Meltdown America now.


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Monday, May 26, 2014

Free trading webinar: The Insiders Guide to Growing a Small Account into a Big Account

Growing your account is not as hard as you think. And it won't take you decades to grow it if you do it the RIGHT (and safe) way. Let John Carter show you how he does it and how you can do it too.

Just click here to grab a seat to Tuesdays FREE webinar

He's pulling back the cloak on how he personally grows his accounts with super low risk, and max gains and control. He'll show you........

   *   His favorite low risk strategy to grow his account

   *  What stops to use and WHEN

   *  How to control risk without being timid

   *  How to secure your financial future.

   *  And a lot more...plus he'll be taking question

Seats are limited for this 'Insider Meeting', so get your name on the list TODAY:

Just Click Here to Reserve Your Seat to John's Meeting 

See you Tuesday!
Ray @ The Crude Oil Trader



Thursday, May 22, 2014

How to Grow a Small Trading Account into a BIG One

He's back! Our friend and trading partner John Carter of Simpler Options is back to answer the number one question he gets at the Simpler Options phone bank...."how can I trade using a small trading account"?

As you have probably already learned [like all of us] trading fees quickly erode our trading accounts even when we have some success when using a small account. Today John shows us how to put that all behind us.

Growth is on our minds, and I'm sure it's on yours.....so watch this free video from the industries leading educator and start growing and protecting your account today.

How to Grow a Small Account into a BIG One

Here's what you'll learn from John......

   *   The difference between trading for income vs. growth and what no one else will tell you about this

   *   The # 1 job of every trader has to accomplish or look for a new job

   *   Why you don’t want to focus on being right in trading and yes this is counter intuitive

   *   Examples of my favorite trades for growing a small account

   *   Position sizing appropriately for a small account and the types of stocks and ETFs to trade

John shows us all of his trades in his real 5K account that he'll be growing right before our eyes. And John explains in detail every method he uses to make it all happen.

Watch the video here...and thank me later

See you in the markets,
The Stock Market Club

P.S.  please feel free to leave a comment after watching the video, we want to hear your take on what John is doing.




Wednesday, May 21, 2014

The Birth of a New Bull Market

By Jeff Clark, Senior Precious Metals Analyst


If I asked you why you think I’m bullish on platinum and palladium, you’d probably point to the strikes in South Africa, the world’s largest producer of platinum. Or maybe the geopolitical conflicts with Russia, the largest supplier of palladium. Maybe you’d even mention that some technical analysts say the palladium price has “broken out” of its trading range.

These are all valid points—but they’re reasons why a trader might be bullish. When the strikes end, or Russia ends its aggression, or short-term price momentum eases, they’ll sell.
And that will be a mistake.

Because underneath the headlines lies an irreparable situation with the PGM (Platinum Group Metals) market, one that will last at least several years and probably more like a decade. This market is teetering on the edge of a supply crunch, one more perilous than many investors realize. As the issues outlined below play out, prices will be forced higher—which signals that we should diversify into the “other” precious metals now.
The basic problem is that platinum and palladium supply is in a structural deficit. It won’t be resolved when the strikes end or Russia simmers down. Here are six reasons why…...

#1. Producers Won’t Meet the Cost of Production

The central issue of the striking workers in South Africa is wages. In spite of company executives offering to double wages over the next five years, workers remain on the picket line.

Regardless of the final pay package, wages will clearly be higher. And worker pay is one of the biggest costs of production. And the two largest South African producers (Anglo American and Impala), which supply 69% of the world’s platinum, are already operating at a loss.


Once the strike settles, costs will rise further. Throw in ongoing problems with electric power supply, high regulations, and past labor agreements, and there is virtually no chance costs will come down. This dilemma means that platinum prices would need to move higher for production to be maintained anywhere near “normal” levels. Morgan Stanley predicts it will take at least four years for that to occur. And if the price of the metal doesn’t rise? Companies will have no choice but to curtail production, making the supply crunch worse.

#2. Inventories Are Near the Bottom of the Barrel 

 

One reason platinum price moves have been muted during the work stoppage is because there have been adequate stockpiles. But those are getting low. Impala, the world’s second-largest platinum producer, said the company is now supplying customers from its inventories. In March, Switzerland’s platinum imports from strike-hit South Africa plummeted to their lowest level in five and a half years, according to the Swiss customs bureau.

Since producers can’t currently meet demand, some customers are now obtaining metal from other sources, including buying it in the open market. As inventories decline, supply from producing companies will need to make up the shortfall—and they’ll have little ability to do that.

#3. The Strikes Will Make Recovery Difficult and Prolonged

Companies are already strategizing how to deal with the fallout from the worst work stoppage since the end of apartheid in 1994…
  • Amplats said it might sell its struggling Rustenburg operations. Even if it finds a buyer, the new operator will inherit the same problems.
  • Impala said that even if the strike ends soon, its operations will remain closed until at least the second half of the year.
  • Some companies have announced they may shut down individual shafts. This causes a future problem because some of these mines are a couple of miles deep and would require a lot of money to bring back online—which they may balk at doing with costs already so high.
  • It’s not being advertised, but a worker settlement will almost certainly result in layoffs since some form of restructuring will be required. This could trigger renewed strikes and set in motion a vicious cycle that further degrades production and makes labor issues insurmountable.

#4. Russian Palladium Is Already in a Supply Crunch

When it comes to palladium, Russia matters more than South Africa, since it provides 42% of global supply. Remember: palladium demand is expected to rise more than platinum, due to new auto emissions control regulations in Asia.

But Russia’s mines are also in trouble…
  • Ore grades at Russia’s major mines, including the Norilsk mines, are reported to be in decline.
  • New mines will take as long as 10 years to come online. It could take a decade for Russian production to rebound—if Russia even has the resources to do it. This stands in stark contrast to global demand for palladium, which has grown 35.8% since 2004.
  • Russia’s aboveground stockpile of palladium appears to have dwindled to near extinction. The precise amount of the country’s reserves is a state secret, but analysts estimate stockpiles were 27-30 million ounces in 1990.
Take a look at reserve sales today:


Many analysts believe that since palladium reserve sales have shrunk, Russia has sold almost all its inventory. As unofficial confirmation, the government announced last week that it is now purchasing palladium from local producers. This paints a sobering picture for the world’s largest supplier of palladium—and is very bullish for the metal’s price.

#5. Demand for Auto Catalysts Cannot Be Met

The greatest use of PGMs is in auto catalysts, which help reduce pollution. Platinum has long been the primary metal used for this purpose and has no widely used substitute—except palladium.

But that market is already upside down.


Palladium is cheaper than platinum, but replacing platinum with palladium requires some retooling and, on a large scale, would worsen the supply deficit. As for platinum (which does work better than palladium in higher-temperature diesel engines), auto parts manufacturers are expected to use more of it than is mined this year, for the third straight year. Some investors may shy away from PGMs because they believe demand will decline if the economy enters a recession. That could happen, but tighter emissions controls and increasing car sales in Asia could negate the effects of declining sales in weakening Western economies.

For example, China is now the world’s top auto-producing country. According to IHS Global, auto sales in China are projected to grow 5% annually over the next three years. PricewaterhouseCoopers forecasts that sales of automobiles and light trucks in China will double by 2019. That will take a lot of catalytic converters. This trend largely applies to other Asian countries as well. It’s important to think globally when considering demand.

The key, however, is that supply is likely to fall much further than demand.

#6. Investment Demand Has Erupted

Investment demand for platinum rose 9.1% last year. The increase comes largely from the new South African ETF, NewPlat. At the end of April, all platinum ETFs held nearly 89,000 ounces—a huge amount when you consider it was zero as recently as 2007.

Palladium investment fell 84% last year—but demand is up sharply year-to-date due to the launch of two South African palladium ETFs, pushing global palladium holdings to record levels. And like platinum, there was no investment demand for palladium seven years ago.

Growing investment demand adds to the deficit of these metals.

The Birth of a 10 Year Bull Market

 

Add it all up and the message is clear: by any reasonable measure, the supply problems for the PGM market cannot be fixed in the foreseeable future. We have a rare opportunity to invest in metals that are at the beginning of a potential 10-year bull run. Platinum and palladium prices may drop when the strikes end, but if so, that will be a buying opportunity. This market is so tenuous, however, that an announcement of employees returning to work may be too little, too late. We thus wouldn’t wait to start building a position in PGMs.

GFMS, a reputable independent precious metals consultancy, predicts the palladium price will hit $930 by year-end and that platinum will go as high as $1,700. But that will just be the beginning; the forces outlined above could easily push prices to double over the next few years.

At that point, stranded supplies might start coming back online—but not until after major, sustained price increases make it possible.

The RIGHT Way to Invest

In my newsletter, BIG GOLD, we cover the best ways to invest in the metals themselves (funds and bullion), but for the added leverage of investing in a profitable platinum/palladium producer, I have to hand the baton over to Louis James, editor of Casey International Speculator.

You see, most PGM stocks are not worth holding, so you have to be very diligent in making the right picks. Remember, the dire problems of the PGM miners are one reason we’re so bullish on these metals. However, Louis has found one company in a very strong position to benefit from rising prices—and its assets are not located in either South Africa or Russia.

It’s the only platinum mining stock we recommend, and you can get its name, our full analysis, and our specific buy guidance with a risk free trial subscription to Casey International Speculator today.
If you give it a try today, you’ll get three investments for the price of one: Your Casey International Speculator subscription comes with a free subscription to BIG GOLD, where you’ll find two additional ideas on how to invest in the PGMs.

If you’re not 100% satisfied with our newsletters, simply cancel during the 3 month trial period for a full refund—but whatever you do, make sure you don’t miss out on the next 10 year bull market.  

Click here to get started right now.


The article The Birth of a New Bull Market was originally published at Casey Research



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Tuesday, May 20, 2014

The Most Anticipated Oil Well of 2014

By Marin Katusa, Chief Energy Investment Strategist

Large international oil companies (IOCs) and the largest national oil companies (NOCs) are all anxiously watching an oil well that’s being drilled by a North American company in a little, out of the way country in Europe. In fact, this country—Albania—has recently garnered so much attention from Big Oil due to the results of the elephant potential of this oil deposit that the Albanian Energy Ministry just decided to establish an open tender system for the next round of sales of blocks with major oil and gas potential. If you’re not familiar with it, “open tender” is an auction process where the highest bidder gets the land blocks.

The Energy Ministry wouldn’t do this unless the demand were significant, and when Doug Casey and I visited the region recently, we were very impressed with its world-class potential. We’re both excited to see the oil well results that are slated to come out within the next few months—so are the IOCs and NOCs, and so should you. To share our excitement, Doug and I thought it would be a great idea to literally bring you into the room to see and hear what we see and hear—and thanks to modern technology, I present to you today the Casey Energy Report (CER) Crossfire.

One of the few times I filmed a CER Crossfire was with Keith Hill from Africa Oil. It’s not something I do regularly—only when I’m really excited about a company. The company we have on CER Crossfire today, Petromanas Energy (PMI.V), is chasing world class, elephant oil deposits, but rather than deepwater Africa (like Keith did with Africa Oil), it’s drilling deep onshore in Europe.

As you will hear me discuss in the video, the last time I’ve seen a company chasing deep world class oil deposits with this kind of massive upside was Africa Oil. Shell, one of the largest IOCs, is paying almost all of the US$70 million this oil well costs to drill to earn its 75% share of the project, and it will do the same with the next well. We haven’t seen such a high reward-to-risk ratio in a long time. So, rather than reading a long missive, I invite you to watch this edition of the Casey Energy Report Crossfire with Glenn McNamara, the CEO of Petromanas. I think it will definitely be worth your time.



Now You Can Take the Lead… We Make It Simple

We expect great things from this company. You can read our ongoing guidance on Petromanas and our other top energy stocks every month in the Casey Energy Report. In the current issue, for example, you’ll find an in depth field report on the Europe trip Doug and I took, what we learned at our site visits, and which companies are poised to benefit most from the budding European Energy Renaissance. There’s no risk in trying it: If you don’t like the Casey Energy Report or don’t make any money within your first three months, just cancel within that time for a full, prompt refund.

Even if you miss the cutoff, you can cancel anytime for a prorated refund on the unused part of your subscription. You don’t have to travel 300+ days a year to discover the best energy investments in the world—we do it for you. Click here to get started.


The article The Most Anticipated Oil Well of 2014 was originally published at Casey Research.com.



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Thursday, May 15, 2014

Puerto Rico’s Stunning New Tax Advantages

By Nick Giambruno, Senior Editor, International Man

Chances are that you have heard something about the stunning new laws in Puerto Rico that give unbelievable tax benefits for mainland Americans who move to the island. Benefits that are so incredible that many at first thought they were simply too good to be true…...but they most certainly are not.


With strategies that purport to legally allow US citizens to avoid having to pay taxes, the first thing that usually comes to mind is some sort of cockamamie scheme. This is because the US government is no slouch when it comes to shaking down its citizens. It’s mind boggling expenditures necessitate this. It would be dangerously foolish in the extreme to think you could slip one past them.

However, the tax benefits of becoming a resident of Puerto Rico are not an illusion, nor some type of scam. They are very real, 100% legal, and could change your life. That is not hyperbole. They have already changed the lives of many. These benefits are why scores of mainland Americans have already made the move—including two members of Casey Research. Many more have seriously considered it. To spur job growth and economic activity in general, the Commonwealth of Puerto Rico introduced extraordinary tax incentives for incoming residents and service businesses.

Specifically, for Puerto Rican residents and businesses that qualify—mostly expatriates from the U.S. mainland or their enterprises—the recently enacted Act 22 and Act 20 provide for a zero tax rate on capital gains and certain interest and dividends earned by individuals, and for low single digit tax rates on qualifying service income earned by corporations operating in Puerto Rico.

Puerto Rico is no novice at sculpting tax rules to attract foreign investors and expatriates. For decades the country has offered tax incentives to many types of businesses, especially manufacturers, which is why today you’ll find plants belonging to Praxair, Merck, Pfizer, and other big names dotting the island’s lush interior.
Due to the ever-increasing extra-territorial regulations they are forced to comply with, many countries and foreign financial institutions are showing American citizens the “unwelcome mat.” Puerto Rico, on the other hand, is a newly tax-friendly jurisdiction that is—and will continue to be—open to Americans.

One accountant who specializes in offshore structures remarked, “This is the biggest opportunity I’ve seen in 25 years.”

He’s right: this is truly an astounding and unique opportunity for individual Americans; there is no other way to legally escape the suffocating grip of these taxes besides death or renunciation of U.S. citizenship. This is because the US is the only country in the world that taxes its nonresident citizens on all of their income regardless of where they live and earn their money. For this reason, an American who moves to a zero tax jurisdiction like Dubai, for example, still pays a full U.S. tax bill. A Canadian expat working in Dubai would have no income tax bill at all.

Note: The US does exclude up to $99,200 of foreign earned income (salary, wages, etc.) from taxation if certain conditions are met, but there is no break for an overseas American’s investment income.

American are in the uniquely unfavorable position of having arguably the worst tax policies and a government that can effectively enforce them. For many, it is a tight and suffocating tax leash. It is no wonder, then, why record numbers of Americans are giving up their citizenship to escape these onerous requirements. Even if you do decide to take the plunge and renounce your US citizenship, there’s a good chance you’ll get stung with the costly exit tax and also may have trouble reentering the US.

There is, however, another way, thanks to the new options in Puerto Rico. American citizens can effectively gain many of the tax benefits of renunciation without actually having to do so. Due to Puerto Rico’s situation as a commonwealth of the U.S., its residents are not subject to US federal income taxes from income generated in Puerto Rico.

Previously this did not make any practical difference, because although Puerto Rican residents are not subject to U.S. federal taxes, they are subject to Puerto Rican taxes, which are often at similar levels to those on the U.S. mainland. However the situation has changed immensely, with the two powerful, new laws that exempt new Puerto Rican residents from certain key taxes from the Puerto Rican government.
 .
Anyone who relocates to Puerto Rico can apply for these tax incentives—including mainland U.S. citizens, who can find similar benefits nowhere else in the world, thanks to the island’s unique legal situation.

Casey Research has done a thorough boots on the ground investigation and found that the tax advantages are real and that for many Americans, including individuals operating on a modest scale, they are a huge opportunity that could truly be life changing. The findings were recently published in a comprehensive A-Z guide on the Puerto Rico option. Click Here to Learn More.


The article Puerto Rico’s Stunning New Tax Advantages was originally published at Casey Research



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Tuesday, May 13, 2014

Why the Market Should Pay More Attention to Sports and Poker

Did your coach ever tell you not to signal before you made a move, or do you know why it’s so important to have a good poker face if you’re trying to bluff? It’s because it’s pretty hard to trick a person that can see what you’re going to do next. What does this have to do with trading the markets for consistent profit?


The market signals before just about every move it makes.


So, why doesn’t this make the market incredibly easy to predict? It’s because most traders don’t know the market’s “tell.” That’s why you learn to watch your opponent’s position in sports, or to watch your opponent’s pulse and face in poker. If you don’t know that a nervous twitch means your neighbor is trying to bluff you with his pair of twos, then how do you know he doesn’t have the cards? On the other hand, if you know his “tell”, you can anticipate his bluff even if the rest of the table thinks he’s got a strong hand. Doc Severson spent a lot of time (and a lot more money) looking for those signs in the market, but as James Bond remarks in Casino Royale, “It was worth it to discover his tell.”


Learn the Market’s Tell
 

After years of study and testing (he was an engineer, after all), Doc Severson found a way to see the market “signal” before it makes a move. He used it to position himself before the 2013 S&P rally, and he is seeing the market signal another big move now. He’s already preparing his positions for this move, and he wants to show you how to anticipate them as well.


How to Predict the Next Big Move for Yourself (Free Video)

 

Yellen’s Wand Is Running Low on Magic

By Doug French, Contributing Editor

How important is housing to the American economy?

If a 2011 SMU paper entitled "Housing's Contribution to Gross Domestic Product (GDP) quot; is right, nothing moves the economic needle like housing. It accounts for 17% to 18% of GDP. And don't forget that home buyers fill their homes with all manner of stuff—and that homeowners have more skin in insurance on what's likely to be their family's most important asset. All claims to the contrary, the disappointing first quarter housing numbers expose the Federal Reserve as impotent at influencing GDP's most important component.

The Fed: Housing's Best Friend

 

No wonder every modern Fed chairman has lowered rates to try to crank up housing activity, rationalizing that low rates make mortgage payments more affordable. Back when he was chair, Ben Bernanke wrote in the Washington Post, "Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance."

In her first public speech, new Fed Chair Janet Yellen said one of the benefits to keeping interest rates low is to "make homes more affordable and revive the housing market."

As quick as they are to lower rates and increase prices, Fed chairs are notoriously slow at spotting their own bubble creation. In 2002, Alan Greenspan viewed the comparison of rising home prices to a stock market bubble as "imperfect." The Maestro concluded, "Even if a bubble were to develop in a local market, it would not necessarily have implications for the nation as a whole."

Three years later—in 2005—Ben Bernanke was asked about housing prices being out of control. "Well, I guess I don't buy your premise," he said. "It's a pretty unlikely possibility. We've never had a decline in home prices on a nationwide basis." With never a bubble in sight, the Fed constantly supports housing while analysts and economists count on the housing stimulus trick to work.

2014 GDP Depends on Housing

 

"There's more expansion ahead for the housing market in 2014, with starts and new-home sales continuing to rise at double-digit rates, thanks to tight inventory," writes Gillian B. White for Kiplinger. The "Timely, Trusted Personal Finance Advice and Business Forecast(er)" says GDP will bounce back. Fannie Mae Chief Economist Doug Duncan says, "Our full-year 2014 economic forecast accounts for three key growth drivers: an acceleration in spending activity from private-sector forces, waning fiscal drag from the federal government, and continued improvement in the housing market."
We'll see about that last one.

Greatest Housing Subsidy of All Time Running Out of Gas

 

With the central bank flooding the markets with liquidity, holding short rates low, and buying long term debt, mortgage rates have been consistently below 5% since the start of 2009. For all of 2012, the 30 year fixed mortgage rate stayed below 4%. In the post gold standard era (after 1971), rates have never been this low for this long. The Fed's unprecedented mortgage subsidy has helped the market make a dead cat bounce since the crash of 2008. After peaking in July 2006 at 206.52, the Case-Shiller 20 City composite index bottomed in February 2012 at 134.06. It had recovered to 165.50 as of January. However, while low rates have propped up prices, sales of existing homes have fallen in seven of the last eight months. In March resales were down 7.5% from a year earlier. That's the fifth month in a row in which sales fell below the year earlier level.

David Stockman writes, "March sales volume remained the slowest since July 2012." He listed 13 major metro areas whose sales declined from a year ago, led by San Jose, down 18%. The three worst performers and 6 of the bottom 11 were California cities. Las Vegas and Phoenix were also in the bottom 10, with sales down double digits from a year ago. This after housing guru Ivy Zelman told CNBC in February, "California is back to where it was in nirvana." Considering the entire nation, she said, "I think nirvana is not far around the corner… I think that I have to tell you, I'm probably the most bullish I've ever been fundamentally, and I'm dating myself, been around for over 20 years, so I've seen a lot of ups and downs."

Housing Headwinds

 

Housing is contributing less to overall growth than during both the days of 20% mortgage rates in the 1980s and the S&L crisis of the early 1990s. In Phoenix, where home prices have bounced back and Wall Street money has vacuumed up thousands of distressed properties, the market has gone flat. In Belfiore Real Estates' April market report, Jim Belfiore wrote, "The bad news for home builders is they have created a glut of supply in previously hot market areas… Potential buyers, as might be expected, feel no sense of urgency to buy because they believe this glut is going to exist indefinitely."

Nick Timiraos points out in the Wall Street Journal that with a 4.5% mortgage rate and prices 20% below their peak, "… homes are still more affordable than in most periods between 1990 and 2008." So why is demand for new homes so tepid? And why have refinancings fallen 58% year over year in the first quarter?
"Housing's rocky recovery could signal weakness more broadly in the economy," writes Timiraos, "reflecting the lingering damage from the bust that has left millions of households unable to participate in any housing recovery. Many still have properties worth less than the amount borrowers owe on their mortgages, while others have high levels of debt, low levels of savings, and patchy incomes."

More specifically, "So far we have experienced 7 million foreclosures," David Stockman, former director of the Office of Management and Budget, writes. "Beyond that there are still nine million homeowners seriously underwater on their mortgages, and there are millions more who are stranded in place because they don't have enough positive equity to cover transactions costs and more stringent down payment requirements." Young people used to drive real estate growth, but not anymore. The percentage of young home buyers has been declining for years. Between 1980 and 2000, the percentage of homeowners among people in their late twenties fell from 43% to 38%. And after the crash, the downtrend continued. The percentage of young people who obtained mortgages between 2009 and 2011 was just half what it was ten years ago.

Young people don't seem to view owning a home as the American dream, as was the case a generation ago. Plus, who has room to take on more debt when 7 in 10 students graduate college with an average $30k in student loan debt? "First time home buyers are typically an important source of incremental housing demand, so their smaller presence in the market affects house prices and construction quite broadly," Fed Chairman Ben Bernanke told homebuilders two years ago.

There's not much good news for housing these days. For a little while, the Fed's suppression of interest rates juiced housing enough to distract Americans from weak job creation and stagnant real wages. Don't have a job? No problem! Just borrow against the appreciation of your house to feed your family. But Yellen's interest rate wand looks to be out of magic. The government had a pipe dream of white picket fences for everyone. But Americans can't refinance their way to wealth. Especially in the Greater Depression.

Read more about the Fed’s back-breaking economic shenanigans and the ways to protect your assets in the Casey Daily Dispatch—your daily go-to guide for gold, silver, energy, technology, and crisis investing.

Click here to sign up—it’s Free.


The article Yellen’s Wand Is Running Low on Magic was originally published at Casey Research



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Monday, May 12, 2014

Are Valuations Really Too High?

By John Mauldin


The older I get and the more I research and study, the more convinced I become that one of the more important traits of a good investor or businessman is not simply to come up with the right answer but to be able to ask the right question. The questions we ask often reveal the biases in our thinking, and we are all prone to what behavioral psychologists call confirmation bias: we tend to look for (and thus to see, and to ask about) things that confirm our current thinking.

I try to spend a significant part of my time researching and thinking about things that will tell me why my current belief system is wrong, testing my opinions against the ideas of others, some of whom are genuine outliers.

I have done quite a number of media interviews and question and answer sessions with audiences in the past few months, and one question keeps coming up: “Are valuations too high?” In this week’s letter we’re going to try to look at the various answers (orthodox and not) one could come up with to answer that basic question, and then we’ll look at market conditions in general. This letter may print a little longer as there are going to be a lot of charts.

I am back in Dallas today, getting ready to leave Monday for San Diego and my Strategic Investment Conference. I’m really excited about the array of speakers we have this year. We’re going to share the conference with you in a different way this year. My associate Worth Wray and I are going to do a brief summary of the speakers’ presentations every day and send that out as a short Thoughts from the Frontline for four days running. Plus, for those who are interested in my more immediate reactions, I suggest you follow me on Twitter. There are still a few spots available at the conference, as we have expanded the venue, and if you would like to see who is speaking or maybe decide to show up at the last minute (which you should), just follow this link. Now let’s jump into the letter.

Take It to the Limit

First, let’s examine three ways to look at stock market valuations for the S&P 500. The first is the Shiller P/E ratio, which is a ten year smoothed curve that in theory takes away some of the volatility caused by recessions. If this metric is your standard, I think you would conclude that stocks are expensive and getting close to the danger zone, if not already in it. Only by the standards of the 2000 tech bubble and the year 1929 do you find higher normalized P/E ratios.



But if you look at the 12 month trailing P/E ratio, you could easily conclude that stocks are moderately expensive but not yet in bubble territory.



And yet again, if you look at the 12 month forward P/E ratio, it might be easy to conclude that stocks are fairly, even cheaply priced.



In a Perfect World

Earnings are projected to grow rather significantly. Let’s visit our old friend the S&P 500 Earnings and Estimate Report, produced by Howard Silverblatt (it’s a treasure trove of data, and it opens in Excel here.

I copied and pasted below just the material relevant for our purposes. Basically, you can see that using the consensus estimate for as-reported earnings would result in a relatively low price to earnings ratio of 13.5 at today’s S&P 500 price. If you think valuations will be higher than 13.5 at the end of 2015, then you probably want to be a buyer of stocks. (Again, you data junkies can see far more data in the full report.)



But this interpretation begs a question: How much of 2013 equity returns were due to actual earnings growth and how much were due to people’s being willing to pay more for a dollar’s worth of earnings? Good question. It turns out that the bulk of market growth in 2013 came from multiple expansion in the U.S., Europe, and United Kingdom. Apparently, we think (at least those who are investing in the stock market think) that the good times are going to continue to roll.



The chart above shows the breakdown of 2013 return drivers in global markets, but this next chart, from my friend Rob Arnott, shows that roughly 30% of large cap U.S. equity (S&P 500) returns over the last 30 years have come from multiple expansion; and recently, rising P/E has accounted for the vast majority of stock returns in the face of flat earnings.



The Future of Earnings

What kind of returns can we expect from today’s valuations? There are two ways we can look at it. One way is by looking at expected returns from current valuations, which is how Jeremy Grantham of GMO regularly does it. The following chart shows his projections for the average annual real return over the next seven years.

To continue reading this article from Thoughts from the Frontline – a free weekly publication by John Mauldin, renowned financial expert, best-selling author, and Chairman of Mauldin Economics – Please Click Here.



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Sunday, May 11, 2014

What You and Monica Lewinsky Might Have in Common

By Dennis Miller

Collateral damage can assume many forms—and though some may be more newsworthy than others, the latter are no less real, nor any less frightening.


On Tuesday, controversial radio talk show host Rush Limbaugh called Monica Lewinsky “collateral damage in Hillary Clinton’s war on women,” saying that President Bill Clinton and his wife destroyed the former White House intern “after he got his jollies, after he got his consensual whatevers.”

Last month, Jeremy Grantham, cofounder of GMO, a Boston based asset management firm that oversees $112 billion in client funds, dubbed savers “collateral damage” of quantitative easing and the Federal Reserve’s continued commitment to low interest rates.

Would it be worse to be known as the “president’s mistress” for more than a decade and, as Lewinsky claims, to be unable to find a normal job? Maybe. But it’s no laughing matter either to find yourself penniless in your “golden years.”

Signs of Monetary Collateral Damage Among Seniors

 

The 55-plus crowd accounts for 22% of all bankruptcy filings in the U.S.—up 12% from just 13 years ago—and seniors age 65 and up are the fastest growing population segment seeking bankruptcy protection. Given the wounds bankruptcy inflicts on your credit, reputation, and pride, it’s safe to assume those filing have exhausted all feasible alternatives.

But even seniors in less dire straits are finding it difficult to navigate low interest rate waters. Thirty seven percent of 65 to 74 year olds still had a mortgage or home equity line of credit in 2010, up from 21% in 1989. For those 75 and older, that number jumped from 2% to 21% during the same timeframe—another mark of a debt filled retirement becoming the norm. With an average balance of $9,300 as of 2012, the 65 plus cohort is also carrying more credit card debt than any other age group.

While climbing out of a $9,300 hole isn’t impossible, the national average credit card APR of 15% sure makes it difficult. For those with bad credit, that rate jumps to 22.73%—not quite the same as debtor’s prison, but close.

None of this points to an aging population adjusting its money habits to thrive under the Fed’s low interest rate regime.

Minimize Your Part of Comparative Negligence

 

A quick side note on tort law. Most states have some breed of the comparative negligence rule on the books. This means a jury can reduce the monetary award it awards a tort plaintiff by the percentage of the plaintiff’s fault. Bob’s Pontiac hits Mildred’s Honda, causing Mildred to break her leg. Mildred sues Bob and the jury awards her $100,000, but also finds she was 7% at fault for the accident. Mildred walks with $93,000. (Actually, Mildred walks with $62,000 and her lawyer with $31,000, but I digress.)

Comparative-negligence rules exist because when a bad thing happens, the injured party may be partly responsible. For someone planning for retirement, the bad thing at issue is too much debt and too little savings. Through low interest rates, the Federal Reserve is responsible for X% of the problem.

Though ex-Fed chief Bernanke doesn’t seem to see it that way—in a dinner conversation with hedge fund manager David Einhorn, he asserted that raising interest rates to benefit savers wouldn’t be the right move for the economy because it would require borrowers to pay more for capital. Well, there you have it. And there’s nothing you can do about that X%. You can, however, reduce or eliminate your contribution.
In other words, you don’t have to be collateral damage; you can affect how your life plays out.

Money Lessons from Zen Buddhism

 

This might sound like a “duh” statement, but it bears repeating from time to time. Inheritance windfall from that great-aunt in Des Moines you’d forgotten about aside, there are two ways to eliminate debt and retire well: spend less or make more.

Rising healthcare costs, emergency car repairs, and the like are real impediments to reducing your bills. Costs rooted in attempts to “keep up with the Joneses,” however, are avoidable. Those attempts are also futile. A new, even richer Mr. Jones is always around the bend.

Instead of overspending for show, make like a Buddhist and let go of your attachment to things and your ego about owning them. Spring for that Zen rock garden if you must and start raking.

One of the wealthier men I know drove around for years with a gardening glove as a makeshift cover for his Peugeot’s worn out, stick shift knob. It looked shabby, but this man wasn’t a car guy and had no need to impress. As far as I know, the gardening glove worked just fine until he finally donated the car to charity and happily took his tax deduction. Maintaining your car isn’t overspending, but you catch my drift. Dropping efforts to show off can benefit us all.

That said, keeping up isn’t always about show. You may feel pressure to overspend just to be able to enjoy time with your friends and family. Maybe you can no longer afford the annual Vail ski week with your in laws or the flight to Hawaii for your nephew’s bar mitzvah. Maybe your friends are hosting caviar dinners, but you’re now on a McDonald’s budget and can no longer participate.

Spending less in order to stay within your budget can mean missing out on experiences, not just stuff. If you’re in this camp, there’s no reason to hang your head. As I mentioned above, you can spend less or you can make more. The latter is far more fun.

An Investment Strategy to Prevent You from Becoming Collateral Damage

 

While it’s tempting to start speculating with your retirement money, resist. If you have non-retirement dollars to play with and the constitution to handle it, carefully curated speculative investments can give you a welcome boost. However, if all of your savings is allocated for retirement, just don’t do it.

Unless you’re still working, how, then, can you make more money in a low-interest-rate world? At present, my team of analysts and I recommend investing your retirement dollars via the 50-20-30 approach:
  • 50%: Sector diversified equities providing growth and income and a high margin of safety.
  • 20%: Investments made for higher yield coupled with appropriate stop losses.
  • 30%: Conservative, stable income vehicles.
No single investment should make up more than 5% of your retirement portfolio.

Whether you’re designing your retirement blueprint from scratch or want to apply our 50-20-30 strategy to your existing plan, the Miller’s Money team can help. Each Thursday enjoy exclusive updates on unique investing and retirement topics by signing up for my free weekly newsletter.

Don’t let the Fed’s anti-senior and anti-saver policies unravel your retirement.  

Click here to start receiving Miller’s Money Weekly today.



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How a Big Cat Started Europe’s Addiction to Crude Oil

By Marin Katusa, Chief Energy Investment Strategist

On July 1, 1911, a German gunboat named Panther sailed into the port of Agadir, Morocco, and changed history. For the previous two decades, a faction within the British Admiralty had called for the navy to switch from coal fired ships to ones powered by a new fuel. Admiral John Fisher, First Sea Lord, led the charge, trumpeting oil’s numerous advantages: It had nearly twice the thermal content of coal, required less manpower to use, allowed refueling at sea, and burned with less telltale smoke.

Doesn’t matter, replied naval tradition: Britain lacks oil, and she has lots of coal. The switch would put the greatest navy in the world at the mercy of burgeoning oil rich countries and the oil trusts that operate in them. (It didn’t help that the navy’s first test of oil firing in 1903 engulfed the ship in a cloud of black smoke.)


It wasn’t common knowledge at the time, but Germany had surpassed the mighty British Empire in manufacturing in the late 1800s, most notably in the production of steel. Britain’s manufacturing base had largely moved abroad, taking investment along with it. Germany, meanwhile, was determined to build up the quality as well as quantity of its goods. That included its military technology and capacity, especially its navy. Has a familiar ring, doesn’t it?

Then came the Panther. Germany said she was there to protect German businessmen in restive Morocco, a reason more credible had there actually been German businessmen in Morocco. Britain read it as a challenge to its supremacy, a maneuver toward expansionism, and a threat to trade routes west out of the Mediterranean.

Britain’s young, up and coming home secretary wondered what specifications would be required to outmaneuver the ships of Germany’s growing navy. The war college gave a deceptively simple answer: a speed of at least 25 knots.

Coal couldn’t do it—too many boilers, too much weight, too long to build up a head of steam, too short a range. But oil could.

With the Panther’s arrival in Morocco, Admiral Fisher’s faction gained a new and eloquent advocate for converting the British Navy to oil, and it wasn’t long before Home Secretary Winston Churchill became First Lord of the Admiralty and the fellow whom history often credits with guiding the British Empire’s destiny with oil.

Germany’s Great Game

 

If Britain were to switch its navy to oil, it would need a secure supply of the stuff. Churchill saw that the struggling Anglo-Persian Oil Co. had the resources, but lacked the cash.

With Germany setting its cap for control of Middle Eastern oil—building a railroad between Berlin and Baghdad was the last straw—it wasn’t hard for Churchill to convince the Parliament that cutting a deal with Anglo-Persian Oil Co. was a good idea.

In exchange for an infusion of cash, the British government got 51% of the company’s stock. A hush hush rider on that deal was a contract for Anglo-Persian to supply oil to the Royal Navy, with very favorable terms, for the next 20 years.

All this happened just in time for the spark that finally ignited the Great War, or as we call it today, World War I. Because of Churchill’s preparations, among them a new class of oil-fired ships, Allied naval forces were able to restrict the flow of essential supplies to Germany.

By war’s end, every country realized the strategic importance of a secure supply of oil. The players have been maneuvering ever since.

Fast-Forward 100 Years—the Rise of Mother Russia

 

The fortunes of the various players may change, but the scrimmage remains the same. Oil does everything from power vehicles on land and sea to supply manufacturers with the building blocks of medicines, plastics, and a host of other products.

The Soviet Union was a global powerhouse and a major oil producer until its disintegration in 1991, and Russia then had to shop hat in hand for loans to keep its economy afloat. It was largely its oil and gas resources that have enabled Vladimir Putin, Russia’s canny and forceful president, to wrest his country back onto the world stage of heavyweights in recent years. The European Union is currently Russia’s largest customer.

Indeed, Europe is feeling the squeeze from Russia, which has gunned hard to make it easy to get its oil and gas, but not so easy to keep getting them. Putin will happily play hardball with any country that won’t meet his terms—just ask Ukraine—and doesn’t mind if others down the line feel the sting of his stick.

The EU-28 imports over 50% of all the energy consumed. Russia provides about one-third of all the oil and natural gas imported by EU-28. Germany is the largest importer of Russian oil and natural gas.

The member countries of the European Union may be cheering Belarus on, but they’re also taking the hint from Russia. And they’d better: Between growing demand in Asia and instability in the Middle East, the European Union faces some serious energy challenges.

Slowly but surely, Europe is waking up to its situation. Alternative energies are a noble goal, but the hard truth is that the technology isn’t there yet to replace hydrocarbon fuels. For energy security, there’s little choice for EU countries but to back the oil and gas companies that call Europe home.

“We must get on and explore our resources in order to understand the potential,” declared Britain’s energy minister in July. Other countries, such as Germany, are taking on this pursuit as well. We believe that governments and oil giants in other European countries will follow their lead.

This article is from the Casey Daily Dispatch, a free daily e-letter written by renowned investment experts in the fields of precious metals, energy, technology, and crisis investing. Click here to get it your inbox every day.

The article How a Big Cat Started Europe’s Addiction to Oil was originally published at Casey Research



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Thursday, May 8, 2014

Is it Time to Admit That Gold Peaked in 2011?

By Jeff Clark, Senior Precious Metals Analyst

Have you seen this “real price of gold” chart that’s been making waves? Among other things, it purports to show the gold price adjusted for inflation over the past 223 years. Notice the 1980 vs. 2011 levels.



The chart makes it seem that on an inflation-adjusted basis, gold has matched its 1980 peak in 2011, or nearly so. A mainstream analyst who still thinks of gold as a “barbarous relic,” a government official who doesn’t want people to think of gold as money, or an Internet blogger looking for some attention might try to convince you that this proves that the gold bull market is over, arguing that the 2011 peak of $1,921 is the equivalent of the 1970s mania peak of $850 in January of 1980.

The logic is flawed, however; even if it were true that gold has matched its 1980 peak in inflation-adjusted prices, it would not prove that the top is in this time. This is not the 1970s, the global economy is under very different pressures, and there’s no rational basis at all for saying the top this time has to be at the same or similar level as last time.

That’s even if it were true that gold has matched its 1980 peak—but it hasn’t.

Inflation-Adjusted Gold Has NOT Matched Its 1980 Peak

 

First, if you go by official U.S. Bureau of Labor Statistic numbers, $850 in 1980 is equivalent to $2,320 in 2011, when gold hit its peak thus far in the current cycle. (It’s $2,403 in 2013 dollars, as is said to be used in the chart.)

We don’t know what data the authors of the chart used, nor their inflation adjustment method, so it’s hard to say what the problem is, but at the very least, we can say the chart is very misleading.

But there’s more. As you probably know, the government has made numerous changes to the way it calculates inflation—the Consumer Price Index (CPI)—since 1980. So, even the BLS number we’ve given grossly underestimates the real difference between the 2011 and 1980 peaks.

For a more apples to apples comparison, we should adjust for inflation using the government’s 1980 formula. And for that, whom better to ask than John Williams of Shadow Government Statistics (AKA Shadow Stats), the world’s leading expert on phony US government statistics?

I asked John to apply the CPI formula from January 1980 to the $1,921 gold price in 2011, to give us a more accurate inflation adjusted picture. Here’s what his data show.


Using the 1980 formula, the monthly average price of gold for January 1980 would be the equivalent of $8,598.80 today. The actual peak—$850 on January 21, 1980—isn’t shown in the chart, but it would equate to a whopping $10,823.70 today.

The Shadow Stats chart paints a completely different picture than the first chart. The current CPI formula grossly dilutes just how much inflation has occurred over the past 34 years. It’s so misleading that investment decisions based on it—like whether to buy or sell gold—could wreak havoc on a portfolio.

This could easily be the end of the discussion, but there are many more reasons to believe that the gold price has not peaked for the current bull cycle…...

Percentage Rise Has Been Much Smaller

 

Inflation adjusted numbers are not the only measure that matters. The percentage climb during the 1970s bull market was dramatically greater than what we experienced from 2001 to 2011. Here’s a comparison of the percentage gain during both periods.


From the 1970 low to the January 1980 peak, gold rose 2,346%. It climbed only 535% from the 2001 low to the September 2011 high—nowhere near mimicking that prior bull market.

Silver Scantly Participated in the 2011 Run-Up

 

After 31 years of trading, silver has yet to even reach its nominal price from 1980. It surged to $48.70 in 2011—but it hit $50 in January 1980.

On an inflation-adjusted basis, using the same data from John Williams, silver would need to hit $568 to match its 1980 equivalent.

The fact that silver has lagged this much—when its greater volatility would normally move its price by a greater percentage than gold—further shows that 2011 was not the equivalent of 1980.

No Bubble Characteristics in 2011

 

I’ll get some arguments from the mainstream on this one. “Of course gold was in a bubble in 2011—look at the chart!”

Yes, gold had a nice run-up that year. It rose 38.6% from January 1 to the September 6 peak. Anyone holding gold at that time was very happy. But that’s not a bubble. One of the major characteristics of a bubble is that prices go parabolic.

And that’s exactly what we saw in 1979-1980:
  • In the 12 months leading up to its January 21, 1980 peak, gold surged an incredible 270%.
  • In contrast, the year leading up to the September 6, 2011 peak, the price climbed 48%—very nice, but hardly parabolic, and less than a fifth of the 1970s runaway move.

No Global Phenomenon in 1980 (Next Time It Will Be)

 

In the 1970s, the “mania” was mostly a North American phenomenon. China and most of Asia didn’t participate. When inflation grips the world from all the money printing governments almost everywhere have engaged in, there will be a much greater demand for gold than in 1980.

When that day comes, there will be severe consequences for those who don’t have enough bullion. Not only will the price relentlessly move higher, but finding physical gold to buy may become very difficult.

Comparable Price Moves? So What?

 

The argument we started with is really the clincher. It doesn’t matter how today’s gold prices compare to those from prior bull markets; what matters are the factors likely to impact the price today. Are there reasons to own gold in the current environment—or not?

First, a comparison: Apple shares surged 112% in 2007. After such a run up, surely investors should’ve dumped it, right? Well, those who did likely regretted it, since it ended that year at $180 and trades over $590 today. In fact, even though it had already risen dramatically and in spite of it crashing with the market in 2008, there were plenty of solid reasons to buy the stock then, not the least of which was the introduction of the iPhone that year.

So should we sell gold because it rose 535% in a decade? As with the Apple example above, that’s not the right question.

There are, in fact, several more relevant questions for gold today:
  • What will happen with the unprecedented amount of money that’s been printed around the world since 2008?
  • Why are economies still sluggish after the biggest monetary experiment in history?
  • Global debt and “unfunded mandates” are at never-before-seen levels; how can this conceivably be paid off?
  • Interest rates are at historically low levels—what happens when they start to rise?
  • Regardless of your political affiliation, do you trust that government leaders have the ability and willingness to do what’s necessary to restore the economy to health?
If these issues were absent, maybe we’d change our position on precious metals. But until the word “healthy” can honestly be used to describe the fiscal, monetary, and economic state of our global civilization, gold should be held as an essential wealth-protection asset.

Today’s volatile world is exactly the kind of circumstance gold is best for.

The message here is clear, my friends. Regardless of the measure, gold has not matched its 1980 peak. And the reasons to own it have not faded. Indeed, they have grown. Continue to accumulate.

Learn about the best ways to invest in gold—how and when to buy it, where to store it for maximum safety, and how to find the best gold stocks—in the free 2014 Gold Investor’s Guide.

The article Time to Admit That Gold Peaked in 2011? was originally published at Casey Research


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Wednesday, May 7, 2014

Three Stocks To Own Right Now

Every once in a while a stock jumps off the chart at you as a no brainer buy but it’s not often that three stocks jump out as must owns. Our trading partner Wayne Burritt found three this week that are just that.

After you see his complimentary report, we think you’ll agree.

Inside you’ll learn:

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Monday, May 5, 2014

A Yen for a Mortgage

By John Mauldin

For some time I have been saying that I was going to close the mortgage on my new apartment and then hedge it in yen. I promised to tell you the story, including what type of loan I got and how I am doing the hedge. This week I was finally able to pull the trigger. This topic will also let us re-examine why I think the Japanese yen is a screaming short. I am going to make this a shorter letter, as Amsterdam is calling, and it is a beautiful day. This is not a big think piece, but I think many of you will find it interesting. It outlines how I put my economic thinking into actual practice, and names names, if you will, of those who helped me do it.

A little background might be in order for those who want to know about the house. Others might skip to the next heading, An ARM and a Leg. I bought my last home in 1991 and sold it around 1998. I bought during the savings and loan crisis, which gave us the Resolution Trust Corporation, which sold me my hew home. I paid about 35% of the original asking price only two years earlier, at the high water mark, so I got a good deal. (Which was partially offset by the fact that I had to bring a check to the closing from the home I sold to get the new one.) Homes in some parts of Texas were literally being auctioned on the courthouse steps and paid for with credit cards.

For that home, I actually offered $50,000 less than several other offers on the table, but I attached a large nonrefundable cashier’s check, as a deposit, to the offer, while other bidders wanted the harried RTC clerk to make some much-needed repairs (the pool was green, fire ants had chewed through wiring, there had been flooding, etc.). But he had a monster stack of homes on his desk to sell, and my offer involved the least work, so he simply took it. I didn’t make all that much when I sold the home seven years later, by the way, but I did OK.

Rental properties in Texas at that time and up until recently have been good deals, in my opinion. For me, the cost of renting was much lower than the total cost of buying a home. About six years ago I moved to downtown Dallas after 40 years on the Fort Worth side of the metroplex. I moved first into a high rise (with some of the kids) and then later rented a larger home in Highland Park during the Great Recession, when larger homes simply couldn’t find buyers. It was stunningly cheap for the value. I was quite happy with my long term set up, but in January the owner called from California and offered to let me out of my lease if I would move in 45 days so he could sell the home in the spring. The market had finally come back, and homes in the “Park Cities” were selling within a few weeks of going on the market.

I was not really interesting in moving, but I had been to an apartment that a good friend of mine (David Tice of Prudent Bear fame) had renovated, in what is called the Uptown area of Dallas. He bought two apartments on the 22nd floor of a high rise, basically taking the whole south side, then knocked down interior walls and made one large, open apartment He really did it quite nicely. I fell in love with his place, which is rather unusual for me, as I have been in fabulous homes all over the world; and while I admired many of them, none had ever “spoken” to me. But the views of downtown Dallas and the surrounding area just seemed so full of energy to me; and as a writer, I need to feel the energy. It recharges me. (I know, some people want beaches or mountains or a cave, and I have written this letter from many corners of the planet, but I do like a place with energy.)

So I called David’s realtor. Amazingly, two adjoining apartments were just coming on the market. They were basically apartments that had been bought on spec during the crisis, and the market had now come back enough that the owners were ready to sell. One of the apartments had never been lived in or rented. They were the two three bedroom apartments on the east side of the building, but they had the downtown views as well as northern ones.

Dallas has plenty of high rises, but oddly there are very few larger apartments except for penthouses. And the penthouses command a LARGE premium for what is still just basically floor space. I checked all the local similar offerings to get an idea of relative value, and I again put in a below market offer for the two apartments. After a lot of negotiating by my realtor, Nancy Guerriero, my offer was accepted. Then the hard part began, and that was getting a mortgage. Because I was going to renovate and because there was a tenant in one of the apartments, I could not get anything like a traditional mortgage. My mortgage broker, Ron Schulz, must have shopped several dozen banks. Basically, banks don’t like high rises and homeowners’ associations, as their local experience has not been good. Without going into details, I had to get three different loans to do the deal, and finally got help from a local banker, Joe Goyne, president of Pegasus Bank. Joe is a throwback to the old personal bankers we used to have here in Texas.

We started on the design almost as soon as I committed to the place. I was lucky in that my niece, Jen Mauldin, had trained with one of the largest architectural design firms in the country and done major design projects all over the world (the estates of Abu Dhabi princes, commercial developments in Macau, high roller suites in Vegas, Ritz Carltons, etc., plus lots of very nice homes). She had gone out on her own and was available. We set budgets and timelines. (Cue laughing from all my friends. They were right to laugh.) The planned 120 days of construction stretched into 180+ days – and forget about the budgets. Then there was the shock when it developed that new mortgage rules basically meant that I had to go to a 70% loan instead of the 80% I had been told I would get.

Plus, I was a rookie and did not check a “small” detail. I asked if I could get my construction costs rolled into the new loan. The answer was yes, but what they meant was that I could get the construction loans rolled in but not my out-of-pocket costs, because Texas has a law that you cannot get money out of your mortgage when you refinance, and what I paid out of pocket was considered getting money back. Oops – I had paid a lot out of pocket just to move things along, when I should have gone to Joe and upped my construction loan. Silly me.

All told, I had to come up with way more cash than I thought I would when I started. The difference was large enough that I would not have done the deal if I had known. But I really like my place, so in a sense I am glad that I didn’t know. (You can see some of the work on the place at Jen’s website.)

An ARM and a Leg 

But then came the time to get a takeout mortgage. Joe had lent me the total amount at 3.75% for one year.
It soon became apparent I would get only a 70% loan, which would basically take me out of the construction loans. I got lucky in that the appraisals turned out higher than my cost basis, as values have actually moved up. First feelers were not encouraging, so I began to shop.

I wanted a 5 year adjustable-rate mortgage (ARM) with a 30 year amortization. My feeling is that there will be a recession within the next five years (if we do not have one, it will be the longest span on record with no recession in the US) and that rates will once more go way down – and I can then lock in whatever I want, probably a 15 year fixed, at that time. My risk is that we may never again see rates as low as they are today, but that is a chance I am prepared to take. (I really do eat my own “cooking.”)

Two personal connections turned up offers in the 4.5% range. Ron was beginning to get feelers in the high 3% range. I called my broker at JP Morgan (more below), and Travis Moss in his office went to work and got me an offer for the 5 year ARM at 2.875%; but it was not clear they could actually do the deal, as high-rise financing is complicated in Texas. About that time, my regular bank, Capital One, changed loan officers. The new guy gave me a courtesy call; and upon finding that I needed a mortgage, he jumped into the process. Rather than a loan that they would securitize, they were looking for a loan to put on the books.

They matched the JP Morgan offer and really dropped the closing costs. No points, etc. I sheepishly told Travis (who is a friend) that I was getting a better offer, and within a day he had matched it. We decided to go with JP Morgan, as that is where I am going to do my yen hedge, but it was hard to turn down Clinton Coe from Capital One. He really wanted that loan. When we had our crisis in Texas back in the early ’90s, we “lost” our banks to national banks and lost a lot of that personal touch I had known for the first part of my career. It is nice to see bankers like that again in Texas.

I signed the closing papers and had literally just stood up from the table when I took a call from the banker at Capital One, offering to cut the rate to 2.75% and axe a few other costs as well. WOW. Now, in Texas you can cancel a loan commitment for up to three days. I was tempted for a minute, but decided that because I had told Travis I would do the deal, I was not willing to take that back. But I did call Travis and tell him what had happened, joking about it. He said “wait a minute.” He hung up, then quickly called me back and said, “We will match it. Go cancel your loan.” When was the last time your banker tore up your loan and then lowered the rate for you five minutes after you signed the deal?

So I rescinded the first loan and then had to wait another 30 days (the rules) but finally closed on the way to the airport to come to Amsterdam.

A Yen for Mortgages

Long-time readers know I am a huge bear on the relative value of the Japanese yen versus almost any currency, but especially the dollar. I have been saying for some time that I expect the yen to one day be at 200 and maybe even higher. But that journey is going to take a long time. Forty years ago the yen was at 357 (or thereabouts), and then it rose over time to the high ’70s last year, when it started to fall again. The chart below goes back 43 years. Think, by the way, how your businesses would react if the value of the currency in which you trade rose by a factor of four over 40 years.



Later in the letter I will go more into my reasoning as to why I think the yen will fall over time, but for now let’s look at how I got a “yen mortgage.”

I asked readers to help me find a “pure” yen mortgage. I said I thought the market for such a mortgage would be huge, and I would help build it. I must admit, I was somewhat surprised when nothing really turned up. Ten year government paper in Japan is at 0.6%. You would think that getting 2% for a 15 year mortgage would appeal to someone, but running a few connections still brought me nothing. I even found a U.S. bank that would agree to a takeout and mortgage guarantee, but still no takers. I guess a billion isn’t as big a deal as it used to be.

The basic concept is that if the yen falls by 50% (my bet) and I have my loan structured in yen, then I pay less in dollars. Perhaps a lot less. But since no pure yen loan is available that I can find, a synthetic one will have to do.

There are lots of ways to do it. Futures are the obvious way – simply selling the yen short. But I have no way of knowing timing on the yen, and in my view there will be some significant “corrections” along the way, so using futures would be a constant battle of margins, rolling into forwards, paying commissions with every new contract, etc. And given the new Dodd-Frank rules, it is #$%W$#$ hard to simply tell a broker to execute a trade. To do the trade I ended up doing (see below), I had to be on the phone in the middle of the Amsterdam night to verbally confirm that I was sane and really, really did want to do the trade. But given my travel schedule and possible technological issues, updating my futures trade could have been problematic.

So I elected to keep it simple and do a 10 year put option. I want Abe-san and Kuroda-san to pay for about half my mortgage. I will gladly pay the other half. All they have to do is print yen to fulfill their part of the transaction – and they seem pretty committed.

Warning: Don’t try this at home, kids. This is a VERY risky bet, even though my losses are limited to my entire investment. And while my logic might be compelling, at the end of the day I am trading/betting/gambling (all essentially the same thing) that politicians in a country and a culture I don’t live in and don’t truly understand are going to act in a certain way. They might choose another path with different disastrous results that would make the trade go against me. They have no good choices, only disastrous ones, because they have overleveraged their government and cannot possibly meet their obligations without some kind of default. Rather than outright default to their own retirees, I think they will print and inflate and monetize away that debt. But that’s just me making a trade to counter what I think they will do (and what they tell us they will do). With that preface, let’s look at what I am doing.

To execute the trade, I went to The Plumber. That is my rather affectionate name for Erick Kuebler, a JP Morgan broker here in Dallas. Darrell Cain introduced us, with a rather effusive (for Darrell) endorsement. Having met a few brokers over the years, including some really good ones, I just listened and watched. But as Erick is part of that downtown TCU-grad mafia (a local thing – he was in the same frat with Kyle Bass and a group of guys), he kept showing up at places where I was.

Over time, I realized that Erick understood the workings of the market better than anyone I personally knew. Not the normal things you and I think about, but what really happens when you execute a trade. I simply want to go to a screen and buy or sell, in much the same way that I go to a faucet and turn it on and get water. I expect water to come out when I twist the handle.

The Plumber knows what happens when I do that. He knows where the water comes from, who purifies it, what tank it was stored in before it got to me, whether it will be hot or cold, and what the pressure is. He knows whether to use copper or PVC pipe in the construction. He knows who charges what at each step along the line. I have learned a lot from The Plumber. (Simple ETF trades, for instance, are not all that simple. Especially in size.) For the record, I am a registered broker with my own firm, and you would think I would know this stuff. I kind of knew but had no real idea how many toll gates there are if you are not paying attention. Erick specializes in larger trades for clients trying to avoid those tolls. He laughs at the HFT guys.

Plus, Darrell chose Erick and JP Morgan to handle my self-directed defined-benefit pensions plans (which deserve a whole letter – for the right small business they are a marvelous tax preference vehicle), so Erick was the logical choice to help me do this yen trade.

Buying “in-the-money” or close-to-spot options is expensive. While I have no way to know what the yen will be one or two years from now, I truly think that over ten years Japan has no choice but to print massively.

So, if I think the yen will eventually get to 200, I can buy an option that allows me to exercise the put at a strike price of 130. If I do a million dollars notional, that means if the yen goes to 200 I make about $700,000. The rules keep me from disclosing how much that put option costs me, but let’s just say that I end up with a nice multiple if I’m right.

Of course, if the market is right (in its current state of unwavering faith) and the yen doesn’t even top 130, I lose all of my option premium. ALL OF IT. 100%.

I will eventually add two more trades, one option at 140 and another at 150, but as I am notoriously bad at timing, I am going to “feather” those trades in over the next few months. I can see the yen dropping below 100 or going above 105 quickly (it is at 102 and change today); but since I don’t know, it just seems better to me to take some time to put the whole trade on. I now have until May 5, 2024, for the yen to rise above 130 … or I take the loss.

Given that I think 200 is where we’re going – it doesn’t really matter all that much if we start at 98 or 105; but I think that in general it’s good practice to pace your investments when it’s practical to do so.

A Bug In Search of a Windshield

I wrote about four years ago that Japan was a bug in search of a windshield. In January 2013 I actually started to invest personal assets in the “short Japan” story (mainly through funds), and with this week’s action I’m doing so more aggressively. The position represents an outsized portion of my personal portfolio, and it’s one I would not suggest that most people take in such size. But then, you ask, why am I doing it?

I guess I’m a true believer. Japan has a government debt-to-GDP ratio of at least 221% and perhaps as high as 245%, depending on your data source and how you account for certain securities. The interest rates on the Japanese 10-year bond is at 0.6%, yet interest-rate expenses eat up some 23% of total government revenue. (Debt service accounts for 46% of government tax revenue.) If interest rates were to rise to OECD levels, or another 2%, interest-rate expense would eat up 80% of government revenue. That is not a workable business model.

My friends over at Hayman Advisors (Kyle Bass’s fund) sent me the following pieces of data: Added together, Japanese debt service and social security (nondiscretionary spending) exceed government tax revenue and have done so for each of the last five years. The fiscal deficit has been greater than 10% of nominal GDP in each of the last five years. Japan has ~¥1.1 quadrillion of total government debt (~¥1,100 trillion) compared to nominal GDP of~¥481 trillion (a 221% ratio).

Japan has consumed the savings of multiple generations through the sale of government bonds. Japan now has less than 5% of its government debt sourced outside Japan. But the country does not “owe it to itself.” It owes it to the tens of millions of savers and retirees who have played the game correctly, worked hard and saved all their lives, and now want to use those savings in retirement.

The largest pension funds are no longer net buyers of Japanese bonds (JGBs). They are now selling, and that tide to swell with a vengeance, since Japan is rapidly aging. Further, the largest pension funds are starting to roll out of JGBs and into equities. Which makes sense, as who wants to own a 10-year JGB at 0.6% if inflation rises to 2%? What rational investor would choose to do that?

Japan cannot afford interest rates to rise all that much. So there must be a good market for JGBs. But who will buy?

Two weeks ago, there was a day and a half when the Bank of Japan was not in the market for 10-year JGBs. Even though they are buying in size every month with their latest aggressive round of QE, there are times when they are not “in the market.”

During my recent speeches, I have been asking the room how many JGBs they think traded during the period when the BoJ was out of the picture. Make your guess now.

No one gets it right. For that day and a half, the bond market had zero trades. The Bank of Japan is now the market. Think about that! (See: reuters.com/japan-jgb.)

Given the reality of Japanese finance, I think they BoJ will continue to “hit the bid” in order to hold interest rates down. They will space out their buying more to keep those no-trading days out of public view. They will give us a song and dance from time to time to try and keep the valuation of the yen from rising too fast, but in the end they are going to monetize more in absolute terms than the U.S. did in an economy three times Japan’s size. Perhaps as much as $8 trillion over an extended period. That’s the relative equivalent of the US Fed buying $30 trillion and putting it on its balance sheet. If you thought the Fed was going to do that, what would you do now?

What do you think Japanese investors will do when they realize what is happening? Buy equities, of course, but also diversify internationally. This move is going to play havoc with cross border capital flows into all sorts of markets.

This is a brief synopsis of the Japan story. For a much fuller read, I point you to some of my past letters, or better yet, the full story in chapters two and three of Code Red.

I urge you to be cautious about putting on a “yen hedge” for your own mortgage. It is hard to do and more expensive for options with a notional value of less than $1 million, so it might not fit into your portfolio all that well. Talk with your financial advisor or broker, and really do your own homework. There are very smart people who, like me, are yen bears but who think that 140 or 150 is about as high as the yen will go. When I start talking 200, they think I’m smoking some of the stuff sold in the coffee shops here in Amsterdam . If they’re right, my trade will be in the money but not all that good over time, considering the risk and use of capital.

Amsterdam, Brussels, Geneva, San Diego, and Tuscany

I am in Amsterdam today, and it is beautiful. I will soon be off to the new ship museum and other sites before – if all goes well – I rent a car and take a leisurely Sunday drive through the countryside to Brussels, something I have always wanted to do. I may try to get lost, at least for a few hours. Who knows what I might stumble on?

I will be speaking Monday night in Brussels for my good friend Geert Wellens of Econopolis Wealth Management before we fly to Geneva for another speech with his firm, and of course there will be the usual meetings with clients and friends. I find Geneva the most irrationally expensive city I travel to, and the current exchange rates don’t suggest it will be any different this time.

I come back for a few days before heading to San Diego and my Strategic Investment Conference, cosponsored with Altegris. I have spent time with each of the speakers over the last few weeks, going over their topics; and I have to tell you, I am like a kid in a candy store – about as excited as I can get. This is going to be one incredible conference. You really want to make an effort to get there; but if you can’t, be sure to listen to the audio CDs. You can get a discounted rate by purchasing prior to the conference.

I had lunch today with Eddy Markus, the founder and chief economist of ECR, one of the more respected research shops that analyze European credit and currency markets. We have communicated over the years, and he politely sends me a note every so often to broaden my limited understanding of the world. I always listen.

Eddy has a somewhat different view of the problems facing Europe. He and I see the same issues (debt, impossible-to-keep government promises, no fiscal union, banking capitalization woes, etc.), but he thinks the euro will break up, not in just a few years but much further down the road, in ten years, perhaps. It is his view that the dream of a unified Europe will be chased by politicians all the way to the bitter end. They will kick the can down the road much further than some of us think possible. He believes they can hold it together longer with promises and halfway measures, promises to fix things at the next meeting, etc. I admit to wondering just how they can accomplish that, and we spent a few pleasant hours over lunch on the canals as he explained his views.

Ten years? Wow. A lot of things will change in 10 years, but Keynes is right about this: the markets can stay irrational longer than you can remain solvent. I find it hard to believe that France can stall that long; but then again, we are talking politics, not economics.

It really is time to hit the send button. Have a great week. I am off to ponder how human beings could pile into such small ships and dare the oceans. (I get seasick relatively easily and find a storm at sea to be such an awful idea that I have a hard time even thinking about getting on a boat.) I therefore find it fascinating that it seemed like a good idea at the time and that so many did it. But then again, I am shorting the yen – who knows what craziness true believers will get up to?

Your still trying to think about Europe in 10 years analyst,
John Mauldin


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