China is the world’s leading importer of raw materials and exporter of manufactured goods. Not only is China’s stock market crashing, but the economy as a whole is crashing which means fewer imports of raw materials from other countries, which has a boomerang effect on those countries’ economies as well.
Greece is bankrupt.
Greece is not only bankrupt, but in a full blown depression. Spain, Italy, Portugal and France are not far behind.
U.S. Earnings are down across the board.
The earnings from many of the U.S. producers are down, in fact, store closings are happening all over the country from some of the larger names, such as McDonalds, Walmart, and Target, just to name a few. Companies are also laying off employees due to the slowdown. The employment numbers reported in the news are completely bogus. For each of the past six years, more businesses have closed in the United States than have opened. Prior to 2008, this had never happened before in all of U.S. history.
The Baltic Dry Index is at record lows.
I’ve mentioned this before, the Baltic Dry Index is a measure of goods and raw materials being shipped around the globe. When the global economy is good, the Baltic Dry Index is high, when things are bad, the Baltic index drops. Today, the index is at all-time lows.
Puerto Rico is bankrupt.
This may not sound like such a big deal; I mean Puerto Rico is just a small island in the Caribbean, right? But Puerto Rico may have a bigger impact on the U.S. economy than Greece, due to the huge amount of derivative exposure on Puerto Rican bonds by U.S. banks.
There Is No Bond Market Liquidity.
Most people have no idea what this means. The bond market (U.S. Treasuries) is the underlying basis for the entire U.S. economy. If the bond market collapses, everything else comes down with it. Right now, there are no buyers in the bond market, that’s what it means when there is no liquidity. There are no investors to buy them. So what’s keeping the bond market afloat? The U.S. Treasury. They are themajor buyer of U.S. bonds. How long can they keep it going?
China is liquidating their reserves of U.S. Treasuries at an unprecedented rate, due to their collapsing economy. Folks, the dominos are falling and the bubble in the bond market is close to popping.
While Barack Obama has been in the White House, government dependence has skyrocketed to levels that we have never seen before.
Nearly 50% of the nation is dependent on some sort of government assistance. What’s going to happen to those people when they can’t get it anymore? Do you think there will be rioting and civil unrest?
The labor force participation rate, which is the percentage of people between the ages of 25 and 54 that aren’t working and that aren’t looking for work has surged to record highs since the end of the last recession.
This is the part they leave out when reporting the unemployment numbers. They don’t include this little tidbit of information in their employment calculations.
· The FDIC admits it can’t handle another banking crisis. There is only enough money in the insurance fund to insure just 1% of all the money in U.S. bank accounts.
Think your money’s safe in your bank? The FDIC has your back right?
· AAPL (Apple) Down 15% From Highs - Worst Drop In 30 Months
· US Recession Imminent As Factory Orders Plunge For 8th Consecutive Month
· US Consumer Spending Declines for Third Consecutive Month, Down 5 Of Past 7 Months
· The Bloomberg Commodity Index is at a 13-year low.
I think you get the picture. Things are not what they seem. This type of news is not getting out from the mainstream media. We no longer live in a free market country. Everything is being suppressed or manipulated to try and keep the house of cards from falling, but they are losing. The house of cards is already starting to fall across the globe and it’s only a matter of time before it builds up speed and starts to affect you and me.
We haven’t had a depression in this country since 1929. But one is coming and you need to be prepared. The depression of 1929 took most people by surprise. The same thing is happening today. If you don’t prepare you could be devastated. The writing is on the wall. You need to hold physical assets that will maintain value during a crash. Things like physical gold and silver bullion and debt free real estate. You should either hedge your stock market positions or go to cash. Cash will be extremely important in a deflationary environment. I believe we will experience deflation first and then hyperinflation when the government tries to ‘fix’ the problem by printing more money to add liquidity into the system. That’s the only tool they have left in their tool chest.
A reset is coming in the global economy and it’s going to be ugly.
The End of Manipulation?
This week I want to introduce you to the ABX – Allocated Bullion Exchange. See the description from the exchange below:
The Allocated Bullion Exchange (ABX) is the world's first electronic institutional exchange for allocated physical precious metals. We bring global trading, price discovery and clearing facilities into one online trading environment via our ground-breaking trading platform, MetalDesk. ABX aims to modernize and globalize the precious metal markets by connecting all major global liquidity centers and breaking down barriers of entry to the global wholesale market.
This is a brand new precious metals exchange that will put the COMEX and LBMA out of business. This exchange is not yet live, however, it was supposed to open in late April 2015 and the opening was pushed back to allow the huge influx of broker applications to get processed and set up for the opening. It is expected to open any week now and when it does, it will have a huge impact on the price of precious metals.
Because this exchange trades only physical metals, it will be a vehicle for true price discovery and therefore, halt the fraudulent manipulation taking place on the current paper markets of the COMEX and LBMA.
I wanted to bring this to your attention because this is a big development in the normalization of precious metal pricing going forward.
Live long and prosper…
(RGLD) (SLW) (GDX) (PHYS) (PSLV)
These stocks are at extreme lows and sentiment is at an all-time low. The best time to buy any security is when it’s hated and cheap. These securities will provide massive gains when the market decides to break loose. (Which I think is soon.) Buy the stock outright or trade late 2016 CALL options.
I want to comment about something I believe is happening in the precious metals markets right now. I believe that available physical metal is getting so scarce due to the high demand from the BRICS countries as well as others that very soon we are going to have a default in delivery. That means that any investor who has invested a large amount of cash (100k share lots) in the COMEX or LBMA for gold or silver futures is going to ask for delivery and these exchanges are not going to have the metal to deliver.
The COMEX and LBMA are paper gold and silver exchanges. They say they have the metal, but it is widely believed amongst the precious metal dealers that they don’t have it or are very close to running out. If they don’t have it for delivery, that would make investing in the futures market very risky, especially if you expect to receive delivery of the metal you have invested in.
One day soon these exchanges are not going to be able to deliver the metal that’s being demanded and they will have to settle in cash rather than physical metal. I believe that’s already happening and once they get called on it, it will collapse the paper exchanges and the price of precious metals will skyrocket.
This is why it’s so important to invest in physical metal or trade precious metal stocks, like the miners and mining royalty companies, rather than the (GLD) and (SLV) ETF’s. These ETF’s are the physical holding depositories for the COMEX and LBMA exchanges and they are running out of metal fast.
Note the daily chart of gold below. Gold is due for at least a short term bounce up to around the 1140 – 1160 level. You could enter a trade now or wait until it breaks the upper trend line shown on the chart below. Watch your stops as it reaches your target of 1140+.
Stock Market Indices
Look at the monthly chart of the S&P below. I believe this represents a cycle top and it’s about to roll over into a correction. Within the next 60 days, I expect it to break the lower support line of the ascending triangle pattern. Once that line is broken, look for a strong move down and the start of a bear market.
The best time to short the stock market is when the price drops below that lower trend line. That break will signal a move down into a bear market. I expect that in September, if not sooner. If you are long the stock market, then that trend line break is where you should put a hard stop loss. That way, you’re out before all hell breaks loose.
Energy Stocks: (XLE) (UNG) (USO) (LNG)
Crude oil is stuck and can’t decide which way to go. We need to wait for a bottom before making any moves in this sector. (See commodities comments below.)
Financial Stocks: (XLF) (IYF)
I’m staying away from financial stocks at this time, until after the S&P correction. Once this economy implodes, financial stocks are going to lead the way. I will place short positions at that time.
Biotech: (BIB) (KITE) (IBB)
Biotech’s have been in an uptrend along with the stock market, however, just as a rising tide raises all ships, a receding tide will lower them as well. I think we will see a correction in the biotech sector along with the impending stock market correction.
Commodities: (FCX) (JJG) (DBA)
Commodities will move higher if we have inflation, however, I think we will start with deflation as the global economies crash and have inflation after the central banks begin printing more money to try to stem the crash in the markets. I will just watch these until I see a signal of a move up in price and a break of the downtrend line.
Perth Mint and U.S. Mint Cannot Meet Demand as Gold Bullion Demand Surges
Investing in the financial markets can involve considerable risk. Past performance is not necessarily an indication of future performance. The information included in this report is for educational purposes and is not a solicitation, or an offer to buy or sell any security or use any particular system. Information is based on historical research using data sources believed to be reliable, but there is no guarantee as to its accuracy. L. H. Marks does not represent himself as acting in the capacity of a licensed investment counselor or manager for funds that are not under his direct control and fiduciary responsibility. L. H. Marks will not provide you with any personally tailored advice concerning the nature, potential value or suitability of any particular security, portfolio or securities transaction, investment strategy or other matter. From time to time, L. H. Marks may hold positions in securities mentioned, but are under no obligation to hold such position.