Financial Sense Newshour Guest Expert Interviews
A change of leadership at the fed always perturbs the markets, particularly the bond market
Jim welcomes back Eric Janszen, Founder & President at iTulip Inc. Jim and Eric discuss why things didn’t go badly globally in 2012, as so many had predicted. They also discuss the current economy and its prospects. Eric notes that the US economy still has a huge output-gap, meaning there will likely be no inflation resurfacing for now. However, Eric does see inflation moving beyond food and energy in 2014. They discuss the folly of raising taxes during a weak economy, as well as the prospects for an era of turbulence as Ben Bernanke leaves the Federal Reserve in 2014.
The challenge today is to find enough skilled construction workers
Jim welcomes Michael Fink, President & CEO of Leewood Real Estate Group/NJ, LLC and Past National Vice President, National Association of Home Builders. Michael discusses the real estate market today from the perspective of a major home builder. He sees builders as much more cautious today, building fewer homes in smaller phases than in earlier eras. Michael also sees a more conservative buyer, much less willing to overextend and take on too much debt. One of the biggest issues he sees currently is the shortage of skilled construction workers, as many left the industry after the real estate downturn, starting in 2007.
Mid-Cap oil stocks are outperforming
Jim welcomes back Kurt Wulff CFA, Independent Energy Analyst at McDep LLC. Kurt believes energy stocks are still undervalued, with European energy equities offering the best value of attractive P/E ratios and higher dividends. He mentions that the best way to play shale oil & gas is with the small to mid-cap companies. Kurt lists his favorite mid-cap as well as large-cap energy companies, and emphasizes the overall financial strength of the the energy sector companies.
Real estate downturn was the worst since the Great Depression
Jim welcomes Gerald (Jerry) Howard, CEO of the National Association of Home Builders. Jerry and Jim discuss the real estate market, where Jerry sees the beginning of a new recovery, with many positive signs in all markets. He notes that the historic real estate downturn, beginning in 2007, was the worst since the Great Depression in the 1930’s. Jerry discusses how regulators are threatening the recovery by impeding mortgage lending, and how Congress could torpedo real estate if it were to eliminate the mortgage interest deduction. Jerry also notes that there is still a significant shortage of skilled construction workers, as many left the industry over the last six years.
Serious crisis facing the mining industry
Jim welcomes back John Kaiser, Founder at Kaiser Research Online. John discusses the gold industry and how gold demand has been hurt by the global slowdown in growth and prosperity. John believes the gold miners are in a trap, as they struggle to find cheap ounces in friendly jurisdictions. John also discusses the increasing desperation of bullion banks, and that they may not have the gold they claim to have. He believes the strengthening dollar has also hurt the resource sector.
US real estate is cheap compared to the rest of the world
Jim welcomes back Puru Saxena, Editor and Founder at Money Matters and Puru Saxena Limited in Hong Kong. Puru is very concerned about the real estate bubble still building in China. He notes there are “ghost cities” all over China and it will end very badly. Even prices in Hong Kong are out of control. Puru sees the most value currently in US real estate and stocks, and is his moving his investment assets to the US. He sees Europe as a mess, Japan as a mess, and China as the next major bubble to burst. Given those assessments, Puru believes the US is by far the best, and safest, place to invest in the current environment.
Interest rates could rise because of defaults, not inflation
Jim is pleased to welcome back Felix Zulauf, president of Zulauf Asset Management AG and Co-CIO of Vicenda Asset Management AG in Zug, Switzerland. Felix and Jim cover a wide range of global macro issues, including today’s deflationary environment versus the inflationary 1970’s, Japan as the likely catalyst of the next...
There is a lack of new home inventory – at lowest levels in three decades
Jim is pleased to welcome Rick Sharga, Executive Vice President at Carrington Mortgage Holdings, LLC. Rick is of the country's most frequently-quoted sources on foreclosure, mortgage and real estate trends and has appeared on NBC Nightly News, CNN, CBS, ABC World News, CNBC, FOX and NPR. Rick believes we are close to a peak in the distressed mortgage market, and it should start to get better. He does not see signs of a housing bubble, as lenders are still restrictive, builders are cautious, and new home inventory is at its lowest level in three decades. Rick sees a broad real estate recovery underway, but prices are only back to where they were a decade ago.
The man who exposed Bernie Madoff and history’s greatest Ponzi scheme
Jim is pleased to welcome Harry Markopolos CFA, the man who blew the whistle on Bernie Madoff and the largest Ponzi scheme in history. His book is titled “No One Would Listen: A True Financial Thriller”. Harry discusses how both the SEC and the financial industry ignored his warnings of obvious fraud for years before it all came tumbling down in 2008. Harry tells a fascinating story of money, corruption and power, and how a massive financial fraud such as the Bernie Madoff case could happen again.
Day of reckoning coming - could surface first in Japan
Jim welcomes back Brian Pretti CFA, Managing Editor at ContraryInvestor.com. Brian sees Quantitative Easing in some form as here to stay. He doesn’t feel the Fed is able to “tap on the brakes” any longer. The new brakes are the “open-mouth committee”. Brian sees foreign capital coming into the US, buying real estate, stocks and bonds. He believes there is a risk of a market melt-up at the end of the year, with global capital flooding into the US to buy equities.
Lessons of the great German and American inflations
Jim is pleased to welcome Ronald Marcks, who under the penname Jens O. Parsson wrote “Dying of Money” in 1974, as double-digit inflation was heating up in the US. In his book, Mr. Marcks wrote of the German inflation of 1914-1923, and the rise of the American inflation of the late 1960’s into the 1970’s. Jim and Mr. Marcks discuss the parallels of Weimar Germany to what is happening today. They also discuss the phenomenon that every burst of monetary inflation has been followed by a stock market rise and boom in prosperity and every contraction by a stock market fall and recession. Mr. Marcks sees a “latent inflation” in the US, as the money supply has increased much faster than prices for the last three decades.
Capital is flowing into the US from Europe and Japan
Jim welcomes back Michael Kantrowitz CFA, now teaming with Francois Trahan at Cornerstone Macro in New York City. Michael’s expertise includes business-cycle forecasting the implications for financial markets including global asset allocation, sector positioning, and stock selection. Michael believes we have been back in the “risk-on” trade for over a month, and will likely be in the risk-on mode for the balance of the year. Cyclical sectors are now outperforming, and Michael believes the fuel behind this move is lower inflation. He sees capital flowing into the US from both Europe and Japan. This is helping provide the unusual situation of a stronger dollar and stronger stock market at the same time. The financial world is becoming less correlated than in recent years. Michael prefers the Financial, Technology and Industrial sectors as the best of the cyclical plays.
Currency wars could morph into damaging trade wars, slamming the brakes on global growth
Jim welcomes back John Butler, Chief Investment Officer at Amphora Commodities Alpha Fund in London. John poses the question; might the US may be covertly intervening in the foreign exchange markets to support the US dollar? Because of the Federal Reserve’s QE policy, the pressure is building on the dollar. If foreigners dramatically accelerate their diversification out of dollars and into other currencies, and gold, the US would face a dilemma. The US could allow interest rates to rise to stabilize the dollar, triggering a recession, or it can continue to suppress interest rates but watch the dollar fall sharply, triggering far higher inflation and economic (and perhaps political) instability. John believes the US may take a third path, continuing to suppress interest rates through QE, but covertly intervening on foreign exchange markets to support the dollar. Desperate policymakers sometimes do desperate things.
Spring weather in the US has something for everyone - summer heat-waves ahead
Jim welcomes Evelyn Browning Garriss, Editor of the Browning Newsletter. Evelyn details the wild spring weather of 2013 in the US, with record cold, record heat, floods and drought all hitting different parts of the country. She sees summer heat-waves coming to much of the country heading into a stormy fall in the Atlantic region.
US redeploying assets to Asia
Jim welcomes back JKC de Courcy, Chief Executive at Intelligence Research Ltd, publisher of Courcy’s Intelligence Brief out of London. Jim and JKC discuss a number of geopolitical hot spots, including Asia, Europe and the Middle East. One of the major stories is China’s push for regional hegemony in Asia. As China grows more aggressive and bellicose, Japan is considering a constitutional change to rearm and expand its military. As the US is re-deploying assets to Asia, Europe is pushing for military integration to fill the vacuum. In the Middle East, JKC sees the Iran/Israel conflict over nuclear weapons development coming to a head.
Today’s globalized markets make a big difference
Jim is pleased to welcome back Adam Fergusson, author of When Money Dies, written in 1975. Mr. Fergusson is also a former Member of the European Parliament, and has been a Special Adviser at the Foreign Office, and a consultant on European affairs for international industry and commerce. When Money Dies had been out of print for 30 years until recently; yet had never ceased to be quoted on both sides of the Atlantic. The book is well-known to financial commentators and has become something of a classic. Jim and Mr. Fergusson discuss the parallels and differnces between 1920’s Weimar Germany and today’s global financial system. He sees the potential for more inflation today, but not hyperinflation.
Higher energy prices on the way
Jim welcomes back Jeff Rubin, economist and author of the recently published book on oil, “The End of Growth”. Jeff discusses the issues of pipeline politics in Canada, and how environmentalists are trying to shutdown unconventional oil production by opposing pipeline construction. Jeff also notes the massive amounts of water required for fracking, and how the current drought in the US may curtail the use of fracking. Jeff also discusses major energy producers such as Suncor walking away from projects due to poor economics. For these reasons and others, Jeff sees higher energy prices on the way.
Entitlements and the long-lasting, negative impact on the character of our citizens
Jim welcomes Nicholas Eberstadt, a political economist and a demographer by training, who holds the Henry Wendt Chair in Political Economy at American Enterprise Institute. In his book, Nicholas details the exponential growth in entitlement spending over the past fifty years. As he notes, in 1960 entitlement payments accounted for well under a third of the federal government’s total outlays. Today, entitlement spending accounts for a full two-thirds of the federal budget. He makes the case that while this spending certainly drains our federal coffers, it also has a very real, long-lasting, negative impact on the character of our citizens.
The Lifetime Income Series: You Gotta Know Where You’re Goin’ Before You Can Figure Out How to Get There
Special Guest - Dick Gregerson on the Importance of a Business Plan and a Succession Plan
This week Jim and Cathlyn discuss the difficult environment many retirees face and how to create a plan for a secure retirement. They discuss the “new normal” of a low interest rate environment, which has followed bear markets in technology and housing. The result is many people don’t have the assets they thought they would have.
Biggest mistake investors make is to disregard diversification
Jim is pleased to welcome back Marc Faber PhD, of Marc Faber Limited in Hong Kong. Marc and Jim discuss the current state of the gold market and that Marc is buying gold every month, which he is storing in Asia, not Switzerland or the US. Marc also emphasizes the importance of diversification, and how his assets are evenly divided among real estate, stocks, bonds and gold. He also notes that sadly most investors are always chasing performance, forcing them to usually buy high and sell low. While Marc mentions that currently there are more sellers than buyers in gold, he acknowledges that “something isn’t right in the gold market”. Marc and Jim also discuss the current strength of the US dollar.
The reflation trade will return in the second half of 2013
Jim is pleased to welcome back Barry Bannister CFA, Managing Director at Stifel Nicolaus. Barry characterizes the first half of 2013 as recovery from a deflationary shock, with defensive stocks outperforming. He sees the second half of the year as a return of the “reflation trade”, with an emphasis on the energy, materials, industrials and technology sectors. Barry also discusses the many parallels between the depression-era policies of 1932-1937 and the current economic policies from 2009 -2013. He sees politicians repeating many of the same policy mistakes, and believes if the economy falters, it will be policy-driven, not from the economic fundamentals.
Gold stocks are being given away
Jim welcomes back Ned Schmidt CFA, Publisher of The Value View Gold & The Agri-Food Value View Reports. Ned is very optimistic on gold. He also advises investors to ignore Wall Street, as he believes gold is currently funding the “carry trade”. He notes that Chinese imports of gold have doubled from a year ago. Ned also cites three key factors for his optimism. The first is the ratio between gold valuation and the stock market is the best since 2008. Secondly, he believes the bottom in the price of physical gold is in place. Lastly, Ned believes the next Federal Reserve chairperson, widely believed to be Janet Yellen, will make Ben Bernanke look conservative when it comes to money-printing.
QE Is Keeping the Patient Alive, But Not Healthy
Jim welcomes back Russell Napier, Consultant with CLSA Asia-Pacific Markets. Russell makes the case that faltering economic growth in the emerging markets, weaker commodity prices, a falling yen and strengthening dollar are warning signs of a deflationary shock ahead. Russell believes that the rally in developed-world equities will not last much longer as emerging market growth slows. He is bearish on gold shorter term, but bullish longer-term as both structural and cyclical forces turn in gold’s favor. Russell sees the current falling gold price as a sign that the global reflation is failing and we are nearing a deflationary shock.
Rick Santelli: Hold Onto Your Wallet - The Entitlement Society Now Being Adopted as US Economic Policy
Austerity is the worst word in the English language for politicians
Jim welcomes back Rick Santelli, On-Air Editor at CNBC and veteran trader and financial executive. Rick refers to current central bank policies as a world-wide “money fest”, given by the Central Banking Country Club. Rick sees the US adopting the “entitlement society” as current economic policy, which he asserts has never worked globally. He advises taxpayers to hold onto their wallets. Taxes will be going higher to pay for ever increasing government spending.
There is no energy silver bullet
Jim is pleased to welcome back Dr. Oliver Inderwildi PhD, Research Fellow at Smith School of Enterprise and the Environment, University of Oxford, UK. Dr. Inderwildi speaks to the high degree of oil price volatility over the past four decades, and its damaging and destabilizing effects on the global macro-economy. He discusses the main drivers of oil price volatility and how it has influenced both the level of inflation and the level of unemployment within economies affected by it. Dr. Inderwildi notes while there is no energy “silver bullet”, he discusses economic policies that could help prevent or minimize oil price volatility.
A VAT tax is coming unless we change our politicians
Jim is pleased to welcome back Steve Forbes, Chairman, CEO, and Editor in Chief at Forbes Media and an internationally respected authority in the worlds of economics, finance, and corporate leadership. They cover a number of issues, including the recent plunge in gold, the Fed’s manipulation of the economy and the potential for future inflation, and the government’s relentless search for more revenue to raise federal spending. Mr. Forbes believes there is a determination in Washington to increase taxes on wealth, following the French model.
Natural gas inventories dipping below 5 year average
Jim welcomes Dan Steffens, the President of Energy Prospectus Group (EPG), a networking organization based in Houston, Texas. Dan publishes EPG’s newsletter, “The View From Houston”. Dan discusses his views on natural gas, and lays out the case for higher natural gas prices ahead. Dan and Jim also discuss the energy stocks, and Dan advises investors to look for companies that balance natural gas and oil production, and can switch back and forth as market conditions warrant.
The dividend game is not over
Jim is pleased to welcome Jeffrey Saut, Managing Director of Research at Raymond James Financial. Jeff mentions that many investment managers and other professionals are feeling “performance pressures” from having missed the recent rally, as well as others that have underperformed by emphasizing international equities over US-focused equities. Jeff does not think the dividend play of recent years is extended, as payout ratios average only 32% of earnings on the S&P index, compared with historical norms of 50% payout ratios.
Greece received 100 billion euro bailout, Cyprus got shafted
Jim is pleased to welcome back Michelle Caruso-Cabrera, an award-winning financial television journalist working for CNBC. Michelle and Jim discuss her on-the-ground reporting from Cyprus during its financial crisis. She believes Cyprus was treated unfairly by the European powers, and didn’t receive the same treatment as Greece, which was kept afloat with massive bailouts. Michelle notes that Cyprus runs on its banking system, and Cyprus was treated as an off-shore tax haven, not a sovereign country. She also points out that Cyprus did not cut government spending, but raised taxes instead. Michelle also discusses the European economy and the chances of the Euro surviving longer term.
It is the price of paper gold that has plunged, not gold itself
Jim welcomes Ronald Stoeferle, publisher of the respected annual report, “In Gold We Trust”, and a gold fund manager in Vienna, Austria. Ronald tells Jim that we were close to a run on the bullion banks during the recent chaotic drop in gold. He also sees a growing movement to remove gold from the financial system, as paper gold is creating too much counterparty risk, as witnessed by the Dutch bank ABN Amro’s recent gold default. Ronald sees the divergence between paper gold plunging in price and record demand for physical gold as a loss of confidence in the banking system by the public. The next issue of “In Gold We Trust” will be published in June.
Energy producers have substantially underperformed the S&P 500 Index in the last 12-24 months
Jim welcomes Joseph Dancy, Manager LSGI Venture Fund, and Professor at SMU Cox School of Business in Texas. Joe sees a discrepancy between energy company performance and share prices, as most major oil producers have underperformed the S&P 500 Index. Joe notes that the global demand for oil is rising relentlessly through industrialization and growth in China, India and other developing nations. With record oil company revenues and growing global demand likely to continue, Joe sees a much more positive performance for the energy sector looking ahead.
The European Union is a basket-case and can’t survive long-term
Jim welcomes back Martin Armstrong of Armstrong Economics. Martin and Jim cover many important topics, including Washington’s need for more revenue, the future of the European Union, the current outlook for gold, the Cyprus banking situation, the pension system in the US, and how Congress is working hard to exempt itself from Obamacare. Martin also touches on economic trouble brewing in Europe, Japan and Argentina. As to the banking system, Martin advises to avoid large banks involved in proprietary trading and stay with the regional banks.
2012 – A turning point for digital media
Jim welcomes Alex Daley, Chief Technology Investment Strategist with Casey Research. Alex and Jim discuss Apple, and if it is a buy at current levels. Alex also discusses Apple’s transition from a rapidly growing tech company to a Blue-Chip company with a growing dividend.
Frank Holmes of U.S. Global Investors: Paper Gold Is Short-Term and Leveraged - Physical Gold Is Long-Term and Cash
The Old Mining Model of Acquisition and Production Is Broken - A New Model Is Emerging
Jim welcomes Frank Holmes, CEO and chief investment officer of U.S. Global Investors, Inc., which manages a diversified family of mutual funds and hedge funds specializing in gold, natural resources and emerging markets. Frank believes the two main factors determining gold demand are the Fear Trade (of inflation or economic crisis) and the Love Trade (gold jewelry demand- primarily from India and China). Frank also discussed why gold stocks have underperformed the metal; the old model of acquisition and production is broken. Frank sees a new model emerging, one that is more shareholder-friendly. After the recent hard landing, Frank sees the price of gold likely to remain in a consolidation period, until demand overwhelms supply.
The Fundamentals For Precious Metals Haven’t Changed
Jim welcomes back Ross Hansen, founder of Northwest Territorial Mint, now the largest private mint in the US. Ross discusses the recent high demand for physical precious metals, and notes that the fundamentals of the market have not changed. At the moment, there is a shortage of product, specifically gold and silver coins. Ross advises to not pay the current higher premiums on coins, but just buy the rounds or bullion. He sees the “fast money” crowd trading in and out of the paper gold market, but the demand for physical precious metals continues to rise. Jim and Ross also discuss the current situation in Cyprus.
Recent Whiff of Deflation, But Plenty of Money Floating Around to Create Inflation
Jim welcomes back Eoin Treacy, Global Strategist at Fullermoney, a division of Stockcube Research Ltd. in London. Eoin is favorable toward US markets, noting contracting P/E’s and rising dividend yields on US stocks. He believes the US has an advantage over other countries, and sees...
Doha - The first Peak Oil conference initiated by Gulf State oil producers
Jim is pleased to welcome back Dr. Robert Hirsch, Senior Energy Advisor at Management Information Services Inc. and an authority on Peak Oil. Dr. Hirsch has just returned from an historic peak oil conference in Doha, Qatar, the first ever initiated by Gulf State oil producers. Dr. Hirsch believes there will be a “sea change” coming to the Middle East, once peak oil is reached. The timing of its arrival is difficult to predict, but it will likely be sooner than the global economy is prepared for. He makes the point that most people don’t understand that peak oil is a “liquid fuel problem”, and thus wind and solar technology will never solve the problem. Dr. Hirsch also sees the current projections of future US energy independence as “pure fiction”.
Japan ready to unleash a tsunami of money globally
Jim is pleased to welcome back Brian Pretti CFA, Managing Editor at ContraryInvestor.com. Brian says to brace yourself for the flight of global capital coming into the US later this year. For now, all roads lead to the dollar. Brian believes the first wave will come from capital fleeing both Europe and Asia. Brian and Jim also discuss the new Japanese monetary policy and how this will unleash a flood of cheap money on the globe. This will encourage sophisticated investors to borrow in Japan, invest in the US, and pay back the loan in cheaper Yen, increasing the return substantially.
How Safe Is Your Bank Account?
Jim welcomes Simon Mikhailovich, Co-Founder of Eidesis Capital LLC in New York City. Jim and Simon cover a number of topics, including gold, why people should own it, and the difference between paper and physical gold. Simon also discusses the safety of your bank accounts in the future as governments look at the “Cyprus Model”, including the US. Simon talks about the coming “wealth taxes” in Europe, as governments desperately search for revenue amidst weakening economies. Simon calls gold “the most under-owned asset class in the world” and believes the real bull market in gold has not yet begun.
Wall Street’s Lobbying Machine vs. The Individual Investor
Jim welcomes back Dave Lauer, a Market Structure and Technology Architecture Consultant. His most recent work includes public policy with Better Markets and technology architecture with IEX, a new equity market. Previously, he worked as a senior quantitative analyst at Allston Trading and Citadel Investment Group. Dave believes the cops (regulators) are not on the beat, and this puts individual investors at a distinct disadvantage. He sees HFT traders as manipulators of the market without fear of punishment. Dave says the “uptick rule” must be reinstated to protect the individual investor, but the Wall Street lobbying machine convinces both regulators and legislators that it isn’t necessary. With money and influence on their side, the Robo Traders are becoming the Robber Barons of the 21st century.
Less of a possibility of a Summer Swoon than in previous years
Jim welcomes Dwaine Van Vuuren, CEO at Recession Alert in South Africa. Dwaine is a full-time trader specializing in real-time recession dating models. According to his models and index, Dwaine sees no recession in sight for the US. His long leading growth index shows moderate expansion ahead, and his investment models say to stay 100% invested a present. Of the ten models Dwaine follows, only two have any warning of future slowing.
Energy stocks outside the US are down and opportunities abound
Jim welcomes back Kurt Wulff CFA, Independent Energy Analyst at McDep LLC. Kurt and Jim discuss energy equities today and Kurt sees Exxon as the Rodney Dangerfield of oil stocks, not getting the respect it deserves. He sees XOM as a must-own anchor of any energy portfolio. Kurt also discusses other energy equities, such as Encana and Suncor. He notes that Encana is a potential takeover target, perhaps by the Chinese. Energy stocks outside the US have been down lately, and Kurt sees many value opportunities in the energy sector.
There Is No Hard Currency Left But Gold
Jim is pleased to welcome back Grant Williams, Portfolio & Strategy Advisor at Vulpes Investment Management in Singapore, and author of the popular investment letter, “Things That Make You Go Hmmm…”. Grant discusses the recent policy change in Japan, which is now printing massive amounts of Yen to raise inflation and weaken the currency. Grant notes that it didn’t work in the 1930’s for Japan, and it won’t work this time. He does see a coming Asian currency war in response however. Grant also speaks in some detail about gold and gold equities. He believes the world is struggling with accepting gold as a currency. But Grant notes that at some point deficits matter and excessive money printing will eventually drive the price of gold significantly higher.
US Tax Code Favors Outsourcing of Production Overseas
Jim welcomes Ramesh Ponnuru, Bloomberg columnist and visiting fellow at the American Enterprise Institute. Ramesh discusses an article he wrote about a proposal from US Congressman Devin Nunes to incentivize American and foreign business to invest in the US through a new approach Nunes calls a “business consumption tax”. It would treat all businesses the same, and instead of taxing their income, it would tax their cash flow.
Long-term secular trend signals higher corporate productivity but less jobs in the future
Jim welcomes back Barry Ritholtz, CEO and Director of Equity Research at Fusion IQ, an online quantitative research firm. Barry discusses how the many economic “crises” today are overblown and essentially driven by the media and Washington. Barry sees the vast majority of “news” today as simply gossip. As to stocks, Barry believes they are not as cheap as 3 years ago, but still reasonably priced. He much prefers the dividend theme to stock buy-backs by corporations. Barry also discussed a long term secular trend in demographic changes that will be a negative for employment longer term, as increasingly more productive companies need fewer workers to stay profitable.
Don’t expect drought conditions and crop/livestock vulnerability to end west of the Mississippi
Jim welcomes back Evelyn Browning Garriss, Editor of The Browning Newsletter. Evelyn discusses changes in weather patterns in the tropics that should add more rainfall in the springtime, but bring more heat waves and potential “flash droughts” in the summer.
How the value of the dollar influences inflation
Jim welcomes Professor Steve Hanke, Professor of Applied Economics at The Johns Hopkins University in Baltimore. Professor Hanke is also a Senior Fellow at the Cato Institute in Washington, D.C. Jim and Professor Hanke discuss his recent article “Hyperinflation? No. Inflation? Yes.” He sees better growth ahead in the second half, perhaps as high as 3%, but also growing inflation as well. Professor Hanke notes that the US has had periods of high inflation in its history, including the Civil War, but never hyperinflation. He does not believe we will see it in the US in the foreseeable future.
Wait for the Seasonally Weak Summer Period to Buy in the Ag Sector
Jim welcomes back Ned Schmidt CFA, Publisher of The Value View Gold & The Agri-Food Value View Reports. Ned discusses the top performing commodities in 2013: oats, cotton, eggs and butter. He notes that the global population keeps growing and everyone needs to eat. Ned also discusses his four “Best of Class” stocks in the agriculture sector. He advises not to buy them now, but wait until the seasonally weak summer period, when prices will likely be lower. Ned also discusses how he got into studying and writing about the agriculture sector. It turns out it was a play on China.
The US, Japan and the UK will drive gold prices higher
Jim welcomes back Axel Merk, founder and portfolio manager at Merk Investments LLC. This week Axel discusses some of the downside of currency wars, including a loss of competitiveness in domestic economies, growing social unrest, and in extreme cases, war.
Bernanke’s Message to Investors: Get Out of Cash
Jim is pleased to welcome back Don Coxe, Chairman at Coxe Advisors LLP. Don sees an emerging shale oil and natural gas boom in the US, which will make it a cheaper place to do business. He sees American ingenuity overcoming government interference. As to commodities, he sees a rally in the dollar impacting commodity prices short term, but he lays out the fundamental case why commodity prices will rise in the longer term. Don doesn’t see the Euro as a viable alternative to the dollar, as Europe’s problems mount. Lastly he notes that Ben Bernanke’s implicit message to investors is “get out of cash”.
Debunking the Alternate CPI As a Valid Metric
Jim welcomes Doug Short, VP of Research at Advisor Perspectives. Doug sees the US markets as having room to grow and are above trend. He also discusses the Alternate CPI statistics, which Doug believes do not add up, and are out of sync with reality. Given the alternate CPI inflation levels, Doug notes that the current S&P 500 would be considerably more undervalued than in 1982. However, he notes that it still feels like a recession, since comsumer income has not kept up with inflation. Median household income is down 8.4% since 2000. This is among the reasons that many investors are scared, and remaining on the sidelines.
Mexico Is Becoming the “New China” for the US Market
Jim is pleased to welcome back Jeffrey Saut, Managing Director of Research at Raymond James Financial. Jeff believes we have started a new secular bull market, but calls the stock market advance the “most hated rally in half a century”. Jeff notes that the support for the rally comes from a number of factors including central bank stimulus, low interest rates, strength in housing and autos, and improvement in the employment picture. He also mentions that the world is currently underinvested in US equities. Jeff makes an interesting observation about Mexico, both in terms of its labor situation and railroad transportation to the US, calling it the “New China” for US markets.
As Long As Central Banks Are Printing Money, You Have to Be in Stocks
Jim welcomes Puru Saxena, Editor and Founder of Money Matters and Puru Saxena Limited in Hong Kong. Puru believes that the Chinese real estate bubble is on the verge of a major bust, which will not bode well for China, or Asia. He believes the thirteen year bear market in stocks is over, and a multiple year bull market in equities has begun, especially in the US. Puru sees the dollar as the most liquid and secure currency in the world and does not foresee a dollar crisis. Due to supply and demand factors, he does not favor commodities, as prices will be under pressure in the near to medium term.
Available Global Net Oil Exports Continue to Decline, Outpacing Gains in US Oil Production
Jim welcomes Jeffrey Brown, Independent Petroleum Geologist, creator of the Export Land Model, and ASPO-USA Board Member. Jeffrey explains his Export Land Model, and reviews the major trends regarding availability of oil exports on the world market. Jeffrey also looks at the growing tension between oil production and the rising internal demand of oil-producing nations as well as China, India, and other emerging economies. His overall thesis is that the US oil industry continues to make a serious mistake by providing, in his opinion, wildly unrealistic scenarios for future US and global crude oil production.
Global QE Makes the Dollar Look Relatively More Attractive
Jim welcomes back Douglas Noland, Senior Portfolio Manager at Federated Investors Inc. Doug sees the global government finance bubble as the next crisis epicenter. He believes the US has exported the finance bubble and today QE by central banks around the world make the dollar more attractive by comparison. Doug also sees the German people taking a harder line against bailouts in Europe, leaving their government in a bind. He believes that US bank depositors are also at risk of confiscation, by inflation.
“A Film That Could Save Your Life”
Jim welcomes Pamela Popper PhD, N.D. who appeared in the recent film “Forks Over Knives” and is one of the co-authors of the companion book, which reached the New York Times bestseller list. Despite the most advanced medical technology in the world, we are sicker than ever by nearly every measure. Forks Over Knives examines the claim that most, if not all, of the degenerative diseases that afflict us can be controlled, or even reversed, by rejecting animal-based and processed foods. The film looks at groundbreaking studies that conclude that our animal-based diet is primarily responsible for America’s three biggest killers: heart disease, cancer and diabetes. Despite the profound implications of their findings, the work by Dr. Colin Campbell and Dr. Caldwell Esselstyn has remained relatively unknown to the public.
Regulators Turning a Blind Eye to Fraud
Jim welcomes William Black PhD, Professor of Economics and Law at University of Missouri-Kansas City School of Law. Professor Black sees an increasing trend of crony capitalism in world markets. He sees two primary reasons for the mess; regulatory neglect and competition from overseas exchanges with less stringent regulations. In terms of corruption, Black believes the current credit crisis is 70 times larger than the Savings & Loan Crisis. In the S&L crisis, Black notes that there were 30,000 criminal referrals, and 2,000 white collar criminals went to prison. In the current credit crisis, stemming from 2008, there have been zero criminal referrals and zero prosecutions. He sees the FBI as the only agency with any effectiveness in white collar crime, but they are woefully understaffed.
Many Shale Oil Plays Are Already Peaking
Jim welcomes energy expert Bill Powers back to the program. Bill notes that energy stocks are now getting a bid, and he and Jim discuss the significance of Freeport McMoRan getting back into the oil business. They also discuss the risks of extrapolating energy discoveries into the future, as many recent shale oil plays are already peaking. They also look at Daniel Yergin’s “Undulating Plateau” and how it may be taking place now, instead of decades from now.
Preparedness Is Key - No Early Warning System Yet to Protect You From a Major Earthquake
Jim welcomes back Dr. Patrick Abbott, Professor Emeritus, Department of Geological Sciences at San Diego State University. Dr. Abbott is an expert on earthquakes and is a veteran of many media appearances in California after significant quakes. He talks with Jim about the probability of “The Big One”; how to prepare yourself...
China’s Growth Rate Will Likely Be Under 5% This Year
Jim is pleased to welcome back Dr. Jim Walker, Founder and Managing Director at Asianomics Limited in Hong Kong. He expects slower growth in China this year, likely under 5%. Dr. Jim believes Japan’s new policy of weakening the Yen only benefits the government in inflating away its enormous debt load.
Peak Gold- It’s now much more difficult to find large gold deposits
Jim is pleased to welcome noted geologist Keith Barron PhD, Director, Founder and Exploration Geologist at U308 Corp. Keith and Jim discuss the recently completed PDAC Convention from Toronto, the world's premier event for the mineral industry. Keith notes that the junior miners have been killed and offer opportunities at rock bottom prices. He notes that the majors have also disappointed, and have too often diluted their shareholders. Keith sees an emphasis going forward on economic projects that make sense, rather than large deposits that have a lesser ore grade. Keith also looked at the issue of “peak gold” and how it is now much more difficult to find large gold deposits anywhere on the globe.
All Markets are Manipulated, But Precious Metals Markets Most of All
Jim welcomes back David Morgan of The Morgan Report. David believes the fundamentals are still strong for the precious metals markets, but investor sentiment is at or near rock bottom. He also sees the metals markets as the most manipulated of all markets. From his long experience, David knows that picking a bottom in the metals markets is extremely difficult. Accordingly, his advice in taking a position in either stocks or physical metal is to build your position gradually, and never buy all at once.
Government Water Subsidies Distort Supply and Demand Issues
Jim welcomes Scott Rickards, founder and CEO of Waterfund LLC. Waterfund is pioneering a pricing benchmark for fresh water for actuarial purposes. The index will reflect the actual cost of producing and delivering water. The index will also allow for a hedge against the cost of water. Scott believes the index will unlock private capital to invest in water scarcity. Scott sees the users of the index as institutional investors, water retailers (such as water companies, miners and beverage firms) and governments and municipalities.
The Bankruptcy System Is Broken and The Lawyers Are Making A Fortune
Jim is pleased to welcome James Koutoulas of Typhon Capital Management. James has been a leading advocate in fighting to recover $1 billion for customers from the MF Global bankruptcy. James tells Jim that the bankruptcy system is broken, and the regulators are outmanned, out-lobbied and afraid of large financial entities. Furthermore, the media is woefully ignorant on financial matters and lacks true investigative journalists. James notes that by its lack of action, the government has stated, loud and clear, that it will not prosecute “well-connected” criminals.
The Federal Reserve has enabled the Government’s runaway spending, wars and political favors
Jim welcomes back Bud Conrad, Chief Economist at Casey Research. Bud lays out his case that federal government policies have distorted the economy, impoverished the middle class and greatly expanded the size of the federal bureaucracy. Bud also discusses how much longer the government can continue these policies, and what is the most likely endgame for a country with way too much debt.
The Sequester “Crisis” Is All Manufactured
Jim welcomes back Brian Pretti CFA, Managing Editor at ContraryInvestor.com. Brian and Jim discuss the Fed’s current policy of pumping trillions of dollars into the markets. There are legitimate reasons to be pessimistic, but Brian believes you can’t sit on the sidelines when the Fed is aggressively printing money. He sees stocks as not cheap, but not expensive either. They also discuss the Sequester “crisis” which is seen as a phony and manufactured political exercise.
Who Caused It – Who Called It – What’s Next
Jim welcomes the creators of the new documentary film, “The Bubble”. Thomas Woods and Jimmy Morrison discuss the causes of the financial crisis, look at past financial crises, and touch on governmental responses to the current situation. They also look at a future that must deal with unsustainable debt, unfunded liabilities and inflation. Among those interviewed for this film: James Grant, Dr. Ron Paul, Marc Faber, Joseph Salerno, Jim Rogers and Doug Casey. Jim also plays selected clips from “The Bubble”, which is scheduled to be released later this spring.
A Few Simple Fixes To Break The HFT Web of Structural Flaws and Conflicts of Interest
Jim is pleased to welcome back Joseph Saluzzi, Co-Founder of Themis Trading LLC. As a vocal critic of the current High Frequency Trading structure, Joe discusses how the regulators are totally outmatched by the highly complex HFT firms on Wall Street. Joe mentions that there are “mini flash crashes” every day in individual stocks in the exchanges. He also adds that the addition of so many exchanges today now allow for arbitrage opportunities that disadvantage the individual investor. Joe offers a few simple fixes: 1) Take away the profit incentive of the exchanges, 2) Ban payment for order-flow and 3) Re-institute the Up-Tick Rule. Joe adds that these fixes are not likely to take place until investors contact their Congresspersons, in large numbers, demanding change. Otherwise the politicians will continue to answer to industry lobbyists.
Rotation Out of Safe-Haven Assets into Equities
Jim welcomes back Greg Weldon, Founder and CEO of Weldon Financial. Greg and Jim discuss a variety of topics, starting with currency wars and gold’s recent breakdown. Greg says there’s a global perception that things are improving, leading to a rotation out of safe-haven assets into equities. Greg is bearish on gold in the short term, but bullish on gold longer term. As to the currency wars, Greg sees every major country in a race to the bottom in debasing their currencies, with Japan using “rocket fuel” to weaken the Yen. The problem for central banks is they are not able to reflate their “real” economies.
Energy, Efficiency and Financial Stress
Jim welcomes back Gail Tverberg to speak on energy, and they discuss her views on limits to oil supply limiting long-term economic growth. Gail believes the key issue is that global oil supply is not rising very quickly, no matter how much investment is made. Because of this “sinkhole” phenomenon, we are getting less and less back for every dollar invested; or declining energy return on energy invested. Gail argues that the ultimate impact for developed (OECD) countries will be a long-term contraction of their economies. The problem is that our current global financial system depends on long-term growth.
Expect Record High Gas Prices By May
Jim welcomes back Michael Kantrowitz CFA, Director, Portfolio Strategy & Quantitative Research at Wolfe Trahan in New York. Michael sees the inflationary set-up as the big difference between 2012 and 2013. He expects record high gas prices by May, and sees Chinese economic growth leading to more inflation for US consumers. He mentions a steady stream of early signs of inflation. Michael discusses investing in areas that will benefit from massive central bank stimulation: energy, materials, industrials and technology.
How to develop your own royalty trust ETF earning 8%
Jim welcomes back Kurt Wulff CFA, Independent Energy Analyst at McDep LLC. Kurt discusses how Canadian energy stocks are at attractive valuations currently. Kurt and Jim also discuss the “war” between rail and pipelines in the transportation of oil and gas, and how pipelines are the much cheaper alternative. Kurt sees natural gas as a long term growth story and, also discusses how he would diversify an energy portfolio.
A Disfunctional and Politicized Economy - The New Status Quo?
Jim welcomes Daniel Amerman CFA. Daniel discusses what he terms a false dichotomy between those in the “Mainstream” camp, and “Gloom and Doomers”. He sees a future investing reality where neither the old economy will repeat itself, nor will there be an economic collapse. Dan sees a future economy under the increasing control of the government. He believes there will be a “third path” of a blended economy that shifts a little more each year from being dominated by free markets, to being dominated by the State. Daniel notes this pattern has played out in many nations over many centuries. If his vison of the new status quo plays out, future investment results are unlikely to be what either Mainstreamers or Doomers expect.
Government Keeping Real (GAAP) Spending Off The Books
Jim welcomes Laurence Kotlikoff, Professor of Economics at Boston University. Professor Kotlikoff notes that 10,000 citizens a day are joining Social Security and Medicare. He believes deficits will explode, as a majority of politicians will never vote to reduce benefits. To become solvent, Professor Kotlikoff calculates retirement benefits need to be cut by 22% today, or taxes must be raised by 31% across the board. He also calculates the true fiscal gap today at a staggering $220 trillion.
Pullbacks in Gold Usually Last 18-20 Months
Jim welcomes John Doody PhD, Editor of The Gold Stock Analyst. This week John discusses the gold ETF’s and their impact on gold stocks. John notes that many gold companies are more shareholder-friendly today, and stressing disciplined growth. This also reflects a change in management at some of the larger gold mining companies. John also discusses Japan’s coming yen devaluation, and how it may affect the gold market.
Stocks are cheap compared to zero interest rate alternatives
Jim welcomes back Martin Armstrong of ArmstrongEconomics.com. On the topic of a dollar collapse, Martin doesn’t see it happening, as there are no strong alternatives to the dollar. He sees Japan as the next currency trouble spot, and believes a single global currency is coming down the road. Martin sees the time-frame of a global currency crisis as 2017-2018. He also discussed gold, and said it should be owned as a personal hedge, but that no government will ever adopt a gold standard, which would limit its power to spend money.
Wall Street is too excited about fertilizer stocks
Jim welcomes back Ned Schmidt CFA, Publisher of The Value View Gold & The Agri-Food Value View Reports. Ned discusses the random weather patterns this year and their effects on the agriculture sector. He notes Brazil and Argentina have record corps, but low soil moisture in the US Midwest could be a problem for planting this year. Ned doesn’t see any major price spikes in the grains this year, but he sees rising prices ahead for oats, hogs and cotton.
Tax Vampires Squandering Tax Revenues- Taxes Out Of Control
Jim is pleased to welcome back James Dines, Editor & Publisher of The Dines Letter. Jim and Mr. Dines discuss a wide range of topics, including a coming new social order, the coming age of robots, debt deleveraging, the pension funding crisis and the specter of tax vampires, squandering tax revenues. Mr. Dines also touches on the likelihood of hyperinflation in our future, and how US debt levels are un-payable, and will ultimately be inflated away by the Fed. The legendary James Dines has been publishing The Dines Letter since 1960.
A Rebirth In American Manufacturing
Jim is pleased to welcome economist Jeff Rubin, and author of “Why Your World Is About To Get A Whole Lot Smaller”. Jeff discusses lower economic growth as the “New Normal”, along with high energy prices. He sees rising oil prices in the future making tar sands and shale oil plays economic to produce. Jeff believes OPEC countries will be a less important source of supply in the future as they consume more of their own oil. He sees the North American manufacturing sector as the best investment play, as a rebirth in manufacturing gets underway, reconnecting production to its consumer markets.
Means Testing For Social Security Is Coming
Jim welcomes back John Williams from Shadow Government Statistics. John lays out his reasons why he believes hyperinflation is inevitable, and notes the clock is ticking. John believes the trigger point for a hyperinflationary scenario will be massive selling in the US dollar. He sees means-testing coming for Social Security, but doesn’t believe it will a solution to our debt problems. John also sees the gold market as rigged by the government, and notes that is one of the reasons gold has not risen more.
Why the white metals are outperforming gold
Jim welcomes back Nick Barisheff, CEO at Bullion Management Group Inc. Nick looks at the issue of how much gold should be in one’s overall portfolio, as well as the role of gold as a hedge. Nick also discusses why diversification among metals is important, and why the white metals are currently outperforming gold. He also mentions that increasing the gold allocation is important in times of rising inflation.
Volcanic eruptions launching climate-changing debris into the stratosphere
Jim welcomes back Evelyn Browning Garriss, Editor of the Browning Newsletter. Evelyn sees a new normal in the Pacific Ocean, with cooling on the North America side and warming on the Asian side. She expects average rainfall in the Midwest, which will not be enough to break the drought.
Choose Your Risk Wisely; The Fed Wants Everyone in the “Risk Trade”
Jim is pleased to welcome back Rick Santelli, On-Air Editor at CNBC. As usual, Rick is pulling no punches with his refreshingly honest and informed perspective. Rick discusses why the Senate hasn’t passed a budget since April 2009. A budget requires that logic and discipline be applied to government spending. Rick sees no “end game” in sight to the negative interest rate cycle that has penalized savers and those on fixed incomes. As a champion of free markets, Rick admits that markets are no longer truly free; they are all managed markets today.
Best outlook for growth since 2007; the financial system repairing itself
Jim is pleased to welcome Don Coxe, Chairman of Coxe Advisors LLP and an economic historian of broad perspective. Don is the most bullish he has been since 2007, and sees growth picking up around the globe. He doesn’t see a recession in the US, and believes the only reason to be bearish on the US is due to political dis-function in Washington. Don believes the bond market has been driven to excess and the public is making a big mistake by going into bonds. He sees a strong rotation out of bonds and into stocks ahead. Don sees the global economy improving and thinks commodity stocks are the best way to play the global recovery.
Japan has been reluctant to print money in excess since 1998 - until now
Jim welcomes Axel Merk, Founder and Portfolio Manager at Merk Investments LLC. Axel sees fireworks ahead this year in the currency markets, originating out of Japan. He notes that the Japanese have been reluctant to print money since the late 1990’s, but that has changed under the new government of Prime Minister Abe.
Jordan could be the next area of instability
Jim welcomes back JKC de Courcy, Chief Executive at Courcy’s Intelligence Service in London, and publisher of Courcy’s Intelligence Brief. Mr. de Courcy sees three big threats in 2013: the continued fragmentation of the Middle East, a growing arms race between China and Japan, and an Israeli/Iranian confrontation. He sees continued bloodletting in the Middle East among religious factions, and notes that Jordan may be the next area of instability. Mr. de Courcy also sees growing tension between China and Japan, as the new government in Japan decides to re-arm. He also believes that Israel is planning for the worst, and may strike against Iran’s nuclear capability.
Welcome Back to the Return of Dividend Investing
Jim welcomes back Jeffrey Saut, Managing Director of Research at Raymond James Financial. Jeff sees the main problem for most investors is never having learned to manage risk, as they took big losses in both 2000 and 2007. Jeff notes that both individual investors and institutions are currently underinvested in equities, and the biggest mistake now is being too bearish. He also believes if we get a correction caused by the upcoming debt-ceiling debate in Washington, it will be a buying opportunity. Jeff also sees the trend in dividend investing continuing and growing.
The “Dollar Collapse” Camp Has Been Wrong - And Will Be Wrong Again This Year
Jim welcomes back Eoin Treacy, Global Strategist at Fullermoney in London. Eoin sees the new Japanese government aggressively attempting to create more inflation, and improve exports by cheapening the Yen through massive money printing. He also believes the US industrial sector looks extremely attractive, and believes investors should be buying equities at these levels. Eoin also notes that the “dollar collapse” camp has been wrong in the past, and he believes they will be wrong again this year, as he expects the dollar to strengthen.
The cheapest place to find oil reserves is now on Wall Street
Jim welcomes back energy expert Joseph Dancy. Joe notes that Saudi Arabia is cutting back oil production, and the US is one of the few areas in the world where oil production is growing. Joe also sees more merger and acquisition activity ahead, as he believes the cheapest place to find oil reserves is now on Wall Street.
The Big Issue Not Being Addressed: Unsustainable Health Care Costs
Jim is pleased to welcome back former US Senator Alan Simpson. Senator Simpson blasts politicians of all stripes for not addressing the main issue: unsustainable health care costs. He feels the debt ceiling debate will be pure political theater, and the US is not in danger of defaulting on its debt. Despite the coming media and political theatrics, Mr. Simpson believes the issue will pass without a crisis. He advises turning off your television. He also notes the reason that politicians continue to “kick the can down the road” and never seriously confront the serious debt issues, is simply because they don’t want to anger the special interest groups and risk losing their privileged positions at the center of power.
Why Central Banks Are Accumulating Gold
Jim is pleased to welcome back John Butler, Chief Investment Officer at Amphora Commodities Alpha Fund in London. John discusses that more countries are moving out of dollars, and eventually the dollar will become less important as a reserve currency. But he cautions there is danger in predicting an eminent dollar collapse, and those who did in 2010 have paid the price. John also notes that because of the special privilege of having the reserve currency, the US will likely win a major currency war. He also discusses why the world’s central banks are buying gold, and why the bond market is not a store of value. It is an inflation wolf in sheep’s clothing.
Investors Can Now Buy Physical Gold and Silver In Their IRA’s
Jim welcomes Jonathan Potts, Managing Director of FideliTrade Inc at Delaware Depository Services Company LLC. Jonathan covers a wide range of issues on bullion storage, including the difference between allocated and non-allocated storage. He notes that bullion storage offers liquidity as well, as investors can buy or sell their bullion at any time. Jonathan also notes that one of the biggest changes in the bullion storage industry is that investors can now buy physical precious metals in their IRA’s. He also sees most gold bullion investors as long-term holders of the metal, while silver bullion investors tend to trade and speculate more.
Rapid Nuclear Energy Development in China and India Will Also Drive Uranium Price Higher
Jim welcomes back Bill Powers, Editor of Powers Energy Investor. Bill believes the price of uranium has bottomed due to fundamental factors. This is the last year of the Megatons to Megawatts Program between the US and Russia, which provided a large supply of uranium into the market. Bill also notes rapid development of nuclear energy plants in both China and India, as well as plans in Japan to re-start the Fukushima nuclear facilities. Bill also sees tremendous value in small and mid-tier energy companies, and believes we will experience higher oil prices later this year.
Simon Mikhailovich: Bonds Are Not A Safe Haven – Today’s Population Hasn’t Experienced a Bond Debacle
Gold Investors Should Ignore Short-Term Volatility
Jim welcomes back Simon Mikhailvoich, Co-Founder of Eidesis Capital LLC in New York City. Simon discusses the current debt issues in the US and notes that our deficit spending is being financed by the Federal Reserve printing money, enabling politicians to spend even more money. Simon also looks at the bond market, which he believes many investors perceive as a safe haven. He notes that most of today’s population has never experienced a true bond debacle, such as happened in Greece, and most expect the current situation to continue indefinitely. That is not likely, as interest rates have been falling for 30 years, and are now near historic lows. As to gold, Simon advises investors to ignore the short-term volatility in gold, and focus on the long-term fundamentals.
Industrial Demand The Biggest Driver Of Silver – 80% Of Silver Is Consumed
Jim welcomes First Majestic Silver Corp. President & CEO Keith Neumeyer this week. Keith sees the company moving from 9 to 16 million ounces of production by 2014, and on the way to becoming a major silver producer. Keith also emphasized that 80-85% of silver is consumed, and industrial demand is now the biggest driver of silver, not monetary demand. He noted that the technology sector alone is now a major driver of silver demand. Looking ahead, Keith believes that a squeeze is coming in the silver market, where demand will outstrip available supply.
Bond Vigilantes May Begin Testing the Resolve of Central Banks in 2013
Brian Pretti CFA of ContraryInvestor.com joins Jim again this week. Brian sees 2013 as an inflection point for Quantitative Easing (QE), noting that if you stretch a rubber band long enough, it eventually breaks. Brian believes the final end-game of the Debt Super Cycle is nearly at hand, when governments will be forced to deleverage. He thinks the bond market may begin to show some vulnerability as the “bond vigilantes” begin to test the resolve of the major central banks.
The metals need “money velocity” for ignition
Jim welcomes back David Morgan of The Morgan Report. David mentions that both gold and silver prices got “ahead of themselves” in 2011, hence the long consolidation period since. He believes that this “scare you out, wear you out” phase is coming to an end, and higher prices are ahead. David acknowledges that QE takes time to work its way through markets, and for significantly higher prices, the velocity of money in the system must pick up. David sees a volatile year for the metals, and expects silver to re-test $50 at some point, and gold to hit $2,000, as a new group of buyers come into the metals market.
We’ve gone beyond the tipping point, and there is no way out
Jim welcomes Ross Hansen, founder of the Northwest Territorial Mint, now the largest private mint in the US. Ross and Jim discuss the debt issues facing the US, and Ross notes that a debt crisis will arrive suddenly, as it did in Greece. Regrettably, he believes that there is no way out, and that the US has gone beyond the tipping point for fixing its debt and unfunded liability issues. Ross also believes people are worn out by government-driven crises, and are suffering from crisis-fatigue. As to the physical precious metals, Ross see the best value in silver rounds and junk silver at present.
Big Money buys on downturns, the public buys on upturns
Jim welcomes back geologist Keith Barron PhD. He thinks January could be a big month in the metals, and looks for a positive start to the year. Keith also notes that gold discoveries are becoming smaller in size, as “elephant” discoveries are now very rare. Mining CEO’s are now looking for quality ounces, not quantity ounces. Keith sees gold production declining dramatically in South Africa. Keith believes there will be a significant shift in acquisitions, as large cap miners focus on grade, infrastructure and low capital costs in the future, as well as geopolitical considerations.
The Fed has become an enabler of government spending spree, now funding half the deficit
Jim welcomes back Bud Conrad, Chief Economist with Casey Research. Bud sees the US passing the “tipping point” with US debt levels moving from 100% of GDP to 120% of GDP in President Obama’s second term. Bud believes that future inflation is now “baked in the cake” and this could possibly lead to hyperinflation. Bud’s investment thesis is to own resource stocks and real estate to mitigate the effects of future inflation.