- The Donald and plans for world government…
- If the establishment missed the rise of Trump, what are they missing in the markets?
- The “wisdom” of Canada’s government selling all its gold
- Scary headlines + government action = soaring sales in a niche sector
- The credibility of the government’s auditors… a reader’s performance anxiety… the water in China… and more!
In our efforts to “follow the money” through Big Government and Big Business… and tease out the implications for your investments… we really couldn’t care less what Mitt Romney had to say about Donald Trump today.
What Robert Zoellick says, on the other hand, is another matter entirely.
You’ve never heard of him? Or it sounds only vaguely familiar? Therein lies a tale…
“We the undersigned… are united in our opposition to a Donald Trump presidency,” says an open letter issued last night by nearly 80 self-described “members of the Republican national security community.”
Politico is spinning this story as “Neocons Declare War on Trump,” spotlighting guys like Max Boot from the Council on Foreign Relations. “I’m literally losing sleep over Donald Trump,” he says.
But it’s not only the intellectual fathers of the misbegotten Iraq War who are alarmed by Trump. That brings us to Zoellick, described in the Politico piece as “a former deputy to Secretary of State Condoleezza Rice.”
That description sorely underplays Zoellick’s role in the global power structure.
“The agenda of the global power elite is world money, world taxation, world government, a cashless society, negative interest rates and inflation through debt monetization,” writes Jim Rickards in the current issue of Strategic Intelligence.
“A full roster of the power elite would run into the thousands of names,” he goes on. “Most are completely unknown to the general public. That’s how the power elite like it. Meanwhile, some names do stand out because particular positions require confirmation or are inescapably newsworthy.”
But here’s a short list and the matrix of their connections…
At the center of it all is Robert Rubin, one-time Goldman Sachs CEO, Bill Clinton’s Treasury secretary, then chairman at Citi and currently chairman at the Council on Foreign Relations. Three of his acolytes — Timothy Geithner, David Lipton and Michael Froman — are also part of this group.
That’s a lot of Democrats. But this is a bipartisan bunch, and Robert Zoellick is one of the key Republicans. From 2007–2012, he was president of the World Bank.
And during his World Bank tenure, Zoellick floated an important trial balloon for the emerging global monetary order.
It’s right there in The 5’s voluminous archives. Zoellick gave a series of interviews and wrote a pivotal Op-Ed for the Financial Times coinciding with a summit of G-20 leaders in South Korea. Remember, Jim says the G-20 has been the de facto global government since the Panic of 2008.
Zoellick called for a new monetary system with multiple reserve currencies — not just the dollar. He said this system “is likely to need to involve the dollar, the euro, the yen, the pound and a renminbi that moves toward internationalization and then an open capital account.”
With the benefit of five years’ hindsight… and 18 months of Jim Rickards’ insight in these pages… we now recognize what Zoellick is describing as the special drawing right, or SDR, the International Monetary Fund’s super-currency.
In the coming global order, the SDR “will be the de facto benchmark for oil prices and other essential goods and services in world trade,” Jim says. “By this channel, unelected officials will control inflation and erase the real value of debts to alleviate government debt burdens. Control of money means control of society and social welfare.”
Does the rise of Trump threaten to upset these plans? We have no idea. But Zoellick putting his name to this open letter is an indication the elites are deeply worried about the possibility.
What will they do about it? Some prominent signatories of the letter, such as Boot, say Hillary Clinton is “vastly preferable.”
“If Mr. Trump actually manages to technically snag the [Republican] party’s nomination,” writes the author and social critic James Howard Kunstler, “I can imagine several consequences. One, that he will indeed succeed in destroying the party. The other leaders at the dark heart of its hierarchy will never stand for Trump.
“In that case, they will form a breakaway rump GOP and throw their support to Michael Bloomberg, if he decides to jump in… The less appetizing alternative consequences involve the apparatus of the runaway Deep State (NSA and the military) either bumping off Trump or staging a coup d’état against him in the event that he manages to get elected.”
Understand that’s not a prediction on our part. We’re just connecting dots that you’re not likely to see connected elsewhere. You can mentally file it away for future reference.
And here’s the investment takeaway: Just as the elites couldn’t foresee the rise of Trump, they can’t foresee what’s coming this year for the markets and the economy.
“Many everyday Americans insist on the conspiracy theory of the elite,” says Jim Rickards. “Their power is so great and concentrated in so few hands that it must be a conspiracy. It’s not.
“Take it from me, the closer you get to real power, the more you realize how out of touch with reality our rich and powerful really are. They have power and money, yet they are just as frequently surprised by events as you are, maybe more so. In fact, when important changes emerge, our elites are often the last to know.
“Elites mostly talk to other elites. They are too important (in their own minds) to interact with everyday Americans. As a result, they are in a policy bubble. Once the conventional wisdom forms, they continually repeat it to each other and never hear contrary opinion.”
Which brings us to something we hinted at yesterday — a startling new formation taking shape on the charts of the major U.S. stock indexes. Jim calls it “the cannonball.” The elites don’t see it coming… and Jim says you need to act now to get out of its way. He’s out with a brand-new research report all about it. You can check it out right here.
In the meantime, the major U.S. stock indexes are treading water for a second day running. At last check, the S&P 500 is off a quarter percent, at 1,982.
Gold, on the other hand, is touching its recent highs at $1,256.
And you can’t chalk up the move to dollar weakness. The dollar index is off a half percent, at 97.7 — around where it was a week ago when gold was $1,241.
Here’s a sign gold has put in a bottom: The Canadian government has dumped all of its gold reserves.
Late last year — when gold was near $1,050 — Canada still had 3 metric tons of gold reserves — not much less than it had in 2003. But by early last month, that number had fallen to 0.62 metric tons. As of this morning, it’s all gone.
Well, almost all of it. A footnote in a report out today from the Canadian Finance Department says the government still holds 77 ounces — not enough to reach the $1 million threshold to justify having it on the books. So it’s effectively zero.
The decision is “wise and astute,” says economist Ian Lee from the Sprott (!) School of Business at Carleton University. “It gives them more strategic flexibility,” Lee tells Canada’s Global TV network, “to sell the gold, take the money and invest in U.S. government bonds or United Kingdom bonds or French bonds or German bonds.”
Heh… We can’t say as we’re surprised by that remark, given the level of economic discourse in Canada. Time to set the wayback machine to September 2011 and one of The 5’s all-time fave video clips, from a local newscast in Calgary…
Anyway, we’re seeing shades of the “Brown Bottom” 15 years ago — when Britain’s finance minister and future prime minister Gordon Brown dumped a sizeable chunk of the U.K.’s gold reserves. At the time, gold was still under $300.
The FBI is confirming what the owners of gunmaker stocks already know — sales are brisk.
The National Instant Criminal Background Check System, or NICS, logged 2.6 million background checks during February. That’s the third-highest total ever; No. 2 was December 2012 (after Sandy Hook), and No. 1 was December 2015 (after San Bernardino).
“It’s not difficult to understand,” says Greg Guenthner of our trading desk. “People want to protect their families. And yes, they want to buy guns to do it. Every incident of gun violence not only stokes these fears — it also brings fears that the government is just moments away from hammering out new restrictions on firearms and ammunition.
“In this market,” says Greg, “you should pay close attention to the stocks and sectors that are strongly outperforming the major averages.” Among the two big publicly traded handgun names, Greg says Smith & Wesson (SWHC) looks stronger at the moment. He sees 20% near-term upside… but be prepared for plenty of volatility along the way.
“I find it very interesting that you cite the ‘government’s own auditors’ unable to figure out where the government’s money is spent,” a reader carps.
“Come on, now — are you saying that you trust the words of the ‘government’s own auditors,’ when I don’t think you trust any other numbers coming out of the federal government?
“I think the point is that a truly independent auditor could find plenty of fraud, waste etc. I think this is why many of the common Joes out there think that we need an outsider — not another politician — to run the country. Things, obviously, are not going so well fiscally, and a lot of people feel that a shake-up is needed.”
The 5: Missing the point for $200, Alex.
It’s not that the government’s auditors couldn’t find evidence of the proverbial “waste, fraud and abuse.” It’s that the government’s books are such a mess that using “generally accepted accounting principles,” the auditors couldn’t render an opinion about whether the books are cooked or not. That’s how far gone matters are.
And for the record, we’re scared to death of anyone who wishes to “run the country” — insider, outsider or otherwise.
“As a longtime reader and recent subscriber to several Agora Financial offerings,” a reader writes, “I thought the right thing to do would be to listen the advice of the experts.”
[We definitely detect a “but” coming here…]
“I must, however, admit that beginning mid-January until now, I might have done better using my dartboard. Currency Wars Alert, Bubble Finance Trader and Trend Following have completely ignored bigger trends in the market. Many of the recommendations have been absolutely slaughtered. In some cases, the underlying security has risen as much as 20%. Barring WWIII, I am not sure they will ever recover.
“Mind you that I am not playing with the mortgage money and fully accept all of the risks. I hope in the future that the so-called experts pay a little more attention before more of their recommendations slide into the abyss.”
The 5: Are you reading the same publications we are?
There’s only one recommendation so far in Trend Following With Michael Covel. Not surprising, since it’s our newest newsletter. It’s down 8%.
The track record in David Stockman’s Bubble Finance Trader since launch last fall has been spectacular. The average closed position grew 88% in 67 days; several of the open positions are in the red, but most of those options don’t expire till January next year.
Ditto for the recent recommendations in Jim Rickards’ Currency Wars Alert that are in the red; they still have anywhere between three and 10 months to play out.
If you’re using mid-January as the starting point, the S&P 500 is up 5.3%. But it’s still below where it ended 2015. And more trouble is likely on the way. Patience…
“It appears to me that the Impossible Trinity as discussed by Jim Rickards applies to the euro so long as the EU member countries remain independent,” a reader suggests.
“As such, was the euro not doomed from the start? I have always compared the EU and euro concept to be like wanting to have your cake and eat it too.”
The 5: As Jim is wont to remind us, the euro is not an economic project — it’s a political one, aimed at ensuring its member states will never again go to war with each other.
That’s why he could confidently predict last year that Greece would remain in the eurozone come hell or high water. Whatever has to give to keep the eurozone together, its leaders will do it.
“We lived in Michigan for a while and used to go over into Canada,” a reader weighs in on our ongoing beer debate. “My husband swears the beer is better on the Canadian side.
“During the same time frame, though, he had to go to China for a business trip. I went along, as the spouses were meant to accompany. At the time, I was pregnant with my second child, and my doctor had given me all the usual warnings about what to eat or not eat. At one meal, I had ordered bottled water to go with my food, and they brought me a Budweiser. I tried very hard to explain why I did not want alcohol and wanted bottled water. The waiter just kept responding, ‘No, is the same thing.’ We laughed so hard over that for a very long time. I took only a few sips, and my doctor still told me it was safer than drinking tap water!”
The 5: At least they didn’t try to serve you any baijiu…
The 5 Min. Forecast
P.S. Economists at the Royal Bank of Scotland recently sent a note to their clients warning we’re facing a “cataclysmic year.”
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