- A holiday miracle: Wait till you see why one man is so grateful
- Miracle cures: Years in the making, now becoming real
- Rickards on the possibility of gold slipping to $950
- More millennials living with family… Boomers still paying student loans
- Stolen bucket of gold flakes on a cross-country tour… Could Trump’s corporate tax plan cause a crash?… A Canadian tells why a VAT isn’t so bad… And more!
As the holidays approach, think for a moment about the things you’re grateful for.
Your family? Your friends? A new job? A new home?
Kevin Douglass is grateful that this Christmas, he can once again lift his arms above his head.
Back in March, Kevin was injured during a car crash in California. Severely injured. Paralyzed from the neck down.
He had no hope… until he was told about an experimental operation he could undergo.
The experiment was a success. Kevin can do things now that until this year no one in his situation could ever hope to do. You can see the proof… for him and another patient named Brian Campbell… right here. You can also meet the doctor who helped make it all possible.
It’s the latest and most compelling chapter in a science-and-wealth story we’ve been following for eight years…
“For the first time ever, there is hope for the 1.3 million Americans who have suffered paralysis due to a spinal cord injury,” says Ray Blanco of Breakthrough Technology Alert.
“Doctors are undoing the damage and restoring lost function — all thanks to a relatively simple medical procedure developed by a cutting-edge company.
“It won’t be long before doctors can restore your eyes to their youth, correcting damage that glasses, contact lenses or even laser surgery can’t help… or rebuild your heart so it beats as strongly and surely as a 29-year-old’s heart.
“We could even see lasting cures for everything from arthritis to diabetes.”
Yes, that’s a huge promise. We hinted at the magnitude of that promise yesterday. We’ve been talking about it in one form or another going back to late 2008. Some of our readers have been able to make up to five times their money in the years since.
But with miraculous stories like those of Kevin and Brian… the profit potential is about to grow exponentially. See the proof for yourself — a true holiday miracle — at this link.
We don’t want to say Dow 20,000 is out of reach today… but it sure is looking elusive.
At last check, the index is down fractionally at 19,957. The other major stock indexes are down a bit more. Treasury yields are backing down, the 10-year at 2.55%.
The only economic number capturing traders’ attention today is existing home sales — up 0.7% in November, driven by condo sales.
A lesser-followed economic number is also out today — the Philadelphia Fed state coincident index, a composite of four job indicators in all 50 states. We follow this index because it has a good track record of foretelling recessions. And while the number was flirting with recessionary territory over the summer, it’s recovered smartly the last two months; today’s reading for November is the strongest in over a year.
Gold sits near a 10-month low at $1,131… and Jim Rickards says you can’t rule out the possibility of $950 during 2017.
Well, he never said the march to $10,000 would be a straight line.
“A new low of $950 per ounce is not out of the question based on Fed tightening and resulting dollar strength,” he tells readers of Rickards’ Gold Speculator. “The dollar price of gold is simply the inverse of the dollar. A strong dollar typically results in a lower dollar price for gold.”
What would the setup for $950 look like? “The Fed expects ‘reflation’ under Trump,” Jim explains, “and begins leaning in with rate hikes designed to cut off inflation. This would be the result of Yellen’s belief that tight labor markets plus stimulus equals inflation (the Phillips curve) and her belief that monetary policy acts with a lag (thus the need to act now).”
To no small degree, this is exactly what the Fed declared last week when it laid out plans for three interest rate increases next year… after only two in the last 13 months, the only ones since the Panic of 2008.
But what if “Trumpflation” doesn’t come into being?
Back to Jim’s scenario amid Fed tightening: “The Trump reflation never happens. Instead, Congress pushes back against tax cuts that are not revenue neutral, and opposes big spending plans.
“Meanwhile, the economy in not as strong as many believe. We’re in the eighth year of an expansion, so there’s not much bang for the buck in terms of new spending. We will experience diminishing or negative marginal returns to so-called stimulus.”
Under this scenario, the stock market is getting way ahead of itself — and a violent correction follows. “By the time the Fed sees its blunder and tries to reverse course, it will be too late. They won’t be able to cut rates enough to steer out of the recession. Negative rates and QE4 won’t be effective. The cheaper Chinese yuan and weak euro will make it impossible to cheapen the dollar as a way out. The stock market could crash 30% or more.”
That’s deflation: Asset managers dump whatever they can to raise cash. Gold isn’t spared. That’s what could send gold to $950.
However… $950 wouldn’t hold for long, Jim says.
“From there, either things will get much worse, in which case gold will get the safe-haven bid, or the Fed will massively monetize debt to fight deflation, in which case gold will get the inflation bid. Either way, gold could see a drawdown in the months ahead, but nothing will stop its long-term rise.
“Gold wins in the end, but it could be a volatile ride, with new lows possible. That’s not a bad thing for those still building their positions, especially in gold miners, which are even more volatile than gold. You should use occasional drawdowns to add to your position.”
Sign of the times, Part 1: The “intergenerational household” of Great Depression days is back.
The real-estate tracker Trulia finds about 40% of Americans age 18–34 living with parents, siblings or other relatives during 2015. The percentage has been rising steadily since 2005… but now it’s the highest since 1940.
We keep hearing from self-styled demographic experts about how the millennial generation is *this* close to a huge new wave of household formation… but so far, it ain’t happening.
Trulia’s research downplays the burden of student debt… pointing instead to rising rents in big cities and tighter mortgage-lending standards than in the go-go early 2000s.
Sign of the times, Part 2: 114,000 Americans over 50 had a portion of their Social Security checks garnished for student debt during 2015.
The Government Accountability Office issued a report yesterday revealing that since 2001, the feds have clawed back $1.1 billion in Social Security old-age and disability payments for unpaid student loans. That includes $171 million last year.
Some of those recipients borrowed for their kids’ education… but most of the debt is for the recipients’ own education. All told, about 7 million Americans over 50 still owe student debt… and about a third of those boomer borrowers are in default.
Remember, student debt isn’t dischargeable in bankruptcy… so the garnishments will surely grow from here.
As we suspected when the story first came to light… it’s really hard to pawn 86 pounds of gold flakes.
Back on Sept. 29, a guy in New York lifted a bucket of gold flakes off the back of an armored truck that — oops — had been left unattended. The gold is valued at around $1.6 million. Police released surveillance video at the end of November — when we suggested it’s a lot harder to unload gold flakes as opposed to coins or jewelry.
(Maybe gold “shavings” would be a more accurate term; the flakes are leftovers from jewelers doing their handiwork with gold.)
Now comes word that the NYPD has identified a suspect named Julio Nivelo… who’s believed to have fled to Orlando, and now is hanging out in Los Angeles — the gold still in his possession.
This is great: The NYPD should do a “Where’s Waldo” kind of thing tracking its movements for as long as Nivelo is on the lam. Wanna take bets the next sighting will be in Vegas?
“About the engineer who learned more in the first 30 days on the job than in five years of university,” a reader writes: “He seems to forget that he probably wouldn’t learn much advanced calculus, differential equations, materials sciences, chemistry, physics and so forth on the job.
“Without the foundation knowledge acquired in university, the engineer would not have been able to function in his engineering job. Some of the ‘worthless’ courses he took, like English, history, etc., often have the indirect value of broadening his thinking. These ‘worthless’ courses help with being able to write an intelligible report or showing more creativity in design. Would you want a surgeon who learned on the job?
“For the sciences, university is usually the most efficient and effective way to acquire the foundation needed for the chosen profession. Once you have the basic foundation of knowledge, then nothing can replace experience as a ‘teacher.’
“Now, for other endeavors like the study of the nature of man, navel lint knitting, basket weaving and a whole host of other ‘soft’ subjects, on-the-job training (OJT) is definitely the way to go. Or stop…”
“I have not yet seen this question addressed in any investment or economic discussions,” a reader tees up an interesting proposition:
“If President-elect Trump is successful in getting Congress to implement a low tax rate for corporations to repatriate their offshore profits, what potential unintended consequences might this unleash in the world economy?
“Obviously, these funds are not parked overseas in cash. They must be invested in something there that will be adversely affected if corporations start to dump them in favor of bringing them back to the USA.”
Writes another in the same vein: “If we reduce tax on foreign profits held offshore in order to bring that money back into the into the U.S., doesn’t the withdrawal of that large amount of money from banks in Europe, which are already very weak, drastically worsen the banking situation over there?
“Am I missing something? I never hear any consideration of this point when repatriation is discussed.”
The 5: Great questions. We’ll put this to our panel of experts and follow up before the end of the week…
“This could not be further from the truth,” a reader writes after our glib description of a value-added tax as “a tax tacked onto every stage of production.”
We hate getting called out for oversimplifying, but the reader raises a good point, so we’ll give him the floor: “The only one that pays a VAT is the end consumer of a product or service. All of those that are paying the tax ‘at every stage of production’ get to claim all the tax back. If the end product or service is exported, then there is no tax charged.
“I’ll give you an example. I am in Canada running a business that buys and sells industrial parts in the USA, and these parts are delivered directly to our customers from our vendors. The parts never enter Canada. All of my operational expenses in Canada, from pens to telephones to internet to desks, and services like accountants, lawyers, insurance and cleaners, are subject to a VAT (5% on the federal level and 9.5% on the provincial level).
“At the end of the month, I declare all taxes that I have charged and collected on my sales and services provided (none, because none of my sales are in Canada), and from this I deduct all the taxes I have paid. Net result for me is that the government sends me back thousands of dollars, as my tax credits, obviously, exceed my tax collections.
“Obviously, I am a fairly unique case, because the end result for most companies is that they net have to remit something (assuming their sales are greater than their expenses).
“So think of it this way: The Canadian government does not tax me for consuming products and services required to run my business.
“Now, we could spend a night or two of drinking and discussing the merits (or lack thereof) of any taxes being collected by any government. But under the assumption that the government must collect some form of sales tax, a value-added tax is infinitely better than what you currently have going on in most states, which really is a punitive tax on providers of goods and services.
“As a result of our VAT tax structure, out of the box and all other things being equal, this Canadian is more competitive than anyone in the USA doing the same thing as I am, simply because my government doesn’t penalize me for doing business.”
The 5: Thanks for describing the ins and outs. Our worry, of course, is that a backdoor VAT in the United States will be imposed on top of all the other tax burdens we bear — including the existing “punitive tax on providers of goods and services.”
And so it goes…
Best regards,
Dave Gonigam
The 5 Min. Forecast
P.S. In the past year, Congress has banned three incredible Social Security loopholes. Here in The 5, we’ve documented the demise of “file and suspend,” among other techniques.
But buried deep in the official Social Security website… there’s an investment “loophole” that NOBODY can ever take away.
It’s available to all American seniors and can add hundreds… even thousands of dollars in extra monthly income.
Click here to discover how to take advantage.
