- Why gold is on the cusp of something big
- Bold gold call: $1,500 before year-end
- Fed plans to reduce balance sheet: Jim Rickards weighs in
- Is Trump only weeks away from making Yellen a lame duck?
- The intriguing timing of Steve Bannon’s “reassignment”
- The bankster who wants new bank regulations… the IRS hires four collection agencies… another “5” enters the fray… and more!
So far in April, gold has hugged the $1,250 level tightly. This morning the bid is $1,252.
Three times since late February, the gold price has approached the 200-day moving average — a closely watched technical indicator.
“Don’t look now, but gold is about to push through an important level!” says our income specialist Zach Scheidt.
“You see, precious metals (including gold, silver and some other niche metals) have been a very strong area for investors this year. In December, gold was trading well below $1,150 per ounce. Today, the yellow metal is about 10% higher — very close to the $1,250 mark.
“There are a number of reasons gold is trading higher this year:
- Inflation concerns
- Political uncertainty
- Expensive stocks.
“All three of these issues are creating demand for gold. That’s because investors know that gold is a great way to protect their wealth during turbulent times.
“But perhaps the biggest force driving gold higher is the U.S. dollar weakness,” Zach goes on.
Compared with other major global currencies, the dollar is getting pulled down…
“This decline,” Zach reminds us, “has a lot to do with investors’ perceptions of the Fed and what Janet Yellen will do with interest rates.
“Heading into the end of last year, the dollar was trading higher. Investors were expecting the Fed to start aggressively raising rates. And higher interest rates naturally led to a stronger U.S. dollar. (That’s because investors want to own dollars when they can get a higher interest rate on deposits.)
“But this year, investors are rethinking their perspectives on the Fed and interest rates.
“Recent comments from Yellen and other Fed officials have made it clear that the Fed will not be as aggressive as previously thought. Fed members are worried that higher rates could choke off economic growth — especially with today’s turbulent political climate.
“Given the amount of uncertainty in the market right now, I believe there is a possibility we could actually see the Fed reverse course and lower rates in the next year,” Zach declares.
“And the action in the U.S. dollar shows that I’m not alone in worrying about the Fed’s inability to aggressively hike rates.”
Result: It’ll take more “weak dollars” to buy an ounce of gold… at the same time that inflation expectations are on the rise.
“This year,” Zach concludes, “I expect gold to hit $1,500 per ounce — and possibly trade much higher!”
Now, you can certainly buy the metal and pocket a $250 profit over the next nine months. But we urge you to consider Zach’s “quick cash” gold technique. Some of his premium subscribers used this technique to pocket an instant $300 payment two days ago. And there are more payments where that came from.
We’re so keen on this technique that we’re willing to give away real gold coins. To date, we’ve given $1.2 million in gold coins to readers just like you.
But we hope you understand we can’t do that indefinitely. We urge you to check out this video while there’s still time… because we’re taking it offline at midnight Monday night.
To the markets… where stocks are trying to recover from yesterday’s late-day losses.
After we went to virtual press yesterday, the Fed released the minutes from its March meeting. At the risk of repeating ourselves, Fed “minutes” aren’t like the minutes from your local sewer board meeting. They’re not an objective record of who said what. They’re a carefully crafted document designed to “telegraph” the Fed’s intentions to the market. And this latest version of the document pointed to more monetary tightening this year — about which more shortly.
What had been a gain of 150 Dow points swung to a 40-point loss by the close. As we write this morning the index has recovered about 60 of those points, resting just above 20,700.
No market-moving numbers today, and earnings season doesn’t start till next week… so traders are keeping an eye on the meeting between President Trump and Chinese President Xi Jinping. Air Force One will touch down at Mar-a-Lago in Florida around the time this issue of The 5 hits your inbox.
By the way… doesn’t the timing of Steve Bannon’s removal from the National Security Council seem, well, interesting in this context?
Recall in early February there was a minor stir when one of Bannon’s old Breitbart podcasts came to light. “We’re going to war in the South China Sea in five–10 years,” he said in March 2016. “There’s no doubt about that.”
Suddenly out of nowhere he’s pulled off the National Security Council a day before Xi Jinping pays a visit. Does that count as an olive branch to Xi? Just wondering… Haven’t seen anyone else raise the question outside the Asian press.
Then again, it might just be plain ol’ Deep State maneuvering. Given all the shuffling since Inauguration Day, Trump’s national security team is now dominated by conventional thinkers whose priority is antagonizing Russia rather than China. Meet the new boss…
So… about that Fed tightening. For the first time, yesterday’s Fed “minutes” broached the possibility of reducing the Fed’s balance sheet.
As you might recall, the Fed’s balance sheet exploded during and after the Panic of 2008. The Fed was furiously buying Treasury paper and mortgage-backed securities, on the theory that doing so would restore “confidence” to markets. Today the bloated balance sheet is nearly five times the size it was nine years ago…
“Reducing the balance sheet size,” Jim Rickards tells us, “is just part and parcel of the Fed’s mission to ‘normalize’ rates and the balance sheet after Ben Bernanke’s mad scientist experiments with zero interest rate policy and QE from 2009–2013. Bernanke skipped an entire normalization cycle in 2010 and 2011, and now the Fed is playing catch-up for Bernanke’s blunder.
“The Fed has to raise rates before the next recession, because they failed to raise them in the early stages of the current expansion.”
But as Jim has cautioned for months, all this tightening might end up triggering the next recession, because the economy is weaker than either the Fed or the markets believe. (That comes back to what Zach Scheidt was saying earlier about the Fed possibly cutting rates in the next 12 months.)
And don’t forget this wild card: “Janet Yellen is on her way out the door next January,” Jim reminds us, “maybe sooner if Trump appoints a ‘chairman-in-waiting’ in the person of Kevin Warsh, which would make Yellen an instant lame duck.”
Warsh is the first name we’ve seen Jim suggest as possible successor. He’s a 40-something financier who was on the Fed’s Board of Governors from 2006–2011. That’s not to say other names won’t emerge.
Bottom line: “A Yellen-induced recession,” says Jim, “might make a nice going-away present from her to Donald Trump.
“Fasten your seat belts. This stock market rally could reverse quickly as Fed tightening starts to bite.”
OK, Gary Cohn, what’s the catch?
That’s our first-blush reaction to a Bloomberg story that says Gary Cohn — the former president of Goldman Sachs, now the head of Trump’s National Economic Council — “said he supports a policy that could radically reshape Wall Street’s biggest firms by separating their consumer-lending businesses from their investment banks.”
That sounds a lot like the reinstatement of Glass-Steagall — the Depression-era law that was repealed at the end of the go-go ’90s under President Bill Clinton, abetted by a Republican Congress.
By itself, there’s nothing wrong with the mixing of commercial and investment banking… but when commercial banks have a taxpayer backstop, it creates the proverbial “moral hazard.” The banks amped up their risk and we got the Panic of 2008.
To be sure, Bloomberg’s story relies on whispers from anonymous sources. But we’re mentally filing it away for future reference…
Remember how for years the IRS told us that if someone calls you on the phone demanding immediate payment of back taxes, it’s a scam? Well, now you can’t be so sure.
Starting this month, the IRS has contracted with four private collection agencies… and they will use the telephone.
Supposedly, these agencies will operate under strict standards that’ll make it easier to separate a real call from a scam one. If your account is transferred to them, you’ll get written notice from both the IRS and the contractor before anyone calls. Under the Fair Debt Collection Practices Act, they can’t call you before 8:00 a.m. or after 9:00 p.m. And you’ll never be instructed to pay the contractor, only the U.S. Treasury.
If you’re wondering whom to thank for this little gem, the GOP Congress tucked it into a transportation bill at the end of 2015, and President Obama signed it.
“Did you guys see this newer bit they’ve started on CNN?” says a note from one of our eagle-eyed copy editors.
“It’s on the air, too. The coffee mug even reminds me of Rude Awakening”:
“You give us roughly 5 minutes,” says the page, “and we’ll brief you on the 5 things you need to know for the day and buzzy stories your co-workers, friends and family will likely be talking about.”
“Buzzy.” Gag me with a pitchfork.
Over the years, we’ve gotten used to this. For the record, our Saturday countdown edition is called “5 Things You Need to Know.” Back in 2013 a reader alerted us to a new Wall Street Journal web feature called “The 10-Point.”
And if you’re a newer reader, you should know The 5 launched in April 2007; we’re coming up on our 10th anniversary toward the end of the month. That long predates Fox News’ chatfest The Five — which launched in 2011 as a stopgap when the network suddenly yanked Glenn Beck’s chalkboard from a daily time slot.
“My goodness,” writes one of our regulars — “is a too-big-to-fail bankster sending a veiled message to his shareholders? ‘Don’t worry about your equity in JPM. When the $#!+ hits the fan, we won’t do that silly bailout thing again. We’re going straight to a bail-in!’
“Hey, why wait for a good-for-nothing Congress to save your hide again if you can just confiscate what you need? When the next crisis arrives, a lot of people are going to get an expensive and painful lesson: ‘Bank depositor’ is code for ‘unsecured creditor.’
“Here comes the ice-nine scenario Jim Rickards has been warning us about. Got bullion?
“Thanks as always for the great work you and your team do.”
“Yellen and leaks,” says the subject line of a reader email inspired by yesterday’s episode of The 5.
“Danielle DiMartino Booth’s new book Fed Up mentions in Chapter 18, ‘Insider Trading,’ that ‘Yellen would come under fire for leaking information to Medley Global Advisors, which advertised to clients that it provided information on central bank developments “by cultivating relationships with senior policymakers around the globe” Yellen’s refusal to cooperate with a congressional inquiry led the House Committee on Financial Services to issue a subpoena to the Fed requiring it to provide information about its internal investigation of the leak. The Fed has so far declined to comply.’
“Maybe now Congress can revisit this issue. The book certainly portrays Yellen as completely out of touch during the Bernanke years (I haven’t finished the book yet, so I don’t know what she says about her as chairman).”
The 5: It sure won’t be the Fed looking into the matter; with Jeffrey Lacker’s resignation on Tuesday, the Fed’s inspector general has closed its investigation.
That’s even though we still don’t know who committed the original leak to the Medley analyst, which Lacker confirmed with his silence.
And so it goes…
The 5 Min. Forecast
P.S. In case you didn’t see it above…
One of our top researchers is so confident about gold miners… and his one-of-a-kind strategy to play them… that he’s willing to give away real gold to prove it.
But we all knew our outrageous gold giveaway would soon come to an end.
“Soon” turns out to be only four days from now.
To get your piece of this outrageous gold experiment right now, follow this link.