As we approach the end of the third week of trading in April, in what has been a choppy environment in the gold and silver markets, a legend in the business that is connected in China at the highest levels just predicted a massive short squeeze in the gold market.

Price Of Gold To Surge More Than 70%!
By John Ing, Maison Placements
April 21 (King World News) – Since the 2008 recession, US households have lost nearly $13 trillion. Nine years after the financial crisis, the Trump reflation rally is up nearly 10 percent and since his election, U.S. household net worth has climbed an astonishing $93 trillion, on subsidized credit and hopes that Trump will bring back prosperity through growth. That ascent also reflects the overvaluation of real estate and the stock market leading to the highest consumer confidence since the peak of the dot.com bubble. And although, the Federal Reserve increased rates a quarter point, only the third time in 50 years, there are numerous credit distress stories from interest-sensitive car loans to shopping centers and of course retail spending…

While Candidate Trump’s promises to boost economic output through tax cuts, raising tariffs and infrastructure spending were successful enough to get him elected by the so-called forgotten American, President Trump’s failure to replace Obamacare has cast a cloud over his entire White House program. Now his tax reform plan faces even larger hurdles, sending a wave of risk aversion throughout global markets. The threats are both external and internal. The gap between campaign rhetoric and reliability is vast. The fault lines run deep. The judiciary also took a hit as the Republicans exercised the “nuclear option” to appoint Gorsuch to the Supreme Court, breaking 200 plus years of Senate tradition. Mr. Trump is hobbled by his rhetoric and his fractious party, many of who owe their seat to voters rather than Trump’s coattails, are exercising independence. That other branch of government, Congress found its voice having an important say in Mr. Trump’s vision and so everywhere, existing trends are being called into question. What will happen when the debt ceiling comes next, since he will need Democrats to avert a government shutdown by the end of April?

That debt ceiling was restored on March 16, 2017. Since 1960, Congress has raised the debt ceiling around 80 times and now Congress must raise it again. For now, the prospect of deficit spending, anathema to much of the Republican party is about to be tested when lifting the debt ceiling will raise the specter of gridlock on Capital Hill, ironically led by Trump’s own party in an ideological struggle over the vision of Trump and the legislative branch.

Mother of all Bubbles
Then in the aftermath, the Fed is considering the exit from a super-loose monetary stance and shrinking its crisis-era $4.5 trillion balance sheet laden with three rounds of quantitative easing and a debt load that is the mother of all bubbles. To avoid the inevitable pick-up in inflation, the Fed forced the banking system to boost their capital reserves as a means to increase capital ratios but also to sterilize those newly minted funds. Normalization will involve selling or allowing the trillions of Treasuries and mortgages to mature which could lead to higher rates. Noteworthy is that America could pay almost $1 trillion in interest payments on its whopping $20 trillion national debt, now at 100 percent of GDP but when unfunded entitlements are included, it is equal to 300 percent of GDP. Although, Mr. Obama doubled the national debt in only eight years, Trump’s ever higher America First spending and tax reform is a debt time bomb ready to explode.

Blame Game
While the Trump administration focuses on middle-class tax cuts, infrastructure spending and deregulation, few focus on the expansion of his massive budgetary deficit. The traditional media continues to harp about Trump the man, such that their role has become much more politicized. In fact, America’s institutions have similarly become politicized with a Fed government official admitting leaking information to the media or an Obama national security director coopting the Presidential race, blurring the roles between national interests and partisan politics – this is the swamp that requires draining.

Of concern is that abnormally low rates are at an end and as they become normalized, the trillions created so altered the capital markets, that they have become permanently mismatched, over leveraged and more vulnerable than in 2007-2008. Margin debt, for example, has climbed to a record in February and the price earnings ratio is higher than in 1999. Still complacency and blaseness exists and while the bond vigilantes of the past go missing, our euphoric markets will be caught off guard as both political and economic risks mount.….more here