KWN TOP STORIES Silver, Major Reversal And A World Headed Toward Disaster

Here is the good news for silver as well as a major reversal and a world headed toward disaster.

“While it is the duty of the citizen to support the state, it is not the duty of the state to support the citizen” – President Grover Cleveland

Silver
May (King World News) – Graddhy out of Sweden:  Silver is today trying to break back above upper yellow resistance line. As said two weeks ago, we most probably had a false breakout in the making.

Silver Attempting To Break Back Above
Resistance After False Breakdown/Shakeout

Major Reversal
Graddhy out of Sweden:  My very big picture, long standing ratio chart showing precious metals miners vs gold has broken away from the blue backtest. Next time at black line will be the 4th try. Expecting this ratio to make new highs in this bull market.

THE LONG DROUGHT WILL SOON BE OVER:
Mining Stocks To Radically Outperform Gold

We Are Heading Toward Disaster
Alasdair Macleod:  After two centuries of debasement the Roman denarius ended up with no silver content. The decline of the empire was accompanied by increasingly costly bureaucracy, stifling the economy. It was a template for today.

There are differences. But we share suffocating bureaucracy and the lack of specie in our currency systems. As Rome did from Nero onwards, we have lost the plot. A general deterioration in our sense of purpose is an additional factor.

Perhaps Diocletian was the Joe Biden of his day. He was infamous for his edict on maximum prices, which basically shut down the production of goods. Will Joe Biden introduce a similar edict? Don’t rule it out…

Intervention’s slippery slope
The point President Cleveland made back in the 1880s was that individuals and vested interests had no rights to preferential treatment by a government elected to represent everyone. For if preference is given, it is always at the expense of others.

Those days are long gone, and the last president to take this stance was Calvin Coolidge in the 1920s. He was followed by Herbert Hoover, who was very much an interventionist. As Coolidge reportedly said of his Vice-President, “That man has given me nothing but advice, and all of it bad”. Hoover was criticised for his disastrous intervention policies by Franklin Roosevelt, who succeeded in ousting him in the 1932 election, and then outdid him with even more intervention. The outflows of gold generated by accelerating government spending and the Fed’s monetary policies led in 1933 to the suspension of gold convertibility for American citizens and the devaluation of the dollar in 1934 from $20.67 to $35 per ounce of gold.

Interventionsism has increased ever since, not just in America but in all other advanced nations. The socialisation of earnings and profits and the regulation of our behaviour by governments dominates economic activity today. Despite the warnings of sound-money theorists, a process that commenced over a century ago has not yet led to economic collapse, though the dangers of escalating state liabilities are a growing threat to economic stability…

---

VERY BIG DEAL!
This exploration company just made one of the biggest
acquisitions of 2021 that stunned investors!
To learn more click here or on the image below

---

A point that is ignored by nearly everyone is that government spending is an expensive luxury for any economy, tying up capital resources in the most inefficient way. Furthermore, governments, through tax and the diversion of savings and monetary inflation, destroy personal wealth. Yet, it is clear both through observation and logic that a successful economy is one that instead maximises personal prosperity.

This is clearly illustrated by observing the difference between Venezuela and America. Venezuela overtly and covertly has transferred nearly all personal wealth to its socialist government in the name of equality for all. The costs of government increased exponentially relative to its sources of available finance, bringing forward the day when economic and civil order cease entirely. America, despite decades of growth in government spending, has not yet sequestered most of its citizens’ wealth, though the process has been accelerating in recent years.

However, the problem is likely to become more of a public issue in the coming months, triggered perhaps by an increase of US Government bond issues at a time of an economic downturn and a downturn in bond demand due to a reluctance by the Fed to raise government borrowing costs.

At the same time as President Biden’s administration faces increasing spending demands, the Fed is trying to normalise its balance sheet by ceasing QE, and then presumably running off its bond exposure. Add to the mix marginal reductions of financial securities exposure in foreign-owned portfolios, and we have the potential for a perfect storm in the reserve currency’s bond market.

We have already seen a sharp increase in bond yields since March 2020, with the benchmark 10-year US Treasury yield increasing from 0.5% to 3%. On an historic basis and given that the Fed’s inflation target of 2% is left in the dust, the time-value on this bond is still far too low, despite the increase in yields so far.

Official consumer price inflation already exceeds 8%, and there is unlikely to be any significant let-up in this rate. And readers should give more credence to independent estimates than clearly biased government ones. ShadowStats.com currently has consumer prices rising at well over 15%.

We should not be surprised if these dynamics soon result in a derating of US Government bonds, and of the US Government’s finances. The derating won’t come from rating agencies which rightly fear official sanctions, but from markets themselves. But then markets are always the final arbiters of value.

Instead of passively accepting the Fed’s monetary cool-aid, proper assessments of bond risk can be expected to increasingly dominate valuations. Assuming the Fed continues to suppress interest rates, market pressures will lead to bond yield curves steepening and overcoming attempts at yield curve control. The interest cost to the Treasury will increase for all its new debt, except for very short-term borrowing. After snoozing through the period of zero interest rates, we are bound to awaken with some suddenness to the consequences of monetary debasement, which we have been collectively ignoring for too long.

Therefore, when thinking about risk, the economics of inflation are likely to become central to our thoughts. And as bond yields adjust by rising, we will be increasingly aware of the debt trap faced by the US Government. A one per cent increase in interest costs it an extra $230bn. Will President Biden pay for this by cutting the overall budget at a time of economic downturn? Unlikely, on the evidence so far. And when we begin to think in terms of what the time-value on US Government debt should be, possibly two per cent above a rising, but heavily doctored, CPI, how will an increase of borrowing costs of perhaps three or four per cent or even more look on the government’s books?……….More Here

Click here for reuse options!
Copyright 2022 Hiram's 1555 Blog