Sunday, July 24, 2016

How to Profit From These Massive, Brexit Induced Trends

By Justin Spittler

This has the makings of a classic speculative opportunity—one where politically caused distortions are liquidated and prices readjust. But a word of caution. It’s going to take place within the context of the Greater Depression. And, as Richard Russell, who lived through the last depression, observed: In a depression, nobody wins. The winner is just the person who loses the least.

The EU will disintegrate. It never made sense from the beginning to try to get Swedes to live by the same rules as Sicilians or Germans by the same rules as Portuguese. Not to mention that the rules are entirely arbitrary. Worse, almost all the rules are economic in nature, with legislated winners and losers. Deals like that always lead to resentment, among both the winners and the losers.

In addition to this, the EU is very problematical when it comes to immigrants. There will be more migrants trying to settle in Europe. Why? Because the Muslim world, the swath of countries extending all across northern Africa, through the Middle East, Central Asia, and the Far East, is likely to become increasingly unstable. The EU, as a very politically correct organization is loathe to turn them away. However, once they’re within Schengen, the migrants can travel anywhere. Perhaps where welfare benefits are best and where other migrants are gathering. Remember, when times get tough, both politicians and the capite censi look for someone to blame.

How to profit from this? Most people don’t think the EU will collapse just because Britain (which has always been closer to the U.S. than the Continent anyway) has left. They’re wrong. For one thing, although Brussels won’t become a ghost town, it’s going to lose scores of thousands of highly paid Eurocrats and their minions. I recall that property there was some of the cheapest in Europe in the early ’80s, it’s going to return to that status. We’ll look for a REIT to sell short, specializing in the Brussels market.

It will accelerate the disintegration of nation-states everywhere. 

There are about 200 nation-states in the world. The international “elite,” the “intelligentsia,” the members of the Deep State everywhere, and organizations like the EU in Brussels, would like to see a much smaller number of more powerful states. Orwell anticipated just three mega-states in his dystopia. But the actual trend is in the opposite direction.

It’s not just the UK seceding from the EU, but Scotland from the UK. The Basques and Catalans may eventually secede from Spain. Belgium, a totally artificial country, may eventually break up into Flemish-speaking Flanders and French speaking Wallonia. France has half a dozen secession movements. Italy was only unified into its present form from scores of principalities, duchies, and baronies in 1871 by Garibaldi. It was the same with Germany until Bismarck in 1871. 

The break-up of the USSR in 1990 into 13 smaller states was a good start, but Russia itself is a small empire with dozens of distinct ethnic and linguistic groups. You will rarely hear about this in the mass media, but there are dozens of secession movements throughout Europe. That’s one more reason why (in addition to the interest rate risk and the inflation risk, which are both substantial) you should stay away from long-term government bonds.

The euro will cease to exist.....
The Esperanto currency was doomed from the beginning. It was not just an “IOU nothing,” like the U.S. dollar, but a “Who owes you nothing” since it’s not even backed by a specific government’s taxing power. How to profit? I’ve put on long-term futures contracts, long the British pound vs. short the euro. My rationale is simple. Britain will benefit from exiting the EU, attracting capital and strengthening the pound—which is down 11% against the euro since Brexit. The euro, meanwhile, will approach its intrinsic value at an accelerating rate.

A truly major banking crisis.....
Much worse than that of 2007–2009. Governments, who are all bankrupt, borrow money from commercial banks. Commercial banks have lent it to them because they believe it’s a risk free loan. Governments encourage them to lend recklessly, hoping that will jump-start sluggish economies. Central banks, which are the arms of their governments, have taken interest rates to zero and below for that reason and to make it easier for governments to service their debt. This policy has encouraged businesses to take on debt.

It’s an idiotic and reckless experiment that will end—likely in this cycle—with bankrupt central banks and governments bailing out bankrupt commercial banks and businesses. Just the way they did in 2007–2009. Except this time, the situation is much more serious. How to profit? Don’t own European companies, stocks or bonds, and banks in particular. In fact, even though they’re already down considerably, they’re going lower and are excellent candidates for short sales, or the sale of naked calls.

A panic into gold..... 
You’ve heard this story many times before here. But it’s truer than ever as we approach a genuine crisis. There are no stable paper currencies anywhere in the world. The dollar has been strong only because it’s liquid. Liquidity is good, but here, we’re talking about liquid like nitroglycerin. Hedge funds will start buying gold in size. As will central banks, who don’t want to hold each other’s paper. As will individual investors. Right now, few people even think about gold, much less understand it. How to profit? Buy gold. I expect we’ll see it well over $5,000 this cycle. Silver should do even better in relative terms. And gold stocks have explosive upside.

An exodus of capital and people from Europe.....
to parts of Latin America, plus to the U.S., Canada, Australia, and New Zealand. This is, obviously, bad for Europe and good for the recipient countries. In recent years, I might not have included Latin America, but things have changed. Argentina and Colombia are liberalizing economically. The continent isn’t involved in any entangling alliances, isn’t on the migration highway, and has low costs. Why a wealthy European would stay in that stagnant and unstable continent when he could live better, and mostly tax free, at a fraction of the cost in Argentina is a mystery to me.

Chaos in Africa..... 
Almost every country in Africa is an ex-European colony. Over the last 50 years, Europe, with the U.S. and now China, have shipped over a trillion dollars to the continent. Most of it has been recycled back to Europe by the African elites that stole it, and the rest has mostly been wasted. 

That flow is going to stop for a number of reasons, but among them is that it makes no sense in an “every-man for himself” world. At the same time, essentially all of the world’s population growth over the next couple of decades is going to come from sub Saharan Africa. It’s a nasty economic environment that’s a formula for conflict. 

Millions of Africans will want to emigrate, especially to the homelands of their ex-colonial masters in Europe. They won’t, however, be welcome. How might one take advantage of this? The higher population is going to put upward pressure on commodities, and the chaos is going to make their production much riskier in Africa.

In conclusion..... 
Brexit itself is likely to be good for Britain. And it augurs some big changes in the world at large. Don’t forget that it will all be in the context of both the Greater Depression and the accelerating and world-changing technological revolution I described last month. Our objective here remains to not only keep you advised of what’s happening, but help you profit from opportunities while avoiding major dangers.

Editor's note: The biggest threat to your wealth right now isn’t an economic recession, a stock market crash, or even a global banking crisis. It’s something much bigger and far more dangerous. This short video explains more…

It explains how violent currency moves—like we’re seeing today—have preceded some of the worst financial disasters in history. By the end of the video, you’ll know why you can’t afford to ignore the warnings we’re seeing right now. You’ll learn how to protect yourself and profit from the coming crisis. Click here to watch this free video.



Get our latest FREE eBook "The Rebel's Guide to Trading Options"....Just Click Here!

Stock & ETF Trading Signals

Friday, July 15, 2016

Why This Stock Rally Won’t Last…And What You Need to Do With Your Money Today

By Justin Spittler

Silver is sending us an important warning. Yesterday, the price of silver closed at $20.30, its highest price since July 2014. Silver is now up 45% this year. That’s nearly eight times better than the S&P 500’s 5.9% return. And it’s almost double gold’s 25% gain this year. If you’ve been reading the Dispatch, you know silver is rallying for the same reason gold’s taken off. Investors are worried about the economy and financial system.

Like gold, silver is real money. It’s also a safe haven asset that investors buy when they’re nervous. Unlike gold, silver is an industrial metal. It goes into everything from batteries to solar panels. Because of this, it's more sensitive to economic slowdowns. That’s why many folks think of silver as gold’s more volatile cousin.
Lately, silver has been acting more like a precious metal than an industrial metal. It’s soaring because the global economy is in serious trouble. Today, we’ll explain why silver is likely headed much higher. And we’ll show you the best way to profit from rising silver prices.

Silver has been in a bear market for the better part of the last five years..…
From April 2011 to December 2015, the price of silver plummeted 72%. This 56 month downturn was the longest silver bear market on record. As brutal as this bear market was, we knew it wouldn’t go on forever. That’s because silver, like other commodities, is cyclical. It experiences booms and busts. As you just saw, the losses in commodity bear markets can be huge. But the gains in commodity bull markets can be even bigger. During its 2008–2011 bull market, silver soared an incredible 441%. That’s why we watch commodities so closely. Every few years, they give you the chance to make huge gains in a short period of time.

On December 18, Casey Research founder Doug Casey said silver wouldn’t get much cheaper..…
Doug told Kitco, one of the world’s biggest precious metals retailers, that gold and silver were near a bottom:
My opinion is if it's not the bottom, it's close enough to the bottom. So, I have to be an aggressive buyer of both gold and silver at this point.
Doug’s call was dead on. Silver bottomed at $13.70 an ounce on December 17. That same day, gold bottomed at $1,051 an ounce. In other words, Doug was one day off from perfectly calling the bottom in gold and silver.

The price of silver has soared 49% since December..…
But it could head much higher in the coming years. Remember, silver soared 441% during its last bull market.
Silver is “cheap” too. It’s trading 58% below its 2011 high, even after this year’s monster rally. It’s also never been more important to own “real money.” That’s because it looks like the world is on the cusp of a major financial crisis. Doug explains:
Right now, we are exiting the eye of the giant financial hurricane that we entered in 2007, and we’re going into its trailing edge. It’s going to be much more severe, different, and longer lasting than what we saw in 2008 and 2009.
As longtime readers know, the last financial crisis caused the S&P 500 to plunge 57%. It sparked America’s worst economic downturn since the Great Depression. And it allowed the government to launch a series of radical “stimulus” measures, none which actually helped the economy.

BlackRock (BLK) sees tough times ahead too..…
BlackRock is the world’s biggest asset manager. It oversees $4.6 trillion. That’s more than the annual economic output of Japan, the world’s third biggest economy. BlackRock manages more money than Goldman Sachs (GS), JPMorgan Chase (JPM), and Bank of America (BAC). This makes it one of the world’s most important financial institutions…and one that probably understands the global economy better than almost any other company on the planet. Like us, BlackRock’s chief investment strategist, Richard Turnill, thinks the next few years could be very difficult. CNBC reported on Monday:
"This feels more and more like we're in an environment of low returns and high volatility for some time," Richard Turnill said on "Squawk Box.” "The period of political [Brexit] uncertainty ahead of us isn't going to last for weeks or quarters, but potentially for years," he said.
According to BlackRock, the “Brexit” made the global economy more unstable..…
If you’ve been reading the Dispatch, you know Great Britain voted to leave the European Union (EU) on June 23. The Brexit, as folks are calling it, shook financial markets from Tokyo to New York. It erased more than $3 trillion from the global stock market in two days. 

Then, stocks started to rally. By this Tuesday, global stocks fully “recovered” from the Brexit bloodbath. The S&P 500 and Dow Jones Industrial Average even hit new all time highs this week.

Many investors took this as proof that the worst was over. We, on the other hand, reminded readers to not lose sight of the big picture. We explained that stocks were rallying because they’re the least bad place to put your money right now. We encouraged you to not “get sucked back into the stock market.”

Larry Fink doesn’t think U.S. stocks should be rallying either..…
Fink is the chairman and CEO of BlackRock. That makes him one of the most powerful people in the world.
Like us, Fink isn’t “buying” this stock rally. CNBC reported yesterday:
"I don't think we have enough evidence to justify these levels in the equity market at this moment," Fink said Thursday on CNBC's "Squawk Box."
According to Fink, stocks are rallying for the wrong reasons:
He said the recent rally has been supported by institutional investors covering shorts, or bets that stocks would fall, and not individual investors feeling bullish.
"Since Brexit, we've seen ETF flows almost at record levels … $18 billion of inflows," Fink said. "However, in the mutual fund area, we're continuing to see outflows."
What that tells you is retail investors are pulling out, he said. "You're seeing institutions who were short going into Brexit … all now rushing in to recalibrate their portfolios."
In other words, this rally could fizzle out any day.

We recommend you invest with great caution right now..…
If you still own stocks, consider selling your weakest positions. Get rid of your most expensive stocks. Only hang on to companies that you know can make money in a long economic downturn. We also encourage you to own gold. As we said earlier, it’s real money. It’s preserved wealth for centuries because it possesses a unique set of attributes: It’s durable, easy to transport, and easily divisible. You can take a gold coin anywhere in the world and folks will instantly recognize its value.

We recommend most folks to hold 10% to 15% of their wealth in gold. Once you own enough gold, consider putting money into silver. It could deliver even bigger gains than gold in the years to come. To learn why, watch this short video presentation. It explains why the biggest threat to your wealth right now isn’t an economic recession, a stock market crash, or even a global banking crisis.

It’s something much bigger and far more dangerous. The good news is that you can protect yourself from this coming crisis. Watch this free video to learn how.

REMINDER: Our friends at Bonner & Partners are holding a special training series..…  
If you’ve been reading the Dispatch, you know part of our job is to share exciting opportunities with you when we hear about them. Today, we invite you to take part in a special training series hosted by Jeff Brown, editor of Exponential Tech Investor.

If you haven’t heard of Jeff, he’s an aerospace engineer, tech insider, and angel investor. His advisory, Exponential Tech Investor, focuses on young technology companies with big upside. For example, Jeff recommended an IT security company in October that’s already up 72%. Another one of Jeff’s picks has jumped 38% since February. And one is up 178% in less than a month.

In Jeff's training series, he reveals his secret to making money in technology stocks. He also talks about a HUGE opportunity taking shape in the technology space.  Click here to sign up for Jeff’s training series.

It’s 100% free and will take up less than 15 minutes of your time. Click here to register.

Chart of the Day

Silver stocks just hit a new three year high. Today’s chart shows the performance of iShares MSCI Global Silver Miners ETF (SLVP), which tracks large silver miners. As regular readers know, silver stocks are leveraged to the price of silver. It doesn’t take a big jump by silver for them to skyrocket. This year, silver’s 45% jump caused SLVP to soar 171%. It’s now trading at its highest level since April 2013.

If you think gold and silver are headed much higher like we do, you could put some of your money into gold and silver stocks. According to Doug Casey, these stocks could enter a “super bubble” in the coming years. Keep in mind, these are some of the most volatile stocks on the planet. Many gold and silver stocks can swing 5% or more in a day. If you can stomach that kind of volatility, you could see huge returns in gold and silver stocks over the next few years.



Get our latest FREE eBook "Understanding Options"....Just Click Here!


Stock & ETF Trading Signals

Friday, July 8, 2016

Why the “Bond King” Is Having Flashbacks of the 2008 Financial Crisis

By Justin Spittler

As you probably know, Great Britain stunned the world by voting to leave the European Union on June 23. The “Brexit,” as folks are calling it, triggered a selloff that wiped $3 trillion from global stocks in two days. The announcement also shook the currency market. The pound sterling plunged 8% the day after the news broke. It was one of the British currency’s worst days ever. The U.S. dollar, euro, and Japanese yen experienced huge moves too.

It’s now been two weeks since the historic event and panic is still in the air. Investors around the world have piled into government bonds, which are widely considered safe assets. Yesterday, the yield on the 10 year U.S. Treasury hit a fresh all time low. Yields on British, Irish, German, and Japanese 10 year bonds also hit record lows. A bond’s yield falls when its price rises. Investors have loaded up on gold too. The price of gold has shot up 8% since June 23.
 
This shouldn’t surprise you if you’ve been reading the Dispatch. Regular readers know gold is the ultimate safe haven asset. It’s preserved wealth through every sort of financial crisis because it’s unlike any other asset. It’s durable, easily divisible, and easy to carry. Its value doesn’t depend on “confidence” in any government. In other words, it’s real money. After its Brexit fueled rally, gold is up 29% on the year. It’s at its highest price since March 2014. Yet, this rally is showing no signs of slowing down.

The SPDR Gold Shares ETF (GLD) just had one of its best days ever..…
On Tuesday, investors put $1.3 billion into the fund, which tracks the price of gold. According to Investor's Business Daily, it was the fund’s third best day ever. It was also the fund’s best day since stocks crashed on August 8, 2011. Investors have now plowed $15.26 billion into GLD this year. That’s the most of any of the 1,931 ETFs tracked by global analytics and research firm XTF.

In London, the panic has gotten so bad that several fund managers stopped their funds from trading..…
The Wall Street Journal reported yesterday:
Henderson Global Investors, Columbia Threadneedle and Canada Life are the latest fund managers to stop investors pulling their money out against a backdrop of political and economic uncertainty following Britain’s vote to leave the European Union. The fresh moves by fund companies to suspend redemptions Wednesday came after Standard Life Investments, Aviva Investors and M&G Investments suspended trading on U.K. property funds earlier this week. This means that half of the 10 largest U.K. property fund managers have suspended trading temporarily.
In other words, these managers have trapped their investors’ money to keep their funds from collapsing.

"Bond King" Bill Gross says something very similar happened just before the 2008 financial crisis..…
Gross is one of the world’s most well-known investors. He founded Pacific Investment Management Company (PIMCO) in 1971. Under his watch, PIMCO grew into the world’s biggest bond fund. Today, he runs his own bond fund at Janus Capital. Like us, Gross is worried about what’s happening in London right now. Bloomberg Business reported yesterday:
“It’s reminiscent of Bear Stearns’ subprime funds before the Lehman debacle,” Bill Gross, a fund manager at Janus Capital Group, said on Bloomberg TV. “The system doesn’t allow liquidity to flow into the proper places. If these property funds are just one indication, perhaps there will be others to follow. I think it’s something to worry about.”
The collapse of Lehman Brothers in 2008 helped set the global financial crisis in motion. The S&P 500 went on to plunge 57% in two years. And the U.S. economy entered its worst downturn since the Great Depression.

Government officials are scrambling to contain the crisis..…
Last week, the Bank of England (BoE) pumped £3.1 billion into Britain’s banking system. It pledged to inject as much as £250 billion to stabilize its financial system. And on Tuesday this week, the BoE announced more “stimulus” measures. It eased special capital requirements for Britain’s banks. Specifically, the BoE lowered how much money banks need to hold as a “buffer.” The move increases the lending capacity of U.K. banks by as much as £150 billion. Economists at the BoE believe more borrowing and spending will stimulate the economy. As we’ve shown you many times, this won’t work. Casey Research founder Doug Casey explains:
It’s part of the Keynesian view, in which spending and consumption drive the economy. This isn’t just wrong, it’s the exact opposite of what’s true. It’s production and saving that drive an economy. You have to save to build capital, and capital is necessary for…everything. What these people are doing is destructive of civilization itself.
Still, this won’t be the last stimulus measure that the BoE rolls out..…
Last Tuesday, we said the BoE would likely cut interest rates. Two days later, Mark Carney, who heads the BoE, said the central bank needs to cut rates soon. The Wall Street Journal reported:
Mr. Carney said it was his personal view that the central bank would need to cut its key interest rate, currently 0.5%, “over the summer,” adding that an initial assessment of the economic damage caused by the vote to leave the EU would be made at the Monetary Policy Committee’s July meeting, and a “full assessment,” alongside new forecasts for growth and inflation, would take place in August. That suggests he favors an August move, while leaving the door open to an earlier decision.
According to The Telegraph, the BoE could cut rates much sooner than August. That’s because the financial markets have “priced in” a 78% chance that the BoE will cut rates next week. But there’s a problem. The BoE’s key rate is currently 0.50%. In other words, it doesn’t have much room to cut rates. To stimulate the economy, the BoE will likely have to launch quantitative easing (QE), which is just another term for “money printing.”

The BoE won’t fix Britain’s economy by cutting rates or printing money..…
According to MarketWatch, central banks have cut rates more than 650 times since Lehman Brothers collapsed in September 2008. They have also “printed” more than $12 trillion over the same period. And yet, the global economy is barely growing. The U.S., Europe, Japan, and China—the world’s four biggest economies—are all growing at their slowest rates in decades. There’s no reason to think these easy money policies will work this time. It’s much more likely that central bankers will destroy the currencies they’re supposed to defend. Doug Casey explains:
In a desperate attempt to stave off a day of financial reckoning during the 2008 financial crisis, global central banks began printing trillions of new currency units. The printing continues to this day. And it’s not just the Federal Reserve that’s doing it: it’s just the leader of the pack. The U.S., Japan, Europe, China…all major central banks are participating in the biggest increase in global monetary units in history. These reckless policies have produced not just billions, but trillions in malinvestment that will inevitably be liquidated. This will lead us to an economic disaster that will in many ways dwarf the Great Depression of 1929–1946. Paper currencies will fall apart, as they have many times throughout history.
If you do one thing to protect yourself from reckless governments, own gold. As we mentioned above, gold is real money—it’s the only currency that doesn’t depend on a government or central bank doing the right thing. For other ways to safeguard your wealth, watch this free presentation. We encourage you watch this video even if you don’t have a dime in the stock market. That’s because the coming crisis will hit you no matter where you keep your money. The good news is that you can protect your money if you make the right moves soon. You could even turn this threat into an opportunity to make a lot of money. Watch this short video to learn how.

REMINDER: Doug Casey will be in Las Vegas next week..…
Doug will be at FreedomFest 2016: Freedom Rising, an annual festival where free minds meet to talk, strategize, socialize, and celebrate liberty. Doug will be giving several speeches, and he’ll also receive an award for his new novel, Speculator. He’ll join a star-studded lineup of speakers that includes Libertarian presidential candidate Gary Johnson, Senator Rand Paul, and Agora founder Bill Bonner. FreedomFest takes place July 13–16 at Planet Hollywood in Las Vegas. To learn more, visit www.freedomfest.com. Enter the code SALEM to get $100 off the ticket price.

Chart of the Day

Silver just set a new two year high. As you can see from today's chart, silver has soared 45% this year. On Monday, it topped $20 for the first time since August 2014. Longtime readers know that silver is gold’s more volatile cousin. Like gold, silver is real money. But unlike gold, it’s an industrial metal. It goes into everything from solar panels to batteries. Because of this, it's more volatile, and more sensitive to an economic slowdown than gold is.

So, if you’re nervous about the economy or financial system, the first thing you should do is own gold. We encourage most folks to hold 10% to 15% of their wealth in gold. Once you own enough gold, consider adding silver to your portfolio. It could see even bigger gains than gold in the years to come.




Get our latest FREE eBook "Understanding Options"....Just Click Here!

Stock & ETF Trading Signals

Wednesday, July 6, 2016

This 5,000 Year Low Is Ruining Your Retirement

By Justin Spittler

The global banking system, and your financial future, are at serious risk right now. To understand why, just look at what's going on with the government's latest radical policy. Regular Dispatch readers know we're talking about rock bottom interest rates. According to MarketWatch, global interest rates are at the lowest level in 5,000 years. Credit is cheaper right now than at any point since the First Dynasty of ancient Egypt, around the 32nd century BC. Today, we'll explain what this means and how to protect yourself going forward..…

Interest rates didn’t get this low “naturally.” They’re at record lows because central bankers put them there..…
In 2008, the Federal Reserve dropped its key rate to near zero to fight the financial crisis. It’s kept rates there for eight years to encourage borrowing and spending. Other major central banks did the same thing. According to MarketWatch, there have been more than 650 rate cuts since September 2008. Rates in Canada and England are also near zero. In Europe and Japan, rates are below zero.

As we’ve explained before, negative interest rates basically tax your bank account. Instead of earning interest on the money in your bank account, you pay the bank. Not long ago, negative rates were unheard of. Today, more than $12 trillion worth of government bonds pay negative rates, up from $6 trillion in February. 

They’ve even seeped into the corporate debt market. According to Bloomberg Business, more than $300 billion worth of corporate bonds now “tax” bondholders. Central bankers told us low and negative rates would “stimulate” the economy. But, as you’re about to see, they’ve done far more harm than good.

Central bankers made it much harder to retire..…
That’s because rock bottom rates don’t just make it cheap to borrow money. They make it tough to earn a decent return. From 1962 to 2007, a U.S. 10 year Treasury paid an average annual interest rate of 7.0%. Today, a U.S. 10 year Treasury yields just 1.5%, an all time low. It’s the same story around the world. Last week, 10 year bonds in Ireland, England, Germany, France, and Japan all fell to record lows. In Japan, you actually have to pay the government 0.23% every year you own one of its 10 year bonds.

This is a serious problem for hundreds of millions of people. For decades, retirees could earn a safe, decent return owning these bonds. Some folks even lived off the interest they earned from these bonds. These days, you have to own riskier assets like stocks to have any shot at a decent return. Central bankers have effectively forced retirees to gamble with their life savings. Rock bottom rates are a serious threat to major financial institutions too.

According to U.S. banking giant Citigroup (C), low and negative rates are “poison” to the global financial system..…
They could make pension funds, insurance companies, and banks “no longer viable in the long term.” Business Insider reported last week:
As Citi notes: "Viability in its strong sense means profitability (a rate of return on equity at least equal to the cost of capital). In its weak sense, viability means solvency." Basically, Citi is warning that the negative rates may stop institutions being able to make money, which in turn would hit their ability to pay out on things like pensions and insurance policies.
This is a major risk even if you don’t have a pension or life insurance policy. That’s because pension and insurance companies oversee trillions of dollars. They’re pillars of the global financial system…and negative rates are destroying them.

Rock bottom rates could also put some of the world’s biggest banks out of business..…
You see, banks earn most of their money making loans. When rates are high, they make more on each loan. When rates are at record lows, like they are today, banks often lose money. Business Insider explains how today’s record-low rates are starving banks of income:
Citi points out that: "Banks in large part live off the differentials between lending and borrowing rates or between investment returns and funding rates." Persistently low interest rates could hit these differentials, lowering profitability and seriously harming banks in the long run.
Profits at America’s four biggest banks fell by an average of 13% during the first quarter…
This group includes Citigroup, Wells Fargo (WFC), Bank of America (BAC), and JPMorgan Chase & Co. (JPM). European banks are doing even worse. Swiss bank UBS’s (UBS) profits plunged 64% during the first quarter. Profits at Deutsche Bank (DB), Germany’s biggest lender, fell 58%. Spanish banking giant BBVA’s (BBVA) earnings fell 54%. The CEO of Deutsche Bank warned last month:
In the banking world, we are currently struggling with negative interest rates.
We will struggle more as the effect of those negative interest rates plays out into our deposit books.
Dispatch readers know some of Europe’s most important financial institutions are looking for ways to get around negative rates..…
Commerzbank, one of Germany’s largest banks, said last month that it was thinking of pulling money out of Europe’s banking system to avoid paying negative rates. Other banks have started making riskier loans and buying riskier assets to offset rock-bottom rates. The Financial Times reported in March:
Gonzalo Gort├ízar, chief executive at Spain’s Caixabank, expressed concerns about a build up of risk in the banking system as a whole. “In a world of low or negative interest rates, that is a possible consequence; you could see banks taking more risk,” he said.
Longtime readers know excessive risk-taking by banks contributed to the 2008 financial crisis. As a result, the S&P 500 plunged 57% from 2007 to 2009. And the U.S. entered its worst economic downturn since the Great Depression.

Bank stocks are already trading like a financial crisis has begun..…
Swiss bank Credit Suisse (CS) has plummeted 63% over the past year. Deutsche Bank is down 60%. Royal Bank of Scotland (RBS) is down 59%. Mitsubishi UFJ Financial Group (MTU), Japan’s biggest bank, is down 39%. These are huge drops in short periods. Remember, these are some of the most important financial institutions on the planet.

We encourage you to take action now..…
Our first recommendation is to avoid bank stocks. Low and negative rates are eating these companies alive right now. And it could be years before governments abandon these failed policies. According to Fed Chair Janet Yellen, low interest rates are the “new normal.” We also encourage you to own physical gold. As we like to remind readers, gold is real money. It’s preserved wealth for centuries because it has a rare set of characteristics: It’s durable, easy to transport, and easily divisible. A gold coin is valuable anywhere in the world.

This year, gold has jumped 26%. It’s trading at its highest price in two years. But Casey Research founder Doug Casey says this rally is just getting started. According to Doug, gold could soar 500% or more in the coming years. If you’re nervous that central bankers will take this interest rate experiment too far, own gold. It’s the best way to protect yourself from desperate governments.

We also encourage you to watch this short presentation. It explains how these failed monetary policies could spark something much worse than a banking crisis. As you’ll see, this is a threat to you even if you don’t a have a single penny in the stock market. Click here to watch this free video.

Chart of the Day

Deutsche Bank is trading like a financial crisis has begun. Today’s chart shows the performance of the German banking giant. You can see its stock is down more than 50% over the past year. Last Thursday, it hit it a new record low. Like other European lenders, low rates are killing Deutsche Bank. Last year, the company lost $7.5 billion. It was its first annual loss since the 2008 financial crisis. And yet, its plunging stock suggests more bad results are on the way.

According to the International Monetary Fund (IMF), Deutsche Bank is the world’s riskiest financial institution. That’s a problem even if you don’t keep money with Deutsche Bank or own its shares. The Wall Street Journal reported last week:
The IMF also said the German banking system poses a higher degree of possible outward contagion compared with the risks it poses internally. “In particular, Germany, France, the U.K. and the U.S. have the highest degree of outward spillovers as measured by the average percentage of capital loss of other banking systems due to banking sector shock in the source country,” the IMF added.
In other words, problems at Deutsche Bank could spread to other banks around the world. It’s another reason why you should avoid bank stocks and own gold right now.




The article This 5,000-Year Low Is Ruining Your Retirement was originally published at caseyresearch.com.


Get our latest FREE eBook "Understanding Options"....Just Click Here!

Stock & ETF Trading Signals

ShareThis