Veritas Research

Veritas Research
Contributor since: 2012
Indeed, the current state of affairs is unsustainable. But gold is not a good investment in terms of returns (only as a devaluation hedge) and there are other cheap assets. Global deflation may occur when Japan sinks, and nobody can print any harder and printing won't look appealing after Abenomics QE fails.
Natural *phenomena, the plural. Not "natural phenomenon," the singular. There are a few other typos in this transcription.
Interesting albeit uncontroversial review of Popper v. Hayek.
Soros makes the liberal mistake of assuming that government regulations do something other than protect the elite interests crafting said legislation. Regulation is only used to stabilize the system after a crisis, like the New Deal or 2008, and even then only as a temporary placation.
The 300% or so debt to GDP ratio in the US precludes higher short-term rates because interest on the national debt already consumes 10% of the federal budget. Not to mention the anemic global economy and desired portfolio "wealth effect."
Mutual funds offer little over ETFs. When retail investors start to realize that it will be game over for a lot of cushy office-sitters.
Good but I'd like to see more data and fewer quotes.
The complaint is completely justified -- and it is a complaint, strictly speaking.
Cutting entitlement spending with anemic domestic growth is not a good idea. Serious fiscal investment needs to occur to get people working. Civilian Conservation Corps and renewable energy infrastructure.
Military spending must be cut. The Heritage Foundation's numbers are flawed. The real military budget is closer to 47% of GDP. This is not productive spending.
True, but there is political risk. Companies get nationalized. The state is less predictable in the developing world.
These fools think wages adjust along with inflation. The reality is that they're repressed by state policies that systematically weaken labor. Real wages have been stagnant since the 1970s... when does Bernanke think they will adjust upward? He shouldn't hold his breath...
Yes, except the correlation of tangible to financial assets disappears (or goes negative) in a crisis. For instance, silver trades as a risk-on commodity now. But when nations start defaulting, sellers of unsafe sovereigns need a place to hide and the correlation shifts abruptly. That is why statistics without macroeconomic understanding only works in the short-term.
That figures constitutes the notional value of mostly interest rate swaps between banks. These banks are over-levered and keep doubling down to service the debts owed to one another. They have been taking big risks and are not entitled to a bailout at the expense of currency strength.
1) This article contributes little new information to the conversation.
2) The author glosses over alternative scenarios. It's not a matter of life or death, black and white, 1 or 0; instead of giving $12.3T to investment banks with no strings attached, the Fed could have paid off homeowners' debts (or written them down substantially) bailing out both the banks and the people (two birds with one stone). This was not done, because banks like Goldman had big short bets that wouldn't have worked out if the Fed actually solved the problem.
3) Comparing the U.S. to the GIIPS nations on the basis of one variable is facile and naive. Yes, austerity in Europe is worse than in the U.S. (for now); but they have a sovereign debt crisis; we had a housing bubble and liquidity crisis. GIIPS economies are hugely dependent upon government spending compared to the U.S., etc. There are many other factors to control for.
However, I agree with the author's sentiment that the IMF's policy was hugely detrimental. However, it is not an accident:
The IMF is the enforcement arm of Western banking interests; they forcibly restructure economies and collect on usurious loans. When these loans are not paid to their liking, the IMF appropriates public assets at a discount and sells them off. This is happening in Greece; the lottery, the water system, even the islands are being parceled out. This is extortion--plain and simple.
The IMF has not come after the U.S. because America dominates the fund's politics. International bankers have no national allegiance, though, and will soon cannibalize U.S. assets (as China has been doing for years).
Austerity that diminishes the economic power of the people must be resisted (or face a Greek-scenario). Austerity with regard to state taxation and spending, like wars, subsidies and graft, must be cut.
In any case, no amount of austerity could solve the debt crises without evaporating the money supply and ushering in economic depression. The only viable solution, to echo the likes of Steve Keen and David Graeber, is mass debt forgiveness. Restructuring and jubilees must take place or else the world will continue teetering on the brink of collapse. It is unlikely to happen without a fight, though, because banks stand to loose the most if they must write down their debts.
You may indeed. Financial Sense is an excellent resource and I'm happy to contribute.
And yet the S&P is just off all-time highs. The market is broken.
This is important information, please keep us updated.
Invest at your own risk, but I typically advise clients to be overweight precious metals, safe sovereigns, agricultural land, and select equities. If you are concerned about a full-blown crisis, tangible assets are the only prudent stores of value (no counter-party risk). My other articles outline the case for the aforementioned assets in greater detail. Take care.
We need decentralized credit systems desperately.
Check out Graeber's "Debt: The First 5,000 Years."
Interesting method, the only caveat is that value-at-risk models are based on expected variance and rarely work when most needed: during a crisis.
In a crunch, correlations move toward 1.
Market events do not actually follow a normal distribution, they're clustered (as Mandelbrot described).
Also, tail risks are not accounted for.
Any VaR model can be massaged to more accurately model these two factors, but we must not be overconfident in the model.
Here's a great elaboration of these points:
I'm quite amenable to Georgism. Classical liberalism doesn't restrict the state enough (by eliminating it). I'm not familiar with Biblical Economics, as I'm allergic to anything Abrahamic, especially as applies to the scientific method (though economics is hardly science).
As for your critique of my critique, care to be more specific? Are you sure you're not committing a "fallacy fallacy"? Take care.
Someone's been reading Daniel Kahneman.
REITs are risk-on, farmland rises with commodities as well as uncertainty (in this respect, it is like precious metals). Farmland has been on a tear for years, however, and there are few deals to be had. BRICs (private and public) are buying with both fists. Timberland is highly correlated with housing data. Take care.
Author: Historically, gold doesn't have an "inverse correlation" with stocks, it has a low positive correlation. Gold doesn't do the opposite of equities, but rather has little correlation whatsoever. Recently, the correlation has been stronger because equities and gold are trading on the same fate: central bank intervention.
A point that should be more emphasized is the increasing role of gold as money of last resort, as central banks buy and new rules are passed to edify gold as a legitimate capital base.
You make the assumption that: "Over the long term, as the economy begins heal and fear subsides, gold will likely prove to be a poor investment."
Why do you think the worst is behind us? From my estimation, we're in the eye of the storm. Here are some articles where I detailed the issues still facing the status quo:
"The Consequences of Financial Repression"
"The Monetary Elephant In The Room: Fed Debt Financing Charade"
Black Gold: Can you direct us to a source that backs up the claim that most of the debt is due in the next 5 years? I understood that the debt has been rolled into-long dated bonds, much of which are held by the Fed.
John Slater: "total nominal exposure by U.S. banks was $183 trillion, with approximately 93% held by just four banks at the end of Q1 2012. With some large financial institutions' Tier 1 capital ratios still below 10%" Same question, can you provide documentation for these claims?
I agree with both of you, but I think it's in the interest of the public record to be certain that these stats are not hearsay.
Also, unless China dumps Treasuries and forces the Fed to monetize more than 61% of the debt (trashing the dollar and imports), rates can't rise. It's politically impossible. Nobody can overpower the Fed, other than China, Japan and some Eurobanks (U.S. banks are patsies of the Fed). Only China has steadily rising incentive to do so, however.
Here's an article I wrote on this very subject:
Useful analysis. What do you think of a AUD-hedged government bond position?
If we see slowing growth, especially in China, we will also see RBA rate cuts (to spur growth).
If growth surprises to the upside, and the AUD continues at unsustainably high levels, we'll see rate cuts (to weaken the currency).
Both scenarios would be good for bond prices.
Here's an article I recently wrote on Australian bonds:
"Condemnation without investigation is the height of ignorance." —Albert Einstein
I'm not sure reason and science are distinguishable, nor that one is masculine and another feminine... The predictions you have made are quite far in the future, can you make any that can be verified sooner?
I don't agree with the idea that because we're in a "night cycle" that reason is gone. We can't even determine, in aggregate, how "reason" is doing on a global scale, anyway. How do we measure "reason"? Technology is making incredible advances every day. . .
Also, I'm not sure we can distinguish between theoretical and intuitive knowledge. It depends on how we define intuition, but I am skeptical of any mystical a priori knowledge.
“Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works."
John Stuart Mill
Agreed, expansion of the money supply (and leverage) lead to nominal gains that, when the rubber meets the road, are spurious at best.
Every so often, the shenanigans of high finance are reset in a big wipe-out. Central banks have been successful in preventing such an outcome since WWII, but their methods are of little use now. If you expect the worst, get into tangible assets.
This might interest you:
This might interest you:
Trading won't help if your counter party defaults.
Glad I can help.
"One of Spain's regional mayors robbed a number of supermarkets last week and distributed the stolen food to the poor. As a member of a regional parliament, he is immune from prosecution. Government stealing from those that have is of course nothing new, but apparently in Spain there's no attempt to hide it."
I'm more concerned about the government stealing from those that have-not. On balance, the wealthy and privileged benefit from government force, which enables rent-seeking, corporate welfare, regressive taxation and labor suppression.
I must applaud the mayor's action. Finally a public servant making a sacrifice for the "greater good." He committed the crime as an individual, despite his legal protection. He's like Robin Hood with legal protection (which is probably temporary, applying only as long as he's in office).
Stealing from a local grocery store with an owner-proprietor would be immoral because it would set him back substantially. Stealing from a supermarket chain is equivalent to stealing pennies from a myriad of shareholders. The food probably would have gone bad anyway.
If the alternative is starvation or malnourishment, human beings have a right to appropriate necessary resources if the current owner makes no concession. The right to life supersedes the right to property. Furthermore, this is not an action of the state but of a private vigilante that happens to be a mayor (which complicates things a bit).
While I tend to agree with these sentiments, I think your case would be much stronger if you supplied both a motive and evidence for the manipulation.
geo: Who gave the Bank of NY Mellon the green light to steal from segregated accounts? Is it documented anywhere?
It looks like metals are building a strong base in anticipation of central bank action and perhaps flight from treasuries.
Treasury prices will not decline unless China pulls out of the market. The Fed will step in and monetize even more than last year's 61% debt, but they can keep prices and yields frozen for a long time. The concern is inflation and REAL yields.
Just a style suggestion: In your title, you should not include "Weekly Gold And Silver Report For August 17, 2012," it's too generic and does not catch the eye. You should have "What Happens If Bonds Prices Collapse?" first, and the gold and silver report part second (if at all). Keep up the good work.