Thursday , October 29 2020
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Michael Maharrey

Articles by Michael Maharrey

The Stock Market Is Completely Untethered From Economic Reality

2 days ago

We’ve been saying for months that the stock market has completely disconnected from economic reality. The markets have hit record highs despite the economic chaos caused by the government response to COVID-19. As Peter Schiff put it in a podcast back in May, the markets are on a Fed-induced sugar high.In a recent article, David Stockman put the stock market bubble into perspective and asked a poignant question: how could the S&P 500 be trading at its highest multiple in 70 years when the growth rate of corporate earnings has been sinking for more than two decades?Here are a few market extremes Stockman notes.Amazon is now 43% of the S&P 500 consumer discretionary index;Nearly two-thirds of the market is underperforming so far this year;Year-to-date, only one in three stocks is actually

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Fun on Friday: He Put 2 Pounds of Gold Where?

6 days ago

People will do just about anything to avoid paying taxes. Case in point – a man from Dubai shoved about 2 pounds of gold — where the sun don’t shine —  in order to avoid paying customs taxes in India.Yes. I said two pounds.Up his butt.Ouch.The man caught the attention of authorities’ at Kerala’s Kannur airport because he was “walking funny.”Well, yes. I imagine he was. You’ve heard the old saying, “He walks like he has a corncob up his butt?” Well, imagine more than two pounds of gold rammed up there.They caught a second man on the same flight carrying nearly three pounds of gold, but officials didn’t say whether he concealed the metal in the same manner.According to the report from The National, a UAE news site, “Officials at the Air Intelligence Unit extracted the gold from the

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Why Do We Put So Much Faith in Central Bankers?

9 days ago

Well-known management consultant Peter Drucker perfectly described the predicament faced by central bankers.You can’t manage what you can’t measure.”So why do we put so much faith in central bankers?Initially, central banks were conceived as the lenders of last resort for the banking system, but in the words of economist Pascal Hügli, they have mutated into “dealers of last resort.” They are the fire department called in to put out the world’s economic fires.The Federal Reserve’s response to the coronavirus pandemic is what we’ve come to expect from our central banks. The Fed almost immediately cut interest rates to zero and then launched QE infinity, buying up trillions in Treasury bonds and mortgage-backed securities. But it didn’t stop there. It set up lending programs, buying risky

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Fun on Friday: Searching for the Jekyll Island Creature

13 days ago

I spent a little time at Jekyll Island, Georgia, last weekend. I looked hard, but I didn’t find the mythical creature from Jekyll Island. From what I hear, it’s taken up permanent residence in Washington D.C. But I did locate its birthplace.If you don’t get the reference, I’m referring to the Federal Reserve. The central bank was conceived during a secret meeting at a private club on Jekyll Island. According to an NPR article, Sen. Nelson Aldrich, chairman of the Senate finance committee, organized the clandestine meeting.“He told a handful of New York bankers to go on a given night, one by one, to a train station in New Jersey. There they would find a private rail car hitched to the back of a southbound train. To conceal their identities, Aldrich told the bankers to come dressed as

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Fun on Friday: A Moving Nightmare

20 days ago

I hate moving.We moved from Kentucky to Florida about a year ago. It wasn’t fun. It was stressful. I lost things.Now, imagine moving $11.7 billion in gold bars and coins.No thanks!But Netherlands’ central bank recently did just that. It moved 14,000 gold bars and about 1,000 boxes of gold coins.The Royal Dutch Military Police coordinated the move, because, you know, you probably don’t want to trust ACME Moving with $11.7 billion in gold. Those guys tend to lose things just like I did. And I’m guessing their insurance probably wouldn’t cover the loss.On a side-note, I don’t think I’d want to be the guy that has to tell some government officials, “Oops, we seem to have misplaced a box of gold coins.” The response would probably be along the lines of, “Oops, you’re going to prison.”At

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Retail Apocalypse

22 days ago

Less than two months after reopening, Regal Theaters will shut down all 536 of its locations on Thursday (Oct. 8).The company said the closures reflect “an increasingly challenging theatrical landscape” due to the coronavirus pandemic.  Regal says the closures are temporary, but the company has not set a date to reopen.The shutdown reflects broader problems in the retail marketplace that have been exacerbated by COVID-19 and stabs another knife in the narrative of a quick economic recovery.The Regal shutdown will result in layoffs for 40,000 employees.Regal is a subsidiary of UK-based Cineworld Group and ranks as the second-largest theater chain in the US after AMC.Hollywood has exacerbated the problems for movie theaters. Studios have delayed dozens of big releases over the past six

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Silver Charts Best Quarter Since 2010

23 days ago

Silver just charted its best quarter since 2010.The white metal finished up 27.62% through the three months ending Sept. 30. Taking the timeline back a bit further, silver is up 106.6% off its March low. And there are plenty of reasons to believe the silver bull-run will continue.Silver saw a big third quarter gain despite a significant sell-off at the end of September. Both gold and silver dropped precipitously last month in large part due to a surge in the dollar.  The white metal dipped below $21 an ounce at its lowest, about $8 off its August highs.Overall, the fundamentals continue to look good for silver.Dollar strength creates the strongest headwinds for precious metals. Investors moved into the dollar late last month due to concerns about a resurgence in coronavirus in Europe,

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Fun on Friday: Don’t Get Duped

27 days ago

Gold scams fascinate me.I guess it’s because I can’t imagine getting suckered by these setups. I mean, who is going to buy gold in a gas station parking lot? Or believe that some dude from Africa they’re in an internet relationship with is going to pay them to ship gold? It seems implausible people would buy these stories. But a lot of people do. They fall for these scams. As a result, the scammers keep scamming. Here’s how to avoid getting duped — don’t take anybody’s word for anything. Check, verify and confirm.It’s interesting how scammers target different demographics. The scammers on the dating sites target the lonely. Some of the telephone and email scammers target the elderly. Well, I’ve got a new one for you today  – scammers targeting political conservatives.And my-oh-my it was

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Is This a Buying Opportunity for Silver?

29 days ago

Gold’s recent correction has taken silver down with it. The white metal dipped below $21 an ounce at its lowest, about $8 off its August highs.That has led some to speculate that we’ve seen a knockout blow for silver. These are generally the same people who have declared the gold bull dead. But I think it’s way too early to hang “rest in peace” over the silver market for the same reasons I don’t think the gold bull run is over. In fact, this may be an ideal buying opportunity. In order to begin saying last rites for precious metals, you have to believe the Federal Reserve is actually going to tighten monetary policy and the dollar is going to remain strong. Both of these prospects seem pretty implausible.The big drop in both gold and silver last week was primarily been driven by dollar

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We Don’t Need a Higher Minimum Wage; We Need to Fix Our Money

September 27, 2020

You’ve almost certainly heard about the “fight for $15” movement to increase the minimum wage. Well, some activists have upped the ante. How does “Fight for $20” strike you?Here’s the problem, these people are trying to solve a legitimate problem with a really bad solution.Last year, Rep. Rashida Tlaib (D-Mich.) called for a $20 national minimum wage. And why not? If $15 is good, wouldn’t $2o be better? In fact, why not go for $30 an hour. Or $100? If you can just arbitrarily assign a number to wages without consequences, why not go really big?This reveals the problem with progressive thinking on wages. They know at some level you can’t force wages to infinity. But they have no actual economic principle upon which to peg their policy. They just throw out arbitrary numbers based on

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Fun on Friday: Wanna Take My Bet?

September 25, 2020

I bet you have gold within arm’s reach right now — even if you aren’t wearing any jewelry.Wanna take my bet?It’s in your cell phone!If your cellphone is within arm’s reach, so is a little bit of gold.According to the US Geological Survey, the average cell phone has about 0.034 grams of gold inside. That equals about 0.001 troy ounces and is worth roughly $1.86. So, no – I don’t recommend busting into your phone to get the gold. But it’s there.On a side-note, your phone also contains about 0.35 grams of silver.Now, before you start getting all cocky thinking you won the bet because you’re reading this on a computer, not a cell phone — well, you still lose. The average laptop contains about 0.1 grams of gold.Checkmate.Now obviously, that’s not a whole lot of gold. But it adds up. Think

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Should We Declare the Gold Bull Run Dead?

September 24, 2020

Gold had another precipitous drop on Wednesday (Sept. 23), falling through the support level at $1,900 to a 2-month low. That has led some to ask – is the gold bull dead?The concern is understandable but I think it’s too early to declare last rites. In order to believe the gold bull run is over, you have to believe the Federal Reserve is actually going to tighten monetary policy and the dollar is going to remain strong.That seems rather unbelievable.The big drop in gold and silver has primarily been driven by dollar strength. The dollar index hit a two-month high on Wednesday. Investors have moved into the dollar due to concerns about a resurgence in coronavirus in Europe and the possibility of further economic lockdowns. The sudden risk-off sentiment hasn’t only clobbered gold and

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No Inflation? Money Supply Continues to Grow at Record Rate

September 23, 2020

To hear Federal Reserve officials, politicians and mainstream financial media pundits tell it – there is no inflation. In fact, the consumer price index remains “stubbornly low” according to those who view rising prices as an economic good. But inflation defined correctly is rampant. In fact, it is at all-time record levels.Strictly speaking, inflation is an increasing money supply, and by that measure, it hs set records for five straight months.Last month, year-over-year growth in the money supply (as measured by TMS) came in at 37.56%. That was up 36.92% from July’s record rate. In comparison, the August 2019 increase in the money supply was a paltry 1.86%.As measured by M2, the money supply grew by 23.23% in August, nearly the same rate as July’s record of 23.29%.The “true” or

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The Fed Is Backstopping the Enormous Government Debt

September 22, 2020

The 2020 budget deficit surged passed $3 trillion in August even as the US government continues to borrow and spend at a torrid pace. Since March, the federal government has added $3.3 trillion to the national debt. That is on top of the $1.4 trillion in debt Uncle Sam piled on in the 12 months through February 2020.So, who is buying all of this government debt?There are a lot of buyers out there, but when you boil it all down, the US government wouldn’t be able to maintain this level of borrowing and spending without the backstop of the Federal Reserve.The Fed was the biggest buyer of US Treasuries in July, adding $89 billion worth of bonds to its balance sheet, according to the most recent Treasury International Capital data. That brought its total holdings of US debt to $4.9 trillion

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Fun on Friday: Constitution Day

September 18, 2020

I’m not sure that this is appropriate for “fun” on Friday. It’s more like sad on Friday. Or ironic on Friday. But I don’t have anything more fun, so I’m going to run with this.As you may know, yesterday was Constitution Day. And you know what? The federal government can’t even get that right.On Sept. 17, 1787, delegates (most of them, but not all) at the Philadelphia Convention signed the proposed Constitution for the United States and sent it off to begin the long and arduous ratification process.So, what does the federal government do to celebrate this momentous occasion?It violates the Constitution.Given the operation of the federal government today, I guess it should come as no surprise it has even managed to mess up Constitution Day.So, what have they done now?Well, in 2004,

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The Fed Delivers What’s Expected

September 17, 2020

If you go to McDonald’s, you expect to get a hamburger. If you go to KFC, you expect to get chicken. And if you go to the Federal Reserve, you expect to get easy money.The Fed delivered exactly what you would expect at this month’s Federal Open Market Committee meeting that wrapped up Wednesday.The Fed reiterated its commitment to artificially low interest rates and quantitative easing to infinity into the foreseeable future, despite offering a somewhat more upbeat assessment of the US economy.In its statement, the FOMC said it would hold interest rates at zero, “until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment.” Based on a survey of Fed officials, the central bank plans to leave interest rates at zero through at least

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China Signals It May Dump More US Debt

September 15, 2020

The Chinese are threatening to dump US Treasuries even as the federal government borrows money at a torrid rate. If the Chinese were to follow through, it could wreak havoc on the bond market and send interest rates surging despite the Federal Reserve’s best efforts to hold them down.The fiscal 2020 US budget deficit surged past $3 trillion in August. And Congress is considering more spending. Treasury Secretary Steve Mnuchin recently  called for more fiscal stimulus and said  “now is not the time to worry about shrinking the deficit.”Meanwhile, the Chinese have slowly been divesting themselves of US Treasuries over the last several years. At the peak, China held about 1.32 trillion in US debt. That has fallen to about $1.07 trillion as of the last Treasury International Capital data

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Fun on Friday: Labor Day

September 4, 2020

Can you believe it’s already Labor Day weekend?In some ways, 2020’s stay has dragged on seemingly forever — like an unwanted aunt visiting “for a while.” But in other ways, 2020 has just flown by. I mean, it’s already fall — although I live in north Florida so it feels like anything but fall.Anyway, even if 90-degree temperatures say otherwise, fall is here as Labor Day weekend ushers out summer. So, a lot of you will probably take a day off Monday — which quite frankly doesn’t make sense.I mean, it’s “labor” day, right? Shouldn’t we celebrate by laboring? But no. We celebrate working by not working. It’s kind of backward, isn’t it?I have to admit, I’m not a big fan of Labor Day. Don’t get me wrong — I like taking a day off as much as the next guy. I am a fan of grilling meat and there

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Coronavirus Masks Underlying Government Spending Problem

September 3, 2020

According to CBO projections, the federal budget deficit will come in at $3.3 trillion for fiscal 2020. That’s more than triple the budget shortfall last year and more than double the previous deficit record set at the onset of the Great Recession.The media has pretty much ignored the ballooning deficits since the beginning of the pandemic, but the fact that the federal debt held by the public is projected to reach or exceed 100 percent of U.S. GDP for the first time since World War II in fiscal 2021 generated some headlines. Even so, most of the reporting ignores Uncle Sam’s chronic spending problem and pins the blame for the surging deficits on government response to the coronavirus pandemic.The fact is the federal government was on an unsustainable borrowing and spending trajectory

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Fun on Friday: How Did Scammers Fool a Pawnshop??

August 28, 2020

I’ve written sever Fun on Friday articles about gold scams. Usually, the victims are elderly folks and you can kind of understand how they might get fooled by scammers. But you know who I wouldn’t expect to get conned in a gold scam?Pawnshop owners.And yet, here we are.I mean, these people buy gold and take it for collateral every single day. That’s literally their business. You’d think they’d be the last people in  the world you could trick with fake gold.Apparently not.I ran across an article a few days ago about a pawnshop in Thailand that got ripped off by gold scammers. According to the story, Krit and Anadda Tianmai, owners of the Thong Tian Nid Gold Shop, lost more than $285,000 when they accepted fake gold chains as pawn collateral. The scammers claimed to be construction

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Wells Fargo: Gold Bull Run Signals Growing “Lack of Trust” In Monetary System

August 26, 2020

It’s easier to understand gold’s record-breaking move up if you look at it from the other side of the equation. The dollar is now at its all-time low compared to gold. In simple terms, the dollar is losing value and dollar debasement is driving up the price of gold.This isn’t a narrative you don’t typically hear on the mainstream financial networks, but there seems to be a growing awareness that the dollar and the system based on it might be in trouble – even in the mainstream investment world. We’ve seen Warren Buffet make a bet on gold, and Goldman Sachs recently warned that the dollar could be in danger of losing its reserve status. Now, Wells Fargo has weighed in, warning in a report that the bull run in gold signals “a growing lack of trust in the world’s monetary system.”Wells

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Confessions of a Reluctant Gold Investor

August 24, 2020

Vitaliy Katsenelson serves as the chief investment officer at Investment Management Associates in Denver. In an article he wrote for , he admits his company has resisted buying gold in the past.But the company is buying gold now.Why?In a nutshell — currency debasement.Gold hedges our clients against two scenarios: a weaker US dollar and the debasement of all currencies (the dollar declines and so do other currencies). Dollar outflows will be looking for homes. Some money will flow into euros, British pounds, and Swiss francs, and some into gold — an incorruptible asset class (central banks and politicians cannot create more gold).”Katsenelson wrote that in the past, his rationale for not owning gold was that he’d rather own “good companies.” This is very similar to the strategy Warren

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Fun on Friday: Happy Birthday Ron Paul!

August 21, 2020

Yesterday was Ron Paul’s 85th birthday and I thought it would be apropos to use this Fun on Friday space to pay him a little tribute.I had the privilege of interviewing Dr. Paul for my GodArchy podcast the day before his birthday. He is sharper at 85 than a lot of 30-year-olds. And his energy is amazing. Even in retirement, he’s still working hard, hosting his Liberty Report program, writing articles and doing interviews.Sometimes I feel like I’m the only person in the “liberty movement” who didn’t get involved through Ron Paul’s presidential campaigns. I was a little late to the party. I first became aware of Ron Paul during the 2008 campaign. I heard snippets on the news about him and heard Rush Limbaugh mention him a few times. But I was still firmly entrenched in establishment . I

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Fun on Friday: If You Gotta Wear a Mask…

August 14, 2020

As regular readers of Fun on Friday know, I’m not a big fan of masks. They are uncomfortable. They are inconvenient. And they are incredibly ugly.But my opinion notwithstanding, it doesn’t look like masking is going away anytime soon, so we have to find ways to cope with it. A couple of weeks ago, I explained how I was having a little fun with the mask requirements here in Nassau County, Florida.Well, in Turkey, they have actually found a way to address the ugly issue.Turkish brides are donning gold masks.I don’t mean gold-colored masks. That would still be ugly.  I’m talking about actual 22-karat and 14-karat gold masks.They are truly beautiful. You can check out some photos of gold masked brides HERE.Of course, like most things made of gold, a gold wedding mask will set you back more

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July Budget Deficit “Only” $63 Billion

August 13, 2020

The federal budget deficit for July was only $63 billion, according to the latest Monthly Treasury Statement issued by the Treasury Department.Of course, $63 billion is a huge budget shortfall. I say “only $63 billion” simply because it pales in comparison to the $864.1 billion deficit in June. In reality, the July deficit continues the trend of unprecedented borrowing and spending we’ve seen throughout the year.The only reason last month’s deficit gives an illusion of improvement is because the Treasury enjoyed a big influx of revenue with the tax filing deadline shifted to July due to coronavirus. All of those tax payments that would have normally come in April were shifted forward to last month. The federal government took in $563 billion in July compared to $241 billion in June.

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Three Questions to Ask Before You Declare the Gold Bull Dead

August 12, 2020

Gold and silver got had an abysmal day on Tuesday (Aug. 11). The price of gold dropped more than 5%, falling far below the $2,000 level. It was the worst single-day rout in seven years. Things stabilized somewhat on Wednesday with apparent support above $1,900, but the big selloff fueled speculation that the gold bull run could be over.Here are three questions you should ask yourself before declaring the gold bull dead.1. Do you believe the economy can quickly recover? Let’s say they develop a coronavirus vaccine tomorrow. Do you believe that the economy can just spring back to life?2. Do you believe that the federal government will stop borrowing and spending billions of dollars every single month anytime soon? Keep in mind, the federal government was borrowing and spending billions of

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Status Report: Sound Money in the States

August 11, 2020

If you want to end unconstitutional, overreaching federal power – end the Fed. It’s the engine that drives the most powerful government in the history of the world.But Congress will never abolish the central bank. It can’t even come up with the will to audit the Fed.So what can we do?There are actually actions that states can take.Even though state action can’t end the Fed, there are steps states can take that will undermine the Federal Reserve’s monopoly on money. By passing laws that encourage and incentivize the use of gold and silver in daily transactions by the general public, state action has the potential to create a wide-reaching impact and set the foundation to nullify the Fed’s monopoly power over the monetary system.Over the last two years, a number of states have taken

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Fun on Friday: Five Awful Uses for Gold

August 7, 2020

We all want gold, right? We like gold things.Athletes compete for the gold medal. We give our loved ones gold jewelry. When something is great, we say it’s the gold standard.But there have been some pretty atrocious things made with gold. Here are my top-five awful uses for gold.1. Gold poop pillsI mentioned these in a recent Fun on Friday when I listed odd uses for gold. Making pills so people can poop gold is not only odd, it’s pretty awful.Designer Ken Courtney and artist Tobias Wong produced 24K, swallowable gold pills. This was back in 2005. The pills were filled with gold leaf and cost $425 at the time.2. Poison RingsWhen I think about it, this should probably be number one – given that this is specifically for killing people. This actually dates back to ancient cultures. People

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Americans Currently Owe More Than $21 Billion in Back Rent

August 5, 2020

Most people remain blissfully ignorant of the economic wounds inflicted on the US economy by the government-imposed economic shutdowns in response to the coronavirus. But every once in a while, the curtain blows back and we catch a glimpse of the damage.For example, a report released last week by global advisory firm Stout, Risius and Ross estimated that Americans currently owe more than $21.5 billion in past-due rent.A federally imposed eviction ban that shielded about one-third of renters living in buildings with federally backed mortgages recently lapsed and the $600 weekly federal unemployment benefit expired last Friday. One analyst told that without more government help, we could see “a staggering surge in homelessness, unlike anything we have seen.”Moody’s Analytics Chief

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Fun on Friday: Men With Sticks Chasing a Silver Cup

July 31, 2020

Twenty-twenty has been a miserable year for sports fans. Coronavirus shut down sports back in March, leaving sports junkies to chose between blankly staring replays of 5-year-old football games or actually picking up a book.But we’re starting to see signs of normalcy.Or at least the new normalcy.Baseball finally started its season a couple of weeks ago. Of course, you can only watch in person if you can figure out how how to shape-shift into a cardboard cutout – or if you’re a politically connected doctor invited to throw out the first pitch. (Somebody needs to give Dr. Fauci throwing lessons, by the way.) But baseball is back.And this weekend, the NHL will finally kick off the 2020 Stanley Cup playoffs.Yes, it is time for men with sticks to chase down a silver cup.Hockey in summer is

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