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Tuesday 07.05.2016

The Price Of Silver Explodes Past 20 Dollars An Ounce As The European Banking Crisis Deepens

Have you seen what the price of silver has been doing? On Monday, it exploded past 20 dollars an ounce, and as I write this article it is sitting at $20.48. Earlier today it actually surged above 21 dollars an ounce for a short time before moving back just a bit. In late March, I told my readers that silver was “ridiculously undervalued” when it was sitting at $15.81 an ounce, and that call has turned out to be quite prescient. The Friday before last, silver started the day at $17.25 an ounce, and it is up more than 18 percent since that time. Overall, silver is up more than 30 percent for the year, and that makes it one of the best performing investments of 2016. So what is causing this sudden surge in the price of silver? This is something that we will discuss below…

This sudden spike in the price of silver has definitely caught a lot of analysts off guard. Some are suggesting that the fact that the Fed is now less likely to raise rates after the Brexit and the fact that the dollar has been slipping a bit lately are the primary reasons for silver’s rise…

This isn’t a gradual increase either. It’s an explosive growth spurt. Just three months ago silver had reached an 11 month high. Now silver prices have reached a 23 month high. Several factors appear to be influencing these gains, including a weakening dollar, and the fact that the Fed may cut interest rates in light of the Brexit vote.

Personally, I don’t buy those explanations. To me, the continuing implosion of major banks over in Europe is the main factor that is driving investors to safe haven assets such as silver. Rumors continue to spread that Deutsche Bank is essentially insolvent at this point, and many are watching for the imminent collapse of the largest and most important bank in Germany. When this happens, it will be a much, much more cataclysmic event for the global financial system than the collapse of Lehman Brothers was back in 2008.

Deutsche Bank to Initiate the Next ‘Financial Crisis’!

I am certain that you remember Lehman Brothers and the “chaos” that it created when it ‘failed’. If you think that the Worlds’ Central Banks are now wiser and consequently will not allow another similar event to occur, think again. We will not only see a repeat of this occurrence, again, but it will be exponentially larger than Lehman’s was!

On June 29th, 2016 the IMF stated that “among the [globally systemically important banks], Deutsche Bank appears to be the most important net contributor to systemic risks, followed by HSBCand Credit Suisse,” reports The Wall Street Journal.

However, if you were to believe that statement, why should you be concerned about a German bank and how it will affect you while living in the U.S.? The IMF adds: “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,” reports Bloomberg. The chart below clearly shows the systemic risks emanating out of a Deutsche Bank (DBK) collapse.

Two years in succession, the American unit of Deutsche Bank has failed the FED’s “stress test” which is what determines the ability of the bank to weather out yet another ‘financial crisis’.

Barclays is already warning investors to take cover for the coming recession

Barclays on Monday downgraded forecasts for two UK-listed companies, blaming an expected "period of recession and uncertainty in the UK."

Analyst Andrew Ross and his team took the red pen to the online estate agent Rightmove and the price-comparison website MoneySupermarket.com.

The investment bank says it likes both companies' business models and believes they will win out in the long run. But both are too intertwined with the fabric of the UK economy to avoid taking a hit from the dip in the British economy that the bank expects to see as a result of the vote for a British exit from the European Union, or Brexit.

On Rightmove, analyst Ross and his team say: "We remain structurally positive on Rightmove. But last week's referendum changes the story near term. Our economists now expect a period of recession and uncertainty in the UK, which is likely to mean reductions in house prices and transaction volumes. Rightmove does not have a one-for-one link to these two factors. But there will be an impact if new home developments are mothballed, estate agency branches start to close and price increases for the property portals become more difficult."

Taxpayers still paying for Sanders' secret service

The 500 Tons of Gold That Signal Investors’ Rising Global Angst

Global gold holdings have expanded by more than 500 metric tons since bottoming in January in a signal of investors’ rising concern about slowing growth, a Federal Reserve that’s probably on hold and the ructions caused by Britain’s vote to quit the European Union.

Assets in bullion-backed exchange-traded funds rose 6.6 tons to 1,959.1 tons on Friday, up from 1,458.1 tons on Jan. 6, according to data compiled by Bloomberg. The holdings swelled 37 tons last week as investors reacted to the U.K.’s vote, and swelled in five months out of six in the first half.

Bullion prices climbed to the highest level in more than two years in June as investors absorbed the implications of the U.K. result, adding to a rally that’s been driven by the Fed’s hesitation in raising borrowing costs and the spread of negative rates in Europe and Japan. Banks including Goldman Sachs Group Inc. raised their outlooks for gold after the vote, while yields on 10- and 30-year U.S. Treasuries have touched record lows.

“The low-yield environment globally, and increased volatility in the financial markets as a result of a number of key geopolitical developments, have increased the appeal of gold as an investment and safe-haven asset respectively,” said Vyanne Lai, an economist at National Australia Bank Ltd. The push-back in the markets’ expectations for the timeline of further U.S. rate hikes suggests further upward potential for prices, she said.

The Revolt Against Globalism

There was William Galston at the European Council on Foreign Relations, listening to his fellow elitists and foreign policy honchos caviling about the rise of Donald Trump and bemoaning the fate of the European Union (EU) at the hand’s of Britain’s Euro-skeptics. As the assembled luminaries had a collective sad in their five-star hotel, wondering how the proles could’ve gotten so far out of hand, Galtson – longtime Democratic party hack, former domestic advisor to Bill Clinton, and a senior fellow at the “centrist” Brookings Institution – heard a call to arms. It was almost as if Cecil Rhodes, the British imperialist and original founder and financier of the Council on Foreign Relations, had spoken to him from on high – or, rather, from below – and commanded him to spread the Word far and wide:

“I realized that the stakes in the U.S. presidential election are even higher than I had thought. The fate of the entire postwar order hangs in the balance, and with it the prospects for democracy world-wide. Without vigorous American leadership, the prospects are not bright.”

Oh, yes, those shortsighted Little People are “turning inward,” and “this is understandable,” but, hey, “liberal internationalism is back on its heels” and the dreaded “ethno-nationalist populism” – i.e. resistance to the One World “global governance” schemes of Galston and his comrades – “is on the march.” What’s a globalist to do?

And it’s not just the English-speaking world that’s resisting the globalist agenda. Those Frenchies are getting restive, too, and the rest of Europe is balking at “the obvious candidate for continental leadership” for “historical reasons.” After all, everyone remembers the last time the Germans tried to impose “union” on the Europeans, so there’s that. See how prejudiced the Little People can be? They just don’t have the foresight to worry about the New Hitler – Vladimir Putin, if you even have to ask – who “senses a historic opportunity to exploit Europe’s divisions for his own purposes.” Why, he actually wants to trade with Europe, and that would undermine the war plans of the CFR types, who are fixated on restarting the cold war.

Nearly 1 Million Ignore Deportation Order – Including Over 170K Convicted Criminals

The Center for Immigration Studies (CIS) reported that nearly one million immigrants are ignoring a deportation order from an immigration court. Nearly 200,000 of those are convicted criminals.

“The fact that almost 10 percent of the illegal resident population has already been ordered removed and is still here illustrates just how dysfunctional our immigration enforcement system is. It also should be of great concern that 20 percent of them are conviction criminals, and that most of these are at large in our communities,” CIS Policy Studies Director Jessica Vaughn told the Washington Times’s Stephen Dinan.

Her comments were based on a report released by the CIS on June 30. The report reveals that 925,193 immigrants have remained in the United States after being ordered to leave the country. Of those, 179,040 are convicted criminals who were ordered deported. Only 11,373 of those ordered deported have been detained.

Of the 179,040 convicted criminals who were ordered removed, only 6,905 are being detained. That leaves 172,135 convicted criminal aliens roaming the streets after a final order of removal. This number is at the highest lever for the past four report years and represents a 20 percent increase over the 2012 numbers, according to Immigration and Customs Enforcement reports obtained by CIS.

Italy on Collision Course with EU: Renzi 'set to pump billions into troubled banks'

Angela Merkel has ruled against Matteo Renzi breaking EU rules. Policymakers in Rome want to inject cash into the troubled firms, in the event that confidence in Italy's financial sector drops to dangerously lower levels, according to reports.

In the wake of Britain's vote to leave the European Union, investors rushed to dump stocks in Italy's banks amid worries for their stability.

The firms are sitting on around £270billion of bad loans, and it's feared this liability in the face of a struggling eurozone economy could tip the banks over the edge. The Italian leader is determined to put extra cash into banks to restore faith, according to the Financial Times, even though such a move is against EU rules.

Last week German leader Angela Merkel and EU heads ruled out allowing Italy to breach the regulations. Italy's stock market has failed to recover after being hit with Britain's vote to leave.

This Is "Worrisome": The Probability Of A US Recession Surges To 60%, Deutsche Calculates

Ever since the US manufacturing economy entered a recession over half a year ago as a result of the collapse in capex spending in the energy sector and the soaring layoffs in shale, the strawman used by the economic apologists to "justify" that the broader economy has not followed in such recessionary footsteps, has been the frequent trotting out of the yield curve, which simply because it is still curved upward in nominal terms (if flattening recently to levels not seen since 2007), is presented as "evidence" that the US is still growing.

Just one problem: as Bank of America first explained in February, when one adjusts the curve to account for trillions in unprecedented liquidity support by the Fed which is skewing the message sent by the 2s10s (for example by looking at the 3m5s OIS adjusted curve), the curve is already inverted.

Over the weekend, following the latest collapse in long-term yields to new all time lows, Deutsche Bank looked at what implied recession odds are if one once-again adjust for Fed intervention. What it found, in the words of Deutsche Bank's Dominic Konstam, is "worrisome." From Deutsche Bank:

Since the UK referendum the US yield curve has flattened to new post-crisis lows. The 3m10y spread is now 115 bps compared to 210 bps at the start of the year, and the 2y10y spread is just 85 bps versus 120 bps on January 1. This relentless flattening of the curve is worrisome. Given the historical tendency of a very flat or inverted yield curve to precede a US recession, the odds of the next economic downturn are rising.

U.K.'s biggest Brexit headaches

Shocking New Facts About Poverty in the US

Most of us complain once in a while about having too little money. Perhaps we can’t afford the vacation we want, or maybe we sometimes pay a bill late, or we’re even living paycheck-to-paycheck. Although many people will experience a tough financial situation or period, for most of us the situation is only temporary. Unfortunately for some people, poverty is a reality that can be very detrimental both financially and emotionally, and can be difficult to escape.

The U.S. Census Bureau uses set dollar value thresholds to determine who is in poverty, and these vary by family size; the family members are considered to be in poverty if the total money income is less than the applicable threshold. Poverty is a problem that often goes unseen for those who are not experiencing it, but there are new facts that are too shocking to ignore. Here are a few of them.

Poverty is more common than you think. According to the Current Population Survey Annual Social and Economic Supplements conducted by the U.S. Census Bureau, from 2009 to 2012, 34.5% percent of the population had at least one period of poverty lasting at least two months or more. On the other hand, chronic poverty during this period was actually fairly rare: Only 2.7% of the population lived in poverty for all 48 months. Contrary to many common stereotypes about poverty, especially the idea that people who are poor are lazy or refuse to try to get out of poverty, the truth is that many of the people who experience poverty don’t stay in poverty for a long time.

About 13.5% of 18- to 64-year-olds were in poverty in 2014, and 10% of those aged 65 and over experienced poverty. Sadly, about 21% percent of children under 18 were in poverty (and they represented 23.3% of the total population and 33.3% of the people in poverty). These statistics are surprising because many people believe that retirees are more likely to be in poverty.

Student Loan Program, Even Death May Not Bring a Reprieve

Amid a haze of grief after her son’s unsolved murder last year, Marcia DeOliveira-Longinetti faced an endless list of tasks — helping the police gain access to Kevin’s phone and email; canceling his subscriptions, credit cards and bank accounts; and arranging his burial in New Jersey.

And then there were the college loans. When Ms. DeOliveira-Longinetti called about his federal loans, an administrator offered condolences and assured her the balance would be written off.

But she got a far different response from a New Jersey state agency that had also lent her son money. “Please accept our condolences on your loss,” a letter from that agency, the Higher Education Student Assistance Authority, said. “After careful consideration of the information you provided, the authority has determined that your request does not meet the threshold for loan forgiveness. Monthly bill statements will continue to be sent to you.”

Ms. DeOliveira-Longinetti, who co-signed on the loans, was shocked and confused. But her experience with the authority, which runs by far the largest state-based student loan program in the country, is hardly an isolated one, an investigation by ProPublica, in collaboration with The New York Times, found. New Jersey’s loans, which currently total $1.9 billion, are unlike those of any other government lending program for students in the country. They come with extraordinarily stringent rules that can easily lead to financial ruin. Repayments cannot be adjusted based on income, and borrowers who are unemployed or facing other financial hardships are given few breaks.

Starbucks Workers Learn The Grim Reality Of A Higher Minimum Wage

The inexorable reality of the bottom line has produced howls of outrage from Starbucks employees who have seen their hours cut in response to increases in the minimum wage.

The grim reality is a far cry from the words of Starbucks CEO Howard Schultz, who has said, ” … we will pay above the minimum wage in every state we operate. Starbucks is way above the minimum wage. I have always looked at total compensation.”

In fact, things are so bad that Jaime Prater, a Starbucks employee, created an online petition that has more than 9,000 signatures in an effort to get the Lords of Starbucks to hear what life has become for the baristas in the trenches.

” … the current labor practices are sinking morale at corporate stores. Baristas feel the force of the labor cuts and the gross underemployment because of the new standard. We understand that businesses have to be profitable to survive, we get it. What’s happening currently is some of the most extreme labor cuts in Starbucks history,” the petition reads.

POLL: Almost 30% of Americans think Obama sympathizes with ISIS

Here’s why silver is shining brighter than gold

Silver prices hit a two-year high Monday, climbing above $21 an ounce, as the precious metal continues to gain from the safe-haven rally following the UK referendum, driven mostly by a sudden jump in Chinese demand.

Asian buyers scooped up vast volumes of physical silver overnight, with the Shanghai Futures Exchange, the most actively traded silver futures contract, hitting its 6% daily maximum at opening to reach 4,419 yuan ($663) a kilogram.

Precious metals have risen on anticipation of further monetary stimulus measures from central banks in the wake of the UK’s vote to leave the European Union.

But while gold has got most of the media attention, silver has captured investors’ interest. Since the vote on June 23, bullion prices have risen 7% on the New York Mercantile Exchange, while silver has climbed 17%. On Monday silver rose as much as 6.9% to an intraday peak of $21.132 an ounce, its highest value since July 2014, before paring some gains to trade at around $20.35.

Something Huge Is Coming From Japan

Pretend, for a minute, that your country responds to the bursting of a credit bubble by borrowing unprecedented amounts of money and using it to prop up banks and construction companies. This doesn’t work, so you create record amounts of new money and push interest rates into negative territory in an attempt to devalue your currency. But this — amazingly — doesn’t work either. Your currency soars and the inflation you’d hoped to generate never materializes.

Now what? Is there even anything left to try, or is it simply time to stand back and let the current system melt down? Those are the questions facing Japan, and the answers are not obvious. Here, for instance, is its inflation rate two years into the largest major-country money creation binge since Wiemar Germany:

Deflation is to be expected and even desired in a well-run country where debt is minimal, money is sound and rising productivity makes things continuously cheaper. But in an over-indebted financial system, deflation is death because it magnifies the debt burden and raises the odds of an existentially threatening financial crisis.

EU exit could trim UK GDP by 1.5 to 4.5% by 2019: IMF head

A European Union exit could cut Britain's gross domestic product by anywhere between 1.5 and 4.5 percentage points by 2019, IMF chief Christine Lagarde said in an interview published in Le Monde newspaper on Monday.

The worst scenario would be one where Britain's status came under that of any third-country trading partner under rules of the World Trade Organisation, the International Monetary Fund head said.

Asked about the impact of the vote to leave the European Union, Lagarde said:

"Depending on the scenario, British GDP would drop by 1.5 to 4.5 percent but we haven't got the slightest idea how long talks between Britain and the EU will take, or the result."

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