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The Coming CONTAGION – CDS Sales Double from 2016

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Posted by Martin Armstrong - Armstrong Economics

on Thursday, 31 August 2017 06:24

Contagion-Vault

The issue of credit default swaps (CDS) in 2017 is running at twice that of last year reflecting rising concerns of another coming crash. The number of hedge funds and banks dealing with highly sensitive credit derivatives has reached almost $30 billion in 2017 up from only about $ 15 billion in 2016 and just $ 10 billion back in 2015. The credit default insurance, which is supposed to pay certain amount of money a particular company or government registers its insolvency. The trading in CDS was blamed by numerous observers for creating the financial crisis that became a widespread contagion in 2008 in particular. 

Hedge funds are now investing in these risky securities in order to achieve returns on the order of magnitude that are difficult to achieve in the current market environment due low interest rates. High-profile funds such as Apollo, Brigade Capital and Blue Mountain are among those who bought tranches with terms of 2-3 years, according to the FT. The real danger with this instruments is that the next crash will be far worse in the bond markets than at any time since 1931 and the prospects of actually being able to collect on these time-bombs is more unlikely since the entire system will freeze. The crisis is one stemming from liquidity and failure to understand the contagion will lead to significant losses. 

The pending view on the stock market remains extremely bearish among professional since their historical view is very myopic and their models rarely extend back before 1971. The was the entire reason Long-Term Capital Management collapsed and set off a crisis that became a contagion. Because they could not liquidate positions in Russian debt, they were forecast to start selling investments around the world to raise cash to cover losses in Russia. Therefore, you can have a great solid investment in an area unrelated to the bond crisis, yet that investment can tank regardless of the fundamentals.



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Asset protection

11 Opportunities in Gold, Uranium and Diamonds

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Posted by James Kwantes via Streetwise Reports

on Friday, 25 August 2017 08:14

Former journalist James Kwantes, editor of Resource Opportunities, provides a tour of promising junior mining opportunities, from the extremes of northern Canada to the tropics of French Guiana.

The Gold Report: The U.S. stock market has been in a bull run for a number of years. What are your thoughts on the market and what it means for precious metals?

James Kwantes: Since Donald Trump was elected president, but also for years before that, large-cap U.S. stocks have been a "can't miss" for investors, who have been rewarded for chasing returns. It seems very toppy to me, but that doesn't mean it couldn't go on for a while still. In 2000, in the big tech boom, the market caps of the two or three largest technology companies equaled the market cap of something like every mining company in the world. We're at that level again. We're starting to see weakness in the U.S. dollar, and that's positive for gold. These things are cyclical. Gold looks like it's ready for the next longer-term breakout and we're heading into a period of seasonal strength. We're starting to see signs of strength in the junior market as well.

TGR: Would you talk about a couple of companies that you like in the precious metals area? 

JK: Let's start with the Yukon, where I recently did some site visits. When you fly into the Yukon, you see placer mining operations, where miners pull gold out of the rivers and the gravels. They look like big gravel pits from the air, and some of the operations are very large. Placer mining is a big industry in the Yukon—about 20 million ounces (20 Moz) of placer gold has been pulled out since the Klondike Gold Rush days in the late 1890s—but the Yukon has never really had a large bedrock gold mine. So the hard-rock source for all that gold is a kind of holy grail in the Klondike.

Last year, Goldcorp Inc. (G:TSX; GG:NYSE) bought Kaminak Gold Corp. and its Coffee project for $520 million. That sparked another gold rush, an exploration rush, that is seeing many of the world's largest gold mining companies do joint venture deals with companies that have Yukon projects.

TGR: What are some of the companies you are excited about in the Yukon?

JK: There's an interesting company called Klondike Gold Corp. (KG:TSX.V). It owns a large land position around Dawson, the epicenter of the Klondike Gold Rush, that includes some of the most productive placer mining creeks where a lot of gold is still being pulled out. Klondike Gold owns the claims above many of the best creeks. 

Klondike is systematically exploring an area called Lone Star, which was the site of one of the only historical bedrock gold mines that produced high-grade gold. Klondike has hit about 2 kilometers (2 km) of gold mineralization along a structure that CEO Peter Tallman thinks may continue for as long as 7 km. 

I like Klondike for several reasons. It's very close to Dawson City, so its costs of drilling are very low. And in the Yukon that's important. A lot of these companies require helicopters to get in and out, which is expensive. Klondike has great backing. Frank Giustra, the co-founder of Goldcorp and founder of Lionsgate Films, is a major shareholder. So is Francesco Aquilini, another Vancouver-based billionaire whose family owns the Vancouver Canucks hockey team. So Klondike has some deep-pocketed shareholders and a plan to home in on an area with lots of gold mineralization. I really like its prospects for this year.

TGR: What's another company in the Yukon that you like?

JK: Arcus Development Group Inc. (ADG:TSX.V), a small company that is under the radar. The CEO, Ian Talbot, is a geologist and a lawyer, and was BHP Billiton Ltd.'s (BHP:NYSE; BHPLF:OTCPK) lawyer out of its Vancouver office. Arcus owns a land position directly north of Goldcorp's Coffee deposit. The Coffee project covers a vast land position, but a lot of the gold mineralization is on the northern portion, very close to where Arcus's Dan Man project is. Last year, Goldcorp bought 19.9% of Arcus. So even though it's not on the radar of investors, it's on Goldcorp's radar. Arcus is drilling the project this year. I'd be surprised if Goldcorp didn't buy it out at some point.

Kwantes8-14-17-1

TGR: Did any other companies in the Yukon catch your attention?



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Asset protection

European Banks – The Next Crisis – The Unseen Cause in Plain View

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Posted by Martin Armstrong - Armstrong Economics

on Wednesday, 23 August 2017 07:37

Frankfurt-Cloudy

The clouds have not lifted from the heart of the financial center within the European Union on the continent. The origin of the next crisis is unseen yet in plain view if you care to look. Ten years since the financial crisis of 2007-2009, the core fundamental problems in the banking sector have not yet been resolved and still fester beneath the surface. Indeed, following the collapse of the investment bank Lehman Brothers, a financial tidal wave swept the world. The collapse of the mortgage backed securities market in the States, set off a contagion where the crisis spread at a rapid pace around the world. European banks tried to compete with New York adopting similar carefree lending. In the end, the Draconian measures from Brussels and constantly adding regulation to all levels of business mixed with tax increases, prevented the economy itself from truly recovering only further preventing a bank recovery.



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Is The Stock Market Setting Itself Up For A Spectacular Crash?

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Posted by Sol Palha - Tactical Investor

on Tuesday, 22 August 2017 06:53

Neither a man nor a crowd nor a nation can be trusted to act humanely or to think sanely under the influence of a great fear.” Bertrand Russell, Unpopular Essays

The stock market crash story is getting boring and annoying to a large degree. Since 2009, there has been a constant drumbeat of the market is going to crash stories. In 2009, many experts felt that the market had rallied too strongly and that it needed to pull back strongly before moving higher up. They were calling for 15%-20% correction. Ten years later and most of them are still waiting for this so-called strong correction or crash. A stock market crash is a possibility but the possibility is not the same thing as certainty, and this is what seems to elude most of the naysayers. One day they will get it right as even a broken clock is correct twice a day. In the interim waiting for this stock market crash has cost these experts a fortune, both in lost capital gains and actual booked losses if they shorted this market.

It’s 2017, and the markets are overbought, and we agree that they need to let out some steam, but as for a crash that will only occur when sentiment turns bullish. The crowd has not embraced this market and until they do corrections but not crashes is what we should expect. In fact, we penned an article titled “Dow Could Trade to 30K But not before This Happens”, where we discussed the possibility of the Dow trading to 30k before it crashes. The one factor that could alter this outlook would be for the masses to turn bullish suddenly.

This market will experience a spectacular crash one day; nothing can trend upwards forever and eventually the market has to revert to the mean. Markets never crash on a sour note; the crowd is chanting in joy when the markets suddenly change direction. A simple look at previous bubbles will prove this; the housing bubble, for example, did not end on a note of fear; the crowd was ecstatic. Even the Tulip bubble that lasted from 1634-1637 ended on a note of extreme joy.

Jim Rogers states that the next crash will be the worst one we have seen in our lifetimes.

We’ve had financial problems in America — let’s use America — every four to seven years, since the beginning of the republic. Well, it’s been over eight since the last one. This is the longest or second-longest in recorded history, so it’s coming. And the next time it comes — you know, in 2008, we had a problem because of debt. Henry, the debt now, that debt is nothing compared to what’s happening now.

In 2008, the Chinese had a lot of money saved for a rainy day. It started raining. They started spending the money. Now even the Chinese have debt, and the debt is much higher. The federal reserves, the central bank in America, the balance sheet is up over five times since 2008. It’s going to be the worst in your lifetime — my lifetime too. Be worried Business Insider 

In a broad manner of speaking, he is right, but the proverbial question as always is “when”; so far the naysayers have missed the mark by 1000 miles. This entire rally has been based on the fact that the Fed artificially propped the markets by keeping rates low for an insanely long period and infusing billions of dollars into the markets. One day the pied piper is going to collect but as we have stated over and over again over the years, that until the masses embrace this market, a crash is unlikely. A strong correction is, however, a certainty; it’s just a matter of time.

The market has defied every call, and even some of the most ardent of bulls are now nervous; we stated this would occur over two years ago. The Market has put in over 36 new highs this year and is living up to the new name we gave it late in 2016. Up to that point, we referred to this market as the most hated bull market of all time; after that, we started to refer to this market as the most Insane Stock Market Bull of all time. Insanity by definition has no pattern so expect this market to do things no other market has ever done before.

A strong correction is a certainty; the million dollar question is when 

We are using the word correction and not crash for until we start seeing non-stop headlines for Dow 35K, and the overall sentiment turns bullish, the markets are unlikely to crash. Sentiment analysis reveals that the crowd is still either uncertain or bearish when it comes to the stock market.

pic3d69218b981f7c75c9eff8f15bb8a0e9
Anxiety Index


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Asset protection

Silver Cycles and War Cycles

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Posted by Gary Christenson - The Deviant Investor

on Friday, 18 August 2017 06:54

Why Silver Cycles and War Cycles?

Because silver prices and wars are connected, and because cycles have predictive value when viewed over the long term. Look at silver prices since the year 1900. Yes, silver has not freely traded for a long time, but there is value in the study.

J-Silver-800x629

Six important silver lows have been identified with green ovals. Two other lows in 1931 and 1971 are ignored. The six lows identified approximately match these wars:

Low Date War

1 1914 World War I

2 1939 World War II

3 1963 Vietnam War

4 1990 Gulf War

5 2001 War on Terror



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