Gold’s future doesn’t look all that pretty, and most investors and analysts are expecting prices to fall lower on the back of what seems to be a recovery in the U.S. economy as the dollar strengthens and yields rise.

However, according to one U.K.-based analyst, one factor is being overlooked and may translate into a better outlook for gold in 2017.

Aside from the rising dollar, Tom Kendall, head of precious metals strategy for ICBC Standard Bank, is focused on the cost of rising yields, particularly to the U.S. Treasury.

As he explained it in a report released Friday, the Treasury is currently just under $14 trillion of U.S. treasury bills, notes and bonds outstanding. According to the Congressional Budget Office (CBO), he continued, net interest payments on that outstanding debt will amount to around $250 billion this year, with forecasts expecting net interest payments to reach $712 billion by 2026.

“However, since that August report was released yields on 5 to 7 year Treasuries have increased by around 80 basis points, most of which has come since the US election,” Kendall noted.

“If we apply an 80bps increase to the CBO’s net interest forecasts and keep the other variables unchanged, then by 2026 the Treasury would be paying an additional $185 billion in interest annually.”

Despite this, Kendall said that he expects this revival in U.S. economic confidence – or as he put is, “the current reflationary exuberance” – to persist into the first few weeks of Trump’s presidency.

“[I]n other words, real yields will probably rise further. In which case the dollar will stay firm and gold will remain largely unloved by institutional investors,” he said.

However, by the end of the first quarter, the mood would become “more sober” as the U.S. government focuses on the country’s debt dynamics.

“Discussions about the lifting the debt ceiling beyond $20 trillion will then begin in earnest,” he said. “Disappointment on the growth front coupled with rising interest costs and fractious negotiations on the debt ceiling could well result in a more bullish environment for gold.”

Despite this somewhat positive outlook, Kendall said gold is still up against potential headwinds and one key, yet unlikely, threat could be Trump’s tax plan.

“The one fiscal policy that could defer that positive scenario for gold would be a temporary reduction in the tax paid by US corporates on overseas earnings,” he explained. “A sizeable tax cut that incentivized repatriation would lead to a large one-off boost to the Treasury’s revenues. However, history suggests that would just postpone the inevitable.”

February Comex gold futures were slightly up Monday morning with prices last trading at $1,141 an ounce, up 0.32% on the day.

(Kitco News) – The use of silver for photovoltaic cells and ethylene oxide will rise by roughly one-third from 2015 to 2020, according to a report issued Thursday by the Silver Institute.

Silver Institute: PV, EO Silver Use To Rise Sharply By 2020Photovoltaic cells are used to make solar panels, while ethylene oxide is used as a part of the production of plastics and chemicals. These two uses of silver will collectively consume an average of 120 million ounces of silver per year from 2016 to 2020, an increase of 32% compared to 2015, the Silver Institute said.

The author of the report was CRU Consulting, a global commodities consultancy. The Silver Institute is an industry association headquartered in Washington, D.C. Its members include silver producers, refiners, manufacturers and dealers.

“There are many reasons to be positive about demand for silver in photovoltaic (PV) cells,” the Silver Institute said. “The number of solar panel installations is forecasted to rise steadily in the coming years as a result of a combination of carbon-emissions legislation, government policies and a decrease in the cost per gigawatt of electricity generated using PV. This will bring about substantially increased silver consumption despite slow and steady declines in the amount of silver used per individual solar panel.”

In particular, the report projected that 2018 will be a bumper year for PV silver demand due to the expected construction of a record number of solar arrays. The Silver Institute said that silver PV use in 2018 is expected to roughly 75% greater than in 2015.

Ethylene oxide is a raw material for a number of plastic and chemical products, the most important of which is ethylene glycol, used in the production of antifreeze coolants and polyethylene terephthalate (PET), a resin of the polyester family used in fibers for clothing as well as plastic bottles and food containers, the Silver Institute explained.

“EO requirements are also expected to increase as the market for antifreeze continues to grow,” the Silver Institute said. “Car usage is expected to increase through 2020, with China leading the way, and Europe and North America projected to maintain their current high vehicle usage rates. The combined pull of PET packaging and automotive use will boost underlying growth in EO consumption, with a projected 30 million ounces of silver demand targeted to EO through 2020.”

(Kitco News) – Gold could continue to weaken next week as rumors persist that China is unofficially restricting gold imports into the country.

First India, Now Rumors Circulate About China Curbing Gold ImportsEarlier this week, reports circulated suggesting that international banks, licensed by the government to bring gold into the country, are having difficulties with their imports.

According to these banks, the People’s Bank of China is taking a longer time to approve each importing transaction. Some of the banks have reduced or even outright stopped importing gold into the country as a result.

Many analysts noted that the central bank is trying to unofficially restrict gold coming into the country in an effort to curve the high level of capital outflows from the nation’s investors.

While this has the potential to disrupt the gold market, at a seasonally important time, some analysts said they do not see this as an effective long-term policy.

Simona Gambarini, commodities economist at Capital Economics, said that China’s gold imports are only a fraction of the nation’s trade deficit. According to research firm Thomson Reuters GFMS, China’s gold imports amount to about 4% of total imports.

China’s gold import curbs come almost a week after gold investors had to deal with rumors that the Indian government may be looking into restricting gold imports to crack down on its growing black market economy.

Gambarini said that she is following the India market a lot closer as this could cause a bigger disruption in the global gold market. Gold plays a much bigger role in India, where the yellow metal is the nation’s second biggest import, just behind oil.

Gambarini said that the Chinese rumors could spook some investors, who are already negative on gold, but that so far she sees this as a limited factor.

“Right now, I think this is a local story as lower imports are driving up premiums,” she said. “It is still early days and we will have to wait until we get December’s trade data to see the impact this unofficial policy has had on the gold market.”

However, long-term, Gambarini said that the gold market could be in for some difficult times if the two largest gold-consuming nations curb their gold demand in 2017. Unprecedented physical demand in China and India helped stabilize gold prices in the last three years.

PREM WATSA stood at the podium and delivered the most prescient warning the crowd would hear, writes Porter Stansberry, the founder of Stansberry Research, in Daily Wealth.

“There’s a one-in-50- or a one-in-100-year storm coming…When the music stops, it stops very quickly.”
It was April 2007, just six months before the S&P 500 hit its peak. Watsa reminded the audience at the Richard Ivey School of Business what really happens when a specific trade gets too hot…Generally, that trade collapses.

And he was right.

Two years later, just a few months after the market bottomed in mid-2009, Watsa had booked a 489% profit from a bet on the great recession. Essentially, he’d gone short on real estate. It was a $2.1 billion payday.

It wasn’t his first correct call on a bubble…nor the first time he’d profited massively. But it was probably his biggest success.

Today, we’re going to show you how Watsa pulled off one of the most profitable bets we’ve ever seen…and how we can do the same thing.

As early as 2005, Watsa was targeting big American banks and bond insurers exposed to the housing boom.

He had been buying large amounts of credit default swaps (CDSs). These swaps are effectively insurance. The buyer (Watsa, in this case) pays to transfer the risk of default for a bond to someone else…who provides “insurance” against a default. Then, when the underlying security suffers a default, the CDS buyer profits.

At one point in 2006, Watsa was down $87 million on his position – or 74%. But he knew the crisis was just around the corner. So he kept buying.

When the global financial crisis hit in 2008, Bear Stearns, Lehman Brothers, and AIG all failed. Within the year, the $433 million bet Watsa had placed was worth more than $2.5 billion.

He made $2.1 billion on the deal – almost five times his original investment.

Watsa saw the bubble forming and knew that it must eventually collapse. So he made his bet by buying insurance on the companies he knew would suffer the most.

That’s exactly what we aim to do.

First, and most important, we also see a storm coming – only this one will be far more damaging than the credit crisis in 2008-2009.

If you’ve read any of our recent essays on the looming crisis then you know. We’re seven years into a bull market…one that has been driven by artificially low interest rates and debt. Corporate debt issuance has grown over the past five years at a pace we’ve never experienced before. More than $9.5 trillion in global corporate debt is coming due over the next five years. About $1.6 trillion of that debt is below investment grade, known as “junk”.

Yet the market is pricing little risk into the equities that hold it. The market’s “fear gauge” – the Volatility Index (or “VIX”) – remains near near-record lows. No one is paying attention.

It won’t last. It never does.

This credit cycle is nearing an end. When it finally rolls over, many investors holding the shares of weaker credits – aka “junk” rated companies – are going to see the value of their stocks plummet. Some will go to zero.

Here’s where the second important point of Watsa’s story comes in: Instead of simply shorting stocks, he used CDSs to take the trade even further. He wasn’t just betting that these companies would go down. He was betting that they wouldn’t be able to pay their debts at all.

We think the same thing will happen this time. And we plan to profit in a similar way.

We’ve identified key sectors that face many of the problems that we saw back in 2007. These sectors have increasing debts and a wall of maturities coming due.

We’ve also compiled a list of 30 names from that universe of distressed companies into what we call “The Dirty Thirty”.

The only difference between Watsa’s strategy and ours is the instrument we’ll use. We want to protect our portfolios and speculate on the pending collapse. But it’s not easy for small retail investors to buy CDSs. So instead, we’re using long-dated put options. The mechanics are different. But the outcome will be the same.

Don’t let the idea of trading options intimidate you. Put options are simply contracts you hold with your broker that allow you to sell a stock at a specified price at a specified time. And we’ve created our new service, Stansberry’s Big Trade, to walk you through each trade step by step.

I believe that, like Watsa, we stand to make huge 500% gains. But remember, like he did, we could also face some stress in our positions.

These are speculations, not safe bets to buy and hold forever. That’s why we’ll exercise patience and build out a diversified portfolio over the next 12-36 months. These factors are critical to our success with this strategy.

Investors remain complacent about the underlying problems in the credit markets today…just like in 2007. No one listened to Watsa when he said the collapse was coming. They believed that the results would be different.

Our bet is that this time, nothing’s changed. And this is our chance to set ourselves up for massive profits.

(Kitco News) – The U.S. Mint is reporting another record year for coin sales and this time, it is for its gold-bullion products.

Tuesday morning, the U.S. Mint announced that it had sold out of 2016 American Eagle one-ounce, quarter-ounce and tenth-ounce coins. However, one-half-ounce American Eagle and one-ounce Buffalo coins for 2016 are still available.

According to the latest sales data compiled by the U.S. mint, 984,500 ounces of gold in various denominations of American Eagle coins have been sold this year, the highest sales rate since 2011 when one million ounces in gold bullion coins were sold.

The busiest month for coin sales this year was in November. The U.S. Mint recorded total sales of 147,500 ounces, up 27% from October’s sales figures and up more than 52% from November 2015.

The demand for bullion coins soared last month as prices dropped more than 8%, falling to a low at $1,167.90 an ounce.

However, in a recent report, commodity analysts at Commerzbank noted that the higher coin sales have not done much to put a dent growing supplies. Outflows in gold-backed exchange traded products have recently dominated the marketplace, they added.

SPRD Gold Shares (NYSEARCA: GLD), the world’s biggest gold ETF, has not seen any net inflows in the last 17 consecutive sessions. Last month, the ETF saw its gold reserves drop by 1.7 million ounces.

Analysts have noted that while physical demand won’t be enough to drive prices higher, it is expected to slow down the selling pressure and stabilize the market, at the very least..

This is the third consecutive year the U.S. Mint has seen unprecedented demand for bullion coins. In 2014 and in 2015, the mint reported record sales for silver coins. However, 2016 has proven to be somewhat of a lackluster year for the mint in terms of silver products.

For the entire year, the U.S. Mint has sold 37.6 million ounces of silver, down about 20% from 2015, which saw record sales of 47 million ounces.

It’s early Tuesday morning, and I can almost hear what’s going on inside the five-star hotel in Austria where the oil world’s dying “leadership” – which by tomorrow, may be permanently dead – have the U.S.-led “oil PPT” on the phone, trying to “manage” the fact that with Russia not attending tomorrow’s all-important meeting; at which, the odds of a viable, believable agreement are slim to none. Which, I might add, is what I have predicted from the day after September’s fraudulent “Algiers agreement” was promulgated – not because an actual agreement had occurred, but to buy time ahead of tomorrow’s meeting, to keep prices up for two more months. Crude oil prices are in freefall, so it’s only a matter of time until a new “oil PPT” generated headline hits the tape; such as the same one that hit Thursday (just before talks collapsed Friday) and yesterday (just before Russia decided not to attend tomorrow’s meeting); i.e., the Iraqi oil minister’s hollow espousal of “optimism.” This, in a nutshell, is how the Precious Metal Cartel “manages” gold and silver prices as well; i.e., via propaganda and market manipulation. Which, as may well befall the oil Cartel tomorrow, will inevitably fail – when the forces of physical reality eventually play out, as they always do.

Before I get to today’s very, very important topic, I feel the need to comment on Harry Dent – given that, as occurs every time gold prices decline, he’s out in force fear mongering his perpetual $700 price target. Which in turn, has prompted several worried readers to ask about it.

Long-time readers are well aware of my disdain for his commentary, given how it shows little, if any, understanding of gold’s history; let alone, its time-tested differentiation from other “commodities.” In this article, from ten months ago, I actually commend him for the aspects of his analysis I agree with, whilst separating it from his long-standing misunderstanding of gold. Which, if you read through it, you’ll find links to my two previous articles about his “deflationary” reasons for proclaiming gold’s death for the past five years; which, when you read through them, you’ll understand the hypocrisy of his claiming gold will plunge due to “deflation,” whilst ignoring the fact that stocks are currently trading at all-time highs. Heck, in the post-Trump environment, we have seen the biggest bond market crash in 25 years; as well as one of the biggest hype-bubbles ever – base metals – which have surged parabolically due to inflationary fears, real or misguided. And yet, gold prices have been suppressed like never before, given the Cartel’s latest propagandist “meme” that the economy will “recovery” under Trump – ignore the record high deficits, and resulting inflation – so gold is not needed.

Dent’s track record, as described in the aforementioned articles, speaks for itself – such as his 1999 prediction that the Dow and NASDAQ would reach 41,000 and 20,000, respectively, by 2008; and his April 2011 prediction that the Dow would plunge to 3,000 by 2014. In both cases, utilizing the same emotion-grasping modus operandi – which is extremely useful in selling newsletters – of predicting things that are rising will soar, whilst things that are falling will plunge. And given that he has been predicting for years that stocks would crash, only to see them surge to all-time highs (because he doesn’t understand the concept of rigged markets), he is clearly speaking more about gold now, as it’s the only thing he has recently gotten “right” (again, because he doesn’t understand, or acknowledge, the concept of rigged markets).

He yesterday wrote of how gold will go to $700 not because of the “deflation” reasoning he has given for years (which has failed him miserably, given that gold has been the best performer in every deflationary event in memory), but because India will likely ban gold imports. Which, as I discussed in both Friday’s and yesterday’s Audioblogs, not only makes little sense, but has already been refuted by senior Indian officials. Not that they can’t change their mind, of course; but I assure you, if Narendra Modi was insane enough to try it, he’d likely incite a revolution like the French in 1789, or the Bolsheviks in 1917. And of course, he conveniently ignores the fact that any decline in demand in India, were it to occur (highly unlikely given its raging, rapidly adjusting black market, with the Rupee at an all-time low), would be more than offset by rising demand from China (where the PBOC has devalued the Yuan to a nine-year low); and oh yeah, the global Moslem community, as the new Sharia Law gold standard is scheduled to be unveiled by year-end.

His argument all along, that gold would decline due to “deflation,” is what errs me most, given that gold, going all the way back to the Great Depression – and continuing through the 2008 crisis, and every “deflationary” event since – has been the world’s best safe haven asset during such times, Cartel manipulation notwithstanding. And if you think the powers that be can stave off deflation forever; or “stimulate” growth without hyperinflation, you are not paying attention to the lessons of a thousand years of fiat currency history. Not to mention, Economics 101, if you think a commodity with an all-in cost of perhaps $1,500/oz; amidst an industry already in dire financial condition; with reserves in freefall; declining production; limited capital availability; and oh yeah, record high demand and near record low above ground, available-for-sale inventories; could fall to $700; let alone, as fiat currencies the world round crash.

OK, on to the cataclysmic political and economic events of TODAY; starting with the potential for the OPEC meeting, which with each passing minute looks more and more likely, to decidedly – and potentially, permanently – fail to support prices, amidst the worst crude oil glut in the century since it was first commercially used. Trust me, the powers that be – let alone, if Trump wants nothing to do with them – are going to have their hands full preventing an immediate economic catastrophe if OPEC produces no agreement; and potentially, World War III due to the ominous political and social ramifications – including an exploding Moslem migrancy crisis; expanded Middle Eastern civil war; and undoubtedly, heightened U.S./Saudi/Iranian/Russian tensions.

Even the OPEC meeting pales in comparison to the global “BrExit movement”; which, as I vehemently predicted all summer and Fall, U.S. decidedly citizens joined on November 8th. Which, just five days from now, may well go parabolic, when – not if – Italians resoundingly reject the “Constitutional Reform” referendum that actuality, should be deemed an “ItalExit” vote – or as Five Star Movement leader Beppi Grillo deems it, “ItaLeave.”

Of which, I am officially “shouting from the rooftops” that it not only represents a seminal moment in Italian history, but global history. As when, as is widely expected, the referendum fails, expectations of the dissolution of the European Union – and Euro currency with it – will unquestionably skyrocket. Which is probably why the Italian bank sector – by far Europe’s weakest – is in freefall mode; why Italian (and all other PIIGS’) bonds are plunging; and why the Euro is within a hair’s breadth of its 13-year low, en route to much, much lower levels; potentially, starting Sunday night.

Which, I might add, will be devastating for global trade, given that European exports would become more competitive against the countless nations whose exports have already been collapsing – one more desperate than the next for a weaker currency. Which goes double for the U.S., of course, as the surging dollar I have long predicted – because the dollar always surges against less liquid fiat trash during times of crisis – is destroying whatever’s left of the near dead U.S. manufacturing sector. In turn, making Trump’s silly claims that he can bring long-gone jobs back sound that much more ridiculous. And oh yeah, inciting the “final currency war” I first warned of four years ago to go thermonuclear.

Did I mention the upcoming, unprecedented bond defaults? First, by the energy sector, given that more “high-yield” (i.e, junk) debt is tied to the oil industry than any other. And second, because the ECB has created the biggest-ever financial bubble in European sovereign bonds; in many cases, taking some of the world’s worst credits to negative yields; all of which, will violently crash when the reality of an imminently collapsing European Union takes hold of fearful speculators’ minds. Which I assure you, no amount of NIRP, QE, or other market manipulation will be able to staunch – as once the “tear this wall down” mentality, to quote Ronald Reagan’s famous 1987 speech, gains momentum, NOTHING will be able to stop “Economic Mother Nature” from demonstrating her long-suppressed wrath. Most notably, in the monetary world, as billions of global denizens, trapped in rapidly collapsing fiat currencies, desperately seek safe havens to hide in; of which, the majority of sovereign bonds will no longer be on that tiny, select list.

So, to the Italians (and Austrians) this weekend, I implore you to “tear down the walls” of destruction (and market manipulation) that has destroyed your finances; and in many cases, your lives; so that, as was destined from day one, REALITY can once again rule the day!

P.S. As I was about to hit “send,” the Iranian oil minister unequivocally said Iran would NOT cut production – causing prices to plunge further; and likely, ending all hope of an OPEC agreement!