Week in Review with Jerry Robinson (8/23-8/29)

By Jerry Robinson | FTMDaily.com

Federal Reserve Confusion… Last week offered much in the way of understanding how things may be beginning to unfold at the Federal Reserve. After the August 10 Fed Board meeting where tensions reportedly flared among members over when to begin a new round of quantitative easing, came the Fed’s annual retreat to Jackson Hole where Bernanke undoubtedly revealed the Fed’s stance as a deflation fighter. You can read his entire speech here.

Five Facts That Every Investor in China Should Know… Money manager Puru Saxena joined me on my radio show last weekend from his office in Hong Kong to talk about why he is more bullish than ever on investing in China. He talks about the specific areas and sectors in China where he and his clients are investing. Listen to the two-part interview below.

Tail-spinning USD… In other news, China’s drive to provide its currency with international reserve status got a boost last week. Many of the world’s biggest banks – including JP Morgan and Citibank – have launched international roadshows promoting the use of the renminbi (the Chinese currency) instead of the U.S. Dollar to their corporate customers engaging in trade deals with China.

Citibank also made news last week when a foreign exchange report was released warning that another round of quantitative easing from the Federal Reserve was be the “endgame” for the U.S. Dollar. Here’s a brief excerpt from the Citibank report:

A second round of QE will likely put sharp downward pressure on the USD, to some degree versus the euro
and other G10 currencies, with potential for a broader USD sell-off. Foreign investors are likely to view the renewed direct intervention as indicating that the Fed’s balance sheet expansion and implicit monetization of fiscal expenditures are first line approaches to dealing with disappointing recovery prospects, rather than the exceptional measures they were meant to be initially. This could have severe implications for foreign perceptions of the quality of the US assets that they are accumulating in private and official portfolios, and may lead them to draw the conclusion that USD weakness is less a by-product than a desired outcome of these measures.

Inside Job… A new film about the 2008 financial crisis that looks excellent. Watch the trailer below.

Housing Crisis Deepens… The  residential real estate market took it in the chin in July. According to a report conducted the National Association of Realtors:

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, dropped 27.2 percent to a seasonally adjusted annual rate of 3.83 million units in July from a downwardly revised 5.26 million in June, and are 25.5 percent below the 5.14 million-unit level in July 2009.

For a good article about the July home sales report with some startling charts, click here.

How Hyperinflation Will Happen… Gonzalo Lira wrote an interesting blog post called “How Hyperinflation Will Happen.” It is an enlightening article. You can read it here.

China Will Force the World Off Oil… The Council on Foreign Relations warned last week of China’s growing demand. You can read the report here.

401(k) and IRA Confiscation? I have been warning you for some time that government-controlled assets like 401(k)’s and IRA’s are ripe for seizure by the Federal government. This seizure will likely take the form of higher distribution taxes on the income received from these qualified plans. Here’s a new article about the topic from the European press.

Still Bullish on Silver… Silver continues its price rise. And when you consider the fundamentals driving the metal, the future looks even more bright. Here’s five trends that will drive silver even higher in the coming years.

About Jerry Robinson

Jerry Robinson is an economist, published author, columnist, international conference speaker, and the editor of the financial website, FTMDaily.com. In addition, Robinson hosts a weekly radio program entitled Follow the Money Weekly, an hour long radio show dedicated to deciphering the week’s economic news.

Bill Murphy Discusses Gold Price Manipulation with Jerry Robinson – 8/21/10

Follow the Money Weekly radio show host Jerry Robinson interviews Bill Murphy of the Gold Anti-Trust Action Committee. In this 15 minute interview, Murphy talks about manipulation of the price of gold and what he thinks gold should be priced right now. He also touches on where he thinks gold will go in the future. 

Listen to more interviews like this one at http://www.ftmdaily.com

Week in Review with Jerry Robinson

By Jerry Robinson | FTMDaily.com

What a dismal week for economic and geopolitical news!

GEOPOLITICAL TENSIONS

Of course, the big news last week came out of the Middle East. The U.S. announced new peace talks set to take place next month between Israel and the Palestinians. And after years of delays, Iran finally began loading tons of uranium fuel into their first nuclear reactor (Russian-built) on Saturday. Iran claims that they have a right to produce nuclear energy, and in an unusual gesture offered to allow oversight of their nuclear activities. Iran maintains that its intentions are peaceful.  Israel immediately denounced Iran’s new nuclear power plant calling it ‘totally unacceptable.’ In response to the news of an atomic Iran, Israeli Foreign Ministry spokesman Yossi Levy said:

“It is totally unacceptable that a country that so blatantly violates resolutions of the (United Nations) Security Council, decisions of the International Atomic Energy Agency and its commitments under the NPT (non-proliferation treaty) should enjoy the fruits of using nuclear energy.”

The U.S. appeared to disregard the political urgency of the news. Darby Holladay of the U.S. State Department told news agencies:

“We recognize that the Bushehr reactor is designed to provide civilian nuclear power and do not view it as a proliferation risk.”

However, the U.S. did admit that while Iran posed no immediate threat, they could potentially have a bomb through the conversion of fuel into weapons-grade uranium within 12 months. According to sources within Washington, U.S. and Israeli intelligence would detect such conversion “within weeks” and would have ample time to engage Iran in military strikes.

In classic form, Iran’s leader warned that an attack on the reactor would be met with a global and “painful” response.

I would expect that we will witness rising tensions followed by a full-scale war between the West and Iran within the next 18-36 months.

ECONOMIC MALAISE

On the economic front, the weekly jobless claims reached 500,000, a 9 month high. Consumer bankruptcies hit a 5 year high this week.

And it appears that the U.S. government’s “chicken in every pot” policy regarding home ownership may be coming to an end as Washington attempts to “untangle the wires” of America’s housing and mortgage crisis.

Besides, “renting” instead of “owning” is fast becoming a new normal in today’s tumultuous economy. At least so says Fortune magazine in it’s new article entitled: Five ‘new normals’ that really will stick

Flight to Safety

Flight to Safety… In other news, small investors appear to be losing their appetite for risk by fleeing the stock market for the perceived “safety” of the bond market. According to the Investment Company Institute, small investors withdrew a staggering $33.12 billion from domestic stock market mutual funds in the first seven months of this year. Click the chart to the right for more.

No Liquidity… And in a sign that American’s lack liquidity, Fidelity Investments reported this week that hardship withdrawals from 401(k) retirement saving plans rose to the highest level in 10 years during the second quarter.

When this news is coupled with the fact that most working Americans have very little liquid savings, it offers further proof that the Mutual Fund industry has successfully trained the American public to max out their 401(k) before building adequate liquid savings reserves.

The Mutual Fund industry sponsors many popular financial commentators today who fervently preach the “max out your 401(k)” gospel. Suze Orman and Dave Ramsey are just two examples of the droves of financial personalities who have been paid handsomely to pay little attention to the importance of adequate and diversified liquidity prior to “maxing out a 401(k).”

However, as of late, “abundant liquidity” has become a hallmark of many financial gurus like Orman and Ramsey. Unfortunately, this sudden emphasis upon liquidity comes late for the millions of Americans facing foreclosures and bankruptcies.

Consider for a moment that most people’s two largest assets are their primary residences and their 401(k)’s. Both of these assets are explicitly government-controlled. Diversification is the only weapon against a cash-strapped government hungry for revenue. When the government comes looking for cash where do you think it is going to look? With nearly $20 trillion in personal retirement assets, why not slap a higher distribution tax on your 401(k) and traditional IRA? Could they? Of course. What could you do about it? Nothing. Except maybe curse the Suze Ormans and Dave Ramseys of the world who told you to stuff money into a 100% government-controlled asset. Why not just put your money into a box and hand the government the key and ask them to give it back to you at retirement? That, by the way, is the definition of a 401(k)… minus Mutual Fund fees.

Across the Pond… Since making the news a couple of months ago, the country of Greece has imposed strict austerity measures. The result? Greece is in the grip of a depression. Purchasing power is dropping, consumption is taking a nosedive and the number of bankruptcies are on the rise. In addition, stores are closing, tax revenues are falling and unemployment has hit an unbelievable 70 percent in some places. Has Greece entered the death spiral? You can read more here.

Big Brother Alert… There’s more troubling news on the growing threat of government intrusion.

Biometrics R&D firm Global Rainmakers Inc. (GRI) announced today that it is rolling out its iris scanning technology to create what it calls “the most secure city in the world.” In a partnership with Leon — one of the largest cities in Mexico, with a population of more than a million — GRI will fill the city with eye-scanners. That will help law enforcement revolutionize the way we live — not to mention marketers.

The intrusion of constant government monitoring is slowly becoming a reality. We are already tracked like animals. But they won’t stop until they have total and complete control.

Is the real price of gold over $2,000 right now? My weekend radio interview with GATA Chairman, Bill Murphy, offered some unusual information. According to Murphy, the artificial suppression of the price of gold has caused the precious metal to be severely undervalued. Murphy states in the interview that if the price manipulation were to end, gold would be trading at around $2300/oz! If you are interested in the precious metals sector, do yourself a favor and take time to listen to this weekend’s radio program. You can listen to the entire show here. Or, if you prefer to listen to the show on iTunes, click here.

That’s all for this update. Look for a few blog updates this week and an excellent radio program next weekend. My guest will be geopolitical and economic analyst, Puru Saxena. Mr. Saxena will be joining me from Hong Kong.

Have a prosperous week!

About Jerry Robinson

Jerry Robinson is an economist, published author, columnist, international conference speaker, and the editor of the financial website, FTMDaily.com. In addition, Robinson hosts a weekly radio program entitled Follow the Money Weekly, an hour long radio show dedicated to deciphering the week’s economic news.

Economic Recovery or Financial Armageddon? – LISTEN NOW!

Follow the Money Weekly radio host Jerry Robinson talks with popular author and financial commentator, Michael J. Panzner regarding the most pressing economic issues. The interview includes Panzner’s outlook on inflation in the U.S., as well as his opinion about precious metals and agriculture.

Part 1

Part 2

Listen to the entire radio show, and hear more interviews like this one at our website: http://www.ftmdaily.com/ftmweekly.php

Six Important Questions for Gerald Celente – LISTEN NOW!

Follow the Money Weekly radio host Jerry Robinson asks Gerald Celente six vital questions about the times and trends of the U.S. economy. In this shocking and timely interview, you will hear Celente’s opinion of where the U.S. economy is headed, as well as what the future holds for citizen preparedness during times of war.

Part 1

Part 2

Listen to the entire radio show, and hear more interviews like this one at our website: http://www.ftmdaily.com/ftmweekly.php

6 More Reasons Why Gold is Guaranteed to Go Higher

By Jerry Robinson | FTMDaily.com

A U.S. government report issued yesterday revealed that China cut its holdings of Treasury bonds and notes by the most ever recently. China’s holdings of long-term treasurys fell by $21.2 billion in June to $839.7 billion. With U.S. interest rates at record lows, the move is not surprising. But don’t expect the Chinese to make a rapid flight from U.S. debt. Instead, I expect a slow and methodical diversification. This slow, yet steady move, will force the Federal Reserve into a corner. Their two options will be to: 1) Monetize the unsold debt by printing money or 2) Raise interest rate targets. I expect the printing presses will be employed first.

For those who still think that this economic crisis is not unique, I recommend you read a short post by the Pragmatic Capitalist entitled, “This is Not the 1930’s.” Here you will learn why unfortunately the labor market is tied to the debt levels.

The billionaire investor, George Soros, is making news this week after it was revealed that he has been dumping his hedge fund’s holdings of U.S. stocks. Now his largest holding, by percentage, is in gold. His other top holdings included convertible bonds and high tech companies like RF Micro Devices (RFMD) and Epicor Software (EPIC). And just in case you needed any more proof, here’s 6 more reasons why the price of gold is guaranteed to go higher in the coming months and years.

And finally, Google’s CEO Eric Schmidt stated this week that the private lives of young people are now so well documented on the internet (Facebook, MySpace, etc.) that many will have to change their names on reaching adulthood. Of course, Mr. Schmidt is assuming that people still feel, uh, what’s that word again? Oh yes, “shame.”

About Jerry Robinson

Jerry Robinson is an economist, published author, columnist, international conference speaker, and the editor of the financial website, FTMDaily.com. In addition, Robinson hosts a weekly radio program entitled Follow the Money Weekly, an hour long radio show dedicated to deciphering the week’s economic news.

FTM RADIO – “The Glenn Beck-Goldline Fiasco”

CLICK HERE TO HEAR THIS WEEK’S SHOW >>

On this week’s program, Jerry Robinson takes a look at the Congressional investigation into the popular precious metals dealer, Goldline. And because Goldline is one of the top sponsors of the Glenn Beck Program, the debate is becoming politically charged.Jerry and precious metals expert, Tom Cloud, discuss the good, the bad, and the ugly of the growing fiasco.

Our special guest interview is with geopolitical analyst, author, and columnist, Jeff (JR) Nyquist, who joins us to discuss Chinese and Russian attempts to topple the U.S. economy.

And we are proud to add a brand new segment this week: “Financial Strategies with John Bearss.” Finally, precious metals expert Tom Cloud gives his Precious Metals Market Update.

CLICK HERE TO HEAR THIS WEEK’S SHOW >>