If government regulations are squeezing your business, and you want to avoid the risk inherent in the mainstream financial system, what do you do?
This is true even if your business is – shall we say – not completely above board.
In fact, Japanese organized crime is reportedly turning to gold as its traditional revenue streams are squeezed by stepped-up law enforcement. Deutsche Welle reports gold smuggling and theft have risen sharply, particularly in southern Japan.
Obviously, we don’t want to get involved in organized crime, but can we learn something from these Japanese gangsters?
Gold is flowing into India and China, as demand for the yellow metal in the world’s two largest markets continues to boom.
Gold imports into India surged once again in May, building on strong March and April numbers. Increasing imports signal a continued rebound in demand for the precious metal in the world’s second-largest market after a tepid 2016.
According to a Reuters report, gold imports quadrupled in May year-on-year, coming in at 103 tons. Analysts say they expect the rise in imports will likely help support global prices in the coming months.
The Indian government set the tax rate for gold under the uniform goods and services tax lower than expected, sending a wave of optimism through the country’s gold and jewelry dealers. Analysts say the lower rate signals a potential recovery in demand for the yellow metal in the world’s second-largest market.
According to a Bloomberg report, India fixed the duty at 3% over the weekend, lower than the 5% expected.
As we pointed out last week, the Federal Reserve finds itself stuck between a rock and a hard place. Well, data released last Friday made that squeeze even tighter.
Weak employment and wages have many analysts backing off expectations for aggressive action by the Federal Reserve this year. The Fed has been talking up the economy for months to justify interest rate normalization. But the actual data tells a different story. As Peter Schiff put it in his newest podcast, the most recent weak data further undermines the Fed’s credibility.
Over the last few weeks, three states have moved measures forward that chip away at the Federal Reserve’s monopoly on money by facilitating and encouraging the use of gold and silver.
While Congress will most likely never even audit the Fed, much less end it, this kind of action at the state level can undermine the Federal Reserve. Coupled with individual action, it could effectively erode the central bank’s monopoly on money.
Gold advanced 0.05% in May, according to the Financial Times of London, finishing the month at $1,268.92 per ounce
That may not sound terribly significant, but put in a broader context, we find gold is on quite the win-streak.
May marked the fifth consecutive monthly advance for the yellow metal. The last time gold went on such an extended run was six-and-a-half-years ago. Year-to-date, gold has advanced a healthy 10.6%.
The Federal Reserve basically has two paths forward.
It can continue raising interest rates and risk popping the stock market bubble (among other balloons) it has inflated over the last 9 years. Or it can hold rates at the current artificially low rates and risk a currency crisis.
That’s it. That’s the corner the Fed and other world central banks have backed themselves into. They’re stuck between a rock and a hard place.
Leaving it in a desk drawer probably isn’t the best idea. Sticking it in a sock under your mattress isn’t exactly secure either. You could bury it in the back yard, but then you run the risk of forgetting exactly where you put it. And drawing a giant X on the ground might be a little obvious.
Storage is an important consideration when investing in physical gold and silver. You want to keep your investment safe and secure, but also accessible.
Debt is piling up worldwide. But so what?
We have described increasing levels of US debt as a “ticking debt bomb.” American families have amassed more than $1 trillion in credit card debt alone. As of the end of 2016, the average credit card debt per American household stood at $8,377. That was up from $7,893 at the end of 2016.
Of course, credit card debt makes up just one portion of US consumer indebtedness. You also have to factor auto loans and student loans into the mix. In February, total consumer credit stood at $3.79 trillion. The annual growth rate of total consumer debt is pushing 5%.
Americans tend to focus on the Federal Reserve, but often forget the US central bank isn’t the only game in town.
While Yellen and company hint they will try to continue pushing interest rates up, European Central Bank president Mario Draghi told European Parliament’s Economic and Monetary Affairs committee he intends to push ahead with his interventionist monetary policy. That means continued negative interest rates and quantitative easing for the EU.
So, are the world’s two largest central banks taking divergent paths to doom?