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Results 101–149
of 149 found.
Gold Faces Short-Term Price Trap
by John Browne of Euro Pacific Capital,
Gold appears set on a very strong upward path. However, in the short term, if global recessionary forces re-emerge and/or investors become euphoric over the US dodging a debt default, gold could face a significant price correction. If governments inflate wildly in a futile attempt to avert a pending depression, leading to stagflation, then gold should rebound in priceMy forecast should not be construed as an appeal for investors to sell their gold and try to time their way back into the market. Rather I would suggest that there may be some discounted buying opportunities in the coming months.
Obama Demagogues Default
by John Browne of Euro Pacific Capital,
Many of the key people responsible for Americas historic mess, including the President, Treasury Secretary Geithner, former NEC Director Summers, and Fed Chairman Bernanke, have pronounced publicly that a failure to lift the debt ceiling will cause a catastrophic Treasury debt default. This is simply not true. The US Treasury has tax revenues that cover the service of its current (staggering) debt of some $14.3 trillion. Yet, that doesn't mean the US government won't be forced to default in other ways.
Sovereign Debt Blows Big Holes in Big Banks
by John Browne of Euro Pacific Capital,
The past few days have been very bad for the world?s largest banks. American behemoths Citigroup and Bank of America are down about 7% each. Across the Atlantic, things are far worse. BNP Paribas, Barclays, and Banco Santander are all down 13% or more... and Socit Gnrale is down an astounding 16%! Some pundits warn of an overreaction and suggest this is a buying opportunity for the beat-up financials. I disagree. Rather, I think the financials should now be considered toxic assets. Caution is justified.
Greeks Buy Time for Insolvent Bankers and Delusional Politicians
by John Browne of Euro Pacific Capital,
Last week, the Greek parliament voted by a narrow margin to pass an economically crippling austerity plan of some $40 billion in return for some $159 billon of fresh liquidity injections. Although many hailed the event as a needed first step on a long road to recovery, I believe the austerity program will make a bad situation worse. It is a flawed solution that stems from a false premise: that Greece should continue to be part of the euro zone, and continue to use the euro as its currency. To return to national economic viability Greece must abandon its use of the euro currency.
Fed Benefits from Global Fears
by John Browne of Euro Pacific Capital,
This week, in the second in a series of less-than-impressive press conferences, Fed Chairman Ben Bernanke offered market observers little hope that any additional quantitative easing programs are on the horizon. The Chairman continues to cling to the position that the economy is improving (with the recent ?soft patch? attributable to external forces) to the extent that additional Fed support will be unnecessary. Left unsaid was any guidance as to who the Chairman believes will buy the massive amounts of Treasury debt formerly swallowed up by the QE II program?
Hard to Take a Bone from a Dog
by John Browne of Euro Pacific Capital,
Only by enacting massive reforms of major entitlements, which includes cuts to Social Security and Medicaid benefits, and reductions in military and domestic spending, will America be enabled once more to balance its books, generate real wealth, and issue sound currency.
But given all that we know of how politics works in America, how many elected officials will grab the bone from the dog's mouth and pull? Regrettably, I can't assume many are up for the challenge. As a result, we must assume the worst for the U.S. dollar.
Bernanke Double Talk Creates Opportunity
by John Browne of Euro Pacific Capital,
Fed Chairman Bernanke?s remarks at his historic first press conference were met by a tidal wave of skepticism. Although many of the mainstream outlets characterized his performance as ?serious? and ?masterful," most rank-and-file Americans were left with a very different impression. Any casual glance at the broad internet coverage of the event shows that the public is deeply skeptical of Mr. Bernanke and the actions he is taking. If that skepticism runs more than skin-deep, it could herald a fundamental change in American politics and a restoration of sound finance in America.
Silver Takes it on the Chin
by John Browne of Euro Pacific Capital,
This week saw the type of downside volatility in the precious metals market that will be remembered for years to come. For those of us who have been long gold, and silver in particular, the memories will not be pleasant. While many had been expecting a pullback in silver, when the violence did come it was still shocking. Silver shed one third of its value in less than one week. And while gold was pulled down by the general sell off in all commodities. the yellow metal shed only 6.5% during the carnage. Those mild losses should remind us that gold is not just another commodity.
Bernanke Falls Flat
by John Browne of Euro Pacific Capital,
Despite loud huzzahs from a variety of boosters who proclaimed that Chairman Bernanke spoke with gravitas and wisdom at the first ever Federal Reserve press conference, the wider investing public clearly saw the performance as unconvincing. During and immediately after the proceedings the prices of gold and silver rose strongly to new highs as the U.S. dollar plummeted. The affair seemed to solidify the understanding that Bernanke and his cohorts have no intention whatsoever to reverse the current trend of inflation and a weakening dollar.
Silver Set to Soar as Paper Folds?
by John Browne of Euro Pacific Capital,
As a result of active ?demonetization? efforts by the IMF and its member central banks, gold and silver have experienced the type of volatility that has given conservative investors reasons not to perceive the metals as dependable cash alternatives. Instead gold and silver have become known as the asset class to hold as a hedge against inflation. However, during the 1990?s, when inflation was in general much higher than it has been since the turn of the millennium, gold and silver prices drifted lower and stagnated.
Will Precious Metals Survive the Double Dip?
by John Browne of Euro Pacific Capital,
It is rare for precious metals to appreciate in parallel with the broader stock market. Yet, this has been the case in the two years since the stock market began coming back from the 2008 financial crisis. Although metals have outperformed US equities over that time frame, it is noteworthy that stocks have gone up at all. Since January 2, 2009, the S&P is up about 50%. While gold is up 68% and silver is up a staggering 267%. With rising interest rates, oil at over $100 a barrel, and the recovery running out of steam, many investors are wisely asking if the markets are set for a sharp pullback
The Insidious Effects of Japan's Disaster
by John Browne of Euro Pacific Capital,
While the world?s attention has been focused on the physical destruction wrought by the Japanese earthquake, the attempts to contain the fallout from the Fukushima Daiichi plant, and the problems that Japan faces to rebuild its infrastructure, few have illustrated how long-lasting the radiation's effects may be. There has also been little mention of how large radiological events could impact economies of countries outside the immediate fallout zone. In reality, the disaster could make as much of an impact on investors in New York, London, or Sao Paolo as it makes on an investor in Tokyo.
Saudi Arabia: More Secure Than It Appears
by John Browne of Euro Pacific Capital,
As revolution spreads throughout North Africa and the Middle East, many fear that the forces that toppled regimes in Tunisia, Egypt, and possibly Libya, will spread to the Gulf oil states, particularly Saudi Arabia. The specter of radicalized Islamist elements taking control of the world?s second largest oil producer is a justifiably harrowing prospect. However, Saudi Arabia?s political dynamics are very different from the Middle Eastern states that are in revolt. Understanding these forces should assure us that a doomsday scenario is unlikely.
Japanese Fallout May Hit Treasuries
by John Browne of Euro Pacific Capital,
As the fourth largest economy in the world, behind the EU, US, and China, any major setback in Japan likely will have widespread repercussions. Japan is also the third largest holder of US Treasuries, behind the United States and China. While it is too early even to assess the Japanese damage accurately ? let alone to forecast the full implications ? it is possible to see the potential for a meltdown of the US Treasury market and international monetary system. Current estimates hold that the Japanese disaster has already lowered world economic growth by a full percentage point for the year.
Morgan Opens Gold Window
by John Browne of Euro Pacific Capital,
Earlier this month, J.P. Morgan made an important announcement: the bank would now accept gold as collateral for loans. The move appears to have been well-timed, the price of gold and silver climbed steeply, based largely on political turmoil in the Middle East. But why should Morgan?s decision be of interest to anyone outside the bank? It can be argued that J.P. Morgan is the world?s premier major bank. As such, its decision to accept gold as collateral offers a rare glimpse into the very private financial decision-making of some of the largest and most sophisticated investors in the world.
Financial Disconnect
by John Browne of Euro Pacific Capital,
The printing of fiat money is likely to be able to sustain a false economic recovery for some time. But, eventually, the cost will be a rapid erosion of the value of the US dollar ? not just in real terms, but also against almost every other foreign currency. Despite possible short-term corrections, gold and silver holdings are likely best to shield investors from the perils that lie ahead.
Is The US Rally Sustainable?
by John Browne of Euro Pacific Capital,
The impressive recovery experienced recently by the US stock market is unlikely to be sustained through natural means. When the markets do ultimately turn south, the Fed will surely arrive on the scene with more liquidity. When that happens, the very currency upon which these investments are based will erode from under them.
Pie in the Sky
by John Browne of Euro Pacific Capital,
Investors would be well-advised to retain a jaundiced view of all political statements, especially those of central bankers and politicians positioning themselves for the next election. In 2011, investors should focus their eyes not on the sky, but at the brick wall our Union is fast approaching.
The Great Debt Shift
by John Browne of Euro Pacific Capital,
If one were asked to describe the major global economic changes that have unfolded since the financial crisis began, a good starting place would be the massive shift of debt from the private to the public sector. Attempting to arrest a deepening crisis, governments all around the world have bailed out businesses and companies by transferring bad debts to the public books. Although these moves have provided some current stability (after all, governments are much less likely to default), the long-term consequences may be dire.
Will The Tea Party Congress Bring Recovery?
by John Browne of Euro Pacific Capital,
If the Republicans make good on their campaign promises, we will see cuts in government spending and an end to fiscal stimulus. Given that short-term stock market performance is very much dependent on such government assistance, the current rally is hard to fathom. Meanwhile, gold and silver have experienced a counterintuitive correction (although to be honest, pundits are making much more of this 4% pullback than the size of the move merits). Could it be that the markets now believe that fiscal restraint in Washington is the best pathway to growth?
The Waves of 2011
by John Browne of Euro Pacific Capital,
2011 likely will open with a deepening recession, increasing austerity, and falling asset prices. If this is met by a new round of inflation creation and yuan revaluation, then investors should weigh whether to redeploy assets in anticipation of potential rising commodity prices. I expect these developments not to happen gradually, but to come in great waves. Smart investors will tie their fate to an investment vessel with a solid hull, because in these seas, even a hint of rot could tear a ship asunder.
The Dollar Threads a Needle
by John Browne of Euro Pacific Capital,
Forecasting the dollar?s short-term relative value is an extremely difficult exercise. Sadly, logic holds little sway in the current marketplace. However, over the longer term, I believe dollar weakness will undermine the market ? just as we saw with the dot-coms and real estate. At some point, fundamentals will be felt.
Two Flawed Currencies
by John Browne of Euro Pacific Capital,
Despite America?s economic problems, the US dollar has maintained its respected status the world over ? and has even managed to maintain value in comparison to other currencies. The dollar?s charmed life stands in strong contrast to the euro, which is currently suffering from its internal flaws and the Europeans' unfortunate recognition of reality.
The Dollar Survives Again
by John Browne of Euro Pacific Capital,
As far as investors are concerned, the G-20 provided little new information, but confirmed the continuing drift. The international monetary system is still based upon the gravely flawed U.S. dollar. The Yuan will not be allowed to rise in the near term, the euro faces great political challenges, and the U.S. dollar seems continually to be devalued. Meantime, precious metals, key commodities, and hard currencies should continue to benefit.
A Bad Plan Poorly Disguised
by John Browne of Euro Pacific Capital,
With our economy sagging and our international clout waning, one of the few assets upon which the US can rely is the confidence that the rest of the world has traditionally showered upon us. That confidence is the reason why the US dollar was elevated to global reserve status more than 65 years ago. With so much riding on perception, Tim Geithner?s recent statements denying the existence of a dollar debasement campaign could not be seen as anything less than foolhardy.
Beware the Fed Tide
by John Browne of Euro Pacific Capital,
This week desperation became palpable at the Fed. In both the formulaic statement that accompanied its Federal Open Marked Committee policy decision and Chairman Ben Bernanke's unusual (and clumsy) Washington Post op-ed follow up, the guardians of our currency expressed grave disappointment at the slow pace of U.S. economic recovery and emphasized the continued threat of deflation. The Fed is now pledging to defeat this recession using any monetary means necessary. Unfortunately, their embrace threatens to smother our economy.
The One-Sided Compromise
by John Browne of Euro Pacific Capital,
Last weekend at the meeting of G-20 finance ministers China agreed to 'look into' a revaluation of the yuan and the management of trade surpluses in return for accepting America's continued dollar debasement. They also agreed to an international self-policing regime to curb currency manipulation. Secretary Geithner?s 'victory' at the G-20, however, was a Pyrrhic one. China will now become the third-largest shareholder in the IMF, and developing economies will get a six percent larger voting share.
Global Currency Meltdown
by John Browne of Euro Pacific Capital,
The Fed is being pressured to erode the value of the U.S. dollar in order making foreign sales more lucrative in nominal terms. But this form of stealth protectionism will fail just as surely as more overt trade barriers. Only when currencies are allowed to float freely will trade imbalances be corrected. Washington's attempt to force the issue is only doing harm to the world economy by introducing uncertainty and punishing the prudent. The Fed has gone radioactive, setting off a global currency meltdown. Perhaps only gold can truly shield investors from the fallout.
A Candid Appraisal of the Recovery
by John Browne of Euro Pacific Capital,
Over the last two weeks, seemingly good economic news offered some shreds of optimism to a stock market that was desperate for a pick-me-up. Although it hard to begrudge the punch drunk for grasping at a little hope, however, investing is a dispassionate endeavor that calls for close and realistic analysis. Any structural changes to the economy will come slowly ? and perhaps too late. Meanwhile, whatever actions the Fed takes in the name of further stimulus will sacrifice long-term sustainability in favor of a short-term boom.
Buy and Hold Still Holds
by John Browne of Euro Pacific Capital,
As Americans have justifiably lost faith in the stock market, the classic buy-and-hold investment strategy has fallen from favor. The problem is that retail investors are wrongly equating the performance of stocks as a class with the trajectory of American stocks in particular. Fortunately, buy-and-hold still works in many parts of the world. Meanwhile, retail investors sitting in U.S. bonds and bank accounts will ultimately pay a steep price through inflation.
Take Your Pick: Sinking US or Soaring BRIC
by John Browne of Euro Pacific Capital,
If America is headed for depression, then US equity, real estate and even bond investments may become increasingly risky relative to the BRICs. Investors still holding US securities and bonds might wish to follow the example of the People?s Bank of China and begin harvesting their dollar gains. With the proceeds, investors should allocate to economies showing growth based on genuine demand and solid fundamentals.
America, the Odd Man Out
by John Browne of Euro Pacific Capital,
At long last, a good portion of mainstream economists now concede that a 'double-dip' recession is in the cards for the United States. To head off the pain, 16 top economists sent an open letter to the President urging him to 'stimulate' the economy with a massive new round of government spending. We feel this is a recipe for turning a recession into a depression.
A Precious Metals Bubble?
by John Browne of Euro Pacific Capital,
In the first few days of July, the prices of gold and silver appeared to break a five-month upward trend by drawing back about 5 percent from the record June peaks. Despite many similar corrections that have occurred frequently during the long bull market in precious metals, pundits nevertheless looked to draw bold and significant conclusions from the drop.
Government Policies Pushing Towards Depression
by John Browne of Euro Pacific Capital,
As leaders around the world look to tighten the reins on out of control spending, President Obama and his Democratic supporters in Congress believe that their stimulus actions have succeeded and should be redoubled. Armed with nothing more than faith in government and a belief that spending is both a means and an end, it appears that the U.S. stimulus policy will continue. The net result of these efforts will not be a more vibrant economy, but the perpetuation of fear and confusion in the business community and the continuing expansion of deficits that will lead inevitably to higher taxes.
Stalemate in Toronto
by John Browne of Euro Pacific Capital,
The G20 summit was an attempt to ignore the out-of-control spending contained in Western governments' budgets and instead unite behind a banner that they called "financial responsibility." This is akin to a group of Mafiosi holding a summit on business ethics. President Obama had three goals going into the summit; none were achieved.
Suiting Up For a Post-Dollar World
by John Browne of Euro Pacific Capital,
The U.S. has always benefited from its reserve-currency status, which allows it to accumulate unsustainable debts for an unusually long period without the immediate repercussions of inflation or higher borrowing costs. This false sense of security, however, may be setting us up for a truly monumental crash. After two decades as net sellers of gold, foreign central banks have now become net buyers. What's more, more than half of central bank officials surveyed by UBS didn't think the dollar would be the world's reserve in 2035.
Uncertainty Reigns Supreme
by John Browne of Euro Pacific Capital,
Five factors contribute to uncertainty in the market: doubt as to whether the euro will survive, "lurching socialism" in western economies, increased lending between banks and lack of credit for companies, fear that the finance industry is being targeted by politicians, and measures by Germany - such as banning naked short-selling - in reaction to the euro crisis. Those five factors are driving increased volatility.
Reports of Our Recovery Are Greatly Exaggerated
by John Browne of Euro Pacific Capital,
From all outward appearances, it seems that a grim chapter in U.S. economic history has come to an end. The economic position of the United States and the member states of the European Union, excluding Germany, however, is not as healthy as our media and politicians would have us believe. The danger is even greater when measured against the relative security and economic success of China, India, Brazil, Australia, Canada and New Zealand. In these countries, economic growth and financial responsibility are real. At home, the reports of our recovery are greatly exaggerated.
Mr. Hu, Tear Down This Wall!
by John Browne of Euro Pacific Capital,
Over the last few decades, China has built a 'Great Firewall' to keep socially disruptive web content from reaching its citizens. American companies have long acquiesced to this censorship charade in order to have access to China's booming online market. Last week, however, Google changed its mind, shut down its regulated site on the mainland, and redirected users to its uncensored Hong Kong portal. This laudable act of defiance indicates that China's bustling marketplace is straining under its authoritarian political regime. Euro Pacific Capital expects the regime to yield.
Bull Market or Just Bull?
by John Browne of Euro Pacific Capital,
As the markets have rebounded from the brink of disaster, many Wall Street cheerleaders have proclaimed the dawning of a major new bull market. If we measure market cycles biannually, and if bull markets need not eclipse peaks achieved in previous cycles, then this forecast is spot on. The political, economic and financial fundamentals of our new big government era, however, do not support a sunny long-term outlook for U.S. stocks, and may even presage a second financial crisis.
Unlocking the Jobs Dilemma
by John Browne of Euro Pacific Capital,
Politicians in the U.S. and Western Europe have placed productive, private-sector jobs - the lifeblood of a sound economy - under assault. Most American job losses in recent decades resulted from outsourcing to more competitive economies because of the harmful effects of domestic government policies. Big spending will not resolve this deleterious situation. The only realistic solution is to unlock the power of the entrepreneurial spirit by shrinking government and removing subsidies and guarantees to big businesses.
The Dominoes of Default
by John Browne of Euro Pacific Capital,
The sovereign debt crisis in Greece has drawn attention to countries with similar fiscal conditions, including the United Kingdom. Fueled by socialist fiscal policies, the debt ratio in Britain is rapidly approaching Greek levels. The pound sterling has lost 25 percent of its value relative to the U.S. dollar since mid-2008. U.S. sovereign debt is in nearly the same proportion relative to GDP as debt in the U.K. If the U.K. defaults on its debt, the U.S. may be the next domino to fall.
Will the Pause Refresh?
by John Browne of Euro Pacific Capital,
Western governments allowed their structural deficits to fester during the current lull in the economic storm. Major players in the world financial system such as the United Kingdom and the United States now face the threat of default. Countries such as China, India and Switzerland that have pulled their wealth into the sturdy shelter of gold, by contrast, will likely emerge battered but viable.
Paper Hangers
by John Browne of Euro Pacific Capital,
The 80-year decline in central banking discipline is the biggest problem facing developed economies. Finance ministers from Washington to London, Tokyo, Madrid and Athens are attempting to fill fiscal gaps by issuing greater quantities of currency and debt. Governments need to curtail spending in order to meet financial obligations.
Euro Trashed?
by John Browne of Euro Pacific Capital,
John Browne of Euro Pacific Capital says in his market commentary that Greece's debt crisis represents the first real test of the eurozone. A bailout of the Greek government financed by Germany and other EU member states might stabilize the euro in the short term, but would put the union on a path toward gradual monetary collapse. On the other hand, a Greek default might hurt in the short term but would preserve the integrity of the currency.
Results 101–149
of 149 found.
