YOU'VE BEEN WARNED🔴 Prepare For Global Debt Bubble Collapse with Gold & Silver In Feb 2019

These Billionaires Are Issuing Terrifying Warnings About Global Debt Levels

With all types of debt at all-time record highs, this is going to end badly, and now these billionaires are issuing some terrifying warnings… We write a lot about global debt levels at Sovereign Man.

In fact, the very first Notes from the Field I ever wrote, in June 2009, was about how broke the US was… and the severe consequences that eventually face a nation that recklessly spends money it doesn’t have.

And debt has been a major theme in this publication ever since.

As you know, since the Great Financial Crisis in 2008, debt levels have only gotten worse. But not just for governments.

Sovereign debt, corporate debt and consumer debt are all at all-time highs.

The US government has $22 trillion of debt and is running $1 trillion+ deficits every year. There’s a record $15 trillion of corporate debt. And the US consumer has racked up around $4 trillion of debt (not including mortgages).

And you don’t have to take my word for it that this is all going to end badly…

Last week, one of the most respected hedge fund managers in the world came out with a warning scarier than anything we could have dreamed of.

Seth Klarman runs the $28 billion hedge fund, Baupost Group. The guy is famously secretive (and conservative). So the fact that he went out of his way to make this public statement means you should pay attention.

Also, Klarman’s fund is closed (he’s actually been returning money), so he’s not doing this to scare people into investing in his fund.

In a 22-page letter to his investors, Klarman warned that government debt levels, particularly in the US (where debt exceeds GDP), could lead to the next global financial crisis.

“The seeds of the next major financial crisis (or the one after that) may well be found in today’s sovereign debt levels,” he wrote.

In addition to debt levels, Klarman is worried about the increasing social unrest (something we’ve written about in detail) and the public’s inability to decipher who is telling the truth these days between politicians and the media… both of which make it difficult for a capitalist system to thrive.

Who knows what will ultimately bring the system crashing down, but let’s focus on the US government’s exploding deficits…

In 2018, the federal government’s deficit hit $1 trillion. But these are “good times,” with soaring asset prices, solid corporate profits and record-low unemployment.

What happens when a recession inevitably occurs. Our friend Jim Grant of Grant’s Interest Rate Observer, says the deficit will blow out to $2 trillion.

So, $22 trillion in the whole and a $1 trillion deficit in a good year. Not to mention, interest rates are rising, which means all of this debt is just getting more expensive.

Eventually, people will simply refuse to lend Uncle Sam any more money… because they know there’s no way they’ll be repaid.

And we’re already seeing signs of that.

According to the Wall Street Journal, in the first eight months of 2018, overseas buyers of US Treasurys only bought half the amount they did over the same period in 2017.

From Klarman:

“There is no way to know how much debt is too much, but America will inevitably reach an inflection point whereupon a suddenly more skeptical debt market will refuse to continue to lend to us at rates we can afford…”

And when fewer people want your bonds, that means it’s more expensive to borrow. But the government can’t afford to pay any more…

The government already spends 28% of its revenue just on interest (at a time when interest rates are near all-time lows).

Ultimately, Klarman believes the debt (along with the massive wealth disparity caused by a 10-year asset price boom) will lead to social unrest…

“It is not hard to imagine worsening social unrest among a generation that is falling behind economically and feels betrayed by a massive national debt that was incurred without any obvious benefit to them.”

Again, this isn’t Sovereign Man speaking… it’s a bespectacled hedge fund manager out of Boston.

Another line from Klarman that comes straight from Notes… “By the time such a crisis hits, it will likely be too late to get our house in order.”

But Klarman isn’t the only billionaire alerting the public right now…

At the recent Davos gathering, Ray Dalio, founder of the world’s largest hedge fund, said he thinks the next downturn will be worse than the Great Depression.

And like Klarman, Dalio says the problem comes down to too much debt…

“The biggest issue is that there is only so much one can squeeze out of a debt cycle and most countries are approaching those limits”.

The world is drowning in debt. And there’s no austerity measures in sight. In fact, a rising tide of socialist politicians want to explode government spending (paying for free healthcare, education and everything else under the sun).

We don’t know when this monetary experiment will end. The European Central Bank and Bank of Japan both essentially reneged on their plans to start tightening monetary policy. And yesterday, the Federal Reserve has signaled it will stop hiking rates.

Global central banks, it seems, have already given up on their weak attempts to tighten… fearing the economy wouldn’t hold up.

If they step back on the gas of QE, I believe that’s the point when people lose faith in fiat… and the US dollar specifically.

And while this all goes down, the central banks (who control the printing press) have been buying gold at the fastest pace in years. You may want to consider doing the same.

Gold is one of the few asset classes that hasn’t risen to absurd heights. But it may be coming back to life… the metal rallied to an eight-month high this week.

Sudden Sentiment Shift: The Mainstream Rediscovers Precious Metals

Gold & silver, after being pretty much ignored for the past few years, are now the shiny new toys of the investment world. John Rubino explains… It’s amazing what a few weeks of outperformance will do for an asset class.

Gold and silver, after being pretty much ignored for the past few years, are now the shiny new toys of the investment world. From just the past couple of days:

Highest Central Bank Buying in 50 Years Drives Growth in Gold Demand in 2018

(MarketWatch) – Global gold demand reached 4,345.1 tonnes (t) in 2018, up 4% on 2017 and in line with five-year average demand of 4,347.5t, according to the World Gold Council’s latest Gold Demand Trends report. The annual increase was driven by a multi-decade high in central bank buying and accelerated investment in bars and coins during the second half of the year. While annual inflows into exchange-traded funds (ETFs) were down 67% in 2018, demand was boosted in the final quarter by inflows of 112.4t.

Central banks added 651.5t to official gold reserves in 2018, up 74% on 2017 and the second highest yearly total on record. Net purchases jumped to their highest level since the end of US dollar convertibility into gold in 1971, as a greater pool of central banks turned to gold as a diversifier.

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‘Long Gold’ Is Goldman’s Favorite Commodity Play Right Now

(Kitco) – On top of being bullish on gold prices this year, Goldman Sachs’ favorite commodity play at the moment is “long gold.”

Gold has a lot of potential and can hit $1,450, according to Jeffrey Currie, global head of commodities research at Goldman Sachs.

When asked about his top play on commodities during an interview with Bloomberg this week, Currie replied: “Long gold, we see that one with the most upside.”

The reason for such an optimistic outlook on the yellow metal this year includes recession fears, gold’s wealth-effect, and central bank buying, according to Goldman.

“We believe the world is A-ok right now, however, recessionary fears remain high and that is increasing the physical demand for gold. Wealth-effect is better for gold, and finally central banks are buying,” Currie said.

In terms of which banks are buying, Currie highlighted that India bought 70 tonnes last year and China started re-entering the market.

“One hundred tonnes of central bank buying gets you to $1,425 alone. Our target is $1,450,” he said.

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CNBC’s Jim Cramer thinks Gold is going to $1,500

(Kitco News) – As gold prices wrapped up another great session and hit fresh eight-month highs, Mad Money’s Jim Cramer said that he is a gold “believer.”

“We are big gold believers here. Now gold is at $1,300, we think gold is going to $1,400-$1,500. We suggest that everybody have a little bit of gold in their portfolio,” Cramer said on Wednesday.

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Silver Eagle sales jump in January

(SRSRocco) – As the demand for precious metals shows some life once again, sales of the U.S. Mint Silver Eagles jumped in January. Not only have Gold, and Silver Eagle sales increased, so have the precious metals prices. In the past two months, gold and silver prices have gained 7% and 11% respectively. Today, gold reached $1,320, while silver topped $16.

While January sales of Silver Eagles fell to a low last year at 3.2 million oz (Moz), down from 5.1 Moz in 2017, they picked up this month surpassing 4 Moz. According to the U.S. Mint’s most recent update, Silver Eagle sales totaled 4,017,500 versus 3,235,000 last year:

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Why 2019 could be Gold’s year

(ETF Daily) – Gold was stuck in a rut before it began to move up last fall, and it’s now back at $1,300 per ounce for the first time in eight months.

Gold futures closed above the key $1,300 per troy ounce this week, and the February contract closed at a high of $1,308.90 Tuesday. Gold had fallen into a slump last summer and had been held back by a soft demand picture

The changing demand dynamic, and a flight to safety by skittish investors has changed the prospects for gold and it could perform much better in 2019.

“This could be gold’s year,” said Suki Cooper, precious metals at Standard Chartered Bank. Since mid-November, when gold was at $1,200, it has gained about 9 percent.

“You could start see prices trading toward $1,400 by the end of the year,” Cooper said. Gold has not been at $1,400 since September 2013.

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Silver Shortage Promises to Boost Price in 2019

(Bloomberg) — Think of it as a potential silver lining for investors. A deepening shortage is promising to help boost prices as haven demand for the precious white metal rebounds in 2019.

Silver surged 9.1 percent in December, its biggest monthly gain in almost two years. The commodity has benefited as a persistent trade war, weakening dollar and prospects of slower pace of U.S. rate increases drove haven demand for precious metals. The price outlook is improving at a time when demand for gold’s cheaper cousin is poised to top production for a seventh straight year.

With miners avoiding new projects amid global economic uncertainty, the price could spike as high as $17.50 an ounce from about $15.87 now, according to a Bloomberg survey of 11 traders and analysts. About 26,000 tons of silver is expected to be produced this year, according to estimates by Robin Bhar, a London-based analyst at Societe Generale SA. That would be the least since 2013, and means global physical demand will again top output.

“Supply growth has started to slow, more than for any other precious metal,” said John LaForge, the head of real assets strategy at Wells Fargo Investment Institute.

What do all the headlines mean for future demand? As technical analyst Michael Oliver told mining analyst Jay Taylor in a recent interview:

Even [financial advisors] who don’t like gold are getting calls from clients asking “how come we don’t have any gold in our accounts? It’s the best performing asset for the last six months.” Once non-gold people realize it’s the best performing asset out there, they’ll be forced into it, which will widen the investor base for gold mining stocks. If just a small part of what’s in the broader stock market flowed into gold that’s a huge rush of money for such a small sector. The gold and silver miners will probably be the best place on the planet.

Gold Bugs Look Out, the Federal Reserve Just Made a Case For Higher Gold Prices

Gold Prices Could Be Setting Up to Soar, All Thanks to the Federal Reserve

The Federal Reserve has just made a very strong case for owning gold. It wouldn’t be shocking to see gold prices surging in the coming months.

You see, over the past few years, the Fed has been adamant that it will continue to raise rates, which put pressure on gold. The narrative was that gold is a useless asset in times of rising interest rates. Investors followed through and ditched the precious metal.

But now, the Federal Reserve’s rhetoric is changing. According to its most recent monetary statement, “In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.” Put simply, the Fed is pretty much saying it’s slightly concerned about what’s happening, and may not be raising rates going forward.

The Federal Reserve was very aggressive in raising rates and made it very clear that it would not stop no matter what. Recall how President Donald Trump was telling the Fed that it’s doing a bad job and shouldn’t raise rates, and the board didn’t listen?

This is very big news—and very bullish for gold bugs.

Here’s the kicker: as the Federal Reserve has hinted it won’t raise rates, there’s already a lot of talk about how rate cuts could be on the table down the road.

However, that would be getting ahead of ourselves.

What Should Gold Bugs Know Going Forward?

Don’t be shocked if those who ditched gold between 2013 and 2015 suddenly rethink their decision and start buying. This could cause gold prices to move higher.

However, if you are looking for leveraged returns, it would be wise to pay close attention to gold mining stocks. They tend to outperform performance on gold bullion by a large margin.

Over the past few years, gold mining stocks have been heavily scrutinized by investors. Should we see a bull run in gold prices, it wouldn’t be surprising to see them do much better than they did in the previous bull market.

How High Could Gold Prices Go?

Over the past few years, we have seen a formation of a technical analysis pattern called an ascending triangle on the gold price chart (above). This pattern develops when there’s an uptrend but the price finds it difficult to pass beyond a resistance level.

For gold, this resistance level has been around $1,355 to $1,375.

Note that price starts to escalate once the resistance level is broken.

As it stands, we are seeing bullish momentum. Indicators like the moving average convergence/divergence (MACD), plotted on the chart above, say buyers are present, purchasing, and could take gold prices much higher—that is, assuming the price breaks above resistance.

To predict where gold prices could go next, technical analysts usually measure the widest part of the triangle and add its length above the breakout level.

In this case, the widest part of the triangle is the price action between December 2015 and July 2016 at about $300.00. Adding that to the breakout level of $1,375, we could see gold prices as high as $1,675.

Time will obviously tell. However, I remain bullish and believe it would be foolish not to look at gold as the Fed mulls over rate increases.