Getting the Market Right: How to Use EBITDA

Transcript:
Steve McDonald (SM): Our guest this week is Marc Lichtenfeld. He’s here to talk about EBITDA. And I’ll let you explain what it is because every time I try to say it, I say income tax instead of interest, taxes, depreciation and amortization. I’m in the markets 35 years. I’ve been working in them since ’91. What were you doing in 1991?

Marc Lichtenfeld (ML): I was out of school. That’s when I was starting to learn about the markets.

SM: Okay. I don’t ever remember hearing it mentioned, but in the last five, maybe 10 years, it’s EBITDA this and EBITDA that. What is it? Why are people using it?

ML: Sure. So it’s earnings before interest, taxes, depreciation and amortization. And it’s used to kind of smooth out some of the earnings… you know, some tricky accounting mechanisms that people use because there’s so many noncash items and earnings – so many one-time items in earnings numbers.

And so EBITDA really is almost a cross between cash flow and earnings. It’s a measure of the performance of the business. So you’re taking out the interest. You’re taking out the taxes and those non cash items like depreciation and amortization.

So it’s kind of a measure of just how well the company sells its widgets or sells its services. And they look at EBITDA margins on occasion, so it’s really kind of a performance metric more than anything else.

SM: Can the average guy actually use it? I mean earnings is drilled into us. Cash flow – not quite as much – it should be, but it isn’t. How does the average guy work that into his thinking?

ML: Sure. So you can use it the same way you would use earnings and cash flow. You can look at growth metrics. Is EBITDA growing, and if so, by how much? And how does that compare with its peers in the market?

You can look at the price-to-EBITDA, just like you would a price-to-earnings ratio (P/E) or price-to-cash flow ratio. And a rough metric, you could say, is 10 times. If a stock is trading at 10 times or less its EBITDA multiple, then it’s probably inexpensive. If it’s trading at 40 times EBITDA, that’s probably very expensive.

SM: So the multiples as compared with the P/E  are going to be lower because it’s a bigger number?

ML: Yeah, exactly. And like I said, 10 times is a very ballpark number that you’d want to look at. And again, it’s going to matter what sector it’s in. If a stock is trading at 15 times EBITDA but the sector averages 20, then that’s probably a cheap stock; it probably doesn’t have to be a 10.

SM: Where is the best place to find this?

ML: It depends on the company. Some companies will come out with the EBITDA number in the press release. It will just be as plain as day.

Other times you kind of have to do the math yourself on the income statement and just subtract those other things. …read more

The Direction of Gold and Silver Prices for the Next Three Months

As they say, timing is everything. This applies in almost everything especially in investing. Although the prices of precious metals are likely to remain stable, analyzing it for a longer time table is very important before taking further action. This year has been claimed as the golden year for precious metals. The increasing incomes will likely pull up the demand of precious metals too. As the law of supply and demand states, the limited supply and high demand of precious metals will likely push the prices of precious metals higher.

Gold Price for the Next Three Months

June – For the month of June, the predicted price of gold at the beginning is $1,266/oz with $1,301/oz as the highest price and $1,177/oz as the lowest price. When calculated, the average price is $1,246 dollars per ounce.

July – For July 2018, the expected price of gold at the beginning of the month is $1,239/oz. The average price is $1,226/oz since the highest price is $1,282/oz and the lowest possible price is $1,160/oz. The price of gold at the end of the month could hit up to $1,221/oz.

August – $1,221/oz is the estimated beginning price of gold for the month of August while $1,215/oz is the predicted price at the end of the month. The price of gold for the month is averaging at $1,217/oz with $1,276/oz as the highest price and $1,154/oz as the lowest price.  Prices get harder to estimate the further out you project, so the actual values could be very different than shown.  Unforeseen events, storms, political turmoil, etc. can impact the prices greatly.

The above data shows a decrease in the price of gold, nonetheless it is expected that it will change any time soon as the demand for it keeps on growing as months go by and the value that it holds never fades no matter how long the time is.

On the other hand, the price of silver will likely maintain its value and an increase is expected due to the demand of silver in different industries. It is predicted that the lowest price for silver could be $16/oz and the highest is $21.30/oz. This is due to the limited supply of silver, but the demand is amazingly high leading its price to likely increase within the next three months. Silver remains as an attractive and versatile option for people who cannot afford the prices of buying gold.

Like any other asset, the prices of gold and silver can sharply change from time to time, yet their importance will never go out of the way. Their importance will never change no matter what the price is in as much as their uses will never be wasted no matter what the form is.

…read more

Does Your Pension Fund Have Enough Gold

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Is Gold Required for Proper Diversification in a Portfolio? (How Much is enough?)

The following video is meant to provoke some thinking in the establishment regarding financial planning. Many investors that are fortunate enough to save choose to get help investing their money because they do not want the responsibility and subtly have someone to blame if things go wrong.

For years I have approached the Financial Planning Industry only to be given the short shrift, which means even if some planners know how crucial gold is to properly diversify a portfolio almost all in the industry totally ignore gold entirely.

This video provides some insights into why and how much gold is required. Further the World Gold Council has become active in this awareness campaign.

Let me ask for your help. If you currently have a Financial Planner and they do not have you weighted properly in gold, please ask them why? Further, anyone sincerely interested in their financial future please consider posting this video to your social media, forward to those in your circle of influence and generally spread the word.

David Morgan
The Morgan Report

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There is so much information in this report. So be sure to watch the movie, understand the times we are living in, and please share with your friends, family, social media or anyone that you care about. These times are changing rapidly.

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New 20% Gold Video and Storage Problems

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Thus was born The Morgan Report – since then we’ve helped 11,000-plus members scattered over the globe in every continent and over 100,000+ e-newsletter subscribers have read our weekly e-newsletter — This Week’s View from The Morgan Report.

Through our publication, The Morgan Report, we provide you with ways to achieve greater financial security and wealth in all sorts of environments.

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Our mission statement reads…

“To teach and empower people to understand the benefits of an honest monetary system.”

Today’s monetary system is based upon a lie. The lie is that you can get something for nothing, or perhaps more simply stated, wealth can be printed. History has shown throughout 5000 years that whenever a country has tried to maintain this illusion (lie), failure has been the result. We invite you to learn more about what The Morgan Report can do for you. Click on the Learn More About The Morgan Report button now!
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Requiesce in Pace

Cemetery

This post Requiesce in Pace appeared first on Daily Reckoning.

It is Memorial Day weekend… when we pause to honor the nation’s war dead.

Most Americans will not, of course.

It is merely a chance to lie flat on a beach… to munch frankfurters… to dream the dreams of approaching summer.

We’ll be joining them of course.

We will not be planting tiny American flags atop forgotten graves this weekend.

We will not be bugling taps.

It is unlikely we will thank a veteran for his service — not because we lack respect — but because we scarcely know any.

But we remember how we were brought up short one day… strolling the American military cemetery above Omaha Beach.

The rows and rows and rows of bleach-white crosses — and an occasional Star of David — seeming to stretch from horizon to horizon.

A haunting poem from the First World War came to us as we wandered among the dead… and listened for their ghostly counsel.

“In Flanders Fields,” the poem was called.

From which:

In Flanders fields the poppies blow
Between the crosses, row on row,
That mark our place, and in the sky
The larks, still bravely singing, fly,

Scarce heard amid the guns below.
We are the Dead; short days ago
We lived, felt dawn, saw sunset glow,
Loved and were loved, and now we lie
In Flanders fields.

The American military cemetery above Omaha Beach

What fetched us was not so much the gravity of those distant events — but the soul-numbing waste of it all.

What great things may have awaited that 21-year-old second lieutenant if a German bullet hadn’t cut him down on June 6, 1944?

What did life have in store for that sergeant of the 2nd Ranger Battalion… who never made it up Pointe du Hoc?

What about this young paratrooper of the 101st Airborne Division, whose bones lie beneath a shady tree?

What might he have amounted to?

Maybe a lot.

Maybe nothing at all.

But he had a life to live. And every right to live it.

Let us also not neglect the pulverized and unidentified dead, known only to their creator.

What about the futures they never had?

“For of all sad words of tongue or pen,” lamented poet John Greenleaf Whittier, “the saddest are these:

“It might have been.”

And so before we embark on our Memorial Day weekend merriments…

Let us lower our heads in mournful reflection of America’s martial departed… and of what might have been.

Requiescant in pace.

Regards,

Brian Maher
Managing editor, The Daily Reckoning

The post Requiesce in Pace appeared first on Daily Reckoning.

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Is Legal Marijuana a Seasonal Industry?

legal marijuana seasonal industry 1

I’m sure all of our readers can name a few seasonal industries.

Tourism and hospitality earnings obviously fluctuate throughout the year. Some energy companies are affected by annual shifts between summer-blend and winter-blend gasoline. And it’s no secret that many retailers make most of their money in the last three months of the year.

But did you know that legal marijuana sales are also seasonal?

They sure are.

This week’s chart – compiled by Marijuana Business Daily using data from the Colorado Department of Revenue – shows a consistent surge in marijuana sales in the spring and summer and a drop-off in the fall.

This yearly pattern has big implications for marijuana investors – especially as Canada prepares to legalize the stuff nationwide this summer.
Why do legal marijuana sales follow the seasons?
You might think marijuana’s seasonality centers around 4/20, the annual stoner celebration. But if you look closely at the chart, you’ll see a consistent lull in April sales.

Instead, tourism seems to be the main driver of this spring and summer surge. And as I mentioned above, tourism is one of the most seasonal industries in existence.

Out-of-staters accounted for more than half of legal marijuana sales in Denver in 2014, according to a recent report from the Colorado Department of Revenue.

And a more recent study from the Colorado Tourism Office found that nearly half of the visitors polled came because of the state’s marijuana laws.

With these statistics in mind, it’s easy to see why marijuana sales fluctuate throughout the year in Colorado. They ramp up along with tourist traffic as the weather gets warmer. Then they fall during Colorado’s autumn off-season.

Why does any of this matter to your portfolio?

Because Canada is set to legalize marijuana nationwide in just a few months. It’s already the home of most publicly traded marijuana companies. And like Colorado, it has a beautiful summer tourism season and a chilly autumn off-season.

[iu-adbox]
How do you play this seasonal industry?
If Canada’s marijuana retailers are anything like Colorado’s, their seasonal trends should also be exploitable.

You could simply buy pot stocks during the autumn off-season and sell them during the summer. And you could use call options to amplify your short-term gains.

Or, for even less effort, you could just read Matthew Carr’s newsletters. He’s The Oxford Club’s resident expert on both marijuana investing and seasonal trend trading.

Good investing,

Samuel
Thoughts on this article? Leave a comment below. …read more

Getting Out of Dodge

Rare Commodity

Modern economists are prone to shouting fire in a crowded theater.  The world is full of seeming incongruences. Economists puzzle over things like population growth and arable acres of farmland. They project out a linear scenario of increasing divergence, and see a catastrophe in the making.

Professional scaremonger Thomas Robert Malthus, one in a long line of scarcity prophets who failed to recognize the capacity of human ingenuity and free markets to solve the perceived problem of “finite resources”. The effects of demographics are the exact opposite of what the scarcity scaremongers claim: there is no overpopulation problem based on the allegedly “limited carrying capacity” of the planet (as an aside, note that most of the land area of the planet remains completely devoid of people). On the contrary, the more human beings there are, the more tacit and outright knowledge exists and the more ideas and innovation can be tapped for the benefit of all – provided a free market remains operative. Unfortunately, the free market and its “anarchy of production” as Marxists used to derisively refer to it, is precisely what the scarcity prophets ultimately attack – since their demands can only be fulfilled by applying the most vicious statist coercion. [PT]

Yet it is beyond individual human capacity to precisely fit each piece of the puzzle together, particularly where the shapes and numbers of pieces are continuously changing.  That is what markets are for; to make real time corrections and adjustments, which keep things from slipping too far into disorder.

Most of the time markets work remarkably well.  But occasionally, and especially where governments have commandeered a nation’s economy or its money, disaster strikes. That’s when it’s time to get out of Dodge.

Today we greet you from beyond the outer margins of civilization.  Here in Joshua Tree, in Southern California’s High Desert, we are on a quest to unearth a rare and valuable commodity.  One that is in low supply and high demand in our day to day activities. Perhaps it is in low supply and high demand in yours too.

Specifically, the rare and valuable commodity we are after is silence.  We don’t get enough of it.  We need more of it.

The silence of outer space, where Neptune the Mystic sails on the silent wings of noise while reflecting on the ironclad principles of probabilistic processes (we’ll let you know when he comes up with a definitive theory). [PT]

Without question, silence is an essential element needed to think, contemplate, and discern just what in the world is going on.  Silence is also essential for lucid conjecture.  Without silence, it is near impossible to rise above the noise and distractions, and peer out beyond the horizon to see what’s coming.

Yet silence is not all that we are after out here in the middle of nowhere.  We are also after perspective and empirical awareness.  We want to observe how it is that anything lives in these bleak and rugged conditions. We also want to …read more

Geopolitics, Channel Stuffing, and Silver Flag Setup | David Morgan

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Geopolitics, Channel Stuffing, and Silver Flag Setup

Are global hot-spot eruptions more likely to cause flight to the US Dollar, or precious metals, or both – and in what order? Despite what the mainstream media and government stats claim, what obvious signs of our true economic health or ill are right in front of our eyes if we will only awaken?

David Morgan, renowned silver guru and author of “The Silver Manifesto,” returns to Reluctant Preppers to advise us to “choose the red pill” of awareness to the truth, and to prepare accordingly. Morgan also guides us through a deep-dive into the 2-year silver price chart to identify a technical pattern set-up that signals a likely major move ahead!

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Special Report: Silver Price Forecast: How high will the price of silver be this year? How about next year? Grab Your Silver Price Forecast Free Report Right Now! In this report you will discover Silver might surprise everybody by the end of this year.

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Special Report: Riches In Resources: The RIR report was written by myself. Often I rely on my team to help with research and trips to various companies, annual meetings, quarterly updates, conference calls, investor seminars, and all that we do to keep our members at the cutting edge of the Wealth building/Wealth preservation sector.
There is so much information in this report. So be sure to watch the movie, understand the times we are living in, and please share with your friends, family, social media or anyone that you care about. These times are changing rapidly.

Because there is a 100% failure rate of ALL fiat money throughout history, you will learn what to do by obtaining our Free Reports. Just enter your first name, your primary email address and click the Get Special Report button below.

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Our mission statement reads…

“To teach and empower people to understand the benefits of an honest monetary system.”

Today’s monetary system is based upon a lie. The lie is that you can get something for nothing, or perhaps more simply stated, wealth can be printed. History has shown throughout 5000 years that whenever a country has …read more

Let’s Agree on “How Much Is Enough”

Editor’s Note: Me again! If you’ve been keeping up with your Investment U emails this week, you’re probably thinking, “Get on with it, already! Tell us about these new and exciting changes coming to our free subscription!”

(And if you haven’t been keeping up, now’s your chance!)

In yesterday’s note, I tempted you to a game of Clue. There were two key words that stood out in ETF Strategist Nicholas Vardy’s article, The Father of Free Markets Is Not Who You Think.

Well, several of you wrote in and… all of you guessed correctly – well done!

The words that summarize Investment U’s evolving brand and mission are “liberty” and “wealth”.

We want to do more than just teach you the ropes and leave you to your own devices. Instead, we want to involve you every step of the way on the journey from financial literacy… to financial liberty.

We’re convinced that’s the shortest way to a rich life.

I promise to provide more details next week after Memorial Day.

But for now, because Alex is in transit home from The Oxford Club’s Chairman’s Circle Wealth Cruise, I’m bringing you his original answer to the column, “How Much Money Is Enough?”

Wishing you a terrific holiday weekend with lots of friends and family, beer and burgers, and health and wealth.

Donna DiVenuto-Ball, Managing Editor

I’ve written several columns addressing a foundational question about money: How much is enough?

There’s no shortage of opinions on the subject, as readers demonstrated with their own thoughts in Monday’s column. (It was a smorgasbord of the practical, the political and the philosophical.)

In our increasingly competitive world, some feel that money is the way we measure our competence, our success, even our worth as individuals.

This isn’t just wrongheaded, in my view. It’s offensive. There are plenty of folks doing incredibly skilled and underpaid work such as social workers, nurses, high school basketball coaches or Navy SEALs, to name just a few.

Many feel there is a gap between how they live and the way they should be living – and that money would make up the difference.

And perhaps it would. Money is a linchpin issue in all our lives. We want and need things. It takes money to get them.

Some live openly with the accumulation of money as a primary goal. Others think it isn’t important – or shouldn’t be.

Yet millions harbor a chronic fear that they will never truly have enough – or be able to keep it.

It’s easy for those of us with money – even if we came from nothing – to forget what a struggle life can be without it.

Studies show the majority of Americans spend almost everything they make, shouldering enormous stress as they live paycheck to paycheck.

It’s not just the poor and lower middle class, by the way. A realtor friend once told me I’d be shocked to discover how many neighbors in his gated community were “just two mortgage payments from the edge.”

Money can do great things and promote important causes. But it can also …read more

Gold and Gold Stocks – The Gloom Patrol

 

Fun with Positioning and Sentiment

Last week we discussed the gold sector “conundrum” – the odd fact that there is apparently quite strong demand for gold despite a macroeconomic environment that would normally be considered quite bearish for the metal. Gold recently seems to have lost its last remaining inter-market “ally” if you will, as the dollar has begun to enter an uptrend as well. Positioning data in precious metals futures are nevertheless rather remarkable, given the relatively benign price action in gold and silver. The mood in the sector has turned quite gloomy for no obvious reason.

The Gloom Patrol is loose – the man with a plan (a certain Mr. Nobody) and his friend Agent ! only wanted to have some fun… but the gloom proved too strong. Take it from us, when someone says  “are we not proof that the universe is a drooling idiot with no fashion sense?”, then that person must have partaken of that pure, unadulterated gloom that is well-known to be the exclusive preserve of the genus gold bug.

Below is a chart of the legacy CoT report data detailing net hedger and net large speculator positions in gold futures. These positions have reached levels that have in the past often marked lows, particularly under bull market conditions. The italicized qualification is important, as very different levels can be seen in bear markets. If one is bullish on gold, one should actually hope that large speculators as a whole don’t become too bearish – that is usually not a good sign.

On the other hand, these positions have to be brought into context. The main context in this case is prices. In other words, we are putting some weight on the impact changes in speculative positioning have on prices. We were astonished to see that gold is following a pattern we have previously observed in silver: a lot of bearish sentiment was expressed in a shift in positions despite prices exhibiting quite a bit of resilience by the standards of recent years.

Legacy CoT report: last Friday the CFTC reported that the net long position of large speculators had decreased to ~92440 contracts, while the net short position of hedgers had decreased to ~118,000 contracts. Almost exactly the same configuration was last in evidence on December 27, 2016 – both the speculative net long position and the hedger net short position were actually slightly larger then (the gap was 8,000 contracts wider). At the time gold traded slightly above $1,138 per ounce, as opposed to $1,291 when the most recent snapshot was taken. That is almost a $153 difference – one would normally expect the mood to be a bit more upbeat.

The situation is even more glaring when considering the managed money category from the disaggregated CoT report. This group includes CTAs, hedge funds and the like, and we would consider most of them technical traders, this is to say, trend followers. In other words, one would expect that most …read more

The Uses of Precious Metals

Precious metals have become an integral part in man’s day to day living. Aside from being a commodity for market volatility and economic disturbances, precious metals are used in different industries to make different products that are widely used for the advancement and comfort of living. From electronic devices to medical and beauty products, precious metals are widely used. What other major areas are precious metals used?

Aircraft Engine
Precious metals are some of the main components that are used in the aviation industry in order to manufacture aircraft engines. Commonly, precious metals are used in well over 20 parts of the aircraft engine including the blades, heat exchangers, vanes, etc.

Household Devices
Most household devices, like the refrigerator, mobile phones and computers contain precious metals. Sadly, the precious metals contained in these devices are disposable because once the device gets destroyed, recovery of the precious metal is almost impossible. The salvage and recovery industry is growing around disposing of old computer and phones, and then recovering the precious metals from the parts containing them. Also, catalytic convertors in automibiles.

Medical/ Pharmaceutical Advancement
The use of precious metals in the medical and pharmaceutical field can be clearly noticed in the past few years. This is because of the strong antibacterial properties which is extremely needed and useful especially in the medical field. They are used in a wide variety of medical and pharmaceutical products found in hospitals with the like of catheters, endotracheal tubes and hygienic coatings.

Beauty Industry
Surprisingly, the demand of precious metals used in the beauty industry is unwavering. Beauty products are embedded with precious metals, specifically gold because of its beautifying properties. Even makeups contain gold as the trend of glittering makeup is on the spot nowadays.

Food Industry
You read it right, there are foods that contain gold because of its healthy benefit. A restaurant in New York sells chicken coated in gold at a jaw dropping price, yet customers are still flocking into the store to have a taste of it.

Movie and Television Industry
Most costumes that are used in movies and televisions contain some level of precious metals. An example of this is the film Harry Potter wherein almost all costumes used greatly relied on precious metals.

Truly, precious metals are valuable assets in almost every walk of life. Their unending lists of uses is very evident especially in manufacturing and industry. It is not surprising that precious metals would continue to dominate the world be it as an asset or an investment. The use of precious metals in manufacturing processes and products has increased the sophistication and comforts of man’s living, thus the demand of precious metals will likely continue to increase.

…read more

The “Axis of Gold” Will Drive Gold Higher by the End of 2018

Chart

This post The “Axis of Gold” Will Drive Gold Higher by the End of 2018 appeared first on Daily Reckoning.

A major blind spot in U.S. strategic economic doctrine is the increasing use of physical gold by China, Russia, Iran, Turkey and others both to avoid the impact of U.S. sanctions and create an offensive counterweight to U.S. dominance of dollar payment systems.

This is the Axis of Gold.

This gold-based payments system will dilute and ultimately eliminate the impact of U.S. dollar-based sanctions.

Gold offers adversaries significant defenses against these dollar-based sanctions. Gold is physical, not digital, so it cannot be hacked or frozen. Gold is easy to transport by air to settle balance of payments or other transactions between nations.

Gold flows cannot be interdicted at SWIFT, the international payment system. Gold is fungible and non-traceable (it is an element, atomic number 79), so its origin cannot be ascertained.

We have a lot of data to support the claim that the Axis of Gold exists and is gaining strength.

We know that for example, Russia has tripled its gold reserves in the last ten years. It’s gone from about 600 tons to over 1800 tons of physical gold, and is moving very quickly towards 2,000 tons. That’s an enormous amount of gold.

China is also amassing physical gold at an astounding rate. Like Russia, it has tripled its gold reserves, officially from 1,600 tons to 1,800 tons.

But we have very good reason to believe China actually has a lot more gold than that.

China might actually own up to 4,000 tons of physical gold. We don’t know the exact number because China is highly secretive about its gold acquisitions. But that’s a reasonable estimate. China is also the world’s largest gold producer with mining output of about 450 tons per year.

Iran also has an enormous amount of gold. Iran received billions of dollars in gold from the Obama administration as bribes to join in the now discredited nuclear deal (the “JCPOA” or Joint Comprehensive Plan of Action) to limit Iran’s nuclear weapons program.

Iran has also received gold imported from Europe via Turkey, but the exact amount is unknown.

We don’t have any insight into how much it has because it’s also highly nontransparent. But in the first quarter of 2018, Iranian gold bar and coin purchases more than tripled.

Turkey is also acquiring enormous amounts of gold, which should not be surprising given Turkish president Recep Erdogan’s recent comments questioning the role of the dollar in global trade.

The Turkish central bank has almost doubled its gold holdings since last May, according to the World Gold Council. And it was the second largest buyer of gold among central banks for the first quarter of 2018.

So that’s the Axis of Gold. Again, evidence for this Axis of Gold is overwhelming.

I have contacts in the national security industry community who have, in their own roundabout way, been able to confirm that to me, so it’s very clear that’s what’s happening.

This is the type of information you don’t see …read more