China

Jim Rogers Names ‘Top Three Best Currencies To Hold In Your Asset Portfolio’

Well-known investor, author, and financial commentator Jim Rogers was recently interviewed by Geoff Rutherford for Sprott Money News. Rogers talked about a number of financial/investment topics, including currencies. From their exchange recorded March 12, 2015:

RUTHERFORD: Right. Now kind of, I guess, tying in with this as well. The next question is, what are the top three best currencies to hold in your asset portfolio? And likewise, this must be from one of our Canadian listeners, where does Canada fit into the above question?
ROGERS: Well, I’ll tell you, my top three at the moment- my top three at the moment are the U.S. dollar, the Chinese renminbi, and the Hong Kong dollar. Those are the ones I own the most. Hong Kong dollar of course is tied to the U.S. dollar at the moment. The Canadian dollar- I own some Canadian dollars. Canada has been a sounder country than the U.S. for the past 30 years say. No, not 30 years, past 20 years that Canada’s been run more on a sounder basis than the U.S. So I still own some Canadian dollars. They’re certainly down in the last two or three years against the U.S. dollar for a variety of reasons, but I still own Canadian dollars.

(Editor’s note: Bold added for emphasis)


“Ask The Expert – Jim Rogers (March 2015) | Sprott Money News”
(Currency discussion starts @ 7:29)
YouTube Video

The last time I blogged about Rogers and currencies, I noted back on November 11, 2014, he had just bought Russian rubles.

The former investing partner of George Soros also talked about gold, the taxation of U.S. bullion coins, China, Russia, the U.S. dollar as the world’s reserve currency, the safest countries to keeps money and assets, and Canada in this installment of “Ask The Expert”.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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The ‘Fearmongers’ Will Get The Last Laugh

I haven’t had much to blog about recently when it comes to the “crash prophets”- Marc Faber, Jeremy Grantham, Jim Rogers, and Peter Schiff.

I have noticed one thing though. These individuals appear to be coming under a growing barrage of attacks in the mainstream media and elsewhere lately. Following them as I have for a number of years (anyone remember when I used to be the editor of Investorazzi.com, “Tracking The World’s Greatest Investors,” from 2008 to 2010?), the harsh atmosphere feels a lot like it did in the middle of the last decade, when these four were calling for the bottom to fall out of the housing and stock markets, the economy, and larger financial system- and were subsequently ridiculed for it.

We all know what happened next. And the initial pain could have been a hell of a lot worse if Washington and the Fed hadn’t papered up that debacle and kicked it down the road a few years into the future.

As for their antagonists back then? Well, a particular line from “Grace” the school secretary in the 1986 film Ferris Bueller’s Day Off comes to mind when I think of their fate:

Well, makes you look like an ass is what he does, Ed.

These days, it’s an all-out assault again on Faber, Grantham, Rogers, and Schiff by the financial Pollyannas, emboldened by some positive economic/investment data in an overall lame recovery, historically-speaking. Case in point, a February 26 Yahoo! Finance article in which Jeff Macke wrote:

The Dow Jones Industrial Average made a fresh high, joining its cousin the S&P 500 and now we await the Nasdaq to push above 5,048. Instead of celebrating prosperity here’s what the media is likely to do which is the wrong attitude.

Trot out the usual cast of fearmongers to tell everyone why a biblical crisis is in our immediate future. This week it was Nobel Prize winning Yale Professor Robert Shiller…

I’m not picking on him. Quite the opposite. As fear mongers go Shiller is the best of them. The worst is probably Marc Faber who emerges from a cave in Switzerland periodically to call for “an 1987 level crash”. Faber started making that explicit prediction in spring of 2012 when he said the chances of a global recession that year or 2013 were 100%. He was wrong of course but that was a better call than his 2009 prediction that the U.S. would suffer hyperinflation levels only seen in Zimbabwe. For the record Zimbabwe experienced 231 million percent inflation that year. If Faber isn’t wrong on that call he is very, very, very early…

A couple of things came to mind reading Macke’s piece:

When did high stock prices become interchangeable for “prosperity”? I’d like to see the evidence demonstrating real economic prosperity and a booming stock market go hand-in-hand each and every time. Last I heard, the White House and the Fed were still on their knees praying this happens.
• Robert Shiller a “fearmonger”? If I’m not mistaken, didn’t Dr. Shiller spot both the dot-com bubble and the housing bubble? Fearmonger? Try a damned good economist. And a public servant for warning anyone who would listen about these financial debacles.
• “The worst is probably Marc Faber…” The same Dr. Faber that became well-known for advising clients to get out of the U.S. stock market one week before the October 1987 crash, for predicting the 2008 global financial crisis, for calling the March 2009 U.S. stock market bottom and subsequent rally, in addition to correctly-forecasting the rise of commodities, emerging markets, and China in the 2000s? Yeah, he’s the worst.

“But that was a better call than his 2009 prediction that the U.S. would suffer hyperinflation levels only seen in Zimbabwe. For the record Zimbabwe experienced 231 million percent inflation that year.” Did Dr. Faber predict Zimbabwe-like hyperinflation would strike the U.S. between January 1, 2009, and December 31, 2009 (which seems to be insinuated by the inclusion of that second sentence), or did Faber make this forecast during 2009 that it would eventually occur here? I see the haters have latched on to the former. In which case, produce the evidence he said hyperinflation would strike the U.S. in that particular year.

You see, here are the problems with such attacks on Marc Faber, Jeremy Grantham, Jim Rogers, Peter Schiff, and others.

• First, the “crash prophets” have a pretty solid track record over time when it comes to making correct market/investment calls. Over the years I’ve read material by journalists confirming this. Plus, I’ve catalogued it on the “Crash Prophets” page. That being said, no one’s perfect, and bad calls happen once in a while.
• Second, unless specifically stated, since I started observing Marc Faber, Jeremy Grantham, Jim Rogers, and Peter Schiff a decade ago, I get the impression they take a long-term approach to many of their forecasts. Yet, the attacks often consist of trying to call the outcome of the ball game while it’s still in the early innings, so to speak. I can’t even begin to count how many times I’ve heard/read attempts to discredit these guys because something they predicted still hadn’t materialized. Perhaps it’s because the forecasted event is still unfolding?
• Third, investigating where and from whom the attacks are coming from often reveals the real motives behind the trash-talk. And many times, “where you stand depends on where you sit.” In other words, lots of obvious self-interest out there.

I expect attacks on Marc Faber, Jeremy Grantham, Jim Rogers, Peter Schiff, and other “crash prophets” to intensify as the nation’s “financial reckoning day” grows closer. It’s an evitable consequence of not donning rose-colored goggles and playing ball with the Pollyannas.

But like in the period of time after the housing crash, the “Panic of ’08,” and subsequent “Great Recession,” I’m pretty sure these esteemed investors/money managers will be having the last laugh.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein)

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Signs Of The Time, Part 82

I had a tough choice to make earlier tonight- either watch President Obama’s 2015 State of the Union Speech, or finish up doing laundry.

After all my clothes were put away, I saw on my Internet service provider’s home page some jibberish about how some “shadow of crisis” had passed. I pulled up a transcript of the President’s speech tonight and sure enough there was this:

America, for all that we’ve endured; for all the grit and hard work required to come back; for all the tasks that lie ahead, know this:

The shadow of crisis has passed, and the State of the Union is strong.

At this moment — with a growing economy, shrinking deficits, bustling industry, and booming energy production — we have risen from recession freer to write our own future than any other nation on Earth. It’s now up to us to choose who we want to be over the next fifteen years, and for decades to come…

Mark my words. The “shadow of crisis” hasn’t passed. It was merely papered over. Keynesian “enlightenment,” government intervention, bailouts, stimulus packages, quantitative easing, QE 1, QE 2, QE 3, willing-and-able presstitutes, and what do we have? The Not-So-Great Recovery. Answer me this- if the economy is so strong, why have interest rates been effectively at zero for how many years now? “But Janet Yellen and the Federal Reserve are going to start raising interest rates soon.” We’ll see, but if they do, I suspect rates will be raised incrementally, and I can’t help but wonder if the next few years won’t resemble the early part of last decade when a housing bubble inflated (and eventually popped) under the guise of a strong economy, but with the Fed slow on the trigger to raise rates and take way the punch bowl. This time around, we could even have multiple asset bubbles (in bonds? housing? stocks?) formed before the next installment of the longer financial crash arrives. Who knows exactly how the next crisis will play out, but I’m pretty sure the end result will be much uglier than the last episode. Not many bullets left for Uncle Sam and the central bank to use.

One more thing. “We have risen from recession freer to write our own future than any other nation on Earth.” God forbid anyone scratch the surface to reveal how many more trillions of dollars of debt has been piled on our financial house of cards in order to kick the can down the road a little bit more. There’s no escaping the fact that the United States is the world’s largest debtor nation. And another inconvenient fact happens to be that taking on significant debt is akin to slavery.

“Freer to write our own future.” If only it were true. Financial reckoning day is more like it.

I’ll leave Survival And Prosperity readers with this. Back in the early 1990s while attending the University of Illinois in Urbana-Champaign I remember listening to a recording of “The Rat Pack” in action. Frank Sinatra was chiding Dean Martin and Sammy Davis, Jr. Now, the “Chairman Of The Board” made an observation that better describes the situation we’re in than what the President Of The United States said this evening:

You’ve had your fling and you flung it.

Enjoy the “good times” while they last, then prepare to batten down the hatches.


Scene from The Final Countdown (1980)
YouTube Video

Note that it’s not the end of the word I’m talking about here. But things will definitely suck for a while before the economy and society gets better again. By that time, we’ll probably be well on our way to having passed the baton to China.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Peter Schiff: China, Other U.S. Creditors Could Emulate Switzerland, Implode America When Fed Attempts QE4

“One of the world’s safest investments- the Swiss franc- has swung wildly this week after the central bank in Switzerland announced it would scrap its policy of limiting the rise of the currency.

It may seem like an arcane move, but it’s not. The Swiss National Bank’s surprise decision on Thursday caused the franc to surge against the euro and dollar, sending shockwaves through the global financial system.

Holders of Swiss francs profited handsomely, but many investors and brokerage firms, were pounded with losses…”

-Associated Press, January 16, 2015

Anyone been paying attention to what happened with the Swiss franc this past week? I have a feeling most American aren’t- which is a mistake, because the actions of the Swiss central bank may be repeated by China and other countries in the near future with respect to our country. Euro Pacific Capital CEO Peter Schiff talked about the possible implications in his January 16, 2014, entry in The Schiff Report vlog on YouTube.com. Schiff warned viewers:

When the Fed comes up with QE4, China is going to be faced with a similar decision as Switzerland. Are they going to back up their trucks and load them up with dollars? Because if we do QE4, we’re going to expect the Chinese to bear the burden if they want to keep their currency from going up. And I think Switzerland is going to show them the way. They’ll see the light. This is not going to be detrimental to the Swiss economy. On the contrary, this is going to be a positive for Switzerland, and it could be a positive for China if they abandon their peg as well. But, that’s going to be even worse for America than what Switzerland did to Europe… for America, we’ve been relying on this Chinese crutch for so long, you take it away, and there’s a real implosion here. We’re going to suffer much more if the Chinese pull our plug. I mean, we’re really going to go down the drain. This might not necessarily be the nail in the coffin for the Europeans. ..

People should look at this lesson of Switzerland and heed these warnings. And don’t just look in the rearview mirror at what happened in Switzerland. But look forward, look through the windshield at what’s coming. Look at the relationship between the Swiss franc and the euro and what are the implications between the dollar and other pegged currencies like the yuan and the Hong Kong dollar. All of these relationships are eventually going to crack. All of the countries that are subsidizing the United States, that are absorbing our trade deficits, that are piling up our Treasuries- they’re all going to have the same problem that Switzerland had. They made a mistake and corrected it in three short years. These others countries have been making a bigger mistake for a longer period of time, but eventually, they are going to be forced to bit the bullet and cut and run. And I think it’s going to be the same decision that motivated the Swiss is going to be the prospect of QE4, because everybody is expecting a tighter Fed, everybody believes that we have a legitimate recovery, and nobody is expecting this recovery to implode, and the Fed to come back with QE4- but that is exactly what’s going to happen. Just the way they were caught by surprise by what happened with the Swiss franc, they’re going to be even more surprised by what’s going to happen with the U.S. economy, what’s going to happen with the dollar…

Don’t wait for that to happen. Don’t be surprised. Don’t be bankrupted like the forex traders, or the forex companies that were extending the credit to the leveraged speculators. Get your economic house in order. Understand that economic fundamentals always come through in the end. Sometimes it takes longer to happen, and sometimes people become emboldened, because if something hasn’t happened, they think it’s never going to happen. And exactly when you get complacent, when you think it’s always going to be that way- and believe me, the people that were levered up short the Swiss franc, in their wildest imaginations, they could not see this day coming. Even though it should have been obvious that this day would come. Nobody knows when. And that’s why I always tell my clients, we’ve got to be prepared in advance. It’s too late, if you’re a day late. You’ve got to be early. If you woke up yesterday morning, and you were short the Swiss franc, it was too late to cover. The market just gapped, it was a huge move, there was nothing you could do. You had to be prepared in advance. You couldn’t time it- there was no way to know exactly when it was going to happen- because nobody could figure that out. You have to be early. You can’t be late. And so when it comes to structuring your portfolio and preparing for a dollar crisis, you’re not going to see it coming. You’re not going to do it at the last minute. You’ve got to be prepared in advance. And, you know, there’s plenty of warning signs that that day of reckoning is coming.


“Will China Pull a ‘Switzerland’ on the U.S. Dollar?”
YouTube Video

Schiff, who also heads up SchiffGold, shared his view on how gold might perform in the coming year. He told viewers:

I think gold’s going to have a big first half- even bigger than the first half of 2014- but in the second half, that’s when it could really take off.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Marc Faber: ‘The President, For Whatever Reason, Might Not Finish His Term’

This year’s Barron’s Roundtable convened on January 12, 2015, at the Harvard Club of New York. And one member of the Roundtable, Swiss-born investment advisor and fund manager Marc Faber, brought up some interesting scenarios for the coming year. Dr. Faber told Roundtable participants:

Many surprises could occur in the next 12 months. The president, for whatever reason, might not finish his term. China’s president, Xi Jinping, doesn’t speak as much as Obama, but when he speaks, he makes sense. He is a powerful person. In the past 45 years, China has pursued a policy of nonintervention in other countries’ domestic affairs. But that might change because of its oil interests in the Sudan. China is the largest supplier of troops to the U.N. peacekeeping forces. Its troops are conveniently placed next to Sudan’s oil facilities. China also has a large interest in the Iraqi oilfields. If ISIS moves toward southern Iraq, which it currently can’t do, China will protect its interests. The Chinese are becoming more assertive in their geopolitical ambitions. They must ensure a supply of natural resources, such as oil, copper, and iron ore. In their view, the Americans have no interests in Southeast Asia and eventually will have to move out. It is unclear how this will be achieved, or when, but it probably won’t happen peacefully

(Editor’s note: Bold added for emphasis)

Thailand-based Faber, like fellow “crash prophets” Jim Rogers and Peter Schiff, recognizes that the West’s economic power is steadily being transferred to the East. He added in New York City:

Even if Asia doesn’t grow much this year, economic power is shifting to Asia. The Indian economy could grow by 5%-6% in 2015, although the Indians would say I am too pessimistic. Nonetheless, a 5% growth rate is enormous, compared to zero in Europe.

(Editor’s note: Bold added for emphasis)


Heineken Commercial “The Date” feat. Mohammed Rafi, Jaan Pehechaan Ho (1965)
YouTube Video

You can read the entire Roundtable discussion on the Barron’s website here.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Nouriel Roubini: ‘Mother Of All Asset Bubbles’ To Pop In 2016

One of the original “crash prophets” of the 2008 global economic crisis is now sounding the alarm over what he sees in 2016.

I first mentioned Nouriel Roubini, a former Treasury official under the Clinton administration, a professor of economics at NYU, and chairman of Roubini Global Economics, in my old blog Boom2Bust.com several years ago. Roubini correctly-predicted the financial crisis, but “Dr. Doom”- as the financial media likes to call him- had become more optimistic this year. On May 14, 2014, he “debated” fellow “prophet” Peter Schiff on CNBC’s Fast Money, saying:

We’re printing a lot of money but it’s not creating credit. It’s not creating inflation. And if we had not done this policy, this Great Recession would have become a Great Depression. So, inflation is going to stay low. Gold prices are going to fall. And I don’t believe that the dollar’s going to collapse. Actually, I believe the dollar’s going to become stronger in the next few years- just the opposite of what Peter thinks.

But these days, Dr. Roubini is starting to sound gloomy again. Last week, I happened to come across a Yahoo! Finance interview with Roubini from earlier this month. From an exchange with editor-in-chief Aaron Task:

TASK: Nouriel Roubini is often referred to as “Dr. Doom”- affectionately of course- but the NYU professor and chairman of Roubini Global Economics is not always downbeat. He prefers “Dr. Realist,” and in February 2013 Roubini told Yahoo! Finance and this reporter that, “The mother of all asset bubbles had begun, and would eventually be bigger than the 2003-2006 bubble.” Since that time the S&P 500 is up about 40 percent, so Nouriel, that was a great call if you were long, and bubbles are great if you’re long and you get out in time. Where do you see- what inning, if we use the baseball analogy, are we in in this bubble from your point of view?
ROUBINI: We’re in middle-later innings. Next year we’ll have economic growth. We’re still easy money. I think that this frothiness that we’ve seen in these financial markets is likely to continue- from equities to credit to housing. And in a couple of years, most likely, this asset inflation is going to become asset frothiness. And eventually, an asset and a credit bubble. And eventually, any booming bubble ends up a bust and a crash. I don’t expect that happening next year, but I would say that valuations in many markets- whether its government bonds or credit or real estate or some equity markets- are already stretched. They’re going to become more stretched as the real economy justifies a slow exit, and all this liquidity is going into more asset inflation. And so, two years down the line for them to shake out, but not before then.
TASK: A couple of years down the line, okay.
ROUBINI: Yeah. 2016 I would say.

(Editor’s note: Bold added for emphasis)


“Roubini: U.S. equities will be strong until 2016”
Yahoo! Finance Video

Dr. Roubini gave this advice to investors:

At this point, I would be neutral or underweight U.S. equities compared to other markets.

As for “best bets” in 2015, he told viewers:

Several I would say. I would say, dollar strength relative to the euro, relative to the yen, relative to the commodity currencies, relative to fragile emerging markets. And a bet on commodities further another leg down, certainly industrial metals like copper and others linked to China. Those will be two of the stories for 2015.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Jim Rogers: Buy China, Japan, Russia, Agriculture

Last Thursday, I talked about a recent interview I listened to of well-known investor Jim Rogers. Robert Williams, the founder of the Baltimore, Maryland-based investment research/market commentary service Wall Street Daily, was asking the questions.

Apparently, I didn’t hear the entire exchange between the two. Williams got the former investing partner of George Soros in the legendary Quantum Fund to share with listeners what stocks he’s buying/intends to buy these days. From the Wall Street Daily website last Friday:

WILLIAMS: Do you have confidence in the U.S. stock market?
ROGERS: Well Bob, the U.S. stock market is making an all-time high. As you know, it’s up more highs this year than any year since 1929. That’s not a bottom. I’d rather buy – I’m buying shares in other markets around the world. I mentioned Russia… China, I bought more Chinese shares yesterday… Japan, I want to buy some more if I get time off the phone to buy more Japanese shares. You know the Chinese and Japanese markets are down 60% from their all-time highs. America’s making all-time highs as it did in 1929. I don’t know if these other markets are better, but I know buying low and selling high often turns out to be right.

(Editor’s note: Bold added for emphasis)

China, Japan, Russia. Check.

And agriculture.

On November 25, Jim Rogers appeared on the Bloomberg Television show Countdown. Host Mark Barton noted the chairman of Rogers Holdings is now an independent director of PhosAgro, Europe’s biggest phosphate fertilizer maker. Rogers shared with viewers:

So I started investing in Russia. I found this company. I’m bullish on agriculture. I’m bullish on these guys. They’re young, smart people. So here I am.

When asked what else he was bullish on in Russia, Rogers said:

I’ve been buying shares of the Moscow Stock Exchange… The easy way is the index, so I bought the ETF, as well. There are various ways to play Russia. Russia’s hated. In my view, wrongly so. And I hope, that all this is going to pass and I’ll make a lot of money.

On China, the Singapore-based investor noted:

I’m buying shares in China… Since the economic plenum of November of 2013- you know the Chinese said, “These are the areas of the economy we’re going to emphasize.” Mark, if the government is going to put a lot of money into those areas, I am too. They’ve got more money than I do. They’re smarter than I am. So I’m investing with them.

When pressed about other areas he was investing in, Rogers pointed out:

The markets that I have been investing in this year- new things- are Japan, Russia, China, agriculture. That’s where I’ve been putting my- those are all depressed markets. Why would you buy the U.S. at an all-time high, when you can buy Japan 60 percent below its all-time high, or China, 60 percent below its all-time high?

He added the following about Japanese Prime Minister Shinzō Abe and “Abenomics”:

He’s going to ruin Japan. But in the next two or three years, I hope he’s going to make me a lot of money. And the investment community. He’s making stocks go up.


YouTube Video

You can listen/read (transcript provided) to the rest of that Rogers interview by Robert Williams on the Wall Street Daily website here.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Marc Faber: Young Americans Will Earn Less, Have Less Wealth Than Their Parents

I wrote on Survival And Prosperity a couple years ago:

Back in 2006 when I was working at a suburban fire department, a battalion chief came into my office, saw the local paper on my desk, and asked, “Did you read that piece about how kids these days might be the first generation who won’t be better off than their parents?” I replied, “Yeah, it was depressing.” The fire officer confided, “That stuff scares me. I’m worried they might be right about that.” I’d be concerned too, especially if I were the parent of a couple of young kids like this chief was.

Fast forward almost nine years after that discussion took place. Swiss-born investment advisor/money manager Marc Faber was interviewed by Barron’s last week. The publisher of the monthly investment newsletter The Gloom Boom & Doom Report talked with editor Jack Otter about a number of financial topics, including how younger people in Western societies will be less well-off than their parents. From their exchange:

OTTER: You always find new ways to depress me. And today you told me that for the first time in 200 years of history, we will bequeath to our children less wealth than their parents had.
FABER: Yes. I meant that with respect to Western societies and Japan, where essentially the younger people, today’s generation, will earn less than their parents. And they will have less wealth than their parents, inflation-adjusted, because we will have wealth taxes, we’ll have more estate taxes, and we have essentially declining real median incomes in the Western world and Japan. But the good news is that we have essentially have in the countries that opened up post-breakdown of the socialist, communist ideology- China, Soviet Union, Eastern Europe, and so forth, and India, of course- we have entire generations that will earn much more and have a much better standard of living than their parents had.

On India, “Doctor Doom”- as the financial media likes to call him- thinks that India’s stock market could rise by 15 percent in 2015.


“Dr. Doom Offers 2 Stocks Picks, But Gloomy Outlook”
Barron’s Video

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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China Overtakes U.S. As World’s Largest Economy

“The 19th century belonged to England, the 20th century belonged to the U.S., and the 21st century belongs to China. Invest accordingly.”

-Warren Buffett, famous American investor

Lost in all the mainstream media frenzy over protests/riots related to the deaths of Michael Brown and Eric Garner was the following from MarketWatch columnist Brett Arends this morning:

There’s no easy way to say this, so I’ll just say it: We’re no longer No. 1. Today, we’re No. 2. Yes, it’s official. The Chinese economy just overtook the United States economy to become the largest in the world. For the first time since Ulysses S. Grant was president, America is not the leading economic power on the planet

The International Monetary Fund recently released the latest numbers for the world economy. And when you measure national economic output in “real” terms of goods and services, China will this year produce $17.6 trillion — compared with $17.4 trillion for the U.S.A…

To put the numbers slightly differently, China now accounts for 16.5% of the global economy when measured in real purchasing-power terms, compared with 16.3% for the U.S.

(Editor’s note: Bold added for emphasis)

While this century may very well go down in history as being “China’s Century,” I suspect the nation of 1.36 billion people will suffer setbacks (some serious) not unlike America did in the years leading up to it becoming a superpower. Despite this, the Chinese look to be taking the baton from the U.S. as far as 21st century hegemony is concerned.


“Little Apple- 2014 Hot Song in China”
YouTube Video

You can read the rest of Arends’ piece on the MarketWatch website here.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Thursday, December 4th, 2014 Asia, Hegemony, Mainstream Media No Comments

Jim Rogers On Commodities: ‘This Is A Correction In A Bull Market’

Not sure how I missed an interview of investor Jim Rogers on the Business Insider website back on November 14- because it’s a terrific one. From an exchange between BI co-founder, CEO, and Editor-In-Chief Henry Blodget and the “guru” who predicted the commodities boom that began in 1999:

HB: You made a great call on commodities more than a decade ago. We’re in a downturn now. What is your view going forward?
JR: Great question. I certainly missed this correction. The correction has been worse than I thought. Some of it I knew — I’ve been quite vocal that gold would go down and stay down for a while during this bull market, maybe even under $1,000 dollars per ounce. But still the overall correction I got wrong. My view, rightly or wrongly, is that this is a correction in a bull market. You will remember in the bull market in stocks between 1980 and the end of the century, we had some very serious corrections. And every time people said the bull market was over, it wasn’t. It ended in a bubble. My view is that’s what’s going to happen with commodities. We’re in a correction, a serious one, but that it will turn around. Back to what we said about oil, most major oil fields are in decline. In agriculture, we’re running out of farmers. So we’re facing a serious problem worldwide. I don’t see enough new supply to say the bear market has started again, that the bull market is over. I think there will be one more big leg.
HB: So is this a buying opportunity?
JR: For sugar maybe. Rice maybe. I do own gold, I do own silver. I haven’t bought any of significance in a few years. I haven’t sold any. Gold went up for 12 years in a row without a down year, which is extremely unusual in markets. So in my view the correction will be unusual as well. Gold has not had a 50% correction in years, which too is unusual. That would be $960 per ounce. I’m not predicting it’s going to go there. I’m just pointing out to you there’s going to be another chance to buy gold and silver in another year or two or three, I have no idea why. If America goes to war with Iran, I’ll probably buy gold at $1,600, begging to get more…

The former investing partner of George Soros in the Quantum Fund also talked about:

• U.S. stocks
• Fed stimulus
• More economic “hard times” ahead
• Crude oil
• Russia
• Ukraine
• Asia
• Timing investments
• Advice for young professional investors

The Business Insider piece really is one of the best interviews of Jim Rogers in a while, which you can read on their website here.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Peter Schiff: Gold Will ‘Take A Rocket Ship Back Up’ And Eclipse $5,000

Kitco News anchor Daniela Cambone got the chance to speak to Euro Pacific Capital CEO Peter Schiff on November 18. The “crash prophet” who correctly-predicted the U.S. housing bust and 2008 global economic crisis was at the Grand Cayman Liberty Forum, and here’s what the long-time gold bull had to say about the precious metal. From their exchange:

CAMBONE: So let’s tie this back into gold now. What’s your outlook for the metal? I know you’ve been bullish on the metal. Do you continue to be?
SCHIFF: Yes. I’m bullish. You know, it’s hard to call the short term obviously and people now are trying to say, “Oh Peter, you know, you were saying gold was going to go to $5,000.” It’s going to go to $5,000. And in fact, I looked at some of my CNBC interviews and I was predicting $5,000 when gold was $500. So, it’s not like I just started doing it when it was at $900. Right? I’ve had that target on my mind for some time. And I think we’re going to eclipse it. And I think when this decline is over-and it’s been 2 or 3 years since gold hit its high around $1,900- I think it’s going to rise faster than before. Normally markets go down- they take the stairs up and the elevator down. Well I think that gold is going to take a rocket ship back up, because I think when all the people who have been shorting gold and selling gold realize that they’ve got it wrong, and they want to buy it back- it’s just not there. Because I think the real gold- all the gold that was dumped out of ETFs- I think it’s sitting in vaults in Russia and China, and it’s never going to see the light of day again. So when the buyers want it back, it’s not going to be there…

Schiff proclaimed later:

This is the best fundamental environment I’ve ever seen for gold. And also, I do believe that the dollar’s days as the world’s reserve currency are numbered, and when the dollar is no longer accepted as the reserve currency, what’s going to take its place? It’s not going to be the euro. It’s not going to be the yen. I think it’s going to be gold. I think the world is going to go back to gold…


“Gold Will Take Rocket Ship Back Up – Peter Schiff | Kitco News”
Gold discussion starts at 3:44
YouTube Video

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Obama’s Foreign Policy In A Nutshell

I’m going to roll back things a bit today. Last night, I talked about the 1-hour Huckabee TV special “Threats To America” on FOX News. In the segment about China, KT McFarland, the FOX News National Security Analyst and host of FoxNews.com’s DEFCON 3, talked about how the Obama administration perceives our nation’s place on the world stage. McFarland told Huckabee viewers:

This administration came into office not thinking America should be the greatest power in the world. They thought if America gets taken back a peg or two, that’s going to make the world a better place. They don’t think America has necessarily been a force of good in the world. And as a result, they’re very comfortable with seeing the rising China, the rising Middle East, the rising Iran. And why? Because they think if America steps back, then somehow this global community is going to be in charge of things and we’ll all be at peace. When in fact, if it’s not America, then who is it? It’s Chinese rules. It’s Moscow rules. It’s Tehran rules. Or, even worse, it’s complete chaos.


KT McFarland on Obama’s foreign policy (starts at 2:37)
YouTube Video

I consider myself a lifelong student of U.S. foreign policy and international relations. And even have some academic and work experience in these areas as well. Having followed this administration’s dealings with the rest of the world since day one, I’d have to say McFarland- who’s held national security posts in the Nixon, Ford, Reagan administrations- seems pretty much spot-on in her assessment of Obama’s foreign policy.

“Somehow this global community is going to be in charge of things and we’ll all be at peace”

I used to think this might be possible (mostly skeptical however) back when I was a college/graduate student.

Then I wised up after observing how the real world works.

Got realpolitik? Because China, Russia, and Iran sure as hell do.

Remember what one of Barack Obama’s predecessors- John F. Kennedy- warned:

Domestic policy can only defeat us; foreign policy can kill us.

Amen to that. I’m not saying idealism is necessarily a bad thing. Just that U.S. foreign policy makers need to start “keeping it real” again, as other nations will pursue national self-interest over the “global good” when the situation arises, the two cannot be mutually-satisfied, and the perceived benefits outweigh the costs.

When America “gets taken back a peg or two,” in many cases spurning the greater good (and inviting the ire of Uncle Sam/others) doesn’t look nearly as “expensive” as it once did.

And some still wonder why China, Russia, Iran, and others have been so active on the international stage the last couple of years…

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Global Economy Flashes Warning Signals

I’m picking up on a growing number of “bad vibes” about the global economy these days.

First, Rich Miller reported on the Bloomberg website Thursday about the findings of the latest Bloomberg Global Poll of international investors:

The world economy is in its worst shape in two years, with the euro area and emerging markets deteriorating and the danger of deflation rising, according to a Bloomberg Global Poll of international investors.

A plurality of 38 percent of those surveyed this week described the global economy as worsening, more than double the number who said that in the last poll in July and the most since September 2012, when Europe was mired in a recession.

Much of the concern is again focused on the euro area: Almost two-thirds of those polled said its economy was weakening…

Europe isn’t the only source of concern in the global economy, according to the quarterly poll of 510 investors, traders and analysts who are Bloomberg subscribers. More than half of those contacted said conditions in the BRIC economies — Brazil, Russia, India and China — are getting worse, compared with 36 percent who said so in July.

(Editor: Bold added for emphasis)

Granted, it’s just a poll. But there’s also this from British Prime Minister David Cameron in a piece he penned that was published on The Guardian (UK) website Sunday:

Six years on from the financial crash that brought the world to its knees, red warning lights are once again flashing on the dashboard of the global economy.

As I met world leaders at the G20 in Brisbane, the problems were plain to see. The eurozone is teetering on the brink of a possible third recession, with high unemployment, falling growth and the real risk of falling prices too. Emerging markets, which were the driver of growth in the early stages of the recovery, are now slowing down. Despite the progress in Bali, global trade talks have stalled while the epidemic of Ebola, conflict in the Middle East and Russia’s illegal actions in Ukraine are all adding a dangerous backdrop of instability and uncertainty…

(Editor’s note: Bold added for emphasis)

Cameron added the following, which I thought was pretty funny (disturbing?):

When we faced similar problems in recent years, too many politicians offered easy answers, thinking we could spend, borrow and tax our way to prosperity. Those were the wrong answers then; they are the wrong answers now. We are not going to repeat the mistakes of the past…

(Editor’s note: Bold added for emphasis)

Sound like any country you know?

Finally, exacerbating fears about global economic health was the following “shock” announcement. Mitsuru Obe and Eleanor Warnock reported on The Wall Street Journal website this morning:

Japan Falls Into Recession

Japan’s economy shrank for a second quarter in a row, after a sales-tax increase took the steam out of Prime Minister Shinzo Abe ’s bid to turn Japan into a global model of revival.

Mr. Abe, who has sought to revive the world’s third-largest economy after two mostly sluggish decades, is set to announce this week that he will delay plans to raise the nation’s sales tax next year and call elections in December…

“Two mostly sluggish decades”

Some really bright financial-types suspect Japan’s so-called “zombie economy” is what’s ultimately in store for America. While I have no doubt about a coming U.S. economic crash, I remain somewhat more optimistic for the country’s prospects upon emerging from the coming carnage.

Stay tuned…

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Cameron, David. “David Cameron: Red lights are flashing on the global economy.” The Guardian. 16 Nov. 2014. (http://www.theguardian.com/commentisfree/2014/nov/16/red-lights-global-economy-david-cameron). 17 Nov. 2014.

Miller, Rich. “World Economy Worst in Two Years, Europe Darkening, Deflation Lurking: Global Investor Poll.” Bloomberg.com. 13 Nov. 2014. (http://www.bloomberg.com/news/2014-11-13/world-outlook-darkening-as-89-in-poll-see-europe-deflation-risk.html). 17 Nov. 2014.

Obe, Mitsuru and Warnock, Eleanor. “Japan Falls Into Recession.” The Wall Street Journal. 17 Nov. 2014. (http://online.wsj.com/articles/japan-falls-into-recession-1416182404). 17 Nov. 2014.

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Jim Rogers: ‘World Is Starting To Realize It Must Move Away From The U.S. Dollar’

Well-known investor, financial commentator, and author Jim Rogers appeared on global news network RT (Russia Today) yesterday where he spoke with anchor Kevin Owen about the state of the U.S. dollar. Rogers warned:

The dollar is a seriously-flawed currency. And people need something else to use. And whether it’s the ruble or the renminbi or what- I don’t know- I suspect it will be the renminbi, but the world is starting to realize it must move away from the U.S. dollar.

Owen asked the former investing partner of George Soros if we are any closer to a time when the dollar won’t be used as a reserve currency. To which Rogers replied:

Not this year. Not next year. But certainly by the end of this decade you’re going to see many people use other things. Kevin, people have already started. 15 years ago, the U.S. dollar was 70 percent of people’s reserve currencies. Now it’s down to 62 percent. People are already moving away. Slowly, but they are moving.

The Singapore-based investor who predicted the commodities boom that began in 1999 also confided with viewers:

I bought rubles on Friday.


“Jim Rogers: By the end of this decade US dollar will lose world dominance”
YouTube Video

Despite the above warning, Rogers shared with Reuters back on October 23 that he still owned the U.S. dollar. He explained:

I have no confidence in the long-term strength of the U.S. dollar. I only own it because I expect all this turmoil to happen. And in times of turmoil, people flee to the safe-haven of the U.S. dollar. It’s not a safe-haven, but they think it’s a safe-haven, so people will own it. That’s why I own it.

Now what I expect to happen is, the dollar will go up stronger and stronger over the next year or two, at which point- some point- I’ll have to sell it. I have no idea what I’ll do with my money then because the world has got this terrible, terrible unsound foundation in all assets.


“Why Jim Rogers owns dollars printed by ‘crazy’ Fed bankers”
Reuters Video

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Tuesday, November 11th, 2014 Asia, Crash Prophets, Currencies, Europe, Investing No Comments

Sunspot Region 2205 Week Away From ‘Perfect Position To Do The Most Damage’ To Earth

Regular readers of Survival And Prosperity know I blog about severe space weather from time to time. Here’s something I came across on Bloomberg.com today that might interest a number of you. Brian Sullivan reported:

Those Sunspots Approaching Earth Could Bring Blackouts

A new group of sunspots that has come into view of Earth has the attention of the U.S. Space Weather Prediction Center.

The area, referred to as 2205, spat out an x-ray flare that produced a moderate radio blackout today, according to the center’s website. Earlier this week, it let loose several coronal mass ejections, explosions of magnetic fields and plasma from the sun’s atmosphere that can knock out power grids and disrupt navigational systems.

Most of the material in today’s flare, along with the earlier eruptions, was pointed away from Earth, thus sparing the planet severe storms…

Here’s what really grabbed my attention though. Sullivan added:

The sunspots that are now becoming visible will take about two weeks to traverse the side of the sun pointed at the Earth, [Forecast Office Lead Robert] Rutledge said. In about a week, the system will be in perfect position to do the most damage, he said…

(Editor’s note: Bold added for emphasis)

The potential economic costs associated with such solar storms are staggering. Consider this recent estimate from the FOX News website back in March:

“The cost of an extreme space weather event, if it hits Earth, could reach trillions of dollars with a potential recovery time of 4-10 years,” professor at China’s State Key Laboratory of Space Weather Ying D. Liu warned in a press release. “Therefore, it is paramount to the security and economic interest of the modern society to understand solar superstorms.”

Check out the entire article on Bloomberg.com here.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

“The massive solar blast that almost wreaked havoc on Earth.” FOX News. 19 Mar. 2014. (http://www.foxnews.com/science/2014/03/19/massive-solar-blast-that-almost-wreaked-havoc-on-earth/?intcmp=features). 6 Nov. 2014.

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