Dollar Collapse

Expect the UK to drop out of the headlines as it grapples with the nuts and bolts of choosing new leaders and untangling itself from the EU. The big news going forward will be the trend Brexit started, as other European countries consider their own variations on the "leave" theme -- with all that that implies for interest rates, bank stocks and general financial instability. Fascinating and terrifying year ahead. 

Brexit is dominating this week's headlines, but the event itself is less important than what it signifies, which is the increasing loss of faith in governments and central banks. Voters no longer trust big institutions to act in their best interest and are voting for alternatives of various kinds. When this lack of trust spreads to the financial markets, it's game over.

With the terrorist attack in Orlando world markets have headed down. It’s looking more and more likely that there will be a Brexit. What impact will it have? Will other countries follow? The system is ripe for a further unraveling. In its already weakened state, how much more abuse can it sustain? Gold and silver are up since the beginning of the year. They got through a minor correction the week before last and have now fully recovered, obviously a sign of strength. There’s a new financial system on its way. Get ready for it now.

John and I discuss the upcoming referendum in California, where barring a conservative reformation in the state, will certainly pass. Recent polls show 60 percent of the public in favor. This provides and interesting contrast in constitutional views of the right and the left. Everyone supports the Constitution when it comes to pushing their agenda. It’s when something they oppose is on the ballot, that all of a sudden the Constitution takes a back seat to the overwhelming need at hand. This is exactly what the framer/founders wanted to avoid when they drafted the document. The Constitution was not intended to be flexible and allow a sliding scale of enforcement. Rather, limited government was its primary goal. Perhaps we are in the process of getting back to this fundamental core belief.

Watch Brexit, the Movie, to understand why Britain might just leave the EU -- and why other members should leave as well. Meanwhile, the Saudis are apparently out of money, the bricks and mortar retailers are out of customers and Wall Street bankers are looking at mass unemployment. Brutal times for obsolete institutions!          

Macy's reports horrendous earnings and Italian banks finally reveal their non-performing loans. Share prices plunge accordingly. China, meanwhile, admits that it's over-leveraged and promises to stop borrowing. In other words, wherever you look, a global slowdown is coming and a massive devaluation will soon be the only politically feasible solution. 

China's most recent borrowing binge didn't work. Japanese and European negative interest rates resulted in their currencies going up, not down as they hoped. Global growth is slowing. Inflation is nonexistent and debt keeps rising. Only gold and silver are looking strong. The world's governments, in short, are about to panic. 

Combine record-high stock prices with weak corporate earnings, a too-strong dollar and rising turmoil in Europe, Asia and Latin America, and the result is a dangerously vulnerable market. Time to go "risk-off", in other words. But don't forget to keep buying gold and silver.

Goldman, Morgan Stanley and IBM release numbers that look, well, depression-like. Housing starts plunge, gold and silver spike, China's bond market seizes up, and Deutsche Bank prepares to name names in its gold manipulation scandal. And US stocks keep rising...what's wrong with this picture? 

Most US companies will report earnings this month, and most analysts think the results will depressing. That's bad news for stock prices and might add to the (already considerable) pressure on governments to step up their stimulus programs. Gold and silver, meanwhile, seem to like all this financial turmoil. 

Between the "Panama papers" and the DC Madam's customer list, we might be witnessing the end of personal (and corporate and government) privacy. The result? Less financial and geopolitical risk-taking and more gold buying. But don't get burned by failing precious metal dealers. Here's how to make sure you get what you pay for. 

It's just about official: With corporate sales and profits shrinking and consumer spending flatlining, the US economy will grow hardly at all this year while the rest of the world will probably drop back into recession. The result: Massive policy changes here and abroad, with major implications for stocks, bonds, precious metals and real estate. 

If easy money has stopped working, then what's left? Massive deficits, of course. Pressure is building on governments around the world to increase spending and pay for it with borrowed funds. Sound familiar? It should, since it's what they've been doing on and off for decades. But this time, "fiscal stimulus" will, like QE and NIRP, turn out to be too much of a good thing, with dire consequences for just about everyone. 

What do record corporate share repurchases, the rise of Modern Monetary Theory, China's attempts to support its currency and Europe's political turmoil have in common? They're all examples of big players on the global stage repeating the same behaviors while each time expecting a different result. They'll be disappointed again, and the consequences will be epic. 

Over the next couple of weeks the Chinese, European, US and possibly Japanese central banks will say things that move the markets. None of this will change the fact that the global economy is slipping into a deflationary depression, but in the short run, traders might once again be fooled. Gold, meanwhile, has had a great run and might be ready for a correction. But don't worry. Reality (terrible for mainstream investors, great for gold bugs) will win out in the end. 

Gold just finished its best two months in several years, and a prominent gold mining analyst has finally turned bullish. Meanwhile, the European Union continues to suffer the death of a thousand cuts, with Britain threatening to leave and other members rebelling against Germany's liberal immigration policies. The world, in short, is becoming ungovernable. 

Money is pouring out of banks and into home safes, leading to calls for the elimination of cash.  Britons are thinking of leaving the EU, sending the pound sterling down and gold up (in pound terms). Silicon Valley unicorns are dying (you'll have to listen to find out what that means). The global financial crisis, in short, has acquired some new facets, each of which could cause widespread trouble in the year ahead. 

Another Monday, another extreme market move. This time, though, underlying conditions are changing in an especially serious way. European banks are running into various kinds of trouble that, if not resolved in a hurry, might lead to a replay of the 2008-2009 financial crisis. So keep an eye on Banca Monte dei Paschi in Italy and Deutsche Bank in Germany. As they go, so might go the world in 2016. 

A few weeks of falling stock prices have led the world's central banks to respond in their usual way, with lower interest rates and easier money -- in other words with the same policies that failed to prevent the ongoing slide into deflationary recession. The result: Over $5 trillion of bonds worldwide now trade with negative yields (meaning they charge their owners instead of paying them interest), by far the most ever. Anyone who thinks this will return the economy to "normal" hasn't been paying attention. 

Last week's dead cat bounce ended with a thud on Monday. Oil plunged, stocks retraced more than half of their bounce, and a couple of manufacturing reports reinforced the sense that the US is tipping into recession. Meanwhile, political systems around the world continue to teeter on the edge of (what establishment elites would consider) the abyss. A Donald Trump/Bernie Sanders race is now at least conceivable in the US this November, while formerly fringe parties of both the right and left are gaining power in Europe. That's what happens when you grossly mismanage the economy.