After a reasonably quiet session for the US markets (when many had hoped the DOW would break the 20k level) Asia had little chance of making much ground. The Hang Seng took most of the wind out of their sales with prices down around -0.8% with many large caps lower on year end profit-taking and following the weaker energy prices. HSI was the weakest of the Asian indices and that was early morning selling reaching its low prior to lunch then played around 21,650 for the balance of the day. As we approach the holidays volumes have died along with volatility. The JPY traded within a narrow range playing around 117.50 as the Nikkei closed small changed.

In Europe the market continues to focus its attention on the Italian banking sector and the oldest of them all BMPS and the likely government bailout. Having announced a liquidity concern and a restrain surrounding the four month mark, in the absences of fresh additional, the bank is facing a €5bn government bailout – officials to meet formally Friday. The shares closed today at 15.08 (-7.5% on the day) which puts the 1yr return at -87.5%. Following the EU central banks rules this will include a “bail-in” where existing bond holders will suffer a write-down whereby spreading the cost to current bond holders (many held by private individual Italian investors). It has been eight years since the financial crisis and still European banks face challenges that the US banks had sorted years ago. Overall, European indices closed lower with DAX, IBEX and FTSE Mib. (Italy) closing around -0.45% whilst the CAC and FTSE closed unchanged to +0.4%.

Again, we wait for the 20k mark to be hit as nerves saw year end profit-taking mixed with seasonally light flow. Data was mixed with Initial Claims and Q3 GDP better whilst Confidence erred based upon levels. The majority, if not all, the big money has now been placed and so we follow small orders until year end. Indices closed lower but again in extremely light volume. Given the DXY strength this year and the YTD performance of the core (DOW +17%; S+P +13% and NASDAQ +10%) it is surprising that this remains the most unloved rally in modern thinking!

US curve saw move flattening as we approach year end, with 2’s unchanged whilst 10’s closed 2.53%. (1bp flatter) but is seeing a little selling at the close. Bunds closed almost unchanged at 0.25%, Italy closed 1.85%, Greece 7.06%, Turkey 10.84%, Portugal 3.76% and Gilts 1.37%.

Markets Covered:

Private Blog Update for Gold going into Close 2016

States are simply going bankrupt and in the process, they will become very nasty and aggressive. In South Carolina they will introduce a bill for the legislative session that will begin in the new year that will require all manufacturers and sellers of computers and other internet-capable devices to install porn-blocking software on all their products. If vendors or customers want to remove the filters, then they can do so if you pay a one-time $20 fee per device. This is the same scheme of viruses that freeze your computer and you must pay a ransom to unlock it.

The problem with this type of legislation is the costs it will impose on business to (1) create a porn filter, and (2) it will be for only computers and devices sold in South Carolina. What if you then just buy off of Amazon or some other mail order concern? Will Amazon have to block sales to South Carolina? How is such a law enforceable? This is typical of brain-dead politicians who just cannot reform and constantly are looking for new schemes to justify taxing the people.

The issue is really not the porn content. Obviously, you can still watch porn if you pay $20. What’s next? Sports? News? How about just talking in person since that must be highly dangerous if not recorded. We have cities in California trying to tax every movie you stream. So do you have to move to a different city to watch movies? We are headed into a taxing nightmare because politicians even in state and local government NEVER reform and are incapable of managing a bubble gum machine. Unfortunately, the United States will break apart and we are looking at a major tax rebellion not too far ahead. We can see the hatred rising with Trump from the left and these are ALWAYS the most intolerant people as well as the most violent in history.

QUESTION: Marty; I was watching Fox News and on the same show they had Steve Forbes and Steven Moore. I remembered you were friends with Steve Moore when he was at the Cato Institute. There was talk the two of you were going to do something together. Both are in with Trump along with Nigel Farage. My Question is, obviously you also know all the people advising Trump. Are you going to be an adviser as well?

HG

ANSWER: Yes, I know Steve Moore. Yes, we used to communicate regularly. No, I will not be an adviser to Trump. I would be glad to answer questions behind the curtain and offer access to our computer system forecast if they are serious. But I would never take a position in front of the curtain. I have advised far too many governments around the world and major multinational companies. They would turn that into some sort of treason in a Senate confirmation hearing or say that I advised Japanese and German auto manufacturers and turn that into treason.

Just not interested. Behind the curtain works better. I do what I do because trying to move even a pebble inside government takes on a huge effort. It is far easier to move mountains from the outside than from the inside.

QUESTION: Aloha Martin, Can you please comment about the new Sharia gold standard. It is being touted as allowing Muslims to more gold vehicles besides owning the usual physical coins and jewelry thus increasing the demand. I understand it as long as the paper is backed by physical is is allowed. I remember you commenting on this in the past but how does this tie in?

Thank you very much for what you are doing.

ANSWER: The gold promoters only surface to report on anything that could support their conclusion. The Sharia gold standard is by no means a game changer. We are in a global trend that is far bigger than anyone actually comprehends. We are talking about the collapse of government structures. Gold will be supported ONLY when the majority comes to see how dangerous the future is. The Sharia gold standard will by no means alter the trend. Gold is heading lower. Gold gave up most of its entire gains in 2016, and is trading just above the closing of 2015. The trend is your friend — everything else is noise.

Yesterdays strong US close encouraged a positive performance for Asia with even Asian dealers questioning whether the DOW is close 2016 over the psychological 20k level. This positive momentum certainly helped sentiment in todays market with the Shanghai index closing up 1.15%. Currency is having a large impact on equity markets as the US Dollar Index continues to make ground. Closing in NY yesterday the DXY touched a 14yr high and despite todays small retracement continues to look positive. The Yuan has lost around 7% over the calendar year but the PBOC has said recently that they manage it against a basket of currencies and not solely the USD.

Considering the performance of the European banking index today it was a surprise core indices did not close lower! Again, BMPS was in the news after reports that the Italian bank may fail in its attempts to raise the required €5bn. Shares were down nearly 20% but finally closed around 12% lower on the day, having been suspended at one point during morning trading. Spanish lenders were also under pressure after the EU’s top court ruled in favor of mortgage customers and as a result may have to pay back billions of euro’s. Oil slipped in late European trading after the news that the stock piles rose 2.26 million barrels last week.

Approaching such a psychological level and just two days ahead of Christmas it really was not much of a surprise that volumes were thin and no-one felt brave enough to attempt the key level. Stocks closed small lower as geopolitical concerns do not help sentiment, a small retracement in energy and a breather for the dollar index. Gold recovered from its recent lows and a little renewed buying interest returned to the long end of the US Treasury market.

What will be interesting over the next few trading days is the fact that today was the last QE purchases until Monday the second of January. With the ECB already trying to move away from being the lone support the new year issuance calendar is likely to be frontloaded attempting the target the lower rates before it is too late. US 10’s closed the day 2.54% with 2’s at 1.19%; closing the curve +135bp. German 10yr Bund closed +0.24%; closing the US/Germany 10yr spread at +230bp. Italy closed 1.82%, Greece 7.05%, Turkey 10.89%, Portugal 3.73% and finally UK Gilt 10’s at 1.39%.

Chicago is where they dragged a man out of his car and beat him because he voted for Trump. Well, what’s going on at Hampshire certainly also gives us some pause. According to reliable sources there are some really serious issues brewing at this college. A group of Hampshire students took down the American flag on campus the day after the election and burned it. To cover-up that act, the college allegedly raised a new flag at half-mast to reflect their dissatisfaction with the election. The college said this was in response to the escalating number of news reports from across the country over recent months and years of hate speech, harassment, and violence against people of color, immigrants, international citizens, and Muslims. The college then said they lowered the flag in respect of veterans, who have since protested that cover-up. One former student who supported Trump was banned from the school’s alumni board. The school then tried to claim he was not on their list of alumni. When others chimed in and said he was, they restored his access to the blog. However, current students showed real hate speech by calling him a Nazi. He was then blocked again and thrown off the blog.

The college allowed the flag to remain at half-staff to honor the students’ expression and to facilitate a campus dialogue. They should be stripped of ALL federal aid. The college did nothing to support unity and allowed the pro-Hillary activists to bully and dominate the agenda by threatening anyone who disagreed. They hurled hate-speech in protest of what they claimed was hate-speech. The definition of hate-speech seems to be anything they disagree with.

“Sometime overnight the campus flag was burned. The College does not know who burned the flag, whether it was burned by one or more students or others. The incident is still under investigation by campus police,” the college admitted.

The college was forced to claim the flag burning is under investigation. Meanwhile, the current students are clearly predominantly socialists who claim to despise Trump so they engage in hate-speech and bully any student who disagrees with their agenda. Parents are paying over $60,000 a year to brainwash their kids into intolerant Socialists.

The students who burned the flag in support of Hillary are obviously wasting the national resources since they are too stupid to research who made their student loans non-dischargeable in bankruptcy — Oops! The Clintons!

Clearly, the students who protested and burned the flag are probably on financial aid and a large portion of the college is funded by the federal grants system that they protested against. Since the college and the current student class refuse to respect our country, they should be disqualified for financial aid as of the spring term 2017. Let the students who do want to really learn go to another college that is less political. If I had kids there, they would be out.

This, unfortunately, is setting the stage for the breakup of the United States going into 2036. This divide between left and right is becoming huge — bigger than the Grand Canyon.

The Scandinavian countries Sweden, Denmark and Norway are regarded as a pioneer in the the effort to eliminate money and move totally electronic. Denmark closed its final Mint outsourced the operation to Finland. This means that there is no coinage in the three states struck anymore. In this war on cash, about 20% of all transactions were settled in Denmark last year with cash. In Germany and Austria, cash transactions accounted for 80%. Scandinavia is pushing hard to eliminate all cash completely to enable 100% efficient tax collecting.

The demand for paper dollars is rising in Europe significantly. The average person will continue to increase their hoarding of US dollars, especially in the aftermath of India. Particularly with Trump in office, there will be no cancellation of cash overnight. Even getting rid of $100 bills will be extremely problematic since the 1990s, about 50% of all paper dollars are held outside the United States, which was the Federal Reserve’s estimate back in the 1990s.

The demand for U.S. currency internationally has actually replaced gold. US currency is being held for the same reasons since it is a recognized as a unit of account globally, THE international medium of exchange, and especially in light of events in India and Turkey, the dollar has become the store of value. No doubt the goldbugs will yell about that statement. But it is true. Far more people are using dollars than gold internationally, particularly since you cannot hop on a plane with gold. Japan, Norway, and Sweden are the top three holders of US currency in small denominations. Switzerland is the largest holder of $100 billion followed by Netherlands and Belgium. Germany is rising EXTREMELY fast and may now rise to the second largest holder on that list.

It was Edmond Safra and Republic National Bank that was sending plane-loads of $100 bills to Russia. I personally saw these skids of cash in the bank. To get this much cash back then, meant that the U.S. Treasury had to have approved and sent these skids of cash to the bank (money-plane-crec-1996-02-13-pt1-pge196-2).

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Ben Swann is not a national TV journalist, but he is making a name for himself on his Atlanta, Georgia, station by going against the mainstream media. Here is Swann’s piece on the five problems with the Democrats’ claims that Russia hacked the DNC files and gave them to Wikileaks. Wikileaks outright denied this claim and stated bluntly that their source was a LEAK and not a HACK.

This entire nonsense about Russia hacking the DNC and somehow tipping the election to Trump can be summed up very neatly. If the Democrats were HONEST, then there would not have been anything to report. So they are crying foul and blaming Russia instead of themselves.