Marc Faber Talks About Hong Kong

Marc Faber says Hong Kong is a city without anything at all, they import everything: water, oil, food, whisky, appliances. They get their money by trading.

SHFE Chinese Silver Whale Keeps Buying

As predicted, silver went up and it has still room to go higher. (BTW, this is a record high in silver warehouse stock)

Taylor Rule Rate Vs. Gold Price

John Taylor, a Stanford University economist once considered to lead the Federal Reserve, developed a formula to calculate where the Fed funds rate should hypothetically be according to inflation rates, strength of the labor market, and potential output of the economy. Inflation became a problem during all times when the Taylor Rule Rate became higher than the Fed funds rate.

The chart below shows the gold price against the [Taylor Rule Rate - Fed Funds Rate]. Whenever the blue line is positive, gold will do well.

Financial reset continuing: SDR

Gold has started to move up against the SDR basket of currencies. This is the perfect evidence of a global monetary reset. As the whole world prints money, gold will go up against all fiat currencies.

Delinquencies Vs. Unemployment Rate

The delinquencies are a leading indicator for the growth in the unemployment rate. As more and more people default on loans, these losses will be taken by the companies holding those loans (auto loans, student loans, mortgage loans). The result is that they will need to cut costs and fire people.

The correlation is very accurate here. In 2019 and going into 2020, we know that delinquencies will be rising and this should indicate that the unemployment rate will spike up.

Volcker 2.0 in 2020

Volcker 2.0 will be implemented in Jan 2020 and will reduce compliance costs for smaller banks. It will also allow certain smaller banks to use in-house money and your depositor money to engage in fund investments and proprietary trading. Trading volumes will be going up along with trading revenues.

This will really boost stocks even higher next year. But it will make the whole system even riskier, because when these proprietary trades go bad, it's the depositors who will bail out the banks.

U.S. dollar will have a correction

The U.S. dollar is overdue for a correction to the downside as budget and current account deficits balloon. To bet on this, you should of course buy precious metals.

Gold is God's money

Jesus in Matt. 22:19 asked them to show whose likeness and inscription was on the coin. When they said Caesar's, he responded, "Render therefore to Caesar the things that are Caesar's, and to God the things that are God's."

Fiat USD money belongs to George Washington.

 But gold and silver are God's money, they are faceless.

 

Marc Faber buys platinum

Marc Faber said if he would buy one thing, it would be platinum.

Stock Screener: Bank of China (BACHY)

For our next stock pick we will go with Bank of China.

• China modest GDP growth at 2% 
• China has 5 times the population of U.S. with huge upside
• Trade deal could boost Chinese market
• Hong Kong democratic party won election in 2019
• Bank of China is one of 4 biggest state-owned banks
• Global central bank QE will boost bank stocks higher 
• High dividend of 6%
• Low PE valuation of 5
• Trading below book value
• Marc Faber stock pick
• 1 year target estimate has 30% upside

Singapore Real Estate Market Outlook

Singapore's GDP is going to be flat at 0.5% amid trade tensions between the U.S. and China. When GDP rebounds, we will also see rents increase in the real estate space.

Moreover, the real estate market is going to see less supply in the coming 2 years, which could boost the real estate market even more.

 

Rents are going to grow as well, while vacancy rates go down.

Ascendas REIT consists mostly of logistics and business property in Singapore and to a lesser extend Australia. Rents are expected to rise modestly, especially when investment picks up from capital fleeing Hong Kong.

There's been an increase in capital outflows from Hong Kong-based investors into other major global real estate markets, with Australia, Singapore, Japan, and the U.S. all seeing an increase in purchasing activity," said Ben Burston, Knight Frank LLP's Australia-based chief economist.

 

Net operating income is at 6%, with a dividend of 5%.

Silver Supply and Demand

Very interesting charts. More info here.

Total demand is stagnant (Silver Institute):

 

Fabrication demand is improving:

 

China is important:

Supply is declining (along with lower copper, zinc byproduct supply):

 

 

 

SHFE silver discrepancy growing

Data shows silver will break out.

Supply and Demand for Commodities

Some interesting charts from Willem Middelkoop on supply and demand projections in the commodity space. Make notice that copper and zinc supply is trending down, which also means that silver supply will go down as it is a byproduct of copper/zinc production.

 

Permanent Portfolio

The permanent portfolio: gold, cash, stocks, bonds.
You should hold some of each asset class based on inflation/deflation, growth/stagnation.

Trump Caves on Tariffs

Trump cancels December tariffs and lowers tariffs by 50% on some Chinese goods. This will be a setback for precious metal mining stocks.


10 year bond yields shoot higher:


Gold plunges:



Oil and GDP move higher: