It’s time to sit back, relax and enjoy a little joe …
The USA is celebrating its 239th birthday this weekend. Hooray!
For the record, it was on July 4th, 1776, that the United States officially divorced itself from English rule. With that in mind, here’s a holiday pop quiz question for you:
Q: Do they have a Fourth of July in Great Britain?
(I’ve got the answer below, after this week’s poll question.)
Okay, off we go …
Credits and Debits
Credit: The US unemployment rate continues to fall. The Bureau of Labor Statistics says June’s unemployment figure was just 5.3%. Wow! That’s the lowest level in almost 38 years. Cue the fireworks show!
Debit: Before you get too excited, keep in mind that headline jobless figure is only possible due to government hocus pocus: they don’t count the 1.5 million exasperated people who quit looking for work over the past year — 640,000 of them in June alone.
Debit: As David Stockman points out, if one tallies the number of labor hours actually supplied to the US economy compared to the potential labor hours of the nation’s available workforce, then the true unemployment rate is 42.9%. I’ll wait while you read that again.
Debit: The headline jobless numbers also gloss over the deteriorating composition of the workforce: Yes, 161,000 new part-time jobs were created last month — but the number of full-time positions fell by 349,000. That’s only good news if you like working at McDonald’s.
Credit: Speaking of the Golden Arches, did you see that they’re increasing the size of their Quarter Pounder this month? It’s pre-cooked weight will climb from 4 ounces to 4.25. Be still my beating heart. McDonald’s hopes the change will increase burger sales. I doubt many people will notice.
Debit: On the other hand, restaurants have certainly noticed the recent rise in egg prices — from April to May they jumped 120%, thanks to a recent episode of bird flu. The USDA says it may take up to two years for the egg industry to fully recover.
Debit: Meanwhile, Greece has officially defaulted on a $1.75 billion payment to the IMF. Unfortunately, that’s just a very small portion of the $350 billion Athens owes creditors.
Credit: Then again, as Latvia’s President admitted this week — to the bankers’ chagrin — everybody knows the Greek debt will never be repaid because it’s too big. What he forgot to mention was that the same story applies to the debt owed by Italy, Portugal, Spain, and Ireland too.
Debit: Oh, and it’s no secret that the US won’t be able to pay off all of the debt it has accrued either — well, unless it wants to destroy the US dollar. Frankly, the US doesn’t have a choice. The math ensures the US dollar is on borrowed time. (No pun intended.)
Debit: So now the real “fun” begins: There are already reports surfacing that Greek banks are considering so-called “haircuts” of 30% on all deposits over $8900.
Debit: And, no, depositors can’t pull their cash out and stuff it in a mattress before the haircuts become official; withdrawals have been limited to less than $67 per day in July. The good news is, at that rate, it only takes 150 days to withdraw $10,000 worth of euros. Well, assuming the euro lasts that long.
Credit: MarketWatch says the Greek financial crisis, “won’t hurt the US economy.” I know. As Franklin Saunders notes: “Y’all write that down, right next to Irwin Fisher’s famous statement before the 1929 crash, ‘Stocks have reached a permanently high plateau.'”
Credit: Puerto Rico avoided a default of its own on Wednesday — at least temporarily — after it made last-minute bond payments totaling slightly more than $1 billion. Yes, I’m talking about the US territory of Puerto Rico.
Credit: Even Puerto Rico’s governor admits that his island — like Greece — now has far too much debt on the books for anyone to believe that it can ever be repaid. Are you beginning to see a pattern here, people?
Debit: Oddly, gold and silver prices — which typically skyrocket on serious market turmoil like what unfolded in Greece and Puerto Rico this week — fell. Stocks, on the other hand, somehow kept their losses manageable. Strange. It’s as if there was an invisible hand intervening in the markets — or not so invisible.
Debit: Even so, the so-called “Plunge Protection Team” couldn’t keep the stock markets completely unscathed — the S&P 500 still had its biggest decline since March. As for the Dow and Nasdaq, they had their worst weeks since April and early May, respectively. But the worst is yet to come.
Credit: Consider the recent suppression in precious metals prices a gift to you from the powers that be. At least you still have a chance to protect yourself at prices that are a relative bargain. For now. The day is coming when you won’t be so fortunate.
Debit: One thing is certain: When the Plunge Protection Team can no longer contain the next big financial crisis, don’t expect central banks to help. Even the Bank of International Settlements now says they’ve backed themselves into a corner from which there’s no escape.
Credit: Of course, the only surprise from the BIS’s warning is the amount of time it took for them to figure that out. After all, some of us (ahem) have been saying the same thing for more than a few years now.
By the Numbers
Here are some Independence Day facts, just in time for the Fourth of July:
2,500,000 US population on July 4, 1776.
321,200,000 US population today.
56 Signers to the Declaration of Independence.
5 Committee members who drafted the Declaration of Independence. (Ben Franklin, John Adams, Thomas Jefferson, Roger Sherman and Robert R. Livingston)
1826 Year that Jefferson and Adams died. (Coincidentally, both on July 4th — the 50th anniversary of the signing of the Declaration of Independence!)
1832 Year the last surviving signer of the Declaration died. (Maryland’s Charles Carroll, 95.)
9 Number of Declaration signers from Pennsylvania. (The most from any state.)
$673,000 Value of US flags exported to Turkey in 2014; that was the most of any country.
$3,500,000 Value of all US flags imported to America last year.
97 Percentage of imported US flags that came from China.
Source: InfoPlease
Last Week’s Poll Results
Can you drive a car with a stick shift?
- Yes (59%)
- No (34%)
- Yes, but not very well. (7%)
More than 500 Len Penzo dot Com readers responded to last week’s question and, somewhat surprisingly, almost 3 in 5 say they’re comfortable operating a manual transmission vehicle — better known as a “stick shift.” I’ve had at least one stick shift vehicle in my driveway almost continuously since I first learned how to drive more than 30 years ago. Of course, I taught my teenage son, Matthew, how to drive a stick last year — and my 15 year-old daughter Nina is now learning. I think knowing how to drive a manual transmission is one of those skills everyone should have. Hey, you never know when you might need to drive one — and they’re fun! (Well, they are once you get the hang of it.)
The Question of the Week
[poll id="69"]
Quiz Answer
Of course, Great Britain has a Fourth of July! You don’t really think they’d go from July 3rd to the July 5th, do you? I know. It’s an old joke my Dad likes to break out every Independence Day. Somebody almost always falls for it.
Insider Notes: Food as an Alternative Investment Vehicle
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Other Useless News
Programming note: Unlike most blogs, I’m always open for the weekend here at Len Penzo dot Com. There’s a fresh new article waiting for you every Saturday afternoon. At least there should be. If not, somebody call 9-1-1.
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(The Best of) Letters, I Get Letters
Every week I feature the most interesting question or comment — assuming I get one, that is. And folks who are lucky enough to have the only question in the mailbag get their letter highlighted here whether it’s interesting or not! You can reach out to me at: Len@LenPenzo.com
This week, Randy took a few minutes to fill out an official Len Penzo dot Com complaint form:
Here in Kansas we’re tired of the “dumbing down of America” by morons, and it appears you fit in that category.
Well, what did you expect, Randy? People like me who insist on living here in California are morons by definition.
I’m Len Penzo and I approved this message.
Photo Credit: imagekb.com
I am amazed how badly manipulated things really are! Gold and Silver should be climbing steadily. I still think it could take a few years before we are hit hard enough here in the states for people to wake up! Although many are saying this Fall going into 2016 is going to be the implosion! I guess a lot rides on when China reveals how much Gold they have, the Chinese say they will be setting the price of Gold by the new year, so we shall see.
That market manipulation is the desperate maneuvers of a financial system in its death throes, Jared.
Have patience. This is going to finally come to a wicked and unceremonious end — for everyone — sooner rather than later.
The amazing thing is, most people will have never seen it coming. The warning signs in Greece had been flashing bright lights and sounding loud klaxons since at least 2010, and yet look at all of the people who remained either ignorant or in denial, and refused to protect themselves. Instead, they left their cash in the banks until it was too late; now they’re going to be taken to the cleaners because of it.
People don’t see it coming because they don’t pay attention. They are watching sports, ‘Murican Idle, and the Mainstream media news, which barely mentions Greece or any relevant economic news. The news they get is spoon-fed through the government. We are told we have 5.3% unemployment and the recovery is well under way and if things aren’t perfect yet it’s because of Russia, Iran, China, ISIS, etc.
It’s incredible, given the history of Cyprus, that anyone would have money in a bank in Greece, but they seem to suffer from the same inattention problems we have here in the U.S.
Yes.
I was watching Foxnews, a supposedly Conservative station and they were saying that Greece would not effect our economy here in the USA, I don’t see how it wouldn’t?! They then went on to say how our economy was growing stronger and adding more jobs every month then reported that the people out of the work force was the highest since 1977! Am I missing something here or are they totally lost, and I thought they were a conservative company. I have seen Peter Schiff on their several times and he only gets ridiculed. Do you think there really is a way for them to rig this thing to where it can go on indefinitely? I have seen a few reports of the elite wanting to make the money digitized, would this contribute to this madness continuing nonstop?
Don’t confuse the news reports on Fox News Channel — which is down the middle of the political spectrum, unlike CNN, MSNBC and the alphabet networks which are clearly left of center — with most of its commentary shows (O’ Riley, Hannity, etc.), whose bias is center-right and right of center. The news only seems “conservative” because the other channels are so far to the left.
Schiff is a Libertarian; as such, he doesn’t see eye-to-eye with most folks in the mainstream media who believe government is the answer to all of our problems. As a Libertarian, he advocates personal responsibility and individualism.
As for this going on indefinitely … after 44 years of unrestrained money printing (and decoupling the dollar from gold), we have finally crossed the rubicon onto the exponential end of the debt curve. If you’re familiar with exponential curves, you know there is no way this can go on indefinitely without blowing up; eventually, the shenanigans being taken to keep this Ponzi scheme under wraps is finally going to become apparent to enough people that confidence will finally collapse — and the current debt-based monetary system will go with it.
I think the collapse will not be as dramatic as waking up one day and everything has fallen. The collapse that has already begun will continue with a falling market rising prices an fewer real jobs as time goes on. Things will just grind to a halt as the Chinese Yuan becomes one of, and eventually THE world’s currency, the dollar will not survive. The only thing that will prolong the status of the dollar is the considerable might and reach of the U. S. military. I think the dollar can hang on and do well for several years to come, but certainly not forever without fundamental changes in our economy. But those changes will never happen.
Just read an article on zerohedge that stated the BIS blamed old school philosophies on economics (guessing the Austrian school of thought like Peter Schiff) for the many unraveling a of world financial markets! These people are unbelievable, they think of themselves as Gods! I am also a fan of Jim Sinclair and Bill Holter who have mathematically shown how there is no turning back, I’ll be glad when these Keynesians are put into the dustbin of history where they belong!
Holter and Schiff are all extremely smart individuals who opened my eyes to how our debt-based monetary system REALLY works. I would also include Mike Maloney among my financial mentors.
As for the Keynesians: When this is all over, many of them should be sent to prison.
I think the Grexit (no vote) today might be the snowflake that starts the avalanche! All hell is about to break loose in the global fiat currency world!
We’ll see, Jared. I think this has a little while longer to play out, but I think it is clear that the bankers are clearly beginning to drown in this sea of worldwide debt. They are starting to lose control. We’re not there yet, but it’s coming.
The gold and silver price suppression is getting ridiculous too. Gold gapped up $14 and silver gapped up 24 cents at the open on Sunday night — the metals should have soared even further after that, considering the results of the Greek vote. Instead, the prices of both were immediately smashed down!!!! (Plunge Protection Team at work.)
The whole system is now a sham. Price discovery is dead.
This will continue until the system implodes.
At least their manipulation allows people who have still yet to wake up the chance to purchase metals at some discounts. Two questions, what is your opinion of Bitgold? Also APMEX has 1 oz Copper rounds for .99, do you think. Copper will be a valuable commodity such as gold and silver?
People who are interested in saving copper can do it much more cheaply by just collecting pennies made prior to 1982 — each penny actually has about 2 cents worth of copper in it, at current prices.
Some people save nickels too.
As for me, I’ll stick with silver and gold.
As for bitgold: As I mentioned last week, Jared. There is too much counterparty risk.
I enjoyed reading your Independence Day facts. Where do you get this information? Happy 4th of July everyone. Hope you all had a blast.
A link to the source is always listed at the bottom, Jayson.
Len – thanks for your great information. Do you recommend purchasing 1/2 oz, 1/4 oz, 1/10 oz gold products? What is your opinion on the APMEX gold rounds vs. Gold Eagles?
Thanks, KALENA. I prefer the Eagles to generic rounds, despite the higher premiums for equivalent weight; I just think they will be easier to sell when the time comes.
For me, there are a couple of downsides to the smaller-weighted gold coins:
The biggest are the higher premiums. The lower the weight, the greater the percentage premium (which essentially acts like a tax). APMEX premiums are currently:
1 troy oz generic gold round ~ 2.4%
1 troy oz Gold Eagle ~ 4.8%
0.5 troy oz Gold Eagle ~ 7.9%
0.25 troy oz Gold Eagle ~ 11.7%
0.1 troy oz Gold Eagle ~ 13.3%
Another one is the small size of the coins, especially the one-tenth ounce gold Eagle — it’s slightly smaller than a dime! I like my coins to be a bit more substantial — but that’s just me. I’d rather have seven 1 troy-ounce Silver Eagles than a single 0.1 troy-ounce Gold Eagle (based upon current prices).
With the gold-to-silver ratio currently over 74, I also think silver has a lot more “room to run” compared to gold. (Then again, there won’t be any “running” until the powers that be finally lose control. LOL)
How much silver do you recommend someone holds to prepare for these upcoming events? It is hard for the everyday person to be able to acquire large amounts at one time. Thanks! JB
JB, I addressed your question in the following article:
http://lenpenzo.com/blog/id23998-economic-collapse-101-how-much-gold-and-silver-should-people-own.html
By the way, precious metal prices are plunging today! If you are thinking of buying, this is a great time stick your toe in the water.
Thanks interesting article. I have been acquiring silver most of my life a little here and there, but never was sure how much was enough. I only have a small amount of gold as it is more expensive up front. I think I may shift my focus to acquiring gold to even out my holdings. With the pending financial collapse do you feel it would be good idea to reduce my Real Estate holdings or to increase them. I am in the purchase of purchasing 2 more properties but haven’t decided if I will do anymore after that until I see where our economy is heading.
I almost feel like I should begin stacking cash so that when the downturn hits I can purchase double the amount I can in the current sellers market. Not trying to take all your time but have been reading through site and felt I should ask. Thanks!
I’m with you: I think prices for most tangible assets are going to go much lower before the currency finally implodes and goes supernova (essentially the death of the dollar), which is why I think it is smart to keep some dry powder on hand.
The only trick is to not get stuck with a lot of cash before the currency blows up and becomes worthless.
It could get tricky. You don’t want to be stuck with worthless dollars in the end, but you don’t want to be stuck without cash when the banks close. In any case, buy your gold and silver now. We are seeing supplies get shorter and shorter with Europe buying everything they can get their hands on right now.