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Category: Economics

Gold and Standards

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US Presidential nominations for a seat on the board of the Federal Reserve – America’s central bank – rarely attract the kind of media attention as did that of Judy Shelton, President Trump’s nomination for one of two vacant seats in early July.

Shelton is an economic adviser to President Trump, and currently the USA Director to the European Bank for Reconstruction and Development (EBRD).

The USA’s indifference to the EBRD, which it (correctly) regards as a vast waste of time and money, is registered in Shelton’s attendance record at EBRD Board meetings – she has missed 42% of them in her first year in the job. That kind of behaviour irritates all those who feel the West has a duty to assist the ‘economic development’ of the satellite states of the former USSR. This flow of taxpayer funds from West to East shows no sign of letting up, almost 30 years since the taps were opened. When will the former Soviet empire be ‘developed’? It’s a rhetorical question…We know what Shelton thinks though: “It’s the wasteful government spending that ends up being the problem.”

Be that as it may, the nomination of Judy Shelton is fascinating choice for anyone interested in gold. Her choice reveals a great deal about President Trump’s view of the way the world is, and perhaps should be. For Shelton has made no secret of her interest in putting the USA back onto the gold standard.

Put simply, if a country is on a gold standard that means the government of that country can only print as much money as it holds in gold. Having a gold standard therefore enforces fiscal discipline – and removes the resource which all governments resort to in times of crisis, the printing press. The clue is in the name – standard.

It’s conventional to argue that standards are not what they used to be, but in the case of central banks and the governments who run them, standards were never what they used to be. Since time immemorial governments have been fiddling with money, from shaving slivers from gold coins to running the banknote printing presses until they start steaming. We all just accept as natural that the Federal Reserve, the Bank of England, and other central banks, set their sights on annual inflation of 2%. It never seems to occur to anyone to ask why we accept any inflation at all. After all, inflation is corrosive; 2%/year is like pancreatic cancer – a silent killer.

Governments and conventional economists everywhere start frothing at the mouth whenever someone mentions going back to the gold standard. “Whoever today dares to hint at the possibility that nations may return to a domestic gold standard is cried down as a lunatic. This terrorism may still go on for some time…What all the enemies of the gold standard spurn as its main vice is precisely the same thing that in the eyes of the advocates of the gold standard is its main virtue, namely its incompatibility with a policy of credit expansion.” So wrote the great Austrian economist Ludwig von Mises more than a century ago.

It’s not surprising therefore that Judy Shelton has come in for mainstream and social media attack; the accusations, by and large, are abusive – “Another lazy, do nothing entitled Republican” is one – but they are really letting off steam against the American President. Shelton herself seems thoughtful, modest, and balanced. What she wants – like millions of others – is an end to governments playing fast and loose with the money supply. She wants a currency that is not debauched. She wants to have certainty that a dollar is a dollar and that it will buy the same amount of goods today, tomorrow, and always. She wants a standard that people can live by and have faith in. Good luck with that. The USA has more than 8,133 tonnes of gold in its reserves but that isn’t anything like enough to pay off its debt owed to foreign investors. When gold hit $1,895/oz in September 2011 China, Japan, and other countries owned $4.7 trillion in U.S. Treasury debt. That was 10 times more than the $445 billion in gold reserves at Fort Knox. So a return to the gold standard is a good idea in principle but a non-starter in practice.

Looser monetary policy – pumping more freshly printed cash out – is on the cards for as far as the eye can see; even supposedly responsible newspapers such as the Financial Times are calling for precisely this. This is a catastrophic situation, like being locked in a room whose walls are gradually moving inwards, with no escape.

Fortunately there is a way out, a way of protecting one’s wealth; a universal gold standard may not be feasible and exist only as a fantasy, but one can have one’s very own gold standard. That personal gold standard is called Glint. With Glint you can save in gold; you can spend in gold; you can put all your wealth into gold. And then you can sit back and watch with indifference the madness of the banknote printing presses working over-time in the USA, Europe, anywhere.

 

Yield Curve Inversion – Good for Gold

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A yield curve gives us an idea of future interest rate changes and economic activity. In the US, this curve is at its widest spread since the financial crisis, which is an alarming situation as it has previously signalled forthcoming recessions.

This is not the first time that the curve has inverted this year; it also happened in March after the Federal Reserve announced a much longer than expected pause in tightening of monetary policy. Furthermore, yield curves around the world have plunged to new record lows, making these worries even more significant. It is important to understand that it is not just about whether the curve is inverted or not, but also how long for. In previous periods the longer the curve remained in a steady inverted state the more positive the outlook for gold became.

Fears of a recession is potentially one of the reasons why gold has risen in recent weeks; this paired with the threat of an intensifying global trade war is forcing investors to look for safe havens such as gold.

Throughout the last few decades we have seen that gold performs well during periods of an inverted yield curve. It may be premature to call a US recession, but the negative news keeps piling up. Following its initial rally, the gold price is now consolidating just as we had predicted and written about over the last two weeks. Once it settles further and if conditions remain the same, we would expect gold to perform well in the coming period.

Chose Glint and protect your wealth today.

 

A French Farce

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If it wasn’t so tragic it might be funny. The next president of the European Central Bank – as everybody knows but is too polite/afraid to mention – comes with baggage.

The superbly coiffed Christine Lagarde is seguing from her position as managing director of the International Monetary Fund (IMF) into the seat kept warm since mid-2011 by Mario Draghi, and is to become president of the European Central Bank (ECB). She is officially negligent, however, if nothing more sinister.

The negligence judgement was imposed on Christine Lagarde by the French Cour de Justice de la République or CJR in 2016. The CJR was established in 1993 by the then President, François Mitterrand, with the sole remit to try cases of alleged ministerial misconduct.

Lagarde was French finance minister in 2008 under President Nicholas Sarkozy – who is himself now facing trial, accused of fraud and bribery. The CJR court judged that Lagarde was guilty of negligence in a complex case involving the award of €404 million to the businessman Bernard Tapie; the CJR did not hand Lagarde any punishment however, other than the slap on the wrist. She could have been given a fine and one year imprisonment. In 2007 Tapie backed Sarkozy for the Presidency…wheels within wheels.

Lagarde did not appeal the ruling against her, which spoke volumes. She merely said at the time: “There’s a point in time when one has to just stop, turn the page and move on and continue to work with those who have put their trust in me.” It’s the phrase of today – just ‘move on’, nothing to see here.

Why does any of this matter? What has it got to do with gold?

It matters because Lagarde’s appointment to the most powerful banking job in the EU’s eurozone is a bit like giving the job of chief fire prevention officer to someone who may have pyromaniac tendencies. That someone so powerful, so richly endorsed by the great and the good, could be judged negligent in a multi-million case by a French court, surely should have been considered a black mark against her.

That she is about to steer the Eurozone economy at an incredibly difficult time, trying to pull it out of stagnation – something which former Goldman Sachs employee Draghi failed to do after years of trying – is worrying. Lagarde is no economic hawk – indeed, we expect her to be much more of a dove than Draghi; which in turn means oodles more quantitative easing.

Reuters calculated in December 2018 that the ECB’s “asset purchase program, a monetary experiment known as quantitative easing” (launched in March 2015) has seen €2.6 trillion pumped into the Eurozone economy in four years; that’s €1.3 million a minute. A tidal wave of cash will have bought…economic growth struggling to be more than 1% this year.

We find ourselves paradoxically placed. As scrupulous defenders of honest government and cleaner-than-clean people in political office – and the president of the ECB is a political office – we do not feel we can welcome Lagarde into her new role, although congratulations Christine on landing a €400,000-plus a year job. After years of media acclaim Lagarde clearly thinks she now has carte blanche to espouse a gender-agenda, telling a recent interviewer that “when it’s bad, you call women to the rescue.” Nope. When things are bad you call on someone you know is not negligent, male or female.

On the other hand, this is terrific news for gold. As the eurozone economy continues to drag its feet like a child on its way to a yelling, Lagarde and her advisers can only deliver more of the same – much, much more printing of increasingly devalued paper money. The great compromiser, Lagarde will not want to be known as the person who imposed austerity on the EU and nor would that work either – it would simply exacerbate the tendencies for the EU to fracture. So our very best and honest advice is – get your Glint card now, download the app and upload the gold. And hold onto your seat, because it will be rocky.

Consolidation for now – with uncertainty a constant

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The gold price had a warm and sunny June: it went up by almost 13%, hitting on 25 June an intra-day high of $1440/oz. Speculative investors in the futures market significantly increased their bullish positions over the month. As many of such investors are looking for swift, short-term gains, it is inevitable that some have decided to take profits, so the price has come down a little. But the factors that underlie its recent rise are all still in place, and they can be summed up in one word – uncertainty. The combination of falling Bond yields and the possibility of lower US interest rates (and thus a potentially weaker dollar) continues to make gold a very attractive investment. The US Federal Reserve is putting out lots of signals that an interest rate cut is imminent; the Bank of England’s Governor, Mark Carney, said this week that “intensification of trade tensions has increased the downside risks to global and UK growth”, Governor-speak meaning ‘no interest rate rises for now’, and the European Central Bank is in a quandary about what to do to get the Eurozone economy out of its sluggishness. One thing is certain – the ECB will end up doing fresh quantitative easing, i.e. printing more banknotes. The chart below shows the gold price in US dollars set against the open interest established by the US Commodity Futures Trading Commission (CFTC);  increasing open interest represents new or additional money coming into the market. ‘Open interest’ is a reflection of investor interest in a particular market.

All in all this is a particularly supportive background for gold not just for the short but also the longer term. It’s time you downloaded Glint and started buying, saving, and spending gold.

Gold, black cabs, and politics

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The gold price has been soaring in most paper money terms recently. In pounds sterling, it came close to its record since 1970 of £1,124.23 per troy ounce, set on 28 February 2012. Gold has set a new record high in Australian dollars, too – above A$2,000.

Why these new highs?

Uncertainty stalks the world, that’s why.

For one thing, the US Federal Reserve hit the uncertainties button on 19 June. Slowing economic growth, rising trade tensions, inflation stuck at below its 2% target, were all on the lips of Jay Powell, Chairman of the Reserve, as he readied the market for a cut in US interest rates in 2020.

The US is moving from its “solid” rate of growth anticipated by the Fed in May, to a “moderate” pace, It’s well known that President Donald Trump, anxious for his re-election success, is pressing the Federal Reserve to cut interest rates.

Before the Fed made known its latest macroeconomic view, the president of the European Central Bank, Mario Draghi, – i.e. printing paper – in order to try to get the European Union’s economy moving faster than a very tired snail.

The fact that these two major economic areas are nudging close towards stagflation – stagnation combined with badly disguised inflation – was enough to jolt the US dollar gold price higher.

And for the gold price to rise so significantly in pound sterling, the uncertainties are considerable.

The United Kingdom is now less than a month away from having yet another Prime Minister, who will have the job of dealing with the vote to leave the European Union. It has been more than three years since the UK referendum on EU membership – and these three years have been wasted, whether you are a Leaver or Remainer. “I’m exasperated. I’ve had enough,” said John Griffin, one of the biggest donors to the Conservative Party and the founder of Addison Lee, the London-based private taxi company, in  . Griffin – who voted to remain in the EU but has reconciled himself to the vote to leave – expressed his annoyance at Boris Johnson, the favourite to become the next leader of the party, and therefore Prime Minister. Johnson has said that the UK will leave the EU by 31 October, the final date agreed between the UK and the EU.

There’s no doubt that Johnson has great charisma, and that he can fill a hall with supporters. He has wit, charm, and great good humour. But he is a deeply divisive character with a murky past. His well-publicised quarrel with his girlfriend – and his refusal to answer media questions about it – is just the latest episode which raises doubts his personal stability, doubts that influential supporters of the Conservative Party like Griffin are now openly expressing. Nevertheless he seems to retain more support from the grassroots of the Party than does Jeremy Hunt, the only other contender still in the race.

From black cabs to the gold price might seem a long way, but the two are closer than you think. Griffin’s obvious annoyance at there being no clear, obvious, universally popular candidate for the UK’s next Prime Minister speaks noisy volumes about the current uncertainty in the UK.

No wonder gold is so high in sterling terms.

Rather than shrug your shoulders and wonder what you can do, buy some gold at the most competitive premium on the market via Glint.

Guard your wealth against politicians, and their promises.

Spend gold instantly, anywhere, with the Glint Mastercard. Download the app here.

 

Worried? Who’s Worried? Should We Be Worried?

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Recent headlines regarding the situation in the Middle East can hardly be viewed positively. Since the US pulled out of the agreed nuclear disarmament with Iran last year, tensions have been steadily rising. Now, we have alleged Iranian attacks on oil tankers and more US firepower arriving by the day. Iran has the second largest population in the Middle East, at 83 million, is the 6th largest oil producer and holds the 2nd largest reserves of natural gas and seemingly on its way ‘once again’ threatening to become a nuclear weapon state.

Throughout history, we have seen tension in the Middle East creating oil supply concerns, pushing up prices. Often, these accompanied economic growth worries, amid rising inflation and interest rates. But, in today’s markets, no-one seems to worry about anything. Stock prices remain elevated, maybe it’s the permanent high plateau that Irving Fisher talked about in 1929!  The oil price has hardly budged and inflation expectations and interest rates are falling, not rising. Que raro!

 

Since 2nd May, Trump’s administration has imposed a policy of zero imports of Iranian oil due to Iran’s unwillingness to consider negotiations over the JCPOA. In addition to this, Trump is looking to block import waivers from all of Iran’s major export countries such as China and India, in order to put extra pressure on Iran with the threat of a serious economic situation. As a result, sanctions could remove another 500,000 barrels per day from the market.

In response, Iran has threatened to stop the flow of oil production from other big suppliers via the Strait of Hormuz. However, the Strait of Hormuz is around 20 miles wide and would be very difficult for them to block it for a long period of time. Furthermore, Saudi Arabia and the UAE have alternative pipeline routes that could avoid the Strait of Hormuz, with Saudi able to send around 6.5 million barrels per day around the Persian Gulf.

Although these sanctions seem to present a serious problem for Iran, China said that Iran’s oil was too cheap to pass up, and it has been increasing its purchases of Iranian crude oil in 2019, up to 700,000 barrels per day in April. It is likely that China will try to bypass these sanctions which will significantly reduce the threat to Iran’s exporting revenue. How the US will react to this, is up for discussion but it certainly doesn’t help ongoing tariff and trade war talk.

The market appears to be pricing in zero % probability of anything escalating, but we believe it is just another example of declining volatility, in all asset classes and would be very wary of complacency at this time. A neutral observer could be forgiven for thinking that the current status is only one spark away from an outright outbreak of hostilities in the region. What then?  While the long-term gold/oil ratio at 24 is at its average for the last decade and high compared to the noughties, any war and an oil spike could well see gold rise significantly as well.

Of course, no one cares until they do. Donald Trump and the market-place are far more focussed on the Federal Reserve’s projected path of interest rates of 2019, a complete U-turn from the 2018 with gradually rising rates. With record unemployment at 3.6% in May, wage inflation rising and bullet-proof stocks, who in their wildest economic dreams could imagine that we would need to price in three Fed interest rate cuts, back down to the zero-bound. Maybe, this is ominous in its own right, and a Middle-East war is a mere side-show.

Protect your assets through buying gold using the Glint.

Are the rich getting richer and everyone else struggling to make ends meet?

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A recent international report from the OECD economics think-tank has made some worrying statements.

  • Middle-class families are seeing their incomes stagnating as they are squeezed by the ultra-rich taking a bigger slice
  • The middle-classes are being ‘hollowed out’, with declining chances of rising prosperity and job insecurity concerns
  • The OECD believes there will be political consequences for Western countries
  • It says middle-classes have been the “bedrock of democracy”

We thought we would do own own analysis at Glint on the growing wealth disparity. The analysis is using UK data, but it is likely to be similar the world over.

The Sunday Times Rich list, updated and published every April since 1989 is a list of the 1000 wealthiest people or families living in the UK, ranked by estimated net wealth. To have ever been included in this list, you have clearly attained the status of ‘rich’ by observable metric comparisons. To simplify the analysis of easily obtained data, we have taken the top 12 people on the list in the last 10 years, starting soon after the global financial crisis. As you can see, their wealth has increased every year since, with a cumulative increase of over 200%, approaching an annualised increase of 12% a year. The rich certainly are getting richer!

(NAV-Net Asset Value, base=100, start 2009)

In comparison, the increase in wealth of the middle-classes shown by average UK wages and the lower-classes shown by the UK minimum wages is a far cry from the rate of growth seen by the rich, with barely a 20% increase in the last decade. But, it gets even worse than that. Unfortunately, consumer price inflation has often outpaced wage inflation and the real (nominal less inflation) wage changes over that time are actually falling. The middle-classes and the lowest paid workers are barely keeping their heads above water. They are indeed, getting poorer.

The rich, either through inherited or self-made wealth, typically hold their assets in bonds, equities, property and private businesses. Since the ‘last’ great financial crisis of 2008, the central banks have responded to ‘save the system from collapse’, by dropping interest rates to zero and embarking of the biggest monetary experiment of all time with Quantitative Easing’, money printing by another word. What has it achieved?

Well, for one, it has put the wealth of the rich’s asset classes at nose-bleed valuation levels. Bonds, equities, property and private businesses are at very high metrics of earnings, never seen before in history, while inflation and lack of wage growth has seen everyone else struggle to keep up.

Everyone would like to be able to save for a rainy day and see those savings grow but it does seem out of reach for most workers. While the UK savings rate has some correlation to the level of deposit interest rates, encouraging savings with returns, we believe the main reason that the UK savings rate has fallen so much is down to the declining amount of excess income as shown by the real wage declines. So not only are you barely keeping up with cost of living, but you are not able to save.

At Glint, we have long believed that saving regularly in gold can benefit anyone’s pot, whether you are rich or poor. Over the last 10 years, the chart below, shows the appreciation of the gold pot, relative to the meagre return of the cash deposit pot. Saving a regular amount into equities and bonds is reasonably accessible to most middle-classes, but the current valuations make this much less attractive than in in the past. Gold as an asset class for saving is far cheaper in comparable metrics and Glint has made it incredibly easy to do.

Investing with a Crystal Ball

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The legendary investor, Jim Rogers, used to say you only had to make a decision on one asset class every ten years to enjoy unbelievably high investment returns and that diversification and over-trading were the way to ruin. While Jim might well have incorporated many different asset classes into his ten-year choices, we have just looked at the last half century worth of returns by decade of US equities and gold.

So, with the benefit of hindsight, you would only need to make a decision every decade between US equities or gold to make truly eye-popping returns, obviously the RIGHT decision. It is quite incredible that the correct decade decision makes 315,132% returns over 50 years, but the incorrect decision loses 30.7%.

Undoubtedly, the volatility and drawdowns of this strategy would have been unbearable, but it does illustrate the point notably. The better informed you are, and the more knowledge you have of valuation and economic conditions, the more you can aspire to trade with the Gods. For mere mortals, some diversification is certainly wise.

I believe it is a far harder decision today, amidst the super-high valuations driven insanely by extraordinary money printing, to identify a major asset class that beckons a stellar ten-year return and could be considered cheap. But, if the decision is simplified and only includes a choice between stocks and gold to hold for the next ten years, then looking at the valuation of US equities at century high valuations on many metrics, gold is a clear winner.

We have shown Hussman’s margin-adjusted Cyclically adjusted price/earnings ratio (MAPE) before. Clearly, US equities are not cheap, or fair. They are in fact, more expensive on this metric than at any time in the last 100 years, blown up by the largest global monetary printing conditions ever.

Growth is slowing globally, especially in Europe, with real recession concerns in the foreseeable future, Brexit or no Brexit.  While wage inflation is gaining traction, adding to concerns.

And global liquidity, led by China is taking a distinct turn for the worse. The chart below shows monetary liquidity heading much lower, which historically correlates with large collapses in equity values.

Gold, on the other hand remains very quiet, still some 30% lower than its 2011 peak, treading water, biding its time? Is it cheap versus US equities? Of course.

But there is another part of the metal market that is truly cheap and solidly backs up the argument for precious metals as cheap.

Gold and silver mining stocks have become a forgotten market. Most of these stocks – junior and major caps – trade on the Canadian stock market with some other country listings. As an asset class, they are by far the cheapest. The metrics to measure them in 2011, at the highs of the metals last bull cycle, are no longer used. They have, in all effect, become penny stocks, beckoning insolvency. Companies, many with no debt and hundreds of ground claims with in-situ metal values in the hundreds of millions are going for single digit market caps.

 

The indices, GDX mining and GDXJ junior mining have fallen by up to 80% in the last eight years and these are indices. Imagine how many actual companies have fallen the full 100% and closed! Canada is the land of bandwagons – boom and bust, pump and dump – with stock market practices, which have long since been outlawed by developed countries. Last year, all the brokers were raising money for crypto mining hardware. Recently, they have raised money for cannabis companies that now have ridiculous valuations and will no doubt overpromise and under deliver. At a conference in Canada, one analyst presentation showed that 82% of ALL Canadian public listed companies (not just mining) had negative net income! (That’s a loss to you and me.) But you get the picture. There has been no financing at all, to speak of, into smaller mining companies and the larger companies are failing to provide any real profit potential at these metal prices.

 

While I can clearly see the ‘cheapness’ of this asset class at the moment, in relation to the metal prices, and I believe the metal prices will have to rise as production falls off the proverbial cliff, there is a concern that the whole model is potentially broken. As a result, I would not buy single stocks, only the indices. Often, when there is so much negativity and only extreme pessimism prevails, these are true cycle bottoms.

2019-2029, only time will tell what the future beckons for gold and US equities, but the facts seem to speak for themselves.

The State of Modi’s India

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This week we decided to look solely at India as the country is growing and changing.

The general election in India is fast approaching, with Prime Minister Narendra Modi and his party facing a path to glory. The political steamroller is now in full swing with all politicians campaigning in what will be the world’s largest democratic vote. This will be a significant event that takes place over several weeks to make sure that the millions of voices across India are heard loudly and clearly. The official date is yet to be announced but polling is due to take place between April and May 2019. During the last general election, 830 million individuals were eligible to vote. This time around the country is expecting about 875 million people to have their say. Modi and his nationalist party are looking to be re-elected following their landslide victory in 2014 but are being opposed by Rahul Gandhi, the descendant of the Gandhi dynasty. He is the son of former Prime Minister, Rajiv Gandhi, and the grandson of Indira Gandhi, India’s first female leader. His grandfather was Jawarhlal Nehru, who was India’s founding Prime Minister.

India’s political model is based on the UK system where parties promote candidates for seats in the lower house of parliament with 543 seats at stake. Whichever party wins the majority of seats gets to choose the Prime Minister in charge. Last time around, BJP and Modi won 282 seats in the general election. With their alliances, this number grew to 336 seats, making it the biggest majority in 30 years.

The voting will take place across India’s 29 main states and seven smaller territories that are known as Union territories, with some carrying more weight than others, based on their population. The largest battleground is the northern state of Uttar Pradesh, as it is home to approximately 200 million people. Given that this region accounts for 80 seats in parliament, it is critical for both parties and their ambitions of forming a government. Other key states are Maharashtra, West Bengal, Bihar and Tamil Nadu.

Unemployment and Slow Job Creation

Not too long ago, Narendra Modi looked untouchable, but a few months is a long time in Indian politics. Modi entered 2019 with his halo being shattered as Congress rallied towards the tail end of 2018 after winning a series of state elections, which were labelled “semi-finals”. Opinion polls and state elections were contradictory, demonstrating that BJP had lost a lot of ground. More worryingly, Modi’s popularity has dropped uniformly across urban and rural areas. One factor that could be pivotal is job creation. Even though India’s economy is growing faster than most across the globe, it is evident that jobs are not being created fast enough to match the country’s growth. Looking forward, it is estimated that 1 million Indians will turn 18 each month for the next several years, and at that speed, unemployment could well increase rapidly. Statistics show there is discontent within the population and research demonstrates that confidence in the economy has fallen by over 25% in the past year.

 

Farmers

The despair continues within the farming community who have been struggling with steep falls in the price of staples, such as chickpeas, onions and oilseeds. This is not a good sign and could be pivotal to the outcome of the election as 70% of people still directly or indirectly earn their living from the agricultural industry. Since we last wrote about the farming industry, the mood has not changed much with farmers marching to Delhi five times in the past year. Several commentators have suggested that the farming community is still disturbed by Modi’s decision in 2016 to invalidate a majority of the currency in the economy, which led to a cash shortage and an estimated 2% negative impact on the country’s GDP. In many ways, Modi is now suffering for promising so much when he came to power in 2014. In reality, citizens are dismayed as they feel little has changed in people’s lives after four years (at least in some parts).

Capturing Tycoons

What could play in Modi’s favour is his tenacity to bring a group of fugitives to justice. He has stepped up his efforts to punish a liquor tycoon, an arms dealer, a billionaire jeweller and a corporate lobbyist who have all fled India to avoid trials at home. India’s relationship with the UK has led to an order being signed to extradite Vijay Mallya, who currently lives in London after his Kingfisher airline defaulted on its $1.3 billion loans. This followed the successful extradition of Christian Michel (an arms dealer) and Deepak Talwar (a lobbyist) who were both brought back to India. This has helped Modi’s core initiative of bringing corruption under control which has marred India for decades. Prosecuting wealthy individuals accused of breaking the law would be a key boost for Modi’s image at a critical time in his political campaigning, as these individuals are loathed by the poor, who perceive them as being above the law.

Conflict with Pakistan 

Tensions have been rising with Pakistan recently and Narendra Modi has been responding unfavourably. This has raised questions about Modi’s Pakistan policy and whether he is looking to go to war. One of the objectives of the Balakot attack was to show the Indian public that Modi is a leader with the will to fight the terrorism that is brewing within Pakistan. The Premier has taken a hardline approach with Pakistan, with the BJP often threatening to go to war. This has been led by the party’s right-wing Hindu nationalistic views. Going to war with Pakistan would not guarantee political victory but it may help to gain votes from those sitting on the fence. Commentators believe that a warlike atmosphere would benefit his campaign to get re-elected for a second term. This has presented the Prime Minister with the opportunity to do what he enjoys the most, projecting the aura of a ‘strong leader’. By thumping his chest, driving the hyper-nationalism, he has not only made it impossible for any opposition party to take a stand against this, but will also take the wind out of the growing momentum against the BJP.

Adjusting Real Estate Taxes

To gain further votes and secure his second term, Narendra Modi’s government has announced that it would lower taxes on unfinished and affordable homes. Under the new tax regime, rates will fall from 12% to 5% on unfinished residential developments. Similarly, the rate will fall from 8% to 1% for affordable homes. This will be effective from April 1st and cover 90-95% of housing sales in India’s largest cities. This could reduce the net cost of buying homes by 6-7%, helping to bring down India’s unsold inventory as these measures are expected to shift demand from completed to under-development housing. Most developers have considerable unsold stock within this sector and while interest rates are stabilising (and expected to fall), this is positive news for buyers and companies. This is the eighth tax cut since GST was introduced, with four of the eight reductions coming in the months leading up to the state elections. These cuts will do nothing but aid Modi’s chances of getting re-elected.

Summary

Despite all the negativity, Prime Minister Modi is still enormously popular compared to Rahul Gandhi and this should ensure that he will stay in power for the next term. It just means that Modi’s victory will be less of a landslide and he will have to rely on his coalition partners, who will make greater demands for their support. Last time, the idea of BJP winning a majority on their own was unheard of, so a more normal result this time is not so surprising. That said, Congress has lacked the political imagination to really inspire the masses and found it difficult to produce a counter-narrative to the one assimilated by the BJP. It is clear that Congress has still not adjusted to the changing politics in India and are grabbing on to a political dynasty, having failed to groom a young, alternative leader other than one out of the Gandhi family. Congress’s lack of malleability will provide a strong tailwind for Modi and his quest to change India and remain in power.

Monopoly Night in America

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Guest Editorial by David Sanders

Who could forget family game night?  For the thespians in all of us it was Charades.  For the wanna be wordsmiths, Scrabble.  The future doctors honed their steady hand playing Operation, the really little kids wanted to romp through Candy Land which upon finishing scrounged whatever sweets they could find.  Future diplomats or dictators played Diplomacy and Grandpa always tried to swindle the family’s pocket change over a seemingly harmless, “just a few hands” of poker.  All of these games have a special place in our homes and hearts.  Quite possibly they helped define our characters and maybe even taught us a few life lessons and skills.

Inevitably, one person in the family would suggest Monopoly.  This was greeted with a wide swath of response.  “It’s too long” flew first out of dad’s mouth.  Mom didn’t like the constant infighting.  The boys tussled over the pewter car so they could make engine noises as they motored around the board.  The girls fawned over the precious little doggy.  And finally, grandpa was there to tell you a tale of the depression and of course, take all your money.  All in all a glorious family cacophony (Special side note, my grandfather Edward was raised very close to Baltic Avenue in Atlantic City during the depression and yes that was the crappy purple property nobody seemed to want.  He told me he was once robbed and only had a skate key, he didn’t even own the skates to go with said key).  So back to my article.  Usually one person was very eager to be the banker, but why?  Come hook or crook, in this case a crook, we learned this person cheated.  What in the wide wide world of sports, (thank you Mel Brooks/Slim Pickens) brought about this greedy behavior?  In 1991 Parker Brothers was sold to Hasbro who realized this plus many other infractions and released a Cheaters Edition.

Because this is a blog and not a novel, I will refer you to your favorite source of information on the internet or simply trust me.  Monopoly in its rawest form was originally called the LandLord’s Game and was invented in 1903 by Lizzie Maggie and then patented in 1904.  Maggie had originally set the game up to make people aware of Ricardo’s Law of Rent.  She included two sets of rules one for the Anti-Monopolist and one for the Monopolist.  Maggie wanted to clearly show the difference and why people should be up in arms.  Since then the game went through many iterations from different groups of people in various cities and finally ended up among Quakers in Atlantic City.  This version of the game was copied by Charles Darrow and sold to Parker Brothers.  Apparently, Milton Bradley and Parker Brother turned down the game on different occasions and blamed it on things such as “too complicated” and, “too long to play”.

Ok, now for the crux of this article and possibly my conspiracy mind acting out.  What I find fascinating is Monopoly was turned down for years but then suddenly produced in 1935.  Warning dear reader as this is pure speculation by me, so…What happened in 1933?  If you said, easy FDR took the U.S. off the Gold Standard.  Kudos to you dear reader!  Once the U.S. was off the Gold Standard all kinds of coinage disappeared leaving a need for currency.  Paper money was flooding the streets of America soon after and was accepted out of necessity.  Yes there was paper money before but this new money wasn’t redeemable for Gold it was becoming Fiat Money, aka toilet paper.  When the notes were no longer redeemable for Silver in 1968 the transition was complete. Was Monopoly a scheme by the establishment to get the average American family and future families to accept paper money?  I believe it was and it succeeded thus far but the world is currently puking up this grotesque concoction.  Debt is now defined in trillions, trillions dude!  If you really don’t understand how big that number is see here.  While you are at it feel free to look up de-dollarization, go ahead, I’ll wait.

The evidence is mounting that something must be done and soon!  At least Monopoly has kept up with the changing landscape.  Look at this Monopoly version with a bank card that tracks your wealth, ahem, you mean debt right Monopoly?  While I am ranting, why is it called a credit score when you are really applying for debt?!

Millennials would understand wealth if they were exposed to it.  Fiat Money globally has about run its course and a lot of people can’t even save for big items because of inflation.  Please take a look at the most recent Monopoly board, Monopoly for Millennials.  The banker box literally gloats and bashes you with its cane while stating, “Forget Real Estate. You can’t afford it anyway.”  I would suggest to Millennials instead of getting angry, get even.  Nothing could get you more even than to save and spend in Gold.  Say goodbye to inflation, it won’t harm you when you are vested in Gold.  Then pick up a copy of The Creature from Jekyll Island.  Learn how this happened and pass this information on to your children so it can’t happen again.

Ready, set, save!  Once you are onboard and ready to take command of your wealth, work hard and set your sights on what you are saving for: An education, a house, a zombie monster truck.  It is all up for grabs and you can afford it sooner than later with Gold.  Don’t believe me?  Just check out this handy Gold calculator and thank me later.  In this reality you do pass GO and you do collect $200.  Just make sure you save in Gold.