The Great Dollar Dump & Global Debt Bomb

Swiss America Trading Corporation

CEOs are dumping stock in their companies

Gold last traded at $1,227 an ounce. Silver at $15.57 an ounce.

News Summary: Precious metal prices ended higher Wednesday as U.S. dollar trades near lows. U.S. stocks see gains as traders continue to digest latest U.S. economic reports.

CEOs are dumping stock in their companies. Here’s what that means– CNN Money
“The captains of Corporate America are steering a record amount of cash into stock buybacks….Yet with their own money, executives are quietly taking a much different approach: They’re cashing out. Insiders dumped $8.4 billion of their shares in May and $9.2 billion in June, according to an analysis of regulatory filings by TrimTabs Investment Research. That’s the biggest two-month period of insider selling in a year. ‘They’re buying back from the front door, and shoveling shares out the back door,’ said John Mousseau, president of CEO of Cumberland Advisors, an investment firm that manages more than $3 billion. ‘It would be like going on TV to tell everyone what stocks we like, and then selling them,’ he said….Vast corporate purchases of stock are a reward for shareholders, at least in the short term. Not only do buybacks provide persistent demand, which lifts share prices, but they artificially inflate earnings per share….Despite authorizing massive buybacks, insiders aren’t buying much themselves. In June, insiders sold about $8 of stock for every $1 they bought, according to TrimTabs. That ratio has climbed sharply since the end of last year.”

debtThe $247 trillion global debt bomb– The Washington Post
“The untold story of the world economy – so far at least – is the potentially explosive interaction between the spreading trade war and the overhang of global debt, estimated at a staggering $247 trillion. That’s ‘trillion’ with a ‘t.’ The numbers are so large as to be almost incomprehensible. Households, businesses and governments borrow on the assumption that they will service their debts either by paying the principal and interest or by rolling over the debts into new loans. But this works only if incomes grow fast enough to make the debts bearable or to justify new loans. When those ingredients go missing, delinquencies, defaults and (at worse) panics follow….Since 2003, global debt has soared. As a share of the world economy (gross domestic product), the increase went from 248 percent of GDP to 318 percent. In the first quarter of 2018 alone, global debt rose by a huge $8 trillion. The figures include all major countries and most types of debt: consumer, business and government. But to service these debts requires rising incomes, while an expanding trade war threatens to squeeze incomes. The resort to more tariffs and trade restrictions will make it harder for borrowers to pay their debts. At best, this could slow the global economy. At worst, it could trigger another financial crisis.”

The great dollar dump: Russia liquidates US Treasury holdings– RT
“Russia is continuing to diversify state reserves away from US debt. The latest data from the US Treasury shows that Russia’s share hit an 11-year minimum and totaled only $14.9 billion. The share of US sovereign debt bonds in Russia’s portfolio has been reduced dramatically in recent months. Russia held $96.1 billion in US Treasuries in March before selling half its holdings in April, dropping to 22nd place among major foreign holders of American treasury securities at $48.7 billion. In 2010, Russia was among the top 10 holders of US Treasuries at $176.3 billion. With its holdings falling to $14.9 billion in May, the country is now below the $30 billion threshold for inclusion on the Treasury Department’s monthly report of major holders. On Tuesday, the Treasury released a list of 33 countries which includes the biggest holder China to the smallest Chile. Russia is no longer on the list….The head of the Central Bank of Russia (CBR) Elvira Nabiullina said in May that slashing of the holdings was result of the systematic assessment of all kinds of risks, including financial, economic and geopolitical. Meanwhile, Russia’s gold holdings have been steadily increasing, bringing its share of the precious metal to its highest level in nearly two decades. Russia’s gold holdings in May grew by one percent to 62 million troy ounces, worth $80.5 billion, according to the CBR. According to Nabiullina, gold purchases helped to diversify reserves.”

The world could soon run out of gold, Mining experts warn – The Star
“Mining experts have warned that the world’s gold supplies could soon be depleted. Experts across the industry said we will soon hit ‘peak gold’ – the point at which gold discoveries start to decline as there are no more new resources to discover. According to scientists, the ‘peak gold’ point will be reached in 2019 and supplies of the precious metal are set to tail off year-on-year from that point onward….Last month, Rudy Fronk, Chairman and CEO of Seabridge Gold said: ‘Peak gold is the new reality in the gold business with reserves now being mined much faster than they are being replaced.’ While Nick Holland, CEO of South Africa’s largest gold producer Gold Fields, said: ‘We were all talking about how production was going to increase every year. I think those days are probably gone.’ Kevin Dushnisky, President of mining giant Barrick Gold, commented: ‘Falling grades and production levels, a lack of new discoveries, and extended project development timelines are bullish for the medium and long-term gold price outlook.'”

RealMoneyBlog – Free daily/weekly email

2018RMPTHE FUTURE OF MONEY, Swiss America’s 36th Anniversary issue of REAL MONEY PERSPECTIVES discusses the biggest wildcards to prepare for in 2018, cryptocurrency mania and why gold and silver are the safest forms of wealth i

You may also like...