"We can ignore reality, but we cannot ignore the consequences of ignoring reality." - Ayn Rand
Something big is happening beneath the surface of a Dow and S&P 500 trading near all-time highs. The soaring repo rate, more demand for overnight Fed funding loans than is being supplied and a big move in the price of gold since the end of May are clear indicators.
The global financial system is unsustainably over-leveraged. This problem is compounded by the massive increase in OTC derivatives. The U.S. financial system, in exceptional fashion, leads the way. Trump calls it "the greatest economy ever." Yet the Fed was unable to "normalize" the Fed Funds Rate back up to just the historically average level without crashing the financial system. In fact, the Fed couldn't even get halfway there before it had to reverse course and take rates lower plus hint a more money printing.
Phil Kennedy of Kennedy Financial hosted me plus Larry Lepard (mining stock fund manager) and Jerry Robinson (economist and trend trader) to discuss what appears to be a giant margin call on the global financial system and where we think the price of gold is headed:
NOTE: I will be analyzing the signal being sent by the soaring repo rate this week and why it may be evidence that the fractional reserve banking fiat currency system is collapsing in my Short Seller's Journal this week. You can learn more about my newsletters here Short Seller's Journal and here Mining Stock Journal. Two weeks ago I presented ROKU as a short at $169 and last week Tiffany's (TIF) at $98. So far my put play on ROKU has been a home run.