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Over the 70 years, any time the New Orders Index has dipped below 43.5, a recession has followed soon after.
the monthly reported data, which dates back to 1948, sizable declines in the ISM Manufacturing New Orders Index have coincided with U.S. recessions.
Since 1973, there have been four instances where commercial bank credit declined by at least 1.5% from an all-time high. Three of these periods coincided with the benchmark S&P 500 losing about half of its value…
The fourth such instance has been ongoing over the past three months.
declining money supply with above-average inflation has never been a winning combination. The four previous instances since 1870 where M2 declined by at least 2% resulted in three depressions and one panic.

Wall Street can be a fickle thing when it's examined over short timelines. In 2021, the 30-component Dow Jones Industrial Average (DJINDICES: ^DJI), broad-based S&P 500 (SNPINDEX: ^GSPC), and growth-stock-fueled Nasdaq Composite (NASDAQINDEX: ^IXIC) all surged to record-closing highs. This was followed up by the worst performance in 14 years for all three indexes in 2022.

Although a small number of megacap tech stocks have had a phenomenal start to 2023, many investors are still left to wonder when the 2022 bear market will be firmly put into the rear-view mirror and a period of uncertainty will come to a close. In other words, investors would love to know where stocks are headed next.

Truth be told, there is no such thing as a foolproof indicator that can concretely predict the directional movement in stocks 100% of the time. There is, however, an assortment of indicators and metrics with exceptional track records of being right. Those investors who follow these indicators and metrics may have an edge over those who don't.

This economic indicator hasn't been wrong in seven decades

Right now, one economic indicator that's been nothing short of flawless in predicting the directional movement in stocks over the past 70 years has a pretty clear message for where equities are headed next. I'm talking about the ISM Manufacturing New Orders Index.

The ISM Manufacturing New Orders Index is actually a subcomponent of the more popular ISM Manufacturing Index, which is also commonly known as the Purchasing Managers Index. Every month, the Institute of Supply Management (ISM) surveys over 400 industrial executives to gauge the health of new industrial orders, inventories, employment, and a handful of other factors.

Although America's industrial sector isn't the behemoth it was before the rise of the technology sector, it still plays a key role in U.S. employment and serves as a rock-solid indicator of economic growth or contraction to come.

The U.S. ISM Manufacturing New Orders Index is measured on a scale of 0 to 100, where 50 represents a baseline of neither expansion nor contraction. A figure above 50 implies expanding industrial orders, whereas a number below 50 suggests orders are declining.

As you can see from the monthly reported data, which dates back to 1948, sizable declines in the ISM Manufacturing New Orders Index have coincided with U.S. recessions.

According to research from Ed Clissold, the Chief U.S. Strategist at independent research firm Ned Davis Research, no bear market after World War II has bottomed prior to an official recession being declared by an eight-economist panel of the National Bureau of Economic Research. In other words, if a U.S. recession were to occur, history would suggest that the Dow, S&P 500, and Nasdaq Composite have yet to reach their true bear market lows.

While the ISM Manufacturing New Orders Index has had plenty of instances since 1948 where readings fell below 50 and signaled a contraction in new industrial orders, the somewhat arbitrary line in the sand has been a reading below 43.5. Out of the more than one dozen instances where the ISM Manufacturing New Orders Index has produced a reading below 43.5, only one proved to be a false-positive for a U.S. recession. That occurred roughly 70 years ago. Since then, any time the New Orders Index has dipped below 43.5, a recession has followed soon after. Multiple times in 2023, the ISM Manufacturing New Order Index has fallen below 43.5.

Other economic indicators may spell trouble

However, this is far from the only economic indicator raising eyebrows at the moment.

For instance, U.S. commercial bank credit is signaling trouble. Over the past half-century, commercial banks have been steadily increasing the amount they've loaned out with virtually no interruption. That's because banks have to cover the costs of taking on deposits.

Since 1973, there have been four instances where commercial bank credit declined by at least 1.5% from an all-time high. Three of these periods coincided with the benchmark S&P 500 losing about half of its value, give or take a bit in each direction. The fourth such instance has been ongoing over the past three months.

The failure of SVB Financial's Silicon Valley Bank, followed by Signature Bank and First Republic Bank being seized by regulators, has banks very clearly tightening their lending standards. When banks begin pulling back on lending, it typically bodes poorly for the U.S. economy and stock market.

Additionally, we're witnessing something truly historic from M2 money supply. M2 incorporates everything in M1 money supply (physical coins, cash bills, demand deposits in a checking account, and traveler's checks), and adds money market funds, savings accounts, and certificates of a deposit under $100,000.

During the COVID-19 pandemic, M2 money supply surged at its fastest pace in 150 years. Stimulus money was flying out of Washington, D.C., to ensure that the U.S. economy didn't completely fall on its face during pandemic-related lockdowns.

Now, it's a different story. M2 has fallen 4.8% from its all-time high set last summer, which marks the first decline in M2 money supply in 90 years! While a dip in money supply may be logical after its historic expansion, declining money supply with above-average inflation has never been a winning combination. The four previous instances since 1870 where M2 declined by at least 2% resulted in three depressions and one panic.

Although the Federal Reserve is far more knowledgeable and we hope more prepared to tackle economic tumult than it was during the Great Depression (i.e., the last time M2 substantially declined), the sizable drop in M2 we're witnessing may spell trouble for the U.S. economy and stock market.

Story by Sean Williams 6-20-23 Redacted shorter to keep to important points and bullet points added by HGG. https://www.msn.com/en-us/news/other/supreme-court-rules-against-navajo-nation-in-water-rights-dispute/ar-AA1cTr5A?ocid=winp2fptaskbarhoverent&cvid=86b74729865a409eb054b85b8a1d6e4e&ei=11

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The U.S. has intensified plans to evacuate Americans living in Taiwan, The Messenger reported.
The report came a day after Taiwan's air force scrambles into action after spotting 10 Chinese warplanes crossing the sensitive median line of the Taiwan Strait, as the island's defense ministry said four Chinese warships also carried out combat patrols.
"The fact that the U.S. is doing this doesn't mean that they expect there will be a war," Cancian told The Messenger. "It's only a statement that there could be a war."

Mark Cancian, a senior adviser at the Center for Strategic and International Studies, was involved in the 1975 evacuation of Americans from Saigon. He told The Messenger that planning for an evacuation from Taiwan "is a very prudent thing to do."

"The fact that the U.S. is doing this doesn't mean that they expect there will be a war," Cancian told The Messenger. "It's only a statement that there could be a war."

The U.S. has intensified plans to evacuate Americans living in Taiwan, The Messenger reported.

The plans, which have been underway for at least six months, have "heated up over the past two months or so," a senior U.S. intelligence official told The Messenger.

The report came a day after Taiwan's air force scrambles into action after spotting 10 Chinese warplanes crossing the sensitive median line of the Taiwan Strait, as the island's defense ministry said four Chinese warships also carried out combat patrols.

The intelligence official told The Messenger that a "heightened level of tension" had driven the evacuation preparations.

"It's nothing you wouldn't read in the news," the official told The Messenger. "Forces building up. China aligning with Russia on Ukraine."

The outlet reported that the evacuation planning has been kept quiet because it's a sensitive subject for the Taiwanese government.

"Even talking about an [evacuation plan] starts people thinking something may be going on even if it is just prudent planning,” a former State Department official told The Messenger.

"The fact that the U.S. is doing this doesn't mean that they expect there will be a war," Cancian told The Messenger. "It's only a statement that there could be a war."

Experts agree that any evacuation from Taiwan would pose multiple challenges due to the country’s geography, as well as hundreds of thousands of other foreigners likely attempting to evacuate.

One source told The Messenger that there’s often only one main route between any two points on the island, and that the many tunnels could become chokepoints.

The Messenger reported that the planning began after Russia’s February 2022 invasion of Ukraine.

"Ukraine drove a relook at what the plans were," one source told the outlet.

In a statement to Newsmax, the Department of Defense said:

“Secretary Austin and other DOD leaders have been very clear. We do not see a conflict in the Taiwan Strait as imminent or inevitable. He spoke about this most recently in Singapore (below) and at length in recent HASC/SASC hearings. We wouldn’t be able to comment on NEO plans for a hypothetical invasion scenario.”

Some U.S. officials have said an invasion could happen in the coming years, while other officials and experts doubt the Chinese government will resort to force in its longstanding pledge to “reunify” with Taiwan, The Messenger reported.

As of 2019, more than 80,000 Americans were in Taiwan.

Story by Charlie McCarthy 6-12-23 Redacted shorter to keep to important points and bullet points added by HGG. https://www.newsmax.com/newsfront/u-s-evacuate-americans/2023/06/12/id/1123264/

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Gold, Silver, Bitcoin assets are his 'best insurance' against Economic Crash Landing.
US economy, believes worst-case scenario will play out
Kiyosaki’s top pick is gold, gold serves as an anchor for portfolios built to maximize wealth protection
From 1974 to 2008, there were eight years when inflation in the U.S. was considered abnormally high. Gold prices surged an average of 14.9% year-over-year during these eight periods.

“I say crash landing,” the entrepreneur and author of the Rich Dad Poor Dad book series tweeted recently. “I hope I am wrong yet that is what I believe.” Kiyosaki’s comments were related to the ongoing debate about the future of the global economy given the rapid escalation of interest rates.

Economists have long believed that central bank tightening raises the cost to borrow money, which discourages spending and in turn, causes a recession. This scenario is described as a “hard landing” for the economy. In contrast, central bankers believe they can achieve a so-called “soft landing” which means successfully clamping down on inflation with higher interest rates while avoiding a recession.

Simply put, Kiyosaki believes the global economy is heading for a recession. Some signs of this are already evident. The IMF warns that a third of the world faces a recession in 2023, while Germany is already technically in one. Kiyosaki is focused on three assets that he believes are the “best insurance against corruption & incompetence,” of global governments in the face of this crisis.

Gold

Kiyosaki’s top pick is gold, which has a stellar track record of withstanding economic chaos. From 1974 to 2008, there were eight years when inflation in the U.S. was considered abnormally high. Gold prices surged an average of 14.9% year-over-year during these eight periods, according to research published in the Journal of Wealth Management.

Gold prices are also up over the past year. Every ounce of the yellow metal is worth roughly 6.8% more this year than last June, while inflation has been between 6% and 4% over that period. Simply put, gold has retained its value despite the cost of living crisis, which is precisely what it’s expected to do.

This is why gold serves as an anchor for portfolios built to maximize wealth protection.

Silver

Silver is another favorite among concerned investors like Kiyosaki. In fact, silver outperformed gold during a historic wave of inflation half a century ago. During the 1970s, the price of silver surged 3,900%, while the stock market was up only 188% and gold was up 1,800%. This is why some have preferred silver over gold during periods of high inflation.

However, its potential outlook during a hard landing isn’t certain. Silver’s performance during recessions and economic pullbacks is mixed. In fact, the S&P 500 outperformed silver during five out of eight recessions since the 1970s.

Nevertheless, silver is on Kiyosaki’s list of “best insurance” during a hard landing and that could be a good reason to add it to your watch list too.

Bitcoin

Kiyosaki’s last pick is, perhaps, the trickiest. Bitcoin doesn’t have the track record of gold or silver since it was only launched after the Great Financial Crisis of 2008. Since then, of course, it has delivered a tremendous return for early adopters. Later adopters, however, have missed out.

Bitcoin is trading at nearly $27,000, which is more or less the same level it reached in late-2020. That means investors of Bitcoin have had a 0% total return for more than two and a half years. This underperformance is even more egregious when we consider the rise of inflation over that period.

Simply put, Bitcoin hasn’t proven to be an effective inflation hedge outside of the stock market. However, some believe it needs more time to deliver on its promise.

Story by Vishesh Raisinghani Jun. 06, 2023, Redacted shorter to keep to important points and bullet points added by HGG. https://finance.yahoo.com/news/crash-landing-robert-kiyosaki-once-104500015.html

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Signs of de-dollarization are unfolding in the global economy, strategists at the biggest U.S. bank JPMorgan said…
The strains of steep U.S. interest rate rises and sanctions that have frozen Russia out of the global banking system have seen a fresh push by the "BRICS" nations, Brazil, Russia, India, China, and South Africa, to challenge the dollar's hegemony.
In the FX reserves held by central banks around the world, for example, its share has declined to a record low of 58%.

LONDON, June 5 (Reuters) - Signs of de-dollarization are unfolding in the global economy, strategists at the biggest U.S. bank JPMorgan said on Monday, although the currency should maintain its long-held dominance for the foreseeable future.

The strains of steep U.S. interest rate rises and sanctions that have frozen Russia out of the global banking system have seen a fresh push by the "BRICS" nations, Brazil, Russia, India, China, and South Africa, to challenge the dollar's hegemony.

JPMorgan strategists Meera Chandan and Octavia Popescu said that while overall dollar usage is within its historical range and the greenback remains at the top of the pack, a closer look shows a more bifurcated picture.

Their assessment on the dollar is the most high profile by any large U.S. bank so far, although heavyweight money managers such as Goldman Sachs Asset Management have aired similar views.

While the greenback's share of FX trading volume remains just shy of record highs at 88% and its use in trade invoicing has not changed much over the last couple of decades, other areas have seen an erosion.

In the FX reserves held by central banks around the world, for example, its share has declined to a record low of 58%.

Although that is still by far the largest share of any global currency, it drops further when accounting for gold, which now comprises 15% of reserves versus 11% five years ago.

"Some signs of de-dollarization are emerging," JPMorgan's analysts said, adding the trend was likely to persist even as the dollar maintains its "large footprint".

Efforts by BRICS countries and other major commodity exporters to loosen the dollar's stranglehold on global commerce have ramped up since the start of the war in Ukraine, which saw the U.S. freeze a large chunk of Russia's foreign reserves.

Since then Saudi Arabia and China have begun talks to settle Chinese oil sales with the yuan, Brazil and China have announced the phase-in of a yuan clearing arrangement for some trade between the two countries while China and Russia are also now doing a significant portion of their trade in yuan.

China's yuan now accounts for a record but still, small 7% of FX trading volume, while the euro's slice has shrunk 8 percentage points over the last decade of ultra-low interest rates to 31%.

Trade invoicing has not seen much change, with the dollar and euro maintaining a steady 40-50% share over recent decades, although the U.S. share of global exports is now estimated at a record low of 9% compared to a record high of 13% for China.

Progress in internationalizing the yuan has been limited, meanwhile, JPMorgan added and is unlikely to change much given the country's capital controls.

The "CNY" is 2.3% of SWIFT payments, JPMorgan's analysts said, versus 43% for the dollar and 32% for the euro.

Story by Marc Jones June 5, 2023, 10:43 am PDT, Redacted shorter to keep to important points and bullet points added by HGG. https://www.reuters.com/markets/signs-de-dollarisation-emerge-dollar-top-currency-jpmorgan-2023-06-05/#:~:text=LONDON%2C%20June%205%20(Reuters),dominance%20for%20the%20foreseeable%20future

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The deal features a major black swan event that could lead to higher demand for gold and silver.
As shown below, the US has over $31.4 trillion in public debt. This is a significant increase considering that the debt amounted to $9.7 trillion in 2008 and only $345 million in 1968.
This new deal is expected to increase US debt by more than $4 trillion over the next few years. This will see the US National debt rise to over $35 trillion.
Meanwhile, there is a big risk that US Social Security will run out of money in 2034. The timeline may be shorter as government estimates are always wrong.
There is a black swan event as confidence in US debt could erode over the next few years. And with future debt ceiling deliberations, there is a possibility that the US will default.
The emerging market is up in arms against the US dollar. As we wrote here, the de-dollarization discourse has never been louder.
All of these factors could be bullish for gold prices as it is the better-known alternative to the USD.
This explains why many countries like Russia, China, and Turkey are buying a lot of gold.
Although the price of gold has declined, it is likely to recover in the coming months. If that happens, silver will also benefit.

Commodity prices have eased in recent weeks as worries about the economy worsen. The metals of electric vehicles such as lithium and nickel all plummeted, while crude oil prices fell ahead of the latest OPEC+ meeting. The price of gold, which recently hit a record high, fell to around $1,950. Similarly, the price of silver entered a correction after falling 11% from its year-to-date high.

Black swan event

The biggest news recently has been the debt ceiling agreement reached between Democrats and Republicans. This deal, if approved, will allow the US to avoid a default and keep the government open. Most importantly, it will prevent a credit rate downgrade by key companies like S&P Global, Moody’s and Fitch.

However, the deal features a major black swan event that could lead to higher demand for gold and silver. While the deal is expected to reduce the deficit by freezing spending, the reality is that public debt will continue to soar.

As shown below, the US has over $31.4 trillion in public debt. This is a significant increase considering that the debt amounted to $9.7 trillion in 2008 and only $345 million in 1968.

The growth rate of public debt has increased in recent years, thanks to spending on Covid-19. When Trump took office in 2016, the US debt exceeded $19 trillion.

This new deal is expected to increase US debt by more than $4 trillion over the next few years. This will see the US national debt rise to over $35 trillion. Analysts believe that US debt will exceed $50 trillion by 2030.

Unfortunately, there is no way to reduce this trajectory. To reduce debt, the US must cut spending, including on defense, which both sides reject. Additionally, the government must raise taxes, which Republicans oppose.

US debt and gold prices

Meanwhile, there is a big risk that US Social Security will run out of money in 2034. The timeline may be shorter as government estimates are always wrong. Therefore, there is a black swan event as confidence in US debt could erode over the next few years. And with future debt ceiling deliberations, there is a possibility that the US will default.

Also, the US will suffer a black swan event when Social Security runs out of money. As we are seeing in France, tampering with social security can lead to chaos. French citizens are in revolt after the government decided to raise the retirement age by two years.

Furthermore, the emerging market is up in arms against the US dollar. As we wrote here, the de-dollarization discourse has never been louder. All of these factors could be bullish for gold prices as it is the better-known alternative to the USD. This explains why many countries like Russia, China, and Turkey are buying a lot of gold. It also explains why gold prices have soared to a record high this year.

Although the price of gold has declined, it is likely to recover in the coming months. If that happens, silver will also benefit.

Story By Invezz via QuoteMedia 5-31-23 Redacted shorter to keep to important points and bullet points added by HGG. https://www.investorsobserver.com/news/qm-news/7824787644116740

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Americans consider gold the second-best long-term investment option, according to a recent Gallup poll. Gold beat out stocks, bonds, and savings accounts.
On the contrary, the number of Americans naming gold as the best long-term investment almost doubled this year from last.
Street speculated that inflation pressure on US consumers may be driving demand as people seek an inflation hedge.

The perception that gold is the best investment over the long term rose from 15% in 2022 to 26% in the 2023 poll, overtaking stocks at the number two spot.

Real estate has held the top spot since 2013 with 35% of Americans rating it the best long-term investment in the most recent poll. That was down sharply from last year’s record high of 45%.

Stocks held third place with 18%, followed by savings accounts/CDs (13%) and bonds (7%).

Americans best long term investment- 2nd GOLD

World Gold Council senior market analyst Louise Street noted that while higher interest rates seem to have dampened investors’ perception of real estate as the best long-term investment, it hasn’t damaged the perception of gold.

On the contrary, the number of Americans naming gold as the best long-term investment almost doubled this year from last. This, despite interest rates climbing to a 16-year high in March.”

The Gallup poll dovetails with gold demand data. Demand hit an 11-year high in 2022, driven primarily by central bank gold buying and physical gold investment.

Gold bar and gold coin demand grew by 2% globally in 2022, building on strong demand in 2021. In total, global investors bought 1, 217 tons of gold bars and coins. The second half of the year was particularly strong for bar and coin buying, charting two successive quarters of demand of around 340 tons for the first time since 2013.

Investors in the West had a particularly strong appetite for gold and broke an annual record. Combined US and European purchases of gold bars and coins hit 427 tons. That exceeded the previous record of 416 tons set in 2011.

While institutional investors have sold gold on hot inflation news, thinking that means more rate hiking by the Federal Reserve, Street speculated that inflation pressure on US consumers may be driving demand as people seek an inflation hedge.

According to the Gallup poll, conviction in savings accounts/cash deposits as a good long-term investment increased only slightly this year, even with cash deposit rates reaching 5%. But these rates are still quite poor in real terms and anyone expecting persistent inflation may be tempted more by the long-term investment proposition of gold than that of savings accounts. Our research shows that gold’s potential to ‘protect against inflation/currency fluctuations’ is well recognized among gold investors.”

World Gold Council research shows Americans recognize gold’s “long-term value proposition and save haven attributes.” According to the WGC, around two-thirds of investors agree that “gold is a good safeguard against periods of political and economic uncertainty” and that “the price of gold increases over time.”

Story by Tyler Dugan 5-30-23 Redacted shorter to keep to important points and bullet points added by HGG. http://www.zerohedge.com/personal-finance/americans-rank-gold-second-best-long-term-investment

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Unchecked US borrowing could end up threatening the dollar's long-term dominance, according to Jim Grant.
Promises to cut spending will likely be "negated and forgotten," he told CNBC.
Fears about the government defaulting on its debt repayments have weighed on demand for dollar-denominated Treasury bonds.

(Business Insider) The dollar's dominance as a reserve currency could come under threat in the future if the US doesn't rein in its borrowing spree, according to markets expert Jim Grant.

"Our currency is the greatest export you could imagine – it costs nothing to produce, it is accepted worldwide," he told CNBC's "Squawk Box" Thursday. "But that acceptance of the currency and the debt denominated in those dollars, we must not take for granted."

Investors have been fretting about government borrowing in recent weeks with politicians struggling to solve Washington's debt-ceiling impasse.

The Biden administration is widely expected to agree to future spending cuts in exchange for the Republican-led House of Representatives voting to raise the $31.4 trillion debt ceiling.

The "Grant's Interest Rate Observer" author said he expects the standoff to end soon - but warned that it's unlikely the deficit will fall even if the Biden administration promises to cut future spending.

"I think it will be resolved, but not solved," Grant told CNBC.

"There'll be a resolution as there was in 2011, but in 2011 we promised $2.2 trillion in savings over 10 years and the net result was an increase in cumulative deficits of $11.5 trillion," he added.

"In form, this imminent resolution will entail a lot of out-year promises, which based upon history will be negated and forgotten."

High long term US borrowing levels pose a threat to the dollar because they fuel investors' fears that the government could default on repaying its debts.

That reduces demand for dollar-denominated Treasury bonds, which only payout their yields if the government meets its debt obligations.

Story by George Glover 5-26-23 Redacted shorter to keep to important points and bullet points added by HGG. http://wwwmarket.businessinsider.com/news/currencies/dedollarization-dollar-dominance-debt-ceiling-interest-rates-borrowing-jim-grant-2023-5

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Silver followed on gold’s steps in May and dropped from the 2023 highs as the dollar strengthened. But despite the steep correction, silver might be a good addition to a portfolio for investors with a medium to long-term horizon.
So here are three reasons to buy silver:
- Silver outperformed main fiat currencies in the last 22 years
- The 2050 net zero target implies strong demand for silver in the years ahead
- The medium to long-term technical picture remains bullish

Silver outperformed main fiat currencies in the last two decades

Historical performance is one of the best reasons to add silver to a portfolio. That is, besides the fact that it is not correlated with the stock market. As a rule of thumb, the less the correlation, the better the decision to add an asset to a portfolio.

When compared to a basket of currencies made of the US dollar, euro, British pound, Australian dollar, Canadian dollar, Chinese Yen, Japanese yen, Swiss franc, and the Indian rupee, silver has outperformed on average in the last 22 years by: 9.4%, 9%, 10.2%, 7.8%, 8.1%, 8.5%, 10.4%, 6.5%, 11.5%, 9.1%.

So, in the end, it is not about having a preference for precious metals, but it is about adding the right asset to a portfolio.

Strong demand for silver should support higher prices

The price of silver also depends on industrial demand. Most of it derives from solar photovoltaics, and demand grew 28% YoY in 2022.

Moreover, to meet the net zero emissions goal by 2050, solar PV power generation will need to grow a staggering 25% YoY until 2030.

Silver’s medium to long-term technical picture remains bullish

What has followed the COVID-19 pandemic, looks like a bullish pattern.

Story by Invezz via QuoteMedia 5-25-23 Redacted shorter to keep to important points and bullet points added by HGG https://www.investorsobserver.com/news/qm-news/6427645530525804#:~:text=So%20here%20are%20three%20reasons,term%20technical%20picture%20remains%20bullish

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Central bank digital currencies (CBDCs) will cause financial privacy and anonymity to end, as cash will likely be eradicated.
"It becomes a very frightening proposition to hand over any and all financial privacy to some central organization."
Critics warn of CBDCs' potential to be used as a tool of surveillance and control.
CBDCs make bank runs" impossible," said Butler, because the monetary authorities can prevent depositors from withdrawing their money.
Gold and silver are the best defense against the future risks of CBDCs, Butler claimed.
"Hold precious metals," he said. "You can get a physical metal stored outside the banking system with a precious metals custodian. That's always a prudent thing to do in any case if you're concerned about either inflation or a financial crisis."
Use this space to add more details about your site, a customer quote, or to talk about important news.

(Kitco News) - Central bank digital currencies (CBDCs) will cause financial privacy and anonymity to end, as cash will likely be eradicated. That is according to John Butler, Investment Director at Southbank Investment Research, who also suggests that gold is the best hedge against this future scenario.

"Moving headlong towards CBDCs in the current political context is very dangerous," he told Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News. "It becomes a very frightening proposition to hand over any and all financial privacy to some central organization."

CBDCs are programmable, digital tokens issued and controlled by central banks. They operate as fiat currency and can be used as a medium of exchange. Proponents of CBDCs claim that they will improve financial inclusion and efficiency while reducing the likelihood of bank runs and money laundering. However, critics warn of CBDCs' potential to be used as a tool of surveillance and control.

Figures from the Atlantic Council show that 114 countries worldwide are developing CBDCs, and 11 have fully adopted them. Canada is the latest nation to advance a CBDC agenda, currently asking the public for consultation about moving ahead with its own official digital currency.

Butler, who has over 25 years of experience in finance, suggested that CBDCs could take a"dystopian" turn for the worse, cutting off access to funds for political dissidents, or being used to socially engineer the population-at-large.

"We absolutely should be putting the breaks on it," he said. "If they do choose to move in this direction, be very afraid."

Bank collapse and CBDCs

The recent failures of the banks First Republic, Silvergate, Silicon Valley Bank, and Signature have set off an ongoing banking crisis. First Republic, the second-largest bank in U.S. history to fail, was absorbed by JP Morgan in a last-minute deal with Treasury backing.

Butler forecast that a crisis could be used to fully implement CBDCs as depositors grow weary of "weak banks" failing.

"[Regulators are] going to step in and flip the switch and go wholesale over to CBDCs, so you won't have to worry any of those risks of the banking sector anymore," he stated.

CBDCs make bank runs "impossible," said Butler, because the monetary authorities can prevent depositors from withdrawing their money.

"The funds will have to stay in the banks [during a bank run]," he observed."We might see something similar this time around as the current crisis escalates."

A CBDC-defensive portfolio

Gold and silver are the best defense against the future risks of CBDCs, Butler claimed.

"Hold precious metals," he said. "You can get a physical metal stored outside the banking system with a precious metals custodian. That's always a prudent thing to do in any case if you're concerned about either inflation or a financial crisis."

Citing prior historical episodes, Butler observed that gold has a positive rate of return during times of zero, low, or negative interest rates.

"Gold actually becomes materially more attractive as a store of value in a low or zero rate world, one that CBDCs would find it easy to implement," he said. "Gold's traditional, timeless I would argue, store-of-value properties are actually enhanced by CBDCs in that simple way."

He also suggested that for those operating within markets, holding equities that generate a reliable "cash flow" is a good idea, especially when dividends hold their value against inflation.

Story by Filip De Mott 5/07/2023 Redacted shorter to keep to important points and bullet points added by HGG. https://www.kitco.com/news/2023-05-15/Florida-Governor-DeSantis-signs-anti-CBDC-bill-into-law.html

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Florida Governor Ron DeSantis has signed an anti-CBDC bill into law, banning the use of American or foreign central bank digital currency (CBDC) in the state.
The bill is designed to protect consumers and businesses in Florida by “Expressly prohibiting the use of a federally adopted Central Bank Digital Currency as money
DeSantis, “Big Brother’s Digital Dollar.” He said at the time that the creation of a digital dollar would grant “more power” to the government.
“[A CBDC] provides the government with a direct view of all consumer activities,” said the Florida governor. “Any way they can get into society to exercise their agenda, they will do it. So, what the central bank digital currency is all about is surveilling Americans and controlling [the] behavior of Americans.”
The Florida CBDC ban is scheduled to take effect on July 1, 2023.

Florida Governor Ron DeSantis has signed an anti-CBDC bill into law, banning the use of American or foreign central bank digital currency(CBDC) in the state.

During the Friday press conference following the signing, DeSantis accused President Biden's administration of wanting to “crowd out and eliminate other types of digital assets, like cryptocurrency.”

The bill is designed to protect consumers and businesses in Florida by “Expressly prohibiting the use of a federally adopted Central Bank Digital Currency as money within Florida’s Uniform Commercial Code (UCC); instituting protections against a central global currency by prohibiting any CBDC issued by a foreign reserve or foreign sanctioned central bank; and calling on likeminded states to join Florida in adopting similar prohibitions within their respective Commercial Codes to fight back against this concept nationwide.”

DeSantis first announced the bill on March 20 while standing in front of a podium that read “Big Brother’s Digital Dollar.” He said at the time that the creation of a digital dollar would grant “more power” to the government.

“[A CBDC] provides the government with a direct view of all consumer activities,” said the Florida governor. “Any way they can get into society to exercise their agenda, they will do it. So, what the central bank digital currency is all about is surveilling Americans and controlling [the] behavior of Americans.”

The presidential hopeful cited concerns over rising inflation in the U.S., increasing interest rates, and the recent pressure on banks as examples of how government policies have had a direct negative effect on U.S. consumers.

“You’re opening up a major can of worms and you’re handing a central bank huge, huge amounts of power,” he warned.

Governor DeSantis also said that “the reckless adoption of a ‘centralized digital dollar’ will stifle innovation and promote government-sanctioned surveillance.”

As opposed to decentralized cryptocurrencies like Bitcoin, CBDCs are directly controlled and issued by governments, potentially giving them the ability to see all consumer activity and limit certain purchases.

DeSantis also highlighted the effect that a CBDC would have on commercial banks, saying that it could “diminish the role of community banks and credit unions in our financial system as CBDC currency would be a direct liability of the Federal government, rather than of a chartered financial institution, shrinking market lending power.”

Other ‘like-minded states’ have already joined Florida in pushing back against the possibility of a U.S. CBDC. On May 3, North Carolina's House of Representatives voted unanimously to ban the state's agencies and institutions from accepting any CBDC payments.

The bill also bans the state from participating in any CBDC development activities, including tests and pilot programs such as Project Cedar, the New York Fed’s CBDC pilot, which recently moved from the research to the development phase.

And on March 9, South Dakota Governor Kristi Noem vetoed House Bill 1193, which aimed to amend her state’s Uniform Commercial Code to exclude digital assets like Bitcoin from the legal definition of money while creating an exception for CBDCs.

“It was sold as an update to the guidelines of the UCC, backed by all our financial institutions, our banks,” Noem said in an interview with Tucker Carlson. “As we started reading through it, we saw the section of the bill that changed the definition of currency.”

Noem said the bill would “pave the way for a government-led CBDC” while effectively banning other forms of cryptocurrency like Bitcoin. “So for me, it very clearly was a threat to our freedom,” she said.

Noem said the same language was embedded in bills working their way through more than 20 other state legislatures. “I believe it’s to pave a way for the federal government to control our currency, and thus control people,” she said. “Its should be alarming to people and it’s being sold as a UCC guidelines update.”

More than 114 governments and central banks are at some stage in the exploration of creating a CBDC, including the United States, but there appears to be a clear consensus among U.S. lawmakers about the main concerns: protecting privacy, limiting the impact on commercial banking, and ensuring fair access for all citizens.

The Florida CBDC ban is scheduled to take effect on July 1, 2023.

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