North Korean Worries Lift Gold August 9, 2017 Even with a stronger U.S. Dollar, geopolitical risks have taken over and given the price of Gold a boost. Speculation in the Gold and Silver futures markets, as reflected in the CME open interest figures, are up as some investors start to rotate their investments out of equities and into metals. Strong words from our President towards North Korea have the world’s financial markets nervous. For those who follow the CME Fed Watch tool, a real chance of a rate hike can’t been seen until December and that number isn’t overly impressive, just sitting at 42 percent. No doubt North Korean issues will further stall the President’s agenda, as Congress must keep a close eye in the rear view mirror as Kim Jung Un continues his threats. Some Wall Street gold traders indicate that for the gold rally to continue, the North Korea rhetoric must escalate and a selloff in equities must occur, otherwise we will head back to the $1,250 area where they say the price of gold has strong support. Now Today’s Featured Topic: Is The World Bankrupt? Let’s start across the pond: The European debt clock is currently running at over 12.5 trillion Euro. That’s an average of 24,589 Euro per person in debt. Italy leads the group with over 2.3 trillion Euro in debt with an average of 38,136 Euro for each individual. But that’s only the tip of the iceberg in Italy as their non performing bank loans has doubled in the past 6 years to over 350 billion Euros. So far this year, Investors have taken over 60 billion Euros off of Italy s bad performing loan books at an expected return of over 4 percent. Also the government had to pump in 25 billion Euros to bail out 3 banks that were at the brink of failure. Germany, France and the United Kingdom also have high levels of debt. France and German at over 2.2 trillion Euros in debt and the United Kingdom at 1.7 trillion Euro’s in debt. And let us not forget Greece where all their debt problems seem to never go away, are currently holding 325 billion Euro’s in debt. Greece’s bad loans are currently siting at 110 billion Euro’s and there too, like Italy, are looking for investors for help. So far investors have taken over millions of bad performing loans at a fraction of their value as they try to renegotiate the terms of the bad loans and in some cases come in and seize their assets. Common sense will tell us that these bad performing loans problems are miles away from an end. The question that comes to my mind is, why is anyone in Europe still underwriting these loans? What were Italy’s bank executives thinking when just their non-performing loans increased year over year for the last six years? It’s baffling to me that as they watched bank after bank need a government bailout that they wouldn’t tighten up their lending practices? And where were the government officials? Sloppy financial underwriting practices are “always” a recipe for disaster. To our shores: It’s not much better here in the States. Currently, our national debt is sitting at $20.4 trillion dollars. That’s $63,389 dollars of debt for each individual here in our country. And we Americans are holding over a trillion dollars in credit card debt; that’s greater than the Gross Domestic Product of all but 15 countries. And now a report released on Monday this week by the Federal Reserve states that Americans now have the, “HIGHEST CREDIT CARD DEBT IN U.S. HISTORY.” This level now exceeds the level reached during the financial crisis in 2008. Are our bankers here having the same brain freeze issues that are facing the bankers in Europe? Or is it the 20 to 25 percent interest rates on credit cards that are so attractive to bank executives that they don’t care who they issue credit to. This year, household debt, which includes housing, auto loans and student loans, also surpassed the numbers reached during the 2008 financial crisis. It has also been reported that grandparents have stepped up to help the younger ones with their loan burdens. This also could be a disaster for older Americans as the average American couple has only $5,000 dollars put away for retirement. Also, only one third of working Americans participate in company sponsored deferred retirement accounts. That Leads To The Topic Of Social Security: Social Security payments for almost 40 percent of retirees represent 90 percent of all their yearly income. You might want to read that line again. That number seems staggering to me. When, or will we ever, address the entitlement programs here in our country? Healthcare for everyone? Not unless you are ready to allocate 60 percent of your tax dollars to cover the cost of universal health care. It will only be when credit agencies tell us, “the world is bankrupt” that bankers and government officials “get it.” As in long car rides when my children would say, “are we there yet?” In this case, my children, I’m sad to say, “yes we are!” After reading this, for a secure future, doesn’t an investment in physical Gold make sense? Have a wonderful Wednesday. Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. 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