Today features a piece by a man whose recently released masterpiece has been praised around the world, and also recognized as some of the most unique work in the gold market.  Below is the latest piece by Ronald-Peter Stoeferle of Incrementum AG out of Liechtenstein.

….click HERE or on image for full extensive article

3 stunning 40+ year charts expose how the Fed rate hike will impact gold, bonds and commodities!

Markets, in general, cheered the news, which is what usually happens when the Federal Reserve follows through on what it said it was likely to do.

The knee-jerk reaction looks like an expectation of higher inflation. Stocks, gold and note yields all rallied strongly.

Looking at all rate hikes since 1971, this is only the third time all three rallied at least 0.5% on a day the Fed hiked their target rate.

We’d never seen the three markets act like this on the first hike in a cycle, though.……see chart and read more HERE

Call it the “Great Collapse” or the “Epocalypse.” Whatever you call it, it’s about to change the world.

I am referring to an economic crisis so big that the global economy will be forever different after those days. This economic collapse has already begun throughout the world, but I am holding off on using the title “Epocalypse Now” until the US stock market joins the crash. That’s the point at which we’re all in (i.e., at a level where everyone knows it and denial that it is happening falls apart). I anticipate making that call in a matter of days now. Here is where we stand at present:

….read more HERE

Société Générale SA’s (EPA: GLE) (SocGen) recent quarterly Global Economic Outlook proposes a number of potential “black swan”-type events,  how likely these are to occur and what kinds of effects they may have on the global economy.

Interestingly, SocGen sees more downside risks than possible upside surprises. 

A look at SocGen’s forecasting and analysis of the risks, rewards, and possible impacts:

How to Safely Get Your Money Through Everything the Market Will Throw at You in 2016

Most of the time, when pundits say “black swan,” they really mean “a disruptive event that no one saw coming – much less had any idea how to deal with.”

So they’re manageable, but they can still be downright dangerous to your money. That means a broad perspective, a willingness to entertain all the possibilities, and robust asset protection strategies – like the ones I’m about to show you – go a long way in helping you avoid these events.

The best part is, you can even make some nice money while everyone else loses their shirt…

This Can Be a Very Profitable Exercise

Laying some of the groundwork for this exercise is Société Générale SA’s (EPA: GLE) (SocGen) recent quarterly Global Economic Outlook.

In this report, the international French bank proposes a number of potential “black swan”-type events, and then provides some detail on their thinking about how likely these are to occur and what kinds of effects they may have on the global economy.

Interestingly, SocGen sees more downside risks than possible upside surprises. That’s an outlook I’d have to agree on.

Let’s look at SocGen’s forecasting and analyze the risks, rewards, and possible impacts.

First, the disruptors…

SocGen Disruptors

No. 1. A “Brexit” (British Exit) from the European Union: 45%

From SocGen: The United Kingdom’s Prime Minister Cameron is likely to hold a referendum on whether the UK should exit the European Union. That’s likely to take place late next year. Expected impact: Low.

Now, the UK is part of the EU and already wields a fair degree of independence via its own pound sterling currency. With all the problems Greece has faced, it’s still part of the EU. So I don’t see the UK going anywhere, just negotiating a better deal. I peg the probability of a Brexit at 10%.

No. 2. A Hard Landing for China: 40%

From SocGen: Expect a 40% risk of seeing a lost decade scenario instead in the medium term. Risk of hard landing comes from credit crunch due to intensified capital outflows, bad loans, lack of central bank stimulus; failing housing demand could see developers fail, cutting development; capacity overhang means manufacturing could keep suffering, leading to bankruptcies and unemployment.

I believe China’s administration realizes the magnitude of the challenge in transitioning to a consumer economy. It’s likely to use its massive reserves and to stimulate through quantitative easing (QE) and lowering rates to ensure the smoothest transition possible, as not doing so carries huge risks to stability. I see the probability of a hard landing at 20%.

No. 3. The American Consumer Saves More: 25%

Hey, I guess it could happen, but with such low oil/gasoline prices, consumers are already saving more by default. I think the risk of more saving is closer to 15%. It’s sad to see that SocGen considers saving more to be a negative, too.

No. 4. A New Global Recession: 10%

Here I think SocGen has totally underestimated the odds. I believe they’re likely much closer to about 35%. But don’t forget – there would almost certainly be a worldwide coordinated mega-QE program to combat this.

No. 5. The Fed Hikes Rates Too Late: 10%

Is SocGen kidding? It’s already too late. So, I’d have to peg this at 100% probability, if that’s possible. But better late than never, I guess. Anyways, a rate hike is highly likely this month, so the next issue will be the size of the hike, then follow-through with subsequent hikes, their size and frequency. Of course, Yellen’s measured pace means don’t expect too much too fast.

Now, it has to be said that 2016 holds the possibility of a few positive surprises, too, though not as many as we’d like. These actually have the potential to improve the global economic outlook – and line our pockets, if we’re properly prepared.

SocGen “Upside Surprise”

No. 1. Stronger Investment and Trade: 20%

I’d agree there’s about a 20% probability of this, what with all the QE, ultra-low rates, and other massive stimulus that’s already taken place. This would help boost economic activity somewhat.
No. 2. More Fiscal Accommodation: 15%
Again… Hah! Fiscal accommodation has never ended even, unarguably, in the United States, where rates are still abnormally low. And consumer and government debt are dangerously high, so rates have to stay low. At this point, though, the effect is probably neutral, since economic activity is still too low to encourage any significant new borrowing.

No. 3. Fast-Track Reform: 10%

This is pretty laughable, too. Structural reforms are the right thing to do, so naturally they’re just about the last thing on central planners’ minds. Reforms have proven effective, but also painful and politically suicidal. My take? Zero percent probability. It’s not gonna happen.

How to Prepare for These Outcomes

Given all of these points and the fact that, by definition, there are black swans circling that we simply can’t even imagine (like Donald Rumsfeld’s “unknown unknowns”), the risk of exiting a state of relative complacency and hitting up against marked volatility is going to increase in 2016.

The Chicago Board of Options Exchange Volatility Index (VIX) was relatively calm over the last couple of months, but episodes of extreme spiking, like the flash sell-off we saw in August, are probably coming back – perhaps even with a vengeance – as the market tries to place odds on the pace of future Fed rate hikes and other unknowns, if any.

So one hedging idea might be to buy the iPath S&P 500 VIX Short-Term Futures TM ETN (NYSE Arca: VXX), but I’d only recommend holding this over a relatively short period of weeks to one or two months as insurance.

And don’t underestimate the value of cash as a longer-term hedge. But with the recent weakness in the U.S. Dollar Index telegraphing a possible end to its 18-month rise, consider a mix of normally stable currencies.

For example, I’d expect to see first and foremost the U.S. dollar, British pound sterling, and Swiss franc, but also the Canadian and Australian dollars, and now even the Chinese yuan all benefit from safe-haven attraction.

And thanks to exchange-traded funds (ETFs), you can easily gain exposure to any and all of these currencies with but a few keystrokes in your online brokerage account.

Here are the ETFs and their pertinent details:

• U.S. Dollar: PowerShares DB U.S. Dollar Index Bullish (NYSE Arca: UUP) ETF. As the world’s reserve currency, the U.S. dollar should be part of your cash mix.
• British Pound: Guggenheim CurrencyShares British (NYSE Arca: FXB) ETF. As part of the EU but not the currency union, the pound is a natural haven for Europeans.
• Swiss Franc: CurrencyShares Swiss (NYSE Arca: FXF) ETF. Long seen as a neutral haven within Europe yet remaining outside the EU, and after having dropped its peg to the euro in January, the franc is pricier but still attractive for safety.
• Canadian Dollar: Guggenheim CurrencyShares Canadian (NYSE Arca: FXC) ETF. Being neighbor to the United States and after a considerable decline along with oil over several months, the loonie looks like a fantastic bargain right now.
• Australian Dollar: Guggenheim CurrencyShares Australian (NYSE Arca: FXA) With a relatively strong economy and also viewed as a commodity currency, the Aussie dollar is attractive, especially with FXA yielding 1.6%.
• Chinese Yuan: WisdomTree Dreyfus Chinse Yuan Fd (NYSE Arca: CYB) ETF. As the dominant power in Asia (and way beyond) and a soft peg to the greenback, China’s currency is another haven of sorts. CYB has $112 million in assets and trades 22,000 shares daily.

Don’t discount the importance of cash in your portfolio, and that means seeking diversification even within this most basic of allocations.

Remember, even if we can’t actually predict black swans, that doesn’t mean we can’t protect against them.

Cash may not be exciting, but it sure feels good when everything’s going to hell in a handbasket.

As recently as two months ago, few experts in or outside of government had a clue that global terrorism would suddenly bust onto the European and American scene.

Fewer still could foresee the political and economic consequences.

But if you take a peek at Larry Edelson’s Money and Markets issues of recent years, you’ll find a series of forecasts pinpointing what’s happening today with a considerable degree of detail.

In our issue of Feb. 18, 2013, he wrote: “We are on the edge of seeing the war cycles turn violently higher [with] another surge of terrorism, massive civil unrest in the U.S., [and] a war in the Middle East.”

On May 13, 2013, he told us to expect “increased terrorism and jihadist movements, as well as domestic terrorism.”

On Dec. 23, 2013, he warned of “increasingly authoritarian leadership on both sides of the Atlantic.”

He also told us, unambiguously, that the reality — and the fear — of terrorist attacks would help send Europe into a tailspin …

Cause massive migration from the war-torn regions …

Drive flight capital to the United States …

And transform the face of American politics.

Needless to say, no one can forecast specific places, names and dates. But the key is the cause-and-effect pattern …

1. The rapid spread and escalation of wars in the Middle East …
2. The terrorist attacks in Europe and the U.S. …
3. The polarization of politics on both sides of the Atlantic …
4. And the global tsunami of flight capital to the United States.

How did he know? By carefully studying the patterns of history.

Needless to say, this is not the first time religious, ethnic and regional conflicts have had long-range consequences that reeled out of control.

Join me on a time machine through history, and consider carefully these six horrible episodes …

Ancient Rome, 64 AD. A great fire consumes the city for six days, and the population blames Emperor Nero, claiming he set the fire for his own amusement.

In order to deflect the blame, Nero points his fingers at the Christian “sect,” orders the arrest of its members, tortures them until they name other Christians, and then executes as many as he could round up. The majority of Romans feel the punishment was well-deserved.

Europe, 1930s. Most readers are very familiar with the rise of Hitler and the Holocaust. What’s not so well known is the prewar exodus of Jewish refugees from Nazi Germany and the response of host countries.

In 1938, for instance, a blaring headline in the Daily Mall of London warns of “German Jews Pouring Into This Country,” with one British government official noting that “the way stateless Jews and Germans are pouring in from every port of this country is becoming an outrage.”

We see similar sentiment in France, Belgium, Holland, Poland, Hungary, and even in the U.S. The refugees are viewed as “harbingers of a dangerous ideology” and “threats to the economy.”

In 1933, for example, the Chamber of Commerce of the French city of Metz says that “highly undesirable Jews have become a veritable plague for honest French merchants.” And by 1935, the French government enacts a series of quotas on certain professions, effectively blocking Jews — a precursor for the more pernicious and deadly forms of antisemitism still to come.

Spain, 1492. In the same month that Ferdinand and Isabella give the order for Christopher Columbus to mount an “expedition of discovery to the Indies,” they also issue an edict that “all Jews should be driven out of the kingdom and its territories.”

It doesn’t take long. By July 30 of that year, nearly the entire Jewish community — some 200,000 people — is expelled from Spain.

Tens of thousands die in transit. In some instances, Spanish ship captains charge refugees exorbitant sums only to dump them overboard at sea.

In the last days before the expulsion, rumors spread that the fleeing refugees have swallowed gold and diamonds. Many are knifed to death by bandits seeking the treasures.

The most fortunate escape to Turkey, where Sultan Bajazet welcomes them warmly. Among the most unfortunate are those who flee to neighboring Portugal, where tens of thousands are forcibly converted to Christianity on pain of death.

Ottoman Empire, 1915. On the eve of World War I, there are two million Armenians in the declining empire. By 1922, there are fewer than 400,000. The others — some 1.5 million — are killed.

Ninety years later, David Fromkin, a World War I historian quoted by the New York Times, describes it this way: “Rape and beating were commonplace. Those who were not killed at once were driven through mountains and deserts without food, drink or shelter. Hundreds of thousands of Armenians eventually succumbed.”

The primary roots of the disaster: The collapse of the Ottoman Empire — in the same country that welcomed Spanish Jews four centuries earlier. The empire’s ruler is also the caliph of the Islamic community, while Christian Armenians are concentrated largely to the East. Many of them, successful merchants and industrialists, appear markedly better off in many ways than their Turkish neighbors.

The breaking point: 1908, when the Young Turks — ambitious, discontented junior army officers — seize power and seek to “Turkify the empire.” Five years later, in March 1914, they enter World War I on the side of Germany, are soundly defeated by Russian forces, and then blame the minority Armenians for siding with the enemy.

The mass killings begin one year later, on April 24, 1915, when several hundred Armenian intellectuals are rounded up, arrested and later executed.

Soviet Union, 1945. Stalin views ethnic Germans living in the USSR as a major security risk, fearing they’ll collaborate with invading Germans. With this rationale, over one million are banished to Central Asia and Siberia, followed by another 200,000 who have been resettled by Poland.

Conditions are so severe that, by October 1945, only about two-thirds of the deportees have survived. And the resentment toward Germans is so deeply ingrained that the survivors are not “rehabilitated” until 1954 and not allowed to return to the European USSR until 1972.

Indonesia, 1965. In the early hours of Oct. 1, 1965, a breakaway group of army dissidents assassinates six Indonesian Army generals in an aborted coup attempt. Not only do they fail to topple the government, but they prompt the government to launch a massive “anti-communist” purge … which, in turn, leads to an ethnic war against Chinese immigrants and their descendants … and ultimately, the mass murder of 500,000 innocent civilians.

What are the chances something
like this could happen again?

In Syria, Iraq, and North Africa, it already has happened. As I’ve detailed here in recent months, the Islamic State has already massacred Christians, Yazidis, Sunni Muslims, and others.

In the Mediterranean Sea, the Aegean Sea, and on multiple land routes to Western Europe, thousands of war refugees have already perished, the victims of traffickers that greatly outnumber the vile Spanish ship captains of the 1490s.

And on six continents, ethnic-religious dividing lines — between Sunnis and Shiites, Muslims and Christians, Muslims and Hindus, Buddhists and non-Buddhists — are being drawn with ever greater venom, bloodshed and firepower.

All this helps explain why the United States, despite any of its failings that we may deplore, remains the number one destination for frightened families and scared money.

It helps explain why the U.S. stock market has held up so well for so long, despite a global economic slowdown.

And it’s also why all investors must remain vigilant.

The lessons of history are stark and clear: Sometimes events reel out of control.

It may not happen very often. But when war, ethnic strife, and economic deprivation line up in one time and place, the consequences can be catastrophic.

We pray the events of the years ahead will not reach some of the extremes of history. But a keen awareness of those extremes is an essential element in helping to prevent it.

Good luck and God bless!

Martin