We see charts as the “improved mousetrap,” as it were, and superior as a tool for market timing over fundamentals, or any other similar undertaking, for relating to what and when to buy in the markets. Still, there are not that many converts who pay more attention to what the market is saying. The one thing we know for sure is, regardless of whatever one has in the form of expectations, they are always subordinate to the final arbiter over price, and that is the market itself. The best we can say about gold is that it may be transitioning from its protracted down trend. The signs that gold remains under pressure are still there, bearish spacing, lower swing highs, etc, and that means any buying has to be very select, or not at all, again, profit being the only objective.
Tag: economic analysis
On the myth that it is not important how much is printed, Jim Rickards says that the Fed’s safety net of printing has holes in it. If the money printing could go on indefinitely then you would be right and I would agree with you but it cannot go on indefinitely. The Fed could legally print more than the $4 trillion they’ve already created — $8 trillion, $12 trillion, $16 trillion. Some people say that they can do that — legally they can but they will destroy confidence at some point.
The Incrementum Inflation Signal started showing rising inflationary momentum after a period of 19 month of disinflation. Is Inflation making a comeback just as the consensus worries about deflation risk? That was the subject of Incrementum’s first Advisory Board in which much respected names have a seat.
While the major central banks continue to flood the global financial markets with their fiat currencies and as geopolitical tensions around the world look set to increase, the price of gold is likely to rise.
Whether the economic recovery is for real or not, remains to be seen. Judging from the recent economic data, there seems to be no recovery in real terms, only an artificial push in financial risk assets based on hopes for easy money. As investors, it all boils down to risk reduction. Precious metals have the unique characteristic to mitigate counterparty risk, which is far more important in our humble opinion than speculation (hope) on recovery.
If the 2000 collapse of the US dot.com bubble was an economic heart attack, the 2008 economic collapse was a stroke, a stroke so severe that the usual central bank response, to lower interest rates, did nothing to revive economic growth. The ongoing economic crisis is only part of a much larger and far more significant paradigm shift. Gender, cosmic polarities, institutions, cultures and consciousness will all be affected. These are dark times but it is also true that it is darkest before the dawn.
This is an infographic which represents the view of the Credit Suisse commodities research team. It shows the bearish case for gold in 2014. While our view is that some of the elements are correct, we believe that exploding Chinese demand (chart is missing on the infographic) and the brewing systemic risk do represent solid counter arguments.
“Gold Wars” reveals how the world economy has swayed off the right path, away from a safe and prosperous economic system. Governments launched a vicious and determinant war against gold, which led to a painful 21st century with hyperinflations, economic instability and massive debt. Lips traces these changes in the economy to the departure from the gold standard in favor of creating the fiat system as early as World War I.
If we had a too low inflation computation, this would be overstating real GDP. The computation of productivity gains from the overstated real GDP would be overstated as well. But those supposedly high productivity numbers are betrayed by the trade, currency and Capex directions. It is hard to manipulate nominal GDP, however we already noted in a previous piece how a repressed inflation computation would lead to repressed nominal rates which would in turn promote an explosion of credit.
While major Western banks have been found guilty of one transgression after another, I don’t believe that any Chinese bank participated in these devious schemes. And, when it comes to gold, I will follow the Chinese and not the US. I will take advantage of these lower prices to buy more and not to sell. I also believe that the price of gold has made its lows for the year.
Personally, I am certain that some type of cosmetic deal will be reached soon and it will be back to business as usual. The U.S. Debt Ceiling will be raised once again. Another increase in the debt ceiling will allow U.S. politicians to continue spending which will lead to a further loss in confidence as well as the value of the U.S. dollar. And, as this happens the price of gold will go much higher.
The U.S. economy is being overwhelmed by a loss of faith and trust in politicians, government, and bankers, excessive debts, artificially low interest rates, unsustainable deficit spending, expensive wars, QE (money printing) to infinity, “Inflate or Die” monetary policy, potential derivatives implosion, Obamacare and so much more. A slow-motion collapse is occurring and most of us do not see it.
Despite recent disappointing economic data from the US, it is generally expected that the Federal Reserve will begin to taper its asset purchases. No matter what the Fed decides, any tapering or even lack thereof, its size, and what the FOMC implies for future tapering will almost certainly spark sharp price reactions in the bond markets, currency markets, stock markets, and precious metals. Your portfolio should include physical gold that is held out of the banking system. And, this physical gold does not include gold exchange traded funds, or limited edition medallions. Gold is not like other commodities, it’s the only honest currency and an alternative currency to all paper currencies.
Gold prices climbed back above the $1,400 an ounce on Tuesday after Interfax reported that Russia detected a missile launch. A Russian Defence Ministry spokesman quoted by the Interfax news agency said the launch was picked up by an early warning radar station at Armavir, near the Black Sea, which is designed to detect missiles from Europe and Iran. The momentum in gold prices continues to trade with an upward bias and look set to soon re-test $1450 an ounce.
I do expect a full-blown currency crisis at some point and I expect gold to be the beneficiary. The global spotlight has been on Europe, and spotlights are typically a sign that problems will strike elsewhere. Japan is a crisis-in-waiting, and the emerging markets are taking a beating now. I have been in a very tiny minority who likes gold while simultaneously suggesting the US dollar would not collapse.