Tag: interest rates

Addicted To Debt, Deficit Spending, and QE

Addicted To Debt, Deficit Spending, and QE

Central banks and governments created this addiction – addicted to debt, deficit spending, and Quantitative Easing. Consider the upcoming pain for most people, governments, markets, and pension plans if the drug is removed and we suffer the withdrawal symptoms.

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Extremes In The Markets: Expect Consequences (Part I)

Extremes In The Markets:  Expect Consequences (Part I)

We have many economic and political extremes in our current world. Perhaps this time will be different, but I doubt it. Debt will increase until a “reset” occurs. Politicians will “extend and pretend” and make MANY promises. The S&P has enjoyed a large rally in the last 6 years. It will correct. Bonds are in a massive bubble, partially created by the low and negative interest rates forced upon the system by central banks. All bubbles eventually burst. Gold and silver and their stocks have been beaten down for nearly four years. They will rally to new highs.

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Gold Tumbles On Rising Rates

Gold Tumbles On Rising Rates

Gold got hit hard Friday on two fronts. One was the sharp jump in U.S. interest rates. The other was the surge in the U.S. Dollar to the highest level in eleven years. The chart below shows the price of gold tumbling $29 (-2.4%) on Friday to the lowest level for the year. And it did so on rising volume.

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Currency Turmoil Make Gold And Silver Ownership a Necessity

Currency Turmoil Make Gold And Silver Ownership a Necessity

The first two months of 2015 have seen turmoil in the currency markets extend from Russia and Ukraine to the heart of Europe. “Central Banks Now Open 24/7 Fighting Currency Wars and Deflation,” blared a February 12th Bloomberg headline. Against this backdrop, precious metals have been on the rise in terms of all currencies except the Swiss franc and the U.S dollar.

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Why Gold Fell 2.5 pct On Friday

| February 8, 2015 | Category: Price
Why Gold Fell 2.5 pct On Friday

Gold benefits from falling rates and a weaker dollar. It got hurt on both fronts on Friday. The big jump in rates pushed the dollar sharply higher. That combination pushed gold $31 dollars lower (a loss of -2.5%). The first chart shows gold falling back below its 200-day average on rising volume. Gold shares also fell. The second chart shows the Market Vectors Gold Miners ETF GDX losing -5.5% at week’s end which kept it below its 200-day moving average. Gold stocks have been market leaders during the first two months of the year. Higher rates might change that.

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Microdocumentary: 4 Major Boom And Bust Cycles Explained

Microdocumentary: 4 Major Boom And Bust Cycles Explained

This microdocumentary video examines in detail 4 major booms in the last 100 years and explains how monetary policy and interest rate manipulation has led to the inevitable bust.

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Rate Bounce After Fed Meeting Pushes Dollar Higher and Gold Price Lower

| September 17, 2014 | Category: Price
Rate Bounce After Fed Meeting Pushes Dollar Higher and Gold Price Lower

Although today’s Fed announcement didn’t really change anything, the financial markets continued to anticipate higher U.S. rates. The first chart shows the 5-Year Treasury Note Yield climbing close to its yearly high. The 10-Year T-Note yield also bounced. The widening spread between U.S. and foreign yields continues to support the dollar. The second chart shows the Dollar Index hitting a new recovery high. That pushed most commodity prices lower. The orange bars in the second chart shows the Gold Trust falling to a new low.

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Why Money Is Worse Than Debt

Why Money Is Worse Than Debt

Governments and Central Banks (which are like economic Siamese twins) not only print Fiat Money but on top they make the cost to print more money, issue new debt and serve past debt ridiculously low….In reality, Real Interest rates (nominal interest rate less real inflation rate) or the cost to issue more fiat money has even become negative. Propaganda must be extremely solid to keep such a mirage alive and absolute no accident may happen.

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Rates Are Rising, Supporting The Dollar But Bad For Gold

| September 13, 2014 | Category: Price
Rates Are Rising, Supporting The Dollar But Bad For Gold

I recently explained that a rising dollar is bearish for gold (and most commodities). So are rising rates. The chart shows a very strong inverse correlation between the price of gold and the 2-year Treasury yield. As a rule, falling rates are good for gold. The bottom in the two-year yield in late 2011 coincided exactly with a peak in gold (see circles). The rise in short-term rates since then has corresponded with falling gold prices. Rising rates should continue to weigh on the precious metal.

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Illusioned by the Economic “Recovery”

| September 11, 2014 | Category: Economy
Illusioned by the Economic “Recovery”

The names of the programs change over time, but in essence the outcome is the same: injecting more money into the system. It is our understanding that we have more uncertainties today than a few years ago. This is also the reason why we believe that the global economy will not see a positive development in the years ahead. Holding parts of one’s wealth in physical gold and silver, stored outside the banking system, never made more sense.

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Are Rising Rates A Threat To The Price Of Gold?

| August 22, 2014 | Category: Economy
Are Rising Rates A Threat To The Price Of Gold?

Contrary to popular belief, rising rates are no threat to gold. This metal soared in the 1970s during the last secular rising-rate environment as stocks and bonds got hit. Gold powered higher again in the 2000s with both short and long rates far higher than today’s levels. And gold surged during the only major modern rate-hike cycle seen a decade ago, when the Fed more than quintupled short rates.

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Don Coxe: Gold Will Be Worth Much More Than $1,300 per Oz

| February 26, 2014 | Category: Investing
Don Coxe: Gold Will Be Worth Much More Than $1,300 per Oz

When those fears began to evaporate, gold investors looked down, saw no safety nets—and began bailing out. No inflation? No euro crisis? No reason to hold gold. We think most investors are missing the point: nearly six years of unprecedented money printing, unprecedented subsidization of big banks with zero-cost money, and massive government intervention into the economy have not delivered even a soupçon of robust, inflation-generating growth.

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Higher Interest Rates: No Longer a Death Sentence for Gold

Higher Interest Rates: No Longer a Death Sentence for Gold

Conventional wisdom suggests that higher rates are bad news for gold. However, as detailed in a recent special report by the World Gold Council, an environment of rising rates is not necessarily a death sentence for the yellow metal. In fact, excluding the high real-rate environment of the late 1970s and the early 1980s, US real rates have actually exerted little influence on gold prices.

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Gold Investing – Are The 7 Fundamental Drivers And Negative Real Rates Still Intact?

Gold Investing – Are The 7 Fundamental Drivers And Negative Real Rates Still Intact?

The latest investment research paper from the World Gold Council analyzes three topics in detail: (1) Gold and US interest rates: a reality check (2) What drives gold? Factors that influence the asset class and its role in a portfolio (3) The role of gold in defined-contribution plans explained in a Mexico case study.

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