DMR–Gold, financial markets curiously subdued as complex market realities unfold

Gold pushed over the $1300 mark this morning in subdued trading typical of the annual summer doldrums. It is up $2 on the day $1301, but up $7 from its overnight lows. Silver is 15¢ higher at $16.92 and quietly closing the ratio gap between the two metals (now at 77 to one).

Curiously, the reaction to the obvious breakdown in relations among G-7 countries has been subdued in financial markets thus far this morning. At the same time, if there is any market unease about yesterday’s CNBC report that the Fed might put an early end to interest rate hikes and quantitative tightening, it isn’t apparent on this quiet Monday morning.

Perhaps tomorrow’s meeting between the U.S. and Korean leaders preoccupies market thinking at this juncture. Then again it might all come down to something more basic. Perhaps market players across the spectrum – funds, institutions and private investors – simply need time to sort out the overwhelming complexities of the general unraveling predicted in Strauss and Howe’s Fourth Turning. . . . . . . and how to react to it.

Quote of the Day
“I grew up in a purely urban family. We had no relatives in the country. I’m born in 1944. When I was a baby, my mother could only buy food because she still had some gold coins. Without gold I would have starved. She always told me that. Therefore, this generation already has a certain gold affinity. In extreme times of crisis, this is one of the few things left to be accepted. Gold was the only thing left to the people of the city at that time. Before the silver cutlery was also traded at the farmer.” – Ewald Nowotny, European Central Bank governor

Chart of the Day

Chart note: The currency problem in Turkey has become something of a poster child for a more generalized deterioration occurring in a number of emerging countries. This chart shows gold priced in Turkish lira. The inflation rate as quoted by official sources is just over 12%, but Steve Hanke, economics professor at Johns Hopkins University, estimates the real inflation rate at closer to 39%. The Turkish lira itself is down almost 20% year to date against the dollar and Turkey’s citizens are moving to gold coins and bullion as a preferred store of value.

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