Monthly Archives: January 2019

The real reason why gold is surging and why it won’t stop

CCNMarkets/Sam Bourghi

“Geopolitics, monetary policy and a slowing economy have all been cited as primary factors behind gold’s bullish breakout in 2019. While these catalysts cannot be discounted, the real reason gold is surging and why it will continue to do so is the trend in real interest rates relative to inflation.”

USAGOLD note:  For those who like to track this sort of thing, we offer a live chart on the real rate of return on both gold and the dollar at our Gold Trends and Indicators page. . . Please scroll toward the bottom of the page.

Bar chart showing real rate of return on the dollar based on one year CDs and the CPI

Sources: Bureau of Labor Statistics, Federal Reserve Board of Governors, St. Louis Federal Reserve [FRED]


Repost from 10-25-2019

Share
Posted in Today's top gold news and opinion |

Will the printing presses run at ‘such a frenzied pace you will be able to hear them from Mars’?

Zero Hedge/Tyler Durden

photo of large , bundled stacks of $100 bills“Will equity yields continue to grind lower (PEs higher) in line with US bond yields falling into negative territory, and as the printing presses are started up again and running at such a frenzied pace you will be able to hear them from Mars? Or will, as I suspect, a slide into recession again be accompanied by the bursting of credit and asset bubbles and the ensuing recession be as surprisingly deep as the 2008 GFC?”

USAGOLD note:  The above is a slice of Albert Edwards latest thinking as posted with commentary from Tyler Durden. . . . .Worth the visit.  As Durden reminds us Edwards “called the current move in rates years if not decades ago.”  Of course, one can utilize the opportunity to trade one’s portfolio to the max.  Another option would be to hedge the portfolio, sit back and admire the  monetary helicopters raining money on every city, town and village in the land.


Repost from 9-6-2019

Share
Posted in Today's top gold news and opinion |

Taking the hard way out

EvergreenGavekal/David Hay

photo of gold bullion bars“Gold is the ‘third rail’ of money management. It’s been in the penalty box for so long that an investment advisor can get fired for even mentioning it. However, gold has recently broken out from a long basing period. The wind now appears to be at its back after six years of slogging.”

USAGOLD note:  The author is right to point out that the metal is often marginalized in mainstream financial circles these days (though a number of top money managers have endorsed it, including some of the most successful). That marginalization, he goes on to show “sets the stage for a significant paradigm shift over the next decade” – a position he shares with a number of analysts at this point in time. A lengthy analysis, but worth the time particularly for first-timers.


Repost from 12-30-2019

Share
Posted in Today's top gold news and opinion |

The risk of derivatives isn’t gone. It’s merely morphed.

Bloomberg/Opinion/Sajiyat Das

“In the 10 years since Lehman’s failure, policymakers eagerly have pointed to initiatives that, they believe, made the financial system safer and a repeat of 2008 unlikely. That view is Panglossian.”

USAGOLD note:  With attention focused on the trade wars, shrinking credit spreads, and the potential for a new emerging country debt crisis, the elephant in the room – the highly-leveraged, multi-trillion dollar derivative market – has been pushed discreetly into the closet.  A Norwegian trader’s $132.6 million loss trading energy futures last week, though small potatoes in the world of derivatives, issued a warning how suddenly things can go wrong.  This Bloomberg opinion piece tells why current safeguards are likely to fall short in the event of a larger and more widespread meltdown.

Repost from 9-6-2019

Share
Posted in Today's top gold news and opinion |

Funding of U.S. deficits by monetary creation reaches 90% in late 2019

GoldSeek/Daniel R. Amerman

Image of old-fashioned printing press“Total deficit spending, the extent to which monies spent by the federal government exceeded taxes collected, was a staggering $422 billion in just the last 12 weeks. In total, $367 billion of the funding for this increase in the national debt was provided at very low interest rates, via the mechanism of the Federal Reserve simply creating the money needed to fund the government spending.”

USAGOLD note: This assessment ties in with a post made here (Scroll below) a few days ago in which Greenlight Capital’s David Einhorn says no matter what you call what is now going in the repo market it amounts to monetizing the debt. “[O]ver the thousands of years of economic history,” says Amerman, “variations on this theme of just creating the money to spend, have been attempted many times in many nations, by governments and elites who have seen personal financial or political gains by doing so. It has never worked out over the long term. Not once.”


Repost from 12-15-2019

Share
Posted in Today's top gold news and opinion |