Young, rich Americans don’t trust the stock market, so they’re turning to alternative assets
Yahoo! Finance/Jeannine Mancini/7-31-2023
“Based on a survey conducted by Lansons, it was found that less than 10% of the entire American population has invested in alternative assets. However, among the younger generations, there is a more significant interest in alternative investments, with 30% of Gen Z and 25% of millennials either investing in such assets or possessing knowledge of platforms that facilitate these investments.”
USAGOLD note: One of the alternatives mentioned is gold.
Notable Quotable
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
“The first step in theorizing correctly about money is to understand that the value of money, like that of commodities, is never fixed and unchanging. Chinese philosophers who published the earlier Mohist Canons(468 B.C.~376 B.C.) grasped this crucial point. They recognized that metallic money, such as the ‘knife coins’ then in wide circulation, was valued and exchanged by weight and argued that the real value of money, despite its fixed face value, was not stable but fluctuated inversely with the prices of commodities. When commodity prices were high, money was ‘light’ or its purchasing power low; when prices were low, money was ‘heavy’ or its purchasing power high. Thus, if monetary conditions were such that the nominal prices of commodities were abnormally high, the real prices of commodities were not high but rather money was ‘light’ or depreciated.”
Joseph T. Salerno
The Mises Institute
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Air pockets, free falls, and more cowbells
Hussman Funds/John Hussman/July 2023
“There is a particular “setup” that we’ve historically found to be associated with abrupt “air pockets” and ‘free falls’ in the S&P 500. It combines hostile conditions in all three features most central to our investment discipline: rich valuations, unfavorable market internals, and extreme overextension. The last time we observed this combination to a similar degree was in November 2021, shortly before the S&P 500 lost a quarter of its value. The S&P 500 remains lower than it was then. Despite enthusiasm about the market rebound since October, I remain convinced that this initial market loss will prove to be a small opening act in the collapse of the most extreme yield-seeking speculative bubble in U.S. history.”
USAGOLD note: Hussman tells in detail how the stock market is breaking down and why it should be taken seriously.
Market Overview
Landscape mode is recommended for mobile phone viewing.
Market Data by TradingView
Delayed data except FOREX
It’s all about the lags
LinkedIn/David Rosenberg/7-27-2023
“The fact that Fed-induced curve inversions have presaged recessions 100% of the time in the past is never respected. Always a case of hope triumphing over experience. Thing is — very rarely do recessions occur in the same month as the onset of the inverted yield curve. There are lags, and that typically can be a year or longer. Think back to 2007. But like the story of the boy who cried wolf, the wolf did show up in the end.”
USAGOLD note: A heads up from Rosenberg……
Recessions follow inverted yield curves with a lag
(Grey bars = recessions)
Source. US Federal Reserve [FRED]
|
ORDER DESK Reliably serving physical gold and silver investors since 1973 |
Citi says it’s ‘only a matter of time’ before gold hits a record
Bloomberg/Renjeetha Pakiam/7-20-2023
“The metal is benefiting from loose monetary policy, low real yields, record inflows into exchange-traded funds and increased asset allocation, the bank’s analysts including Aakash Doshi and Ed Morse said in a report. Gold is expected to climb to an all-time high in the next six-to-nine months, and there’s a 30% probability it’ll top $2,000 an ounce in the next three-to-five months.”
USAGOLD note: The report points out that prices for the metal have already posted new highs in every other G-10 and major emerging market currency this year. Silver, it says, will benefit from “demand for a store of wealth.
Our primal instinct for gold
Money Week/Dominic Frisby/7-20-2023
“The experience of beauty, whether derived from nature, art, music or even mathematics, correlates with activity in the emotional brain, the medial orbitofrontal cortex. Beauty has long been associated by philosophers with truth and purity – also qualities commonly associated with gold. Our instinct for gold and the emotions it inspires from beauty to desire are basic.”
USAGOLD note: Frisby examines mankind’s age-old attachment to gold.
Short and Sweet
Only real intrinsic money survives the test of time
Here is a timeless observation from the now-deceased Richard Russell (Dow Theory Letter):
“Paper money is now being created wholesale throughout the world. Stated simply, all paper currency is now valued against each other. But more important, ultimately ALL paper is ultimately valued against the only true, intrinsic money – gold. In world history, no irredeemable paper currency has ever survived. Since all the world’s currency is now irredeemable (in gold), this means that in the end, the only form of money that will survive is real intrinsic money – gold. It’s not a question of whether gold will survive, it’s a question of when the world’s current paper money will deteriorate and finally die. I can tell you that irredeemable paper will not survive – but obviously I can’t tell you when it will die. The timing is the only uncertainty.”
The chart below from the World Gold Council speaks to Russell’s point. It shows the performance of various currencies – past and present – against gold over the long term. When the end comes, as the chart illustrates, it can come abruptly and without warning. For those who stick to the proposition that gold is not really an inflation hedge, or that it is not really a safe-haven against currency debasement, the chart offers instruction. For those who already own gold as a safe-haven, it provides justification. For those who do not own gold, it serves as an incentive. As the old saying goes: All is well until it isn’t.
Chart courtesy of the World Gold Council
________________________________________________________________________
Ready to begin or add to your precious metals holdings?
DISCOVER THE USAGOLD DIFFERENCE
Reliably serving physical gold and silver investors since 1973
Oil markets will face ‘serious problems’ as demand from China and India ramps up, IEF secretary general says
CNBC/Charmaine Jacob/7-22-2023
“Oil demand bounced back to pre-Covid levels quickly, “but supply is having a tougher time in catching up,” said Joseph McMonigle, secretary general of the International Energy Forum, adding that the only factor moderating prices right now is the fear of a looming recession.”
USAGOLD note: Rising oil prices could have a profound effect on the inflation rate as it settles in, assuming McMonigle is right.
Most of what we’ve heard about the yuan dethroning the dollar is from the West. Here’s what China’s actually said about it.
MarketsInsider/Huileng Tan/7-31-2023
“While China might not be happy with American dominance — in global politics, culture, or the financial system — Beijing is far from openly advocating for the ‘redback,’ another name for the yuan, to immediately replace the greenback.
USAGOLD note: Important insights at the link……
Notable Quotable
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
“‘Experience keeps a dear school,’ said Ben Franklin, ‘but fools will learn in no other.’ The wise man remembers. The fool forgets. The wise man listens. The fool talks. He ignores both the living and the dead… the immemorial dead, whose whispers carry the distilled wisdom of history. No – this time is different, comes the fool’s eternal cry. The past is of no use to me.”
Brian Maher
Daily Reckoning
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Traders brace for $102 billion wave of Treasury bond sales
Bloomberg/Liz Capo McCormick/7-31-2023
“The US Treasury is set this week to begin a ramp-up in issuance of longer-dated securities that’s likely to stretch into next year, forced by a rapidly deteriorating budget deficit and soaring interest rates.”
USAGOLD note: The new bond sales come at a time when the Fed, Japan, and China are no longer buyers. What happens if support doesn’t materialize?
China’s gold consumption reaches 555 tons, rising 16.4% in the first half of 2023
“Among the gold consumption, the purchase of gold bars jumped 30.12 percent year-on-year to 146 tons in the first six months, while that of gold jewelry reached 368 tons, up 14.82 percent from the same period last year. Gold used for industrial and other purposes declined 7.65 percent to 40 tons, the data showed.”
USAGOLD note: China’s appetite for gold grows as its middle classes gain wealth……Note the strong gain in bullion bar demand, a sign that Chinese investors are buying gold as a safe haven.
Thinking about buying gold and silver?
Gold in six easy lessons
1. Don’t buy it because you need to make money; buy it to protect the money you already have.
2. Don’t look at price as a barrier; look at it as an incentive.
3. Don’t buy the paper pretenders; buy the real thing in the form of coins and bullion.
4. Don’t fall prey to glitzy TV ads; do your due diligence instead.
5. Don’t allow naysayers to divert your interest; allow yourself the right to protect your interests as you see fit.
6. Don’t forget the golden rule: Those who own the gold make the rules!
Ready to become a member of the ruling class?
DISCOVER THE USAGOLD DIFFERENCE
Reliably serving physical gold and silver investors since 1973
Buy gold and sell U.S. dollars, this strategist says. Here’s why.
MarketWatch/Frances Yue/7-21-2023
“When a global slowdown has been lacking, the dollar has declined at a per annum rate of -1% whereas gold has gained 10% per annum…” – Tim Hayes, Ned Davis Research, chief global investment strategist
USAGOLD note: Ned Davis Research recently downgraded the U.S. dollar from neutral to bearish and upgraded gold from neutral to bullish. It points to an important technical indicator as further evidence of the changing dollar-gold scenario. In January, gold achieved “a golden cross, when its 50-day moving average rose above the index’s 200-day moving average, while the U.S. dollar saw a death cross.” Since the January crossover, gold is up 7.75%, and the US dollar index is down 2.2%.
Chart courtesy of GoldChartsRUs • • • Click to enlarge
Who wants to keep hiking rates on the FOMC and who doesn’t?
Bloomberg/Steve Matthews, Kyungjin Yoo and Dave Merrill/7-25-2023
“After more than a year of solid agreement that higher interest rates were needed, differences among policymakers have started to deepen as they weigh when to stop hiking and how long to keep rates elevated.”
USAGOLD note: The politics of economics at the Fed broken down. A good lead in to today’s rate decision and press conference……
Short and Sweet
Inflation is a process not an event
But history, as we are learning now, shows runaway inflation can come suddenly and without warning
Image courtesy of Visual Capitalist • • • Click to enlarge
We sometimes forget that inflation is a process rather than an event. One of the better-known examples of that axiom is the nearly two centuries-long debasement of Rome’s silver denarius. The Roman citizen who had the wisdom to hedge that process by going to gold at nearly any point along the way ended up preserving some portion, if not all, of his or her wealth. Those who did not suffered its debilitating effects. In the inflationary process, the line between cause and effect is not always a straight one, and its timing difficult to discern. History teaches us, though, that when runaway inflation does arrive, it comes suddenly, without notice, and with a vengeance. That is why it pays to view gold as a permanent and constantly maintained aspect of the investment portfolio. “A change of fortune,” Ben Franklin tells us, “hurts a wise Man no more than a change of the Moon.”
_________________________________________________________________
(Related please see: News & Views Special Report / March 2020 / Hedging the decline and fall of a currency – The baseline case for gold hasn’t changed much in 1700 years)
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Looking to prepare your portfolio for whatever uncertainty lies ahead
DISCOVER THE USAGOLD DIFFERENCE
ORDER DESK:
1-800-869-5115 x100 • • • orderdesk@usagold.com • • • ONLINE ORDER DESK-24/7
Reliably serving physical gold and silver investors since 1973
The inflation giant has awakened. Why price growth will persist.
Barron’s/Brian Swint/7-23-2023
“To the contrary, inflation is likely to be a more persistent threat than it has been in decades, owing to the long list of powerful forces that have driven prices higher, and the limits of central-bank efforts to control it.”
USAGOLD note: Anyone who lived through the decade of the 1970s can tell you that claims that inflation had been tamed were often wildly overblown.
Inflation rate 1970s
Chart courtesy of TradingEconomics.com