Nov 30, 2016

The Bearish Gold Narrative Is False

What people are saying is that because we are going to have a higher inflation, the Federal Reserve is going to have to raise interest rates to fight that higher inflation and those higher interest rates will be bullish for the U.S. Dollar and a strong dollar is going to hurt gold prices. But even if we do get one or two interest rate hikes over the next several years, that will not be sufficient to restrain the inflationary forces that will be building in the economy.

So even if interest rates go up slightly, inflation will go up much more and so real interest rates in an inflationary environment will be falling and not rising and that is very negative for the U.S. Dollar and it is extremely positive for gold. (Barrick Gold (ABX), Market Vectors Gold Miners ETF (GDX), Market Vectors Junior Gold Miners ETF (GDXJ), SPDR Gold Trust ETF (GLD), Newmont Mining (NEM), Goldcorp (GG), NovaGold (NG))

Nov 29, 2016

Higher Inflation Is Bullish For Gold

The idea that higher inflation is somehow a negative for gold is completely wrong. I do agree that the markets are correct in that inflation will be increasing, especially given the stimulus that a Republican Congress and President Trump may in fact deliver. But that is a good thing for gold, not a bad thing for gold. (SPDR Gold Trust ETF (GLD), Market Vectors Gold Miners ETF (GDX), Market Vectors Junior Gold Miners ETF (GDXJ), Newmont Mining (NEM), Barrick Gold (ABX), Goldcorp (GG))

Nov 28, 2016

For How Long Can The Market Be Oblivious To Higher Rates?

For how long can the stock market be oblivious to higher interest rates? Because not only do higher interest rates dramatically slow the economy, they crush the housing market, but stocks themselves, you value stocks based on interest rates. You discount earnings based on interest rates.

Even if the earnings go up a little bit, you have to discount them by a higher amount and the PEs (price to earnings ratio) are already very high and the justification for the high PEs was not the growth rate, it was the discount rate. (SPDR Dow Jones Industrial Average ETF (DIA), SPDR S&P 500 Index ETF (SPY), Nasdaq 100 Index ETF (QQQ))

Nov 25, 2016

The Catalyst For The Next Economic Recession

The same people that believed that there was a real economic recovery now believe it is going to get even better. Why? In fact, this so called recovery is so old that we are overdue for a recession and why would not this big increase in interest rates be the catalyst to cause it?

Nov 24, 2016

Bond Market: Serious Technical Damage Has Been Done

Everybody is ignoring the monetary drag that is already evident from the bloodbath in the bond market and this is going to continue.

In fact if you look at the trend lines, we have broken some serious trend lines now which were down in yield and up in bond prices that have been in existence since 2007. So we have done some serious technical damage in the bond market. (10- year U.S. Treasuries, 30-year U.S. Government Bonds, iShares Barclays 20+ Year Treasury Bond ETF (TLT))

Nov 23, 2016

The Stock Market Is Getting It Wrong

Regardless of a December interest rate hike, the Federal Reserve is soon going to be reversing course and cutting interest rates and doing another round of quantitative easing (QE). In fact, long term interest rates are already spiking up on the potential that Yellen might raise interest rates and that is going to be enough to really prick the bubble in the housing market.

So far the stock market is remaining oblivious to the spike in bond yields because I think they believe the stimulus that might result from the tax cuts and spending increases will be enough to offset the drag of higher interest rates and I think they are very mistaken. There is no way to counteract the damage to this bubble that will result from a spike in long term interest rates.

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