Swiss America Blog Archive

Swiss America Blog Archive


1.13.22 - 'The Most Undervalued Metal on Earth'

Gold last traded at $1,820 an ounce. Silver at $23.10 an ounce.

NEWS SUMMARY: Precious metal prices consolidated recent gains Thursday amid mild profit-taking and a weaker dollar. U.S. stocks moved higher as investors hoped for a rebound from a rough start to the new year.

This is 'the most undervalued metal on the planet' -David Morgan/Kitco

"Expect silver, the 'most undervalued metal on the planet' to finally breach $30 an ounce in 2022, said David Morgan of TheMorganReport.com.

'I think [retail demand for silver] is going to be up because the stock market starts to sell off, the 10-year goes through the golden cross, we start to see more uncertainty in the market, and then if the cryptocurrency market starts to wane, we will see a lot more interest in the precious metals, so I think all three of those things are synergistic to push the metals higher,' Morgan said.

Industrial demand continues to provide tailwinds going into 2022, Morgan added.

'Electrification...anything electrical or electronic will probably [be the main driver]. Solar panels will probably play a big role,' he said.

As fossil fuels hit 'the energy cliff,' renewable energy sources, like solar power, will play a bigger role in energy generation. However, there's a major problem, Morgan noted.

'There isn't enough silver to put the United States housing market on solar, let alone the industrial side of the United States. In other words, all commercial activity in the United States that require electricity would require about two years' worth of all the silver we mine on the planet. To put all the houses on silver would take about one year's worth of silver,' he said."

crash The Everything Crash -Bonner Private Research

"Keeping people in a state of alarm seems to be a good strategy for the major media - and the government itself. They seem to want to keep you glued to the news cycle… and ready to follow orders.

That’s part of the reason the Fed can no longer tolerate a normal market correction. Or normal interest rates. Now, they’re like normal flu seasons… or a normal recession -the media treats them like the end of the world. Something must be done!....

In these pages for example, we calculated that the FANGMAN stocks alone could hold as much as $8 trillion in vanishing liquidity.

But wait… a TV financial commentator tells us we have a whole new source of 'liquidity' - cryptos. They are certainly 'liquid' forms of wealth, readily exchanged for other cryptos… and even dollars. That market is said to be worth nearly $3 trillion, 'that’s $3 trillion dollars of purchasing power that didn’t exist before,' he beamed.

But it’s also $3 trillion that could evaporate as easily… and much faster… than it accumulated. Ex nihilo nili fit. So the nili might go right back to the nihilo whence it came.

In fact, the total market cap of cryptos hit that $3 trillion peak in November of last year. As of Thursday, it was $1.99 trillion, according to coinmarketcap.com. The big culprit is Bitcoin - the largest crypto by 'market cap' - which has fallen from $69,000 at its high to around $41,000 (a respectable correction of 40%).

Taken as a whole, if the stock market were to go back to normal range, about $20 -$30 trillion would go away. That’s based on the historic mean of Warren Buffett’s famous market-cap to-GDP indicator, which is 86%.

In other words, with GDP around $23.2 trillion today, stocks would be worth around $29 trillion. The total market cap of the Wilshire 5,000 - the broadest measure of US stocks - hit $48.7 trillion earlier this week.

You do the math. Or we’ll do it for you. Stocks would lose around $28.8 trillion if they declined from 211% of GDP to 86% of GDP. Give or take a couple of trillion, given how markets tend to overcorrect.

How much liquidity would you have then? Not much. And that would be a big surprise to everyone."

How Easy Money Inflated Corporate Profits -Mises

"In the incessant media discussion about whether inflation is transitory there is a big elephant in the room about which all are silent...The elephant is the fantastic surge in US corporate profits that monetary inflation has fueled during the second year of the pandemic. This elephant’s unremarked appearance is likely transitory, unlike the simultaneous jump in US consumer prices.

Transitoriness is the essential theme of the contemporary Fed show - a point it has in common with Arthur Miller’s Death of a Salesman. There antihero Willy Lowman laments that in the twilight of his working life he still feels 'temporary.' The Fed show, though, fits best into the theater of the absurd. The big elephant occupies a large part of the stage, but the characters never acknowledge its existence.

Instead, the lead character, Jerome Powell, spends spring, summer, and autumn 2021 telling all that the contemporaneous jump in consumer prices is transitory. In no way does he mean goods and services prices on average will fall back down to prepandemic levels once the notorious bottlenecks resolve themselves....

Bluntly, when the Fed machinery of money is splurging out fantastic profits amid understandable praise from the powerful beneficiaries, why hurry to make an exit from emergency stimulus?....

How has monetary inflation driven this profits boom?

Quite simply demand across an array of business sectors has surged (one factor here has been the tremendous growth in demand for consumer durables) albeit offset in part by demand weakness elsewhere especially for service output suffering from infection risk, while a range of factors (including so-called global bottlenecks) have been constraining supply.

The new money demand has entered the system in a way which has driven up profit margins and corporate revenues. We should include here the spending out of fantastic wealth gains, whether in equities, real estate, or the crypto space, even if much of this is ultimately illusory....

The catalyst to asset market deflation would be a dose of reality which prompts first of all the US equity market space. Perceptions there would shift. The elephant - the giant profits surge of 2021 - would lose its permanence and become transitory in appearance."

The New Trend in Healthcare: Do-It-Yourself -Wall Street Journal

"Two years into a pandemic that has strained health systems and made booking doctors' appointments next-to-impossible for some, patients are providing more of their own care at home....

Frustrated with an overburdened health system, more consumers are turning to gadgets, home kits, apps and monitors for tasks and tests previously handled by trained medical workers.

They are monitoring their own blood pressure, conducting EKGs, tracking blood sugar and cholesterol levels, and pricking their own fingers for blood tests normally done at the doctor’s.

Many doctors support patients taking more responsibility for their own care, but warn that too much DIY without expert guidance could miss important health problems.

Despite those concerns, more physicians are recommending that patients shoulder at least some additional work, because staff shortages and worker burnout mean that patients often face long wait times for appointments and overloaded care providers.

'I tell my patients, You are your first line of defense. The system can’t take care of you,' says Wendy Wright, a nurse practitioner who owns Wright & Associates Family Healthcare, two clinics in southern New Hampshire. Her wait list has grown to more than 100 people. 'We can diagnose and treat you. But it might not be in a timely manner,' she adds."

RealMoneyBlog - Free daily/weekly email


1.12.22 - D.C. Has an Insider-Trading Problem

Gold last traded at $1,826 an ounce. Silver at $23.16 an ounce.

NEWS SUMMARY: Precious metal prices rose Wednesday on rising inflation and a falling dollar. U.S. stocks inched higher despite a key consumer price inflation report showing a historic 7% gain.

Gold tip-toes up on inflation risks despite strength in yields -CNBC

"Gold prices edged higher on Monday despite U.S. 10-year Treasury yields hitting a two-year high, as traders hedged their positions against inflation and ongoing geopolitical risks....

Gold is holding around the $1,800 area despite the rise in yields, showing that the market is looking at other factors such as the inflationary environment and geopolitical tensions, said Saxo Bank analyst Ole Hansen.

'The weakness in stocks has potentially also added some support to the precious metal market,' Hansen said, adding that yields will nonetheless remain in focus this week, along with U.S. CPI inflation data.

U.S. core CPI is expected to have risen by an annual 5.4% in December, up from 4.9% in the prior month, which could stress the need for earlier-than-anticipated interest rate hikes by the Federal Reserve."

new normal The Post-Normal Economy -The Big Picture

"The past week, I have been looking at some of the more interesting and unusual market charts. I started doing the same for a few of my favorite economic data series: NFP, Quits Rate, Wages, Housing Prices, Business Formation, Inflation, Retail Sales, Car sales, etc.

Pick any economic chart of your choosing; the simple truth is that nothing is 'normal.' And by normal, I mean a traditional run-of-the-mill recession and recovery cycle. Everything today is aberrant and excessive, fast/strong/deep/record-breaking . . . Unprecedented....

It began with the externality of the pandemic, followed by a massive fiscal stimulus to accompany the ongoing monetary stimulus...These are massive, enormous, unusual inputs, and we have simply become accustomed to them....Whatever part of the economy you want to review, you will be hard-pressed to find a data series that looks remotely normal....

The economy is not in a 'New Normal,' but rather is in a 'Post-Normal' state....Spend a few hours watching FinTV or reading financial media. You might wonder where these pundits’ self-confidence comes from. How can they so self-assuredly discuss not only what is happening today, but then so very comfortably explain what comes next?

Pardon my skepticism, but I have a sneaking suspicion the pundits haven’t the slightest idea as to what is going to happen. Not about the markets or inflation or elections or pretty much anything else that will occur between today and when the ball drops again on New Year’s Eve.

I understand the game, the 'fake it til you make it' aspect to all this bravado. But that does not mean I have to like it, or not remind you that much of what you hear is unadulterated bullshit (and I mean that in the technical, professor Frankfurt version of the word).

The bottom line is that consumers of financial media need to constantly remind ourselves as to what we actually know, and what is unknowable."

Washington, D.C., Has an Insider-Trading Problem -New York Magazine

"The central bankers running the U.S. Federal Reserve are the closest thing we have to gods of the markets, their decisions on interest-rate policies and their bond-buying sprees watched breathlessly by everyone on Wall Street - and increasingly Main Street.

Last year, the Fed’s influence became even more pronounced after the central bank pumped trillions of dollars into the markets when the global COVID-19 pandemic hit and financial assets of all kinds went into free fall.

As markets began to bounce back on the Fed’s massive effort, two regional Fed presidents - Boston’s Eric Rosengren and Dallas’s Robert Kaplan - were not sitting in some ivory tower pouring over economic data. No, they were actively trading their personal stock portfolios, benefiting from the Fed’s intervention.

The Fed has been criticized for many things in the past: It has been called a handmaiden to the big banks and accused of widening the gulf between the haves and have-nots in this country with a decade of rock-bottom interest rates that fueled raging-bull markets in stocks and bonds disproportionately benefiting the one percent. But until last year, its members had not been viewed as using their insider status to profit ahead of the public.

Of course, Fed officials aren’t the only Washington insiders who had access to market-moving information during the pandemic. A surprisingly large number of Congress members also appeared to have been able to use their inside knowledge for financial gain while unemployed Americans were lining up at food banks.

Four senators were probed by the Department of Justice for insider trading, and at least one of them is still part of an active SEC investigation.

Meanwhile, the winning trades of Speaker of the House Nancy Pelosi have become so legendary they have inspired social-media accounts with large followings. On TikTok - for both ironic and unironic reasons - the 81-year-old California Democrat’s investments are a subject of viral interest. One widely viewed video described her as 'the stock market’s biggest whale.'

Pelosi has come under scrutiny several times, including for purchases of Tesla stock made by her husband a little more than a month before President Joe Biden announced an executive order requiring that all federal vehicles must be electric.

And last summer, her husband exercised call options worth $5.3 million to buy shares of Google parent Alphabet just before the House Judiciary Committee passed a series of tech antitrust bills so mild the market yawned."

Get Ready for a New Roaring Twenties -RealClearScience

"Mark P. Mills, a physicist, senior fellow at the Manhattan Institute, faculty fellow at Northwestern University, and a partner in Montrose Lane, an energy-tech venture fund, is out to rekindle our collectively dashed hopes. In his new book, 'The Cloud Revolution: How the Convergence of New Technologies Will Unleash the Next Economic Boom and a Roaring 2020s', Mills convincingly argues with verve, vitality, and - most importantly - evidence, that humanity is about to take a great step forward in the coming decade....

Mills says. 'What comes next will likely be more consequential than the comparable technological flourishing that began in the 1920s. We will again see a boost to the economy’s productivity, which always increases overall wealth. The ‘rising tide’ does ‘lift all boats.’ The future will repeat a central pattern of the past. The 25 percent in the near future will live like the 5 percent today, and the future 5 percent will live like today’s 1 percent, and so on.'

The key driver of this collective boon will be the Cloud, Mills says, along with the knowledge and technologies it spawns. The most basic definition of this nebulous term is software and services run on computer servers in data centers accessed via the Internet.

But the Cloud is much more than just Netflix, Google Drive, and Apple iCloud. It democratizes technology as never before, connecting everyone and everything, allowing unprecedented gathering and splicing of information....

The Cloud, Mills argues, brings together the three foundational spheres for technological revolution: 'the means for gathering and propagating information, the means (machines) of production, and the class of materials available to do everything.'

Mills offers copious examples of recent advancements in these three spheres. He lists numerous discoveries currently relegated to esoteric academic journals; any of these innovations could profoundly affect our everyday lives soon without us really noticing....

'We do in fact live in a time of a new normal,' Mills writes. 'But instead of our future being one of perennial slow growth and technological stagnation, it will be just the opposite.'

What could get in the way of this optimistic view? What could spiral a new Roaring Twenties down into a second Great Depression? Mills sees China and climate change as the biggest dangers, primarily because they are linked with thinking, business practices, and government policies that encourage controlling or even limiting growth and innovation."

RealMoneyBlog - Free daily/weekly email


1.11.22 - 23% of Workers Plan to Quit in 2022

Gold last traded at $1,818 an ounce. Silver at $22.74 an ounce.

NEWS SUMMARY: Precious metal prices rose Tuesday on bargain-hunting and a weaker dollar. U.S. stocks fell after Federal Reserve officials hinted at fighting inflation aggressively in the year ahead.

Big Gold Breakout Nearing -Seeking Alpha

"A major gold breakout is nearing, with a massive pennant formation converging. Gold climbed into this big continuation pattern from below in powerful uplegs and has been consolidating high since.

Prices usually break out of big pennants in the same direction they entered, implying gold’s imminent breakout will be to the upside. That will ignite strong gold-futures momentum buying.

The resulting acceleration and amplification of gold’s breakout rally will start enticing investors to return, fueling a major upleg. Fed tightening shouldn’t matter, as Fed officials mostly just talk hawkish.

The bottom line is a major gold breakout is nearing, with a massive pennant formation converging. Gold climbed into this big continuation pattern from below in powerful uplegs, and has been consolidating high ever since.

Prices usually break out of big pennants in the same direction they entered, implying gold's imminent breakout will be to the upside. That will ignite strong gold-futures momentum buying from specs.

The resulting acceleration and amplification of gold's breakout rally will start enticing investors to return, fueling a major upleg. Fed tightening shouldn't matter, as Fed officials talk tough but rarely follow through with all threatened actions. The FOMC surrenders after stock markets fall sufficiently on rate hikes and balance-sheet runoffs. And gold has tended to power strongly higher during past Fed-rate-hike cycles anyway."

MMT The Power and Poison of MMT -Project Syndicate

"While MMT is not new, it has been gaining traction in recent years. And a significant share of its following nowadays comes across almost as zealots, unwilling to brook any dissent. Meanwhile, mainstream economists largely regard MMT as tantamount to professional heresy, with some avoiding so much as uttering its name.

Needless to say, the rigid stances of MMT’s devotees and detractors have not lent themselves to productive discussion. This is a serious loss for policymakers, because MMT includes both problematic propositions and perfectly reasonable - even highly useful - positions.

In the latter category, the idea that stands out is essentially functional finance theory (FFT). Proposed by Abba Lerner in 1943, FFT holds that, because governments borrowing in their own currency can always print money to service their debts, but still face inflation risks, they should aim to balance supply and demand at full employment, rather than fret about balancing the budget....

MMT and FFT are not synonymous. MMT includes two additional propositions that, in my view, are unsound. The first is that monetary policy should be conducted in such a way that it facilitates fiscal-policy decisions, such as by maintaining a constant (very low) interest rate....

More important, if interest rates are held constant, and prices start to rise, inflation could snowball. MMT proponents would advocate tax hikes as a way to manage aggregate demand and control inflation. But, given what we know about asset dynamics, this would be a hard sell.

MMT’s second problematic proposition - that governments should provide a job guarantee in order to maintain full employment, while mitigating inflationary pressures - is even harder to defend. It simply moves too far in the direction of socialist labor allocation, and enables governments to wield excessive control over workers’ wages.

When I explained MMT to former Japanese Prime Minister Shinzo Abe, he compared it to preparing fugu. If done correctly, the puffer fish is a sublime delicacy. But if the chef makes even a minor mistake, the diner could suffer a rapid and painful death."

Inflation up, virus down as priorities in US -AP News

"Heading into a critical midterm election year, the top political concerns of Americans are shifting in ways that suggest Democrats face considerable challenges to maintaining their control of Congress.

A poll from The Associated Press-NORC Center for Public Affairs Research finds that management of the pandemic, once an issue that strongly favored President Joe Biden and his fellow Democrats, is beginning to recede in the minds of Americans. COVID-19 is increasingly overshadowed by concerns about the economy and personal finances - particularly inflation - which are topics that could lift Republicans.

Just 37% of Americans name the virus as one of their top five priorities for the government to work on in 2022, compared with 53% who said it was a leading priority at the same time a year ago. The economy outpaced the pandemic in the open-ended question, with 68% of respondents mentioning it in some way as a top 2022 concern....

Consumer prices jumped 6.8% for the 12 months ending in November, a nearly four-decade high. Meanwhile, roughly twice as many Americans now mention their household finances, namely, the cost of living, as a governmental priority, 24% vs. 12% last year."

Nearly a quarter of workers plan to quit in 2022, report shows -Protocol

"The Great Resignation will likely continue into 2022. About one-quarter of workers are looking to get a new job this year, according to a report from ResumeBuilder.com released earlier this week. Of those employees, some want to move into tech-related industries such as IT, business and finance.

Roughly 23% of those surveyed last month said they want to quit this year. Another 9% have already found a new job, and an additional 9% said they'll retire this year. Most of those resignations are happening in the retail, food and hospitality industries, according to the report.

'Employees may wait for end-of-the-year bonuses to make a change or see what new opportunities arise in the new year,' career strategist Carolyn Kleiman said in the report. 'Plus, as the pandemic continues, people continue to evaluate their lives, and work is a large part of that.'

Better pay and benefits, finding remote work and landing a job people are passionate about are some of the top reasons for seeking new work, the report shows. Time and time again, remote tech work has proven to be hugely popular and will likely continue to grow in 2022. The hunt for a more purposeful job also checks out, given that more people have said they lost a sense of meaning in their work since the COVID-19 pandemic began.

Of those looking for new jobs, about one-third want to stay in their current industry, while another third want to switch to industries including IT, media and communications, and business and finance."

RealMoneyBlog - Free daily/weekly email


1.10.22 - What Is the Great Reset?

Gold last traded at $1,801 an ounce. Silver at $22.51 an ounce.

NEWS SUMMARY: Precious metal prices steadied Monday despite rising interest rates and a firmer dollar. U.S. stocks fell, extending a rocky start to 2022 for equity markets as the 10-year Treasury yield moved above 1.8%.

10 reasons to be bullish the gold complex in 2022 -Kitco

"With bearish gold headlines making the rounds as the new year came to a close last week, you would think bullion was down double-digits in 2021. But after gaining a stellar 18% in 2019, then another 24% in 2020, the gold price consolidated those huge gains as much as 20% by Q2/2021 and ended last year down just 3.5%....

On Thursday, St. Louis Fed President James Bullard said the Fed could raise interest rates as soon as March and is now in a "good position" to take even more aggressive steps against inflation, as needed, after a policy reset last month....

Despite the continued under-performance for gold as we begin the new year, the fundamental backdrop in 2022 for precious metals and related mining share prices continues to strengthen.

Below are 10 reasons why I expect the gold price to eventually rise above $2,000 per ounce in 2022, along with the mining sector creating a significant bottom in Q1/2022:

1) Inflation has become increasingly problematic and more persistent than previous sanguine assessments by Federal Reserve Chairman Jerome Powell and other Fed officials.

2) Real interest rates are expected to remain deeply negative. Higher inflation combined with continued low interest rates should ensure negative real rates, always a strong buy signal for gold investors....

3) The Federal Reserve's more aggressive tapering and the expectation of three rate hikes in 2022 have already been largely priced in....

4) Geopolitical fears include the ongoing threat of war between North and South Korea that would draw in the United States; tensions between the U.S., China and its neighbors over Taiwan....

5) The global economy is beginning to sputter. Spreading economic weakness will make any tightening moves by central banks difficult to implement without broader repercussions....

6) During the last tightening cycle, between late 2015 and 2019, the Federal Reserve raised interest rates nine times and gold prices rallied nearly 35%. And between 2004 and 2005 the U.S. central bank raised rates 17 times and gold prices rallied 70%....

7) Physical gold buying centered in India and China has risen dramatically....

8) Net buying of gold bullion by central banks is likely to continue and may possibly increase....

9) Positioning by commodity traders is at negative extremes and is usually followed by short-covering rallies....

10) Gold mining equities are trading at deep value while generating record cash flow."

reset What Is the Great Reset? -Imprimis

"Is the Great Reset a conspiracy theory imagining a vast left-wing plot to establish a totalitarian one-world government? No. Despite the fact that some people may have spun conspiracy theories based on it - with some reason, as we will see - The Great Reset is real.

Indeed, just last year, Klaus Schwab, founder and executive chairman of the World Economic Forum (WEF) - a famous organization made up of the world’s political, economic, and cultural elites that meets annually in Davos, Switzerland - and Thierry Malleret, co-founder and main author of the Monthly Barometer, published a book called COVID-19: The Great Reset. In the book, they define the Great Reset as a means of addressing the 'weaknesses of capitalism' that were purportedly exposed by the COVID pandemic.

But the idea of the Great Reset goes back much further. It can be traced at least as far back as the inception of the WEF, originally founded as the European Management Forum, in 1971....

The specific phrase 'Great Reset' came into general circulation over a decade ago, with the publication of a 2010 book, The Great Reset, by American urban studies scholar Richard Florida....

The Great Reset aims to usher in a bewildering economic amalgam - Schwab’s stakeholder capitalism - which I have called 'corporate socialism' and Italian philosopher Giorgio Agamben has called 'communist capitalism.'....

Proponents of the Great Reset hold 'neoliberalism' responsible for our economic woes. But in truth, the governmental favoring of industries and players within industries - what used to be known as corporatism or economic fascism - has been the real source of what Schwab and his allies at the WEF decry.

While approved corporations are not necessarily monopolies, the tendency of the Great Reset is toward monopolization - vesting as much control over production and distribution in as few favored corporations as possible, while eliminating industries and producers deemed non-essential or inimical....

Another way of describing the goal of the Great Reset is 'capitalism with Chinese characteristics' - a two-tiered economy, with profitable monopolies and the state on top and socialism for the majority below....

The Great Reset represents the development of the Chinese system in the West, but in reverse. Whereas the Chinese political class began with a socialist political system and then introduced privately held for-profit production, the West began with capitalism and is now implementing a Chinese-style political system....

The draconian lockdown measures employed by Western governments managed to accomplish goals of which corporate socialists in the WEF could only dream - above all, the destruction of small businesses, eliminating competitors for corporate monopolists favored by the state.

In the U.S. alone, according to the Foundation for Economic Education, millions of small businesses closed their doors due to the lockdowns. Yelp data indicates that 60 percent of those closures are now permanent. Meanwhile companies like Amazon, Apple, Facebook, and Google enjoyed record gains....

As if the economic and governmental resets were not dramatic enough, the technological reset reads like a dystopian science fiction novel. It is based on the Fourth Industrial Revolution - or 4-IR for short. The first, second, and third industrial revolutions were the mechanical, electrical, and digital revolutions.

The 4-IR marks the convergence of existing and emerging fields, including Big Data, artificial intelligence, machine learning, quantum computing, genetics, nanotechnology, and robotics....

In terms of the social order, the Great Reset promises inclusion in a shared destiny. But the subordination of so-called 'netizens' implies economic and political disenfranchisement, a hyper-vigilance over self and others, and social isolation - or what Hannah Arendt called 'organized loneliness'on - a global scale....

Let me end on a note of hope. Because the goals of the Great Reset depend on the obliteration not only of free markets, but of individual liberty and free will, it is, perhaps ironically, unsustainable.

Like earlier attempts at totalitarianism, the Great Reset is doomed to ultimate failure. That doesn’t mean, however, that it won’t, again like those earlier attempts, leave a lot of destruction in its wake­ - which is all the more reason to oppose it now and with all our might."

This Is How Bull Markets End -American Consequences

"Based on history, I’m seeing the same price action that usually marks the end of a bull market...So this is something to keep in mind as we continue to witness stocks rocketing to new highs....

I’m going to analyze two big stocks today… Caterpillar (CAT) and Microsoft (MSFT).

These stocks represent different sectors of the economy, and when they’re rallying together, it’s a sign of strength. When they’re not, it’s usually a warning.

Right now, we’re seeing a very wide divergence....In 2008, this wide divergence between CAT and MSFT led to a massive crash and big bear market....

The price action in the Nasdaq 100 from 1998 to 2000 and from 2020 to 2021 are still very much in sync.

So when I lined this up with what happened between CAT and MSFT back then and now, it gives me more evidence that history is indeed repeating.

All is not well under the hood of the stock market. What else does it mean for the market if this analog continues?

It means I’m expecting this bull market to end by February or March 2022....So prove me wrong, Mr. Market… But for now, I’ll respect your history."

What The Climate Scare And Pandemic Fearmongering Have In Common -Issues & Insights

"Climate alarmists have said it’s necessary to ratchet up the fear about global warming to get the public’s attention. It’s the same story with the coronavirus outbreak. Authorities wanted to strike fear in the people, so they exaggerated the lethality of a virus deadly to only a narrow demographic segment.

Compare and contrast: Global warming, 1988. '​​We have to offer up scary scenarios, make simplified, dramatic statements, and make little mention of any doubts we might have,' about global warming, said Stanford climatologist Stephen Schneider....

Pandemic, 2020. Britain’s ​​Scientific Pandemic Influenza Group on Behavior warned 'that ministers needed to increase the perceived level of personal threat from Covid-19 because a substantial number of people still do not feel sufficiently personally threatened,' the London Telegraph reported....

Global warming, 2014. The American Journal of Agricultural Economics said their article 'provides a rationale for the tendency of news media and some pro-environmental organizations to ​​accentuate or even exaggerate the damage caused by climate change.'

'We find,' they wrote, 'that the information manipulation has an instrumental value.'

Pandemic, 2020. The Scientific Pandemic Influenza Group on Behavior recommends the perception of fear regarding the coronavirus needed to 'be increased among those who are complacent, using hard-hitting emotional messaging.'....

The chilling fact there is much to be afraid of – not of a falling sky or a virus that we hope is on the wane, but of those eager to stir up dread and anxiety so they exercise the raw power they covet."

RealMoneyBlog - Free daily/weekly email


1.7.22 - $2,100 Gold Ahead -Commodities Analyst

Gold last traded at $1,798 an ounce. Silver at $22.36 an ounce.

NEWS SUMMARY: Precious metal prices steadied Friday as downbeat economic data weakened the dollar. U.S. stocks fell after the December jobs report came in short of expectations.

Spot gold at $2,100? Commodities analyst says gold could test new highs this year -CNBC

"Gold could test new highs of $2,100 per ounce this year, according to a resource analyst at fund management company Fat Prophets.

U.S. dollar weakness and inflation are some factors that are likely to boost the precious metal’s prices, David Lennox told CNBC’s 'Street Signs Asia' on Monday.

'We do think across the course of 2022, we will see the gold price testing at the all-time record highs, but we can’t see it traveling much beyond that once it gets there,' he said.

Lennox said it looks like everything is in place for the U.S. dollar to decline, though it hasn’t happened yet. If the greenback weakens, it would be a 'boon' for gold, he added.

Meanwhile, inflation in the U.S. is close to 6% - up from around 1%, he said. Gold is seen as a hedge against inflation and increases in value as the dollar declines, but its track record has been spotty in the past.

'We do believe that high momentum in inflation and that lower U.S. dollar is going to drive the gold price higher in 2022,' he added."

cash app Venmo, PayPal and Cash App will now have to report transactions totaling more than $600 to the IRS -Daily Mail

"President Biden's IRS is cracking down on payments made through third-party apps, requiring platforms like Venmo, PayPal and Cash App to report transactions if they exceed $600 in one year.

The new reporting requirement will ensure that small businesses that receive payments through those apps are paying their fair share in taxes on them.

Beginning Jan. 1, 2022, third-party payment processors were required to report such transactions. Though businesses were always required to self-report such incomes to the IRS, many often did not keep record of their smaller transactions.

The payment apps were previously required to send users 1099-K forms if their gross income exceeded $20,000 or they had more than 200 transactions per year.

The new tax law was part of the March 2021 American Rescue Plan, which passed with no Republican votes....The cash apps will now be required to send the 1099-K form to businesses with electronic transactions greater than $600. The new change will apply for the 2022 tax season.

'For the 2022 tax year, you should consider the amounts shown on your 1099-K when calculating gross receipts for your income tax return,' PayPal warned on its website. 'The IRS will be able to cross-reference both our report and yours.'"

The great population growth slowdown -Vox

"Fewer babies were born in New York City in 2020 than any year on record, while the US population grew by just 0.1 percent in the year between July 2020 and July 2021, with the country adding just 392,665 people from net migration and births over deaths.

That’s the lowest numeric increase since the Census Bureau began making annual population estimates at the beginning of the 20th century. On a percentage basis, it’s the lowest growth in the nation’s history.

Increased deaths from the pandemic plays a role, as do inevitably creeping mortality rates in an aging population. But the primary cause is declining fertility rates, as fewer Americans have children, and those that do tend to have smaller families.

The total fertility rate in the US - an estimate of the average total number of children a woman will have over her lifetime - has declined from 2.12 in 2007 to 1.64 in 2020, well below the 2.1 needed for a population to replace itself without immigration.

Nor is this merely an American phenomenon. By one estimate, half the world’s population lives in countries with below-replacement-level fertility, and nations like Japan - with very low birth rates and little immigration - are already experiencing population decline....

Despite that, global population at the start of 2022 was nearly 7.87 billion, and should cross the 8 billion mark over the next few years. For those worried about climate change, fewer people - especially in some of the richest and most carbon-intensive countries in the world - might seem like an unmitigated good.

Indeed, there’s evidence that a growing number of young people are opting out of having children specifically because they’re worried about what life would be like for their offspring in a hot and chaotic world. Such concerns may be more intense these days, but they aren’t new - human overpopulation has been a major concern for the environmental movement for decades....

And while population growth plays a role in climate change - it’s called anthropogenic warming for a reason - it’s not as big a factor as we might expect, as Sigal Samuel wrote for Future Perfect in 2020....Change in consumption patterns - through a mix of better efficiency and new technologies that don’t emit carbon - and there’s room enough to keep growing the population without cooking the planet."

Bitcoin, other cryptocurrencies drop on hawkish Fed minutes -CNBC

"Bitcoin and other cryptocurrencies fell sharply on Thursday as hawkish minutes from the Federal Reserve’s December meeting hit global risk assets.

Bitcoin was trading at $42,739.52, down more than 7% from the 24 hours previous, according to Coin Metrics data. It fell as low as $42,503.88 in the last 24 hours, the lowest level in more than a month.

Other cryptocurrencies fell too. Ethereum dropped nearly 12% to $3,335.99 while solana sank 12% to $146.84.

The crypto sell-off comes after stocks fell on Wednesday following the release of minutes from the Fed’s December meeting in which the central bank indicated it would dial back its supportive monetary policy, including reducing the amount of bonds it holds.

The Fed also indicated that it may have to raise interest rates sooner than expected....

Growth assets such as technology stocks tend to be hit when rates rise, as future earnings becomes less attractive to investors when yields are higher. That sentiment has filtered through to cryptocurrencies, which are seen as risker assets."

RealMoneyBlog - Free daily/weekly email


1.6.22 - US Mint Sees Strongest Gold Sales in 12 Years

Gold last traded at $1,789 an ounce. Silver at $22.18 an ounce.

NEWS SUMMARY: Precious metal prices eased back Thursday following hawkish Fed comments and a flat dollar. U.S. stocks continued their slide amid investor worries over tighter monetary policy in 2022.

U.S. Mint sees strongest gold coin sales in 12 years -Kitco

"Despite gold's uninspiring performance in 2021, the precious metal saw an impressive wave of physical demand throughout the year.

Updated sales data released from the U.S. Mint on Monday showed demand for physical gold hitting its highest level since 2009. The U.S. Mint said that in 2021 it sold more than 1.25 million ounces of gold in various denominations of its American Eagle gold coins, up more than 48% from last year.

According to the sales data, the mint's busiest month last year was in January when it sold 220,500 ounces of gold. Another memorial month for the mint included June when it sold 182,000 gold ounces as gold prices dropped more than $100 in the month as the Federal Reserve signaled that it was looking at reducing its monthly bond purchases before the end of the year.

August was another busy month for the mint as it sold 136,000 ounces of gold. Early in August, the gold market experienced a flash crash, which saw prices drop more than 4% falling to a new low for the year. However, investors were quick to buy on the dip below $1,700 an ounce.

October and November also saw strong gold sales. Physical gold started to attract new investor attention in the final quarter of 2021 as inflation pressures saw extraordinary increases, jumping to multi-decade highs."

gold chart The Impact of Higher Inflation on US Asset Class Returns -AIER

"Which US asset classes perform best or worst amid periods of high inflation (6% or more)? Answer: commodities perform best, while bills perform worst. It’s commonly recognized that bonds are not a good inflation hedge - and they aren’t - but less recognized is that equities also fail in this regard; each has returned only a bit more than bills amid periods of higher inflation....

With the US CPI up by 6.9% over the past year - the highest rate since 1982 - have US asset returns reflected this longer-term history? Mostly, but not perfectly....Commodities have outperformed all other assets over the past year, with a real gain of 46%. Bills have lost 6.2%, also consistent with the history.

The outlier is equities, which have gained 19.7% in real terms. This is contrary to history. Why? Probably because the Fed until recently chose not to 'chase' the higher inflation rate with rate hikes; yet this month it hinted that it would raise rates three times (by 75 basis points) in 2022.

Now consider the longer-term history....Commodities have materially outperformed equities (13.2% versus 1.8%) under periods of high inflation while significantly underperforming amid low inflation. Equities have returned far more (16.4% p.a.) under episodes of low inflation versus 9.1% p.a. under moderate inflation and only 1.8% p.a. under high inflation. Meanwhile, bonds have returned 7.7% p.a. under low inflation, 5.7% p.a. under moderate inflation, and just 0.9% points p.a. under high inflation.

Clearly, financial assets perform poorly under high inflation (versus tangible assets). Less recognized is that equities serve no better than bills or bonds in protecting investors from the erosion of capital caused by high inflation (and by the higher interest rates that typically result). Huge equity gains amid high and rising inflation are historically (and economically) unjustified and unsustainable....

The Fed seems to be...mimicking the BoJ by refusing to raise rates, not because US inflation is 'too low' or high or 'transitory,' but because the Fed likewise is intent on satisfying the US Treasury’s need to borrow cheaply. The ratio of US federal debt to GDP ratio is now 125% - double what it was in 2007."

Inflation or Recession? The Fed Faces a Choice. -Mises

"Despite Federal Reserve chairman Jerome Powell originally proclaiming this inflation spiral to be transitory, the Federal Reserve has announced that they will end their bond buying program three months earlier than expected, in addition to speculating three interest rate hikes in the coming years as opposed to the originally planned single rate hike.

With the quantitative easing policy maintained throughout the covid-19-induced recession finally ending, the federal funds rate is expected to rise to 0.9 percent in 2022, 1.6 percent in 2023, 2.1 percent in 2024, and 2.5 percent in the undetermined long run.

Mortgage-backed security and bond purchases will be reduced by $10 billion and $20 billion a month, respectively, in order to expedite the conclusion of the program by March 2022, rather than June. While this course of action is likely to mitigate the soaring inflation, it may lead to a myriad of detrimental effects to other facets of the economy.

To start, the aforementioned contractionary monetary policies will presumably slow GDP growth, wage growth, and possibly even job creation over the course of their implementation....

Furthermore, a rise in the federal funds rate will undisputedly lead to a rise in net interest payments made by the government. In fiscal year 2020, the United States federal government spent $345 billion in net interest payments alone, despite near-zero interest rates.

The nonpartisan Committee for a Responsible Federal Budget found that even a 2 percent increase in interest rates would cause net interest payments to rise to a whopping $750 billion....

What’s more, interest rate hikes will most certainly have strong effects on many Americans’ fiscal behavior. The upcoming interest rate increases will pull the prime rate up, thus furthering the burden of credit card holders paying interest. It would be in the best interest of consumers to pay off their debts in a timely manner in order to avoid further economic strain later on. We should also anticipate a rise in fixed mortgage rates....

In the final analysis, while contractionary monetary policy may be necessary to combat the recent rise of inflation, the sheer number of adverse effects of these actions remind us why we should try to avoid these situations altogether."

Has COVID Run Its Course? This Chart Suggests The Answer Is Yes -Issues & Insights

"Two years after COVID first landed on our shores, the rate of new cases has absolutely exploded. That’s making headlines. Here’s what isn’t making headlines: Daily COVID deaths are down....

While the number of people testing positive for COVID has indeed soared - the CDC reported almost half a million new cases on Dec. 29 alone, nearly twice the daily peak from last year - the number of people being admitted to intensive care units and the number reported to have died from COVID hasn’t followed suit.

Johns Hopkins University reports that from Dec. 27 to Jan. 2, there were 17,759 ICU beds occupied with COVID patients. That’s down from 25,000 in mid-September 2021.

The number of inpatient beds occupied by patients with COVID is currently 93,282, which is below the number of beds occupied in mid-September. And many of those are in the hospital for other reasons, but just happened to test positive for COVID.

What’s more, the seven-day moving average for the number of people who died with COVID is lower than it was on Oct. 24, which was the day that the current wave started - 1,100 compared with 1,323.

That’s strikingly different from previous waves, which as this chart shows, saw daily deaths starting to climb along with cases, with only about a two-week lag.

If this outbreak had been like the previous ones, COVID-related deaths would have started climbing weeks ago.

What does this mean? Most likely it means that the disease is getting less lethal as it gets more transmittable, which is how viruses work.

As an article in New Scientist explains, 'In time, virologists predict, the virus will become more benign, following an evolutionary pathway previously taken by four other human coronaviruses that today cause nothing more than the ‘common cold.'

If this is in fact what’s happening right now, why isn’t this news being shouted from the rooftops? We can only speculate, but our guess is that power-mad politicians and public health tyrants like Anthony Fauci don’t want this sort of good news getting out."

RealMoneyBlog - Free daily/weekly email


1.5.22 - The Case Against Cryptocurrencies

Gold last traded at $1,824 an ounce. Silver at $23.13 an ounce.

NEWS SUMMARY: Precious metal prices rose Wednesday on safe-haven buying and a weaker dollar. U.S. stocks traded flat as investors looked for clues on where the economy stands heading into the new year.

Gold firms above $1800 per ounce as pandemic, inflation risks linger -CNBC

"Gold climbed above the key $1,800-per-ounce level on Tuesday, after a sharp retreat in the last session, as some investors sought cover from pandemic-led uncertainty, inflation and its impact on the U.S. Federal Reserve’s rate hike trajectory....

'Gold prices are seeing some relief after being pummeled by surging U.S. Treasury yields on Monday,' said Han Tan, chief market analyst at Exinity.

'Still, lingering concerns over a possible turn for the worse in the worldwide battle against COVID-19 should offer some measure of support for gold prices while waiting for the global outlook to brighten considerably,' Tan added....

'Once the dust settles it is very important to watch what the FOMC does and not what it says,' Saxo Bank analyst Ole Hansen said in a note.

U.S. real yields may not rise as much as expected by the market 'and with that in mind and given the prospect for U.S. stocks coming off the boil, we believe gold as well as silver and platinum will offer a positive return in 2022,' Ole added.

In the physical market, the world’s second-biggest bullion consumer India splurged a record $55.7 billion on gold imports, amid lower prices and pent-up wedding demand."

crypto The Case Against Crypto -Stephen Diehl

"These days so much of my free time is booked with calls to explain to people outside the software industry why crypto assets are such a destructive force and why I support forceful regulation to halt this financially corrosive enterprise from spreading further into markets.

I basically have to repeat myself on the basic arguments for every call covering the same basic monetary theory, American history and technical limitations. Thus I’m going to summarize the basic argument so we have a reference and I don’t have to keep repeating myself all day.

1. The technology does not solve a real problem. -- The crypto project has had 13 years to try and find a problem to solve. It has not found one.

The real world has fundamental constraints that make the technology unworkable, whenever it has to interact with the outside world the benefits of decentralization disappear and the solutions end up simply recreating slower and worse versions of processes and structures that already exist.

Despite that, for the last thirteen years these projects have done nothing but scam people by creating synthetic asset bubbles for gambling and destroying the environment....

2. So called 'cryptocurrencies' aren’t actually currencies, and cannot fulfil the function of money. -- Money exists to exchange for goods and services in an economy. It is created to mediate the exchange of goods so that we have a common unit of account we can trade instead of bartering goods directly.

Money needs to have a reliable and stable value compared to a domestic basket of common goods and services, in order to achieve that the supply of the money needs to be controlled by a monetary authority which can expand or contract the supply according to market fluctuations....

The crypto project contains unresolvable logical and economic contradictions in its stated purpose. State controlled money embeds control and accountability for fiscal stability and market intervention in the democratic process where it inevitably and rightly belongs.

3. The history of private money is one of repeated disasters that destroy public trust. -- The lessons of history are quite clear on this issue because the United States flirted with such a system back in the Free Banking Era from 1837 to 1863. In this time period there were hundreds of private entities that went about issuing their own private bank notes allegedly created one-for-one with state bonds.

The problem with these so-called wildcat banks is that their reserves were not always verifiably backed and were thus subject to runs on the bank in which customers could not access their funds. The second issue is that unlike public money which is universally accepted at par, the wildcat bank notes had a massive secondary exchange market where notes from different banks would not trade at par....

4. Crypto assets are all unregistered securities. -- Crypto assets are simply unregistered securities on ventures whose stated aspiration is to develop technology to become digital wildcat banks. They’ve just synthesized their corporate equity and alleged notes into one financial product.

Cryptocurrencies aren’t currencies and have no mechanism to ever become currencies. They are effectively unregulated securities where the only purpose of the products is price appreciation untethered to any economic activity. The only use case is gambling on the random price oscillations, attempting to buy low and sell high and cash out positions for wins in a real currency like dollars or euros.

Public money should just work for most people without them having to be concerned with the details. This is ultimately where cryptocurrencies tap into the ignorance, desperate faith in technical solutionism and political resentment of the public and weaponize it for the aims of these libertarian private money charlatans to engorge themselves. These guys aren’t building a new financial system, they’re just lining their own pockets.

History repeats itself first as tragedy and then as farce. The wild economic oscillations of yesterday’s gold standard is today’s dog meme mania. Human nature is remarkably invariant through the ages and if we don’t learn the lessons of history then we’re doomed to repeat the mistakes of past generations."

Why Commodities Could Absolutely Soar in the Next Decade -American Consequences

"Equities are near all-time-high valuations today, and anybody who has held them for decades knows they’ve been a tremendous long-term investment.

Today, though, I want to focus on something else – and get a sense of where the broader world of commodities stands. In short, while this is a volatile asset class, we could be on the verge of a new market cycle....

Commodity prices have ripped higher this last year. The S&P GSCI is up 33%… That’s about eight percentage points better than the S&P 500.

It’s important to compare commodities to stocks and see where we stand in the cycle….

You see, learning to read commodity market cycles can be a very lucrative proposition – and it can offer excellent diversification during times of poor equity returns....

Commodities are highly cyclical and tend to be volatile, but they’ve provided an effective hedge in decades when equity returns have disappointed. And as I mentioned earlier, they’ve done better than stocks so far this year.

We can’t know what will happen in the future… but perhaps this is a glimpse of a new market cycle.

My sense for where we stand in the present suggests that the markets are approaching an important turning point… a decade of higher commodity prices and generally poor equity returns would be right in line with the picture we’ve just painted.

We’ll see what happens between now and 2031… But keep this in mind as we head into the new year."

A Holiday Ad To Make Us Feel Good About America -New York Post

"It’s not often that a television commercial draws us into a story, reminds us of the best parts of ourselves and moves us deeply...But this holiday season, one of America’s last iconic brands, Chevrolet, accomplished just that – a pitch perfect ad that comes at just the right moment in our national story.

When many Americans are having trouble simply recognizing the country they’ve known all their lives, when there is division over race, politics, leadership, the press, and even Covid we wonder who we are, even what we are. It is at this moment that Chevrolet has come forward with a decidedly non-woke message to evoke the essence of our lives and America....

In Chevrolet’s four-minute commercial called 'Holiday Ride,' directed by Academy Award winner Tom Hooper ('The King’s Speech'), we see a widower struggling with his grief by visiting the barn where he keeps a now-beat-up 1966 Impala that belonged to his late wife. In a flashback, he remembers his pretty young wife, her radiant smile, her excitement, through an old 8-millimeter film taken when she is first given the car so many years ago.

Then, in what may be the most important scene, his daughter, now grown, goes to the local garage and explains to the guys sitting around, about her father’s sadness. Before she can even ask, the guys completely understand and jump in to help. 'It’s your mother’s car ... ?' One of them asks. Then he turns to the others with just one question: 'Anyone up for some night work?'

They are all in. This is a sense of caring and generosity we have always seen in America and we still do - after tornados in Kentucky, floods in the Ohio Valley, fires in the West, ice storms in Texas ... and after 9-11. We are the wealthiest nation on earth, the most generous, and filled with decent neighbors.

In 'Holiday Ride,' we watch the old guys lovingly restore the car, we see how the father is moved by his daughter’s caring, by the community’s kindness and by the memory of his beloved wife. This hits all of us in different ways. There are 15-million widows and widowers in America who immediately understand this man’s pain....

In this ad, we also see community, connection to our neighbors, generosity, caring and, especially, love. It’s amazing how this is all wrapped up in four minutes around a gorgeous 1966 blue Impala convertible. Amazing, but not at all surprising. Happy holidays, America."

RealMoneyBlog - Free daily/weekly email


1.4.22 - Money Has Never Felt More Fake

Gold last traded at $1,814 an ounce. Silver at $23.03 an ounce.

NEWS SUMMARY: Precious metal prices rose Tuesday on bargain-hunting and a weaker dollar. U.S. stocks traded mixed as investors considered whether the economy can overcome the latest surge in Covid cases and continue riding 2021's momentum.

Retail investors see gold hitting record highs above $2,000 in 2022 -Kitco

"Retail investors remain significantly bullish on gold prices next year as the precious metal looks to end 2021 with nearly a 4% loss.

Gold prices have seen a solid push higher, moving above $1,800 an ounce on the last trading day of 2021. Spot gold prices last traded at $1,827.95 an ounce....

Analysts note that the rise in consumer prices this past year has been met with expectations that the Federal Reserve will tighten interest rates soon than expected. At its December monetary policy meeting, the U.S. central bank signaled that it would end its monthly bond purchase by March and could raise interest rate three times in 2022.

However, U.S. monetary policy is not scaring many retail investors who appear to be significantly bullish on gold heading into the new year. According to Kitco News' annual outlook survey, a clear majority of Main Street investors expect gold prices to push new record highs in 2022.

This year, nearly 3,000 people participated in Kitco's annual online survey. Of those 1,605, 54% said they see gold prices above $2,000. Meanwhile, 592 voters, or 20%, said that gold would trade between $1,900 and $2,000."

monopoly Money has never felt more fake -Vox

"NFTs - non-fungible tokens, little digital assets that exist on a blockchain - are having a moment. What’s not really clear is why. Then again, everything about money feels a little strange at the moment.

Between NFTs, crypto, and GameStop, AMC, and other meme stocks, money has rarely felt more fake. Or, at the very least, value has rarely felt so disconnected from reality.

The concept of value is a fuzzy one, and valuation is often more art than it is science. Psychology has always played a role in money and investing - and there have always been bubbles, too, where the price of an asset takes off at a rapid pace and disconnects from the fundamental value....

Historically, the economy was theoretically based on labor and value creation at the individual level, and on the structural level, voting shares in companies based on their financial fundamentals and future value, said tech industry veteran Anil Dash, CEO of the programming company Glitch. But that idea died long ago.

'A machine is what it does, and the purpose of the system is the output of the system. And the purpose of our financial systems ... is to create ever more detached financialization that can just generate what the industry calls wealth and what the rest of the world just doesn’t see.' In other words, the confusing status of value today is a feature, not a bug

You can see this clearly in the markets in 2021.

One of the first big stories of the year was the GameStop saga, and it was a fun one. An army of day traders on the Reddit forum r/WallStreetBets drove up the price of the game retailer’s stock in a matter of days, forcing halts in trading and costing some hedge funds that had been betting against the stock quite a bit of money....

'For a huge swath of the retail world, the mentality has merged of what is trading versus what is investing versus what is essentially just gambling,' said Tyler Gellasch, executive director of Healthy Markets, a nonprofit....

It’s easy to be dismissive of the current state of casino capitalism, where random people are just tossing random money at random anything. It’s also relatively easy to recognize that this landscape is likely to be one where there are few winners, and the winners are probably going to be the people who were already winning, financially.

'For every one person that makes money, you have 100 people that have lost money. It’s basically just a giant wealth redistribution scheme,' said Stephen Diehl, a software engineer in London....If and when the bubble around some of these hyped investments bursts, a lot of people are going to get hurt and lose money."

What will happen with house prices in 2022? -Calculated Risk

"Earlier I posted some questions on my blog for next year: Ten Economic Questions for 2022. Some of these questions concern real estate (inventory, house prices, housing credit, housing starts, new home sales)....

It appears house prices - as measured by the national repeat sales index (Case-Shiller, FHFA, and CoreLogic) - will be up around 18% to 20% in 2021. What will happen with house prices in 2022?....

Both Case-Shiller and FHFA noted the recent deceleration in house price growth. From the FHFA:

'House price levels continue to rise but the rapid pace is curtailing through October,' said Will Doerner, Ph.D., Supervisory Economist in FHFA's Division of Research and Statistics. 'The large market appreciations seen this spring peaked in July and have been cooling this fall with annual trends slowing over the last four consecutive months.'....

There are a wide range of price forecasts for 2022, from around 2% YoY growth to as much as 14%.

If inventory doesn’t increase in 2022, house prices will continue to increase at a double-digit pace. There are several possible reasons for an increase in inventory in 2022. Here are a few:

1) A sharp increase in mortgage rates.
2) Economic problems overseas that spillover into the US.
3) Unregulated areas of finance causing economic problems.
4) Affordability (a combination of higher mortgage rates and higher prices).

A sharp increase in mortgage rates is possible, especially if inflation stays elevated and the pandemic subsides (each wave of the pandemic has pushed down interest rates)."

The Hangover: Covid Stimulus Spending Aftermath -National Review

"The Covid-19 epidemic and the federal response follow a familiar pattern: A crisis emerges, extraordinary action is taken, that extraordinary action acquires interest groups who wish to see it become ordinary action, economic troubles inevitably follow, and sorting it all out gets pretty hairy pretty quickly....

Emergency. Emergency spending. Inflation. Recession. Recovery. The pattern is not difficult to discern.

Because our current tribal rage causes us to see everything in the dumbest possible binary terms, it is sometimes difficult to make the case that Covid-19 was a genuine crisis, that it required an extraordinary response, and that, at the same time, the crisis has been exaggerated, the response has overreached and over-persisted, and that an unpleasant process, something like the economic version of drug withdrawal, is now necessary....

There is no easy fix. The usual way to put a brake on inflation is to raise interest rates. That is a hard thing to do for the U.S. government, which is the most indebted organization in world history and already spends a substantial share of each year’s tax revenue on interest payments for prior years’ spending.

Both the government and the broader economy have become very accustomed to ultra-low interest rates - free money, in effect - and both will have a tough time adapting to a different credit environment.

Prosperity will emerge - if we let it. But first, we have to do the hard part: reforming our public finances with an eye toward long-term stability and following a more sensible long-term monetary policy, thereby creating the conditions of stability and predictability in which sensible and profitable long-term investment is possible.

The hangover is coming. That’s the bad news. The good news is that hangovers end."

RealMoneyBlog - Free daily/weekly email


1.3.21 - U.S: From Greatness to Obscurity?

Gold last traded at $1,799 an ounce. Silver at $22.80 an ounce.

NEWS SUMMARY: Precious metal prices eased back to kick off 2022 amid profit-taking and a firmer dollar. U.S. stocks traded mixed as investors reflected on the economy’s ability to overcome the surge in Covid cases.

Gold Price Prediction for 2022 -Yahoo Finance

"As a technician, I’m always looking for historical price patterns to help forecast future moves. In gold, I see overwhelming similarities between now and the 18-month consolidation between 2004 and 2005. This pattern, if it holds, supports a convincing breakout in 2022 and a rally towards $3000 by year-end.

Gold is in a similar setup to 2005. The post-breakout consolidation that started in August 2020 is almost over. Expect renewed bullishness beginning in Q2 2022 that should last into year-end. Our most bullish case suggests gold could challenge the $3000 level.

I believe we are finalizing the ending triangle consolidation now, and a decisive breakout should follow in the second quarter of 2022, possibly as soon as February or March.

We expect much better performance from gold in 2022, with the potential for a 60% advance from current levels. Gold miners could outperform to the upside and may double from current levels. Our Basic Metals Portfolio is overweight and will continue to add high-quality assets in 2022."

markets The Fed's Moves Pumped Up Stocks. In 2022, It May Pull the Plug. -DNyuz

"For two years, the stock market has been largely able to ignore the lived reality of Americans during the pandemic - the mounting coronavirus cases, the loss of lives and livelihoods, the lockdowns - because of underlying policies that kept it buoyant.

Investors can now say goodbye to all that.

Come 2022, the Federal Reserve is expected to raise interest rates to fight inflation, and government programs meant to stimulate the economy during the pandemic will have ended. Those policy changes will cause investors, businesses and consumers to behave differently, and their actions will eventually take some air out of the stock market, according to analysts.

'It’s going to be the first time in almost two years that the Fed’s incremental decisions might force investors or consumers to become a little more wary,' said David Schawel, the chief investment officer at Family Management Corporation, a wealth management firm in New York....

'The nightmare scenario is: The Fed tightens and it doesn’t help,' said Aaron Brown, a former risk manager of AQR Capital Management who now manages his own money and teaches math at New York University’s Courant Institute of Mathematical Sciences. Mr. Brown said that if the Fed could not orchestrate a 'soft landing' for the economy, things could start to get ugly - fast.

And then, he said, the Fed may have to take 'very aggressive action like a rate hike to 15 percent, or wage and price controls, like we tried in the ’70s.'"

How Nations Slip from Greatness to Obscurity -Frontpagemag

"Men, like nations, think they’re eternal. What man in his 20s or 30s doesn’t believe, at least subconsciously, that he’ll live forever?

In the springtime of youth, an endless summer beckons. As you pass 70, it’s harder to hide from reality.

Nations too have seasons. Imagine a Roman of the 2nd. century contemplating an empire that stretched from Britain to the Near East, thinking: This will endure forever. Forever was about 500 years, give or take....

America has moved from a relatively free economy to socialism – which has worked so well nowhere in the world. We’ve gone from a republican government guided by a constitution to a regime of revolving elites. We have less freedom with each passing year.

Like a signpost to the coming reign of terror, the cancel culture is everywhere. We’ve traded the American Revolution for the Cultural Revolution. How do nations slip from greatness to obscurity?

-Fighting endless wars they can’t or won’t win
-Accumulating massive debt far beyond their ability to repay
-Refusing to guard their borders, allowing the nation to be inundated by an alien horde
-Surrendering control of their cities to mob rule
-Allowing indoctrination of the young
-Moving from a republican form of government to an oligarchy
-Losing national identity
-Indulging indolence
-Abandoning faith and family – the bulwarks social order.

In America, every one of these symptoms is pronounced, indicating an advanced stage of the disease.... If we let America slip through our fingers, if we lose without a fight, what will posterity say of us?"

How Biden's Agenda Is Causing Inflation -Reason

"The Consumer Price Index (CPI) tracks the cost of everyday items. It's jacked up a whopping 6.8 percent over the past year, the biggest increase in almost 40 years. Gas is up 51 percent, beef is up 20 percent, and furniture by 11 percent....

Biden, his advisers, and his champions in the press are ignoring the tough lessons of the past by downplaying inflation or bizarrely claiming it only freaks out rich people.

Even worse, Biden and crew are delusionally pronouncing that we can tame inflation by pumping massive amounts of government money into the economy - a course of action that will almost certainly make everything more expensive.

'What this package will do is lower some of the most important costs, what [families] pay for health care, for child care. It's anti-inflationary in that sense,' said Treasury Secretary Janet Yellen in defense of the recently passed $1.2 trillion infrastructure bill and promises of even-bigger bills related to the president's 'Build Back Better' agenda.

What Ford, Biden, Warren, and Yellen have in common is a failure to understand inflation's most important underlying cause, which the Nobel Prize–winning economist Milton Friedman was explaining with unique clarity back in the 1970s.

'To understand the cause of inflation, you must understand that it is anywhere and everywhere a monetary phenomenon,' said Friedman. Supply-chain issues and rising demand are factors too, but the biggest contributors come from the government and the Federal Reserve....

Back in the '70s, Friedman likened the early stages of inflation to alcoholism. Politicians get to spend more money, tax revenues increase without passing new legislation, and some consumers feel like they are gaining purchasing power as their wages go up.

'Inflation is just like alcoholism,' he warned. 'In both cases, when you start drinking or when you start printing too much money, the good effects come first and the bad effects come only later. That's why in both cases there's a strong temptation to overdo it, to drink too much and to print too much money.'

Here's a final insult: Even the price of booze is going up, so not only will we have more sorrows, it's going to cost us more to drown them."

RealMoneyBlog - Free daily/weekly email


12.30.21 - 1933 Gold Coin Sells for $18.9 Million

Gold last traded at $1,813 an ounce. Silver at $23.00 an ounce.

NEWS SUMMARY: Precious metal prices steadied Thursday in thin pre-holiday trading. U.S. stocks inched higher in early light trading after the S&P 500 and DJIA closed at new records.

Gold in a Post-Pandemic Landscape -WGC/Wall Street Journal

"In uncertain times, investors traditionally turn to gold. It’s tangible and solid when everything else seems in flux.

For nearly two years, the Covid-19 pandemic has wreaked unprecedented upheavals across the world. Reflecting this uncertainty, the price of an ounce of gold soared from $1,474 on March 19, 2020, to $2,067 by Aug. 6, 2020 - an all-time high. It has eased somewhat since then but remains mostly in a range above $1,700.

As the pandemic continues, daily life has assumed a new normal. But the uncertainty persists in the form of supply-chain and labor problems, which are driving inflation higher for the first time in three decades....

Reacting to bad news is no way to run a portfolio, investment advisers say. Instead, build a portfolio with a long time horizon and diversify it so that not all of its components are affected in the same way during market turmoil.

'You choose assets that will work together to improve the risk-adjusted returns of your portfolio,' says George Milling-Stanley, chief gold strategist at State Street Global Advisors.

Because gold tends to rise when stocks fall, the yellow metal can be a valuable diversification tool. 'I think of gold as a long-term strategic investment rather than a short-term tactical one,' Mr. Milling-Stanley says.

'The question of timing or entry point becomes less relevant if you’re making a strategic investment over the long term. What gold is likely to do in the next few months is less relevant.'....

A little bit of gold has long been considered a way to reduce risk in portfolios. In a widely diversified portfolio, the traditional allocation has been between 2% and 10%, depending on factors including the investor’s age and risk appetite."

gold coin Stuart Weitzman's 1933 Double Eagle Gold Coin Sells for a Record US$18.9 Million at Sotheby's -Barron's

"Fashion mogul Stuart Weitzman’s 1933 Double Eagle gold coin shattered auction records for the world’s most valuable coin at Sotheby’s New York on Tuesday morning.

The rare coin, the only of its kind in private ownership, sold for $18.9 million, nearly doubling the world record, Sotheby’s said. The result came after a three-and-a-half-minute bidding war among three bidders in the saleroom at Sotheby’s York Avenue headquarters and another on the phone. The buyer’s identity was not disclosed.

The previous auction record for a coin was set in 2013 by a 1794 Flowing Hair silver dollar, which sold for US$10 million at Stack's Bowers in New York....

With a face value of US$20, the Double Eagle was the last gold coin produced for intended circulation. It features an American eagle in flight on one side and Liberty striding forward on the other.

After President Franklin D. Roosevelt withdrew the U.S. from the gold standard, in an effort to lift the country from the Great Depression, the coin was never issued. Most of the coins were then destroyed and declared illegal to own, except this one."

The Fed's Doomsday Prophet Has a Dire Warning About Where We're Headed -Politico

"Thomas Hoenig doesn’t look like a rebel. He is a conservative man, soft-spoken, now happily retired at the age of 75. He acts like someone who has spent the vast majority of his career, as he has, working at one of the stuffiest and powerful institutions in America: the Federal Reserve Bank....

In 2010, Hoenig was president of the Federal Reserve regional bank in Kansas City. As part of his job, Hoenig had a seat on the Fed’s most powerful policy committee, and that’s where he lodged one of the longest-running string of 'no' votes in the bank’s history.

Hoenig’s dissents are striking because the Fed’s top policy committee - called the Federal Open Market Committee, or FOMC - doesn’t just prize consensus; it nearly demands it....

Between 2008 and 2014, the Federal Reserve printed more than $3.5 trillion in new bills. To put that in perspective, it’s roughly triple the amount of money that the Fed created in its first 95 years of existence...Hoenig was the one Fed leader who voted consistently against this course of action....

Hoenig warned that it would suck the Fed into a money-printing quagmire that the central bank would not be able to escape without destabilizing the entire financial system.

On all of these points, Hoenig was correct. And on all of these points, he was ignored. We are now living in a world that Hoenig warned about....

'There is no painless solution,' Hoenig said in a recent interview. 'It’s going to be difficult. And the longer you wait the more painful it will end up being.'

To be clear, the kind of pain that Hoenig is talking about involves high unemployment, social instability and potentially years of economic malaise....

Hoenig isn’t optimistic about what American life might look like after another decade of weak growth, wage stagnation and booming asset values that primarily benefited the rich. This was something he talked about a lot, both publicly and privately...When the financial system benefited only a handful of people, average people started to lose faith in society as a whole."

Dollar’s Best Days Look Numbered Amid Rush to Front-Run Fed -Yahoo Finance

"Investors are primed for the dollar to climb next year. But the juiciest trades may be over even before 2021 ends....

'The dollar is expected to strengthen in the first half of 2022 as the Fed likely ends tapering in March and starts raising rates in June,' said Naoya Oshikubo, chief manager at Sumitomo, which oversees about $740 billion in assets.

The greenback may surrender some of its gains in the second half, though 'its adjustments will be moderate, just to remove the excess rally related to the heightening expectations prior to rate hikes.'....

With traders gearing up for rate hikes, some are suggesting dollar gains may falter in 2022, or that the currency may even drop....

'Historically the dollar has traded with strength in the six months preceding the first U.S. interest rate hike,' said Arjun Vij, portfolio manager at JPMorgan Asset Management...But with two-to-three rate increases already baked into markets, 'there is the possibility that the bond market tries to price a policy mistake in the U.S.'"

*Swiss America will be closed Friday, December 31. Happy New Year!*

RealMoneyBlog - Free daily/weekly email


12.29.21 - Ten Key Economic Questions for 2022

Gold last traded at $1,804 an ounce. Silver at $24.84 an ounce.

NEWS SUMMARY: Precious metal prices steadied Wednesday on mixed economic data and a weaker dollar. U.S. stocks traded mixed as traders continued to assess the threat of the omicron Covid-19 variant.

Gold price hits 5-week high as crude oil surges -Kitco

"Gold and silver prices are higher in early U.S. trading Tuesday, with gold notching a five-week high and silver a four-week high. Sharp gains in crude oil futures this week and a wobbly U.S. dollar index are fueling the precious metals market bulls....

U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins, and are at or near their record highs. Traders and investors continue to exhibit general 'risk-on' attitudes that are bullish for the stock markets.

The Omicron strain of the coronavirus is proving to produce less serious illness than the other strains, while new vaccines and therapeutics are rolling out to battle the virus.

'Serious but manageable' appears to be how the marketplace is viewing the matter. The U.S. Center for Disease Control has just cut in half the quarantine time for those exposed to the virus.

The key 'outside markets' today see Nymex crude oil prices higher, at a five-week high, and trading around $76.85 a barrel. The U.S. dollar index is slightly lower early today. Meantime, the yield on the U.S. Treasury 10-year note is presently fetching 1.472%."

balloon Ten Economic Questions for 2022 -Calculated Risk

"Below are my ten questions for 2022. These are just questions; I'll follow up with some thoughts on each of these questions.

The purpose of these questions is to provide a framework to think about how the U.S. economy will perform in 2022, and if there are surprises - like in 2020 - to adjust my thinking.

A key question is when will the pandemic subside significantly? This will have a huge economic impact but is a question for infectious disease experts. The good news is a large percentage of the population is vaccinated, and there are effective drugs on the way. Science should continue to make progress against the virus.

1) Economic growth: Economic growth was probably around 5.5% in 2021 as the economy rebounded from 2020...The FOMC is expecting growth of 3.6% to 4.5% Q4-over-Q4 in 2022. How much will the economy grow in 2022?

2) Employment: Through November 2021, the economy added 6.1 million jobs in 2021...Will the remaining jobs lost in 2020 return in 2022, or will job growth be sluggish?

3) Unemployment Rate: The unemployment rate was at 4.2% in November... the FOMC is forecasting the unemployment rate will be in the 3.4% to 3.7% range in Q4 2022. What will the unemployment rate be in December 2022?

4) Participation Rate: In November 2021, the overall participation rate was at 61.8%...the BLS is projecting the overall participation rate will decline to 60.4% by 2030 due to demographics. What will be the participation rate in December 2022?

5) Inflation: Core PCE was up 4.7% YoY through November. This was the highest YoY increase in core PCE since 1989. The Fed is forecasting the YoY change in core PCE will be in the 2.5% to 3.0% range in Q4 2022. Will the core inflation rate increase or decrease by December 2022?

6) Monetary Policy: In response to the pandemic, the Fed cut rates to zero...A majority of FOMC participants expect three rate hikes in 2022. Will the Fed raise rates in 2022? If so, how many times?

7) Residential Investment: Residential investment (RI) was a slight drag on growth in 2021...Note: RI is mostly investment in new single-family structures, multifamily structures, home improvement and commissions on existing home sales. How much will RI change in 2022?

8) Housing Credit: Will we see easier mortgage lending in 2022? Will we see a further sharp increase in mortgage equity withdrawal (MEW)?

9) House Prices: It appears house prices - as measured by the national repeat sales index - will be up around 18% to 20% in 2021. What will happen with house prices in 2022?

10) Housing Inventory: Housing inventory decreased sharply during the pandemic to record lows in early 2021. Will inventory increase as the pandemic subsides, or will inventory decrease further in 2022?"

Three Books That Aren't About Investing… Which Every Investor Should Read -American Consequences

"Serious investors care about more than the markets. They care about the freedom that makes those markets work, and the wisdom behind that freedom. Serious investors also care about the things that threaten market freedom – such as foolish politics and ideology.

Having investments is like having kids. You want them to grow and prosper, with liberty and responsibility. You don’t want them ruined by bad ideas… like getting a face tattoo....

1) Free to Choose By Milton and Rose Friedman

Nobel Prize-winning economist Milton Friedman (1912-2006) possessed the wisdom behind market freedom. He was the 20th century’s leading academic theorist of free-market economics.

But Free to Choose is a book for the general public written with his wife Rose, also an economist and with a degree in philosophy, too....

2) The Road to Serfdom By Friedrich Hayek

Austrian-born economist Friedrich Hayek (1899-1992) was another powerful advocate of free markets. He saw central planning as the greatest threat to economic liberty and argued that the danger exists whether the central planners are dictators in China, bureaucrats in Europe, or Democrats and Republicans in Congress and the White House....

What will the politicians and political appointees in charge of that centralization do? They’ll plan how we work, spend, save, invest, and do business.

We’ll be told what to do, how to do it, and where the benefits of our labors will go. We’ll become our government’s serfs....

3) New Ideas From Dead Economists By Todd Buchholz

Todd Buchholz provides us with the whole scope of economic thinking from Adam Smith to Alan Greenspan. He tells us what the great thinkers thought, and sorts through which ideas were wise and which were stupid.

He shows us how to use the great thinkers to think for ourselves about the economy. And he does it all in 287 pages of clear, quick, and often very funny writing....

Buchholz explores every prominent economic theory. We discover how the wisest – and the most foolish – economists concocted their ideas. If economics were a fancy restaurant, New Ideas would be a tasting menu....

Meanwhile, Buchholz never loses sight of that moral dimension of economics – putting human capital first."

Biden's War against Fossil Fuels Is a War against Ordinary People -Mises

"Among other steps designed to restrict domestic production of oil and natural gas, the president canceled completion of the Keystone XL pipeline, banned drilling for oil in the Arctic Wildlife Refuge, and greatly curtailed the issuance of leases for companies to develop fossil fuel resources underneath public lands and waters.

Since then, the prices of gasoline, oil, and natural gas have risen smartly...Bank of America is predicting that the price of a barrel of oil may rise to $120 this winter, inflicting additional hardships on the poorest Americans.

Globally, many countries are already in the midst of a full-blown energy crisis. There are critical shortages of fossil fuels at a time when energy from so-called renewable sources (more accurately, 'intermittent' energy sources) have fallen far short of expectations....

Surely, with so many people at home and around the world needing more energy so badly, the Biden administration would ease off its aggressive restrictions on fossil fuel production here in the United States, wouldn’t it? Alas, no. Instead, Team Biden has doubled down on its anti-energy policies....

Team Biden left the recent United Nations climate gathering in Glasgow pleased that a plan has been put into place for the world’s major banks to restrict investment in companies that produce fossil fuels....

The only action the president has taken to try to lower domestic gasoline prices has been to dip into our national Strategic Petroleum Reserve. That stockpile was created to be available in the case of a national emergency. A 'national emergency' would be something like war or weather or terror-related ruptures of vital fuel pipelines. The 'emergency' that the president has today is his own plummeting popularity polls.

President Biden’s insistence on squelching fossil fuel production before intermittent sources are sufficient to fill the gap is unconscionable. If the coming winter is harsh, the resulting hardships suffered by Americans and others around the world will be a humanitarian crisis that could have been avoided by a rational and compassionate energy policy."

RealMoneyBlog - Free daily/weekly email


12.28.21 - Taxing Economic Credibility

Gold last traded at $1,810 an ounce. Silver at $23.07 an ounce.

NEWS SUMMARY: Precious metal prices steadied Tuesday on rising oil and a flat dollar. U.S. stocks traded mixed as traders weighed the economic impact of Omicron.

Gold clings around $1,800 as holiday lull sets in -Reuters

"Gold prices hovered around the key $1,800-per-ounce level ahead of the year-end, even as the dollar steadied and appetite for riskier assets improved on easing fears over a fallout from the Omicron coronavirus variant....

'This is just noise on a low-volume day ahead of the holidays,' said Daniel Pavilonis, a senior market strategist at RJO Futures.

He added that next year was bound to be good for gold, especially with high inflation likely to persist....

'Gold faces technical resistance at $1,815 and $1,826, with geopolitical risks ahead potentially keeping gold supported, despite the tapering narrative,' said Nicholas Frappell, a global general manager at ABC Bullion."

credibility Taxing Economic Credibility -Project Syndicate

"Gone are the days when political leaders saw credibility as their most precious asset. From presidents and prime ministers on down, economic policymakers have crossed into territory beyond the familiar terrain of political hyperbole, becoming increasingly disconnected from voters’ own understanding of reality.

There are multiple explanations for this. First, today’s communication environment favors extreme statements over cold, dispassionate, fact-based analysis. In a polarized society, politicians have grown more interested in feeding their extremist base than in offering moderation or compromise.

Second, forecasts sometimes turn out badly. The claim that 'inflation is transitory' was not unreasonable at first; but it became more dubious with every passing month, partly because the public has a different understanding of the term than economists do. To the average voter, transitory means 'gone quickly,' a description that does not fit a problem that has not only persisted but worsened....

Third, political leaders hate to be the bearers of bad news, preferring to blame problems on their opponents or some political foil like the oil and gas industry. Every time gasoline prices spike, the left claims it is the result of a nefarious conspiracy of domestic producers....

The failure to see this reflects widespread economic illiteracy, which is the fourth reason for the current situation....Consider inflation. To economists, statistical agencies, central banks, and finance ministries, inflation means prices are rising. But to the general public, inflation implies that prices are uncomfortably high for one’s budget....

An example is the budget-scoring gimmickry used to hide the true costs of legislation like US President Joe Biden’s 'Build Back Better' (BBB) bill. To cram as many 'progressive' policies as possible into a ten-year $1.75 trillion budget window, many benefits supposedly would end after a short period....

All political leaders feel pressure to try to circumvent the laws of economics or even the laws of arithmetic - as Biden has done by claiming that his bill costs nothing. Whatever temporary advantage this tactic confers, the resulting erosion of credibility eventually comes back to haunt political leaders of all stripes."

The Last Hurrah -Rogue Economics

"This is the final Diary you will receive from us via Rogue Economics/Legacy Research. Yes, we’re moving on....

Let’s begin with a 'thank you.' Many dear readers have been suffering through our Reckonings and Diaries now for more than 20 years....

Many thanks to you, Dear Reader, for sticking with us… especially to those dear readers who have taken the time to write and tell us why they thought we were a fascist… a communist… or simply a moron. Heck, they may be right....

And now, in the home stretch of our career, we hope to make the relationship worthwhile for you....

As you get older, you may become more vulnerable to the coronavirus, but you become more resistant to claptrap. You remember the WIN buttons… the lime-colored leisure suits… and the Vietnam War....

We bring this up because we think we are approaching a period of Peak Delusion. A good dose of geezer cynicism may be the only way to survive it.

The 'new' dollar – without gold backing – was introduced more than 50 years ago. When it came out, the old-timers preached doom.

Now, we’re going to see that they were right. No pure paper money has ever survived a full credit cycle. Our guess is that this dollar will be gone, too, when interest rates reach their next top....

In 2000, our very simple 'Trade of the Decade' – sell stocks, buy gold – turned out to be the best trade of two decades.

At the end of the 1990s, gold was trading at $282 an ounce. The Dow was just over 11,000. Since then, gold has gone up about 6 times. The Dow is only up three times.

Investors who made our trade have coasted calmly through the three major crises of the 21st century… and are still way ahead."

What to expect from America's third year of COVID -Axios

"America's third year of dealing with the pandemic is likely to start as bleak as ever, with a devastating Omicron surge for the first couple of months.

Yes, but: Experts are hopeful that once the wave of cases, hospitalizations and deaths caused by the Omicron variant ebbs, life will finally be able to more closely resemble normal.

Between the lines: The silver lining of a tough January and February is that most of the country could have some degree of immunity afterward - either through vaccination, infection or both - that helps protect them against severe COVID infections in the future....

State of play: The new year 'will start with an almighty surge of Omicron. This will play out differently in various places, but it is hard to imagine anywhere will be spared,' emailed Bill Hanage, a professor of epidemiology at Harvard....

What they're saying: 'The best possible scenario is Omicron tears through the population, it causes a month or a month and a half of economic disruption and illness, and then we’re through it,' said Megan Ranney, an emergency physician and academic dean for Brown's School of Public Health....

The big picture: Experts say we're never going to be 100% done with the coronavirus. The hope is that it becomes more like background noise.

'We’re moving into the third year of something that feels frustratingly predictable and avoidable,' said Saskia Popescu, an Arizona-based epidemiologist.

'Everyone is in a very exhausted frame of mind where you have a lot of false dichotomies, a lot of us versus them - which doesn’t help anybody.'"

RealMoneyBlog - Free daily/weekly email


12.27.21 - 2022: Inflation Will Define Next Market Battleground

Gold last traded at $1,807 an ounce. Silver at $22.96 an ounce.

NEWS SUMMARY: Precious metal prices rose Monday on year-end bargain hunting and a weaker dollar. U.S. stocks rose despite a slide in airline shares following Covid cancellations.

Gold Price Holds $1800 for Christmas as US Inflation Confirmed at 4-Decade High -Bullion Vault

"Gold prices slipped into the long Christmas weekend in London on Thursday, trading $5 below last week's finish as the fast-spreading Omicron variant of Covid-19 failed to dent a rally in world stock markets and new US data confirmed inflation has accelerated to the fastest pace in 4 decades.

After yesterday's third-quarter GDP revision showed annualized economic growth of 2.3%, beating analyst forecasts, the Bureau of Economic Analysis said Thursday that the so-called 'core' PCE measure of domestic US prices rose 4.7% per year in November.

Matching the peak of February 1989, that was the fastest such rate of inflation in the world's largest economy since September 1983....

'European banks prepare for pullback in ECB stimulus,' says a headline from the Wall Street Journal, noting how covered bond issuance 'rose recently to highest monthly level since pandemic began.'

'The threat of inflation, which will underpin a potential rate increase, or less liquidity provided by the central banks,' reckons Gabriel Levy, global head of debt capital markets at French bank Natixis."

inflation Inflation Will Define the Next Market Battleground in 2022 -Institutional Investor

"Inflation is no longer transitory. With the monthly core inflation rate running above 4 percent for half a year, investors have come to believe that it will pose an acute challenge in 2022, despite the recent tapering announcement from the central bank....

The current inflationary environment is a result of two significant changes to the Fed’s policies, according to BCA. One is the Fed’s decision to shift away from premature tightening...The second is the Fed’s plan to target a flexible average inflation instead of a purely forward-looking inflation rate....

BCA predicts that the Fed will begin to raise rates in June 2022 at a pace of 25 basis points each quarter. But with tougher financial conditions...it might slow the pace of tightening.

'Financial conditions are incredibly easy at present,' the report said. 'But it is conceivable that risky assets will sell off on fears of Fed rate hikes, and a large enough sell-off would cause the Fed to pause.'....

A high inflation rate accompanied by the Fed’s tightening policy will likely result in more volatile investment portfolios and lead to a “tolerable” year instead of another “great” one like 2021, according to Erik Knutzen, multi-asset chief at the investment management firm Neuberger Berman....

The conclusion, Knutzen said, is that inflation is among a few key factors that 'will define the battlefield for markets in 2022,' regardless of the Fed’s pace of monetary tightening. 'Asset allocation is likely to be a tougher fight next year than it was this year,' he added."

Covid-19 Marches Toward Endemic Status in U.S. as Omicron Spreads -Wall Street Journal

"The Omicron variant’s aggressive advance is the latest twist in the course of a disease that public-health experts say is on a path toward becoming endemic in the U.S.

In other words, the Covid-19 pandemic won’t have an end date. Rather, a crisis that engulfed the world within months of the coronavirus’s discovery in China will dissipate in fits and starts into something that feels more like normal over the course of years, infectious-disease experts say.

'I don’t think there’s going to be a day where the whole thing feels over,' said Joshua Schiffer, an associate professor in the vaccine and infectious disease division at Fred Hutchinson Cancer Research Center....

Omicron shows how vulnerable society remains, even in countries with relatively high levels of population immunity. The variant accounted for 73% of new U.S. infections in the week through Dec. 18, Centers for Disease Control and Prevention estimates show, up from 13% the week before.

Hospitalizations and deaths were already rising in the U.S. before Omicron was identified, and officials have said they expect its rapid spread to further strain the healthcare system.

With a new wave rising, people and institutions are making decisions that reflect changing attitudes toward the threat that Covid-19 represents....

Meanwhile, people and businesses have had mixed reactions to Omicron. Some are scaling-back holiday plans, while others are forging ahead. After two years, many people are tired of the pandemic’s disruptions and precautions used to fight it....

Physical therapist Noah Greenspan opened a rehabilitation clinic in New York City on Monday for patients with lingering Covid-19 symptoms, or long Covid. He had provided online services and a smaller, temporary clinic since October 2020. 'We are planning as if Covid will never go away,' Dr. Greenspan said....

The CDC says a disease is endemic when it is continuously circulating in an area at a baseline level and in a predictable pattern. A lack of social disruption is another hallmark of an endemic disease, some public-health experts said.

The question then becomes: How much risk and how many Covid-19 deaths will people and governments tolerate?"

Books: George Will's Truly Wonderful 'American Happiness' -Real Clear Markets

"The first book I ever read on public policy was Compassion Versus Guilt. A collection of columns by the great Thomas Sowell...In many ways Sowell’s collection is a look back in time. Some writers are so prominent and popular that they still rate this kind of publication.

Washington Post columnist extraordinaire George Will is one of them. Thank goodness. His latest collection of essays, 'American Happiness and Discontents: The Unruly Torrent 2008-2020' is nothing short of spectacular.

Will doesn’t hide his disdain for some of the consequences of what he would undeniably view as progress. He laments that 'New technologies' have produced 'a blitzkrieg of words, written and spoken.' Worse, the words in Will’s mind are more and more 'shouted by overheated individuals who evidently believe that the lungs are the seat of wisdom.'

Will’s book is an antidote to the present level of discourse, and most fun for readers eager to learn well beyond policy is that so much of Will’s commentary springs from the voluminous books he consumes with great vigor. As he puts it, 'The more fuss is made about new media, the more I am convinced that books remain the primary transmitters of ideas.'

In short, this most excellent of books is in many ways about books, and will have the reader ordering all manner of new ones after reading commentary that springs from the reading of them by Will. American Happiness teaches a great deal, but also sets the stage for a great deal more learning....

In a Wall Street Journal interview about American Happiness, Will was asked about his favorite column within. It’s 'Jon Will at Forty,' which is about his oldest son who has Down syndrome. Will’s account of his son’s life, and how well-lived it has been is beyond uplifting. He hasn’t let the limits he was born with deter him from pursuing a great and happy existence."

RealMoneyBlog - Free daily/weekly email


12.23.21 - Silver will go ‘crazy’ in 2022

Gold last traded at $1,807 an ounce. Silver at $22.91 an ounce.

NEWS SUMMARY: Precious metal prices rose Thursday on safe-haven buying ahead of the Christmas holiday weekend. U.S. stocks extended gains as investors looked past recent jitters over the spread of the omicron Covid variant.

Silver will go 'crazy' in 2022, gold to break $2k again, speculation will end -Kitco

"2022 is the year speculative money recedes from the markets, said E.B. Tucker, director of Metalla Royalty.

'Everybody is a speculator, and so next year, I expect this speculation runs out of gas. There's no more stimulus check coming. There's more liquidity coming into the average person's pocket.'

'They got a raise this year, but everything they're buying is going up in price. Sales are slowing down. The refinance boom is slowing down,' Tucker told David Lin, anchor for Kitco News.

'Next year, you're going to see a rotation out of [stocks] and you're going to see a move into something real.'

Tucker predicts that next year, silver will 'go crazy' and gold prices will top $2,000 again as capital rotates into precious metals."

cancelled Christmas is Canceled -The Reformed Broker

“Okay this is probably not true everywhere but it’s definitely true in New York.

Omicron is the sequel nobody wanted. Stocks are already selling off because case counts exploded over the last seven days. I personally know more than fifty people who’ve tested positive this weekend.

Almost none of them know each other. All vaccinated. All breakthrough infections. Maybe the vaccines are keeping them from getting really sick, but they’re not stopping sh*t.

Scientists are saying J&J and AstraZeneca offer no protection whatsoever. The Chinese and Russians gave themselves their own vaccines. Neither of them work. Unfortunately these are the shots that most of the 'vaccinated' populations in Africa and Latin America got. India too....

Back to Long Island. My friend’s son had a Bar Mitzvah scheduled for Saturday night. His wife had to cancel it on Friday as all the 'We can’t make it' texts came in. They weren’t canceling because they’re afraid of getting sick. They’re canceling because they’re afraid of testing positive and getting put into quarantine....

Sporting events are being canceled, in some cases due to lack of non-quarantined players. Saturday Night Live went without an audience this weekend. The Christmas show. This is the big meme of the moment as lines for tests wrap around the block.

I share all of this anecdotal stuff with you as a reminder about the playbook. This is the playbook that got you through both the onset of the pandemic with as well as the delta explosion this past summer.

We only know two things at this point - we know for sure the headlines are going to get worse (way worse) into January. But we also know their ability to shock us will only diminish....

The shutdowns, cancellations, case counts, etc are going to be horrendous this coming January. But, at a certain point, stocks will react less to each piece of news. And eventually, it’ll be 'let me guess, more cases. Great.' and stocks will rise. You will not see this turn in sentiment coming. It always comes.

But not yet. The realization of Omicron’s immediate impact on the economy I’ve just described is only now beginning to wash over us all. The stock market can still be surprised. It’s early and it’s going to suck. Be prepared."

Buchanan: What To Do About That Russian Ultimatum-ZeroHedge

"'Get off our front porch. Get out of our front yard. And stay out of our backyard.'

This might stand as a crude summary of two draft security pacts Deputy Foreign Minister Sergei A. Ryabkov delivered last week as Russia’s price for resolving the crisis created by those 100,000 Russian troops on Ukraine’s borders.

Ryabkov’s demands appear to be a virtual ultimatum, designed to be rejected by the U.S. and NATO and provide Moscow with a pretext for an invasion and occupation of part or all of Ukraine....

Russia is calling for the creation of a security zone around its borders to include all of the former Soviet Union and beyond, where U.S. and NATO military bases would be prohibited....

Before dismissing these Russian demands outright, the U.S. should look closely to see if there are not some issues on which compromise is possible and common ground can be found so the Ukraine crisis might be defused....

The U.S. has already signaled, with President Joe Biden’s warning to Putin about 'severe … economic sanctions' should Russia invade, that we are ruling out war and confining any U.S. response to nonmilitary means....

A Russian-Ukrainian war, which Kyiv would almost surely lose, would prove a disaster for both nations.

The winner would be China. For such a war would leave Russia no place else to turn for an economic, political and strategic partner. And U.S. interests are not served by the cementing alliance between Beijing and Moscow."

'Twas the Night Before Christmas -Real Clear Markets

"’Twas the night before Christmas, now just hours away,
But Santa had problems with his magical sleigh.
His reindeer were hungry and not ready to fly,
Their feed was lost in the broken chain of supply.

Ships by the score were for weeks unable to reach
The east port of Savannah or the west in Long Beach.
When, at last, Santa found food for his hungry herd,
Their long wintry ride now could proceed undeterred.

And so, he set out on this cold Christmas eve night,
Determined to bring the world great joy and delight.
But as large snowflakes below him drifted and swirled,
He began pondering the weird state of the world.

He saw it firsthand o’er the long Texas border
Where the scene was one of chaotic disorder.
The lack of control seem’d such a sorry disgrace,
With thousands of refugees all over the place.

So much has changed during these last harried two years,
As Covid panic took hold on great waves of fear.
Governments had decreed ’cross states, cities and towns,
Strict new sets of rules and most distressing lockdowns.

By, in effect, putting so much commerce on ice,
These actions would exact a brutally high price.
But no mandated rules or strictures unbending,
Have done much to hasten the pandemic’s ending.

When Big Pharma brought out new vaccines at ‘warp speed,’
We hoped a jab or two would be all that we’d need.
But then came Delta and its breakthrough infections,
As the new caseload spike raised fears and dejection.”
(The rest of the story...)

*Swiss America will be closed Friday, December 24. We hope you and your families have a wonderful holiday.*

RealMoneyBlog - Free daily/weekly email


12.22.21 - 2022's Great Asset Price Reconciliation

Gold last traded at $1,799 an ounce. Silver at $22.75 an ounce.

NEWS SUMMARY: Precious metal prices rose Wednesday on safe-haven buying and a weaker dollar. U.S. stocks continued to rebound from a three-day losing streak spurred by fears about the omicron Covid variant.

A Gold Price Forecast for 2022 *2,500 USD Underway* -InvestingHaven

"Our 2022 gold price forecast comes at a very interesting time. At the time of writing the USD being one of the leading indicators for the price of gold has been dominating precious metals prices.

It did 'suppress' them throughout most of 2021, more than at any point in time in recent years. Lately, however, the USD has been rising together with precious metals....

A new bull market in gold and silver has started with the June 2019 breakout....Based on the long term charts which show gold's dominant patterns we expect this new bull market to continue for several years....

Based on the long term charts which show gold’s dominant patterns we expect this new bull market to continue for several years....

We strongly believe that our bullish gold forecast for 2021 is simply delayed with one year. It’s postponed to 2022. And this makes our 2022 gold forecast even more bullish than the one of 2021....

Our gold price forecast for 2022 is strongly bullish with a price of $2,500. We expect GOLD to peak somewhere in the 2nd half of 2022 provided it clears $2,015 in the first half of 2022."

sky falling The Great Reconciliation Of Asset Prices In 2022 -ZeroHedge

"The coming new year will be fraught with risk due to the removal of central bank and government supports. This could very likely lead to the collapse of the most overvalued stock market in history.

According to the Conference Board, US economic growth is set to slow from 5.5% annual growth for all of 2021, to 3.5% during 2022. Of course, Wall Street apologists almost never predict a recession until we are in the middle of one.

Nevertheless, it is clear that the growth of the economy will slow significantly next year. And, in the view of Pento Portfolio Strategies, the risk of a recession and an asset bubble collapse is high....

We recently learned from the Bureau of Labor Statistics (BLS) that Consumer Price Inflation (CPI) surged by 6.8%, and Producer Price Inflation (PPI) shot up by 9.6% y/y in November.

This helped to send Real Average Hourly Earnings down by 1.9 percent from November 2020 to 2021. CPI is running at a 40-year high and is at a rate that is 3.4 times higher than the Fed’s asinine 2% target.

Of course, the clueless Fed finally started reacting to all this inflation by announcing at the December FOMC meeting that it would be speeding up the pace of its taper by two times....

It will take (ten) 25 basis point rate hikes to reach a 2.5% Fed Funds Rate (FFR), which the FOMC now regards as a neutral overnight lending rate. Powell believes a neutral FFR would be 50 bps above the FOMC’s 2% inflation target - assuming inflation falls to that level.

In spite of these plans, the chances are very small that the Fed will end up being able to hike rates very much at all before the entire artificial economic construct comes crashing down....

Then, you must factor in the stubborn COVID Delta variant and the new and more contagious Omicron mutation, which Mr. Powell now views as potentially adding upward pressure on inflation.

This could cause the Fed to tighten its monetary policies even more quickly. The consumer will also be left with the complete lack of any fiscal support of any significance next year, after receiving $50k on average per American family over the previous two years.

The next recession, which is likely to occur in '22, will cause solvency concerns to spike as revenue collapses and the National Debt-to-Federal-income ratio soars....

That leaves the Fed and Treasury with a dangerous dilemma: allow asset prices and the economy to implode, which will certainly fix the inflation problem; but will most likely lead to a depression.

Or, try and pull the economy and assets higher by once again borrowing and printing multiple trillions of dollars, which will send the rate of inflation skyrocketing from its 40-year high."

US population growth at lowest rate in pandemic's 1st year -Associated Press/KWQC

"U.S. population growth dipped to its lowest rate since the nation’s founding during the first year of the pandemic as the coronavirus curtailed immigration, delayed pregnancies and killed hundreds of thousands of U.S. residents, according to figures released Tuesday.

The United States grew by only 0.1%, with only an additional 392,665 added to the U.S. population, from July 2020 to July 2021, according to population estimates released by the U.S. Census Bureau.

The U.S. has been experiencing slow population growth for years but the pandemic exacerbated that trend. This past year was the first time since 1937 that the nation's population grew by less than 1 million people.

'Population growth has been slowing for years because of lower birth rates and decreasing net international migration, all while mortality rates are rising due to the aging of the nation’s population,' said Kristie Wilder, a Census Bureau demographer.

For the first time, international migration surpassed natural increases that come from births outnumbering deaths. There was a net increase of nearly 245,000 residents from international migration but only around 148,000 from natural increase."

These are the 5 most valuable skills to learn in 2022, says futurist - and where to find free online courses -CNBC

"As a futurist and business strategist who’s trained thousands of executives to navigate booming markets, I’ve identified five skills that can make you an especially valuable professional in 2022 - and free online courses that teach them.

1. Problem-solving - In the future, it will pay to think critically and creatively about your work — and to add unique skills, experiences and connections to your professional toolkit....Recommended free course: Creative Thinking: Techniques and Tools for Success

2. Strategic planning - Futurists don’t predict the future. We identify trends in society or a market and consider the impact that these trends might have....Come up with a plan B, and protect yourself against uncertainty....Recommended Free Course: Strategic Planning Skills

3. Decision-making - We will all be called on to make fast and impactful choices in 2022. This is true even if we don’t have the same level of information or the time to plan as we did in the pre-Covid era....Coach yourself on how to exercise good judgement and trust your instincts, and you’ll stand out from those who are too nervous to be decisive. Recommended Free Course: Critical Thinking for Better Judgment and Decision Making

4. Listening - People who will achieve business success in 2022 and beyond will know how to draw on a wide range of talents, perspectives and skills. That requires the ability to really listen to other people and their opinions....Recommended Free Course: How to Listen

5. Logistics - Deadlines are getting tighter and job responsibilities are getting greater. In the next few years, you’ll be called upon to think like a project manager....Recommended Free Course: Introduction to Project Management"

RealMoneyBlog - Free daily/weekly email


12.21.21 - Gold: On Course to Break All-Time Highs?

Gold last traded at $1,788 an ounce. Silver at $22.52 an ounce.

NEWS SUMMARY: Precious metal prices traded mixed Tuesday amid a minor Wall Street relief rally and firmer dollar. U.S. stocks rebounded from three days of losses amid fears about the fast-spreading Covid omicron variant.

Are Gold Prices on Course to Break All-Time Highs Once Again? -International Banker

"Gold was one of the star performers throughout much of 2020. But with concerns over the impact of the coronavirus abating throughout much of 2021, bullish sentiment for the yellow metal had decisively cooled off by the third quarter.

But today, with yet another strain of COVID threatening to send much of the world into a restrictive state once more, will the safety that gold has historically offered during such times of crisis elevate its price again, perhaps even eclipsing last year’s record highs?

Gold remains among the world’s most recognized safe-haven assets during periods of market turmoil, and investor interest in the precious metal tends to soar when there is more uncertainty - and more potential volatility - surrounding traditional financial markets, such as equities and bonds, than is normally the case.

This was certainly apparent in 2020 as the coronavirus pandemic panicked global markets, particularly during the first quarter. By early August, the bullion’s price had reached an all-time high of $2,067 per ounce (/oz) and remained distinctly elevated above $1,850/oz throughout much of the remainder of the year....

Gold did climb above $1,850/oz in mid-November, however, with the surge in inflation in recent months prompting gold investors to turn to the bullion to hedge against rising prices.

'Looking ahead, we see risks of further strength in [the consumer price index] in early 2022, which could stoke even stronger demand for gold,' UBS noted on November 12...Similarly, commodity strategists at ANZ (Australia and New Zealand) Banking Group stated on November 16 that higher inflation expectations contributed to more gold bullishness."

grinch Get ready for a larger-than-expected interest rate spike in 2022 -TheHill

"As investors assess what is in store for 2022, they should not lose sight of what has transpired over the past two years.

What stands out is that the COVID-19 pandemic is different than any prior global shock in the last 50 years. When it struck in early 2020, the economy suffered its steepest decline on record as businesses and schools were shuttered.

But it also rebounded quickly as businesses reopened, and it has since recouped all of the output declines and most job losses. The economy has also experienced the steepest rise in inflation in three decades....

The vigorous policy response in turn provided cover for investors to add risk to their portfolios. Stock market returns since late March 2020 have exceeded any comparable period in U.S. history with the major indices doubling in value. And there has been no meaningful correction over that period.

Looking ahead, the investment landscape will likely prove trickier for several reasons. First, the COVID-19 pandemic is proving more difficult to eradicate than many had anticipated. Second, the Fed has signaled it will likely raise interest rates to curb inflation. Third, much of the good economic news has been priced into markets....

The looming issue is whether this gradual glide path of rate increases will be sufficient to bring inflation back to the Fed’s average annual target of 2 percent....

To a large extent, the gains this year reflected a strong rebound in corporate profits, with earnings for S&P 500 companies up by 40 percent. Going forward, however, investors should lower their return expectations as the economy and earnings normalize while interest rates rise.

How well the stock market performs will hinge to a large extent on how inflation fares. If it recedes as the Fed expects and interest rate increases are gradual, valuations are likely to remain high.

But should inflation prove to be persistent, and the Fed is compelled to accelerate the pace of rate hikes, the stock market would become vulnerable and the bull-run could end. For this reason, I believe caution is warranted."

Mandates, COVID spike bringing Wall Street back to square one -New York Post

"The Wall Street holiday party circuit is a usually great place to have some laughs and pick up a few scoops. Not this year. The scoops are fewer than usual, as are the laughs, because COVID was supposed to be over and as we know, it’s not.

No, the big story circulating among bankers and traders as they sip their party drink of choice is that we all should party like it’s 1999 because word from their bosses is that seriously protracted lockdowns could soon be coming.

The banks are actually moving back toward COVID square one: People working from home, many more Zoom meetings with clients and in general hiding from a virus that experience tells us can’t be escaped.

The Street isn’t ready to officially announce any of this, my sources say. And who knows, maybe the bank chiefs will soon grow a pair and learn to live with something that isn’t going away no matter how many times ­Anthony Fauci or ­Rochelle Walensky tell us to mask up on the treadmill.

But you know something is up when Jamie Dimon of JPMorgan and James Gorman of Morgan Stanley start doing 180s on their back-to-office mandates. Recall that along with Goldman Sachs’ David Solomon, they were the COVID tough guys: 'Get to work or else' were their marching orders just a few weeks ago.

Not so much anymore. 'Between now and Jan. 3, 2022,' Morgan Stanley is telling brokers in NYC 'to work remotely . . . limit business get-togethers' because of an uptick in COVID in the city and at the firm, an internal memo says....

You can’t totally blame the executives for their inconsistent approach to dealing with COVID; they take their orders from the clown show that aptly described how our government, both at the federal and state level, has dealt with the pandemic."

My Holiday Gift: Wisdom Lifted From the Greats- RealClearMarkets

"How can you invest better in 2022? Learn from the greats who preceded you. Here are some famous minds whose words can aid you in 2022 - and far beyond.

'Your ultimate success or failure depends on your ability to ignore the worries of the world long enough to allow your investments to succeed. It isn’t the head but the stomach that determines the fate of the stock-picker.' -Peter Lynch

How did Lynch turn the tiny Magellan Fund into a world-beating juggernaut? Partly by tuning out false fears that scared others from stocks....

'Be fearful when others are greedy, and greedy when others are fearful' -Warren Buffett

Modern history’s greatest investor knows markets pre-price headline worries....

'In the short run, the market is a voting machine but in the long run it is a weighing machine.' -Benjamin Graham

Popular sentiment can make stocks wildly wiggly briefly, but fundamentals prevail over any longer periods that truly matter.

'Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.' -Sir John Templeton

Sir John’s description of market cycles is still the best going."

RealMoneyBlog - Free daily/weekly email


12.20.21 - Gold Hits Fresh Monthly High, Eyes $1,815

Gold last traded at $1,794 an ounce. Silver at $22.28 an ounce.

NEWS SUMMARY: Precious metal prices steadied Monday on safe-haven buying and a weaker dollar. U.S. stocks traded sharply lower amid rising pandemic fears and year-end bullish exhaustion.

Gold hits fresh monthly high, eyeing $1,815 barrier amid risk-off -FX Street

"Gold built on its post-FOMC strong recovery from the $1,753 area, or over two-month low and continued gaining traction for the third successive day on Friday. The momentum extended through the early North American session and pushed spot prices to a fresh monthly high, around the $1,811 region in the last hour.

As investors looked past this week's hawkish central bank decisions, the prevalent cautious mood was seen as a key factor that benefited the safe-haven gold.

Worries about the economic risks emerging from the rapid spread of the Omicron coronavirus variant continued weighing on investors' sentiment. This was evident from a generally weaker trading sentiment around the equity markets.

The flight to safety triggered a fresh leg down in the US Treasury bond yields, which kept the US dollar bulls on the defensive and further underpinned the non-yielding yellow metal.

Apart from this, the momentum could also be attributed to some technical buying on a sustained move beyond the 200/100-day SMAs confluence and the $1,800 round figure. With the latest leg up, gold has rallied around $60 from the low touched on Wednesday."

the Fed It’s No Surprise That The Fed Is Rolling Over -Rogue Economics

"Birds do it. Bees do it. Even educated fleas do it.

Give them more money from the Federal Reserve… and interest rates below the rate of inflation… and everybody does it.

Borrows money, that is. And who does it best? The U.S. government… Borrower Numero Uno in the whole world.

It borrows so much - nearly $6 trillion added to its debt over the last two years - it could never do so honestly. It has to connive with the Federal Reserve to provide more cash and keep interest rates low.

But now, the central bank is in a tough spot. It encouraged people to take on debt. So if it raises rates… they will lose their investments, their businesses, even their homes.

Billionaire investor and hedge fund manager Ray Dalio sees the 'Inflate or Die' trap; MarketWatch reports: 'Ray Dalio warns Fed’s hands are tied and higher U.S. inflation is sticking around. Democracy, maybe not.'....

As expected, the Fed is rolling over. Instead of putting out the inflation fire, it will reduce the rate at which it adds tinder! And nobody, except the financial press, was fooled.

But who cares? Not investors. They’re bidding up stocks, sure that the Fed still has their backs.

And not the federales either. At the current inflation rate, the real value of federal debt is going down at about $1.4 trillion per year.

And the elite? They’re in power… and getting richer. What’s not to like?"

If We Don't Get Inflation Under Control, It Could Unleash Some Dramatic Consequences -Reason

"America needs to get its fiscal house in order.

Inflation has reached its highest level in decades. While we're not yet in a situation like we had in the 1970s - and we can hope that the Federal Reserve will regain control before it reaches that point - there are still plenty of reasons to be upset that inflation is getting so out of hand.

Inflation is commonly defined as a general increase in prices, leaving our money with less purchasing power. When the prices of goods and services increase faster than wages, workers essentially take a pay cut. Savers and those who receive interest payments also lose out. Once inflation hits the value of the money saved, its spending power wanes....

Not everyone loses when inflation suddenly appears, though. For example, debtors get to repay their loans in less-valuable dollars. This benefits no one more than the federal government, the world's biggest debtor....

Not surprisingly, history is full of kings and governments using inflation to reduce their debt burdens. Understandably, holders of debt bonds get nervous when highly indebted governments are slow to rein in inflation....

According to the Congressional Budget Office, in the next decade, the Department of the Treasury will have to pay somewhere in the neighborhood of $5.4 trillion in interest payments. A 1 percent increase in rates would add some $250 billion a year to that sum. This is money the federal government does not currently have and would have to borrow at higher rates.

In other words, inflation, in conjunction with the enormous government debt and short-term financing, could unleash dramatic consequences. This risk should provide important incentives to put America's fiscal house in order, including moving away from short-term financing. But so far, there's no sign of anyone willing to make the tough choice."

'The Tragi-comic Climate Doomsday Cult' -Master Resource

"I recently read a piece by Melanie Phillips that spoke volumes about the two-week snooze show hosted by the United Nations last month in Glasgow. 'The Tragi-comic Climate Doomsday Cult' begins:

'What would happen if a doomsday cult were to take over the world? Science fiction? No. It’s happened. How else to explain the collective lunacy of the COP26 meeting in Glasgow, an absolute farce where world leaders made complete fools of themselves?

'There’s been much criticism of the hypocrisy of the event, with hundreds of private jets flying into Glasgow to hector the world about reducing carbon emissions.

'Far, far worse has been the total erasure of rationality in the hysterical chorus that this was the 'last chance to save the planet' - and the fact that no-one in mainstream debate has challenged this as utter unscientific garbage....

'If anything embodies and signals the end of the age of reason it is this climate cult, in the grip of which the west has gone through Alice’s looking-glass into a surreal post-science, post-truth world.

'No wonder Russia and China didn’t even bother to turn up to COP26. Their contempt for the west must be bottomless as they look upon its accelerating economic and cultural green suicide - and rub their hands.'"

RealMoneyBlog - Free daily/weekly email


12.17.21 - Gold Benefits from Dollar Easing

Gold last traded at $1,802 an ounce. Silver at $22.51 an ounce.

NEWS SUMMARY: Precious metal prices extended gains Friday on safe-haven buying despite a firmer dollar. U.S. stocks extended losses as investors sold tech and bank stocks amid worries over tighter monetary policy and the ongoing pandemic.

Gold benefits from dollar easing after Fed meeting -CNBC

"Gold was boosted on Thursday by a fall in the U.S. dollar, after the Federal Reserve decided to end its pandemic-era bond purchases early next year....

The Fed on Wednesday paved the way for three interest rate hikes by the end of 2022 as the economy nears full employment and the U.S. central bank copes with a surge of inflation.

That weighed on the dollar, which is down around 0.2% against its rivals, making gold cheaper for holders of other currencies.

'The main factor today is the performance of the U.S. dollar,' said Ricardo Evangelista, senior analyst at ActivTrades.

With the Fed meeting out of the way, the real impact of the Omicron coronavirus variant on economic activity is the big question mark for gold, Evangelista added."

rates Inflation in the Housing Market -Wealth of Common Sense

"Shelter carries a one-third weighting of CPI according to the BLS....If you’ve been a homeowner for more than a few years, you’ve basically experienced deflation in your housing costs.

Housing prices are up, home equity is through the roof and mortgage rates have fallen...You could argue the homeowner has never had it better than they’ve had it this past cycle.

But what if you’re a renter? After a brief dip at the onset of the pandemic, rents are playing catch-up with housing prices in a hurry....

And what about first-time homebuyers?

Let me count the ways on how awful the past 18 months or so have been for those looking to purchase their first home:

Housing prices are screaming higher. There is no housing supply from a combination of pandemic demand, aging millennials and a lack of new housing starts following the housing bubble. Interest rates are on the floor so no one knows how or where to save for a down payment. So much cash is sloshing around the system that houses are being paid for in cash and well over asking price in many locations....

The pandemic has made inequality in the housing market even worse than it was before.

If you owned a home prior to 2020, you’ve made out like a bandit, with higher asset values and lower debt payments. If you’re in this situation, consider yourself lucky.

But if you’re in the rental market or trying to buy your first home, you’re experiencing a painful bout of inflation."

No Doubt Investors: Fear Stock Market Failure -Smead Capital Management

"Chairman Powell has communicated to consumers that the Federal Reserve will be 'retiring transitory.' To us, this is the largest mea culpa in the last 40 years of Federal Reserve policy....

As our Chief Investment Officer, Bill Smead (occasionally called dad) recently wrote, the inflation that we are seeing is a wolverine. There is no natural predator to kill it off. It’s not a cute, adorable puppy.

The only thing adorable in 10 years will be listening to the stories of investors that thought they wouldn’t have to deal with prior tough equity eras like the 1970s and 2000s. We refer to these as stock market failure. Many millennials that have just begun their investing journeys will have their 'head' in their 'hands' while they 'sit and cry.'....

Consumers and households across the developed world are fatigued by the first four waves of this pandemic. We believe this will only grow with the waves to come. We believe this translates to a spending of the excess savings and net worth that U.S. and developed economy households have....

The number one cause of death is life. We will all die, even Elon Musk. The world has come to grips with the reality of that because of this pandemic. As Musk said last week, the biggest risk to economic growth is not enough people being born. We would say not enough life. Life being lived.

In the face of COVID death, consumers are excited about life, private property ownership and getting out. This is acutely human in a finite life, but not what investors had been pricing in. We are 'no doubt' investors in the economic story ahead. Few stand among us. Inflation is real. Poor stock and bond returns can be real. We believe pools of wealth will be hurt and/or will die from this.

Fear stock market failure."

The Democrats’ agenda is on a collision course with reality -Washington Examiner

"Despite Democrats’ various attempts over the last four months to promote their $5 trillion tax and spending bill, they have barely managed to sell it to themselves, let alone the public.

They want people to believe it is the silver bullet to solving our country’s problems. But unfortunately for them, the public does not share their sense of optimism - and for good reason.

Recently, the Congressional Budget Office issued an analysis that warned the economic effects of two provisions that Democrats have long touted in their bill - taxpayer-funded family leave and child care - would raise costs for families and further disincentivize work.

Time and again, sadly, we have seen that the policies Democrats are promoting have failed to square with the reality that millions are witnessing.

For instance, President Joe Biden’s promise to freeze border wall construction projects turned out to be a clear sign of capitulation in the battle against illegal immigration, helping to jump-start a border crisis.

Likewise, Biden’s decision to terminate the Keystone XL pipeline and block new oil and gas leases on federal lands has left America facing an energy crisis and the highest gas prices in eight years with one arm tied behind our back and more reliant on foreign energy resources. Even the president’s nearly $2 trillion bailout bill from March of this year has been classified as a cause of inflation by the San Francisco Federal Reserve.

Recent polling shows that inflation is the No. 1 concern among voters, with 43% believing that the Democrats’ next tax and spending bill, which recently passed on a partisan vote in the U.S. House of Representatives, will only make inflation worse.

Yet, instead of recognizing how their policies contribute to the spike in prices families are facing, Democrats in Washington are choosing instead to use budget gimmicks and fake offsets to hide the true cost of their agenda....

An agenda that gives government more control over child care and paid leave decisions will drive more people into the arms of big government, which dictates the terms of those benefits and raises the cost for others. Those are the consequences of an agenda driven by partisan tactics and political timelines instead of the needs of working families. Democrats are on a collision course with reality. They should stop and turn the car around."

RealMoneyBlog - Free daily/weekly email


12.16.21 - Fed Signals 3 Rate Hikes in 2022

Gold last traded at $1,797 an ounce. Silver at $22.42 an ounce.

NEWS SUMMARY: Precious metal prices rose Thursday on safe-haven buying and a weaker dollar. U.S. stocks traded mixed as investors digested the Fed's signal that it would be aggressive on tapering and a forecast of three interest rate hikes in 2022.

Gold - Recovery Ahead -Seeking Alpha

"The gold market is nearing the end of a difficult and very challenging year. Most precious metal investors must have been severely disappointed....

Physical investors can easily sit through such a sideways shuffling. But leveraged traders had nothing to laugh about....

Despite the 15-month correction, gold has been able to easily hold above the uptrend channel, which goes back to December 2015. The steeper uptrend channel that began in the summer of 2018 is also still intact ....

In summary, the chances of a renewed recovery starting in the near future predominate on the daily chart. In the first step, such a bounce could run to around US$1,815.

Secondly, the bulls would then have to clear the downtrend-line, which would release further upward potential towards US$1,830 and US$1,870. The very best case scenario might see gold being able to rise to the psychological number of US$1,900 in the next two to four months....

Following the FOMC interest rate decision and the FOMC press conference, the start of a recovery would be extremely typical. Statistically, gold prices usually finish the last two weeks of the year with higher prices, because the trading volume in the western world is very low over the holidays.

Overall, the seasonal component turns 'very bullish' in a few days, supporting precious metal prices from mid-December onwards. Typically, January, in particular, is a very positive month for gold, but the favorable seasonal period lasts until the end of February."

inflation Inflation is out of control. It's time for the Fed to raise interest rates -CNN

"Inflation now tops the list of complaints among US consumers. Prices for everything, from necessities like food, energy and shelter, to luxury goods like autos and vacations, continue to climb. Amid this worsening challenge, Americans are looking for some relief....

Now, all eyes are on the Federal Reserve's next move. While achieving full employment and price stability are both part of the Fed's dual mandate, it should probably be more worried about these higher prices. Incoming labor market data suggest that the economy has achieved or will soon reach full employment, but inflation is still out of control.

The Fed must act now to help prevent faster inflation from scuttling the US economic expansion and eroding consumers' purchasing power. That means it should accelerate the pace of its quantitative easing taper, and raise interest rates a few times next year.

Higher inflation isn't entirely a byproduct of Fed policies. Pandemic-induced lockdowns overseas that cause manufacturing order backlogs - which raise costs for firms - are outside of the Fed's control. Moreover, the copious amounts of fiscal stimulus that the federal government injected into the US economy, and prospects for more stimulus ahead, also generate consumer price inflation.

However, the Fed has been responsible for low interest rates, which have contributed to rising financial asset and home prices, which can fuel demand for goods and services that spills over into consumer prices. For example, households might use the increased equity in their homes to fund purchases or home improvement projects.

So it makes sense that Fed policymakers might accelerate the pace at which they taper quantitative easing and build in room for several interest rate hikes in 2022. Those hikes might go a long way toward helping consumer price inflation to cool. Even two or three hikes would leave interest rates well below historic levels and continue to provide room for the economic expansion to continue."

Fed Doubles Taper, Signals Three 2022 Hikes in Inflation Pivot -Bloomberg

"Federal Reserve officials intensified their battle against the hottest inflation in a generation by shifting to an earlier end of their asset-buying program and signaling they favor raising interest rates in 2022 at a faster pace than economists were expecting.

Heralding one of the most hawkish policy pivots in years, the central bank said Wednesday it will double the pace at which it’s scaling back purchases of Treasuries and mortgage-backed securities to $30 billion a month, putting it on track to conclude the program in early 2022, rather than mid-year as initially planned.

The faster pullback puts Fed Chair Jerome Powell in position to raise rates earlier than previously expected to counter price pressures if necessary, even as the pandemic poses an ongoing challenge to the economic recovery. The Fed flagged concerns over the new omicron strain, saying that 'risks to the economic outlook remain, including from new variants of the virus.'

Projections published alongside the statement showed officials expect three quarter-point increases in the benchmark federal funds rate will be appropriate next year, according to the median estimate, after holding borrowing costs near zero since March 2020.

That marks a major shift from the last time forecasts were updated in September, when the committee was evenly split on the need for any rate increases at all in 2022. The new projections also showed policy makers see another three increases as appropriate in 2023 and two more in 2024, bringing the funds rate to 2.1% by the end of that year."

Silver On Sale: Silver-Gold Ratio Back Above 80-1 -Zero Hedge

"The silver-gold ratio has climbed back above 80-1. This has historically signaled silver on sale. That means it takes just over 80 ounces of silver to buy an ounce of gold.

To put that into perspective, the average in the modern era has been between 40:1 and 50:1. In simple terms, historically, silver is extremely underpriced compared to gold. At some point, you should expect that gap to close....

Geologists estimate that there are approximately 19 ounces of silver for every ounce of gold in the earth’s crust, with a ratio of approximately 11.2 ounces of silver to each ounce of gold that has ever been mined.

In 1792, the gold/silver price ratio was fixed by law in the United States at 15:1...With silver playing a smaller role as a monetary metal, the silver-gold ratio gradually spread....

Currently, most analysts believe the Fed is about to embark on a war against inflation and significantly tighten monetary policy. As a result, gold and silver have both seen significant selling pressure despite an extreme inflationary environment. The markets are already pricing in tightening and the silver-gold ratio is widening.

But the question is can the Fed successfully raise interest rates high enough to stop the inflation train? ....

The supply and demand dynamics also look good for silver. Investment demand has skyrocketed and supply is down. Industrial demand is rising. Mine output was hit hard by shutdowns due to the coronavirus pandemic, but silver production was already on the decline with mine output dropping four straight years.

Now may be the perfect time to take advantage of silver on sale."

RealMoneyBlog - Free daily/weekly email


12.15.21 - Will Dems Throw Powell Under the Bus?

Gold last traded at $1,765 an ounce. Silver at $21.57 an ounce.

NEWS SUMMARY: Precious metal prices traded steady Wednesday ahead of anticipated hawkish Fedspeak. U.S. stocks retreated as investors expect the Fed to take a very big step toward a rate hike in order to fight rising inflation.

If Property Prices Crash, Look to Gold -ETF Trends

"Consumer Price Inflation hit its highest levels since June of 1982 last month at 6.8%. Economists expect that inflation will continue to grow. 'We expect this to continue until early in 2022 where we expect pricing to reach at or near 7.3% before costs start their long descent back towards 2%,' said Joe Brusuelas, chief economist at RSM, in a note to clients....

The latest inflation news is bound to put the wind back in the yellow metal’s sails. In an interview with Kitco News, principal and mining strategist at Hallgarten & Co. Christopher Ecclestone said, 'The inflation beast has gotten out, and it’s going to take a lot of effort to get it back into its cage.'

Ecclestone emphasized, 'This will ultimately impact property markets. It’s going to impact companies that are highly leveraged. We are already seeing big property crashes in China that are linked to overextended property developers.'

Ecclestone went on to note that when property prices crash, investors will be looking for another inflation hedge, and this could be good news for gold bugs. 'Traditionally, gold has been a hedge against inflation. There is a mistaken view that higher interest rates would impact the price of gold because supposedly people are borrowing money to buy gold which is totally a bogus construct,' Ecclestone said.

'Most people are using gold as a savings method.' He went on to express his belief that gold could reach $2000 an ounce shortly, and then steadily climb to $3000 over the next four years. Ecclestone also thinks that silver can hit $30 next year.

Gold bears have had an easy go of it throughout the year, but the persistence of inflation means that the bulls are about to dominate. Investors can act quickly to get in on gold while the price is still deflated, and there are a number of viable approaches."

laws Civil asset forfeiture laws hurt people like me -Washington Examiner

"How is it that someone not even accused, let alone convicted, of a crime can lose their property to the government? It happened to me, and it happens to countless innocent people every year through civil asset forfeiture laws. It’s time we do something about it.

On a March night in 2015 in Springfield, Massachusetts, I found myself surrounded by five uniformed police officers. One of them demanded the keys to my car, and he told me that they would be taking the car whether I gave them the keys or not.

Why? They suspected that my son, Trevice, had used the car in a crime. But I had no knowledge of this. Police never showed me a warrant, and they told me not to get involved or I could face criminal charges myself. They just took my property away from me.

And then they held that property for six long years. In the years that followed my car’s seizure, Trevice was killed, leaving two beautiful and accomplished daughters without their father. I had almost nothing by which to remember my son - and nothing to leave to his children. I assumed I would never see my car again.

After my car spent several years in the government’s possession, the district attorney finally filed a complaint seeking to forfeit the car for good in early 2020. I did not know what the legal jargon meant, but I knew that I needed help. The legal papers initially only gave me a couple of weeks to respond, and as I got closer to the deadline, I became more desperate and frantic. It was a confusing and terrifying process.

It turns out I’m not the only one who has experienced this injustice. Under civil asset forfeiture, the government can take away the money, cars, and even homes of people who haven’t done anything to violate the law.

It’s shockingly common, too: According to the Institute for Justice, 'states and the federal government have forfeited a combined total of at least $68.8 billion' every year since the year 2000. I was one of the people targeted by this broken and unfair system. But I was one of the lucky ones....

Fortunately, I was finally able to get my car back after attorneys at the Goldwater Institute stepped in on my behalf. No innocent person should need a lawyer in order to ensure that their property rights are respected.

Yet a majority of states have these laws that let the government take and profit from a person’s property, even when that person hasn’t been accused of any criminal activity. Even though asset forfeiture laws were designed to target drug lords and the like, it’s now innocent people like me who frequently bear the brunt of these laws....

Today, my oldest granddaughter now has the car the government had taken from me, and I am grateful that she has a positive legacy from her father, my son. While my grandchildren got to see an injustice corrected, too many others don’t get to see justice done. That’s why the time has come to reform our civil asset forfeiture laws and protect the rights of innocent Americans."

Inflation Surges Near to a 40-Year High. Wages Aren't Keeping Up. -Mises

"According to the Consumer Price Index (CPI) for November, year-over-year price inflation rose to 6.8 percent. It hasn't been that high since June 1982, when the growth rate was at 7.2 percent....

It's unclear to what degree inflation might already be entrenched, but year-over-year growth in the CPI has been over 5 percent for the past six months - and on a clear upward trajectory.

At the same time, inflation is taking a bite out of workers' purchasing power. November's numbers on average hourly earnings suggest that inflation is erasing the gains made in workers' earnings. During November 2021, average hourly earnings increased 4.8 percent year over year. But with inflation at 6.9 percent, earnings clearly aren't keeping up:

Looking at this gap, we find that real earnings growth has been negative for the past eight months, coming in at –2.1 percent year-over-year growth for November 2021. November was the eighth month in a row for negative growth in earnings.

Moreover, according to the Conference Board, US salaries are growing at a rate of approximately 3 percent this year.

Combined with November's unemployment rate of 4.2 percent, November's inflation growth puts the US misery index at 10.82. That's the highest level since June of this year, and similar to the misery index levels experienced when the unemployment rate surged in the wake of the 2008 financial crisis....

In many ways, the current situation with the Fed is just a continuation of what we saw during the Yellen and Bernanke years...Today, there's apparently still little enthusiasm for any sudden moves, lest Wall Street get spooked. The Fed may talk like it's concerned about consumer inflation, but it's shown it's much more committed to keeping asset prices high, and that precludes any significant effort at reining in inflation."

How long until Democrats throw Jerome Powell under the bus? -TheHill

"How long will it be until Democrats decide to throw Jerome Powell under the bus?

After all, why should President Biden’s big-spending agenda absorb the stink-bomb of inflation when the Federal Reserve chair is also clearly to blame for soaring prices?....

This is dangerous for Democrats. Voters not only consider inflation our number one concern today; they also blame Biden. A scapegoat would come in handy.

Famed money manager Mohammed El-Erian wrote in August that the Fed’s ultra-loose monetary policy was 'increasingly putting at risk not just the recovery but also President Biden’s transformational economic agenda.' He’s right; it’s amazing that more Biden apologists have not jumped on that bandwagon.

Here’s why: It is inconceivable that Powell did not foresee the mounting pressures that are boosting prices. A fast-tightening labor market, excess demand resulting from federal government payments that the country did not need, rising oil prices and – yes – supply chain problems that created head-spinning price anomalies early on should have derailed the Fed’s bond-buying program months ago; all these pressures were like a tea kettle sounding its whistle just before it bursts....

Biden re-nominated Powell for another term as chairman of the Federal Reserve Board on Nov. 22. Just eight days later, the central bank’s chief markedly changed his tone and signaled an acceleration of the Fed’s tapering program.

Coincidence? Skeptics might conclude that Powell held off combating inflation in order to win another four years in the prestigious post."

RealMoneyBlog - Free daily/weekly email


12.14.21 - Gold Steadies Ahead of Fed Statement

Gold last traded at $1,771 an ounce. Silver at $21.92 an ounce.

NEWS SUMMARY: Precious metal prices slipped Tuesday ahead of Wednesday's Fed statement. U.S. stocks retreated for a second day as new inflation data continued to show a record rise in wholesale prices.

Gold steadies as investors prepare for Fed taper timeline -CNBC

"Gold steadied in a narrow range on Monday as the market focus pivoted to this week’s Federal Reserve meeting to learn how quickly it plans to unwind economic support measures introduced in response to the coronavirus pandemic....

'Until we get an idea of how much the Fed accelerates tapering and whether or not they are particularly hawkish in their statement, gold will be under pressure,' said Michael Hewson, chief market analyst at CMC Markets UK.

Gold is considered an inflation hedge, reduced stimulus and interest rate increases tend to push government bond yields up, raising the opportunity cost of bullion.

But with the market pricing in the Fed moving forward into a rate rise cycle, it is sufficient for gold to be counted as a defensive asset right now, said Stephen Innes, managing partner at SPI Asset Management."

metaverse If Only We Could Live in the Metaverse -Rogue Economics

"A storm passed over Ireland yesterday. The power went off. Trees blew down. The roof of an old shed flew off.

Oh… if we could only live in the Metaverse… where the only things that happen are things we want to happen. If only we knew where to find it!

Here on Planet Earth, life goes on. And with so many hours… so many resources… so much brain power and capital applied to the fantasy world, it is not surprising that the real world feels a little neglected....

In the fantasy world, assets get more and more valuable… even though they don’t produce any more wealth…houses go up so much that you can 'take out' some of the value, without giving up floorspace…

'Crypto' currencies… meme stocks… NFTs… and money-losing companies can make you rich - even without sales, profits, goods or services, employees, skills, or tax bills. What in the real world can compete with that?

An educated guess: from a flood of liquidity from the Federal Reserve, that buoyed up everything not firmly attached to the real world. For the last 10 years, scarcely anyone’s toes have been able to touch the bottom....

Meanwhile, the most important credit in the world, the U.S. 10-year bond, is trading at a nominal yield of 1.4%. But subtract the going inflation rate - 6.2% - and you see that the real yield is MINUS 4.8%.

And now, after lending money for years at yields below inflation, is it any wonder that people retreat to fantasyland?

It is a place where time has stopped… and the future holds no risk. You will not age. No storms will blow up. No one will be shot or die of the omicron variant.

Yes, it is a fantasy world. A make-believe world. A world that exists… but only as a fleeting aberration....And bitcoin… the coin of the new fantasy realm… lost a quarter of its peak value in the last month.

How long before the fantasists need to come up for air?"

These Are The Things Real People Are Spending Millions Of Real Dollars On, In The Metaverse -ZeroHedge

"While billions are joking about Facebook's 'metaverse' plans, real people are spending millions (and soon billions) in real cash to buy imaginary objects. As BofA's Alkesh Shah writes, metaverse land (and yacht) purchases are accelerating as blockchain-enabled applications and new frontiers continue to develop.

Here are some examples of what people are spending all too real money on:

Metaverse Group, a subsidiary of Tokens.com, purchased a 116-parcel estate in Decentraland’s Fashion Street district for ~$2.4 million (618k MANA) on Nov 23. If you’re wondering where Decentraland is on the map, it’s not.The 6,090 square feet of digital land purchased exists solely in the metaverse....

Republic Realm, a digital real estate firm, purchased 259 parcels of land in Decentraland’s Metajuku district for ~$914k (1.3mn MANA) on Jun 18. The firm plans to transform its 16,000 square feet of digital land into a virtual shopping district where users can purchase digital wearables.

Retail stores are leased and operated by third parties with current occupancy at 40%. If the idea of digital clothing sounds a bit farfetched, Balenciaga, Burberry,Dolce & Gabbana, Givenchy, Gucci and Louis Vuitton, among others, have already released digital collections.

Axie Infinity, a play-to-earn gaming platform, announced on Nov 24 that it had sold a 'Genesis' plot of digital land – one of 220 – for ~$2.3 million....

Needless to say, such 'meta' investments are extremely risky. Unlike actual real estate, which tends to retain some value even during a market downturn, the value of virtual properties could fall to zero if the world they are in goes out of fashion and people stop visiting it....

BofA's take: 'the metaverse consists of persistent virtual reality platforms, powered by blockchain technology, which allow users to interact through augmented reality (AR) headsets'...To be clear, 'the metaverse has already arrived with ~$392 million spent this year on metaverse-related digital assets.'"

Government 'Regulation' of 'Stablecoin' Is a Multi-Sided Misnomer -Forbes

"Here’s how a 'stablecoin' is defined: 'any cryptocurrency designed to have a relatively stable price, typically through being pegged to a commodity or currency or having its supply regulated by an algorithm.'

All of which explains why 'stablecoin' is put in quotes. A crypto currency made 'stable' by its peg to paper currencies is not stable. Almost by definition. Think about it.

From 1971 to 1973 the dollar’s definition as 1/35th of a gold ounce was severed. This is important because global non-dollar currencies were generally pegged to the dollar. Their value was consistent based on their peg to a dollar defined in terms of a gold ounce...With the dollar defined in terms of a commodity known for remarkable stability, there was little currency or commodity volatility to speak of.

Since 1973, and with the dollar no longer having a commodity definition, currency trading has soared. As a consequence, currency trading is staggering in its scope. There’s roughly $7 trillion worth on a daily basis.

The above number tells you all you need to know about 'stablecoin' or 'coins.' There’s no such thing. Private currencies pegged to paper currencies like the dollar, euro et al are pegged to paper forms of money that bounce around with some regularity.

See the $7 trillion trading number yet again. If paper currencies were actually stable as measures of value, the trading would be non-existent. In short, a 'stablecoin' defined as such because it has a paper currency peg is a rather humongous contradiction.

The same applies to private or 'crypto' money that has a strict supply limit. Almost by definition this kind of currency won’t be stable...Much as a foot is useful as a measure because it’s always 12 inches, the only true 'money' is that which holds its value throughout time....

Historically gold defined money not based on randomness, but because the yellow metal’s price has always been incredibly stable thanks to a stock/flow disparity that’s enormous. Gold is the constant. Stablecoins defined in terms of gold would logically be stable; that is, unless these coins are pegged to the dollar, euro, yen (or name your currency) price of gold. This is an important distinction.

In 2001 a dollar purchased 1/260th of an ounce of gold, but as of this writing a dollar purchases 1/1800th of an ounce. The previous number is yet another reminder of how volatile the dollar is, but also how worthless it would be to peg a currency to the dollar price of gold. There’s no stability to speak of. Truly stable 'stablecoins' would have their value measured directly vis-à-vis gold."

RealMoneyBlog - Free daily/weekly email


12.13.21 - Gold Rises on Record High Inflation

Gold last traded at $1,787 an ounce. Silver at $22.32 an ounce.

NEWS SUMMARY: Precious metal prices advanced Monday on safe-haven buying despite a firmer dollar. U.S. stocks retreated as investors remained cautious over how the pandemic will impact the economy and what the Fed will announce Wednesday.

Gold prices end higher as U.S. inflation rate climbs to a nearly 4 decade high -Marketwatch

"Gold prices turned higher on Friday after the U.S. government reported that the rate of consumer inflation hit the the highest level in nearly 40 years.

Prices for the precious metal had been stuck in range bound trading, “supported by inflation and omicron concerns as well as persistently, historically-low real rates,” but prices were capped by a strong U.S. dollar and concerns the Federal Reserve may more aggressively tighten monetary policy, said Jeff Klearman, portfolio manager at GraniteShares

'The current low level of real rates reflects a great deal of uncertainty regarding the course of future Fed monetary policy and until they increase and maintain higher levels they will continue to support gold prices.'

Data on Friday revealed that the U.S. cost of living climbed in November and drove the rate of inflation to a nearly 40-year of 6.8%. The consumer price index increased 0.8% last month, more than the 0.7% advance expected by economists polled by The Wall Street Journal.

The 'much higher-than-expected CPI release not only increases inflation concerns but also adds to concerns the Fed may have fallen behind in its fight against inflation,' said Klearman. 'A too aggressive Fed, acting to combat inflation, may also detrimentally affect economic growth leading to falling stock (and other asset) prices, providing support to gold prices.'"

punch The Way Out -Imprimis

"Here are two questions pertinent to our times: (1) How would you reduce the greatest free republic in history to despotism in a short time? and (2) How would you stop that from happening? The answer to the first question has been provided in these last two disastrous years. The answer to the second has begun to emerge in recent months. Both are worthy of study.

To establish despotism in a nation like ours, you might begin, if you were smart, by building a bureaucracy of great complexity that commands a large percentage of the resources of the nation....

This much has been done. It would require a doctoral thesis to list all the ways that rules are made in our federal government today, which would make for boring reading...But how many know how the Centers for Disease Control (CDC) came to be, under what authority it operates, and who is its head? Here is a clue: it is not Anthony Fauci.

Admittedly, this new kind of bureaucratic government would take - has taken - decades to erect, especially in the face of the resistance of the Constitution of the United States, which its very existence violates. But once it has been erected, things can happen very fast.

What, for example, if a new virus proliferates around the world? There have been procedures for dealing with such viruses for a long time. They begin with isolating the sick and protecting the vulnerable. But suddenly we have new procedures that attempt to isolate everybody....

To set up a despotism capable of pulling this off you would need the media’s help. Those controlling the media today are trained in the same universities that invented the bureaucratic state, the same universities the senior bureaucrats attended....

The media would need to be willing to suppress, for example, the fact that 50,000 doctors, scientists, and medical researchers signed the Great Barrington Declaration. That document reminds people that you cannot suppress a widely disseminated contagious virus through shutdowns and mass isolation, and that if you try, you will work immeasurable destruction of new kinds - unemployment, bankruptcy, depression, suicide, multiplying public debt, broken supply chains, and increases of other serious health problems....

How to Defeat a Rising Despot: One of our local restaurants is a 30-year-old diner called Spanglers Family Restaurant. Mitch Spangler is the proprietor. The business was founded by his late father, and Mitch was purchasing the business from his mother...When a second lockdown was ordered by Michigan’s governor a year ago last month, he kept his restaurant open.

He put a sign on the door and posted on Facebook to make clear, among other things, that he was acting out of necessity for the sake of his business and the livelihoods of all 20 employees dependent on it; that precautions would be taken....

Mitch Spangler is our kind of fellow, and the College gave him some help organizing his legal representation. We did not wish to be in the newspaper about this because we were facing our own pressures, and we too were determined to resist them. But Spangler was no good at keeping a secret: he wore a Hillsdale College t-shirt on FOX News and thanked us for our help....

The story about Mitch Spangler is about our right to work and to store up the product of our labor so that we and our families can eat and thrive...To interfere with these rights is to interfere with the nature of the human being.

In addition to the right to make a living and the right to raise our children, we have the right to participate in our government, even if we are not experts, and the right to look to the heavens and not to our ruling class for guidance. We have these rights because we - every single one of us - were born with them sewn by God into our nature, and we cannot find our earthly fulfillment without them.

If we put these facts together as a people, we will have recovered the understanding that produced the American Revolution. We will stop these current predations upon our rights. We will bring this overwhelming government back where it belongs, under the control of the people. The signs of such a movement are emerging."

Massive U.S. Debts Could 'Trap' Powell as Fed Fights Inflation -Bloomberg/Yahoo Finance

"The U.S. went on a borrowing binge last year and the hangover could make it harder for the Federal Reserve to fight inflation without crashing the economy.

Corporate debt has surged $1.3 trillion since the start of 2020 as borrowers took advantage of emergency Fed action as the pandemic spread, slashing interest rates and backstopping financial markets to keep credit flowing. More debt held by more companies suggests potential risks as borrowing costs rise from currently low levels.

That could create financial stability concerns for Fed Chair Jerome Powell and his colleagues as they debate removing pandemic support in the face of what a report Friday showed were the hottest price rises in almost 40 years. And a tough task: Not since Alan Greenspan’s time has the U.S. central bank tried to navigate the economy back to price stability from too-high inflation.

Powell’s challenge is to try to curb price pressures without large costs to employment or growth, a move that would likely anger both political parties and blotch his record with the first Fed-assisted hard landing since the 1990-1991 downturn.

'They are in a difficult position,' said Jeremy Stein, professor of economics at Harvard University and a Fed governor from 2012 to 2014. If inflation is more persistent 'and they really have to hike rates significantly, you can imagine what happens to asset valuations: There’s just a tremendous amount of interest-rate sensitivity in markets.'....

If higher rates and wider corporate borrowing spreads throttle access to credit, it could push more firms into bankruptcy.

'There are negative aspects when you encourage people to borrow, but then later feel that you can’t raise rates because so many people borrowed,' said Howard Marks, co-founder of Oaktree Capital Group. “That’s something of a trap.”

The next recession: Here’s when the 'everything bubble' will burst -Fortune

"In October 20XX. That’s not a typo. To reach the best guesstimate of when the next recession will begin, we need to understand how the Federal Reserve creates unsustainable booms and why the next bust may be just around the corner....

The Fed’s inflationary policies have increased my two cents fivefold. Maybe the next cryptocurrency is on the horizon: My 10 Cents.

If a dog can have a crypto, why can’t a retired finance professor who warned the public that prices were about to accelerate due to the Fed’s inflationary policies in the spring of 1976 have one?

Consumer prices rose 5.7% in 1976, 6.5% in 1977, 7.6% in 1978, 11.3% in 1979 and 13.5% in 1980. Talk about being right on the money!....

One of the best leading indicators of a cyclical downturn is the unemployment rate, which reached a cyclical bottom in May 1979 (5.6%) several months before the 1980 recession and didn’t peak until November 1982 (10.8%). The unemployment rate declined until the next upturn in layoffs began to accelerate in 1990.

Currently, the unemployment rate has been declining from the lockdown peak of early 2020 and has reached levels that historically have signaled the beginning of the end of a cyclical boom. Lockdowns have undoubtedly distorted the unemployment rate, but the historical pattern reveals that when the unemployment rate nears three percent and then turns up, a recession will soon begin....

My fearless forecast, therefore, is: Inflation accelerates in 2022. Then, the public outcry over skyrocketing prices and the media reports highlighting how prices are decimating the average family’s purchasing power may cause the Biden administration to impose wage-price controls as President Nixon did in 1971 to take the sting out of inflation before his 1972 reelection campaign. Biden could use an executive order if Congress doesn’t give him statutory authority to impose price controls.

Without price controls, I expect the Fed to raise the Fed Funds Rate, sometime in 2022 and to continue tightening in 2023. Thus, the next recession could begin in the fall of 2023, but no later than a year later. If the recession does not begin on schedule, it only means it has been postponed, not eliminated."

RealMoneyBlog - Free daily/weekly email


12.10.21 - Crypto: ‘Top Contender’ for Correction

Gold last traded at $1,784 an ounce. Silver at $22.18 an ounce.

NEWS SUMMARY: Precious metal prices gained Friday on rising inflation and a falling dollar. U.S. stocks rose, extending Wall Street’s strong rally this week - despite inflation hitting a 39-year high.

Silver Chartbook - Silver, Time To Act -Seeking Alpha

"Gold’s response to Covid was a 37% up move, while silver moved up 80%. This volatility leverage works both ways, increasing the risk for silver if not purchased on low-risk entry points and traded with appropriate money management.

We have pointed out various reasons why we find silver an extremely attractive play long term in this year’s chartbook releases....

We expect a price advance on silver within the next six to eight quarters to a price target of US$74.40! Significant profits allow for an outstanding risk/reward ratio....

We encourage participation since we see procrastination towards a wealth preservation strategy as the poorest choice in this challenging time for your hard-earned money."

market bulls Tesla, bitcoin, growth stocks? When will the next market bubble pop -CNBC

"When a stock or sector of the market is trading way above its intrinsic value, investors may call it a 'bubble.'

'We would urge caution, severe caution. Be very afraid of the valuations of these growth companies,' Peter Chiappinelli, portfolio strategist at GMO Asset Allocation, told CNBC.

Market bubbles are investing phenomena that can occur when valuations are driven by exuberant behavior - and they can burn investors.

The last 12 months have seen several bubbles burst. Take meme stocks such as GameStop and AMC, as well as dogecoin. And there may still be looming bubbles yet to pop....

Some investors believe Tesla and bitcoin are also bubbles soon to burst.

'Tesla [added] almost [$]200 billion in market cap in a week’s span ... when you see that type of euphoria, in particular names, those could be potential examples of bubbles soon to burst,' Jason Snipe, founder and chief investment officer of Odyssey Capital Advisors, told CNBC."

Crypto Is ‘Top Contender’ for Correction, Money Managers Say -Yahoo Finance

"By many counts, 2021 was the year cryptocurrencies were finally embraced by institutions. Now those same money-managers say the asset class is ripe for a big selloff next year.

Digital assets are the 'top contender' for a 'major correction' in 2022, with nearly three-quarters of institutions polled saying they’re not an appropriate investment for most retail investors, according to a survey done for Natixis Investment Managers....

This year saw a number of big fund managers and pensions start to dabble in crypto, while numerous big-name investors famed for their financial markets acumen have also gotten involved....

Dire predictions for its demise have been a constant for Bitcoin, the largest and original cryptocurrency, since its debut a little more than a decade ago...Since breaking into the mainstream consciousness, Bitcoin has jumped more than 5,000% over the past five years. Bitcoin slumped as much as 3.7% to $48,685 on Wednesday."

Overcoming The Covid-19 Blues -Medium

"I am one of an estimated 25 million suffers of so-called 'long Covid'.

There are two types of long Covid; the first includes symptoms such as; serious lung fibrosis as well as major organ and tissue damage. The second is more subtle, including symptoms such as; sustained fatigue, brain fog and post-exertional malaise.

Health care professionals at a recent Harvard-sponsored forum are now warning that long-Covid represents the next major health crisis we will be facing long after the pandemic ends. Bottom line: It appears that we will all be living with the impact of Covid for a very long time.

As we now move into the third year of this life-changing global pandemic, I offer this humble song to help put the Covid-19 crisis into perspective."

Are you one of the few not facing the Covid blues?
Well bravo! How very good for you.
May we all somehow overcome the Covid blues!

It started in China, Wuhan was the city,
And circled the globe, oh what a pity.
It came to America, oh so quickly,
Making the citizens remarkably sickly.

The pharmaceuticals jumped to the cause!
And worked on a solution without a pause.
Vaccinations were said to be to "the cure",
But a whole lot of folks were not so sure!

My, how our world has so quickly changed,
Yes, our lives have been completely rearranged.
Since Covid first crossed Dr. Fauci's lips.
And the government began offering us tips.

From masks, to zoom meetings, to lockdowns,
2020 brought lots of demands from the top-down.
American's began to ponder our new touchless era,
Asking: "Is Covid real, or a government chimera?"

Yes, this pandemic has further divided our nation,
The new social taboo; "Did you get your vaccinations?"
Then came the 2021 economic fallout; rising inflation,
Despite five trillion in stimulus, there's still no salvation.

As 2022 dawns and the new strains now threaten,
With a death toll of 5 million, fear has begun to set-in.

It's time to reflect on what's most important in life,
Is this the year for more thought about the afterlife?”

RealMoneyBlog - Free daily/weekly email


12.9.21 - Will Gold or US Dollar Hit Highs in 2022?

Gold last traded at $1,775 an ounce. Silver at $21.98 an ounce.

NEWS SUMMARY: Precious metal prices remained stable Thursday despite a firmer dollar. U.S. stocks dipped as traders took a pause awaiting fresh economic data on Friday.

Will it be gold or U.S. dollar at new record highs in 2022? 'I'm bullish on gold,' says NDR strategist -Kitco

"Gold and the U.S. dollar are well known for their inverse correlation. But will 2022 be the year of gold or the U.S. dollar? Ned Davis Research's (NDR) chief global investment strategist Tim Hayes weighs in.

With the Federal Reserve looking at a more aggressive tapering schedule next year and potentially two rate hikes, the U.S. dollar index has been holding up quite well at the 96 level, which has been weighing on gold.

But will the inflation narrative change the outlook for gold next year?

'The dollar made a high right after the COVID-19 crisis in March. And on the question of which one is more likely to make a new high - gold or the dollar - I'd say gold. I'm currently neutral on the dollar, which sort of implies that it stays in its trading range. But I'm bullish on gold,' Hayes told Kitco News.

Contrary to the U.S. dollar, gold has a solid setup going into next year and could reach new all-time highs after consolidating since its August 2020 record highs, Hayes noted. 'Gold is likely to hit new record highs as long as this environment remains. And that implies that this is about as good as it gets for the U.S. dollar,' he said."

metaverse The Metaverse Will Change the Way We Live, Think and Work -RealClearMarkets

"The metaverse and how it will usher in - like the first iteration of the internet - a new era and change the way the way we learn, interact, collaborate, and run our businesses.

This is the year 1995 (the year the internet was launched) all over again, but much much bigger. The metaverse is only in the first stage, but it is here.

Now, its participants are wearing goggles and glasses to enter a new 3D world, but the day will come in the not-too-distant future when there will not be virtual headsets or augmented reality glasses, but chips implanted in humans that allow them to connect in real-time by simply thinking the name or business or organization or friend with whom they want to interact.

Just what is the metaverse? Let’s start with Fortnite as an example. Fortnite is an MMORPG (Massively Multiplayer Online Role Playing Game) in which 100 players fight it out until the last man standing in a fast-paced, action packed 3D environment which was developed by Epic Games.

It was recently valued at $17 billion. In 2020, 15,000,000 gamers experienced Fortnite’s Galactus event. According to Charlieintel.com, Epic has nearly 400 million registered users. The demand for 3D virtual reality games is off the charts and growing....

While the internet was built on code, today’s metaverse is built on engines that build 3D universes. Discover Unity, a game engine that can create 3D, VR, and AR experiences for any industry, including 'Auto, AEC, Film, and More.' Fifty-three percent of the 1,000 top-grossing mobile games globally are powered by Unity, according to their website....

According to a 2020 study published in the Journal of Computers in Education, Immersive content and VR can improve knowledge retention to a rate of more than 75 percent. This compares favorably to class lectures, which have a learning retention of only five percent and reading retention of just 10 percent....

Let’s imagine we could go back to 1995 when the pinnacle of the digital experience was represented by AOL, CompuServe, and Prodigy...We had no idea what the promise of the digital world held....

Today, however, the metaverse is laying out a vision that includes the 350 million players spending 80 billion hours a year playing Fortnite, 27 million people attending virtual concerts, and more. These advances have opened the doors to shopping, playing, learning, collaborating, and even traveling wherever you want, all inside the burgeoning metaverse."

Pulling The Punch Bowl -Smead Capital Management

"Overall common stock index performance can be a very confusing thing to most investors. From a cyclical standpoint, the history of stock price performance in the U.S. is closely associated with the Federal Reserve Board. When the Federal Reserve Board reverses an accommodative interest rate policy, it is affectionately referred to as 'pulling the punch bowl.'....

To reiterate Buffett’s thoughts, bull markets in stocks take on a party atmosphere. Just witness the goofy level of option trading, the millions of small investors chasing exciting futuristic companies/meme stocks and the undying devotion to index investing....

The best percentage stock market rallies of my career were in 1982, 1991, 2009 and 2020-2021. In all cases, the Fed’s easy money policy got dumped into bonds and common stocks, triggering big bull moves....The exact opposite is true when the Fed tightens credit to slow down an overheated economy or to stop the inflation wolverine from roaming the landscape!....

The thing to understand about our current circumstance is that is has come 40 years into the most pervasive and extended 'easy' money period in U.S. history. This has led to 40 years of declining interest rates (did we mention $4-5 trillion of U.S. government borrowing to fight the pandemic?). This means that investments from bonds to equities with long duration attached are filled with the most long-term confidence of the last 40 years.

For this reason, owners of 'two in the bush' stocks are running the highest risk possible. When the punch bowl gets pulled, the margin of safety in stocks goes to the 'bird in the hand'....

What investments do well when the Fed is tightening credit and fighting inflation? Go back to the decade of the 1970s, which was spent fighting inflation. Energy stocks, real estate and home building thrived, because they were viewed as beneficiaries of the inflation. Fear stock market failure."

2022 U.S. Market Outlook: Under Pressure -Charles Schwab

"I don’t manage portfolios, but I have much sympathy with what two investing legends have recently said. Leon Cooperman has been very vocal about being 'a fully invested bear;' and Julian Robertson believes that 'trying to sell short in this market is like being run over by a train that’s going to derail a mile down the road.'....

For all the talk of a 'resilient market,' under the surface, the churn in terms of drawdowns was significant. Rotational corrections are preferred over the bottom falling out all at once; but there is a risk that indexes, at some point, reflect more of the weakness that has persisted under the surface.

Macro backdrops that include slower growth, and a move from a loose to tighter monetary policy, tend to usher in higher intra-market correlations and greater tail risks. We continue to recommend a bias toward quality and not trying to time short-term sector rotations....

One of my oft-expressed mantras about investing is that neither 'get in' nor 'get out' is an investing strategy - that simply represents gambling on moments in time, while investing should always be a disciplined process over time.

That discipline should involve diversification - across and within asset classes - and periodic rebalancing. Investors need to remain extremely alert to the risks of monetary policy, inflation, speculative froth, and ongoing virus concerns. But what ultimately matters is not what we know about the future; it’s what we do along the way."

RealMoneyBlog - Free daily/weekly email


12.8.21 - Economists Struggle To Hide Collapse

Gold last traded at $1,784 an ounce. Silver at $22.42 an ounce.

NEWS SUMMARY: Precious metal prices steadied Wednesday on dollar weakness. U.S. stocks drifted lower as investors took a pause following a two-day rally earlier in the week.

Inflation to keep gold's opportunity costs low in 2022 -Kitco

"The World Gold Council's (WGC) global head of research Juan Carlos Artigas has said that there are two competing forces in the gold market at the moment.

In an interview with Nasdaq, Artigas said that gold will find support as an inflation hedge trade as investors look to protect themselves against the risk of costs rising. He added that the other factor driving the precious metal is the opportunity costs regarding the speed and strength of interest rate rises, which could create a headwind for gold.

Having said that, Artigas has the view that the risk of higher inflation will outweigh the opportunity cost because inflation could become more persistent. In addition to this, he noted that the impact of higher interest rates could be priced in 'to a degree.'

Artigas said that in a recent WGC survey results, many gold and non-gold institutional investors said they want to increase their gold holdings over the next three years....

Gold is a tried and tested tool for central banks and will continue to be an essential component of their strategic holdings. As time goes on, more investors and central banks will increase their exposure to gold due to the ongoing issues with inflation."

currency When Fiat Currency Stops Being Money -Mises

"Most emerging and developed market currencies have devalued significantly relative to the United States dollar in 2021 despite the Federal Reserve’s aggressive monetary policy.

Furthermore, emerging economies that have benefited from rising commodity prices have also seen their currencies weaken despite strong exports. As such, inflation in developing economies is much higher than the already elevated figures posted in the United States and the eurozone.The main reason behind this is a global currency debasement problem that is making citizens poorer....

When the government issues currency - promises of payment - that are neither a store of value nor a generally accepted means of payment nor a unit of measure, it not only does not create money, it destroys it by sinking the purchasing power of the poor captive citizens, who are forced to accept its notes and little pieces of paper (government officials, pensioners, etc.).

This is what we are seeing in many nations all over the world, a massive salary and savings slash created by government intervention on the monetary balance to its own benefit.

Governments benefit from inflation because they pay their debt in a currency of diminishing value and they impose a cut to the price they pay for wages and the services of the sectors that provide service to the issuer of currency."

Mainstream Economists Are Struggling To Hide The Incoming Economic Collapse -ZeroHedge

"The problems of devaluation and stagflation have been present since 1913 when the Federal Reserve was officially formed and given power, but the true impetus for a currency collapse and the destruction of American buying power began in 2007-2008 when the Financial Crisis was used as an excuse to allow the Fed to create trillions upon trillions in stimulus dollars for well over a decade.

The mainstream media’s claim has always been that the Fed 'saved' the U.S. from imminent collapse and that the central bankers are 'heroes.' After all, stock markets have mostly skyrocketed since quantitative easing (QE) was introduced during the credit crash, and stock markets are a measure of economic health, right?

Reality isn’t a mainstream media story. The U.S. economy isn’t the stock market.

All the Federal Reserve really accomplished was to forge a devil’s bargain: Trading one manageable deflationary crisis for at least one (possibly more) highly unmanageable inflationary crises down the road. Central banks kicked the can on the collapse, making it far worse in the process.

The U.S. economy in particular is extremely vulnerable now. Money created from thin air by the Fed was used to support failing banks and corporations, not just here in America but also banks and companies around the world....

A Catch-22 situation arises and the Fed must make a choice: 1) To continue with inflationary programs and risk taking the blame for extreme price increases, and 2) Taper these programs and risk an implosion of stock markets which have long been artificially inflated by stimulus.

Without Fed support, stock markets will die. We had a taste of this the last time the Fed flirted with tapering in 2018. In other words, the choice is stagflation, or deflationary depression."

Covid's Three Blind Mice -City Journal

"How could public officials vowing to 'follow the science' on Covid-19 persist in promoting ineffective strategies with terrible consequences?

In a memoir of his time on the White House Coronavirus Task Force, Scott W. Atlas provides an answer: because the nation’s governance was hijacked by three bureaucrats with scant interest in scientific research or debate - and no concern for the calamitous effects of their edicts.

Atlas’s book, 'A Plague Upon Our House', is an astonishing read, even for those who have been closely following this disaster. A veteran medical researcher and health-policy analyst at the Hoover Institution, Atlas, a radiologist, joined the Task Force six months into the pandemic, after he had published estimates that lockdowns could ultimately prove more deadly than Covid....

Vice President Mike Pence chaired the Task Force, but Atlas says that Pence and the other members were regularly cowed into submission by three doctors who dominated from the start: Deborah Birx, the Task Force’s coordinator, along with Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, and Robert Redfield, director of the Centers for Disease Control.

Atlas calls them 'the troika' because of their strategy for presenting a united front, never disagreeing with one another during the meetings in the White House Situation Room. (Reporting later revealed that they had made a pact to resign in unison if any of them was fired.)

These veterans of the federal bureaucracy had worked closely together during the AIDS epidemic, and their track record was hardly reassuring. Their long and costly quest to develop an AIDS vaccine ultimately failed, but they did manage to persuade the public that AIDS would spread widely beyond gay men and intravenous drug users. Redfield, with some help from Fauci, was the chief prophet of a 'heterosexual breakout,' a threat that terrified Americans for more than a decade but never materialized....

Atlas's portrayal of the troika - a better term might be the three blind mice - rings true, both because of the details he provides and because it jibes with what he and they were saying (and not saying) publicly throughout the pandemic.

It may seem incredible that the troika would violate a fundamental principle of public health by ignoring the devasting collateral damage of their policies, yet they never even pretended to conduct a cost-benefit analysis.

'Perhaps the most remarkable insight in the Fauci email trove,' Atlas notes, referring to the thousands of emails from Fauci that were made public, is 'the total lack of mention of harms from the lockdown throughout the pandemic.'....

The politician who comes off best is Florida governor Ron DeSantis, who had, Atlas observes, 'a far more detailed understanding of the pandemic than anyone I had encountered in the Task Force.' Trump comes off fairly well, too, in his conversations with Atlas, as he frets about the harms of the lockdowns and instinctively recognizes the futility of the troika’s strategies."

RealMoneyBlog - Free daily/weekly email


12.7.21 - Gold Up, Investors Await Fed’s Next Move

Gold last traded at $1,783 an ounce. Silver at $22.52 an ounce.

NEWS SUMMARY: Precious metal prices rose Tuesday on bargain-hunting despite a firmer dollar. U.S. stocks rebounded as investors grew less fearful of the potential economic impact from the new omicron coronavirus variant.

Gold Up, Investors Await Fed’s Next Move Amid Tighter Jobs Market -Yahoo Finance

"Gold was up on Monday morning in Asia, with investors continuing to digest a mixed U.S. report and weighing its impact on the U.S. Federal Reserve’s next move....

The U.S. job report, released on Friday, was mixed. Non-farm payrolls were at 210,000 in November, lower than the 550,000 figure in forecasts prepared by Investing.com and the previous month’s 546,000 figure. The unemployment rate fell to 4.2%, a 21-month low....

Although an indication that businesses are boosting hiring, prices remain high and there is little sign of supply constraints easing.

The Fed will likely speed up its asset tapering when it meets later in the month, in response to a tightening labor market. This could also lead to earlier-than-expected interest rate hikes."

winter America's Nightmare Winter -Rogue Economics

"This winter will bring hardships for the poorest among us. But today, we look at another winter – harder… longer… and further in the future.

What are the odds of a staggering economic collapse… political and social chaos… hyperinflation… and revolution? One in two? One in ten? We don’t know....

In the 2020s, major governments throughout the world were committed to two remarkably implausible policies...First, they were 'transitioning' to a post-fossil-fuel economy, setting a specific temperature target for the planet. Second, they were funding their programs with “printing press” money.

None of the major powers – Europe, America, Japan, or China – had any real money.

The real money - backed by gold - was eliminated in 1971, when Richard Nixon closed the gold window. Thenceforth, the U.S. government would no longer honor its promise to redeem dollars for gold presented by foreign central banks. Since then, they were all flying blind....

By 2021, all the world’s major economies were running large deficits and headed for bankruptcy. And yet, rather than reverse course and let them recover, policymakers doubled down – especially in the energy sector.

Internal combustion engines were penalized. Electric vehicles were subsidized. Power plants were decommissioned. Oil pipelines were shut down. New oil wells weren’t drilled. Storage tanks were abandoned....

Energy from solar and wind struggled to keep up. Unlike oil-fired generators, they were idle much of the time. At night, for example, the solar panels were worthless. And there was no guarantee that they wouldn’t be idle just when you needed them....

On paper, the supply of energy - much of it coming from highly subsidized, inefficient, and centrally controlled new 'renewable' sources - was adequate. In practice, the system - like the Soviet economy - was rigid and brittle.

Then, one especially cold night… with no sun… and no wind – and temperatures falling below zero in half the country - it failed completely. The power system collapsed. Valves froze up. Fuses blew. Ice-covered wires fell. The dark passage had begun."

Davos Is Making The Central Bank Case For Gold -Zero Hedge

"Now, we have policy clarity from the Fed. They will be tapering QE and they will be raising rates in 2022. Now the markets can begin the task of readjusting themselves into year-end.

With that in mind, it makes perfect sense to see gold, which has been a losing trade all year under pressure just from tax-loss selling alone, no less expectations of a stronger U.S. dollar.

It also makes sense for high-flying equities to take a hit along with junk bonds which were yielding less than inflation. There are trillions in misallocated capital out there that go far beyond the simple idea that the Fed’s only mandate is to prop up the equity markets....

This week we saw two major announcements by two very different central banks vis a vis gold. Singapore has now joined the ranks of Russia, Turkey, Hungary, Serbia, Poland and others in adding to their central bank gold reserves. This is a very significant move because this is the first country outside of those in Russia’s nominal orbit....

If Singapore is worried, like everyone else is about a collapse of the current financial system which is expressly on the table via Davos and the Great Reset, then those with the gold will be in a much better position to defend their currencies during a crisis and maintain a relatively stable global exchange rate.

Since Singapore aims to be the independent broker between East and West, especially now that Hong Kong has all but been taken over by China, this move is very interesting to say the least....

What’s the only real weapon the central banks have to maintain credibility? Their gold reserves. This is the essence of why Davos, I think inadvertently, is creating the new role for gold during these times of change."

Omicron Brings Another Round of Pointless Travel Restrictions -Reason

"We're long past the point in the COVID-19 pandemic when politicians are doing much more in response to viral scares than engage in rituals to soothe a fearful public and enhance their own power. With the new omicron variant spreading across the world, travel restrictions seem to be the response of choice because they're politically popular.

Never mind that closing borders is ineffective at anything other than further burdening already hobbled families and economies. The actual danger posed by omicron remains uncertain, but the policy response is as pointless as it was preordained....

New York Gov. Kathy Hochul (D) promptly declared a state of emergency granting her extraordinary power. More worryingly, a world already suffering severe disruptions started closing its borders in irrational ways.

Following in the footsteps of the United Kingdom, the U.S. banned travelers from South Africa and seven neighboring countries, even though omicron was already in the Netherlands and elsewhere well before the variant was revealed to the world. In fact, the new variant was well-established in the countries announcing travel restrictions, including the U.S....

Official reaction seemed crafted more to further separate families and impoverish an already troubled world than to address a bug that was already loose. Health experts make exactly that point.

'Travel restrictions may play a role in slightly reducing the spread of COVID-19 but place a heavy burden on lives and livelihoods,' the World Health Organization's Africa office warned as travel bans proliferated. 'If restrictions are implemented, they should not be unnecessarily invasive or intrusive, and should be scientifically based.'....

Omicron has already spread to dozens of countries. Travel restrictions at this point aren't going to delay anything except the already-interrupted flow of goods and people needed to keep the world functioning.

So, what's the point of closing borders when it's too late to keep the bug out? The real effect of otherwise pointless measures is to accumulate power to politicians who covet just that, and to appease a public that demands somebody do something about a virus that shows every sign of becoming a permanent part of life."

RealMoneyBlog - Free daily/weekly email


12.6.21 - Fed's Inflation Pivot Catastrophic for Stocks

Gold last traded at $1,779 an ounce. Silver at $22.29 an ounce.

NEWS SUMMARY: Precious metal prices steadied Monday on mild profit-taking and a weaker dollar. U.S. stocks rose as investors looked past the emerging threat from the omicron Covid-19 variant.

Gold rises 1% as virus jitters, lower yields lift demand -CNBC

"Gold prices rose nearly 1% on Friday as uncertainty sparked by the Omicron coronavirus variant and a dip in U.S. Treasury yields boosted the safe-haven metal’s appeal....

'Gold is benefiting from a flight-to-safety as investor worries around a faster Federal Reserve taper and the COVID situation as both Delta and Omicron pose a risk to short-term growth outlook,' Edward Moya, senior market analyst at brokerage OANDA.

'Gold’s end of week performance is significant as it coincides with curve flattening that includes high expectations for a faster Fed taper.'

Sentiment in wider financial markets remained weak, with the Nasdaq tumbling over 2%, as mixed U.S. jobs data and fears around the Omicron coronavirus variant weighed.

Further lending support to gold, the U.S. 10-year bond yield dropped below 1.4% for the first time since September, reducing the opportunity cost of holding non-interest bearing gold."

revolution Outrageous Predictions 2022: Here comes a revolution -Saxo Group

"1. The plan to end fossil fuels gets a rain check - Policymakers kick climate targets down the road and support fossil fuel investment to fight inflation and the risk of social unrest while rethinking the path to a low-carbon future.

2. The US mid-term election brings constitutional crisis - The US mid-term election sees a stand-off over the certification of close Senate and/or House election results, leading to a scenario where the 118th Congress is unable to sit on schedule in early 2023.

3. US inflation reaches above 15% on wage-price spiral - By the fourth quarter of 2022, US CPI inflation reaches an annualized 15% as companies bid up wages in an effort to find willing and qualified workers, triggering a wage-price spiral unlike anything seen since the 1970’s.

4. Facebook faceplants on youth exodus - The young abandon Facebook’s platforms in protest against their mining of personal information for profit; the attempt by Facebook parent Meta to reel them back in with the Metaverse stumbles.

5. EU Superfund for climate, energy and defense announced, to be funded by private pensions - To defend against the rise of populism, deepen the commitment to slowing climate change, and defend its borders as the US security umbrella recedes, the EU launches a bold $3 trillion Superfund to be funded by pension allocations rather than new taxes -

6. Women’s Reddit Army takes on the corporate patriarchy - Mimicking the meme stock Reddit Army tactics of 2020-21, a group of women traders launch a coordinated assault on companies with weak records on gender equality, leading to huge swings in equity prices for targeted companies.

7. India joins the Gulf Cooperation Council as a non-voting member - The world’s geopolitical alliances will lurch into a phase of drastic realignment as we have an ugly cocktail of new deglobalising geopolitics and much higher energy prices.

8. Medical breakthrough extends average life expectancy 25 years - Young forever, or for at least a lot longer. In 2022, a key breakthrough in biomedicine brings the prospect of extending productive adulthood and the average life expectancy by up to 25 years, prompting projected ethical, environmental and fiscal crises of epic proportions.

9. New hypersonic tech drives space race and new cold war - The latest hypersonic missile tests are driving a widening sense of insecurity as this tech renders legacy conventional and even nuclear military hardware obsolete. In 2022 a massive hypersonic arms race develops among major militaries as no country wants to feel left behind.

10. Spotify disrupted due to NFT-based digital rights platform - Musicians are ready for change as the current music streaming paradigm means that labels and streaming platforms capture 75-95 percent of revenue paid for listening to streamed music. In 2022, new blockchain-based technology will help them grab back their fair share of industry revenues."

The end of the party is just getting started -Briefing

"The Q&A portion of Fed Chair Powell's testimony on the Coronavirus and CARES Act before the Senate Banking Committee this week was chock full of market-moving insight....

The Omicron variant is not a risk that has been embedded in the Fed's current forecasts, but even so, Fed Chair Powell made it sound as if the bigger risk related to Omicron is more on the inflation side than on the labor market side of things.

Hence, he made it a point to highlight in his prepared remarks that a reduced willingness to work in person could intensify supply-chain disruptions, from which we can infer that there is an expectation that it would contribute to inflation pressures lasting longer....

The implication of the Fed chair's remarks before the Senate Banking Committee is that the Fed knows it missed the mark with its transitory inflation view, that it needs to speed things up with its tapering plan, and that the shift is on from a dovish policy stance to a less dovish policy stance....

Now, with the Fed chair suggesting he thinks the tapering pace should happen faster, there is a residual expectation that rate hikes will follow relatively soon after the tapering is complete.

When the first rate hike does happen, the policy rate will still be extraordinarily low. Nonetheless, the abrupt pivot by Fed Chair Powell is tantamount to issuing the first signal that the 'party like it's 1999 vibe' is coming to an end."

Fed's inflation pivot could be catastrophic for stocks -CNBC

"Federal Reserve Chairman Jerome Powell’s retirement of the term 'transitory' to describe inflation could have an unexpectedly bleak knock-on effect on risk assets, according to Cole Smead, president and portfolio manager at Smead Capital Management.

Powell surprised markets earlier this week by altering his previously consistent tone on inflation, telling U.S. lawmakers that 'it’s probably a good time to retire that word (transitory) and try to explain more clearly what we mean.'....

Speaking to CNBC’s 'Squawk Box Europe' on Thursday, Smead said Powell’s comments amounted to a 'mea culpa,' or an admission that he was wrong, and that the potential effect it could have on Fed policy and the value of assets might be underappreciated.

'Most equities have been punished the last couple of days, and we can talk about the omicron [Covid variant], but I really think it’s people somewhat fearful of the Fed’s pivot to being wrong.'....

He argued that the U.S. consumer is seeing 'incredible inflationary pressures,' and real yields - interest rates adjusted to remove inflation - are going to spike if the Fed tightens.

'We’re going to watch real yields go from the most negative levels we’ve seen since like 1974 to a meaningful real yield, and that is catastrophic for risk assets,' Smead concluded."

RealMoneyBlog - Free daily/weekly email


12.3.21 - The Fed's Perilous High-Wire Act

Gold last traded at $1,784 an ounce. Silver at $22.53 an ounce.

NEWS SUMMARY: Precious metal prices rose Friday on mixed data and a firmer dollar. U.S. stocks fell, after a disappointing November jobs report, ending a roller-coaster week driven by Covid omicron variant fears.

Gold price at $10k, silver at $500 due to 'a decade of shortage' -Kitco

"This will be a 'decade of shortage' defined by high inflation and a failed attempt to raise rates – the perfect combo to trigger a massive rally in gold, said Goehring & Rozencwajg Associates managing partner Leigh Goehring.

Next year, inflation could already be pushing 9%, and it could get a lot worse, Goehring told Kitco News in an interview.

'We're getting closer to the explosion of gold prices to the upside. I'm a big believer that inflation is not going away. It's going to continue to be a problem. We could be looking at a black swan event in inflation. It could be an oil shock, natural gas shock or agricultural shock,' Goehring said.

Federal Reserve Chair Jerome Powell already shocked the markets this week by dropping the phrase that 'inflation is transitory' and stating that the U.S. central bank will be discussing accelerating the pace of tapering at the upcoming December meeting.

An inflationary black swan event could kick-start that inflationary psychology, which has been missing despite annual U.S. inflation running hot at 6.2%....

How big of a bull market will it be? Goehring is expecting gold to reach $10,000 an ounce by the end of the decade. And for silver to eventually catch up and trade around $500 an ounce.

'By 2028, gold could be over $10,000. If gold is over $10,000 and we go back to the 20:1 gold-silver ratio. That's $500 silver,' he said. 'It will be the decade of shortages, and everyone's going to get poorer except for the people that own physical gold and silver.'"

The Fed's high-wire act just got even more perilous -CNN

"Investors were spooked by the discovery of the new Omicron variant of the coronavirus. Now, they're contending with another wrinkle in the outlook: The Federal Reserve could be prepared to roll back stimulus measures faster than planned because of persistent inflation.

What's happening: Stocks fell sharply on Tuesday after Fed Chair Jerome Powell told Congress that plans to taper asset purchases by $15 billion each month may no longer be appropriate, and the central bank may need to move quicker. The S&P 500 and Dow both closed down 1.9%, while the Nasdaq Composite finished the day 1.6% lower.

In a note to clients, strategists at UBS laid out the current situation this way: 'Omicron + taper = volatility.'

The Fed already had an incredibly difficult job on its hands. Its preferred measure of inflation, released last week, showed consumer prices climbing at the fastest pace in three decades.

The central bank has said it will start rolling back crisis-era measures to keep the economy from running too hot — though it doesn't want to jeopardize the recovery in the US job market, where unemployment still sits at 4.6%. Before the pandemic, the unemployment rate was at 3.5%.

The arrival of the Omicron variant has made assessing the situation even harder. While scientists are rushing to determine whether the strain is more transmissible and if vaccines remain effective in protecting against severe disease, economists worry that it could cause more people to stay home or even force the closure of some venues again. That would hurt the jobs comeback.

Powell sounded hawkish on Tuesday despite this development. Goldman Sachs' team notes that Powell 'stated three times, with increasing firmness, that it would be appropriate to discuss accelerating the pace of tapering.'"

CEOs and insiders sell a record $69 billion of their stock -CNBC

"CEOs and corporate insiders have sold a record $69 billion in stock in 2021, as looming tax hikes and lofty share prices encourage many to take profits.

From Satya Nadella at Microsoft to Jeff Bezos and Elon Musk, CEOs, founders and insiders have been cashing in their stock at the highest pace on record. As of Monday, sales by insiders are up 30% from 2020 to $69 billion, and up 79% versus a 10-year average, according to InsiderScore/Verity, which excludes sales by large institutional holders.

The selling is likely to increase even more as December is often an active month for sales due to tax planning....

Some market watchers see insider selling as a warning sign and signal of a market top...The bulk of this year's sales have been highly concentrated among a few large sellers, including Musk and Bezos, who each sold around $10 billion in stock this year....

Taxes and high valuations are also fueling the sales. Microsoft CEO Satya Nadella sold off nearly half of his Microsoft shares last month for about $285 million. The company said in a statement that the sale was for 'personal financial planning and diversification reasons.'"

Can Media Cover 'Build Back Better' Fairly When It Awards Them Gov Goodies? -CNSNews

"It might come as a surprise to the media establishment and even government legislators that the First Amendment protection for freedom of the press also applies to all Americans. Basically, every American is a member of the press.

When government bestows special status and privileges to 'journalists' that aren't provided for all citizens, the nation enters the dangerous realm of press exceptionalism. That's the notion that journalists play such a unique role in American democracy that they need to be on pedestals. The problem is that journalists can't be surrogates of rank and file Americans when they are being bought off and compromised by governmental entities privileging the reportorial class.

The journalism industry is being made part of the establishment by an increasing flow of government enticements. The Biden Administration’s Local Journalism Sustainability Act is part of the Build Back Better package. It is working its way through Congress now.

The bill helps fund payroll expenses of news outlets, and generates revenue for those outlets by giving tax incentives to advertisers and subscribers. This ill-conceived legislation is super-charged press exceptionalism that will take the teeth out of the press’ historic watchdog role....

News coverage of Biden's spending package is now necessarily compromised since news organizations stand to benefit from its passage. Journalists and politicians have historically kept an arms-length, and at times adversarial, relationship. Journalism executives should recognize government handouts for precisely what they are – attempts to maneuver and manipulate press sympathies to the government's advantage.

States also want to patronize and exploit the media with special perks. California’s Gov. Gavin Newsom has signed a new law that gives reporters unfettered access to demonstrations and protests otherwise closed off by the police....

Instead of looking for government favors, the press would be better off to focus on improving the service it was designed to provide for news consumers. Credibility ratings for the press are near record lows."

RealMoneyBlog - Free daily/weekly email


See older Blog posts here

More Links

Weekly Charts

Current Spot Prices

Weekly Charts
Current Spot Prices

Gold

$1836.82

Silver

$24.17

Platinum

$1037.50