Numbers from Bizarro-World
The past few months have been really challenging for anyone invested in gold or silver; for me personally as well. Despite serious warning signs in the economy, staggering debt levels and a multitude of significant geopolitical threats at play, the rally in risk assets seemed to continue unabated.
Bizarro-World intrudes into our reality, courtesy of central banks. [PT]
Introductory Remarks: The “Anti-Politician” Godfrey Bloom, by PT
Most of our readers will probably remember former UKIP chief whip and European Parliament representative Godfrey Bloom. As far as we know, he is the only politician who ever raised the issue of the workings of the fractionally reserved central bank-directed monetary system in the EU parliament. This system is of course central to the phenomenon of the recurring boom-bust sequences plaguing the global economy.
Godfrey Bloom (left) and interviewer Claudio Grass
Claudio Grass in Conversation with Todd “Bubba” Horwitz
Todd Horwitz is known as Bubba and is chief market strategist of Bubba Trading.com. He is a regular contributor on Fox, CNBC, BNN, Kitco, and Bloomberg. He also hosts a daily podcast, ‘The Bubba Show.’ He is a 36-year member of the Chicago exchanges and was one of the original market makers in the SPX.
Todd “Bubba” Horwitz and Claudio Grass
A Strong First Half of the Year, Followed by Another Retreat
In early 2016 gold had a big bull run. The precious metal rose close to 25% this year, pushed higher in a summer rally that peaked on July 10th. Gold experienced a bumpy ride over the remainder of the summer though, as investors became increasingly concerned about a potential rate hike by the Federal Reserve. Uncertainty returned to gold market and has intensified further since then.
Initially, gold rallied sharply in 2016, but then retreated again in the second half as concerns over Fed rate hikes and the impact of Mr. Trump’s election victory have pushed bond yields and the US dollar up in the short term.
The U.S. Elections: The Latest Crack in the System
The 2016 U.S. presidential elections are unprecedented: I don’t believe we have ever witnessed before a campaign year so toxic, so dangerously divisive and full of ad hominem attacks. Both camps have vilified the opposition and their followers, creating a schism in society. There has been no rational dialogue on the issues that truly concern the American public.
The schism
Illustration by : M. C. Escher
Lurid Media Coverage
In recent months, more and more of our clients and friends from overseas are asking us whether it is safe to travel to Europe. These fears are understandable, given the media coverage of the tragic events that occurred this year. The press painted a sinister and truly graphic picture of Europe as a war zone, as a target of global terrorism.
Inside the Brussels airport shortly after the bomb blast in March.
Photo credit: Pavel Ohal
Mounting Resistance
Thousands of people recently demonstrated in Brussels against free trade deals negotiated by the EU. This happened just days before a meeting of EU trade ministers in Bratislava last Friday, which was considered the last push to salvage the Transatlantic Trade and Investment Partnership (TTIP) between the EU and the United States. Not only is Europe divided on the deal, but the talks have been extremely secretive.
This placard carried by anti-TTIP protesters in Brussels goes to the heart of the problem, namely the secrecy characterizing the deal.
Photo via flushthetpp.org
Renewed Escalation
This summer witnessed a renewed escalation between Russia and Ukraine after Russian President Vladimir Putin accused Ukraine of sending saboteurs to attack Russian troops, targeting “critical infrastructure”. Kiev denied the allegations and claimed Russia’s “fantasy” was nothing but a false pretense to launch a “new invasion”.
August 10: Russian president Putin announces that there was an altercation involving a group of Ukrainian saboteurs at the border with Crimea. We note he appeared to be genuinely angry about it.
The Rationale for Interventionism
It has been almost eight years since former U.S. President George W. Bush warned the world that “without immediate action by Congress, America could slip into a financial panic and a distressing scenario would unfold.”
September 2008: a solemn-faced “rescue party” of bureaucrats and politicians (from left to right: Ben Bernanke, GW Bush, Hank Paulson and Donald Cox) announces that the village needs to be destroyed in order to save it (“normally, we’re all for free market capitalism, just not this time”).
Photo credit: Credit Larry Downing / Reuters
The “Third Way”
“Stealth, intrigue, subversion, and the deception of never calling socialism by its right name” – George Bernard Shaw
An emblem of the Fabian Society: a wolf in sheep’s clothing
Crumbling Stability
In the past few months, we have witnessed a series of defining events in modern political history, with Britain’s vote to exit the EU, (several) terror attacks in France and Germany, as well as the recent attempted military coup in Europe’s backyard, Turkey.
Global stability continues to be undermined
A Fragile System
Ronald Stoeferle, managing partner and investment manager at Incrementum AG, and probably best known to our readers as co-author of the “In Gold We Trust” report, the most widely read gold report in the world
Photo credit: Elke Mayr / WB
Most read in the last 20 days:
As the Madness Turns
A Growing Gap The first quarter of 2019 is over and done. But before we say good riddance. Some reflection is in order. To this we offer two discrete metrics. Gross domestic product and government debt. US nominal GDP vs total federal debt (in millions of USD) – government debt has exceeded total economic output for the first time in Q4 2012 and since then its relative growth trajectory has increased – and it seems the gap is set to widen further....
Bitcoin Jumps as Ordered - Precious Metals Supply and Demand
Digital Asset Rush The only part of our April Fools article yesterday that was not said with tongue firmly planted in cheek was the gold and silver price action (though framed it in the common dollar-centric parlance, being April Fools): “Gold went down $21, while silver dropped about 1/3 of a dollar. Not quite a heavy metal brick in free fall, but close enough.” Bitcoin, hourly – a sudden yen for BTC breaks out among the punters. [PT] It also...
A Trip Down Memory Lane – 1928-1929 vs. 2018-2019
Boom Times Compared It has become abundantly clear by now that the late 2018 swoon was not yet the beginning of the end of the stock market bubble – at least not right away. While money supply growth continues to decelerate, the technical underpinnings of the rally from the late December low were actually quite strong – in particular, new highs in the cumulative NYSE A/D line indicate that it was broad-based. Cumulative NYSE A/D line vs. SPX – normally the A/D line...
Debt Growth and Capital Consumption - Precious Metals Supply and Demand
A Worrisome Trend If you read gold analysis much, you will come across two ideas. One, inflation so-called (rising consumer prices) is not only running much higher than the official statistic, but is about to really start skyrocketing. Two, buy gold because gold will hedge it. That is, the price of gold will go up as fast, or faster, than the price of gold. CPI monthly since 1914, annualized rate of change. In recent years CPI was relatively tame despite a vast increase in the...
Unsolicited Advice to Fed Chair Powell
Unsolicited Advice to Fed Chair Powell American businesses over the past decade have taken a most unsettling turn. According to research from the Securities Industry and Financial Markets Association, as of November 2018, non-financial corporate debt has grown to more than $9.1 trillion [ed note: this number refers to securitized debt and business loans, other corporate liabilities would add an additional $11 trillion for a total of $20.5 trillion]. US non-financial corporate...
Long Term Stock Market Sentiment Remains as Lopsided as Ever
Investors are Oblivious to the Market's Downside Potential This is a brief update on a number of sentiment/positioning indicators we have frequently discussed in these pages in the past. In this missive our focus is exclusively on indicators that are of medium to long-term relevance to prospective stock market returns. Such indicators are not really useful for the purpose of market timing - instead they are telling us something about the likely duration and severity of the bust that...
The Liquidity Drought Gets Worse
Money Supply Growth Continues to Falter Ostensibly the stock market has rallied because the Fed promised to maintain an easy monetary policy. To be sure, interest rate hikes have been put on hold for the time being and the balance sheet contraction (a.k.a.“quantitative tightening”) will be terminated much earlier than originally envisaged. And yet, the year-on-year growth rate of the true broad money supply keeps declining noticeably. The year-on-year growth rates of...
The Effect of Earnings Season on Seasonal Price Patterns
Earnings Lottery Shareholders are are probably asking themselves every quarter how the earnings of companies in their portfolios will turn out. Whether they will beat or miss analyst expectations often seems akin to a lottery. The beatings will continue until morale improves... [PT] However, what is not akin to a lottery are the seasonal trends of corporate earnings and stock prices. Thus breweries will usually report stronger quarterly earnings after the...
The Gold-Silver Ratio Continues to Rise - Precious Metals Supply and Demand
Is Silver Hard of Hearing? The price of gold inched down, but the price of silver footed down (if we may be permitted a little humor that may not make sense to metric system people). For the gold-silver ratio to be this high, it means one of two things. It could be that speculators are avoiding the monetary metals and metal stackers are depressed. Or that something is going on in the economy, to drive demand for the metals in different directions. As a rule the gold silver...
What Were They Thinking?
Learning From Other People's Mistakes is Cheaper One benefit of hindsight is that it imparts a cheap superiority over the past blunders of others. We certainly make more mistakes than we’d care to admit. Why not look down our nose and acquire some lessons learned from the mistakes of others? Bitcoin, weekly. The late 2017 peak is completely obvious in hindsight... [PT] A simple record of the collective delusions from the past can be quickly garnered from...
Austrian Theory and Investment
Realtime Charts
Gold in USD:
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/gold/t24_au_en_usoz_2.gif)
Gold in EUR:
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Silver in USD:
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Platinum in USD:
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USD - Index:
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