This is the clearest explanation of the selloff I've read, and the reason is the framing: treating the dollar and gold as two currencies and simply comparing their dilution rates strips out all the noise about yield and "risk off." Most commentary this week never got past the headline.
The 5.4% versus 1.9% comparison is the whole argument in one line, and I'd push it one step further: those two numbers are not the same kind of number.
Mine supply growth is a geological constraint. No one convenes a meeting and votes to double it, and the marginal ounce gets harder to pull out of the ground every decade. Money growth is a policy variable, and it has only ever moved in one direction once a government needs to fund something expensive.
Equal carry today, wildly unequal risk of tomorrow. The asymmetry is the trade — not the yield.
Financial markets are presently experiencing an extreme mania, perhaps the worst in history, so one would expect precious metals to be out of favor. Recent price gains are likely largely attributable to central bank buying driven by attempted weaponization of the US dollar. Ultimate timing is only knowable in hindsight but anticipating skyrocketing precious metal prices in the years ahead is close to intellectual child's play at present, for those who aren't caught up in this mindless financial mania. However be warned, powerful deflationary forces characterize the early stage of financial collapse which might take precious metal prices lower in the interim.
As long as fiat money and credit expand via central bank action and within the financial system due to fractional reserves at financial intermediaries, thus distorting rates of interest, there will be financial manias and collapses. The notion that central banks are going to engineer a "soft landing" at this point is simple fantasy.
Worth noting, most economists are sold on the academic nonsense called Keynesianism so they will completely fail to anticipate inevitable outcomes yet again.
This does make sense. % rates rise then Gold drops but borrowing costs for the government increases so I would probably buy more physical Gold/ maybe other commodities at reasonable $. Not sure where I heard this but eventually it all leads back to no 3rd party risk and final insolvency, if you believe this can't go on indefinitely. When the crumbling starts I would prefer this. And it is going to crumble. You might not be able to trade paper bullshit for the alternative possibly but I am not slick enough to understand smaller detonations that lead to the big kahuna. As a side I have real concerns about internet viability during such an event. I could be wrong.
Yes, These Delusional Keynesians somehow believe Inflation equates to Economic Growth which clearly does not, as demonstrated by Benjamin Shalom Bernanke and Janet Yellen who "Targeted 2% Inflation" as a goal. These Are Frankfurt School educated fake Economists aka Fabian Socialists (Communists). They wouldn't understand real Economics or Business Dynamics if it bit em in the ass. They wouldn't be able to operate a Lemonade stand in front of their homes. I hope they don't have children. Janet Yellen was one of the dimmest bulbs I had ever witnessed testifying before Congress. Inbreeding is a horrible thing.
This is the clearest explanation of the selloff I've read, and the reason is the framing: treating the dollar and gold as two currencies and simply comparing their dilution rates strips out all the noise about yield and "risk off." Most commentary this week never got past the headline.
The 5.4% versus 1.9% comparison is the whole argument in one line, and I'd push it one step further: those two numbers are not the same kind of number.
Mine supply growth is a geological constraint. No one convenes a meeting and votes to double it, and the marginal ounce gets harder to pull out of the ground every decade. Money growth is a policy variable, and it has only ever moved in one direction once a government needs to fund something expensive.
Equal carry today, wildly unequal risk of tomorrow. The asymmetry is the trade — not the yield.
Excellent article
Very informative as well as reinforcing. Steady as she goes then. Carryon…
Great summary conclusion, well said.
Financial markets are presently experiencing an extreme mania, perhaps the worst in history, so one would expect precious metals to be out of favor. Recent price gains are likely largely attributable to central bank buying driven by attempted weaponization of the US dollar. Ultimate timing is only knowable in hindsight but anticipating skyrocketing precious metal prices in the years ahead is close to intellectual child's play at present, for those who aren't caught up in this mindless financial mania. However be warned, powerful deflationary forces characterize the early stage of financial collapse which might take precious metal prices lower in the interim.
As long as fiat money and credit expand via central bank action and within the financial system due to fractional reserves at financial intermediaries, thus distorting rates of interest, there will be financial manias and collapses. The notion that central banks are going to engineer a "soft landing" at this point is simple fantasy.
Worth noting, most economists are sold on the academic nonsense called Keynesianism so they will completely fail to anticipate inevitable outcomes yet again.
This does make sense. % rates rise then Gold drops but borrowing costs for the government increases so I would probably buy more physical Gold/ maybe other commodities at reasonable $. Not sure where I heard this but eventually it all leads back to no 3rd party risk and final insolvency, if you believe this can't go on indefinitely. When the crumbling starts I would prefer this. And it is going to crumble. You might not be able to trade paper bullshit for the alternative possibly but I am not slick enough to understand smaller detonations that lead to the big kahuna. As a side I have real concerns about internet viability during such an event. I could be wrong.
Yes, These Delusional Keynesians somehow believe Inflation equates to Economic Growth which clearly does not, as demonstrated by Benjamin Shalom Bernanke and Janet Yellen who "Targeted 2% Inflation" as a goal. These Are Frankfurt School educated fake Economists aka Fabian Socialists (Communists). They wouldn't understand real Economics or Business Dynamics if it bit em in the ass. They wouldn't be able to operate a Lemonade stand in front of their homes. I hope they don't have children. Janet Yellen was one of the dimmest bulbs I had ever witnessed testifying before Congress. Inbreeding is a horrible thing.
Oh they understand real economics but they worship at the altar of usury. It's in their nature.
It's in their genes...
It's in their genes...
Trump's import tariffs(taxes!) have sucked up about $400 billlion. Big drag on our economy!