[Sticky] Another very scary $$$$ topic from our brother Yumbo.  

 

The Evil Genius
Admin
Joined: 1 year ago
Posts: 1466
15/04/2019 9:42 pm  
For a variety of  reasons the stock markets controlled by the major Central Banks - Wall Street, EU and BoJ have all been flat for the last four months - ever since the 24th Dec 2018 NasDaq crash that saw 15% wiped off the Dow. The EU and BoJ are still in QE after ten years and twenty years respectively - with no result except zombie companies and a destruction of the middle class. The US is not far behind but not by much. The dollar as a reserve currency has cushioned the fall but the end result will be the same.
Wall Street has nothing to pump up stocks with now that Powell has tightened rates, and employed QT to destroy the money supply.. The bad news from trade wars, employment figures, tech companies and now Boeing has rattled investors - who have piled into the treasury bond markets causing a 2 year - 10 year inversion with no change in the 30 year bonds. Fiat money has nowhere to go to find yields - as debt keeps increasing with the higher rates there seems to be a temporary standoff between debt increase and yield - with money not knowing which way to move. Powell's fear is that when the recession strikes the Fed needs to cut rates by 4% to avoid the economy crashing - this cannot happen as at just 2.5% so far the stock market has tanked and any further rise may cause the recession he is trying to avoid. A classic Catch 22.
With Trump having control of the Fed (he has nominated 5 of the 7 sitting Reserve Chairs) it would appear he has the means to demand a rate cut and return to QE. The Fed however is resisting this - which annoys him no end, But the Fed are right - any drop in rates or return to QE will mean a massive change in policy - admitting the economy cannot work without free money and the Fed has no control over its own policies. The effects of that admission will be catastrophic for Trump the year before re-election. For all intents and purposes he has to keep the stock market bluff going a bit longer until he gets to a second term. That is his balancing act that seems almost impossible - with trade wars, shooting wars, Saudis' threatening to end the petrodollar trade and Russians coming to get him (sic).
With the BIS taking chains off gold, expect the metal to start climbing internationally without being pulled down by Wall Street's paper trade - with its current use as backing for fractional reserve lending.  A higher gold price now increases bank balance sheets and liquidity. As 60% of world trade still depends on the US dollar the strength of the dollar will still outperform gold until there is a significant drop in either the countries using the dollar and / or the countries buying oil with it. The restrictions on gold backing within the USA will not see it used as effectively as in other countries. Therefore China and Russia can immediately triple or quadruple their purchasing power using gold at 100% reserve capacity and fund mega-projects - while the USA cannot do the same or risk a rush to gold and a drop in Treasury buying. US sanctions mean nothing if gold can be legally used within the BIS banking framework as the foundation for cross-border trade. Previously gold could be used in internal trade arrnagements like SCO, EAEU or BRI - but now the BIS restrictions have been lifted expect more countries to demand repatriation of gold from London or New York - which may not happen as the gold was already probably used elsewhere. We will see how this plays out for gold.
https://dailyreckoning.com/money-is-gold-and-nothing-else/&source=gmail&ust=1555449763060000&usg=AFQjCNH6l1JocMA-Om5hGKqFBJbm9oXKh w"> https://dailyreckoning.com/money-is-gold-and-nothing-else/

It is very likely that to get back to some form a QE the Fed may employ helicopter money this time - giving money directly to its citizenry - which will be called Modern Monetary Theory or such. This is a main democratic platform for 2020 and also may be picked up by the GOP. In essence, whoever promises to turn the USA into a bigger socialist state may well win - this includes Trump.

Beered by Xanthine, Market Watcher, Uly The Cunning and 1 people
Quote
BigSiameseCat
Founder.
Joined: 1 year ago
Posts: 1095
15/04/2019 9:52 pm  

Gold and silver are hugely underpriced both in dollars and what they can buy in goods and services compared to historical norms. There's been a long history of price suppression of both. Neither of them are likely to drop much in terms of dollar price, but they may not show increases for years. This makes them a low risk investment but they may not show a return for several years. They are more insurance or long term investment, not a get rich quick scheme. Note that I am not talking about the GLD or SLV funds, I am referring to taking delivery of physical coins and bullion. I'm partial to constitutional silver as in 1964 and earlier dimes, quarters, and half dollars. Finite supply, small denomination, easily recognizable, very very hard to counterfeit.


ReplyQuote
Uly The Cunning
Admin
Joined: 1 year ago
Posts: 2190
16/04/2019 4:06 am  

I don't trust in the idea of storing gold and silver, because it has repeated time and time again in history that governments take it back from the people when they want to. I have a very limited trust in government in that regard, among others. I am not saying it is a bad choice to own gold or silver, but don't break the bank and your back to hoard it, only to find that the government has the 'right' to claim it from you without so much as a thank you.

"Remember, you're fighting for this woman's honor, which is probably more than she ever did."
Groucho Marx: Duck Soup (1933)


ReplyQuote
BigSiameseCat
Founder.
Joined: 1 year ago
Posts: 1095
16/04/2019 8:47 pm  

I agree that you have to be careful how you store it. Certainly any gold or silver sitting in a bank safety deposit box can and will be claimed by the government when they wish. The outlawing of owning Gold currency in the Great Depression showed that, yet those who were quiet about what they owned, had no problems. It's not a risk free option, but then having a supply of one's and zeroes in an account somewhere isn't risk free either. Just ask the citzens of Cyrprus. Or the Senior GM stockholders, for that matter.


ReplyQuote
BigSiameseCat
Founder.
Joined: 1 year ago
Posts: 1095
17/04/2019 3:11 am  
Posted by: Travis3000

Cut open corpses and store gold in there.  Problem solved.

The usual method is to lose them in a boating accident on one's favorite lake or pond.


ReplyQuote
Uly The Cunning
Admin
Joined: 1 year ago
Posts: 2190
17/04/2019 7:54 am  

Well, the complication then becomes, how do you use a currency that you are not even supposed to have. You essentially have a most valuable asset that is worthless to you. You can always do what happened in the past, where you just sit on it until it is legal again, but that is a gamble and might not even be in your lifetime, depending on circumstances.

I still say knowledge is worth more than gold. Have information, books, scientific designs for purifying water, growing food, building good structures and more. This will be worth more than the worlds value of gold any day. 

"Remember, you're fighting for this woman's honor, which is probably more than she ever did."
Groucho Marx: Duck Soup (1933)


ReplyQuote
Market Watcher
Moderator
Joined: 1 year ago
Posts: 191
17/04/2019 4:36 pm  

Yumbo is not wrong. I have been concerned about the inverted yield curve for months. 


ReplyQuote
Advertisements