It’s been a while since we went around the intertubes for some market analysis…
- Mortgage Rates at 35 Week High but Purchase Applications Picking Up –GaveKal [biiwii comment: a rush to ‘get in’ before the big bond bear (interest rate rise)? but this is the public we are talking about (the same public that was convinced about $200 oil). that could be bullish for bonds (bearish for interest rates) after our target of 3.6% to 3.7% on the 30 year is registered on the ‘continuum’, though there’s a 1st time for everything, so we’ll avoid overly rigid thinking…]
Well okay, the media has its rationalization, but stocks were obviously at a bounce point yesterday.
Stepping away from the stupid noise that the media inject each and every day, there is a tie-in between the US dollars’s resumed correction, a speculated upon ‘C’ leg up in commodities, the fact that silver vs. gold has room to bounce (but is big picture bearish) and oh yes, this chart’s all-important message…
‘Inflation expectations’ appear to still be well in play. But at around the time the ‘Continuum’ above reaches the limiter (AKA 100 month EMA), other indicators should also be at potential termination points. We finely detailed the plan in an NFTRH update this morning, but for our purposes here, we’ll just note that all of this is counter-trend as it stands now. So don’t get lost along the way. Stay on your indicators.
By Steve Saville
Worry About Capital Controls, Not Gold Confiscation
Due to the confiscation of gold by the Roosevelt Administration in 1933, there remains an undercurrent of concern among gold owners that the US government or another major government will confiscate gold in the future. However, the risk of this happening is presently so low as to not be worth taking into account. Of far greater risk are capital controls and the confiscation of cash.
Gold confiscation is not a realistic threat under the current monetary system, because under the current system gold isn’t money. To further explain, the reason that gold was confiscated in the US in 1933 was that gold, at that time and place, was money, with the dollar essentially being a receipt for gold. Consequently, the amount of gold in the banking system placed a limitation on the quantity of dollars. By making gold ownership illegal the US government not only prevented the public from removing gold from the banking system, thus eliminating one of the superficial deflationary forces, it also pushed additional gold into the banking system and paved the way for greater monetary inflation.
Continue reading Don’t Worry About Gold Confiscation…
Fundamentally, the gold stock rally was labeled a “bounce only” because it was just another item rising anti-USD in an ‘inflation trade’ revival. Right along with Oil, Copper and the outliers like REE, Lithium, Uranium, etc.
If we are disinterested in commodities (I am and have been), then we were cautious on the precious metals for this reason.
Like it or not, we are in a process of eliminating the inflationist gold bugs, and a lot of ‘inflation trade’ promoters while we’re at it. I guess that is me being “sanctimonious” as one blog described me recently. I prefer ‘overly judgmental’, but whatever.
Moving on, one indicator of the coming problem in the gold sector was the tried and true HUI-Gold ratio (HUI-GLD used here, while NFTRH used a very similar HUI-Gold chart to note the early caution signal on May 17).
By Michael Ashton
I am not one of those people who believe that if the Fed is dramatically easing, you simply must own equities. I must admit, charts like the one below (source: Bloomberg), showing the S&P versus the monetary base, seem awfully persuasive.
Continue reading If Liquidity is Your Sword, Keep Swinging