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In the midst of work uncovering a target for the US dollar that will surprise many if it comes about, of taking a hard look at the messages of long-term Treasury yields and the yield curve, defining potential macro outcomes (inflation, Goldilocks or deflation) based on these indications and planning strategy accordingly, NFTRH 662 got a little out there with a discussion of the mindset that is behind the name of the Notes From the Rabbit Hole service.
The mention of John Hussman (I could also have put the estimable Jeff Snider or the Robert Prechter of yore in this piece) is not meant to insult. It is meant to simply state that a fiduciary manager like him, honestly following his work, is not geared to make significant gains during high risk market phases.
(more…)When gold stock bulls complain about a “smack down”, a “hit” or a “smash” against the poor gold stock sector what they should be thinking about is what a relatively small market the gold stock universe is compared to the multitude of galaxies populated by cyclical and risk on stocks and commodities and the massive bond market. The gold stock sector’s noise to trading volume ratio must be far and away the biggest bull market on the planet (I know because I am part of it :-)).
And once in a while the sector actually warrants all that noise. Like in 2001 when markets were beginning a bear phase and economies were faltering. Like in Q4, 2008 when gold stocks were crashing to unwind previous inflationary excesses, leading stocks and commodities into a terrible crash and rebounding first. Like in March of 2020 when the miners crashed and ‘V’ bottomed to lead what is to this day an ongoing economic recovery born of the inflation that gold and gold stocks first sniffed out.
(more…)There are times when gold is an okay inflation hedge, while under-performing the likes of industrial metals, oil/energy, materials, etc. During those times, if you’re doggedly precious metals focused you should consider silver, which, as a hybrid precious metal/industrial commodity, has more pro-cyclical inflation utility than gold.
But as I have argued for much of the last year, if the inflated situation is working toward cyclical progress (as it is currently) then there is a world full of trades and investments out there to choose from, many of which are trouncing gold (which, as I have belabored for the better part of 2 decades now, is not about price but instead, value) in the inflated price casino.
The latest ISM Report on Business shows one negative among the important areas as employment declined. Now, before we get too excited about that gold-positive reading let’s also realize that manufacturing employment is still growing, new orders are briskly increasing, backlogs are up and customer inventories are down. In short, manufacturing continues to boom.
(more…)Of course, a career politician will be adept at framing the narrative just right, adding to it, tweaking it and layering on fancy words and concepts in order to veil the true and unbelievably simple fact that the inflation started under a very different presidential administration and continues to this day. The only difference is that the party that won the election gets to take a bow for the broad results that have little or nothing to do with them.
Biden goes on offensive against economic critics, argues rising wages show his agenda is working
Well, his agenda was to push rising employment costs into the economy with the inflation the Fed created out of thin air. So that is true. I am not against raising minimum wages under this vile inflationary system because low income people cannot keep up with the pace of the inflation the Fed has created. Under an inflationary regime, an inflationary (Keynesian) system, you can’t go with the old conservative method of letting each earn his or her way based on merit. At some point – due to inflation – the goalpost has been moved too far away.
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