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You see, it’s not a Trump thing. It’s an ‘America is so hopelessly indebted (as are other developed economies) that they have no choice now’ thing.
However the election shakes out – most likely Democrat president and congress, Republican senate – the stock market is cheering two things in my opinion. It is cheering US dollar compromising fiscal stimulus (Fed prints, politicians spend) and the coming of more US dollar compromising monetary policy (Fed prints, Fed monetizes bonds AKA debt, Fed screws with any other esoteric tool it can get its hands on in the age of MMT TMM, AKA Total Market Manipulation).
I have a still profitable position against the Euro that is about to tick un-profitable this morning. That was my hedge against a firming US dollar, which is the anti-market to the US stock market especially, but also to many global markets, because I am long US and global stocks. I may have to pull back to hedging stocks (including gold stocks) with high cash levels. So says the ongoing inflationary operation.
After a well deserved correction of nearly 3 months the gold stock sector is still flashing positive signs beneath the surface, as the correction matures
The correction that began in August amid the ‘Buffett Buys a Gold Stock!‘ tout has now ground on for nearly 3 months. As noted in the NFTRH 626 Opening Notes segment:
“Thus far the correction in gold, silver and the miners is perfect, where perfection means long, drawn out and maddeningly frustrating to bulls (and bears thus far). That’s what corrections are, remedies to excitement, confidence and of course, greed.”
We are managing the technical details (and associated strategies) of the correction in HUI and individual gold stocks each week in NFTRH, but as a gold stock investor it has not been a time for making money since August. As a trader it has been a difficult time for making money as well, because of the lack of a definitive drop that the sector’s corrections are known for. It has been a grind, and in that annoying, time consuming process, it has been perfect.
Another little thought experiment – – and I welcome corrections or new insights on this.
The Fed has made it clear they want inflation. They want it at 2% or above, and they’re willing to let it go decently above that level for a while before they consider raising rates. They’ve said so repeatedly.
At the same time, trillions and trillions of new dollars are floating around out there. Adjunct to this, the world has never been so in debt. It hasn’t stung too much, because interest rates are so historically low that the burden of interest rate expense today isn’t much different in nominal terms than it was twenty years ago, even though we are dramatically deeper in debt. So the government is a bit spoiled by near-zero rates.
A rising Gold/Silver ratio preceded the March disaster, made an ill-fated bounce pattern in May-June and then got hammered by the 24/7 liquidity spigots opened up by a desperate Federal Reserve and Trump admin. They are desperate because the inflation MUST take hold in order to keep the system from unwinding to its fundamentals, which of course are nothing but robo-printed (funny) munny (political commentary withheld from this post, but insert what we all know here if you’d like…).
Well, it’s that time of year again – – late August, when the annual Jackson Hole conference o’ surprises appears. This article from Bloomberg makes it plain what’s coming up with the big closing speech this Thursday morning………..