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July 16, 2019 | Now That’s Just Crazy, Part 1: Junk Bonds With Negative Yields

A central bank that’s desperately trying to ignite a borrowing/spending frenzy to offset an incipient recession has one wish above all: That the currency it’s creating flows beyond safe-haven assets and into riskier niches. Call it the democratization of credit or Ponzi finance. Either way, the result is a lot of borrowing and spending, which […]

July 11, 2019 | Strange Bedfellows Indeed: Trump And AOC Converge On Monetary Policy

President Trump and Congresswoman Alexandria Ocasio-Cortez don’t agree on much – and would be loath to admit it if they did. But their ideas on monetary policy are converging on the same goal: easy money forever. Trump is now trying to force the deep state to devalue the dollar: Trump has reportedly asked aides to […]

July 6, 2019 | This (Completely Reasonable) Change In Investor Behavior Would Send Gold To The Moon

Mark Mobius took over for the legendary John Templeton at Franklin Templeton’s Emerging Markets Fund back in the 1980s, and filled those big shoes well for three decades. Now running his own shop, he recently made what seems like a completely reasonable suggestion about gold — one that if adopted by the broader investment community […]

June 30, 2019 | Check Out The Epic Battle In The Gold Market

It is generally, if grudgingly, accepted that the “paper gold” markets – that is, the people trading futures contracts and options – are able to dictate the metal’s price and have used this power to suppress and delay gold’s inevitable trip to the moon. It’s also generally believed (at least by gold bugs) that demand […]

June 26, 2019 | Europe Gives Up On Sound Money, Prepares To Join The Currency War

Not so long ago, Europe seemed to have its financial house more-or-less in order. German government spending was actually falling. Industries that had been nationalized in the socialist 70s were being privatized. The European Central Bank – run by sound money advocate Jean-Claude Trichet – was smarter and more cautious than the incoherently rambunctious Bernanke […]

June 25, 2019 | Is Gold About To Get Whacked?

Gold has spent the past couple of weeks steamrolling technical barriers and reviving the spirits of long-suffering gold bugs. But markets don’t move in a straight line. Bull runs (if that’s what this is) have stomach-churning corrections along the way – usually just as everyone concludes that the good times will roll on forever. 321gold’s […]

June 24, 2019 | If History Still Matters, Silver Is Poised For A Huge Move

It’s been a pretty good couple of months for precious metals, but more so for gold than silver. Both are up but gold is up more, and the imbalance that this creates might be one of the major investment themes of the next few years. The gold/silver ratio – that is, how many ounces of […]

June 23, 2019 | Finally, FOMO Arrives For Gold

The past few years have been a feeding frenzy for most major asset classes. Stocks blew through previous highs, as did trophy real estate, fine art, and, most recently, Treasury bonds. A big part of the reason for what came to be called the everything bubble was the sense that with everyone else making easy […]

June 17, 2019 | Will A False Flag Iran War Cause A Financial Crisis?

Just a couple of weeks ago the financial world’s biggest worry was the plunging price of oil. Supply was up, stockpiles were building and speculation was pointing towards $40 a barrel, a price at which the fracking/shale oil “miracle” would evaporate. A trillion dollars of related junk debt would default, taking a big part of […]

June 9, 2019 | Something Huge Just Happened In Europe

Critics of modern monetary policy have been predicting that the day would come when a central bank would cut interest rates (or at least promise to), and the financial markets, instead of throwing a party, would fall. Then it would be game over for easy money. This has yet to happen in the US. Both […]

June 6, 2019 | Gold Tests Resistance – Again. Will The Sixth Time Be The Charm?

Here we go again. After a couple of big trading sessions, gold – for the d. It looks like fundamentals, including the Fed’s capitulation to choppy stock markets and trade-war related economic uncertainties, are trumping gold’s usual seasonality (strong in spring, weak in summer) at the moment. And those issues aren’t abating: Recent headlines paint […]

June 4, 2019 | The Fed Dusts Off “Whatever It Takes”

The most consequential words ever spoken by a central banker are, without doubt, ECB chair Mario Draghi’s 2012 promise to “do whatever it takes” to stop the bleeding of the Great Recession and keep the eurozone from spinning apart. Specifically: “Within our mandate, the ECB is ready to do whatever it takes to preserve the […]

June 2, 2019 | The Trump Trade War Recession?

You’d think that the more trouble the US causes around the world, the weaker the dollar would trade. Who, after all, wants to own the currency of the country perceived by most to be the source of today’s long list of trade conflicts and dirty wars? Apparently everyone, in a dynamic that’s been defying logic […]

May 31, 2019 | Slowing Economy, Plunging Stocks Are Forcing The Fed’s Hand

A few short weeks ago, the economy seemed to be growing, the trade war looked winnable and the Mueller Report appeared to take presidential impeachment off the table. And then… The economy hit a rough patch. Auto sales are down and home sales are way down. This morning: Pending home sales fall, marking the 16th-straight […]

May 30, 2019 | This Cycle’s Most Dangerous Bubble, In Three Charts

One of the lessons of the past few decades’ boom/bust cycles is that each financial bubble emerges in a different asset class. In the 1970s it was precious metals, in the 1980s junk bonds, in the 1990s tech stocks and in the 2000s mortgage-backed bonds. Today the only one of these with a reasonable chance […]

May 28, 2019 | Stumbling Towards Chaos: All This Happened In Just One Week

Every week is eventful these days. But the most recent one stands out for sheer edge-of-the-abyss when-it-rains-it pours diversity. Some of the highlights: US stocks fell for the 5th straight week “logging the longest weekly losing streak since June 2011.” The US yield curve inverted decisively as long-term Treasury yields plunged. Past yield curve inversions […]

May 27, 2019 | Financial Markets To Federal Reserve: Time To Start Cutting Rates

In late 2018 the US stock market tanked, in effect holding a gun to its own head and threatening to pull the trigger unless the Fed stopped raising interest rates. The Fed, painfully aware that an equities bull market is an existential threat in today’s hyper-leveraged world, quickly caved, promising no more rate increases if […]

May 25, 2019 | Silver Speculators Say It’s Time To Start Buying

The gold futures market took a big step towards bullish — or at least neutral — in the past week. Speculators (usually wrong at big turning points) scaled back their long bets while commercials (usually right at turning points) reduced their net short positions. This is progress, but still leaves speculators long and commercials short. […]

May 24, 2019 | Negative Interest Rates Spread To Mortgage Bonds

There are trillions of dollars of bonds in the world with negative yields – a fact with which future historians will find baffling. Until now those negative yields have been limited to the safest types of bonds issued by governments and major corporations. But this week a new category of negative-yielding paper joined the party: […]

May 22, 2019 | The Terrifying Truth About Negative Interest Rates

Pushing interest rates below zero is both an act of desperation and something that in theory should have a huge, immediate impact of the behavior of borrowers and savers. The fact that negative rates have become the new normal in big parts of the world but haven’t caused the expected behavior change should scare the […]

May 19, 2019 | Brutal Gold Futures Action Explains Last Week’s Big Price Decline

Just when it looked like gold futures — which still, unfortunately, dictate the price of physical precious metals — were ready to turn bullish, last week’s commitment of traders report (COT) revealed that commercial traders (usually right at big turns) had gone massively short while speculators (usually wrong at turning points) went aggressively long. That […]

May 17, 2019 | Trump Is Turning Out To Be A Consequential President

The Donald’s personal failings make it hard to say nice things about his presidency. Yet contrary to most inside-the-Beltway expectations, he’s having an impact. Let’s start with abortion, something that divides the country in a visceral way, with one side seeing it as murder and the other side viewing its prohibition as the subjugation of […]

May 15, 2019 | The Mixed Blessing Of Falling Birth Rates

The developed world is doing something unprecedented: It’s no longer reproducing. That’s great for the environment and very good for the work and housing prospects of the relative handful of kids that are being born (since fewer workers mean rising pay and fewer households mean cheaper real estate). But it’s bad for retirees who will […]

May 13, 2019 | Tales From The Casino, Part 1: Funds That Bet On Volatility Might SPIKE Volatility, Crashing The Markets

It’s a measure of modern financial markets’ absurdity that bets on bets on bets have come to seem normal. Maybe acronyms like CLO and CDO make them sound scientific. Or maybe it’s the sense that if Wall Street’s “rocket scientists” create something it must be highly advanced and therefore beneficial for society. But in reality, […]

May 10, 2019 | A Different Kind Of Wage Inflation Heralds This Cycle’s End

Towards the end of long expansions (this one is the longest on record) things get tight. Factories operate flat-out and start raising prices. Good workers become harder to find and companies start competing for them with higher wages and other perks. This story is about the “other perks” which, because they don’t show up in […]

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