High-level macro-market insights, actionable economic forecasts, and plenty of friendly candor to give you a fighting chance in the day's financial fray.
Good issue. I read Micheal Lewitt's output constantly and he has the appalling situation nailed down quite well.
One thing on gold. I am a holder of the physical and mining stocks but I thought the 2020 price rise was the start and so doubled my miner positions. Consequently I am still about 10% in deficit today on the miners, although up about 15% on the metals overall.
One thing that has now entered my thought process is the possibility / probability that gold will be made illegal once again if it gets to $5k let alone $10k. I have read many saying that this wont happen in todays world since gold is no longer transactional "money" for the masses. However I see Russia and China (latter probably has 2-4 times more gold than the official statistics) and a host of others leaning toward a gold backed future and in a "war" scenario, be it a hot one or a financial one, I can see our corrupts government system "nationalizing" the mines and the metal to save the dollar from collapsing. Most probably feel thats very unlikely but just take a look at what governments are already doing. Even if it's only a 10-20% chance it seems like some form of self protection is wise. What I certainly do believe is that the capital gains taxes on gold (and probably silver too) will soar. Forget the 28% collectible level. At $5000/oz gold I expect gains taxes will be windfall(d) at 50% minimum and quite possibly toward 70 -80%. Something to consider.
The twin deficits come from the same place. We have open capital markets which allows foreign countries to suppress their own workers and export their resulting weak demand to the US. Blaming Congress is silly. When trade is more balanced, they won’t be able to spend like they do now. As long as it is imbalanced you will have large deficits in either the public, private, or a combination of those sectors.
Gold and bonds tend to be correlated - falling real rates are good for gold. But in the scenario you discuss, a U.S. debt default, they'd likely move in opposite directions at first (gold becoming a safe haven), but then reverse as higher real yields would be required to compensate for the added risk of Treasuries. Does that roadmap make sense to you?
Just renewed my 3 mo T-bills at 5.25. An old indicator, dead for 10 years that now is alive and well. Avoid stocks and stay with T bills when the SPX earnings yield is less than the 3 mo T bill yield. As of Sat Barrons, SPX EY is .82% less than the 3 Mo T bills. This usually happens when the Fed is raising rates. When the SPX EY becomes positive, go back into stocks when the 50 day is above the 200 day and the 200 day is sloping up.
Very good exploration, David. Physical Gold is the play of the millennium for this Fourth Turning paradigm shift. 'Do or die' time for humanity. Our saving grace against the evil controlling so called 'elite' is that evil Force (police/military/tax) based systems such as the global matrix construct now extant are unnatural and as such are doomed to total failure. Also numbers are on our side (they are few and we are many). The incoming debt ceiling fiasco is a catch 22 doom loop setup whichever way it goes. In the 2019 Jackson Hole Blackrock white paper, they noted that a hyper inflation collapse is almost inevitable once the INFLATION monster is loosed upon the land, which it is now. No escape now possible. In God and Gold I Trust
Good issue. I read Micheal Lewitt's output constantly and he has the appalling situation nailed down quite well.
One thing on gold. I am a holder of the physical and mining stocks but I thought the 2020 price rise was the start and so doubled my miner positions. Consequently I am still about 10% in deficit today on the miners, although up about 15% on the metals overall.
One thing that has now entered my thought process is the possibility / probability that gold will be made illegal once again if it gets to $5k let alone $10k. I have read many saying that this wont happen in todays world since gold is no longer transactional "money" for the masses. However I see Russia and China (latter probably has 2-4 times more gold than the official statistics) and a host of others leaning toward a gold backed future and in a "war" scenario, be it a hot one or a financial one, I can see our corrupts government system "nationalizing" the mines and the metal to save the dollar from collapsing. Most probably feel thats very unlikely but just take a look at what governments are already doing. Even if it's only a 10-20% chance it seems like some form of self protection is wise. What I certainly do believe is that the capital gains taxes on gold (and probably silver too) will soar. Forget the 28% collectible level. At $5000/oz gold I expect gains taxes will be windfall(d) at 50% minimum and quite possibly toward 70 -80%. Something to consider.
The twin deficits come from the same place. We have open capital markets which allows foreign countries to suppress their own workers and export their resulting weak demand to the US. Blaming Congress is silly. When trade is more balanced, they won’t be able to spend like they do now. As long as it is imbalanced you will have large deficits in either the public, private, or a combination of those sectors.
Gold and bonds tend to be correlated - falling real rates are good for gold. But in the scenario you discuss, a U.S. debt default, they'd likely move in opposite directions at first (gold becoming a safe haven), but then reverse as higher real yields would be required to compensate for the added risk of Treasuries. Does that roadmap make sense to you?
On EM bond closed end funds, what do you think would happen to NAV and discount if there is a moderate US recession? I hate substantial drawdowns :-(
And without mentioning any $ticker $symbols, do you prefer Templeton over Morgan Stanley for closed end funds manager?
Just renewed my 3 mo T-bills at 5.25. An old indicator, dead for 10 years that now is alive and well. Avoid stocks and stay with T bills when the SPX earnings yield is less than the 3 mo T bill yield. As of Sat Barrons, SPX EY is .82% less than the 3 Mo T bills. This usually happens when the Fed is raising rates. When the SPX EY becomes positive, go back into stocks when the 50 day is above the 200 day and the 200 day is sloping up.
Thank you for mentioning No Labels Org, very interesting.
Great piece. Thanks.
"A house divided...." is Mark 3:25 in the bible. Might be Lincoln said it as well though.
Re long Treasuries- I believe the mandates of many pension funds require them to buy these ?(not that I agree with that mandate)!
Very good exploration, David. Physical Gold is the play of the millennium for this Fourth Turning paradigm shift. 'Do or die' time for humanity. Our saving grace against the evil controlling so called 'elite' is that evil Force (police/military/tax) based systems such as the global matrix construct now extant are unnatural and as such are doomed to total failure. Also numbers are on our side (they are few and we are many). The incoming debt ceiling fiasco is a catch 22 doom loop setup whichever way it goes. In the 2019 Jackson Hole Blackrock white paper, they noted that a hyper inflation collapse is almost inevitable once the INFLATION monster is loosed upon the land, which it is now. No escape now possible. In God and Gold I Trust