Nov 30, 2016

The Bearish Gold Narrative Is False

What people are saying is that because we are going to have a higher inflation, the Federal Reserve is going to have to raise interest rates to fight that higher inflation and those higher interest rates will be bullish for the U.S. Dollar and a strong dollar is going to hurt gold prices. But even if we do get one or two interest rate hikes over the next several years, that will not be sufficient to restrain the inflationary forces that will be building in the economy.

So even if interest rates go up slightly, inflation will go up much more and so real interest rates in an inflationary environment will be falling and not rising and that is very negative for the U.S. Dollar and it is extremely positive for gold. (Barrick Gold (ABX), Market Vectors Gold Miners ETF (GDX), Market Vectors Junior Gold Miners ETF (GDXJ), SPDR Gold Trust ETF (GLD), Newmont Mining (NEM), Goldcorp (GG), NovaGold (NG))

Nov 29, 2016

Higher Inflation Is Bullish For Gold

The idea that higher inflation is somehow a negative for gold is completely wrong. I do agree that the markets are correct in that inflation will be increasing, especially given the stimulus that a Republican Congress and President Trump may in fact deliver. But that is a good thing for gold, not a bad thing for gold. (SPDR Gold Trust ETF (GLD), Market Vectors Gold Miners ETF (GDX), Market Vectors Junior Gold Miners ETF (GDXJ), Newmont Mining (NEM), Barrick Gold (ABX), Goldcorp (GG))

Nov 28, 2016

For How Long Can The Market Be Oblivious To Higher Rates?

For how long can the stock market be oblivious to higher interest rates? Because not only do higher interest rates dramatically slow the economy, they crush the housing market, but stocks themselves, you value stocks based on interest rates. You discount earnings based on interest rates.

Even if the earnings go up a little bit, you have to discount them by a higher amount and the PEs (price to earnings ratio) are already very high and the justification for the high PEs was not the growth rate, it was the discount rate. (SPDR Dow Jones Industrial Average ETF (DIA), SPDR S&P 500 Index ETF (SPY), Nasdaq 100 Index ETF (QQQ))

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