Mar 31, 2020

Gold Isn't A Fear Trade

The media coverage, what little there is, of why people are buying gold, is wrong. Gold isn't a fear trade, or a hedge against the stock market. It's the best way for savers to protect their purchasing power when central banks are intent on destroying it by printing paper money. 

Thoughts On Trump's Infrastructure Spending Plans

President Trump thinks it's the perfect time for the government to borrow trillions more to improve our infrastructure. That's like a guy who just lost his job deciding it's the perfect time to take out a second mortgage to put in the swimming pool he's always wanted.

You Are Paying For The Bailouts!

If you don't know who is paying for the massive stimulus bill and bailouts, it's you. There's no free lunch. Everyone who saves or earns dollars will have their purchasing power stolen to fund an unprecedented increase in government spending. If you don't want to pay, buy gold.

Mar 26, 2020

The US Dollar Is Entering a Tailspin

Last week as the US dollar spiked many currency speculators were suckered into the trade. They are now underwater hoping for a rally. Soon they will stop hoping, and bailout of the biggest currency head fake ever. The US dollar is entering a tailspin from which recovery is impossible.

Topics: currency trading, forex, US Dollar;

Mar 25, 2020

Gold Is The Safe Haven

Treasury bonds are not a safe haven. The Federal Reserve will own all the Treasury bonds, as well as most other U.S. dollar denominated debt. The problem is that the tens of trillions of dollars the Fed will print to buy all those bonds will be practically worthless. Gold is the safe haven.

Real bond yields will plunge as inflation soars. Normally rising inflation would push up nominal yields to compensate buyers for the erosion of their purchasing power. But since the Federal Reserve is buying to keep nominal yields from rising, the entire bond market is about to be monetized!

Mar 24, 2020

Gold: How It Reacts During Crisis

During the 2008 financial crisis, gold fell about 25 percent and took seven months to make a new high. This time gold only fell about 15 percent, and may make a new high in under a month. This shows how much greater this financial crisis is, and how much more reckless current Fed policy is.

Related trading instruments: SPDR Gold Trust ETF (GLD), Market Vectors Gold Miners ETF (GDX)

Bailing Out The Airline Industry

Watching CNBC anchors spreading more industry propaganda that without a government bailout, the U.S. will not have an airline industry. Without a bailout the U.S. will have a much stronger airline industry. To work at CNBC one must fail a test on free market economics.

Related trading instruments: Delta Air Lines (DAL), American Airlines (AAL), JetBlue Airways (JBLU)

Mar 23, 2020

QE Infinity Will Crash The U.S. Dollar

Americans wanting intervention to weaken the U.S. dollar should be careful what they wish for. The overvalued U.S. dollar is making things worse abroad, but it's actually lessening the pain here. Quantitative Easing (QE) infinity will crash the U.S. dollar on its own once the global dollar liquidity squeeze ends.

Mar 21, 2020

Gold Will Skyrocket

Gold is falling because investors are clueless as to what is coming. Their mindset is similar to that of central bankers. They have no idea how bad the consequences of the current monetary and fiscal policy mistakes will be. When they figure it out en masse, gold will skyrocket.

Related trading instruments: SPDR Gold Trust ETF (GLD), iShares Silver ETF (SLV), Market Vectors Gold Miners ETF (GDX), Market Vectors Junior Gold Miners ETF (GDXJ)

Mar 19, 2020

Inflation Is Coming

All the discussion of the current economic decline and whether the stock market has bottomed is missing the point. The damage being done now by Federal Government spending and Federal Reserve money printing to cushion the immediate impact has adverse consequences worse than the Coronavirus. 

The money the Federal Reserve is printing isn't going to have value. It isn't going to buy anything. Prices are going to skyrocket. And in fact, this coronavirus is accelerating that process because it's reducing the supply of goods available to buy.

Mar 16, 2020

This Crisis Is Economic, Not Merely Financial

The financial crisis of 2008 was a cake walk compared to this. All that happened in 2008 was real estate prices fell, borrowers defaulted, and lenders lost money. Today global commerce is grading to a halt. Production is shutting down. This crisis is economic, not merely financial.

Game Over!

In 2008 we bailed out the banks and GSE's, as they owned the mortgages. Today it's not just mortgage debtors who can't pay, it's all debtors. It's not just banks that need to be bailed out, but every leveraged business in every industry. Who is left to do the bailing? Game over!

Mar 12, 2020

The Russell 2000 Index Is Down 33% From Its High

The Russell 2000 Index, the purest stock play on the U.S. economy, is down 33 percent from its record high set in August of 2018, wiping out all the gains from June of 2016, 3 months before real Donald Trump was elected President. A Presidency that lives by the stock market dies by it as well!

Related trading instruments: iShares Russell 2000 Index ETF (IWM), SPDR S&P 500 Index ETF (SPY), Nasdaq 100 Index ETF (QQQ), SPDR Dow Jones Industrial Average ETF (DIA)

This Is Similar To 2008

CNBC anchors keep repeating that what is happening now bears no resemblance to what happened in 2008. Not only is this extremely similar to 2008, as in both cases a credit bubble popped, but it's also similar in that none of the anchors on CNBC saw that crisis coming either!

Mar 9, 2020

Why Own Bitcoin?

Bitcoin was created after the 2008 financial crisis and hodlers always assumed that it would be the safe-haven of choice during the next. Looks like they assumed wrong. If Bitcoin is not a currency, not a store of value, and not a safe haven, then what is it and why own it?

The Fed Will Cut Rates To Zero

The collapse in oil prices will provide cover for the Federal Reserve to cut interest rates to zero and ramp up QE, as it can claim it's necessary to fight declining inflation expectations. But when the U.S. dollar cracks, and oil and consumer prices surge, the Federal Reserve will be unable to reverse the policy.

Mar 5, 2020

The Dow Jones Transports Is In Bear Market Territory

The Dow Jones Transports are leading the decline, now down 20 percent into official bear market territory. The next stop is the December 2018 low, which is 5 percent below current levels. If we take that out the January 2016 low is a realistic target. That would be a 44 percent decline from the high! 

Related stocks: Delta Air Lines (DAL), United Parcel Service (UPS), Union Pacific Corporation (UNP), American Airlines

How A Recession Really Happens

What happens when declining revenue results in over-leveraged businesses being unable to make the interest payments on their debts?

What happens when over-extended workers living paycheck-to-paycheck get laid off and can’t make their mortgage, car loan, or credit card payments?

The Fed Can’t Stimulate The Economy During Downturns

The Federal Reserve should not even have the mission of stimulating the economy during downturns, as it can’t actually do it. All the Federal Reserve can do is exacerbate the problems that recessions attempt to solve. The Fed only succeeds in delaying the day of reckoning by making the problems bigger.

Trump Cannot Beat Biden In A Recession

While it was possible that Donald Trump could beat Bernie Sanders during a recession, there is no way he can beat Joe Biden. Biden won't be good for the economy or the stock market. He will increase government spending, taxes, and regulation substantially. Look out below!

Mar 1, 2020

The Last Thing The Fed Should Do

The last thing the Federal Reserve should do now is rescue the stock market or the economy by cutting interest rates. It's rate cuts of the past that have left both the stock market and the economy so vulnerable in the present. It's much better to swallow some very bitter tasting medicine.

Related trading instruments: SPDR S&P 500 Index ETF (SPY), Nasdaq 100 Index ETF (QQQ), SPDR Dow Jones Industrial Average ETF (DIA)

Stocks: Sell-Off or Crash?

CNBC anchor Andrew Ross Sorkin of CNBC just said there is no other word to describe the recent market plunge other than "sell-off." Let me introduce a new word into Andrew's vocabulary, "crash."

Related trading instruments: SPDR S&P 500 Index ETF (SPY), Nasdaq 100 Index ETF (QQQ), SPDR Dow Jones Industrial Average ETF (DIA)

The U.S. Economic "Recovery" Was Based On A Stock Market Bubble

The U.S. economic "recovery" was based on a stock market bubble. Once that bubble pops there is no way to avoid a severe recession. It does not matter why the bubble pops. All that matters is that it does. A stock market crash pulls the rug out from under an asset-based economy.

Sanders Generates Enthusiasm By Promising Free Stuff

Senator Bernie Sanders generates enthusiasm not by promising more freedom, but more free stuff. His sales pitch is not to allow voters to keep more of what they earn, but to take more of what others earn. It’s a campaign based on envy and theft, rather than personal achievement.

Sanders says “anyone who feels entitled to a decent standard of living” should join his campaign. No one is entitled to anything they did not earn. No one has a right to use government to steal what others have earned. Plus, what defines decent and who defines it?

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