DJ MS CRAZY D-BASE
It’s so hard to know where to start any economic commentary this “Covid”, world.
Actually, this note was waiting for the gold price to take breather before it could be completed but now we’ll just have to finish it anyway.
As you can see from the chart below, Gold in USD, has been suffering a little “parabola”, in recent times.
For those investors underweight the useless yellow barbaric relic, that no one wants, one should be relived that it’s not yet made an all-time high in AUD.
And it may also be useful to know for said “underweight investors” in high quality, low cost, no debt Australian gold miners are that they are actually down for this week to date. See the chart below.
If one has been invested in gold stocks since the last Financial Crisis one certainly understands why gold stock investors always have one finger on the sell button!!!!
However, the biggest news of the last two weeks (yes, Corona and Trump included) was the almost (until a severe beat-down last night) return to precious metal status of Silver, Golds long lost relative and sworn enemy of Wall Street.
Ah well, was fun while it lasted.
The serious issue for global investors should be the “why”, of the seemingly sudden nature of precious metal mis behaviour.
Unfortunately, there are not many financial commentators calling this Covid + Maxed out debt (causing no growth) + no derivative collateral + + + + for what it is.
If you don’t feel it by now, it’s the end of an economic super cycle and NOTHING, NOTHING will stop Central Bankers from going ALL IN on more of the same to keep it going, whilst expecting a different result. Actually, we’re not sure they care for the long term result.
These last of these policies, include Negative Interest rates. Maybe, it’s this final, “whatever it takes” commitment from US Fed Chair J-Powell last week that lit up Precious Metals?
Who knows, the Europeans and Japanese have been at it for years.
We prefer not to pen our preference for the, “something else afoot” theory, to the rise in precious metals, such is the beating we’ve taken since the Paulson TARP (Troubled Asset Relief Program) of 2009.
We submitted some troubled assets, still no response.
The reality is, for the first time in 1000 years (could be more, we’ve shown this chart before), negative interest rates are an accepted tool of Central Bank policy, thought of as a kind of insurance, to get your money returned, not bothering about the “return on capital” rate, rather the return of.
We’ve run out of potential reader head space to go through the legendary Mike Green’s (Logica Capital) call of a negative US 10-year bond rate as, “THE END GAME”, for now.
For now, just add the prospect of inflation (purchasing power of money decreasing) to the above global negative interest rate scenario. Inflation, we’ve covered this before many times on this site for those wishing to review.
Sufficient to say that, if rising gold and other hard commodities signal any type of actual inflation, global central planners have a problem that is not solvable, no tools left, as more will make it worse.
Whilst we’re on the “unsolvable”, we’re going to leave you with some pictures that give you a glimpse into the future that may have scared some investors into precious metals.
The only political statement we wish to make around the attempt at humour below is:
The undiscussed and indisputable contribution of constant too big to fail bail outs and Central Bank policy contribution to the incredible and fast-growing Wealth divide is a major issue. Globally, on both sides of politics.
Many of the most energized and active PC warriors cannot get this, for now. Hope for a peaceful solution seems unrealistic.
Don’t forget, Gold is not rising, the purchasing power of your paper money is D-Basing!
Adios.
