I’ve written several Fun on Friday columns about eating gold. I told you about the golden goose. I told you about the LA steakhouse that will serve you a nicely cooked steak garnished with gold flakes. I even told you about an Indian caterer who responded to a couple’s request to “stun” their wedding guests by making them “poop gold.”
Of course, if you’re going to eat, you’re also probably going to want to drink. If so, I’ve got something to tell you about. You’ve heard beer referred to as the “golden brew,” right? Well, a brewery in Ohio is taking that term very literally.
North American funds gobbled up gold last month as gold-backed ETFs collectively added 22.5 tons of the yellow metal globally in March.
Overall, gold-backed ETFs increased their holdings to 2,415 tons worth an estimated $102.8 billion, according to data released by the World Gold Council.
Jim Grant recently interviewed former Ronald Reagan Officer of Budget and Management David Stockman on his Grant’s Interest Rate Observer podcast.
Their conclusion?
America is broke.
And central bank free money broke it.
“As a dog returns to its vomit, so fools repeat their folly.” – Prov. 26:11
It appears there is some repeat folly brewing.
Remember subprime mortgages? Well, they’re back.
There has been a lot of volatility in the stock market over the last couple of months. Peter Schiff has been saying we are already in a bear market. But most mainstream analysts remain upbeat. They insist the recent volatility is normal. The economy is picking up steam. Inflation remains tame. The jobs market continues to grow. Everything is great!
But there are realities underlying this market few people seem to be paying any attention to, and they reveal a serious disconnect between corporate America and Wall Street.
Companies are drowning in debt.
Gold demand will increase modestly in 2018 as mine production remains flat, according to an industry report.
Metals Focus released its Gold Focus 2018 report this week. It projects a 1% increase in gold demand this year with stronger physical investment, jewelry and industrial demand partially offset by a drop in central bank buying.
After rallying on Friday, stocks tanked on Monday, dropping over 450 points. In fact, it was the worst first day of the second quarter since the Great Depression.
Most analysts blamed the plunge on the escalating trade war, but Peter Schiff has a different take. He said it was just another bad day in a bear market. In fact, he said the market could have rallied because the Chinese response wasn’t as bad as it could have been. But when you’re in a bear market, all news is bad news.
The trade war is heating up. Could it jump-start a breakout in gold?
Some analysts think so.
China fired a salvo in what could become a full-blown trade war on Monday. The Asian nation slapped tariffs of up to 25% on 128 US products including frozen pork, wine and steel pipes in retaliation for US tariffs levied on Chinese steel and aluminum.
Stock markets rallied to close out March and ended up in the black for the holiday-shortened week, but markets were down on the month and also for Q1 2018. In fact, it was the first quarter in the red for stock markets in 10 quarters.
During his most recent podcast, Peter Schiff said he thinks this was just the first of many down quarters to come, reiterating a theme he hit on last week.
Remember, the market action that I’ve been observing really, to me, looks like a bear market.”
Indians are hoarding their gold despite an increase in the price during the first quarter of 2018. Analysts say they are holding onto their gold in anticipation of bigger price increases.
Gold was up around 1.5% in dollar terms in the first quarter of this year. According to the Economic Times of India, the yellow metal appreciated 4.41% in rupees.
Even with that healthy increase, old gold sales in India fell by 35-40% in Q1 2018 compared to the previous quarter. According to the paper, analysts and traders think Indians are holding back selling in anticipation of further price increases, especially if the US and China get into a full-blown trade war.
