Everybody seems bullish on the economy. Nobody is worried about anything, even though there is everything to be worried about. Peter Schiff said he feels like he’s in Alice in Wonderland. In his most recent podcast, he referenced a Morgan Stanley analyst interviewed by CNBC.
She’s unquestioningly bullish on every front. Everything is bullish. There is nothing at all to worry about. In fact, the only thing she said that anybody is worried about is that there’s nothing to worry about. It’s that things are so good, they’re wondering what are we missing. Maybe we should be a little bit worried because nobody is worried because everything is good. I mean, there are so many things to worry about. That is the reality. But they’re not worried about any of them.”
Over the last two years, the Federal Reserve has been nudging interest rates higher and their efforts are starting to bear fruit in the marketplace. Bond yields are beginning to climb.
The question is how high can rates go before the house of cards the central bankers built comes tumbling down?
Precious metals dealers are bullish on gold and silver in 2018.
According to an informal survey conducted by the nonprofit Professional Numismatists Guild, retailers anticipate gold will reach $1,460 this year, and perhaps climb even higher. They also like silver’s prospects, projecting the price to hit the $20 per ounce mark.
The dollar continued to tank Wednesday, hitting a 3-year low after Treasury Secretary Steven Mnuchin said he welcomed a weakening dollar.
The dollar index measuring the greenback against a basket of six major currencies slipped below 90 for the first time since December 2014. Meanwhile, gold climbed, hitting its highest level since August 2016.
The World Gold Council has weighed in on the cryptocurrency vs. gold debate. Unsurprisingly, the organization came down on the side of the yellow metal. But despite whatever bias you might perceive, the WGC report is certainly worth considering.
Why should you buy gold?
A report published this week by the World Gold Council pinpoints four key reasons.
Gold is a highly liquid yet scarce asset, and it is no one’s liability. It is bought as a luxury good as much as an investment. As such, gold can play four fundamental roles in a portfolio.
Many state legislatures kick off their 2018 sessions this month and that means continuing efforts to facilitate gold and silver ownership at the state level.
Bills introduced in Tennessee and Alabama would repeal state sales taxes on the sale of gold and silver bullion, and an Arizona bill would build on a foundation set last year and take another step toward treating gold and silver as money. These efforts not only help expand the market for gold and silver in the US, they also have the potential to undermine the Federal Reserve’s monopoly on money.
There is a lot of talk about Bitcoin versus gold, but the blockchain technology that serves as the foundation for Bitcoin may become an important part of the gold market in the future.
According to a Bloomberg report, the London Bullion Market Association (LMBA) plans to seek proposals including the use of blockchain to track gold ownership.
Markets in commodities from crude oil to diamonds and even tomatoes are looking at using the digital ledger technology that underpins cryptocurrencies like Bitcoin — known to some as ‘digital gold’ — to track ownership. Tracing gold supply is key to preventing metal that funds armed conflict from entering world markets, identifying owners and maintaining security from mine to vault.”
Ten-year bond yields have hit their highest level since July 2014.
Meanwhile, the stock market has gone up about 45% since that time. Contrast that with earnings that have increased just 6%. As Peter Schiff pointed out in his most recent podcast, a lot of the justification for that increase in stock market valuation has been lower interest rates.
Well, they’re not lower anymore. They’re back exactly where they were in July 2014. But what’s more ominous is not where they are but where they’re headed.”
We’ve written extensively about the stock market bubble blown up by artificially low interest rates and Federal Reserve quantitative easing. But stocks aren’t the only asset bubble out there. In fact, 2017 may go down as the year of the bubbles. And the new housing bubble is one that seems to be floating under the radar.
Financial manager James Stack has noticed it. He predicted the housing crash in 2005, and he told Bloomberg the housing market is flashing red again.
It is 2005 all over again in terms of the valuation extreme, the psychological excess and the denial. People don’t believe housing is in a bubble and don’t want to hear talk about prices being a little bit bubblish.”
