The SchiffGold Friday Gold Wrap podcast combines a succinct summary of the week’s precious metals news coupled with thoughtful analysis. You can subscribe to the podcast on iTunes.
Bitcoin and the blockchain are joined at the hip – so much so that a lot of people don’t distinguish between the two. Cryptocurrency and blockchain have almost become synonymous. But in fact, they are two different things, and it’s important to understand the distinction.
The blockchain is a technology. Cryptocurrency is a medium of exchange or a store of value that operates on that technology. You can have a blockchain without cryptocurrency, but you can’t have cryptocurrency without a blockchain. In fact, there are a lot of other possible uses for the blockchain beyond serving as a platform for bitcoin.
Last month, we reported on troubling signs in the corporate bond market. According to Moody’s, the majority of US companies have a “speculative” credit rating. They are considered high risk. As a result, their debt is “high yield” or “junk. When you combine leveraged loans and junk bonds, the total level of “junk” debt in the US marketplace comes in at around 37%.
In a recent article, investment guru and economic analyst Jim Rickards said we may soon face a devastating wave of junk bond defaults.
The next financial collapse, already on our radar screen, will quite possibly come from junk bonds.”
Some people claim gold isn’t “sound” money any more than dollars or euros. They argue that the gold supply can be inflated just like a fiat currency. After all, gold is constantly being pulled out of the ground, right? They say a gold standard actually makes the boom-bust cycle worse. But commentators who make this claim miss a number of important points.
The following article was written by Peter Schmidt. Any views expressed are his own and do not necessarily reflect the views of Peter Schiff or SchiffGold.
When Nixon closed the gold window in August 1971, the US found itself in exactly the same economic circumstances as Britain had in September 1931 when she reneged on her gold standard obligations. If Ben Bernanke’s theory on the Great Depression is correct – namely, that ‘countries that left gold earlier also recovered earlier’ – the United States should have received an enormous economic shot in the arm after finally freeing itself from its formerly golden fetters.
So what has all the resulting money creation and credit expansion from the Fed’s PhD economists with total freedom of action wrought since 1971? A cursory review of the automobile industry, which is not an unreasonable proxy for the entire US economy, reveals that the economy did not receive a shot in the arm by freeing central bankers from their “golden fetters”– unless of course the shot was loaded with some sort of highly-toxic economic poison.
The price of gold has languished in recent weeks. After falling below $1,300 in May, the yellow metal has hit 2018 lows this month. Dollar strength along with the anticipation of further Federal Reserve rate hikes have bolstered the dollar and weighed on gold.
Peter Schiff has been saying this dollar strength is merely an upward correction in a bear market. Peter’s not alone in this view. Some mainstream analysts have even acknowledged the dollar surge is likely temporary.
So what about the gold market? Should we just give up on it? Well, as we’ve pointed out, fundamentals point to an overall healthy market for the yellow metal. And we’re not alone in our thinking. An article in the Economic Times of India points out three reasons gold will likely come out of its slumber. Interestingly, we’ve touched on all three of the factors this article mentions.
Dan Kurz runs the DK Analytics website where he posts detailed breakdowns of complex economic issues. We recently interviewed Dan as part of our It’s Your Dime Series. In his most recent post, Dan used his analytical skills to break down the first 18 months of the Trump administration.
Dan finds a little good, a little bad and even some ugly in the first year-and-a-half of Trump’s term. Dan likes the fact that the president has called out fake news, the fact that he seems to be pushing back against the establishment/deep state and his Supreme Court picks. On the other hand, Kurz believes the growing trade war could be bad news for the US economy and sees some troubling Hooverism developing.
Global mine production fell slightly in 2017, the first drop in mine output since 2008. In fact, gold production has generally increased every year since the 1970s. The drop in 2008 was something of an anomaly, as it occurred at the onset of the 2008 financial crisis. The recent slowdown in mine production is more concerning. In fact, many people speculate we may be at or near “peak gold.”
There has been a tremendous amount of debate about building walls to stop illegal immigration. But the IRS is building walls to keep Americans in.
The US government is cracking down on Americans with outstanding tax bills by revoking passports.
Rutgers University-New Brunswick researchers have developed a star-shaped gold nanoparticle that could open the door to improving storage of solar energy.
According to scientists at the university, the nanoparticle coated with a semiconductor can produce hydrogen from water over four times more efficiently than other methods. The development could boost solar energy use and possibly lead to other renewable energy developments.
