We recently reported that bankers around the world have started to express concern about the rapidly inflating stock market bubble, and its future impact on the world economy. While many in the mainstream banking world agree the problem exists, they see different causes and call for different solutions. Some worry the Fed might raise rates and end expansionary policies too quickly. Some fear the central bankers may not do it fast enough. These contrasting concerns reveal the tight spot the Fed finds itself in. Yellen has put herself between a rock and a hard place. If she tightens, she risks bursting the bubbles. If she doesn’t, she risks inflating bubbles further, leading to an even bigger crash when they finally burst.
The following article by Thorsten Polleit was originally published by the Mises Institute Fed Watch. It offers some in-depth analysis on the options the Fed faces along with a gloomy conclusion. No matter what, it will remain on a course to trouble.
The usual suspects are in the process of inflating an eerily familiar bubble.
It’s another housing bubble, but this time centered on rental property.
July was a good month for gold. The yellow metal was up 2.1% on the month, driven in large part by a weakening dollar and political uncertainty in the US. In fact, it’s been a good year for gold so far. It’s up just over 10% to date.
This is great, but we’re taking a pretty short-term view here. What do things look like if we step back and take in a broader perspective?
It’s been a pretty good century for gold.
States continue to pass measures that chip away at the Federal Reserve’s monopoly on money by facilitating and encouraging the use of gold and silver.
Under a bill recently signed into law by North Carolina Gov. Roy Cooper signed a bill into law investors will no longer have to pay state sales taxes when they buy gold and silver. The new law removes an important roadblock in the way of their everyday use as money, taking the first step toward breaking the Federal Reserve’s monopoly. With the governor’s signature, the law went into effect retroactively to July 1, 2017.
A month earlier, Louisiana Gov. John Bel Edwards signed a similar bill into law that went into immediate effect.
While repealing state sales taxes on precious metals may seem like a relatively small step, it removes one barrier to owning gold and silver and eliminates a penalty on the use of sound money.
The Dow cracked 22,000 this week, marking the third 1,000-point milestone in 2017. The Dow industrials are up 20% since election day.
In fact, Pres. Trump is taking credit for the rise. As the Dow approached the 22,000 mark, the president tweeted that the market has gone up 4,000 points since his election.
In his most recent podcast, Peter Schiff once again points out that the economic fundamentals don’t support this stock market bull run, saying there are cracks in the foundation.
Silver production in Chile plummeted 32% in May.
This precipitous drop in output in the world’s fifth largest silver producing country is part of a broader trend of falling production and tightening silver supply.
According to reporting by Seeking Alpha citing Chile’s Ministry of Mines, the country’s silver production in May fell to 97.1 tons compared to 141.9 tons in May 2016.
You can call London the City of Gold.
According to figures released by the London Bullion Market Association (LBMA), as of March 31, vaults in London held 7,449 tons of gold. That’s the equivalent of about 596,000 gold bars. The value of the yellow metal stored in London vaults is close to $300 billion.
London is also home to 32,078 tons of silver valued at $19 billion. That’s roughly the equivalent of 1,069,255 silver bars.
The amount of gold in the city underscores its position as the world’s biggest gold trading center.
Debt in the US is the mother of all bubbles.
The US government is more than $20 trillion in debt, with actual unfunded liabilities pushing far higher. Meanwhile, American families have amassed more than $1 trillion in credit card debt alone.
During a speech at Cambridge House IMWC earlier this summer, Peter Schiff discussed the massive levels of government, corporate, and personal debt in the US and how it will eventually take the air out of America’s bubble economy.
Peter starts the speech by showing the economy isn’t nearly as great as the mainstream pundits claim. He highlights the massive levels of debt, how the government manipulates employment numbers, and the very real problem of inflation. Then he shows how Federal Reserve policy has gotten us into this predicament and the choice it will ultimately be forced to make. Peter says in the end, the Fed will sacrifice the dollar.
July was a good month for gold.
The yellow metal was up 2.1% on the month, driven in large part by a weakening dollar and political uncertainty in the US. It was the strongest month for gold since February.
The price hit $1,270.98 on July 31, the highest level since mid-June.