Donald Trump and Chinese Vice Premier Liu inked their signatures on the Phase 1 trade deal this week. But was it really a big deal? Or was it no deal? Mike Maharrey talks about it on this week’s Friday Gold Wrap podcast. He also talks about why the gold market seems to be holding steady despite some strong headwinds and the outlook for the yellow metal in 2020.
A week ago, nearly $100 billion in short-term liquidity was added via the Federal Reserve Bank of New York offering cash in the repo market.
As a reminder, the repo market is the overnight market of repurchase agreements. This is where one sells an asset with an agreement to purchase it back at a slightly higher price the next day. In other words, very short term collateralized lending.
The sound of war drums dominated this week. After Iran launched missiles at US bases in Iraq in retaliation for an airstrike that killed an Iranian general, gold spiked to over $1,600 an ounce — an eight-year high. But tensions seem to have eased and the price of gold with it, as the war drums have quieted. So, what did we learn from this and what’s next for the gold market? Host Mike Maharrey talks about it in this episode of the Friday Gold Wrap podcast.
Sometimes it’s a lot easier to sit down at the table than it is to fold your hand and leave.
Nearly four months after it started, the Federal Reserve continues to run overnight repo operations and it’s unclear when the central bank will actually end these “emergency” measures.
The Fed stepped into the repo markets last September to “unplug” the financial system’s “plumbing” with an injection of cash. It was the first such move since the financial crisis a decade ago. The move stabilized the markets, but months later, it doesn’t appear the Fed has a viable exit strategy.
Gold had a pretty good run in 2019. In fact, it was the best year for the yellow metal in nearly a decade. So what’s in the cards as we rush headlong into the 2020’s? In this episode of the Friday Gold Wrap podcast, host Mike Maharrey looks back at 2019 and highlights some of the things that drove precious metals markets. Then he pivots and looks ahead at 2020 and beyond. Where are we going and what will get us there?
In 2019, gold had its best year since 2010. Peter Schiff appeared on the RT Dec. 31 and said he thinks the yellow metal should have done even better. And given the current economic conditions, he believes the 20’s will be an explosive decade for gold.
You know, the reason the US stock market went up this year is because the Fed surprised everybody by doing exactly what I had been predicting they would do. They aborted their feigned attempt to normalize their interest rates and shrink their balance sheet. They went back to rate cuts and quantitative easing. This is extremely bullish for gold.”
As economist Thorsten Polleit pointed out, inflation has pernicious effects on the average person, while tremendously benefiting the chosen few. Inflation the money supply is a policy intentionally carried out by central bankers around the world. Polleit calls this an “inflation scam.” With the Federal Reserve signaling that it is willing to let the inflation monster run loose, you should be prepared to see the value of the dollar erode even further in the future.
In essence, inflation facilitates a transfer of wealth from the average Joe and Jane to the politically connected. You can’t talk about wealth inequality without pointing a finger at the Federal Reserve. After all, it is the central bank that generates inflation by effectively creating money out of thin air.
Reuters has dubbed the 2010s the “decade of debt.”
The Reuters report focused on the ballooning levels of corporate debt, but consumer and government indebtedness has skyrocketed over the last 10 years as well. This massive debt bubble poses a significant systemic risk to the financial system and the economy. Some in the mainstream are starting to hint at this, but they still don’t seem to recognize the magnitude of the problem.
Gold has rallied through the last weeks of 2019 and has pushed back above the $1,500 per ounce mark. The yellow metal is on pace to finish the year up close to 18%. And there is a lot of optimism that gold will continue to shine in 2020.
As we look ahead to the new year, here are five reasons gold may well skyrocket in 2020.
If something cannot go on forever, it will stop.
This seems self-evident, but as Jim Rickards noted in a recent article about the ever-growing levels of debt, people tend to ignore this indisputable truth.
Total global debt reached a record of over $250 trillion in the first half of 2019, according to an Institute of International Finance report published in November. Global debt surged by $7.5 trillion through the first half of the year. “With no sign of a slowdown, we expect the global debt load to exceed $255 trillion in 2019, largely driven by the US and China.”