Are we in the early stages of a gold bull market? Incrementum thinks so and offers three key reasons for this assessment in its most recent In Gold We Trust Report.
At the moment we are at the turning point towards a gold bull market. The macroeconomic and geopolitical factors support this tendency. One of the things we notice across the bull markets of the past 50 years is that, even in its weakest period of increase, gold gained more than 70%. This record supports our optimism for future developments. From our point of view, stronger inflation tendencies or the abandoning of the rate-hike cycle in the US could trigger an increase in momentum of the gold price. We regard these scenarios as realistic.”
It looks like the Federal Reserve may have another excuse to slow or even stop hiking interest rates if it so desires.
According to the conventional wisdom, the Federal Reserve is in the process of “normalizing” interest rates and will continue to push rates up into the foreseeable future. But could the Fed be close to the end of its tightening cycle? Peter Schiff made that case during a recent podcast.
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.
The US government has hit borrowing levels not seen since the peak of the financial crisis.
The US Treasury’s net borrowing totaled $488 billion from January through March, according to a statement released Monday. That was $47 billion more than the department’s estimate. It was also a record for first quarter borrowing, according to Bloomberg.
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.
Rising interest rates could unleash a zombie company apocalypse – if the Fed lets it happen.
Corporate bankruptcy levels in the US hit seven-year highs last month.
New Chapter 11 bankruptcies surged 63% year-over-year in March. All-told 770 companies filed for Chapter 11 protection last month. That is the highest level since April 2011.
Stock markets had another bad day Tuesday. The Dow Jones fell over 400 points as the 10-year Treasury yield broke through 3%. Several “marquee” companies warned of higher costs, including Google-parent Alphabet and Caterpillar.
In his latest podcast, Peter Schiff said he thinks the correction is over.
Not the downward move. That is not the correction. This is the bear market. The upward move was the correction. It was the first correction in this young bear market that technically is not a bear market yet because we’re not down 20%. But that’s only a matter of time before the people call the bear market what it is.”
Conventional wisdom holds that rising interest rates are bad for gold. The fact that the Federal Reserve has been nudging rates up over the last couple of years has accounted for a lot of the bearishness in the gold market. But the conventional wisdom doesn’t line up with the current reality. Even as the Fed has hiked rates, the price of gold has gone up – increasing by 8.5% since the Federal Reserve’s first rate hike of this cycle in December 2017.
A recent report issued by the World Gold Council indicates that gold investors focused primarily on interest rates are looking in the wrong place. They need to be watching the dollar.
Our analysis shows that the correlation between gold and US rates is waning and that the US dollar is again a stronger indicator of the direction of price. And, in our view, this will continue over coming months.”
Last week, Peter Schiff said we may well be in the calm before the economic storm. In his latest podcast, he said the storm may be on the horizon. But most people are still oblivious, including the Federal Reserve.
Can the auto industry survive in a high interest rate environment? We’re about to find out.
Earlier this month, we reported that the air has started to come out of the subprime auto bubble. Nevertheless, Americans are still buying cars. Last week, we got a Commerce Department report that consumer spending was up thanks in large part to the strongest auto sales in six months. But there is a dark lining in this silver cloud and the long-term prospects for the auto industry could be dimming.
Why?
