You would think folks on Wall Street would be pretty good at economics. Some of them are. But as Alex Merced will attest, just because somebody lands a job as a stockbroker doesn’t mean they’re a good economist.
Alex works as a Wall Street trainer. He also teaches economics. In fact, he’s produced hundreds of videos on economic topics ranging from basic to advanced. In this episode of It’s Your Dime, host Mike Maharrey and Alex talk about economics and investing.
One of the reasons to own physical gold is that it doesn’t come with any counterparty risk.
In simplest terms, counterparty risk is the chance that one party in a financial transaction will default on its contractual obligation. My asset is somebody else’s liability. If I loan you money, there is always the possibility that you won’t pay me back. Or consider buying a stock. There is a risk that the company will go bankrupt and the value of that stock will go to zero.
As gold has rallied over the last few months, silver has lagged behind. The silver-gold ratio spread to near-record levels. This tells us that silver is extremely undervalued compared to gold. But last Tuesday, that spread began to narrow ever-so-slightly and silver crossed a key price level on Thursday. Could this be the beginning of the breakout in silver we’ve been expecting? On this episode of the Friday Gold Wrap podcast, host Mike Maharrey breaks down what’s going on in the silver market along with the big leg-up in gold this week. He also highlights the ever-growing levels of consumer debt and tells you the latest on China’s move to dump US bonds.
Hedge fund king Ray Dalio says we are on the cusp of a “paradigm shift” and investors should buy gold.
In a post at LinkedIn, Dalio described paradigms as relatively long periods when markets and market relationships operate in a certain way. Eventually, the paradigms become “overdone” and we see a major shift.
In paradigm shifts, most people get caught overextended doing something overly popular and get really hurt. On the other hand, if you’re astute enough to understand these shifts, you can navigate them well or at least protect yourself against them.”
The silver-gold ratio has been way out of whack for months. In recent weeks, it has been above 90-1 and approached 93-1. The modern average over the last century is around 40:1. This tells us that silver is significantly undervalued compared to gold.
Peter Schiff has described this as silver on sale.
Silver has never been this cheap in terms of gold … Meaning that it’s a great time to be buying silver.”
Peter talked about the silver market in his most recent podcast. Could the white metal be joining gold’s party?
Last week, Independent Strategy head David Roche said gold could hit $2,000 by the end of the year. And Rosche isn’t the only big name in the investment world who sees a shiny future for the yellow metal. Mark Mobius recently said he thinks gold could push above $1,500 as central banks move interest rates lower, engage in more QE, and as geopolitical uncertainty continues to ramp up.
“I love gold,” Mobius said.
He also offered a bit of investment advice, saying gold should make up at least 10% of every investment portfolio — something Peter Schiff has been advising for a long time.
Jerome Powell took center stage this week and the Federal Reserve chair didn’t do anything to dampen expectations of a rate cut. That sent both stocks and gold higher. The yellow metal pushed back above $1,400 after tanking in the wake of last Friday’s June jobs report and stocks swooned. Everybody seems to love Easy Street. In this episode of the Friday Gold Wrap podcast, host Mike Maharrey breaks down what the Fed chair said and didn’t say. He also debunks the “there is no inflation” myth and highlights some other interesting news in the gold markets.
Gold will likely shine over the next six to 12 months as heightened risk meets easy money — this according to the World Gold Council’s mid-year outlook.
Gold ranked as one of the best-performing assets through the first half of 2019, beaten only by stock markets – which have also been supported by the turn toward looser monetary policy – and oil. And if you combine gold’s gains through H1 2019 and the Q4 2018, nothing beats it.
Holdings in global gold-backed ETFs surged in June, charting their largest increase in seven years driven by increased geopolitical uncertainty, fear of an economic slowdown and widespread anticipation of looser central bank monetary policy.
Globally, gold holdings in ETFs rose sharply by 127 tons last month, according to the latest data from the World Gold Council.