Category Archive: 6) Gold and Austrian Economics

The Elephant in the Gold Room, Report 16 June

We will start this off with a pet peeve. Too often, one is reading something about gold. It starts off well enough, discussing problems with the dollar or the bond market or a real estate bubble… and them bam! Buy gold because the dollar is gonna be worthless! That number again is 1-800-BUY-GOLD or we have another 1-800-GOT-GOLD in case the lines on the first number are busy!

Read More »

Paul Tudor Jones Likes Gold

Gold is Paul Tudor Jones’ Favorite Trade Over the Coming 12-24 Months. In a recent Bloomberg interview, legendary trader and hedge fund manager Paul Tudor Jones was asked what areas of the markets currently offer the best opportunities in his opinion. His reply: “As a macro trader I think the best trade is going to be gold”.

Read More »

Gold To Reach 6 Year High Over $1,400 on Uncertain Outlook for Global Markets

Gold is finally gaining the traction needed to boost prices to a level not seen since 2013 as concern mounts over increased trade war tensions and the global growth outlook. Bullion may touch $1,400 an ounce this year as investors hedge risk, according to Rhona O’Connell, head of market analysis for EMEA and Asia regions at INTL FCStone Inc.

Read More »

Irredeemable Currency Is a Roach Motel, Report 9 June

In what has become a four-part series, we are looking at the monetary science of China’s potential strategy to nuke the Treasury bond market. In Part I, we gave a list of reasons why selling dollars would hurt China. In Part II we showed that interest rates, being that the dollar is irredeemable, are not subject to bond vigilantes.

Read More »

A Surprise Move in Gold

Traders and Analysts Caught Wrong-Footed. Over the past week gold and gold stocks have been on a tear. It is probably fair to say that most market participants were surprised by this development. Although sentiment on gold was not extremely bearish and several observers expected a bounce, to our knowledge no-one expected this.

Read More »

Gold Hits 10 Week High At $1,328/oz as Trade Wars Spur Safe Haven Demand

Gold has consolidated on yesterday’s gains and is marginally higher as risk aversion creeps back into markets. Gold rose 1.5% yesterday to its highest level in more than three months. Concerns that trade wars look set to escalate globally and fears that President Trump’s threat of tariffs on Mexico will hurt the global economy are spurring safe haven demand.

Read More »

Bitcoin: What is the Best Day of the Week to Buy?

Shifting Patterns. In the last issue of Seasonal Insights I have discussed Bitcoin’s seasonal pattern in the course of a year. In this issue I will show an analysis of the returns of bitcoin on individual days of the week. It seems to me that Bitcoin is particularly interesting for this type of study: it exhibits spectacular price gains, it is a very new instrument and it is unregulated. Moreover, it trades around the clock, even on weekends.

Read More »

Dollar Supply Creates Dollar Demand, Report 2 June

We have been discussing the impossibility of China nuking the Treasury bond market. We covered a list of challenges China would face. Then last week we showed that there cannot be such a thing as a bond vigilante in an irredeemable currency. Now we want to explore a different path to the same conclusion that China cannot nuke the Treasury bond market.

Read More »

US Money Supply Growth and the Production Structure – Signs of an Aging Boom

Money Supply Growth Continues to Decelerate. Here is a brief update of recent developments in US true money supply growth as well as the trend in the ratio of industrial production of capital goods versus consumer goods (we use the latter as a proxy for the effects of credit expansion on the economy’s production structure).

Read More »

Gold Investment In Switzerland Remains Very Popular

Investors in Switzerland like gold and it is the second most popular investment after property or real estate20% plan to invest in gold in the next 12 monthsAlmost two-thirds buy or invest in precious metals at their bank; fewer than one-in-ten buy gold online

Read More »

THE PENALTY FOR SAVING

In previous articles, we have outlined in great detail the many faults of the current monetary policy direction of major central banks and the large-scale economic impact of keeping interest rates artificially low. Among the worst offenders is the ECB, that is unapologetically persistent on continuing this exercise in absurdity that are negative interest rates.

Read More »

In Gold We Trust 2019 

The New Annual Gold Report from Incrementum is Here. We are happy to report that the new In Gold We Trust Report for 2019 has been released today (the download link can be found at the end of this post). Ronnie Stoeferle and Mark Valek of Incrementum and numerous guest authors once again bring you what has become the reference work for anyone interested in the gold market.

Read More »

The Crime of ‘33, Report 27 May

Last week, we wrote about the impossibility of China nuking the Treasury bond market. Really, this is not about China but mostly about the nature of the dollar and the structure of the monetary system. We showed that there are a whole host of problems with the idea of selling a trillion dollars of Treasurys: Yuan holders are selling yuan to buy dollars, PBOC can’t squander its dollar reserves If it doesn’t buy another currency, it merely tightens...

Read More »

Proposed Negative Rates Really Expose The Bond Market’s Appreciation For What Is Nothing More Than Magic Number Theory

By far, the biggest problem in Economics is that it has no sense of itself. There are no self-correction mechanisms embedded within the discipline to make it disciplined. Without having any objective goals from which to measure, the goal is itself. Nobel Prize winning economist Ronald Coase talked about this deficiency in his Nobel Lecture:

Read More »

China’s Nuclear Option to Sell US Treasurys, Report 19 May

There is a drumbeat pounding on a monetary issue, which is now rising into a crescendo. The issue is: China might sell its holdings of Treasury bonds—well over $1 trillion—and crash the Treasury bond market. Since the interest rate is inverse to the bond price, a crash of the price would be a skyrocket of the rate. The US government would face spiraling costs of servicing its debt, and quickly collapse into bankruptcy.

Read More »

Gold Tops $1,300/oz As Trade Wars Escalate and Increased Risk of U.S. War With Iran

Gold sees safe haven demand push it to highest in one month as it breaches key $1,300/oz and £1,000/oz levels. U.S. China trade wars escalates as China retaliates and imposes tariffs on $60 billion of U.S. goods. Increased risk of war in Middle East after U.S. alleges Iran bombed Saudi oil vessels destined for the U.S.

Read More »

The Monetary Cause of Lower Prices, Report 12 May

We have deviated, these past several weeks, from matters monetary. We have written a lot about a nonmonetary driver of higher prices—mandatory useless ingredients. The government forces businesses to put ingredients into their products that consumers don’t know about, and don’t want. These useless ingredients, such as ADA-compliant bathrooms and supply chain tracking, add a lot to the price of every good.

Read More »

THE CURRENT MONETARY ORDER IS NEARING ITS END

Interview with Dimitri Speck. Given the massive intervention and monetary manipulation experiment by central banks over the last decade, the amount of distortions created in the market, as well as the record debt accumulation at all levels of the economy, have given rise to considerable risks for investors. For a more detailed understanding of these issues and for his outlook, I turned to Dimitri Speck, a renowned expert in the development of...

Read More »

New Federal Legislation Requires Full Audit of America’s Gold Reserves

Washington, DC (May 8, 2019) – U.S. Representative Alex Mooney (R-WV) introduced legislation this week to provide for the first audit of United States gold reserves since the Eisenhower Administration. The Gold Reserve Transparency Act (H.R. 2559) – backed by the Sound Money Defense League and government accountability advocates – directs the Comptroller of the United States to conduct a “full assay, inventory, and audit of all gold reserves,...

Read More »

Nonmonetary Cause of Lower Prices, Report 5 May

Over the past several weeks, we have debunked the idea that purchasing power—i.e. what a dollar can buy—is intrinsic to the currency itself. We have discussed a large non-monetary force that drives up prices. Governments at every level force producers to add useless ingredients, via regulation, taxation, labor law, environmentalism, etc.

Read More »