@OPA said:
Congratulations to gold - New all time highs! $2050+!!!
"This was but a fleeting moment?" If not, all you gold bugs should be "backing up the trucks."
Surprised $2K didn't stick for good this time but it's certainly better than life in the gutter. One look at premiums on the metal of kings makes it not feasible to back up the truck. RGDS!
So your saying I shouldn't throw some plastic at gutter metal?
I wouldn't throw anything at gutter metal cept maybe some cow manure.......on second thought not even that, cow dung actually has a real world purpose. RGDS!
I wouldn't throw anything at gutter metal cept maybe some cow manure.......on second thought not even that, cow dung actually has a real world purpose. RGDS!
Can't say I disagree with this, but occasionally I find a cool piece that I'd like to have and hold.
If the price doesn't get crazy I'll add it to the shipwreck hoard.
Cool Factor does come at an additional cost.
@Goldminers said:
Someone explain why the dollar is going way up vs other currencies as we get closer to a short-term default? Gold dropping like a stone. Yes, some interest rates are up a little, but I thought the consensus was for gold to be a hedge against default and debt risk.
No, the dollar is the safe haven during times of stress. Has been for decades.
@Goldminers said:
Someone explain why the dollar is going way up vs other currencies as we get closer to a short-term default? Gold dropping like a stone. Yes, some interest rates are up a little, but I thought the consensus was for gold to be a hedge against default and debt risk.
No, the dollar is the safe haven during times of stress. Has been for decades.
currencies are the last safehaven in times of high inflation.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
@TwoSides2aCoin said:
...."I'm gonna party like it's 1999..."
Something seems odd about her face (narrow). Genuine ?
Could just be the lighting.
Looks fake. The surfaces look too much like what you'd find on a matte proof.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
According to Jim Rickards, the dollar is up and the yield curve is steeply inverted is because of a worldwide liquidity crisis in spite of trillions of new money being pumped - and the main reason is because of the crappy collateral underlying so many derivatives contracts, I.e., securities that the FED is taking off the banks’ hands that are being fully-valued, instead of being marked to market at around a 20 percent loss - all of which is massively inflationary.
Q: Are You Printing Money? Bernanke: Not Literally
At the same time, Ed Dowd is saying that the 40% higher than normal excess death rate, lost work hours, and spike in disabilities since March of 2022 is what's causing the rush into cash and short term treasuries, hence the steeply inverted yield curve - is massively deflationary and subsequently requires more huge infusions of liquidity. All while the FED is raising interest rates, and will probably continue to do so. So Dowd says to keep your powder dry because lots of assets will get much cheaper.
Two strong countervailing trends. I plan to steer clear of the banking system and paper assets as long as this continues, but I still think that it can't go on indefinitely. None of this even considers an assortment of other big problems in the US and around the world, any of which can blow up the whole economy in short order.
I think I'll keep my hard assets. At the very least, they are real.
Q: Are You Printing Money? Bernanke: Not Literally
@blitzdude said:
More than just the face IMO. RGDS!
Hmmmmmm. Passes the Sigma tester. Came in roll of same year 1 oz coins from legitimate bullion dealer who I've done a million in biz with, over the past decade or so. Just sayin'.
@jmski52 said:
$2,050 is so yesterday. OTOH, $3,000 is so tomorrow.
This is closer to the truth, from my hands on experience in a shop, than what many here keep distorting as fact, via history. I mean it's true that history repeats itself, but then, so does distortion. I recommend any citizen to go to the U.S. mint and order one ounce. Tell me: how much ?
$2,050 is so yesterday. OTOH, $3,000 is so tomorrow.
You did not answer my question. Will we see $2050. gold again this year. $3000 gold within the next 2 years s a pipe dream
Obvious who is using the pipe. LOL
Yes to both of your questions. The FED is guaranteeing it. And by the way, interest rates will be going back up because inflation will not stay down.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
i never lock in on a CD when rates are rising. I ride the lower savings rate that is capable of rising with interest rates. Currently getting 4.3% at SoFi.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Too many significant variables to predict the short term, but the pressure for gold prices is certainly to the upside. There are lots of other things to worry about.
Q: Are You Printing Money? Bernanke: Not Literally
There is a popular belief that gold prices have an inverse relationship with increasing interest rates. The idea is that, since higher interest rates make fixed-income investments like bonds more attractive, money will flow out of gold and into high-yielding investments as rates rise. However, historical data shows no significant correlation between rising interest rates and falling gold prices. While monetary policy may influence gold markets, there are many other factors that affect the direction of precious-metals prices.
Yes to both of your questions. The FED is guaranteeing it. And by the way, interest rates will be going back up because inflation will not stay down.
So higher interest rates are good for gold?
Aren't higher rates brought on because of inflation concerns? Don't those that buy/stack gold (demand) do so to protect from inflation? Has not recent higher inflation, that resulted in higher rates, not driven gold up? I don't mind the stupid questions; I mind answering them over and over again. Take notes.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Proof collection did a much better job of answering the question, although it's not a complete explanation
We all get the narrative derryb, but gold is lower today than 18 months when the FED started interest rates and we've had the strongest inflation in 40+ years. So.it appears that it was the answer that was stupid, not the question.
@cohodk said:
Proof collection did a much better job of answering the question, although it's not a complete explanation
We all get the narrative derryb, but gold is lower today than 18 months when the FED started interest rates and we've had the strongest inflation in 40+ years. So.it appears that it was the answer that was stupid, not the question.
ProofCollection is correct when he says "historical data shows no significant correlation between rising interest rates and falling gold prices."
However the data does show shows that there is a correlation between rising interest rates and rising gold prices.
And your comment "gold is lower today than 18 months" ago is correct by only a few dollars and only because you once again cherry picked two data points to misrepresent what is really happening. LOL
Fact is gold is riding at all time highs, maybe not today but most others.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Government debt is a key factor driving the M2 money supply. Gold also has a long-term correlation with the money supply. The debt ceiling just raised to 35 trillion and the budget deficit is $1-2 trillion per year. Interest on the government debt is $600 billion+ per year now, so interest rates do have some impact.
These factors influence the dollar price of gold along with other world gov't debt and central bank gold purchases. Gold prices overall will follow the money creation needed to pay the debt. The more we borrow, the higher gold prices will go.
@Goldminers said:
Gold also has a long-term correlation with the money supply. The debt ceiling just raised to 35 trillion and the budget deficit is $1-2 trillion per year. Interest on the government debt is $600 billion+ per year now, so interest rates do have some impact.
Inflation in the supply of money leads to an increase price inflation. As a dollar insurance policy, gold rises as the money supply rises. With most assets affected by more available money, the price of the asset rises rises. Don't look for a reduction in the money supply any time soon - look for continued inflation increases and more money printing. Contrary to mainstream belief, the FED is way behind in fixing monetary problems. In fact, most of its "fixes" over the last 15 years have created more monetary problems. There will be further fixes that will worsen the inflation problem.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
@Goldminers said:
Gold also has a long-term correlation with the money supply. The debt ceiling just raised to 35 trillion and the budget deficit is $1-2 trillion per year. Interest on the government debt is $600 billion+ per year now, so interest rates do have some impact.
Inflation in the supply of money leads to an increase price inflation. As a dollar insurance policy, gold rises as the money supply rises.
That's a little too simplistic and ignores other factors, such as money velocity which can offset or exaggerate the effects of change in money supply.
@Goldminers said:
Gold also has a long-term correlation with the money supply. The debt ceiling just raised to 35 trillion and the budget deficit is $1-2 trillion per year. Interest on the government debt is $600 billion+ per year now, so interest rates do have some impact.
Inflation in the supply of money leads to an increase price inflation. As a dollar insurance policy, gold rises as the money supply rises.
That's a little too simplistic and ignores other factors, such as money velocity which can offset or exaggerate the effects of change in money supply.
Money supply increases are the primary cause of price inflation. Sure, supply and demand of the product affects price of the product. But supply and demand are ultimately affected by the amount of money chasing the product.
Example:
Go to a coin auction and pay attention to the hammer prices. Then give everyone in the peanut gallery twice the money they came in with. What do you believe is going to happen to hammer prices.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
@cohodk said:
Rates have been rising for the last 6weeks and PMs have dropped. In the preceeding 6 weeks rates dropped and PMs rose.
I ain't making this up.
If rates go up, as derryb professes, PMs will go down.
You guys keep looking to the 70s as parallels, but it ain't gonna work that way this time.
Not to worry though, eventually PMs will go up.
prime example of short term vision. Investments in physical PMs is not a short term play for most buyers.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
@Goldminers said:
Gold also has a long-term correlation with the money supply. The debt ceiling just raised to 35 trillion and the budget deficit is $1-2 trillion per year. Interest on the government debt is $600 billion+ per year now, so interest rates do have some impact.
Inflation in the supply of money leads to an increase price inflation. As a dollar insurance policy, gold rises as the money supply rises.
That's a little too simplistic and ignores other factors, such as money velocity which can offset or exaggerate the effects of change in money supply.
Money supply increases are the primary cause of price inflation. Sure, supply and demand of the product affects price of the product. But supply and demand are ultimately affected by the amount of money chasing the product.
Example:
Go to a coin auction and pay attention to the hammer prices. Then give everyone in the peanut gallery twice the money they came in with. What do you believe is going to happen to hammer prices.
But that's not money velocity. When people are optimistic, they spend more freely which increases money velocity and inflation. When people are pessimistic, they tend to save which reduces money velocity. This is independent of supply.
@Goldminers said:
Gold also has a long-term correlation with the money supply. The debt ceiling just raised to 35 trillion and the budget deficit is $1-2 trillion per year. Interest on the government debt is $600 billion+ per year now, so interest rates do have some impact.
Inflation in the supply of money leads to an increase price inflation. As a dollar insurance policy, gold rises as the money supply rises.
That's a little too simplistic and ignores other factors, such as money velocity which can offset or exaggerate the effects of change in money supply.
Money supply increases are the primary cause of price inflation. Sure, supply and demand of the product affects price of the product. But supply and demand are ultimately affected by the amount of money chasing the product.
Example:
Go to a coin auction and pay attention to the hammer prices. Then give everyone in the peanut gallery twice the money they came in with. What do you believe is going to happen to hammer prices.
But that's not money velocity. When people are optimistic, they spend more freely which increases money velocity and inflation. When people are pessimistic, they tend to save which reduces money velocity. This is independent of supply.
And it's the money velocity created by the Fed pushing rates to 5% that is keeping the economic engine humming.
@Goldminers said:
Gold also has a long-term correlation with the money supply. The debt ceiling just raised to 35 trillion and the budget deficit is $1-2 trillion per year. Interest on the government debt is $600 billion+ per year now, so interest rates do have some impact.
Inflation in the supply of money leads to an increase price inflation. As a dollar insurance policy, gold rises as the money supply rises.
That's a little too simplistic and ignores other factors, such as money velocity which can offset or exaggerate the effects of change in money supply.
Money supply increases are the primary cause of price inflation. Sure, supply and demand of the product affects price of the product. But supply and demand are ultimately affected by the amount of money chasing the product.
Example:
Go to a coin auction and pay attention to the hammer prices. Then give everyone in the peanut gallery twice the money they came in with. What do you believe is going to happen to hammer prices.
But that's not money velocity. When people are optimistic, they spend more freely which increases money velocity and inflation. When people are pessimistic, they tend to save which reduces money velocity. This is independent of supply.
Optimism of the economy does not trigger spending of available cash as much as does fear of what that item will cost in the future. Money supply does not affect MV as much as does raising interest rates. This has been demonstrated since 2008 where new money did not stimulate consumer spending anywhere near what it did for investment spending. This was by design of those creating the QE.
The rising cost of money to spend (debt/interest rates) will decrease MV as the cost of that money rises.
The FED uses interest rates for a few things. One of them is to encourage or discourage spending. As with many things they have not learned how to correctly use the gas peddle. When they do there will be an end to the boom/bust cycles they create.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
@Goldminers said:
Gold also has a long-term correlation with the money supply. The debt ceiling just raised to 35 trillion and the budget deficit is $1-2 trillion per year. Interest on the government debt is $600 billion+ per year now, so interest rates do have some impact.
Inflation in the supply of money leads to an increase price inflation. As a dollar insurance policy, gold rises as the money supply rises.
That's a little too simplistic and ignores other factors, such as money velocity which can offset or exaggerate the effects of change in money supply.
Money supply increases are the primary cause of price inflation. Sure, supply and demand of the product affects price of the product. But supply and demand are ultimately affected by the amount of money chasing the product.
Example:
Go to a coin auction and pay attention to the hammer prices. Then give everyone in the peanut gallery twice the money they came in with. What do you believe is going to happen to hammer prices.
But that's not money velocity. When people are optimistic, they spend more freely which increases money velocity and inflation. When people are pessimistic, they tend to save which reduces money velocity. This is independent of supply.
And it's the money velocity created by the Fed pushing rates to 5% that is keeping the economic engine humming.
I'm not sure it works like that. Higher rates are discouraging spending, as we see in the housing sector. No one is doing a cash-out refi to remodel or go on vacation, for example.
@Goldminers said:
Gold also has a long-term correlation with the money supply. The debt ceiling just raised to 35 trillion and the budget deficit is $1-2 trillion per year. Interest on the government debt is $600 billion+ per year now, so interest rates do have some impact.
Inflation in the supply of money leads to an increase price inflation. As a dollar insurance policy, gold rises as the money supply rises.
That's a little too simplistic and ignores other factors, such as money velocity which can offset or exaggerate the effects of change in money supply.
Money supply increases are the primary cause of price inflation. Sure, supply and demand of the product affects price of the product. But supply and demand are ultimately affected by the amount of money chasing the product.
Example:
Go to a coin auction and pay attention to the hammer prices. Then give everyone in the peanut gallery twice the money they came in with. What do you believe is going to happen to hammer prices.
But that's not money velocity. When people are optimistic, they spend more freely which increases money velocity and inflation. When people are pessimistic, they tend to save which reduces money velocity. This is independent of supply.
And it's the money velocity created by the Fed pushing rates to 5% that is keeping the economic engine humming.
I'm not sure it works like that. Higher rates are discouraging spending, as we see in the housing sector. No one is doing a cash-out refi to remodel or go on vacation, for example.
Show me where spending is being discouraged.
Folk don't need to take out home equity loans. They are spending the interest they are now earning.
The interest earned on 200k now easily covers new car payments and a vacation.
We are a service economy. Airlines, hotels, restraurants, pool and lawn care, evem home builders,...all doing quite well.
@ProofCollection said:
Higher rates are discouraging spending, as we see in the housing sector. No one is doing a cash-out refi to remodel or go on vacation, for example.
Higher rates discourage spending that depends on credit. Those with cash will spend in a higher rate environment to avoid even high prices later. I just bought a new refrigerator, not because I need it now, but because I will need it in less than a year and it is likely cheaper now.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
@Goldminers said:
Gold also has a long-term correlation with the money supply. The debt ceiling just raised to 35 trillion and the budget deficit is $1-2 trillion per year. Interest on the government debt is $600 billion+ per year now, so interest rates do have some impact.
Inflation in the supply of money leads to an increase price inflation. As a dollar insurance policy, gold rises as the money supply rises.
That's a little too simplistic and ignores other factors, such as money velocity which can offset or exaggerate the effects of change in money supply.
Money supply increases are the primary cause of price inflation. Sure, supply and demand of the product affects price of the product. But supply and demand are ultimately affected by the amount of money chasing the product.
Example:
Go to a coin auction and pay attention to the hammer prices. Then give everyone in the peanut gallery twice the money they came in with. What do you believe is going to happen to hammer prices.
But that's not money velocity. When people are optimistic, they spend more freely which increases money velocity and inflation. When people are pessimistic, they tend to save which reduces money velocity. This is independent of supply.
And it's the money velocity created by the Fed pushing rates to 5% that is keeping the economic engine humming.
I'm not sure it works like that. Higher rates are discouraging spending, as we see in the housing sector. No one is doing a cash-out refi to remodel or go on vacation, for example.
Show me where spending is being discouraged.
Folk don't need to take out home equity loans. They are spending the interest they are now earning.
The interest earned on 200k now easily covers new car payments and a vacation.
We are a service economy. Airlines, hotels, restraurants, pool and lawn care, evem home builders,...all doing quite well.
I think the percentage of the population relying on bank account savings interest for car payments and vacation is negligible. People who have money like that aren't terribly affected by an increase in interest rates. Your anecdotal observations are not reliable as an indication of what's going on in the broader economy for the bottom 90% of society. What you're seeing is probably the result of an expansion and use of CC debt and making use of home equity from recent years of massive appreciation but that won't last forever:
The raising of interest rates is having its desired effect of slowing money velocity. Whereas if you wanted to quote a home remodel or pool 1-2 years ago you'd have a hard time getting someone to call you back and you'd be booking work months out, now they return your call and they can start reasonably soon. I can see where the trend is heading.
If mortgage rates suddenly went back from the high 6's to the high 4's the real estate market would reignite and the inflation candle would burn high again. It will take a while yet for people to max out their credit cards and use up their HELOC funds from the last several years of housing appreciation, but it's definitely winding down. In my local market where I am an agent, high interest rates are definitely discouraging buyers and almost completely stopping anyone from switching houses (they don't want to lose their mortgage rates in the 3's). The only saving grace for RE in my city is that supply is even lower than demand so prices will continue higher but overall sales volume is low.
IMO rates probably need to go even higher but that is going to be politically difficult, aside from other factors like the growing interest on the national debt.
Those that have the cash savings are spending the interest. This amounts to about $1 Trillion per year. Those spending are keeping folk in the service industry employed.
High frequency data is availability from all the big banks that issue credit cards. Obtain that info for yourself, and you will see what is being spend and how it is being paid for.
When a car that has been running at 100 mph slows down to 70 it almost feels like it stopped. But it's still going 70.
When a car that has been running at 100 mph slows down to 70 it almost feels like it stopped. But it's still going 70.
same illusion works with the economy for those not paying attention to the speedometer.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Numismatist. 50 year member ANA. Winner of four ANA Heath Literary Awards; three Wayte and Olga Raymond Literary Awards; Numismatist of the Year Award 2009, and Lifetime Achievement Award 2020. Winner numerous NLG Literary Awards.
Comments
.> @derryb said:
You're making me want to fry up some scrapple. Yummy!!!!
Dollar has traded higher because the interest rate differential among the basket currencies has widened.
If only Japan would finally free the shackles, then we see gold move.
Knowledge is the enemy of fear
Your computer has cow dung in it ?
Can't say I disagree with this, but occasionally I find a cool piece that I'd like to have and hold.
If the price doesn't get crazy I'll add it to the shipwreck hoard.
Cool Factor does come at an additional cost.
No, the dollar is the safe haven during times of stress. Has been for decades.
currencies are the last safehaven in times of high inflation.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Off 5% from the high, no big deal.
...."I'm gonna party like it's 1999..."
Something seems odd about her face (narrow). Genuine ?
Could just be the lighting.
More than just the face IMO. RGDS!
The whole worlds off its rocker, buy Gold™.
Looks fake. The surfaces look too much like what you'd find on a matte proof.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
According to Jim Rickards, the dollar is up and the yield curve is steeply inverted is because of a worldwide liquidity crisis in spite of trillions of new money being pumped - and the main reason is because of the crappy collateral underlying so many derivatives contracts, I.e., securities that the FED is taking off the banks’ hands that are being fully-valued, instead of being marked to market at around a 20 percent loss - all of which is massively inflationary.
I knew it would happen.
At the same time, Ed Dowd is saying that the 40% higher than normal excess death rate, lost work hours, and spike in disabilities since March of 2022 is what's causing the rush into cash and short term treasuries, hence the steeply inverted yield curve - is massively deflationary and subsequently requires more huge infusions of liquidity. All while the FED is raising interest rates, and will probably continue to do so. So Dowd says to keep your powder dry because lots of assets will get much cheaper.
Two strong countervailing trends. I plan to steer clear of the banking system and paper assets as long as this continues, but I still think that it can't go on indefinitely. None of this even considers an assortment of other big problems in the US and around the world, any of which can blow up the whole economy in short order.
I think I'll keep my hard assets. At the very least, they are real.
I knew it would happen.
Fake ? Ok.
I'd submit them for authentication , but none of you are buying anyway.
Hmmmmmm. Passes the Sigma tester. Came in roll of same year 1 oz coins from legitimate bullion dealer who I've done a million in biz with, over the past decade or so. Just sayin'.
It could be the photo. It's real money and gold, in hand. Bet.
"Congratulations to gold - New all time highs! $2050"
Will we see it again this year?
What about silver at $25+?
$2,050 is so yesterday. OTOH, $3,000 is so tomorrow.
I knew it would happen.
This is closer to the truth, from my hands on experience in a shop, than what many here keep distorting as fact, via history. I mean it's true that history repeats itself, but then, so does distortion. I recommend any citizen to go to the U.S. mint and order one ounce. Tell me: how much ?
.> @jmski52 said:
You did not answer my question. Will we see $2050. gold again this year. $3000 gold within the next 2 years s a pipe dream
Obvious who is using the pipe. LOL
Yes to both of your questions. The FED is guaranteeing it. And by the way, interest rates will be going back up because inflation will not stay down.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
a lot of people holding cash now waiting for the cd rates to go up, which they will in time
i never lock in on a CD when rates are rising. I ride the lower savings rate that is capable of rising with interest rates. Currently getting 4.3% at SoFi.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Too many significant variables to predict the short term, but the pressure for gold prices is certainly to the upside. There are lots of other things to worry about.
I knew it would happen.
>
So higher interest rates are good for gold?
Knowledge is the enemy of fear
From: https://www.investopedia.com/articles/investing/100915/effect-fed-fund-rate-hikes-gold.asp
There is a popular belief that gold prices have an inverse relationship with increasing interest rates. The idea is that, since higher interest rates make fixed-income investments like bonds more attractive, money will flow out of gold and into high-yielding investments as rates rise. However, historical data shows no significant correlation between rising interest rates and falling gold prices. While monetary policy may influence gold markets, there are many other factors that affect the direction of precious-metals prices.
Aren't higher rates brought on because of inflation concerns? Don't those that buy/stack gold (demand) do so to protect from inflation? Has not recent higher inflation, that resulted in higher rates, not driven gold up? I don't mind the stupid questions; I mind answering them over and over again. Take notes.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Proof collection did a much better job of answering the question, although it's not a complete explanation
We all get the narrative derryb, but gold is lower today than 18 months when the FED started interest rates and we've had the strongest inflation in 40+ years. So.it appears that it was the answer that was stupid, not the question.
Knowledge is the enemy of fear
ProofCollection is correct when he says "historical data shows no significant correlation between rising interest rates and falling gold prices."
However the data does show shows that there is a correlation between rising interest rates and rising gold prices.
And your comment "gold is lower today than 18 months" ago is correct by only a few dollars and only because you once again cherry picked two data points to misrepresent what is really happening. LOL
Fact is gold is riding at all time highs, maybe not today but most others.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Government debt is a key factor driving the M2 money supply. Gold also has a long-term correlation with the money supply. The debt ceiling just raised to 35 trillion and the budget deficit is $1-2 trillion per year. Interest on the government debt is $600 billion+ per year now, so interest rates do have some impact.
These factors influence the dollar price of gold along with other world gov't debt and central bank gold purchases. Gold prices overall will follow the money creation needed to pay the debt. The more we borrow, the higher gold prices will go.
M2 and gov't debt
M2 and gold
My US Mint Commemorative Medal Set
Inflation in the supply of money leads to an increase price inflation. As a dollar insurance policy, gold rises as the money supply rises. With most assets affected by more available money, the price of the asset rises rises. Don't look for a reduction in the money supply any time soon - look for continued inflation increases and more money printing. Contrary to mainstream belief, the FED is way behind in fixing monetary problems. In fact, most of its "fixes" over the last 15 years have created more monetary problems. There will be further fixes that will worsen the inflation problem.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
That's a little too simplistic and ignores other factors, such as money velocity which can offset or exaggerate the effects of change in money supply.
Money supply increases are the primary cause of price inflation. Sure, supply and demand of the product affects price of the product. But supply and demand are ultimately affected by the amount of money chasing the product.
Example:
Go to a coin auction and pay attention to the hammer prices. Then give everyone in the peanut gallery twice the money they came in with. What do you believe is going to happen to hammer prices.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Rates have been rising for the last 6weeks and PMs have dropped. In the preceeding 6 weeks rates dropped and PMs rose.
I ain't making this up.
If rates go up, as derryb professes, PMs will go down.
You guys keep looking to the 70s as parallels, but it ain't gonna work that way this time.
Not to worry though, eventually PMs will go up.
Knowledge is the enemy of fear
prime example of short term vision. Investments in physical PMs is not a short term play for most buyers.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Yet you play short term trends. This is the hypocrisy that now infiltrates society. All assets are long term. All assets are short term.
Pm can suck for decades. PMs can rock for a few years. Stocks can suck for decades and rock for short term.
Just go with the flow and stop making excuses for poor performance or taking pride for outperformance.
Knowledge is the enemy of fear
But that's not money velocity. When people are optimistic, they spend more freely which increases money velocity and inflation. When people are pessimistic, they tend to save which reduces money velocity. This is independent of supply.
And it's the money velocity created by the Fed pushing rates to 5% that is keeping the economic engine humming.
Knowledge is the enemy of fear
Optimism of the economy does not trigger spending of available cash as much as does fear of what that item will cost in the future. Money supply does not affect MV as much as does raising interest rates. This has been demonstrated since 2008 where new money did not stimulate consumer spending anywhere near what it did for investment spending. This was by design of those creating the QE.
The rising cost of money to spend (debt/interest rates) will decrease MV as the cost of that money rises.
The FED uses interest rates for a few things. One of them is to encourage or discourage spending. As with many things they have not learned how to correctly use the gas peddle. When they do there will be an end to the boom/bust cycles they create.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I'm not sure it works like that. Higher rates are discouraging spending, as we see in the housing sector. No one is doing a cash-out refi to remodel or go on vacation, for example.
Show me where spending is being discouraged.
Folk don't need to take out home equity loans. They are spending the interest they are now earning.
The interest earned on 200k now easily covers new car payments and a vacation.
We are a service economy. Airlines, hotels, restraurants, pool and lawn care, evem home builders,...all doing quite well.
Knowledge is the enemy of fear
Higher rates discourage spending that depends on credit. Those with cash will spend in a higher rate environment to avoid even high prices later. I just bought a new refrigerator, not because I need it now, but because I will need it in less than a year and it is likely cheaper now.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I think the percentage of the population relying on bank account savings interest for car payments and vacation is negligible. People who have money like that aren't terribly affected by an increase in interest rates. Your anecdotal observations are not reliable as an indication of what's going on in the broader economy for the bottom 90% of society. What you're seeing is probably the result of an expansion and use of CC debt and making use of home equity from recent years of massive appreciation but that won't last forever:
The raising of interest rates is having its desired effect of slowing money velocity. Whereas if you wanted to quote a home remodel or pool 1-2 years ago you'd have a hard time getting someone to call you back and you'd be booking work months out, now they return your call and they can start reasonably soon. I can see where the trend is heading.
If mortgage rates suddenly went back from the high 6's to the high 4's the real estate market would reignite and the inflation candle would burn high again. It will take a while yet for people to max out their credit cards and use up their HELOC funds from the last several years of housing appreciation, but it's definitely winding down. In my local market where I am an agent, high interest rates are definitely discouraging buyers and almost completely stopping anyone from switching houses (they don't want to lose their mortgage rates in the 3's). The only saving grace for RE in my city is that supply is even lower than demand so prices will continue higher but overall sales volume is low.
IMO rates probably need to go even higher but that is going to be politically difficult, aside from other factors like the growing interest on the national debt.
Those that have the cash savings are spending the interest. This amounts to about $1 Trillion per year. Those spending are keeping folk in the service industry employed.
High frequency data is availability from all the big banks that issue credit cards. Obtain that info for yourself, and you will see what is being spend and how it is being paid for.
When a car that has been running at 100 mph slows down to 70 it almost feels like it stopped. But it's still going 70.
Knowledge is the enemy of fear
same illusion works with the economy for those not paying attention to the speedometer.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Gold had a great week. Time to dust this one off. Gold futures contract closed at $2095.70 this week. Wow!
COMEX futures new ATH:
gold futures front month over $2135
session high is 2152.3
under 2125 now
Are we having fun yet?