I want to take a break in the self/home defense series and chat a bit about recent economic developments, including gold.
So the Feds tossed another 75 basis point hike on us this week. That was totally expected. They have to look like they’re doing something to combat the worst inflation in 40 years.
But in this world, in the year 2022, nothing is as it seems. Nothing is as it should be. See, on one hand they’re hiking rates into a slow economy, which is a recipe for disaster. But on the other hand, the one they hide behind their back, they’re buying up about 320 million dollars worth of assets per day.
Why is that? Remember a couple weeks back, where the ECB put out a news blurb that literally caught me so off guard, I had to rethink a lot of things? That blurb said that the ECB would use “unlimited” resources to keep the debt market intact.
The European Central Bank will unveil an unlimited bond-buying tool next week to help markets better adjust to steeper and faster interest-rate increases than previously thought, economists surveyed by Bloomberg say.
I want to take a break in the self/home defense series and chat a bit about recent economic developments, including gold.
So the Feds tossed another 75 basis point hike on us this week. That was totally expected. They have to look like they’re doing something to combat the worst inflation in 40 years.
But in this world, in the year 2022, nothing is as it seems. Nothing is as it should be. See, on one hand they’re hiking rates into a slow economy, which is a recipe for disaster. But on the other hand, the one they hide behind their back, they’re buying up about 320 million dollars worth of assets per day.
Why is that? Remember a couple weeks back, where the ECB put out a news blurb that literally caught me so off guard, I had to rethink a lot of things? That blurb said that the ECB would use “unlimited” resources to keep the debt market intact.
The European Central Bank will unveil an unlimited bond-buying tool next week to help markets better adjust to steeper and faster interest-rate increases than previously thought, economists surveyed by Bloomberg say.
Unlimited - Adjective. Lacking any controls. Boundless. Infinite. When I saw that, my head sort of Linda Blair’d and spun around. For two decades I’ve been preaching that the worlds central banks have rigged the markets to keep them stable, and here’s the European Central bank saying they will use money they don’t have, in unlimited amounts, to help keep markets from projectile vomiting as they hike rates.
If that’s not the most in your face admission of rigging markets, then nothing is. And for now, our own Central bank is following the same playbook. They’re “buying it all” to keep the debt market from an absolute melt down.
A few weeks back, we saw great panic in the bond market. The 10 year yield was jumping higher day by day, and faster than “ever.” Then a miracle happened. It just started going the other way. Well that miracle is/was our own central bank, behind the scenes, buying up any and everything.
The entire world is swallowed in debt. Unpayable, crushing debt. It can’t and won’t be paid back. Which means they only have two choices. Keep blowing the bubble, or stop blowing and it pops. That’s it. Two choices only.
Right now they’ve decided to keep blowing it. YES they just hiked interest rates, and yes that’s going to impact the economy in a negative way. They know that. But with inflation running at 9% formally ( 16% in reality) they have no choice but to put on a grand illusion that they’re in a position to fix it.
They can’t. Our administration is tossing around trillions like candy at a kids birthday party. How much have we sent to Ukraine, so that more young Ukrainian men can be killed? How much is their build back better/get green baloney going to take?
Only a government could screw this up so perfectly. You can’t have on one hand… the feds hiking rates which is DESIGNED to squish out demand and thus drop prices; and then on the other hand, flood the economy with another trillion dollars for your pet projects.
We just got more evidence of inflation in Friday. Core PCE came in + 4.8%. That’s another 40 year high. So, while Powell was spewing crap about how interest rates are now looking to be in the right spot, giving Wall Street the wink and nod to start a big old bear market bounce, he’s LYING.
It's all they ever do. For years on end you’ve been told they have a 2% inflation target at the fed. 2%. Do any of you believe we’ve seen 2% inflation over the past 30 years? Maybe for a few months during recessions, but overall? Please.
So hike he must. He’ll cover his tracks by having the NY Fed keep buying up assets so that the bond market doesn’t throw a hissy and melt down.
In other words, we are in a bear market bounce; kicked off not by better earnings (they stink out loud) not by signs of a strengthening economy (it’s fading) but by Powell mentioning that rates are in a better place, hinting that they might slow rate hikes in the future.
Speaking of… The DOW has about 500 more points of headroom before it runs into a line of snot that would be hard to get over. Add to that the “overbought” indicator (Maclellan) is way over 60. The S&P has another 50 points of headroom it could run up, but it too is flashing overbought. The NASDAQ has already entered the danger zone.
What’s that all mean? I think we might eek out some more gains this upcoming week, but then seasonality kicks in and we should see a significant fade in August. I took profits on everything on Friday, not willing to see if the run extends or not.
Okay, so gold. I’m a metals bug, you all know that. And yes the metals have sucked for a long long time. Nothing has been rigged as much as gold and silver, and it stinks because each and every one of you know that both should be significantly higher.
In the past few days, gold and silver have made an advance. Miners have turned and moved higher. Is this yet another in a long string of headfakes? Maybe not.
Lets talk silver first. There isn’t any. Miles Franklin got an order to fill for 50 million worth of silver coins. US coins. Not bars, or bullions. Nope, couldn’t do it. They called a ton of wholesale dealers and ended up having to split the order with some junk silver and some gold. That market is very skinny folks.
Next up gold. Unless the only news you get is from some creep at MSNBC or ABC, or CNN, you probably know that the world is splitting apart. More and more countries are joining the BRICS and they are hell bent on setting up their own currency, FAR APART from US dollars. Not only that, but they want their new currency backed by STUFF. Real stuff. Like oil, gas, GOLD, etc.
I think it’s very possible that Gold and silver put in a nice run for the next few months. I think that looking at the miners in here is a good idea. I think that if you were always wanting to buy an ounce of gold, now is a good time. If you want some silver Eagles, do so now. Yes premiums are nuts…there’s simply very little supply.
We have very significant issues coming at us over the next several months. Russia IS going to win in Ukraine. Sorry Nate, your David vs Goliath idea is and was simply wrong. Then the US and the other war hawks are going to have to think about their next move. None of it will be good. What needs done is that Russia removes the Ukraine Nazi’s, and US puppets like Zelensky and then sits down with their military and hammer out an accord. The US and England probably won’t allow that, so…there’s always more war.
We have midterms coming up. God only knows what lunacy will take place ahead of and during that. China and the Taiwan issue is on the table. Is Pelosi still going to go to Taiwan, and thus kick dirt on China’s leaders? They suggest that is a very bad idea. Well our government is chock full of bad ideas.
Buy some gold and silver folks. Look at some trades in the miners. Maybe start to scale in some stock shorts near the end of next week. Good luck and have a great week.