The US stock markets are all at record highs, gold is at a record high, and silver is at the highest price since 2013. Welcome to the everyone wins market, no craps allowed.
Congratulations to silver bulls, copper bulls, gold bulls, S&P 500 bulls, Nasdaq bulls, Dow bulls, and US housing bulls?
Record High on Gold
Gold’s Strongest Move In a Year Was When the Dollar Was Rising
Gold and the US dollar are not as inversely correlated as widely believed. Sometimes gold and the dollar move strongly in the same direction. Let’s discuss why.
On April 11, 2024, I noted Gold’s Strongest Move In a Year Was When the Dollar Was Rising
Gold’s strongest move in over a year started in March with the US dollar index generally moving higher.
Gold vs the US Dollar
Gold vs the US Dollar Synopsis
Contrary to widespread myth, gold is not a good US dollar hedge.
With the US dollar Index at 90, gold has been at $380, $1000, $1130, and $1900.
And there are times when gold and the dollar rise together.
When Does Gold Do Best?
In general, gold is a poor inflation hedge. The best example is gold fell from$850 to $250 per ounce with inflation every step of the way.
In the mid-to-late 1990s, everyone thought “The Maestro”, Alan Greenspan, had everything under control. In such periods, gold is among the worst assets to hold.
Gold is best viewed not as a hedge against inflation but a hedge against credit stress, stagflation, and faith in central banks.
Is Everything Under Control?
Hello Jerome Powell. Sorry for asking, but we need to know: Is everything under control?
It seems to me the distinct message from multiple markets is that things are not under control.
For discussion, please see How are Gold, Climate Change, Bitcoin, and the Fed Related?
Mr. Powell, please comment on the above chart that I posted on March 7, 2024.
On April 5, I noted Millennials Rush to Buy $2,300 Gold Bars at Costco
“Neither party will fix the deficits. Neither party will do anything about mounting debt. No one will do anything about anything because the political system is totally broken.” Mish
That’s the message of gold. Bitcoin advocates would say Bitcoin as well.
Looking for another place to buy gold from a reputable dearer?
Please give Bullion Star a look.
For proper disclosure, I do have an affiliate relationship. It does not affect the price you pay but it helps me a tiny bit. The above link contains my affiliate code. At Bullion Star, you can buy grams of gold and silver as well as ounces.
Faith in Central Banks
The market does not believe everything is under control.
Neither do I.
Not sure how any useful information can be gleaned from the DXY, which is nothing more than a relative currency strength measurement and doesn’t measure the loss in purchasing power, when comparing it to the gold price.
The DXY measures the cleanest dirty shirt in the laundry on a daily basis as they are all “devaluing” over time. In a debt based monetary system, the printing of the interest to pay the ever-increasing debt must continue or collapse ensues.
“With the US dollar Index at 90, gold has been at $380, $1000, $1130, and $1900.”
Notice the price trend over time, the DXY stays the same, the dollar price of gold is increasing as the dollar devalues, just not necessarily relative to say the Euro, which is 40% of that index, as I understand it.
That being said, I think the conclusion is correct, gold is more useful as a hedge against the failure of currencies. Of course one also has to ignore the constant paper gold fuckery being employed to control it’s price at the LBMA and COMEX, but that’s a whole other issue.
I think the market participants and some commentators have a world view that says that the price of gold or silver should be as if the debt levels and quantity of the medium of exchange were insignificant and that the laws of mathematics should not apply or all would be lost. This fantasy world they seem to be in can’t go on forever…Reality has to be faced sooner or later.
MISH, whhy did you switch from Goldmoney to Bulion Star?
It is hard dealing with GoldMoney
I had several complaints from readers about the paperwork needed at Goldmoney. Then it hit me too. Had to re-send proof of ID, proof of where I lived, my bank account statements, etc., a few times.
It was a nuisance.
I could not make trades until I did.
I closed my account instead.
Goldmoney is reputable, but I got tired of this stuff. It was only an accident that Bullion Star reached out to me right after I decided to close my GoldMoney account.
Mish
I agree 100% liked it but was so hard to purchase!
“Our new reality in Europe consists of frequent rapes, stabbings, killings, murders, shootings, even beheadings. But let me be clear about one thing. This did not used to happen before. This is a newly imported problem.” https://www.paulcraigroberts.org/2024/05/18/the-shieldmaiden-calls-white-ethnicities-to-arms/
ounz is a good ETF. Perthmint also offers a good way to get exposure to gold, one of them its ETP product on the ASX (pmgold).
Perth mint has been accused of not having the gold in unallocated accounts that people believed they owned at the time. In other words, they sold gold but didn’t actually deposit any into the storage that people were paying for. Don’t use them, there are other more reliable options.
ZH had a headline saying that it takes $178,000 for a family of 4 to live comfortably.
The federal government is running a trillion of debt every 100 days. The term parabolic comes to mind. The IMF, billionaires, and pundits are all warning about it.
Gold is now more closely correlated to the Chinese Yuan than the $USD.
The rationale for this should not be surprising to anyone.
Gold is more volatile than the dollar, but holds its value better over the long term while the dollar (and all national currencies) goes to zero). Since 1913 (i.e. when the Fed was invented), the dollar has lost 97% of its value in inflation adjusted terms. Gold has quadrupled (gained 300% of its value) in inflation adjusted terms. So gold has increased in real terms by 1.2% a year while the dollar has declined by about minus 3% per year.
As usual you don’t get something for nothing. You get compensated for the volatility of holding gold instead of dollars with about a 4% higher annual return over the long haul. Don’t buy only gold unless you have a long time horizon (and accept the possibility of benefiting only your heirs). Don’t hold only dollars unless you have an extraordinary level of risk aversion. Modern portfolio theory tells you to hold some of both.
You are using a red herring (mattress dollars) to idolize gold as an investment. Yes, gold did marginally better than mattress dollars since 1913, but gold still was the most stupid long-term financial investment (apart from mattress dollars). Bills, bonds, and stocks yielded multiples of what gold yielded (see Figure 2.1. in Siegel’s investment book, Sixth Edition).
The Fed is getting the same results as all other central economic planning commissions.
That said, I don’t think its fair to blame Powell for the Convalescent Center at 1600 PA Ave, and Grandma Yellen across the street at the Treasury Dept. And then grandpa Schumer and grandpa McConnell over at the capitol, up against the Marxist party AOC et al… fiscal policy is third world.
Monetary Policy has been “OK” under Powell, in the sense that he stopped making the situation worse. There was zero reason to keep “temporary emergency” interest rates from The Bernank. Twenty years is not temporary, and its no longer an emergency. It was a failed policy.
Grandma Yellen should stick to baking cookes and knitting yarn animals. Never should have been allowed in the Eccles Building nor the Treasury.
Powell absolutely must raise rates to fight inflation, and he absolutely can’t raise rates without forcing the US government to admit it is bankrupt. So he picked a middle point and hoped for the best. Its probably the best of however many bad choices.
That said, the Fed is central economic planning — it is destined to fail even if there was such a thing as a perfect Fed chair.
Great Grandma, great grandpa.
And from Wikid: The financial position of the United States includes assets of at least $269 trillion (1576% of GDP) and debts of $145.8 trillion (852% of GDP) to produce a net worth of at least $123.8 trillion (723% of GDP).[a]
wiki-dicks, like all the other wiki media properties, is edited by a bunch of unemployed left wing extremists. Even the founders of the wiki organization have publicly admitted (more than a decade ago) that the Wiki properties did not turn out the way many had expected. Instead of a source of crowd checked information, it became dominated by an insider clique that prevented edits from anyone and everyone outside their clique… and increasingly it was a clique of unemployed left wingers too extreme even for the wiki HQ employees in San Fransisco. No credible person would cite such a hopelessly discredited source.
You @blurtman are far more than a decade out of date.
This is what happens … before everything goes to ZERO.
Everything except Gold and Silver that is
Off topic but I have a question for you Trump fans(I’m not voting for either of them): If Trump is so great then why was he at a WEF forum on the same stage with Klaus praising him? I’d really like to know.
Why did he initiate Operation Warp Speed? Why does he continue to insist that was a great idea?
Oh right — cuz he’s a puppet… just like all politicians. An actor…
Check this Biden clip out … WTF??? https://lionessofjudah.substack.com/p/what-exactly-is-going-on-here
Keeps your friends close and your enemies closer.
I seriously doubt that’s the case of trump and klaus
Why’d you ask the question if you didn’t want an answer? Or were you just trolling because of your TDS?
Great article explaining the central banks buying gold and the effect on the gold price.
“Ultimately, as Weisenthal said, “When Russia was cut off from SWIFT in 2022, that was just seen as this like watershed move, the sort of finance equivalent of a nuclear option.” That nuclear option has made the rest of the world taking a shine to gold while leery of the dollar.”
https://mises.org/power-market/nuclear-option-has-foreign-central-banks-dodging-dollar-and-going-gold?
Someone has to be buying the US treasuries China is dumping. I would suspect the US and EU central banks, not unlike corporations buying back their own stock.
All parties need to strengthen their own currencies, esp. the West as they embark on the greatest inflationary ‘printing’ spree of all time in their quest for total, internal feudal control, while China invests in the developing world.
Those still seeking gains are powering the markets. Those seeking safety are buying gold and silver (which is under priced for this inflation) as profitable enterprise fades away. The massive, clueless peasantry are just trying to survive, and becoming ever more reliant on whatever forms of UBI are offered, as are their immediate exploiters.
Japan mandated banks to buy treasuries as a means to pull them out of the lost decade, I wager that happens here.
It is already happening. It is a different format of QE to keep rates from spiking and.the dollar going lower.
To add, the Treasury’s pushing short term debt over longer as a way to control rates….or maybe we’re talking the same thing (You said “Fed”)
That makes no sense QE of any kind will kill the USD
Buying treasuries would most likely sink them completely Not gonna happen
The Fed has been in treasury auctions and manipulating the market as far back as the 1980s and probably longer. We are well down the path of the Japanese central bank and Japan.
Another $500,000 in Au and Ag and I pay off my house.
Only 500k? Must be a pokey little house in Cali or NY.
The Fed is operating under the rule: never stop bluffing until forced. This reminds me of the similarities between present Fed behavior and that of the wizard in The Wizard of Oz.
“Is everything under control?”
Nope. It never is. And it never will be. There are over 8 billion variables living on earth today and one never knows what they might do.
No one can “control” the economy. I know for sure that “I” cannot control it.
But I can take advantage of it. Like this week. Another good week selling into strength. Gotta love the volatility. Buy
the dips and sell the rips.
Cheers all!
If you’re not familiar with Russell Napier, I think you’d find him interesting.
He called the rate hikes of 2022, atop his prediction of low unemployment with a stock slump, all came true in 2023.
His thesis is based on the idea that most economists forget pre-1980’s economics, or assume anything before that era is irrelevant.
He says higher inflation is here to say, roughly 3%, and it’s out of the Fed’s hands, this one’s all about debt.
Not going to be the supreme downvote guy if you keep posting like that!
Oh yeah, well I upvoted you….bring it!
Thanks. I am familiar with him. Lots of youtube interviews. A long term thinker. Which I am as well.
The debt is unprecedented. Today a Fed governor said another rate hike isn’t out of the question.
2023 was a stock slump ? My portfolio didn’t notice as I took advantage of rising rates.
We really do need a cleansing recession. 2020 didn’t qualify because of all money that was handed out and created.
I’d suggest the same I said to Dave above, check out Russell Napier.
We’re likely entering a new era, where government control comes back in place of the laissez faire / self regulation that’s been gradually brought into the economy over the last 4 decades.
The boiling frog finally knows it’s boiling.
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“2023 was a stock slump ?” Typo, meant 2022
“No one can “control” the economy.”
Amen!
The very fact that anyone, anywhere, is even trying; and even worse that there exists people so stupid they cheer for exactly that; is why we have “economic problems” in the first place.
There will always be resource constraints: I’m not suggesting ending Fed and junta wealth redistributions would get rid of those. But absent idiots meddling; “the economy” would function as well as it possibly could be. Hence there would, definitionally, be no meaningful “problems” with it. Just as there are no meaningful problems with a calculator who gives the correct answer to all inputs it is designed to handle; even if there exists numbers too large for it to handle.
No worries. Trump will fix this mess by (1) cutting the Fed rate back to zero (which will help fight inflation), (2) raising import tariffs on everything to 50 percent (which will do away with the US trade deficit), and (3) deporting 10 million undocumented immigrants (which will provide a jobs bonanza for unskilled American workers). You have to give it to him. The man has a plan!
I agree that no matter who is president. the interest rates are going back to zero in 2025. I dont see anything positive about exporting people tho. For the next 20 years, every year, year after year, fewer and fewer kids turn 16. Few unskilled workers available for 20 years (whose gonna get your food?) However, we will be awash in more and more people turning 50 for the next 30 years, and we all know what productive workers they are. If Mexico and South America are so stupid theyd let all those kids (only 1 in 1000 needs to become a doctor) come up here, we should welcome them with open arms.
According to a recent piece from the Center for Immigration Studies, “only 46 percent of the foreign-born who arrived in 2022 or later were employed in the first part of 2024.” The surge in “illegal” immigration is being financed by taxpayer dollars (often laundered through NGOs, but not always). Many of them are being flown into the US rather than the more traditional “wetback” route. They are being paid to come, and many have no intentions of working.
I have no problem with hardworking migrants looking to better themselves through hard work coming to the US and making it a better place. But I have a real problem with my tax dollars being used to import and support a bunch of deadbeats who are given all sorts of government provided goodies (lodging, food, clothes, phones, etc) without having to work for it.
Not all immigrants are “created” equal. And our government is using deliberate policy choices to keep out the good ones and bring in the worst ones.
“ the Center for Immigration Studies”
LOL
Reminds me of all the “Patriotic citizens for liberty” organizations that popped up around 2009-2010 that promoted cherry picked facts about how great US healthcare is, and were funded by health insurance lobbyists.
“The center for caring moms who love semiautomatic assault weapons in schools”
Has a Goebelsesque feel to it, lovely.
I dont think I could disagree with you more. You lost me with “many have no intention of working.” Have you ever met one? And since half of all adults in the US pay no Federal income tax at all, I seriously doubt you are paying for much of anything.
Stats show both in the USA and in the UK and EU that “MENATs” (Middle East, North Africa, and Turkey) illegals have the highest economic inactivity rates. 85% in the UK – they are freeloaders and black market-ers.
There are some fundamental differences… people keep focussing on public debt and don’t observe the private debt servicing costs, which are not really close enough to GFC levels to pull the rug on the yield inversion. This is a function of misdescribing the reasons for price rises as inflation, when it’s not. The political policies causing price rises, such as illegal mass immigration, sanctions, tariffs, taxes and net zero are not enough to tip the economy and the bond market because private debt is not high enough; nor is oil prices; nor is volatility.
With automation, AI and Work From Home ( with home being that of Indians or others in their own countries) there will be less need for workers in the US.
What is the under/over on more than 50% of white collar jobs vanishing within a decade? Or of 90% of long haul truck drivers jobs being lost to self driving trucks?
The only skills shortage will be certain trades like electricians, plumbers and mechanics and that shortage will get worse until the education system is gutted of all the ivory tower snobs that look down on the trades or until parents realise that those in skilled trades are the only ones making enough to afford homes and the encourage their kids to go the trade route.
Albert, you’ve completely negated the benefits of borrowing tens of billions to build a pointless wall to keep workers out during a labor shortage.
“Real men wear diapers”, I’m not kidding, that’s the new slogan Maga’s are promoting.
JM&J how daft are you? You have walls on your house to keep everyone out and ensure they proceed to the door where YOU will decide if the person is worthy of and desired to come into your home. Don’t pretend that we NEED a WIDE OPEN border, unchecked, to handle the labor shortage. I mean, we need doctors, engineers, plumbers, electricians, welders, … as well as non-certification laborers, but, with an unchecked border, you have absolutely no control or clue as to who is arriving. Again I have said to you and I say again, open your door wide open and put a sign out front alerting all to see that your home is there for the having and see who enters, eats your food, sleeps in your bed and, for lack of a better word, squats.
How is this so difficult to understand?
It wouldn’t even work in YOUR OWN CIRCUMSTANCE (nor mine, nor anyone’s) yet you think it will work and is working in aggregate? PREPOSTEROUS!
With 10 million+ arriving, why is there still a massive labor shortage? Because they are not prepared to work in the U.S. in aggregate– women with children, those that don’t speak fluent English, those that don’t have a skill.
4.1 M retire every year now so with domestic population growth and the massive influx in the last 4 years if the influx were ready to fill the gap in some magical way (silly), we would be holding our own with labor, espcially with increasing automation.
But go ahead and give it a go when you head into Germany, see if you can just stay. See if you can arrive unchecked. Head on over to our good friends in Canada, see what happens.
A country without a hard border is just an area.
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Now, back to the point of the post–the everything bubble. It’s occurring because there is no federal limit on anything at the moment and moral hazard is all around. No one will lose until the punch bowl is actually removed. The suspension of the debt ceiling and the end of quantitative tightening is just more liquidity and it is going anywhere and everywhere. Millions of folks are in their homes, unwilling/unable to move but sitting on a positive-return house just on the interest rate differential alone without regard to the massive price appreciation in 4 years. And as long as the labor market allows for a permanent source of income whenever one needs it, there is no real fear other than the uncertainty of inflation. What’s puzzling is why rates haven’t been risen further to drive inflation down more and one might suspect there are politics afoot. Theirs is an asymmetric response. They’ll let it burn hot but if someone mentions they felt a chill the rates are lowered immediately.
Would it be possible to give me the cliff’s notes version of your lengthy insultive tirade?… didn’t read it, no plans to.
Thanks Bill
Which specific industries are suffering a labour shortage, and how do you know what skills and training those illegal workers have if you don’t vet them via a visa application process? Why should they take the jobs of those who followed the rules? Why should those who invest time and money in education and in applying for a visa and work permit have their salaries undercut by unscrupulous employers who hire unvetted illegal workers? I mean, do you go to other countries and work illegally? If not, why not?
Middle-class Socialists seem to abandon the working-class in their country, and their hard-won rights in favour of casually undermining them to help people who might be in organised crime or carry deadly diseases. All in the name of getting a cheaper latte.
“… and how do you know what skills and training those illegal workers …”
As a non American, why are you so concerned with American illegal immigration?
This and the gun thing has always had me scratching my head, is it because it’s an easy way to erupt divisiveness?
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Oh well, I also forgot to mention that Trump plans to gift every American household a Trump Bible on Inauguration Day so that people will stop cheating on their spouses.
Rumor has it he’s opening a new line of gold plated designer diapers.
So if gold is not an inflation hedge, explain why the median house, priced in gold, is cheaper today than it was in 1975.
In a recent article about gold, the WSJ wrote that in Ancient Rome. A nicely made Toga purchased for your daughters wedding cost 1 Oz of gold. And a nicely made custom suit purchased today for your daughters wedding, cost 1 Oz of gold.
Gold tracks the loss of purchasing power over long timeframes. Maybe you do not consider that an inflation ‘hedge’. But I’ll take my chances.
Gold did not keep up with inflation.
https://www.foxbusiness.com/lifestyle/average-cost-american-home-decade-born-1940s-present-day
“Between 1970 and 1975, the average cost of a home jumped from $27,000 to $40,900 — which would be $213,457.27 and $233,195.38 in 2024, respectively.”
But if you like your gold, keep buying it, no one here is stopping you from it.
Not sure what point you were trying to make. I cannot follow your post at all.
However, I do know that it was illegal for Americans to own gold in 1970. I also know that shortly thereafter, Nixon stopped allowing foreign governments to redeem gold, as we were out of $42 gold. Trying to get an accurate value for gold between 1933 and 1975 is a fool’s errand, because there was not a market price for gold due to the American public being out of the market (and governments heavily involved in market manipulation in the artificially illiquid gold market).
what an astute and carefully thought out argument that left out some key facts.
Everything in the universe boils down to math, you can use it to prove your point and if you can’t then it’s just hot air.
And just think if they’d left Exxon in Dow 30 instead of Salesforce.
Regarding your first point, the price of gold certainly is a worldwide price. However, we were referring to the price in dollars. That makes the US consumer much more relevant to the topic at hand. Furthermore, during most of the 1930s and 40s, the British pound was the primary reserve currency, so the US dollar had even less influence on the world stage than it does now. Talking about a price in dollars for a commodity where those with dollars are not allowed to purchase said commodity seems a little ludicrous to me.
Regarding your second and third points, I’m perfectly capable of defending the argument that gold preserves its value across time. However, I’m also well aware that the correlation between the quantity of the currency (ie inflation) and the relative value of gold has some variation. Thus you can always cherry-pick times when gold has “underperformed” if you are so inclined. I’ll give two counterexamples that show gold is holding its own just fine.
Case 1: Spot gold is up 90% since May 2019 (ie prior to the repo market chaos in September that year and the idiotic currency expansion that occurred post-Covid). Inflation in US dollar terms is not up 90% over that time, so gold has more than held its own.
Case 2: At the turn of the 20th century (I go back to this time because it is just before the creation of the Federal Reserve), a common laborer could earn 30oz of gold per annum, and a skilled laborer could easily command double that. There was no income or payroll tax on that income. Today, the median personal income is 17oz of gold that is potentially subject to payroll and income tax. Thus, in terms of wages, gold has beaten inflation by 76% before accounting for taxes, which would tip the scales even further towards gold. (Plus that’s today’s overall median, so it includes skilled laborers as well, and accounting for that further skews the results in gold’s favor.)
Those dollars are not USD, they are Eurodollars = overseas dollars created outside the USA, and used by other countries for trade. The USA is not the most significant player in the gold market.
The topic being discussed involved the US dollar price of gold during the time it was illegal for Americans to own gold (1933-1974). The British pound played a significant role in international transactions even into the 1960s. The eurodollar did not become a major player until well into the 1970s.
Sure, the demand outside the US dwarfs the demand for gold inside the US, but the available dollar supply outside the US was relatively tiny and those with dollars in the US couldn’t buy gold, so it skewed the USD/gold ratio.
Governments tried all sorts of tricks to stabilize the USD/gold ratio throughout the 1960s, from swap lines to the London gold pool. However, none of these worked, and Nixon was eventually forced to acknowledge that the system was broken and ended gold convertibility for good in 1971. The problem was the creation of too many dollars throughout the 50s and 60s. The LBMA price throughout that time was not accurate, because it was an artificially manipulated price that clearly did not reflect the market fundamentals that forced Nixon to end the charade. After decades of suppression, the gold market spent years trying to find an appropriate market price. The gold price quickly surpassed $100/oz and never went back below that, so I’d say that $100/oz in 1970 is a more accurate price than the ~$35/oz the LBMA shows that blew up USD/gold convertibility.
And now you’ve summarized the problem with “gold bugs” and that’s the creation of specific snapshots in time or going back to an era that no longer exists to justify and rationalize buying and owning gold. Gold “failed” against inflation, the S&P 500, Bitcoin and other investments, it’s plain and simple.
You’ve already made up your mind and know the answer before the question is asked and it’s always going to be “gold” as the solution no matter what the problem is now or will be later.
That’s fine, believe whatever you want and buy gold, no one is going to stop you and you won’t listen anyway.
I own some gold coins and I plan on selling them as soon as a certain price level hits because we all know all investments fluctuate over time up and down. Gold will eventually correct and it’ll be crickets when someone asks, “what happened to gold?”
I prefer to invest in instruments that continuously produce income in the form of interest, dividends, rent, and option premium. That’s been working great for me and I’ll keep doing it, gold not so much.
It sounds to me like you don’t understand what gold is. Gold is money that preserves your purchasing power across time. Obviously that is in a range that fluctuates across time, but it is not a straight line down like fiat currency.
But gold is not an investment. You don’t buy gold to get rich. Gold doesn’t work that way. As you say, it doesn’t produce income. There is no way for it to grow. Gold is for preserving wealth that you already have, not generating new wealth. Gold should always underperform investing in businesses, real estate, etc over long timelines.
Gold is not an investment. It is a hedge against currency debasement. I would never argue otherwise. You aren’t comparing apples and oranges: you are comparing apples with the entire business of operating an orchard.
I don’t hold much gold either, precisely because it is not an investment and will not grow my real wealth over time. But to say that gold does not protect against inflation because it does not increase your real purchasing power over time is disingenuous at best.
Demand for gold in the USA is different from demand for gold in, say, India.
So what?
Surely you would look at the LBMA for a price during that period?
“Gold did not keep up with inflation.”
I pride myself as the champeen down vote earner here.
Just tell these guys what they wanna hear so I can maintain my status.
There can only be one!
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“Just tell these guys what they wanna hear so I can maintain my status.”
I can’t because that would require me to tell a math lie and one of the commandments is “thou shall not bear false witness to math.”
I would also break another commandment of “thou shall not covet a non-math proposition”
Math must be kept holy.
Well, in fairness to all, that depends the type of math, there’s “math”, then there’s corporate cherry-picked thinktank math, political math and five-year-old-kid-asking-for-allowance math (the latter three being the same)
You can rearrange formulas or construct them to say many things.
https://pricedingold.com/
I do maths every day, but it’s engineering maths, not economics bollocks.
There is no inflation in your country or my country, it’s deflation.
The price of gold actually varies by currency and country, and if you are in a country inbetween Istanbul and Manila, you will find gold is prized more than in the west.
No it surpassed it
I bought a house in 1980 for 50k. Gold was $800. Sold that house last year for $1.5 million. Gold was $2000. 30x vs 2.5 x.
The house was a 12x better inflation hedge than gold.
I’m half-sure someone’s going to tell you you’re making that up.
When you reference wrt gold you notice that typical family houses tend to cost about 100oz of gold in the UK:
https://pricedingold.com/uk-house-prices/
In the USA the average house price looks like about 50z
https://pricedingold.com/us-home-prices/
In 1980, a house was about 20oz, so very cheap during that dip; by 2023 its back to about 50oz again (after that boom in the noughties where US houses went up to 140oz!). So he probably doubled his money in real terms because the price in 1980 was cheaper than average, and even now the price of houses is cheaper than average, when referenced to gold. Gold bugs see this as indicative that gold is cheap and can go maybe 20% higher to around $3000/oz.
I’m not sure what part of “gold is the best inflation hedge” you think Dave didn’t completely shut down, but it’s shut down.
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thats not a discussion of inflation hedging its a discussion of speculative bubbles. Gold is money, not an inflation hedge either. Speculative bubbles are largely a product of misunderstanding money, ie believing it is fiat or credit. Money in the end always wins until a new strong man or wise man settles down the chaos of the broken system and then the cycle of theft and speculative bubbles restarts at some point after a bad succession
It appears you have had 5 doublings of house value during this 44 year period. I calculated an 8.1% annual return if you don’t figure in interest,property taxes, insurance, repairs, sellings costs, and highly subsidised capital gains tax code.
Cherry picking a time frame in housing, gold, oil or stocks will always look fabulous.
I have noticed with gold and silver purchases that one pays a premium for stamping into rounds, and in California at least 7.5% in sales tax.
One dollar in 1980 had the same purchasing power as $3.61 dollars today. This also has to be included in any calculus of returns. Next to an aging body, currency devaluation is the biggest theft of personal wealth. The youth of any age are the wealthiest people, if only they take the chance to realize it, and shake off the salt that older people continually try and pour into their wounds with Wars, Politics, and Disfunctional Economic Manipulations.
Gold was $800/oz for all of TWO DAYS in 1980, clown.
It was $800 when I sold the gold, in order to buy the house. I had bought the gold at $250 a few years earlier. It was the first and last time I owned gold. I was much younger and was influenced by the high inflation back then, and it seemed like gold was a good inflation hedge. I got lucky, because gold was back down to $400 or so a few months later. I learned that it wasn’t a very good hedge after all. And not a very good investment either.
When you have incomplete facts, you likely arrive at an incorrect conclusion. The full story is that Volker did the only thing he could have done to save the currency at the time, jack interest rates to almost 20% and well above the real inflation rate, and that was a one trick pony because the federal gov’t debt was so low that it wasn’t going to render the gov’t insolvent vs it’s tax receipts.
Then there is the concept of Gibson’s Paradox, the relationship of the price of gold to real interest rates. Volker had to jack interest rates ABOVE the real rate of inflation in order to control the price of gold. Here’s the money shot from an article on that Paradox:
“In other words, the bottom line of their analysis is that gold prices in a free market should move inversely to real interest rates. Under the gold standard, higher prices meant that an ounce of gold purchased fewer goods, i.e., the relative price of gold fell. Since under the Gibson paradox long-term interest rates moved with the general price level, the relative price of gold moved inversely to long-term rates. Assuming, as Barsky and Summers assert, that the Gibson paradox operates in a truly free gold market as it did under the gold standard, gold prices will move inversely to real long-term rates, falling when rates rise and rising when they fall.”
So you experienced the first successful defense of the FRN vs. Gold after being removed from the gold standard. Shortly thereafter the futures exchanges were created and those were and are currently used for the same purpose. They are failing as they were destined to do in a debt based monetary system that requires an ever-expanding money supply. The people here who are unaware are going to have a religious experience when it happens. Best of luck.
Two years before the crash of 29, the FED lowered rates. The crazy stock market turned totally out of control.
Nowadays I think the culprit isn’t the FED, it’s the PBOC (People’s Bank of China)
China is giving almost free goods to the world, giving billons of yuans to their companies, pumping the chinese stocks out of pride…
better to just realize the whole system is broken globally and it can’t be hidden anymore by easy access oil
With the new tariffs, Chinese goods are going to become much more expensive. Given that so much of what we consume comes from China, this will spike inflation. The FED HAS to increase rates, not reduce them.
US tariffs might also spur deflation for many countries as the Chinese will need to sell at a loss on the world markets whatever they cannot sell to the US. That will have knock on effects for other countries as the dumped Chinese goods will undercut both locally consumed goods in many countries as well as the ability to export by many countries when competing against dumped Chines goods.
Kevin Bacon. Animal House.
Thirty $Trillion, down the drain.
With virtually every asset class up and climbing how will it be that we don’t get higher inflation from all this money slushing around? Anyone who owns any types of these assets will be celebrating and spending based on their “improved” portfolios and wealth effect. Airlines booked solid for the summer and fall is filling up fast.
I’m riding the money train too but I’m also hedging with puts on S&P500 for September. It’s my little insurance policy that I’m glad to pay a premium for because this circus has to come to an end, we just need the fat lady to sing.
In the meantime, it’ll be turtles….and inflation….
By the way, you left T-bills off your list, it ain’t much at 5.4% but it’s honest work.
Great comment. You almost sounded like Chuck Prince, dance while the music’s playing. We saw how it worked out once the music stopped. (hence your S&P puts)
You’d have to believe a completely discredited regime media propaganda apparatus to think everything is okay in 2024.
The markets speak for themselves, they are all up, it’s not an illusion. If you’re not participating then you’re not playing the game right. Better re-read the rules and learn to play or you’ll never catch up.
About once a month I have meetings in Seattle so I get a snapshot over time.
Ho Lee Fuk
Freeways are so bad – far worse than Mexico OR EVEN BELIZE?
University district Food Bank is the size of a Barnes & Noble
Homeless drug addicts EVERYWHERE.
Streets are POTHOLED and shite.
Graffiti EVERYWHERE
Insane looking PEOPLE EVERYWHERE
Tents EVERYWHERE
Restaurant food is shite
Filthy garbage strewn roads
The US is turning into a Brazilian Favela – it’s all decaying in front of your eyes.
At some point people will overcome the cognitive dissonance in their head and realize the model in their head does not match reality in front of their eyes. And when they do they’re going to buy silver and gold.
It’s all fake
FAKE ELECTIONS
FAKE POLITICIANS
FAKE ECONOMY
FAKE MEDIA
FAKE HISTORY
Get out of your basement once in awhile. Life is nowhere near that bad. Thats nonsense.
Seattle is bad, it wasn’t always. I was shocked at what I saw as different between 1998, 1999, 2000, 2010…and 2021, 2022. Night and day. Lots more development but a lot of what Fast Bear said. It’s a bifurcated economy and it all seems like it’s working well if you’re on the 60% side but that 40% is gonna get a whole lot angrier and you ain’t gonna like the comeuppance. If you are an asset owner, you think it’ll go on forever. It might go on longer but the damage to the 40% will become worse, like a virus that fails to mutate and kills the entire population and thus itself. Currently we’re in the self reinforcing up cycle with liquidity and we start to think it can persist.
Still, Seattle ain’t nothing like it was and it shocked me. I was sad. Even my friends that I visited who lived their forever say the same thing. I’ve come out of my basement and seen it.
Not sure why anyone would defend what I saw as being desirable because it’s not.
Remember there is anecdotal and there is empirical. One city does not an opinion make (anecdotal). My one city is Chicago which gets WAY worse press than anywhere, and it isnt anywhere near that bad. A couple of Venezuelan families on the way to the store tonight, and thats about it.
Yes but a lot of data people treat with credulity is based off of surveys. Eventually an aggregate of anecdotes shows a trend. The trend in the UK is of decimated town centres with little but betting shops, charity shops, pawnbrokers, turkish barbers (cash in hand/drugs money laundering) etc… and the USA probably has it’s equivalent.
It’s a sight you can see consistently across locations, and it’s a long-term trend that has much to do with technology gutting the shopping experience, as well as unsustainable-debt-fuelled-socialism paying for the holy church of the NHS, and all the other bloated public sector departments/handouts.
You will see whole areas of towns and cities without a single local/native in them in the UK now, and not much sign of industry. These large immigrant areas are poor, and messy, and full of ethnic-orientated shops, there is nothing for locals/natives, who mainly flee to greener areas less intruded upon by immigration.
It’s a visible polarisation of society and the economy where no amount of legislation can compel native people, and the immigrants that have no consent of the natives to be there, to live together: it’s a recipe for disaster as in Sweden. The MENATS are the European equivalent of Latinos in the USA perhaps.
I suspected that much seeing non-watchable BBC drama, which used to be second to none up until turn of the century.
Now, unwatchable crap.
I came across this article today, very fitting to your comment.
https://ofdollarsanddata.com/bitcoin-and-gold-wont-save-you/
“most of the theories around how to allocate your money for the end of the world are misguided.”
All theories about allocating money for the “end of days” are misguided.
1, because there’s always been an “end of days” around the next corner.
2, If the end comes, money will be useless.
Fiat money will be useless but there will ALWAYS be a need for some means of exchanging something of value for needed goods/services, such as clearing the rats out of your cave or providing food.
At Thanksgiving, does it strike you odd when everyone encourages you to take the living room all for yourself?
“…The US is turning into a Brazilian Favela…”
No. You are describing Blue Cities, exclusively.
The difference b/t red areas & blue areas is 1stWorld vs. 3rdWorld.
Red state secession is inevitable, imo.
“The markets speak for themselves, they are all up..”
Up is the new down.
Kidding aside, my portfolio’s on fire, can’t speak for these guys.
.
The 666 bottom on the S & P after the bailouts was the big f- y- to the muppets.
“You’d have to believe a completely discredited regime media propaganda apparatus to think everything is okay in 2024.”
I’m carefully considering a plan to panic and stay awake nights worrying, but for the time being, things are pretty good.
.I’ll be on alert though, I will.
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something tells me you are only alert when you gaze into the mirror. is that a new wrinkle?