POSTIVE MACRO FOR GOLD:
a) Deficits. Deficits drive inflation and slow growth. Great for Gold.
5 TRILLION DOLLARS IN ADDITIONAL DEFICITS have been promised through tax cuts on the wealthy. This will pass and no amount of cutting pennies off government salaries or aid to the needy will even begin to offset this. Neither will increased GDP.
When Reagan cut taxes in 1980 the top marginal tax rate was 90 percent and the US was a surplus nation. Each dollar of resultant debt could expect to produce 2 and a half dollars of GDP. That was supply side economics.
Today the top marginal tax rate is 37 percent (And with loopholes closer to 17 percent) and the US is one of the world's largest debtor nations. It now takes 4 dollars of addtional debt to create 1 dollar of GDP. If you have 6th grade math you could figure out the efficacy of that plan.
GREAT FOR GOLD.
B) TARIFFS. Tarrifs are highly inflationary. First they make goods more expensive. Second they destroy supply chains. Third, they induce retalliatory tarrifs. Fourth: They immediately increase INFLATION EXPECTATIONS.
You can argue that applied with precision within a grand master plan they eventually will help onshore businesses and add jobs. You can argue that. This is a long term prospect that may or may not occur. In the short run in an environment where most middle class families are deeply underwater - those families can expect much harder times ahead. And they do expect that - just look at the inflation expectation component of consumer confidence. It's through the
And inflation expectation causes inflation.
GREAT FOR GOLD.
c) GEOPOLOTICAL CONFUSION AND PANIC.
Most people don't realize that gold is a STABILITY HEDGE. The more unstable events appear to be the higher the price of gold. Right now we are in an historically unstable period. Who are our allies? Not Europe, Not other democracies. Not Nato. Not Canada. Russia? The Nazi Party in Germany? The fascists in Yoguslavia? Not China. Though China is the major ally of our new allies. When Russia buddies up to us are they doing so on behalf of China? What does that mean? Does it mean anything? What about Saudi Arabia? They're settling oil with China outside the dollar. What about the Belt Road initiative? Trump's threatened tarrifs on anyone involved but nobody seems to care. In fact the Belt Road Initiative exists to combat just such threats. So what does the mean over time?
Nobody F-ing knows! All we know if the situation is entirely unstable.
GREAT FOR GOLD
MASSIVE CENTRAL BANK BUYING. Central bank buying all around the globe in response to the massively unstable economic and political environment in the US is accelerating. Most central banks are selling US debt and buying gold to use as their principle Tier 1 Reserve Asset. The more unstable the US appears to them the more this trend continues. (I know - to some of us here the US appears to be in great shape. Exceptional. Incredible. But we don't run the other centtral banks for the world. It's only really relevant as to what they think.)
GREAT FOR GOLD
NEGATIVES FOR GOLD: A massive price run up without much of a breather from months and month. Everything, no matter how big the bull market, must take a breather now and then. When it comes don't let it knock you out of your position. This is an historic bull. Hang on for dear life.
The other negative for gold: the US public just doesn't see any of the above. They think everything is just fine, Better than fine. They think Gold has a plan for us and we will prosper with HIS BLESSING.
At some point they may want to suplement HIS BLESSING with a little gold.
Then gold will really take off in dollar terms.
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