Commodity Trade Mantra

Posts Tagged ‘Stagflation’

Gold Wins in 3 out of 4 Scenarios - None Bode Well for the Economy

If you think of gold, the only way gold loses is if normal business and private sector cycles come back. If that is the case, gold goes back 100 dollars per ounce. The other outcomes, deflation, stagflation, hyperinflation are good for gold. So gold wins in three out of four scenarios, but none of the three are particularly appealing. Here is why.

Gold Prices will rise on Weaker Dollar - Thanks to Fed's Monetary Policies

Change happens for a reason. Yellen may not be “missing” the risks of stagflation. More likely, she is heading there on purpose – as terrible as that sounds to say. How will gold react? That’s still not clear. But in our view, the longer term trends involve price inflation and economic stagflation. These will weigh down the dollar and drive gold prices higher against it.

Eurozone in Danger on Falling Purchasing Power of Dollar, Not Rising Commodity Prices

All financial prices in the Eurozone are badly skewed. So far, the price inflation environment has been benign, but this year, things have been changing. Higher levels of debt will never allow the ECB to run interest rates up sufficiently to kill price inflation. More likely, positive rates of only one or two per cent would be enough to destabilise the Eurozone’s financial system.

Beware! The Billionaires Start Buying Gold as Stagflation Triggers Demand

The billionaires are buying gold. George Soros has just invested in a gold producer, Barrick gold. Soros’ former chief strategist Stan Druckenmiller has stated gold is now his largest currency holding. There is billionaire hedge fund manager Paul Singer who reportedly believes gold is at the beginning of a global rebound. Stagflation is driving positive perceptions of gold.

The Gold Price Has Been Captured By The Modern Banking System

The dynamics behind the gold market are however different now from the early seventies. This time, the gold price is likely to be driven by physical shortages in the old world, as American and European investors wake up to stagflation, their central bank’s interest rate dilemma, and the loss of physical liquidity from their vaults.

Inflation Expectations, Fears, are Rising and Markets are Responding

When I ask if inflation is about to make a comeback, what I’m really wondering is if the value of the dollar is about to fall. I prefer these measures not because they are more accurate – although I think they generally are – but because they are more timely. Prices will follow the value of the dollar eventually but the impact on investments is much quicker.

Inflation - The Fed's Nightmare Scenario Is Becoming Reality

Higher inflation is not a dream come true. It is the Fed’s worst possible nightmare. It will expose the error of their 8-year stimulus experiment & the Fed’s impotence in restoring health to an economy that it has turned into a walking zombie addicted to cheap money. If inflation catches fire now, with growth close to zero, the Fed will be completely incapable of controlling it.

Silver “Particularly Cheap” as “Blood On The Commodity Streets”

Key commodity price ratios, such as those between precious and industrial metals, are already at levels associated with financial crises such as that of 2008. In other words, there is already ‘blood on the commodity streets’, presenting investors and commodity traders with potentially attractive opportunities.

Doubling Down on Inflation

The benefits of inflation are supposed to be compounded by rising stock & real estate prices, creating a wealth effect for the owners of those assets which subsequently trickles down to the rest of the economy. In other words, seed the economy with money & inflation & watch it grow. But why has growth yet been a no show?

The Safest Investments in a Dangerous World Market

You need both the wood & the spark to have the fire of inflation. US Fed & other central banks have printed trillions of dollars of money in the past four years. So far, inflation has been relatively tame. The printed money is only the wood; a spark is still required. Events in the Middle East, Ukraine and China today may provide the spark.

Will The Fed's Massive Money Creation End In Inflation Or Depression?

The Fed’s massive money creation could go either way, which is potentially confusing. Till it stokes demand, it could lead to inflation. If it increases an already heavy debt burden, it could lead to recession, joblessness, and depression. Or it could lead first to the one and then to the other.

follow us

markets snapshot

Market Quotes are powered by India

live commodity prices

Commodities are powered by India

our latest tweets

follow us on facebook