Commodity Trade Mantra

Posts Tagged ‘US Federal Reserve’

Will The Price of Silver Take a Breather Before Another Rally Kicks Off?

The price of silver has emerged as the perfect compensation for those whom the market inflicted losses last year. The price of silver appears set for a correction, which suggests the overbuying activity that took place in June could witness several cash outs in the coming weeks. But the overall direction of commodity prices suggests that this could just be a breather before another rally kicks off.

Negative Interest Rates Positively Driving Gold Demand

Gold returns in periods of low rates are historically twice as high as their long-run average. Portfolio analysis suggests that gold allocations in a low rate environment should be more than twice their long term average. We believe that, over the long run, negative interest rates may result in structurally higher demand for gold from central banks and investors alike.

Gold Retreats as US Fed Members Turn Hawkish in Rate Hikes

Gold had been gaining traction earlier last week following a dovish report by Janet Yellen, the US Federal Reserve chairperson. Gold prices retreated following the rise in the US dollar index. With investors offsetting their positions to take profits and a hawkish view by other Fed members, the sentiment for gold seems to be negative.

The Inevitability Of A Very Dramatic Inflation

Since deflation is the problem that’s staring us in the face now, governments are doing everything they can to reverse it & return to inflation, as they benefit from inflation. People can only be taxed so much before they rebel, but inflation acts as a hidden tax & most people don’t recognise it. Trouble is, hyperinflation, when it comes, comes very fast and is uncontrollable.

A Reality Check of the Gold and Silver Market

If you want realistic answers as to why gold and silver have not rallied to reflect the huge demand for their limited supply, look no further than the ongoing events unfolding around the world as diversions to keep the elite’s theft-of-the-world’s-wealth-by-fiat under control. That is reality in a nut shell.

The Reality Behind the Numbers in China’s Boom-Bust Economy

The US Federal Reserve orchestrated an artificial boom from 2001 to 2007 through artificially low interest rates, paid for it with millions of destroyed jobs, wasted labor & wasted resources, but has resumed doing so once again. The Chinese Central Bank learned nothing from the Fed’s catastrophic experiment for its economy. They will reap the same rewards.

Central Banks Behind Slowdown in Global Trade

Over the past decade, all central banks went into overdrive with currency devaluations. This has done more harm than good. A currency war between developing nations is likely to be more damaging than thought, leading to a reduction in global trade & possibly economic growth, rather than just reapportioning a fixed level of trade between winners & losers.

Why Stocks Could Fall 50% if the Fed Makes the Wrong Move

I don’t know what the Fed’s going to do. That’s a guessing game. What’s important is that we’re in an extremely fragile situation. The world has too much debt & the Fed’s margin for error is tiny. If it takes a wrong step & stocks plummet 50%, it could cause a bigger financial crisis than in 2008. Do you trust the US government & the Fed to manage this dangerous situation?

The Fed Is Spooking the Markets, and Not China

The Fed has always known that the fragile economy created through stimulus might prove unable to survive even the most marginal of rate increases. The markets have now panicked that the rate hikes are about to occur in the face of a weakening economy. How much further will markets have to fall before the Fed comes to the rescue by calling off any threatened rate increase?

Keeping the Low Interest Rates Bubble-Boom Going

A normalization of interest rates, after years of excessively low interest rates, is not possible without a likely crash in production and employment. If the Fed goes ahead with its plan to raise interest rates, times will get tough in the world’s economic and financial system. Why then do the decision makers at the Fed want to increase rates?

Gold Is Down. Remember - Fed will achieve Inflation ‘whatever it takes’

If the Fed maintains its tight money mantra in the middle of a deflationary currency war, then gold & other commodities could go a bit lower. My expectation is the Fed will wake up to the damage it’s doing and reverse course. The commodity and currency markets will soon hear the message that the Fed will achieve inflation ‘whatever it takes’. And then – gold will once again shine.

Why Dodgy US Jobs Data is Keeping Gold Prices Down

Low unemployment rate will be used as evidence to prevent the dollar from rising. If the US dollar retains its current strength, then gold prices won’t move higher in the short term. There’s no reason for a mass market movement into hard assets like gold if the US dollar is strong and the official inflation rate is low.

The Market is Simply not Expecting Renminbi Devaluation to Happen

The Chinese seem to have changed the focus of their monetary policy from one that targets the exchange rate to one that targets domestic money supply growth. This shift will only serve to increase the divergence between the Fed and PBOC monetary policies and put more downward pressure on the renminbi.

The Secret Reason the SNB Opposes the Swiss Gold Referendum

One of the 3 objectives of the gold initiative is to have all Swiss gold stored in Switzerland. Swiss central bankers maintain it’s imperative to maintain foreign gold storage at major gold trading centers that can be quickly traded in event of a financial crisis. The ‘yes’ campaign counters that its safer to have it’s gold stored in Switzerland.

Inflation's Not the Only Way Easy Money Destroys Wealth

One of the major negative factors that undermine the real wealth generation is loose monetary policy of the central bank, which boosts demand without the prior production of wealth. The longer the Fed’s loose policy stays in force the harder it is for wealth generators to generate real wealth & prevent the pool of real wealth from shrinking.

A New Fed Playbook for the New Normal

The Fed knows very well that the economy needs zero% rates to stay afloat. So while the market talks the talk on raising rates, the Fed will continue to walk the walk of zero percent interest rates. Since none of the Fed’s prior QE programs were followed by rate hikes but by more QE, why should this time be any different?

Money Creation: The Road to Hyperinflation

With banks willing to lend money and customers increasingly willing to borrow, bank credit can be expected to gradually increase in a self sustaining, inflationary spiral. With asset prices being gradually inflated, more investors are inclined to borrow at low interest rates to share the bonanza – An outcome, the central banks look for.

Still Think the Fed Isn't Fueling Inflation? Check Out This Chart

One camp reckons the reason why inflation is muted is that the Fed largesse has flowed into asset bubbles rather than goods and services, and proponents of this view make a good point: since little of the Fed largesse has trickled down to the to bottom 99.5%, it can’t exerting much pressure on consumer prices.

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