Gold is currently showing some strength, with a price over $1600. However, there is still a lot of paper gold selling (where the spot price is determined), and there is no clear direction in price. In fact, I have been saying all year that until silver gets above $18.50, I won’t consider this a gold bull market.
By Associated Press – Re-Blogged From Headline Wealth
In its boldest effort to protect the U.S. economy from the coronavirus, the Federal Reserve says it will buy as much government debt as it deems necessary and will also begin lending to small and large businesses and local governments to help them weather the crisis.
The Fed’s announcement Monday removes any dollar limits from its plans to support the flow of credit through an economy that has been ravaged by the viral outbreak. The central bank’s all-out effort has now gone beyond even the extraordinary drive it made to rescue the economy from the 2008 financial crisis.
Stefan Gleason, Money – Re-Blogged From Headline Wealth
As the coronavirus spreads fear, sickness, and death, a specter haunts investors – the specter of deflation.
Despite central bankers’ attempts to push inflation rates higher, equity and commodity markets are collapsing. Inflation expectations as reflected in tanking U.S. Treasury yields, meanwhile, appear headed toward zero – and perhaps even below.
“I think that we have a real danger of deflation in the economy right now,” former Trump economic advisor Stephen Moore told Fox Business’ Maria Bartiromo last weekend.
Clearly, symptoms of deflation and leading indicators of economic contraction are now manifesting in dramatic ways:
One of the advantages of being a sexagenarian is that after forty years investing in stocks, bonds, commodities, and currencies you have a pretty good idea when something is not exactly “right.” If you have lived a good, normal life and you still have decent control of over your mental faculties and bodily functions, you remember moments in time that impacted your sensibilities, not unlike your first crush on a girl, or that final exam, or an authoritarian coach’s dressing-down.
However, given my chosen profession, nothing gets more indelibly etched into one’s psyche than a big price “move” in something one owns. Be it a loss or a win, one can recall all the inputs that created that “move” and, sometimes elatedly and sometimes sadly, one can recall all of the ramifications and repercussion from the “move.” You will, later in life, regale in the joy (or sorrow) of recounting the story of the “move” until people roll their eyes in angst upon being subjected to their ninth or tenth serving.
Our base scenario for 2020 is that it might be a worse year for gold than 2019 was. However, there are three major upside (and one downside) risks for the gold market, which could materialize in 2020. Today’s article will introduce you to these potential catalysts that could send gold prices higher (or significantly lower) in 2020.
We stated earlier that unless something bad happens, 2020 may be worse for the yellow metal than 2019, as gold fundamentals seem to have deteriorated since the last year. Of course, bad things are happening all the time, but do not result in any possible negative developments. Rather, we have in mind three downside risks to our macroeconomic outlook, or three upside risks for gold. What are they?
Share prices on the major US exchanges are hitting all-time highs at the same time that both the number and percentage of companies that do not make any money at all are rising.
According to the Wall Street Journal, the percentage of publicly-traded companies in the U.S. that have lost money over the past 12 months has jumped close to 40% of all listed corporations–its highest level since the NASDAQ bubble and outside of post-recession periods.
In fact, 74% of Initial Public Offerings in 2019 didn’t make any money as opposed to just 25% in 1990—matching the total of money-losing ventures that IPOED at the height of the 2000 Dotcom mania. The percentage of all listed companies that have lost money for the past three years in a row has surged close to 30%; this compares with just over 10% for the trailing three years in the late 1990s.
We currently have well above average prices for stocks, bonds and homes. This raises a simple question – what would happen to the average retirement account and to home equity for the average homeowner, if valuations were to return to what long term averages show us are normal valuations?
Using decades of valuation information on stocks, bonds and homes, this analysis develops numbers in each category that show how much of current national stock, bond and home prices represents average values, and how much is a premium above normal valuations.
Using those historical values and the illustration of an example homeowner and retirement account investor, it is demonstrated that the current premium is around 59% above long term average valuations. How the loss of such a premium could have life changing implications for tens of millions of homeowners and retirement account investors is reviewed.