Gold surged on Monday after a spike in coronavirus cases worldwide dashed hopes of a quick economic recovery. Within 24-hours the number of infections globally rose 183,020, a new record, the World Health Organization reported, Reuters said the US saw a 25% increase in new COVID-19 cases over the week ending June 21st.
So, the stock market has dropped. Every government in the world has responded to the coronavirus with drastic, if not unprecedented, violations of the rights of the people. Not to mention, extremely aggressive monetary policy. And, they are about to unleash massive fiscal stimulus as well (for example, the United States government is about to dole out over $2 trillion worth of loot).
The question on everyone’s mind is what will be the consequences?
The standard analysis is that governments will print massive amounts of money. And, this will, of course, cause massive inflation (i.e., skyrocketing consumer prices). There’s just one problem with this analysis.
Summary: Among the fear barrages of the past 50 years, “running out of resources” has been the most persistent. Here is why we won’t run out of minerals. As for other kinds of resources, that is a more complex story for another day. I first ran this excerpt in January 2011.
The history of America since WWII has been a succession fear barrages rained on us by the Left, the Right, and the government. Many of these were sold to the public despite their contradiction by science. Today we have the doomster narratives of climate change, exaggerations of the findings of the IPCC. People casually talk about our certain doom from the weather, just as ten years ago people talked about civilization’s certain collapse when the “oil ran out.” Since these fears are clearer in retrospect, let’s see why peak oil was clearly bogus.
By Michael Snyder – Re-Blogged From Freedom Outpost
Oil, copper and lumber are all telling us the exact same thing, and it isn’t good news for the global economy. When economic activity is booming, demand for commodities such as oil, copper and lumber goes up and that generally causes prices to rise. But when economic activity is slowing down, demand for such commodities falls and that generally causes prices to decline. In recent weeks, we have witnessed a decline in commodity prices unlike anything that we have witnessed in years, and many are concerned that this is a very clear indication that hard times are ahead for the global economy.
Let’s talk about oil first. The price of oil peaked in early October, but since that time it has fallen more than 25 percent, and the IEA is warning of “relatively weak” demand out of Asia and Europe…
The International Energy Agency said on Wednesday that while US demand for oil has been “very robust,” demand in Europe and developed Asian countries “continues to be relatively weak.” The IEA also warned of a “slowdown” in demand in developing nations such as India, Brazil and Argentina caused by high oil prices, weak currencies and deteriorating economic activity.
“The outlook for the global economy has deteriorated,” the IEA wrote.
By Alasdair Macleod – Re-Blogged From GoldMoney
We are getting ahead of ourselves here. Gold does not circulate as money – yet. It might never do so. Perhaps the end of government currency, fiat money imposed on us by government laws, may never be replaced by what for millennia has been the people’s money, gold. Do we even wish it? Given what we have to do to get there, probably not.
It is hard to think of a life without Nanny State giving us her money-tokens to buy our sweets, telling us what to eat and what medicine to take. But Nanny State is getting long in the tooth. When she was younger, she was less controlling. Her constant refusal to allow us, the ordinary people, to do what we want is an increasing source of friction.
By Bob Shapiro
Venezuela used to be a relatively rich country. Today, it has a nominal GDP around $100 Billion, a population around 32 million, a labor force of 14 million, and unemployment over 30%. GDP fell last year by 14%, and inflation is so high that official statistic are meaningless. 87% of the population is described as living below the poverty line.
Through the many recent years of socialism in Venezuela, the government has racked up deficits and debt that defy reality. With recent low oil prices, and government mismanagement of the industry, revenues have fallen so much that, if the Central Bank didn’t print money with wild abandon, the government would have had to declare bankruptcy long ago.
By Stefan Gleason – Re-Blogged From http://www.Gold-Eagle.com
Investors got lulled into a state of inflation complacency. Persistently low official inflation rates in recent years depressed bond yields along with risk premiums on all financial assets.
That’s changing in 2018. Five drivers of higher inflation rates are now starting to kick in.
Re-Blogged From http://www.MoneyMetals.com
Crooked bankers are all over the headlines again.
The world’s largest metals hedge fund, Red Kite Management, Ltd., is suing Barclays for rigging copper prices. Federal prosecutors launched an investigation of Wells Fargo bankers working on its foreign exchange desk Friday. And on October 23rd, a jury in New York convicted an HSBC trader of fraud.
The HSBC trader, Mark Johnson, said he “thought we got away with it” to his coworkers after cheating their client in a massive foreign exchange transaction. But he was wrong. The jury found him guilty for his involvement in a 2011 exchange in which the Cairn Energy Plc converted $3.5 billion dollars to British pounds.
By Frank Holmes – Re-Blogged From http://www.Gold-Eagle.com
As many of you know, copper is often seen as an indicator of economic health, historically falling when overall manufacturing and construction is in contraction mode, rising in times of expansion.
That appears to be the case today. Currently trading above $3 a pound, “Doctor Copper” is up close to 28 percent year-to-date and far outperforming its five-year average from 2012 to 2016.
By Hugo Salinas Price – Re-Blogged From http://www.Gold-Eagle.com
Once again, I turn over in my mind the Chinese plan regarding their imported oil, which consists in convincing their oil suppliers to accept yuan in payment (and thus re-directing their sales outside the orbit of the US dollar) with an additional sweetener in case the oil exporters do not wish to hold assets denominated in yuan: the sweetener consists in offering to exchange the yuan received by the oil exporters, for gold purchased on the world markets – and not out of Chinese reserves.
Again, I mention that for the first time in 46 years – ever since that fateful date, August 15th, 1971, when Nixon took the US “off gold” – gold is once again mentioned as part of a commercial deal – and one of great importance.
By Spock – Re-Blogged From http://www.Silver-Phoenix500.com
Global Macro Thesis: Copper, Copper, Copper
The Chinese are holding their next national congress assembly from 18th October. This is a major event where macro policy for China is agreed and implemented. On the agenda will be the electrification of national road transport, with a plan to be all electric by 2050. This will achieve two objectives: Reduce pollution in the major cities and to be the global leader in the electric vehicle (EV) technology, and associated technologies. The Chinese are also building the infrastructure around the concept, including a huge electric grid upgrade across the country over the next 10 years, to cope with the additional load.
By Anjli Raval, David Sheppard, & Tom Hancock – Re-Blogged From Financial Times
The Red metal is a key source of income for some of the world’s biggest mining companies. Copper jumped to its highest level in two years on reports that China could ban imports of scrap metal by the end of next year — a move that would probably boost demand for refined metals in the world’s top importer.
Copper for delivery in three months on the London Metal Exchange rose as high as $6,400 a tonne on Wednesday, a level not seen since May 2015, having risen by about 5 per cent over the past two sessions. In afternoon trading, it moderated its gains to $6,316 a tonne.
By Sol Palha – Re-Blogged From http://www.Silver-Phoenix500.com
The financial media has provided reams of data trying to lay out the case that this economic recovery is real. Many of the statistics provided do indeed support the theme that the outlook is improving. One must, however, keep these two facts in mind when looking at the data:
- The Fed poured huge amounts of money into this market. Minus the money, this so-called economic recovery would have never come to pass
- Due to the low-interest rate environment, corporation borrowed money on the cheap and poured billions into share buybacks since the crash of 2009.
Hence, while some of these statistics paint a rosy picture, the outlook is far from rosy as two key leading economic indicators have failed to confirm this recovery from the onset.
The Baltic Dry index is trading 92% below its all-time high. Now imagine the Dow was in the same position and the press instead of calling it a crash, made the assertion that we were in the midst of a raging bull market. You would think they were insane. Well, the same analogy applies today; this index clearly indicates that there is no recovery on a global basis and that hot money is creating the illusion of one. Remove this excess cash from the system, and the economy together with the stock market will collapse.
By Stuart Edwards – Re-Blogged From http://www.Gold-Eagle.com
Much like other commodities, traders have always devoted a certain level of attention towards copper. There are two key reasons for this observation. First, this red metal is highly indicative of industrial demand and therefore, the health of domestic economies. Secondly, political policy shifts and fiscal plans can have a knock-on effect in regards to its pricing. We have witnessed a great deal of volatility during the past few months and while the medium-term outlook remains positive, many are wondering if a support level will soon be reached. Let us take a look at the root causes of this volatility as well as what to expect in the coming months.
By Stefan Gleason – Re-Blogged From Money Metals News Service
The dollar’s reign as the world reserve currency will come to an end some day. But before that happens, the penny will likely go into the dustbin of monetary history.
U.S. pennies have already been debased – going from 95% copper before 1982 to just 2.5% copper (and 97.5% zinc) since. Now there’s a push afoot in the Senate to junk the penny entirely.
All the sound and fury Republican leaders made about repealing Obamacare signified nothing. They aren’t eager to betray the healthcare lobby, insurance providers, and pharmaceutical companies who worked with Congress to write the law and who paid so handsomely into campaign funds. They would rather betray voters.
Supporters of eliminating the penny note that it no longer makes any economic sense to produce them.
By Steve Saville – Re-Blogged From http://www.Silver-Phoenix500.com
For an industrial commodity with a liquid futures market, the “term structure” of the futures market is the most useful — perhaps even the only useful — indicator of whether physical supply is tight, abundant or somewhere in between.
The term structure of a commodity futures market is the prices of futures contracts for the commodity over all available expiration months. It can be displayed as a chart, with price along the vertical axis and the expiration months along the horizontal axis. Here are examples for oil and copper.
By Surf City – Re-Blogged From http://www.Gold-Eagle.com
If you are going to trade the commodity sector, you had best follow the USD, which is why I do. If I am correct that the USD’s longer 15 Year Super Cycle is toping in 2017, then the CRB will be a fun sector where we will focus.
With respect to Weinstein’s 4 Stage Model, here is a great site that is the best I have found that covers his model quite well.
(4 Stages: 1 = Basing, 2 = Bull, 3 = Toping, 4 = Bear)
If the USD is topping then inflation will start to show up in the CRB with Gold and Silver leading the way…
By Jeb Handwerger – Re-Blogged From http://www.Gold-Eagle.com
The Trump presidential election win has pushed capital into a major risk on rally, benefiting stocks, energy and the US Dollar.
Interest rates are soaring in line with the Dow Index breaking 20k indicating major inflationary pressures.
Commodities such as industrial metals, copper and oil are also rallying.
The junior gold miners could be on the verge of breaking a six-month downtrend.
A few weeks ago in an article titled, Seasonality Favors Precious Metals And Junior Miners Going Into Year End , I attached the following chart.
By Rick Ackerman – Re-Blogged From http://www.Silver-Phoenix500.com
There is as yet insufficient evidence to speculate on whether copper’s impressive post-election leap will turn into a belly flop, or instead prove to be the booster stage of a much bigger rally. Whichever is the case — and I strongly doubt there will be any in-betweens — it’s inconceivable that this legendarily sensitive economic barometer will guess the outcome incorrectly. Inflation, or deflation? Growth or economic stagnation? Keep your eyes focused on ‘doc’ copper and you cannot miss an important turn — assuming one comes, and however unexpected — toward inflation following 35 years of the opposite.
From a technical standpoint, it is necessary to see that, so far at least, copper’s steepest rally in a decade is still just a fledgling on the weekly chart. Yes, it has surmounted a daunting multitude of minor peaks. However, these are mere foothills in comparison to the two ‘external’ peaks that I’ve labeled. The higher lies at 3.2790, and any rally from these levels that surpasses it without taking much of a breather along the way will be convincing evidence that the rip-roaring inflation of the 1970s is about to return in some shape or form. Anything less than that, however, can only suggest that an economic upswing of indeterminate strength is coming and perhaps no more.
By Michael Pento – Re-Blogged From http://www.PentoPort.com
While investors have been focused on the perennial failed hope for a second half economic recovery, they have been missing the most salient point: the US most likely entered into a recession at the end of last quarter.
That’s right, when adjusting nominal GDP growth for Core Consumer Price Inflation for the average of the past two-quarters the recession is already here. But before we look deeper into this, let’s first look at the following five charts that illustrate the economy has been steadily deteriorating for the past few years and that the pace of decline has recently picked up steam.
If and when the Dollar returns to being a Hard Currency – one backed by or actually containing Gold or Silver – there will be numerous changes which will occur.
One will be the elimination of constant and continuous growth of the money supply. A stable money supply is likely to result in a stable price level (CPI) – or even a continuous decline as the US saw during the 1800s.
But, there will be other, sometimes much less obvious benefits, and I’d like to consider one possibility today – the effect on the Price of Copper.
Copper is one of the most widely used base metals worldwide, mostly in electrical components like wire and motors. It has an active futures market, where because its ups and downs in price coincide with the ups and downs of the Economy, it has acquired the nickname of Dr. Copper.
By Frank Holmes – Re-Blogged From http://www.Gold-Eagle.com
- In a down week for most markets, silver fared the best, falling only 0.11 percent. There was no particular story supporting the move, but note that silver really didn’t fully participate in the precious metal rally last week and perhaps had less to lose.
- Over the past five days investors bought 26.8 metric tonnes of bullion through exchange-traded products backed by the metal, according to Bloomberg, the most since January 2015 as seen in the chart below. In addition, Reuters says gold and silver demand is off the charts; the U.S. Mint sold nearly as much gold on the first day of 2016 as in all of January 2015, with silver sales equally as astounding.
By Rick Mills – Re-Blogged From http://www.Silver-Phoenix500.com
- There is a slowing of production and dwindling of reserves at many of the world’s largest mines.
- All the oz’s or pounds are never recovered from a mine – they simply becomes too expensive to recover.
- The pace of new elephant-sized discoveries has decreased in the mining industry.
- Discoveries are smaller and in less accessible regions.
- Mineralogy & metallurgy is more complicated making extraction of metals from the mined ore increasingly more complex and expensive.
- Mining is cyclical which makes mining companies reluctant to spend on exploration and development.
- A looming skills shortage
- There is no substitute for many metals except other metals – plastic piping is one exception.
- Metal markets are small so speculation is a larger factor.
- There hasn’t been a new technology shift in mining for decades – heap leach and open pit mining come to mind but they are both decades old innovation.
- Country risk – resource extraction companies, because the number of discoveries was falling and existing deposits were being quickly depleted, have had to diversify away from the traditional geo-politically safe producing countries. The move out of these “safe haven” countries has exposed investors to a lot of additional risk.
- Lack of recognition for population growth, growing middle class w/disposable incomes and urbanization as on-going demand growth factors.
- Climate change.
Increasingly we will see falling average grades being mined, mines becoming deeper, more remote and come with increased political risk.
By Sol Palha – Re-Blogged From http://www.Silver-Phoenix500.com
Doctor copper, can no longer be viewed as a leading indicator, in fact, a name change might be in order. A change of name from Dr Copper to deadbeat copper might in order, given its dismal record over the years. After the financial crisis of 2008-2009, the economy, the stock markets and copper parted ways; while the markets and the economy trended higher, copper plunged into an abyss, and it is still trying to find its footing.
All Jokes aside, the reason copper is diverging from the markets is because the Feds destroyed the concept of a free market system long ago. Copper is indicating that this economic recovery is nothing but an illusion. However, several rounds of QE, plus interest rates being held down for a record-breaking period, have altered reality. The markets are moving higher because of hot money, and the economic miracle would end without the low-interest rate band aid. Against such a backdrop, copper ceased to work. In this environment, fundamentals and basic technical analysis can lead you astray; in such an environment Mass psychology works the best. The masses have accepted that Fed intervention is the new norm and that the Fed is the saviour. Hence, this is what investors need to pay attention too, as the psychology of the masses is what drives the markets. Given the old historical pattern between, copper and the markets, the stock market should have followed copper into the abyss, but instead we find that several indices are dangerously close from putting in new highs.
By Sol Palha Re-Blogged From http://www.Silver-Phoenix500.com
Anxiety is a thin stream of fear trickling through the mind. If encouraged, it cuts a channel into which all other thoughts are drained.– Arthur Somers Roche
Once upon a time in the good old days, before QE changed everything, any signs of strength from copper could be construed as a sign that the economy was on the mend. After QE, this story came to an end…and a new reality came into play. The Fed manipulated the markets in favour of short-term gains through what could be determined as borderline illegal monetary policy; a policy that has maintained an ultra-low interest rate environment that favours speculators and punishes savers.