The Commodity Cycle: What It Means for Precious Metals Prices

By Stefan Gleason – Re-Blogged From https://www.moneymetals.com

The cycle for any commodity follows the same basic pattern…

When prices are low, production falls. As new supplies diminish, the market tightens and prices move higher. The higher prices incentivize producers to invest in production capacity and increase output. Eventually, the market becomes oversupplied, prices fall, and the cycle starts all over again.

Of course, this is a simplified model of what drives commodity cycles. Booms and busts can be amplified and extended by speculators, by unexpected shifts in demand, or even by interventions from central banks and governments.

Regardless of the causes, commodity markets will always be cyclical in nature. Commodities as a group can be pressured upward or downward by extrinsic forces such as monetary inflation or credit contraction.

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Stalling Engines: The Outlook for U.S. Economic Growth

By John P Hussman – Re-Blogged From Hussman Funds

Imagine driving a car moving down the road at 20 miles an hour. You hold a rope out the window. At the other end of that rope is a skateboard. If the skateboard is behind the car, yanking the rope pulls the skateboard forward, so the skateboard might temporarily speed ahead until it gets way ahead of the car and the rope tightens again. At that point, yanking the rope will pull the skateboard back, so even while the car continues down the road at 20 miles an hour, the skateboard actually loses ground for a while. Over the long-term, the car and the skateboard move ahead at the same speed, but the speed of the skateboard over shorter horizons depends on its position relative to the underlying trend.

The same proposition applies to the trajectory of numerous economic and financial variables. We have to be attentive to at least two things: 1) the central tendency of growth in underlying fundamentals, and 2) our current position, relative to that central tendency. The difference between the two is what separates longer-term growth from cyclical fluctuations.

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What is the Opportunity Cost of Climate Waste?

By Eric Worrall – Re-Blogged From http://www.WattsUpWithThat.com

What do we miss out on because the world wastes so much money and attention on climate? Imagine if some of that squandered money was spent on other fields such as medical research, such as the following accidental discovery, which if developed offers the possibility of longer life and superhuman athletic prowess.

Mouse

Mouse. By George Shuklin (Own work) [CC BY-SA 1.0], via Wikimedia Commons

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Brexit & Gold

By Kal Kotecha – Re-Blogged From http://www.Gold-Eagle.com

Since its discovery many centuries ago, gold has managed to maintain its relevance and stature to this day. Used to make royal crowns and other valuable items, the value of gold has been high as from its discovery days. The Greek scientist Archimedes (287-212BC), the inventor of the Archimedes Principle was the first person to find a way to measure the density of gold and other metals without deforming them.

This tale begins when King Hieron II of Syracuse suspected the goldsmith, whom he had commissioned to manufacture the royal crown, and suspected the  gold given to him was replaced with an equal weight of silver. The king therefore asked Archimedes to determine the purity of the gold crown. Being a holy object dedicated to the gods, the crown had to be examined without deformation of any kind. While in a bath, Archimedes noticed that his body displaced more water the more he sank into the tub. He immediately got out and ran home naked shouting “Eureka! Eureka!” which is Greek for “I have found it!”

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Really Measuring Real GDP

cropped-bob-shapiro.jpg   By Bob Shapiro

Consider two families. Both have a weekly income of $1000, and both spend it all.

Next year, one family gets a $30 raise (3%) and again spends it all ($1030). The second family does not get a raise, but it borrows $30 and spends all $1030.

Question: Are both families doing just as well, or is one doing better than the other?

My guess is that you can see that it is earnings which are important, rather than spending. I expect that you will agree that family one is 3% better off than family two, which borrowed 3% to match the spending of family one.

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The bad and the bad of US corporate income taxes

There are many good reasons to undertake corporate tax reform this year. Politicians from both sides of the aisle have declared support for cutting the headline corporate tax rate and recouping the lost revenue through a broadening of the tax base. President Obama’s budget for fiscal year 2016 calls for a cut in the corporate tax rate from 35 to 28 percent (with a special rate of 25 percent for manufacturing). Former Ways and Means Chairman David Camp’s tax reform proposal from last year called for a cut in the rate to 25 percent. The recent Rubio-Lee proposal would similarly cut the rate to 25 percent. There is even speculation that Paul Ryan and President Obama may be working on a deal to cut headline rates this year. Here’s why we need to get this done.

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China Just Crossed A Landmark Threshold

By Frank Holmes – Re-Blogged From http://www.silver-phoenix500.com

Back in July 2013, the think tank Heritage Foundation predicted that China’s outbound investment “could very well exceed $80 billion [by the end of the year] and is on course to breach $100 billion by about 2016.”

With all due respect to the Heritage Foundation, China just beat the forecast by a couple of years, exceeding the $100 billion mark at the end of 2014. For the first time, in fact, China invested more capital outside its own borders than it did inside. As legendary Major League Baseball player and coach Yogi Berra once quipped: “It’s tough to make predictions, especially about the future.”

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