Fundamental Analysis of Gold

As we often point out in these pages, even though gold is currently not the generally used medium of exchange, its monetary characteristics continue to be the main basis for its valuation. Thus, analysis of the gold market requires a different approach from that employed in the analysis of industrial commodities (or more generally, goods that are primarily bought and sold for their use value). Gold’s extremely high stock-to-flow ratio and the main source of gold demand  – which is monetary, or investment demand – suggest that gold has to be analyzed as though it were a currency rather than a commodity.

 

The stock-to-flow ratios of gold and silver compared to those of industrial and food commodities. Gold’s large StFR is one of the most important features (and to a lesser extent this also applies to silver) making it useful as a money commodity – click to enlarge.

 

Read the rest of this entry »

     

 

 

Input Data Errors

Dear Readers,

I owe you an apology. I made a mistake. I am writing this letter in the first person, because I made the mistake. Let me explain what happened.

 

The wrong stuff went into the funnel in the upper left-hand corner…

 

Read the rest of this entry »

     

 

 

Approaching a Tipping Point

Taking the path of least resistance doesn’t always lead to places worth going.  In fact, it often leads to places that are better to avoid.  Repeatedly skipping work to sleep in and living off credit cards will eventually lead to the poorhouse.

 

Sometimes the path of least resistance turns out to be problematic

 

Read the rest of this entry »

     

 

 

Disappearing Credit

All across the banking world – from commercial loans to leases and real estate – credit is collapsing. Ambrose Evans-Pritchard writing for British newspaper The Telegraph:

 

Credit strategists are increasingly disturbed by a sudden and rare contraction of U.S. bank lending, fearing a synchronized slowdown in the U.S. and China this year that could catch euphoric markets badly off guard. Data from the U.S. Federal Reserve shows that the $2 trillion market for commercial and industrial loans peaked in December.

The sector has weakened abruptly as lenders tighten credit, especially for non-residential property. Over the last three months it has dropped at a rate of 5.4% on annual basis, a pace of decline not seen since December 2008.

 

C & I loans, y/y growth. Readers may recall that we recently showed this chart in “Libor Pains”, in which we discussed corporate debt. Actually, y/y commercial & industrial loan growth peaked in early 2015 already, not just “last December”… but lettuce not quibble (Pritchard likely meant to refer to total commercial bank credit, the growth rate of which reached an interim peak in late 2016 – shown further below). The point remains that credit growth is falling fast – click to enlarge.

 

Read the rest of this entry »

     

 

 

Counterintuitive Moves

Something odd happened late in the day in Wednesday’s trading session, which prompted a number of people to mail in comments or ask a question or two. Since we have discussed this issue previously, we decided this was a good opportunity to briefly elaborate on the topic again in these pages.

A strong ADP jobs report for March was released on Wednesday, and the gold price dutifully declined ahead of it already, while the stock market surged concurrently. Later in the day, the Fed minutes were published, and their tone was definitely seen as very “hawkish”, at least by today’s standards.

 

Strange happenings alert!

 

Read the rest of this entry »

     

 

 

Unknown (sort of) Head of State

BUENOS AIRES – Type Swiss President “Doris Leuthard” into Google. You will get about 450,000 results. Do the same with Donald Trump, and the number is closer to 396 million. That’s 87,900% more references. The world’s press is as fascinated by President Trump as it is indifferent to President Leuthard.

 

Doris Leuthard, President and energy minister of Switzerland. She has won her second presidential term this year. It basically doesn’t matter… she is primus inter pares, as the Swiss Federation is actually administered by a body of seven people (the Federal Council), modeled after the ancient Athenian polis system. The president does not enjoy greater political power than her colleagues – there is no single “boss”. We have written about the unique Swiss political system in greater detail here.

Photo credit: Jacques Demarthon / AFP

 

Read the rest of this entry »

     

 

 

Dashed Hopes

Despite widespread optimism among libertarians, classical liberals, non-interventionists, progressive peaceniks and everybody else opposed to the US Empire that some of its murderous reins may finally be pulled in with the election of Donald Trump, it appears that these hopes have now been dashed.

 

Liberty… some of it is still above water, but definitely not as much as there could or should be.*

 

Read the rest of this entry »

     

 

 

Orders of Preference

Last week, we discussed the growing stress in the credit markets. We noted this is a reason to buy gold, and likely the reason why gold buying has ticked up since just before Christmas.

Many people live in countries where another paper scrip is declared to be money — to picture the absurdity, just imagine a king declaring that the tide must roll back and not get his feet wet when his throne is placed on the beach — not real money like the US dollar.

 

Holding back the tides is serious business… apart from his odd obsession with the waves, King Cnut the Great, son of Sweyn Forkbeard, King of all England and Denmark and the Norwegians and of some of the Swedes, is reportedly known to historians as the most effective Danish King England ever had [PT]

 

Read the rest of this entry »

     

 

 

Identified Flying Objects

The future is here and it’s not all it was cracked up to be.  For example, one of the great disappointments of the 21st century, thus far, is the lack of flying cars.  Wasn’t this supposed to be the signature achievement of Tomorrowland?

 

The Terrafugia flying car – this one was actually said to be in development a little while ago with the maiden flight of the prototype scheduled for 2018. Is the Age of the Jetsons finally beginning? One thing is clear: once this car becomes widely available, we can finally go about abolishing the State. The question “Who will build the roads?” will once and for all be laid to rest!

Image credit: Terrafugia

 

Read the rest of this entry »

     

 

 

Darkening Picture

SÃO PAULO – We arrived on Sunday morning. São Paulo can have terrible traffic. It is a sprawling place of 12 million people. But it was early when we pulled into town; the traffic moved swiftly. We decided to go to mass at the old São Paulo (Saint Paul’s) Cathedral downtown.

 

São Paulo, similar to Mexico City, reminds on a bit of the universe, or at least of one of the universe’s main characteristics: it has seemingly no boundary.

Photo credit: Journeying Jeff

 

Read the rest of this entry »

     

 

 

Wrong Focus

If one searches for news on LIBOR (=London Interbank Offered Rate, i.e., the rate at which banks lend dollars to each other in the euro-dollar market), they are currently dominated by Deutsche Bank getting slapped with a total fine of $775 million for the part it played in manipulating the benchmark rate in collusion with other banks (fine for one count of wire fraud: US$150 m.; additional shakedown by US Justice Department: US$625 m., the price tag for a deferred prosecution agreement).

 

 

Read the rest of this entry »

     

 

 

Swamp Battle

 

Washington [is] a lot more broken than President Trump thought that it was.

— White House Budget Director Mick Mulvaney

 

SÃO PAULO, BRAZIL – On Friday, the much-hyped Trump/GOP Obamacare reform sank into the swamp.  If anything keeps us from national bankruptcy, it won’t be entitlement reform. Not under Donald J. Trump.

 

A collection of swamp victims who haven’t paid attention… didn’t they know that Dracula can’t be killed?

 

Read the rest of this entry »

Most read in the last 20 days:

  • Strange Moves in Gold, Federal Reserve Policy and Fundamentals
      Counterintuitive Moves Something odd happened late in the day in Wednesday's trading session, which prompted a number of people to mail in comments or ask a question or two. Since we have discussed this issue previously, we decided this was a good opportunity to briefly elaborate on the topic again in these pages. A strong ADP jobs report for March was released on Wednesday, and the gold price dutifully declined ahead of it already, while the stock market surged concurrently. Later in...
  • Gold – An Overview of Macroeconomic Price Drivers
      Fundamental Analysis of Gold As we often point out in these pages, even though gold is currently not the generally used medium of exchange, its monetary characteristics continue to be the main basis for its valuation. Thus, analysis of the gold market requires a different approach from that employed in the analysis of industrial commodities (or more generally, goods that are primarily bought and sold for their use value). Gold's extremely high stock-to-flow ratio and the main source of...
  • Doomsday Device
      Disappearing Credit All across the banking world – from commercial loans to leases and real estate – credit is collapsing. Ambrose Evans-Pritchard writing for British newspaper The Telegraph:   Credit strategists are increasingly disturbed by a sudden and rare contraction of U.S. bank lending, fearing a synchronized slowdown in the U.S. and China this year that could catch euphoric markets badly off guard. Data from the U.S. Federal Reserve shows that the $2 trillion market...
  • The Balance of Gold and Silver – Precious Metals Supply and Demand
      Orders of Preference Last week, we discussed the growing stress in the credit markets. We noted this is a reason to buy gold, and likely the reason why gold buying has ticked up since just before Christmas. Many people live in countries where another paper scrip is declared to be money — to picture the absurdity, just imagine a king declaring that the tide must roll back and not get his feet wet when his throne is placed on the beach — not real money like the US...
  • The American Empire and Economic Collapse
      Dashed Hopes Despite widespread optimism among libertarians, classical liberals, non-interventionists, progressive peaceniks and everybody else opposed to the US Empire that some of its murderous reins may finally be pulled in with the election of Donald Trump, it appears that these hopes have now been dashed.   Liberty... some of it is still above water, but definitely not as much as there could or should be.*   While the hope for a less meddlesome US foreign policy...
  • Pulling Levers to Steer the Machine
      Ticks on a Dog A brief comment on Fed chief Janet Yellen’s revealing speech at the University of Michigan. Bloomberg:   “Before, we had to press down on the gas pedal trying to give the economy all of the oomph that we possibly could,” Yellen said Monday in Ann Arbor, Michigan. The Fed is now trying to “give it some gas, but not so much that we’re pushing down hard on the accelerator.” […] “The appropriate stance of policy now is closer to, let me call it...
  • Credit Contraction Episodes
      Approaching a Tipping Point Taking the path of least resistance doesn’t always lead to places worth going.  In fact, it often leads to places that are better to avoid.  Repeatedly skipping work to sleep in and living off credit cards will eventually lead to the poorhouse.   Sometimes the path of least resistance turns out to be problematic   The same holds true for monetary policy.  In particular, cheap credit policies that favor short-term expediency have the...
  • The Empire Needs an Emperor
      Unknown (sort of) Head of State BUENOS AIRES – Type Swiss President “Doris Leuthard” into Google. You will get about 450,000 results. Do the same with Donald Trump, and the number is closer to 396 million. That’s 87,900% more references. The world’s press is as fascinated by President Trump as it is indifferent to President Leuthard.   Doris Leuthard, President and energy minister of Switzerland. She has won her second presidential term this year. It basically...
  • Mea Culpa – Precious Metals Supply and Demand
      Input Data Errors Dear Readers, I owe you an apology. I made a mistake. I am writing this letter in the first person, because I made the mistake. Let me explain what happened.   The wrong stuff went into the funnel in the upper left-hand corner...   I wrote software to calculate the gold basis and co-basis (and of course silver too). The app does not just calculate the near contract. It calculates the basis for many contracts out in the distance, so I can see the...
  • The Cost of a Trump Presidency
      Opportunity Cost Rears its Head Last Thursday’s wanton attack on a Syrian air field by the US and its bellicose actions toward North Korea have brought the real cost of candidate Trump’s landslide victory last November to the forefront.   It didn't take long for Donald Trump to drop his non-interventionist mask. The decision was likely driven by Machiavellian considerations with respect to domestic conditions, but that doesn't make it any better.   Unlike...
  • India – Is Kashmir Gone?
      Everything Gets Worse  (Part XII) -  Pakistan vs. India After 70 years of so-called independence, one has to be a professional victim not to look within oneself for the reasons for starvation, unnatural deaths, utter backwardness, drudgery, disease, and misery in India. Intellectual capital accumulated in the West over the last 2,500 years — available for free in real-time via the internet — can be downloaded by a passionate learner. In the age of modern technology, another mostly...
  • French Election – Bad Dream Intrusion
      The “Nightmare Option” The French presidential election was temporarily relegated to the back-pages following the US strike on Syria, but a few days ago, the Economist Magazine returned to the topic, noting that a potential “nightmare option” has suddenly come into view. In recent months certainty had increased that once the election moved into its second round, it would be plain sailing for whichever establishment candidate Ms. Le Pen was going to face. That certainty has been...

Austrian Theory and Investment

Support Acting Man

Own physical gold and silver outside a bank

Archive

j9TJzzN

350x200

Realtime Charts

 

Gold in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Gold in EUR:

[Most Recent Quotes from www.kitco.com]

 


 

Silver in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Platinum in USD:

[Most Recent Quotes from www.kitco.com]

 


 

USD - Index:

[Most Recent USD from www.kitco.com]

 

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

 
Buy Silver Now!
 
Buy Gold Now!
 

Oilprice.com