Dow Plunges As Gold Steadies
Jack Davis | Dec 29, 2016 10:21
Originally published by Chamber of Merchants h2 Dow Fails to Reach 20,000/h2
What a shame.
As I’ve posted again and again…something has been odd about the market.
But before we go there…let’s digress…
h2 Wilbur Ross Calls out Yellen and Fed/h2Wilbur Ross:
Wilbur Louis Ross, Jr. (born November 28, 1937) is an American investor, and former banker, known for restructuring failed companies in industries such as steel, coal, telecommunications, foreign investment and textiles. He specializes in leveraged buyouts and distressed businesses. As of August 2014, Forbes magazine lists Ross as one of the world’s billionaires with a net worth of $2.9 billion.[1]
On November 24, 2016, it was reported by the Associated Press that Ross will be tapped for Secretary of Commerce by the incoming Trump Administration.[2] The Trump transition team confirmed the President-elect’s intent to nominate him on November 30, 2016.[3]
Wilbur Ross is the new Secretary of Commerce for the United States.
As of 7 hours ago, Wilbur Ross has started tweeting… and his first and only three tweets are the following:
“Janet Yellen spent the last 4 years warning of the bad side effects of a strong dollar yet now Donald comes to power she becomes a hawk and threatens to raise rates 3 times next year. The dollar is at a 14 year high yet all of a sudden the strong dollar is of no concern to her. We are being killed on trade, killed on exports and have a record national debt and trade deficit. Currency manipulation is semi responsible.”
Read that again.
Now read that again.
Get it? The Secretary of Commerce has called the Federal Reserve out, saying that the 3 rate hikes are unrealistic.
There is a war between the new Government and the Federal Reserve and it’s going to get ugly.
Secondly, months ago…Donald Trump said that the stock market is a big, fat, ugly bubble.
That was when the market was 10% lower than now… Oh wait…
I forgot to mention:
The Dow Jones is having a slight “correction”.
The S&P 500 is down 0.6%
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The Nasdaq 100 is 0.7% down…
But don’t worry. The news tells me that this is perfectly normal and healthy for the stock market…
Well the CBOE Volatility Index is up which shows it’s not simply plain sailing:
And Gold is not only holding support but is hanging around $1143+
This is while the dollar is quickly losing its gains from the overnight rally.
Now the Euro is bouncing hard (which causes the dollar to fall):
The Yen is bouncing hard (lower is stronger) which causes the US dollar to fall:
Remember what I have been repeating over and over again about the US bond yields?
The 30 year bond yield: compare last year December to this year December… Looks like a reversal at the resistance line:
If this continues, the US dollar rally is finished…and Gold is set to continue its rebound… expect lower interest rates for longer…
US gold miners are having another day of gains so far:
The ultra sensitive Direxion Daily Junior Gold Miners Bull 3X Shares (NYSE:JNUG) (Junior Gold Miner 3x ETF) is up 8% :
But what about the Trump rally?
Remember what led the pack on the Trump rally?
Many of my known associates were all touting the copper price… the world is in a boom! Look at copper! Look at copper!
Well after a China GDP downgrade copper has given back almost all of its Trump gains + check out the lonely negative volume on copper… I think we’re heading lower than this:
If copper is heading lower, it means the expectations for global growth are lower…
That is bad for everyone…
Except the Central Banks only have one way to fix this predicament:
Lower interest rates and more money printing…
That is good for gold. And apparently bitcoin:
Yes, roughly a week ago I mentioned that bitcoin is interesting and worth a look. I said it may top around $820 or something like that… Well… $966… Yes… I mean that. Bitcoin is almost as valuable as gold.
It’s mostly due to Chinese residents trying to export their capital and trying to circumvent government restrictions… But bitcoin is not a hard asset… I expect, very soon, for bitcoin to be converted to currency then gold.
Either way… I wouldn’t chase bitcoin at this height… I might be silly for saying that but, I said it before…When it’s back at $600 then maybe….
Folks… 2017 is already looking to be a very volatile, very topsy turvy year.
If the economics are going to continue down this path then gold is going to shine…
Let me show you what the mainstream media says about tonight’s economic data:
Yet… here’s the reality:
In case no one can recall, the 2008 financial crisis was due to the housing crisis.
Okay… here’s a reality that not one article has mentioned so far. The 5 year treasury note auction occurred a few hours ago.
For your information:
h3 5 Year Treasury Note/h3The figures displayed in the calendar represent the yield on the Treasury Note auctioned.
U.S. Treasury Notes have maturities of two to ten years. Governments issue treasuries to borrow money to cover the gap between the amount they receive in taxes and the amount they spend to refinance existing debt and/or to raise capital. The rate on a Treasury Note represents the return an investor will receive by holding the note for its entire duration. All bidders receive the same rate at the highest accepted bid.
Yield fluctuations should be monitored closely as an indicator of the government debt situation. Investors compare the average rate at auction to the rate at previous auctions of the same security.
The auction results? The Yield was higher than the last 6 years… We’re back at 2009 levels:
But remember what we saw in the previous post:
The housing market is not looking so great… Let’s bring it closer… When I say housing market… we automatically think of houses… What we should be thinking of is people/families that cannot afford to buy homes…that cannot afford to pay the repayments on homes… Then extrapolate that to banks who don’t get paid for their loans… who need to start repossessing homes… then extrapolate that to the construction sector who won’t be building new homes…When I say that, think about all the people and tradespeople working on building and construction who lose their jobs…
Get the picture?
So will they let it happen again? I hope not.
And the first step is as Wilbur Ross says, which is the higher interest rate is all talk and not based on reality. The dollar is overvalued.
Gold is going to shine because not only will the Fed need to lower interest rates, they’ll need to inject more currency into the system to keep it from collapsing. Janet Yellen is only a shadow of the “Saviour” of the economy, Ben Bernanke.
Now , Ben who is the person that doesn’t understand what gold is, is the teacher, the idol of Janet Yellen, the current Federal Reserve chair.
They will be printing more money. They will keep interest rates low. And plenty of manipulation will need to happen to keep inflation under control while this happens. One of the casualties will need to be crude oil since a higher oil price drives higher inflation.
My next post will be on how Australian and US homeowners just got duped into signing higher interest rate contracts… while interest rates are about to go lower than before…
h3 Rant/h3The system we live in is evidencing on a daily basis to be a system of servitude… I know that sounds morbid…but seriously, what’s happening to us is historic and unprecedented…and nobody notices that it’s happening.
Here’s some advice… Become debt free as soon as possible. Own hard assets that cannot be erased or diluted with a keystroke. Use the system to your advantage, don’t be a slave to it.
Our future generations are being born into serfdom.
“Serfdom is the status of many peasants under feudalism… It was a condition of bondage, which developed primarily during the High Middle Ages in Europe and lasted in some countries until the mid-19th century.”
We take on debt, to send our children to school, so that they can take on debt to go to university, to then graduate and take on debt to buy a house without enough space for a backyard, to pay it off for the rest of their lives. And if they ever do make it to the retirement age, they will discover that their pensions have been squandered by the government who could not keep up with the rate of inflation. That is, if they pension age doesn’t get raised at the last minute to prevent citizens from accessing their “savings”.
Ask yourself…who do you know that actually has savings? And if they do, what kind of interest do they earn on those savings?
Today we have debt. We are born into a world that requires us to owe the bank and work it off for the rest of our lives. We are not people anymore.
We are consumers now. We are debtors now. A debtor is born every second.
Well I’m a Merchant.
I’m going to break the bank.
Yes. I haven’t slept tonight. I’m a bit cranky.
But still grateful for this life and the opportunities available to make a difference and experience a difference.
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