With the Fed continuing to ramp down its QE programme, a bearish technical set up, and a lack of CPI inflation, the outlook for gold is bearish, and therefore gold is still likely to go to $1,000 before it goes to $2,000.
In December last year I outlined a number of factors that were bullish for US stocks, and said that they would continue to be the primary beneficiary of Fed policy and other favourable macro forces. My bullish outlook has not changed, and this article explores more reasons to be bullish on large-cap US equities.
The average London home is now worth more than it was at the height of the property boom in the fourth quarter of 2007. However, while property prices in the capital have recovered what they lost during the financial crisis, property in the rest of the UK has not.
This article attempts to outline all the macro forces and trends that are currently impacting the global economy and financial markets. It is only by understanding all of these forces (and the interplay between them) that investors can begin to see the inevitable path from banking crisis to sovereign debt crisis to currency crisis.
This article explores the subject of Quantitative Easing (QE) and tries to answer the following questions: What is QE? How does QE work?, What is QE supposed to do?, and Why has QE failed to stimulate growth?
In a world where government deficits are rising, interest rates are at record lows, central banks are printing money, unemployment remains stubbornly high, and bank deposits are being raided to rescue insolvent banks, it is hard to believe that gold and silver have fallen so sharply. In this environment the only thing that makes sense is Trend Following.
Since the financial crisis hit the US Federal Reserve has created more than $2.2 trillion. However, all this new money has not found its way into the economy. Instead, it is just sitting idle in the banking system, and as a result money velocity has plunged to the lowest level in more than 50 years.
The price of gold recovered overnight losses after the release of US Federal Reserve meeting notes in London trade Thursday morning, rising back to $1375 as major stock markets also rose with commodities.
While the Fed’s taper talk has been tapered and then un-tapered, the market may now be tapering the Fed rather than vice versa. Let’s assess Act 2 of the taper talk and the implications for the markets, including the dollar and gold.
Wholesale gold edged back from last week’s two-month closing high on Monday morning, recording its best London Gold Fix since 18th June above $1375 per ounce. World stock markets slipped, with Indonesia dropping 5.5%, as major government bond prices also fell, driving interest rates higher.
In normal times, today’s combination of record low interest rates and massive infusions of capital into the banking system would ignite the mother of all expansions. That it hasn’t has confused the economists whose textbooks clearly state that it should. And it has convinced the Fed to just keep upping the ante with QE after QE.
There is some evidence in the UK of a pick-up in consumer spending. There are two likely factors behind this, the first perhaps being seasonal, aided by the fine weather. The second is less obvious, but combines with the first to encourage purchases of big ticket items; and this is cheap consumer finance coupled with growing expectations of higher interest rates in the future.
In the short to medium term, the U.S. dollar and currencies are heavily influenced by the actions of the Fed. As the Fed may be reading tealeaves as much as anyone else, we may be facing particularly high policy uncertainty that, in turn, reflects on elevated volatility in the bond and currency markets. The good news is that this may yield opportunities for the prudent investor.