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Started by bear - March 30, 2021, 10:53 a.m.

as long as the buck is going up, and interest rates are going up (bonds down),  it will be hard for precious metals to get any traction.  we'll see if those 2 things turn any time soon.  

a big gold rally often depends on negative real rates.  (this can mean inflation picking up while interest rates are not going up , like we saw from 2003 to 2008).  (short rates went up, but not long rates). 

yes, folks we have inflation,  but markets seem to believe that it is not a big problem.  

prices are going up substantially for lumber, homes (in the right areas), pickup trucks, healthcare, etc.  

Re: gold
By wglassfo - March 30, 2021, 12:24 p.m.
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Ray Dailio has some interesting thoughts

He thinks bond holders will begin to sell bonds when they realize that bonds adjusted for inflation are a poor investment and start looking for other investment opportunities. So far bonds have been a short term investment as the value changes but eventually the long term value and ROI will capture the attention of bond holders

He also thinks the gov't will need to sell trillions of dollars worth of bonds, with very little buying interest from bond buyers given the low int rates

He thinks the gov't will want to build back better, which will require huge amounts of spending, assuming this all passes congress. He thinks spending will happen

The end result will be  printing of trillions of dollars to finance the huge spending, of which this could amount to upward of 4 trillion, in the yr 2021, in various spending bills for various projects not forgetting the Green Deal will be a part of this spending, plus the 1.9 trillion already passed into law

He thinks this new spending will not be the usual bond issues, bought by traditional bond buyers. One example is Jamie Dimon coming out and saying he would not touch a 10 yr bond

So: He has a lot of other stuff, such as much higher taxes etc but the take away I got was the bond market might have no buyers due to low int rates, just when the gov't is on a spending spree and needs to sell bonds.

The bottom line after his reasons are:

He thinks the Fed will need to print a lot of dollars to support the bonds and eventually the spending, with  very few bond buyers. This will lead to higher taxes and investment dollars leaving the USA for more accommodative taxes and investment opportunities. Even if dollars do not leave the USA the printing of dollars will lead to inflation, which as bear has said we already have inflation

Ray thinks printing of dollars with very few buyers, plus money leaving the country will cause inflation or stag flation which will ultimately lead to a lower dollar

Ray did not mention gold other than a hedge against inflation, but the dollar going down is the big thing he sees in the near future, leading to higher consumer prices, which means the consumer buys less stuff with the available dollars. This then leads into less employees, for stuff the consumer can't afford which leads into a vicious cycle of unemployment and a hard recession 

He expects to see a serious dollar decline starting at the end of 2021

As an added  item of interest, Russia is selling treasuries and buying gold, Yuan and Japanese yen to diversify their assets holdings

I hope I did not confuse the thread will other things besides gold but I think gold and inflation maybe dollar devaluation are sort of tied together in one bundle.