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Easy Fed Gives Gold Rocket Fuel
kitco.com ^ | June 20, 2019 | Jim Wyckoff

Posted on 06/20/2019 6:04:23 AM PDT by Migraine

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To: gdc61

“i’m thinking this morning might be a good time to buy a couple tubes of liberties or buffaloes“

Platinum, rarer than gold, is still at a very low relative price.


21 posted on 06/20/2019 8:11:38 AM PDT by VanShuyten ("...that all the donkeys were dead. I know nothing as to the fate of the less valuable animals.")
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To: Moonman62
And yet the markets have been pushing down U.S. Treasury rates -- the benchmark for many consumer and business loans in the U.S. -- even while the Fed was raising its own discount rate.

What's that all about?

22 posted on 06/20/2019 8:17:58 AM PDT by Alberta's Child ("Knowledge makes a man unfit to be a slave." -- Frederick Douglass)
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To: EEGator

Why thank you. Glad you recognized your flaw.


23 posted on 06/20/2019 8:30:02 AM PDT by Kozak (DIVERSITY+PROXIMITY=CONFLICT)
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To: dangus
Rather, it’s the risk of recession

Gold shoots up on the risk of recession? Up gold and down economy are seldom seen in tandem. But opinions vary I'll concede. But there's no reason to play the insanity card.

24 posted on 06/20/2019 8:30:41 AM PDT by Migraine
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To: Alberta's Child

It’s all about the Fed manipulating rates at the short end.

This Dynamic Yield Curve animation makes it clear to see.

Click Animate:

https://stockcharts.com/freecharts/yieldcurve.php


25 posted on 06/20/2019 8:45:25 AM PDT by Moonman62 (Facts are racist.)
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To: Alberta's Child

And yet the markets have been pushing down U.S. Treasury rates — the benchmark for many consumer and business loans in the U.S. — even while the Fed was raising its own discount rate.

...

Actually, the Prime Rate moves in lock step with the Fed’s funds rate.


26 posted on 06/20/2019 8:46:40 AM PDT by Moonman62 (Facts are racist.)
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To: Migraine

>> Gold shoots up on the risk of recession? <<

Absolutely. Gold is a hedge. No matter of opinions varying; this is first-day-of-class Finance 101 stuff.


27 posted on 06/20/2019 8:54:54 AM PDT by dangus
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To: Alberta's Child

The bond market is convinced a recession is coming, because of the end of the y/y tax and spend stimulus from the Trump tax cuts and spending boom. The stock market is bullish though because they’re convinced the Fed is going to lower rates in the coming months, and they’re very likely right about that.


28 posted on 06/20/2019 10:25:41 AM PDT by babble-on
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To: dangus
Absolutely. Gold is a hedge. No matter of opinions varying; this is first-day-of-class Finance 101 stuff.

Finance 101? I doubt it. Finance 101 primarily covers macro-financial policies, not individual investing. From the Wharton course description for Finance 101: "The goal is to provide a unified framework for understanding macroeconomic events and policy, which govern the global economic environment of business. The course analyzes the determinants and behavior of employment, production, demand and profits; inflation, interest rates, asset prices, and wages; exchange rates and international flows of goods and assets; including the interaction of the real economy with monetary policy and the financial system."

In my experience and opinion, investing in physical gold is a fools game. Gold does not generate or provide income, dividends, or share splits; gold does not have intrinsic value; although gold is is used in the manufacturing of goods, there is no shortage of supply that drives the price. Rather, the price of gold as an investment is primarily driven by emotion - hype, fear, and uncertainty - which is part marketing strategy by the people who sell gold as an "investment."

29 posted on 06/20/2019 10:29:51 AM PDT by Labyrinthos
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To: Labyrinthos

No, Finance 101 because the flight of money from growth-yielding investments to hedges is very, very much a macroeconomic policy matter. But you’re sorta right, I guess.... although it’s very basic, they probably wouldn’t cover it for a few units.

And yes, gold is a foolish investment EXCEPT as a hedge. The point is that when everyone else is crashing and burning, you’ll have some cash to buy very cheap.


30 posted on 06/20/2019 10:50:25 AM PDT by dangus
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To: dangus
And yes, gold is a foolish investment EXCEPT as a hedge. The point is that when everyone else is crashing and burning, you’ll have some cash to buy very cheap.

This is what I don't understand: From my research, the claim that gold is a hedge against inflation comes mostly from the people who sell gold, and the people who brought gold because the seller convinced them that gold is a hedge against inflation. But I have yet to find any disinterested research that concludes that gold is a better hedge than treasury notes or bonds, for example, that are held to maturity. How specifically is gold a hedge if it has no intrinsic value and the price is primarily set by demand? Realistically, I can't use physical gold to pay for goods and services, and therefore, I would have to convert the gold into cash. But during a severe recession or hyper-inflation, there is no guarantee of sufficient demand to support the price, and as a result, I might have to sell the gold for less than what I paid.

31 posted on 06/20/2019 11:22:42 AM PDT by Labyrinthos
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To: dangus
Absolutely. Gold is a hedge. No matter of opinions varying; this is first-day-of-class Finance 101 stuff.

Yes, I agree that gold is a hedge. But it is a hedge against inflation, not recession. Gold goes flat in a recession. Thanks for the condescending lesson, though.

32 posted on 06/20/2019 11:36:13 AM PDT by Migraine
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To: Migraine

Gold does NOT go flat in a recession. In fact, the only two “recessions” it was flat in, were the the two “recessions” caused by inflation caused by surges in the price of oil caused by the two Persian-Gulf wars. In other words, if you sought gold as a hedge against inflation, you lost out. In every OTHER recession, you made out.

But yes, if you get your financial advice from con-men on conservative talk radio, you’d certainly learn that gold is a hedge against inflation.


33 posted on 06/20/2019 12:08:27 PM PDT by dangus
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To: Migraine

(Keep in mind that those con men telling you to buy gold are trying to sell it themselves.)


34 posted on 06/20/2019 12:08:58 PM PDT by dangus
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To: dangus

Once again, you give a nice lesson in condescension. No thanks, though.

I don’t listen to con men on the radio or anywhere else. I have made a serious study of gold price fluctuations since the early 80s. And, while I don’t FULLY get all the varying strands of causation, I do have a feel for it. I have put my money where my mouth is and have done well. It has afforded a lower-middle class guy to retire very comfortably; and for that I am grateful to God, most especially.

My main interest in physical is for the SHTF aftermath, when nobody’s currency will be trusted.

Meanwhile, I kick back, with my finite, inferior understanding of gold prices, which lately have been largely moved by big central bank game-playing (the Chinese, Russians, Saudis and others) where they manage to go long, chase the price up $100, go short, and drive the price down $100; rinse and repeat, over the past 10 years or so. I think they use proxies, oligarchs. It’s been uncanny.

I am excited by what may be a breakout.


35 posted on 06/20/2019 1:07:27 PM PDT by Migraine
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To: Migraine

Look, I’m sorry if I “mansplained” to you. But when you say stuff that is plainly counter-factual, like that gold flattens before a recession or deny that gold is a recession hedge, I can only presume you’ve never looked at a historical chart of the price of gold.


36 posted on 06/20/2019 1:21:21 PM PDT by dangus
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To: Migraine

This market reaction puts the lie to claims that we’re in a slowdown and about to enter recession, it’s justpartisan talking down by Democrats hoping to campaign on a weak economy in 2020.

Had that actually been the case, we’d have seen no such activity in PM’s.


37 posted on 06/20/2019 1:23:53 PM PDT by RegulatorCountry
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To: Migraine

When the cyclical back and forth starts getting noticed outside of large investors they will short-circuit that. The same thing was going on in currencies for two years back in Obama’s second term, it was really the only decent return out there for small fry such as myself. Dollar takes off, making Euro, Franc or Yen look like a bargain, go into one of those then wait six months for the downward dollar spike. It went on like clockwork then it didn’t.

This PM reaction says to me that the market believes the US economy is strong, otherwise holding steady on rates would have received a different reaction. Gold and other PM’s spiking is either due to inflationary fears or economic instability due to other factors.

I don’t think you’re seeing a “breakout” therefore, and won’t until there is economic trouble in the US. We’re not there, not now.


38 posted on 06/20/2019 1:29:36 PM PDT by RegulatorCountry
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To: crz; Migraine

>
The private banks have this country just about where they want it.

The interest on the debt will soon outstrip all other in the budget.

Then what?
>

DUH! Then the Leftists raise taxes...BIGLY, w/ the “begrudging” support of their voluntary political stooges, the (R)N(C).

What? You *think* that govt would SHRINK??


39 posted on 06/20/2019 4:10:45 PM PDT by i_robot73 (One could not count the number of *solutions*, if only govt followed\enforced the Constitution.)
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To: i_robot73

LOL


40 posted on 06/20/2019 4:12:00 PM PDT by Migraine
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