Gold Death Cross

[errolanderson]

An opinion . . . .

The recent plunge in gold is a warning of far deeper potential financial market problems on-the-horizon.

The biggest concern are the insane stock market valuations. S and P valuations are now more than double the historic average.This is the direct result of over-used, reckless and abused central bank policies.

But investors have been smug ... the Fed always have their back. And my banker always says ‘stay invested’. That’s terrific for quarterly profits and bragging rights. But clearly, control by the Fed is waning. Money printing to save-the-day no longer has the same impact.

But there is now a snake starting to come out of the corner ... rising rates. U.S. treasury yields are rising. The bond market just had a terrible week.

This historic equity market strength has no fundamental support snd purely driven by cheap money. Now the snake is out . . . .

And has the Fed now lost control of the bond market?

Asset prices are rising due to cheap money and investors shoveling money into something that will generate a return.

But what if . .. mortgage rates climb, say just 1 percent? What will Humpty-Dumpty do next?

This could quickly impact credit markets. And any hiccup in credit markets would have an immediate impact on commodity markets.

They are all tied together . . . .

[Rareearth]

Thanks Errol for your thoughts.

If a farmers in December sold canola to a large exporter for delivery in July. If the market has a quick, decisive correction. Do you think the exporter will walk away from their contract obligation to buy and take delivery of the grain?
I believe the long list of excuses will be used.
Then the trickle down impact to the farm cash flow, local retailers, etc

I hope we don’t need insurance to cover that risk.

[errolanderson]

Thanks Errol for your thoughts.

If a farmers in December sold canola to a large exporter for delivery in July. If the market has a quick, decisive correction. Do you think the exporter will walk away from their contract obligation to buy and take delivery of the grain?
I believe the long list of excuses will be used.
Then the trickle down impact to the farm cash flow, local retailers, etc

I hope we don’t need insurance to cover that risk.

Great question . . .

Credit markets globally are at huge risk (IMO). The Fed is now losing control and the collapse in gold and the bond market may be the starter’s pistol.

This could disrupt ocean shipments. The Baltic Dry index could again plunge as credit dries up. We have all seen this in the past. The stock market will correct and we will hear the ongoing chat to ‘buy the dips’ . . . just like the gold bulls were told.

[Solaire]

Don't you think that investing in gold is no longer profitable in the modern world? I would agree with the fact that gold is some kind of stable commodity to invest in, but you will not make a fortune on it. Alternatively, with the help of some investing services, people can easily trade with any investment such as currency, crypto and shares. For example, I use https://www.investous.com/ Investous to sell my bitcoin on the market.

[Mutamycete]

Don't you think that investing in gold is no longer profitable in the modern world?

Nowadays we have a lot of opportunities to invest in huge companies that have much greater potential than gold.