Gold getting killed
Commodities remain weak post-election. We’re seeing this across the board, including in metals and energy, contrary to media pronouncements that the new administration will be pro-inflation. I had expected gold to “take a rest”for a while, but without major nominal dollar downside based on the hypothesis that the main driver of higher gold was ongoing budget deficits and the resulting pressure on the Fed to monetize them. Technical considerations clearly flagged underperformance of gold relative to stocks, though that could just as easily be realized by higher stock prices as lower gold prices; on that front the dollar is the wild card. Other shorter term drivers included fears the results of the election would drag on and of world war.
The latter are coming out of gold prices on the relatively clean election outcome and perceptions that the incoming administration will cease escalation and de-escalate where possible.
It’s difficult to pin down just how much of the rally was on the inflation concerns and how much was political. A rough guess might be that the rally from $2600-$2800 was the latter.
Other commodities have been selling off as well, indicating that the dollar strength we’re seeing in foreign exchange is real. It’s hard to square this with the media narrative that the administration’s policies will be inflationary. Tentative speculation is that it goes from inflationary fiscal policy->tighter monetary policy->less inflation, but even that’s hard to make sense of.
Treasuries remain weak too. The Fed is trying to kick off a rate cut cycle and rising yields say it’s wrong. Heck, I said it was wrong. Market rates been rising since the day before the first cut back in September. The Fed will lose this battle, along with another chunk of its waning credibility.
Stocks are trading higher. This would be unremarkable except we’re seeing small caps lead for a change. Whether this has legs remains to be seen.
Kiiled?
Deader than a tin of spam!!!!!!!!!!!
I couldn’t resist borrowing your line!
Max Keiser did!
Meantime
https://www.youtube.com/watch?v=O7msShdrH0s
Ho Ho Ho
Trump victory here in the UK is something of a mixed bag.
The lower orders are delighted by it…..the British establishment are sh1ting themselves.
It seems Blighty signed up to back up all of Ukraines debts to the IMF, after all it was a sure thing that Russia would fail……..expect they didn’t.
Russia had to “not lose”, could win on points, the West needed a quick “knock out”, did not get it.
Given that the Labour government did EVERYTHING it could to help the DNC win, the now fear a butal PAYBACK.
Trump needs not to make mistake of forgiving the bastards. For too long the DNC has got off scott free from a counterstrike. The GOP has made this error time & time again……playing the “Big man”, “turning the other check”………only for this to been seen as a sign of weakness…..no more!
Be like the “Godfather” hit them all!
This time Trump has some very good people along for the trip, he needs to plan his moves with care. He needs to end Ukraine & Israel wars, he need to smash Europe, kill the EEC & return nationstates from te EuroCommies
Tough orders, but i he has a chance at it….
Thanks for the on-the-ground report! We can’t trust our media to be straight with us.
Sounds like things are not all that different across the pond. Ordinary folks here are pleased – for the most part they’re the ones that voted for him – the elites are beside themselves.
This is the first I’ve heard about the debt guarantees. Hopefully there is hidden in the fine print some sort of escape clause. Better yet, maybe the IMF will be dissolved, along with a few other transnational pretenders to world government. From here it looks like the EU is on track to subsume the sovereignty of its nation states and that the UK was smart to extricate itself.
We can also hope Mr Trump has learned a thing or two since his first stint. So far it’s looking better. I remember well being less than thrilled with his selection of cabinet and advisors then … very establishment. This time we have the likes of Elon Musk and Ron Paul, not to mention disaffected former opposition party figures like Robert Kennedy and Tulsi Gabbard. A politically diverse lot, but that all have been ostracized by said establishment is an encouraging sign.
Still very early to be counting chickens though. I’m hopeful that the border will be fixed and that we will pull back from the precipice of world war. Not so hopeful that our fiscal canyon will be filled and inflation quelled, but will take what we can get.
I must confess that its HIGHLY enjoyable to see the Euroscum & City of London assholes in complete meltdown. They “Missed” their chance with Trump & now payback is going to be a BITCH.
The British scum are now in deep panic, trying to sabotage the British road network by closing roads & throwing up cycling routes everywhere. Full scale anti car war in play, from what i can tell they are intending to reduce the nation to something between a Hippy comloon camp & Marxist re-education camp!
Just look at how well respected the British PM is!
https://www.youtube.com/shorts/S2-uFA6MQIM
https://www.zerohedge.com/political/uks-telegraph-journalist-gets-hate-incident-visit-police-over-year-old-tweet
She is a main line, centre of the road reporter, very steady, well respected……….
I tell you now this goverment will be brought down in the net year or so……& it will be the end of the Labour Party…….
Hmmm … thanks again for the local color … I didn’t realize it had gone that far. Having never been there, my impressions of British life have been limited through the lens of British media. As you’re probably aware, British television and music are quite popular stateside (big fan, especially once I started to learn the language;-).
labor got only 30-something % of the vote but because of the first-past-the-post system they have an overwhelming majority in parliament and it’s unlikely the gov’t will fall. in the meantime the labor party has started enforcing “woke” in a positively orwellian fashion – actually it’s a combination of orwell and the chinese social credit system. in china if your score is low you can’t book a flight, or if your score is lower you can’t even buy a train ticket. in the u.k. if you post something deemed offensive in a tweet you can be sent to jail for a year or three.
in other news, the labor gov’t is apparently inspired by the “success” of german energy policy, and is determined to follow germany into de-industrialization and penury.
ps re uk. i’ve been talking about financial repression in our future, and pensions being mandated to buy treasuries. it’s being openly discussed in the u.k.
Pensions Minister, Emma Reynolds, has refused to rule out the option of mandating pension investments as part of the push to encourage greater pension investment in UK growth.
Asked by Pensions and Lifetime Savings Association (PLSA) chief policy counsel, Nigel Peaple, whether the government was in favour of investment freedom and would avoid mandation, Reynolds said that “we’re considering all options for now”.
https://www.telegraph.co.uk/business/2024/11/13/reeves-to-rip-up-pension-rules-in-dash-for-growth/
The Chancellor is to unveil the ‘biggest set of reforms to the pensions market in decades’
In other words “We steal your pension money via getting the pension firms to sell good investments to buy our shitty bankrupt company &/or invest in our shitty hair brained C02 scams…
I see it quite differently from Mega. Here in the UK the establishment & university educated had arrogantly seen Trump 1 and Brexit victories as symbols of an uneducated bigoted electorate.
This latest Trump victory with his broader appeal has finally awoken the establishment that it is Joe Public’s economic situation that is the catalyst behind those election “shocks”.
I’m pretty optimistic for the UK going forward. It’s a very stable democracy and the powers that be want it to stay that way.
OTOH The EU and the mercantilist Germany in particular ,where VW just announced its first ever factory closures, is looking less rosy.
I believe the UK and US will see stronger inward investment rather than relying on cheap labour and massive deficit spending moving forward.
The UK definitely dodged a bullet with Brexit and calls to reverse it have practically stopped since this Trump victory.
Thanks, LL. FWIW from my admittedly less informed perspective, I’ve been optimistic on the UK since Brexit. Long term … virtually everyone expected the transition to be rocky. But it was a gutsy move necessary to head off the risk of ultimate loss of national sovereignty. And this is the culture that produced the Magna Carta, Isaac Newton, the Industrial Revolution, the Beatles …
Whether it started out that way, the European project was starting to look like an epic bait and switch. It was first going to be a trading co-op. Later came the monetary union, and then talk of fiscal union. That’s a vector of increasing centralization. It’s almost an entropic inevitability. The US started out with with specific limited powers delegated to the federal government, and it’s become increasingly centralized since. Centralization takes willful vigilance to resist. Possibly because government seeks to minimize accountability.
No government is perfect, but government closest to the people is inherently more accountable to them.
Allow me to put you fully in the picture.
The Labour party “Won” the election by getting less than 20% of the vote. The Tory party failed totally to deal with mass immigration, they tried a “Dog & pony show” of trying to get them shipped off to somewhere in africa.
They failed to “unseen” legal challenges (Same thing happening now in italy).
The anger of the British (mostly white working class) boiled over and a new far right party called “Reform” ran in the election. It split what was the Tory vote thus Labour “Won”.
So the deep state plan to mass import peoples into the UK (Small nation) lifting the population from 55 million to now over 70 million with “plan” to be over 100 million!
This would be great if the UK had large manufacturing base together with cheap Hydro carbons/cheap power & lots of other natural resources………….they dont!
The North sea is shutting down, C02 taxes has killed investment. The war in ukraine has caused energy prices to rocket in europe, the UK now has the most expensive power in the G7.
Its hard to see how we are going to produce our way to success when so many other nations have vastly cheaper power with local resources……………….
Getting back to this Labour government, the got BIG problems.
The last government “Bet the farm” on breaking up Russia…….this has failed. Thus the Limy scum find themselves with a BIG bill before them. It seems that Ukraine got a MEGA IMF loan for $50 billion……………which they can’t pay…………& who guarantee the loan?…….Yep you guessed it…….suddenly the British, who are now 100% debt to GDP & have almost unserviceable debt, suddenly have this dropped on them.
It gets worse.
Most of the UK GDP is generated by borrowing to spend. Without ever increasing spending & debt the economy will stall & the GDP will fall, massively increasing the debt to GDP figs.
A few other things to factor in.
Trump inn circle is 100% focus on the middle east & China. They want to get the US back to front line manufacturing/Tec once again. They are NOT interested in Ukraine & are (according to Ex British PM Bois Johnson) about to dump to “Project” in the lap of the Europeans & the British……..British troops may have to be sent (at great cost) to fight Russia forces in Ukraine.
Given just how well it went in Afghanistan & Iraq & no one wants to join the Armed forces this policy will not last long!
The Question that is for froth in my mind is this.
Given that the British sent its agents to the US in large numbers to try to help the DNC to win….& failed. Given that Trump is likely to be “Some what upset” by this & politically he has nothing in common with e Labour party & given that some say the City of London were responsible for him almost getting his head blown off (Bit Alex Jones,but)…..
AT WHAT POINT DOES THE FED SAY NO MORE?
AT WHAT POINT DO THE BOND HOLDERS SAY NO MORE?
AT WHAT POINT DOES THE GILT MARKET STOP DEAD?
AT WHAT POINT DOES THE IMF HAVE TO BE CALLED IN?
?
Mike
DR Who from 1976 when the IMF was called in
https://www.youtube.com/watch?v=xAmZjYLRYzU
I sure hope it doesn’t come down to calling in the IMF. Who’s gonna prop up the IMF? Isn’t that us?!!!
because of its huge parliamentary majority, i think it will be a long time before we call for labor vs a head of lettuce.
Gold penetrated $2600 to the downside – falling to nearly $2540 on 1114, but sprang back convincingly, to $2640 as I type. This provides some technical support for my guesstimate that the move from $2600 to $2800 represented a short term political premium. Although today’s rally can be associated with an offensive escalation into Russia and rising fears of nuclear war, the underlying fiscal and monetary bullish trend remains intact. The below opinion for example predates today’s geopolitical news:
Gold Surges as Goldman Doubles Down on $3,000 Target for 2025
Well gold is getting killed again. First it was shot. Then they dragged up the corpse, propped it up against the wall, and shot it some more.
Media attribute the most recent shooting to the nomination of Bessent for Treasury Secretary, ostensibly one that would work to reduce the deficit. That would be a constructive development for the dollar, which should contribute to lower gold prices, but the rationale is undermined by the fact that at the same time the dollar is down against foreign fiat.