Gold Hits $3000
Let’s pick up where Bear Market Warning left off. But I’m getting a bit weary of bear market talk … aren’t you? How about a bull market? There’s always a bull market in something.
If you’ve been following along, you already know where: Gold. Moments ago it tagged the storied $3000 mark for the first time. Stepping back to take a look at the bigger picture, it’s been stair-stepping its way higher since first breaking out of a $1600-$2000 trading range it had occupied for most of 2020-2022. In round terms, first from $2000-$2200, then $2200-$2400, to $2400-$2600, $2600-$2800, and most recently $2800-$3000.
How high can it go? Given enough time, there is no limit … because there is no limit to how far our pricing unit can fall. Borrowing a device from calculus, as the pricing unit approaches zero, the price of gold approaches infinity.
So while analysts float price targets, bear in mind that the question of time is the only real unknown.
Not to keep you in suspense, but it’s unknown to me, too. I suspect this round number will act like a magnet on the gold price for a while. What we do know is the drivers, and that the main known one is that tacit pricing unit, commonly the US dollar. It in turn is being driven by a mass of government debt that was nursed into existence by years of reckless monetary policy. Keep interest rates low enough long enough and sooner or later politicians begin to think it costs nothing to borrow and go crazy.
This turns out to be a trap, because once the debt is grows to the point of becoming an existential threat, the only solution is to keep the nominal cost low enough to bear, even if the real cost is much higher. Pressure grows to “inflate away the debt”. But the artificially low interest rates that are necessary to do that are just more of the same thing that caused the problem in the first place.
This is where terms like “debt spiral” come from.
So while I don’t know how high gold will go or when, I do know that I better not go without.
Much the same can be said of stocks. The rub for stocks though is that, even having retreated 10% from their highs, the US stock market, as tracked by the S&P 500, is in bubble territory, at similar valuations as it was at the highs of 1929 and 1999. Most of this overvaluation is concentrated in a handful of the world’s largest stocks by market capitalization.
This leaves better options, but isn’t to suggest that there is any one subset of stocks that’s assured to be immune from decline. The trick is to at least get some return potential for your risk. Growth investors need to at least ask at what price. Financology readers can find model ETF portfolios with an emphasis on dividends, quality and value here.
What about bonds? The dour outlook for currency extends to bonds, since the cash flows they promise are fixed in currency terms. As I have discussed before, the bond market appears to have topped out in 2020 and is now in a secular bear market that could last for years. That’s a very different kind of financial environment than most investors alive today have known for most of their lives … a four decade secular bull market in bonds. But secular bear markets are made up of a series of cyclical bull and bear markets, and after a period of years where bonds and stocks were highly correlated, that correlation appears to have broken, at least for the time being. So for now bonds have regained diversifying power and, while there are never any risk free investments, diversifying among gold, reasonably priced stocks, and high quality bonds is a realistic risk reduction strategy.
The commonly made error here is to forget that there are other things to invest in besides tech stocks and cryptocurrencies. Diversify across industries and geographies. Own some treasuries. And don’t make the most common mistake of all and imagine that you have a complete and balanced portfolio if you own stocks and bonds. You can’t build a sturdy table with two legs. Consider commodities, including the one least correlated to stocks, and the one in a proven bull market, gold.
It now looks like the seasonal low for stocks is in. Yesterday was likely it. For the full context, see Bear Market Warning.
To call this a resumption of the bull market though would be premature. Stocks may now be in rally mode, but after having put in a lower low … this week taking out the January low. This puts the ball squarely in the court of this presumed rally … if it fails short of taking out the February high before turning lower, it’s a bear market rally.
Very disappointing week ref Trump & Russia .
I thought Trump had “Something”………he does not appear to.
Even my dog knows what the Russian demands are & Putin is not going to be kidded or threatened.
As it stands, a load of nothing.
Mega’s dispatch from England:- Collation of the Worthless
Our “beloved” PM has been on TV, he held a Zoom meeting with 25 heads of State ref his plans for sending a peace keeping force in Ukraine.
“Operation False flag” will include troops from “Many” nations……….seeing how only Starmer, Micron, the Green Goblin, the NATO leader & the Dark Lord thats just taken over Canada spoke you can take it as read that they are the ones “Going in”.
IN other words this is City of London operation………they NOT giving up.
https://x.com/Megatron_ron/status/1900962008956125683?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Etweet
Mike
Mega’s dispatch from England………….the End game in Ukraine
This morning we have the news that Trump & Putin will discuss “Land & Powerplants” in Ukraine…….meantime the British just loaded its 2nd carrier.
https://www.youtube.com/watch?v=YQhW2FkMHEI
AS far as i can Tell her sister ship is in the far east on a international excise. It is ALMOST unheard of for Bankrupt British to move let alone “Store for War” its “spare” carrier.
Ok, so lets see…………the British are getting cut out of Ukraine deal altogether (so it seems).
Trump is moving forward to end the war, Russia is moving forward……
So, something HAS to stop this from happening……..the British cant wait till 2036 to have another go, they bet the farm on winning this one! Collapse is not far off, the end of an pretence of the British being a “Global power”………so i expect a “False Flag” but not in Ukraine.
I suspect a passenger jet getting shot down or something at sea.
Danger time
Mike
Gold continues to toy with the $3000 mark, nosing above and dipping below. This is as expected … the big round number exerts a magnetic attraction, as traders want to buy low and sell high … and below feels low and above feels high.
Seasonal influences continue to dominate stocks. Intuition tells me it’s literally the change of seasons … stocks have a marked historical tendency towards weakness around the equinoxes. For those who prefer more financially tangible explanations, cash needs for income tax due may pressure stock prices earlier in the filing season while a pickup in refund activity takes over later.
but but but Jim Rickards said(5 years ago) Gold would be $15,000 in 2025
If you look hard enough you can find wrong predictions even from me;-) Gold appears to be trying to break free of that magnet … and no surprise, to the upside. My answer to how high is infinity … but I won’t say when. First rule of making market predictions is give a price or a time but not both. I break it all the time, but not with this one;-)
Mega’s dispatch from England:- Everything up for grabs
Well, we had Trump start another round of war in the middleast, then try to stop one in Europe.
Mixed results………..
A lot of Dead in Gaza again, lot of bombing Aden area. Meantime Putin agrees a “limited ceasefire”. Very little progress politically, but major gains for Russia on the battlefield.
Meantime the British scum scramble to make welfare cuts in what is easy to see is a slapdash attempt to cut spending. No real thought has gone into this, they are already back tracking on what they said & details will NOT be out until next week.
No mention on “Motoabilty” that free car deal for anyone who feeling a bit down in the mouth & thinks a visit to the local BMW dealership on Mega’s expenses might cheer them up some.
No more news on the British “Collection of the fools” project to put “peacekeepers” into Ukraine. So far the only nations willing to deploy is British, French & may be Demark……oh how Putin must be worried sick by that!
Coal Update
For sometime now i been thinking about how the lower than vermin scum whom run this nation intend to power it once “Free issue Fiat money” goes away?
While Windmills are fine as are hydro plants etc the truth of the matter is Blighty needs power baby! Since we decided to import vast numbers of people from the 3rd World our engery demands are climbing.
Northsea gas/oil almost gone, we need something else.
Now it would be nice if Fussion was not a wet dream that is “Only 5 years away” for the last 50 years, but we need stuff that works. Look as the might the British have failed to find any Di lithium crystals, or Unicorn droppings………….so what to do?
Eletric prices are X10 what they are in Russia, X5 in the USA……..givien that very soon balance of payments are going to be a big thing again as far as i can see, only one hope…COAL.
Or rather “Clean coal”
Trump has tonight said he going to build “Hundreds” of new plants i did a little digging (Pardon the pun) & found this:-
https://asia.nikkei.com/Business/Energy/Japan-s-clean-coal-power-experiment-is-starting-to-bear-fruit
Given that Blight sits on 300 years worth & it can be dug by AI machines rather than by hand i think its a sure bet that is were we going. Already tonight the Tory party leader has said that Net Zone by 2050 is NOT possible & we need to balance the Green issues with output issunes………………in short “Greta just got dumped”!
Lets watch & see
Mike
Across the pond nuclear is the new Big Thing. It went out of style after Three Mile Island, but now that Big Tech is building power hungry data centers it’s cool again. You’re not supposed to ask how they solved that little nuclear waste disposal problem.
At $3035.35, gold has outperformed both bitcoin and Nvidia over the past year. In dollar terms, it has now nearly doubled from its October 2022 low. Media continue to chalk up this stunning performance to Trump’s policies, especially tariffs, but don’t bother to note that the vast majority of that near doubling came in 2024.
So what happened in 2024? Crashing fiat. The Fed started cutting rates, after starting to talk about it at the end of 2023. After spending most of the previous year vowing to vanquish inflation, it lost its spine and folded. Exploding federal debt makes it unlikely it will find its missing mojo. It didn’t help that reckless sanctions poisoned the global dollar system.
Now media forgets history and Trump, never popular with the WEF crowd, is designated whipping boy.
Another wave of inflation in coming…………….
Mike
Gold just at $3055.47.
The magnet has lost its grip.
Gold has broken free.