First, for all you right minded wording detectives out there, you are absolutely right... inflation is not rising prices and deflation is not dropping prices. Also, deflation is not two…
Mario just popped up from the upper left corner of the Whack-a-Mole table top and hammered the Euro* (see Biiwii commentary here), logically sending USD upward. But the gold-silver ratio…
By far the most negative feedback I get is when I write something about inflation or specifically, about how inflation is nowhere to be found outside of the stock market…
As crude oil continues down today we are presented with a perfect opportunity to review why gold mining fundamentals can IMPROVE in a rising US dollar atmosphere. So many people run the equation through their heads: USD Strong = Run Away!
The title's quote is one of many eminently quotable messages I had the pleasure of receiving over a few years of contact with a late, great and a very interesting…
No matter the debates over inflation vs. deflation, increasing employment vs. sound monetary policy or systemic health vs. fragility (and whatever else is flying around in Jackson Hole this week), the CPI marches onward and upward. That is the system and it is predicated on creating enough money out of thin air while inflation signals are (somehow) held at bay.
The Straw Man* in this argument lives in the idea that inflation is not always destructive, that inflation can be used for good and honed, massaged and targeted just right to achieve positive ends to defeat the curse of deflation that is surely just around the next corner. Currently, the Straw Man is supported by the reality of the moment, which includes long-term Treasury yields remaining in their long-term secular down trend.
Indeed, right here at this very site was displayed much doubt about the promotion having to do with the “Great Rotation” out of bonds and into stocks (i.e. that the yield would break the red dotted EMA 100 this time). We noted it right at that last red arrow on the Continuum© below. Now, with commodity indexes right at critical support and precious metals not far from their own, the time is now if a match is going to be put to that dry old Straw Man and silver is going to out perform gold, inflation expectations barometers (TIPS vs. unprotected T bonds) are going to turn up and the Continuum is going to find support.
Excerpted from this week's premium report, NFTRH 282: Last June when tidbits about a would-be future ‘taper’ of T bond purchases (QE) were popping up in the media NFTRH 241…
The ISM has once again expanded. Policy is working, so please Dear Mr. Bernanke, begin to withdraw not only a token amount of Treasury bond asset buying in October; make a real statement for the ‘organic’ economy. Pull all T bond purchases and stop buying some MBS to boot. You’ll not only help the Fed’s balance sheet by doing so, you’ll also send a clear message to the people that you have confidence in the natural economy to build on its momentum.
Last week the Fed treated us to a whipsaw as market perceptions apparently were not in line with the FOMC policy statement, which was basically a punt. Then the very next day the Fed’s James Bullard jawboned the media about a possible October Federal Reserve tapering. Hence, a letter writer was left with images of a 3 ring circus heading into the weekend. From the opening segment of the September 22 edition of Notes From the Rabbit Hole:
Last week’s opening title was ‘Get Ready for a Climax to the ‘Taper’ Hype’ and boy did it ever climax. The FOMC rolled over and the market over reacted. Everybody it seems (bears, bulls, inflationists, deflationists, gold bugs; everybody) was punished at one point or another. James Bullard even had the nerve to get in front of a microphone and exercise his jawbone about a possible October ‘taper’ and the anti-climax was on.
In the current policy and media stoked market environment, anything is possible. It’s the wonderful, magical world of hands-on policy making. 5 years after the financial crisis, but still not enjoying a ramping economy like the good old (and long gone) days of the last great secular bull market (RIP 2000)? Just sit back, relax and let the man in charge control the image.
Here is what the US Fed did to the currency it is supposedly a steward of yesterday. The USD plunged below an important support level. If this breakdown holds below 80.50, it measures to the mid-70’s. Enter an ‘inflation trade’, in which we’d look to fan out from the precious metals and include other commodity and global stock items.
The media love to get a hold of buzz words and then give them a spin and a life all their own. Recent examples were the mainstream media’s presentation of ‘Operation Twist’ – which was simply an official yield curve manipulation designed to sanitize and dampen inflationary signals – as an inflationary operation, and the ‘Fiscal Cliff’ drama that sent herds of conventional investors to the sidelines* when they should have been contrarian (and bullish) back in Q4, 2012.
Here is the chart we have been using in NFTRH, showing inflation protected T bond fund TIP vs. regular T bond fund TLT. This ratio has been bottoming for months…
Last week the Silver-Gold ratio (SGR) failed to get with the bear memo as the sector got a hard shakeout, and look what happened. This week through the ups and…