Gold hits near 5-week low after Fed strikes hawkish note … Gold slid to a near five-week low on Monday after comments from top Federal Reserve officials fuelled speculation that U.S. interest rates would rise sooner rather than later, weighing on the dollar. Speaking at a meeting of leading central bankers in Jackson Hole, Wyoming, Fed chair Janet Yellen said on Friday that an improvement in the economy and the labour market in recent months had boosted the case for hiking rates. -CNBC
Why buy gold? The economic numbers are looking better and fedgov never lies, right?
However, there is this from ZeroHedge:
In “A Death Knell Just Tolled For Luxury Real Estate”, we documented the sudden trapdoor that opened beneath the ultra-luxury segment in the Manhattan housing market.
Then several days later, we observed that it is not just the luxury NYC market that is in trouble, but the broader market across all of the US, when we noted three “Red Flags” that the broader US housing market was starting to roll over.
What ZeroHedge reports is that mom and pop auction buyers were taking the place of institutional investors. Also, retail prices for home goods and furniture were imploding. Finally, there’s a lot less house-buying traffic.
Traditionally, housing prices are among the first to suffer in an emergent downturn. And in this case, it’s not just the ordinary housing market.
The luxury market has dropped precipitously. Sales of luxury houses and units in the Hamptons have been halved and prices of what’s selling have been dramatically chopped.
Aspen, according to the article:
In the first half of this year, the average price per square foot of Aspen homes dropped 22 percent to $1,095 from $1,338 in 2015. Recent Aspen sales also closed at more than 15 percent below listing price, a rare discount.
Meanwhile, Miami luxury condo sales have crashed 44%. Miami may be worse than the Hamptons or Aspen. Non luxury sales are hardly better: Residential purchases are down some 21%.
This is happening against a backdrop of Federal Reserve bullishness about the economy. Of course, given that Yellen wants to raise rates, the Fed seems perpetually bullish these days.
Reality never changes in our view. We’re still in the same “bear” market we were back in 2008 – and actually since 2001.
Gold and silver metals manipulations have ensured that the dollar has remained viable as a reserve currency even though the dollar and other currencies have been tremendously debased.
The debasement has accelerated since 2008. The entire fiat market is a kind of Ponzi scheme leaking the last remnants of confidence. It’s so bad that at the recent Jackson Hole Fed meeting one continuing refrain was that fedgov ought to substitute fiscal manipulations for monetary ones.
Almost every large central bank around the world is struggling to reflate (though supposedly the Fed is not). But this is a purely monetary picture.
Larger trends such as Russia’s realignment of the ruble away from the dollar and the soon-to-be-competitive yuan – about to be placed in the International Monetary Fund’s SDR basket – will place increasing pressure on the dollar as a reserve currency.
As central banks grow more desperate, they are increasingly purchasing equity directly in the marketplace in addition to bonds. In fact, step back from the day-to-day crisis pronouncements by economists and it becomes increasingly clear that one of the main jobs of a significant central bank is to prime the stock-market by printing as necessary.
We are supposed to believe this money printing somehow generates jobs and industrial growth. But after years watching this crisis develop on the Internet, we can see that money printing has a much bigger impact on financial markets than industrial ones. Central banks and stocks are joined at the proverbial hip. One dishonest system supports another.
This presents a lot of problems for investors, of course. Nothing operates normally. Large financial institutions are constantly propped up along with the larger economy. Printing money “cures” a multitude of serious economic injuries.
Of course, the trouble is that sooner or later it doesn’t. At some point yesterday’s economic certainties are exposed as today’s wishful thinking.
And so, no matter what central banks do, no matter the stock manipulations sending the market higher or other manipulations sending metals down against the dollar, individual investments in gold and silver (as part of a larger diversified portfolio) are probably a good idea.
The same forces manipulating the market upwards inevitably have a crash in mind. In order to make progress toward globalization, a crisis is called for sooner or later, hopefully the bigger the better.
There’s no telling how long the current situation can last. But chances are considerable volatility will be part of what’s going on. And when the end comes, what will remain, as before, are gold and silver.
And this is a reason to consider them for your portfolio. Physical metals, and perhaps ETFs and even gold and silver stocks. They all have their place in this endlessly manipulated fiat environment.
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