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Charts For A Crazy World, July 5: Soaring Debt, Negative Interest Rates Set Up Gold’s Next Run

edsl48

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New investment porn to start the day


One glance at this chart should silence any talk of “a return to normalcy”. We are emphatically not headed in a normal direction.
next gold run
The liquidity being generated by this debt binge is pushing up prices in a wide variety of sectors. Shipping costs, for instance, are soaring…
next gold run
… which is raising manufacturing costs for any company that buys materials or components from overseas (in other words all of them).
next gold run
At the same time, a tsunami of hot money pouring into the financial markets is turning investors into speculators. Where most stockholders, both professional and amateur, used to hold their positions for years, today’s overstimulated players now go in and out in months.
next gold run
And they do it with borrowed money. Margin debt – created when an investor borrows against existing stocks to buy more – is spiking, not just in nominal terms but as a percent of GDP.
next gold run
Over in fixed income, hot money has kept bond yields from rising along with inflation, producing a negative inflation-adjusted (i.e., real) yield on 10-year Treasuries, something not seen on this scale since the inflationary 1970s.
next gold run
Gold had a spectacular run in the 1970s, and ought to do well in the even more chaotic environment we’re now creating. But silver might do even better. A declining line on the next chart indicates silver outperforming gold (while both rise).
next gold run
When should the precious metals bull market really get going? Probably not until the current bemusement turns to panic. But in the meantime, seasonality is becoming positive as we enter what are generally the best months of the year.
next gold run
 

the_shootist

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New investment porn to start the day


One glance at this chart should silence any talk of “a return to normalcy”. We are emphatically not headed in a normal direction.
next gold run
The liquidity being generated by this debt binge is pushing up prices in a wide variety of sectors. Shipping costs, for instance, are soaring…
next gold run
… which is raising manufacturing costs for any company that buys materials or components from overseas (in other words all of them).
next gold run
At the same time, a tsunami of hot money pouring into the financial markets is turning investors into speculators. Where most stockholders, both professional and amateur, used to hold their positions for years, today’s overstimulated players now go in and out in months.
next gold run
And they do it with borrowed money. Margin debt – created when an investor borrows against existing stocks to buy more – is spiking, not just in nominal terms but as a percent of GDP.
next gold run
Over in fixed income, hot money has kept bond yields from rising along with inflation, producing a negative inflation-adjusted (i.e., real) yield on 10-year Treasuries, something not seen on this scale since the inflationary 1970s.
next gold run
Gold had a spectacular run in the 1970s, and ought to do well in the even more chaotic environment we’re now creating. But silver might do even better. A declining line on the next chart indicates silver outperforming gold (while both rise).
next gold run
When should the precious metals bull market really get going? Probably not until the current bemusement turns to panic. But in the meantime, seasonality is becoming positive as we enter what are generally the best months of the year.
next gold run
I usually poo poo graphs but these clearly show the race to the financial apocalypse is picking up speed. How long can they keep this going?
 

savvydon

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The race to the financial apocalypse is picking up speed. How long can they keep this going?
Great question... clearly, though, it is still going. As I type gold is up nearly $20 as it charges back up through $1800. Silver, on the other hand, has been pummeled in the past hour and is now down a dime. Bill Murphy over at GATA posits that the 'banking cartel' uses their most direct leverage against metals specifically on silver, because it is a smaller market, and thus easier to manipulate. This morning's BS, er, action, has their fingerprints all over it.
 

Casey Jones

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I usually poo poo graphs but these clearly show the race to the financial apocalypse is picking up speed. How long can they keep this going?
Uh...long enough for their Chyna labs to engineer an Epsilon Variant?

The Grate Reset is no longer a pleasing option. It's a desperate Hail-Mary for them.
 

Halcyon

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Owning gold is playing the long game. All these exponential debt charts is all you need to know. Inflation or deflation doesn't even matter. Fiat owners lose either through inflation or through mass defaults on bonds/ bank accounts etc, i.e. through counterparty risk with other people that go bust.