Sive Morten
Special Consultant to the FPA
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Fundamentals
Gold now mostly follows the common tendency. As geopolitical tensions from Middle East come off the headlines of media agencies and everybody turns to TX problems, markets stuck in indecision. Forex, and gold stand in tight range without any big swings in any direction. Of course, this stagnation will be broken sooner rather than later. But first some power has to be built to get release later.
Market overview
Gold prices eased on Monday as investors rolled back expectations of a U.S. interest rate cut at the end of March, with a surge in equity markets further dampening interest in safe-haven bullion. Technical selling and a rally in stock markets are likely the two main factors limiting buying interest in the gold and silver markets, said Jim Wyckoff, senior analyst at Kitco Metals.
Higher interest rates increase the opportunity cost of holding bullion. Gold fell about 1% last week, its biggest weekly decline in six, after the U.S. Federal Reserve said it needs to see more inflation data before any rate cut judgment could be made and that the baseline for cuts to start was in the third quarter.
Speaking about other precious metals, UBS expects platinum to be undersupplied by 300,000 ounces in 2024, for a second consecutive year, mainly on the back of the platinum to palladium substitution in auto catalysts.
Markets are pricing in the U.S. central bank to hold rates unchanged at the end of the policy meeting on Jan. 30-31 and have pared back the timing of the first interest rate cut, according to CME's FedWatch Tool. On the physical front, India increased the import duty on gold and silver findings, used in making jewellery.
Gold eased on Wednesday after data showed strong U.S. business activity, even as a weakened dollar limited losses, while investors looked ahead to more economic indicators to assess when the Federal Reserve might first cut interest rates. U.S. business activity picked up in January and inflation appeared to abate, an S&P Global survey showed. A strong U.S. economy and push back from central bank officials is leading some investors to rethink their bets on how quickly the Fed will cut rates this year.
China's central bank announced a deep cut to bank reserves that will inject about $140 billion of cash into the banking system.
Gold edged higher on Thursday as Treasury yields fell after U.S. GDP data highlighted that pace of inflation slowed, while focus shifted to inflation data for further hints on the Federal Reserve's interest rate cut strategy. Benchmark 10-year Treasury yields slipped after the GDP data. The U.S. economy grew faster than expected in the fourth quarter amid strong consumer spending, with growth for the full year coming in at 2.5%. The report also showed fourth-quarter inflation pressures subsiding.
Gold also got some support from a separate report that showed initial claims for state unemployment benefits in the United States increased 25,000 to a seasonally adjusted 214,000 for the week ended Jan. 20. Economists had forecast 200,000 claims in the latest week.
Gold prices held steady on Friday as investors' attention shifted to the U.S. Federal Reserve's policy meeting due next week for more insights into the interest rate outlook. U.S. prices rose moderately in December, keeping the annual increase in inflation below 3% for a third straight month, which could allow the Fed to start cutting interest rates this year. Another set of data on Thursday showed the U.S. economy grew faster than projected in the fourth quarter.
On the physical side, China's gold premiums climbed this week as additional stimulus measures aided sentiment, days before Lunar New Year celebrations begin.
In the short-term, the direction of gold and silver will continue to be dictated by incoming economic data and their impact on the dollar, yields and rate cut expectations, said Ole Hansen, Saxo Bank's head of commodity strategy in a note.
XIB Asset Management, the Canadian hedge fund that gained more than 200% in the first two years of the pandemic, is now betting that gold and uranium will outperform as interest rates decline. The firm, founded by Sean McNulty and Peter Hatziioannou, expects policymakers to begin lowering borrowing costs soon.
That said, every cycle is different. This time around, heightened geopolitical tensions in a key election year for many major economies, combined with continued central bank buying could provide additional support for gold.
Further, the likelihood of the Fed steering the US economy to a safe landing with interest rates above five percent is by no means certain. And a global recession is still on the cards. This should encourage many investors to hold effective hedges, such as gold, in their portfolios.
One of these scenarios focused on the consensus view that a soft landing would be engineered in the US and Europe; China’s growth would be soft; inflation risks would abate but longer maturity interest rates would remain stubbornly elevated, and high prices would restrain consumer demand. In this context, gold performance could be lacklustre and any upside may depend on continued central bank demand.
Financial conditions have eased markedly on the back of the bond market rally but market expectations of policy rate cuts seem excessive - a concern some Fed officials have voiced since the December meeting - and the tensions around the Suez Canal have highlighted how continuing geopolitical factors can have swift inflationary (cost-push) implications.
Although we still view a material resurgence of inflation as a remote possibility, this scenario would likely be positive for gold, as it undermines monetary policy and risks an even harder landing further down the road. In 2023, gold played more to the tune of the 2-year Treasury yield (real and nominal), than the historically more important 10-year yield, something that tends to occur during heightened policy uncertainty. This anomaly diminished during the summer, as peak rates appeared more certain and supply issues focused attention on the back-end of the yield curve. Over the last few weeks, however, it appears we‘ve seen a shift back to monetary policy, perhaps highlighting the perilously narrow path to an economic soft landing.
Gold was a surprising star in 2023, surging against the odds of rapidly rising interest rates and resilient economies. Central banks are largely to thank for the outperformance, but elevated geopolitical risks likely created investor reticence to give up gold as well as being a key driver of central bank demand. Meanwhile, the rates-driven weakness seen in developed markets, led by European ETF flows, was insufficient to dent gold’s performance.
In the near term, a tug-of-war between historically positive January seasonality and some pushback against the dovish sentiment that drove prices to all-time-highs in December is likely. Equally, there may well be a battle between intermittent inflationary scares (shipping costs) and recessionary impulses (JOLTS hiring), highlighting how perilously narrow the path to an economic soft landing is.
Gold - to - Oil Ratio
Since now we do not have clear driving factors for gold market, at least those that we haven't mentioned yet, we could recall our discussion of Gold-to - Oil ratio. Historically it counts that level of 30 is a breakeven. Now gold trades around 26-27. It means that it has potential of ~100-200$ per Oz, if crude oil will not raise anymore. But with the recent statement there are lot of questions...
Bloomberg has released interesting article - OPEC's mission to protect oil prices is starting to look even more difficult this year because... supply from the US and non-OPEC+ countries began to grow beyond expectations. The oil market expects a surplus if OPEC+ does not act yet. And here we have to ask uncomfortable question. Let's to take note of this provocation on the part of Bloomberg based on the IEA forecast (from the Union of Energy Consumers) and, based on the results of the second quarter, check whether the forecast deficit of the 1st quarter has turned into a surplus. Why should production volumes suddenly increase despite the fact that, with higher oil prices, drilling volumes decreased? Let us leave this aside. Besides, with the new reality in Red Sea of oil delivery, expectations of oil price probably will be skewed to the upside.
No Recession yet?
Yesterday we've considered US liquidity issues and how it could make impact on US Dollar value and inflation. Now we take a look at some external factors. First is, the core market for any economy - Real Estate. Previously we already have shown you this chart, now it slightly has changed:
The home prices has very interesting feature for the US budget. So, if real estate prices fall, then the tax base also falls. A good example could be seen after the 2008 crisis. In general, maintaining real estate prices by all means as long as possible is a critically important story, because taxes may not be collected. Not only because property taxes will be reduced, but also because federal revenues will fall due to lower profits from the resale of residential real estate. It's much the same with the stock market. A growing stock market is a supplier of taxes to the state budget.
Therefore, if a recession begins and asset prices begin to deflate, we can expect an even greater growth rate of public debt. Here, by 2030, they promised that the national debt would reach 50 trillion. dollars In principle, you can wait a couple of years earlier.
Obviously, the long-term cycle of rate cuts played a key role here. Taking into account the fact that the rate has risen to the values of 20 years ago, it would be nice for real estate prices to fall by 30 percent, but this is obviously hampered by the fact that no one wants to sell real estate, having a mortgage for 30 years at 3%.
On the other hand, one cannot expect that this ratio will improve due to income growth. To do this, labor productivity in the economy must increase by 30%, which, of course, is unrealistic. Therefore, we are waiting for the bubble to deflate. It is not necessary explain the effect of bubble blow to the US budget, taxes will drop further and burning of existed cash will accelerate to approach QE whatever form it will be.
Heading into 2023, the annual Federal deficit burn rate was already at $1.5T, which is not only embarrassing but dangerous. Unfortunately, hard math suggests that this figure is likely to get worse in 2023. Much worse.
Using the prior deficit growth percentages (800 and 1000 bps) in 2008 and 2020, respectively, 2023 could mathematically see annualized Federal deficit burn rates hitting $2T to $2.6T, which would conservatively place the U.S. Federal deficit somewhere between $3.5T and $4T in 2023.
But that’s just the beginning. But as for inflationary pain and gold’s gradual victory over the same, our genius policy makers in DC have come up with a simple and familiar solution: Just lie about it. As former Finance Minister and European Commission President, Jean-Claud Juncker, famously confessed, “when it becomes serious, you have to lie.” And when it comes to lies from high, the empirical abundance of such lies over the years is not fable but fact.
From employment data to CPI data, or from central bank distortions and digital currencies to Ex-Items accounting scams and media fictions on viral science or the re-definition of a recession, the rising levels of open fantasy passing for daily reality seems to suggest that things must indeed be getting “serious.” Just yesterday we've talked about big mismatches in the US data and outstanding 3.3% GDP growth. Despite such serious problems, the latest changes now being made to redefine an already dishonest CPI scale for measuring inflation is nothing short of comical, or at least tragi-comical.
As for the CPI methodology changes scheduled to take effect next month, the inflation fiction writers over at the Bureau of Labor Statistics (i.e., the BLS, or “Office of BS” for short) have decided to adjust the weightings for Owners’ Equivalent Rent (or, “OER”). Among other tricks, the aim of the Office of BS is to now use neighborhood level information on housing structure types for a calendar year to effectively manipulate a lower than honest CPI inflation rate. This is rich coming from a CPI scale (red line below) that is already notorious for under-reporting genuine inflation by 50% when compared to the old inflation scale (blue line below) used in the Volcker era.
Effectively, such lies may never be right, but as the official data point of the US Government, they are also never wrong. Now let's take a look at definite rate numbers. For example, the Fed likes to use Taylor rule most of all. Based on current unemployment rate (which is ~ 2.5 times lower than U-6 form) and CPI numbers (which is also ~ 2 times lower) Taylor rule shows that the Fed could cut the rate ~ for 1% down to 4.5% level:
The fact is that the Fed has been using the Taylor Rule for decades to figure out what the Fed funds rate should be, and factoring in the current rate of inflation and unemployment into the Taylor Rule calculation shows that the Fed rate should be 4.5% today. It is very convenient when there is a simple formula.
Now, if we take a look at Germany, the same Taylor rule points that rate has to be 6.7%, which is 2.2 p.p. higher than the current rate, according to the Taylor rule, with German inflation at 3.7% and unemployment at NAIRU. The spread has risen again recently and there is a risk that inflation will start to rise again.
The difference between wage inflation in Europe and the United States is becoming noticeable. Both economies have strong labor markets, but wage inflation in the US is falling and wage inflation in the eurozone is trending upward:
The source of this difference is European trade unions, which often look back at last year's consumer price inflation when formulating wage demands for the following year. This inertia in wage formation makes inflation in Europe more persistent and more difficult for the ECB to control. But worse, is that the business finds itself in pincers. A year and a half after the peak of inflation, it has lower selling prices at higher costs.
But wait a minute - official inflation in EU is dropping even faster than in the US. We think that ECB will start rate cut earlier than the Fed, while Taylor rule tells the different thing. But this is correct only if the US data is fair, where we have big doubts. Taking in consideration the new reality of global logistic expenses, as it is shown on the chart-
Hardly we could count on big rally of real interest rates in the US, as the Fed is limited with rate change and stands at the eve of the rate cut. Based upon the foregoing, each of us must therefore ask ourselves where to find his or her safe haven in a time of extended war, dishonest math, re-defined recessions, dying bonds, debased currencies and gyrating equity markets trending noticeably south. it becomes increasingly clear their “risk-free-return” of so called riskless Treasuries is little more than return-free-risk.
That is why more informed investors, willing to take the extra minutes to understand simple bond history and math soon discover that yes, even the 0% yield of gold with its naturally-derived/constrained stock to flow ratio (i.e., a nearly “finite” annual production of barely 2%) and infinite duration does a far better job of preserving wealth than bonds of finite duration and seemingly infinite issuance… It seems that in nearest 3-6 month we should go to some culmination as things around are becoming really tight and stretched - stock market, liquidity level, budget deficit, geopolitical tensions, inner US political struggle. Tension is growing, people become nervous everywhere, but it can't last for too long.
Gold now mostly follows the common tendency. As geopolitical tensions from Middle East come off the headlines of media agencies and everybody turns to TX problems, markets stuck in indecision. Forex, and gold stand in tight range without any big swings in any direction. Of course, this stagnation will be broken sooner rather than later. But first some power has to be built to get release later.
Market overview
Gold prices eased on Monday as investors rolled back expectations of a U.S. interest rate cut at the end of March, with a surge in equity markets further dampening interest in safe-haven bullion. Technical selling and a rally in stock markets are likely the two main factors limiting buying interest in the gold and silver markets, said Jim Wyckoff, senior analyst at Kitco Metals.
Higher interest rates increase the opportunity cost of holding bullion. Gold fell about 1% last week, its biggest weekly decline in six, after the U.S. Federal Reserve said it needs to see more inflation data before any rate cut judgment could be made and that the baseline for cuts to start was in the third quarter.
Speaking about other precious metals, UBS expects platinum to be undersupplied by 300,000 ounces in 2024, for a second consecutive year, mainly on the back of the platinum to palladium substitution in auto catalysts.
Markets are pricing in the U.S. central bank to hold rates unchanged at the end of the policy meeting on Jan. 30-31 and have pared back the timing of the first interest rate cut, according to CME's FedWatch Tool. On the physical front, India increased the import duty on gold and silver findings, used in making jewellery.
Gold eased on Wednesday after data showed strong U.S. business activity, even as a weakened dollar limited losses, while investors looked ahead to more economic indicators to assess when the Federal Reserve might first cut interest rates. U.S. business activity picked up in January and inflation appeared to abate, an S&P Global survey showed. A strong U.S. economy and push back from central bank officials is leading some investors to rethink their bets on how quickly the Fed will cut rates this year.
China's central bank announced a deep cut to bank reserves that will inject about $140 billion of cash into the banking system.
Gold edged higher on Thursday as Treasury yields fell after U.S. GDP data highlighted that pace of inflation slowed, while focus shifted to inflation data for further hints on the Federal Reserve's interest rate cut strategy. Benchmark 10-year Treasury yields slipped after the GDP data. The U.S. economy grew faster than expected in the fourth quarter amid strong consumer spending, with growth for the full year coming in at 2.5%. The report also showed fourth-quarter inflation pressures subsiding.
Gold also got some support from a separate report that showed initial claims for state unemployment benefits in the United States increased 25,000 to a seasonally adjusted 214,000 for the week ended Jan. 20. Economists had forecast 200,000 claims in the latest week.
Gold prices held steady on Friday as investors' attention shifted to the U.S. Federal Reserve's policy meeting due next week for more insights into the interest rate outlook. U.S. prices rose moderately in December, keeping the annual increase in inflation below 3% for a third straight month, which could allow the Fed to start cutting interest rates this year. Another set of data on Thursday showed the U.S. economy grew faster than projected in the fourth quarter.
On the physical side, China's gold premiums climbed this week as additional stimulus measures aided sentiment, days before Lunar New Year celebrations begin.
In the short-term, the direction of gold and silver will continue to be dictated by incoming economic data and their impact on the dollar, yields and rate cut expectations, said Ole Hansen, Saxo Bank's head of commodity strategy in a note.
XIB Asset Management, the Canadian hedge fund that gained more than 200% in the first two years of the pandemic, is now betting that gold and uranium will outperform as interest rates decline. The firm, founded by Sean McNulty and Peter Hatziioannou, expects policymakers to begin lowering borrowing costs soon.
WGC considers three possible scenarios for 2024, with the soft landing one as most probable. As we look forward to 2024 investors will likely see one of three scenarios. Market consensus anticipates a ‘soft landing’ in the US, which should also positively affect the global economy. Historically, soft landing environments have not been particularly attractive for gold, resulting in flat to slightly negative returns.
That said, every cycle is different. This time around, heightened geopolitical tensions in a key election year for many major economies, combined with continued central bank buying could provide additional support for gold.
Further, the likelihood of the Fed steering the US economy to a safe landing with interest rates above five percent is by no means certain. And a global recession is still on the cards. This should encourage many investors to hold effective hedges, such as gold, in their portfolios.
One of these scenarios focused on the consensus view that a soft landing would be engineered in the US and Europe; China’s growth would be soft; inflation risks would abate but longer maturity interest rates would remain stubbornly elevated, and high prices would restrain consumer demand. In this context, gold performance could be lacklustre and any upside may depend on continued central bank demand.
Financial conditions have eased markedly on the back of the bond market rally but market expectations of policy rate cuts seem excessive - a concern some Fed officials have voiced since the December meeting - and the tensions around the Suez Canal have highlighted how continuing geopolitical factors can have swift inflationary (cost-push) implications.
Although we still view a material resurgence of inflation as a remote possibility, this scenario would likely be positive for gold, as it undermines monetary policy and risks an even harder landing further down the road. In 2023, gold played more to the tune of the 2-year Treasury yield (real and nominal), than the historically more important 10-year yield, something that tends to occur during heightened policy uncertainty. This anomaly diminished during the summer, as peak rates appeared more certain and supply issues focused attention on the back-end of the yield curve. Over the last few weeks, however, it appears we‘ve seen a shift back to monetary policy, perhaps highlighting the perilously narrow path to an economic soft landing.
Gold was a surprising star in 2023, surging against the odds of rapidly rising interest rates and resilient economies. Central banks are largely to thank for the outperformance, but elevated geopolitical risks likely created investor reticence to give up gold as well as being a key driver of central bank demand. Meanwhile, the rates-driven weakness seen in developed markets, led by European ETF flows, was insufficient to dent gold’s performance.
In the near term, a tug-of-war between historically positive January seasonality and some pushback against the dovish sentiment that drove prices to all-time-highs in December is likely. Equally, there may well be a battle between intermittent inflationary scares (shipping costs) and recessionary impulses (JOLTS hiring), highlighting how perilously narrow the path to an economic soft landing is.
Gold - to - Oil Ratio
Since now we do not have clear driving factors for gold market, at least those that we haven't mentioned yet, we could recall our discussion of Gold-to - Oil ratio. Historically it counts that level of 30 is a breakeven. Now gold trades around 26-27. It means that it has potential of ~100-200$ per Oz, if crude oil will not raise anymore. But with the recent statement there are lot of questions...
Bloomberg has released interesting article - OPEC's mission to protect oil prices is starting to look even more difficult this year because... supply from the US and non-OPEC+ countries began to grow beyond expectations. The oil market expects a surplus if OPEC+ does not act yet. And here we have to ask uncomfortable question. Let's to take note of this provocation on the part of Bloomberg based on the IEA forecast (from the Union of Energy Consumers) and, based on the results of the second quarter, check whether the forecast deficit of the 1st quarter has turned into a surplus. Why should production volumes suddenly increase despite the fact that, with higher oil prices, drilling volumes decreased? Let us leave this aside. Besides, with the new reality in Red Sea of oil delivery, expectations of oil price probably will be skewed to the upside.
No Recession yet?
Yesterday we've considered US liquidity issues and how it could make impact on US Dollar value and inflation. Now we take a look at some external factors. First is, the core market for any economy - Real Estate. Previously we already have shown you this chart, now it slightly has changed:
The home prices has very interesting feature for the US budget. So, if real estate prices fall, then the tax base also falls. A good example could be seen after the 2008 crisis. In general, maintaining real estate prices by all means as long as possible is a critically important story, because taxes may not be collected. Not only because property taxes will be reduced, but also because federal revenues will fall due to lower profits from the resale of residential real estate. It's much the same with the stock market. A growing stock market is a supplier of taxes to the state budget.
Therefore, if a recession begins and asset prices begin to deflate, we can expect an even greater growth rate of public debt. Here, by 2030, they promised that the national debt would reach 50 trillion. dollars In principle, you can wait a couple of years earlier.
Obviously, the long-term cycle of rate cuts played a key role here. Taking into account the fact that the rate has risen to the values of 20 years ago, it would be nice for real estate prices to fall by 30 percent, but this is obviously hampered by the fact that no one wants to sell real estate, having a mortgage for 30 years at 3%.
On the other hand, one cannot expect that this ratio will improve due to income growth. To do this, labor productivity in the economy must increase by 30%, which, of course, is unrealistic. Therefore, we are waiting for the bubble to deflate. It is not necessary explain the effect of bubble blow to the US budget, taxes will drop further and burning of existed cash will accelerate to approach QE whatever form it will be.
Heading into 2023, the annual Federal deficit burn rate was already at $1.5T, which is not only embarrassing but dangerous. Unfortunately, hard math suggests that this figure is likely to get worse in 2023. Much worse.
Using the prior deficit growth percentages (800 and 1000 bps) in 2008 and 2020, respectively, 2023 could mathematically see annualized Federal deficit burn rates hitting $2T to $2.6T, which would conservatively place the U.S. Federal deficit somewhere between $3.5T and $4T in 2023.
But that’s just the beginning. But as for inflationary pain and gold’s gradual victory over the same, our genius policy makers in DC have come up with a simple and familiar solution: Just lie about it. As former Finance Minister and European Commission President, Jean-Claud Juncker, famously confessed, “when it becomes serious, you have to lie.” And when it comes to lies from high, the empirical abundance of such lies over the years is not fable but fact.
From employment data to CPI data, or from central bank distortions and digital currencies to Ex-Items accounting scams and media fictions on viral science or the re-definition of a recession, the rising levels of open fantasy passing for daily reality seems to suggest that things must indeed be getting “serious.” Just yesterday we've talked about big mismatches in the US data and outstanding 3.3% GDP growth. Despite such serious problems, the latest changes now being made to redefine an already dishonest CPI scale for measuring inflation is nothing short of comical, or at least tragi-comical.
As for the CPI methodology changes scheduled to take effect next month, the inflation fiction writers over at the Bureau of Labor Statistics (i.e., the BLS, or “Office of BS” for short) have decided to adjust the weightings for Owners’ Equivalent Rent (or, “OER”). Among other tricks, the aim of the Office of BS is to now use neighborhood level information on housing structure types for a calendar year to effectively manipulate a lower than honest CPI inflation rate. This is rich coming from a CPI scale (red line below) that is already notorious for under-reporting genuine inflation by 50% when compared to the old inflation scale (blue line below) used in the Volcker era.
Effectively, such lies may never be right, but as the official data point of the US Government, they are also never wrong. Now let's take a look at definite rate numbers. For example, the Fed likes to use Taylor rule most of all. Based on current unemployment rate (which is ~ 2.5 times lower than U-6 form) and CPI numbers (which is also ~ 2 times lower) Taylor rule shows that the Fed could cut the rate ~ for 1% down to 4.5% level:
The fact is that the Fed has been using the Taylor Rule for decades to figure out what the Fed funds rate should be, and factoring in the current rate of inflation and unemployment into the Taylor Rule calculation shows that the Fed rate should be 4.5% today. It is very convenient when there is a simple formula.
Now, if we take a look at Germany, the same Taylor rule points that rate has to be 6.7%, which is 2.2 p.p. higher than the current rate, according to the Taylor rule, with German inflation at 3.7% and unemployment at NAIRU. The spread has risen again recently and there is a risk that inflation will start to rise again.
The difference between wage inflation in Europe and the United States is becoming noticeable. Both economies have strong labor markets, but wage inflation in the US is falling and wage inflation in the eurozone is trending upward:
The source of this difference is European trade unions, which often look back at last year's consumer price inflation when formulating wage demands for the following year. This inertia in wage formation makes inflation in Europe more persistent and more difficult for the ECB to control. But worse, is that the business finds itself in pincers. A year and a half after the peak of inflation, it has lower selling prices at higher costs.
But wait a minute - official inflation in EU is dropping even faster than in the US. We think that ECB will start rate cut earlier than the Fed, while Taylor rule tells the different thing. But this is correct only if the US data is fair, where we have big doubts. Taking in consideration the new reality of global logistic expenses, as it is shown on the chart-
Hardly we could count on big rally of real interest rates in the US, as the Fed is limited with rate change and stands at the eve of the rate cut. Based upon the foregoing, each of us must therefore ask ourselves where to find his or her safe haven in a time of extended war, dishonest math, re-defined recessions, dying bonds, debased currencies and gyrating equity markets trending noticeably south. it becomes increasingly clear their “risk-free-return” of so called riskless Treasuries is little more than return-free-risk.
That is why more informed investors, willing to take the extra minutes to understand simple bond history and math soon discover that yes, even the 0% yield of gold with its naturally-derived/constrained stock to flow ratio (i.e., a nearly “finite” annual production of barely 2%) and infinite duration does a far better job of preserving wealth than bonds of finite duration and seemingly infinite issuance… It seems that in nearest 3-6 month we should go to some culmination as things around are becoming really tight and stretched - stock market, liquidity level, budget deficit, geopolitical tensions, inner US political struggle. Tension is growing, people become nervous everywhere, but it can't last for too long.
