"Everything you need to know about gold"
STIMULUS DOESN’T ALWAYS STIMULATE
The word stimulus has become an oft-repeated term, sometimes overused. We are referring to the non-biological meaning below.
STOCKS – BITCOIN – GOLD
Stock prices, according to the S&P 500, are up seventy percent from their lows last April. The Nasdaq Composite at its most recent high point was up even more, sporting a ninety-five percent increase from its nadir. A number of individual stocks have done even better.
For the entire year 2020, however, stocks were up a more modest sixteen percent (S&P 500) and only seven percent for the Dow Jones Industrial Average.
However, the outsized performance of the Nasdaq was even more apparent on a full calendar year basis. For 2020 the Nasdaq was up forty-three percent. Relative to its peers, the average Nasdaq stock was up more than three to four times as much as non-Nasdaq stocks.
CONSUMER PRICES NOT REFLECTING HIGHER INFLATION
As of November 30th, the annual inflation rate for the year 2020 is 1.17% (CPI). And it is not likely to get a whole lot worse anytime soon.
When the Federal Reserve responded to the financial crisis of 2007-08 with hugely unprecedented monetary expansion efforts, many thought that it would lead to runaway inflation and collapse of the U.S. dollar. It didn’t; and the expected higher inflation rates did not occur.
Always searching, always relentless in the quest for more, bigger, better, etc. It is a never-ending thirst that cannot be quenched; a hunger that cannot be satisfied.
Today’s investor seems oblivious to whatever it was that brought us to this point in world civilization. Economic fundamentals have taken a back seat to fantasy and hyperbolae.
Case in point: Bitcoin.
After a recent spike to the upside over the past seven days, both gold and silver have turned negative again and could be headed back to their recent low points reached early in the day on Monday, November 30th.
The movement in both gold and silver is evident of a decided shift in trend direction to the downside. What happens after prices return to their recent lows could prove interesting; or downright discouraging if you are expecting a resumption of the trend to higher prices.
Sometime after the end of the second quarter, news of Berkshire Hathaway’s acquisition of Barrick Gold made headlines. Not known for a favorable opinion on gold, Warren Buffett surprised some people with his move. Also, the addition of Barrick Gold Corp to the Berkshire portfolio was noteworthy for another reason…
“…Warren Buffet, while he did add to his positions in a few stocks, he added only a single new stock to his portfolio – Barrick Gold.”
As significant as Buffet’s entry into the gold arena is, news of Berkshire Hathaway’s third quarter reshuffling prompted some confusion among observers and investors. The original stake of 21 million shares had been reduced by almost 9 million shares to a total of only 12 million shares at the end of September.
JUDY SHELTON AND JANET YELLEN…
Last week the Senate failed to confirm the nomination of Judy Shelton as a member of the Board of The Federal Reserve. Some thoughts and observations.
If it had done so, and once she was occupying a currently vacant seat on the board, we might reasonably have expected some fireworks.
The Fed always does its job. So, just what is their job? And, how well do they perform?
For the answer to the first question, one statement will suffice: The Fed’s job is to create money; at all times and in all seasons.
The Federal Reserve Bank creates money for the US government to spend and for banks to loan. It is a partnership that dates back more than one hundred years.
Apparently investors don’t tire of hearing the same old thing; and their advisors willingly provide the same questionable advice: “The best way to play this new bull market in gold is to buy gold stocks” or something to that effect. Are gold stocks a better choice than golditself? Let’s find out…
