May, 2013

The Quantitative Beatings will Continue Until Economy Improves

The Fed’s purpose, when it comes down to it, is to buy bonds. Under their various “Quantitative Easing” (QE) programs, they sure have bought a lot of bonds. This pushes up the price of the bonds. Since the yield is basically the inverse of the bond price, this means the rate of interest falls. This […]

Monetary Facts

 Milton Friedman said that if a country had bad economic policies, its currency would weaken, which would restore balance. Imports would drop and exports would rise. Japan’s insane policy has so far crushed the yen by 22%. The results? As Mish writes, imports +9.4%, exports +3.8%. Their trade deficit fell to the worst level in decades. […]

Guest Post: Cyprus – A Stock Market Dies

Author: Pater Tenebrarum What Happens Usually After Big Bear Markets Conclude? If we look back at the history of big bear markets in stocks, they normally put in a definitive low either at the height of a panic (a spike low), or after an extended period of disinterest, during which the market usually declines considerably further […]

Monetary Metals Supply and Demand Report: May 26, 2013

On the week, the gold price went up about $30. Silver was up $0.11. The gold bugs may be wondering if it’s safe to come out now. One recurrent theme of ours is that it is exceedingly difficult to trade gold against the US dollar. Without leverage, it’s not possible to make a profit in […]

What is the Meaning of GLD Gold Outflows?

A quick glance at the data for ounces held by each Exchange Traded Fund (ETF) shows that right after the crash of 2008, ounces began to pour into GLD. Ignoring a little jitter, there was no significant outflow until 2013. GLD has lost over 20% of its metal so far this year, dropping from about […]

Bernanke “No Tapering”: Silver Goes Up and Down Again

In February, I wrote What Drives the Price of Gold and Silver? If there is a credible rumor that the Fed is planning to further extend its “Quantitative Easing”, how would you expect the monetary metals to react? Typically, the gold price would rise and the silver price would rise even more. The question is why. […]

The Dollar Price Rises 33% in Lumber

      Yesterday, we showed pictures of the price of a dollar in gold, silver, euros, and yen. Here is a picture of the price of a dollar in board-feet of lumber. This is a bit silly, as lumber is not a currency. But it is interesting that it shows the same phenomenon. Also, […]

The Dollar is Going Up

Let’s take a look at a few graphs of the dollar, from Feb 1, 2013 through Friday May 17, 2013. Yes, I said graphs of the dollar. I’ve priced the dollar in gold first (of course), then silver, the euro, and even the yen. The pattern is obvious. The dollar is going up. I did […]

The Dollar is Going Up Part II

Meanwhile, the spread between the interest rate and the dividend yield or earnings yield makes an attractive arbitrage. If you are the CFO of a public company and your shares pay a 4% dividend and you can borrow at 2%, it is practically a “no brainer”. The problem is that incurring debt for no productive […]

Gold:Silver Ratio spikes over 66!

Yesterday in the Gold Basis Report, we wrote: “…we reiterate that we are cautious about the price of silver (measured in grams of gold) and think the ratio is more likely to rise than to fall.” Little did we know. As this 5-minute chart shows, the ratio rose to over 66(!) before coming back down […]