‘Gold Will Have its Day Again’

Gold seemed to be stabilising at the end of last week. Commodities remained weak. Steel has fallen 31% this year. Brent crude is off 17% since early February, and copper is down 15%. Copper is the metal that you need to make almost anything – houses, cars, electronics. When it goes down it generally means the world economy is getting soft.

At the beginning of last week, the conventional analysis of the gold sell-off was that the central banks’ efforts to revive global growth were working. The feds have the situation under control; so who needs gold?

By the end of the week, it appeared that gold – and commodities – had sold off for the opposite reason: because central banks’ money printing wasn’t working…and the world was slipping further into a period of slow growth and barely contained depression.

Business Insider:

‘Recent U.S. economic data has been disappointing, especially in the realm of housing, which is what the U.S. bull case is all about.

‘In Germany, dubbed the strong-arm of Europe, economic sentiment just fell.’

And growth has begun to slow in China – still considered a global growth engine – as it continues to crack down on corruption, property prices, and shadow banking. China’s plan to shift its economic model away from exports to domestic demand led growth has also contributed to the lower growth rate.

In the US, building permits are down…foreclosures are up. There is no renaissance happening in manufacturing. Only half the new jobs expected showed up in March. Retail sales are down and consumer confidence is off.

And in Britain, the unemployment rate is rising. Retail sales are falling. And figures out this week will probably tell us that the country is in a triple-dip recession.

And here’s Ambrose Evans-Pritchard in the Telegraph:


‘It is becoming ever clearer that the roaring boom in global equities since last summer has priced in an economic recovery that does not in fact exist. The International Monetary Fund has had to nurse down its global growth forecasts yet again. We are still stuck in an old-fashioned trade depression, with pervasive over-capacity in manufacturing plant and a record global savings rate of 25pc of GDP.

‘As you can see from the chart below, the divergence between stock markets and the Deutsche Bank index of raw materials is astonishing to behold, so like the pattern in early 1929.

‘Deutsche Bank index of raw materials

‘…The US economy is growing below the Fed’s own “stall speed” indicator. Half a million people fell out of the workforce in March. Retail sales fell in March. So did manufacturing.

‘”There is a threat of deflation almost everywhere. A lot of central banks will have to follow the Bank of Japan, whatever they say now,” said Lars Christensen from Danske Bank.

‘The era of money printing is young yet. Gold will have its day again.’

Regards,

Bill Bonner
for Markets and Money

Join Markets and Money on Google+

From the Archives…

Why Too Much Data Might Actually Protect Your Privacy
19-04-13 – Sam Volkering

This Gold Bug Ain’t for Turning!
18-04-13 – Bill Bonner

Music for Contrarian Ears
17-04-13 – Dan Denning

Bring on the Gold Correction
16-04-13 – Bill Bonner

Why China’s ‘Population Pagoda’ Could Mean Slower Growth for Australia
15-04-13 – Dan Denning

Claim your FREE Special Investor Report…

Why Interest Rates Could Stay Low for the 21st Century… and How YOU Can Profit
Markets & Money Free ReportWill Australian interest rates hit 0% in the next couple of years? If controversial economist Phillip J Anderson is correct… super–low interest rates could be here for the next century. In this special investor report you’ll learn how you can take advantage of low interest rates and potentially make a fortune over the coming decades.

Download this free report now and discover:

  • How to Boost Your Wealth Four Ways in a Low Interest Rate World: Inflation is your biggest enemy when interest rates are low. Phil reveals his four–pronged strategy to overcome this… and shows you where to profitably park your cash in the coming decades.
  • How the ‘Victorian Equilibrium’ Can Make You Rich: What if you could accurately predict where interest rates will travel in the future? You’d know the best time to lock–in rates on your mortgage repayments and save bucket loads of cash… or pick up the interest rate sensitive stocks most likely to rocket higher. As Phil reveals, if you understand the centuries old ‘Victorian Equilibrium’ discovered by an American history professor… you’ve got the next best thing to a crystal ball for interest rates.
  • Why this $402 Million Decision Signals Low Interest Rates: In October 2014, UK treasurer George Osborne announced Britain will pay back debt used to finance the First World War — 96 years after the first shot fired. Phil reveals what this landmark decision means for long term interest rates both in Australia and across the globe and how this could affect your long term investing habits.

To download your free report ‘Why Interest Rates Could Stay Low for the 21st Century’ simply subscribe to Markets and Money for FREE today. Enter your email in the box below and click ‘Send My Free Report’.

We will collect and handle your personal information in accordance with our Privacy Policy.

You can cancel your subscription at any time.

Bill Bonner

Bill Bonner

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities.

Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind Markets and MoneyDice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill's daily reckonings from more than a decade: 1999-2010. 

To have Bill's reckonings delivered straight to your inbox subscribe to Markets and Money for free here.

Read more

Bill Bonner

Latest posts by Bill Bonner (see all)

Leave a Reply

2 Comments on "‘Gold Will Have its Day Again’"

Notify of
avatar
Sort by:   newest | oldest | most voted
slewie the pi-rat
Guest

the recovery does not, in fact, exist?
Ambrose! this is hooliganism!
Free Pussy Riot!
Free Tibet!
Free ammo for Libyans!
Free SNAP, Crackle, and Pop…
…and marshmallows!

fuk_u killed the recovery.
1 rat survived.
he is gonna try to bring the whole “complex” down and destroy the world w/ nukuler waste.
trust me.

slewie the pi-rat
Guest

whoa!
SHE just called!
she’s evolving!

wpDiscuz
Letters will be edited for clarity, punctuation, spelling and length. Abusive or off-topic comments will not be posted. We will not post all comments.
If you would prefer to email the editor, you can do so by sending an email to letters@marketsandmoney.com.au