Here are the latest news items and commentary on current economics news, market trends, stocks, investing opportunities, and the precious metals markets. We also cover hedges, derivatives, and obscura. And it bears mention that most of these items are from the “tangibles heavy” contrarian perspective of SurvivalBlog’s Founder and Senior Editor, JWR. Today, we look at investing in silver. (See the Precious Metals section.)
Precious Metals (Silver):
The recent breakout in the spot price of silver to above $16.28 per Troy ounce probably has some short-selling traders quaking in their boots. The price ratio of silver-to-gold is now running around 88-to-1, which although down from the recent absurd 92-to-1 high still screams opportunity for silver investors. I suspect that the price of silver will escape the market manipulators and the silver-to-gold ratio will revert to around 75-to-1, or possibly even lower. (75-to-1 would mean a spot price for $18.88 for silver, assuming that gold holds at around $1,415 per ounce.) And in the long run, with more silver than gold being consistently “used up” in unrecovorable industrial processes, I expect the silver to gold ratio to be down around 25-to-1, by the end of the 21st Century. Watch the metals markets closely, folks. I’ll admit that I’ve always had a predilection for silver, but the fundamentals here would convince just about anyone that the Silver Bull may soon have his day!
Economy & Finance:
The “Scared & Desperate” Fed Is Playing The Most Dangerous Game. Here is a key quote:
“On Wednesday odds for a 50bp rate cut had dropped to 34%, by the time Clarida, Bullard, and Williams were done these odds had skyrocketed to 71%.
Come on. None of this is an accident.
JP Morgan now expects 12 central banks to cut rates in the next 2 months. The global easing cycle has begun. With negative rates still in place.
What’s all this really tell us? A recession is coming, they know it and they are desperate to prevent it. It also says zero rates are coming back and I suspect, in due time, negative rates. Which means markets will eventually drop despite the current efforts to jam things higher.
But a Fed desperate to jawbone markets higher, to “influence markets” is playing the most dangerous game.
A Fed admitting they have limited ammunition and are openly abandoning their data dependency mantra to stop the business cycle is an open admission of weakness. And a weak Fed may commit the worst sin a Fed can commit: Lose confidence of the market. And once that happens all things are possible…”
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