Tag: notes from the rabbit hole

Is The Yield Curve Really Flattening?

Posted on by The INO.com Team

There is a lot of talk now about a flattening of the yield curve.  This talk has been among the most intense right here at the website you are reading at this moment.  A flattening curve is commonly viewed as bad for gold, and according to Mark Hulbert, is an indicator of a coming recession.

But is the curve really flattening or is this all hype based on Janet Yellen's press conference comments?  Here is a chart the likes of which we have been using in NFTRH for many months now, the 30 year vs. the 5 year yield.

30.5

Here we should lend some perspective.  Okay Beuller, I ask you what is different this time from the last flattening? Continue reading "Is The Yield Curve Really Flattening?" →

ZIRP Up Next?

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Everyone expects Janet Yellen to be a rolling over, inflationist stooge just like they did Ben Bernanke.  Bernanke came on board after Alan Greenspan had taken the Fed Funds rate up to around 5% if I remember correctly.  Inflationists and gold bugs thought they had it in the bag when 'Helicopter Ben' assumed control.

Indeed, Bernanke did what he was supposed to do (per the 'Helicopter 'Ben' script) as systemic stresses began to gather in 2007, addressing that pesky Funds rate, culminating in December, 2008's official ZIRP (zero interest rate policy).  Here again is the chart showing the S&P 500's 'Hump #3' attended by this most beneficial monetary policy.

spx.irx

As noted again and again, the much trumpeted 'taper' of QE is not only not a negative for the economy, we have made a strong case that its mechanics are actually a positive, in the near term at least.  But putting ZIRP on the table would be a whole different ball of wax. Continue reading "ZIRP Up Next?" →

Precious Metals Grind Out a New Trend

Posted on by The INO.com Team

Gold is Monetary Value

We preface the post with a statement that has not changed since I began public writing nearly 10 years ago:  Gold is not about price; gold is about value.  This point was hammered home to me 11 years ago by a person who had much influence upon my viewpoint toward the financial system and its various diseased components at a time when I was ready to listen and understand.

So whether we are talking about 2013′s epic price crash or a new bull trend in 2014, the simple fact is that physical gold itself is a store of monetary value.  That applied last year as the value was marked down by greed and confidence and it will apply this year as it is marked up in the face of a likely unwinding of those things.  Humans, what funny and hyper kinetic animals. Continue reading "Precious Metals Grind Out a New Trend" →

Gold Mining is Counter Cyclical

Posted on by The INO.com Team

The following is the opening segment of this week’s Notes From the Rabbit Hole, NFTRH 276:

Somewhere along the road from the 2000 bottom in gold stocks to the 2008 flame out of inflationary hysteria, the gold stock sector went from counter cyclical first mover to ‘inflation trade’ also ran.  Gold stocks put in a secular bear market bottom in 2000 just as the US and many global economies were topping out.

Then came the era that NFTRH has labeled ‘Inflation onDemand’ (IoD).  The economy was successfully* inflated by Alan Greenspan early in the decade as easy monetary policy fomented an epic credit bubble, which took over and did the heavy lifting for a cyclical bull market and buoyant economy that terminated hard in 2007/2008.

During this time of IoD ‘inflation bulls’ and commodity bulls who had all the answers for a newly inflation-phobic public emerged and took center stage.  Misperceptions were formed, cemented and driven home.  Nowhere were the misperceptions more intensely and dangerously embedded than the gold stock sector, which at its core is different than most commodity sectors and indeed, most stock sectors.  Introducing another one of our ‘busy’ charts to illustrate…

hui.mo

Okay, article over… the chart says it all.  No more words necessary! Continue reading "Gold Mining is Counter Cyclical" →

Closing the 2008 'Gap'

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A disclaimer:  I am long and/or trading several regular 'bull stocks' (as well as short a couple).  Don't interpret the sober message below as a 'sell your stocks right now!' style bearish warning.  Indeed, after an expected choppy start to December I think more bull market mania, errr… rally, could still be ahead.  But it would be just dandy if people would keep their perspective along the way.

From the December 1 edition of Notes From the Rabbit Hole (NFTRH 267):

In 2008 market and economic participants suffered a hard downside 'gap' in the prices of their assets and in the levels of their expectations.  The bull market that began in March of 2009 is doing a fine job of closing that gap and fully resetting the herd from the utter fear mode of Q4, 2008 to a 2007 or even 1999 style greed mode today. Continue reading "Closing the 2008 'Gap'" →