Tag: quantitative easing (QE)

John Hathaway and Doug Groh: Buy Gold Like It's 1999

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The Gold Report: In a 4th of July investor letter, you wrote that the precious metals complex, both mining shares and bullion, appear to be in the process of completing a major bottom, and you're more comfortable with the proposition that the downside potential has been fully exhausted. What are the signs that it's really turning this time?

John Hathaway: The gold futures chart is showing that we are in the process of a reverse head-and-shoulders pattern, which is a sign that a bottom has been completed. It means that downward momentum has been exhausted. This bottom will be confirmed when gold trades above $1,400/ounce ($1,400/oz), which is a stretch from where we are. At least we can say fairly credibly that it's shaping up to be a bottom, but we may test it over the summer.

Source: International Strategy Investment Group LLC

TGR: Are statistics on money flows telling you that investors are starting to get interested again? Continue reading "John Hathaway and Doug Groh: Buy Gold Like It's 1999" →

The Greatest Risk To Investors Today

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By: Jody Chudley of Investing Answers

We've seen this set-up before...

All through 2006 and 2007, I heard some of the smartest minds in the investment game warning about the massive housing bubble that was about to pop. For a long time, these smart folks looked wrong, as housing prices kept going up and up.

Then things changed in a hurry, and we suffered through the worst credit crisis in our country's history and a housing bubble collapse. Anyone that didn't heed the warnings got crushed.

I see the same thing happening today. There have been warnings that we could be in for severe inflation ever since the Federal Reserve rolled out the printing presses back in 2008 with its "quantitative easing" program.

So far, not much has happened. However, similar to the housing bubble, that "nothing" could turn into something very quickly.

After years of easy money policy by countries around the globe, the inflation pump could be primed. Continue reading "The Greatest Risk To Investors Today" →

I Owe My Soul - Why Negative Interest Rates Are Only the First Step

Posted on by The INO.com Team

By: Jeff Thomas, International Man

In 1946, an American singer, Merle Travis, recorded a song called "Sixteen Tons." The song told the story of a poor coal miner in Kentucky, who lived in a small coal mining town. The town's economy revolved entirely around the mine.

The mining company owned a "company store," which had a monopoly on the sale of provisions. It charged rates that were designed to use up the weekly paycheque of the miner, so that the miner, in effect, was a slave to the mining company. As the song states,

You load sixteen tons, what do you get
Another day older and deeper in debt
Saint Peter don't you call me 'cause I can't go
I owe my soul to the company store

Negative Interest Rates

Let's put the song aside for the moment and have a look at a concept that has been bandied about by the European Central Bank (ECB) for a while now. Since the collapse of the central banks would doom the world (their claim, not mine), it is essential that the banks be saved no matter what else must be sacrificed. Efforts to "save" the situation have been implemented through quantitative easing (QE) and the setting and continuation of low interest rates.

Unfortunately, in spite of record profits by banks and staggering bonuses handed out to senior bank executives, somehow the QE and low interest rates have not created the prosperity desired. The economy is still in the tank. What to do? Continue reading "I Owe My Soul - Why Negative Interest Rates Are Only the First Step" →

Crude Oil, Iraq and The Economy – Are We On A Collision Course?

Posted on by The INO.com Team

Hello traders everywhere! Adam Hewison here, discussing the situation in Iraq and how it could possibly affect the US and world economy.

After spending over $1 trillion and having lost the lives of over 4,500 brave Americans in Iraq, the country has once again imploded. I don't have to reiterate what is going on with Muslim extremists, but it seems they are hellbent to take over Baghdad, the capital of Iraq, and the rest of the country. It would appear now, Muslim extremists feel empowered to push their views to the max.

The Middle East has always been a problem waiting to happen, ever since the British left in the 50s. Arab unity seems to be the major problem in this area and one that's been going on perhaps for centuries.

I've always believed that the west's principal interest in that region was because of the crude oil (NYMEX:CL.N14.E) under the sand. I'm positive we would not even be there if they did not have vast resources of energy that the world is addicted to. The question now is, what is going to happen if Iraq and the oil fields are taken over by Muslim extremists and Iran? Should that happen, and the odds are becoming more and more likely that it will, it will produce a world that is totally different from what we know now.

I have been positive on crude oil (NYMEX:CL.N14.E) since May 19th at the $101.98 level (currently trading at $106.98). This market has the potential to continue in a very positive manner and move substantially higher, possibly to the $120 to $125 a barrel area. Continue reading "Crude Oil, Iraq and The Economy – Are We On A Collision Course?" →

ZIRP Gains More Attention

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We have been talking about how there had been no bubble in US stocks and how the economy is doing just fine.  We have also been talking about how the bubble is in policy and that the economy and stock bull market have been created – yes, like Frankenstein’s monster once again – out of this policy bubble.

Enter economist Joseph LaVorgna of Deutche Bank…  Fed needs to start raising rates, top forecaster says.

Will wonders never cease?  As you may know, I read the financial MSM to get a feel for what the casual market participant is reading, what the majority is being told is the truth.  Usually it is some combo of self-promoters and agenda (sometimes political) driven bulls and bears.

“The economy is improving much faster than the Fed is willing to acknowledge, LaVorgna said in an interview. At the current rate of hiring, more jobs will be created this year than in any year since 1999.”

Exactly, and still they inflate.  He correctly puts the focus on the financial (and national) disgrace called ZIRP as opposed to the theater surrounding QE’s long term bond purchases.

“In six months, the unemployment rate will be below 6% and the core inflation rate will be at 2%,” he said. “We are way ahead of schedule. We’re going to get to 5.2% or 5.4% a year ahead of schedule.”

“The Fed is behind the proverbial curve,” he said. “The Fed should be raising rates.”

It’s all that this corner of the interwebs has been hammering on for over a year now.  If the economy is at all real, get rid of QE and end ZIRP. Continue reading "ZIRP Gains More Attention" →