Two Things that Investors Should Know

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Gold Market Discussion

First Thing You Should Know:

How do you think President Trump would like to have a full Monty recession underway around while he’s campaigning for reelection in 2020?

Not much!

He says the Fed is holding back the economy.  That’s why he’s calling for the Fed to lower interest rates a full-percentage point and to start another round of Quantitative Easing.  

As we wrote here several weeks ago, “It has taken a lot of loose money to drive the stock market to today’s levels.  Now the market, addicted to losing money, is growing skittish.  As we saw at the end of last year, the stock market wants the Fed to provide it with another fix.

“It’s like a junkie getting the heebie-jeebies.  If it doesn’t get its fix, it will fall.  Hard.”

So when Fed chairman Powell failed to dangle a rate cut in front of the stock exchanges the other day, the Dow quickly gave up about 500 points.  (And focused our attention on the opportunity to take advantage of the buying opportunity in gold!) 

Are lower rates and more Fed bond buying in our future?  The President is demanding it.  And the stock market is threatening that it will do something drastic once again if it doesn’t get its way.

Remember how gold skyrocketed during QE 1, 2, and 3 beginning in 2008?

It’ll happen again.

Second Thing You Should Know:

It starting to look like “Groundhog Day”.  The same thing over and over:  Foreign central banks just keep buying gold.

Here’s the 5/1/19 Bloomberg story, “Central Banks Are Ditching the Dollar for Gold”:

“First-quarter gold purchases by central banks, led by Russia and China, were the highest in six years as countries diversify their assets away from the U.S. dollar.

“Global gold reserves rose 145.5 tons in the first quarter, a 68 percent increase from a year earlier.”

The global de-dollarization and central bank move to gold is one of the most important monetary events of the day.  And yet it is overlooked by the mainstream press and financial establishment in a way that is disappointing but not surprising.


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