Tag Archives: newsletter

Many economists argue that the key challenge is that of insufficient aggregate demand.  That is why world growth is slow.  Hobbled with debt, households have pulled back.  Business investment is weak.  Government dissavings has been offset by household and business savings.  The solution offered by some economists is a large public investment program.  The G20 encouraged members not to rely on monetary policy, which even some central bankers are concerned, has reached a point of...

During a period in which the zero bound no longer is the floor of interest rates, and many central banks continue to ease policy,  we have been watching gold a bit closer.   In early January, we noted that the technical pattern warned of breakout.  Our first objective was $1110-$1135.  In early February, we updated our view with gold trading near $1150. The charts still looked constructive; we suggested a new target near $1200.   The increasingly precious metal rose to almost $1263.5o on...

In a recent article by Kessler Companies (hat tip Zerohedge) they correctly point out that inflation, as measured by the consumer price index, have a tendency to accelerate as the US economy moves into a recession. Contrary to popular belief, the beginning of a recession is not deflationary but the exact opposite. As can be seen from the chart, consumer prices do indeed move higher into recessions as represented by the shaded areas. Why? The most obvious explanation is simply that the...

In a recent article by Kessler Companies (hat tip Zerohedge) they correctly point out that inflation, as measured by the consumer price index, have a tendency to accelerate as the US economy moves into a recession. Contrary to popular belief, the beginning of a recession is not deflationary but the exact opposite. As can be seen from the chart, consumer prices do indeed move higher into recessions as represented by the shaded areas. Why? The most obvious explanation is simply that the...

What is the issue?    The UK has long had a strained relationship with the EU and has never been comfortable with the ever increasing drive for greater integration and harmonization of rules and regulations coming from Brussels.  As the EU has grown, more decisions are made by a qualified majority.  Previously decision required unanimity.  The shift weakens the power of a UK veto.    The UK Prime Minister has called for a national referendum on continued UK membership of the EU.  When...

What is the issue?    The UK has long had a strained relationship with the EU and has never been comfortable with the ever increasing drive for greater integration and harmonization of rules and regulations coming from Brussels.  As the EU has grown, more decisions are made by a qualified majority.  Previously decision required unanimity.  The shift weakens the power of a UK veto.    The UK Prime Minister has called for a national referendum on continued UK membership of the EU.  When...

EM ended last week on a soft note, due to a variety of both external and internal factors.  Firm US data continue to support our call for resumed Fed tightening, and this gave the dollar a bit of a bid.  With the dollar gaining against the majors, this spilled over into generalized dollar gains vs. EM as well.  Weak data out of China this week poses a risk to EM, though we suspect that how China markets react will set the tone for the wider EM.Idiosyncratic EM risk remains in play too. ...

EM ended last week on a soft note, due to a variety of both external and internal factors.  Firm US data continue to support our call for resumed Fed tightening, and this gave the dollar a bit of a bid.  With the dollar gaining against the majors, this spilled over into generalized dollar gains vs. EM as well.  Weak data out of China this week poses a risk to EM, though we suspect that how China markets react will set the tone for the wider EM.Idiosyncratic EM risk remains in play too. ...

The gold to silver ratio moved up very sharply this week, +4.2%. How did this happen? It was not because of a move in the price of gold, which barely budged this week. It was due entirely to silver being repriced 66 cents lower. This ratio is now 83.2. It takes 83.2 ounces of silver to buy an ounce of gold. Conversely, it takes 1/83.2oz (about 0.37 grams) of gold to buy an ounce of silver. This ratio is now within a hair’s breadth of breaking out past the high set on Oct 17, 2008. See the...

The gold to silver ratio moved up very sharply this week, +4.2%. How did this happen? It was not because of a move in the price of gold, which barely budged this week. It was due entirely to silver being repriced 66 cents lower. This ratio is now 83.2. It takes 83.2 ounces of silver to buy an ounce of gold. Conversely, it takes 1/83.2oz (about 0.37 grams) of gold to buy an ounce of silver. This ratio is now within a hair’s breadth of breaking out past the high set on Oct 17, 2008. See the...