If the focus is on growth, then that is exactly the reason we need to keep China's growth up so that we are able to sell them more goods. That's the only possibility we may thrive from now assuming another industry/technology revolution is not coming soon. No other thing would turn things around(get the growth/jobs# up) for US at this moment.
well, health care cost surge is due to the Obama care, not because fed did the QE. Look at housing cost, gas cost, consumer goods prices, none higher than 2006.
After the devaluation of the Chinese currency, people are worried," said Rajan Venkatesh, head of India bullion at ScotiaMocatta, part of Canada's Bank of Nova Scotia. "They are afraid of a currency war. They are going back to gold."
Prices could rise to $1,230 to $1,240 within a month, he said on the sidelines of the International Gold Convention in the city of Panaji in western Goa state.
This has to be good for GDX !! Today's article.
Sentiment: Strong Buy
The last go around the fed bought government debt and Fannie and Freddie home mortgages. that propped up the housing market but it also created a situation where capital was misapplied toward housing because the mortgage rates were manipulated below free market rates. Look at home builders and related housing businesses, they are in the tank because all that misapplied debt brought forward housing related economic activity at the expense of future activity and that future is now.
Buying federal debt only supported consumption because the debt is financing various forms of government handouts or consumption. It is never wise to borrow for consumption as that capital (read wealth) is consumed and not put to productive use to pay back the debt and interest. As stated before, the debt is bring forward consuming economic activity at the expense of future activity. When the borrowing stops or even slows, we will revert back to sustainable economic activity and that is a lot less than the current level. The government is spiraling down a debt rat hole.
You are right if you believe the government data that living costs are not going up too much, but the numbers are cooked. For example, health care is some 20% of our GDP, yet less than ten percent of inflation calculations and healthcare is rising at 3 or four time the inflation rate. We are in for a severe econ0mic slow down and the policies of the federal reserve have not necessarily been the total cause, but they have exacerbated the pain required to get us out of the current debt mess.
You reference the text book did not actually echo reality. That is so correct, we have had economic growth that has not kept up with population expansion when we were supposed to grow the economy robustly with all this government interference and manipulation. The reality is about to present itself right in front of us and it is going to be a very painful economic slow down. You can expect the blame game to commence full tilt.
The reality is the equity boost in people's 401k account are not used for exchange of goods and therefore there is no fear on inflation at all.
I don't think so. The living cost has not surged since recession even with so much money printed. There is no inflation resulted. Besides, only people's 401k account got boosted. That's all the positives we see and the side effect according to textbook did not actually echo the reality.
two wrongs do not make a right. Excessive printing by both countries no matter the mechanism is wrong. Ultimately it is a wealth transfer from the holders of the currency to the recipients of the printed money. That is why the 1% in America made out and the middle class savers got hosed.
I know it is hard to swallow especially in an election year, but that is the reality US has to face and play with it with a cooperative policy.
Chinese government would need more currency to stabilize its ailing stock market. This is completely following Fed's QE tactics. Fed was printing money to buy Treasury bonds while Chinese government prints money to buy back state-own corporations/banks stocks. They are virtually equal by nature. The Yuan devaluation is necessary just like Fed's QE. It will also directly help China's exports as well. JPM researchers said China needs to further devaluate Yuan for about 10%. So a good strategy for the Chinese would be to (just like fed) announce its plan for consistent devaluation contingent on a monthly review basis and its purpose to use the funds to stablize the stock market. This would provide the impact of printing trillion of Yuan right away while without actually printing it now. This QE will certainly boost gold price and gold miners. I believe that would be the direction the Chinese government is going if it is accepted by US and other countries. All US needs is stop raising rates again. If China slow down or crash, that would be bigger killer to US market than Yuan Valuation itself.
Yep. it is a gamble at this point. When volatility is this high, every holding is a gamble. If you don't want to gamble, then just stay on your behind. When event comes, it will trigger more than a one day surge, you may just follow the momentum. If you already hold it, sell it before next Tuesday if nothing stimulating happening in China.
The gdx had a big dent on July, and today. it is at a critical point of either up or down. 50-50 is nothing said. Would like someone has more insight to point to a clear direction. Either it would more likely go to 17 or 14?
it is due to emerging market funds selloff. have to wait till emerging market stabilized or another big event like China devalue Yuan again to have this GDX pumped. Positive macro, everyone is leaning toward easing than tightening again. Negative macro, every other commodity not named gold is nose-diving due to supply-demand extreme imbalance. So, right now it is a 50-50 for GDX to go up again..
Partially. Options overbought make the call holders to get panic easily in order to lock up their profits before it is vaporized.
However, the broader market selloff is the initializer of all this. Some emerging market funds were liquicated heavily that also have gold miner stocks. which caused the selloff from the beginning, and then in turn triggerred the call options selloff.
GDX is not linear tie to GLD, but they loose coupled. Why GDX crash when GLD is up. People are paying more for gold, and gdx should go up also, this need some time to happen.
Soros broke the british pound in 1992 !
look it up on wiki !
GDX is getting ready to Launch and the hedge fund shorts are going to get creamed and go bankrupt !