Heavy Meddle

As we go to press, gold is in the $1,490 per ounce range, despite the strong dollar. 

Historically, the higher the dollar, the lower the price of gold.  

Gold is dollar-based.  As the dollar strengthens, other currencies weaken against it. 

With gold trading at this current level, despite a strong dollar, it is uncommon… it’s a signal of its strength. 

Gold has not fallen below our $1,450 per ounce mark.  Should it fall below that mark, we forecast it will drop further to $1,390, which we also forecast will be its bottom range.  

And it should be noted that with the aggressive cheap money pumping schemes in the repo markets and central banks lowering interest rates, money junkies are back in the in the stock market casino placing bets that equities will keep rising. 

Crypto Future

Bitcoin bounced back from its five-month low after Mark Zuckerberg testified before Congress to get approval from U.S. regulators for Facebook’s “Libra cryptocurrency” project. 

Some of Libra’s corporate backers, such as Visa and PayPal, dropped out after each committed to $10 million. 

France and Germany already rejected Libra, and now some 21 major American corporate backers bowed out after pressure from the government. 

Unlike Bitcoin, which is decentralized, has no leadership, and competes against other cryptocurrencies, Libra would compete among traditional currency, which could devalue the dollar. 

TREND FORECAST: We maintain our forecast that the future of cryptocurrencies will continue to expand as world currencies and customer payment go digital. 

Further, as central banks continue to lower interest rates, nations go deeper into debt and their currencies devalue.  Those seeking safer haven assets who are not interested in investing in gold and silver will go crypto.

And we maintain our gold forecast of rising to $2,000 per ounce within a year… and possibly higher depending on rising socioeconomic instability and geopolitical disturbances across the globe. 

New Market Highs – Low Holiday Hopes

The tech sector closed out at a record high on Friday, climbing more than one percent. 

On 27 October, despite the measure of hiring by U.S. companies falling to a seven-year low and fewer employers raising pay, the S&P 500 jumped to a record high on better-than-expected earnings and the never-ending promise of a trade deal between the U.S. and China.

Notably, Amazon reported last Thursday it had $70 billion in sales in the third quarter, up 24 percent from a year ago. Profit was reported as $2.1 billion, a 28 percent reduction from last year. 

It was Amazon’s first decline in profit since mid-2017.

eBay’s quarterly profit dropped 57 percent this quarter to $310 million (37 cents a share). After adjustments, profits grew in one year from 56 cents to 67 cents a share.

Most importantly, both eBay and Amazon dimmed financial estimates for fourth quarter revenue based on projections for weaker holiday sales.

In fact, Walmart Inc. will ring in Christmas this week with promotions, thus extending the holiday sales season. 

PUBLISHER’S NOTE: As we have long noted, Americans are deep in debt and short on cash. Forty percent of adults can’t cover a $400 emergency expense, and median household income is at 1999 levels.

With 51 percent of working Americans earning less than $30,000 a year and 40 percent making less than $20,000 annually, the dim holiday prospects are in the numbers. 

On the high end, according to the Federal Reserve, the top one percent of U.S. households had an aggregate net worth of $35 trillion at the end of June… 32 percent of the total, up from 27 percent since the end of 2009’s Great Recession.

And the top 10 percent owns 69 percent of American wealth at $74 trillion. They hold 72 percent of all financial assets, including a record 86 percent of corporate equities and mutual funds, plus a record 68 percent of the money in bank accounts.

As noted in this issue’s “Geopolitical Roundup,” the growing wealth gap will be a major factor in the “Taking to the Streets” trend that has begun sweeping the globe. 

Dwindling Purchase Orders

A private survey of business activity showed the slowest growth in a decade, which is expected to continue in upcoming months.

Businesses are not purchasing durable goods, such as transportation equipment – a trend also mirrored in Japan and the eurozone. 

Durable goods purchases decreased 1.1 percent in September from August. In this same period, autos and parts fell 1.6 percent, and aircraft orders declined 11.8 percent.

New purchases for nondefense goods dropped 7.5 percent from September to August.

The Purchasing Managers Index (PMI) increased from 51 in September to 51.2 in October.  A reading above 50 shows growth in the business sector. Below 50 shows contraction, thus there was no substantial growth.

PUBLISHER’S NOTE: While equity markets bounce back, general sentiment among economists sinks lower. 

Despite the central banks injecting massive amounts of monetary methadone into the economic system, a new Reuter’s poll of 500 economists forecasts that a steeper decline in global economic growth is more likely than an expansive recovery.

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