ALL THINGS BIG AND SMALL 2.0

Gold is priced in USD. But the chart below shows gold price  rise is  not just against the USD but against all major fiat currencies.. In other words, paper money which monetary authorities can print with a tap on the computer keyboard is getting increasingly worthless. Therefore its a good reason to have gold as a hedge against inflation and as a safe store of value. The chart below shows gold has risen most against the INR, PHP and IDR.  I don't have sufficient knowledege of the reasons for the structural weaknesses of the Indian, Indonesian and Philippines economy but  this new era of (1) extremely high sovereign debt levels in the US, EU and Japan (2) war in the middle east leading to crude oil and natural gas shortages leading to high prices in energy and  commodities. (3) a deeply polarized and unpredictable USA (4) natural disasters from a Super El Nino.  All these factors make gold (and silver, its much cheaper but more volatile  sister preciou...

 Until this whole mess is sorted out: Fed FOMC 28 Oct, US mid-term elections 3 Nov, US-Iran Hormuz, Houthis-Saudi Arabia; the level of uncertainty is too high for any meaningful analysis amid the daily volatility. But one positive signal for gold/silver is that even though inflation is raging, there are signs of investors expecting it to be quickly followed by a recession- which is good for gold/and silver as the Fed will do all it can to avoid or mitigate a recession by its usual measures of printing money and maybe bailing out the too-big-to-fail entities like the big banks- and this category of entities now include the debt-ridden the AI, semiconductor and data centre companies.    Gold/Silver prices are not correlated with nominal interest rates but real interest rates which is nominal rates minus inflation, a.k.a. real yields. In the chart below, the left 2 panels show the 10-year real yields and the right 2 panels show the 5-year real yield. Real yields are neg...

 #Click on animated GIF of Gold monte carlo GARCH GBDT simulation forecast.  • On 16 Sep, the Fed raised the Fed Funds rate by 25 basis points from 3.75% to 4.00%.  • On 18 Sep, the BOJ did the same, raising its uncollateralized overnight interest rate from 1.00% to 1.25%.  • Bond yields rose with 10-year Treasuries breaching 5% and 30-year breaching 5.38 %  • The USD saw a modest rally with the DXY index in the 99 to 100 range • Oil prices rose with WTI reaching US$112 for a brief moment as US/Iran/Yemen Houthis tensions were exacerbated But Gold and Silver did not follow the rules of Economics and Finance which states that gold price should be falling. Their prices initially fell to a yearly low on Mon, Tue, Wed before sharply recovering on Thu, Fri. See Table below: The five main reasons for this unusual behaviour: • Investors are now not concerned that holding gold does not pay interest, but are viewing it as a hedge against inflation and global ...