Tag Archives: inflation

The Election in Greece: Syriza Party’s Stunning Win

It was to be a grand thing, this Euro. It was the water that would raise all the boats of each European country and for 10 years it did just that. The headquarters was set up in Brussels. A troika would rule. It was the European Commission, The European Central Bank (ECB) and the International Monetary Fund (IMF). Each country could issue its own bonds. Interest rates fluctuated based on the relative economic strength of each country. Germany with its strong industrial capacity and exports rose to the top. The Southern countries of Greece, Spain, Portugal and Italy lacked the exports. Instead they relied on the money from their bonds to put people to work in the public sector. What no one realized at the time was that all the new debt being issued would eventually need to be repaid in Euros, not their old currency. This inflated the debt.Continue Reading

Investors Seek the Fed’s Guidance on the Economy

What do the latest Fed minutes tell us? Since the recession began, the Fed has set two goals for the economy. Perhaps the foremost objective is to maintain inflation at or near the 2% level. The one crisis point would be a drop in inflation below the flat line. This would indicate that the economy is teetering on the brink of recession. The entire quantitative easing program is aimed at keeping the economy growing. We are seeing the effects of stagnation in Europe with the introduction of negative interest rates to stimulate the economy. So far, the US economy has been expanding, albeit very slowly. The latest 2nd quarter GDP numbers came in better than expected at 4.6%. The media has jumped on this number and is prodding the Fed to raise interest rates. However, all is not that great. The 1st quarter GDP actually fell 2.1% after a brutally cold winter in the Northeast. When taken together these numbers indicate a moderate expansion in the economy. According the Fed’s statistics, inflation in August was at 1.7%. However, this number does not include food, energy and shelter.Continue Reading

Where is the Price of Gold Headed?

The markets have turned in a strange performance over the past several weeks. The numbers on the economy came in weaker than expected with GDP down -.1% in April. Unlike other recoveries, spending growth has decelerated. Each year it takes a step down. This is not the way it should be. In all past recoveries, spending growth increased as the economy grew. Discretionary spending was up but 90% of that was due to inflation, especially in food and energy. Consumers are being forced to spend more. Our US deficit is running at about $17.3 trillion. The US Federal Reserve’s Balance Sheet has grown to $4.9 trillion. Surprisingly, the US stock market made a new all time high in the Dow and S & P. Gold, on the other hand, fell to its lowest level in the past 15 weeks.Continue Reading

Inflation is Rising and Government Can’t Stop It.

You are standing in line at the checkout of your local supermarket. The cashier tallies up your tab and you are shocked at how much it is. It’s way more than last year and even more than last month. It dug a big hole in your weekly paycheck. On the way home you stop to fill your gas tank only to find that the price of gas has gone up 15 cents a gallon since your last fill up. You arrive home and check your mail and find that your landlord just raised the rent. These events are not random. They are happening all across America.Continue Reading

The Big Question for Investors-Inflation or Deflation

Investors are scratching their heads asking: “What in the world is going on? What is real? What should I believe?” There seems to be no consistency. On the one hand we have the Dow Jones Industrial averages making new highs, yet unemployment is not coming down enough and the housing sector while ticking up a bit it still has not regained its pre- recession values. Fully one third of homeowners still have negative equity.Continue Reading

Gold-The Long View

We always have considerable news and information about gold. Since its spectacular rise from its 2002 lows, gold has captured the imagination of investors worldwide. Unlike other assets gold has its own peculiar characteristics. Some of these are quite mysterious, yet when understood; make investing in gold more predictable.Continue Reading

Why the Fed’s Money Printing Has Not Lead to Higher Inflation

Over the past four years the US Federal Reserve has provided the economy with more than $3 Trillion. With all that money printing the logical conclusion is that we should be having super high inflation. But this is not happening. Our inflation numbers are running about 2% for core inflation (food and energy excluded.) The recent mini crash in gold prices is also confirming low inflation expectations. Gold prices usually rise during periods of high inflation as they did in the late 1970s following the jump in oil prices. All goods and services followed oil higher and set in motion a time of runaway inflation.Continue Reading

Basics of Precious Metals Investing

Should you invest in precious metals? The answer is probably yes, but before you do so, here are some basics about this sector.Continue Reading