“The legacy of negative interest rates. If I pay you to hold my money, I am declaring my money unsound. The gold price agrees.”
— Chris Carolan, @spiralcal
The fact that investing in gold doesn’t pay interest has been a strong argument against the Midas metal for ages. But the spreading of calamitous negative yields, as sovereign nations apply beggar-thy-neighbor policies to push on a string and debase their currencies in hopes of spurring slowing economies, sparked gold to reach 6-year highs earlier in the week.
We shall see if there are any winners in the race to the bottom. Gold is affirming its historic role as a store of value.
Grizzly Bear snacking on berries, h/t Drew Rush / NatGeo
After an early bounce, tired bulls are on the back foot. Hungry bears are selling. When asked why the market moved up or down on a given day, my dad would answer in his Brooklynese, “Sometimes the bulls gotta get fed and sometimes the bears gotta get fed.”
“What is life but playing with time..?”
— Keith Richards
We’re heading up to LA for a few days to see our ‘kids,” celebrate our 31st Wedding Anniversary, and jam with the Stones!:-)
Their sound is timeless and always great to hear. In my opinion, the old musicians are better than the old athletes; they can still play.
Investing is something done over time. Speculators must be keenly aware of time. Options are wasting assets, whose time decay accelerates over the last few weeks of their life.
In life, time truly flies. We’ll be trying to slow it down a bit over the next few days, before we pick up the scrapings and get back to work.
Best regards and gold rings on ya,
Bullish herd mentality, h/t B. Rich / Hedgeye
“Irrational behavior is, ironically, the most predictable behavior.”
— Chris Carolan, @spiralcal
The human behaviors of buying and selling drive market price movement. Human behavior is often emotional and a herd mentality can kick in.
Market price tends to climb a “Wall of Worry” and slide down a “Slope of Hope.”
You saw it last week, the previous week, and you’re seeing it this week. You’ll likely see it over the weeks ahead, as well.
Geodesic dome, h/t R. Buckminster Fuller Estate and bfi.org
“I’m not trying to imitate nature. I’m trying to find the principles she is using.”
— Buckminster Fuller
Often, patterns of market price movement resemble fractal patterns found in nature.
The thing for traders to keep in mind is that there is never certainty, only probability.
I hope your week gets off to a bright start.
“Point drops in any index, be it the DJIA or the S&P 500, are meaningless. All these ‘3rd largest (point) drop in history’ stories are meant to mislead and scare you. Don’t let them. The only thing that matters is by what percentage did an index or stock decline or advance.”
— Jim O’Shaughnessy, @jposhaughnessy
“If you believe you have a foolproof system, then you have failed to take into consideration the creativity of fools.”
— Frank Abagnale
“For technicians, there’s one thing to remember. If prices are going up, there are more buyers. If prices are going down, there are more sellers.”
— Larry Pesavento
“Real econ risk is if things go wrong, WH doesn’t have a plan & doesn’t have any competent personnel to come up with one. Trump’s econ brain trust consists of a guy who plays an economist on TV, a nutcase the entire (real) econ profession has disowned, & the producer of Lego Batman.”
— Catherine Rampell, @crampell
Obvious Man, from Wiley Miller’s Non Sequitur comic strip h/t gocomics.com, Andrews McMeel Publishing
“This is the greatest non sequitur in finance.”
— Jim Grant, editor of Grant’s Interest Rate Observer
The venerable Mr. Grant is referring to bonds priced to yield less than zero.
Deutsche Bank data shows negative yielding debt has topped $15 trillion, representing 25% of all outstanding bonds.
Negative interest rates are not good. They reflect and forecast trouble. They have serious consequences for investors and sovereign nations.
Who would buy negative yielding bonds? See the Greater Fool Theory.
Don’t be a fool and don’t be cruel. Spread some kindness today.