Gold and the Elephant In the Room

We are setting up for a disastrous next year for the markets but the markets don’t sense it yet. The stronger dollar will be retaliated by China soon enough and we have been here before. The Fed just doesn’t seem to get it with their 3 more rate hike talk. And those who trade the markets ignore the fact that this market is built on a foundation of Fed incompetence. When we finally do begin to fall, it will be brutal. I also think it will be fast. That’s why I don’t mind jumping on the first ETFs that turn green on the weekly that are short the market. They are going against the trend but will also lead the reversal. Many have some great charts so don’t be bothered getting stopped out this early in the game. We’ll be back in soon enough.

Gold is getting slammed by the strong dollar too and I know those who have followed my Current Thoughts for awhile know I emphasize this inverse relationship with gold quite often. It should be no surprise to you that gold is lower.

I expect prices to pick up mid-January to June again, one more major dip, then off to the races. There will be plenty of opportunities along the way to buy gold and silver lower, either over the next month or during the dip next year. Remember, this is NOT the deflationary contraction I write about. That’s still to come. This is fluff from the Fed and belief that more debt that comes from the next administration will continue that seemed to work during the last 2 administrations. President Obama called George Bush “unpatriotic” for raising the debt $4 trillion during his tenure. What does that make President Obama? What will it make Trump who wants to spend on infrastructure? Where the hell do these people think money comes from? And why doesn’t anyone talk about the elephant in the room the National Debt which is approaching $20 Trillion? No one talks about the elephant in the room. Donald Trump barely mentioned it in his debate speeches and unlike President Obama going after George Bush on his spending, we never heard President Elect Trump challenge President Obama or Hillary Clinton on this. Does anyone really know what $20 Trillion represents?

Ironically the entire S&P market value is approximately the same number as the U.S. National debt, close to $20 Trillion. The entire top 30 companies that represent the DJIA is worth $5.553 trillion as of today. Do you realize how much work has to be done to decrease this national debt with a Congress and yes, President, left or right, who keeps abusing the printing presses. When the Fed raises rates and we really do start to tick up in the interest payments on the national debt, it won’t be because of a strong economy. Because of the strong dollar, U.S. corporations earnings are going to go down next quarter. The Fed in reality shouldn’t have raised at all but they have a reputation to uphold, a reputation that told us there would be 4 rate increases this year and we had only one. A reputation that tells us we will have 3 rate increases next year. I’ll once again call this a “one and done” which is what I said exactly one year ago.

The Fed is simply clueless. And in case you didn’t know, Total unemployment which counts those who are NOT counted in the national number of 4.6% is 9.3%. No one ever talks about that.

Perhaps this is part of the “Illusion” I write about in my book you should be reading if you haven’t already.

Meanwhile gold is selling at a discount.