Have you ever noticed that whenever gold starts to break out – as it is trying to now – the mass media suddenly runs stories on deflation? The Wall Street Journal offers us a good example today. I’m not saying there’s a conspiracy – it’s just awfully funny.
Global Deflation Pandemic Begins to Brew
In congressional testimony this week, Federal Reserve Chairman Ben Bernanke gave no indication that he planned to turn off the central bank’s liquidity spigots anytime soon.
Critics howled that the Fed is risking runaway inflation. More immediately, however, the threat of deflation seems a bigger concern — not just in the U.S., but also in economies around the world.
Meanwhile, holdings at the world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust GLD, were unchanged from the previous business day at 1,086.61 tonnes. Holdings have declined 47.42 tonnes or 4.2 percent since hitting a record of 1,134.03 tonnes on June 1.
Notice the headline that Reuters puts on this chart, though …
Source on chart: Thompson/Reuters/WSJ
Funny, looking at that chart, I’d say investors who buy gold in the GLD are probably resting after a recent buying binge, and the next leg up could be extreme. Alternately, the GLD has been getting some bad press from a lot of gold bugs recently, so maybe more people, companies and funds are switching out of the GLD and buying physical bullion.
IN OTHER NEWS
The excellent John Schloegel writes about “The Bi-Polar Market.”
Following up on Wednesday’s link to the story that US Savings Rate Hits 6.9%, Highest In 15 Years, now we learn from a Gallup poll that One-Third of Americans Still Set on Spending Less.
There are some nifty charts. I recommend you click through and read the article.
Will this new thriftiness change? Almost 25% of all mortgages are upside down. I’d say it’s not going to change soon.
Ten Myths about Subprime Mortgages
Subprime mortgages have been getting a lot of attention in the United States since 2000, when the number of subprime loans being originated and refinanced shot up rapidly. The attention intensified in 2007, when defaults on subprime loans began to skyrocket. Researchers, policymakers, and the public have tried to identify the factors that explained these defaults.
Unfortunately, many of the most popular explanations that have emerged for the subprime crisis are, to a large extent, myths. On close inspection, these explanations are not supported by empirical research.
It is Paulson, Bernanke and Bush who showed a colossal lack of judgment. It is the management of Bear Stearns, AIG, Lehman, Merrill Lynch, Fannie Mae and Freddie Mac who showed a colossal lack of judgment. It is Alan Greenspan and all the member of the Federal Reserve who showed a colossal lack of judgment. It is most of Congress that showed a colossal lack of judgment. It is Tim Geithner and President Obama who continue to show a colossal lack of judgment. And it is the American taxpayer who will have to pay the tab for the colossal lack of judgment shown by all of them.
S&P Commits Professional Suicide With Ratings Round-Trip
Rare? Medium Rare? Medium? Well Done? S&P? Indeed, as the last peg in the gradation of burnt to a crisp, S&P smells completely done. As in there isn’t even left a shadow of a doubt that all S&P does is pander to the solicitations of whatever few remaining clients it may have, or, as the case may be, the U.S. government. Any credibility S&P, which one would be excused for confusing with Sycophantic & Pathetic, may have tried to salvage over the past 6 months has been gutted and left to dry after this most recent fiasco, which is the final straw on the McGraw-Hill subsidiary’s expedited route to the NRSRO utterly discredited trash heap.
Sprott: It’s the REAL Economy, Stupid
Anything that starts with “We are now in the early stages of a depression” is a must read. Hat-tip Zero Hedge.
The Obama Administration Continues the Bush-Era Policy of Screwing the Public Yet Again
Okay, that’s not the headline of this Bloomberg article, but it should be. The first paragraph gives you the gist:
State and local governments, forced to close budget gaps by firing workers and shutting schools, may pay at least $4.2 billion more in interest than companies with similar credit ratings on Barack Obama’s Build America Bonds.
And guess who benefits the most? Goldman Sachs. Of course!
Speaking of which, Paul Farrell at Marketwatch has a great article about Hank Paulson’s hard work on behalf of Goldman Sachs … when he was Treasury Secretary. It’s a must-read.
Have a good weekend.
Related Posts
- Friday Morning Roundup (01/23/09)
- Friday News Roundup — The Foreclosure Bomb (08/07/09)
- Monday News Roundup — Gold, Agriculture, Oil and More (01/18/10)
- Friday Gold and Dollar Charts (09/18/09)
- Tuesday News Roundup (06/24/08)
{ 1 comment… read it below or add one }
Hey Sean,
Thanks for all the research you provide us. It is very helpful.
I thought it was interesting that Greenlight Financial took physical delivery on all of it’s gold holdings. Gold is also the largest portion of their portfolio at this time. As I understand it, this is a pretty odd move for this major hedge fund. I also read about an insurance company that is doing the same. I can’t remember what company though.
I am curious of what this is saying to you. Are they concerned that GLD does not have the gold to back up the paper? Are they afraid that one day in the near future it will become very hard if not impossible to get physical gold? Your thoughts?
One side question related to the equities. Are you expecting a major pull back with a possible retest of March lows? Seems like everyone is screaming we are back in a bull market. I find that very hard to believe. But this market has shocked me so far. Your input is appreciated.
Stacy