Grant Williams Presentation

Great video on some of the current economics that are not sustainable. You should definitely give this a watch.  If you want to skip to the gold section, it starts at 33:30 or so.

Nightly Commentary - May 31, 2013

Certainly an interesting in the markets today. Taking a look at the HUI index, it looks like the trade today was to sell the dollar and buy gold stocks. It will be interesting to see how we end the month. It looks like the gold stocks may have potentially bottomed. 

Investors are currently very bullish on the US economy which means people are buying the dollar. However, the day had a big reversal. 

Gold was up 22.50 today and still has a long way to go. The trade as mentioned, seemed to be selling the dollar and buying gold and gold mining stocks. 

One other thing to note is that the COMEX short positions for gold is incredibly high. There could be some short covering coming in soon which will be quite a move if this were to happen. It will be very important to see how gold ends but it did break through $1400 and now we are at some key levels. Tomorrow will definitely be interesting to see how the month ends. 

Quantiative Easing Will Continue

I've been reading lots of financial articles online in the mainstream media about the federal reserve eventually tapering off QE. If you dont know what QE is, essentially they are printing money to buy government bonds to keep low interest rates for the U.S. government.

Now this is virtually impossible, given that the federal reserve is buying up a large portion of all treasuries. The real question is, would you loan the U.S. government money for 10 years earning about 2%?  I doubt it, I mean inflation is going to be much higher than that given that Bernanke wants to continue to print money. Nobody would be dumb enough to do that.

The media has not really been talking about the U.S. debt. A majority of the U.S. debt is in treasuries which is short term debt. They are basically on a adjustable rate mortgage and when interest rises (its practically a guarantee it will happen), the question is, what will the federal reserve do?  Will they print money to buy up all the bonds? the correct thing to do would be to let it rise and the U.S. would have to go austerity, but that would be highly unlikely. Can you imagine the events that happened in Europe happening in the United States?  There are 47.6 million people on food stamps, imagine if these people were not able to continue to receive these benefits.

With the media saying that the U.S. economy is on the upswing, once these banks with all their excess reserves, begin to lend money out to small business, that is when you will see the velocity of money begin to increase. Currently, banks are not lending money out and because of this, we have not seen inflation increase. Once this happens, you will see consumers begin to bid up prices and this is when it really gets interesting.

Doctor declines all forms of health insurance. Slashes prices by 50%!

I thought this was a fairly interesting article and this is a prime example of how free markets can reform healthcare in the United States and across the world.

A doctor decided to decline all forms of insurance for patients and instead decides to accept cash only. By doing this, he has eliminated unnecessary overhead and is able to provide BETTER service and slash prices in half.

"Before, Ciampi charged $160 for an office visit with an existing patient facing one or more complicated health problems. Now, he charges $75.

Patients with an earache or strep throat can spend $300 at their local hospital emergency room, or promptly get an appointment at his office and pay $50, he said. Ciampi collects payment at the end of the visit, freeing him of the time and costs associated with sending bills, he said. That time is crucial to Ciampi. When his patients come to his office, they see him, not a physician’s assistant or a nurse practitioner, he said.

“If more doctors were able to do this, that would be real health care reform,” he said. “That’s when we’d see the cost of medicine truly go down.”

Link

Why Markets Have been Going Up

Contrary to what the media has been saying about the markets and how they are recovering based on strong fundamentals of the U.S. economy. If you take a look at this chart, this shows the monetary base which is the amount of currency circulating in the economy.

Pretty simple, with more money or currency floating around the world, naturally, prices will be going up. The extra money happens to be going into the stock market and even housing prices in the U.S.

Gold Chart

Took a look at the weekly gold chart today. It looks to me that gold is now finally oversold. The media seems to be blasting it nonstop left and right. Taking a look at the RSI (relative strength index), it looks to me that gold will have a reversal sometime in the next week or two.

Currently, there is overhead resistance at $1400, and the next one would be around $1430 if we do push through $1400.

On the downside, the key levels would be at $1350 and $1325.

As for my long term outlook, I am very bullish on the gold market. The only time I will be turning bearish is when we have positive real interest rates and when central banks stop their QE (quantitative easing).

For those not familiar with what QE is, essentially, central banks are creating money out of thin air and purchasing assets. Typically they purchase their own government bonds, however, the federal reserve is currently purchasing mortgage back securities as well, which has increased demand for housing in the United States. The Fed is currently printing about $80 or $85 billion a month and the Japanese are planning to double their money supply.

All this can only be bullish for gold and silver in the long run.

Welcome

Welcome to my financial blog. I intend to update this blog with financial news and anything that I feel is relevant, whether it would be political or anything random. I will also post financial terms I learn along the way including calculations in finance and accounting.

I have very libertarian views and I will also try my best to analyze the markets and any companies I am currently looking at. I am very bullish on commodities in the long run and I have been influenced by the likes of Ron Paul, Peter Schiff, Jim Rogers, Jim Rickards, and many more people that I am sure that I have missed.

Hopefully you all follow this blog and my journey along the way.