The Mess That Greenspan Made - Part 21

Gold snapped a three-week losing streak and saw solid gains last week as a result of renewed safe haven demand, but silver registered losses for the fourth straight week, following the broad commodity market lower. A stronger U.S. dollar has been a key factor in limiting recent gold price gains and, with the eurozone economy now stumbling badly, the strong inverse correlation between the two could continue to hold metal prices in check.

GoldU.S. stocks and bonds both rose last week and this too limited the upside for gold while the latest ETF flows indicate U.S. investors may again be souring on the metal, due in part to its inability to break free of its recent trading range.

hysical demand in Asia remains weak during this seasonally slow time of the year, but with prices still relatively low, gold buying in India and China should pick up in the weeks ahead.

Geopolitical tensions between Russia and the West over Ukraine along with ongoing violence in Iraq and Gaza continue to be about the only supporting factors for precious metals. Absent this safe haven demand, it is reasonable to think that gold and silver prices could be much lower since global demand has been lacking, however, none of these conflicts appear headed toward long-term resolutions and should continue to lend support…

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Monday Morning Links

Embattled PM Nouri Maliki attacks president – BBC
Kerry Pulls U.S. Support for Maliki as Militants Gain – Bloomberg
The US bombing its own guns sums up American failure in Iraq – Vox
Ukraine’s forces say close to taking rebel-held Donetsk – Reuters
US Sanctions on Russia May Sink the Dollar – Ron Paul Institute
Fed’s Fischer says QE has been “largely successful” – ForexLive
How the Federal Reserve Should Measure Inflation – Bloomberg
How to save a million bucks for retirement – USA Today
Job Market Tilts Toward Workers, Virtuous Cycle Begins – Bloomberg
The Savings and Loan Debacle: Twenty-Five Years Later – Mises
Why the ‘Libertarian Moment’ Is an Illusion – The Atlantic
The Wall St. Hype Machine Breaks Down – Wolf Street
Contradictions – Alhambra Partners

Easing of Ukraine tensions helps drive stocks – AP
Is it time for Wall St. to issue a correction? – CNN/Money
Is now the time investors should move to cash? – CNBC
Low, Expanding Risk Premiums Drive Abrupt Market Losses – Hussman Funds
The guys who get you out will never get you back in – Reformed Broker
Junk bond bubble bursting sounds warning for UK shares – Telegraph
Gold down as Ukraine tensions ease, European shares rise – Reuters
“World Insecurity” May Have “Positive Impact On Gold” – Ex BOE Mervyn King – GoldCore
Gartman reckons end-game for gold price management could be nigh – Mineweb
Chinese Gold Demand 1094 MT YTD, Silver Premium At Record High – BullionStreet
Hedge Funds Are Digging Gold Miners – WSJ

Consumers at pivot point as U.S. economy steams ahead – MarketWatch
The World is in Flames, but the U.S. Economy Is Catching Fire – Fiscal Times
For largest U.S. companies, jobs growth has lagged profits, revenues – Reuters
Loose policies from Beijing help pump the credit bubble – Sober Look
German Economy Backbone Bending From Lost Russia Sales – Bloomberg
Europe’s fragile economy put to test as Ukraine, Iraq sour mood – Reuters
Italian growth: Is this a new recession or a six-year decline? – voxeu
Why first time buyers are piling into hot UK housing market – Telegraph
Singapore private home resale prices fall to 21-month low – CNA
Stock Market Starting To Price In The Next Housing Downturn – Seeking Alpha
Americans Are Still Very Wary of Housing Markets – Realty Biz
Inflation in the Great Recession and New Keynesian Models – NY Fed
Fed Exit Fears Overstated, S&P Economist Says – WSJ


The Weekend Update is Now Available

The latest issue of the Iacono Research Weekend Update has been posted to the website and is now available for subscribers here.

There will be no changes to the model portfolio or the buy ratings this week, but the Chinese economy and stock market are examined and the latest round of covered call sales are addressed in the following discussion topics:

The executive summary is as follows:

Renewed safe haven demand as a result of heightened geopolitical tensions in Ukraine and Iraq sent the price of Treasuries and gold higher while risk assets such as U.S. stocks moved lower, but the latter rebounded late in the week and just about every asset class ended higher. The Chinese economy continues to improve, as does the U.S. economy, and the trade-weighted dollar moved higher.

Commodity markets continue to be adversely affected by a stronger U.S. currency but related shares moved higher with broad equity markets. Silver was one of the week’s few losers but mining stocks added to their recent gains and the model portfolio rose 0.6 percent, now up 8.8 percent for the year.

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The U.S. is the world leader in prison population and a close second in prison population rate. How we got there is shown below from the animated graphic in this story at Vox.

We currently lead the world with over 2 million people incarcerated (many for drug crimes as part of the wildly unsuccessful “War on Drugs”) and our prison population rate is exceeded by just one country – the Republic of Seychelle (no, never heard of it before either).

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