Has the Wall Street finally
given up on the economic recovery?
During the period 2008 till now, the US Central Bank framed economic
policies that systematically channelized the funds of the US economy towards
the stock markets by creating an environment of:
a) zero or near zero interest rates
b) more than adequate liquidity in the entire US
and global economy focused towards creation of capital and generation of
employment (knowing very well that the recovery of the US economy is dependent
upon the general overall progress and recovery of the global economy)
c) restoration of consumer confidence in the
economy for putting consumer spending back on track
d) inflation target of 2% (which could never be
achieved – perhaps the only indicator which indicates that the anomalies in the
US market still exist and the growth has occurred in a highly skewed manner
only in select geographical pockets and the distribution of the benefits of
such growth are equally skewed and uneven)
It was beneficial for the largest economy of the world (in terms of
consumption and GDP) to have a strong domestic currency, i.e., USD, to have low
cost imports for the consumers to get out of the depression spiral as soon as
possible. That perhaps explains for the stronger dollar against majority of the
global currencies (Please refer to my blog: What will happen to the US Dollar
after this? http://commoditycurry.blogspot.in/2015/09/what-is-going-to-happen-to-usd-after.html)
The US economy having reached the peak of the (so claimed) recovery
which henceforth seems to unsustainable at the historic rates and with
inflation target not having been met, it now makes sense for the Fed to depreciate
the currency and eventually fall in line with the global secular trend. After
all no economy or central bank can control or influence the world economy or afford to do so for
so long (nearly a decade) with its policies and words.
Gold and Silver
Gold and silver are poised for a
vertical take-off, in the era of beginning of a faltering US economic recovery, zero interest rates nearing an end and a weakening USD.
Here are the charts of Gold and
Silver. My comments are given on the charts
Here is the link to my previous posts/
blogs:
Contact:
The author can be contacted at riskadvisory@outlook.com
Disclaimer:
These extracts from my trading books are for educational purposes only.
Any advice contained therein is provided for the general information of readers
and does not have regard to any particular person's/ corporation’s investment
objectives, financial situation or needs and must not be construed as advice to
buy, sell, hold or otherwise deal with any commodities, currencies, securities
or other investments. Accordingly, no reader should act on the basis of any
information contained therein without first having consulted a suitably
qualified financial advisor.
Well written and well timed.
ReplyDeleteThanks Mr. Vinay Gupta
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