Vulnerability of Our System

This very light trading week was kind of a mixed bag. Yes, stocks gained this week. As someone recently wondered, “How can stocks go down when an infinite amount of money is created in order to keep it from falling?” The existing system is so fragile that unless the equity markets stay up, the entire economic system can come crashing down. Yes, the long bond did rise 0.37%, but in general, “stuff”—as measured by gold, silver, and the Rogers Raw Materials Fund—fell. That suggests that at least for this week, the market in general is okay with the status quo. For the most part I suspect most folks simply don’t want to look at the vulnerability of our system. Just think about the happy holiday season. “Don’t worry, be happy” is a preferred Wall St. refrain.

On November 27, economist John Williams, author of “Shadow Stats” and a free-market economist who unlike most in his profession is worth a lot more than his salt, provided the following bullet points regarding the current status of our economy:

  • An Unfolding, Deepening Recession
  • Upside Revision to Third-Quarter Gross Domestic Product, from 1.9% to 2.1%, Reflected No More Than an Involuntary Build-Up in Unsold Inventories
  • Net of Inventory Change, Third-Quarter Final Sales Declined Minimally
  • Second-Quarter Gross Domestic Income, Theoretical GDP Equivalent, Revised Down to 0.9% from 1.8% Annualized Real Growth
  • October 2019 Real New Orders for Durable Goods, Ex-Commercial Aircraft, Continued to Plunge, Despite Major Downside Revisions to Prior Months
  • October CASS Freight Index Dropped Year-to-Year for the 11th Straight Month; Indicating a Deepening Downturn and Risks of a Fourth-Quarter GDP Contraction
  • With the FOMC-Proclaimed Sustainable Moderate Expansion Evaporating, Expectations Should Shift in Favor of a More-Accommodative Fed

I can’t see anything in John’s predictions that are bearish for gold. Can you?

About Jay Taylor

Jay Taylor is editor of J Taylor's Gold, Energy & Tech Stocks newsletter. His interest in the role gold has played in U.S. monetary history led him to research gold and into analyzing and investing in junior gold shares. Currently he also hosts his own one-hour weekly radio show Turning Hard Times Into Good Times,” which features high profile guests who discuss leading economic issues of our day. The show also discusses investment opportunities primarily in the precious metals mining sector. He has been a guest on CNBC, Fox, Bloomberg and BNN and many mining conferences.