Gold Macro

Financial experimentation continued last week with the US S&P 500 share index “levitating” to record highs in all main indices!

On Friday the S&P 500 finished bang on 2500 points, right on the close. Golf Clap.

Yep, no ICBM missiles, nukes, terror, crypto crash or dismal data is going to crash that party.

It’s a pity the same doesn’t happen in Australia! The All Ords here are truly all ordinary, trading mostly between 5750 and 5800 points for about 6 months now. We hope this proves to be a blessing in disguise.

The tug of war between economic fundamentals and the world’s central bankers continues in earnest.

One of this week’s headline themes reads, “Gold falls for the 5th day as investors prefer riskier assets”.

And why wouldn’t they!! The world didn’t end, Trump got the invisible debt ceiling raised and $150 BILLION per month of central bank emergency monetary stimulus is still enough to keep yields under control.

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You’ll be pleased to hear that today’s note is heavy on pictures and light on dribble/rant words.

On the back of the recent US Fed inflation modelling “confusion” (going one way then the other) it’s high time to let the pictures be provocateur!

The “pictures” are a little global focused so we’ll quickly join the dots back to OZ for you and your money before said charts.

Firstly, if inflation was referred to as “cost of living” people may pay more attention to the farce of the numbers. But it’s not.

To understand post-GFC economics all you need to know is:

1. If inflation rises, take out the culprits, like accommodation, power, veggies, fruit and health care.
2. If inflation falls, select the ones to put back in.
3. If the market worries about too much domestic money printing then get someone else to do it.
4. Think and be thankful for The US Fed, Euro Central Bank and the one that owns more than 50% of all its own domestic equity ETF’s and its entire bond market, the central bank of Japan.
5. If all major economies are doing this, then funding for Australian banks and therefore Aussie property, continues at low rates.
6. Rinse and repeat until next blow up.
7. Then print more.

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