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Tag Archives: Sunshine Profits

Rising Cost Pressure – What Will Mr. Powell and Mr. Gold Do?

The latest IHS Markit Flash U.S. Composite PMI signals very fast economic expansion – but also strong inflationary pressure. Good news for gold, overall. On Friday, the recent IHS Markit Flash U.S. Composite PMI has been published . There are two pieces of news for gold – one good and one bad. Let’s start with the negative information. The report signals an unprecedentedly fast expansion in business activity in May. Indeed, the composite index surge from 63.5 in April to 68.1 this month...

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Gold Sings a “Hot N Cold” Song

Although spring has begun, we can still find ourselves in winter, or even summer. Gold may benefit from such a seasonal aberration. Oh, how wonderful, spring has finally started, hasn’t it? We have April, after all. Well, in calendar terms, it’s indeed spring, but economically it can be summer already or still the beginning of winter. How so? I refer here to Kondratiev cycles (also known as Kondratieff cycles or Kondratyev cycles). As a reminder, Nikolai Kondratiev was a Russian economist who...

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Will Powell Lull Gold Bulls to Sweet Sleep?

The Fed left its monetary policy unchanged. However, the lack of any action amid economic recovery is dovish – good news for gold. On Wednesday (Apr. 28), the FOMC has published its newest statement on monetary policy. The statement wasn’t significantly altered. The main change is that the Fed has noticed the progress on vaccinations and strong policy support, and that, in consequence, the economic outlook has improved. Previously, the US central bank said that indicators of economic activity...

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Will Euro and Gold Go Up With Pandemic Upturn in Euro Area?

The worst may already be behind the euro area’s economy. This bodes well – both the euro, as well as gold, can benefit from it. The Governing Council of the European Central Bank met last week, keeping its monetary policy unchanged. The inaction was widely expected – no surprises here. The June meeting could be much more interesting as the ECB will have to decide whether or not to slow its bond buying under the Pandemic Emergency Purchase Programme that was accelerated in the second quarter...

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Will a Fiscal Revolution Raise Gold to the Throne?

Revolution, baby! There is growing acceptance for an aggressive fiscal policy, which could be supportive for gold prices from the fundamental, long-term point of view. We live in turbulent times. The pandemic is still raging and will most likely have lost lasting effects on our society. But a revolution is also happening right before our eyes. And I don’t mean another storming of the U.S. Capitol or the clash of individual investors with big fish on Wall Street. I have in mind something less...

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Gold Under Fed’s New Monetary Regime

Did you believe that the monetary policy of Ben Bernanke in a response to the Great Recession was extraordinary? Nah, Bernanke was an amateur compared to Jerome Powell. The latter quickly reintroduced ZIRP, implemented unlimited quantitative easing, and provided bailouts to Wall Street – and now he risks higher inflation as a result. In August 2020, Federal Reserve Chair Jerome Powell delivered his Jackson Hole speech, unveiling a new monetary framework in the process. He announced a flexible...

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Fed Not Thinking about Rate Hikes. Maybe Thinking about Gold?

The Fed Vice Chair says that the Fed will not even think about hiking interest rates until the inflation reaches 2 percent. Meanwhile, the price of gold decreases further. What is exactly happening in the gold market? Over the last week, several Fed officials spoke publicly with the purpose of convincing investors that their new policy strategy would be positive for the economy. Powell himself testified three times before Congress. However, the most interesting remarks were delivered by...

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Corona Strikes Back In Europe. Will It Boost Gold?

The number of new daily infections in Europe is rapidly increasing, even reaching new heights in several countries. That is just another reminder that the second wave in fall or winter is upon us. Yes, I know. You are all fed up reading about the coronavirus. And yet, the coronavirus is not fed up with spreading around the globe. The number of new daily infections keeps going up, as the chart below shows. Most significantly, the coronavirus cases are in a dramatic rise across Europe. The...

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Unemployment Rate Drops. Will It Drag Gold Down?

The U.S. labor market improved in August, although headlines paint too rosy a picture. What does it all mean for the gold market? Great news for the U.S. labor market: according to the BLS, the American economy regained 1.4 million jobs, while the unemployment rate fell below 10 percent for the first time in the pandemic era! To be more precise, the unemployment rate declined from 10.2 percent in July to 8.4 percent in August, as the chart below shows. Importantly, the fall in the...

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FOMC Minutes Push Gold Down

July FOMC minutes hit the gold prices. But what’s next for the yellow metal? The key event last week was the publication of the minutes from the FOMC meeting in July. After their release, the U.S. dollar jumped, while the price of gold dropped, as the chart below shows. Why? Well, the Fed officials disappointed investors who expected some clues about upgrading the U.S. central bank’s forward guidance in September. In other words, the Fed failed to provide any new guidance as to the interest...

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