The Embattled Dollar

Gold Complex Takes a Hit But......

Rather busy this morning but wanted to dash off a quick note concerning yesterday's gold and gold complex sell off. Although the weakness in the yellow metal appeared particularly worrisome, especially if you were reading the financial media, the action in the precious metal stocks was far less concerning.

Just look at the charts, First the GDX

And then RGLD

What is interesting here is that the pullback in the gold equities, particularly RGLD, one of the companies most levered to gold and precious metal prices, just brought the price trend back to the recent trend. More so, the intra-day lows appear to have been rejected, as volume on the downturn was light while buying pressure started to enter the market late in the day.

If I had to guess, and it is just a guess, I think yesterday's price action was a dab of short-term profit taking for those who entered the market in June and selling pressure from those trapped at or around the 52-week highs seen in March 2014 and August 2013. 

I would not be surprised to see a pullback in prices, considering the run we have had in 2014. That said and turning to my timing models........................

6-Month model

 Long-term model

The models have and continue to remain in a buy-range.

The Death Of Money Part 2

Keynesian Logic or Lack There Of

Logic and Keynesian should not even be mentioned in the same sentence.

Financial Innovation with Andrew Lo

An interesting look at the state of Financial Innovation. If you have never had the pleasure of hearing Mr. Lo speak, this may help fill that void. i can tell you his thoughts are usually thought provoking.

Everything Wrong With Krugman and Keynesian Economic Thinking

The excerpt is originally written by David Stockman and can be at David Stockman's Contra Corner » Stockman’s Corner. 

It is fortunate that Paul Krugman writes a column for New York Times readers who want the party line sans all the economist jargon and regression equations. So her

It is fortunate that Paul Krugman writes a column for New York Times readers who want the party line sans all the economist jargon and regression equations. So here is the plain English gospel straight from the Keynesian oracle: The US economy is actually a giant bathtub which is constantly springing leaks. Accordingly, the route to prosperity everywhere and always is for agencies of the state—especially its central banking branch—to pump “demand” back into the bathtub until its full to the brim. Simple.

You often find people talking about our economic difficulties as if they were complicated and mysterious, with no obvious solution. As the economist Dean Baker recently pointed out, nothing could be further from the truth. The basic story of what went wrong is, in fact, almost absurdly simple: We had an immense housing bubble, and, when the bubble burst, it left a huge hole in spending. Everything else is footnotes.

And the appropriate policy response was simple, too: Fill that hole in demand.

True enough, the housing and credit bubbles did burst. But that’s exactly where the rubber meets the road in the debate between Keynesians and Austrians. The latter see bubbles as an artificial expansion of economic activity owing to cheap credit and the malinvestments which flow from it.

When bubbles inevitably burst, therefore, the artificial bloat in investment, output, jobs and incomes is eliminated—or in the old fashioned phrase, liquidated.  Moreover, liquidation is the equivalent of purging a cancer; it removes a malignant growth, but does not reduce the true wealth of society or the sustainable living standard of the people.

The reason for this proposition is Say’s Law. That is, sustainable demand must originate in production; valid “spending” must be derived from the income earned in the process of supplying real goods and services. That includes spending that is financed by savers out of their own current incomes, and spending by transfer payment recipients that is financed by taxes on producers.

The full article can be found after the jump here, click here.

The Death of Money with Jim Rickards- Part 1

To be honest, there was something about Rickards I did not like for the longest time. Many of his theories went a little further than I was willing to believe (and many still do) and his demeanor came of wrong to me. Albeit, maybe that was a bad interview or two, has I have grown to take his opinions more seriously.