• 556 days Will The ECB Continue To Hike Rates?
  • 556 days Forbes: Aramco Remains Largest Company In The Middle East
  • 558 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 958 days Could Crypto Overtake Traditional Investment?
  • 962 days Americans Still Quitting Jobs At Record Pace
  • 964 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 967 days Is The Dollar Too Strong?
  • 968 days Big Tech Disappoints Investors on Earnings Calls
  • 969 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 970 days China Is Quietly Trying To Distance Itself From Russia
  • 971 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 975 days Crypto Investors Won Big In 2021
  • 975 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 976 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 978 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 978 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 982 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 982 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 982 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 985 days Are NFTs About To Take Over Gaming?
  1. Home
  2. Markets
  3. Other

Attention Miners, the Canary is Dead!

If the stock market was a coal mine, and investors the miners, gold would be their canary. A sharp increase the price of gold is a warning signal that all is not well. It is a precursor to rising inflation, higher interest rates, reduced profits, and a general loss of confidence in financial assets.

One of the more astounding aspects of the recent gold rally, which has brought it to fresh eighteen-year highs, is the extent to which excuses have been made to minimize its significance. It's as if a group of coal miners is casually standing around the body of a dead canary, confident that the bird met its demise due to natural causes.

As the third quarter draws to a close the S & P 500 has managed a 3% gain, despite gold's 8.5% rise. Some of the popular excuses offered to "explain" gold's gain are "increased jewelry demand in India" "momentum buying from hedge funds and other speculators," "rising demand in China," "short-covering," and "demand outstripping supply."

While all of the above may in fact be true, they are merely the result, not the cause of gold's rise. Gold is rising for one reason and one reason only, which is the same reason that gold has always risen-- INFLATION. Gold, unlike national currencies, has no yield, so its rising popularity reflects the increased perception that interest rates are not high enough to compensate for inflation. Gold's new found strength is a sign that the world's misplaced confidence in central bankers, and their alleged commitment to limiting the issuance of currency, is finally coming to a long overdue end.

For fiat money to maintain its value there must be a general consensus that its issuers will keep it scarce. Without such a perception, all fiat currencies will eventually decline to their intrinsic values, which is zero. Gold, on the other hand, will always be scarce, as its supply is limited by the cost to mine it. As inflation accelerates, and the world's major central bankers look the other way, or worse deny its existence through slight-of-hand statistics, more people are re-discovering the value of gold.

Unfortunately the vast majority of investors have been lulled into such a false sense of confidence that they are oblivious to the warning that gold is providing. Rather than admit the unthinkable, they find it far easier to rationalize and deny. The result, as would be the case for coal miners ignoring the lifeless body of canary lying at their feet, will be the financial equivalent of death.

For those who prefer life, heed gold's warning and get out of the one currency that has the most to lose. Learn how to protect your wealth through international diversification, Begin by downloading my free research report "The Collapsing Dollar: The Powerful Case for Investing in Foreign Equities" available at www.researchreport1.com

Back to homepage

Leave a comment

Leave a comment