Soaring inflation in Venezuela has left the country’s currency virtually worthless, leaving the troubled nation on the verge of economic collapse. But while economists try to describe the nation’s turmoil with facts and statistics, the story of Venezuela’s struggles was perhaps summed up best in a Reddit forum. On Monday, user “Victorinox126” posted a photo of a man holding his empanada with a Venezuelan two-bolivar bill as a napkin. The .
China’s currency devaluation is a confirmation that the world’s second-largest economy could be on the verge of an economic collapse. At least, that’s the opinion of renowned analyst Jim Rickards.
“There’s no such thing as a one-time thing in currency wars,” he told Amanda Lang on CBC. “It won’t be their last move.” (Source: CBC News, August 14, 2015.)
The Chinese economy is slowing down faster than many economists .
Strong Economic Data Points to Growth in 2015?
As 2014 winds down, many investors are wondering what the economic outlook for 2015 will be. If you look at the U.S. economic data that’s been trickling in, 2015 looks like it could be a very strong year.
The U.S. announced strong third-quarter gross domestic product (GDP) growth of 3.9%. This extends the recent trend of strong quarter-over-quarter GDP growth; in the .
Former Texas Republican Congressman and three-time Republican presidential nominee Ron Paul discusses the latest inflation numbers in June, as well as the likelihood of a rate hike. (Source: Inflation On The Rise, last accessed July 16, 2015.)
In June, the Purchasing Managers Index (PMI), a leading indicator of inflation, increased by 0.4% month-over-month. The reading represents a six percent inflation rate, far higher than most economists .
The U.S. Bureau of Labor Statistics says inflation went up by 0.3% in June, solidifying market expectations that the Federal Reserve will raise interest rates this year. The BLS released its monthly Consumer Price Index report on Friday July 17th.
The CPI is calculated by tracking the prices of “basket” goods and comparing it to their prices in a base year. The BLS currently uses 1982-1984 as the base year, .
Some people are saying that the yellow metal is losing its shine. They have a point, as gold prices have plunged quite dramatically during the past few years. However, we shouldn’t be too fixated on the current gold prices. They are a result of emotional trading, extreme speculation, and possible manipulation. Looking ahead, the fundamentals of gold will eventually be priced in.
Let’s look at inflation first. The money printing .
Despite weak gold prices, excess money printed by the world’s central banks could ignite inflation, driving investors to safe haven assets. Policymakers have been using monetary policy as a form of stimulus in recent years, building a house of cards with nothing but paper money.
If that paper house collapses, disaster would inevitably follow. After 2008, the Federal Reserve undertook a massive operation to buy low-quality assets off the balance .
Peter Schiff believes a hyperinflationary environment caused by the Federal Reserve’s easy money policies will lead to gold prices going astronomically higher. (Source: Is Gold Heading to $13,000?, last accessed July 13, 2015.)
After the financial crisis in 2008, the Federal Reserve lowered interest rates to near zero in a desperate bid to save the banking system. However, according to renowned investor Peter Schiff, flooding the world with such quantities .
On Tuesday, July 7th, the International Monetary Fund (IMF) warned that the U.S. economy may be stalling if the interest rate hike comes too soon.
The IMF called on the Federal Reserve to delay a rate hike until 2016. This is the second push from the IMF to delay the interest rate increase which is at odds against what the Federal Reserve has signaled in the past few months. To .
Gold prices have plunged. But those that are holding the yellow metal needn’t worry. Soon, you might be able to buy gold for double, even triple today’s price.
Let me explain.
Central banks around the world have one thing in common: they like to print money. Since 2008, the U.S. Federal Reserve has increased money supply by 67%, or more than $5.0 trillion. The European Central Bank (ECB) .
Immediate term outlook:
The bear market rally in stocks that started in March 2009, extended because of unprecedented central bank money printing, is coming to an end. Gold bullion is up $1,000 an ounce since we first recommended it in 2002 and we are still bullish on the physical metal.
Short-to-medium term outlook:
World economies are entering their slowest growth period since 2009. The Chinese economy grew last year at its slowest pace in 24 years. Japan is in recession. The eurozone is in depression. With almost half the S&P 500 companies deriving revenue outside the U.S., slower world economic growth will negatively impact revenue and earnings growth of American companies. Domestically, America’s gross domestic product grew by only a meager 2.3% in the second quarter, which will negatively impact an already overpriced equity market.
Estimates Aug. 31, 2015
Trailing 12-month EPS for Dow Jones companies (Most Recent Quarter)