The financial landscape is undergoing significant shifts, with the Nasdaq Composite Index re-testing levels reminiscent of the tech bubble in 2000 when adjusted for the money supply. This re-testing comes amid a broader context of economic uncertainty, with inflation rates remaining stubbornly high despite recent rate cuts. Government spending continues to surge, contributing to a 27-month high in money supply growth.
Gold mining is at a critical juncture, with projections indicating a 17% reduction in new gold mine supply over the next five years. This decline is driven by depleting reserves, declining ore grades, and aging mines. As a result, the focus is shifting towards junior and exploration stocks, which are poised to benefit from a potential gold bull price run.
Many market participants expect inflation to drop quickly, despite commodities soaring since rate cuts started. However, the ongoing issues of government spending and money supply growth suggest otherwise. Some believe that inflation will disappear through optimistic measures, but the reality is far more complex.
The USD has seen a slight dip, with gold trading as high as $2720, just shy of its October 31 all-time high. Central banks continue to be net buyers of gold, further supporting its upward trajectory. Despite the dollar’s strength, gold has risen for seven of the past eight days, indicating a potential record breakout in the near future.
President Biden’s actions regarding Russian assets have raised concerns about the reliability of Treasury securities as a “safe haven.” This geopolitical tension is likely to have far-reaching implications for global markets. The Fed’s diminishing influence over the markets adds another layer of complexity to the economic outlook.
In summary, the financial landscape is marked by significant volatility and uncertainty, with key indicators pointing towards potential shifts in market dynamics.
Sources:
https://x.com/TaviCosta/status/1880026112342020394
https://x.com/goldseek/status/1879926175700832428
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