Today James Turk spoke with King World News about gold, silver, and the major driving force for the world in 2017.
James Turk: “It was a quiet day here in Europe, Eric, which is to be expected because of the US holiday today. Nevertheless, the precious metals showed some good underlying strength by climbing higher…
It is always good to see some follow through on prices, even on quiet days. And we got that today. Both gold and silver closed higher in Europe and above Friday’s New York closing price.
From their lows in December before the holidays began, gold has risen $73, and silver is up $1. By any measure these gains are impressive, particularly when considering that the dollar has remained strong over this period. These recent gains in gold and silver look even better when viewed in terms of other national currencies that have been weak, like the British pound. But that may be changing.
The pound has been selling off the last few days because Teresa May, the British prime minister, is expected to announce tomorrow an outline of Britain’s plans to leave the EU. So the slide in the pound the last couple of days is looking like a selling climax.
It may therefore be one of those situations where the old adage applies, namely to buy the rumor and sell the news – except in reverse. Investors have been selling the rumor waiting for the Brexit negotiating strategy to be revealed. So tomorrow might be the day that everybody starts to cover shorts, with the British pound rising as a result.
I think the British pound should be watched closely over the next couple of days because it might be a clue as to what could happen at the end of the week. Mr Trump’s inauguration could prove to be another turning point, but in this case, it would be a turning point for the dollar. The dollar has climbed on the expectation of lower taxes, less regulation and a stronger US economy, among other things. There is no doubt in my mind that Mr Trump will try to deliver on these promises. But the expectations that have been driving the dollar and US stock market higher need to be put into perspective.
Given the extraordinary strength we have seen in the dollar since his election victory, the reality of the dollar’s current position relative to other major currencies needs to be evaluated relative to the time it will take Mr Trump to deliver on everything he promises as well as what the stock market in particular is expecting. So we could be setting up for another buy the rumor, sell the news situation, that will be revealing itself at the end of this week. The thing to sell would be the dollar, which should be watched carefully here for any signs of weakness.
The 800-Pound Gorilla
Since Mr. Trump’s election victory, stock markets around the world have been rising. The US market has been rising in the face of a strong dollar. In contrast, European markets have also been rising, even as their currencies have been weak against the dollar. Clearly, there is a different dynamic at work here that is causing stock markets to rise regardless what the currency of that country is doing. And this is the 800-pound gorilla that everybody seems to be ignoring, which is the mountain of money printing that has taken place ever since the 2008 financial collapse.
The Major Driving Force In 2017
That money has been working itself into stock market prices around the world, which could be telling us something important about the world’s currencies, namely that inflation is back. I think rising inflation will be the major driving force that everybody needs to consider in 2017, regardless what country they live.
Decades ago the great Richard Russell came up with a simple axiom to explain central bank policy: “Inflate or die.” It means that central banks have to continuously debase national currencies to reflate the system in order to save the system.
So to protect oneself from destructive central bank policies that cause currencies to lose purchasing power, we need to own tangibles or what I call near tangibles, namely, the shares of companies who make their profits from tangibles like commodity producers, miners and agribusiness companies. I expect a great year for them in 2017, with gold and silver leading the pack.”
***KWN has now released the fascinating audio interview with the top trends forecaster in the world, Gerald Celente, who discusses the big surprises ahead in 2017, gold, China, and much more, CLICK HERE OR ON THE IMAGE BELOW.
***ALSO JUST RELEASED: The Greatest Secret Of This Century And Why The Price Of Gold Is Headed Above $6,000 CLICK HERE.
***KWN has also recently released the extraordinary audio interview with the man who advises the most prominent sovereign wealth funds, hedge funds, and institutional funds on the planet, Michael Belkin, and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***KWN also released one of Marc Faber’s greatest audio interviews ever and the overseas line was crystal clear for the recording. Faber covers the great danger facing the financial system in the coming year, what his predictions are in 2017 for global markets, stocks, bonds, gold, silver, mining shares, etc, what investors should be doing with their money right now, what has the wealthy so worried in 2017, how Trump will impact major markets, and much more, and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
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