Article Category: Gold

Three Basic Premises to Assess the Market

Every business cycle and market cycle is different, but avid market watchers understand a few basic premises that generally keep them on the right side of the market. We can apply these to the current environment.

First, bear markets typically accompany recessions. In fact, they discount them. In the long-run, stock prices are highly correlated with corporate earnings. A share of stock is simply a share in the future profits of a company, and when earnings are expected to decline, share prices immediately reflect that perception.

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Posted in: Federal Reserve Gold Inflation Interest Rates Momentum

Is Inflation on Our Doorstep?

Inflation, and perhaps more specifically, inflation expectations, sit at the core of our financial markets. Like the sun's rays, they radiate out influence across the rest of the financial universe.

Fears of deflation have prompted central banks around the world to employ the easiest monetary policies the global economy has ever seen. In the recent past, nearly every central banks' attempt to tighten conditions has been thwarted by the prospect of disinflation or downright deflation.

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Posted in: Bonds Federal Reserve Gold Inflation Interest Rates

Drawn-out Market Top or Consolidation?

Investors are second-guessing themselves today after Friday's surge took major indexes close to their record highs. The push higher last week came on the heels of the monthly jobs report, so let's take quick look at what got everyone so excited.

This visual from MarketWatch tells us just about everything we need to know regarding the latest labor market report.

To begin, the economy created 223,000 jobs last month and the unemployment rate slid to 5.4%. Remember to always take these figures with a grain of salt because they are "seasonally adjusted," which means that the Bureau of Labor Statistics tweaks the figures to fit their seasonal models, which doesn't always work out well (last month's initial figure of 126,000 jobs created was revised to 85,000). Nonetheless, the headline figure was fine, and the underlying data was supportive of ongoing trends.

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Posted in: Economy Federal Reserve Gold Inflation Interest Rates Momentum

Investing: Luck vs. Skill

I read a fascinating article over the weekend that I though applied incredibly well to investing and the financial markets. The subject of the article was the paradox of skill, and its implications are rather profound.

Many endeavors in life are a combination of both skill and luck. Think sports for example. In baseball, a few inches can make the difference between a foul ball and a home run. A minor fluctuation in the wind as the ball flies through the air can be the difference between winning and losing a game.

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Posted in: Earnings Gold Momentum

How Relevant are the Dow and Dow Theory?

It's been almost a hundred and twenty years since Charles Dow first created the Dow Jones Industrial average, commonly referred to as the Dow. Over that time the Dow has undergone a substantial transformation and now bears little resemblance to its prior form.

The Dow originally contained 12 industrial companies. Of those, the only company that remains part of the Dow is General Electric (GE). When initially formed, the Dow was truly an industrial index. All components in the Dow were intimately involved in traditional heavy industry, meaning they produced goods used in construction and manufacturing. Some examples include the American Cotton Oil Company, the American Sugar Company, the U.S. Leather Company and the United States Rubber Company.

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Posted in: Bonds Dow Theory Economy Gold Oil Volatility

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