Default deniers posit that it won’t happen because to default is by definition irrational. Most articles by sensible commentators conclude with that idea. The latest is a piece on the Schwab website. The reality is the House Crazy Caucus is and will continue to be irrational. I wonder what the odds of default are on Fan Duel? I still am trying to figure out where to hide. One thing is for sure, hoping for a deal that sacrifices Social Security and Medicare won’t be much of a win win for us old guys.
Comments
Gold (physical GLD, gold-miners GDX) has been outperforming since October lows. https://stockcharts.com/h-perf/ui?s=GLD&compare=GDX,SPY&id=p72295455994
Global reserve currencies have 100+ or so years of life (in the list below from Bitcoin enthusiasts, you can ignore the last projection), and the US can only hasten the change. https://twitter.com/BTC_for_Freedom/status/1616047232947560448
"World reserve currency periods:
- Portugal (1450–1530)
- Spain (1530–1640)
- Netherlands (1640–1720)
- France (1720–1815)
- Great Britain (1815–1920)
- United States (1921-2030)
- Bitcoin (2030-Forever)"
Ironically, denying there is any connection between money and politics is intensely political just as denying that there are gay people in the military or Florida whose voices need to be heard is. A Don't-Say-Politics policy is endorsing a belief in the pursuit of financial profit by any means necessary regardless of that pursuit's impact on employees, consumers, nation states such as America, humanity and the planet's ecosystem. It's pretending life is all profit numbers and there aren't flesh-and-blood people--employees and consumers--producing the profits much like an abstract physics problem which pretends anything falling is falling in a frictionless fictional world.
I looked at the gold funds and think for retirement accounts. pick the one with the lowest ER and decent liquidity.
In taxable accounts Gold is taxed at long term capital gains rates of 28% as a collectible ( ST is income tax rate)
However, if you use a Canadian fund like PHYS, you can fill out a form every year with your taxes and pay usual LT capital gains rate.
Otherwise buy a mutual fund like SGGDX which seems to have done betted than the index of miners like GDX. NEM is also a possibility as it has a nice dividend.
@LB
I agree Political issues always affect investments. For example, massive changes in the tax laws, an obviously political issue, made huge changes in expected investment returns.
We should be able to distinguish between political discussions with people of good faith presenting opposing but reasoned and fact based arguments or informed ( who of us really knows what is in McCarthy's head?) opinions based on their actual data or professional knowledge, and screes and ideology amplified by the internet with a hostile core.
Unfortunately there is much more of the latter than the former. Many once respected voices of facts and reason are now just the scene of shouting matches. While the NYT is not much better (looking at you 1619 project), I remember how thoughtful and insightful the WSJ used to be. The articles are still generally useful, but no where near as detailed and insightful, but the opinion pages distort and cherry pick facts to rile up the faithful.
This then pollutes everything associated with it. I am reading a pretty good book now about PGE and the California wildfires "California Burning" by K Blunt. My cousin whose house almost burned down in one of the fires refuses to read it as it is written by WSJ reporter. Everything is distorted through you own, mightily amplified political viewpoint.
There seems to be very few places for moderates and independents to have a discussion without getting yelled at.
Yes, and MFO is one of them, thanks to Dr. Snowball.
More than 70% of the country does not know or care what a debt default is.
No problem. Carry on guys.
Of course, Putin could render the entire topic mute by lobbing a nuke or two over there. You don’t suppose he follows U.S. domestic politics?
Looks like Mitch McConnel agrees with StayCalm: "I can't imagine any debt ceiling provision passed out of the Senate with 60 votes could actually pass this particular House," McConnell told reporters Tuesday.
FUNDS. There are many ways to play this GOLD rally: gold-bullion (GLD, IAU, GLDM, SGOL), gold-miners (majors GDX, combo majors + minors GDXJ), commodities ETF BCI (futures-based; K-1 free; 19.5% precious metals), OEFs (FKRCX, FSAGX, OPGSX, SGGDX (combo bullion + miners)), stocks (ABX, NEM, WPM) (some pay variable dividends). Gold is benefitting from weakening DOLLAR and INFLATION (global central banks are also buying gold to reduce their exposure to Western currencies). Bullion-miners mix depends on whether there is soft landing (better for miners) or recession (better for bullion). (Gold sold off later in the week, post-FOMC) (By @lewisbraham at MFO)
Silver better?
COMMODITIES. Industrial-precious metal SILVER is outperforming gold, although the two have high correlation. This is an indication that global economic activity is picking up, including China reopening. Silver is also important for energy transition and EVs, besides its traditional uses in industrial products/processes and jewelry. Weak DOLLAR is also tailwind for precious metals. Silver targets are in $30s with soft landing and $10s with recession.
LINK1 LINK2
https://www.barrons.com/articles/gold-prices-how-to-invest-51675211440?mod=past_editions
https://www.barrons.com/articles/silver-gold-prices-economy-51675291146?mod=past_editions
Gold (IAU) on the other hand, I've been holding since the covid bear at about a 4-5% holding as portfolio diversification. I also hold a smaller amount of SLV mixed in, but boy is it more volatile than the gold holding. In any case, I've been adding to IAU throughout January, mostly in anticipation or defense of dramatic political wrangling or a global recession - or both.
Thanks @yogibearbull for the links and ideas.
Gold-bullion GLD SD = 15.12
Silver-bullion SLV SD = 36.39
So, SLV is 2.4x more volatile than GLD.
As silver is used both as industrial and precious metal, it has more cyclicality tied to economy. This is also indicated in projected range for silver in Barron's article, $10s (recession) - $30s (soft landing).
Gold:silver ratio is about 83, high. At one time, 60 was considered ideal ratio. So, historically, gold is overvalued relative to silver, or silver is undervalued relative to gold.
https://goldsilver.com/price-charts/gold-silver-ratio/
It used to be that Barron's market impact was felt on Mondays, but now, it can be in the late week (Thursday-Friday). The articles on gold in this issue were available on Friday, but gold still tanked on Friday.
To your question, the ENTIRE weekend issue is available at Barron's Digital early-AM on SATURDAY - 4am Central is the earliest I have checked, but just months ago, it was after 6am CT only. I also rely on my home delivery that is between 5am-7am CT on Saturday; Barron's can expect a call from me about missed delivery and redelivery request around 7am+ CT Saturday.
My Summaries are out on Saturdays - Part 1 by early-AM, Part 2 by late-AM. About 2 years worth of Summaries can be found at this link (searchable) but I have decades worth of Summaries (also searchable) in my PC.
https://ybbpersonalfinance.proboards.com/board/12/market-insights
It wouldn’t seem to be in Barron’s own interest or their subscribers’ interests to publish specific stock recommendations piecemeal before their print edition hits the stands Saturdays or can be read in its entirety online. In the case I alluded to, the recommendation of a specific mining company was made by someone they interviewed (in their lead gold piece). Only named 3 out of the dozens of players. The AU miners lost over 4% on average Friday. Roughest down day in a while. But one I was interested in fell only about 1.7% - after strengthening late in the day. In addition, it is one of the bigger players in silver, which fared far worse than gold Friday and so should, one thinks, have experienced an even bigger decline.
While the above mentioned was a “secondary” recommendation made by a person interviewed in the article, I have found Barron’s own recommendations generally spot-on. And, surprisingly, haven’t noticed huge upsurges in price immediately following them - but their picks do mostly rise in the weeks and months afterward. One extreme example of how well their picks do: Only 3 or 4 weeks ago they ran an article promoting TLSA, recommending readers buy it and claiming it was way oversold. But in this week’s edition they found it necessary to run another article strongly suggesting investors sell TSLA (after a huge run up).
Thanks again.
This went through an earlier iteration (that I hated) when Barron's authors put out small snippets of their final columns, or publish pieces during the week that are further edited and consolidated into the final weekend piece. Your favorite, Forsyth, does that a lot.
Unfortunately, I can't even get the print edition delivered at my house anymore. Now it is mailed so it doesn't arrive until Tuesday some weeks
Customer service has no idea why they can't deliver it here, other than to say that the "distributor" was notified. I assume it must reflect the fact that nobody wants to deliver newspapers even for a part time job, and all the paper boys are in the library studying.
I still wonder how confidential, pre publication, any of their ideas are.
I prefer sitting down with Barrons hard copy, but it isn't cheap. I'm thinking of biting the bullet switching to just digital.