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9.18.19 - Gold: 3 Reasons There's Upside Potential

Gold last traded at $1,515 an ounce. Silver at $17.91 an ounce.

NEWS SUMMARY: Precious metal prices were steady Wednesday following the Fed's rate decision. U.S. stocks fell as the Federal Reserve loses control of its own interest rate on the day of their big decision.

3 Reasons Why There's Further Upside Potential for Gold Prices -Holmes/Forbes
"Gold may be off its 52-week highs, but the precious metal is still up more than 15 percent for the year through September 17. This appears to put gold on a path for its best year since 2010, when it gained just under 30 percent. I believe buying the dips in gold right now could turn out to be a wise investment decision. I see a lot happening at the moment - from an unprecedented $17 trillion in negative-yielding bonds worldwide to heightened geopolitical threats - that might boost investors' appetite for the metal, which has a history of holding its value in times of crisis. Read on for three reasons why I believe there's further upside to gold prices... #1 U.S. inflation is finally starting to heat up...In the past, faster inflation has been constructive for gold prices. That's because inflation, by its nature, destroys your purchasing power, and to limit these losses, investors have traditionally turned to the yellow metal as well as gold mining stocks. #2 Negative yields in the U.S.? $17 trillion in debt around the world...has recently pushed the price of gold to new all-time highs in a number of currencies, including the British pound, Japanese yen and Canadian and Australian dollars...It could only be a matter of time before U.S. fixed-income yields turn subzero - especially if Trump gets his way. #3 Geopolitical and economic risks raise the demand for a safe haven. There are a number of geopolitical and economic risks right now that have triggered gold's 'fear trade' Economic growth is slowing worldwide as a result of trade tensions....Other geopolitical concerns, including unrest in Hong Kong as well as last Saturday's attack on Saudi Arabia's oil facilities, have helped support gold demand."

oil How an Oil Price Surge Could Hurt Consumer Spending, and the Economy -New York Times
"For months, American consumers have kept the economy humming. While businesses pulled back, shoppers continued to spend. But a prolonged surge in gasoline prices after the attacks on oil production facilities in Saudi Arabia could undermine that phenomenon and increase the risk of a recession. 'It's clearly not a positive, and it adds a negative to the outlook,' said Steve Blitz, chief United States economist at T.S. Lombard, an independent research firm. 'It's another straw on the camel's back.' Monday's nearly 15 percent spike in oil prices to $62.90 a barrel isn't big enough to bring on a recession - it only returns crude prices to where they were this spring. Monday's jump is expected to add roughly 20 cents to gas prices, which now average $2.56 a gallon nationally, said Tom Kloza, global head of energy analysis for the Oil Price Information Service. But a shock in the form of a rapid $20 or $30 a barrel jump in oil prices would have a bigger economic impact. 'At that level, the consumer takes a significant hit,' said Ethan Harris, head of global economics and research at Bank of America Merrill Lynch. A $25 a barrel increase in oil prices, the kind of move analysts cite as a potential threat to the economy, would add 50 cents to the cost of each gallon of gas. That would mean an extra $45 in monthly spending for the typical family....The biggest risk to consumers - and the economy itself - would be a significant military conflict between the United States and Iran. Businesses, already cautious about spending, would pull back further. Consumers would likewise retreat."

Should You Spend, or Save, as if You'll Live Forever? -New York Times
"Older people's ability to proclaim their youth, strength and all-around-great lives appears to be thriving. But the age you feel, as opposed to the years you've accumulated, affects how you think about your money, many experts now believe. They say it influences how people save, spend, donate and plan what to leave to heirs. This effect isn't confined to people who are just comfortably upper middle class. Chip Conley, founder of the Modern Elder Academy, said research had found that as long as they are in good health, even those in the lower middle class reassess their finances in their 50s to prepare for longer lives than they might have expected....People who feel fit are acting much differently, working longer or taking on side projects to supplement their savings. They're doing this while traveling and enjoying themselves. In a sense they're doing what twenty-somethings can do without fear. 'We try to help people understand the way we live today you're going to have a lot of adult life ahead of you, so don't get caught up on how Social Security is going to support you,' Mr. Conley, 58, said. 'You're not going to retire at 65. You're going to have part-time work by desire or need.' 'To encourage people to think of working way into their 70s, we talk about how retiring can be bad for your health,' Mr. Conley said, mentioning research on longevity rates and retirement. 'People need to build skills that allow them to build money. They could be an Airbnb host with a cottage in their backyard, plus $20,000 from Social Security and then part-time consulting at $20,000. That's enough to live for a very long time.'....Old age is a new thing, and that requires people to reimagine how they're going to pay for it."

Book Review: 'The Smallest Minority' -Tamny/Real Clear Markets
"The Houston-based Kevin Williamson's very entertaining and insightful book, 'The Smallest Minority: Independent Thinking In the Age of Mob Politics,' is among other things a rejection of 'mob politics,' and 'its effects on our political discourse and our culture.' In the free market, the mob most certainly doesn't rule...Free markets are about individual choice, as opposed to decrees from the Commanding Heights about what we'll purchase, and how. When Burger King rolled out its plant-based Whopper, it tested it in St. Louis first, as opposed to ramming it down the throats of thousands of franchisees. Williamson plainly doesn't trust the mob, and it seems one message the National Review reporter is trying to send is that we should aim to localize our policymaking a la Burger King. If so, bad ideas will be contained while good ones will be widely adapted. The free markets account for our many differences, while politicians increasingly strive to craft national solutions to perceived problems. Williamson would no doubt prefer to leave things to the people....Most important is Williamson's muscular disdain for democracy. 'I come not to praise democracy but to bury it.' As he later explains, the 'Founding Fathers understood the dangers of democracy' without limits on government: it would lead to ochlocracy, another word introduced to me by Williamson which is, you might have guessed, mob rule. And while most would describe Williamson as a conservative, particularly given his views on abortion, he's really a libertarian as the previous paragraph makes rather plain. Williamson believes in individual freedom to do as one wishes short of hurting others, and undiluted democracy has little do with freedom....The crisis narrative is easily my favorite part of Williamson's book...'Every interest group, faction, and policy entrepreneur in the country has a crisis narrative to peddle. The Right blames the rhetoric of the Left every time a cop is ambushed, the Left blames the rhetoric of the Right every time a gay man or Muslim is assaulted or worse.' Conservatives and liberals, and conservative and liberal pundits most of all, have thoroughly stripped any meaning from the word 'crisis.' Thank goodness Williamson is willing to showcase this truth....Williamson's conclusion at book's end is that 'the biggest democracies will always be a dangerous place for the smallest minority,' as in the individual. So true. The answer is freedom."

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