This week I stumbled upon an interesting chart. In this chart, the Goldman Sachs Commodity Index (GSCI), an index tracking the prices of a basket of commodities, is contrasted with the S&P 500 index. This gives us the GSCI/S&P 500 ratio. Whenever the GSCI/S&P 500 ratio is high, we are paying relatively little for stocks in terms of commodities. Conversely, if the ratio is low, we are paying relatively much for stocks relative to commodities. What does the ratio imply right now? Is this the
... »Is Now the Moment to Invest in Gold, Silver and Platinum?
April 18 2018
Olav Dirkmaat
Oops! This Is What the TED-Spread Is Doing
April 11 2018
While Trump´s trade war is threatening to escalate (China reacted to Trump´s import tariffs by coming with an own list of import tariffs on U.S. exports, which was quickly followed up by Trump threatening to impose even more tariffs on Chinese imports), we can observe some interesting trends on credit markets. Yes, the yield curve is flattening even further. No, the long-term rate is not on the rise (contrary to what many analysts have been saying for the past three or four years). Yet, this
... »Olav Dirkmaat
Why Gold Prices Fell In 2008
April 4 2018
In 2007, the world economy began to show signs of an impending downturn. At the beginning of March 2008, the Federal Reserve was forced to rescue the corporate bank Bear Stearns. Suddenly, the crisis became an undeniable fact, even among the most optimistic among us. That very same week, gold
... »Olav Dirkmaat
The Real Reason Behind the U.S. Trade Deficit
March 28 2018
Trump is on collision course with its trading partners: the U.S. trade deficit apparently proves that the U.S. is being fooled by its foreign trading partners that sell more to the U.S. than that they buy in return. Hence, Trump thinks that he can “win” a trade war by slapping on import tariffs until the trade deficit with any given individual country exactly equals zero. Any country that has a trade deficit with the U.S. is at risk of Trump’s insanity.
In the first round of Trump’s trade war, the U.S. introduced import tariffs on steel and aluminum. Last week, we entered the second round of Trump’s trade war, as Trump announced to impose import tariffs on approximately $60 billion in Chinese technology imports. Trump accuses the Chinese of intellectual property theft. China... »Olav Dirkmaat
