![]() This week's trading saw the most tangible manifestations of this yet. Or maybe it is naiveté.įor more than two weeks, this update has been awkwardly suggesting and clumsily making the case that despite the persistent trend, which has seen the precious metals trade higher with stocks and inflation, a shift towards a weaker economy, and therefore rate cuts, could still be bullish for metals. In fact, stubborn persistence in the face of mounting odds against her is essentially the hallmark of the Goldilocks archetype. Stock markets didn’t immediately share Bernanke’s optimism, but then again, Goldilocks herself never seems to get it right on the first try either. Though he thankfully avoids using the term, Ben Bernanke made headlines last week when he essentially confirmed what you read here two weeks ago and politely disagreed with Alan Greenspan’s fusty old boom/bust paradigm in favor of the perpetual, sustainable growth model that is the real policy directive behind what has come to be known as “Goldilocks”. Or that the devolution would persist more than a decade and three presidential terms. ![]() They are over on the swings, let’s say, gaining momentum and seeming to fly higher and higher, no matter what the other kids say.Īlmost two decades ago, when Robert Fulghum penned the short essays that appear in his classic book of sentimental optimism, he probably did not imagine that typically straight-laced analysts would similarly revert to childish oversimplification and use a character from a fairytale to describe a new strategic outlook on economies and markets. Increasingly though, it seems that precious metals have gotten off this seesaw altogether. With the two opposing forces roughly in balance, Federal Reserve Bank policy continues to be level, unchanged. The outlook for the economy darkened recently, but we are not staring down the gaping maw of recession just yet either. It remains to be seen which side will grow heavy first and force the Fed’s hand.Ĭurrently inflation is “uncomfortable,” but not spiraling out of control. On one end is inflation and on the other, risk of a recession. ~Precious Points: Lackluster, but not Tarnished, March 17, 2007 The wording of Greenspan’s now infamous “recession” comments indicates nothing more treacherous than adherence to this older, possibly even outmoded, economic philosophy. Bernanke’s policies, in fact, represent a paradigm shift away from a past where every boom was expected to, and had to be followed by a bust.
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