Economic Velocity

According to Macquarie Private Wealth The resource boom ended in 2011 already.  The cliff notes are at Mining and the whole piece is at MPW.  Think China…

End of An Era: 30 Years of Double-Digit Chinese Growth at Saturna Capital.  Yes, the rate of growth looks to have slowed permanently.  However, the absolute growth off the ginormous base is still breathtaking.  For commodity investors the question becomes:  At what pace will urbanization continue?

Rail Traffic Rebounds…… Signals Increasing Economic Strength at Value Plays.  Additionally, housing and employment continue to improve.

Currency wars should provide support for precious metals at Sober Look.  The Japanese have gone to war (Peter Brandt).  How about Fed’s Kocherlakota Says Monetary Policy Not Aggressive Enough (WSJ).  The theory is the precious metals complex will go parabolic when money velocity increases (Of Two Minds).  And it will at some point…

Crude Oil Rallies But Gasoline Prices Remain LevelBespoke.

“Not Enough Net Energy for Economic Growth” says Chris Martenson.  He’s a sharp guy and presents a lot of great information, but the world has changed.  The new price deck changed consumer and producer behavior.

“More than one in four workers in the U.S. take money out of their retirement savings accounts to pay for day-to-day expenses.”  Washington Post  Well, yes, the lower-middle guy has gotten squeezed:

Japanese Stocks Broke Their Long-Term Downtrend
Jan9_Equity Holders1

6 thoughts on “Economic Velocity

  1. JJ-Yesterday soemone mentioned that higher intereste rates and inflation go hand in hand. If interest rates rise, we get inflation, etc. I see the point, but not sure that is always the case……your thoughts?

    • I giggle at the thought of higher interest rates…the system can’t handle it; 5% interest rates and interest expense consumes U.S. government revenue.

      Practically speaking, negative real rates (CPI inflation about interest rates) is very bullish for the gold complex…as is the case today.

  2. So higher interest rates does not mean higher inflation-higher equities, commodities, etc. Rather, negative rates are inflationary or neither? I agree higher interest rates would cripple the economy today.

    • I’d speculate…guess…a tinge higher CPI inflation would be great for risk assets. But once the genie is out of the bottle she’s difficult to put back in. Significantly higher interest rates would crush the stock market because valuations would get beat up.

  3. Excellent read of Macquarie Private Wealth assessment of future comods trent….The link between equities and rising comods is very compelling…

    As for, Mr Martenson, a very interesting man and an excellent website however, he is a peaker and as such his information should be viewed with a great deal of skepticism…

    One thing that the peakers always neglect, is the fact that most of a crude is left behind, waiting for the day when new technology recovers what was left in place for the next generation of oilers….

    The other issue, is that most of the world’s reserves are state operated…Please, how efficient is that I ax?

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