{"id":68297,"date":"2021-08-21T02:15:58","date_gmt":"2021-08-21T09:15:58","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=68297"},"modified":"2021-08-23T20:35:41","modified_gmt":"2021-08-24T03:35:41","slug":"black-coffee-21-aug-2021","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id68297-black-coffee-21-aug-2021.html","title":{"rendered":"Black Coffee: The Long and Short of It"},"content":{"rendered":"

\"\"It’s time to sit back, relax and enjoy a little joe<\/em> …<\/p>\n

Welcome to another rousing edition of Black Coffee, your off-beat weekly round-up of what’s been going on in the world of money and personal finance.<\/p>\n

I hope everybody had a terrific week. With the hardest part of it over, let’s get right to this week’s commentary …<\/p>\n

An honest man is one who knows that he can’t consume more than he has produced.<\/em><\/p><\/blockquote>\n

— Ayn Rand<\/strong><\/p>\n

O speculators about perpetual motion! How many vain chimeras have you created in the like quest? Go and take your place with the seekers after gold.<\/em><\/p><\/blockquote>\n

— Leonardo da Vinci<\/strong><\/p>\n

Credits and Debits<\/strong><\/p>\n

Credit:<\/strong><\/span> Did you see this? While some companies such as Tesla are diversifying into bitcoin, data analytics software company Palantir is betting on gold. How committed to the yellow metal are they? Well … if last month is any indication, Palantir bought $50 million in gold bars<\/a>. I’d say that’s pretty committed.<\/p>\n

Debit:<\/strong><\/span> In other news … Don’t look now, but the S&P 500 actually had a down week<\/a>. No, really. At Friday’s closing bell, it was actually 0.6% lower than the week before. Apparently, the Fed put an intern in charge while its A-team was enjoying a little R&R in the Hamptons. But I’m sure that<\/strong><\/em> won’t happen again …<\/p>\n

\"\"<\/a><\/p>\n

Credit:<\/strong><\/span> On the other hand, the S&P 500 has had positive returns for six straight months<\/strong><\/em><\/a>. But as investment advisor Lance Roberts noted last week, “Such streaks are rare; and when they do occur, they’re usually met by a month, or more, of negative returns.” I hear ya. As a dedicated owner of more than a few gold and silver mining company stocks, I know all about long monthly streaks of seemingly never-ending negative returns.<\/p>\n

\"\"<\/a><\/p>\n

Debit:<\/strong><\/span> Speaking of streaks, June saw China dump US Treasuries for the fourth consecutive month. In fact, over the last two months alone, China sold<\/a> more than $34 billion in Treasuries — that happens to be the biggest 60-day dump since 2016. This doesn’t come as much of a surprise to those who are paying attention, as there has been a worldwide shift in global reserves from Treasuries to gold going on since 2018.<\/p>\n

\"\"<\/a><\/p>\n

Credit:<\/strong><\/span> Of course, there’s a reason why nations now prefer gold to paper. Deutsche Bank’s strategist Jim Reid says, “for 50 years we’ve milked the flexibility<\/a> of fiat currency to kick many cans down the road,” noting that the Global Financial Crisis was the limit to how much debt the free market could handle. Since then, central banks have kept the monetary system on life support via the printing press. “But can we continue to do so?” asks Reid. Short answer: no. Long answer: Hell<\/strong><\/em> no.<\/p>\n

\"\"<\/a><\/p>\n

Credit:<\/strong><\/span> Just how flexible is fiat currency? It’s so<\/strong><\/em>, um, flexible that financial analyst John Mauldin warns that, “We’re in the process of passing a ($1 trillion) infrastructure bill, with (another) spending bill coming down the pike that is five times larger<\/a> than that. It’s possible we could end up with a $7 trillion deficit this year — or 30% of GDP.” Sheesh. For God’s sake, relax<\/strong><\/em>, John. With a little creative accounting, I’m sure the boys in the Congressional Budget Office will make the final numbers look absolutely fabulous<\/strong><\/em>:<\/p>\n