Hello all,
Please poke holes into my theory about the economy. The economy is fueled by low-interest rates and everything is consumed by borrowing as the country's saving rate is poor. This is evident by credit card debt increasing year after year.
The Fed attempted to be hawkish by talking a strong game, but in the 4 quarter of last year after a small hike the market tanked and the Powell capitulated saying the Fed is more data dependent. Now, the market projects no rate hikes this year. And everytime the Fed meets and they don't rate hike gold will rise. The only asset class that is undervalued is mining companies and this is where I been parking my money as this is a play on the gold price. Now that Gold does not have to compete with higher interest rates gold will seem more appealing and the mining companies will benefit from this as their margins will be much better now that the price of gold is improving. We will hit another recession again it's inevitable and when this happens what will the Fed do? They will rate cut again causing more inflation and gold does great in this environment.
What other asset classes is undervalued in this economy? Everything is else is bid way up and It's hard to find value in this market. Yes, an argument can be made for emerging markets being undervalued as well, but in the US market what is cheap? Nothing!!! Buying mining companies seem the smart play because they're cheap now.
Submitted February 18, 2019 at 10:26AM by boki345 http://bit.ly/2NaXDZm
