vrijdag 29 november 2019

Divergence in Misery Index and Gold

What's a bit concerning to me is that the misery index (unemployment + inflation) has been going down, while gold has been going up. This is not normal.

Either misery is going to increase or gold is going to go down. I believe misery is going to go up.


First off, the unemployment rate is going to rise as nonfarm payrolls have been declining.


Second, inflation should be going up in time due to QE of the Fed and massive amounts of debt financing and budget deficits. The trade war is also not resolved yet. Productivity has been going down with industrial production and manufacturing all declining, which will lead to higher inflation.


So the misery index will be going higher and that will also mean that P/E ratios will come down together with stock valuations. Gold will be going higher.


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