"investors preferred to own gold, which pays nothing, over cash US Dollars"
Could that say something about the buyers in addition to their inflation expectations? I'm sure you've seen the Twitter accounts suggesting gold's strength comes from foreign central banks buying the barbaric relic after the US confiscated Vlad's Treasuries. Inflation would not be their primary reason for buying gold.
Florian, it appears to me, at least, that your entire thesis regarding the debasement of the dollar, is actually becoming the new narrative overall. I agree with the premise, and have been expecting it for a while as I have been long commodity and basic materials stocks for months. But I continue to read more and more about that being the situation which leads me to believe, that is the current narrative. Only when we start to hear significant pushback, I think, will the next narrative appear!
What's the chance the next narrative could be crash recession though, with that one you kind of need to wait in cash, you don't have time to prepare. And they often happen when the market comes to terms with a slowdown.
That's true, but the amount of cash is the question. It should ideally change with the probability of a crash. IIRC we are in a recession (or near), a yield curve inversion (last I checked), and following from a tightening cycle. These are all risk factors, so I suppose more cash than normal makes sense.
Great as always Florian. Cheers!
Thank you!
"investors preferred to own gold, which pays nothing, over cash US Dollars"
Could that say something about the buyers in addition to their inflation expectations? I'm sure you've seen the Twitter accounts suggesting gold's strength comes from foreign central banks buying the barbaric relic after the US confiscated Vlad's Treasuries. Inflation would not be their primary reason for buying gold.
Agree that helps, but that buying has been going on before the breakout also…
Plus you see the same bid across other inflation sensitive real assets
Yet another good example of market reflexivity. Thanks for sharing, Florian.
Thank you Miguel!
Florian, it appears to me, at least, that your entire thesis regarding the debasement of the dollar, is actually becoming the new narrative overall. I agree with the premise, and have been expecting it for a while as I have been long commodity and basic materials stocks for months. But I continue to read more and more about that being the situation which leads me to believe, that is the current narrative. Only when we start to hear significant pushback, I think, will the next narrative appear!
What's the chance the next narrative could be crash recession though, with that one you kind of need to wait in cash, you don't have time to prepare. And they often happen when the market comes to terms with a slowdown.
that could well be the next narrative. arguably, one should always have cash as a part of the portfolio
That's true, but the amount of cash is the question. It should ideally change with the probability of a crash. IIRC we are in a recession (or near), a yield curve inversion (last I checked), and following from a tightening cycle. These are all risk factors, so I suppose more cash than normal makes sense.
what does that mean trading wise regarding precious metals and miners?
Own them across the board
thank you, great take ... working also on a research piece dedicated to inflation ... cheers!