From the spate of news reports on the state of the US economy, I sense that the wheels are coming off the (hoped-for) endless ride. The employment numbers were just not all that promising, and the trade numbers are suggesting that the US dollar is too high. I am sure that the US authorities would like to see higher interest rates and a lower dollar, higher rates so that if, as, and when a real slowdown [read recession] comes, they have something to fight it with besides monetary stimulus, and a lower dollar to help American business. Of course, what they might wish for and what is possible are two different things altogether.
The failure of the Fed to raise rates when they “had a chance” is a testament to the reality that there really was no chance, despite Janet Yellen’s loud protests to the contrary. That then raises the question, if there really is not strong “recovery” for 2016, then what should we expect? For my part, I look at the financial condition of Japan (awful), Europe (next to awful, especially some countries such as France and Italy), China (perhaps over the Atrill Curve peak and in need to debt reduction), and the US (right on the cusp of their own “black hole” (see Black Hole Economics on this blogsite). I do not see daylight!
I am inclined to be a buyer of gold and gold stocks at the present time, as I think that perhaps they have been in the doghouse for too long and may be about to emerge. Politically, strength in gold prices is an affront to central bankers everywhere and a rebuke of their own incompetency. Both cases are true – they are incompetent, and deserve rebuke. With Japan’s economy on the verge of collapse, and Europe in a mess, gold could shine without US dollar weakness. An about-face and an implementation of additional Quantitative Easing in the US would, I suspect, have a powerful impact on gold prices – and I think that one is coming.