RE: LOW BOND YIELD BULL GOLDarticle from yesterday bullish on gold in the fall... Basking in a Golden Summer and Preparing for a Frenzied Fall Monday July 25, 2016 16:50 The macro picture is aligned perfectly behind gold. Things have calmed because it is summer, but use this time to prepare for what will be a frenzied fall full of the kind of opportunities that only exist in the early days of a new gold bull market. Things are not terrible in the global economy. Growth is slow but exists. Unemployment is too high in some places but is generally improving. Inflation is not an issue in most countries. The problem, however, is that we are just managing to maintain mediocre despite years of ultra-low, zero, or even negative interest rates. Those rates were supposed to fuel a bigger fire. Instead, we have stubbornly low productivity growth and incredibly high debt levels. Low interest rates are not only problematic because they limit central banks abilities to accommodate future negative pressures; they are also highly problematic in and of themselves. Low rates encourage debt. Debt is future consumption brought forward. Once that happens, consumption that might have happened down the road will not happen. If the consumption is productive a new tool or factory then the theories about cheap debt helping to stimulate the economy make some sense. If the debt is just consumption paying fixed costs then it doesnt generate any growth at all and it limits future growth. That clearly is no good, but cheap debt has become such a mainstay that companies are using it for plain old costs, or for financial engineering (share buybacks), or to increase market share without actually improving their business case. For example, cheap debt encourages companies to buy up their competitors rather than researching and designing a better product. The end result is zero or negative net gain for the economy. And its everywhere. As a result, there just are no really safe places no economies with great strength, no currencies strong based on fundamentals (as opposed to relative security), no governments that have avoided accruing massive debts, no political spheres not facing serious challenges. This insecurity, broad and deep, kicks out one focal point of worry after another. Remember all the angst about Greece? Then all the endless talk about a hard landing in China? And now the anxiety over Europe? Each new cause of concern creates a market mess Greeces stock market has still not recovered from the hammering it got, China rebounded but only after the government intervened in numerous ways to limit the damage, and now European markets and currencies are getting ground down. The overall result: uncertain and volatile equity markets, ultra-low interest rates, wide credit spreads, and a strong dollar. All of those are good for gold. Well, a strong dollar doesnt specifically help gold, but amidst all those other forces it doesnt matter. Because what other options do investors have? Government bonds that literally yield nothing and whose value will deteriorate with inflation? Even in global economic leader America, yields are at an all-time low. For real: in the countrys 240-year history, 30-year Treasuries have never yielded this little. chart The yield on 10-year US Treasuries is also at an all-time low of 1.37%. And yields on British, German, and Japanese 10-year bonds are sitting at 0.7%, -0.2%, and -1.1%, all record lows. Looking ahead, the Japanese government bond yield curve is now negative out 20 years! The other option is stocks, but they are hot-damn expensive in America and riskily volatile elsewhere. So gold. Precious metals are the only option for security and value in our world of ultra-low or negative real interest rates, currency market volatility, and impotent central banks. More and more investors are reaching this conclusion. Thats why gold is already up almost 30% this year but it is also why I expect to keep inching up all summer and into the fall. The gold chart supports my contention. It is developing a clear pattern of higher highs and higher lows. And the price is getting very close to conquering its downtrend line from the 2011 high. chart It is roughed in on this chart, but the crosspoint is US$1,377 per oz. A bit of a step up from here and a momentous achievement it would be, but Im betting it happens before the end of summer. Also significant: if anything were to have pushed gold down, it would have been a strong US jobs report. And that is precisely what we got a few weeks ago: payrolls in America increased by 287,000 jobs in June, the largest gain since October. Gold did drop on the newsfor 5 minutes. It fell from US$1,360 to US$1,335 per oz. in a matter of minutes and then rebounded completely before settling into the US$1,350-per-oz. range for the day. The takeaway: for gold, flat is the new down. And that is the mark of a true bull market. The price has moved steeply enough that another consolidation phase is likely, including pullbacks of a few percent. But remember: while reactions to individual news events a Fed announcement, a stimulus move from the UK, or whatever will move the gold price on a daily basis, the lack of other options for yield or returns is the real driving force behind golds ascent and that is here to stay for some time. Because of all this, I am now of the mentality that gold will end the year between US$1,400 and US$1,500 per oz.