RE:RE:I’m reading a ton of stuffA inference may be that the FED and other central bankers and treasuries are much more interested in the stability of financial markets and banking then in real estate portfolio values. The real estate itself isn’t going anywhere, it still has utility. Look at what happened with Evergrande on the Chinese stock market - looks for all the world like a synthetic put was placed on the stock to contain any anxiety about market capitalization.
The FED has to address inflation concerns eventually without creating a self-fulfilling problem. So they have to taper their $120 billion/mo bond purchases. But they will be more reluctant to move aggressively on interest rates while the economy remains sluggish and stagnant. The good market may well take tapering as confirmation of inflation fears and thus start a new upward leg. If the broad market starts a sell down taper-tantrum reflect that it is high-flyers like the FAANGs, Tesla, etc., that are floating on huge gains that seem very aggressive bets on downstream profit growth. Gold equities are already off this year, in many cases with miners showing healthy income and balance sheets at $1700/gold. Same for junior explorers with viable deposits being outlined. Gold and gold equities may respond to the perceived risks out of a taper tantrum as a flight to safety asset, given interest rates remain in negative real territory, and the FED’s reluctance to raise rates appreciably.
Historically fear of inflation and fear of equity market weakness has been a bigger driver of investment gold demand than actual inflation. The set-up right now is looking more like the late 70’s when stagflation was the flavor de jour.
We all need our own game plan based on our own perception and conclusion of economic forces, do your own thinking. For me, a healthy gold position, including a good chunk of a higher-risk, leverage to ounces explorer portfolio (hello among others TUO and TUD) is a good hedge and potential major profitable trade at this time. Far more attractive today at today’s prices and given another excellent drilling season, the gold price action, then the frothy happy run-up day’s of the summer or 2020.
Got gold? Hang on.
cg