~*~Mining and Metals Du Jour~*~

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Is Gold Set To Lift Off Post Fed And Is The Fed Preparing For A Recession?
Jun. 13, 2017
https://seekingalpha.com/article/4081018-gold-set-lift-post-fed-fed-preparing-recession
Summary

The Fed set to raise rates .25 is a given. Could there be a surprise?

What gives anyone any confidence in the Fed or Trump's policies?

Is the Fed raising rates only to have more power to combat a recession?

Gold demand is set to increase in China and India mostly through demand for investment bars in China, signifying an important change.

Gold, silver and miner bounce coming. Be long all by next week.

The Fed is set to raise rates on Wednesday and most everyone agrees that they will raise rates by .25 basis points. Some go as far as saying the Fed may raise rates by .50 points. Why not? Everyone seems to believe in the Fed and what they do and ignore things like valuations these days. Ever since the days of CNBC commentators looking at the size of Alan Greenspan's briefcase the stock market analysts have worshiped the Fed and their monetary policy, even though we are now once again sitting on a stock market and real estate level that some say is due for a pullback. Let's looks at some details.

Credit card and auto loan delinquencies started to rise in January of 2017. Weak May jobs growth and a revision lower of both March and April's numbers should have the Fed concerned. Interestingly enough that day the stock market shot higher, but so did gold. Consumers are the story here though. Consumers make up 70% of GDP with their spending and the easy money through credit cards and loans to lesser qualified individuals may be ending soon as banks are starting to see some troubles. "Failed consumer loans also dinged banks' balance sheets. Banks charged off $11.5 billion of loans in total in the first quarter, an increase of 13.4%. Net credit card charge-offs rose 22.1%, while auto loan charge-offs increased nearly 28%." Retail stores have seen closures, layoffs and potential bankruptcies. Restaurant sales also continue to decline.

You can't have 3% growth that the Trump administration is expecting without productivity. Many look at the times since the great recession of 2008/2009 as being some of the best. But this has only been found in the pockets of those who benefited from an unprecedented stock market rise fueled by the Fed loosening of interest rates to historic lows. The stock market has reached all time highs and yet if you glance at productivity, you see that this rise is built on a pile of sand, not real growth. The stock market rise is just an illusion as productivity sits at its worst performance in 70 years but who cares when you are making money?