1) Looking at income relative to increases in the cost of living in the US I really don’t see true long-term US economic recovery occurring.
1.1) Median household income 1986 $52,068 to $59,039 = +12.22%
1.2) Median home price 1986 $92,025 to $328,600 = +257.08%
Income in gold 141.41 ounces in 1986 to 44.34 in 2017 = -68.65%
Median Home Price in gold 249.93 ounces down to 245.21 = -1.89%
1.3) Mortgage debt 1986 436.1 billion up to 1,321.9 billion in 2017 = +203.11
Growth of the US National Debt in Gold
2) Compare Median Household Income to other costs.
2.1) Median Household Income 2000 $58,544 to $59,417 2017 = +1.49%
2.2) Median Rent Indexed to 2000 = +74.4%
2.3) Groceries indexed to 2000 = +97.60%
2.4) Health care indexed to 2000 = +135.60%
2.5) Gasoline indexed indexed to 2000 = +93.70%
2.6) Consumer price indexed to 2000 = +46.50%
2.7) Gross Domestic product 2000 12.35T up to 17.27T 2018 = +39.75%
2.8) S&P 500 2000 1,394.46 up to 2,762.13 in 2017 = +98.07%
2.9) Tax receipts. median home, M1, gold, CPI
3) I believe the US has misrepresented true inflation for more than 2 decades to contain US debt service cost. Low inflation justifies artificially low Treasury deposit rates which is saving the US Government trillions in debt service costs and made US budget deficits appear less horrific. Since 1986 US Federal debt has increased by 859.05% yet US Federal debt service cost by only 102.89%.
3.1) Federal debt to debt service cost
3.2) National debt 1986-2017 = + 859.05%
3.3) US debt service cost 1986-2017 = +102.89%
4) These negative rates of return stripped savers of trillions of dollars in interest income that would have been spent in the free market economy.
4.1) CPI relative to short term deposit rates (negative rates of return)
4.2) CPI relative to long term deposit rates
5) With near zero inflation, historic low short-term deposit rates and record low borrowing costs for banks, credit card rates never went below 11.96%. Adding insult to injury The Fed created over 1.7 trillion US dollars with keypunch entries to bail out these banks which enabled the problem to occur in the first place.
5.1) US bank borrowing cost to lending rate
5.2) Emergency purchases of bank debt by the Federal Reserve
6) If US inflation were to be reported using 1990 CPI calculations deposit rates would rise with US debt service cost increasing by over 800 billion annually, using 1980 calculations over 1.6 trillion annually.
33) CPI using pre 1980 & 1990 calculations.
51) BLS.GOV “official CPI
7) During “Economic Recovery” savers were stripped of trillions in interest income, US Federal debt to GDP, Federal debt to income and Federal debt to the employed population are all at or near record highs.
7.1) US debt to GDP ratio at 103.74%
7.2) US debt has grown 5 times faster than personal income ratio
7.3) US debt +859.05% employed population +6.80%
8) The Fed has created over 4 trillion US dollars backed by no tangible asset or income flow which in the long-term will be detrimental to the US dollar.
8.1) Total purchased by the Fed with created money
9) US fiscal mismanagement hasn’t gone unnoticed, there are now 11 countries with a higher credit rating than the United states.
9.1) US credit rating versus other countries
10) The US dollar is now in an established down-trend
10.1) 20 Year Chart US dollar Index
11) The United States is vulnerable to liquidation of US assets help by foreign investors, the 6.3 trillion in US Treasuries is just the tip of the iceberg.
11.1) US Treasury debt held by non US investors
12) I believe USD selling will engage, net new USD shorts will enter the market and the USD could eventually test the lows we saw in
12.1) 20 Year Chart US dollar Index
Although I always trade with the trend up or down I believe in the long-term we’ll see gold continue to outperform Global shares and currencies.
13) Global Stock Index to Gold Ratios
13.1) S&P 500 (ES) Gold (GC) Ratio 20 year using monthly data
13.2) ES/GC last 12 months using daily data
13.3) Euro Stoxx 50 (FX) Gold (GC) Ratio 20 year using monthly data
13.4) FX/GC last 12 months using daily data
13.5) FTSE 100 (X) Gold (GC Ratio) 20 year using monthly data
13.6) X/GC last 12 months using daily data
13.7) DAX (DY) Gold (GC) Ratio 20 year using monthly data
13.8) DY/GC last 12 months using daily data
13.9) CAC 40 (MX) Gold (GC) Ratio 20 year using monthly data
13.10) MX/GC last 12 months using daily data
14) Gold Charts in Major Currencies
14.1) Gold (GC) Priced in Euro Currency (E6) 20 year using monthly data
14.2) GC/E6 last 12 months using daily price data
14.3) Gold (GC) Priced in British Pounds (B6) 20 year using monthly data
14.4) GC/B6 last 12 months using daily price data
14.5) Gold (GC) Priced in Swiss Franc (S6) 20 year using monthly data
14.6) GC/S6 last 12 months using daily price data
14.7) Gold (GC) Priced in Japanese Yen (J6) 20 year using monthly data
14.8) GC/J6 last 12 months using daily price data
14.9) Gold (GC) Priced in Australian (A6) 20 year using monthly data
14.10) GC/A6 last 12 months using daily price data
14.11) Gold (GC) Priced in Canadian (D6) 20 year using monthly data
14.12) GC/D6 last 12 months using daily price data
If you have questions send us a message or schedule an online review .
Regards,
Peter Knight Advisor
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