It appears that governments have grown increasingly confident about their capacity to finance the next wave of the economic cycle. They are throwing caution to the wind and are committing to debt-finance further stimulus. Clearly they are looking at the poor state of unemployment and are concluding that they cannot afford to end the stimulus. This can only increase the inflation rate, though it might just push equity markets higher. I would caution, its probably just likely to prevent a faster fall as the markets will struggle with two issues:
1. The rising unemployment rate
2. The prospects of falling equity markets
3. The prospects of rising inflation
The market in the interim will react positively to good stock news, but rest assured that markets will shake off this good news eventually. In any respect the metals markets are looking good, with gold and other precious metals particularly attractive. In the Asian region, we have seen Philex, one of our favourite stocks double in price to P18.
In Australia, we have seen gold stocks perform well despite the strength in the AUD which reduces the $A denominated receipts from gold sales. There is of course a limit to how high the AUD will rise because of the prospects for a weaker global economy. Meanwhile we are projecting gold to rise from the current $1104/oz to $2400/oz. I'd give the market a maximum of 3 years to reach that level. We first started investing in gold in 2000 when gold was around $280/oz. The stocks then differed from todays. More news at Blue Sky Mines.
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Andrew Sheldon www.sheldonthinks.com
1. The rising unemployment rate
2. The prospects of falling equity markets
3. The prospects of rising inflation
The market in the interim will react positively to good stock news, but rest assured that markets will shake off this good news eventually. In any respect the metals markets are looking good, with gold and other precious metals particularly attractive. In the Asian region, we have seen Philex, one of our favourite stocks double in price to P18.
In Australia, we have seen gold stocks perform well despite the strength in the AUD which reduces the $A denominated receipts from gold sales. There is of course a limit to how high the AUD will rise because of the prospects for a weaker global economy. Meanwhile we are projecting gold to rise from the current $1104/oz to $2400/oz. I'd give the market a maximum of 3 years to reach that level. We first started investing in gold in 2000 when gold was around $280/oz. The stocks then differed from todays. More news at Blue Sky Mines.
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Andrew Sheldon www.sheldonthinks.com
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