Safe havens soar...

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Safe Havens Soar

Geopolitics send gold flying higher — even as fundamentals continue to point to an imminent day of reckoning thanks to the Fed’s ultra-aggressive tightening.

Gold spiked last night and continues to gain today, but it’s no reason for gold bugs to rejoice.

As President Biden was winging his way toward Israel, the remains of a rocket fell on a hospital parking lot in Gaza, resulting in significant if still indetermined civilian casualties.
 

While the evidence points toward an own-goal situation in which a Palestinian Islamic Jihad rocket fell short, the event turbocharged an already tense situation and sent safe haven investments flying higher.
 

But yesterday, even before the rockets launched, there was a rush to safety, with not only gold and silver rising, but also Treasury yields and the dollar.
 

Any port in a storm, as they say.

“The Inevitable Seems To Have Become Imminent”

The stampede to safe havens continued today, with gold adding to its gains, soaring as much as $40 higher.
 

As I write, gold’s up about $25. Silver, after rising even more than gold on a percentage basis, fell into the red but has crept back up into the green. The Dollar Index and 10-year yields remain near their highs, even as stocks are mired at their lows.
 

Again, gold bugs shouldn’t be too happy about these moves, not only because of the death and destruction that’s sparked the price rallies, but also because the very likely de-escalation ahead will send metals prices right back down.

In the end, this geopolitical spike will have obscured underlying fundamentals that are now pointing, more than ever, toward a reckoning in the markets and the financial system.

I confused some followers on Twitter/X this morning when I cryptically posted that “The inevitable seems to have become imminent.”
 

That comment wasn’t directed toward the events in Gaza or the market mayhem that’s resulting, but rather toward the macroeconomic issues that seem to be coming to a climax now.
 

I’ve written extensively for years now on these issues, primarily how debt levels this high make positive real rates impossible to bear...and all the repercussions that follow from that hard fact.

But there’s another issue that I’ve barely touched on: what happens when/if the Fed loses control of interest rates?

This issue revolves around the apparent re-emergence of the “bond vigilantes,” those nameless investors who, upon looking at the U.S. fiscal situation in the 1980s, essentially shouted “No!” as they sold bonds relentlessly.
 

In short, they demanded a much higher yield to take on the risk that was apparent to them.
 

Fast forward to today, and we see the U.S. Treasury force-feeding a mountainous supply of new paper — thanks to an exploding deficit, a tsunami of existing Treasurys rolling over and a backlog of issuance from the latest debt-ceiling brinksmanship — into a market devoid of its usual buyers.
 

Not only the Fed, but other central banks have withdrawn from buying Treasurys...and those buyers who might be so inclined to purchase are now doing so only if much-higher returns are guaranteed.
 

No less than the last three Treasury auctions have been abysmal failures.

If the bond vigilantes wrest control over rates, they will tighten monetary policy far in excess of what the Fed intends...and truly send the economy reeling.
 

In reaction, the Fed will, as usual, over-react, and unleash a flood of new liquidity that will make their previous efforts pale in comparison.

James Lavish has a fantastic thread on Twitter/X explaining the trend in process right now. (James is unable to participate in New Orleans this year, but has agreed to a special video interview exclusive to conference attendees.)

Say what you will about central banks running the global economy, but at least there’s been some order to that regime. What lies ahead will be disorderly, dangerous...and very bullish for gold, silver and other safe havens.

It’s Never Been More Important To Be Prepared

So the “inevitable” I referred to in this morning’s X post was the end game of the four-decade-plus trend of ever-easier money.
 

This latest geopolitical crisis reminds us of how unstable today’s world is, but it isn’t the cause of what will follow. That will come from many years of monetary appeasement and currency debasement.
 

The end game of this trend has always been inevitable, and now many of the repercussions seem about to emerge in the days just ahead.

That’s why it’s more important than ever for every serious investor to be prepared. And the best way to do that, as has been proven over the last 49 years, is by attending the New Orleans Investment Conference.

It’s especially important now, not only because of the volatility now swirling around the markets and the economy, but also because we’re gathering what I feel is our finest speaker roster ever.

In just a couple of weeks, you’ll hear from Matt Taibbi...James Rickards...Danielle DiMartino Booth...George Gammon...Konstantin Kisin...Rick Rule...Dominic Frisby...Brent Johnson...Lyn Alden...Dave Collum...Peter Boockvar...James Stack...Peter Schiff...Jim Iuorio...Tavi Costa...
 

...Adrian Day...Adam Taggart...The Real Estate Guys...Gwen Preston...Brent Cook...Mark Skousen...Nick Hodge...Robert Prechter ...Chris Powell...Albert Lu...Gary Alexander...Dana Samuelson...Jeff Hirsch...Steve Hochberg...Mary Anne & Pamela Aden...Bill Murphy...Gerardo Del Real...Omar Ayales...Rich Checkan...Keith Weiner and more, including yours truly.

Once again, if you register now, you’ll save up to $400 from the registration fee, and guarantee a place in our convenient host hotel.
 

And with our iron-clad money-back guarantee (just let us know with 60 days if you’re unsatisfied, and we’ll refund your entire registration fee!), you have little to risk and so much to gain.
 

Time is running short — I urge you to click on the link below to make sure you’ll join us this year.

All the best,

Brien Lundin
Publisher, Gold Newsletter
CEO, the New Orleans Investment Conference
 

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