USAGOLD/Peter A. Grant/02-13-17
Gold is maintaining a corrective to consolidative tone after failing to sustain Friday’s rebound in the face of continued stock market gains. Shares remain buoyed by President Trump’s promise that he will announce something big with regard to corporate taxes in the weeks ahead.
The trending stock market is certainly no reason to eschew one’s hedges. In fact, the current political and geopolitical environments are seen as key underpinnings to the gold market.
Data out this week are likely to reinforce rising concerns about inflation, which should also help support gold. While this is exactly what the Fed has been striving for, that it is now coming without the support of wage or economic growth should raise concerns.
In an article published last week on the St. Louis Fed’s website, entitle Why Does Economic Growth Keep Slowing Down?, the author points to weak productivity and capacity utilization.
Aside for a very minor turn higher in Total Factory Productivity, the above chart doesn’t show any real indication that things are starting to turn around. And Mr. Martin notes that the 1.6% annualized growth in 2016 is well below even the weak average over the past 8-years.
Sort of makes you want to look at the recent stock market performance with some degree of suspicion. I wonder whether the anticipated corporate tax cut will do anything to improve productivity, capacity utilization, or wages for that matter . . .
