Written by Bryan Lutz, Editor at Dollarcollapse.com:
Every Sunday morning I send out three thoughts.
Sometimes these thoughts are on the economy, life, or hard assets.
If they’re helpful or hopeful to you, that’s great… Sometimes it just comes down to reality. That’s what I’m interested in…
So, here we go.
Here are three Sunday morning thoughts for you:
1. While the S&P 500 soars to new all-time highs, gold outperforms. Here’s why.
On September 12, the Fed announced it would begin to reduce Federal Fund Rates…
And signalled another two cuts before the end of the year.
On September 18, rate cuts started with a 50bps reduction, higher than most expected.
A rate cut reduction allows for more liquidity in the markets.
So, it allows for businesses with debt, and those with mortgages to spend less money on interest payments and more place more money on the profit line of their income statement.
Now, let’s expand what’s happening.
From a macro perspective, interest rates have an inverse relationship with the S&P as well as gold.
When interest rates drop, the S&P and gold prices usually rise.
So, markets sing hallelujah.
The S&P 500 is once again hitting new all-time highs.
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Despite, the S&P hitting a new all-time high, it’s not beating gold.
The S&P has only risen just over 1% from the beginning of August until now while gold is up almost 5% since the beginning of August…
With wider gaps being made since the start of rate cuts.
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This is a trend that can be seen after every rate cut cycle begins.
For the first 18-24 months, gold outperforms the S&P 500.
Some gold stocks perform well, others perform extremely well. As the money supply expands, investors, central banks, and money managers are all hedging against inflation.
If you are interested in find out which gold and silver stocks will outperform, check out our premium service, dollarhedgeinsider.com.
2. Here’s one more reason for gold bugs to rejoice. Incrementum’s Annual OcktoberFest Gold to Beer Ratio shows your gold can buy more beer.
Every year the Mayor of Munich, Germany performs a beer tapping to kick off OktoberFest.
And oh, do the taps flow…
You purchase beer in 1 liter steins(Maß).
This year, one ounce of gold can get you 148 steins of beer.
That’s about 29 more liters than last year(an increase of 25%).
So we’re getting closer to 1980 levels, when it comes to trading beer for gold.
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In the last 75 years, there’s only been six years when gold has risen this much.
That’s because the European Union continues to devalue the Euro.
So, against gold, beer is doing well.
If you are a gold bug headed to OktoberFest, enjoy!
3. The US economy may be slowing down, but it still holds a monopoly on data. And that monopoly is ripe for weaponization.
The Sahm rule may have been triggered.
Unemployment and job losses may be rising…
And inflation may soon return, but in a knowledge economy those that hold the data win.
That’s because owning knowledge is a means to production.
If you do not have the knowledge, you cannot produce, and therefore, you cannot compete.
You can see a 2024 chart of the data centers below:
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There are more data centers in the US than all other major countries combined.
With the federal government, and companies like BlackRock investing billions into building more, data centers for the expansion of artificial intelligence, this gap will most likely widen even more.
It would be interesting to speculate how the federal government could weaponize this kind of monopoly in the future.
But all that exists right now is capability.
We’ve already seen how the US simply cut Russia out of the digital SWIFT payment system, instantly implementing trading penalties and sanctions.
You see, capability makes the US dangerous.
It makes their monopoly on data dangerous.
As of right now, it’s not being weaponized, but it could be.
