Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

When the Rope Slackens

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Upon completing the article I realized that no forward look at the economy and financial markets from an inflationary/deflationary point of view would be complete without consideration of the Yield Curve. Here is its status at the time of writing. It is making a steepening hint this week along with the rise in bond yields. That signaling is inflationary, at least for now. But in 2008 the curve morphed from an inflationary steepener to a deflationary one and that’s an important distinction.

You’ll notice that a blessed Goldilocks economy is mentioned below as a less favored option for 2022. She runs with a flattening curve like the one during the 2013-2019 phase. If it steepens forget about Goldilocks and prepare for either an inflationary or deflationary steepener.

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Mush

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In this upside-down world of ours, the only asset class which reliably sucks is the one you’d least expect: precious metals. Seriously, if you took a time machine back to the year 2011, when gold was over $2,000 per ounce, and told them that the U.S. government was going to bring up another $10 trillion in debt…………whoever you told would sell everything they had to buy all the gold and silver they could afford. And yet, incredibly, that would be just about the only money-losing asset they could muster.

As I type this, gold is down over $30 per ounce. For the past thirteen months, gold has done nothing but fall.

slopechart GLD
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Gold and Copper

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The Copper/Gold ratio remains at a key decision point

Gold has been clobbered lately but a key metallic macro indicator remains in a long-term congestion zone. If it’s going to be cyclical ‘inflation ON’ we’d expect Cu/Au to break through and do what it has not done since a major inflation trade blew out in 2006-2008, and for the 30yr Treasury yield to eventually catch on and rise at least to the EMA 100 (blue line).

copper/gold ratio & 30 year treasury yield
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Glad about Gold

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After years of resisting, what finally pushed me over the edge and into crypto was my disgust at gold’s behavior. Precious metals should be thriving right now. Precious should be where the smart money goes. But, nope, it has sucked out loud for months, and this morning is no exception. I‘m glad to have nothing to do with it anymore. Although you can reliably count on Schiff having a put-everything-in-gold post every other day on ZH.

glddow
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