Russia’s Struggling Economy Starting To Hurt Europe

Gold prices ended lower on better-than-expected jobless claims. U.S. stocks ended volatile session with modest losses. Gold last traded at $1,287 an ounce. Silver at $19.14 an ounce.

Central bankers are once again in the news today.

In Europe, the European Central Bank (ECB) announced today that it is poised to cut interest rates or adopt radical measures next month to stimulate the European economy.

Unemployment remains stuck just below its record level of 12%, zapping consumer demand. The euro is trading near its recent peak above $1.39, making life harder for European exporters and exerting more downward pressure on prices as imports become cheaper. So, naturally, the ECB is going to undermine its value, which seems to be the standard practice for central banks. This will result in higher gold prices in terms of euros and higher demand for gold as well.

To make matters worse, there are early signs that the meltdown in Russia’s economy is starting to hurt some of Europe’s big companies. Any escalation in the conflict in eastern Ukraine could hit business and household confidence.

That crisis contains significant risks for Europe, and the region would feel the impact more than other parts of the world if it escalates.

When it comes to geopolitics, don’t listen to what world leaders say, watch what they do. Amidst all the talk, Putin oversaw a military exercise involving Russia’s nuclear forces and a Russian aircraft carrier task group sailed into the English Channel.

The other central banker in the news is US Fed chair Janet Yellen, who has been spending a lot of time on Capitol Hill lately.

Two statements by Yellen are cause for concern.

Responding to a question from socialist Senator Bernie Sanders, Yellen said she didn’t know whether America was still a capitalist democracy or an oligarchy in which economic and political power rests with a billionaire class.

Additionally, citing the Congressional Budget Office’s long-term budget projections, she told the Joint Economic Committee of Congress that under current policies the federal government’s deficits “will rise to unsustainable levels.”

What she meant by “unsustainable” was left unsaid, as were the economic and political consequences.

In the 10-year budget projections it released in April, the CBO estimated the federal government will run $7.618 trillion in deficits from 2015 through 2024. At the same time, the CBO projected the federal government’s debt held by the public would rise from $11.983 trillion at the end of fiscal 2013 to $20.947 trillion by the end of 2024.

The total debt of the federal government at the end of fiscal 2013–including both the debt held by the public and the intragovernmental debt–was $16.719 trillion. The CBO estimates by 2024, the total debt of the federal government will be $27.159 trillion—of which $20.947 trillion will be debt held by the public.

If that projection holds up, the federal debt held by the public in 2024 would be more than four times the $5.035 trillion federal debt held by the public at the end of 2007.

Finally, a leading market prognosticator expressed worries this week about the possibility of a new, severe financial crisis.

Marc Faber, publisher of The Gloom, Boom & Doom Report, says he believes the 2008 financial crisis could be just a precursor to a more severe economic fallout on the horizon.

As a percentage of the advanced economies, total credit—including corporate, government and consumer debt—is 30 percent higher than it was in 2007, Faber said. “I don’t think the economy is recovering at all. We have in the American economy a slowdown.”

Under that scenario, “stocks in the advanced economies are basically fully priced,” he argued, and said government bonds are expensive, given their low yields.

He also cited the crisis in Ukraine among the geopolitical problems that serve as a negative for the financial markets.

Faber said he expects the selling in the momentum names to spread to the broader U.S. stock market. He predicted a correction later this year.

Gold Jumps On Dovish Fed Minutes

Gold prices up over 1% on dovish Fed minutes. U.S. stocks lower on downbeat trade data from China and better-than-expected jobless claims. Gold last traded at $1,320 an ounce. Silver at $20.09 an ounce.

The sell-off in stocks was renewed in earnest today in the wake of minutes from the last Federal Reserve Open Market Committee meeting.

All the major stock indices, particularly the tech-heavy NASDAQ, are sharply lower thus far and the price of gold is up more than $13.

The minutes suggested officials will be cautious on increasing interest rates going forward.

Ordinarily this would buoy stocks, but not right now. The stock market action is being dominated by continuing worries about high-tech stocks and a flurry of disappointing earnings reports.

The Federal Reserve’s flip-flopping statements on monetary policy bode well for gold.

Today the markets were also greeted with the news that claims for unemployment had plunged to their lowest levels since 2007. But, the devil is in the details and the details suggest this number does not represent a trend.

The issue at hand has to deal with seasonality. The drop in jobless claims may be more the result of statistical quirkiness than a dramatic improvement in the job market. The problem is these numbers are notoriously volatile around March and April. Unemployment claims for this time of year are historically impacted by holidays, such as spring break, Easter and Passover. It remains to be seen whether this is the start of a trend.

Meanwhile, China’s economy lost momentum in the first quarter and growth in 2014 could fall short of the government’s official target . This could jeopardize global growth as many world economies are dependent on China for both the supply and demand side of the equation. It is no wonder millions of Chinese are turning to gold.

Stock Sell-Off May Not Be Over Yet

Gold prices ended slightly lower, but climbed higher after release of Fed minutes. U.S.stocks rally after Fed minutes revealed a more dovish stance than investors expected. Gold last traded at $1,305 an ounce. Silver at $19.77 an ounce.

The stock market has rebounded somewhat over the past two days but there are indications that the sell-off could resume.

Technical analyst Louise Yamada says the stock slide isn’t over just yet.

“I don’t think the pullback is already over,” Yamada, of Louise Yamada Technical Research Advisors, said on Tuesday. “I think that it’s an interim pullback, and we’ve certainly seen what we’ve expected, in the Internet and biotechs coming off. And I think that although they may bounce, there’s probably still a little bit more to go on the downside.”

The selling could spread to other sectors, such as aerospace and consumer discretionary stocks. Yamada says the weakness in stocks lines up well with broader bearish indicators, such as the fact that 2014 started with a weak January, and is a midterm election year.

Another sector that has been in the spotlight recently has been banking. US banking regulators on Tuesday ordered the eight largest “too big to fail” banks to raise capital levels in a bid to address weaknesses seen in the 2008 financial crisis.

Federal Reserve Chair Janet Yellen said the robust capital standards — the banks will need to raise a reported $68 billion in additional capital — were “essential to reduce systemic risk and mitigate the distortions imposed by institutions deemed too big to fail.”

The banks affected are Bank of America, The Bank of New York Mellon, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, State Street and Wells Fargo.

The move is designed to help ensure banks can remain on their feet when the funding market for banks suddenly dries up in a crisis, as happened in 2008, when governments were forced to step in and prop up financial institutions.

This is just the latest sign that there are serious concerns about the health of the banking sector and its ability to withstand an economic and financial crisis.

Let’s face it: you don’t keep ordering banks to prepare for crisis if you don’t have a concern that a crisis is on the way.

The Federal Reserve may be imposing policies on the private sector but the private sector has its own opinion of Federal Reserve policies. Wall Street in particular has been the beneficiary of the Fed’s loose money policies. Now that the Fed is tapering Quantitative Easing and making noises about eventually raising interest rates, Wall Street is protesting.

The latest Fixed Income Forum Survey from global rating agency Fitch Ratings showed that money managers desire the Federal Reserve to maintain their loose monetary policy. According to the data, 70% of the respondents said the Fed’s monetary support is either important or critical.

Rising interest rates are negative for the bond market as they depress the prices of existing bonds.

The money managers also see one major risk to the economy: the labor market. Most believe the employment situation is worse than reported in official statistics–something we’ve been pointing out for months.

There is another long-forgotten factor that may be creeping back into the economy: inflation, in the form of rising prices. Extreme weather has thinned the nation’s cattle herds, roiling the beef supply chain from rancher to restaurant. As a result, beef prices have reached all-time highs in the U.S. and aren’t expected to come down any time soon.

The retail value of “all-fresh” USDA choice-grade beef jumped to a record $5.28 a pound in February, up from $4.91 the same time a year ago. The same grade of beef cost $3.97 as recently as 2008.

Soaring beef prices are being blamed on years of drought throughout the western and southern U.S. The dry weather has driven up the price of feed such as corn and hay to record highs, forcing many ranchers to sell off their cattle. That briefly created a glut of beef cows for slaughter that has now run dry.

The nation’s cattle population has fallen to 87.7 million, the lowest since 1951, when there were 82.1 million on hand, according to the USDA.

Finally, as we have reported repeatedly over the past several months, there is a long-term trend to supplant or even replace the US dollar as the world’s reserve currency. One candidate to step up into the dollar’s place is the Chinese yuan.

Numerous reports have shown nations declaring interest in or directly discussing diversifying away from the US dollar. Standard Chartered bank notes that at least 40 central banks have invested in the yuan and several more are preparing to do so. The trend is occurring across both emerging markets and developed nation central banks. Perhaps most ominously, for the dollar, is a former-IMF manager’s warning that “The Yuan may become a de facto reserve currency before it is fully convertible.”

Yellen Sends Signals Of Possible Ongoing Fed Monetary Policy

Gold prices end slightly lower but set for quarterly gain of nearly 7%. U.S. stocks ended higher, boosted by hopes of monetary stimulus from the European Central Bank. Gold last traded at $1,283 an ounce. Silver at $19.75 an ounce.

On the final day of the first quarter, gold is up about 7% year to date; despite recent corrections. An array of economic reports due out this week should have an impact on the financial markets going forward.

The first such report came out this morning. Though overshadowed by the Obamacare deadline, it showed more indications of a stagnating economy.

A gauge of Chicago-area businesses tumbled in March, hitting the lowest level since August, with drops in new orders and employment. The Chicago purchasing-managers index fell to 55.9 in March, down 3.9 points from February. Economists surveyed had expected a March index reading of 60.

Speaking of Chicago, Fed Chair Janet Yellen was speaking at a conference there this morning and her remarks sent some new signals on possible ongoing Fed monetary policy.

She said the recovery still feels like a recession to many Americans, which is why the central bank will keep its “extraordinary” support for the economy for “some time to come.” This contradicts much of what she has said in the past several weeks, particularly on Capitol Hill before Congress when she has boasted of the success of the Fed in fueling the recovery.

It’s no secret Americans have very little confidence in the economy and haven’t for months. Beyond the way Americans may “feel”, the actual economic statistics have sent mixed signals at best. This certainly doesn’t have the characteristics of a “recovering” economy. In fact, there is plenty to suggest – from business activity and employment numbers – that the momentum is headed in the opposite direction and compounding the US dollar’s problems.

The US economy is not the only world economy of concern for investors. China’s economy is moderating. However, China’s appetite for gold remains robust.

Withdrawals out of the Shanghai Gold Exchange (SGE) in the first quarter of 2014 are close to global new gold production. Sales have totaled 532 tons suggesting an annual total of 2,305 tons should this level of sales continue throughout the year.

Finally, Michael Lewis, author of Liar’s Poker, a 1980s bestseller about excess and corruption in Salomon Brothers on Wall Street, is out with a new blockbuster book called Flash Boys: A Wall Street Revolt.

In the new book, Lewis maintains the US stock market is rigged by a few big traders using automated, ultra-fast computer programs.

“The United States stock market, the most iconic market in global capitalism, is rigged … by a combination of the stock exchanges, the big Wall Street banks and high-frequency traders,” he said in an interview with CBS’s “60 Minutes.”

The victims, he said, are “everybody who has an investment in the stock market.”

“The insiders are able to move faster than you and play it against orders in ways you don’t understand,” Lewis said.

Not only are individual investors victimized by this activity but this program trading is a dangerous activity that can quickly spiral out of control. For instance, program trading played a major role in the October 1987 stock market crash when computer programs snowballed the downward momentum by triggering sell orders without human intervention. And those 1980s computer programs were slow compared to those of today.

Tensions Rising Again In Crimean Region

Gold prices lower on a stronger U.S. dollar and better-than-expected economic data. U.S. stocks end week lower amid concerns over the Fed raising rates sooner than anticipated. Gold last traded at $1,294 an ounce. Silver at $19.79 an ounce.

Geopolitical factors could be poised to once again take center stage in the financial markets. As we enter the weekend, there are 100,000 Russian troops massed on the border with Ukraine.

Just last week, it appeared the crisis was fading after Russia essentially annexed Crimea. But now it appears tensions are once again rising. Ukraine cut off utilities to the Crimean region and Russia rapidly moved 80,000 additional troops to the border.

Russian ruler Vladimir Putin claims the troop movements are just part of routine exercises but US intelligence doubts that claim. In fact, the U.S. State Department believes the Russian army is now prepared to launch an invasion of eastern Ukraine if President Vladimir Putin decides to pull the trigger.

It remains to be seen if Putin will pull that trigger, but the Russian military is not set up like the old Red Army. It would be a major logistical burden to leave 100,000 troops just sitting in place on the Ukrainian border and Ukrainian officials understandably fear the worst.

This is a factor that could very well transform the financial markets by the open of trading on Monday.

Elsewhere, the Federal Reserve is once again in the news. You may recall that the Fed flunked Citigroup in its latest “stress test”, designed to determine how well prepared a bank is to endure potential economic scenarios. Today the banking industry is fighting back.

Bank executives and investors are lashing out at the Federal Reserve, attacking its stress tests as “opaque.”

The stress tests provided a tailwind to US bank stocks when they were first deployed in 2009, shoring up confidence that the sector could withstand a deterioration of the financial crisis.

But the Fed has since raised the bar each year, demanding more capital and better procedures while refusing to heed banks’ complaints that the process is too much of a “black box”.

It certainly is no surprise that a governmental regulatory body has been less than forthcoming, but banks calling someone else “opaque” is certainly hypocritical.

One prominent factor in the financial markets lately is the prospect that the Fed will start to raise interest rates. Just last week, in the wake of comments from Fed Chair Janet Yellen, it looked like rates could rise as soon as the outset of 2015. Now, someone else at the Fed is waffling on that.

The U.S. Federal Reserve will need to keep rates at rock bottom until late 2015 and then increase them only moderately over the next year because it would otherwise risk derailing a building economic recovery, Chicago Federal Reserve Bank President Charles Evans told the Credit Suisse investment conference in Hong Kong.

“I personally doubt that the funds rate is going to start to increase before the middle of 2015.I think it ought to increase later than that,” Evans said.

It will be interesting to see what impact Evans’ comments have on the investment markets, but some experts already see trouble brewing in stocks due to Fed policies.

Once the Fed begins to truly reduce its massive bond buying programs later this year, markets could see a quarter of their value wiped off the books, Jay Jordan, founder of the Jordan Company, told CNBC today.

He blames the monetary policies of former Fed chair Ben Bernanke for artificially inflating asset prices through super-low interest rates:

“We’ve been living under the cloud of financial repression for the last four to five years.”

Jordan said investors need only to look at what happened in emerging markets earlier this year to see how U.S. markets will react once the Fed ends its easy money policies.

“You’ve seen it start in the emerging markets,” Jordan said. “It’s already facing us. Their currencies are getting destroyed. Their GDPs are getting destroyed.”

This morning, USA Today published 3 warning signs it says are flashing on Wall Street:

1. Not-so sweet IPO.

The high profile initial public offering of King Digital, the maker of the game app Candy Crush, got crushed, plunging nearly 16% in its first day of trading, vs. an average first-day IPO pop of 22%, according to Renaissance Capital. The dive sent shivers through the frothy IPO market, which has been flying high and earning comparisons to the IPO peak in 2000.

2. Hot momentum stocks cool off.

Wall Street “story stocks,” such as mega-popular plays favored by Main Street investors, such as social media darling Facebook and electric-car maker Tesla, are getting slammed after skyrocketing earlier in the year. Facebook is 16% below its recent intraday high and Tesla is down more than 20%, which puts it in bear-market territory. Red-hot biotech shares, which were behaving in a speculative fashion, have also gotten slammed.

3. Leader turns laggard.

The once-hot Russell 2000, an index of small company stocks, that soared 37% last year and led the performance derby earlier this year, is not acting like a market leader anymore. Thursday, it closed 4.7% from its March 4 all-time high, and is now performing worse than the large company stocks in the S and P 500.

Indeed, skittishness is making a comeback.

Mutual fund investors are getting nervous. Last week, they yanked nearly $4 billion out of U.S. stock funds, marking the first outflows since mid-February.

SATC Chairman Craig R. Smith on The Harvest Show – March 21, 2014

He oversees one of the most respected ministries in the country … CEO Cary Vaughn talks about his God-given vision for Love Worth Finding Ministries. And the chairman of Swiss America Craig R. Smith joins me with today’s economic news.

Gold Continues To Outperform Other Investments

Gold prices end higher on a weaker U.S. dollar and bargain hunting. U.S. stocks retreated from daily highs, still set for weekly gains. Gold last traded at $1,336 an ounce. Silver at $20.31 an ounce.

Times have been good for holders of gold so far in 2014 despite predictions of lackluster performance from big financial institutions. Analysts weren’t expecting much from gold this year. Many big banks were forecasting average 2014 prices below $1,300 an ounce, down from last year’s average of $1,413. But the precious metal has already managed to outperform U.S. stocks, bonds, emerging markets and the dollar.

One factor that has prompted investors to turn to gold is concerns over the future prospects for the Chinese economy, the 2nd largest economy in the world after the USA. Data indicate that the Chinese economy is losing momentum. CBB International’s China Beige Book survey, published this week, showed China’s economy slowed this quarter, with industries including retail and mining showing weaker revenue growth while loans through non-traditional channels became more expensive.

“The pace of Chinese economic expansion has plainly slowed,” Leland Miller, president of survey publisher CBB International, said.

A future factor for which gold could be called on to provide shelter might be trouble in the US banking sector.

In the event of a deep recession in the United States, steep declines in home prices, and recessions in the euro area as well as Japan; 30 major banks in the U.S. would lose a total of $501 billion over nine quarters, according to the latest round of stress testing from the Federal Reserve.

One bank, Salt Lake City-based Zions Bancorp, wouldn’t meet the Fed’s minimum standards for capital in a worst-case scenario. However, there is another bank that private sector analysts have concerns about and it isn’t a small bank. It’s Bank of America. Goldman Sachs believes that most U.S. banks came out of the recent stress tests looking pretty good, with one notable exception: Bank of America.

The second-largest bank in terms of deposits passed the test but left some analysts wondering just how strong its cash position is. Goldman Sachs expressed its concerns in a note today.

When the one bank that is causing private analysts to be concerned is the 2nd largest bank in the country, that isn’t very comforting, no matter what the Federal Reserve may say about its “stress” testing overall.

On a final note for the week, in case anyone still clings to the illusion we can trust the so-called “mainstream” financial media, Bloomberg’s CEO stated this week that the news agency should have suppressed negative stories about China in the interests of promoting its own business enterprises there …a rather bald-faced admission that manipulation is alive and well.

Gold Prices Shine On Fed Statements

Gold prices extends streak, but fell just short of $1,300. U.S. stocks break four-day winning streak. Gold last traded at $1,295 an ounce. Silver at $20.34 an ounce.

In a recent interview, Federal Reserve Bank of St. Louis President James Bullard stated he was “still optimistic” about the outlook for the economy and predicted a growth of 3%, or more, this year. His statements gave stocks early gains today, which they struggled to maintain later in the day.

This came just one day after Federal Reserve Chairman Janet Yellen said she is planning on continuing the strategy of trimming stimulus in “measured steps.” However, many criticized the new chairman for her inconsistent remarks regarding employment data. Yellen dismissed reports showing last month’s hiring rose by only 113,000, significantly less that the 180,000 forecasted. Yellen expressed that she was “surprised” by these figures but felt there was “progress” in the labor market.

As many know, the unemployment rate doesn’t always tell the whole story and may not be the best measure of the job market because the data only includes individuals who have searched for work within the last four weeks. In the latest report, the unemployment rate had dropped to 6.6% in January. However, a record 91-million adult Americans aren’t looking for jobs, the highest level since 1978, and therefore are not counted in the unemployment rate. Not everyone in this category are discouraged workers, some of these individuals are students or stay-at-home parents who have chosen not to work.

The most recent Jobs Openings and Labor Turnover Survey, or the JOLTS report, showed December was the worst month for job creation since August 2012. Layoffs have hit a four month high and employers are hiring fewer workers than any month since June. This data shows the labor market may not be as strong as Yellen thought.

With all of this instability and inconsistency in the markets gold is the place for investors to seek safety and security. Today, gold reached a three-month high while Silver caps its best rally since 2011. This would extend gold’s streak to a sixth straight session. Both metals rallied on speculation that U.S. stimulus will continue to boost the appeal of alternative assets. So far in 2014 gold has rallied 7.7% amid a slump in emerging-market currencies and rising physical demand.

First Yellen Testimony Sends Mixed Signals

Gold prices climbed higher Tuesday, lifting the metal’s prices more than 3% in five trading sessions. U.S. stocks extend 4-day winning streak after Yellen testimony. Gold last traded at $1,289 an ounce. Silver at $20.15 an ounce.

The Janet Yellen era at the Federal Reserve has commenced this morning as she testified before the US House of Representatives. Her testimony sent mixed signals. She claimed the Fed’s policies would reflect a “great deal of continuity” from the previous Chairmanship of Ben Bernanke, widely believed to mean she plans on continuing to “taper” the Quantitative Easing program. But she also said “too many Americans remain unemployed.”

This certainly suggest she will be leaning toward continued loose monetary policy in general.

And, if the employment picture continues to soften, who knows what her ideas may bring in terms of the future of tapering.

Once again, the latest report from the Labor Department on employment is not encouraging. The department reported this morning that job openings at U.S. workplaces ticked down to 3.99 million in December from 4.03 million in November. The number of separations, such as quits and layoffs, rose to 4.37 million in December from 4.28 million in November. Meanwhile, the total number of hires declined to 4.44 million from 4.53 million. The level of hires was almost 5 million when the recession began.

The stock market will be watching Janet Yellen very carefully, no doubt. But there is something else the stock market is watching right now: the charts of the Dow Jones Industrial Average. Those charts show eerie parallels between the stock market’s recent behavior and how it behaved right before the 1929 crash. The chart superimposes the market’s recent performance on top of a plot of its gyrations in 1928 and 1929 and the two lines look shockingly similar. If this correlation continues, the market faces a particularly rough period later this month and in early March.

In reaction to stock market worries, wealthy investors are avoiding stocks and moving into alternative investments, such as art. The markets for art and collectible cars are exploding. At the London auctions this week, Sotheby’s and Christie’s reported record results for their sales. For now, wealthy investors seem to want to buy assets they view as more secure—and certainly more fun and enjoyable to own. Rare coins are another asset class that bridges the gap between fine art and hard assets.

Elsewhere in the tangible asset markets, gold has been performing extremely well in 2014, in contrast with stocks. Gold is enjoying record demand from China and investment demand in the West is returning. One factor largely attributed to causing the decline in gold in 2013 is now absent from the market: ETFs. These funds sold off a great deal of physical gold in 2013. Those ETFs no longer have quantities of gold to sell. Meanwhile, investment demand for gold coins is soaring, as evidenced by reports from mints in the US, the UK, Austria and Australia.

1.30.14 – Fed Announces It Will Continue To “Taper”

Gold prices fall nearly 2% on higher U.S. dollar, equities gain. U.S. jobless claims jump 19,000 to 348,000. Gold last traded at $1,242 an ounce. Silver at $19.13 an ounce.

The Ben Bernanke era comes to a close tomorrow at the Federal Reserve and the Fed commemorated the event by announcing it would continue to “taper” its bond buying program in February by reducing bond purchases from $75 billion in January to $65 billion.

The Fed justified this decision by citing improved economic conditions, particularly improvements in the unemployment rate.

This is curious because the economic data in recent months has been mixed at best and the employment picture has been masked by steep declines in the labor participation rate to previously unheard of levels .

Of course, this assumes the Fed’s monetary “stimulus” can boost the economy in the first place, a dubious assumption to be sure.

Just this morning, there was yet more evidence of economic stagnation.

The number of people who sought U.S. unemployment benefits near the end of January rose to the highest level in six weeks. In the seven days ended Jan. 25, initial jobless claims jumped by 19,000 to a seasonally adjusted 348,000, the Labor Department said this morning . Economists had generally expected claims to edge up to 330,000.

Consumer confidence dropped last week to the lowest level in two months. The Bloomberg Consumer Comfort Index declined to minus 31.8 in the week ended Jan. 26 from minus 31 reading the prior period. The buying-climate gauge slumped to a three-month low. Retreating stock prices are probably damping sentiment among upper-income groups, while higher gasoline costs at the pump hurt the nation’s lowest earners.

Barring a large rally in the stock market today and tomorrow, the S&P 500 will be down for the month of January, an early warning sign that usually means further weakness ahead.

This will be the first January loss since 2009, and the largest monthly decrease in eight months.

The January barometer has been right in 62 of the last 85 years, or 73 percent of the time. Since 1929, the index followed January’s direction 80 percent of the time when it finished positive, and 60 percent of the time, when it finished negative.

More recently, in the past 35 years, the S&P 500 followed January’s direction 25 times, or 71 percent of the time (83 percent of the time for the Dow, and 74 percent of the time for the NASDAQ).

Volatility as measured by the VIX, is up 26 percent this month. Since the VIX was launched in 1986, there have only been three instances when the so called fear gauge gained over 15 percent in January.

In two of those times, the S&P ended the year down more than 5 percent. The other year, 1987, the market crashed in October, but managed to close positive.

While January is only one of 12 months of the year, history shows it tended to predict the year’s direction quite accurately. Meanwhile, another expert is forecasting higher gold prices in the medium and longer term. Lawrence Roulston of the Resource Opportunities newsletter had this to say about the value of gold to investors:

“Gold is headed higher in the medium term and the long term. There will still be a lot of volatility at play during the short term, but gold will continue its uptrend of the last 13 years. Gold is always going to have an intrinsic value. Think about the big selloff in paper gold last year. People were lining up to buy physical gold as investors were dumping exchange-traded funds and paper gold on the market. But central banks are still net buyers of gold. China is emerging as the biggest buyer at both the consumer and the central bank level. Gold has been the mainstay of financial systems for more than 5,000 years!”