Equities

Secular Stagnation and the Future Price of Gold

The economy is suffering from “secular stagnation,” writes Rosland Capital’s Senior Economic Advisor, Jeffrey Nichols. The economy remains anemic according to Nichols, who released a report on behalf of Rosland Capital.

“The latest economic data show a bounce back from the harsh winter interruption in activity – not an improvement in the underlying fundamentals as wishful thinkers believe.

The household sector simply cannot fund a recovery in consumer spending nor in home sales and new construction – prerequisites for a robust economy – because it remains overly indebted, underemployed and rightfully cautious. Meanwhile, much needed public spending is politically impossible.

Factor in a likely correction – or, worse yet, a crash – on Wall Street and there is still more juice for a resumption in gold’s long-term bull market.

Equity prices have been inflated by central bank monetary creation, not by a fundamentally healthy economy. The broad market indexes (like the S&P 500) are at or near record highs, not because most companies have moved higher but because a small few that dominate the indexes are up sharply.”

Nichols’ takeaway is that while in the past the competition between equities and gold has gone to equities, we are now at a point where there will be a shift towards bullion.

Read his full report or follow Rosland Capital on Twitter for more information.