Beast Of Burden

Despite the horrendous negative economic growth in the first quarter in the United States, equities kept up their purring as if they were a 16-cylinder engine tuned to perfection.

It should be said, however, that everyone knew a hit of this sort was coming, so it has been factored into the prices we're seeing on stocks. That does gold bulls no good, though. Risk appetite is high and haven demand remains very subdued.

There is some renewed tension in Ukraine and the region may be in for a protracted guerilla war. For the moment, the new czarists have hidden behind a veil, so Russia has managed to deflect pressures from the rest of the international community.

The rest of the world's equities were not as lucky as the American exchanges. Two out of three in Europe and two out of three in Asia slid today.

We're always curious about the price of crude oil and its relationship to economic growth and, of course, to gold.

After expanding inventories drove down the price of crude late yesterday and early today in overseas trading, crude rose in the U.S. This tells us that demand is the word of the day. And that demand seems to be coming from all over the globe.

That's a signal economies are growing and a sign that gold may be in for some rough fundamental weather.

An interesting macro side note on the world economy:

International trade is becoming less, not more, of a factor as the global recession slowly fades. There are many reasons for this. However, chief among them is that both the U.S. and Europe have milked all they can from offshoring and are now on-shoring, to use a current buzzword.

Robotics and other efficiencies have become overwhelmingly important to the world's most advanced economies.

The markets that countries like China have so cleverly exploited here and in Europe - that is, low-end product buyers - is comprised of consumers who are still reeling from the effects of the recession and probably won't be fully recovered soon. They will have time to establish new buying patterns.

And, since 2008 - six years ago now - the Baby Boomers of Europe and the United States are all that much older and, while their patterns may not be as traditional as in prior generations, consumption will diminish. And that consumption will focus on quality rather than quantity. The trend will only get magnified.

Finally - speaking of demographics - the Millennial generation, those roughly 18 to 34 right now, have come up in a world of diminished expectations. It may take some years before they become true consumeristsas. And they, like their soon-to-be-retiring parents will seek quality and value over shoddiness of manufacture.

These are macro trends, but they are, long term, good for gold, a traditional store of value.
 
As always, wishing you good trading,