The most recent run in gold and silver is based on the belief that the central banks all over the globe are once again about to ease. When the most recent run up started, there was sound basis for the belief as economic data was weak. However, the recent data flies in the face of gold and silver bulls.
At The Arora Report, we monitor economic data from 23 countries. Late in the second quarter and until recently this quarter, the economic data from all over the world was weak. For the first time since the 2008 financial crisis, our adaptive models were beginning to give a high probability to a recession in the U.S.
Economic indicators can be broadly divided into three categories: the lagging indicators, the coincident indicators, and the leading indicators.
The focus of our research is leading indicators. As the name implies, leading indicators provide an early indication of the direction of an economy. Examples of such indicators are vendor delivery schedules, hours worked in a week, and new construction permits.
Early last year, when the consensus was that the world may enter into a recession; our models based on the leading indicators were forecasting a slower economy, but no recession in the U.S. or Asia, and only a mild recession in Europe. This correct call by our economic models was primarily responsible for generating profits last year.
About a month ago the picture was different. The leading indicators were warning that the probability of a recession had increased.
Europe
On August 14th, GDP data was released in Europe. The eurozone saw quarter-on-quarter contraction of 0.2% less than most expectations….Read more at Kitco
