All Is Not Well

All is not well behind the curtain.

If all you did was listen to the talking heads on TV you might think things are all right.

You've heard the talking points. The economy is strong, we just recorded the lowest unemployment rate in 50 years etc. etc.

But dig a little deeper and there's a lot to be worried about.

While unemployment is at a 50-year low, the U.S. manufacturing index showed its worst reading in a decade.

The U.S. manufacturing purchasing managers' index from the Institute for Supply Management came in at 47.8% for September, the lowest since June 2009.

This was not a one off as it is the second consecutive month of contraction.

The export orders index was 41%, the lowest level since March 2009.

The contraction is the direct result of the escalation of the trade war between the U.S. and China.

Tensions between the two countries seemed to ease last week as Trump announced he had reached a "phase one" deal that would address intellectual property concerns raised by the U.S. and buy $40 billion to $50 billion worth of U.S. agricultural products.

In exchange, the U.S. had agreed to hold off on a tariff hike set for this week.

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But that was the deal according to the Trump administration.

Just this morning we find out that China wants another round of talks before the signing of this deal.

Meanwhile, the Federal Reserve announced last week that it will start buying about $60 billion per month in Treasury bills to ensure "ample reserves" in the banking system.

Translation: "We're worried about liquidity."

The Fed added that the new program does not mark a change in monetary policy.

So the Fed was reducing its balance sheet and is now expanding it to the tune of $60 billion per month until the second quarter of 2020, but nothing has changed. Got that?

George Orwell is somewhere pointing fingers at everyone.

All eyes are once again on the Fed as most believe that another quarter point rate cut is in the cards.

To top it off, the Euro continues to fight for its existence.

Italy just launched new debt in U.S. dollars, not Euros, as it looks to attract dollar investors.

Pick a place. Whether here in the U.S., Hong Kong, Ecuador, Peru, the Middle East, or the UK, the times are a changin' and they bring increased volatility and an opportunity for a great reset.

That means higher gold prices. But be careful what you wish for because those higher gold prices come with a real human cost.

To your wealth,

Gerardo Del RealEditor, Junior Mining Monthly and Junior Mining Trader.

For the past decade, Gerardo Del Real has worked behind-the-scenes providing research, due diligence and advice to large institutional players, fund managers, newsletter writers and some of the most active high net worth investors in the resource space. Now, he is bringing his extensive experience to the public through Outsider Club, Junior Mining Monthly, and Junior Mining Trader. For more about Gerardo, check out his editor page.

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