Gold and silver are assets without counterparty risk if held directly because the bullion itself is the asset.
Obviously there is pricing involved, because the value of all goods is determined in markets these days.
Synthetic assets, on the other hand, are literally propositions that are weighed upon in varying degrees by counter-party risk.
The less tied to a tangible asset through a valid legal instrument, the greater the risk.
Certain new 'digital assets' are as the distillation of a synthetic instrument, with virtually no inherent value.
They are the hallmark of this new era. Such are the times.
The Non-Farm Payroll report was a disastrous miss, which *could* be a play to provoke the Fed to cut interest rates.
But this accumulation of sovereign debt increases the counterparty risk of holding Treasuries and Dollars, which are debt instruments of zero duration, economic theories to the contrary notwithstanding. Physical force is a very artificial asset upon which to rely.
Gold and silver rallied.
Uncle Buck slipped off the 99 handle.
Bitcoin has gone to backtest its recent breakout from its trading range. It does not appear to be a valid 'flight to safety asset' and is heavily correlated to speculation in the tech stock bubble.
But let's keep an open mind.
The 'war' with Iran has been planned with a surprisingly short attention span. And its progress shows.
I am deeply concerned about a cycle of escalation by Netanyahu and Trump to what has been so far been 'unthinkable' to US policy-makers. And these are just the guys who would do it.
And have a pleasant weekend.
Posted by Jesse at 5:04 PM
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These are personal observations about the economy and the markets. In providing information, I hope this allows you to make your own decisions in an informed manner, even if it is from learning by my mistakes, which are many. As a standing policy I never provide individual investment advice to anyone. My comments are intended to be reflection on general macro financial and economic events and trends.
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