In his recent presentation, Grant Williams picked out several mathematical equations that simply don't work: equities vs. fundamentals, the gold price vs. the price of gold, Chinese economic activity vs. the Chinese GDP number, and France vs. well ... logic. In his latest 'Things That Make You Go Hhmm' extravaganza, he extends this series of 'Bizarro' situations to Japan, US Housing, high-yield credit, the outlandish effects that comments by central bank policy makers have on markets, the curious disconnect between insider trades and the broader market among others, and the trajectory of gold and the debt ceiling. There are countless more of these disconnects (the strength of the euro vs. EU economic data being a key one), which lead to a fundamental conclusion that is hard to deny: Sdnob, seitiuqe, setar tseretni, and seicnerruc will all eventually leave Bizarro World and come crashing back down to Earth (where they are known as bonds, equities, interest rates, and currencies); and when they do, they will likely do the opposite of what they're doing right now.
Among Grant's Charts That Make You Go Hhmm:
Tom Fitzpatrick of Citigroup has a point:
As can be seen from the chart [above], Gold has never stayed below that "stairway to hell" for very long. Given that the debt limit number is going to continue higher, a reemergence of Gold strength looks inevitable.
A lot of "considered opinion" suggests that by the end of the present electoral term (the end of 2016 when new presidential elections take place), that the US debt limit will be at around $22 trillion USD."
And the full newsletter is below: