GLDI - The Zugzwang Position
- On one side, rates are forced higher. This will wipe out the marginal debtor. After rates have been falling for so long, the margin may be a wide swathe of the economy. Each downtick is a greater incentive to borrow.
- On the other side, those who understand credit are eyeing the tightening conditions nervously. By some estimates, the percentage of “zombie” debt out there is over 20%. The higher the rate, the more previously non-zombies become zombified.
- Gold’s price is now with a hair’s width of the all-time high. As the price goes up, the abundance of gold to the market rises and the scarcity of gold to the market falls. Since early this month, this trend has been pronounced.
For further details see:
The Zugzwang Position