Kitco News
(Kitco News) – After the COVID-19 pandemic, markets will likely see extremes. And whether it will be deflation, inflation, or both, gold prices stand to benefit, according to the World Gold Council (WGC).
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Bloomberg Opinion/Stephen Roach/1-25-2021
“Based on a wildly unpopular forecast that I made in June of a 35% decline in the value of the dollar by the end of 2021, we are only in the third inning of a nine-inning baseball game. If that forecast comes to pass, it will provide an important exclamation point on the first year in office for America’s 46th president, Joe Biden.”
USAGOLD note: With respect to the Bloomberg headline, we would argue that the dollar’s crash is ongoing, though we would not argue too stridently against Roach’s opinion that we may have reached the terminal phase for this leg of the cycle. Please note the chart immediately below. Based on the consumer price index, the dollar has lost 85% of its purchasing power since 1971 when the Nixon administration severed the link between the dollar and gold and launched the fiat money era. Surprisingly, it has lost 52% of its purchasing power since 1990 during a period economists generally describe as disinflationary.
Sources: St. Louis Federal Reserve [FRED], U.S. Bureau of Labor Statistics • • • Click to enlarge.
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Credit Bubble Bulletin/Doug Noland/1-23-2021
“Yellen: ‘The smartest thing we can do is act big. In the long run, I believe the benefits will far outweigh the costs.’ I hate being this pessimistic. But in no way do the long-term benefits of massive deficit spending today outweigh the cost. Current market and economic structures ensure resources are poorly utilized. The securities markets are today a powerful mechanism for resource misallocation and wealth-destruction. And I see Trillions of deficit spending generating limited sustainable economic benefit. Meanwhile, ‘acting big’ will further fuel ‘Terminal Phase’ excess, with terrible long-term consequences…
My biggest fear is materializing. When this historic Bubble bursts, a major crisis will unfold with our nation’s finances in complete shambles. The Fed’s ‘money printing’ operation has gone parabolic as it desperately attempts to sustain an unsustainable Bubble. Treasury debt growth has gone parabolic as Washington tries to sustain an unsustainable economic structure. The system is on a trajectory that ensures a crisis of confidence – and I don’t see this as some long-term concern. This is an issue of short-term sustainability.”
USAGOLD note: Yellen says “the world has changed.” Noland says “History will not be kind.” By that, we are not certain if he means history will be a harsh judge, or that it will deliver an inevitable comeuppance. Either way, the wolf, it would seem, is at the door.
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Linked-in/Ross Norman
“Specifically we see ongoing US dollar weakness, deeper negative real rates in the treasury markets and a significant rise in unproductive debt as the Democrats open the spigots with fiscal stimulus as supporting factors. With the economy still contracting in Q1, we expect a bounce in H2 as the vaccine frees up the economy. With the recovery comes demand-pull as well as cost-push inflation further fuelled by the higher velocity of money, leading to expectations of much higher inflation, notwithstanding the weak labour markets.”
USAGOLD note: Ross Norman has finished high or won the annual LBMA price forecasting contest (including last year’s) that one is forced to pay attention. He sees $2025 as the average price, $1810 as the low, and $2285 as the high. Norman says physical demand for silver coins and bars will show “impressive gains,” reflecting ‘strong demand for safe havens in these troubled times.” He sees $36 as the high for gold’s traveling companion.
Repost from 1-21-2021
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Visual Capitalist/Niccolo Conte/1-1-2021
Repost from 1-21-2021
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