Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
US Stocks Climb A “Wall Of Worry” To New Highs - 16th Apr 21
Gold’s Singular Role - 16th Apr 21
See what Anatomy of a Bursting Market Bubble looks like - 16th Apr 21
Many Stock Market Sectors Are Primed For Another Breakout Rally – Are You? - 16th Apr 21
What Skyrocketing US Home Prices Say About Inflation - 16th Apr 21
Still a Bullish Fever in Stocks? - 16th Apr 21
Trying to Buy Coinbase Stock on IPO Day - Institutional Investors Freeze out Retail Investors - 15th Apr 21
Stocks or Gold – Which Is in the Catbird Seat? - 15th Apr 21
Time For A Stock Market Melt-Up - 15th Apr 21
Stocks Bull Market Progression Now Shows Base Metal Strength - 15th Apr 21
AI Tech Stocks Buy Ratings, Levels and Valuations - 14th Apr 21
Easy 10% to 15% Overclock for 5600x, 5900x, 5950x Using AMD Ryzen Master Precision Boost Overdrive - 14th Apr 21
The Current Cannabis Sector Rally Is Pointing To Another Breakout - 14th Apr 21
U.S. Dollar Junk Bond Market The Easiest Money in History - 14th Apr 21
The SPY Is Nearing Resistance @ $410… What Is Next? - 14th Apr 21
The Curious Stock Market Staircase Rally - 14th Apr 21
Stocks are Heating Up - 14th Apr 21
Two Methods in Calculating For R&D Tax Credits - 14th Apr 21
Stock Market Minor Correction Due - 13th Apr 21
How to Feed Budgies Cucumbers - Best Vegetables Feeding for the First Time, Parakeet Care UK - 13th Apr 21
Biggest Inflation Threat in 40 Years Looms over Markets - 13th Apr 21
How to Get Rich with the Pareto Distribution - Tesco Example - 13th Apr 21
Litecoin and Bitcoin-Which Is Better? - 13th Apr 21
The Major Advantages Of Getting Your PhD Online - 12th Apr 21
Covid-19 Pandemic Current State for UK, US, Europe, Brazil Vaccinations vs Lockdown's Third Wave - 12th Apr 21
Why These Stock Market Indicators Should Grab Your Full Attention - 12th Apr 21
Rising Debt Means a Weaker US Dollar - 12th Apr 21
Another Gold Stocks Upleg - 12th Apr 21
AMD The ZEN Tech Stock - 12th Apr 21
Overclockers UK Build Quality - Why Glue Fan to CPU Heat sink Instead of Using Supplied Clips? - 12th Apr 21 -
What are the Key Capabilities You Should Look for in Fleet Management Software? - 12th Apr 21
What Is Bitcoin Gold? - 12th Apr 21
UK Covd-19 FREE Lateral Flow Self Testing Kits How Use for the First Time at Home - 10th Apr 21
NVIDIA Stock ARMED and Dangeorus! - 10th Apr 21
The History of Bitcoin Hard Forks - 10th Apr 21
Gold Mining Stocks: A House Built on Shaky Ground - 9th Apr 21
Stock Market On the Verge of a Pullback - 9th Apr 21
What Is Bitcoin Unlimited? - 9th Apr 21
Most Money Managers Gamble With Your Money - 9th Apr 21
Top 5 Evolving Trends For Mobile Casinos - 9th Apr 21
Top 5 AI Tech Stocks Investing 2021 Analysis - 8th Apr 21
Dow Stock Market Trend Forecast 2021 - Crash or Continuing Bull Run? - 8th Apr 21
Don’t Be Fooled by the Stock Market Rally - 8th Apr 21
Gold and Latin: Twin Pillars of Western Rejuvenation - 8th Apr 21
Stronger US Dollar Reacts To Global Market Concerns – Which ETFs Will Benefit? Part II - 8th Apr 21
You're invited: Spot the Next BIG Move in Oil, Gas, Energy ETFs - 8th Apr 21
Ladies and Gentlemen, Mr US Dollar is Back - 8th Apr 21
Stock Market New S&P 500 Highs or Metals Rising? - 8th Apr 21
Microsoft AI Azure Cloud Computing Driving Tech Giant Profits - 7th Apr 21
Amazon Tech Stock PRIMEDAY SALE- 7th Apr 21
The US has Metals Problem - Lithium, Graphite, Copper, Nickel Supplies - 7th Apr 21
Yes, the Fed Will Cover Biden’s $4 Trillion Deficit - 7th Apr 21
S&P 500 Fireworks and Gold Going Stronger - 7th Apr 21
Stock Market Perceived Vs. Actual Risks: The Key To Success - 7th Apr 21
Investing in Google Deep Mind AI 2021 (Alphabet) - 6th Apr 21
Which ETFs Will Benefit As A Stronger US Dollar Reacts To Global Market Concerns - 6th Apr 21
Staying Out of the Red: Financial Tips for Kent Homeowners - 6th Apr 21
Stock Market Pushing Higher - 6th Apr 21
Inflation Fears Rise on Biden’s $3.9 TRILLION in Deficit Spending - 6th Apr 21
Editing and Rendering Videos Whilst Background Crypto Mining Bitcoins with NiceHash, Davinci Resolve - 5th Apr 21
Why the Financial Gurus Are WRONG About Gold - 5th Apr 21
Will Biden’s Infrastructure Plan Rebuild Gold? - 5th Apr 21
Stocks All Time Highs and Gold Double Bottom - 5th Apr 21
All Tech Stocks Revolve Around This Disruptor - 5th Apr 21
Silver $100 Price Ahead - 4th Apr 21
Is Astra Zeneca Vaccine Safe? Risk of Blood Clots and What Side Effects During 8 Days After Jab - 4th Apr 21
Are Premium Bonds A Good Investment in 2021 vs Savings, AI Stocks and Housing Alternatives - 4th Apr 21
Penny Stocks Hit $2 Trillion - The Real Story Behind This "Road to Riches" Scheme - 4th Apr 21
Should Stock Markets Fear Inflation or Deflation? - 4th Apr 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Magflation: An Unexpected Gold and Silver Driver

Commodities / Gold and Silver 2021 Mar 12, 2021 - 12:22 PM GMT

By: MoneyMetals

Commodities

During the 1970's, the U.S. experienced a decade of below-trend economic growth combined with rising interest rates – and eventually – massively higher gold and silver prices.

Some sectors boomed while others lagged, and then as now, the majority of the population struggled with rising home and commodity prices, bookmarked by lofty interest rates.

This stilted and challenging environment, which came to be called stagflation, eventually drove the more perceptive people into gold and silver.


The result?

Gold, having been freed from its long-term tether of $35, first rose to $200, then dropped to $100 before rocketing to an all-time nominal high of $850.

As per usual on a percentage basis, silver rose even more, topping out at $50 the ounce.

For years now, (officially-stated) inflation has been annualizing at one or two percent per year. Most people, including the current generation of market participants, have little or no memory of the relatively high inflation, interest rates and metal's prices of the late '70's.

They may be about to get a shock...

Plata o Plomo?

Mexican bandits, when attempting to relieve victims of their money, might ask them "Plata o Plomo?" – Silver or lead (bullets)?

Given that demand and the rising cost of components have now priced ammunition several times higher in all calibers than last year, perhaps those who stack both silver and ammo should change this phrase to "Plata y Plomo"... Silver and Lead.

The picture nearby from a local gun range shows something well beyond the Fed's sub-2% inflation target.

But then they also said it would be acceptable to let inflation "run hot." Last year a box of .22 rounds could be had for less than $25. Is the Fed getting what they asked for?

Inflation? Deflation? Both?

This debate has gone on for several years as governments continue to ramp up spending. Oversimplified, if they let our debts default, the result is deflation.

If the printing press and spending spigot remain unchecked, then inflation is more likely. Excessive demand, loss of confidence, and increased money velocity (turnover) leads reliably to the inflationary door.

A few asset classes like the stock market and most real estate sectors initially keep up but later on lag severely, as purchasing power declines precipitously.

But gold and silver catch a wave, and wealth preservation for the lucky relative few, historically topping out at 2.5 - 3% of the population's assets, is largely assured, enabling a small minority to seriously blunt the inflationary impacts on their material wealth.

Since August 2020, it hasn't been a bed of roses for metals/mining shareholders.

However, as Lobo Tiggre states, "No price goes up forever without taking a break. That's why they call it a correction...In short, I see any near-term correction as a buying opportunity for commodities - even more so for gold and silver, which are monetary metals as well - notice that silver falls into both categories."

Prices UP? More buying of gold and silver. Prices Down? Same Story.

What's becoming increasingly apparent is that when gold and silver prices rise, public buying increases. And when prices drop... public buying increases! The mints I've spoken to all report sustained sales of everything gold and silver.

Take Australia's Perth Mint.

Perth Mint minted product sales for both gold and silver soared during February, with more than 124,000 troy ounces of gold, and more than 1.8 million troy ounces of silver sold during the month. Relative to February 2020, sales increased by more than 400% for gold and 200% for silver, as investors took advantage of lower precious metal prices.

The Federal Reserve has only three ways to "deal with" debt: make significant cuts in deficit spending; substantially raise taxes; or let inflation drive economic policy, with the end result that government debts are paid off in increasingly worth-less paper.

Agriculture Prices Have Broken a 10-Year Downtrend

Given the way politicians and the currency creators have historically dealt with this, I'd cast a strong vote for the inflationary "solution."

What indications do we have right now that not only is inflation higher in disparate sectors of the economy considerably than the government's highly- manipulated statistics tell us, but even more important, that the rate of increase is moving at a worrisome (to us) speed.

  • In Indonesia, tofu costs 30% more than it did in December.
  • In Brazil, the staple, turtle beans, have risen 50% in the past month.
  • In Russia, consumers are paying 60% more for sugar over the last year.
  • Cereal inflation is now running at a 20% annualized rate.
  • Locust swarms are devouring food supplies in East Africa and Saudi Arabia.
  • Michael Snyder writes that The Head of the UN Food Program has stated there will be "famines of biblical proportions in 2021."
  • And demonstrating that, thanks in no small part to the recent Wall Street Bets – Reddit successful (if initially short-lived) foray into buying silver miners and physical metal, the case that we're moving into the public recognition phase for our thesis has been greatly strengthened.

Note a new subreddit, Wall Street Silver, already has over 30,000 subscribers.

Few people are aware that, even as the Feds tout the validity of the CPI in tracking inflation – both current and expected – they openly admit food prices are the most accurate predictor of inflation!

Start keeping track of your grocery tab!

No less an establishment thinker than former U.S. Treasury Secretary, Lawrence Summers, opines, "I think there's a real possibility that within the year, we're going to be dealing with the most serious incipient inflation problem we have faced in the last forty years."

Consider that – starting right now – elevated inflation, concomitant with uneven economic growth and massive deficit spending via guaranteed income and the likely build out of MMT - is going to duplicate the deleterious stagflationary effects of the '70's... on steroids!

Got silver? Got lead?

David Smith is Senior Analyst for TheMorganReport.com and a regular contributor to MoneyMetals.com as well as the LODE Cryptographic Silver Monetary System Project. He has investigated precious metals’ mines and exploration sites in Argentina, Chile, Peru, Mexico, Bolivia, China, Canada and the U.S. He shares resource sector observations withr eaders, the media and North American investment conference attendees.

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules