Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24
RECESSION When Yield Curve Uninverts - 8th Sep 24
Sentiment Speaks: Silver Is Set Up To Shine - 8th Sep 24
Precious Metals Shine in August: Gold and Silver Surge Ahead - 8th Sep 24
Gold’s Demand Comeback - 8th Sep 24
Gold’s Quick Reversal and Copper’s Major Indications - 8th Sep 24
GLOBAL WARMING Housing Market Consequences Right Now - 6th Sep 24
Crude Oil’s Sign for Gold Investors - 6th Sep 24
Stocks Face Uncertainty Following Sell-Off- 6th Sep 24
GOLD WILL CONTINUE TO OUTPERFORM MINING SHARES - 6th Sep 24
AI Stocks Portfolio and Bitcoin September 2024 - 3rd Sep 24
2024 = 1984 - AI Equals Loss of Agency - 30th Aug 24
UBI - Universal Billionaire Income - 30th Aug 24
US COUNTING DOWN TO CRISIS, CATASTROPHE AND COLLAPSE - 30th Aug 24
GBP/USD Uptrend: What’s Next for the Pair? - 30th Aug 24
The Post-2020 History of the 10-2 US Treasury Yield Curve - 30th Aug 24
Stocks Likely to Extend Consolidation: Topping Pattern Forming? - 30th Aug 24
Why Stock-Market Success Is Usually Only Temporary - 30th Aug 24
The Consequences of AI - 24th Aug 24
Can Greedy Politicians Really Stop Price Inflation With a "Price Gouging" Ban? - 24th Aug 24
Why Alien Intelligence Cannot Predict the Future - 23rd Aug 24
Stock Market Surefire Way to Go Broke - 23rd Aug 24
RIP Google Search - 23rd Aug 24
What happened to the Fed’s Gold? - 23rd Aug 24
US Dollar Reserves Have Dropped By 14 Percent Since 2002 - 23rd Aug 24
Will Electric Vehicles Be the Killer App for Silver? - 23rd Aug 24
EUR/USD Update: Strong Uptrend and Key Levels to Watch - 23rd Aug 24
Gold Mid-Tier Mining Stocks Fundamentals - 23rd Aug 24
My GCSE Exam Results Day Shock! 2024 - 23rd Aug 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Fed President Worried the Fed Risks a Repeat of the 1970s

Interest-Rates / Inflation Feb 26, 2023 - 12:20 AM GMT

By: MoneyMetals

Interest-Rates

Gold and silver markets drifted lower again this week as investors braced for additional Fed rate hikes to come.

On Wednesday, the Federal Reserve released the minutes from its latest policy meeting. Policymakers agreed on the need for additional increases in interest rates. They settled on just a 0.25% bump up at their last meeting. But some dissenters called for a larger 0.5% hike.



Since the Fed’s last move, incoming economic data is emboldening the hawks. A superficially strong U.S. jobs report combined with stubbornly high inflation readings suggest central bankers have more work to do.

Following the Fed's policy meeting earlier this month, Chairman Jay Powell declared that disinflation was taking hold. But since then, inflation indicators have shown the opposite -- that prices levels in the economy continue to come in high and continue to exceed most forecasts.

Federal Reserve Bank of St. Louis President James Bullard is casting doubt on Powell's call for disinflation to take hold. Bullard says monetary policy is not yet sufficiently restrictive. And in recent remarks, he warned that if the Fed is too soft on inflation, we risk a repeat of the 1970s.

James Bullard: Inflation's a pernicious problem, so it is a risk and it does affect... One of the lessons over the last two years is that everybody feels the effects of inflation. It's pretty much across the spectrum, so rich and poor, young and old, everybody notices. So, if we can't get this problem under control soon, we risk a replay of the 1970s.

In the '70s, the U.S. monetary policy did not act strongly enough to keep inflation under control. Let's hope that we get disinflation in 2023, but right now it came in hotter than we thought.

Of course, the 1970s was a difficult decade for investors. Bonds got clobbered while stocks suffered a severe bear market in real, inflation-adjusted terms.

Precious metals were the standout asset class of the 1970s, culminating in a manic run to record highs in gold and silver in January 1980.

We aren’t yet seeing that kind of outperformance take shape. Although demand for physical bullion remain strong, there is little speculative interest on the long side manifesting in futures markets or exchange-traded funds.

In recent weeks, traders have been more inclined to sell metals contracts.

Metals markets are entering oversold territory and may be due for a technical bounce in the near future. Whether that develops into a more sustainable breakout will likely depend on whether the Federal Reserve indicates it will be winding down its rate hiking campaign.

For now, gold and silver bulls will view any bad news on the economy as good news.

In news on the sound money front, both houses of the Mississippi legislature have voted overwhelmingly to exempt physical gold, silver, platinum, and palladium coins and bullion from state sales taxes. The bill now awaits the signature of Republican Governor Tate Reeves.

Mississippi is set to become the 43rd state to exempt sound money from state sales tax. A dozen other states are currently considering legislation to rescind sales or income taxes on precious metals transactions.

The more tax and regulatory barriers to broad public participation in physical gold and silver markets that are removed, the greater the surge in buying will be if a 1970s-style mania phase in precious metals ensues.

By Mike Gleason

MoneyMetals.com

Mike Gleason is President of Money Metals Exchange, the national precious metals company named 2015 "Dealer of the Year" in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review.

© 2023 Mike Gleason - All Rights Reserved
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.


© 2005-2022 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