Stock market crashes of 1929 heralding the Great Depression, 1987 Black Monday, 1999-2000 Dot Com, 2008 Financial Crisis and 2020 COVID crash if you care to remember.
Inflation alone might not trigger gold’s increase in value but ZERO to MINUS interest rates combined with high levels of inflation with a stagnating economy will. I think this is called negative real interest rates. I might just check this with a Alasdair McLoed article!
We have no incentive to save with historic low interest. How is your term deposit going? I am happy to hold bullion than see my bank savings buying power dwindle away before my eyes. Do you believe we will have any meaningful positive interest rates in the next 10 years?
With no avenue for wealth creation through a saving regime, society has been forced to stand around the roulette table and guess on where the wheel of chance will stop. This casino mentality by betting on companies with over valued P/E’s, crypto coins, meme stocks as well as the old fly on the wall has created the bubble of all bubbles.
The pump and dump is back and back big, and who is to say gold won’t be pumped some time in the future like everything else we are seeing today?
The world is minting billionaires nearly as fast as new crypto coins are being created out of thin air. The first trillionaire is not far away. If only they wouldn’t keep getting divorced.
But the gold price is not needing a deliberate pumping to head considerably higher as we have other factors fanning the fire.
But before you again say gold doesn’t rise on the back of inflation consider these points my humble Hot Copperite.
How much has your rent gone up this year over year? Reported at 10% yesterday and housing makes up 40% of the CPI basket read. Transitory inflation I hear you say? I don’t think your landlord is reducing your rent any time soon.
How much does it cost to fill a tank of gas, Premium is a $1.70. Do you think OPEC are going to give away there only moneymaker any cheaper heading into the green energy future? Lucky I drive a Tesla hey! But hang on, no semi conductor chips and mine has over 2000 of the suckers but I will get to supply demands shortly!
Stagnating economic growth will be the new norm, wait for the 3rd quarter earnings to start coming out and see downgrades of current earnings and future guidance forecasts. All the major US airlines did yesterday out of coincidence.
Manufacturing input are rising significantly along with commodity shortages that are cutting into the bottom line forcing you know what? Let’s not talk about shipping costs as well. With people being paid to stay at home and spending on the internet and not being productive in employment they have created a demand surge with a massive production slowdown.
Basic economics of high demand with low supply equals inflation. Low productivity with high input costs adds to the inflation cycle that ultimately ends up in higher purchase costs for the consumer.
So many more factors contribute to the economic reality we now face but as you outlined earlier a few of your favourite forecast experts I know you’re up to speed with the smoke and mirrors narrative that the central banks are currently spruiking.
Wait for the stimulus to fade away and watch the unemployment soar, all these zombie businesses existing because of loan repayment deferral plans not including home mortgages.
Together it equals=
You guessed it Skol because as you said earlier you got it right ….. STAGFLATION
Stagflation is when you will really see the fireworks, but you already knew that, didn’t you.
The year on year company growth/earnings comparisons will all flatline or fall of a cliff next year as the current levels of growth have only been propped up and fuelled by the Central banks QE cash creation policies that you would certainly know are unsustainable.
Thanks for your modest post earlier, so refreshing , but I think you have been watching too many Peter Schiff podcasts!
