Silver Could DOUBLE
The bubble is over.
I want to explain why we are living in an inverse world to that of 2009 through 2011.
In those days, the FED was pumping currency like crazy for the time in its existence, and Wall Street was convinced it would bring hyperinflation.
Everyone and their mother was buying silver, but by the time 2011 came around, Wall Street finally realized that if you pump liquidity into the banking system, which doesn’t trickle down to the consumer economy, you can enjoy growth without creating excess inflation.
The gold trade was over, and so was the silver trade.
Both collapsed hard. Gold, as the signature inflation hedge, dove nearly 50% between September 2011 and December 2015. Silver nosedived from $49 to around $12. The FED then signaled in late 2015 that it might have overestimated its ability to keep rates at zero without causing inflation, so it raised rates.
For the first time in 4 years, Wall Street saw a need to hedge its portfolios. Gold and silver rallied big in the following 9 months until the threat of inflation evaporated once more.
With very low lending rates and credit circling at the top, not filtering through to the lower classes, which didn’t enjoy the deflationary boom, no real inflation materialized even though businesses were hiring left and right.
Powell even said that the connection between wages and inflation seemed to have decoupled.
In 2018, with tariffs and slow growth, gold again sank to $1,180 at the lows.
From then on, it was obvious the economy was heating up. Gold started to climb, reaching nearly $1,800 when the world realized the government’s plan to shut down the entire economy.
From its March 2020 bottom, gold and silver rallied. In July 2020, silver had its best month since 1980. In August, gold hit a new all-time high!
Gold peaked just as markets were hitting all-time highs again as the consensus began to build that central banks had made a huge mistake by igniting a bailout bubble and they’d have to take back their enormous stimulus measures.
The 10-year bond yield went from 0.5% in August 2020 to about 4% recently in one of the most aggressive re-ratings in U.S. history.
It will take another 12-18 months of unwinding to shrink the balance sheet to normal levels acting as more rate hikes, but that isn’t the issue that makes Wall Street reconsider gold after more than a decade of zero returns.
The new job economy gives more wage power to entry-level workers than executives because the party of zero interest rate policies, which saw stock compensation and buybacks go through the roof, HAS ENDED.
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In the coming few months, every business in America will look at how it can function without raising capital as if it has no access to lending, no access to VC money, no access to share dilution, and no way of growing unless it is by investing its own earnings back into itself.
Those that don’t make that pivot and shift to profitability or offer a path will be bought out by competitors for pennies on the dollar.
The indices can’t rally if the world’s largest companies are contracting, and they won’t.
Bonds won’t rally if the U.S. consumers remain strong, which they are.
Therefore, in this cocktail of stagflation, gold will rally to $2,000 again as portfolios clearly need to be hedged for inflation.
Best Regards,
FutureMoneyTrends.com
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