Gold Nuggets and News for May 2020

As we reach the midway of the month, here are some recent developments and news stories we don’t think our friends and clients should miss!

Food prices are starting to climb.

Here’s the headline from CNBC:  US grocery costs jump the most in 46 years, led by rising prices for meat and eggs.

“The Labor Department reported Tuesday that prices U.S. consumers paid for groceries jumped 2.6 percent in April, the largest one-month pop since February 1974.

“The price of the meats, poultry, fish and eggs category rose 4.3 percent, fruits and vegetables climbed 1.5 percent, and cereals and bakery products advanced 2.9 percent.”

It’s not illiquidity… It’s insolvency!

The problem on America’s financial landscaped is not something the Fed can fixed by just printing more money.  It’s not a problem of liquidity.  It’s a problem of insolvency.

That’s the view of Stanley Druckenmiller, the legendary hedge fund manager. 

“The consensus seems to be don’t worry, the Fed has your back,” Druckenmiller said recently. “There’s one problem with that.  Our analysis says it’s not true.”

Trillions in stimulus programs equal plenty of liquidity, but it doesn’t insure growth.  Stated differently, you can lower rates and pump money into the economy, but is it going to make people comfortable flying or make businesses want to expand capacity in the face of weak demand, or make people want to book cruises?  The stimulus programs aren’t enough to make the economy bounce back.  “It was basically a combination of transfer payments to individuals, basically paying them more not to work than to work. And in addition to that, it was a bunch of payments to zombie companies to keep them alive.”

Bloomberg characterized Druckenmiller’s views as “among the strongest comments yet by a Wall Street heavyweight on the bleak outlook facing the U.S.”

We’ve referred to Druckenmiller in these comments recently as among “the smart money” Wall Street figures who are buying gold.

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If people don’t buy something, does the price go up or down?  If people don’t drive does gasoline go up or down?  If people don’t fly, do airfares go up or down?

Looping back to rising food prices for a moment.  The Consumer Price Index for April, released this week, was down 0.08 percent.  According to the Bureau of Labor Statistics, that’s the biggest monthly decline since December 2008.

But hold the phone a second!

Economist Robert Wenzel points out that the drop was in things that nobody is buying.  

But people still eat:

“A 20.6-percent decline in the gasoline index was the largest contributor to the monthly decrease. The indexes for apparel, motor vehicle insurance, airline fares, and lodging away from home all fell sharply as well.

“On the other hand,  food indexes rose in April, with the index for food at home posting its largest monthly increase since February 1974. The prices for food at home increased in the month by 3.5% and the prices for food away from home increased by 4.21%.

“The index for meats, poultry, fish, and eggs increased the most, rising 4.3 percent as the index for eggs increased 16.1 percent. The index for cereals and bakery products rose 2.9 percent in April, its largest monthly increase ever…. 

“Within a month or so, I expect the travel related price indexes to flatten out and then you are going to start to see major across the board indexes showing price increases given the money the Federal Reserve is pumping into the system.”

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Republic Monetary Exchange  — Take delivery of your gold and silver today!

We are continuing to hear reports of other dealerships facing difficulty making delivery of gold and silver to their clients.  

Here at Republic Monetary Exchange we always recommend best practices and despite the difficulties others may have, we still have gold and silver in inventory.  

You can buy today and take delivery today!