They Aren’t Buying What Washington is Peddling

The Gold and Silver Market Can See Right Through It!

We think it is worth going back thru what Washington has been peddling over the last week.

It starts with the Federal Reserve’s announcement on Wednesday (7/27) that it was raising its policy interest rate, the Fed funds rate by 75 basis points, or ¾ of a percent.

Wait just a runaway-inflation second here!  

Just weeks earlier the Consumer Price Index for the 12 months through June was reported.  It was up to 9.1 percent.  That is serious inflation by anyone’s standard.  In fact, it was well higher than the consensus forecast of 8.8 percent.  

In the Phoenix-Mesa-Scottsdale metro area, inflation spiked to 12.3 percent!

Accordingly, it was assumed in many quarters that at their July meeting the Fed would have to – would have to! – show its resolve and raise rates a full percent.  That’s because things were clearly spinning out of control!

But the Fed punted.  Chairman Powell announced a lesser rate hike.  

It looks as though the Fed isn’t really serious about corralling inflation.  So gold ticked up.

Then, the next day (7/28), the numbers came in on the nation’s productivity.  For the second quarter in a row, the US economy was contracting.  Another excuse for the Fed to shirk its responsibility to terminate inflation.  Gold ticked up again.

Then, the day afterward (7/29) another inflation report came out.  This is the one the Fed prefers to rely on (probably because it soft-pedals the extent of the problem).  This one, the Personal Consumption Expenditures index climbed more quickly than it has in 40 years, up a full one percent for the month of May alone.

So gold ticked up again.

Now Biden has a new bill with hundreds of billions of new taxes and spending.   

Here’s what makes the irony complete.  They are calling it The Inflation Reduction Act of 2022.  Of course, it won’t do anything to reduce inflation.  Even Wharton researchers at the University of Pennsylvania get that.  “Statistically indistinguishable from zero,” says the Wharton School study.

We think it will increase inflation.  It’s on a success track along with Biden’s deft Afghan withdrawal, or his claim that you can’t get Covid if you have the shot.  Maybe you remember “transitory inflation.”   Or its cousin “there is no recession.”

We’re in trouble.     

Time to buy gold.  Your best defense against Bidenflation.