The World has Figured it Out. It's Simple. Buying Gold is How You DEFUND The Federal Reserve.
US Treasuries have no appeal to Majority of the World, but Gold does.
You don't have to look back too long in history to see how the Federal Reserve, with its 400 Ph. Ds and unparalleled expertise, made a misstep.
The Federal Reserve didn't hold back, launching an aggressive rate-hiking campaign from March 2022 to July 2023, implementing 11 consecutive increases to tackle the soaring inflation they inadvertently caused.
Do I have to repeat this sentence again?
Yes, it's worth repeating-the Federal Reserve was combatting the soaring inflation they created, a situation that presents a striking irony.
The situation with the Federal Reserve combating inflation after expanding the money supply presents an ironic scenario. To illustrate this, let's consider three well-known analogies that capture a similar sense of irony: a firefighter arsonist, a doctor spreading disease, and a National Institute of Health (NIH) unleashing a biological weapon on the World.
A firefighter arsonist: This is a case where a firefighter secretly starts fires, only to then heroically put them out. It's akin to the Fed creating inflation through monetary policy and then working to control it.
A doctor spreading disease: Imagine a physician deliberately infecting patients with a virus, then treating them for the illness. This mirrors the Fed's role in causing and treating economic "ailments."
A National Institute of Health (NIH) unleashing a biological weapon on the World. This analogy draws a parallel to the Fed's actions, much like the controversial gain-of-function research at the Wuhan Virology Lab, which some believe led to the COVID-19 pandemic.
An exterminator breeding pests: Picture a pest control specialist who covertly releases insects into homes and then offers their services to eliminate the infestation. This parallels the Fed's dual role in monetary policy.
These scenarios all underscore the paradoxical nature of an entity causing a problem it's tasked with solving, much like the Federal Reserve's position in managing inflation after expanding the money supply.
The irony lies in the fact that the supposed solution provider is also the source of the issue.
This series of hikes, one of the fastest in the Fed's history, unfolded with a sense of urgency and intensity.
The increases were as follows:
-March 17, 2022: 0.25% - Gold price was $1,927 per oz.
Gold price increase - This means the larger number (2,530) is 31.29% higher than the smaller number (1,927)
-May 5, 2022: 0.50%
-June 16, 2022: 0.75%
-July 27, 2022: 0.75%
-September 21, 2022: 0.75%
-November 2, 2022: 0.75%
-December 14, 2022: 0.50%
-February 1, 2023: 0.25%
-March 22, 2023: 0.25%
-May 3, 2023: 0.25%
-July 26, 2023: 0.25%
These hikes raised the federal funds rate from near-zero to a range of 5.25%-5.50%, the highest level since 2001. The rapid pace and magnitude of these increases reflected the Fed's determination to bring inflation under control. Yes, the inflation they created.
Yet in this election cycle (like all others before it) not once will you hear Trump or Harris say “DEFUND THE FED”
Gets even worse. The Federal reserve has a dual mandate:
1. Fight inflation
2. Maintain “full employment” (even though US hardly manufactures any longer, LOL)
Last week, the Bureau of Labor Statistics (BLS) came under scrutiny for a controversial revision to its employment data, artificially inflating job growth figures by approximately 800,000 jobs for the period from March 2023 to March 2024. This upward adjustment, which increased the estimated job creation from 2.1 million to 2.9 million, raised eyebrows among economists and policymakers.
Paint a More Robust Picture to Fool the Villagers
This revision appears to be an attempt to paint a more robust picture of the economy than reality warrants. The significant discrepancy has led to questions about the integrity of the data collection and reporting processes, as well as concerns about potential political motivations behind such a substantial upward revision.
Getting back to Gold
Gold has continued its impressive rally, surpassing $2,500 per ounce for the second consecutive week. This surge comes as the U.S. Dollar Index has fallen to a 13-month low, reflecting a significant shift in market sentiment and monetary policy expectations.
The Federal Reserve's pivot towards a more dovish stance has had a profound impact on both gold and the dollar. Traditionally, rate cuts have a positive effect on gold prices, as lower interest rates reduce the opportunity cost of holding non-yielding assets like gold. The current market dynamics suggest that investors are increasingly viewing gold as a safe haven asset, particularly in light of growing concerns about inflation and the weakening dollar.
Changing Perceptions of Safe Havens
U.S. Treasuries, long considered the ultimate safe-haven asset, are now being treated more like bonds of any other country. This shift indicates a potential erosion of the U.S. dollar's "exorbitant privilege" in global financial markets. As a result, investors are turning to alternative stores of value, with gold being a primary beneficiary.
Global Currency Trends
The strength of gold is not limited to its performance against the U.S. dollar. The precious metal has reached all-time highs when measured in Canadian, U.S., Australian, and Euro fiat currencies. This broad-based appreciation underscores gold's role as a global hedge against currency devaluation and economic uncertainty.
Market Implications
The combination of higher inflation expectations and lower interest rates is creating a perfect storm for gold prices. As the dollar weakens, the purchasing power of gold increases, making it an attractive option for investors looking to preserve wealth. Additionally, the ongoing geopolitical tensions and economic uncertainties continue to support safe-haven demand for gold.
Looking ahead, the market will be closely watching the Federal Reserve's next moves. If the central bank follows through with rate cuts as expected, it could further fuel gold's rally. However, investors should remain cautious, as any unexpected shifts in monetary policy or economic data could lead to short-term volatility in the precious metals market.
Gold to 48,000?
GOLD
This chart is both the largest opportunity you will ever have, and also the largest threat you will ever face. Note that using the yearly time frame, the big backtest is already done. The 3rd and final bull phase has started. And now, gold is at the blue gate for breakout. - graddhy.com
Silver has delivered an average return of +332% during the last three Federal Reserve rate-cutting cycles.
First of, the FED is NOT fighting inflation, it is fighting the Barometer, which IS gold paid in USD.
I say this on the morning of the 18 sept rate cut decision, and because the gold price is again at a new high, I expect a NO change today, as in "higher rates for longer".
If they can not wait until AFTER the election, they are supporting the Harris Walz side.