The Fed’s interest rate policy is likely to drive gold prices higher, with the 2-year and 10-year yield charts indicating potential rate cuts that could put pressure on the dollar.
A potential domino effect in currencies has been triggered by the dollar breaking resistance levels, while the Euro and British pound have also broken resistance, with the Canadian dollar yet to follow suit.
Hard assets like gold and silver are expected to perform well in an environment of yield suppression and inflation, with the steepening yield curve serving as an important metric for macro traders.
A shift from tech and AI investments to precious metals could lead to significant upside potential, considering the current 0.5% of GDP in fixed asset investments compared to 20-30% in the 1960s.
Despite skepticism, investing in the mining industry is seen as crucial to address supply shortages and inflation, with potential for growth similar to the start of a gold bull cycle.
The Fed’s 50-basis-point emergency rate cut signals the Treasury’s insolvency, with a $2 trillion deficit and $1 trillion+ interest on short-term debt, while the middle class is being destroyed and the bottom 4 quintiles lose purchasing power.
Gold has outperformed the S&P 500 for 25 years with a better sharp ratio, despite being overlooked as an asset class, even though it’s mentioned in the Constitution.
In a deflationary recession, the Fed may cut rates to zero and implement QE, but inflation could surge into double digits, requiring a different investment strategy than the traditional 60/40 stock/bond mix.
The Fed’s emergency rate cut is unlikely to be a panacea in an uncertain economic environment with asset bubbles and credit issues, as history shows from the last three rate cuts.
Deflation benefits the middle class through productivity growth and lower prices, but harms banks leveraged on securities, revealing that central banks prioritize endless bubbles over individual welfare.
The central bank primarily serves banks’ interests, not individuals, while pretending to care about the latter.
Small business bankruptcies surged 61% in 2022 to 4,553 filings, while total corporate bankruptcies reached the highest level since the 2008 crisis, up 34% year-over-year.
A staggering $300 billion of the $380 billion in SBA disaster loans issued during the pandemic remain unpaid, highlighting the ongoing financial struggles of businesses.
High inflation forces companies to raise prices, driving away customers, while high interest rates simultaneously strain businesses and households, creating a challenging economic environment.
Millennials in their 20s are burdened with $1.1 trillion in debt, despite being only 5 years out of school, contributing to a 15% increase in individual bankruptcies in 2022.
The restaurant industry has been particularly hard-hit, with 17 major chains including Red Lobster, TGI Fridays, and World of Beer filing for bankruptcy in 2022 alone.
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