Economic Recovery Looking Shaky

Everything was up this past week except the T-Bonds. That looks like an inflationary risk on week to me.

With everything up and with rates rising, it must mean everything is A-OK in the economy, right? Well, not exactly. As Danielle DiMartino Booth wrote in her Daily Feather on October 9, the idea of an economic recovery is looking very shaky and rather than a positive growth in GDP during Q3 there is a very real possibility of a negative number this quarter given the hesitancy on the part of Nancy Pelosi to grant more handouts for the COVID-19 economically afflicted.  That would come on top of a negative 31+% GDP print for Q2. Danielle offered a host of bad economic statistics that show this is not a V shaped recovery if it’s a recovery at all. Independent economist John Williams, who says we already have an inflation rate closer to 10%, will argue that we are in a deep recession when the real cost of living is factored into the equation.

As I discussed in my MIF talk this past week and as Lyn Alden has demonstrated so thoroughly, when an economy is afflicted with zero bound interest rates, monetary policy becomes worthless. So, what has to happen is massive fiscal stimulus that will have to be financed with printing press money and a decline in the dollar. This is of course very bullish for gold and silver. With regard to gold, please note Michael Oliver’s chart that he sent out to his subscribers on October 9. With the move higher for gold on Friday, and as indicated on Michael’s momentum chart on your left, gold momentum has broken above the red line, signaling clear sailing for gold. Also, as I showed in my MIF presentation, Michael’s momentum work on the dollar index declares the dollar to be in a bear market. That of course is bullish for gold and other tangibles. As for silver, Michael is even more bullish. I strongly suggest investors would do very well to subscribe to Michael’s work at www.OliverMSA.com.

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