In A World With A Death Spiral Of Debt And Stagflation Gold Is King And Gold Miners Are Free Cash Flow Machines

Tariffs, a recession and the possibility of a government shutdown have Wall Street in a tizzy because they hate all three. But, their affection toward gold is gaining momentum.

Trump seems adamant to overplay his hand and go ahead with tariff wars while making the no pain no gain pitch. He clearly understands his policies could cause a recession. Mass deportations and tariffs are a certain way to cause the economy to slow and inflation to pick up.

Not many want to say it but stagflation is becoming a growing problem by the day.

Recently, I wrote a report that I see things shaping up for gold to have $50 to $100 up days and we got a $50 up day today in the futures market and spot market. What I had noticed is that gold was basing and ready for a significant breakout.

Wall Street stocks were priced for perfection, and didn’t need tariffs and mass deportations to slow the economy and cause inflation to kick in for a second wave that could be worse than the first wave. These trends keep up and stagflation will become a frightening situation for Wall Street stocks as that is the opposite of perfection.

Stagflation has been a problem for several months, and with Trump’s policies it grew from something investors could ignore because there wasn’t a recession. Combine a recession with stubborn inflation and stagflation will for sure be a much bigger topic on Wall Street, financial media, Main Street and in Washington.

The last time stagflation was a problem in America was during the Carter administration and it was wildly bullish for gold and silver. Trump overplaying his hand could make him the second coming of Carter.

But, stagflation is not just an American problem, it is a worldwide problem, as is the Death Spiral of Debt. During the last bout of stagflation in America, the debt wasn’t as big of a problem because the debt to GDP ratio was not problematic. This time it is and making matters worse is that the cost of servicing the debt is consuming over 20% of the income from taxes.

Another looming problem is that $9 trillion of debt that has much lower interest rates has to be rolled over into current interest rates. At current rates that will drive up the cost of servicing the debt even further and make the deficit worse.

Last year was great for gold, and we also saw best in breed gold miners and some of the companies down the food chain perform very well. This year, in addition to gold setting a series of new record highs, it has been encouraging to see the bullish action spread out into more gold miners, developers with high-quality projects and explorers with important discoveries.

A great example of how sentiment is getting more bullish for the gold stocks can be seen in a report from last month (you can find it here) that featured several companies from the report that had made significant breakouts. It has spread out from the gold majors and smaller gold miners, as well as into the gold mine developers and gold explorers.

The reasons to be bullish on gold are remarkable and they are the Death Spiral of Debt, alarming growth in the cost of servicing the debt, decades of destruction of purchasing power of fiat currencies. They have broken the debt and fiat currency system in America and worldwide. Leaving gold as the last man standing as it is soundest money.

Making matters worse are mass deportations and tariffs that will slow the economy and drive inflation higher creating a stagflation crisis in America and worldwide.

There has never been a better time to be bullish on gold as the world is on a path to the Gold Standard 2.0.

Gold miners are making nothing but money, the high cost miners are making around $1000 per ounce they mine and the low cost miners are producing gold for around half of what they are selling it for.

The gold supply chain is broken, as can be seen in gold trading at record highs, but the gold miners can’t increase production. It will stay broken for a long time because there aren’t enough gold mine developers with high-quality projects and too few gold explorers with important discoveries.

The bottom line is that the demand is growing for a long list of reasons that will only get more compelling and the gold supply chain is broken.

Wall Street and generalist investors are waking up to the bullish arguments to be bullish on gold and gold stocks. When they pile in en masse gold and gold stocks will really head into a Golden Era.

All the best,

Allan Barry Laboucan