Inflation Is Coming In Hotter Due To Tariffs And Mass Deportations Which Is Causing Stagflationary Problems - Stagflation Is Very Bullish For Gold And Silver And The Stocks Up And Down The Food Chain
Inflation came in hotter than analysts expected and financial media consider it a surprise. Tariffs and mass deportations have an immediate effect on inflation and in slowing the economy.
The Fed is painted into a stagflationary corner and Trump is throwing paint at them. Which means that the Fed will either have to throw the economy under the bus or inflation. Stagflation has been a real problem for well over a year in America, as well as in the world economy, and due to Trump’s tariffs and mass deportations it will only get worse.
While the Fed and Wall Street types are predicting inflation to be around 3% in 2025, and consumers are expecting more than 4%. Consumers are much closer to reality, but the trend looks like it could easily reach 5-6%.
Fed members are predicting somewhere around 2% economic growth, but that could easily come in lower due to tariffs and mass deportations that will slow the economy.
Stagflation is a worldwide problem and it is about to show up in a much more obvious way to America. Stagflation is very bullish for gold and silver, and they are primed to go much higher in 2025.
Another bullish indicator for gold is the Death Spiral of Debt. The cost of servicing the debt is unsustainable and if the Fed has to fight a second wave of inflation that is building, the cost will only get worse. It is on a path to be above $1.5 trillion in 2025 with a likelihood it will reach $2 trillion.
Gold has already started 2025 powerfully, with an extremely strong January Effect. Last year gold went from the bottom left of the chart to the top right, while setting a series of record highs along the way. Gold is off to an even stronger start to the year than in 2024, and is on a path to setting a new series of records throughout 2025.
Stagflation and the Death Spiral of Debt will be the key drivers of gold in 2025. Adding fuel to the fire is the trend in which big players are taking delivery of physical gold backing their paper positions. This is putting significant pressure on the bullion banks from London to New York that are having serious problems providing the physical gold.
The most exciting trend I’m watching is that several of the picks in my reports are seeing significant breakouts from where they closed 2024. Another group are coiled springs ready for breakouts.
This is much different than what happened in 2024. In February of 2024, the best in breed major gold miners ended a few year bear market. But, most gold stocks tended to trade with a lack of conviction and more like a cup half empty sentiment. The gold bull market in 2024 didn’t really make its way down the food chain.
The best in breed gold miners, higher cost gold miners, developers with high-quality projects and explorers with important discoveries are breaking out and several are coiled springs, the sentiment has changed to a cup getting half full.
Above ground gold is getting very tight and with the bullish factors building a trend that will drive gold much higher, now the market is ready to start pricing gold in the ground much higher as well.
All the best,
Allan Barry Laboucan
