The Fed And Consumers See Stagflation Coming Which Is Extremely Bullish For Gold And Silver

As expected, the Fed didn’t move on interest rates. What stood out the most to me was their predictions for economic growth, which they now expect to slow and get under 2%. They also expect inflation to be stubbornly persistent well above their target rate. Of course they didn’t say it, but what they are predicting is around 1% of stagflation.

When Powell was asked during the press conference about consumers forecasting lower growth that could fall into a recession and much higher inflation than the Fed members, he acknowledged that they have valid reasons to be concerned.

When I heard the question, I thought that for sure he would be dismissive and start making the case that the Fed has a more accurate handle on economic growth and inflation. To my surprise he didn’t, instead he recognized their reasons for concern.

I strongly believe that consumers have a much better reading on the economy and inflation because they live in the real world. They don’t have the luxury of basing their opinions on farcical government data like the Fed. Reality stares them right in the face every day they go to work, and on pay day, as well as every time they pay a bill or buy something.

Consumers are predicting much more significant slowing of the economy than the Fed, in fact, they think it could dip into a recession. While at the same time, they are concerned that inflation is much more problematic and could be well above what the Fed sees coming. They see stagflation of a few percent coming.

If consumers are correct, it won’t be the kind of stagflation that can be ignored, with the growth slowing toward recession. In that scenario, Trump’s stagflation will be more like Carter’s stagflation than Biden’s stagflation.

I firmly believe that the economic numbers coming out during Biden’s term overstated growth and understated inflation. So Trump and his crew can blame some of it on Biden. But, that won’t really work because what is making the gap between growth and inflation get more troublesome is that it is caused by Trump’s mass deportations and tariff policies.

Both of these policies slow the economy and drive up inflation. Mass deportations are already starting to affect the economy, and even before the tariffs are fully implemented businesses and consumers are bracing for the impact. Those reverberations are being felt from Main Street to Wall Street.

They are even being felt in Washington where Team Trump is trying to get ahead of the wave by blaming Biden, and warning folks about a painful period that will be worth it because on the other side are gains.

It won’t matter which politician gets the blame if the economy goes into a recession, or even close to one, while inflation is well above the Fed’s target. The stagflation will be an unpleasant event for consumers. But, not for owners of gold and gold stocks.

There has never been a better time to be a gold bull. The global debt and fiat currency system is broken. There is a Death Spiral of Debt that already has the cost of servicing the debt at unsustainable levels. That is even before they have to roll over $9 trillion in debt this year from much lower interest rates up to the current level. Central bankers in and outside the BRICS network are putting themselves on the Gold Standard. Plus, now stagflation is rearing its ugly head.

These various factors are going to drive gold much higher. I can see gold hitting $4k this year.

What is even more exciting are the gold stocks. Gold miners, from the high-cost to low-cost producers are making money hand over fist. Yet, gold in the ground is still trading at all-time lows.

Great investors like Warren Buffett, and others, say that you want to swing at fat pitches. Well there has never been a fatter pitch for the gold stocks. While gold in the ground is trading at record lows, gold above ground is trading at record highs against every fiat currency including the US dollar. There has never been a scenario like this before.

In 2024, gold was in somewhat of a stealth bull market that was being ignored by generalist investors in the West. Not anymore. This year, copper is in a stealth bull market that few are paying attention to.

Which brings me to one of my favourite picks, McEwen Mining. They are a junior gold miner and they own 46% of private company McEwen Copper which has the Los Azules copper project in Argentina. Los Azules is one of the best undeveloped copper projects in the world.

In 2024, they produced around 135k ounces of gold and will do around the same in 2025. But, then in 2026 their Stock Mine comes online and they will be increasing their gold production and bringing down their costs.

Currently, they are considered a high cost producer, but even high cost producers are making tons of money with gold trading around $1000 above their all in sustaining costs. Not all high cost producers are created equal, the ones to pay attention to are those that are increasing production and bringing down their costs like McEwen Mining.

Another factor to look at for junior gold miners is their ability to find more ounces of gold on their ground. Earlier this year, they announced a significant increase to their resources at the Fox Complex in Ontario, to now exceed 2 million ounces of gold. They are also in the midst of a 69k metre drill program that is going very well based on the results they published in the fourth quarter of 2024 and first quarter of 2025.

In addition to the work they are doing on the gold side of the company, they are also gearing up for a few key catalysts with their copper project.

One of those is they expect to have a feasibility study out in the second quarter of this year. They have also applied for the RIGI program in Argentina, which is where the Los Azules project is located. The RIGI initiative is an effort by Javier Milei to open up the country for big developments that is a win-win for the economy of Argentina and for development of mines in the country.

Los Azules is in the same province as Filo Corp's deposits which was recently bought out by BHP and Lundin for $4.3 billion. The Los Azules deposit is bigger than the deposits in the Filo deal, it is higher grade with lower costs and is at a much lower elevation.

Another catalyst for McEwen Mining is their plan to take McEwen Copper public later this year. Which should unlock value as its own public company.

McEwen Mining has a tremendous growth profile in both gold and copper. Which are two of my favourite metals. Additionally, they have several catalysts to come out throughout this year.

In Closing

I’m very bullish on gold, silver and copper. And as I mentioned earlier, generalist investors haven’t realized yet how impressive the opportunity is in the gold, silver and copper stocks.

With McEwen Mining, they have recently traded under their 50-day moving average and in the past couple of days have broken through it. Not only do they have a great group of assets focused on gold and copper, they are going through an important technical breakout on their stock chart.

Earlier today, I put out a video discussing my top picks. They run the gamut from major gold miners, mid-tier gold miners, and junior gold miners that have aspirations to grow into mid-tier gold miners. Plus, developers with high-quality projects and explorers with important discoveries.

You can find that video report here.

All the best,

Allan Barry Laboucan