The Gold Bull Market Is Just Getting Warmed Up

When it comes to the debt crisis there is an easy way to deal with it, which is a return to the Gold Standard, and a hard way which is to default on the debt. Either way, gold wins.

The debt crisis has reached such an alarming and unsustainable level that it is without a doubt a Death Spiral of Debt. The straw that will break the debt camel’s back is the cost of servicing the debt. 

Of course, if the government were to slash spending and increase taxes, while the Fed cut rates back to the Free Money Era, it would still take many years to fix the problem. But there are roadblocks on this path that are insurmountable.

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Spotlight On A Top Pick

This section of the written reports is for highlighting sponsors at Rocks And Stocks News and picks.

Blackrock Silver had a great group of drill hole intersections to report this morning. The highlight hole from the news returned 5.0 metres with 744 g/t silver equivalent, with several other impressive intersections.

Their fully funded drill program has two goals, one is to convert inferred resources into the measured and indicated categories and is focused on the shallowest parts of the veins which would be mined first. Secondly, to expand on the resources which have plenty of room to grow significantly. 

So far, they are reaching their goals of converting their known zones to higher confidence level categories, which moves them along nicely toward a mining scenario. I will be watching for expansion drilling to grow the resource as it looks like they have impressive targets to reach that goal as well. 

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Since the election, Trump has been putting his team together with key appointments, but most of those won’t affect slashing spending. They have started an advisory group led by Elon Musk that can make recommendations, but then those have to get approval from the elected politicians to move forward. 

This is where things get troublesome because politicians on the left and right like increasing spending and never make cuts to spending, let alone slashing. As they are in the business of buying votes. 

If you look at the big costs in the budget, they are social security, medical care, military and servicing the debt. There have been zero plans about how to slash these costs which will cause a revolt from voters.

Prior to Biden, Trump was the worst president ever when it comes to spending and they were pretty close in that destructive horse race. Many of his supporters think he can go from the worst to slashing spending which defies the evidence in his first term.

A second pillar to realistically fixing the debt crisis is to increase taxes, the evidence is also against him on this issue. In his first term he cut taxes and he wants to do that again. 

The third pillar is that the Fed has to cut rates back toward the Free Money Era and let the economy and inflation run much hotter than they would like. Even if they wanted to do that, the bond vigilantes are not cooperating while the Fed started a rate cutting cycle. 

If they want to stay on the rate cutting cycle they will have to dramatically increase their balance sheet. Starting QE while they are trying to pitch that they are perfect in their rate policy and there is a Goldilocks Economy is a tough sell.

The voters just spoke loudly and don’t buy the Goldilocks economy pitch because they are struggling with inflation every time they buy something. While the bond vigilantes don’t agree with the idea that the Fed has beat inflation and are concerned another wave of inflation is right around the corner. The voters and bond vigilantes are saying that stagflation is in play.

Gold is in the midst of an extremely bullish trend and considering all of the various factors, suggests it is only in the earliest days of a bull market and heading much higher.

All the best,

Allan Barry Laboucan

Disclosure

Rocks And Stocks News does not make buying or selling recommendations. The reports are for information purposes only. Sponsors pay a fee to Rocks And Stocks News for content creation. The business model of Rocks And Stocks News is to fund research and reporting on the sector, picks and sponsors through corporate sponsorship. We are thankful to sponsors for enabling commentary free of charge to readers and viewers of the reports. When reporting on sponsors it is on behalf of the sponsors discussed in the portion of the report mentioning the sponsor. Before making any investment decision it is important for you to speak with your financial advisors to consider your risk profile. It is also important to do your homework. To help in that process, Rocks And Stocks News means to be a gateway by doing reports and interviews of management of sponsors and picks. The reports and interviews should not be considered investment advice. Allan Barry Laboucan is the founder and owner of Rocks And Stocks News, he has worked in the mining sector since 1993 and has been reporting on the sector since 2005. He has worked with and been mentored by very talented geoscientists in geology, geochemistry and geophysics. He uses the skills he has picked up during his career to assess sponsors and picks in the reports. Whether a company is a pick or a sponsor they go through the same filter and are reported on when important news is made that Allan Barry Laboucan wants to discuss on the Rocks And Stocks News platform. He may own shares in sponsors and picks for investment purposes which he discloses when discussing them in the reports.