The Gold Coin Flip Is In A Heads Gold Wins Tails Gold Wins Moment
So the FED meets tomorrow and plenty of investors are focusing on what one of the key culprits that caused the Death Spiral of Debt will do with interest rates. The market will initially react to the headlines, but should dig deeper into the devilish details.
They will continue to pause. Which means without a doubt that they are finished raising interest rates, and the next big moves will be to lower.
The Death Spiral of Debt will only get worse, even if they lower rates a few times this year. Tons of debt needs to be rolled over from the Free Money Era at much higher rates. This will only make the debt servicing go from $1 trillion to $1.5 then $2 trillion. There is an undeniable debt crisis that few are talking about.
The FED likes to promote itself as not being political which is completely untrue. We will see them get political very soon. Trump wins and Powell and his team are out. They won’t want to hand the keys to the FED over to Trump’s team. They will have to help Biden et al, which requires more spending and lower rates.
But, they are running out of time. The first quarter is almost over and the last quarter is too late. The dot plots of economic numbers are not helping them become the lifeline that Biden needs. Not to worry, before long you will start seeing the manufactured economic numbers give them the cover to lower rates.
It will be interesting to see how Powell stickhandles his way through the meeting tomorrow and the press conference afterward. My guess is they will have to make some dovish comments like they did in the December, 2023 meeting.
They are playing chicken with their jobs. Trump wins, they are out, Biden wins and they stay. It is up to them, regardless of the economic numbers.
Whoever wins, they will do what politicians do and keep spending. Which will only make the Death Spiral of Debt worse.
We are really at a heads gold wins and tails gold wins coin flip moment.
The Death Spiral of Debt is unstoppable and the high interest rates are only locking it in. The central bankers of the BRICS nations see this clearly, which is why they are on a path to the Gold Standard. It won’t be long before the Western central bankers will have to do the same.
Gold is primed to head a lot higher. The gold stocks are at depressed prices and will soon join the party. I can already see contrarians and die hard gold bulls are in on gold and starting to position themselves in the household names of the major gold miners.
They are even starting to move down the gold stock food chain somewhat. When the generalist investors and momentum traders start getting into the gold stocks, we should see the gold stocks move from depressed valuations into a more bullish environment.
The golden coin flip is looking very good for gold and gold stocks.
All the best,
Allan