Gold & Silver Wait Their Turn to Ride the Inflationary Wave / Commodities / Gold and Silver 2021
As President Joe Biden pushed massive new spendinginitiatives in his address before Congress, investors shrugged off risinginflation risk. They pushed the S&P 500 up to a new record close onThursday.
Gold,meanwhile, continues to be capped under the $1,800 level – at least for thetime being. Silver shows a slight weeklygain and trades a little over $26 per ounce.
As trading closes out for the month of April, preciousmetals bulls will be hoping for a more fruitful May. Although May is typicallya quiet month in markets – not known for producing major crashes or price spikes– it can represent a seasonal turning point.
The old adage, “sell in May and go away” is premised onthe stock market entering a seasonally weak period that typically lasts throughOctober.
Last year was a very abnormal year, of course. And this onelooks to be atypical as well. With allthe fiscal and monetary stimulus still making its way through the economy,seasonal trends in markets could be moot.
A major breakout in gold and silver prices could occur at any time. Ashort squeeze in the futures markets remains a viable scenario given the stillongoing disconnect between tremendously strong demand for physical bullion andpaper selling of futures contracts.
Some online silverinvesting communities are eyeing May 1st for amassive new buying campaign.
How much buying actually materializes remains to be seen.But with mints struggling to keep up with demand and dealer inventories forpopular products including Silver Eagles, silver bars, and silver roundsalready stretched thin, another buying surge could have an effect on premiumsand availability.
Silver and gold markets are waiting their turn to ridethe inflationary wave that has hit so many other markets this year.
Palladium and copper prices are soaring to new heights.The housing market is rising at one of its fastest clips on record as lumberprices go through the roof. Technologycompanies are grappling with a computer chip shortage. Retailers are strugglingwith a labor shortage as millions of working-age Americans stay home andcollect government benefits.
Just about everywhere you look in the economy, supplychains are strained. The precious metals bullion marketplace is a case inpoint.
The fact that spot prices haven’t responded in kind overthe past several months is a source of frustration for many gold and silverbugs. But it’s also a value opportunity.
Those who can see what’s coming know that the value ofthe Federal Reserve Note will continue to decline. They know that at some pointthe richly valued stock market will correct, pushing mainstream investors toseek alternatives. And they won’t be able to keep up with inflation by sittingin cash.
The tsunami of deficit spending and currency creationcoming out of Washington will only increase going forward. President Biden justproposed trillions in new spending for what he euphemistically calls jobs andinfrastructure. In reality, this spending represents and entire re-making ofthe U.S. economy.
Biden’s far-reaching agenda is leading some to comparehim to Franklin Delano Roosevelt. FDR is commonly believed to have pulled thecountry out of an economic crisis through a range of government programs thatfell under the banner of the New Deal.
What’s less commonly understood about FDR is that heradically expanded the power of government to control and destroy wealth. Hethreatened to pack the Supreme Court until it finally capitulated and stoppedstriking down his power grabs as unconstitutional.
Now Joe Biden is forming a commission to look intopacking the Supreme Court with additional justices that would be more favorableto his agenda.
Back on May 1st, 1933, FDR issued Executive Order 6102 --making it illegal for members of the general public to own more than fiveounces of gold bullion. Back then, the dollar’s value was pegged to gold. Thegovernment’s way of creating inflation was to raise the price of gold in termsof dollars and make sure as few people as possible were protected from thedevaluation.
Under our current fiat monetary regime, the Bidenadministration need not bother with gold prohibition. It can spend and borrowat the will of Congress and get the Federal Reserve to produce all the monetarystimulus it desires.
Just like during the days of the classical gold standard,a currency devaluation will ultimately be reflected in the dollar price of goldand silver as well.
The devaluation won’t be formally announced. But when theprecious metals are trading at record highs again, it will be obvious to anyonewho is paying attention that sound money serves as protection against thegovernment’s steady confiscation of purchasing power.
By Mike Gleason
Mike Gleason is President of Money Metals Exchange, the national precious metals company named 2015 "Dealer of the Year" in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review.
© 2021 Mike Gleason - All Rights Reserved
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