What Biden's Big Infrastructure Push Means for Silver Price / Commodities / Gold and Silver 2021
The federal government isspending and redistributing newly created cash so rapidly, it’s becomingdifficult to keep track of which trillions are going where.
This week, President JoeBiden will pitch a $3 trillion “green” infrastructure package. That’s on top ofthe $1.9 trillion economic “relief” bill he recently signed into law.
Next month, Biden isexpected to roll out plans for additional trillions to be spent on healthcare,education, housing, and more.
Republicans in Congressmay object to some of the proposed spending. But they have a lousy track record– even during times when they were the majority – when it comes to actuallyreining in federal outlays.
Infrastructure spendingis likely to garner some bipartisan support.
Politicians of bothparties are eager to “bring home the bacon” to their districts. Many of themare blighted by deteriorating roads, crumbling bridges, and functionallyobsolete facilities.
Implementing the “BuildBack Better” agenda will require concrete, steel, copper, and other commodities– lots of them.
The green energycomponents in particular could result in massive demand increase for metalsincluding silver.
The Biden administrationis ordering all federal government agencies to transition their vehicle fleetsto electric motors. It is also expanding subsidies and incentives for electricvehicles sold to consumers, with the stated goal of ultimately banning the saleof gasoline-powered cars.
Electrification has asilver lining – literally.
Silver is a superior conductor of electricity. It iscritical in all stages of electrification infrastructure – from solar panels,to charging stations, to battery connections, to just about every electronicsystem that consumes power.
Silver, gold, and other hard assetsalso stand to benefit from the broader rise inflationary pressures likely to accompanyWashington’s spending spree. It’s all being facilitated by debt issuance andthe Federal Reserve’s printing press, which it uses to buy the government bondsthat no one else will.
At the moment, thecentral bank actually wants to see inflation run hotter. It has virtuallyabandoned all concern over budget deficits and other aspects of fiscalresponsibility on the part of Congress.
But Democrats still wantto raise additional revenues the conventional way – through tax increases:Former Fed chair and current Treasury Secretary Janet Yellen is pushing for tax hikes on corporations and high earners.Transportation Secretary Pete Buttigieg wants to impose a mileage tax on motorists.Senate Budget Committee Chairman Bernie Sanders recently introduced legislation to dramatically raise the estate tax.Massachusetts Senator Elizabeth Warren, Rep. Alexandria Ocasio-Cortez, and their allies are threatening to impose a wealth tax.
A bevy of new taxes couldbe just the thing to spook Wall Street and bring the bull market in equities toan unceremonious end.
When investors perceivingrising threats to paper wealth, they are more likely to hunker downfinancially. And among the safe havens they may find attractive for shelteringwealth are physical precious metals.
Paper liquidations ofprecious metals traded on futures exchanges are possible during periods ofdistress in financial markets.
But these types ofselloffs, like the one experienced last year amid the COVID panic, are usuallyfast-unfolding technical events. They aren’t indicative of fundamentally driventrends.
Although the paperselling in March 2020 was quite extreme, strong physical buying in responsehelped lift the gold market to a record high by late summer – and pushed the silver market to a multi-year high.
Given the extreme natureof the inflationary policies now being pursued in Washington, investorsshouldn’t expect the 2020 highs in gold and silver to be any kind of ceiling.
The more rapidly thatofficials depreciate the currency in the months ahead, the greater the upsidepotential for precious metals.
Stefan Gleason isPresident of Money Metals Exchange, the national precious metals company named 2015"Dealer of the Year" in the United States by an independent globalratings group. A graduate of the University of Florida, Gleason is a seasonedbusiness 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 asthe Wall Street Journal, Detroit News, Washington Times, and National Review.
© 2021 Stefan Gleason - All Rights Reserved
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