The New CS Board

[jumanji0881]

'We are sitting on economic cliff': Gold price will be 'well north of $2,000 this year' - ex-JP Morgan MD : https://www.kitco.com/news/2021-04-26/-We-are-sitting-on-economic-cliff-Gold-price-will-be-well-north-of-2-000-this-year-ex-JP-Morgan-MD.html

My Comment : The debt cannot be inflated away'

Excerpts:
"We are already seeing inflation. If you look around the world, you see real estate prices, building supplies, and services skyrocket," he said. "What we created since the early 1990s is an entire financial infrastructure that is relying on debt, and we have accelerated that dramatically in our response to managing the COVID-19 crisis. In that regard, we will continue to increase the money supply globally, and we will continue to have a quite aggressive fiscal policy. We are sitting on an economic cliff."

"We'll see a real big move in gold. We've taken a lot of the length out. We are in a real position to move higher. We'll go well north of $2,000 this year. Realistically, $2,200 is probable. It may have some headwinds as we go through $2,000 again. Gold is in a much better position than where it was a few months ago," Deane said.

The outlook for silver and bitcoin is also bullish. "[Silver] can be somewhere between $35-$40 by Q1 next year. Bitcoin could be north of $100,000 or even $150,000 before the end of the year," he said

With all the debt out there, monetary policy cannot be as effective, Deane added. "If you are now at 50 basis points and you raise rates by 25 basis points. That is a 50% increase in your borrowing costs at a time when the world has the greatest amount of debt we ever had. It would be a huge economic shock to put it through the system," he stated.

The only way the governments have to get rid of some of that debt would be to inflate it away. "By inflating away the debt, that means getting inflation to uptick to get negative real rates," he said. "We backed ourselves into a corner. As a result, we actually need inflation to get us out of it. We need to inflate away the debt. We need modest secular inflation."

However, the problem with inflation is that once it starts to run hot, it is very hard to control, and that could be the problem the Federal Reserve encounters soon. "We don't want inflation to run too hot. And this is the risk of Fed's approach to inflation right now," Deane explained. "People are losing confidence in economic management. People are less likely to hold U.S. dollars. The return on them is zero."