Skousen: Precious Metals, Stocks and Inflation

World Affairs Brief, August 20, 2021 Commentary and Insights on a Troubled World.

Copyright Joel Skousen. Partial quotations with attribution permitted. Cite source as Joel Skousen’s World Affairs Brief (http://www.worldaffairsbrief.com).

PRECIOUS METALS, STOCKS AND INFLATION

There seems to be a disconnect between precious metals and inflation. Collecting or investing in silver and gold used to be a reliable hedge against inflation. But ever since inflation started raging above 10% last year, silver and gold have remained flat. More and more traders now acknowledge that both metals are being artificially manipulated downward. My personal opinion, which I can’t prove (because the details are kept hidden) is that the inside players (like central banks) can sell silver and gold on the open market and buy back privately without reporting it, to replenish their stocks and drive down prices.

But stocks no longer follow real trends, and are powerfully manipulatedBreitbart business noted that stocks strangely went up last Monday after the Taliban’s victory over Afghanistan. “The S&P 500 and Dow Jones Industrial Averages reached all-time highs on the day that America woke up to find the Taliban once again running Afghanistan” That should have been a down sign for all the billions government is spending on military contractors, but it didn’t seem to matter.

They incorrectly assumed investors must be unstoppably optimistic. They were wrong.

Most investors were pessimistic, but these people had little effect on stock prices. Other big players were influencing the stock rise. Strangely, stocks did fall on major indexes shortly thereafter. They reported that,

What really has moved the market is the incoming data. Yesterday, we learned that the combination of high prices, delta variant fears, and the return of mask requirements had weighed more heavily on retail sales in July than almost anyone expected. Today brought the news that housing starts sank much more than expected in July and likely for the same reasons—namely, worries about the impact of resurgent coronavirus and inflation proving stronger and more widespread than anticipated.

Instead of rising prices luring investment into more production and triggering buy-in-advance behavior in consumers, homebuilders and consumers are pulling back, rejecting high prices and increased costs. That’s a recipe for stagflation, rising prices amid sluggish growth.

That’s exactly what I have been saying for years—without indexing people’s salaries to inflation, high inflation eventually makes normal people stop spending—which is stagflation, not hyperinflation.

The minutes of the Federal Reserve’s July meeting showed that the central bankers recognize that inflation is running much hotter than they expected. At the time, a consensus of Fed officials appear to have agreed that conditions were likely to be ripe for the Fed to start cutting back on bond purchases this year. The loss of some of the easy Fed money no doubt contributed to the sell-off Wednesday.

Sadly, the Fed still isn’t raising interest rates to cool off the insane housing market. It’s falling on its own due to high inflation. Finally, Breitbart business editors came to the same conclusion I’ve been saying about covid and the vaccines:

The announcement from the Centers for Disease Control that all double vaccinated Americans will need a third shot eight months after their second is likely to hit consumer confidence hard. Much of this spring’s strength was built on the hope that effective vaccines would allow us to move beyond the pandemic and its restrictions. Now it looks like we’re in for endless shots and mask requirements extending into infinity. We’re not getting back to normal.

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